The Bear Stearns Companies Inc. - Investment Banking - Category Directory

(212) 272-2000

383 Madison Ave

New York, NY 10179

www.bearstearns.com
 

Sales

$7.4 billion

Business Description 

The Company is a holding company that through its broker-dealer and international

bank subsidiaries, principally Bear, Stearns & Co. Inc. ("Bear Stearns"); Bear, Stearns

Securities Corp. ("BSSC"); Bear, Stearns International Limited ("BSIL") and Bear Stearns
Bank plc ("BSB") is a leading investment banking, securities and derivatives
trading, clearance and brokerage firm serving corporations, governments,
institutional and individual investors worldwide. BSSC, a subsidiary of Bear
Stearns, provides professional and correspondent clearing services, in addition
to clearing and settling customer transactions and certain proprietary
transactions of the Company.

 The Company is primarily engaged in business as a securities broker and
dealer operating in three principal segments: Capital Markets, Global Clearing
Services and Wealth Management. These segments are analyzed separately due to
the distinct nature of the products they provide and the clients they serve.
Certain Capital Markets products are distributed by the Wealth Management and
Global Clearing Services distribution networks, with the related revenues of
such intersegment services allocated to the respective segments.

The Capital Markets segment comprises the institutional equities, fixed
income and investment banking areas. The Capital Markets segment operates as a
single integrated unit that provides the sales, trading and origination effort
for various fixed income, equity and advisory products and services. Each of the
three businesses works in tandem to deliver these services to institutional and
corporate clients. Institutional equities consists of research, sales and
trading in areas such as domestic and international equities, block trading,
convertible bonds, over-the-counter ("OTC") equities, equity derivatives, risk
and convertible arbitrage and through a joint venture, the NYSE, American Stock
Exchange, Inc. ("AMEX") and International Securities

Exchange ("ISE") specialist activities. Fixed income includes sales, trading and
research provided to institutional clients across a variety of products such as
mortgage- and asset-backed securities, corporate and government bonds,
municipal, high yield products, foreign exchange, interest rate and credit
derivatives. Investment banking provides services in capital raising, strategic
advice, mergers and acquisitions and merchant banking. Capital raising
encompasses the Company's underwriting of equity, investment-grade, municipal
and high yield debt products.

The Global Clearing Services segment provides execution, clearing, margin
lending and securities borrowing to facilitate customer short sales to clearing
clients worldwide. Prime brokerage clients include hedge funds and clients of
money managers, short sellers, arbitrageurs and other professional investors.
Fully disclosed clients engage in either the retail or institutional brokerage
business. At November 30, 2003, the Company held approximately $203.6 billion of
equity in Global Clearing Services client accounts.

The Wealth Management segment is composed of the Private Client Services
("PCS") and asset management areas. PCS provides high-net-worth individuals with
an institutional level of investment service, including access to the Company's
resources and professionals. At November 30, 2003, PCS had 513 account
executives in its principal office, six regional offices and two international
offices. Asset management manages equity, fixed income and alternative assets
for corporate pension plans, public systems, endowments, foundations,
multi-employer plans, insurance companies, corporations, families and
high-net-worth individuals in the US and abroad. The asset management area had
$27.1 billion in assets under management at November 30, 2003, which compared to
$24.0 billion in assets under management at November 30, 2002.

 The business of the Company includes: market-making and trading in US
government, government agency, corporate debt and equity, mortgage-related,
asset-backed, municipal securities and high yield products; trading in options,
futures, foreign currencies, interest rate swaps and other derivative products;
securities, options and futures brokerage; providing securities clearance
services; managing equity and fixed income assets for institutional and
individual clients; financing customer activities; securities lending;
securities and futures arbitrage; involvement in specialist activities on the
NYSE, AMEX and ISE; underwriting and distributing securities; arranging for the
private placement of securities; assisting in mergers, acquisitions,
restructurings and leveraged transactions; making principal investments in
leveraged acquisitions; engaging in commercial real estate activities;
investment management and advisory services; fiduciary, custody, agency and
securities research services.

