GLOBAL INVESTMENT

BANK

1997 ANNUAL R E V I E W

Credit Suisse Group (“CSG”) is one of the leading global

financial services companies, providing a comprehensive

range of banking and insurance products. It is active on

six continents and in the world’s major financial centers.

Credit Suisse Group comprises five business units — four

banking units and one insurance provider — each geared to

the requirements of specific customer groups and markets:

Credit Suisse

Corporate and individual customers in Switzerland

Credit Suisse Private Banking

Services for private investors in Switzerland

and internationally

Credit Suisse First Boston

Worldwide investment banking

Credit Suisse Asset Management

Services for institutional investors worldwide

Winterthur

Worldwide insurance business

Credit Suisse First Boston (“CSFB”) is a leading global

investment banking firm, providing comprehensive

financial advisory, capital raising, sales and trading, and

financial products for users and suppliers of capital

around the world. It operates in over 50 offices across

more than 30 countries and six continents and has over

12,000 employees.

Credit Suisse First Boston is one of the world’s

largest securities firms in terms of financial resources,

with approximately $7.1 billion in revenues in 1997 and

$7.3 billion in equity and $310 billion in assets as of

December 31, 1997.

Credit Suisse First Boston is organized around the

following five major operating divisions:

Corporate and Investment Banking

Fixed Income

E q u i t y

Credit Suisse Financial Products

Private Equity

1 Chief Executive’s Letter

4 Fact Sheet

6 Deals of the Year

8 Corporate and Investment Banking

1 6 Fixed Inco m e2 0 Equity

2 4 Credit Suisse Financial Products

2 8 Private Equity

3 0 Support Services

3 4 Credit Suisse Group

3 6 Board of Directors

3 7 Executive Board

3 8 Managing Directors

4 0 Financial Statements

4 7 O ffice Locations

1

1997 was an extraordinary year for Credit Suisse First

Boston. The year began with the Firm’s major restructuring

(from three constituent parts) and ended with the impor-

tant BZW acquisition in Europe and Asia. Despite the

intense effort required to absorb these changes, CSFB

produced $1.2 billion of net income, before extraordinary

and exceptional items, and the fastest organic growth rate

of major firms in the investment banking industry, with rev-

enues exceeding $7 billion for the first time.

C S F B ’s strategy is to build exceptional shareholder

value by exploiting attractive global growth trends in the

industry while strengthening our position as one of the

w o r l d ’s leading investment banks. 1997 was a year that

demonstrated well the fruits of this strategy and the

impact of the industry trends that shape it.

Intense concentration in the financial services indus-

t r y, long predicted, is now advancing fast. The process is

producing what many observers have anticipated – a small

group of global institutions emerging preeminent.

Alongside this structural development is continued evi-

dence of the powerful global growth trends underpinning

the industry, dampened in part by market cyclicality and

intense competition.

CSFB faces this environment with considerable

strengths. Among the leading group of global investment

banks, CSFB possesses a unique international culture and

spread of operations and management, particularly

transatlantic, where our business is broadly balanced.

CSFB also continues to foster powerful entrepreneurial

drive and creativity. These distinguishing characteristics

were illustrated well during 1997.

The 30% organic revenue growth rate recorded by

CSFB was broadly based, but showcased particularly the

strengths of key businesses all new to the Firm within the

last eight years. These included our world-leading deriva-

tives business, Credit Suisse Financial Products, which

has grown revenues 26% compounded since the first full

year of operation. Other businesses, less than five years

old, grew spectacularly during 1997 including our Fixed

Income businesses in the emerging markets and in real

estate-related activity, in particular, the Principal

Transactions Group. Within the Equity division very strong

growth was also recorded in Eastern Europe, where CSFB

has been a pioneer. Supporting these particular growth

areas were strong results from more traditional business-

es. CSFB’s Investment Banking revenues increased 26%

from 1996 levels, while customer revenues in Equity out-

side the emerging markets rose 41%. The groups

particularly strengthened by CSFB’s restructuring also

showed tremendous progress with foreign exchange and

money markets achieving growth rates exceeding 69%.

CHIEF EXECUTIVE’S LETTER

We estimate that two of CSFB’s principal divisions

(Fixed Income and CSFP) rank 1 or 2 in the world by

revenues while two others (Corporate and Investment

Banking and Equity) rank among the top 5. With respect

to profitability, CSFB’s 18% return on equity in 1997

compares well with those banks that combine corporate

and investment banking. Particularly pleasing was the

30% ROE achieved, excluding the corporate loan book.

This represents an industry leading level of profitability and

underlines the importance of our strategic shift of capital

away from lending and into other activities. Cost and

productivity measures such as pretax profit margins, 26%,

and compensation/revenues, 49%, remained in line with

other industry leaders.

Although we had a very successful 1997, CSFB is

very conscious of the need to strengthen its competitive

position as the industry changes. In executing our strategy

of capitalizing on growth trends and strengthening the

Firm, CSFB is engaged in several major, multi-year invest-

ment programs. While increasing our cost base near- t e r m ,

these programs are essential to capturing excellent long-

term value for our shareholders. We continue to make

investments to position us well to serve our clients’

increasingly global needs. One such investment which fits

our strategy perfectly was C S F B ’s acquisition of BZW’s

European and selected Asian equity, equity capital mar-

kets and mergers and acquisitions advisory businesses.

This has given CSFB the unique leverage of a third home

market (the U.K.) to complement our global activities.

We are also making substantial investments in the organic

growth of our Equity, Investment Banking, Fixed Income,

and Private Equity businesses. Additionally, a crucial

requirement of the industry trends toward growth, global-

ization and more sophisticated risk management is

investment in our infrastructure and control environment.

Such investment needs are exacerbated by ineff i c i e n c i e s

identified by the Firm’s restructuring and by integrating

B Z W, and major external challenges such as Year 2000

and EMU. CSFB is aggressively responding to these

needs and has taken prudent advantage of 1997’s prof-

itability to make some exceptional provisions to cover the

integration of BZW and some of these one-off Information

Technology costs.

This Annual Review seeks to describe in more detail

C S F B ’s global and product strengths and the strategies

driving our business forward. Most importantly, this Review

reflects the lifeblood of our business – our client relation-

ships. Whether it be in mature or emerging markets, or

with investors or users of capital and advice, our service

to clients comes first. Our capital strength and expertise

as principal increasingly link with our client businesses to

ensure we can provide differentiated service.

Chief Executive of Credit Suisse Private Banking.

Their commitment to excellence and their contributions to

the delicate task of integrating our structures and cultures

have left a lasting mark.

While 1998 has begun well, we are conscious that

not every year will enjoy the market conditions that assist-

ed our growth in 1997. Nevertheless, we look to the

future with confidence and in the knowledge that CSFB’s

strengths continue to build and can be expected to off e r

our clients the consistency and excellence they expect in

the future.

Allen D. Wheat

Chairman of the Executive Board

and Chief Executive Off i c e r

3Neither our 1997 performance nor our future ambi-

tions would be imaginable without the enormous energy,

c r e a t i v i t y, and dedication of our people. Size is important

in the global financial services industry, and we obviously

have size; intelligence is even more important, and I

believe our record of client service and notable transac-

tions demonstrate our resources of thoughtfulness and

imagination. I congratulate our staff worldwide for their

a c h i e v e m e n t .

Two people deserve special mention. Beginning

with the announced restructuring in mid-1996, Hans-

Ulrich Doerig played a crucial role in bringing together the

new CSFB into one global organization. During 1997,

he served with distinction as Chairman of CSFB before

moving on to become Vice Chairman and Chief Risk

O fficer of Credit Suisse Group. Oswald Grubel served as

head of trading until his appointment in March 1998 as

F i n a n c i a l

Resources

Among

the Best

in the

I n d u s t r yPRO FORMA

DOLLARS IN MILLIONS (UNAUDITED) 1 9 9 7 1 9 9 6 % CHANGE

For the year

Revenues $ 7,128 $ 5,493 30%

Operating expenses $ 4,762 $ 3,675 30%

Gross operating profit $ 2,366 $ 1,818 30%

Pretax income (1) $ 1,828 $ 1,417 29%

Net income (1) $ 1,207 n/a n/a

At year end

Total shareholders’ equity (2) $ 7,274 $ 6,551 11%

Total assets $ 310,353 $ 304,346 2%

Selected ratios

Return on average equity (1) 18% n/a n/a

Pretax profit margin (1) 26% 26% —

Expense/revenues 67% 67% —

Staff expense/total revenues 49% 49% —

Tier 1 BIS-based capital ratio (3) 8.5% n/a n/a

Total BIS-based capital ratio (3) 14.9% n/a n/a

Employees 11,863 10,881 9%

( 1 ) Excludes extraordinary/exceptional items, and minority interest.

( 2 ) Shareholders’ equity at January 1, 1997, includes the pro forma effect of CHF 500 preferred stock issuance which occurred on March 31, 1997.

( 3 ) These ratios apply to the Bank.

THE GREATER THE RESOURCES, THE GREATER THE POSSIBILITIES

Asian Region Vice Chairman, Alan Smith near CSFB’s o ffice in Hong Kong with May Koon, director, head Asian Equity Sales.

#1#1#1#1#1#2#1#2#1

A Leader in Innovation1997 Deal of the Year Awards Institutional Investor

NUMBER OFF I R M DEALS OF THE YEAR

Credit Suisse First Boston 10

Goldman Sachs 10

Merrill Lynch 10

Morgan Stanley Dean Witter Discover 9

J.P. Morgan 8

Top Ti e r

C a p i t a l

R a i s i n g

C r e d e n t i a l s

Sources:

( 1 ) Securities Data Company.

( 2 ) Investment Dealers’ Digest.

( 3 ) C S F B .

( 4 ) E u r o m o n e y.

( 5 ) B o n d w a r e .

5

Daniela Iten and Daniel Gut, Swiss fixed income capital markets.

#1

Number one in global privatizations.( 1 )

Number one coordinator of global offerings.( 5 )

Number one European IPO house.( 5 )

Number one in capital markets project finance dollar volume.( 3 )

Number one in Swiss capital markets every year since 1991.( 3 )

Number two in private placements.( 2 )

Number one in quantity of Latin American debt issued from 1990-1997.( 1 )

Number two in Deutsche Mark market share.( 1 )

Number one in Central and Eastern European equity research.( 4 )

Pioneered in European high yield dollar volume.( 3 )

Credit Suisse First Boston has been judged a leader in

client service by a wide range of financial press covering

our businesses. Based on current returns, below is a list

of the Deals of the Year and other awards won by the

Firm for financing and advisory work worldwide. The Firm

won 61 awards this year, up from 40 in 1996.

DEALS OF THE YEAR

T R A N S A C T I O N AWA R D P U B L I C AT I O N

A.K. Steel Project Finance Deal of the Year Corporate Finance

Boeing/McDonnell Douglas M&A Deal of the Year Institutional Investor

BVG Rail Deal of the Year Asset Finance International

CalEnergy Project Finance Deal of the Year Institutional Investor

Ciba Specialty Chemicals Best Non-Privatization Equity Issue of the Year International Equity Review

Ciba Specialty Chemicals/Novartis Demerger of the Year Corporate Finance

Ciba’s Exec Stock Options Best Derivatives Deal of the Year Global Finance

Continental Airlines North America Airline Financing Deal of the Year AirFinance Journal

Credit Suisse Group/Winterthur International Deal of the Year Institutional Investor

ENI European Equity Issue of the Year International Financing Review

First Union/CoreStates Financial Breakthrough Deal Mega-Mergers Investment Dealers’ Digest

Impress Metal Packaging Buyouts Deal of the Year Corporate Finance

Ispat International Equity Deal of the Year Corporate Finance

J. C. Penney Corporate Finance Deal of the Year Institutional Investor

Jorf Lasfar Power Deal of the Year Project Finance

La Oroya Metallurgical Honorable Mention: Privatization LatinFinance

MATÁV East Europe IPO Emerging Markets Investor

International Deal of the Year Institutional Investor

Best Eastern European Equity Issue of the Year International Equity Review

EEMEA Equity Issue of the Year International Financing Review

East European Deal of the Year World Equity

Osprey Maritime Ship Financing Deal of the Year IFR Transport Finance

People’s Republic of China Best Asian Bond Issue Euroweek Asia

Best Sovereign/Public Sector Asian Bond Issue Euroweek Asia

Best Eurobond Finance Asia

Petrozuata Finance Project Finance Deal of the Year Corporate Finance

Latin Project Bond Emerging Markets Investor

Project Finance Deal of the Year Institutional Investor

7T R A N S A C T I O N AWA R D P U B L I C AT I O N

Petrozuata Finance (continued) Americas Project Finance Loan of the Year International Financing Review

Project Finance Deal of the Year LatinFinance

Deal of the Year Project Finance

Pharmacia Biotech/Amersham M&A Deal of the Year Corporate Finance

PT Pindo Deli Pulp & Paper Mills Best Offering for a Corporate Issuer Finance Asia

High Yield Bond Deal of the Year Asiamoney

Best Asian Bond Issue Euroweek Asia

Best Asian High Yield Bond Euroweek Asia

Best Corporate Asian Bond Issue Euroweek Asia

International Deal of the Year Institutional Investor

Asian Bond of the Year International Financing Review

Pycsa Panama Deal of the Year Project Finance

Raytheon/Hughes Aircraft Most Noteworthy Mergers Global Finance

M&A Deal of the Year Institutional Investor

Republic of Italy Swiss Francs Euroweek

Swiss Franc Bond of the Year International Financing Review

Southern Peru Copper Honorable Mention: Structured Trade Finance LatinFinance

Deal of the Year Project Finance

SR Earthquake Fund International Deal of the Year Institutional Investor

Team Rental/Budget Rent a Car M&A Deal of the Year Corporate Finance

Telstra Best IPO of the Year Finance Asia

Best Australian Equity IPO of the Year International Equity Review

Yapi Kredi Bank Asi Best Turkish Equity Issue of the Year International Equity Review

YPF/Andina M&A Deal of the Year Institutional Investor

E N T I T Y AWA R D P U B L I C AT I O N

Credit Suisse Financial Products Credit Derivatives House of the Year International Financing Review

Best Foreign Dealer of the Year Swaps Monitor

Derivatives House of the Year World Equity

Credit Suisse First Boston Best Lead Manager of Asian Bonds Euroweek Asia

Best Bank in Corporate Finance Global Finance

Global Winner in Project Finance Global Finance

Project Finance House of the Year International Financing Review

Swiss Franc Bond House of the Year International Financing Review

Bond House of the Year Americas Project Finance Int’l Yearbook

C O R P O R ATE AND INVESTMENT B A N K I N G

The Corporate and Investment Banking Division had a

stellar year in 1997. We executed a record number of

landmark transactions for valued clients. We also

increased our geographic and industry coverage and

enhanced our product line — all key elements in our strat-

e g y. As a result, CSFB continues to be one of only a

handful of truly global investment banks. The globalization

of the entire financial services industry is proceeding

r a p i d l y, and for a very simple reason: investment banks

need to be global because our clients are global. Our sig-

nificant presence in the U.S., Europe, Asia, and in

emerging markets everywhere puts us at the leading edge

of the globalization trend in each of our major product areas.

In 1997 CSFB announced the acquisition of the

European and selected Asian equity, equity capital mar-

kets and mergers and acquisitions advisory businesses of

Charles G. Ward III

Managing Director

Corporate and

Investment Banking

Full Service Product Offerings

Acquisi tion Finance

Asset Finance

Corporate Lending and Syndicated Finance

Corporate Sales and Divestitures

Debt, Equity and Convertible Underwriting

Equity Derivatives

Generic and Structured Trade Finance

Joint Ve n t u r e s

L e a s i n g

Leveraged Buyouts

Leveraged Finance

Mergers and Acquisitions

Preferred Stock

Private Placements

P r i v a t i z a t i o n s

Project Finance

R e s t r u c t u r i n g s

Share Repurchase Programs

Takeover Defense

(Dollars in Millions) 1 9 9 7 1996 % CHANGE

Revenue $1,479 $1,368 8%

Employees 2,034 2,102 (3%)

Average BIS Capital $2,841 n/a n/a

60+Deals of the Year

in 1997 (1)

Focused Industry Expertise

A u t o m o t i v e

Capital Goods

C h e m i c a l s

Consumer Products

Depository Institutions

E n e r g y

Health Care

I n s u r a n c e

Lodging & Gaming

Media

Metals & Mining

P a p e r, Packaging

& Forest Products

P o w e r

Real Estate

R e t a i l

Te c h n o l o g y

Te l e c o m m u n i c a t i o n s

Tr a n s p o r t a t i o n

( 1 ) See listing on pages 6 and 7.

