1999 ANNUAL REVIEW
HELPING clientsCAPITALIZE ON CHANGE
Businesses today must adapt to a whole new kind of change. Not simply
faster or on a larger scale, but change that transforms entire industries.
Change that presents enormous opportunity for those who capitalize on it –
and equally great risk for those who don’t. This puts a premium on business
leaders who are both decisive enough to act and flexible enough to change
direction. And it calls for a different kind of investment bank.
At Credit Suisse First Boston, we’re specialists in change. We understand
it, we’ve lived through it, and we’ve made a name in trading and fast-moving
industries where change is the daily norm. Most importantly, we help clients
capitalize on change to seize opportunity.
We value ideas over process, creativity over bureaucracy. We work harder
for clients to ensure flexibility and consistent execution. And we are truly
global, deploying our capital base, global perspective and clout to offer a
full range of products, services and capabilities to clients worldwide.
AGENTS OF
change
M A R K E T V O L A T I L I T Y : Daily price
moves of 5% are no longer just common — they are
expected. The market rewards those who have the
ability to anticipate change and capitalize on this new
volatility. CSFB has built depth and diversity into its
global sales and trading operations to provide clients
with timely insight into and execution in the world’s
hottest markets and products. In addition, whether
our clients choose to reduce or increase exposures
to these volatile markets, our broad product diversifi-
cation will provide innovative, tailor-made derivatives
and structured products to assist clients in achieving
their desired risk profile.
D E R E G U L A T I O N : The rules
governing the competitive landscape continue to
shift. Government-protected monopolies are being
dismantled and privatized, throwing entire industries
into competitive turmoil. In many sectors, deregulation
provides business opportunities that did not exist
years ago. CSFB identifies those trends. We stay
ahead of the curve; we see where opportunities lie
and where challenges need to be met.
T H E T E C H N O L O G YR E V O L U T I O N : Dramatic technological
innovations have redefined the way the world does
business — it’s faster, more mobile and more complex
than ever. The challenge is to leverage the unprece-
dented opportunities created by technology to help our
clients maintain and improve their competitive position
in an ever-changing global economy. CSFB is a leader in
using technology to benefit our clients — PrimeTradeSM,
PrimeDebtSM, RESEARCHVIEWSM and TradeWeb® give
our clients electronic trading tools for the major mar-
kets, and [email protected] is just one example of how
CSFB leverages the Internet to communicate about our
business. Advanced applications such as these, cou-
pled with a robust, secure infrastructure, allow us to do
business with any of our clients from any of our loca-
tions, virtually 24 hours a day, affording CSFB the
competitive edge to respond to its clients’ global needs.
G L O B A L I Z A T I O N : The world is becom-
ing decidedly smaller. Once-distant competitors are
now able to invade each other’s space more readily
than ever before, presenting business challenges and
investment opportunities. CSFB’s global platform
enables the Firm to bring an unmatched global
perspective to clients in every corner of the globe.
T H E E U R O : The launch of the euro was the
most important financial event on the Continent in
decades. This monumental change created a large
foreign-exchange market for the new currency, a
large European market for government bonds and
huge fungible capital markets for companies.
Drawing on the collective insights of its extensive
European infrastructure and its global foreign-
exchange expertise, CSFB was the first to buck the
trend of euphoria about the euro, alerting its clients
to the likely downtrend of the currency in January.
This prediction proved to be accurate — and further
enhanced CSFB’s reputation as the most European of
the large global investment banks.
T H E U N R E L E N T I N G P A C EO F C O N S O L I D A T I O N : Global
mergers and acquisitions activity continues to redefine
virtually every industry. Transactions previously thought
improbable suddenly seem possible. Even the largest
multinational corporations may face the challenge of
“buy or be bought.” In a competitive environment in
which change is the only constant, CSFB partners with
its clients to help them seize opportunities and stay
one step ahead of the competition.
OUR PROMISE IS SIMPLE: we help clients LEVERAGE CHANGE TO MOVE THEIR BUSINESSES FORWARD.
WE SEE CHANGE AS THEIR OPPORTUNITY.
2 3
F R A N C H I S E A N D C U LT U R E
CSFB’s culture and franchise remains distinctive among the
world’s leading investment banks for its internationalism,
breadth and openness to change — all key attributes for
success in the “new economy.” At the same time, the
renaissance of the Firm’s market positions has been accom-
panied by strong improvements in unifying culture and
improving cohesion and staff retention. Management is
committed to building on this progress.
The sanctions imposed on CSFP in Japan, while unfair in
our judgment, serve to highlight the legal, regulatory and
operational risks of our industry and the absolute requirement
for a strong control environment and exemplary employee
behavior. CSFB expects to deliver on these standards as well.
The achievements of 1999 were based on the trust and
confidence of our clients with whom we are gratified to work
in record numbers around the world. They also depend on the
loyalty, dedication, energy, talent and creativity of our 15,000
employees globally. I would like to thank them too. Together,
whether in infrastructure and technology, trading, sales,
research or corporate finance, they served this Firm well.
I am also pleased to report a management change we
announced in March 2000, unifying the leadership of the
Investment Banking and Equities Divisions under Brady
Dougan and Chuck Ward, and Chuck is assuming the role of
President of our Firm. In addition, we added two new mem-
bers, Paul Calello and Christopher Carter, to our Executive
Board. I am confident this will help accelerate the progress of
these businesses, where alignment is increasingly important.
O U T L O O K 2 0 0 0
In 2000, CSFB’s goals are demanding yet straightforward:
to help our clients capitalize on change, to invest in our own
business and to realize the rewards of that investment in
improved market shares, infrastructure effectiveness and
shareholder value. We face 2000 recognizing the volatility
and challenges of our industry, but with confidence in
CSFB’s continued progress.
Allen D. Wheat
Chairman of the Executive Board
and Chief Executive Officer
The dawn of a new millennium offers great perspective on
the trends shaping our world. Spearheaded by the Internet
revolution, businesses, markets and the world economy in
general are changing and adapting at unprecedented speed.
The Investment Banking industry sits at the apex of this
transformation. Our mission and function at CSFB is to help
direct, intermediate and facilitate flows of capital and to
advise our clients on restructuring and adapting their indus-
tries to take advantage of change.
CSFB is positioned at the forefront of our industry, har-
nessing change for clients and in our own activities. In just
over 18 months, we have become the global leader in advis-
ing the diverse technology industry on its dramatic evolution.
In other industries our teams are also prominent in helping
investors, governments and companies alike to capitalize on
change in their own areas.
To meet these challenges, CSFB has transformed itself
over the last three years with tremendous growth in market
shares, business diversity, reach and financial substance.
1999 itself was a year of outstanding achievement and
robust financial results at CSFB. Across many products and
geographies our client service earned increases in market
share for the third successive year, cementing CSFB as the
“momentum” firm among the world’s investment banking
leaders. The investments of 1997/8 are paying off hand-
somely and we have continued to invest in building client
capabilities, modernizing infrastructure and positioning
advantageously for E-commerce — and thereby for greater
shareholder value for the future.
B U S I N E S S R E S U LT S
1999 Revenues and Net Income reached records of $9.8 bil-
lion and $1.26 billion, respectively — especially pleasing given
the loss in 1998 triggered primarily by the Russian default.
Activity and profit were more broadly based than ever
before. Yet the Firm’s risk profile declined as planned, and
capital ratios for the Bank strengthened still further (BIS Tier 1
— 9.9% at December 31).
All divisions enjoyed improved results. Most notable was
the Equities Division, which, for the first time, became CSFB’s
largest profit contributor on the strength of nearly doubled rev-
enues. All businesses and market shares improved strongly,
further enhancing CSFB’s global “bulge bracket” positioning.
In tandem with the Equities’ advances, Investment
Banking also grew market shares and revenues. Outstanding
results in the Technology practice vindicated the expansion
initiated in 1998 and strong growth in Europe (actual and in
prospect) underscores the value of our acquisition of BZW
and other investments made in 1997/8.
Fixed Income & Derivatives (“FID”) produced a strong
earnings recovery on a revenue gain of 63%. This was driven
by customer flows, most notably in Credit products, and by
outstanding contributions from the restructured Emerging
Markets businesses. This included Garantia in Latin America
(acquired in 1998), which contributed impressively. FID
return on equity was held back by provisioning in the real
estate area, where risk is being substantially reduced.
CHIEF
EXECUTIVE’S
letter
CSFB IS POSITIONED ATTHE FOREFRONT OF OURINDUSTRY, HARNESSINGCHANGE FOR CLIENTS ANDIN OUR OWN ACTIVITIES.
4 5
PERCENTDOLLARS IN MILLIONS (UNAUDITED) 1999 1998 CHANGE
For the year
Revenues $ 9,753 $ 6,713 45%
Operating expenses $ 7,190 $ 5,341 35%
Gross profit $ 2,563 $ 1,372 87%
Net income (loss) (1) $ 1,262 $ (77) na
At year-end
Total shareholder’s equity $ 7,795 $ 7,135 9%
Total assets $ 275,224 $ 290,696 -5%
Selected ratios
Return on average equity (1) 19% -1%
Pretax profit margin (1) 18% 1%
Expense/revenues 74% 80%
Staff expense/revenues 55% 56%
Tier 1 BIS-based capital ratio (2) 9.9% 8.4%
Total BIS-based capital ratio (2) 17.9% 15.4%
Employees 15,185 14,126 7%
(1) Excludes extraordinary/exceptional items and minority interests.(2) These ratios apply to the Bank.
IMPORTANT
ADVANCES IN
MARKET SHARE
1999 CHANGE VS. 1998
CSFB CSFB CSFB CSFBRANK SHARE RANK SHARE
Global Debt 4 7.2% +1 -0.1%
Global Equity (1) 5 7.0% +3 +2.4%
Global M&A (2) 4 15.4% +1 -0.6%
US Secondary Equity Listed 6 5.8% 0 +1.1%
Equity Research
North America 5 40(3) +1 +13
Europe 4 26(3) +2 +10
(1) Includes equity-linked securities.(2) Based on announced transactions.(3) Number of ranked analysts. Europe reflects latest (February 2000) ranking versus prior year.
Sources: Securities Data Company, McLagan, Institutional Investor
FINANCIAL
HIGHLIGHTS
highlightsOF 1999
A LEADER IN
innovation
BEST BANK OF THE LAST 25 YEARSInternational Financing Review
BEST BOND HOUSE OF THE LAST 25 YEARSInternational Financing Review
EASTERN EUROPE, MIDDLE EAST, AND AFRICABOND HOUSE OF THE YEAR
International Financing Review
BEST PROJECT FINANCE BOND MANAGERProject Finance
PEERS’ POLL: BEST LEAD MANAGER OF EMERGING MARKET BONDS
Euroweek
AMERICAS SECURITIZATION HOUSE OF THE YEAR
International Financing Review
M&A INVESTMENT BANK OF THE YEARMergers & Acquisitions: The Dealmaker’s Journal
INVESTMENT BANK OF THE DECADECentral European
US TECHNOLOGY HOUSE OF THE YEARECM (an IFR publication)
BEST UNDERWRITER OF ASSET-BACKEDSECURITIES
Euromoney
BEST REGIONAL BANK IN EUROPE FORRESEARCH
Global Finance
EQUITY HOUSE OF THE YEAR – JOINT WINNERInsto
EUROPEAN EQUITY HOUSE OF THE YEARInternational Financing Review and ECM
EQUITY HOUSE OF THE DECADECentral European
6 7
TRANSACTION AWARD PUBLICATION
Agora Best East Europe IPO Emerging Markets Investor
Corporate Finance Institutional Investor
IPO Deal of the Year Central European
Al Taweelah A2 Middle East Power and Water Deal of the Year Project Finance
Power Deal of the Year, Europe/Africa/Middle East Project Finance International
ASARCO/Grupo México Mergers & Acquisitions Institutional Investor
AT&T/MediaOne Breakthrough Deal – Telecoms Investment Dealers’ Digest
Deal of the Year: Mergers & Acquisitions Investment Dealers’ Digest
Mergers & Acquisitions Institutional Investor
Banco Hipotecario Best Privatization IPO Euromoney
Public Equity – Editor’s Choice Award Latin Finance
Calpine Best US Project Finance Deal Euromoney
Deal of the Year: Project Finance Investment Dealers’ Digest
North America Power Deal of the Year Project Finance
Commerce One Deal of the Year: E-commerce Investment Dealers’ Digest
Compañía Mega Latin America Oil and Gas Deal of the Year Project Finance
Project Finance Institutional Investor
Project Finance – Editor’s Choice Award Latin Finance
Conoco Deal of the Year, Bonds Euromoney
Highly Commended – Bond by a North American Issuer Corporate Finance
Dabhol Power Asia-Pacific Project Finance Loan International Financing Review
Asia Power Deal of the Year Project Finance
Asian Project Finance Deal IFR Asia
Best Project Finance Deal Finance Asia
Best Project Finance Deal, Asia Global Finance
Project Finance Institutional Investor
Winner, Project Finance Corporate Finance
DaimlerChrysler Deal of the Year, Bonds Euromoney
Edison Mission Energy Best Project Finance Deal, Europe Global Finance
Project Finance Institutional Investor
Esat Telecom Best High Yield Bond Issue euro
Fannie Mae Deal of the Decade Euroweek
Federated/Fingerhut Breakthrough Deal – E-commerce Investment Dealers’ Digest
Firstar Corporation/ Best US M&A Deal EuromoneyMercantile Bancorporation
Freddie Mac Deal of the Year – Agencies Euroweek
Freeserve Corporate Finance Institutional Investor
One of Eight Deals of the Year The Treasurer
GMAC CARAT 1999-2 Breakthrough Deal – Structured Finance Investment Dealers’ Digest
GMAC Swift Trust Deal of the Year – Swiss Francs Euroweek
Swiss Franc Bond International Financing Review
Hoechst/Celanese Highly Commended – Demerger Corporate Finance
Husky Terra Nova North America Oil and Gas Deal of the Year Project Finance
Jazztel Telecommunicaciones Corporate Finance Institutional Investor
J.C. Penney/Genovese Mid-Market Deal of the Year Mergers & Acquisitions
Korea Electric Power Company Best Privatization Deal Global Finance
Lebanese Republic Best Mid-East Sovereign Issue Emerging Markets Investor
Pasminco/Savage M&A Deal of the Year Insto
People’s Republic of China Asia-Pacific Bond International Financing Review
Asian Bond Deal IFR Asia
Pepsi Bottling Highly Commended – Bond by a North American Issuer Corporate Finance
PLDT/Smart/NTT Best M&A Deal Finance Asia
Port Arthur Industrial Deal of the Year, Americas Project Finance International
Republic of Brazil Breakthrough Deal – Emerging Markets Investment Dealers’ Digest
Republic of Croatia Sovereign Issue Institutional Investor
Republic of Slovakia Best Central Europe Sovereign Issue Emerging Markets Investor
Euro-denominated Eurobond Debt Deal of the Year Central European
Republic of Slovenia Euro-denominated Sovereign Eurobond Runner-up Central European
Republic of South Africa Eastern Europe, Middle East, and Africa Bond International Financing Review
STMicroelectronics European Secondary Offering ECM (an IFR publication)
TD Waterhouse Best US Financial Services IPO Euromoney
Telstra Asia-Pacific Secondary Offering ECM (an IFR publication)
Australia Equity Deal IFR Asia
TotalFina/Elf Aquitaine Best Merger euro
Breakthrough Deal – Mergers & Acquisitions Investment Dealers’ Digest
Deal of the Year: Energy Investment Dealers’ Digest
Highly Commended, M&A (Takeover) Corporate Finance
Mergers & Acquisitions Institutional Investor
United Kingdom Deal of the Decade Euroweek
YPF/Repsol Best Mergers & Acquisitions Deal, Latin America Global Finance
Breakthrough Deal – Energy Investment Dealers’ Digest
Deal of the Year, Mergers & Acquisitions Euromoney
Mergers & Acquisitions Institutional Investor
Mergers & Acquisitions Deal of the Year Latin Finance
Mergers & Acquisitions – Editor’s Choice Award Latin Finance
Winner, M&A (Takeover) Corporate Finance
HOUSE AWARDS ENTITY
(See additional House Awards listed on page 5) AWARD PUBLICATION
Credit Suisse First Boston Best Bank in M&A in Asia for Utilities and Energy Global Finance
Best Bank in M&A in Europe for Food, Beverage Global Financeand Consumer Products
Best Bank in M&A in Europe for Leisure Global Financeand Property Companies
Best Bank in M&A in Europe for Technology, Global FinanceElectronics, and Defense
Best Bank in M&A in Europe for Transportation Global Financeand Automotives
Best Bank in M&A in North America for Food, Global FinanceBeverage, and Consumer Products
Best Bank in M&A in North America for Global FinanceMetals and Mining
Best Bank in M&A in North America for Global FinanceTransportation and Automotives
Best Bank in Project Finance in Emerging Asia Global Finance
Best Foreign Securities Firm in the U.S. Euromoney
Best Project Finance Bond Manager Project Finance
Best Regional Bank in Europe for Equity Origination Global Finance
Best Securities Firm in New Zealand Euromoney
M&A House of the Year Insto
Peers’ Poll: Best Lead Manager of Bonds for Eastern EuroweekEuropean Borrowers
Peers’ Poll: Best Lead Manager of Bonds for EuroweekLatin American Borrowers
Top House – Exotic Currency Products Risk
Top House – Exotic Equity Products Risk
Top House – Exotic Interest Rate Products Risk
1999DEALS OF THE YEAR
Hoechst sought to refocus the company toward life sciences
and engaged CSFB to help it demerge certain of its industrial
chemicals businesses into a newly formed, publicly traded
company, Celanese. The scope of the assets to be demerged
had to balance the needs of Celanese — to achieve critical
mass and a sound capital structure — while achieving the
divestiture objectives of Hoechst. Celanese represents the
first large-scale transaction under new German laws enabling
demergers on a tax-efficient basis. In order to ensure a
proper launch for the company in the capital markets, CSFB
designed a special redistribution mechanism to facilitate and
accelerate the natural redistribution of shares to a new share-
holder base. The unique nature of the transaction highlights
CSFB’s ability to structure complex and creative solutions for
clients seeking to reposition their companies through corpo-
rate restructurings.
