Bear Stearns Reports Full Year and Fourth Quarter 2007 Financial Results

NEW YORK--(BUSINESS WIRE)--The Bear Stearns Companies Inc. (NYSE:BSC) reported results today for the fiscal year and the fourth quarter ended November 30, 2007. For the fiscal year the company reported $1.52 earnings per share (diluted), compared with $14.27 for fiscal 2006. Net income for the fiscal year was $233 million compared with $2.1 billion earned in fiscal year ended November 30, 2006. Net revenues for the 2007 fiscal year were $5.9 billion, compared with $9.2 billion in the prior fiscal year. The after-tax return on common stockholders’ equity was 1.8% for fiscal 2007.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations”

In early November the company announced that it anticipated write-downs of approximately $1.2 billion in mortgage inventory net of hedges. At November 30, total net inventory write-downs were $1.9 billion. These write-downs served to reduce fourth quarter earnings per share (diluted) by $8.21. Including these write-downs the company reported a loss for the fourth quarter ended November 30, 2007 of $6.90 per share¹. For the comparable fourth quarter of 2006, the company reported earnings per share (diluted) of $4.00. The net loss for the fourth quarter of 2007 was $854 million as compared with net income of $563 million for the fourth quarter of 2006. Net revenues for the 2007 fourth quarter were a loss of $379 million down from revenues of $2.4 billion for the 2006 fourth quarter.

“We are obviously upset with our 2007 results, particularly in light of the fact that weakness in fixed income more than offset strong and, in some areas, record-setting performance in other businesses,” said James E. Cayne, chairman and chief executive officer. “Our underlying fixed income franchise remains strong and we have taken steps to size the division to market conditions. We are taking appropriate measures to position Bear Stearns for renewed profitability in 2008 by focusing our resources on the businesses with growth potential in the current environment, while streamlining our operations in areas with lower expected activity levels. We are confident that these efforts will ensure Bear Stearns remains a strong and profitable competitor in the global marketplace in the years to come.”

“When Bear Stearns became a public company, consistent with our entrepreneurial roots and to ensure alignment of interests between management and shareholders, we designed our executive compensation programs to pay for performance. In a year in which we produced unacceptable results, the plans are working as they were designed -- and the members of the executive committee will not receive any bonuses for 2007.”

A brief discussion of the firm’s business segments follows:

CAPITAL MARKETS

Fourth Quarter

Net revenues in Capital Markets, which includes Institutional Equities, Fixed Income and Investment Banking, were a loss of $956 million in the fourth quarter of 2007, down from net revenues of $1.9 billion in the fourth quarter ended November 30, 2006.

Institutional Equities net revenues were $384 million, down 11% from $430 million in the fourth quarter of 2006. Record results from international equity sales and trading and continued strong results from domestic equity sales drove this quarterly performance partially offset by reduced performance in structured equity products.
Fixed Income net revenues were a loss of $1.5 billion, down from net revenues of $1.1 billion in the fourth quarter of 2006. The continued re-pricing of credit risk and the severe dislocation in the structured products market led to illiquidity in the fixed income markets, lower levels of client activity across the fixed income sector and a significant revaluation of mortgage inventory. Total write-downs were $1.9 billion in the quarter net of hedges.
Investment Banking net revenues were $205 million in the fourth quarter of 2007, down 44% from the $364 million in the comparable prior-year period. This decrease reflects lower fees from fixed income underwriting which were partially offset by continued strong merger and acquisition activity levels.

Full Year

Capital Markets net revenues were $3.9 billion in fiscal year 2007, a decrease of 46% from the $7.3 billion reported in 2006.

Institutional Equities net revenues in the 2007 fiscal year were up 10% to a record $2.2 billion from $2.0 billion in fiscal 2006. International sales and trading, risk arbitrage and principal strategies all delivered record results.
Fixed Income net revenues were $685 million in 2007, down from $4.2 billion in 2006. Results for 2007 were heavily influenced by the severe market conditions across the fixed income sector. More broadly, the re-pricing of credit also led to significantly lower net revenue levels due to illiquidity in the markets as trading activity levels deteriorated across the spectrum of fixed income products.
Investment Banking reported net revenues of $1.1 billion in fiscal 2007, down 8% from $1.2 billion in the prior fiscal year. Increases in equity underwriting and higher transaction volumes in advisory areas were more than offset by lower fixed income underwriting net revenues and merchant banking results.