9

BZW from Barclays. These businesses have established

market-leading positions in a number of key areas. The

acquisition adds 250 bankers and capital markets profes-

sionals to our European and Asian Investment Banking

operations and bolsters our M&A and Equity positions in

these areas. It also adds a third home market, the U.K.,

to our original home markets of the U.S. and Switzerland.

Mergers & Acquisitions

CSFB completed $172 billion worth of transactions, rank-

ing us among the handful of leading advisors in the world.

Our M&A team executed more than 55 transactions in

excess of $1 billion. These transactions bore our trade-

marks of creativity, strategic perspective, flawless

execution, and strong financing support. CSFB’s global

presence is a particularly strategic advantage for clients as

cross-border M&A activity increases.

CSFB has a strong M&A franchise in markets

around the world, as our M&A highlights list demon-

strates. We were particularly proud of our defense of

Thyssen AG against a hostile offer launched by Fried

Krupp AG Hoesch-Krupp, which later resulted in a friendly

merger announcement valued at $10.5 billion. I n s t i t u t i o n a l

CSFB advised French insurance company Assurances Générales de France (AGF)

on two transactions that illustrate the dramatic opening of the European M&A market.

First, we advised AGF when it acted as white knight for French holding company Wo r m s

& Cie, which had rejected a rare unsolicited offer from another French company. In the

midst of negotiations to acquire Worms for $6 billion, AGF itself received a $9.3 billion

hostile offer from Italian insurer Assicurazioni Generali SpA. CSFB’s efforts as defense

advisor on the largest takeover battle in French history helped AGF to reach an agree-

ment to be acquired by Germany’s Allianz AG and forced the withdrawal of Generali’s

o ff e r. The Allianz/AGF deal, valued at $10.4 billion, creates Europe’s largest insurer.

Largest

Takeover

Battle

in French

H i s t o r y

CREDIT SUISSE FIRST BOSTON CLIENT DESCRIPTION OF TRANSACTION A P P R O X I M ATE DOLLAR VA L U E

CoreStates Financial Corp Sale of Company to First Union Corporation* $ 16,600,000,000

Thyssen AG Acquisition offer from Fried Krupp AG Hoesch-Krupp 10,500,000,000(offer withdrawn)

Assurances Générales de France SA Sale of Company to Allianz AG* 10,400,000,000

Raytheon Company Acquisition of Hughes Aircraft Company from 9,500,000,000Hughes Electronics Corporation and General Motors Corporation

U.S. Bancorp Sale of Company to First Bank System, Inc. 9,086,000,000

Ashland Inc. Joint venture with USX-Marathon Group of their oil refining, 7,000,000,000marketing and transportation operations

Assurances Générales de France SA Acquisition, with SOMEAL SA, of Worms et Cie. 6,100,000,000

Tyco International Ltd. Acquisition of ADT Limited 5,600,000,000

W. R. Grace & Co. Merger of its Cryovac subsidiary with 5,000,000,000Sealed Air Corporation*

Nordbanken AB Merger with Merita Oy* 4,300,000,000

DQE, Inc. Sale of Company to Allegheny Power System, Inc.* 4,200,000,000

Occidental Petroleum Corporation Divestiture of MidCon Corp. subsidiary to KN Energy, Inc. 4,000,000,000

CVS Corporation Acquisition of Revco D.S., Inc. 3,970,000,000

The State Government of Victoria, Divestiture of Loy Yang Power to a consortium 3,800,000,000Australia led by CMS Energy Corp.

U.S. Department of Energy Divestiture of Elk Hills Naval Petroleum Reserve to 3,650,000,000Occidental Petroleum Corporation

First Union Corporation Acquisition of Signet Banking Corporation 3,300,000,000

Falcon Drilling Company, Inc. Merger with Reading & Bates Corporation to form 3,100,000,000R&B Falcon Corporation

Deposit Guaranty Corp. Sale of Company to First American Corporation* 2,700,000,000

American Radio Systems Corp. Sale of its radio broadcasting operations to 2,600,000,000CBS Corporation*

Abitibi-Price Inc. Merger with Stone-Consolidated Corporation 2,300,000,000

Wachovia Corporation Acquisition of Central Fidelity Banks, Inc. 2,300,000,000

The State Government of Victoria, Divestiture of PowerNet Victoria to GPU International, Inc. 2,000,000,000Australia

Team Rental Group, Inc. Acquisition of Budget Rent a Car Corporation 2,000,000,000to form Budget Group, Inc.

Swiss Reinsurance Company Acquisition of Société Anonyme Française de Réassurances 1,780,000,000(SAFR) and subsequent sale to Partner Reinsurance Company

Living Centers of America, Inc. Recapitalization with Apollo Management, L.P., and 1,668,000,000subsequent merger with GranCare, Inc.

Coca-Cola Enterprises Inc. Fairness opinion with respect to the acquisition of Coca-Cola 1,660,000,000Beverages Ltd. of Canada and The Coca-Cola Bottling Co. of New York

The Walt Disney Company Divestiture of four daily newspapers to Knight-Ridder, Inc. 1,650,000,000

CalEnergy Company, Inc. Repurchase of Peter Kiewit Sons’, Inc., 26% interest in 1,600,000,000the company and certain project interests

Province of Buenos Aires Privatization of ESEBA 1,368,000,000

NationsBank Corporation Acquisition of Montgomery Securities 1,200,000,000

Prime Service, Inc. Sale of Company to Atlas Copco AB 1,170,000,000

Viacom Inc. Divestiture of Viacom Radio Group to Evergreen Media Corporation 1,075,000,000

Greenfield Industries Inc. Sale of Company to Kennametal Inc. 1,000,000,000

Texaco Inc. Joint venture with Shell Oil Company and Saudi Aramco of their Not DisclosedEast Coast and Gulf Coast refining and marketing operations*

Texaco Inc. Joint venture with Shell Oil Company of their midwestern and Not Disclosedwestern refining and marketing operations

*Pending at 3/15/98.

Mergers and Acquisitions

H i g h l i g h t s

11

I n v e s t o r magazine named our representation of Raytheon

in its $9.5 billion acquisition of Hughes Aircraft an M&A

Deal of the Ye a r.

We represented Boeing in its $16.3 billion acquisi-

tion of McDonnell Douglas, the largest transaction ever in

the aerospace industry, and one of the largest domestic

acquisitions in U.S. history.

We also represented CoreStates Financial Corp. in

its $16.6 billion acquisition by First Union Corp., which

will create the fifth largest bank in the U.S., and repre-

sents the largest M&A transaction ever in the U.S.

banking industry. Also in the banking industry, CSFB rep-

resented Nordbanken AB in its $4.3 billion merger with

Merita Oy, the first cross-border bank merger in Europe,

creating the largest Nordic bank.

Equity Underwriting

CSFB continues to be a global force in equity underwrit-

ings, benefiting from our extensive local presence in

countries around the world. CSFB is the outright leader

In order to finance a large share repurchase, CalEnergy approached CSFB to

advise on financing options. The situation was complicated by the Asian market

crisis, since CalEnergy has significant holdings in the region. CSFB was able

to fully finance the share acquisition and the purchase of various project interests

through a $723 million global common stock offering, a $400 million revolving

credit facility, and a $350 million senior notes offering totaling $3.1 billion

— accomplishing an increase in the client’s stock price of 20% during the refi-

nancing/marketing period. In awarding the transaction one of its Project Finance

Deal of the Year citations, Institutional Investor noted that it was “the largest,

most successful offering to date by an independent power producer. ”

in global equity coordination and, complementing our lead-

ing position in U.S. IPOs, we became the number one

European house of 1997. We pride ourselves on providing

outstanding execution for clients. For example, our global

marketing strategy for the $535 million Petrobras

Preferred Shares offering was so successful that the

o ffering size was increased by nearly 40%. This story was

repeated many times for the more than 60 offerings we

lead-managed in 1997.

We are also the leading firm for IPOs in which our

clients spin off 100% of their ownership in subsidiary

companies. We believe we’ve earned this position through

our ingenuity in creating structures that best serve our

clients. As an example, CSFB’s management of the spin-

o ff of Ciba Specialty Chemicals Holding Inc. from its

parent Novartis was accomplished through a structure that

never before has been undertaken.

CSFB has also built an unparalleled record in

privatizations harnessing our strategic advisory capabilities

with our global distribution strength to deliver superior

results. (see box pages 14-15).

S t r o n g

U n d e r w r i t i n g

Support

Despite Vo l a t i l e

M a r k e t s

CSFB lead-managed the largest IPO of 1997 and the largest privatization in Australian

h i s t o r y. Based on CSFB’s strong presence in the Australian market and our outstanding

performance divesting the State of Vi c t o r i a ’s energy operations, CSFB was mandated by

The Commonwealth to act as joint global coordinator of a $10 billion IPO for Telstra,

the Australian state-owned telecommunications company. The highly successful off e r i n g

represented an important component of Australia’s continuing privatization strategy.

Largest

IPO

of 1997

Project Finance

We believe we have the premier project finance franchise

in the world. CSFB has been active in Project Finance for

25 years and has been in the vanguard of developing the

capital markets to finance projects. We are among a few

in offering a complete range of products to project finance

clients including advisory, equity and debt capital markets

and lending alternatives — an important benefit brought

by the consolidation of the former Credit Suisse with

the former CS First Boston.

Debt Underwriting and Corporate Lending

CSFB has been a global leader in debt for over a decade.

C S F B ’s debt capabilities offer an array of financing oppor-

tunities for clients ranging from investment grade to

non-investment grade public offerings, private placements

Petrozuata is the first strategic association in Ve n e z u e l a

formed to develop the country’s vast extra heavy oil

reserves. It is a joint venture between Conoco Inc. and

Maraven S.A., a wholly-owned subsidiary of the state-

owned oil company of Venezuela. CSFB lead-managed a

$1 billion bond financing and also acted as lead arranger

and administrative agent of a $450 million bank facility for

the project. The transaction was named Project Finance

Deal of the Year by six periodicals including I n s t i t u t i o n a l

I n v e s t o r, Corporate Finance and Project Finance.

L a r g e s t

L a t i n

A m e r i c a n

P r o j e c t

F i n a n c i n g

CSFB has played a leading role in the development, commencing in 1997, of a

non-dollar high-yield market. CSFB lead-managed the first ever sterling denominated high

yield offering for Castle Transmission International, a company formed by the television

and radio transmission tower businesses of the British Broadcasting Corporation. Having

already provided bank financing for the closing of the buyout, CSFB underwrote

£125 million of 9% senior notes which were ultimately sold to a broad cross-section of

European institutional investors in a syndication that was several times oversubscribed.

First Sterling Denominated

High Yield Off e r i n g

Adebayo Ogunlesi (middle) and Charles Chigas (standing) of project

finance with Francisco Bustillos, Corporate Finance Manager,

Petróleos de Venezuela S.A. (left) and Theodore Helms, International

Finance Manager, PDV America, Inc. (right).

13

of debt, asset-backed and lease financings, corporate

lending and acquisition finance. During the period 1990—

1997, CSFB ranked second in U.S. Corporate issues, and

third in Euro and global U.S. $ issues. Reflecting our truly

global presence, we are currently second in Emerging

Market issues.

Lending is a major differentiating advantage of

CSFB. As a result of the consolidation of the former

Credit Suisse with the former CS First Boston, we are

now able to commit the Firm’s capital towards large, lever-

aged financings in a short amount of time. During the last

decade, CSFB ranked second in “event deals” — bonds

over $750 million that are issued in conjunction with an

acquisition or other major corporate event. When J. C.

Penney launched an offer for Eckerd Corporation, CSFB

extended $3 billion of acquisition financing overnight.

CSFB subsequently lead-managed the $2.5 billion bond

o ffering, which represented the largest investment grade

o ffering of 1997.

CSFB lead-managed 46 High Yield offerings total-

ing $7.4 billion in 1997. CSFB has been in the forefront

of developing the market for high yield issuers in Europe.

We lead-managed the first ever Sterling High Yi e l d

Eurobond — £125 million for Castle Tr a n s m i s s i o n

International. We have also been active in the Asian mar-

ket and underwrote the $750 million offering for PT Pindo

Deli. In the U.S., CSFB has a diverse High Yield client

base that reflects our extensive industry expertise. Several

o fferings were noteworthy including our $300 million

underwriting for Fairchild Semiconductor and our $450

million offering for Winstar Communications.

During 1997 we established a Global Lease Finance

Group to advise clients on all aspects of big-

ticket tax leveraged lease transactions, as well as for the

arrangement of lease debt, debt and equity defeasance,

and other lease-related products such as synthetic leases.

We completed more than 20 lease finance transactions

in 1997.

Our Mission is Client Service

C S F B ’s goal is to offer a broad array of integrated finan-

cial solutions so that clients can attain their strategic

objectives. To this end, we have assembled many of the

w o r l d ’s preeminent product experts in M&A, Equity, and

When Team Rental Group acquired Budget Rent a Car, we advised on the acquisition,

handled the global common stock offering, and arranged seven separate but related

pieces of debt financing. CSFB provided $2 billion in new capital, a $225 million bridge

loan commitment, and managed a $186 million common stock offering. The Firm acted

as sole placement agent for $125 million in convertible subordinated notes, $165 million

in guaranteed senior notes, and $500 million in asset-backed notes. CSFB was also

sole agent for $900 million in asset-backed commercial paper, a $900 million secured

revolving liquidity facility, and a $300 million senior secured revolving credit facility. Finally,

CSFB provided $200 million in letters of credit. This integrated support made possible

Team Rental Group’s successful bid against significantly larger potential buyers and

earned Corporate Finance m a g a z i n e ’s M&A Deal of the Year award.

Premier Coordinator

of Complex

Global Tr a n s a c t i o n s

“Privatization can be a policy tool of immense power,” said

David Mulford, Chairman International for CSFB, “and pre-

cisely for that reason a government which wishes to

employ it must choose an advisor or global coordinator

with the greatest care. At Credit Suisse First Boston, we

have built a reputation in the field because we understand

two absolutely fundamental facts.

“First, to be judged a success, any privatization must

make sense in both financial and political terms. The

appropriate pricing of the asset has enormous political

implications: price it too low, and the government will

Privatization

and Advisory to

Governments

appear to have given away a national resource; price it too

high, and the performance after sale may be sluggish and

create a major financial and political disappointment. It is

an intricate process with dozens of delicate decisions.

“Second, the asset must be restructured for privati-

zation—to operate not as a government agency but as a

profitable private corporation. We’ve had wide experience

repositioning assets for a successful IPO or for sale to a

strategic investor.

“When it comes to a very large privatization, govern-

ments naturally want to entrust the responsibility to

In the past 12 months CSFB has built on its

unparalleled record in privatization equity off e r i n g s .

Completing the transactions required significant

resource commitment, local expertise, capital

strength and global distribution capability. It’s what

you would expect from the world’s first truly global

investment banking firm.

Debt. In order to be more available and more in tune with

clients’ needs, we have placed these investment banking

specialists on six continents and in the major financial

centers throughout the world. Few firms offer the range of

investment banking and lending products that CSFB off e r s

with the same global reach. Few offer the capital base

that we have.

C S F B ’s ability to manage highly complex, multi-

product, global transactions is our greatest strength. We

place a great emphasis on developing highly skilled

bankers who can engineer financial structures that enable

our clients to take advantage of the best market opportu-

nities available throughout the world. Our Team Rental

Group deal is a prime example of how well CSFB pulls

together resources in a multitude of product areas and

diverse markets to serve the interests of our clients. We

plan to continue to aggressively augment our base of

highly skilled experts so that we can continue to deliver a

high level of service to clients around the globe.