9
Full Service Product OfferingsAcquisition FinanceAsset FinanceCorporate Lending and
Syndicated FinanceEquity and Convertible Securities
UnderwritingGeneral Financial AdvisoryHigh Yield UnderwritingInvestment Grade Debt and Preferred
Stock Underwriting Lease FinanceLeveraged FinanceMergers and Acquisitions
Acquisition AdvisoryCorporate Sales and DivestituresJoint VenturesLeveraged BuyoutsRestructuringsTakeover Defense Advisory
Private PlacementsPrivatizationsProject FinanceShare Repurchase Programs Supply Chain Finance
Focused Industry ExpertiseAutomotiveCapital Goods ChemicalsConsumer ProductsDepository InstitutionsEnergyFinancial SponsorsGaming Health CareInsuranceLogistics and TransportationMedia and TelecommunicationsMetals and MiningPaper, Packaging and Forest ProductsPowerReal EstateRetailTechnology
AGENTS OFCHANGE ININVESTMENT BANKING
(Dollars in Millions) 1999 1998 % CHANGE
Revenue $ 2,189 $ 1,791 22%
Employees 2,468 2,373 4%
Average BIS Capital $ 825 $ 1,100 -25%
Charles G. Ward IIIHead of Investment Banking*
The professionals in the Investment Banking Division
demonstrate our Firm’s steadfast commitment to helping our
clients succeed in a business environment in which change is
the only constant.
In 1999, trends such as globalization, deregulation and
consolidation, coupled with seismic leaps on the Internet and
in information technology, often shortened the decision-mak-
ing process to weeks, rather than months or years. Both
threats and opportunities abounded in the business climate,
making strategizing all the more difficult in this era of new
possibilities.
Our Investment Banking professionals help our clients
capitalize on change. We help them view change as a means
to an end — and help them to be proactive, rather than reac-
tive. The risks are significant, but the possibilities are
enormous. As one client recently told us, “Either you cause
change or you become a victim of it.”
We believe the dramatic shifts in science, technology,
demographics, geopolitical conditions and the global econ-
omy are just beginning to be felt. The world continues to get
smaller, with factors such as declining trade barriers and
E-commerce enabling businesses to reach every corner of
the world more quickly and more efficiently.
We have structured the Investment Banking Division to
maximize CSFB’s ability to provide strategic advice and capi-
tal-raising services to our clients throughout the world. We
bring the capabilities of a truly global investment bank to bear
for each and every one of our clients. Our professionals are
inventive, dynamic and thoughtful, with demonstrated expert-
ise across the spectrum of industries and financial products.
In terms of results, the Investment Banking Division
enjoyed its best year ever. We had record revenues and sig-
nificant market share gains. First and foremost, we thank our
clients for the ongoing trust they have placed in us. As a
firm, we have made a number of significant investments that
have bolstered the performance of the Investment Banking
Division, and we believe the division is well positioned to
more deeply understand our clients and to help them capital-
ize on change.
M E R G E R S & A C Q U I S I T I O N S
In each of the past five years, the volume of M&A activity has
T H E D E M E R G E R O F C E L A N E S EF R O M H O E C H S T
* As of March 2000 — President and Co-Head of Investment Banking and Equities
10 11
CREDIT SUISSE FIRST BOSTON CLIENT DESCRIPTION OF TRANSACTION APPROXIMATE DOLLAR VALUE
AT&T Corporation Agreed to acquire MediaOne Group, Inc.* $63,100,000,000
TotalFina Exchange offer for Elf Aquitaine* $54,000,000,000
Hutchison Whampoa Limited Advice with respect to the sale of 44.8% interest $35,000,000,000in Orange PLC to Mannesmann AG
Ascend Communications Merger with Lucent Technologies, Inc. $24,000,000,000
YPF SA Sale of Company to Repsol SA $20,000,000,000
INA - Istituto Nazionale delle Agreed to be acquired by Assicurazioni Generali SpA* $12,580,000,000Assicurazioni SpA
Union Carbide Corporation Agreed to merge with The Dow Chemical Company* $11,900,000,000
Firstar Corporation Acquisition of Mercantile Bancorporation Inc. $10,600,000,000
AT&T Corporation Advice with respect to cable system swap with Comcast Corporation* $9,100,000,000
Teton Acquisition Corp. Agreed to acquire MidAmerican Energy Holdings Co.* $9,000,000,000
Whittman-Hart Inc. Agreed to merge with USWeb Corporation $7,932,600,000
E.I. du Pont de Nemours and Company Acquisition of remaining 80% of Pioneer Hi-Bred International, Inc. $7,700,000,000
Cerent Corporation Acquisition by Cisco Systems, Inc. $7,500,000,000
Coca-Cola Beverages Plc and Merger between Coca-Cola Beverages Plc and Hellenic $6,900,000,000Hellenic Bottling Company Bottling Company*
Case Corporation Sale of Company to New Holland N.V. $6,236,300,000
Alcoa Inc. Agreed to acquire Reynolds Metals Company* $6,000,000,000
AT&T Corporation Advice with respect to investment in AT&T and acquisition of 29.9% $5,000,000,000stake in Telewest Communications plc by Microsoft Corporation*
Siara Systems Agreed to merge with Redback Networks Inc.* $4,300,000,000
Tenneco, Inc. Spin-off of Pactiv Corporation (formally Tenneco Packaging Inc.) $4,200,000,000
J.C. Penney Company, Inc. Sale of private label credit card and accounts receivable $4,000,000,000portfolio to GE Capital
Platinum Technology Acquisition by Computer Associates International Inc. $3,600,000,000
Nortel Networks Agreed to acquire Qtera Corporation* $3,250,000,000
Flextech PLC Agreed in principle to merge with Telewest Communications plc* $3,200,000,000
Enron Corp. Agreed to divest Portland General Electric to Sierra Pacific Resources* $3,100,000,000
Hoechst AG Advice with respect to demerger of Celanese AG $2,800,000,000
Quebecor Printing Inc. Acquisition of World Color Press, Inc. $2,700,000,000
ASARCO Incorporated Sale of Company to Grupo México, S.A. de C.V. $2,610,000,000
Stratec Holdings AG and Synthes Merger between Stratec Holdings AG and Synthes $2,500,000,000
Bayer AG Agreed to acquire the global polyols business and an equity interest $2,450,000,000in the Propylene Oxide capacity of Lyondell Petrochemical*
Pathé S.A. Merger with Vivendi S.A. $2,431,000,000
EarthLink Network, Inc. Agreed to merge with MindSpring Enterprises, Inc.* $2,430,000,000
British Steel plc Merger with Koninklijke Hoogovens NV $2,300,000,000
Telephone and Data Systems, Inc. Agreed to sell 82% stake in Aerial Communications, Inc. to $2,200,000,000VoiceStream Wireless Corp.*
Wang Global Acquisition by Getronics NV $2,200,000,000
The General Electric Company, p.l.c. Acquisition of RELTEC Corporation $2,101,800,000
Nortel Networks Agreed to acquire Clarify, Inc.* $2,100,000,000
Commerce One Strategic alliance with General Motors* $2,000,000,000
* Pending as of 3/10/00
MERGERS AND ACQUISITIONS
highlights
broken the prior year’s record. In 1999, global M&A activity
exceeded the $3 trillion mark for the first time. Clearly, the
unrelenting pace of M&A activity — be it a multibillion-dollar
merger or the divestiture of a non-core unit — has become a
fundamental tenet of successful business strategy.
This unprecedented pace of consolidation has changed
the paradigm in many industries. Successful companies must
be nimble in the face of major strategically driven industry
consolidations. Virtually every industry has been affected by
consolidation — from media conglomerates and financial
institutions to chemical companies and utilities — and thus
the competitive environment is in a constant state of flux.
Our M&A Group is consistently at the vanguard of M&A
activity. In recognition of that fact, Mergers & Acquisitions
named CSFB as investment bank of the year and Global
Finance named Credit Suisse First Boston as the most hon-
ored investment bank in the publication’s 1999 M&A survey.
Global Finance lauded CSFB for the Firm’s “innovative solu-
tions and superior service for their clients.”
In 1999, we provided strategic advice on a record num-
ber of transactions for the Firm. More importantly, we were
involved in transactions that defined many of our clients’
strategic direction.
M&A activity boomed in Europe last year, as the combined
forces of a common currency, stronger shareholder pressure,
high stock valuations, and increasing deregulation and compe-
tition drove heightened activity. European companies, through
unprecedented cross-border consolidation, are building
dynamic corporate entities with sustainable global presence.
Even unsolicited bids became more prevalent in countries
where they were historically uncommon. Among the most
prominent unsolicited transactions was TotalFina’s successful
$54 billion offer for Elf Aquitaine, the largest offer ever in
France. CSFB acted as principal advisor to TotalFina, which
emerged victorious and thus became the world’s fourth-
largest oil and gas company. As Investment Dealers’ Digest
noted in naming the transaction its Energy Deal of the Year,
“no other deal in 1999 provided as clear a microcosm of the
transformation taking place in the rapidly consolidating inter-
national energy market.” The transaction again demonstrated
TotalFina’s role as one of the industry’s leading consolida-
tors, with Total having acquired Petrofina earlier in the year
(on which CSFB also advised).
In Latin America, also in the midst of oil and gas consol-
idation, we advised YPF on the Argentine government’s sale
of its 14.99% interest to Repsol SA and later on Repsol’s
The challenge at AT&T was clear: to transform the company from its traditional base as
a long-distance provider into a dynamic telecommunications company offering the gamut
of services through voice, data, wireless and cable-television transmission. Credit Suisse
First Boston has been advising AT&T since the company first embarked on this strategy.
It began in 1998 with the $11.3 billion acquisition of Teleport Communications Group,
through which AT&T acquired direct connections to the biggest corporate customers in
the Baby Bells’ territories. Later that year, AT&T acquired Tele-Communications Inc. in a
$70 billion transaction that boldly signaled a new direction: to transform the telecom-
munications industry through the convergence of telephone, video and data
transmission. The combination gave AT&T direct access into consumers’ homes with
the potential of reaching nearly one-third of all US households. Then in 1999, in an
authoritative follow-up, AT&T moved to acquire MediaOne, another leading cable
provider, for $63.1 billion in a transaction that ranks as the largest successful unso-
licited offer in the US, with AT&T topping an offer for MediaOne from Comcast. In a
separate but related transaction, AT&T and Microsoft have agreed to a partnership in
which Microsoft will make a $5 billion equity investment in AT&T. Investment Dealers’
Digest named the MediaOne acquisition transaction as its M&A Deal of the Year, noting
that it “signified the foresight, financial innovation and complexity required in order to
bring about industry transformation these days.”
T H E T R A N S F O R M A T I O N O F A T & T
In 1999, the technology sector moved at warp speed. The pace of activity in the sector
required an investment bank capable of assessing the full range of options — with the
experience and judgment to find the right answers. CSFB’s Technology Group brings
unparalleled experience to the tech sector. Time and again, it has been chosen to lead
manage and advise on many of the most significant deals in the industry.
As a result, CSFB made history in technology in 1999. Some of our tech-related high-
lights included:
· The largest technology follow-on common stock offering in history ($2.5 billion
ST Microelectronics)
· The largest Internet IPO in history ($1.0 billion TD Waterhouse Group)
· The largest European Internet IPO in history ($416.6 million Freeserve)
· The best first-day performance for an IPO (VA Linux, up 698%)
· The best performing IPO of the year (Commerce One, up 2,707%)
· The largest technology deal ever completed ($24.0 billion Lucent/Ascend)
· The largest sale of a private communication equipment company in history ($7.5 billion
Cerent/Cisco)
· The largest IT Services M&A deal in history ($7.9 billion Whittman-Hart/USWeb)
· The then-largest software M&A deal in history ($3.6 billion Platinum/Computer Associates)
· The largest software debt financing in history ($4.5 billion Computer Associates)
· The largest equity private placement for a start-up technology company in history
($500 million Zhone)
The Firm’s technology expertise spanned the globe. In addition to the above-refer-
enced Freeserve IPO, we led the IPOs of QXL.com, a UK-based online auction site, and
of Miracle Holding AG, a Swiss software company that was the fifth IPO on the SWX
New Market. We led the IPO of Freenet, a Germany-based Internet service provider on
the Neuer Markt. And we managed the IPO of El Sitio, a leading Argentina-based Inter-
net network targeting Spanish and Portuguese speakers in Latin America and the US.
L E A D I N G A D V I S O R T O T E C H N O L O G Y C O M P A N I E S
1312
subsequent acquisition of the rest of the company; the trans-
actions totaled $20 billion.
In Australia, the State Government of Victoria completed
the final stage of its $21.5 billion privatization of its electricity
assets. CSFB advised the government throughout the reform
and privatization process in what has been widely recognized
as not only one of the largest but also one of the most inno-
vative and successful privatization programs globally.
The activity in the US M&A market showed no sign of
abating. Five of the 10 largest M&A deals of all time occurred
in 1999, and four of those five involved a US company. CSFB
advised on many precedent-setting deals in the US. We
counseled AT&T on its pending acquisition of MediaOne (see
box). We advised Ascend Communications on its $24 billion
merger with Lucent — at the time the largest technology
M&A deal in history. Union Carbide, advised by CSFB, agreed
to an $11.9 billion merger with Dow Chemical to create the
world’s second-largest chemical company.
E Q U I T Y U N D E R W R I T I N G
In a year of record equity issuance, CSFB moved into the top
echelon of equity houses, with significant gains in market
share. The Firm’s investments in a number of areas —
namely the addition of the Technology Group, the BZW acqui-
sition, and a significant commitment to sales, trading and
equity research — combined to bring dramatic market share
gains. As such, CSFB played a prominent role in many of the
year’s most significant transactions, from technology IPOs to
privatizations to insurance company demutualizations.
Our Technology Group truly acted as agents of change
(see box) by lead managing IPOs for 54 technology compa-
nies worldwide, more than any other firm, which included the
year’s best performing IPO, Commerce One. CSFB’s per-
formance in this sector enabled technology clients across the
globe to tap the capital markets for much-needed financing,
often allowing small companies to quickly emerge from
embryonic stages with a powerful acquisition currency.
CSFB also demonstrated a commitment to issuance in
burgeoning markets, such as the Nouveau Marché in France,
the SWX New Market in Switzerland and Germany’s Neuer
Markt. We also helped companies tap new sources of investors.
For example, we led the $742 million privatization IPO of Qatar
Telecom, the largest-ever equity offering from the Gulf region,
which represented the first time foreign investors could pur-
chase shares on the Doha Securities Market.
As with Qatar Telecom, countries around the world con-
tinue to transition government-owned businesses to the private
sector. CSFB has an unmatched record in privatizations by
both helping governments shed these assets and assisting the
newly public companies with their capital structures.
In 1999, we led the largest privatization equity offering
by serving as joint global coordinator on the 2.13 billion-
share offering of Telstra Corporation Limited, the largest
company in Australia, on behalf of the Commonwealth of
Australia. We also handled the $1.3 billion secondary offer-
ing for OTE, the Greek telecommunications company. And
we served as joint global coordinator for the $185 million
privatization offering for the Government of India’s shares in
Videsh Sanchar Nigam Limited, the provider of international
telecommunications services in India, which was priced at a
significant premium to the market despite volatile conditions.
The Firm also assisted many noteworthy private companies
in their public market debuts. CSFB acted as joint global
coordinator and sole bookrunner on the $2 billion IPO of Banca
Monte dei Paschi di Siena, the oldest bank in the world. CSFB
served as lead manager for the IPO of Agora SA, publisher of
Poland’s leading newspaper, the first sizable non-privatization
IPO from Central and Eastern Europe since July 1998. We led
the $496 million privatization IPO of Banco Hipotecario,
Argentina’s leading residential mortgage bank, which was the
first equity offering by a Latin American issuer since the global
market turmoil of mid-1998. CSFB acted as sole global coordi-
nator and bookrunner for the $608 million IPO of Geberit AG,
The insurance industry is in the midst of transformation, with many of the world’s largest insurers moving away from their
“mutual” ownership structures to public ownership. Over the last few years, CSFB has demonstrated continuing leadership
in this global demutualization revolution.
In 1999, the Firm handled numerous demutualization assignments. We acted as joint global coordinator, joint US
bookrunner and joint international bookrunner on Manulife Financial Corporation’s IPO. The $1.7 billion IPO of Manulife, a
Canadian insurer, is a significant milestone in that the offering ranks as the largest equity offering in Canadian history and
as the largest North American demutualization IPO to date.