The Company's business is conducted from its principal offices in New York
City; from domestic regional offices in Atlanta, Boston, Chicago, Dallas,
Denver, Los Angeles, San Francisco and San Juan; from representative offices in
Beijing, Herzliya, Hong Kong, Sao Paulo and Shanghai; through international
offices in Dublin, Hong Kong, London, Lugano, Milan, Singapore and Tokyo; and
through joint ventures with other firms in Belgium, Greece, Spain and Sweden.
The Company's international offices provide services and engage in investment
activities involving foreign clients and international transactions.
Additionally, certain of these foreign offices provide services to US clients.

Bear Stearns and BSSC are broker-dealers registered with the SEC.
Additionally, Bear Stearns is registered as an investment adviser with the SEC.
Bear Stearns and/or BSSC are also members of the NYSE, all other principal US
securities and futures exchanges, the National Association of Securities
Dealers, Inc. ("NASD"), the Commodity Futures Trading Commission ("CFTC"), the
National Futures Association ("NFA") and the ISE. Bear Stearns is a "primary
dealer" in US government securities as designated by the Federal Reserve Bank of
New York.

BSIL is a full service broker-dealer based in London and among other
European exchanges, is a member of Eurex Deutschland ("EUREX"), the
International Petroleum Exchange ("IPE"), Euronext Liffe ("LIFFE"), Euronext
Paris and NASDAQ Europe ("NASDAQ"). BSIL is supervised by and is regulated in
accordance with the rules of the Financial Services Authority ("FSA").

BSB is an Ireland-based bank, which was registered in 1996 and
subsequently granted a banking license on April 10, 1997 under the Irish Central
Bank Act, 1971. BSB allows the Company's existing and prospective clients the
opportunity of dealing with a banking counterparty.

Bear Stearns Global Lending Limited ("BSGL") provides loans to certain
Bear Stearns customers. BSGL is incorporated in the Cayman Islands.

Custodial Trust Company ("CTC"), an FDIC insured New Jersey state
chartered bank, offers a range of trust, lending and securities-clearance
services. CTC provides the Company with banking powers including access to the
securities and funds-wire services of the Federal Reserve System. CTC provides
trust, custody, agency and securities lending services for institutional
accounts; commercial and margin lending; the clearance of government securities
for institutions and dealers; and the processing of mortgage and
mortgage-related products, including derivatives and collateralized mortgage
obligations products. At November 30, 2003, CTC held approximately $107 billion
of assets for clients, including institutional clients such as pension funds,
mutual funds, endowment funds and insurance companies.

Bear Stearns Financial Products Inc. ("BSFP") transacts business as a
triple-A-rated counterparty to eligible clients, offering a wide range of fixed
income and equity derivative products. Eligible clients are those rated A3 or
better by Moody's Investors Service, Inc. and A- or better by Standard & Poor's
Ratings Services or counterparties acceptable to both rating agencies. BSFP
transfers its market risk associated with derivative transactions to Bear
Stearns Capital Markets Inc., an affiliate of BSFP and a wholly-owned subsidiary
of the Company. BSFP is incorporated in the state of Delaware.

Bear Stearns Capital Markets Inc. ("BSCM") is engaged in fixed income
derivatives transactions and hedges associated therewith. BSCM is incorporated
in the state of Delaware.

EMC Mortgage Corporation ("EMC"), is a HUD and Freddie MAC approved lender
based in Irving, Texas. EMC purchases both conforming and non-conforming,
investment-grade and non-investment grade, conventional fixed rate and
adjustable rate residential mortgage loans with servicing released or retained
and sells such loans to investors. EMC also purchases and sells residual
certificates and mortgage servicing rights. In addition, through a subsidiary,
EMC may originate commercial construction loans through approved brokers.

Bear Stearns Mortgage Capital Corporation ("BSMCC") buys conventional
residential mortgages as a secondary market conduit and resells these mortgages
to institutional investors as whole loans or to a special purpose entity in
conjunction with a securitization transaction.

Bear Stearns Credit Products Inc. ("BSCPI") is engaged in credit
derivatives transactions and hedges associated therewith. BSCPI is incorporated
in the state of Delaware.

Bear Stearns Forex Inc. ("BSFX") is a foreign exchange dealer engaged in
foreign currency transactions and hedges associated therewith. BSFX is
incorporated in the state of Delaware.