15

SELECTED 1 9 9 7 US DOLLARS

P R I VAT I Z ATIONS* IN MILLIONS

Telstra Corporation Ltd. Australia $ 9,997 Largest IPO of 1997. Privatized 33% of the company’s stock.

ENI S.p.A. Italy $ 7,795 Third stock offering in 18 months, totaling $18 billion and decreasing the government’s ownership to 51%.

Nordbanken Holding AB Sweden $ 1,046 Largest equity offering in banking sector in Scandinavia ever.

MATÁV Rt. Hungary $ 1,013 Sold 26% of the company in an IPO that was the largest ever offering from the region. First in the region to be NYSE listed.

Petroleo Brasileiro S.A. Brazil $ 535 The first bookbuilding transaction the Brazilian government has ever undertaken; the second largest Brazilian issue ever.

Telecom Italia Italy $ 14,000 The largest European privatization to date comprising $10.933 billion of equity, making this the largest European secondary equity offering ever. An additional $3 billion was a sale to strategic investors, totaling $14 billion.

* CSFB was joint global coordinator for each except for Telecom Italia, which was completed in 1997 by a group from BZW prior to its joining CSFB, and Petrobras, for which CSFB was sole global coordinator.

seasoned professionals who have done the largest and

most challenging deals in the world. We handled the IPO

of Te l s t r a , the Australian telecommunications giant, at

$9.997 billion, the largest of the year, as well as the

largest privatization and public offering in Australian history.

“Governments also want experience in privatizations

with far-reaching economic implications. We did all three

stock offerings of ENI, the Italian state-owned oil compa-

ny; the most recent offering in 1997 won I n t e r n a t i o n a l

Financing Review’s award for European Equity Issue of

the Ye a r. The Italian government raised almost $18 billion

in eighteen months and in the process transformed the

Italian equities market. Regulatory officials there had to

modernize the entire system of retail sales to facilitate

purchases by individual investors. In late 1997, we com-

pleted strategic advisory for the Hungarian government

and the subsequent initial public offering for telecommuni-

cations company MAT Á V. MATÁV became the first Central

European company to be listed on the NYSE and 92% of

the institutional investor base was international.”

1997 was a landmark year for the Fixed Income division.

Our revenue of $3,379 million, a 43% increase from

1996, positions us as one of the most profitable fixed

income divisions in the world. Our success in 1997 stems

from several basic strengths: our diversified business,

which makes possible a substantial appetite for risk; our

balance sheet strength; our premier skills in structuring;

and our global coverage and organization by business

l i n e s .

The biggest growth in earnings came from two rela-

tively new business groups, Emerging Markets Group and

Principal Transactions Group. In addition, our reconfigured

Foreign Exchange business had an excellent year and is

considered among the top handful of Foreign Exchange

businesses in the world.

Government and Corporate

Fixed Income Securities

Global Foreign Exchange

Emerging Markets

New Issues Underwriting

Asset Backed Securities

Leveraged Finance

Mortgage Securities

Real Estate Finance

Money Markets

Bank Notes

Precious Metals

Fixed Income Research

Marc Hotimsky

Managing Director

Fixed Income

(Dollars in Millions) 1 9 9 7 1 9 9 6 % CHANGE

Revenue $ 3,379 $2,356 43%

Employees 1,760 1,535 15%

Average BIS Capital $ 2,441 n/a n/a

Trading Presence

Across Developed

Countries and

Emerging Markets

28markets

FIXED INCOME

17

PT Pindo Deli Pulp and Paper Mills is one of the largest

vertically integrated pulp and paper manufacturers in

Indonesia. To pay down existing bank debt and extend the

c o m p a n y ’s debt maturity profile, Pindo Deli asked CSFB

to organize a $400 million issue of senior notes. After an

extensive roadshow on three continents, overwhelming

demand enabled the company to increase the deal size to

$750 million. Roughly 100 separate institutional investor

portfolios participated in the offering, significantly expand-

ing the company’s investor base.

Our Emerging Markets Group has experienced

remarkable growth in the last several years. As recently as

1992, our only emerging market presence was in Russia.

To d a y, we participate in 28 geographic markets worldwide,

with a physical presence in 15 centers, in particular,

M o s c o w, Wa r s a w, Sao Paulo, Seoul, Shanghai and Cairo.

That presence is especially effective, I am convinced,

because of our heavy reliance upon local professionals

thoroughly familiar with the markets and business culture

they cover. We believe it to be one of the most successful

businesses of its kind in operation today, and we expect

its expansion to continue.

Among award-winning accomplishments in Emerging

Markets last year, I would cite the Group’s financing trans-

actions for Pindo Deli Finance in Indonesia ($750 million

multi-tranche, awarded Asian Bond of the Year by I F R) ,

the Russian Federation seven-year DM 2 billion Eurobond

issue, the $500 million, three-year issue for the City of

Moscow and the RUR 700 billion one- and one half-year

issues for the Republic of Ta r t a r s t a n .

We have also seen significant contributions from the

Principal Transactions Group, which provides creative

solutions for complex real estate transactions. PTG com-

pleted more than $12 billion in U.S. real estate financings

in 18 months, ranking PTG as the leading U.S. real

estate investment banking group. In 1997, PTG success-

fully securitized over $4 billion of commercial mortgage

securities. PTG targets untapped niches where there is a

significant shortage of capital for deals due to past prob-

lems, deals that require analytic complexity, deals that are

d i fficult to understand or deals that are out of favor. This

highly profitable group is expanding its global presence.

Largest Asian

High Yield Off e r i n g

Trading floor, Hong Kong, as viewed through an aquarium.

The words come from Institutional Investor’s description of the $2.5 billion bond financing

CSFB arranged for J. C. Penney, to refinance its acquisition of the Eckerd drugstore

chain (on which the Firm also advised). In spite of adverse market concerns prompted by

a Federal Reserve Board rate increase, the offering was oversubscribed by 1.5 times

after a five day roadshow. Other big issuers immediately found the confidence to go to

market. As J. C. Penney’s treasurer noted, “The deal helped change the tone in the

market from night to day. ”

“Sale of

the

S e a s o n ”

In 1997 PTG purchased a $625 million Swedish property

portfolio, just over $1 billion in U.K. properties, and has

funded more than $500 million in mortgage bond financ-

ings in Latin America. PTG has established a vehicle for

purchasing distressed real estate portfolios in Japan and

is co-sponsoring a company for real estate investments in

the former Soviet Union and East and Central Europe with

the Zell Group.

1997 was a year of great structural change for

CSFB and nowhere in Fixed Income was this more appar-

ent than Foreign Exchange. In 1997 we retooled the FX

operations of the former Credit Suisse and the former

CS First Boston into a single business. Our first task was

to reduce the number of trading operations previously run

by the group and focus on five key international centers.

At the same time, we globalized management and linked

the trading centers to capture information and take advan-

tage of economies of scale in spot trading and market

making. This strategy was aligned with a strong research

and risk management focus that aims at offering clients

value in a variety of markets. In the future, growth

in Foreign Exchange will be led by product innovation,

expansion in emerging currency, and the provision of

a seamless link between FX and all products of the Firm

including Equities and Investment Banking.

Our Debt Capital Markets Group and corporate

secondary trading business saw its share of the $1,778

billion in worldwide bond issuance. In particular, we contin-

ued our efforts to develop and structure creative bond

financings for which we have become well known. This is

exemplified by our offering for J. C. Penney, which was

cited by Institutional Investor as one of 1997’s five “Most

Noteworthy” Deals of the Ye a r.

S e p a r a t e l y, our historical leadership in structured

financings was highlighted by the Triangle Funding Limited

deal, a $5 billion collateralized loan obligation for CSFB’s

loan portfolio. We have continued to expand our high yield

underwriting presence by providing a leadership role in

developing the local currency European high yield market,

as well as increasing our new issue underwriting volumes

globally by 84% over 1996.

In the Swiss capital markets, once again by a very

wide margin, CSFB was the leading institution. This is the

seventh straight year we have held this position.

Three individual parts of CSFB—the London fixed income unit, the banking unit at

CSFB (London), and Credit Suisse Financial Products—combined to create a

$1 billion financing for the Region of Sicily. It was the largest capital markets financing

ever undertaken for a local authority outside North America, and the market’s largest

unrated transaction of 1997. Subsequent to this transaction, the rates achievable by

Italian regions in general improved significantly from their historic levels.

First International

Financing for

Local Authority

CSFB has maintained a presence in Russia for five years, one that now numbers

over 300 people, and is one of the largest foreign bank primary dealers of government

bonds. The Firm completed a $1.2 billion offering for the Russian Federation in the

DM market, the largest in this market by a transition economy. CSFB also lead-managed

a RUR 700 billion bond issue for the Republic of Tartarstan. This was the first Rouble

public bond issue listed and traded on MICEX by a Russian Republic.

Landmark

Russian

Bond

O ff e r i n g s

19

Two eventful transactions were for the Republic of Italy

for SFr. 1,000 million (voted SFr deal of the year by IFR)

and the Citibank Credit Card Master Trust, the first fixed

rate Swiss Franc credit card deal, of SFr 1,064 million.

Our global government bond business has a pres-

ence in most of the leading government debt markets

worldwide. We have sustained our select position as one

of the few firms that provide investors with twenty-four

hour trading in the liquid and global market for govern-

ment bonds and related products. The group is organized

and managed on a global basis, with a fully dedicated

sales force that combines research, execution capabilities,

and ideas to serve investors worldwide.

CSFB has for some time been a leader in electronic

trading, which represents the future in marketing com-

moditized products to customers. We have continued to

expand our current family of electronic products, which

include GovTr a d eS M and CPTr a d eS M, and to encompass

International RepoTr a d eS M, currently doing $3 billion of

transactions per day. We have also introduced a family of

Prime products to execute and clear multi-product trans-

actions, and we are the founding partner of Tr a d e We bS M,

The Principal Transactions Group successfully launched and priced $1.4 billion in

commercial mortgage pass-through certificates—the second largest single commercial

mortgage-backed securities transaction ever. PTG originated all of the approximately

165 commercial mortgage-backed whole loans in the transaction. The senior bonds were

rated AAA by all three major rating agencies. During the initial offering, CSFB sold

the transaction at new issue pricing, and set new market levels for the single-B and

unrated tranches of this transaction.

Major Commercial Mortgage-Backed

Securities Tr a n s a c t i o n

Two eventful transactions were for the Republic of Italy

for SFr 1,000 million (voted SFr deal of the year by I FR)

and the Citibank Credit Card Master Trust, the first fixed

rate Swiss Franc credit card deal, of SFr 1,064 million.

Our global government bond business has a pres-

ence in most of the leading government debt markets

worldwide. We have sustained our select position as one

of the few firms that provide investors with twenty-four

hour trading in the liquid and global market for govern-

ment bonds and related products. The group is organized

and managed on a global basis, with a fully dedicated

sales force that combines research, execution capabilities,

and ideas to serve investors worldwide.

CSFB has for some time been a leader in electronic

trading, which represents the future in marketing com-

moditized products to customers. We have continued to

expand our current family of electronic products, which

include GovTr a d eS M and CPTr a d eS M, and to encompass

International RepoTr a d eS M, currently doing $3 billion of

transactions per day. We have also introduced a family of

Prime products to execute and clear multi-product trans-

actions, and we are the founding partner of Tr a d e We bS M,

which allows customers to transact in cash U.S. govern-

ment securities with multiple dealers.

During 1997, we brought all fixed income research

into a single unit under one global head. Our research

already enjoys a strong reputation, and this change

improves further the service we provide to our customers

and to our own trading desks. The economists (who serve

the entire Firm) were brought under the same manage-

ment structure, enhancing our ability to link global macro

themes with profitable trade recommendations. Among

many achievements in 1997, our researchers laid the

groundwork for the structural changes (towards credit and

duration plays) now being implemented in both our sales

and trading operations ahead of EMU.

The future is always full of uncertainties and new

challenges. The reshaping of the European financial mar-

ket, the expansion of activities in emerging countries, and

the explosion of high yield issuances worldwide are clear

challenges in 1998 and beyond for all global players.

I believe the broad base of our business, its global scope

and capital support give us the strength and the edge to

maintain and even expand our leadership and position in

the Fixed Income markets for many years to come.

E Q U I T Y

Brady W. Dougan

Managing Director

E q u i t y

R e s e a r c h

S a l e s

Tr a d i n g

U n d e r w r i t i n g

Equity Finance/Prime Brokerage

C o n v e r t i b l e s / Wa r r a n t s

D e r i v a t i v e s

Proprietary Tr a d i n g

Private Corporate Equity

Credit Suisse First Boston continued to demonstrate in a

highly profitable 1997 that it belongs among the elite

equity firms to merit the title global super-bulge bracket.

The global footprint of our division—now more than

1,000 people strong worldwide—is extensive. We are

alone in having three major home markets—the U.S., the

U.K., and Switzerland. We have more than 200 traders

spanning the developed markets, the emerging markets,

and cash and derivative products. They trade 5,000

stocks globally, providing liquidity for customers, but also

developing and executing proprietary ideas for CSFB’s

own account.

We have a sales force in excess of 300 people talk-

ing to 2,000 institutional clients globally about research,

secondary ideas and primary issues. The breadth of our

distribution available to our global account base, com-

posed of institutional and individual investors, is extensive.

(Dollars in Millions) 1 9 9 7 1 9 9 6 % CHANGE

Revenue $1,212 $ 834 45%

Employees 1,089 804 35%

Average BIS Capital $ 462 n/a n/a

European

IPO

House(2)

#1Coordinator of

Globally

Distributed

Equity Issues

in 1997(1)

( 1 ) Securities Data Company.

( 2 ) B o n d w a r e .

21

In 1997 CSFB announced the acquisition of the

European and selected Asian equity, equity capital

markets and mergers and acquisitions advisory

businesses of BZW from Barclays. These businesses

have established market-leading positions in a

number of key areas. BZW M&A/Advisory has

advised on $58.5 billion worth of transactions since

1992. The Equity Capital Markets unit has acted as

bookrunner or global coordinator to $19.2 billion of

equity transactions globally during the same period.

These primary divisions are supported by a

secondary division widely acknowledged as one

of the market leaders in equity sales, trading, and

research, with a presence in all principal financial

centers worldwide, as well as a highly skilled

derivatives group producing tailored products for

clients globally.

With this acquisition, CSFB now ranks second

in U.K. equity trading and fifth in European equity

research, up from twentieth.

Major Acquisition

Enhances

Equity & Advisory

C a p a b i l i t i e s

CSFB underscored its commitment to equity

research in the last two years, increasing the size of its

analytical staff and its companies under coverage globally

from 1,500 to 4,000. We have significantly expanded our

coverage in areas such as healthcare, technology, busi-

ness and educational services, real estate and lodging,

natural resources, and Canadian research, while remaining

extremely active in the industrial sector. Our EVA™ p e r-

spective has provided a dynamic framework for equity

research and in the process has become the industry

synonym for the most effective methodology. For the third

consecutive year our focus list of 32 companies outper-

formed the total return of the S&P 500; our three-year

edge over the S&P was 162% to 125%.

We have organized three functions—trading, sales,

and research—across business lines around the world for

optimum effectiveness and mutual reinforcement. More-

o v e r, in all these areas we have maintained the continuity

of key personnel that is the hallmark of a global leader.

CSFB underscored its commitment to equity

research in the last two years, increasing the size of its

analytical staff and its companies under coverage globally

from 1,500 to 4,000. We have significantly expanded our

coverage in areas such as health care, technology, busi-

ness and educational services, real estate and lodging,

natural resources, and Canadian research, while remaining

extremely active in the industrial sector. Our EVA™ p e r-

spective has provided a dynamic framework for equity

research and in the process has become the industry

synonym for the most effective methodology. For the third

consecutive year our focus list of 32 companies outper-

formed the total return of the S&P 500; our three-year

edge over the S&P was 162% to 125%.

