For Immediate Release
Contact: Hannah Burns (212) 272-2395
Rebecca Haas (212) 272-8188
THE BEAR STEARNS COMPANIES INC.
REPORTS THIRD QUARTER RESULTS;
DECLARES CASH DIVIDENDS
Diluted EPS $1.32, up 10.9% from $1.19
NEW YORK -September 14, 2000 -- The Bear Stearns Companies Inc. (NYSE:BSC) today
announced earnings for the company's third fiscal quarter ended August 25, 2000.
Earnings per diluted share was $1.32, up 10.9% from $1.19 per share for
the same period a year ago. Net income for the third quarter of fiscal year 2000
was $181.4 million, down 5.7% from $192.3 million for the comparable period a
year ago.
Revenues, net of interest expense, for the quarter ended August 25,
2000 were $1.3 billion, an increase of 6.3% from $1.2 billion for the comparable
period a year ago. The annualized after-tax return on common stockholders'
equity for the quarter ended August 25, 2000 was 18.8%. For the trailing
12-month period ended August 25, 2000, after-tax return on common stockholders'
equity was 19.5%.
Commenting on the quarter, James E. Cayne, president and chief
executive officer, said, "The results for the quarter were quite solid and were
driven predominantly by very strong performances from our equity businesses,
which offset a weak operating environment for our fixed income and investment
banking franchises. Institutional equities, together with Private Client
Services and Global Clearing, benefited from favorable market conditions and
strong customer order flow. The results were further boosted by the continued
growth of our derivatives business, which performed exceptionally well during
the quarter. This franchise continues to grow and we are very optimistic about
its future prospects."
<PAGE>
"The build-out of our European capital markets businesses continues. We
have added 100 professionals in London since January on top of approximately 600
people already in place. Most recently, we announced that Michel Peretie is
joining the firm as head of European and Asian fixed income, and Olivier
Favre-Gilly is joining as head of European equity capital markets. The
significant additions we have made in Europe, in a relatively short time,
provide evidence of the opportunities to hire talented professionals in the
midst of on-going industry consolidation. Our London operation continues to be
solidly profitable as we work to integrate our recent additions."
Other notable events during the quarter included the completion of the
Warner-Lambert/American Home Products advisory assignment and the $7.5 billion
Global Landmark Securities(TM) (GlobLS(TM)) offering for Ford Motor Company for
which the firm served as joint-bookrunning manager. The company also issued $600
million, 7-year corporate debt that represented the first internet-based auction
for corporate debt securities. Successfully executed on the firm's proprietary
Dutch Auction internet Syndication System(SM) (DAiSS(SM)), the transaction
achieved a substantial book of interest and, consequently, the company realized
economic terms that were highly attractive. Additionally, the company completed
the $800 million purchase of United Companies Financial Corporation,
representing one of the largest acquisitions of sub-performing and
non-performing mortgage assets in history.
A summary of selected components of the results of operations for the
third quarter ended August 25, 2000, compared to the prior year period, follows:
o Commission revenues were $262.0 million, up 9.8%, driven by higher levels
of investor activity across the board in private client services,
institutional and global clearance activities.
o Principal transactions revenues were up 6.4% to $528.2 million, primarily
attributable to a record quarter for our derivatives business. Growth in
derivative revenues, together with increased revenues from our domestic and
international equities activities more than offset the reduced results from
our fixed income activities, which were down due to difficult market
conditions.
o Investment banking revenues were $236.9 million, down 11.0%, resulting from
a weaker equity and fixed income capital markets environment. The decline
in underwriting revenues was partially offset by increased revenues from
our merchant banking activities. Merchant banking revenues increased to
$34.3 million from $7.6 million in the prior year.
o Net interest revenues were $209.1 million, an increase of 26.7%, driven by
interest earned on significantly higher interest bearing balances during
the quarter. For the quarter ended August 25, 2000 margin balances averaged
$56.4 billion, up from $43.1 billion in the 1999 period. In addition,
average stock borrow balances were $50.7 billion and average customer
shorts were $70.7 billion, up from $45.0 billion and $63.1 billion,
respectively, in the 1999 period.
