For Immediate Release
Contact: Hannah Burns (212) 272-2395
Rebecca Haas (212) 272-8188
THE BEAR STEARNS COMPANIES INC.
REPORTS SECOND QUARTER RESULTS;
DECLARES CASH DIVIDENDS
Second Quarter Earnings from Operations were $1.40 per share,
before 63 cents per share Litigation Charge
NEW YORK -June 14, 2000 -- The Bear Stearns Companies Inc. (NYSE:BSC) today
announced earnings for the company's second fiscal quarter ended May 26, 2000.
Net income from operations for the second quarter of fiscal year 2000
was $214.4 million or $1.40 per share, an increase of 8.2% from $198.1 million
or $1.38 per share for the comparable three-month period last year. These
results are before an after-tax charge of $96.0 million, or 63 cents per share,
attributable to increased litigation reserves following the recent jury verdict
in the Henryk de Kwiatkowski case. The company believes the verdict was against
the weight of the evidence and inconsistent with existing law. The company
intends to vigorously pursue all legal remedies available to it. Including such
charge, net income was $118.4 million or 77 cents per share, down 40.2% from
$198.1 million or $1.38 per share for the prior year three-month period ended
May 28, 1999.
Revenues, net of interest expense, for the quarter ended May 26, 2000
were $1.32 billion, a 2.6% decrease from $1.36 billion for the comparable period
a year ago. The annualized after-tax return on common stockholders' equity for
the quarter ended May 26, 2000 was 20.0% before giving effect to the litigation
charge and 11.0% after the charge. For the trailing 12-month period ended May
26, 2000, after-tax return on common stockholders' equity was 21.8% before the
charge and 19.5% after the charge.
Commenting on the quarter, James E. Cayne, president and chief
executive officer, said, "We achieved solid results this quarter, despite more
volatile market conditions and declining trading volumes, predominantly in the
fixed income markets. Furthermore, weakness in the NASDAQ, particularly
technology shares, led to a decline in equity new issue activity. The impact of
this difficult environment was offset by very strong performances in our global
clearing and equity businesses."
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"We continue to make significant investments to expand our core
businesses worldwide, particularly in Europe. We have hired a number of key
senior professionals in London to enhance our European capital markets presence,
most notably, Jeremy Sillem, a leading international banker, who will direct
this expansion and be chairman of Bear, Stearns International Limited. Other
additions to the investment banking effort include Michael Phair and Hugo Ruys
and a team of telecommunications bankers; and Simon Clarkson Webb, who is
joining the firm with a team, as head of European leveraged finance. We are
similarly expanding our European research capabilities in London. Roger Hirst
has joined the firm as head of European equity research. We have also hired two
teams covering the financial services and telecommunications sectors, as well as
five senior equity salesmen. Fixed income credit research will be led by Philip
Crate, who is joining the firm with a team, also based in London. In addition,
we have made senior appointments in our European derivatives unit, including
Guido Rauch, head of European derivatives sales and marketing."
A summary of selected components of the results of operations for the
second quarter ended May 26, 2000, compared to the prior year period, follows:
o Commission revenues were at a record $321.7 million, up 18.2%, attributable
to healthy performances in private client services,institutional and global
clearance activities, with records being achieved in institutional and
global clearance commission revenues.
o Principal transactions revenues were down 22.3% to $513.9 million,
reflecting a generally weaker fixed income market characterized by rising
interest rates and a widening of credit spreads.
o Investment banking revenues were $235.8 million, down 3.5%, due to a
fall-off in corporate bond underwriting activity, including high yield and
investment grade debt.
o Net interest revenues were at a record $232.5 million, an increase of
50.3%, driven by interest earned on record average margin balances during
the quarter.
o Compensation as a percentage of net revenues was 53.3%, versus 49.9% for
the three-month periods ended May 26, 2000 and May 28, 1999, respectively.
As of May 26, 2000 total capital, including stockholders' equity and
long-term borrowings, was $24.6 billion. Book value as of May 26, 2000 was
$28.74 per share, based on 160,568,727 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
July 31, 2000 to stockholders of record on July 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 July 15,
2000 to stockholders of record on June 30, 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 July 15,
2000 to stockholders of record on June 30, 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 10,300 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, Shanghai, Singapore and
Tokyo. For additional information about Bear Stearns, please visit our Web site
at http://www.bearstearns.com.
***
Financial Statements 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.