GLOBAL CLEARING SERVICES

Fourth Quarter

Fourth quarter 2007 Global Clearing Services net revenues were $276 million, up 2% from $271 million in the fourth quarter of 2006. Net interest revenues increased due to higher margin debt balances. Average customer margin debt balances for the quarter ended November 30, 2007 were $82.1 billion, up from $72.0 billion in the prior year quarter. Customer short balances averaged $84.6 billion during the fourth quarter of 2007, down from the prior year fourth quarter average of $90.0 billion.

Full Year

Net revenues for the 2007 fiscal year in Global Clearing Services were a record $1.2 billion, up 11% from $1.1 billion in fiscal 2006. Net interest revenues increased due to higher average customer margin debt and average customer short balances. Average customer margin debt balances in 2007 were $90.3 billion compared with $68.4 billion in the fiscal year ended November 30, 2006. Customer short balances averaged $95.6 billion during the 2007 fiscal year, up from the average of $82.6 billion for the 2006 fiscal year.

WEALTH MANAGEMENT

Fourth Quarter

Wealth Management net revenues were $272 million in the fourth quarter of 2007, up 10% from $247 million in the fourth quarter of 2006.

Private Client Services net revenues were a record $161 million in the fourth quarter of 2007, an increase of 20% from $134 million in the 2006 quarter. Increased equity in client accounts, higher client activity levels and the continued growth in fee-based assets drove the quarterly revenue increase.
Asset Management net revenues were $111 million for the fourth quarter of 2007 down slightly from $113 million in the prior year quarter. Performance and management fees increased compared with the year ago period but were offset by reduced principal gains.

Full Year

Wealth Management net revenues were $830 million in fiscal 2007, a decrease of 3% compared with $858 million in fiscal 2006.

Net revenues from Private Client Services rose 15% to a record $602 million for the 2007 fiscal year from $522 million for fiscal 2006. Higher performance and management fees due to strong performance and higher levels of fee-based assets drove record results.
Asset Management reported net revenues of $228 million in the 2007 fiscal year, down 32% from $336 million in the prior year. The decline resulted from write-offs associated with receivables from and investments in the hedge funds, and lower management fees related to proprietary hedge fund products. Assets under management decreased due to a transfer of assets to a newly formed minority-owned affiliated asset manager and reductions in alternative assets under management. As of November 30, 2007 assets under management decreased to $44.6 billion from $52.5 billion as of November 30, 2006.

EXPENSES

Fourth Quarter

Compensation expenses were $326 million in the quarter ended November 30, 2007, down 69% from $1.1 billion in the 2006 quarter.
Non-compensation expenses were $666 million in the 2007 quarter, up 42% from $468 million in the 2006 quarter. The increase is related to severance and legal expense as well as higher occupancy fees, professional fees, and communications and technology costs.

Full Year

In the fiscal year ended November 30, 2007, compensation as a percentage of net revenues was 57.6% as compared with 47.1% for the 2006 fiscal year.
Non-compensation expenses for the fiscal year 2007 were $2.3 billion, 34% higher than the $1.7 billion reported in 2006. Expenses rose due to higher occupancy expenses, professional fees, and communications and technology costs associated with increased headcount as well as a write-down of intangible assets, representing goodwill and specialist rights of Bear Wagner Specialists and severance charges included in other expenses.

For fiscal year 2007 the pre-tax margin was 3.2% versus 34.1% in fiscal year 2006.

As of November 30, 2007, total capital, including stockholders’ equity and long-term borrowings, was $80.3 billion. Book value on November 30, 2007 was $84.09 per share, based on 136.2 million shares outstanding. The company repurchased approximately 12.0 million shares of its common stock at a total cost of $1.7 billion during fiscal 2007.

Quarterly Common Stock Cash Dividend Declared

The Board of Directors of The Bear Stearns Companies Inc. declared a regular quarterly cash dividend of $0.32 per share on the outstanding shares of common stock payable January 25, 2008, to stockholders of record on January 15, 2008.