o Other income was up 20.4% to $35.2 million from $29.3 million, reflecting
increased asset management revenues from the company's mutual fund and
alternative investment products. As of August 25, 2000, assets under
management stood at $16.4 billion, up 37.8% from $11.9 billion last year,
and assets from alternative investment products grew 40.3% to $2.6 billion
under management at the end of the quarter from $1.9 billion a year ago.
o Compensation as a percentage of net revenues was 52.2%, versus 50.4% for
the three-month periods ended August 25, 2000 and August 27, 1999,
respectively. Due to the change in the company's fiscal year-end from June
30 to November 30, the company's compensation period will cover the
17-month period ending November 30, 2000. Compensation as a percentage of
net revenues for the 14-month period ended August 25, 2000 was 50.7%.
o Non-compensation expenses were $337.9 million, up 17.4% from $287.8
million. The rise was attributable in large part to an increase in expenses
related to the Capital Accumulation Plan, which were $45.7 million for the
current quarter versus $26.3 million a year ago. Other non-compensation
expenses, including market development, technology costs and employment
agency fees, were up related to the expansion of business.
<PAGE>
As of August 25, 2000 total capital, including stockholders' equity and
long-term borrowings, was $24.7 billion. Book value as of August 25, 2000 was
$29.58 per share, based on 159,098,866 shares outstanding.
Quarterly Cash Dividends Declared
The Board of Directors declared a regular quarterly cash dividend of 15
cents per share on the outstanding shares of the company's common stock, payable
October 31, 2000 to stockholders of record on October 17, 2000. The board also
declared a quarterly cash dividend of 68.75 cents per share on the outstanding
shares of Adjustable Rate Cumulative Preferred Stock, Series A, payable October
15, 2000 to stockholders of record on September 29, 2000. In addition, other
regular dividends declared by the Board of Directors include: (i) a cash
dividend of $3.075 per share on the outstanding shares of 6.15% Cumulative
Preferred Stock, Series E, which is equivalent to 76.875 cents per related
depositary share; (ii) a cash dividend of $2.86 per share on the outstanding
shares of 5.72% Cumulative Preferred Stock, Series F, which is equivalent to
71.50 cents per related depositary share; and (iii) a cash dividend of $2.745
per share on the outstanding shares of 5.49% Cumulative Preferred Stock, Series
G, which is equivalent to 68.625 cents per related depositary share, all payable
October 15, 2000 to stockholders of record on September 29, 2000.
Founded in 1923, The Bear Stearns Companies Inc. is the parent company
of Bear, Stearns & Co. Inc., a leading investment banking and securities trading
and brokerage firm serving governments, corporations, institutions and
individuals worldwide. The company's business includes corporate finance and
mergers and acquisitions, institutional equities and fixed income sales, trading
and research, private client services, derivatives, foreign exchange and futures
sales and trading, asset management and custody services. Through Bear, Stearns
Securities Corp., it offers global clearing services to broker dealers, prime
broker clients and other professional traders, including securities lending.
Headquartered in New York City, the company has more than 10,800 employees
located in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles,
San Francisco and San Juan; and an international presence in Beijing, Buenos
Aires, Dublin, Hong Kong, London, Lugano, Sao Paulo, Seoul, Shanghai, Singapore
and Tokyo. For additional information about Bear Stearns, please visit our Web
site at http://www.bearstearns.com.
<PAGE>
***
Financial Tables Attached
For a discussion of the risks and uncertainties that may affect the company's
future results, please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Risk Management" in the company's 1999
Annual Report to Stockholders and its Form 10-K and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Quantitative and
Qualitative Disclosures about Market Risk" in the company's quarterly reports on
Form 10-Q, which have been filed with the Securities and Exchange Commission.