Last year, MetLife’s Board of Directors approved its demutualization plan. With more than 11 million eligible policy-
holders, MetLife has become the largest mutual to date to formally approve such a restructuring. The IPO, scheduled for
early 2000, would make MetLife’s equity the most widely held stock in the US. CSFB has been acting as joint financial
advisor to MetLife.
Also last year, we served as joint lead manager on the $195 million demutualization IPO of Tower Corporation, the
largest New Zealand-owned financial services group. With the completion of the Tower IPO, CSFB has been involved in five
of the six demutualizations completed or announced in the Pacific region.
These achievements, coupled with our historical demutualization work for AMP (largest Australian life insurer), Norwich
Union (first UK demutualization IPO), National Mutual (Australian life insurer) and John Hancock, and the pending demutu-
alizations for NRMA (largest Australian property and casualty insurer) and Insular Life (Philippines’ largest mutual insurer),
all demonstrate CSFB’s leading role in the demutualization revolution worldwide.
D R I V I N G T H E D E M U T U A L I Z A T I O N R E V O L U T I O N
1514
which represents Switzerland’s largest non-privatization IPO
ever. And we served as joint global coordinator and bookrunner
of the $1.0 billion IPO of TD Waterhouse Group, the second
largest online/discount broker in the world. The offering repre-
sents the largest Internet-related IPO ever.
CSFB also continued its tradition of developing innova-
tive security structures to help our clients raise capital. We
acted as lead manager on two offerings for Calpine
Corporation (see box), one of the largest and fastest growing
companies within the independent power generation sector:
8.28 million shares of common stock for $383.5 million in
proceeds and $276 million of convertible trust preferred stock
(HIGH TIDES). The convertible trust preferred transaction,
executed in difficult market conditions, achieved Calpine’s
objective of broadening its investor universe.
D E B T U N D E R W R I T I N G A N D
C O R P O R A T E L E N D I N G
Leadership in debt products remains a mainstay of the Credit
Suisse First Boston franchise. Over the years, the Firm has
repeatedly demonstrated leadership through innovative struc-
tures and by helping borrowers adapt to market conditions.
Last year, CSFB led a number of landmark bond issues
that helped to set the strategic direction of our clients. For
example, we acted as joint lead manager for $4.5 billion in
three-, five- and ten-year global notes for DaimlerChrysler,
which represented the seventh-largest investment grade issue
ever and the largest lead-managed corporate bond offering in
CSFB’s history. The transaction marked DaimlerChrysler’s
first-ever global bond offering.
The Firm served as joint lead manager and joint
bookrunner for Conoco’s $4 billion issue of senior unsecured
notes, the largest-ever energy bond offering. The transaction
marked Conoco’s return to the public debt markets as an inde-
pendent company. Conoco, the fifth-largest US oil company,
used the proceeds to repay debt owed to DuPont as part of
Conoco’s separation from its parent. We also served as sole
bookrunner and joint lead manager for $1 billion of 30-year
senior notes and joint lead manager on $2.3 billion in five- and
ten-year senior notes for Pepsi Bottling Group as part of a
series of transactions that made it independent of its parent,
PepsiCo.
Last year, the Firm executed the largest individual
tranche issue in the history of the bond markets. We served
as joint lead manager and joint bookrunner on Freddie Mac’s
$6 billion of ten-year reference notes. CSFB advised Freddie
Mac to incorporate new marketing tactics and deal-manage-
ment practices that proved to be a leading component in the
global offering’s success; this resulted in a record-sized
order book of $8.5 billion.
We helped our clients tap new sources of capital in the
burgeoning euro market. CSFB launched the first-ever euro-
denominated asset-backed security when it led a €750
million credit-card securitization on behalf of MBNA. We
acted as joint lead manager for €1 billion of Eurobonds for
Ford Motor Credit and on €1.25 billion of Eurobonds for
Royal KPN. We also led a host of euro issues for sovereign
issuers, including: €400 million for the Republic of Slovenia,
€800 million for the Republic of Brazil, €150 million for the
Republic of Latvia, €300 million for the Lebanese Republic,
€300 million for the Republic of Croatia, €500 million for
the Republic of South Africa, and others.
The Firm was active in other denominations in Europe as
well. For GMAC, CSFB led a CHF1 billion ABS issue, GMAC’s
first Swiss franc ABS issuance. We served as joint lead man-
ager and joint bookrunner on a $1 billion Eurobond for Roche
Holdings in the year’s largest corporate Eurodollar issue.
Our leadership role continued in the European high yield
market. We led a highly successful issue for Turkcell, a Turkish
cellular phone company. Emboldened by more than $2 billion
in demand, CSFB increased the offering size from $200 mil-
lion to $400 million. CSFB led a two-tranche €110 million and
$100 million senior-notes offering for Jazztel, a developmental
Spanish telecom company. The offering represented the first-
ever Spanish high yield offering, as well as the first high yield
deal to comprise a larger euro tranche than the dollar tranche.
CSFB also led £100 million of senior notes for Doncasters plc
of the UK and €175 million in senior notes for Esat Telecom
Group plc of Ireland, which won euro’s award for best high
yield issue. We also brought Weight Watchers International to
Credit Suisse First Boston committed the Firm’s full resources on behalf of
Express Scripts, helping the company execute a growth strategy that made it
the largest independent pharmacy benefit management company. We first
assisted Express Scripts on a number of significant transactions related to its
acquisition of Diversified Pharmaceutical Services. CSFB initiated the acquisition
of Diversified Pharmaceutical Services from SmithKline Beecham for $700 million
in cash and served as Express Scripts’ financial advisor. To accomplish the
acquisition, CSFB acted as lead arranger on a $1.05 billion senior secured
credit facility and a $150 million senior subordinated bridge credit facility. CSFB
also acted as lead manager for additional capital raising in the form of a $316
million common stock offering — one of the largest issues completed in the
health care services sector in 1999. CSFB also lead managed $250 million in
senior notes, the demand for which enabled the offering to be increased from
$200 million to $250 million. Finally, CSFB was also advisor to the company on
its sale of YourPharmacy.com and its strategic alliance with PlanetRx.com. Our
work for Express Scripts helped the company navigate the changing pharma-
ceutical landscape and meet market challenges.
P R E S C R I P T I O N F O R G R O W T H :
E X P R E S S S C R I P T S
CSFB has played an integral role in the growth of Calpine, a leading
independent power company, since leading the company’s IPO in 1996.
Calpine has one of the largest electric power development programs in
the US, with more than 12,600 megawatts of capacity in operation,
under construction or in announced development in 16 states. Last year,
CSFB helped Calpine meet its significant capital needs to finance its
growth through a series of successful transactions. In addition to serv-
ing as strategic advisor, CSFB led a $95 million acquisition bridge
facility, a $214 million common stock offering, $600 million in senior
notes, a $383 million common stock offering, a $276 million convertible
preferred offering, and a $1 billion revolving construction credit facility.
The last serves as the primary vehicle for financing Calpine’s future
development projects, will produce significant savings versus “one-off”
financings and ranks as the largest “greenfield” development financing
to date. Investment Dealers’ Digest and Euromoney each named the
transaction as their Project Finance Deal of the Year. CSFB’s commit-
ment to financing Calpine helped position the company for success in
both executing its business plan and delivering returns for investors.
Over the course of the year, in the midst of aggressive capital raising,
Calpine’s stock price rose over 400 percent.
1716
the European high yield market when we led a two-tranche
€100 million and $150 million issue.
In the US high yield market, we led a $450 million senior-
notes offering for AK Steel, the most profitable integrated
steel maker in the US. The transaction, which marked the
sixth transaction CSFB lead managed for AK Steel since
1994, enabled the company to reap significant savings over
its outstanding notes, which were redeemed.
The Firm’s strong capital base enables CSFB to quickly
commit resources to support our clients’ transactions. For
example, we acted as sole arranger and administrative agent on
a fully underwritten $4.5 billion senior credit facility to finance
Computer Associates’ acquisition of Platinum Technology.
CSFB also served as Platinum’s financial advisor in what
ranked as the largest software M&A transaction. CSFB served
as syndication agent, joint lead arranger and joint book man-
ager on a fully underwritten $5 billion senior credit facility for
Metropolitan Life Insurance Company to support its acquisition
of GenAmerica Corp. CSFB also acted as financial advisor to
MetLife. CSFB led a $2.4 billion senior credit facility for New
Holland N.V. to finance its acquisition of Case Corp. (CSFB
also served as Case’s financial advisor); the combined com-
pany ranks as one of the world’s largest agricultural equipment
makers. And a series of transactions we executed on behalf of
Express Scripts helped that company become the largest inde-
pendent pharmacy benefit management company (see box). All
told, we arranged more than $96 billion in syndicated loans in
1999 and posted significant market share gains.
P R O J E C T F I N A N C E
CSFB remains a preeminent investment bank in the area of
project finance. Our track record of developing unique trans-
action structures and opening new markets, coupled with our
proven ability to raise capital from a wide variety of sources,
is unparalleled. In ever-changing global markets, CSFB
brings a consistent record of achievement.
This past year, we opened the Latin American project-
finance debt market for the first time since the Asian financial
crisis. We acted as sole placement agent for secured fixed-
rate notes, lead arranger on floating-rate notes and sole
ratings advisor on a $472 million financing package for
Argentina-based Compañía Mega. With CSFB’s advice, guid-
ance and placement power, this petrochemical project
achieved investment-grade ratings and 15-year financing.
In Asia, our team acted as lead arranger for a $1.4 bil-
lion financing for Phase II of Enron’s Dabhol Power Project.
The financing was the largest emerging-market project
financing completed in 1999 and garnered numerous deal of
the year awards.
CSFB ranks as the top capital raiser for independent
power-generating companies. In 1999, we executed a host
of financings to help these growth companies enhance their
competitive positions in an industry in which deregulation is
dramatically reshaping the playing field. We provided myriad
services for Edison Mission Energy, one of the world’s
largest independent power companies. To help finance its
acquisition of a generating station in Pennsylvania, CSFB
acted as lead arranger on a $1.1 billion bank facility and lead
manager for $600 million in senior notes. In the UK, we
acted as lead arranger of a £1.2 billion bank facility to
finance the Edison Mission acquisition of two power-genera-
tion stations. In New Zealand, we served as lead arranger
and placement agent on a $400 million combination bank
financing and retail preference share issue to finance Edison
Mission Energy’s acquisition of a 40% interest in Contact
Energy. We similarly helped Calpine improve its competitive
position (see box).
Finally, CSFB closed its $2.7 billion Institutional Project
Finance Program. This program offers clients a competitive
advantage in financing projects by increasing execution
speed and thereby reducing execution risk relative to what
might be encountered in the public capital markets or the
bank syndication market. In doing so, it stands as a major
advancement in project financing.
THE FIRM’S STRONG CAPITAL BASE ENABLESCSFB TO QUICKLY COMMIT RESOURCES TOSUPPORT OUR CLIENTS’TRANSACTIONS. ALL TOLD, WE ARRANGEDMORE THAN $96 BILLIONIN SYNDICATED LOANS IN 1999 AND POSTED SIGNIFICANT MARKETSHARE GAINS.
F U E L T O G R O W : C A L P I N E
DaimlerChrysler North America Holding Corporation’s $4.5
billion inaugural global bond offering, for which CSFB acted
as joint lead manager and joint bookrunner, represented the
largest lead-managed corporate bond deal in CSFB’s storied
history, and the second largest in the marketplace overall.
Quality of execution was critically important as Daimler-
Chrysler, one of the world’s premier borrowers, set its initial
debt benchmarks. The task was complicated by the volatile
market conditions caused by expectations of higher interest
rates triggered by the Federal Reserve. CSFB overcame these
challenges with a highly successful transaction, which
allowed DaimlerChrysler to increase the size from $3 billion
to $4.5 billion while simultaneously improving pricing
throughout the road show and offering period. CSFB helped
to generate $9.0 billion in total demand and an orderly after-
market performance.
Recognized as Debt Deal of the Year by Euromoney, the
offering set another milestone as CSFB became the first lead
manager to recognize the growing relevance of non-Treasury
benchmarks in this era of US Government budget surpluses.
We offered price guidance to investors as a spread to another
corporate bond. This innovation reduced risk for Daimler-
Chrysler by eliminating the basis volatility between Treasuries
and corporates and between the when-issued and current
Treasury securities.
Underwriting, Sales, Trading and Research in:Government SecuritiesCorporate SecuritiesEmerging Markets SecuritiesHigh Yield Securities Mortgage and Asset-Backed
SecuritiesForeign ExchangeMoney MarketsInterest Rate DerivativesCredit DerivativesFund Linked DerivativesListed DerivativesReal Estate ProductsPrecious Metals and Energy ProductsPrime Brokerage
HELPING CLIENTSWITH CHANGINGMARKETS INFIXED INCOME AND DERIVATIVES
(Dollars in Millions) 1999 1998 % CHANGE
Revenue $ 4,221 $ 2,586 63%
Employees 2,011 2,130 -6%
Average BIS Capital $ 3,935 $ 4,457 -12%
Christopher GoekjianHead of Fixed Income and Derivatives
Three major events sent ripples throughout the global
fixed income markets in 1999, intensifying the pressures on
companies to react quickly and creating an unprecedented
level of need for timely research and information: the advent
of the euro, the technology boom and the resurgence of the
emerging markets.
CSFB has recognized for some time that the Internet
and the abolition of 11 distinct European currency markets
would present established financial institutions with the need
to shed outdated assumptions, products and ways of doing
business. Anticipating change rather than reacting to it, we
have built flexible, forward-looking systems, products and
services adaptable to a broad array of potential market out-
comes and client needs.
Effective January 1, 1999, we combined CSFB’s fixed
income securities activities with Credit Suisse Financial
Products’ fixed income derivatives operations to make our
fixed income services more seamless and efficient. Our abil-
ity to act as one firm, our pioneering efforts in electronic
trading, our very strong presence in Europe, our historical
expertise in the emerging markets and our increased invest-
ment in research all contributed to the Firm’s ability to trans-
form these sweeping changes into opportunities for our
clients. The success of our Debt Capital Markets efforts is
reflected in our number four ranking in both the US and
worldwide league tables.
T H E E U R O
While some in the financial services industry lamented the
elimination of single-country niche foreign-exchange markets
in Europe, CSFB embraced the change, recognizing that the
merging of 11 currencies into one would be far more than a
simplification of the foreign-exchange world; it would consol-
idate the economic power of 250 million people into a whole
far greater than the sum of its parts.
The launch of the euro created a large foreign-exchange
market for the new currency, a large European market for
government bonds and huge fungible capital markets for
companies. As one of the most European of the large global
investment banks, CSFB was particularly well positioned to
leverage its strong European infrastructure to the benefit of
its clients around the world.
19
D A I M L E R C H R Y S L E R :C S F B ’ S L A R G E S T- E V E R C O R P O R A T E B O N D D E A L
The advent of the euro in 1999 led to significant growth in
international issuance from the European regional banking
sector. A number of domestically focused banks were
anxious to establish their credentials in the euro market
and broaden their investor bases. Many obtained credit
ratings, set up EMTN programs and launched debut euro
issues targeted at the non-domestic market. CSFB was at
the forefront of these developments.
In 1999, CSFB acted as rating advisor and lead man-
ager for the debut international euro issue from Austrian
regional Landesbank Landeshypothekenbank Tirol (“Hypo-
Tirol”). Hypo-Tirol’s objectives were to expand its investor
base without compromising the levels of funding achiev-
able within its domestic market. As a result of its excellent
credit credentials and the quality of CSFB’s rating advice,
Hypo-Tirol obtained a AA+ rating from S&P. The €200 million
Eurobond, three-year FRN issue was priced competitively
against domestic levels and was widely distributed to money
market funds and institutional investors throughout
Europe. Hypo-Tirol has now established a solid foothold
and strong momentum in the broader European market.
This €500 million Slovakia Eurobond
7.50% five-year issue was one of
the landmark deals from Central
Europe in 1999, and reintroduced
the Slovak Republic (Ba1/BB+/BB+)
to the international investor and
political community. Following the
democratic outcome of presidential
elections just prior to investor road
shows, the deal had great mo-
mentum, was priced aggressively
and has performed exceptionally
well in the aftermarket.
In addition to garnering attrac-
tively sourced funds for the Republic,
the transaction also furthered Slovak
financial and political rehabilitation,
thus reinforcing the EU decision at
the Helsinki conference to include
the Republic among the countries on
the fast track to EU accession.
20 21
At the same time, CSFB saw that the long-term suc-
cess of the euro market required the currency to weaken
initially for cyclical reasons. CSFB was one of the few firms
to alert its clients to the likely downtrend of the currency prior
to its launch.
Despite its growth, the European government bond mar-
ket was tiered between its high and low credits, and only three
countries offered real liquidity. The swap market lacked the
same tiering, but suffered from pre-Y2K liquidity dislocations,
which resulted in all-time-high spreads. Having integrated its
swap and bond trading desks helped CSFB maintain liquidity
for its clients when trading volume fell precipitously.