Quarterly Preferred Stock Cash Dividends Declared

The Board of Directors of The Bear Stearns Companies Inc. declared the following regular quarterly dividends: (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 January 15, 2008 to stockholders of record on December 31, 2007.

About Bear Stearns

Founded in 1923, Bear Stearns (NYSE: BSC) is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The Company’s core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. Headquartered in New York City, the company has approximately 14,000 employees worldwide. For additional information about Bear Stearns, please visit the firm’s Web site at bearstearns.com.

Financial Tables Attached

Certain statements contained in this discussion are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those discussed in the forward-looking statements. 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 2006 Annual Report to Stockholders and similar sections in the company’s quarterly reports on Form 10-Q which have been filed with the Securities and Exchange Commission.

A conference call to discuss the company’s results will be held on December 20, 2007, at 10:00 a.m., (ET). Those wishing to listen to the conference call should dial 1-800-374-2412 (or 1-706-634-7253 for international callers) at least 10 minutes prior to the commencement of the call to ensure connection. The conference call will also be accessible through our Web site at http://www.bearstearns.com. For those unable to listen to the live broadcast of the call, a replay will be available on our Web site or by dialing 1-800-642-1687 (or 1-706-645-9291 for international callers) at approximately 1:00 p.m. E.S.T. The pass code for the replay is 26183824. The replay will be available until midnight on January 4, 2007. If you have any questions on how to obtain access to the conference call, please contact Anthea Zeimann at 1-212-272-4417 or via email at azeimann@bear.com.

¹ Due to the net loss in the fourth quarter of 2007, unvested units and stock options from stock compensation awards were not included in the computation of diluted net loss per share because to do so would have been antidilutive. The full year diluted earnings per share computation includes the dilutive effect of weighted average CAP plan and restricted stock units, together with the dilutive effect of stock options. The exclusion of such unvested units and stock options in the fourth quarter increased the computation of loss per share by $.62 per share.

THE BEAR STEARNS COMPANIES INC. SEGMENT DATA
(UNAUDITED)



	Three Months Ended						% Change From		Twelve Months Ended				% Change
	November 30,		November 30,			August 31,	November 30,	August 31,	November 30,		November 30,
	2007			2006		2007	2006	2007	2007			2006
	(in millions)								(in millions)
NET REVENUES

Capital Markets
Institutional Equities	$	384	$	430	$	719	(11%)	(47%)	$	2,158	$	1,961	10%
Fixed Income		(1,545)		1,116		118	nm	nm		685		4,190	(84%)
Investment Banking		205		364		211	(44%)	(3%)		1,076		1,170	(8%)
Total Capital Markets		(956)		1,910		1,048	nm	nm		3,919		7,321	(46%)

Global Clearing Services		276		271		332	2%	(17%)		1,200		1,077	11%

Wealth Management
Private Client Services⁽¹⁾		161		134		148	20%	9%		602		522	15%
Asset Management		111		113		(186)	(2%)	nm		228		336	(32%)
Total Wealth Management		272		247		(38)	10%	nm		830		858	(3%)

Other⁽²⁾		29		(15)		(11)	nm	nm		(4)		(29)	86%

Total net revenues	$	(379)	$	2,413	$	1,331	nm	nm	$	5,945	$	9,227	(36%)

PRE-TAX INCOME

Capital Markets	$	(1,587)	$	809	$	242	nm	nm	$	(232)	$	2,801	nm
Global Clearing Services		145		108		153	34%	(5%)		566		465	22%
Wealth Management		81		31		(227)	161%	nm		(45)		69	nm
Other⁽³⁾		(10)		(55)		7	82%	nm		(96)		(188)	49%

Total pre-tax (loss)/income	$	(1,371)	$	893	$	175	nm	nm	$	193	$	3,147	(94%)


(1) Private Client Services Detail:
Gross Revenues, before transfer to Capital Markets Segment
Gross Revenues, before transfer to Capital Markets Segment	$	191	$	163	$	169			$	710	$	620
Revenue transferred to Capital Markets Segment
Revenue transferred to Capital Markets Segment		(30)		(29)		(21)				(108)		(98)
Private Client Services net revenues	$	161	$	134	$	148			$	602	$	522

⁽²⁾ Includes consolidation and elimination entries.