Equities

General. The Company provides customers with liquidity, sales and trading
expertise and equity research in products such as domestic and international
equities, block trading, convertible bonds, OTC equities,
equity derivatives, risk and convertible arbitrage and through our joint
venture, NYSE, AMEX and ISE specialist activities.

Options and Index Products. The Company provides an array of equity and
index option-related execution services to institutional and individual clients.
The Company utilizes sophisticated research and computer modeling to formulate
specific recommendations relating to options and index trading.

Arbitrage. The Company engages for its own account in both "classic" and
"risk" arbitrage. The Company's risk arbitrage activities generally involve the
purchase of securities at a discount from a value that is expected to be
realized if a proposed or anticipated merger, recapitalization, tender offer or
exchange offer is consummated. In classic arbitrage, the Company seeks to profit
from temporary discrepancies (i) between the price of a security in two or more
markets, (ii) between the price of a convertible security and its underlying
security, (iii) between securities that are, or will be, exchangeable at a
future date and (iv) between the prices of securities with contracts settling on
different dates. The Company also examines relative value strategies. These
strategies focus on pairs of equities or different levels of the capital
structure of the same firm. In these relative value cases, the Company believes
strong reasons exist for the prices of the securities to be highly correlated.

Strategic Structuring and Transactions ("SST"). The Company targets
mispriced assets using sophisticated models and proprietary quantitative
methods. The Company maintains substantial proprietary trading and investment
positions in domestic and foreign markets covering a wide spectrum of equity and
commodity products which include the use of futures, listed and OTC options and
swaps.

Equity Securities.

(i) OTC. The Company makes markets on a principal basis in common and
preferred stocks, warrants and other securities traded on the NASD's
Automated Quotation System and otherwise in the OTC market.

(ii) Direct Access. The Company operates a direct access business by
providing execution and operations services to qualified
institutional investors. Such investors may directly access brokers
on the floor of the NYSE and execute and service orders directly
with them.

Equity Research. The Equity Research Department provides innovative,
in-depth analysis of the global investment environment. Known for theme-oriented
research underpinned by meticulous financial modeling, the department offers
detailed information on over 1,000 companies in roughly 100 industries
(including approximately 50% of the Standard & Poor's 500 Index and
approximately 62% of the market capitalization of the Standard & Poor's 500
Index). It also has a group of economists and strategists that closely monitors
domestic and international markets. The department's broad-based domestic
coverage is complemented by research teams in Latin America, Asia and Europe,
giving its clients an advantage in a world where national boundaries are
becoming more porous. This breadth of coverage allows the department to maintain
a particularly wide-ranging recommended securities list and gives clients a
steady stream of new investment ideas and insights into the more obscure corners
of the financial world.

Convertible Securities. The Company engages in the sales and trading of
equity-linked securities including convertible bonds, convertible preferreds,
equity-linked notes and warrants. Market coverage includes the United States,
Europe, Asia and Latin America.

Equity Sales. The Company is one of the leading firms in the US providing
brokerage services to institutional investors. Institutional equity sales
involves the execution of transactions in US equity and equity-linked securities
for domestic and foreign institutional customers and providing these customers
with liquidity, trading expertise, trade execution, research and investment
advice. The Company provides transaction services for institutional customers
who trade in futures and futures-related instruments.

Block Stock and Portfolio Trading. The Company effects transactions in
large blocks of securities mainly with institutional customers. The Company also
provides customers execution capabilities for baskets of equity securities using
sophisticated computer systems. Transactions are handled on an agency basis
whenever
possible, but the Company may be required to take a long or short position in a
security to the extent that an offsetting purchaser or seller is not immediately
available.

Specialist and Market-Making. The Company engages in specialist and
market-making activities on the NYSE, AMEX and ISE through participation in a
majority-owned joint venture. Such joint venture performs specialist functions
in NYSE-listed stocks as well as stocks and options traded on the AMEX and
performs market-making functions for options traded on the ISE. The rules of
these exchanges generally require specialists to maintain orderly markets in the
securities in which they are specialists, which may require commitments of
significant amounts of capital to the Company's specialist businesses. The
market-making functions of a specialist involve risk of loss during periods of
market fluctuation and volatility, since specialists are obligated to take
positions in their issues counter to the direction of the market in order to
minimize short-term imbalances in the auction market. Due to the occurrence of a
Control Event, as defined by the joint venture Operating Agreement, triggered in
December 2003, the Company is now entitled to designate a majority of the voting
members of the Management Committee, which would result in a controlling
interest of the joint venture. As a result, commencing in fiscal 2004, the
Company will begin consolidating this entity.