The euro eclipsed the dollar market as the largest inter-
national capital market by allowing a huge pool of investors in
Europe to look beyond their borders without incurring a cur-
rency risk. CSFB lead managed several euro offerings for
marquee companies such as Ford, Philip Morris and MBNA,
and emerging-markets borrowers such as South Africa,
Brazil and Kepco.
The concept of a market without borders was not limited to
European investors. The globalization of markets was a theme
that extended to other currencies, and CSFB spearheaded
global bond offerings by leading issues for companies such as
DuPont, Conoco and, the ultimate global corporation, Daimler-
Chrysler. The lack of currency diversification and the end of
pre-EMU convergence trades enticed investors to seek higher
yields through credit diversification. The technology boom
helped supply it by introducing uncertainty across all companies
— not just technology companies — increasing the volatility of
earnings and hence default risk. This in turn forced credit
spreads higher across the board for corporate bonds. Against
this background, a global credit market emerged, particularly in
Europe, where none had previously existed. The European mar-
ket saw the expansion of the embryonic high yield market.
CSFB obtained a prominent position in this new market by lead-
ing bond issues for companies such as Esat Telecom, Turkcell
and Jazztel. CSFB took a leading role in this changing market-
place, placing fifth in both the international debt and emerging
markets league tables. At the same time, the Firm maintained
its dominant positions in some of the markets that were not
affected by these changes, such as Switzerland, where CSFB
again ranked first in underwriting debt issues.
T H E T E C H N O L O G Y B O O M
In addition to increasing volatility and credit spreads, and
contributing to the creation of a broader, deeper European
debt market, the technology boom also increased the need
for our clients to receive good information flow. To meet this
need, CSFB made a number of changes in 1999.
We stepped up our investment in research capabilities to
address the demands of a rapidly changing environment. Our
greatest emphasis was in High Yield. Additionally, we built a
Global Credit Strategy group to provide credit portfolio
strategies as well as analysis and forecasts of swap and
generic credit spread movements across both high-yield and
high-grade names. The FID research department now com-
prises more than 150 professionals. They work very closely
with the coverage groups to offer our clients dedicated
resources delivered in the format they want, from direct
interaction to a faster publication rate to improved web site
delivery.
While some other industry players have resisted online
trading, viewing it as a threat to their traditional offline sales
franchises, CSFB has opted to accelerate the trend for
clients who wish to capture the efficiency and speed of the
Internet. CSFB has been at the leading edge of electronic
trading since launching its PrimeTradeSM family of products in
1998. Recognizing that different clients need different tools,
CSFB has developed a broad array of electronic-trading
products and services that improve speed of execution,
reduce the number of fails, increase liquidity, add price trans-
parency and lower costs. These are grouped into two
categories, trading products and clearing products.
Trading products
· PrimeTrade: The PrimeTradeSM family of products is a
proprietary system for institutional clients that offers
instantaneous transactions and straight-through processing
with CSFB. Launched in 1998, PrimeTradeSM first offered
futures in a variety of markets, including DTB, EUREX,
TIFFE and GLOBEX. Global Foreign Exchange was added
to the platform in 1999. PrimeDebtSM, a comprehensive
electronic medium for the distribution of new-issue securi-
ties that provides issuers with an online platform for the
marketing and execution of debt offerings, was added in
K E E P I N G T H E S L O V A K R E P U B L I C
O N T H E F A S T T R A C K
D E B U T I N T E R N A T I O N A L I S S U E F O R
L A N D E S H Y P O T H E K E N B A N K T I R O L
As part of its spin-off, Conoco needed to raise $4.8 billion to repay DuPont. Conoco senior management used a large
benchmark global bond offering to convey Conoco’s strategy to the widest possible fixed income investor universe, estab-
lishing Conoco as a preeminent credit and oil company.
The deal, which was joint lead managed by CSFB, came to market during the worst cyclical lows for commodity prices
in several years, when investors were turning bearish on energy credits. Conoco benefited from a positive interest rate
environment and was able to capture historically attractive Treasury rates. The company’s marketing strategy, timing and solid
business plan resulted in the deal, which was five times oversubscribed, being upsized to $4 billion from an initial $3 billion,
priced at 3–12 basis points through the initial price talk and placed with some 300 investors internationally.
The Conoco transaction was the largest energy bond ever executed, and became the benchmark for the energy sector
and the market in general.
KPN, the leading Dutch telecommunications com-
pany, launched a highly successful 1.25 billion
Eurobond five-year transaction through joint
bookrunner CSFB. KPN was eager to diversify its
funding base away from the Netherlands, which had
accounted for much of its historical funding base
through the domestic bank and capital markets. A
widely distributed transaction was a prerequisite.
KPN conducted a European road show in
Zurich, Paris, Milan and London, which helped to
introduce the KPN credit to many potential first-
time buyers and build transaction momentum
amid heavy competing supply and volatile new-
issue conditions.
The issue was priced at 35 bps over the BTAN,
and has been a strong performer in the secondary
market despite deterioration in the telecom sector.
Diversification was achieved as only 7% of the
bonds were placed in the Netherlands. German,
Swiss, French and UK investors accounted for
85% of the transaction.
22 23
December 1999. CSFB expects to expand the PrimeTradeSM
platform in 2000 to include commercial paper, government
bonds and investment-grade corporate bonds.
· TradeWeb: CSFB is a founding member of TradeWeb®,
which allows our clients to be in touch, and trade, with sev-
eral dealers. The system has made substantial inroads in
the US Treasury market, where it has gained a significant
market share.
· BrokerTec: CSFB was one of the founding members of
BrokerTec, which acts as an electronic marketplace for pro-
fessional dealers.
Clearing products
In parallel to the actual trading systems, CSFB has developed
a number of clearing systems that allow clients to confirm
their trades, reconcile automatically and export records to
their back-office system. The PrimeTradeSM platform offers a
clearing function called PrimeClearSM for futures, while FX
PrimeBrokerage allows our clients to concentrate their clear-
ing with CSFB while retaining the capacity to execute the
trades at different banks. Custom-made reporting is available
to meet the diverse needs of our clients.
Without question, these E-commerce developments have
brought our clients many benefits. However, CSFB recognizes
that in many cases, technology is not a substitute for the tradi-
tional way we have provided research and execution. Rather,
technology is viewed as a complement to the traditional service
provided by our research teams and sales forces.
Our continued efforts to provide high-quality, integrated,
personal service were enhanced by the merger of CSFB and
CSFP earlier in 1999. In addition, we are emphasizing close
cooperation between our Equity Research and our Fixed
Income Research departments, offering clients the ability to
talk across all asset classes through fewer strategic contacts.
T H E E M E R G I N G M A R K E T S R E V I V A L
CSFB has traditionally had a strong position in the emerging
markets, and despite the Russian bond default of 1998, the
Firm maintained its emerging-markets presence, continuing
to meet its clients’ needs even as other financial institutions
retreated.
But the rapid turnaround in Asia, Latin America, and
Central and Eastern Europe rewarded those with staying
power as investors returned to these markets in force.
The Asian markets, which were the first to deteriorate in
1997, were also the first to rebound strongly. The Indonesian
rupiah, which had traded at 15,000 to the dollar, surged
back to 7,000. Korea, which had been on the verge of bank-
ruptcy, saw its sovereign bonds trading at only 160 basis
points above US Treasuries by year-end 1999.
Russia surprised the world by bouncing back from the
1998 disaster. 1999 was Russia’s first year of GDP growth
since the fall of Communism. Bolstered by rising oil prices,
improved tax collections and a ferociously disciplined central
bank, Russian debt, which had once been worth a few cents
on the dollar after the default, was trading at 70 cents by the
beginning of 2000.
Although Brazil stopped pegging the real to the dollar,
inflation did not ensue and the currency has stabilized.
All these positive developments reestablished confi-
dence. CSFB was instrumental in generating renewed
investor interest in the emerging markets and helping our
clients reenter them. This effort was facilitated by the cre-
ation of the Emerging Market Sales Group structure, which
specializes in emerging-markets assets; it was established in
1999 to bring emerging-markets products to our clients
more effectively. The 1998 acquisition of Garantia in Brazil,
as well as our strong physical presence in Russia, Turkey and
many other emerging-market nations, helped us deliver
timely research and efficient execution to our clients around
the world at a critical, transitional time.
On the underwriting side, CSFB was active in bringing
emerging-markets issuers to the public debt market, both in
the euro and other currencies. The Firm ranked first in the
league tables for sovereign issues in Central and Eastern
Europe, the Middle East and Africa, leading transactions for
issuers such as South Africa, Slovakia, Qatar and Lebanon. In
Latin America, CSFB led Brazil’s debut and follow-on euro
issues. In Asia, we spearheaded transactions for issuers such
as Kepco and Petronas.
T H E Y E A R 2 0 0 0
Looking ahead, we believe the fixed income markets will
become ever more global, efficient, transparent and technol-
ogy driven. CSFB remains committed to driving that change
and staying ahead of the curve to help customers capture
opportunity wherever in the world it exists.
C O N O C O : L A R G E S T- E V E R E N E R G Y B O N D I S S U E
K P N E X P A N D S B E Y O N D T H E N E T H E R L A N D S
25
ResearchSalesTradingNew-Issue UnderwritingStock Loan/Prime BrokerageConvertibles/WarrantsListed/OTC DerivativesProgram TradingIndex ArbitrageRisk Arbitrage
SURGING TOTHE TOP INEQUITY
(Dollars in Millions) 1999 1998 % CHANGE
Revenue $ 3,212 $ 1,655 94%
Employees 1,692 1,649 3%
Average BIS Capital $ 775 $ 1,018 -24%
Brady W. DouganHead of Equities*
No area within CSFB knows change better than the
Equity Division. In three short years, we have transformed
into one of the leading equities businesses in the world. We
have established momentum that focuses on quality, not just
quantity. Today, having outpaced our competitors in numer-
ous equity categories, CSFB is challenging its global, “bulge
bracket” competitors for the top slot in this business.
1999’s record-year performance reflects our clients’ affir-
mation of our work on several fronts. We have consistently
diversified into new markets and products to meet our clients’
divergent needs. Our insights into the impact of technology and
the Internet on the future of the markets are proving right. Our
commitment to maintain and build in markets which others
abandon has positioned us, and our clients, to take advantage
of the market’s cyclical nature. Ultimately, we believe that our
unique blend of global reach, technological innovation and
product diversification makes CSFB a superior catalyst for
change in this “new economy,” where adaptability has become
a prerequisite for success.
G L O B A L R E A C H
Whether driven by technological, political or economic rea-
sons, change has been a consistent theme in the equity
markets. In 1999, our global strategic platform, critical mass
and indigenous insight into local economies enabled us to
assist our clients in capitalizing on change and achieving
market-leader positions.
With a broad global footprint and unique international
flavor, CSFB is alone in the industry in having three major
“home” markets: the US, the UK and Switzerland, two of
which are in the critical and rapidly evolving landscape of
Europe. In addition, our market leadership positions in Latin
America, Eastern Europe, Asia and Australia/New Zealand
give CSFB exceptional strength on virtually every continent
and in every major market, established or emerging. We now
have more than 1,600 equity professionals worldwide, with
300 analysts covering 2,700 companies, 400 salespeople
covering 5,500 institutional accounts, and 250 traders trad-
ing over 10,000 stocks. CSFB executes more products in
more markets for our customers than ever before.
To further broaden our global reach and ability to execute
cross-border activity on our clients’ behalf, we are committed
to continuing growth and investment through both organic
expansion and successful integration of acquired franchises.
We have shown an unparalleled ability to acquire and success-
fully integrate businesses and large groups of people,
The Equity team lead managed Phone.com’s initial public
offering in June, one of the best performing IPOs worldwide in
1999. Phone.com serves as a case study for the multiple
product solutions CSFB can provide to our clients in a rapidly
emerging market. Phone.com is a new company that enables
consumers around the world to surf the Web from their mobile
phones through their traditional telephone service providers.
In 1998, CSFB’s Technology Group invested a little less than
$1 million in Phone.com as a small venture capital stake. This
year our relationship grew to include a $60 million private
placement in March, the $74 million IPO in June, a $400 mil-
lion buy-side assignment of a European competitor in
October, and a $1 billion secondary offering in November.
O N E O F T H E B E S T P E R F O R M I N GI P O S W O R L D W I D E
* As of March 2000 — Co-Head of Investment Banking and Equities
Equity Finance partnered with
Tremont Advisers, Inc. to achieve
one of its biggest successes of last
year. The CSFB/Tremont Hedge
Fund Index is a product that fulfills
clients’ needs by establishing a
standard for tracking and comparing
hedge fund performance against
other major asset classes, like the
S&P 500, on a global basis. The joint
venture was created to construct a
series of premier benchmarks for
the hedge fund industry and to
launch a line of investable index
products tied to the CSFB/Tremont
Hedge Fund Indices. The investable
index products, the first ever in the
hedge fund industry, will be avail-
able to clients in 2000.
CSFB acted as co-lead-manager of Hyundai Motor Co.’s $500 million global
depositary receipts offering. Coming one day after the Daewoo Group
announced its plan to ask foreign creditors to postpone interest and principal
payments on $6 billion of debt, the transaction overcame the obstacles of sell-
ing $500 million of GDRs to a wary foreign investor pool. Despite extremely
volatile and declining market conditions in South Korea, the Equity team was
able to meet Hyundai's needs and market the largest single overseas GDR sale
by a private company in South Korea.
2726
developing a momentum with each move that adds incremental
value for our business and our clients. By the end of the first
quarter of 2000, we intend to have closed on the acquisition of
the Japanese Equities Division of Schroders, filling a hole in
our coverage of global markets.
T E C H N O L O G Y
There is no question that 1999 was the year that technology
drove the market. Fortunately, our foresight to establish a
dominant position in the technology sector in 1998 paid
handsome dividends, raising CSFB’s position in the rankings
in the IPO league tables for the full year. The performance of
our Technology Group, which consists of top-ranked invest-
ment-banking and research professionals, is complemented
by our strength in sales distribution and secondary trading
support.
Our team lead managed 54 IPOs in 1999, more than any
other firm. Even more important than the quantity of our IPOs
was their quality — CSFB ranked number one in aftermarket
performance for IPOs and follow-ons, which were trading
higher by an average of 250% by year-end. Secondary mar-
ket trading climbed commensurately with our primary market
activity, as CSFB rose four places in the secondary OTC
league tables, to sixth overall.
We believe our technology momentum and that of the
technology sector globally have only just begun. Accordingly,
we have grown our technology team to more than 250 pro-
fessionals worldwide, and we will continue to invest in the
franchise.
T E C H N O L O G Y P R O D U C T S
Our commitment to technology took client communications
to a new level. We understand that instantaneous informa-
tion and execution is paramount to our ability to help our
clients capitalize in this fast-moving, increasingly volatile
market. Throughout 1999 and into 2000, we have been
rolling out electronic connectivity services to provide instan-
taneous information, execution and confirmation to our
clients, including:
· CSFB LIVE: CSFB’s web-based interface, which will deliver
RESEARCHVIEWSM and DEALERVIEWSM to our clients
through browsers.
· RESEARCHVIEWSM: All-in-one customizable research
application offering one-stop shopping for analyst reports,
summaries of morning meeting notes, and quick access to
company profiles.
· DEALERVIEWSM: Provides automated order submission,
execution and confirmation to clients through web browsers.
· Point-to-Point Communications: Directly reaches clients
through dedicated leased lines and state-of-the-art protocols
(such as FIX) to access ECNs and clients for order indications
of interests, submission, executions and confirmations.
Additionally, with electronic execution links to all major world
markets, we optimize our straight-through processing.
P R O D U C T D I V E R S I F I C A T I O N / I N N O V A T I O N
CSFB continues to actively enhance our research products,
not only by adding senior personnel to provide wider sector,
industry and geographical coverage, but also by infusing our
research with a cutting-edge technological focus. While main-
taining broad market coverage, we continue to be particularly
focused on high-growth, dynamic industries such as technol-
ogy, E-commerce, telecommunications and health care,
where change and opportunity are greatest.
Our well-respected Value-Based Analysis (“VBA”)
approach forces our analysts to understand and quantify what
is creating the underlying value in industries and businesses.
It is also a metric, which allows us to better understand, pre-
dict and explain the valuation of “new-economy” businesses.
We believe that our research will continue to predict market
changes in 2000 for our clients, as it did in 1999.
The breadth of our financial product offerings is second
to none. Our Equity Derivatives and Convertibles Unit (“EDCU”),
In October, the Equity team completed the second global offering of 2.13 billion shares of Telstra
Corporation Limited, the largest company in Australia. This privatization secondary offering of 16.6%
of the company raised $10.4 billion for the Commonwealth of Australia. As with the IPO, the Equity
team acted as joint global coordinator of the offering. Over the past three years, CSFB has played a
critical role in the overall privatization process that began in 1996 when the Firm completed a scoping
study regarding Telstra’s privatization, and consequently acted as joint global coordinator in the Telstra
IPO in November 1997. Telstra 2, the largest equity offering in Australia’s history and the largest pri-
vatization equity offering completed globally in 1999, was successfully executed despite extremely
volatile market conditions. Demand of approximately 1.5 times the offer of 2.13 billion shares was
generated from investors worldwide, resulting in the offer being priced for institutional investors at
a 0.3% premium to the last trade price in Australia — a considerable achievement in the face of
falling stock markets. This transaction represents a continuation of CSFB’s commitment to the Telstra
privatization process for the Commonwealth of Australia and demonstrates our ability to execute
successfully consecutive privatizations for governments worldwide.