<PAGE>
<TABLE>
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three-Months Ended Nine-Months Ended
-------------------------------- --------------------------------
August 25, August 27, August 25, August 27,
2000 1999 2000 1999
-------------- -------------- -------------- --------------
(In thousands, except share data)
<S> <C> <C> <C> <C>
Revenues
Commissions $ 262,042 $ 238,665 $ 894,143 $ 757,329
Principal transactions 528,202 496,549 1,689,737 1,778,636
Investment banking 236,897 266,031 780,945 746,464
Interest and dividends 1,353,628 1,011,518 4,138,265 2,894,846
Other income 35,236 29,255 104,632 74,246
-------------- -------------- -------------- --------------
Total Revenues 2,416,005 2,042,018 7,607,722 6,251,521
Interest expense 1,144,527 846,429 3,508,872 2,416,272
-------------- -------------- -------------- --------------
Revenues, net of interest expense 1,271,478 1,195,589 4,098,850 3,835,249
-------------- -------------- -------------- --------------
Non-interest expenses
Employee compensation and benefits 663,999 602,200 2,087,182 1,905,947
Floor brokerage, exchange and clearance fees 35,820 37,019 111,690 111,870
Communications 39,931 37,237 125,047 110,904
Depreciation and amortization 37,472 36,213 112,978 103,455
Occupancy 26,909 26,804 79,441 83,009
Advertising and market development 32,531 23,814 91,779 72,148
Data processing and equipment 22,843 19,503 71,284 54,810
Other expenses 142,390 107,237 530,244 395,030
-------------- -------------- -------------- --------------
Total non-interest expenses 1,001,895 890,027 3,209,645 2,837,173
-------------- -------------- -------------- --------------
Income before provision for income taxes 269,583 305,562 889,205 998,076
Provision for income taxes 88,147 113,277 311,211 377,025
-------------- -------------- -------------- --------------
Net income $ 181,436 $ 192,285 $ 577,994 (3) $ 621,051
============== ============== ============== ==============
Net income applicable to common shares $ 171,658 $ 182,507 $ 548,659 $ 591,716
============== ============== ============== ==============
Adjusted net income used for earnings per share(1) $ 197,567 $ 197,361 $ 611,929 $ 663,162
============== ============== ============== ==============
Basic earnings per share (2) $ 1.33 $ 1.19 $ 4.00 $ 4.02
============== ============== ============== ==============
Diluted earnings per share (2) $ 1.32 $ 1.19 $ 4.00 $ 4.02
============== ============== ============== ==============
Weighted average common and common
equivalent shares outstanding (2):
Basic 148,816,237 165,365,835 152,967,377 164,796,954
============== ============== ============== ==============
Diluted 149,242,192 165,365,835 153,169,316 164,796,954
============== ============== ============== ==============
Cash dividends declared
per common share (2) $ 0.15 $ 0.14 $ 0.40 $ 0.43
============== ============== ============== ==============
(1) Represents net income reduced for preferred stock dividends and increased
for costs related to the Capital Accumulation Plan (the "Plan"). For earnings
per share, the costs related to the Plan are added back as the shares related to
such Plan are included in weighted average common and common equivalent shares
outstanding.
(2) Reflects all stock dividends declared through October 29, 1999.
(3) These results include an after-tax charge of $96.0 million, or 63 cents per
share, attributable to increased litigation reserves following the jury verdict
in the Henryk de Kwiatkowski case.