⁽³⁾ Includes certain legal costs and costs related to the Capital Accumulation Plan for Senior Managing Directors ("CAP Plan").

nm - not meaningful

Note: Certain prior period items have been reclassified to conform to the current period's presentation.

THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)


	Three Months Ended							% Change From
	November 30,			November 30,		August 31,		November 30,	August 31,
	2007			2006		2007		2006	2007
		(in millions, except share and per share data)

REVENUES
Commissions	$	328		$	291	$	354	13%	(7%)
Principal transactions		(1,543)			1,258		301	nm	nm
Investment banking		348			394		277	(12%)	26%
Interest and dividends		2,724			2,378		3,369	15%	(19%)
Asset management and other income		181			153		39	18%	364%
Total revenues		2,038			4,474		4,340	(54%)	(53%)
Interest expense		2,417			2,061		3,009	17%	(20%)
Revenues, net of interest expense		(379)			2,413		1,331	(116%)	(128%)

NON-INTEREST EXPENSES
Employee compensation and benefits		326			1,052		664	(69%)	(51%)
Floor brokerage, exchange and clearance fees		80			58		80	38%	0%
Communications and technology		156			130		151	20%	3%
Occupancy		74			55		69	35%	7%
Advertising and market development		44			39		49	13%	(10%)
Professional fees		109			82		91	33%	20%
Other expenses		203			104		52	95%	290%
Total non-interest expenses		992			1,520		1,156	(35%)	(14%)

(Loss)/income before provision for income taxes		(1,371)			893		175	nm	nm
(Benefit from)/provision for income taxes		(517)			330		4	nm	nm

Net (loss)/income	$	(854)		$	563	$	171	nm	nm
Preferred stock dividends		5			5		5	(0%)	(0%)

Net (loss)/income applicable to common shares	$	(859)		$	558	$	166	nm	nm

Adjusted net (loss)/income used for diluted earnings per share ⁽¹⁾	$	(878)		$	584	$	168	nm	nm

Basic earnings per share	$	(6.90)		$	4.42	$	1.30	nm	nm
Diluted earnings per share	$	(6.90)	⁽²⁾	$	4.00	$	1.16	nm	nm

Weighted average common shares outstanding:
Basic		127,119,245			129,182,315		128,949,234
Diluted		127,119,245	⁽²⁾		145,923,131		145,105,029

Cash dividends declared per common share	$	0.32		$	0.28	$	0.32


⁽¹⁾ Represents net (loss)/income reduced for preferred stock dividends and increased for costs related to the CAP Plan and the redemption of preferred stock. For earnings per share, the costs related to the CAP Plan (net of tax) are added back as the shares related to the CAP Plan are included in weighted average common shares outstanding.



⁽²⁾ Due to the net loss in the fourth quarter of 2007, the Diluted EPS calculation excludes 15.1 million dilutive potential common shares, as they were antidilutive.

nm - not meaningful

THE BEAR STEARNS COMPANIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)


	Twelve Months Ended				% Change
	November 30,		November 30,
	2007		2006
	(in millions, except share and per share data)

REVENUES
Commissions	$	1,269	$	1,163	9%
Principal transactions		1,323		4,995	(74%)
Investment banking		1,380		1,334	3%
Interest and dividends		11,556		8,536	35%
Asset management and other income		623		523	19%
Total revenues		16,151		16,551	(2%)
Interest expense		10,206		7,324	39%
Revenues, net of interest expense		5,945		9,227	(36%)

NON-INTEREST EXPENSES
Employee compensation and benefits		3,425		4,343	(21%)
Floor brokerage, exchange and clearance fees		279		227	23%
Communications and technology		578		479	21%
Occupancy		264		198	33%
Advertising and market development		179		147	22%
Professional fees		362		280	29%
Impairment of goodwill and specialist rights		227		-	nm
Other expenses		438		406	8%
Total non-interest expenses		5,752		6,080	(5%)

Income before provision for income taxes		193		3,147	(94%)
(Benefit from)/provision for income taxes		(40)		1,093	(104%)

Net income	$	233	$	2,054	(89%)
Preferred stock dividends		21		21	(0%)

Net income applicable to common shares	$	212	$	2,033	(90%)