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<TABLE>
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three-Months Ended Six-Months Ended
---------------------------------- ---------------------------------
May 26, May 28, May 26, May 28,
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
(In thousands, except share data)
<S> <C> <C> <C> <C>
Revenues
Commissions $ 321,690 $ 272,145 $ 632,101 $ 518,664
Principal transactions 513,944 661,790 1,161,535 1,282,087
Investment banking 235,829 244,501 544,048 480,433
Interest and dividends 1,414,878 895,570 2,784,637 1,883,328
Other income 17,351 22,988 69,396 44,991
--------------- --------------- --------------- ---------------
Total Revenues 2,503,692 2,096,994 5,191,717 4,209,503
Interest expense 1,182,386 740,900 2,364,345 1,569,843
--------------- --------------- --------------- ---------------
Revenues, net of interest expense 1,321,306 1,356,094 2,827,372 2,639,660
--------------- --------------- --------------- ---------------
Non-interest expenses
Employee compensation and benefits 704,528 676,236 1,423,183 1,303,747
Floor brokerage, exchange and clearance fees 39,236 39,721 75,870 74,851
Communications 43,000 37,130 85,116 73,667
Depreciation and amortization 37,572 33,923 75,506 67,242
Occupancy 27,547 28,006 52,532 56,205
Advertising and market development 31,874 24,973 59,248 48,334
Data processing and equipment 22,631 18,619 48,441 35,307
Other expenses 249,099 174,802 387,854 287,793
--------------- --------------- --------------- ---------------
Total non-interest expenses 1,155,487 1,033,410 2,207,750 1,947,146
--------------- --------------- --------------- ---------------
Income before provision for income taxes 165,819 322,684 619,622 692,514
Provision for income taxes 47,442 124,584 223,064 263,748
--------------- --------------- --------------- ---------------
Net income $ 118,377 $ 198,100 $ 396,558 $ 428,766
=============== =============== =============== ===============
Net income applicable to common shares $ 108,599 $ 188,322 $ 377,002 $ 409,210
=============== =============== =============== ===============
Basic and diluted earnings per share (1) $ 0.77 $ 1.38 $ 2.67 $ 2.83
=============== =============== =============== ===============
Weighted average common and common
equivalent shares outstanding (1):
Basic 152,446,615 163,805,887 155,042,809 164,467,068
=============== =============== =============== ===============
Diluted 152,624,273 163,805,887 155,152,977 164,467,068
=============== =============== =============== ===============
Cash dividends declared
per common share (1) $ 0.10 (2) $ 0.14 $ 0.25 $ 0.28
=============== =============== =============== ===============
(1) Reflects all stock dividends declared through October 29, 1999.
(2) 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>
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<TABLE>
THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three-Months Ended
----------------------------------------
May 26, February 25,
2000 2000
----------------- -------------------
(In thousands, except share data)
<S> <C> <C>
Revenues
Commissions $ 321,690 $ 310,411
Principal transactions 513,944 647,591
Investment banking 235,829 308,219
Interest and dividends 1,414,878 1,369,759
Other income 17,351 52,045
----------------- -------------------
Total Revenues 2,503,692 2,688,025
Interest expense 1,182,386 1,181,959
----------------- -------------------
Revenues, net of interest expense 1,321,306 1,506,066
----------------- -------------------
Non-interest expenses
Employee compensation and benefits 704,528 718,655
Floor brokerage, exchange and clearance fees 39,236 36,634
Communications 43,000 42,116
Depreciation and amortization 37,572 37,934
Occupancy 27,547 24,985
Advertising and market development 31,874 27,374
Data processing and equipment 22,631 25,810
Other expenses 249,099 138,755
----------------- -------------------
Total non-interest expenses 1,155,487 1,052,263
----------------- -------------------
Income before provision for income taxes 165,819 453,803
Provision for income taxes 47,442 175,622
----------------- -------------------
Net income $ 118,377 $ 278,181
================= ===================
Net income applicable to common shares $ 108,599 $ 268,403
================= ===================
Basic and diluted earnings per share $ 0.77 $ 1.89
================= ===================
Weighted average common and common
equivalent shares outstanding:
Basic 152,446,615 157,641,253
================= ===================
Diluted 152,624,273 157,685,693
================= ===================
Cash dividends declared
per common share $ 0.10 (1) $ 0.15
================= ===================
(1) 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>