Fixed Income

General. The Company makes inter-dealer markets and trades on a principal
basis in a wide range of instruments including: US and foreign government
securities, government agency securities, corporate debt, mortgages,
mortgage-backed and other asset-backed securities, municipal and other
tax-exempt securities and interest rate swaps and other derivative products.
Bear Stearns is one of the largest dealers in the US in such fixed income
securities. Inventories of fixed income securities are generally carried to
facilitate sales to customers and other dealers.

US Government and Agency Obligations. The Company is designated by the
Federal Reserve Bank of New York as a primary dealer in US government
obligations. The Company participates in the auction of, and maintains
proprietary positions in, US Treasury bills, notes, bonds, and stripped
principal and coupon securities. The Company also participates as a selling
group member and/or underwriter in the distribution of various US government
agency and sponsored corporation securities and maintains proprietary positions
in such securities. In connection with these activities, the Company enters into
transactions in options, futures and forward contracts to hedge such positions.

As a primary dealer, Bear Stearns bids directly on all auctions of US
government securities. Additionally, Bear Stearns furnishes periodic reports of
its inventory positions and market transactions in US government securities to
the Federal Reserve Bank of New York. Bear Stearns also buys and sells
government securities directly with the Federal Reserve Bank of New York as part
of the Federal Reserve Bank of New York's open-market activities. In addition,
the Company engages in matched book activities, which involve acting as an
intermediary between borrowers and lenders of short-term funds, mainly via
repurchase agreements and reverse repurchase agreements. The objective of this
matched book activity is to earn a positive spread between interest rates.

Corporate and Sovereign Fixed Income. The Company acts as a dealer in
corporate and sovereign fixed income securities as well as preferred stocks in
New York, London and Tokyo. The Company buys and sells these securities for its
own account in principal transactions with institutional and individual
customers, as well as other dealers. The Company conducts trading in the full
spectrum of dollar and non-dollar debt securities. The Company offers hedging
and arbitrage services to domestic and foreign institutional and individual
customers utilizing financial futures and other instruments. Moreover, the
Company offers quantitative, strategic and research services relating to fixed
income securities to its domestic and international clients. The Company
participates in the trading of investment-grade and non-investment-grade
corporate debt securities, commercial loans and sovereign and sovereign agency
securities.

Mortgage-Related Securities and Products. The Company trades and makes
markets in the following mortgage-related securities and products: Government
National Mortgage Association ("GNMA") securities; Federal Home Loan Mortgage
Corporation ("FHLMC") participation certificates; Federal National Mortgage
Association ("FNMA") mortgage-backed securities; Small Business Administration
loans; loans guaranteed by
the Farmers Home Loan Administration; Federal Housing Authority insured
multi-family loans; real estate mortgage investment conduit ("REMIC") and
non-REMIC collateralized mortgage obligations, including residual interests and
other derivative mortgage-backed securities and products. The Company also
trades real estate mortgage loans originated by unaffiliated mortgage lenders,
both on a securitized and non-securitized basis. The Company acts as underwriter
and placement agent in transactions involving rated and non-rated
mortgage-related securities issued by affiliated and unaffiliated parties. The
Company enters into significant commitments - such as forward contracts - on
GNMA, FNMA, and FHLMC securities, and on other rated and non-rated
mortgage-related securities. Certain rated and non-rated mortgage-related
securities are considered to be liquid, while other such securities, and
non-securitized mortgage loans, are considered to be less readily marketable.

The Company trades GNMA, FNMA and FHLMC "to be announced" securities
(i.e., securities having a stated coupon and the original term to maturity,
although the issuer and/or the specific pool of mortgage loans is not known at
the time of the transaction). The Company buys and sells such securities for its
own account in transactions with institutional and individual customers, as well
as with other dealers.