L A R G E S T E Q U I T Y O F F E R I N G I N A U S T R A L I A’ S H I S T O R Y
L E A D E R I N
V O L A T I L E A S I A N M A R K E T S
F I R S T H E D G EF U N D I N D I C E S
2928
which has long been considered premier in the industry, is
managed by some of the pioneers in the derivatives busi-
ness. We have combined the management of our derivatives
business across the equity class, and have brought a new
level of service to our customers that is both seamless and
efficient.
EDCU has consistently demonstrated creativity and flex-
ibility, which was recognized by the industry: CSFB earned
accolades from Risk magazine, including the “Top House”
Global Derivatives Award and first place in Exotic Equity
Products. In 1999, we increased our emphasis on customer
businesses within EDCU through heavy investments in equity
finance, security lending and prime brokerage as well as in
convertible primary issuance and secondary trading.
Additionally, across all our products in the equity class, we
stand ready to put our substantial capital behind our clients.
EDCU made investments in program trading this past
year and this, together with improvements in our execution
capability, has ensured a strong foothold in the market. In
1999, we launched The Credit Suisse First Boston
Technology Index on the AMEX. AMEX options provided
investors with a new tool to trade the technology sector, cre-
ating opportunities for profit or hedging against risk. Unlike
other indices, the CSFB Technology Index weightings strike
a balance between market capitalization and equal-dollar
weighting to better reflect how technology funds invest. The
successful launch of the Index was attributed to cooperation
between Program Trading and CSFB Technology Group.
M E D I A A C C L A I M
Our success in 1999 did not go unnoticed by the media. On
December 11, 1999, Barron’s noted that CSFB’s Equity
team had executed more lead-managed IPOs than any other
firm in 1999 with 54 deals cited — ahead of Morgan Stanley
Dean Witter (number two) and Goldman Sachs (number
five). By year-end, following CSFB’s role as lead manager in
VA Linux’s IPO, which broke a US record for price apprecia-
tion on the first day, CSFB ranked first under Barron’s
criteria in both number of lead-managed IPOs and after-
market performance.
The European press also took note of the fact that
CSFB’s Equity team lead managed 33 equity offerings —
including 19 IPOs — for European clients in 12 countries and
17 sectors, raising the equivalent of over $10 billion. Our
clients relied on our advice for timing, investor demand and
valuation for capital offered. We consistently provided them
with accurate market analysis that generated superior returns.
International Financing Review named CSFB European
Equity House of the Year. In Euroweek/International Equity
Review’s poll of market professionals, CSFB was voted Most
Impressive Lead Manager of European Equity Issues. CSFB
also won the Global Finance award for Best Equity
Origination. 1999 represented the first time that one firm —
CSFB — won the three European equity awards from IFR,
Euroweek and Global Finance in the same year.
Euro magazine ranked CSFB as the number one Equity
House for the performance of its issues on the Neuer Markt
in Frankfurt. Despite a 21% correction in the fall of 1999,
the after-market performance of CSFB’s lead-managed IPOs
were up by an average167%.
S U M M A R Y
Beginning in 1997, CSFB established a three-year plan to
build CSFB’s Equity Division into a world-class operation.
Through a number of strategic investments in acquired fran-
chises and our own organic growth, we have successfully
built a full-service, truly global operation that will challenge our
“bulge bracket” competitors. During 1999, we established
significant forward movement in market share and league
table rankings. Our current 2000 performance is on pace to
surpass our all-time record profitability in 1999. We have
gained momentum by delivering superior client service that
will carry our clients, and ourselves, through the face of
change and into the new millennium.
In a successful European equity deal in 1999, CSFB acted as
joint global coordinator and sole US bookrunner on a $417
million IPO for Freeserve PLC. Freeserve has rapidly estab-
lished itself as the UK’s largest Internet service provider and
one of the leading Internet portals. The offering was oversub-
scribed by a factor of more than 30 times, as nearly 1,000
institutional investors applied for the stock worldwide, and
more than 50,000 individuals applied in the UK. Total demand
for the deal exceeded $13 billion. The IPO of Freeserve was a
significant milestone for the European equity market and for
CSFB: Europe’s largest-ever Internet IPO and the first time the
London Stock Exchange has agreed to list a company without
a three-year track record. The Freeserve IPO is now regarded
as the founding father of Internet issuance in Europe.
T H E F O U N D I N G F A T H E R O F
E U R O P E A N I N T E R N E TI S S U A N C E
Change in Europe in 1999 was not confined to the rapidly evolving
technology arena. In 1999, CSFB’s Equity team led two landmark deals
which were germane to the creation of Aventis, one of the world’s
largest life sciences groups. In order to prepare for their merger to
create Aventis, Rhône-Poulenc S.A. of France and Hoechst of Germany
decided to divest their chemicals operations. Rhône-Poulenc man-
dated CSFB to divest its remaining 67.3% stake in Rhodia, which the
Equity team successfully executed through a €1.2 billion secondary
equity offering of Rhodia shares and a €1.0 billion exchangeable bond
offering for Rhône-Poulenc, exchangeable into Rhodia shares. CSFB
was joint bookrunning lead manager for both offerings. CSFB was also
appointed Hoechst’s sole advisor in the demerger of its Celanese
chemicals unit.
C R E A T I N G A G L O B A L L E A D E R I N L I F E S C I E N C E S
Also noteworthy were our recent IPOs for Symyx Technologies, the pioneer of combinatorial materials science, and Caliper
Technologies, renowned for revolutionary advances in pharmaceutical laboratory technology. Together with the earlier
successful radio broadcasting IPOs for Entercom and Radio One, these issues share the distinction of being among the
top-ten best-performing non-technology IPOs of the year.
A M O N G T H E T E N B E S T N O N - T E C H N O L O G Y I P O S
31
Generating Superior ReturnsExperienced Global InvestorsSignificant Commitments
of CapitalCompelling Incentive SystemsIntegrated Origination EffortIndependent Execution and
Commitment Process
EXPANDINGRAPIDLY INPRIVATEEQUITY
(Dollars in Billions) 1999 1998 % CHANGE
Employees 67 63 6%
Assets under Management $ 3.6 $ 2.5 44%
David A. DeNunzioHead of Private Equity
I N V E S T E D C A P I T A L B Y I N D U S T R Y
Technology 4.0 %
Chemicals 0.36%
Consumer Goods 15.02%
18.64% Manufacturing
1.46% Retail/Real Estate
Finance 6.46%
Other 7.33%
Distribution 1.33%
Travel & Leisure 1.37%
Media 1.38% Transportation 5.77%
17.60% Telecom/Cable
8.51% Insurance
6.68% Supermarkets
4.09% Food Products
witnessed the continued rapid expansion of
CSFB Private Equity. At year-end, Private Equity had com-
bined committed capital of over $3.6 billion in its US and
International Funds, compared with $2.5 billion in 1998.
Several significant transactions were closed, and nine invest-
ments in Private Equity’s portfolios were sold at overall
attractive rates of return. In addition, a number of experi-
enced investment professionals joined Private Equity to help
guide the expansion of our investment activities.
Private Equity continues to build upon CSFB’s long and
successful history as a private equity investor. Much of our
exceptional deal flow is produced by the global network of
investment bankers, private bankers and equity research
analysts, among other Credit Suisse Group (“CSG”) per-
sonnel. And while the majority of Private Equity’s capital
comes from outside investors, CSG has also made a signifi-
cant capital commitment. While enjoying these benefits of
affiliation with the Firm, as a separate core division, Private
Equity maintains independent investment decision-making
and governance processes.
Private Equity operates globally with investment profes-
sionals located in New York, London, Hong Kong, São Paulo
and Moscow. Private Equity’s investing activities include cor-
porate partnerships, recapitalizations, buyouts, growth capital
and other types of private equity investments where superior
returns can be achieved. Private Equity is also growing its
participation in emerging technology sectors.
In the US in 1999, Private Equity co-led a $900 million
commitment to Winstar Communications and made a $57
million commitment to Nortrax, Inc., a corporate partnership
with John Deere Construction Equipment Company, that will
assist Deere in the consolidation and management of its
construction equipment dealers. In addition, the sale of J.L.
French Automotive Castings, Inc. was successfully com-
pleted, producing an IRR in excess of 50%.
Internationally, Private Equity invested in Belcom
Holding AG, Switzerland’s leading operator of private radio
and television stations, as well as making several follow-on
investments. In Brazil, we made two significant investments. The
first was a $30 million investment in the recapitalization of Globo
Cabo S.A., the largest cable operator in Brazil. The second was
an investment in UOL, the largest Internet service provider in
Brazil and the largest portal in Latin America.
Conditions in the global M&A and public equity markets
augur well for achieving high returns through private equity
investing in the new millennium. The US continues to per-
form well, Europe is rapidly restructuring, and Asia and Latin
America are generally recovering from their economic set-
backs. These factors are producing a wide variety of
attractive private equity opportunities as businesses around
the world continue to need capital to pursue their strategic
objectives. Private Equity, with its strong combination of
human and financial capital, is well positioned to benefit from
this environment.
1999
P R I V A T E E Q U I T Y T R A N S A C T I O N T Y P E S
• Build-outs/Growth Capital
• LBOs/Build-ups/Recapitalizations
• Corporate Partnerships
• Market Insensitive Investments
• Transitional Equity Investments
33
Credit Risk ManagementRegional OversightStrategic Risk Management/
Risk Measurement & Management E-commerce
MAINTAINING CONTROL THROUGHRISK MANAGEMENT
Richard E. ThornburghVice Chairman of the Executive Board
Vast technological advances in the 1990s allowed the
financial services industry to make great strides in risk man-
agement. CSFB has led its peers in developing value at risk
and credit risk methodologies through our derivatives activi-
ties. During the past year, CSFB has built the infrastructure
to bring all of its trading activities onto a unified historical
simulation model, enabling it to measure and use its risk cap-
ital more efficiently.
CSFB readjusted and dramatically improved its risk pro-
file in 1999. Among other measures, regulatory capital
deployed in the business was reduced by 10%, trading book
value at risk was reduced by 26%, and emerging-market risk
(as measured by country usage) was reduced by 19%.
We look forward to continuing to establish more efficient
controls and to better deploy CSFB’s capital.
CSFB’s senior business line managers are accountable
for all risks associated with their businesses by maintaining
adequate internal controls. Each division takes steps to man-
age counterparty, market, liquidity, legal and operating risk.
An overall monitoring system ensures there are sufficient
independent controls to manage all risks.
Policy and procedure are established by CSFB’s overarch-
ing Credit Policy Committee/Capital Allocation and Risk
Management Committee. Chaired by the Vice Chairman, the
Committee also includes the Chief Executive Officer, the
Chief Financial Officer, the Treasurer, the Chief Credit Officer,
the heads of Strategic Risk Management, Risk Measurement
& Management and of the various business divisions of
CSFB, as well as the Chief Risk Officer of CSG.
The committee approves all of CSFB’s capital manage-
ment procedures, guidelines and risk limits, and allocates
capital to individual divisions. The committee approves any
business decision involving greater than normal risk.
In response to the global market turmoil of 1998, CSFB
created its Strategic Risk Management function to systemat-
ically assess the overall risk profile of CSFB on a global basis
and takes corrective action when necessary. It is the inde-
pendent “risk conscience” of the Firm with regard to risks
that could have a significant economic impact on CSFB.
The Credit Risk Management Group oversees all credit
risk assumed by the Firm, including loans and loan-related
credit risk, counterparty credit, country risk and trading inven-
tory concentrations. The Credit Policy Committee reviews
and approves all unusual risks and manages specific policies
and procedures. The Credit Risk Management (“CRM”)
department assesses CSFB’s overall credit portfolio and rec-
ommends credit provisions. Officers are aligned with each of
CSFB’s major business areas, along regional lines, and, in
some cases, industry or specialty lines.
CSFB’s market risk management function is monitored by
the independent Risk Measurement & Management (“RMM”)
department. Exposures arising from all trading portfolios and
geographical centers are aggregated on a daily basis.
Two means of measuring and managing the market
risks the Bank is considering undertaking are employed —
the “value-at-risk” concept and the scenario analysis method:
· The value-at-risk measures the 99th percentile greatest
loss that may be expected on the portfolio over a ten-day
holding period using market movements determined from
historical data.
· The scenario analysis method estimates the potential loss
arising from the portfolio after moving market parameters.
These movements are based on past extreme events and
hypothetical scenarios.
Market risk is managed and controlled at three levels.
Senior management monitors the Firm’s market risk utiliza-
tions, exposures and risk-adjusted performance; trading
management actively manages its positions against approved
risk limits; and RMM monitors exposures against approved
risk limits, approves limit excesses and ensures that trading
management reduces exposures to within limits.
Business-specific risks are managed through desig-
nated groups and committees within the specific divisions.
The Investment Banking Committee reviews and approves
most of the investment banking transactions, with a special
focus on risk (e.g., legal risks) inherent in such transactions.
Before new activity is undertaken, the New Business
Committee reviews the proposed business and its structure
and infrastructure requirements. To enhance its controls,
CSFB developed a regionally structured oversight function to
complement its functional organization.
Just 18 months ago, the Corporate Communications department was
totally revamped. The department works hand in hand with Research
and Bankers to deliver the right image for the Firm and its clients’ busi-
nesses. Since September 1998, a full 58% of the department’s staff
have joined the Firm, generating 400% and 600% increases in press
mentions and television appearances, respectively.
CSFB’s IT teams dramatically
accelerated the Firm’s “E”
readiness in 1999, with a new
state-of-the-art web site, an
online customer trading inter-
face in Fixed Income and
Equities, and a host of other
initiatives. 2000 will be even
more active.
35
Corporate ServicesFinancial Control and Product ControlHuman ResourcesInformation TechnologyLegal and ComplianceNew Business and Strategic PlanningOperationsTreasury/Tax
ENABLING CHANGETHROUGH OURSUPPORTSERVICES
The importance of CSFB’s Support Division in helping the
Firm take advantage of change has never been greater.
Helping clients capture opportunities and advancing the Firm’s
capabilities requires cutting-edge technology, high-volume
complex processing, and sophisticated risk management and
other controls.
Structurally for the Support Division, 1999 was important
in consolidating earlier acquisitions and integrating CSFP. The
enormous project challenge of Y2K was flawlessly executed;
but of greater strategic significance, we designed and
started implementing the BPTA program (Business Process
and Technology Architecture). This three-year program,
which encompasses multiple projects, will completely over-
haul CSFB’s core information and transaction-processing
engine, upgrading to state-of-the-art “plug and play” archi-
tecture. The resulting benefits to efficiency, service and
control will allow substantial reengineering of costs and
processes in most of the Support Division.
P R O F E S S I O N A L I Z I N GT H E F I R M ’ S C O M M U N I C A T I O N S
At the same time, the Support Division has worked
intensively in upgrading many other parts of CSFB’s infra-
structure, improving controls and paving the way for
continued growth.
The Firm’s financial systems and departments are
upgrading radically, employing a new global general ledger,
revised P&L process, and much more effective, sophisti-
cated analysis and controls.
We continue to modernize our physical infrastructure.
$466 million of capital expenditure on technology and
upgraded premises included completion of office expansion
in London, where over 5,000 of our people are now based.
And the record business volumes have meant a constant
“lights on” challenge for Operations and IT staff, as shown in
the following graphs.
The “E-commerce” revolution is touching us all, whether
through rapid development of new client interfaces or the
expansion of internal web-based communication that has
Stephen A. M. HesterChief Financial Officer
W E B L E A D E R S H I P I N T H E
“ N E W E C O N O M Y ”
The project required 913 person-years of effort
across the Firm’s 1,584 business applications.
Significant system upgrades were also
accomplished and new standards set for complex
project management which have positioned the
use of Technology@CSFB for the next millennium.
36 37
transformed interaction within CSFB’s global, functional
organization. CSFB will be at the forefront of “web” usage,
for clients and in our internal processes.
Just as important is our enhancement of “human capital.”
Throughout the Firm an intensified program of recruitment,
development and enhancement of people processes is under
way, led by Human Resources in partnership with the divisions.
We are also advancing development and training in other areas,
such as Compliance and Legal/Regulatory change.
The pace of change will not let up in 2000. We expect to
intensify our accelerated investment in E-commerce capabili-
ties and BPTA. We expect continued growth, more service
demands, and better and more sophisticated control standards
— all in tandem with a special focus on improving productivity.
Record business volumes have been supported with sharply
higher productivity.
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Our business gains crucial competitive advantage from fast,
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Credit Suisse Group is the parent organization of Credit
Suisse First Boston. Its widespread activities are linked by
the strategy of capturing global leadership in the two dom-
inant trends emerging in the world’s financial services
market: asset gathering/asset management and financial
intermediation.
Credit Suisse Group operates a decentralized manage-
ment structure based on six business units, each geared to
the requirements of specific customer groups and markets:
Credit Suisse Private Banking is one of the world’s
largest private banks and has a strong presence in both the
Swiss and International markets. It specializes in providing
personal investment counseling and professional asset man-
agement for a sophisticated international clientele.
Credit Suisse is a leading bank in Swiss domestic busi-
ness, serving corporate and individual clients through a
multichannel strategy and an efficient branch network covering
all major locations. It is among the leaders in Internet banking.