We have organized three functions—trading, sales,

and research—across business lines around the world for

optimum effectiveness and mutual reinforcement. More-

o v e r, in all these areas we have maintained the continuity

of key personnel that is the hallmark of a global leader.

These combined strengths have made us the fourth

leading global IPO firm, and the outright global coordinator

leader with more than $39 billion in transactions lead-

managed in 1997 as well as the number one European

IPO House. No institution has executed more secondary

IPOs in the last four years than CSFB, as our clients

employ the equity markets (rather than the M&A markets)

to sell their positions in companies. We are also a leader

in the convertible and synthetic new issue markets.

We have become the preeminent lead manager in

privatizations, as demonstrated most recently by the

Dollar Thrifty Automotive Group’s search for a large fleet financing led to a complex

equity/debt transaction that totaled $2.8 billion. In addition CSFB sold Chrysler’s

ownership in Dollar Thrifty, executing an initial public offering of $484 million in common

stock and completing an unusually complicated and innovative structure including

medium-term notes, commercial paper, and liquidity and revolving credit facilities in only

three months.

First 100% IPO of

Rental Car Company

On behalf of Zell Chilmark Partners, CSFB concluded a marketed offering of

15.6 million shares of common stock of the CVS Corporation, one of the leading chain

drugstores in the U.S. The offering, which was confined to a three-day period, was

more than four times oversubscribed. The stock price rose from $51.58 to $54.00

during the period, and resulted in proceeds of $855.5 million for CVS.

E x p e r t

E x e c u t i o n o f

M a r k e t e d

O ff e r i n g

R a i s e s

Stock Price

Ciba Specialty Chemicals Holding Inc. was distributed to shareholders of its parent,

Novartis. The underlying structure of this $5.5 billion transaction—incorporating the

simultaneous par value rights issue, global offering, rights recycling, and hard under-

writing—had never before been undertaken. The deal created the world’s leading

specialty chemicals company and earned a Corporate Finance magazine award as

Demerger of the Ye a r.

E u r o p e ’s

L a r g e s t

S p i n - O ff

CSFB lead-managed the $535 million global offering of preferred shares for

Petrobras, the huge Brazilian integrated oil and gas company. A strong marketing eff o r t

increased the original offering size from 1.35 billion to 2.0 billion shares and broadened

P e t r o b r a s ’s base of international shareholders, in particular, dedicated oil and gas

investors and large U.S. investors.

G l o b a l

M a r k e t i n g

I n c r e a s e s

Tr a n s a c t i o n

S i z e

23

enormous transactions for Telstra and the 1997 phase

of ENI, both described on page 15. CSFB managed the

$723 million common stock offering for the CalEnergy

refinancing, described on page 11, and the $484 million

IPO for Dollar Thrifty Automotive Group—the first 100%

initial public offering of a rental car company. We also

managed the CVS share offering of $855 million and the

M ATÁV privatization IPO at $1,013 million for the govern-

ment of Hungary.

Our strength and market coverage was broadened

by our acquisition of the European and selected Asian

e q u i t y, equity capital markets and mergers and acquisi-

tions advisory businesses of BZW from Barclays

(discussed on page 21), and through the opening of a full

service Canadian equity operation in mid-1997. Similarly,

our joint equity distribution alliance with Charles Schwab

a ffords our client equity issuers with access to an exten-

sive national network of active retail customers, comple-

menting our leading private client services group that

covers over 2,000 sophisticated individual investors and

small institutions.

Our relationship with Credit Suisse Financial

Products has been especially fruitful in the area of equity

derivatives. This business combines CSFP’s balance sheet

and OTC structuring capability with CSFB’s command of

equity derivatives and distribution expertise. The global

integration of all these capabilities is unmatched by any of

our competitors.

The global super-bulge bracket of equity firms is

rapidly taking shape. It will be small and enormously

powerful, with worldwide coverage, research that sets the

standard for excellence and leadership in every product

c a t e g o r y. CSFB already has a solid claim on membership.

It is not a claim we intend to relinquish.

Credit Suisse First Boston acted as joint global coordinator in the largest equity

o ffering from Central Europe by raising $1,013 million in the privatization IPO of MAT Á V,

H u n g a r y ’s main telecommunications services provider. The transaction was completed

within the original price range and in full size, despite a 22% decline in the Hungarian

stock market in the four days ahead of pricing and a 13% decline on the day of

pricing. I F R magazine awarded the MATÁV deal an Equity Issue of the Year for East

Europe/Middle East/Africa.

First Central

European Company

Listed on NYSE

Christopher Goekjian

Managing Director

Chief Executive Off i c e r

Credit Suisse

Financial Products

Interest Rate ProductsSwaps and options in over 30 currencies

Equity ProductsIndex, basket and single stockswaps and options

Foreign Exchange ProductsLonger term swaps and other FX risk management products

Commodity ProductsLonger term swaps and opt ions on precious metals, oil and other energy

Asset Trading and CreditD e r i v a t i v e sIncluding assets and derivativesfrom emerging and developedm a r k e t s

1997 proved to be another record year for Credit Suisse

Financial Products. Net trading revenue for the year was

U . S. $1,167 million, a 23% increase over 1996, resulting

from increased client and proprietary activities. Global

market conditions were benign until the fourth quarter

when the Asian crisis broke. CSFP continued to be at the

forefront of the derivatives industry, and used its leader-

ship in credit derivatives to develop and then make publicly

available an analytical framework for measuring and man-

aging credit risk, CR E D I TRI S K+.

During 1997 interest rate derivatives continued to

be the largest contributor to trading revenues. This area

continued to grow due to higher turnover and proprietary

trading profits in the vanilla products. European swap

markets were very active, ahead of EMU, and an increas-

ing number of CSFP’s clients intensified their interest risk

(Dollars in Millions) 1 9 9 7 1 9 9 6 % CHANGE

Revenue $1,167 $ 950 23%

Employees (front office) 281 241 17%

Average BIS Capital $ 885 n/a n/a

#1 #1Equity

Derivatives(1)

Credit

Derivatives(2)

CREDIT SUISSEF I N A N C I A LP R O D U C T S

( 1 ) World Equity voted CSFP

“Derivatives House of the Year”

in January 1998.

( 2 ) IFR voted CSFP “Credit

Derivatives House of the Year”

in December 1997.

25

management activities. In Japan, the continuing low Ye n

interest rate environment enabled CSFP to execute many

innovative yield enhancement structures. The generally low

level of G7 interest rates has led to increased investor

interest in less developed swap markets such as the

South African Rand where CSFP has developed a domi-

nant presence in the market.

In the first half of the year, the equity business built

on the successes of 1996 and showed very strong

results, which was somewhat offset by a more diff i c u l t

second half. There is clearly a growing equity culture in

Europe which has led to a strong demand for equity-linked

retail products, such as capital protected notes. CSFP

continued to be one of the major providers of these prod-

ucts during 1997. Recurring fears of a potential equity

market correction led to healthy client hedging business,

especially in Europe and the U.S. In Japan several of our

clients hedged their core equity holdings. 1997 again saw

a number of very successful Corporate Finance-type

equity derivative deals that were executed in close cooper-

ation with the Equity Capital Markets group, such as the

Leveraged Executive Asset Plan (“LEAP”) for Ciba

Specialty Chemicals which accompanied the company’s

initial public offering. Additionally, CSFP significantly

In early 1997 many European investors sought access to the exceptional returns

available in the global equity markets without exposing themselves to the downside risks

of equity investing. To meet this objective, together with Credit Suisse First Boston, we

structured and executed several “synthetic” convertible bonds that provide the upside of

equity with the principal protection of a bond. The synthetic convertibles were issued by

European and U.S. corporates, including Nestlé, ABB and Texaco. These issuers immedi-

ately hedged out the equity component of the bonds via an OTC equity component; the

corporates obtained funding at rates substantially below market cost, while investors

gained access to high-quality equity investments that match their desired exposure profile.

“CSFP has been at

the forefront of the

booming synthetic

convertible business…

it goes from strength

to strength.”*

* I F R’s World Equ ity

J a n u a r y, 1998

increased its activity of providing clients with derivative

structures that facilitate share repurchases, divestitures

and acquisitions.

In foreign exchange derivatives, 1997 marked the

continuation of trends established at the end of 1996, as

the USD appreciated roughly 11.5% versus core

European currencies and 13% versus the Japanese Ye n .

These moves were matched by the resurgence of implied

volatilities in the USD currency pairs. The opposite was

true for European crosses where, in anticipation of the

single European currency to be implemented in 1999,

EMS currency volatilities fell to all-time lows. CSFP’s

close working relationship with the Global Foreign

Exchange Group enabled it to provide its clients with a full

array of FX products. In this environment, CSFP focused

on creating interesting investment opportunities and

attractive long-dated hedging strategies.

C S F P ’s commodities business continued to improve,

and as gold continued its long-term decline, many produc-

ers looked to hedge their production. CSFP developed

a number of long-dated hedging products to aid gold

producers and, consequently, significantly increased its

client activity during 1997.

Credit derivative trading and risk management was a

major focus in 1997. The start of the year saw the inte-

gration of the Fixed Income Division’s Asset Tr a d i n g

business with CSFP’s credit derivatives business. In trad-

ing, CSFP now turns over in excess of U.S.$2 billion

notional a month in credit derivatives, making it one of the

two dominant firms in this segment of the derivatives mar-

ket. Expertise gained in this market helped the Group to

arrange the largest CBO/CLO of 1997 — CSFB’s

U.S.$5 billion Triangle transaction. In risk management,

CSFP has developed an analytical model to help manage

its credit exposure. The model’s use has subsequently

been extended on a Group-wide basis and was released

to the public as CR E D I TRI S K+ in October. The principles

behind CR E D I TRI S K+ have been endorsed by Moody’s

Investor Services, Standard and Poors, IBCA, JBRI and

three of the major accounting firms. CR E D I TRI S K+ r e p r e-

sents a significant contribution to the ongoing debate on

the subject.

CR E D I TRI S K+

In October 1997, we released our internal credit risk management framework,

CR E D I TRI S K+, to the public, after extensive internal testing and use. We wanted to pro-

mote discussion about the assessment and management of credit default risk within

a portfolio of different credits. At the same time, we sought to encourage regulators to

consider a more flexible, model-based approach to the calculation of regulatory capital

for credit default risk. CR E D I TRI S K+ received a warm reception from regulators, manage-

ment consultants, accountancy firms, and major academics and generated interest from

all sectors of the financial world, with up to 3,000 hits a week on our website. Wi t h

growing investor interest in what had previously been thought to be an unmanageable

risk, we fully expect to be at the forefront of the debate on the regulatory treatment

of credit derivatives during 1998.

increased its activity of providing clients with derivative

structures that facilitate share repurchases, divestitures

and acquisitions.

In foreign exchange derivatives, 1997 marked the

continuation of trends established at the end of 1996, as

the U.S.$ appreciated roughly 11.5% versus core

European currencies and 13% versus the Japanese Ye n .

These moves were matched by the resurgence of implied

volatilities in the U.S.$ currency pairs. The opposite was

true for European crosses where, in anticipation of the

single European currency to be implemented in 1999,

EMS currency volatilities fell to all-time lows. CSFP’s

close working relationship with the Global Foreign

Exchange Group enabled it to provide its clients with a full

array of FX products. In this environment, CSFP focused

on creating interesting investment opportunities and

attractive long-dated hedging strategies.

C S F P ’s commodities business continued to improve,

and as gold continued its long-term decline, many produc-

ers looked to hedge their production. CSFP developed

a number of long-dated hedging products to aid gold

producers and, consequently, significantly increased its

client activity during 1997.

Credit derivative trading and risk management was a

major focus in 1997. The start of the year saw the inte-

gration of the Fixed Income Division’s Asset Tr a d i n g

business with CSFP’s credit derivatives business. In trad-

ing, CSFP now turns over in excess of U.S. $2 billion

notional a month in credit derivatives, making it one of the

two dominant firms in this segment of the derivatives mar-

ket. Expertise gained in this market helped the Group to

arrange the largest CBO/CLO of 1997 — CSFB’s

U.S. $5 billion Triangle transaction. In risk management,

CSFP has developed an analytical model to help manage

its credit exposure. The model’s use has subsequently

been extended on a Group-wide basis and was released

to the public as CR E D I TRI S K+ in October. The principles

behind CR E D I TRI S K+ have been endorsed by Moody’s

Investor Services, Standard and Poors, IBCA, JBRI and

three of the major accounting firms. CR E D I TRI S K+ r e p r e-

sents a significant contribution to the ongoing debate on

the subject.

27In April 1997 CSFP opened a Tokyo branch,

making it the first bank specializing in risk management

products to open a branch in Japan. The branch will allow

CSFP to provide better service to the Group’s clients in

the Japanese market. This was followed in July by the

opening of the Hong Kong representative office.

Overall, 1997 represented another record year for

CSFP and the company’s position in the industry was

recognized by a number of awards. I n t e r n a t i o n a l

Financing Review acclaimed CSFP Credit Derivatives

House of the Ye a r, and the company also was awarded

Derivatives House of the Year by World Equity and

Best Foreign Dealer by Swaps Monitor. The successes of

1997 against a background of sometimes difficult market

conditions show the strength in depth of CSFP’s trading,

marketing and support functions, all of which are put at

the disposal of CSFB’s global client base.

Credit Suisse Financial Products

Relationship between Daily Revenue

and VAR Estimate

Specialists in

Risk Management

P R I VATE EQUITY

Generating Superior Returns

Experienced investors

Signi ficant commitments of capital

Institutional priority

Compelling incentive systems

Integrated origination eff o r t

Independent execution and commitment process

David A. DeNunzio

Managing Director

Chief Executive Off i c e r

Private Equity

1997 was a year of significant accomplishment for Private

E q u i t y. We redefined our business on a global basis and

added significantly to our staff. At the same time, we

harvested several investments at attractive rates of return,

while investing over $130 million in new situations.

We now have three investment pools to address

global private equity opportunities sourced by CSFB,

Credit Suisse, and Credit Suisse Group. Representing

approximately $1.5 billion in assets under management,

they are focused on the U.S. and Canada, Russia and the

Ukraine, and the rest of the world (“International”). These

funds, when fully subscribed, will aggregate a significant

commitment of CSG capital with that of outside investors

to make direct investments in growth opportunities,

corporate partnerships, recapitalizations, buyouts, and

other types of private equity investments.

1 9 9 7 1 9 9 6 % CHANGE

Employees 43 16 169%

A Global Network

of Professionals

Creates the

Transaction

Opportunities for

Private Equity

29

Our professionals, based in the regional centers of

London, New York, Moscow, and Hong Kong, respond

to the flow of opportunities seen by the global network of

corporate and investment bankers, private bankers and

equity research analysts, among other CSG personnel.

1997 saw increased activity, both among multinational

corporations focusing more intently on core businesses

and among owner-managers who may lack a financial

partner—especially one with industry expertise.

As a separate core division of the Firm, we benefit

from the deal flow of CSFB, but we are afforded indepen-

dent governance and investment decision making by

Credit Suisse Group. Our Division is chaired by Jack

H e n n e s s y, who is also a member of the CSG board and

was formerly CEO of CS First Boston.

One significant investment came with Cable Plus,

a leading provider of integrated private cable, local and

long distance telecommunications services and Internet

access to residential apartment communities in the United

States. Cable Plus’s primary shareholder is Eagle River,

LLC, the investment vehicle of Craig O. McCaw. The

investment enabled the company to aggressively pursue

capital expenditures and acquisition opportunities, and to

partner with a strong financial player. CSFB’s Media and

Telecommunications Group had a long relationship with

Cable Plus and introduced Private Equity when the com-

pany needed expansion capital. Private Equity made a

minority investment in 1997 by purchasing newly issued

preferred stock, assuming a seat on the Board of

Directors as part of the transaction.

Alec D’Janoeff and Heidi Rauber of Private Equity review businessplans with Alfonso Durán Pich, Managing Director of Frida.