</TABLE>
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<TABLE>
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three-Months Ended
----------------------------------
August 25, May 26,
2000 2000
--------------- ---------------
(In thousands, except share data)
<S> <C> <C>
Revenues
Commissions $ 262,042 $ 321,690
Principal transactions 528,202 513,944
Investment banking 236,897 235,829
Interest and dividends 1,353,628 1,414,878
Other income 35,236 17,351
--------------- ---------------
Total Revenues 2,416,005 2,503,692
Interest expense 1,144,527 1,182,386
--------------- ---------------
Revenues, net of interest expense 1,271,478 1,321,306
--------------- ---------------
Non-interest expenses
Employee compensation and benefits 663,999 704,528
Floor brokerage, exchange and clearance fees 35,820 39,236
Communications 39,931 43,000
Depreciation and amortization 37,472 37,572
Occupancy 26,909 27,547
Advertising and market development 32,531 31,874
Data processing and equipment 22,843 22,631
Other expenses 142,390 249,099
--------------- ---------------
Total non-interest expenses 1,001,895 1,155,487
--------------- ---------------
Income before provision for income taxes 269,583 165,819
Provision for income taxes 88,147 47,442
--------------- ---------------
Net income $ 181,436 $ 118,377 (2)
=============== ===============
Net income applicable to common shares $ 171,658 $ 108,599
=============== ===============
Adjusted net income used for earnings per share(1) $ 197,567 $ 117,084
=============== ===============
Basic earnings per share $ 1.33 $ 0.77
=============== ===============
Diluted earnings per share $ 1.32 $ 0.77
=============== ===============
Weighted average common and common
equivalent shares outstanding:
Basic 148,816,237 152,446,615
=============== ===============
Diluted 149,242,192 152,624,273
=============== ===============
Cash dividends declared
per common share $ 0.15 $ 0.10 (3)
=============== ===============
(1) Represents net income reduced for preferred stock dividends and increased
for costs related to the Capital Accumulation Plan (the "Plan"). For earnings
per share, the costs related to the Plan are added back as the shares related to
such Plan are included in weighted average common and common equivalent shares
outstanding.
(2) These results include an after-tax charge of $96.0 million, or 63 cents per
share, attributable to increased litigation reserves following the jury verdict
in the Henryk de Kwiatkowski case.
(3) This cash dividend relates to the two-month period ended February 25, 2000
and was declared to coincide with the company's new quarterly periods resulting
from the company's change in fiscal year-end.
</TABLE>
<PAGE>
<TABLE>
THE BEAR STEARNS COMPANIES INC
SEGMENT DATA
(UNAUDITED)
<CAPTION>
Three-Months Ended Nine-Months Ended
------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET REVENUES August 25, August 27, Increase/ August 25, August 27, Increase/
2000 1999 (Decrease) 2000 1999 (Decrease)
----------- ------------- ---------- ----------- ------------- ---------------
(In thousands) (In thousands)
Capital Markets $ 682,862 $ 685,083 - $2,135,096 $2,267,246 (6%)
Execution Services 366,710 337,514 9% 1,202,550 982,875 22%
Wealth Management 157,316 139,840 12% 542,285 448,882 21%
Other (a) 64,590 33,152 95% 218,919 136,246 61%
------------- ------------- ---------- ------------- ------------- --------------
Total Net Revenues $1,271,478 $1,195,589 6% $4,098,850 $3,835,249 7%
============= ============= ========== ============= ============= ==============
Three-Months Ended Nine-Months Ended
------------------------------------------- -----------------------------------------------
PRE-TAX INCOME August 25, August 27, Increase/ August 25, August 27, Increase/
2000 1999 (Decrease) 2000 1999 (Decrease)
----------- ------------- ---------- ----------- ------------- ---------------
(In thousands) (In thousands)
Capital Markets $ 141,868 $ 225,399 (37%) $ 547,555 $ 838,154 (35%)
Execution Services 138,693 123,898 12% 462,285 363,488 27%
Wealth Management 22,556 14,073 60% 91,539 77,685 18%
Other (a) (33,534) (57,808) 42% (212,174) (281,251) 25%
------------- ------------- ---------- ------------- ------------- -------------
Total Pre-Tax Income $ 269,583 $ 305,562 (12%) $ 889,205 $ 998,076 (11%)
============= ============= ========== ============= ============= =============
(a) Other is comprised of consolidation/elimination entries, unallocated
revenues (predominantly interest), corporate administrative functions, certain
legal costs (including the accrual related to the Henryk de Kwiatkowski verdict
for the nine-months ended August 2000), and costs related to the Capital
Accumulation Plan.
</TABLE>
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<TABLE>
THE BEAR STEARNS COMPANIES INC.