The Company, through various special purpose subsidiaries, purchases,
sells and services entire loan portfolios of varying quality. These portfolios
are generally purchased from financial institutions and other secondary
mortgage-market sellers. Prior to bidding on a portfolio of loans, an analysis
of the portfolio is undertaken by experienced mortgage-loan underwriters. Upon
acquisition of a loan portfolio, the loans are classified as either
investment-grade or non-investment-grade. Loan collection is emphasized for the
non-investment-grade segment of the loan portfolio. A collection department
employs a staff of workout specialists and loan counselors who assist delinquent
borrowers. If collection efforts are unsuccessful, the foreclosure group will
commence and monitor the foreclosure process until either the borrower makes the
loan current, or the property securing the loan is foreclosed or otherwise
acquired. The portfolio may include real estate that has been foreclosed or was
in the process of foreclosure at the time of its acquisition. The foreclosure
group maintains and markets properties through regional real estate brokers.
Investment-grade mortgage loans are sold to other institutional investors in
either securitized or non-securitized form. Moreover, special purpose vehicles
issue REMIC and non-REMIC collateralized mortgage obligations directly or
through trusts that are established for this purpose.

The Company also operates a commercial mortgage conduit that originates
and accumulates commercial mortgage loans for the purpose of securitization.
After receipt of loan applications, extensive credit underwriting reviews are
conducted. After completing pricing analysis and successful negotiations, the
loan will "close" and be included in an ensuing securitization.

Asset-Backed Securities. The Company acts as underwriter and placement
agent with respect to investment-grade and non-investment-grade asset-backed
securities issued by affiliates as well as unaffiliated third parties. These
asset-backed securities include: securities backed by consumer automobile
receivables originated by the captive finance subsidiaries of automobile
manufacturers, commercial banks and finance companies; credit card receivables
and home-equity lines of credit or second mortgages. The Company also trades and
is a market-maker in these asset-backed securities. While there are ready
markets for the investment-grade asset-backed securities described above,
non-investment-grade securities and related varieties thereof may lack
liquidity.

Municipal Securities and Related Products. The Company is a dealer in
tax-exempt and taxable municipal securities and instruments including: general
obligation and revenue bonds; notes; leases; and variable-rate obligations
issued by state and local governments and authorities, as well as not-for-profit
institutions. The Company is active as a managing underwriter of negotiated and
competitive new security issuances and on a select basis, provides financial
advisory services. The Company makes markets in a broad spectrum of long-term
and short-term municipal securities, mainly to facilitate transactions with
institutional and individual customers, as well as other dealers. As agent for
issuers, the Company earns fees by remarketing short-term debt instruments to
investors in the variable rate demand and auction rate bond market. The Company
offers a variety of derivative products to issuers to assist them in reducing
their borrowing costs, maximizing investment returns and managing cash flows and
balance sheets, including but not limited to interest rate swaps, caps, floors,
options and forward delivery, and debt service reserve and debt service deposit
agreements. The Company periodically uses municipal and treasury bonds, futures
and interest rate swaps to hedge its
cash-market bond inventory. In addition, the Company maintains a hedged
portfolio of high quality municipal securities which are remarketed as
short-term securities in order to generate arbitrage profits .

Derivatives. The Company offers to institutional customers, and trades for
its own account, a variety of exchange-traded and OTC derivative products,
including fixed income, credit and equity derivatives. These products are
transacted, as principal, with customers for hedging (credit, currency, interest
rate or market), risk management, asset/liability management, investment,
financing and other purposes. These transactions are in the form of swaps,
options, swaptions, asset swaps and structured notes, as well as more complex,
structured trades which are customized to meet customers' specific needs.
Derivatives enable customers to build tailor-made risk/return profiles, to
customize transaction terms, to develop packaged solutions to a problem, to
implement trades that otherwise could not be executed and to transact business
with standardized documentation. The Company also enters into derivative
transactions for various purposes and to manage the risks to which the Company
is exposed in its various businesses and through its funding activities. The
Company manages its market and counterparty risks arising from derivatives
activities in a manner consistent with its overall risk management policies. The
Company has 24 hours a day capabilities with personnel based in New York,
Chicago, London, Hong Kong, Tokyo, Singapore and Dublin.