Early in 1997 Credit Suisse First Boston International

Equity Partners, L.P. purchased 97.6% of Frida

Alimentaria, S.A., Spain’s leading manufacturer and dis-

tributor of frozen dough, which supplies premium pastry

and bread to patisseries and bakers throughout the coun-

t r y. The investment was accompanied by approximately

$27 million of bank credit provided by Credit Suisse First

Boston. Frida was especially attractive because of its

sophisticated management team, strong marketing and

financial practices, and well-articulated strategy.

Management purchased the remaining 2.4% of the

company and, under an incentive plan put in place with

the investment, may increase ownership in the company

if Frida performs well—which it continued to do

throughout 1997.

Private Equity Invests

in Leading

Spanish Company

S U P P O R TS E R V I C E S

Stephen A. M. Hester

Managing Director

Chief Financial Off i c e r

The support departments at CSFB face unique chal-

lenges. The success of our response will, more than ever

before, affect the Firm’s future. Our challenges are driven

by the intensity and complexity of changing business

needs—to support and control growth, raise productivity,

and modernize and integrate our infrastructure.

Today we are facing a formidable set of problems,

nearly all related to the pace of change in our industry.

They include the emergence of the EMU, the widely

publicized adjustments associated with the year 2000,

even broader adaptations to changing technology, the

development of an appropriate and secure corporate data

warehouse, the establishment of global compliance stan-

dards, and the improved management of our assets in a

productive and innovative fashion. In addition, the acquisi-

1 9 9 7 1 9 9 6 % CHANGE

Employees 6,656 6,183 8%

Employees

Support the

Firm’s Growth and

Global Reach

31

tion of the BZW businesses means that our operations

arm in London must adapt to handle the integration of the

substantial volume of BZW equity business. On page 33

are thoughts by some of my colleagues on managing this

change. On page 45 the importance of the work of our

market and credit risk management departments is set out

in more detail.

CSFB has generated record business volumes for

several consecutive years. But more than volume, the

Firm has added value through greater sophistication, com-

plexity and geographic reach. This has resulted in far

greater demands placed upon our Information Te c h n o l o g y

and operations areas (processing more transactions),

and upon the various reporting and monitoring functions

which examine risk, finance, tax, compliance, and other

regulatory issues.

Market Risk

M a n a g e m e n t

Corporate Services

O p e r a t i o n s

Legal and

C o m p l i a n c e

F i n a n c e

R e g i o n a l

O v e r s i g h t

Credit

Risk Management

Tr e a s u r y, Tax

and Insurance

Internal Audit

Human Resources

New Business and

Strategic Planning

I n f o r m a t i o n

Te c h n o l o g y

M o r e o v e r, the consolidation of the former Credit

Suisse and the former CS First Boston in 1997 meant

that our structural complexity sharply increased in terms of

product, geography, and regulatory environment. In other

words, our global scope is an enhanced business advan-

tage carrying enhanced support responsibilities. Complex

global structuring issues require additional attention from

our tax and legal professionals. Finance and risk functions

now measure and monitor activity and help allocate

resources in an even larger arena. Tr e a s u r y ’s funding

responsibilities are that much more complicated.

To say that our institution is heavily dependent upon

advanced—and constantly advancing—technology is

something of an understatement. We must be able to

communicate with one another, as well as with our clients

and our suppliers, and to process, store, retrieve, and

convert information, everywhere in the world, any time of

day or night, through any local hardware and software

system, smoothly and instantly, while at the same time

preserving the secrecy of confidential information and

ensuring data protection. Like all the other support func-

tions, this is a capability without which the numerous

award-winning transactions that fill this Review would be

u n t h i n k a b l e .

When building a support system to meet these

needs, it is not enough to establish a single, massively

e ffective monolith. A global investment bank has a wide

variety of needs by business and location. Support must

be tailored to meet the requirements of different units and

d i fferent cultures; it must be stable enough to stand up to

mounting demands and flexible enough to adapt to a

swiftly changing environment. All of this requires an

ongoing program of evaluating the effectiveness of our

service delivery and the examination of alternatives that

will improve that delivery—such as outsourcing in the

processing area.

There are numerous requirements for keeping the

support capability at peak eff i c i e n c y. None is more impor-

tant than the people who make the systems work. Our

management team is stretched but rising to the challenge.

In the support areas, as much as the rest of the Firm,

CSFB presents uniquely absorbing and rewarding profes-

sional challenges.

33

“The support departments face unique challenges. The success of our response to

these will more than ever before affect the Firm’s future. Our challenges are driven by

the intensity and complexity of changing business needs—to support and control growth,

raise productivity and modernize and integrate our infrastructure.”

Stephen A. M. Hester, Chief Financial Off i c e r

“If you don’t like change, then you don’t work in technology. Layer onto that the complexities

and demands of a global investment bank, a business growing by acquisition, the constantly

evolving mix of applications, the challenges of the ‘Year 2000’ problem, the preparation

for EMU compliance...and you have the world’s best technology job. In 1997 alone we

completed the global rollout of voice mail, improved our global e-mail systems, implemented

Windows NT in our front office, and handled more transaction volume, from more locations,

than ever before.” Frank J. Fanzilli, Jr. , Chief Information Off i c e r

“From a legal and compliance standpoint, being a truly global investment bank that

is also an acknowledged leader in the emerging markets, gives us the opportunity to

shape global standards for many documentation and compliance practices. These are

standards that tend to spread ‘best practices’ around the world. The benefits to investors

are better documentation and disclosure. The benefit to issuers is greater access to

investors around the world.”

Stephen R. Greene, General Counsel

“The Firm more than doubled its size in 1997 through merger and acquisition. This

presented significant challenges to Human Resources to create a global data base,

integrate multiple compensation and titling systems, and harmonize benefits so that our

employees throughout the world are assured of the Firm’s commitment to them and

their careers at CSFB.”

David C. O’Leary, Head of Human Resources

“From a facilities standpoint, in the last 18 months we have relocated over 4,000

people into a completely renovated building in New York City. 1998 will be more of the

same, with major moves underway in Tokyo, Moscow, and London. The number of

people we have already moved in London in 1998 is more than the size of our entire

work force just a few years ago.”

Luther L. Te r r y, Jr. , Head of Corporate Services

T h e

M a n a g e m e n t

of Change:

S o m e

P e r s p e c t i v e s

CREDIT SUISSE G R O U P

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

dominant trends emerging in the world’s financial services

market—asset gathering and securitization or disinterme-

d i a t i o n .

CSG operates a decentralized management structure

based on five business units, each geared to the require-

ments of specific customer groups and markets:

Credit Suisse is a leading bank in Swiss domestic

business, serving corporate and individual clients through

a multichannel strategy and an efficient branch network

covering all major locations.

Credit Suisse Private Banking is one of the world’s

leading private banking operations. It has a strong market

presence in Switzerland and around the globe and off e r s

comprehensive investment advisory service and solutions

tailored to the needs of private clients.

CSFB is a leading global investment banking firm,

providing comprehensive advisory, capital raising, 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 needs and requirements

of institutional investors.

The Winterthur Group is one of the leading insurance

companies in Europe and one of the largest international

insurance groups operating worldwide. It offers private and

corporate customers tailor-made insurance and pension

solutions at the local and international levels.

The Credit Suisse Group is an institution unique

in today’s global financial markets. Its five core businesses

give a combination of strength and depth. While head-

quartered in Zurich, CSG’s international presence provides

thorough market coverage, from major centers to emerg-

ing markets.

“Credit Suisse Group has a unique position in the

international financial services market as one of the

few truly global providers of integrated banking and insur-

ance services. Our market-driven structure promotes

maximum customer focus, entrepreneurial initiative and

a c c o u n t a b i l i t y, and the creation of high shareholder value.”

Lukas Mühlemann

Chief Executive Officer

of Credit Suisse Group

Services

for institutional

investors

w o r l d w i d e

Corporate and

individual

customers in

S w i t z e r l a n d

“Taking financial risks and managing these risks proactively in a balanced

framework is our core task and responsibility. Credit Suisse Group is uniquely

structured to deal with risk issues, as each of the five business units focuses

and specializes in different markets, products, and locations and therefore in

various risk classes. We are increasingly embedding risk management,

performance measurement, and dynamic capital allocation in a comprehensive

integrated framework with common denominators.”

Hans-Ulrich Doerig

Vice Chairman and Chief Risk Off i c e r

Credit Suisse Group

Services for

private investors

in Switzerland

and internationally

Worldwide

investment

b a n k i n g

Worldwide

insurance business

35

BOARD OF DIRECTORS( 1 )

Rainer E. Gut (2)(3)

Chairman of the Board

Chairman of the Board of Credit Suisse Group

Robert L. Genillard (2)(3)(4)

Vice Chairman of the Board

Vice Chairman of the Supervisory Board of

TBG Holdings, n.v.

Franz Albers

Partner, Albers & Co.

Thomas W. Bechtler (2)

Chairman of the Board of Zellweger Luwa Ltd.

Ulrich Bremi (2)(3)(4)

Chairman of the Board of Swiss Reinsurance Company

Marc-Henri Chaudet (2)

Attorney-at-Law

Mario A. Corti

Executive Vice President of Nestlé S.A.

Michael Hilti (4)

Chairman of the Board of Hilti Corporation

Klaus Jacobi (4)

Former Secretary of State of Switzerland

Andreas W. Keller

Chairman of the Board and Chief Executive Officer

of Edward Keller Ltd. and

Edward Keller Holding Ltd.

Andreas N. Koopmann (4)

Chief Executive Officer of Bobst SA

Heini Lippuner (2)

Member of the Board of Novartis AG

Lukas Mühlemann (2)(3)

Chief Executive Officer of Credit Suisse Group

Peter Spälti (2)

Chairman of the Board of the Winterthur Insurance

Aziz D. Syriani (5)

President and Chief Executive Officer

of the Olayan Group

Ernst Tanner

Chairman and Chief Executive Officer of

Lindt & Sprüngli

(1) Refers to the Board of Directors for the legal entity, Credit Suisse First

Boston, a Swiss bank containing the activities of the global investment bank

and the asset management business units.

(2) Member of the Chairman’s Committee.

(3) Member of the Compensation Committee.

(4) Member of the Audit Committee.

(5) Until May 29, 1998.

37

Brady W. DouganManaging Director

Equity

David C. MulfordManaging Director

Vice Chairman of

Credit Suisse

First Boston, Inc.

Chairman International

Allen D. WheatChairman of the Executive

Board and

Chief Executive Officer

Christopher GoekjianManaging Director

Chief Executive Officer

of Credit Suisse

Financial Products

Stephen A. M. HesterManaging Director

Chief Financial Officer

Marc HotimskyManaging Director

Fixed Income

Stephen E. StonefieldManaging Director

Chairman of Pacific Region

of Credit Suisse First Boston

Franz von MeyenburgManaging Director

Deputy Chairman,

Europe

Charles G. Ward IIIManaging Director

Corporate and

Investment Banking

EXECUTIVE BOARD

MANAGING DIRECTORS

Osmar Abib Jr.Nayla AbousleimanJohn K. Adams Jr.William V. AdamskiAndrew AdcockMark A. AdleyJon M. AfrickZubaid AhmadJohannes AlbeckKristin M. AllenThomas AmstutzDavid L. AndersonRussell L. AppelRome G. ArnoldRichard W. AtterburyLiza BaileyAlessandro BaldinThomas K. BarberRebecca B. Barfield-

JohnsonJanos BarthaDavid C. BasileWilliam R. Battey Jr.W. David BauerAllan J. BaumOmar BayoumiJoseph BeckerJeremy J. BennettWalter BerchtoldBenjamin R. BloomstoneTimothy D. BockHarold W. BogleJulia BondRichard H. BottJonathan D. BramKevin BrauNicholas BrigstockeJohn BrydsonPaul D. BuckleyErnst A. BuetlerPhilippe M. BuhannicJeffrey H. BunzelJohn G. BurkeMartin P. CaffreyCarlo M. CalabriaJorge A. CalderonPaul CalelloElaine C. CampbellLloyd E. CampbellJoseph D. Carrabino Jr.Christopher CarterChristopher R. CarterEnrique CastilloChristopher ChambersJean-Christian Cheysson

Trevor ChiddicksCharles W. ChigasMarkus ChristenAndrew ChristieJohn C. ChrystalJames F. ClarkMichael W. ClarkBenjamin H. CohenRobert A. CohenGeorge W. ColemanPatrick D. ColemanJoseph A. ConeenyJohn E. ConlinDavid M. ConnorsThomas A. ConnorsBrian M. CookAdrian R. T. CooperJohn F. CozziJulie CraddockDavid C. CrisantiErnesto CruzW. Robert DahlRichard B. D’AlbertStewart W. DaumanJonathan R. Davie (1) (5)

Eric De CandiaAdam De Courcy LingGilles De DumastAdam de JongSimon de ZoeteJames D. DeasyFrank J. DeCongelioDavid A. DeNunzioDonald J. DevineKatherine E. DietzeJack J. DiMaio Jr.Alec D’JanoeffCharles B. EdelsteinWilliam J. EganJ. Anthony EhingerAmir A. EilonPaul N. ElliottRusty ElvidgeThomas K. EmmonsD. Wilson ErvinMarcus A. L. EverardBertrand F. FaconFrank J. Fanzilli Jr.Michael A. FederMark L. FinermanRobert FinneyH. Andrew FisherJeremy P. FletcherSimon J. FordJean-Marc Forneri

Craig H. FosterPeter A. FowlerJonathan R. D. FoxMichael P. FriezoAnthony FryKeizo FujitakeHideki FukuiJoseph D. GallagherJohn L. GarciaRichard GillingwaterPaul M. GimsonJames T. Glerum Jr.Joel GlodowskiIrvin J. GoldmanAndrew GordonNicholas Gordon-SmithFrank J. GovernaliLaurence S. GrafsteinMarc D. GranetzStephen R. GreeneMichael D. GreenspanSteven S. GreenwaldCharles Peter GreuterJonathan P. GrussingSanjeev GuptaRalph E. GuyotBalz HaeusermannMichael G. Hajialexandrou(5)

Geoffrey P. HallGordon T. HallLawrence A. HamdanDavid HanMatthew C. HarrisJohn S. HarrisonNeil A. S. HarveyThomas E. HassenJames P. HealyColin H. Hely-HutchinsonWallace C. HendersonStefan HilberMichael HintzeF. Perkins Hixon Jr.James B. HoesleyPaul R. HoferRichard C. Holbrooke (1)

Mark A. HolmesAlan E. HowardAlan H. HowardGina HubbellHarry E. HuerzelerMarco M. IllyBrian C. ImrieAndrew K. IpkendanzAlfred G. JacksonMoez A. Jamal

Robert A. JeffeIan S. JenkinsDaniel J. JohnsonGrant C. JohnsonJ. Leslie K. JohnstonFrancois JourdainHartmuth JungGiles B. KeatingAndreas I. Keller

SarmientoTony KellyPatrick T. KennedyMark W. KennelleyRichard A. Kersley (5)

Susan KilsbyCharles Kirwan-TaylorFritz T. KleinAlexander M. KnasterSteven KochKenneth J. KornblauJ. Steven KrausJames E. KreitmanRobert S. KricheffPaul KuoRaymond S. KuramotoAdam S. KurzerMark B. LandisBruno R. LangFrancois C. Langlade-

DemoyenKarim LariSharon LarmourStephen M. LazarusJames H. Leigh-PembertonRobert J. LevittBarry LewisD. Scott LindsayBruce W. LingSamuel G. LissC. Robert Lister(5)

Gerald M. LodgeStephen T. LongAnn F. LopezChristian LubiczRobin R. MacdonaldAlfredo MagriFrancois J. MaisonrougeG. David M. Maletta IIGuillaume A. MalleJohn S. MarlattMark S. MaronIan MarshJeremy MarshallChristopher G. MartinMichael E. Martin

Osmar Abib Jr.Nayla AbousleimanJohn K. Adams Jr.William V. AdamskiAndrew AdcockMark A. AdleyJon M. AfrickZubaid AhmadJohannes AlbeckKristin M. AllenThomas AmstutzDavid L. AndersonRussell L. AppelRome G. ArnoldRichard W. AtterburyLiza BaileyAlessandro BaldinThomas K. BarberRebecca B. Barfield-