The ‘Personal Financial Services Europe’ initiative tar-
gets affluent private clients in selected European markets,
offering a wide range of Credit Suisse Group and third-party
products, personalized advice and Internet content, and
seamless service through a combination of traditional and
electronic channels.
Winterthur Group is one of the leading insurance com-
panies in Europe and one of the largest international
insurance groups operating worldwide. It offers private and
corporate customers tailor-made insurance and pension solu-
tions at local and international levels.
Credit Suisse First Boston is a leading global investment
banking firm, providing comprehensive advisory, capital rais-
ing, investment, sales and trading, and financial products for
users and suppliers of capital around the world.
The worldwide activities of Credit Suisse Asset
Management are focused on the requirements of institutional
and mutual fund investors.
Credit Suisse Group is an institution well positioned in
today’s global financial markets. Its six core businesses give
a combination of strength and depth. While Credit Suisse
Group is headquartered in Zurich, it has an international
presence providing thorough market coverage, from major
centers to emerging markets.
CREDIT SUISSE
group
Services for institutionaland mutual fundinvestors worldwide
Corporate and individual customers in Switzerland
Services for private investors in Switzerlandand abroad
Global investment banking
Insurance for private and corporate customers worldwide
In response to the fast-moving demands of institutional clients, the
Operations Department developed its “Platinum Customer Service”
package. In only six months, the service has significantly improved
our support ranking among our largest customers. This tailored
effort highlights the essential front- and back-office teamwork
needed to differentiate CSFB with clients in the new century.
“ P L AT I N U M ” S E R V I C E T O C L I E N T SC S F B S U C C E S S F U L LY R E S O L V E D
T H E Y 2 K I S S U E
Financial services for affluent customers inEurope
PERSONAL FINANCIALSERVICES EUROPE
PRIVATE BANKING
FINANCIAL SERVICES
INVESTMENT BANKING
ASSET MANAGEMENT
38 39
Rainer E. Gut (2)
Chairman of the Board
Peter Spälti (2)
Vice Chairman of the Board
Thomas W. Bechtler (3)
Chairman of the Board of Zellweger Luwa
Peter Brabeck-Letmathe (2)
Chief Executive Officer of Nestlé S.A.
Marc-Henri Chaudet (3)
Lawyer
Walter B. Kielholz (3)
Chief Executive Officer of Swiss Re
Heini Lippuner (3)
Member of the Board of Novartis AG
Lukas Mühlemann (2)
Chief Executive Officer of Credit Suisse Group
Brady W. DouganCo-Head of Investment Banking and Equities
David C. MulfordChairman — International
Christopher Carter**Head of Equity CapitalMarkets and EuropeanInvestment Banking
Paul Calello**Head of Equity Derivativesand Convertibles
Christopher GoekjianHead of Fixed Income& Derivatives
Joseph T. McLaughlinExecutive Vice PresidentLegal and Regulatory AffairsEx-Officio Member
John F. NelsonChairman — Europe
Richard E. Thornburgh*Vice Chairman of theExecutive Board
Allen D. Wheat*Chairman of the Executive Board and Chief Executive Officer
Charles G. Ward IIIPresident and Co-Head of Investment Banking and Equities
Stephen A. M. HesterChief Financial Officer
Stephen E. StonefieldChairman — Pacific
EXECUTIVE
boardBOARD OF
directors
(1) Refers to the Board of Directors for the legal entityCredit Suisse First Boston, a Swiss bank containingthe activities of the global investment bank and theasset management business units.
(2) Member of Compensation Committee.(3) Member of Audit Committee.
* Member Credit Suisse Group Executive Board
** Joined Executive Board — March 2000
Michael L. MayoJohn M. McAvoyClaire M. McCarthyMichael J. McGheeJohn E. McGintyJonathan F. McHardyJoseph T. McLaughlinPatricia J. McLaughlinJeremy S. MeadSharon M. MeadowsSimon L. MeadowsMarcelo MedeirosDonald MeltzerSimon J. MenneerEric MeyerPeter S. MilhauptRodney M. MillerBen E. MingayRobert W. MitchellRobin MitraJun MiyazakiJuergen MoessnerPhilip J. MoineauKevin J. MorleyHarold D. MoseleyNeil MoskowitzChristopher C. MothersillRichard H. MoulderPeter J. MurrayStefano NatellaMartin J. NewsonRobert C. O’BrienMarc A. OdendallAdebayo O. OgunlesiTimothy P. O’HaraMasahiro OhshiroDavid C. O’LearyWayne C. OlsonThomas F. O’MaraSusumu OmoriYoshinori OnakaCarlos OnisEoin F. O’SheaDaniel OtthJohn S. OwenJ. Craig OxmanPhillip Z. PaceLuc P. PajotGunnar T. PalmRichard P. PalmieriVincent N. ParkinJames P. ParmeleeMark J. PattinsonRicardo PauloSarah J. PearsonAnthony M. PescoJake C. PetersSilvio PiffarettiCarlos Pinheiro, Jr.Harry C. PinsonSteven M. PlagKenneth E. PlagemanJonathan PlutzikDavid A. PopowitzChristian W. PorathFernando PradoJoseph M. PrendergastMalcolm K. Price
Trevor C. PriceSimon E. Prior-PalmerCraig A. PuffenbergerZhi Zhong QiuFrank P. QuattroneKathryn M. QuigleyD. Neil RadeyRussell T. RayDiego RecaldeThomas ReidDaniel P. ReingoldNorbert ReisPhilip J. RemnantThomas G. RiceGordon A. RichMelanie J. RichmondGregory P. RichterNick C. RileyNancy A. RochfordCarolynn H. RockafellowG. Davide RodriguesLuis Alberto RodriguesAntonio Rodriguez-PinaMatthew S. RoeserHartley R. RogersH. Elliott Rogers, Jr.Clayton J. Rohrbach IIIJohn J. RomanelliMark A. RosenJonathan K. RounerKevin R. RushPaolo A. RushingDavid RussellFernando RussoOlivier SachsJeffrey J. SalzmanThomas J. SandsEdward J. SantoroPierre O. SarkozyGuglielmo Sartori di
BorgoriccoNoriaki SasakiAnne C. SchaumburgPaul G. ScheufeleMichael SchmertzlerJohn E. SchmidtPeter H. SchmukiMaurits SchoutenGeorge A. Schreiber, Jr.Steven R. SchuhScott W. SeatonPhilip W. Seefried, Jr.Steven E. SeltzerMartin SennDavid J. ShannonWilliam C. SharpstoneAlan R. SheriffFrederick E. SherrillHyun Joe ShinEraj ShirvaniAndrew ShoresMason C. SleeperRobert S. SloanGeoffrey T. SmailesJörgen SmebyFrederick M. R. SmithStuart F. SmithElon D. Spar
David SpaughtonLawrence D. SperlingHansruedi StadlerDavid R. StephenRobert B. StevensRobert T. StewartCharles G. StonehillKevin StuddStephan SturmDavid A. SwainGT SweeneyPaul T. SweeneyMarc TabahMavis B. TaintorJoshua B. TanzerMasahito TatsumiAndrew R. TaussigColin A. TaylorLuther L. Terry, Jr.Sudip V. ThakorPeter ThomasDavid J. ThompsonEarnswell T. TiuEthan M. TopperPaul TregidgoBill R. TrotterDavid D. TrudeBruce A. TuckmanHans-Joerg TurtschiJohn J. TwomeyScott J. UlmAndrew S. UmbersRichard A. VaccariEric M. VarvelPhilip S. VasanMatty VengerikJoachim von SchorlemerJames H. VosChristopher E. VroomDavid M. WahDavid P. WalkerThaddeus J. WalkowiczJohn J. WalshAlastair J. M. WaltonTodd E. WarnockPaul J. WeinsteinBenjamin C. WestonDavid P. WheelerR. Alicia WhitakerMarc A. White, Jr.Robert S. WiesenthalBrendan WilliamsRobert L. WilloughbyJonathan J. WilmotKent WilsonRichard K. WincklesLewis H. WirshbaMark WolfenbergerRaymond S. WoodRoger WrightGary H. YablonSteven M. YanezLouis G. Zachary, Jr.John ZafiriouGail S. ZauderIvy L. Zelman
Managing Director — Senior AdvisorsJohannes AlbeckJuerg BrandNicholas O. BrigstockeSir Alan BuddDiana W. ChazaudJohn D. David-JonesJaime de Marichalar Saenz
de TejadaRichard B. duBuscMichael M. FortierCharles B. GatesGeoffrey P. HallGordon T. HallJohn S. HarrisonWilliam W. HigginsJoseph F. HuberThomas W. KeaveneyHans Albert KellerWilliam J. KimmelWilliam P. MelchionniHamish Leslie MelvilleThomas John MooreAndrea A. MoranteGordon S. MurrayWilliam S. PitofskyMartin RommNeal M. SossMarc H. SteglitzJ. Tijo Van MarleClark R. Van NostrandPote P. VidetWilliam M. WigderJohn C. Wilson
Vice ChairmenRichard H. BottJonathan R. DavieSimon M. de Zoete* Steven KochKen MillerRobert S. MurleyMark R. PattersonDouglas L. PaulDidier M. Pineau-ValencienneMark D. Seligman*Alan H. SmithGeorge B. Weiksner
4140
MANAGING
directorsOsama S. AbbasiOsmar Abib, Jr.Harry AdamopoulosJohn K. Adams, Jr.Mark A. AdleyJon M. AfrickNasser A. AhmadKristin M. AllenGuilherme AmaralJames L. AmineDavid L. AndersonMark C. AndersonNicholas AndrewsRome G. ArnoldLiza BaileyMichael G. BakerRobert F. BakerAlessandro BaldinMarcelo BarbaraThomas K. BarberKeven A. BarnumChuck BarraquiasJanos BarthaDavid C. BasileWilliam R. Battey, Jr.W. David BauerAllan J. BaumTed W. BaxterJoseph S. BeckerAndrew S. BenjaminJeremy J. BennettDonald R. BensonWalter BerchtoldPeter B. BlantonBenjamin R. BloomstoneJeffrey F. BlumTimothy D. BockHarold W. BogleJulia BondWillem G. BoschGeorge F. BoutrosWilliam BradyLester R. BrafmanJonathan D. BramDavid M. BrodskyH. Andrew Brownfield IIIJohn BrydsonEdison C. BuchananPaul D. BuckleyPhilippe M. BuhannicJeffrey H. BunzelJohn G. BurkeMarc A. CabiMartin P. CaffreyCarlo M. CalabriaElaine C. CampbellLloyd E. CampbellRichard B. CareyRichard CarlWayne F. CarrChristopher R. CarterCarlos Eduardo CastanhoAndrew J. CattleJohn G. Chachas
Christopher M. ChambersCharlie ChanLap Y. ChanPierre A. ChaoRichard J. CharKaukab N. ChaudhryJean-Christian CheyssonAndrew ChristieJohn C. ChrystalJames F. ClarkMichael W. ClarkDavid H. ClaytonBenjamin H. CohenRobert A. CohenGeorge W. ColemanPatrick D. ColemanJoseph A. ConeenyDavid M. ConnorsThomas A. ConnorsBrian M. CookAdrian R. T. CooperEldad CoppensOmar Martin CordesBertrand X. CothierJulie CraddockErnesto CruzDana J. CuffeRobert A. Curley, Jr.David R. CurtisTerrence E. CuskleyAdam de Courcy LingGilles de DumastAdam de JongJean de SkowronskiJames D. DeasyFrank J. DeCongelioDavid A. DeNunzioJean-Manuel P. DersyDonald J. DevineEdward W. DevineKatherine E. DietzeJack J. DiMaio, Jr.Alec D’JanoeffNichola H. DobinsonJoseph M. DonovanGreg L. DowlingJean-Francois DreyfusCharles B. EdelsteinJ. Anthony EhingerGeorg EhrenspergerRussell ElvidgeKevin W. EnglishD. Wilson ErvinMarcus A. L. EverardBertrand F. FaconMagnus FalkFrank J. Fanzilli, Jr.Michael A. FederMark L. FinermanRobert N. FinneyDavid C. FisherH. Andrew FisherJohn L. FlemingJeremy P. Fletcher
Steven R. FolandSimon J. FordJean-Marc ForneriPeter A. FowlerJonathan R. D. FoxMichael P. FriezoAnthony M. FryYukio FukudaTreacy B. GaffneyRichard W. GallantEdward P. GardenSeth D. GarrettChristian GellSurojit GhoshRichard GillingwaterPaul M. GimsonJames T. Glerum, Jr.Joel GlodowskiIrvin J. GoldmanRobert F. GoldrichAndrew D. GordonNicholas Gordon-SmithMarc D. GranetzMichael D. GreenspanSteven S. GreenwaldJonathan P. GrussingSanjeev GuptaMartin GutMichael G. HajialexandrouLawrence A. HamdanDavid HanMatthew C. HarrisNeil A. S. HarveyThomas E. HassenEdward R. HatfieldRandy L. HazeltonJames P. HealyGerhard HeinrichColin H. Hely-HutchinsonWallace C. HendersonAlan G. HighetEric HimeHerman C. HintzenF. Perkins Hixon, Jr.John C. HodgeJames B. HoesleyMark A. HolmesGeorge R. HornigMarc HotimskyAlan E. HowardKevin W. HudsonKeith HumfressPeter M. HydePer O. HylandHarris Hyman IVMarco M. IllyBrian C. ImrieRichard H. IversAlfred G. JacksonRobert JainMoez A. JamalJohn B. JardineRobert A. JeffeIan S. Jenkins
Grant C. JohnsonDaniel J. JohnsonJ. Leslie K. JohnstonWesley M. JonesFrançois JourdainPhilip KayFrançois KayatGiles B. KeatingAndreas I. Keller SarmientoPatrick T. KennedyRichard A. KersleySusan S. KilsbyThomas KirkpatrickJohn V. KirnanCharles P. Kirwan-TaylorFritz T. KleinM. Kristin KleinRobert A. KlugmanCary A. KochmanJ. Steven KrausJames E. KreitmanRobert S. KricheffPaul KuoRaymond S. KuramotoAdam S. KurzerMichael K. KwatinetzMark B. LandisKarim LariStephen M. LazarusKarsten le BlancBryce W. LeeJohn LeeSung Jin LeeJames H. Leigh-PembertonCameron LesterRobert J. LevittBrett M. LevyBarry LewisD. Scott LindsayBruce W. LingSamuel G. LissGerald M. LodgeStephen T. LongDavid J. LooAnn F. LopezFrank H. LópezChristian LubiczRobin R. MacdonaldGeorge M. MaddisonFrançois J. MaisonrougeG. David M. Maletta IIGuillaume A. MalleCarmen MarinoMark S. MaronIan MarshJeremy MarshallChristopher G. MartinKeith T. MartinMichael E. MartinDavid R. MathersDavid J. MatlinPeter R. MattMichael J. MauboussinDavid A. Mayes
* Deputy Chairman, Credit Suisse First Boston (Europe)
42
43
PERCENT
DOLLARS IN MILLIONS (UNAUDITED) 1999 1998 CHANGE
Revenues
Fixed Income and Derivatives $ 4,221 $ 2,586 63%
Equity 3,212 1,655 94%
IBD 2,189 1,791 22%
PED and Other 131 681 na
Total 9,753 6,713 45%
Expenses
Personnel expense 5,368 3,728 44%
Execution, clearing and brokerage 293 351 -17%
Other operating 1,529 1,262 21%
Total 7,190 5,341 35%
Gross profit 2,563 1,372 87%
Depreciation and amortization 295 195 51%
Write-downs, provisions and losses 527 1,095 -52%
Pretax income before extraordinary/exceptional
items and minority interest 1,741 82 2023%
Income taxes 479 159 201%
Net income (loss) before extraordinary/exceptional
items and minority interest $ 1,262 $ (77) na
Extraordinary/exceptional items, net — (42) na
Minority interest — (35) na
Net income (loss) after minority interest $ 1,262 $ (154) na
(1) The income statements are for the Credit Suisse First Boston global investment banking business unit. They are based on Swiss accounting rules for banks as modified for revenue presentation and the treatment of execution, clearing and brokerage costs as an expense rather than as contra-revenue.