Foreign Exchange. The Company trades foreign exchange with clients as
principal and to hedge its securities positions or other assets and liabilities.
Foreign exchange products include major and minor currencies on a spot and
forward basis, listed and OTC foreign currency options and foreign exchange
futures contracts. Foreign exchange trading desks are maintained in New York and
London and clients can trade or leave orders 24 hours a day. The Company serves
a select list of funds, major corporations and mid-size commercial banks.
Currency option strategies are made available to customers to help them meet
their specific risk management objectives.

Fixed Income Research. The Company is one of the leaders in the
distribution, trading and underwriting of corporate, government, high yield,
emerging markets, municipal debt and mortgage-backed and asset-backed
securities. The Fixed Income Research Department provides ongoing support for
the Company's sales and trading efforts, producing reports, studies and
technical market analyses. The Fixed Income Research Department is comprised of
economists, industry analysts and strategists covering the full range of
research disciplines: quantitative, economic, strategic, credit portfolio,
relative value and market-specific analysis. Fixed Income Research is comprised
of the following three units located in New York and London:

(i) Financial Analytics and Structured Transactions Group ("F.A.S.T.")
is a center of expertise for the creation and analysis of fixed
income and derivative securities worldwide. F.A.S.T. uses innovative
solutions that employ state-of-the-art analytics and technology to
help the Company and its clients successfully meet individual
business objectives. F.A.S.T. is a global resource for financial
engineering and securitization capabilities, fixed income portfolio
management and analytical systems, investment research, trading
technology and general financial expertise. A strategic partner for
the Company's international trading desks, risk management areas and
sales force, F.A.S.T. also serves the Company's external clients. In
addition to formulating and executing customized strategic
investment and trading solutions, F.A.S.T. develops the tools and
recommendations necessary to quantify relevant risks and evaluate
portfolios and securities. F.A.S.T.'s resources are used to create
and model new types of securities, affording clients the unique
perspective of both issuer and investor.

(ii) High grade research provides coverage on 20 industries and
approximately 400 companies whose fixed income securities are
investment grade.

(iii) High yield research provides coverage on approximately 200 corporate
and sovereign issuers whose fixed income securities are
non-investment-grade.

Investment Banking

The Company is a major global investment banking firm providing a full
range of capital formation and advisory services to a broad spectrum of clients.
The Company manages and participates in public offerings and
arranges the private placement of debt and equity securities directly with
institutional investors. The Company provides advisory services to clients on a
wide range of financial matters and assists with mergers, acquisitions,
leveraged buyouts, divestitures, corporate reorganizations and
recapitalizations.

The Company's strategy is to concentrate a major portion of its corporate
finance business development efforts within those industries in which the
Company has established a leadership position in providing investment banking
services. Industry specialty groups include media and entertainment, health
care, financial institutions, industrial, technology and telecommunications.
This list is not exclusive but rather reflects the areas where the Company
believes its knowledge and expertise are strongest. The Company also has a group
that focuses on financial sponsors. These groups are responsible for initiating,
developing and maintaining client relationships and for executing transactions
involving these clients. The Company has focused primarily on those industries
in which the Company also has a strong research capability.

In addition to being structured according to distinct industry groups, the
Company has a number of professionals who specialize in specific types of
transactions. These include mergers and acquisitions ("M&A"), equity offerings,
high yield securities, leveraged and syndicated bank loans, leveraged
acquisitions, commercial real estate and other transaction specialties.

Mergers and Acquisitions. The Company is active in arranging various M&A
transactions for its clients. The Company participates in a broad range of
domestic and international assignments including acquisitions, divestitures,
strategic restructurings, proxy contests, leveraged buyouts and defenses against
unsolicited takeovers.

Equity Offerings. The equity capital markets group focuses on providing
financing for issuers of equity and convertible equity securities in the public
markets. The group assists in the origination and is responsible for the
structuring and execution of transactions for a broad range of clients.

High Yield Securities. The high yield securities group focuses on
providing financing in the public and private capital markets. The group is
responsible for originating, structuring and executing high yield transactions
across a wide range of companies and industries, as well as managing client
relationships with both high yield corporate issuers and financial sponsors of
leveraged transactions.

Leveraged Loan Origination and Syndication. This area of the Company
integrates the origination, structuring, underwriting, distribution and trading
of loans. Such loans include both funded as well as committed investment-grade
and non-investment-grade loans.