JohnsonJanos BarthaDavid C. BasileWilliam R. Battey Jr.W. David BauerAllan J. BaumOmar BayoumiJoseph BeckerJeremy J. BennettWalter BerchtoldBenjamin R. BloomstoneTimothy D. BockHarold W. BogleJulia BondRichard H. BottJonathan D. BramKevin BrauNicholas BrigstockeJohn BrydsonPaul D. BuckleyErnst A. BuetlerPhilippe M. BuhannicJeffrey H. BunzelJohn G. BurkeMartin P. CaffreyCarlo M. CalabriaJorge A. CalderonPaul CalelloElaine C. CampbellLloyd E. CampbellJoseph D. Carrabino Jr.Christopher CarterChristopher R. CarterEnrique CastilloChristopher ChambersJean-Christian CheyssonTrevor Chiddicks

Charles W. ChigasMarkus ChristenAndrew ChristieJohn C. ChrystalJames F. ClarkMichael W. ClarkBenjamin H. CohenRobert A. CohenGeorge W. ColemanPatrick D. ColemanJoseph A. ConeenyJohn E. ConlinDavid M. ConnorsThomas A. ConnorsBrian M. CookAdrian R. T. CooperJohn F. CozziJulie CraddockDavid C. CrisantiErnesto CruzW. Robert DahlRichard B. D’AlbertStewart W. DaumanEric De CandiaAdam de Courcy LingGilles de DumastAdam de JongSimon de ZoeteJames D. DeasyFrank J. DeCongelioDavid A. DeNunzioDonald J. DevineKatherine E. DietzeJack J. DiMaio Jr.Alec D’JanoeffCharles B. EdelsteinWilliam J. EganJ. Anthony EhingerAmir A. EilonPaul N. ElliottRusty ElvidgeThomas K. EmmonsD. Wilson ErvinMarcus A. L. EverardBertrand F. FaconFrank J. Fanzilli Jr.Michael A. FederMark L. FinermanRobert FinneyH. Andrew FisherJeremy P. FletcherSimon J. FordJean-Marc ForneriCraig H. FosterPeter A. FowlerJonathan R. D. Fox

Michael P. FriezoAnthony FryKeizo FujitakeHideki FukuiJoseph D. GallagherJohn L. GarciaRichard GillingwaterPaul M. GimsonJames T. Glerum Jr.Joel GlodowskiIrvin J. GoldmanAndrew GordonNicholas Gordon-SmithFrank J. GovernaliLaurence S. GrafsteinMarc D. GranetzStephen R. GreeneMichael D. GreenspanSteven S. GreenwaldCharles Peter GreuterJonathan P. GrussingSanjeev GuptaRalph E. GuyotBalz HaeusermannMichael G. Hajialexandrou(1)

Geoffrey P. HallGordon T. HallLawrence A. HamdanDavid HanMatthew C. HarrisJohn S. HarrisonNeil A. S. HarveyThomas E. HassenJames P. HealyColin H. Hely-HutchinsonWallace C. HendersonStefan HilberMichael HintzeF. Perkins Hixon Jr.James B. HoesleyPaul R. HoferMark A. HolmesAlan E. HowardAlan H. HowardGina HubbellHarry E. HuerzelerMarco M. IllyBrian C. ImrieAndrew K. IpkendanzAlfred G. JacksonMoez A. JamalRobert A. JeffeIan S. JenkinsDaniel J. JohnsonGrant C. JohnsonJ. Leslie K. Johnston

Francois JourdainHartmuth JungGiles B. KeatingAndreas I. Keller

SarmientoTony KellyPatrick T. KennedyMark W. KennelleyRichard A. Kersley (1)

Susan KilsbyCharles Kirwan-TaylorFritz T. KleinAlexander M. KnasterSteven KochKenneth J. KornblauJ. Steven KrausJames E. KreitmanRobert S. KricheffPaul KuoRaymond S. KuramotoAdam S. KurzerMark B. LandisBruno R. LangFrancois C. Langlade-

DemoyenKarim LariSharon LarmourStephen M. LazarusJames H. Leigh-PembertonRobert J. LevittBarry LewisD. Scott LindsayBruce W. LingSamuel G. LissC. Robert Lister (1)

Gerald M. LodgeStephen T. LongAnn F. LopezChristian LubiczRobin R. MacdonaldAlfredo MagriFrancois J. MaisonrougeG. David M. Maletta IIGuillaume A. MalleJohn S. MarlattMark S. MaronIan MarshJeremy MarshallChristopher G. MartinMichael E. MartinDavid J. MatlinPeter R. MattMichael J. MauboussinDavid A. MayesJohn M. McAvoyClaire McCarthy

39

David J. MatlinPeter R. MattMichael J. MauboussinDavid A. MayesJohn M. McAvoyClaire McCarthyWilliam G. McDonaldMichael J. McGheeJohn E. McGintyJoseph T. McLaughlinPatricia J. McLaughlinJeremy MeadSimon MeadowsRichard MeddingsEthan B. MeisterDonald MeltzerEric MeyerJames W. MeyerTrygve MikkelsenKen Miller(2)

Rodney M. MillerJuergen MoessnerStephan C. MonthThomas John MooreKevin J. MorleyNeil MoskowitzRichard H. Moulder (5)

Robert S. MurleyGordon MurrayStefano NatellaMartin J. NewsonAlasdair A. J. NortonRobert C. O’BrienTetsuo OchiAdebayo O. OgunlesiTimothy P. O’HaraMasahiro OhshiroDavid C. O’LearyThomas F. O’MaraSusumu OmoriYoshinori OnakaCarlos OnisEoin F. O’SheaJ. Craig OxmanLuc P. PajotGunnar T. PalmRichard P. PalmieriVincent N. ParkinMark R. PattersonDavid J. Pierce-JonesHarry C. PinsonWilliam S. PitofskySteven M. Plag (5)

Jonathan PlutzikMichele Porro

Malcolm K. PriceTrevor C. PriceSimon E. Prior-PalmerCraig A. PuffenbergerZhi Zhong QiuKathryn M. QuigleyAndrew ReicherThomas ReidPhilip RemnantThomas G. RiceGordon A. RichJohn A. RichardsNick RileyWilliam M. RobertsFelix E. A. RobynsCarolynn H. RockafellowHartley RogersJohn J. RomanelliJonathan K. RounerKevin R. RushPaolo A. RushingDavid RussellOlivier SachsJeffrey J. SalzmanEdward J. SantoroGuglielmo Sartori

Di BorgoriccoNoriaki SasakiSadeq SayeedAnne C. SchaumburgPaul G. ScheufeleMichael SchmertzlerPeter H. SchmukiMaurits SchoutenScott W. SeatonPhilip W. Seefried Jr.Mark SeligmanMartin SennWilliam C. SharpstoneLawrence A. ShelleyAlan R. SheriffHyun Joe ShinGeoffrey T. SmailesJoergen SmebyAlan H. Smith (3)

Frederick M. R. SmithScott T. SmithStephen M. SparkesDavid SpaughtonRichard G. SpiroHansruedi StadlerMarc H. SteglitzThomas F. SternfieldRobert B. StevensAndrew D. Stone

Charles G. StonehillAnthony Stranger-JonesMarc TabahJean-Guy TalbotYoshinori TanakaMichael TarrantMasahito TatsumiAndrew R. TaussigGregory J. Terry (4)

Luther L. Terry Jr.Peter ThomasRobert L. Thornton Jr.Earnswell T. TiuTheresia TolxdorffTakatoshi ToyodaPaul TregidgoAlexandre TrevezaHans-Joerg TurtschiRobert D. Tyrwhitt-DrakeShigeru UedaScott J. UlmJ. Tijo Van MarlePhilip S. VasanMatty VengerikDavid P. WalkerThaddeus J. WalkowiczJohn J. WalshAlastair J.M. WaltonTodd E. WarnockPhilip N. WeingordNorman S. WeinsteinBenjamin C. WestonDavid P. WheelerMarc A. White Jr.Alex WidmerMichael WilliamsonJonathan J. WilmotLewis H. WirshbaNicholas R. WoolnoughJohn A. WrightNicholas H. WrightJohn M. WylieKenkichi YagiShinji YamadaAtsuyoshi YoshidaLouis G. Zachary Jr.John ZafiriouGail S. ZauderKaren E. Zimmerman

Managing Director—Senior Advisors

Anthony L. BrookeJohn R. CampbellJohn D. David-Jones (5)

Jaime de Marichalar Saenz de Tejada

Richard B. duBuscCarlos Alberto FredericoCharles B. GatesHans-Joachim HeunJoseph F. HuberPhilip M. HuyckThomas W. KeaveneyHans Albert KellerWilliam J. KimmelClaus G. LabesArturo C. F. MathieuDavid C. McCutcheonJack D. McSpadden Jr.Andrea A. MoranteDouglas L. PaulDiana W. ReidChristian E. RohrbachMartin RommLynda RouseMaximilian SorgNeal M. SossAlfred SyzCharles W. ThomasStephen M. UnfriedPote P. VidetGeorge B. WeiksnerBalz M. WielandWilliam M. Wigder

(1) Vice Chairman of

Credit Suisse First Boston

(2) Vice Chairman of

Credit Suisse First Boston

Corporation

(3) Vice Chairman of

the Pacific Region of

Credit Suisse First Boston

(4) Vice Chairman of

the Asia/Pacific Region of

Credit Suisse First Boston

(5) Subject to the completion

of the purchase of certain

BZW businesses from

Barclays expected on or

about April 30, 1998.

Jonathan R. Davie (1)

Managing DirectorVice ChairmanCredit Suisse First Boston

Richard C. HolbrookeManaging DirectorVice ChairmanCredit Suisse First BostonCorporation

Ken MillerManaging DirectorVice ChairmanCredit Suisse First BostonCorporation

Anthony L. BrookeJohn R. CampbellJohn D. David-Jones (1)

Jaime de Marichalar Saenz de Tejada

Richard B. duBuscCarlos Alberto FredericoCharles B. GatesHans-Joachim HeunJoseph F. HuberPhilip M. HuyckThomas W. KeaveneyHans Albert KellerWilliam J. KimmelClaus G. LabesArturo C. F. MathieuDavid C. McCutcheon

Jack D. McSpadden Jr.Andrea A. MoranteDouglas L. PaulDiana W. ReidChristian E. RohrbachMartin RommLynda RouseMaximilian SorgNeal M. SossAlfred SyzStephen M. UnfriedPote P. VidetGeorge B. WeiksnerBalz M. WielandWilliam M. Wigder

Managing Director—Senior AdvisorsVice Chairmen

Alan H. SmithManaging DirectorVice Chairmanof the Pacific Region ofCredit Suisse First Boston

Gregory J. TerryManaging DirectorVice Chairmanof the Pacific Region ofCredit Suisse First Boston

(1) Subject to the completion of the purchase of certain BZW businesses from Barclays expected on or about April 30, 1998.

William G. McDonaldMichael J. McGheeJohn E. McGintyJoseph T. McLaughlinPatricia J. McLaughlinJeremy MeadSimon MeadowsRichard MeddingsEthan B. MeisterDonald MeltzerEric MeyerJames W. MeyerTrygve MikkelsenRodney M. MillerJuergen MoessnerStephan C. MonthThomas John MooreKevin J. MorleyNeil MoskowitzRichard H. Moulder (1)

Robert S. MurleyGordon S. MurrayStefano NatellaMartin J. NewsonAlasdair A. J. NortonRobert C. O’BrienTetsuo OchiAdebayo O. OgunlesiTimothy P. O’HaraMasahiro OhshiroDavid C. O’LearyThomas F. O’MaraSusumu OmoriYoshinori OnakaCarlos OnisEoin F. O’SheaJ. Craig OxmanLuc P. Pajot

Gunnar T. PalmRichard P. PalmieriVincent N. ParkinMark R. PattersonDavid J. Pierce-JonesHarry C. PinsonWilliam S. PitofskySteven M. Plag (1)

Jonathan PlutzikMichele PorroMalcolm K. PriceTrevor C. PriceSimon E. Prior-PalmerCraig A. PuffenbergerZhi Zhong QiuKathryn M. QuigleyAndrew ReicherThomas ReidPhilip RemnantThomas G. RiceGordon A. RichJohn A. RichardsNick RileyWilliam M. RobertsFelix E. A. RobynsCarolynn H. RockafellowHartley RogersJohn J. RomanelliJonathan K. RounerKevin R. RushPaolo A. RushingDavid RussellOlivier SachsJeffrey J. SalzmanEdward J. SantoroGuglielmo Sartori

Di BorgoriccoNoriaki Sasaki

Sadeq SayeedAnne C. SchaumburgPaul G. ScheufeleMichael SchmertzlerPeter H. SchmukiMaurits SchoutenScott W. SeatonPhilip W. Seefried Jr.Mark SeligmanMartin SennWilliam C. SharpstoneLawrence A. ShelleyAlan R. SheriffHyun Joe ShinGeoffrey T. SmailesJoergen SmebyFrederick M. R. SmithScott T. SmithStephen M. SparkesDavid SpaughtonRichard G. SpiroHansruedi StadlerMarc H. SteglitzThomas F. SternfieldRobert B. StevensAndrew D. StoneCharles G. StonehillAnthony Stranger-JonesMarc TabahJean-Guy TalbotYoshinori TanakaMichael TarrantMasahito TatsumiAndrew R. TaussigLuther L. Terry Jr.Peter ThomasRobert L. Thornton Jr.Earnswell T. Tiu

Theresia TolxdorffTakatoshi ToyodaPaul TregidgoAlexandre TrevezaHans-Joerg TurtschiRobert D. Tyrwhitt-DrakeShigeru UedaScott J. UlmJ. Tijo Van MarlePhilip S. VasanMatty VengerikDavid P. WalkerThaddeus J. WalkowiczJohn J. WalshAlastair J.M. WaltonTodd E. WarnockPhilip N. WeingordNorman S. WeinsteinBenjamin C. WestonDavid P. WheelerMarc A. White Jr.Alex WidmerMichael WilliamsonJonathan J. WilmotLewis H. WirshbaNicholas R. WoolnoughJohn A. WrightNicholas H. WrightJohn M. WylieKenkichi YagiShinji YamadaAtsuyoshi YoshidaLouis G. Zachary Jr.John ZafiriouGail S. ZauderKaren E. Zimmerman

FINANCIAL STAT E M E N T S

Income Statements of the Business Unit ( 1 )

Year Ended December 31, 1997

and Pro Forma Year Ended December 31, 1996

PRO FORMA P E R C E N T

DOLLARS IN MILLIONS (UNAUDITED) 1 9 9 7 1 9 9 6 C H A N G E

Revenues

Fixed Income $ 3,379 $ 2,356 43%

Equity 1,212 834 45%

CSFP 1,167 950 23%

CIBD 1,479 1,368 8%

Other (109) (15) n/a

Total 7,128 5,493 30%

Expenses

Personnel expense 3,497 2,676 31%

Execution, clearing, and brokerage 259 186 39%

Other operating 1,006 813 24%

Total 4,762 3,675 30%

Gross profit 2,366 1,818 30%

Depreciation 148 143 3%

Write-downs, provisions, and losses 390 258 51%

Pretax income before extraordinary/exceptional

items and minority interest 1,828 1,417 29%

Income taxes 621 n/a

Net income before extraordinary/exceptional

items and minority interest $ 1,207 n/a

Extraordinary/exceptional items, net (296) n/a

Minority interest (85) n/a

Net income after minority interest $ 826 n/a

(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.

Extraordinary/exceptional items, net include the BZW restructuring charge of $165 million and a

$102 million technology charge for year 2000 and EMU work.