SELECTED FINANCIAL INFORMATION
(UNAUDITED)
(In thousands, except share and employee data)
<CAPTION>
Nine-Months Ended
---------------------------------
August 25, August 27,
2000 1999
---------------------------------
<S> <C> <C>
Income Statement
Revenues, net of interest expense $ 4,098,850 $ 3,835,249
Net income $ 577,994 $ 621,051
Net income applicable to common shares $ 548,659 $ 591,716
Adjusted net income used for earnings per share $ 611,929 $ 663,162
Earnings per common share (1):
Basic $ 4.00 $ 4.02
Diluted $ 4.00 $ 4.02
Financial Ratios
Return on average common equity (annualized) 19.3% 22.5%
Pre-tax profit margin (2) 21.7% 26.0%
After-tax profit margin (3) 14.1% 16.2%
Compensation & Benefits/Revenues, net of interest expense 50.9% 49.7%
Balance Sheet
Stockholders' equity, at period end $ 4,911,600 $ 4,915,660
Total stockholders' equity and trust issued preferred securities, at period end $ 5,411,600 $ 5,415,660
Total capital, at period end $ 24,660,783 $ 21,386,058
Book value per common share, at period end (1) $ 29.58 $ 25.90
Other Data
Employees, at period end 10,807 9,954
Assets under management, at period end $ 16,400,000 $ 11,900,000
Common shares and common share equivalents outstanding, at period end (1) 159,098,866 167,273,344
Weighted average common and common equivalent shares outstanding (1):
Basic 152,967,377 164,796,954
Diluted 153,169,316 164,796,954
(1) Reflects all stock dividends declared through October 29, 1999.
(2) Represents the ratio of income before provision for income taxes to revenues, net of interest expense.
(3) Represents the ratio of net income to revenues, net of interest expense.
</TABLE>
<PAGE>
<TABLE>
THE BEAR STEARNS COMPANIES INC.
SELECTED FINANCIAL INFORMATION
(UNAUDITED)
(In thousands, except share and employee data)
<CAPTION>
Quarters Ended
--------------------------------------------------------------
August 25, May 26, February 25, August 27,
2000 2000 2000 1999
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Income Statement
Revenues, net of interest expense $ 1,271,478 $ 1,321,306 $ 1,506,066 $ 1,195,589
Net income $ 181,436 $ 118,377 $ 278,181 $ 192,285
Net income applicable to common shares $ 171,658 $ 108,599 $ 268,403 $ 182,507
Adjusted net income used for earnings per share $ 197,567 $ 117,084 $ 297,278 $ 197,361
Earnings per common share (1):
Basic $ 1.33 $ 0.77 $ 1.89 $ 1.19
Diluted $ 1.32 $ 0.77 $ 1.89 $ 1.19
Financial Ratios
Return on average common equity (annualized) 18.8% 11.0% 27.9% 18.9%
Pre-tax profit margin (2) 21.2% 12.5% 30.1% 25.6%
After-tax profit margin (3) 14.3% 9.0% 18.5% 16.1%
Compensation & Benefits/Revenues, net of interest expense 52.2% 53.3% 47.7% 50.4%
Balance Sheet
Stockholders' equity, at period end $ 4,911,600 $ 4,865,282 $ 4,937,291 $ 4,915,660
Total stockholders' equity and trust issued preferred securities,
at period end $ 5,411,600 $ 5,365,282 $ 5,437,291 $ 5,415,660
Total capital, at period end $ 24,660,783 $ 24,614,465 $ 23,185,770 $ 21,386,058
Book value per common share, at period end (1) $ 29.58 $ 28.74 $ 28.21 $ 25.90
Other Data
Employees, at period end 10,807 10,373 10,210 9,954
Assets under management, at period end $ 16,400,000 $ 14,600,000 $ 13,700,000 $ 11,900,000
Common shares and common share equivalents outstanding, at period end(1) 159,098,866 160,568,727 162,607,443 167,273,344
Weighted average common and common equivalent shares outstanding(1):
Basic 148,816,237 152,446,615 157,641,253 165,365,835
Diluted 149,242,192 152,624,273 157,685,693 165,365,835
(1) Reflects all stock dividends declared through October 29, 1999.
(2) Represents the ratio of income before provision for income taxes to revenues, net of interest expense.
(3) Represents the ratio of net income to revenues, net of interest expense.
</TABLE>