Leveraged Acquisitions. The Company makes investments as principal in
leveraged acquisitions and in leveraged buy-out funds as a limited partner. The
Company's investments generally take the form of either common or preferred
stock or warrants. Equity securities purchased in these transactions generally
are held for appreciation and are not readily marketable.

Commercial Real Estate. The Company is engaged in a variety of real estate
activities on a nationwide basis. It provides comprehensive real estate-related
investment banking, capital markets and financial advisory services.

Merchant Banking. Bear Stearns Merchant Banking, the dedicated private
equity arm of the Company invests private equity capital in compelling leverage
buyouts, recapitalizations and growth capital opportunities in a broad range of
industries alongside superior management teams.

Emerging Markets

The Company provides financial services in various emerging markets
worldwide including: securities brokerage, equity and fixed income trading and
sales, and securities research, in addition to offering a full range of
investment banking, capital formation and advisory services. As part of these
activities, the Company manages and participates in public offerings and
arranges the private placement of debt and equity securities with
institutional investors. The markets currently covered by the Company include
Latin America, Asia and Eastern Europe.

Global Clearing Services

Global Clearing Services provides clearing, custody, financing, securities
lending, trade execution and technology solutions for hedge funds,
broker-dealers and registered investment advisors.

For start-up and established hedge funds worldwide, Global Clearing
Services offers comprehensive "prime brokerage", which includes advanced
web-based portfolio reporting, enhanced leverage programs, term financing, cash
management and capital introduction.

For broker dealers conducting retail, institutional and money management
activities the Company provides "fully disclosed correspondent clearing
services". The Company's advanced proprietary technology, combined with
comprehensive retail products, integrated prime brokerage, operations expertise
and exceptional service have enabled the Company to maintain its industry
leadership for many years.

For registered investment advisors whose strategies include asset
management, leverage and active trading, the Company provides a combination of
trade execution, web-based portfolio reporting for investors and comprehensive
service.

The Company derives revenues from commissions and service charges from
clearing activities and from interest income on margin financing, client short
selling activity, and uninvested balances. The Company extends margin credit
directly to correspondents to finance proprietary activity.

The financial responsibilities arising from the Company's clearing
relationships are allocated in accordance with agreements with correspondents.
To the extent that the correspondent has available resources, the Company is
protected against claims by customers of the correspondent when the
correspondent has been allocated responsibility for a function giving rise to a
claim. However, if the correspondent is unable to meet its obligations,
dissatisfied customers may attempt to seek recovery from the Company.

Securities transactions are effected for customers on either a cash or
margin basis. In a margin transaction, the Company extends credit to a customer
for a portion of the purchase price of the security. Such credit is
collateralized by securities in the customer's accounts in accordance with
regulatory and internal requirements. The Company receives income from interest
charged on such loans at a rate that is based upon the Federal Funds Rate,
Broker Call Rate, or London Inter Bank Offered Rate (LIBOR).

The Company borrows securities from banks and other broker dealers to
facilitate customer and proprietary short selling activity, and lends securities
to broker dealers and other trading entities to cover short sales and to
complete transactions that require delivery of securities by settlement date.

Futures

The Company, through BSSC and other subsidiaries, provides, directly or
through third-party brokers, futures commission merchant services for customers
and other Bear Stearns affiliates who trade contracts in futures on financial
instruments and physical commodities, including options on futures.
Exchange-traded futures and options derive their values from the values of the
underlying selected stock indices, individual equity securities, fixed income
securities, currencies, agricultural and energy products and precious metals.

Domestic futures and options trading is subject to extensive regulation by
the CFTC pursuant to the Commodity Exchange Act and the Commodity Futures
Trading Commission Act of 1974. International futures and options trading
activities are subject to regulation by the respective regulatory authorities in
the locations where futures exchanges reside, including the FSA in the United
Kingdom.