41

Balance Sheets of the Business Unit ( 1 )

PRO FORMA

DECEMBER 3 1 , JANUARY 1, P E R C E N T

DOLLARS IN MILLIONS (UNAUDITED) 1 9 9 7 1 9 9 7 ( 2 ) C H A N G E

AssetsCash $ 1,403 $ 1,144 23%

Money market papers 11,194 10,963 2%

Due from banks 96,077 95,946 0%

of which securities lending and

reverse repurchase agreements 71,728 60,827 18%

Due from other business units 4,120 0 n/a

Due from customers 72,217 93,515 (23%)

of which securities lending and

reverse repurchase agreements 43,076 63,989 (33%)

Mortgages 4,970 4,156 20%

Securities and precious metals trading portfolios 71,101 60,841 17%

Financial investments 6,488 4,527 43%

Non-consolidated participations 182 211 (14%)

Fixed assets 1,276 1,090 17%

Accrued income and prepaid expenses 4,040 3,275 23%

Other assets 37,285 28,678 30%

Total Assets $ 310,353 $ 304,346 2%

Liabilities and Shareholders’ EquityLiabilities in respect of money market paper $ 12,305 $ 8,335 48%

Due to banks 127,113 160,749 (21%)

of which securities borrowing and

repurchase agreements 58,901 66,893 (12%)

Due to other business units 27,553 10,846 154%

Due to customers, in savings and

investment deposits 322 299 8%

Due to customers, other 67,621 71,237 (5%)

of which securities borrowing and

repurchase agreements 39,442 38,451 3%

Bonds and mortgage-backed bonds 23,299 12,803 82%

Accrued expenses and deferred income 5,573 5,018 11%

Other liabilities 37,413 26,969 39%

Valuation adjustments 1,880 1,539 22%

Total liabilities 303,079 297,795 2%

Total shareholders’ equity 7,274 6,551 11%

Total Liabilities and Shareholders’ Equity $ 310,353 $ 304,346 2%

(1) The above balance sheets are based on Swiss accounting rules for banks. They include allocations from

the real estate units within Credit Suisse Group.

(2) Shareholders’ equity at January 1, 1997, includes the pro forma effect of CHF500 million preferred stock

issuance which occurred on March 31, 1997.

M a n a g e m e n t ’s Discussion and Analysis

of Financial Condition and Results of Operations

I N T R O D U C T I O N

Credit Suisse First Boston (“CSFB”) is a global investment

banking enterprise with principal activities in trading secu-

rities, derivative products and other financial assets as well

as capital markets, advisory services and corporate lend-

ing. CSFB is the investment banking business unit of

Credit Suisse Group (“CSG”) (formerly CS Holding).

It commenced operations in its current form on January 1,

1997 following the restructuring of CSG. CSFB’s compo-

nent parts were not managed or reported as a single

entity prior to 1997 and the restructuring involved complex

customer business, and balance sheet reallocations of

C S G ’s entities.

Credit Suisse First Boston (the “Bank”), a Swiss

bank and a subsidiary of CSG, is the new name of the

Swiss bank formerly known as Credit Suisse. The

Bank contains the activities of the CSFB and Asset

Management business units of CSG. Shown herein is

financial data for the CSFB business unit which consti-

tutes almost 99% of the assets of the Bank as of

December 31, 1997. More detailed information on the

Bank and related unqualified audit opinion is contained in

the Annual Reports of CSG and the Bank, respectively.

There continue to be significant flows of business

and service among the entities of CSG.

Because of the complexities of the changes

described above, only limited pro forma income statement

data was published for individual business units for 1996

and no prior historical data was compiled. However, full

consolidated financial statements of CSG have been pub-

lished. Additionally, CSFB’s opening pro forma balance

sheet as at January 1, 1997, is presented herein without

a prior period comparison.

C S F B ’s activities are subject to various risks includ-

ing volatile trading markets and fluctuations 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 fluctuations. While the reporting

currency of the Bank is the Swiss Franc, CSFB primarily

manages its businesses based on a U.S. dollar functional

currency as presented herein and as prescribed by its

earnings and asset mix.

CSFB’s strategic plans contemplate further invest-

ments in its businesses through organic growth and selective

acquisition.

R E S U LTS OF OPERAT I O N S

C S F B ’s revenues for the year ended 1997 were $7.1 bil-

lion, 30% higher than pro forma 1996 revenues.

Revenues in 1997 increased over pro forma 1996 in each

of CSFB’s operating divisions. The sources of these divi-

sional revenues are primarily realized and unrealized net

trading gains, net interest income resulting from trading

and lending activities, and fee-based earnings from capital

markets activities, commissions on customer transactions

and advisory services. Divisional revenues are based on

Swiss accounting rules for banks as modified for revenue

presentation, the classification of execution, clearing and

brokerage costs as an expense as opposed to a contra

revenue, and CSFB’s internal management reporting

process in which revenues, including capital markets rev-

enues and interest costs, are allocated to divisional

results. Capital markets revenues are shared among

CIBD, Fixed Income and Equity. Divisional revenues for

the year ended December 31, 1997, and pro forma year

ended December 31, 1996, are as follows:

PRO FORMA P E R C E N T

($ MILLIONS) 1 9 9 7 1 9 9 6 I N C R E A S E

Fixed Income $ 3 , 3 7 9 $2 , 3 5 6 4 3 %

E q u i t y 1 , 2 1 2 8 3 4 4 5 %

C S F P 1 , 1 6 7 9 5 0 2 3 %

C I B D 1 , 4 7 9 1 , 3 6 8 8 %

O t h e r ( 1 0 9 ) ( 1 5 ) n / a

$ 7 , 1 2 8 $ 5 , 4 9 3 3 0 %

The geographic distribution of revenues and employees for

the year ended December 31, 1997, is as follows:

43Fixed Income

Revenues for the Fixed Income division increased in 1997

when compared to pro forma 1996, with ROE exceeding

30% in 1997, primarily due to significantly improved

results across most of the substantive product lines of the

division. Particularly good performance occurred in the

Principal Transactions Group (PTG) and the Emerging

Markets Group (EMG). Fixed Income revenues also

increased from improved results from trading high yield

corporate securities, global foreign exchange, and money

markets, offset, in part, by declines in trading govern-

ments and Swiss fixed income securities.

PTG purchases and originates whole loans and pro-

vides a full range of real estate-related advisory services.

In 1997 revenues increased primarily from asset securiti-

zations, increased net interest on a larger average loan

portfolio, and sales of real estate properties.

EMG underwrites and trades in fixed income securi-

ties and foreign exchange of a number of emerging

markets countries. In 1997 revenues increased primarily

from interest earned on a larger average trading portfolio

and improved trading results. These results were tem-

pered, in the fourth quarter of 1997, as a result of the

Asian economic crisis; however, notwithstanding these

events, revenues remained positive for the fourth quarter.

E q u i t y

Revenues for the Equity division increased in 1997 when

compared to pro forma 1996, with ROE exceeding 30%

in 1997, primarily as a result of significantly improved

results in customer-driven businesses, which include trad-

ing, commissions, and capital markets activities. These

revenues were particularly strong in the Eastern European

business, in Switzerland, and in the U.S. businesses.

Results also improved in the trading of convertibles and

risk arbitrage activities.

Equity revenues, inclusive of derivative-related

revenues included in CSFP and equity capital markets

included in CIBD, exceeded $1,450 million for the year

ended December 31, 1997.

C S F P

Revenues for CSFP increased in 1997 when compared to

pro forma 1996, with ROE exceeding 30% in 1997, pri-

marily as a result of improved results in the swaps and

options, commodities and asset trading, and credit deriva-

tives businesses, offset, in part, by declines in OTC equity

derivatives and foreign exchange derivatives; however,

both of these businesses produced positive revenues

in 1997.

C I B D

Although CIBD revenues as a whole increased only 8%

in 1997 as compared to pro forma 1996, investment

banking-generated revenues increased by 26%. These

increases were driven by improved results in equity and

fixed income capital markets activities as well as merger

and acquisition advisory.

The increases in investment banking revenues were

o ffset, in part, by declines in revenues from corporate

lending activities. These declines occurred principally as a

result of CSFB’s strategy, implemented in 1997, to reallo-

cate capital resources from corporate lending to other

businesses. During the fourth quarter of 1997, CSFB

completed a $5 billion securitization as part of this strategy.

CIBD revenues, inclusive of total debt and equity

capital markets revenues reflected in Fixed Income and

E q u i t y, exceeded $1,850 million for the year ended

December 31, 1997.

O t h e r

Losses in the Other division are primarily the result of

investments and transactions managed at the corporate

level, offset, in part, by revenues earned by the Private

Equity division. 1997 was a building year for the Private

Equity division, successfully hiring key people and closing

a large international fund.

Expenses

C S F B ’s aggregate expenses increased in 1997 as com-

pared to pro forma 1996, largely due to enhanced

profitability and growth. Staff costs increased primarily due

to increases in incentive performance compensation and

related payroll taxes, increases in the number of employ-

ees and contractors, and salary increases. These costs

remain in line with industry norms at 49% of revenues.

Execution, clearing, and brokerage increased in

1997 as compared to 1996, as a result of increased trad-

ing activity.

Other operating expenses primarily include costs for

technology and communication, occupancy, professional

services, and business development. The distribution of

other operating expenses for the year ended December

31, 1997, is as follows:

Other operating expenses increased in 1997 when

compared to pro forma 1996, primarily as a result of

increased professional services, communications and busi-

ness development costs associated with higher levels of

business in 1997. In addition, costs increased in 1997

due to investment fund placement fees incurred in 1997

associated with CSFB’s Private Equity activities, occupan-

cy costs associated with CSFB’s new facilities in New

York, and increased fees charged by CSG with respect to

certain infrastructure costs that relate to CSG and its sub-

s i d i a r i e s .

Write-Downs, Provisions, and Losses

Write-downs, provisions, and losses increased in 1997, as

compared to 1996, primarily as a result of credit provi-

sions. Credit provisions increased primarily due to the

adverse effect on loans outstanding in Asia resulting from

the economic crisis that occurred in that region in the

fourth quarter of 1997. CSFB’s credit provisions related

to Asia totaled approximately $450 million at December

31, 1997, which includes a precautionary provision of

$150 million charged to earnings at end-1997.

Approximately 90% of the overall provisions were estab-

lished for lending activities with the balance established

for counterparty risk of trading activities. Other than the

special Asia provision, CSFB’s loan provisions, charged

against 1997 earnings, totaled $102 million, representing

the expected loss amount (ACP) calculated by the credit-

plus-risk-management approach. Also contained in

write-downs, provisions, and losses are various litigation

provisions, including those related to the NASDAQ settle-

ment, which generally affected most firms in the securities

industry that participate in the OTC equity market making

business in the U.S.

Income Ta x e s

C S F B ’s effective income tax rate, excluding extraordi-

nary/exceptional items, was approximately 34% for the

year ended December 31, 1997. This rate represents a

blended rate of the various tax jurisdictions in which CSFB

o p e r a t e s .

Extraordinary/Exceptional Items

Extraordinary/exceptional items in 1997 primarily included

costs related to the acquisition of BZW ($165 million, net

of tax) and an IT provision for year 2000 compliance and

EMU conversion costs ($102 million, net of tax).

Extraordinary items also reflect additional costs associated

with the 1996 restructuring, offset, in part, by gains on

the sale of certain investments.

BZW Acquisitions

On November 12, 1997 CSFB entered into an agreement

to purchase the U.K. and Continental European equities,

equity capital markets, and mergers and acquisitions,

advisory businesses of BZW for GBP 100 million. These

businesses employed approximately 1,000 people (exclud-

ing temporary staff) as of December 31, 1997. Most of

the acquisition is being effected by means of asset pur-

chases, although entities are being purchased in the

Netherlands, Spain, and the U.K.

CSFB completed the acquisition of the U.K. and

Continental European mergers and acquisitions, advisory,

and equity capital markets businesses on December 31,

1997. CSFB also completed the acquisition of the

Continental European equity sales, trading and research

business, in stages, on January 30 and February 27,

1998. In addition, CSFB assumed management of the

U.K. equity sales, trading and research business under a

management services agreement with Barclays. This

arrangement, which covers front office personnel, will

operate until formal completion of the sales of those busi-

nesses to CSFB, which is scheduled to occur during the

first half of 1998. This formal completion is contingent

upon the fulfillment of certain conditions during this period.

In addition, CSFB has signed an agreement with

Barclays to acquire certain of BZW’s equity, equity capital

markets and mergers, and acquisitions advisory business-

es in Asia. Under the terms of the transaction, CSFB

acquired or will acquire certain Investment Banking, Equity

Capital Markets and Equity personnel in Hong Kong;

B Z W ’s 70% interest in an Equity joint venture in

Singapore; BZW’s Equity business in Taiwan; stock

exchange seats in Singapore, Hong Kong and Shanghai;

and additional personnel from Malaysia and Indonesia.

This acquisition is conditional upon CSFB obtaining all

requisite regulatory consents and approvals.

As a result of the timing described above, the bulk

of the acquisition was not completed in 1997, therefore it

has not been consolidated in CSFB’s financial statements

as of December 31, 1997. However, as management fully

expects that the acquisition of the remaining businesses

will formally be completed in 1998, a net of tax provision

of $165 million has been reflected in the financial state-

ments for BZW acquisition costs.

First Pacific Acquisition

In early 1998 CSFB agreed to acquire 75% of the com-

mon stock of First Pacific, which is an investment banking

firm with a leadership position in the equity markets in

Australia. The acquisition is subject to certain conditions,

including the receipt of regulatory approvals.

IT Provision

The IT charge, net of tax, of $102 million primarily repre-

sents a technology-related provision for anticipated year

2000 compliance and EMU conversion costs. These costs

include estimates for employee compensation, consul-

tants, hardware, and software.

LIQUIDITY AND CAPITAL RESOURCES

Assets and Leverage

CSFB maintains a liquid balance sheet with a majority of

the Firm’s assets consisting of marketable securities

inventories and other trading positions and collateralized

financing agreements. Collateralized financing agreements

consist of resale agreements and securities lending

predominantly secured by government and corporate

45

obligations. Levels of trading inventory and collateralized

financing agreements are dependent on market condi-

tions, volume of activity, and customer needs. Accordingly,

C S F B ’s total assets and financial leverage can fluctuate

s i g n i f i c a n t l y.

CSFB, as part of its corporate and investment bank-

ing activities, also maintains a loan portfolio. In addition,

as part of CSFB’s fixed income activities, trading invento-

ries include emerging markets positions, whole loans, and

high yield securities. CSG and its subsidiaries also make

merchant banking investments through CSFB’s Private

Equity division.

In U.S. dollar terms, total assets did not change

significantly at December 31, 1997, as compared to

pro forma January 1, 1997. CSFB’s ability to support

increases in total assets is a function of its ability to obtain

short-term secured and unsecured funding and access

long-term capital markets.

Funding and Capital Strategy

The Bank has a broad-based worldwide funding franchise.

Global funding is managed by a centralized financing unit,

which oversees local funding operations, including those

of CSFB. This global funding function provides coordina-

tion and control of pricing and funding strategies, while

the local market presence provides for investor diversity

and access to unique market opportunities. The Bank

aims to continually broaden its funding base by geography,

i n v e s t o r, issuing entity, and instrument type.

The Bank’s funding sources include interest-bearing

and non interest-bearing deposits, commercial paper, cer-

tificates of deposit, federal funds purchased, long-term

debt, capital securities, and shareholders’ equity. The

Bank places particular emphasis on a large base of well-

diversified and stable fiduciary deposits for its day-to-day

funding needs. Another important source of day-to-day

funding is repurchase agreements, primarily involving U.S.

government and agency securities.

To provide alternative funding sources, the Bank,

through its subsidiaries, has renewed a committed revolv-

ing credit facility with various banks that, if drawn upon,

would bear interest at short-term rates. The facility is

for general corporate purposes. This facility provides for

borrowings up to $1.575 billion during 1998. As of the

date hereof, there are no amounts outstanding under the

f a c i l i t y.

The Bank and its subsidiaries issue long-term debt

through various U.S. and Euro Medium-Term Note

Programs as well as syndicated and privately placed off e r-

ings around the world. To satisfy Swiss and local

regulatory capital needs of its regulated subsidiaries, the

Bank raises subordinated long-term borrowings. In 1997,

to provide sufficient regulatory capital resources required

to implement its strategic objectives, the Bank issued

approximately $1.7 billion of perpetual junior subordinated

debt. At December 31, 1997, the Bank had long-term

debt (including the current portion) of $24.3 billion, with

$8.8 billion representing subordinated debt. The Bank

expects to continue to access the capital markets in sup-

port of the Bank’s existing businesses, as well as any new

business initiatives and the resultant capital and funding

r e q u i r e m e n t s .