(2) Certain 1998 amounts have been reclassified to conform to the 1999 presentation.
financialSTATEMENTS
INCOME STATEMENTS
OF THE
BUSINESS UNIT
Year Ended
December 31, 1999
and Year Ended
December 31, 1998
BALANCE SHEETS
OF THE
BUSINESS UNIT
PERCENT
DOLLARS IN MILLIONS (UNAUDITED) DEC 31,1999 DEC 31,1998 CHANGE
Assets
Cash $ 727 $ 855 -15%
Money market papers 14,327 13,716 4%
Due from banks 105,782 100,892 5%
of which securities lending and
reverse repurchase agreements 84,114 56,948 48%
Due from other business units 1,551 1,377 13%
Due from customers 33,877 44,743 -24%
of which securities lending and
reverse repurchase agreements 14,884 20,825 -29%
Mortgages 4,601 5,220 -12%
Securities and precious metals trading portfolios 76,874 73,428 5%
Financial investments 3,976 7,325 -46%
Non-consolidated participations 640 317 102%
Fixed assets 1,574 1,416 11%
Accrued income and prepaid expenses 3,644 4,978 -27%
Other assets 27,651 36,429 -24%
of which replacement value of derivatives 24,665 33,707 -27%
Total Assets $ 275,224 $ 290,696 -5%
Liabilities and Shareholder’s Equity
Liabilities in respect of money paper $ 18,848 $ 14,489 30%
Due to banks 139,434 134,788 3%
of which securities borrowing and
repurchase agreements 42,024 54,484 -23%
Due to other business units 5,968 11,891 -50%
Due to customers, in savings and investment deposits 69 131 -47%
Due to customers, other deposits 43,526 51,751 -16%
of which securities borrowing and
repurchase agreements 19,624 16,519 19%
Bonds and mortgage-backed bonds 21,577 24,337 -11%
Accrued expenses and deferred income 6,515 6,432 1%
Other liabilities 30,013 38,551 -22%
of which replacement value of derivatives 25,436 35,986 -29%
Valuation adjustments 1,479 1,191 24%
Total liabilities 267,429 283,561 -6%
Total shareholder’s equity 7,795 7,135 9%
Total Liabilities and Shareholder’s Equity $ 275,224 $ 290,696 -5%
(1) The above balance sheets are based on Swiss accounting rules for banks. They include allocations fromthe real estate units within Credit Suisse Group.
(2) Based on the changes of accounting principles, the accounting for securities lending and borrowing trans-actions has been changed in 1999. Using the revised accounting rules, the 1998 total balance sheetwould have been reduced by $6.1 million.
44 45
markets revenues and interest costs, are allocated to divi-sional results. Capital markets revenues and related costsare shared among IBD, FID and Equity, respectively.
Divisional revenues for the years ended December 31,1999 and 1998 are as follows:
($ MILLIONS) 1999 1998 %
CHANGE
FID $ 4,221 $ 2,586 63%
Equity 3,212 1,655 94%
IBD 2,189 1,791 22%
PED and Other 131 681 na
$ 9,753 $ 6,713 45%
The geographic distribution of revenues and employees forthe years ended December 31, 1999 and 1998 are as follows:
1999
1998
(1) Excludes Russia-related losses, which distort the European data.
Employees
37% North America
18% Latin America/Asia
45% Europe
Revenues (1)
42% North America
10% Latin America/Asia
48% Europe
Employees
38% North America
17% Latin America/Asia
45% Europe
Revenues
42% North America
23% Latin America/Asia
35% Europe
Fixed Income and Derivat ives
Revenues for the FID Division increased significantly in 1999when compared with 1998. ROE was 16% in 1999 versuslosses in 1998.
The increase in revenues in 1999 over 1998 was largelydue to more normal trading in those areas most affected by1998 market difficulties together with pleasing growth in thecustomer-oriented Credit Products activities. As discussedabove, substantial revenues were achieved in 1999 fromemerging-markets activities based on a restructured busi-ness model and sharply lower risk profile. Latin America wasparticularly strong thanks to an excellent contribution fromGarantia, which CSFB acquired in 1998. Other credit-sensi-tive areas that were negatively impacted by 1998 marketconditions, such as Credit Products, Distressed Trading andLeveraged Funds, also achieved significantly improvedresults in 1999.
Improved results were also achieved in 1999 in InterestRate Products, Swiss Fixed Income and Commodities.
CSFB reported losses in 1999 in its Real Estate ProductGroup (“REPG”). In 1998, REPG generated substantial rev-enues, particularly from asset securitizations. The market forreal estate-related asset securitizations slowed at the end of1998. Moreover, CSFB restructured this business in 1999with a view toward substantially reducing its risk concentra-tions. This preemptive provisioning, together with creditevents specific to REPG’s asset portfolio, caused losses to berecognized in 1999. In executing this plan, CSFB has alreadyreduced its economic capital deployed in REPG by 28%.
In addition, reduced revenues were recognized in moneymarkets and foreign-exchange trading in 1999 versus 1998.
Equity
Reflecting continued strong market share growth in all areasfrom both the organic investment and acquisition since1997, revenues for the Equity Division increased 94% in1999 over 1998. Substantial increases were recognized inrevenues from customer-driven businesses across all geo-graphic locations. The star performer was the NorthAmerican business and, in terms of industry, technology.
Equity derivatives continued its outstanding performanceas revenues increased over 1998 levels, particularly in con-vertibles and Swiss products.
ROE for the Equity Division significantly exceeded 30%in 1999.
Equity revenues, inclusive of the part of capital marketsrevenues reported in IBD, exceeded $3,700 million and$1,900 million for the years ended December 31, 1999 and1998, respectively.
I N T R O D U C T I O N
Credit Suisse First Boston (“CSFB”) is a global investmentbanking firm with principal activities in client financing andadvisory services, sales and trading of securities, foreignexchange and derivative products, and other financial assets.CSFB is a business unit of Credit Suisse Group (“CSG”).
CSFB operates primarily within the legal entity CreditSuisse First Boston (the “Bank”), a Swiss bank and a sub-sidiary of CSG. The Bank also contains the activities of theCredit Suisse Asset Management business unit of CSG.Shown herein is financial data for the CSFB business unit,which constitutes substantially all of the assets and liabilitiesof the Bank as of December 31, 1999 and 1998, respec-tively. The results of the CSFB business unit also reflectcertain transactions recorded within CSG subsidiaries otherthan the Bank. More detailed financial information on theBank and related unqualified audit opinion is contained in theAnnual Report of the Bank.
There continue to be significant flows of business andservices among the entities of CSG.
CSFB’s activities are subject to various risks includingfluctuations in trading markets, currency risk, national eco-nomic and political risk and in the volume of market activity.CSFB’s results may also be impacted by competitive factors.Consequently, CSFB’s earnings may be subject to wide fluc-tuations. While the legal reporting currency of the Bank isthe Swiss franc, CSFB primarily manages its businessesbased on a US dollar functional currency, as presentedherein, and consistent with its earnings and asset mix.
CSFB’s strategic plans contemplate continued invest-ment in its businesses through organic growth and, ifappropriate, selective acquisition.
M A R K E T E N V I R O N M E N T
CSFB’s 1999 results were impacted by a variety of marketconditions. Equity markets, including new issues, were gen-erally robust throughout 1999, notwithstanding volatilitycaused by inflation fears and higher short-term rates. Levelsof mergers and acquisitions activity increased in 1999, bothin volume and number of deals, over 1998 levels.
The market environment for CSFB’s fixed income prod-ucts was strong in the first third of 1999 but slowedconsiderably thereafter as interest rates rose. Real estateand related product markets did not recover to first-half1998 conditions.
Also, in July 1999, the Financial Supervisory Agency ofJapan (“FSA”) concluded their examination of CSFB’sJapanese activities and issued sanctions against certain of
CSFB’s legal entities in Japan. These sanctions held backactivity in Japan during the year.
CSFB’s 1998 results were heavily impacted byunprecedented economic events that led to a general down-turn in markets overall. In the third quarter of 1998, Russiaexperienced an economic collapse leading to the default onand a restructuring of its sovereign debt obligations. TheRussia collapse adversely impacted other emerging markets.
In addition to negatively impacting emerging markets,these events — in combination with the liquidity tighteningon hedge funds — caused unprecedented volatility in globalmarkets and credit-sensitive securities in the second half of1998. Also, capital markets activity was substantially cur-tailed during much of this period.
As a result, the strong markets that persisted through-out 1997 and the first half of 1998 turned downward in thesecond half of 1998. This downturn adversely impactedCSFB’s trading businesses — primarily its Fixed Income andDerivatives and Equity Divisions.
Commencing January 1, 1999, CSFB integrated itsFixed Income and CSFP divisions into one — Fixed Incomeand Derivatives (“FID”). This integration produced synergiesin product and risk management. In 1999, CSG repurchasedthe 20% minority interest in CSFP held by Swiss Re, whichresulted in CSFP becoming a wholly owned subsidiary ofCSG. This also facilitated the integration of FID. The resultsdiscussed herein are based on the new organization of theFixed Income and Derivatives Division showing its effect, ona pro forma basis, on 1998 results.
R E S U LT S O F O P E R A T I O N S
CSFB’s revenues for 1999 were $9.8 billion, 45% higher than1998 revenues of $6.7 billion. Revenues for 1999 increasedover 1998 in the Fixed Income and Derivatives, Equity andInvestment Banking Divisions. These increases were partiallyoffset by a decrease in Private Equity Division and Other rev-enues, which, in 1998, primarily resulted from a gain from thesale of a strategic investment.
The source of these divisional revenues are primarilyrealized and unrealized net trading gains, net interest incomeresulting from trading and lending activities, fee-based earn-ings from capital markets activities, and commissions oncustomer transactions and advisory services. Divisional rev-enues are based on Swiss accounting rules for banks asmodified for revenue presentation, by the classification ofexecution, clearing and brokerage costs as an expense asopposed to a contra-revenue, and CSFB’s internal manage-ment reporting process in which revenues, including capital
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
46 47
25% ownership, resulted in First Pacific becoming a whollyowned subsidiary of the Bank. First Pacific is an investmentbanking firm with a leadership position in the equity marketsin Australia. In addition, in early 1998, CSFB acquired thecommon stock of First NZ Capital, a New Zealand invest-ment banking enterprise.
Garantia Acquisition
On July 31, 1998, CSG and the Bank completed the acquisi-tion of all of the outstanding capital stock of Banco deInvestimentos Garantia S.A., Garantia Limited, and certain oftheir subsidiaries and affiliates (collectively, “Garantia”) (suchtransaction, the “Garantia Acquisition”). The initial considera-tion payable by CSG to the Sellers in the Garantia Acquisitionconsisted of (i) $200 million and (ii) ordinary shares of CSGhaving a fair market value of $475 million, which becomefreely transferable over a six-year period. Furthermore, addi-tional amounts will become payable, principally to continuingemployees of Garantia, under a retention plan if Garantiameets certain performance targets during the 1998-2001period. At year-end 1999, the Bank recognized additionalgoodwill of $315 million, pursuant to the retention plan, result-ing from Garantia’s strong earnings since acquisition.Garantia’s principal business activities are fixed income andequity trading, asset management and investment banking.
Long-Term Capital Portfolio, L.P. Recapitalization
On September 28, 1998, CSFB agreed to participate with aconsortium of commercial banks and investment firms in arecapitalization of Long-Term Capital Portfolio, L.P. (“LTC”),a troubled private investment fund managed by Long TermCapital Management, L.P. Under the plan, consortium mem-bers provided approximately $3.6 billion in the aggregate innew equity capital to LTC. The Bank invested, directly andthrough an affiliate, $300 million to LTC in return for equity.CSFB engaged in transactions with LTC prior to the recapi-talization, the majority of which were collateralized with USTreasury securities or other collateral. The net asset valueattributable to this investment, which is carried at lower ofcost or market, has appreciated since the date of purchaseand capital redemptions have reduced the outstandinginvestment to $29 million at December 31, 1999.
L I Q U I D I T Y A N D C A P I T A L R E S O U R C E S
Assets and Leverage
CSFB maintains a liquid balance sheet with a majority of theFirm’s assets consisting of marketable securities inventoriesand other trading positions and collateralized financing
lion, respectively (representing the expected loss amount(“ACP”) calculated by the credit-plus-risk-managementapproach). The ACP increased in 1999 giving effect toCSFB’s increased conservatism toward risk in its REPG busi-ness. Also contained in write-downs, provisions and lossesare various litigation provisions as well as amounts relating toother credit-sensitive trading operations.
Additional information on write-downs, provisions andlosses, and related exposures is contained in the Bank’s andCSG’s annual reports.
Income Taxes
CSFB’s effective tax rate in 1999 was approximately 28%.CSFB’s significant geographic diversification results in widelydispersed income tax expense on earnings. Consequently,this rate represents a blended tax rate of the various jurisdic-tions in which CSFB operates.
CSFB incurred income tax in 1998 in excess of reportedpretax income. The effective rate differs significantly from1999 as a result of losses that were concentrated in tax juris-dictions with low tax rates or where net operating losscarryforwards exist while profits were made in other higher taxlocations. In addition, the accounting practice of generallyavoiding the establishment of deferred tax assets contributedto this effect.
Extraordinary/Exceptional i tems
Extraordinary/Exceptional items in 1998 primarily relate toreal estate write-offs (of $50 million, net of tax) in Moscowdriven by the reduced level of business activity following theRussian default.
Acquisi t ions and Investments
Recent Developments
On February 8, 2000, CSFB announced that it agreed toacquire the Japanese Equities division of Schroders. Thetransaction is expected to be completed in March 2000. Thekey employees of the acquired business have agreed to joinCSFB, subject to completion. The acquired businessemploys over 100 people, largely in Tokyo, with related sep-arate teams in London, Zurich and New York.
This transaction is expected to facilitate the growth ofCSFB’s Japanese equities business.
First Pacific and First NZ Capital Acquisition
In early 1998, CSFB agreed to acquire 75% of the commonstock of First Pacific, Stockbrokers Limited and certain affil-iates (“First Pacific”), which, when combined with its existing
I B D
IBD revenues increased 22% in 1999 over 1998 (42%increase in M&A, Debt and Equity Capital Markets rev-enues), and market share gains were achieved reflectingCSFB’s ongoing investment in this division. Net interestincome from lending declined to just 5% of the total, reflect-ing the successful deployment of capital out of that business(capital employed in lending has been reduced by 66% since1997 and has now reached the target range below $1 billion).
IBD revenues, inclusive of gross debt and equity capitalmarkets revenues, exceeded $2,800 million and $2,200 mil-lion for the years ended December 31, 1999 and 1998,respectively.
PED and Other
Revenues reported in the PED and Other division are primar-ily the result of investments managed at the corporate level,as well as revenues earned by the Private Equity Division,which manages funds with investment commitments exceed-ing $3.6 billion, globally.
Expenses
CSFB’s aggregate expenses increased in 1999 over 1998,reflecting strong business volumes and a continuing highlevel of investment in the business, the fruits of which areshown in the Firm’s continuing market share advances. Theseincreases are primarily the result of higher incentive compen-sation, increased hiring in most business divisions andcontinued investment in support infrastructure. In mid-1998,CSFB also made significant investments in personnel includ-ing the acquisition of Garantia and a group specializing intechnology banking and equity research. The full-year effectof this investment is reflected in the 1999 expense base.Support infrastructure costs in 1999 increased as a result ofthe increased demands of a changing business environmenton CSFB’s internal control structure, particularly in light ofCSFB’s wide geographic diversification and business mix.
Staff costs increased 44%, primarily as a result ofincreased incentive bonus awards and related payroll taxesassociated with improved profitability. In addition, staff costsincreased due to the 7% increase in headcount associatedwith the previously mentioned initiatives as well as fromsalary increases. Staff costs as a percent of revenues for1999 were 55%, in line with industry norms.
Execution, clearing and brokerage expense decreasedin 1999 when compared with 1998, primarily due todecreased costs associated with emerging-markets activity.
Other operating expenses primarily include costs forcommunications and equipment, occupancy, professional
services and business development. The distribution of otheroperating expenses for the years ended December 31, 1999and 1998 are as follows:
Other Operat ing Expenses 1999
Other Operat ing Expenses 1998
Other operating expenses increased in 1999 over 1998across all categories due to increases in headcount and con-sultants, CSFB’s expansion of its premises in London as wellas the impact of support infrastructure initiatives.
Write-downs, provisions and losses
Write-downs, provisions and losses decreased in 1999 over1998, primarily as a result of credit provisions reflected in1998, which were largely due to the economic collapse ofRussia. Specifically, 1998 credit provisions were madeagainst forward contracts, loans, reverse repurchase agree-ments, and other assets and derivative contracts involvingRussian products and/or Russian counterparties. AtDecember 31, 1999 and 1998, CSFB’s credit provisionsrelated to Russia totaled approximately $790 million and$980 million, respectively. The decrease in these provisionsin 1999 was primarily due to write-offs against specificassets.
CSFB also has substantial credit provisions related toloans outstanding in Asia resulting from the economic crisisthat occurred in that region in the fourth quarter of 1997.CSFB’s credit provisions related to Asia totaled approxi-mately $410 million at December 31, 1999 and 1998,respectively.
Other than Russian and Asian provisions, CSFB chargedagainst 1999 and 1998 earnings $221 million and $86 mil-
17% BusinessDevelopment
33% ProfessionalServices
25%Communicationsand Equipment
17% Occupancy
8% All Other
16% BusinessDevelopment
31% ProfessionalServices
21%Communicationsand Equipment
15% All Other
17% Occupancy
48 49
agement, Credit Risk Management, and Risk Measurement & Management are discussed herein on page 33.
Management of Other Risks
Other business-specific risks are managed primarily throughdesignated groups and committees within the different divi-sions. These committees include groups that will addressInvestment Banking and Private Equity transactions and newbusiness initiatives. In addition, to supplement its controlenvironment, CSFB has an oversight function that is struc-tured regionally and is designed to complement CSFB’sfunctional organization. The oversight functions consists of (i)selected Executive Board members who have overall respon-sibility for oversight in their respective regions, (ii) regionaloversight managers who assist the Executive Board mem-bers with this responsibility, and (iii) a country manager ineach country who manages local oversight issues. RegionalOversight and Country Management serve as an additionalline of control and concentrate on regulatory and reputationalissues, supervise legal entities and support management inefforts to improve the control environment. This oversightfunction works with business and Finance, Administrationand Operations executives in monitoring and enhancingCSFB’s controls. Various control committees act as clearing-houses for certain control issues. The Legal and Compliancedepartment advises CSFB on how to conduct its businessesand other activities in compliance with applicable laws, rulesand regulations and assists in setting compliance policies andethical standards.