Margin requirements (good faith deposits) covering substantially all
transactions in futures and options contracts are subject to each particular
exchange's requirements in addition to other regulations. In the US, the

Company is a clearing member of the Chicago Board of Trade, the Chicago
Mercantile Exchange, the New York Mercantile Exchange and other principal
futures exchanges. In the United Kingdom, the Company is a member of the IPE,
the London Commodity Exchange ("LCE"), LIFFE and OM London Exchange Limited
("OMLX"). The Company also has non-clearing memberships with MATIF and Eurex in
Europe. In Japan, memberships are held with the Tokyo Stock Exchange, the Osaka
Securities Exchange ("OSE") and the Tokyo International Financial Futures
Exchange ("TIFFE").

PCS

PCS provides high-net-worth individuals with an institutional level of
service, including access to the Company's resources and professionals. PCS has
513 account executives in its principal office and six regional offices and two
international offices.

Asset Management

The Company's Asset Management Department manages equity, fixed income and
alternative assets for some of the leading corporate pension plans, public
systems, endowments, foundations, multi-employer plans, insurance companies,
corporations, families and high-net-worth individuals in the US and abroad. With
$27.1 billion in assets under management as of November 30, 2003, clients
benefit from the asset management group's ability to leverage the Company's
extensive resources and proven skill at turning innovative ideas into rewarding
investment opportunities. Institutional and high-net-worth products span a broad
spectrum of equity strategies including large cap, small cap, systematic, core
and value equity; fixed income strategies including cash and enhanced cash
management, short-term, intermediate, core, high yield and leveraged loans; and
alternative investment strategies including various equity and fixed income
hedge funds, a fund of proprietary hedge funds, private equity funds of funds,
venture capital and structured products.

Administration and Operations

Administration and operations personnel are responsible for the human
resources and legal compliance areas; for processing of securities transactions;
receipt, identification and delivery of funds and securities; internal financial
controls; accounting functions; regulatory and financial reporting; office
services; the custody of customer securities; the overseeing of margin accounts
of the Company and correspondent organizations as well as other functions. The
processing, settlement and accounting for transactions for the Company,
correspondent organizations and the customers of correspondent organizations are
handled by employees located in offices in New York, New Jersey and, to a lesser
extent, the Company's offices worldwide.

The Company executes its own and correspondent transactions on US
exchanges and in the OTC market. The Company clears all of its domestic and
international transactions (i.e., delivery of securities sold, receipt of
securities purchased and transfer of related funds) through its own facilities,
unaffiliated commercial banks, other broker-dealers and through memberships in
various clearing corporations.

International

Outside the US, the Company, through its international subsidiaries,
provides various services including investment banking, securities and
derivatives trading and brokerage and clearing activities to corporations,
governments, institutions and individual clients throughout the world. These
international subsidiaries of the Company have memberships on various foreign
securities and futures exchanges.

BSIL, based in London, provides investors and issuers with a full range of
products and services in both international and US equities, fixed income,
exchange-traded futures and options and foreign exchange. In addition, BSIL is a
major sales and trading center within the Company's global fixed income, credit
and equity-related derivative businesses. BSIL has an investment banking
capability and also services the Company's growing clearance business in Europe.
Bear Stearns International Trading Limited ("BSIT") is also based in London and
provides investors and issuers with products and services in various
non-dollar-denominated equity securities.

Bear Stearns (Japan), Ltd. ("BSJL"), based in Tokyo, serves the diverse
needs of corporations, financial institutions and government agencies by
offering a range of international fixed income and equity products as well as
listed futures. BSJL also offers a range of derivative products within Japan
with special focus on fixed income, credit and equity derivatives. Asset-backed
securitization, mergers and acquisitions, corporate finance and restructuring
services are also available for local and cross-border business.

Bear Stearns Asia Limited ("BSAL"), based in Hong Kong, is the Company's
primary operating entity in the Asia-Pacific region, excluding Japan. This
office provides international equity sales, trading and research services to
institutional and individual clients in Asia.

BSB, based in Dublin, allows the Company's existing and prospective
clients the opportunity of dealing with a banking counterparty. BSB also serves
as a platform from which the Company directs some of its international banking
activities, gaining easier access to worldwide markets and thereby expanding its
capacity to increase its client base and product range. BSB engages in capital
market activities with particular focus on the trading and sales of OTC interest
rate derivative products. BSB also provides custody and trustee services to the
growing number of alternative investment funds domiciled in Ireland and in other
offshore jurisdictions.
 

Ticker

BSC

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