Adjusted net income used for diluted earnings per share⁽¹⁾	$	223	$	2,121	(89%)

Basic earnings per share	$	1.68	$	15.79	(89%)
Diluted earnings per share	$	1.52	$	14.27	(89%)

Weighted average common shares outstanding:
Basic		130,208,999		131,711,382
Diluted		146,442,842		148,575,469

Cash dividends declared per common share	$	1.28	$	1.12


⁽¹⁾ Represents net income reduced for preferred stock dividends and increased for costs related to the CAP Plan and the redemption of preferred stock. For earnings per share, the costs related to the CAP Plan (net of tax) are added back as the shares related to the CAP Plan are included in weighted average common shares outstanding.

nm - not meaningful

THE BEAR STEARNS COMPANIES INC.
SELECTED FINANCIAL INFORMATION
(UNAUDITED)



	Twelve Months Ended					Three Months Ended
	November 30,		November 30,			November 30,		August 31,		May 31,		February 28,		November 30,		August 31,		May 31,		February 28,
	2007		2006			2007		2007		2007		2007		2006		2006		2006		2006
					(in millions, except common share data and other data)

Results
Revenues, net of interest expense	$	5,945	$	9,227		$	(379)	$	1,331	$	2,512	$	2,482	$	2,413	$	2,129	$	2,499	$	2,185
Net income/(loss)	$	233	$	2,054		$	(854)	$	171	$	362	$	554	$	563	$	438	$	539	$	514
Net income/(loss) applicable to common shares	$	212	$	2,033		$	(859)	$	166	$	356	$	548	$	558	$	432	$	534	$	509
Adjusted net income/(loss) used for diluted earnings per share ⁽¹⁾	$	223	$	2,121		$	(878)	$	168	$	375	$	572	$	584	$	449	$	558	$	529

Financial Position
Stockholders' equity, at period end	$	11,801	$	12,129		$	11,801	$	13,000	$	13,308	$	13,274	$	12,129	$	11,722	$	11,708	$	11,166
Total capital, at period end ⁽²⁾	$	80,339	$	66,699		$	80,339	$	78,151	$	75,098	$	71,768	$	66,699	$	61,923	$	58,355	$	57,589

Common Share Data
Basic earnings per share	$	1.68	$	15.79		$	(6.90)	$	1.30	$	2.78	$	4.23	$	4.42	$	3.34	$	4.12	$	3.92
Diluted earnings per share	$	1.52	$	14.27		$	(6.90)	$	1.16	$	2.52	$	3.82	$	4.00	$	3.02	$	3.72	$	3.54
Book value per common share, at period end	$	84.09	$	86.39		$	84.09	$	91.82	$	92.50	$	90.57	$	86.39	$	81.52	$	79.30	$	75.46
Weighted average common shares outstanding:
Basic		130,208,999		131,711,382			127,119,245		128,949,234		131,684,419		133,094,747		129,182,315		132,086,016		132,810,062		132,738,565
Diluted		146,442,842		148,575,469			127,119,245		145,105,029		148,745,798		149,722,654		145,923,131		148,899,406		149,945,896		149,417,369
Common shares outstanding, at period end ⁽³⁾		136,155,586		145,693,021			136,155,586		144,582,401		144,748,090		145,129,095		145,693,021		146,303,331		147,021,508		145,163,510

Financial Ratios
Return on average common equity (annualized)		1.8%		19.1%			(29.1%)		5.3%		11.6%		18.3%		20.5%		15.8%		20.1%		20.1%
Adjusted pre-tax profit margin⁽⁴⁾		3.5%		35.8%			n/a		13.4%		23.3%		35.3%		38.9%		32.7%		35.1%		36.1%
Pre-tax profit margin⁽⁵⁾		3.2%		34.1%			n/a		13.1%		22.0%		33.7%		37.0%		31.3%		33.4%		34.4%
After-tax profit margin ⁽⁶⁾		3.9%		22.3%			n/a		12.9%		14.4%		22.3%		23.3%		20.6%		21.6%		23.5%
Compensation & benefits / Revenues, net of interest expense		57.6%		47.1%			n/a		49.9%		49.0%		48.5%		43.6%		48.1%		48.8%		47.9%
Non-compensation / Revenues, net of interest expense		39.1%		18.8%			n/a		37.0%		28.9%		17.8%		19.4%		20.5%		17.8%		17.7%