Additional disclosure on CSFB’s risk management prac-tices is contained in the Bank’s Annual Report.
In March 2000, the Bank intends to pay a dividend to itsshareholder. In March 1999, the Bank paid a dividend of 240million Swiss francs to its shareholder.
The Bank and its subsidiaries are subject to various cap-ital requirements imposed by various regulatory bodiesaround the world, including the Swiss Banking Commission.At December 31, 1999, the Bank was in compliance withthese requirements. At December 31, 1999, the Bank had aBIS Tier 1 and total capital ratio of 9.9% and 17.9%,respectively, compared with 8.4% and 15.4% at the end ofthe prior year.
Risk Management
General Approach
The general risk management policy of CSG serves as thebasis for CSFB’s risk management programs. The primaryresponsibility for risk management lies with CSFB’s seniorbusiness line managers. They are held accountable for allrisks associated with their businesses, including credit risk,market risk, liquidity risk, legal risk, reputational risk andoperating risk, and are responsible for supplementingCSFB’s independent controls by maintaining adequate inter-nal control systems. The risk management programs aredesigned to ensure that there are sufficient independentcontrols to monitor all risks properly.
The CSG Board of Directors is responsible for determin-ing the general risk policy and risk management strategy ofCSFB. The Chairman’s Committee of the Board of Directorsapproves the overall market risk ceiling, reviews risk expo-sure on a quarterly basis, and approves country limits andother risk ceilings. CSFB’s approach to Strategic Risk Man-
agreements. Collateralized financing agreements consist ofresale agreements and securities lending predominantlysecured by government and corporate obligations. Levels oftrading inventory and collateralized financing agreements aredependent on market conditions, volume of activity and cus-tomer needs. Accordingly, CSFB’s total assets and financialleverage can fluctuate significantly.
CSFB, as part of its investment banking and fixedincome emerging-market activities, also maintains a loanportfolio. In addition, as part of CSFB’s fixed income activi-ties, trading inventories include emerging-markets positions,whole loans, leveraged funds and high-yield securities. CSGand its subsidiaries also make merchant banking investmentsthrough CSFB’s Private Equity Division.
In US dollar terms, total assets at December 31, 1999declined moderately when compared with total assets atDecember 31, 1998. CSFB’s ability to support increases intotal assets is a function of its ability to obtain short-termsecured and unsecured funding and access long-term capitalmarkets.
F U N D I N G A N D C A P I T A L S T R A T E G Y
Funding
The Bank has a broad-based worldwide funding franchise.Global short-term funding is managed by a centralizedfinancing unit, which oversees local funding operations. Thisglobal funding function provides coordination and control ofpricing and funding tactics, while the local market presenceprovides for investor diversity and access to unique marketopportunities. The Bank aims to continually broaden its funding base by geography, investor, issuing entity andinstrument type.
The Bank’s funding sources include interest-bearingand non-interest-bearing deposits, commercial paper, certifi-cates of deposit, federal funds purchased, medium-termnotes, long-term debt, capital securities and shareholder’sequity. The Bank places particular emphasis on a large baseof well-diversified and historically stable fiduciary deposits forits day-to-day funding needs. Notwithstanding the historicstability of the Bank’s unsecured funding sources, CSFB hasa secondary source of liquidity flowing through itsbroker/dealer businesses. CSFB can access significant liq-uidity through the secured funding markets (repurchaseagreements and other collateralized arrangements), whichhave proven reliable in high-stress environments. This sec-ondary source of liquidity is an important means of ensuringavailability of alternative funding for the purpose of meetingbusiness plans and commercial commitments.
Finally, CSFB’s liquidity (i.e., unsecured and securedsources) is continually monitored to ensure that the Firm canmeet its business objectives through various high-stress sce-narios.
To provide alternative forms of liquidity, the Bank,through its subsidiaries, has renewed a committed revolvingcredit facility with various banks that, if drawn upon, wouldbear interest at short-term rates. The facility is for generalcorporate purposes. This facility provides for borrowings upto $1.5 billion during 2000. As of the date hereof, therewere no amounts outstanding under the facility.
Capital Strategy
The Bank and its subsidiaries issue long-term debt throughvarious US and Euro Medium-Term Note Programs as wellas syndicated and privately placed offerings around theworld. To satisfy Swiss and local regulatory capital needs ofits regulated subsidiaries, the Bank raises subordinated long-term borrowings. At December 31, 1999, the Bank hadlong-term debt (including the current portion) of $22 billion,with $9 billion representing subordinated debt. The Bankexpects to continue to access the capital markets in supportof the Bank’s existing businesses, as well as any new busi-ness initiatives and the resultant capital and fundingrequirements.
During 1999, CSFB issued $125 million of perpetualpreferred securities, qualifying as conventional Tier 1 capitaland solo Upper Tier 2 capital. CSFB is the first Swiss bank toissue such a security qualifying as Tier 1 capital.
In selecting the most appropriate funding sources at anypoint in time, such factors as market conditions, interest ratelevels, liquidity needs and maturity profile objectives are con-sidered. Further, in order to manage interest rate, currencyand other risks associated with the above borrowings, theBank has entered into various derivative transactions.
The Bank’s access to external financing is dependent onthe short- and long-term credit ratings of the Bank and cer-tain of its subsidiaries. The cost and availability of externalfunding is generally a function of the ratings. As of the datehereof, the Bank’s debt ratings were as follows:
LONG-TERM
SENIOR JUNIOR
SHORT-TERM SENIOR SUBORDINATED SUBORDINATED
Moody’s P-1 A1 A2 A3
S&P A-1+ AA AA- A+
Fitch IBCA Ltd. F-1+ AA AA- A+
BankWatch TBW-1 AA AA- A+
51
AtlantaGeorgia Pacific Center133 Peachtree Street N.E.40th FloorAtlanta, GA 30303-1841USAVoice 1 404 656 9500Fax 1 404 522 3043
BaltimoreFirst Union Signet Tower7 St. Paul Street, Suite 5Baltimore, MD 21202USAVoice 1 410 223 3000Fax 1 410 223 3105
Boston100 Federal Street30th FloorBoston, MA 02110-1802USAVoice 1 617 556 5500Fax 1 617 542 1814
One Boston Place30th FloorBoston, MA 02108USAVoice 1 617 854 7100Fax 1 617 854 7160
Buenos Aires Esmeralda 130, Piso 221035 Buenos AiresArgentinaVoice 54 11 4394 3100Fax 54 11 4325 4717
ChicagoAT&T Corporate Center227 West Monroe StreetChicago, IL 60606-5016USAVoice 1 312 750 3000
Houston600 Travis StreetSuite 3030Houston, TX 77002-3003USAVoice 1 713 220 6700Fax 1 713 236 9222
Los Angeles10880 Wilshire Blvd21st FloorLos Angeles, CA 90024USAVoice 1 310 481 2600Fax 1 310 481 2800
MexicoCampos Eliseos #345, Piso 9Edificio OmegaCol. Chapultepec Polanco11560 Mexico, D.F.MexicoVoice 52 5 283 89 00Fax 52 5 283 89 30
Montreal1250 Rene-LevesqueBlvd West, Suite 3935Montreal H3B 4W8CanadaVoice 1 514 933 8774Fax 1 514 933 7699
NassauBahamas Financial Centre4th FloorCharlotte & Shirley StreetP.O. Box N-4928Nassau, BahamasVoice 1 242 356 8100Fax 1 242 326 6589
New YorkEleven Madison AvenueNew York, NY 10010-3629USAVoice 1 212 325 2000
Palo Alto2400 Hanover StreetPalo Alto, CA 94304USAVoice 1 650 614 5000Fax 1 650 614 5030
1510 Page Mill RoadSuite 2Palo Alto, CA 94304-1135USAVoice 1 650 614 1600Fax 1 650 614 1601
Philadelphia11 Penn Center26th FloorPhiladelphia, PA 19103-2929USAVoice 1 215 851 1000Fax 1 215 851-0352
San Francisco201 Spear StreetSan Francisco, CA 94105-1637USAVoice 1 415 836 7600Fax 1 415 836 7751
São PauloAvenida Brigadeiro FariaLima, 306401451-000 São Paulo, SPBrazilVoice 55 11 3841 6000Fax 55 11 3841 6900
TorontoOne First Canadian PlaceSuite 3000, P.O. Box 301Toronto, Ontario M5X 1C9CanadaVoice 1 416 352 4500Fax 1 416 352 4680
OFFICE LOCATIONS
THE americas
50
AmsterdamHonthorststraat 191071 DC AmsterdamThe NetherlandsVoice 31 20 5754 890Fax 31 20 5754 860
BudapestNagy Jeno U.12H-1126 BudapestHungaryVoice 36 1 202 2188Fax 36 1 201 9196
Cairo32 Haroon StreetP.O. Box 224DokkiCairoEgyptVoice 20 2 331 8800Fax 20 2 331 8880
FrankfurtMesse Turm60308 Frankfurt am MainGermanyVoice 49 69 75 38 0Fax 49 69 75 38 2444
Geneva59 Route De ChancyP.O. Box 900CH-1211 Geneva 70SwitzerlandVoice 41 22 394 70 00Fax 41 22 792 47 32
GuernseyHarbour House4th FloorSouth EsplanadeSt. Peter Port, Guernsey,Channel Islands GY1 1APVoice 44 1481 713 997Fax 44 1481 714 111
IstanbulBuyukdere CaddesiAli Kaya SokakPolat Plaza B Blok,No. 4 Kat 1380840 Levent, IstanbulTurkeyVoice 90 212 278 2500Fax 90 212 281 6444
JohannesburgSandton City Office Tower9th Floor5th Street, Corner Rivonia Rd2196 SandownRepublic of South AfricaVoice 27 11 884 67 41Fax 27 11 884 71 21
Kiev34 Chervonoarmiyska Street252004 KievUkraineVoice 380 44 247 1900Fax 380 44 247 5790
Limassol199 ChristodoulouHadjipavolou AvenueP.O. Box 575303316 LimassolCyprusVoice 357 534 12 44Fax 357 581 74 24
LondonOne Cabot SquareLondon E14 4QJUnited KingdomVoice 44 20 7888 8888Fax 44 20 7888 1600
LuganoVia Canova 15P.O. Box 2836CH-6900 LuganoSwitzerlandVoice 41 91 802 64 82Fax 41 91 921 00 67
MadridOrtega Y. Gasset 22-2428006 MadridSpainVoice 34 91 423 1600Fax 34 91 423 1638
MilanVia Turati 920121 MilanoItalyVoice 39 02 7702 1Fax 39 02 7702 2216
Moscow5 Nikitsky Pereulok(Formerly Belinski Street)Moscow 103 009RussiaVoice 7 501 967 8200Fax 7 501 967 8210
Paris21 Boulevard de la Madeleine75038 ParisCedex 01FranceVoice 33 1 40 76 8888Fax 33 1 42 56 1082
PragueStaromestske Nam. 15110 00 Prague 1Czech RebublicVoice 420 2 210 83111Fax 420 2 210 83222
Tashkent1 Turab Tula Street700003 TashkentRepublic of UzbekistanVoice 998 71 120 6166Fax 998 71 120 6177
ViennaPalais CorsoMahlerstrasse 12-51010 ViennaAustriaVoice 43 1 512 3023Fax 43 1 512 302323
WarsawFIM Tower, XIII FloorAl Jerozolimskie 8102-001 WarsawPolandVoice 48 22 695 0050Fax 48 22 695 0055
ZugBahnhofstrasse 17P.O. Box 234CH-6301 ZugSwitzerlandVoice 41 41 727 97 00Fax 41 41 727 97 10
ZurichUetlibergstrasse 231P.O. Box 900CH-8070 ZurichSwitzerlandVoice 41 1 333 55 55Fax 41 1 333 55 99
africa, europeAND middle east
52
AucklandThe ANZ Centre23-29 Albert StreetLevel 20AucklandNew ZealandVoice 64 9 302 5500Fax 64 9 302 5580
BangkokAbdulrahim Place, 14th Floor990 Rama IV RoadSilom, BangrakBangkok 10500ThailandVoice 66 2 636 1546Fax 66 2 636 1553
BeijingSilver Tower31st Floor2 Dong San Huan Bei RoadBeijing 100027People’s Republic of ChinaVoice 86 10 6410 6611Fax 86 10 6410 6133
Hong KongThree Exchange Square22nd Floor8 Connaught Place, CentralHong KongVoice 852 2101 6000Fax 852 2101 7990
JakartaDanamon Aetna Life Building24th FloorJalan Jenderal
Sudirman Kav, 45Jakarta 12930IndonesiaVoice 62 21 577 0762Fax 62 21 577 0761
Kuala LumpurMenara Keck SengSuite 27-02, 27th Floor203 Jalan Bukit Bintang55100 Kuala LumpurMalaysiaVoice 60 3 242 5199Fax 60 3 241 6199
LabuanMain Office TowerLevel 10 (B)Financial Park Labuan87000 Labuan F.T.MalaysiaVoice 60 87 425 381Fax 60 87 425 384
ManilaThe Enterprise Center18th Floor, Tower 2, Ayala Ave.Corner Paseo de RoxasMakati CityPhilippinesVoice 63 2 886 5670Fax 63 2 886 5947
Melbourne101 Collins Street27th FloorMelbourne, Victoria 3000AustraliaVoice 61 3 9280 1666Fax 61 3 9280 1890
Mumbai(Formerly Bombay)35/39 Free Press House, 3rd Floor215 Free Press Journal, MargNariman PointMumbai 400 021IndiaVoice 91 22 284 6888Fax 91 22 285 1949
SeoulHanwha Building13th Floor111-5 Sokong-Dong,Chung-KuSeoul 100-070KoreaVoice 82 2 3707 3700Fax 82 2 3707 3881
Shanghai17th Floor, South TowerStock Exchange Building528 Pudong South RoadPudong, ShanghaiPeople’s Republic of ChinaVoice 86 21 6881 8418Fax 86 21 6881 8417
SingaporeOne Raffles Link#03-01 Singapore 039393Voice 65 212 2000Fax 65 212 4868
SydneyGateway Level 311 Macquarie PlaceSydney,New South Wales 2000AustraliaVoice 61 2 8205 4400Fax 61 2 8205 4676
Taipei6th Floor, Union Enterprise PlazaNo. 109, Section 3Min-Sheng East Road,Taipei, TaiwanVoice 886 2 2715 6388Fax 886 2 2718 8934
TokyoShiroyama Hills26th Floor4-3-1 ToranomonMinato-Ku, Tokyo 105-6002JapanVoice 81 3 5404 9000Fax 81 3 5404 9800
WellingtonCaltex Tower282-292 Lambton Quay10th FloorWellingtonNew ZealandVoice 64 4 474 4400Fax 64 4 474 4051
asia/pacific
Credit Suisse Group (CSG) is a global financial services com-
pany, providing a comprehensive range of banking and
insurance products. Active on every continent and in all major
financial centers, Credit Suisse Group comprises six busi-
ness units, each geared to the requirements of specific
customer groups and markets:
PRIVATE BANKING
Credit Suisse Private Banking
Services for private investors in Switzerland and abroad
FINANCIAL SERVICES
Credit Suisse
Corporate and individual customers in Switzerland
Personal Financial Services Europe
Financial services for affluent customers in Europe
Winterthur
Insurance for private and corporate customers worldwide
INVESTMENT BANKING
Credit Suisse First Boston
Global investment banking
ASSET MANAGEMENT
Credit Suisse Asset Management
Services for institutional and mutual fund investors worldwide
Credit Suisse First Boston (CSFB) is a leading global invest-
ment banking firm, providing comprehensive financial
advisory, capital raising, sales and trading, and financial
products for wholesale users and suppliers of capital around
the world. It operates in 56 offices across more than 37
countries and six continents and has over 15,000 staff.
Credit Suisse First Boston is one of the world’s largest
securities firms in terms of financial resources, with approxi-
mately $9.8 billion in revenues in 1999 and $7.8 billion in
equity and $275 billion in assets as of December 31, 1999.
Credit Suisse First Boston is organized around the fol-
lowing four major operating divisions:
Investment Banking
Fixed Income and Derivatives
Equity
Private Equity
The terms “Credit Suisse First Boston,” “CSFB,” “CSFP,” “Firm,” “we” and “our” in this Annual Review typically refer to the business unit (versusthe legal entity, which has the same name but also includes Credit Suisse Asset Management and certain real estate assets and which isreferred to herein as the “Bank”).
This Annual Review was prepared by the Corporate Communications Department of Credit Suisse First Boston and includes the most currentinformation through April 1, 2000. Additional copies and/or additional information can be obtained on the Internet at www.csfb.com or throughCorporate Communications in New York, London or Hong Kong.
© Copyright 2000, Credit Suisse First Boston Design: Russell Design Associates, NYCIssued in the United Kingdom by Printed on recycled paperCredit Suisse First Boston (Europe) Ltd: regulated by SFA.
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www.csfb.com