In selecting the most appropriate funding sources at

any point in time, such factors as market conditions, inter-

est rate levels, liquidity needs, and maturity profile

objectives are considered. Further, in order to manage

interest rate, currency, and other risks associated with the

above borrowings, the Bank has entered into various

derivative transactions.

The Bank’s access to external financing is depen-

dent on the short- and long-term credit ratings of the

Bank and certain of its subsidiaries. The cost and avail-

ability of external funding is generally a function of the

ratings. As of the date hereof, the Bank’s debt ratings

were as follows:

LONG-TERM

SENIOR JUNIOR

SHORT-TERM SENIOR SUBORDINATED SUBORDINATED

M o o d y ’s P - 1 A a 3 A 1 A 2

S & P A - 1 + A A A A - A +

Fitch IBCA Ltd. F - 1 + A A A A - A +

B a n k Wa t c h * T B W- 1 A A A A A + A A

*As of February 10, 1998, BankWatch placed the Bank’s long-term

debt ratings under review for possible downgrade.

On March 30, 1998, the Bank paid a dividend of

850 million Swiss Francs to its shareholders.

The Bank and its subsidiaries are subject to various

capital requirements imposed by various regulatory bodies

around the world, including the Swiss Banking

Commission. At December 31, 1997, the Bank was in

compliance with these requirements. At December 31,

1997, the Bank had a BIS Tier 1 and total capital ratio of

8.5% and 14.9%, respectively. Beginning January 1,

1998, the Bank will comply with the new BIS and EBK

methodologies for computing capital ratios, which are

based, in part, on value at risk computations for trading

p o s i t i o n s .

Risk Management

The general risk management policy of CSG serves as the

basis for the Bank’s risk management programs. The pri-

mary responsibility for risk management lies with the

B a n k ’s (as well as CSFB’s) senior business line man-

agers. They are held accountable for all risks associated

with their businesses, including counterparty risk, market

risk, liquidity risk, legal risk, and operating risk, and are

responsible for supplementing the Firm’s independent

controls by maintaining adequate internal control systems.

The risk management programs are designed to ensure

that there are sufficient independent controls to monitor

all risks properly.

The Board of Directors is responsible for determin-

ing the general risk policy and risk management strategy

of the Bank. The Chairman’s Committee of the Board of

Directors approves the overall market risk ceiling, reviews

the Bank’s risk exposure on a quarterly basis, and

approves country limits and other risk ceilings.

Risk Management at CSFB

The policies and procedures regarding risk and capital

allocation within CSFB are established by CSFB’s Capital

Allocation and Risk Management Committee (“CARMC”).

CARMC is chaired by a senior member of Credit Risk

Management and includes the Chief Executive Off i c e r,

the Global Chief Risk Off i c e r, the Chief Financial Off i c e r,

the Head of Market Risk Management, the Chief Credit

O ff i c e r, and the heads of the various business divisions

of CSFB.

CARMC approves capital management procedures,

guidelines, and risk limits, and allocates capital to the indi-

vidual divisions. This allocation is an important element in

setting upper limits on levels of activity in CSFB’s various

businesses that create counterparty and market risks.

CARMC also is involved with and approves business deci-

sions that, in its view, involve greater than normal

business risk.

C A R M C ’s policies are implemented by CSFB’s

Credit Risk Management (“CRM”) and Market Risk

Management (“MRM”) functions.

Credit Risk Management

CRM is headed by the Chief Credit Officer who reports to

the CEO. CRM is responsible for approving all credit risk

assumed by CSFB. This includes loans and loan related

credit risk, counterparty credit risk, and country risk. In

addition, CRM has oversight responsibility for concentrat-

ed positions in trading inventory. Unusual risks and

specific policies and procedures are reviewed and

approved by the Credit Policy Committee, which is chaired

by the Chief Credit Off i c e r.

C R M ’s responsibilities are carried out by senior off i-

cers within the Credit Risk Management function who are

aligned with each of CSFB’s major businesses. Each of

these CRM Units is organized along regional lines, and in

some cases further stratified along industry or other lines

of specialty, for example leveraged and project finance.

Every credit is rated by CRM staff, and approval

authorities are granted relative to staff experience, rating

of the counterparty, and size and tenor of the transaction.

These authorities are delegated by the Chief Credit

O ff i c e r, who in turn has been granted the full legal lending

authority of CSFB. CRM also is responsible for assessing

the overall credit portfolio and recommending credit provi-

sions as appropriate.

Market Risk Management

The MRM function is led by the Head of Market Risk

Management, who reports directly to the CFO. The inde-

pendent Market Risk Management department

consolidates exposures arising from all trading portfolios

and geographical centers on a daily basis. The Bank uses

two methodologies to measure and manage the market

risks that the Bank may undertake: the “value-at-risk”

concept and scenario analysis. 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 derived from past extreme events and

hypothetical scenarios.

Market risk is managed and controlled at three

levels: (i) senior management is responsible for monitoring

the Bank’s market risk utilizations, exposures, and risk-

adjusted performance, (ii) trading management is

responsible for actively managing its positions against

approved risk limits, and (iii) MRM is responsible for moni-

toring exposures against approved risk limits, obtaining

appropriate approval for limit excesses, and ensuring that

trading management reduces exposures to within limits

following limit excesses when appropriate.

Management of Other Risks

Other business-specific risks are managed primarily

through designated groups and committees within the dif-

ferent divisions. For example, the Investment Banking

Committee reviews and approves most investment banking

transactions, with a special focus on risk (such as legal

and reputational risks) that are inherent to such transac-

tions. A similar risk management program has been

established for the Private Equity division with the forma-

tion of an Investment Committee. Before any new activity

is undertaken, the New Business Committee reviews the

proposed business and its structure and infrastructure

requirements. This Committee is designed to ensure that

all risks (such as operational risks) that are inherent to

such a venture are identified and addressed appropriately.

This Committee is composed of the senior managers

responsible for the Finance, Administration and

Operations functions of CSFB.

To supplement its control environment, CSFB has an

oversight function that is structured regionally and is

designed to complement CSFB’s functional organization.

The oversight function consists of (i) selected Executive

Board members who have overall responsibility for over-

sight in their respective regions, (ii) regional oversight

managers who assist the Executive Board members with

this responsibility, and (iii) a country manager in each

country who manages local oversight issues. Regional

Oversight and Country Management serve as an additional

line of control and concentrate on regulatory and reputa-

tional issues, supervising legal entities and supporting

management in its efforts to improve the control environ-

ment. This oversight function works with business and

Finance, Administration and Operations executives in

monitoring and enhancing CSFB’s controls. Various con-

trol committees act as a clearing house for certain control

i s s u e s .

Additional disclosure on the Bank’s risk manage-

ment practices is contained in the Bank’s Annual Report.

47

The Americas

OFFICE LOCAT I O N S

AtlantaGeorgia Pacific Center133 Peachtree Street N.E.40th FloorAtlanta, GA 30303-1841U.S.A.Voice 1 404 656 9500Fax 1 404 522 3043

Boston100 Federal Street30th FloorBoston, MA 02110-1802U.S.A.Voice 1 617 556 5500

Buenos AiresEsmeralda 130 - Piso 221035 Buenos AiresArgentinaVoice 54 1 394 3100Fax 54 1 325 4717

ChicagoAT&T Corporate Center227 West Monroe StreetChicago, IL 60606-5016U.S.A.Voice 1 312 750 3000

Houston600 Travis StreetSuite 3030Houston, TX 77002-3003U.S.A.Voice 1 713 220 6700Fax 1 713 236 9222

Los AngelesWells Fargo Tower333 South Grand AvenueSuite 2200Los Angeles, CA 90071-1526U.S.A.Voice 1 213 253 2000

633 West Fifth Street64th FloorLos Angeles, CA 90071U.S.A.Voice 1 213 955 8200Fax 1 213 955 8245

MexicoCampos Eliseos #345, Piso 9Edificio OmegaCol. Chapultepec Polanco11560 Mexico, D.F.MexicoVoice 52 5 202 60 00Fax 52 5 202 66 00

Montreal1250 Rene-Levesque

Boulevard WestSuite 3935Montreal H3B 4W8CanadaVoice 1 514 933 8774Fax 1 514 933 7699

NassauScotiabank BuildingRawson SquareP.O. Box N-4928Nassau BahamasVoice 1 242 356 8100Fax 1 242 326 6589

New YorkEleven Madison AvenueNew York, NY 10010-3629U.S.A.Voice 1 212 325 2000

CSFP Capital Inc.Voice 1 212 325 2000Fax 1 212 325 8042

Palo Alto1510 Page Mill RoadSuite 2Palo Alto, CA 94304-1135U.S.A.Voice 1 650 846 6600Fax 1 650 846 6660

Philadelphia11 Penn Center26th FloorPhiladelphia, PA 19103-2929U.S.A.Voice 1 215 851 1000Fax 1 215 851 0352

Portland85 Exchange StreetSuite 201Portland, ME 04101U.S.A.Voice 1 207 780 6210Fax 1 207 780 6735

San Francisco201 Spear Street17th and 18th FloorsSan Francisco, CA 94105U.S.A.Voice 1 415 836 7600Fax 1 415 836 7751

SantiagoAv. Andres Bello 277721st Floor, Office 2101Santiago – Las Condes ChileVoice 56 2 203 3190Fax 56 2 203 3196

Sao PauloAv. Presidente Juscelino

Kubitschek, 506th Floor04543-011 Sao Paulo, SPBrazilVoice 55 11 3048 2900

TorontoCredit Suisse Centre525 University AvenueToronto, Ontario M5G 2K6CanadaVoice 1 416 351 3500Fax 1 416 351 3630

Africa, Europe

and Middle East

Luxembourg56 Grand RueB.P. 40L-2010 LuxembourgLuxembourgVoice 352 46 00 111Fax 352 47 55 41

MadridPaseo De Recoletos17-Planta 128004 MadridSpainVoice 34 1 532 03 03Fax 34 1 532 35 60

MilanVia Bigli 2120121 MilanoItalyVoice 39 2 7702 1Fax 39 2 7702 2200

Via Turati 920121 MilanoItalyVoice 39 2 6374 1Fax 39 2 6596 489

Moscow5 Nikitsky Pereulok(Formerly Belinski Street)Moscow 103 009RussiaVoice 7 501 967 8200Fax 7 501 967 8210

CSFPVoice 7 501 967 8787/8727Fax 7 501 967 8722

Paris21 boulevard de la MadeleineF-75038 ParisCedex 01FranceVoice 33 1 40 76 8888Fax 33 1 42 56 1082

PragueStaromestske Nam. 15110 00 Prague 1Czech RepublicVoice 420 2 248 10937Fax 420 2 248 10996

AmsterdamJohannes Vermeerstraat 91071 DK AmsterdamThe NetherlandsVoice 31 20 575 4444Fax 31 20 575 4455

(Nederland) NVAtriumStrawinskylaan 30531077 ZX AmsterdamThe NetherlandsVoice 31 20 5045 145Fax 31 20 5045 199

BrusselsS.A. Stephanie SquareBusiness Centre N.V.Avenue Louise 65Box 111050 BrusselsBelgiumVoice 32 2535 7854Fax 32 2535 7700

BudapestNagy Jeno U.12H-1126 BudapestHungaryVoice 36 1 202 2188Fax 36 1 201 9196

Cairo32 Haroon StreetP.O. Box 224DokkiCairo EgyptVoice 20 2 349 9760Fax 20 2 361 5136

FrankfurtMesseTurm60308 Frankfurt am MainGermanyVoice 49 69 75 38 0Fax 49 69 75 38 2444

Geneva59 Route De ChancyCH-1213 Petit-LancySwitzerlandVoice 41 22 394 70 00Fax 41 22 792 40 72

GuernseyHelvetia CourtSouth EsplanadeP.O. Box 589St Peter Port, Guernsey

GY1 6LUVoice 44 1481 724 574Fax 44 1481 711 940

HelsinkiEtelaranta 144th FloorFIN-00130 HelsinkiFinlandVoice 358 9 622 2882Fax 358 9 622 1535

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 5787Fax 380 44 247 5790

Limassol199 Christodoulou

Hadjipavolou AvenueP.O. Box 75303316 LimassolCyprusVoice 357 534 12 44Fax 357 581 74 24

LondonOne Cabot SquareLondon E14 4QJUnited KingdomVoice 44 171 888 8888Fax 44 171 888 1600

CSFPVoice 44 171 888 2000Fax 44 171 888 1600

Tashkent1 Turab Tula Street700003 TashkentRepublic of UzbekistanVoice 7 3712 40 6166Fax 7 3712 40 6177

TehranNo. 309, First FloorShahid Vahid Dastjerdi Ave.Between Africa And Vali AsrIR-19686 TehranIranVoice 98 21 878 7655Fax 98 21 878 5215

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

CSFPUetlibergstrasse 231Postfach 700 (FPL2)8070 ZurichVoice 41 1 332 6400Fax 41 1 332 6404

49

OsakaYodokodai-2 Building, 6th Floor4-2-15 Bakuro-MachiChuo-KuOsaka 541JapanVoice 81 6 243 0789Fax 81 6 243 0079

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

Singapore80 Raffles Place #49-01UOB Plaza 1Singapore 048624Voice 65 538 6322Fax 65 531 2708

6 Shenton Way#11-08 DBS Tower 2Singapore 068809Voice 65 226 5088Fax 65 420 4868

SydneyGateway Level 311 Macquarie PlaceSydney, New South Wales

2000AustraliaVoice 61 2 9394 4400Fax 61 2 9394 4382

CSFPVoice 61 2 9394 4515Fax 61 2 9394 4388

Taipei14th Floor205 Tun Hwa North Road Taipei TaiwanVoice 886 2 2713 5559Fax 886 2 2717 0803

TokyoShiroyama Hills26th Floor4-3-1 ToranomonMinato-KuTokyo 105JapanVoice 81 3 5404 9000Fax 81 3 5404 9800

CSFP27th FloorVoice 81 3 5403 4000Fax 81 3 5403 4077/4088

CS Tower1-11-30 AkasakaMinato-KuTokyo 107JapanVoice 81 3 3589 3636Fax 81 3 3224 4040

WellingtonCaltex Tower282-292 Lambton QuayLevel 10Wellington New ZealandVoice 64 4 474 4400Fax 64 4 474 4051

A s i a / P a c i f i cAucklandCoopers & Lybrand Tower23-29 Albert StreetLevel 20Auckland New 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 Floor, GPO Box 5688 Connaught Place CentralHong Kong Voice 852 2101 6000Fax 852 2101 7990

CSFP13th FloorVoice 852 2101 6000Fax 852 2101 7792

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

ManilaSGV I Building14th Floor6760 Ayala Avenue1226 Makati CityPhilippinesVoice 63 2 894 8101Fax 63 2 891 0543

Melbourne101 Collins Street27th FloorMelbourne, Victoria 3000AustraliaVoice 61 3 9280 1666Fax 61 3 9280 1890

Mumbai (FormerlyBombay)35/39 Free Press House3rd Floor215 Free Press Journal MargNariman PointMumbai 400 021IndiaVoice 91 22 284 6888Fax 91 22 285 1949

The terms “Credit Suisse First Boston,” “CSFB,” “CSFP,” “Firm,” “we,” and “our” in this Annual Review typically refer to the business unit (versus the 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, 1998. 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.

Design: RDA Design, NYC© Copyright 1998, Credit Suisse First Boston Photography: Shonna Va l e s k aIssued in the United Kingdom by Credit Suisse First Boston (Europe) Ltd: regulated by SFA. Printed on recycled paper

Uetlibergstrasse 231

P.O. Box 900

CH-8070 Zurich

Switzerland

One Cabot Square

London E14 4QJ

United Kingdom

Eleven Madison Avenue

New York, NY 10010-3629

USA