Financial Ratios (pro forma)⁽⁷⁾
Diluted earnings per share	$	2.41		n/a			n/a		n/a	$	3.40		n/a		n/a		n/a		n/a		n/a
Return on average common equity (annualized)		2.8%		n/a			n/a		n/a		15.6%		n/a		n/a		n/a		n/a		n/a
Adjusted pre-tax profit margin⁽⁴⁾		7.4%		n/a			n/a		n/a		32.4%		n/a		n/a		n/a		n/a		n/a
Pre-tax profit margin^{(5) (8)}		6.9%		n/a			n/a		n/a		30.7%		n/a		n/a		n/a		n/a		n/a
After-tax profit margin ^{(6) (8)}		6.0%		n/a			n/a		n/a		19.3%		n/a		n/a		n/a		n/a		n/a
Non-compensation / Revenues, net of interest expense⁽⁸⁾		35.5%		n/a			n/a		n/a		20.3%		n/a		n/a		n/a		n/a		n/a

Other Data (in billions, except employees)
Margin debt balances, at period end	$	85.8	$	78.6		$	85.8	$	85.2	$	108.4	$	86.6	$	78.6	$	68.9	$	72.7	$	64.5
Margin debt balances, average for period	$	90.3	$	68.4		$	82.1	$	102.2	$	95.4	$	81.3	$	72.0	$	68.8	$	68.4	$	64.5
Customer short balances, at period end	$	88.0	$	95.8		$	88.0	$	81.9	$	109.0	$	95.1	$	95.8	$	85.6	$	81.7	$	78.1
Customer short balances, average for period	$	95.6	$	82.6		$	84.6	$	102.2	$	101.9	$	94.0	$	90.0	$	82.1	$	80.2	$	78.2
Securities borrowed, at period end	$	63.0	$	57.6		$	63.0	$	59.5	$	65.4	$	59.4	$	57.6	$	53.1	$	52.1	$	52.4
Securities borrowed, average for period	$	64.3	$	55.0		$	61.1	$	69.7	$	66.6	$	59.9	$	57.6	$	54.7	$	54.8	$	52.9
Free credit balances, at period end	$	36.1	$	32.6		$	36.1	$	35.8	$	36.4	$	37.1	$	32.6	$	36.5	$	34.1	$	30.6
Free credit balances, average for period	$	36.6	$	32.8		$	36.3	$	38.4	$	38.0	$	33.8	$	34.4	$	35.9	$	30.8	$	29.9
Assets under management, at period end	$	44.6	$	52.5		$	44.6	$	57.8	$	59.8	$	54.1	$	52.5	$	50.2	$	47.9	$	45.4
Employees, at period end		14,153		13,566			14,153		15,516		15,120		14,409		13,566		13,134		12,519		12,061

n/a - not applicable

⁽¹⁾ Represents net income/(loss) reduced for preferred stock dividends and increased for costs related to the CAP Plan and the redemption of preferred stock.

For earnings per share, the costs related to the CAP Plan (net of tax) are added back as the shares related to the CAP Plan are included in weighted average common shares outstanding.

⁽²⁾ Includes stockholders' equity and long-term borrowings.

⁽³⁾ Represents shares used to calculate book value per common share. Common shares outstanding include units issued under certain stock compensation plans which will be distributed as shares of common stock.

⁽⁴⁾ Represents the ratio of income before both CAP Plan costs and provision for income taxes to revenues, net of interest expense.

⁽⁵⁾ Represents the ratio of income before provision for income taxes to revenues, net of interest expense.

⁽⁶⁾ Represents the ratio of net income to revenues, net of interest expense.

⁽⁷⁾ Excludes the effect of the $227.5 million pre-tax non-cash charge related to the write down of intangible assets, representing goodwill and specialist rights of Bear Wagner Specialists taken in the quarter ended May 31, 2007.

⁽⁸⁾ In addition to excluding the effect of the non-cash charge related to the write down of intangible assets, this ratio also excludes the effect of the reduction of $10 million in costs associated with the CAP Plan related to the write down of intangible assets.