Use these links to rapidly review the documentTABLE OF CONTENTS



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

---

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

---

|For the fiscal year ended December 31, 2003 |  | Commission File Number: 1-6862
|------------------------------------------- |  | ------------------------------

Credit Suisse First Boston (USA), Inc.(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization) Eleven Madison Avenue
New York, New York(Address of principal executive offices) |  | 13-1898818(I.R.S. Employer Identification No.) 10010(Zip Code)
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------

(212) 325-2000(Registrant's telephone number, including area code)

---

Reduced Disclosure Format

The Registrant meets the conditions set forth in General Instruction I (1) (a) and (b) of Form 10-K and is therefore
filing this Form 10-K with the reduced disclosure format.

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class:
61/8% Notes due 2011                                                                                                                                                                                                                                                                 |  | Name of each exchange on which registered:
New York Stock Exchange           
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------
|Accelerated Return Equity Securities (ARES)SM due
    November 30, 2004 Linked to the S&P 500® Index
Five-Year Contingent Protection Securities due
    September 30, 2008 Linked to the S&P 500® Index
Five-Year Contingent Protection Securities due
    November 26, 2008 Linked to the S&P 500® Index |  | American Stock Exchange
  
American Stock Exchange
  
American Stock Exchange

Securities
registered pursuant to Section 12(g) of the Act: None

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days: Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: ý

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act): Yes o    No ý

Because the registrant is an indirect wholly owned subsidiary of Credit Suisse Group, none of the registrant's outstanding voting stock is held by nonaffiliates of the
Registrant. As of the date hereof, 1,100 shares of the Registrant's Common Stock, $.10 par value, were issued and outstanding and held by Credit Suisse First Boston, Inc.

Documents
Incorporated by Reference:None



---

CREDIT SUISSE FIRST BOSTON (USA), INC.
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2003



|                                                                                      |  |                                                                                                              |  | Page No.
|------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --------
|Cautionary Statement Pursuant to The Private Securities Litigation Reform Act of 1995 |  | (i)                                                                                                         
|Form 10-K Item Number:                                                                |  |                                                                                                             
|PART I                                                                                |  |                                                                                                              |  |         
|Item 1:                                                                               |  | Business                                                                                                     |  | 1       
|Item 2:                                                                               |  | Properties                                                                                                   |  | 19      
|Item 3:                                                                               |  | Legal Proceedings                                                                                            |  | 19      
|Item 4:                                                                               |  | Omitted Pursuant to General Instruction I                                                                    |  | 25      
|PART II                                                                               |  |                                                                                                              |  |         
|Item 5:                                                                               |  | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 26      
|Item 6:                                                                               |  | Selected Financial Data                                                                                      |  | 26      
|Item 7:                                                                               |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                        |  | 27      
|Item 7A:                                                                              |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 54      
|Item 8:                                                                               |  | Financial Statements and Supplementary Data                                                                  |  | 64      
|Item 9:                                                                               |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 64      
|Item 9A:                                                                              |  | Controls and Procedures                                                                                      |  | 64      
|PART III                                                                              |  |                                                                                                              |  |         
|Item 10:                                                                              |  | Directors and Executive Officers of the Registrant                                                           |  | 65      
|Item 11:                                                                              |  | Omitted Pursuant to General Instruction I                                                                    |  | 66      
|Item 12:                                                                              |  | Omitted Pursuant to General Instruction I                                                                    |  | 66      
|Item 13:                                                                              |  | Omitted Pursuant to General Instruction I                                                                    |  | 66      
|Item 14:                                                                              |  | Principal Accountant Fees and Services                                                                       |  | 66      
|PART IV                                                                               |  |                                                                                                              |  |         
|Item 15:                                                                              |  | Exhibits, Financial Statement Schedule, and Reports on Form 8-K                                              |  | 68      
|Index to Financial Statements and Financial Statement Schedule                        |  | F-1                                                                                                         
|Signatures                                                                            |  | II-1                                                                                                        
|Index to Exhibits                                                                     |  | E-1                                                                                                         

---

Cautionary Statement Pursuant to The Private Securities Litigation Reform Act of 1995

We have made in this Annual Report on Form 10-K, including, without limitation, in "Legal Proceedings" in Part I, Item 3 and in
"Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7, and from time to time may otherwise make in our public filings, press releases or
other statements, forward-looking statements concerning our operations, economic performance and financial condition, as well as our future plans and strategic objectives. Such forward-looking
statements are subject to various risks and uncertainties, and we claim the protection afforded by the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. Actual results could differ materially from those anticipated herein or in any such other filings, releases or statements because of a number of factors, including, without limitation,
those detailed in "BusinessCertain Factors That May Affect Our Results of Operations" in Part I, Item 1, those discussed elsewhere herein, and in other public filings and press
releases. These forward-looking statements are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and beyond
our control. Forward-looking statements are typically identified by the use of future or conditional verbs such as "will," "should," "would" or "could," and by words or phrases such as "believe,"
"expect," "intend," "estimate" and similar expressions. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results may differ, possibly
materially, from the results indicated in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements except as otherwise required by applicable
law.

(i)

---



PART I

Item 1: Business

OVERVIEW

We are a leading integrated investment bank serving institutional, corporate, government and high-net-worth individual clients. We provide
our clients with a broad range of products and services, which include:



We
are the product of a business combination. On November 3, 2000, our indirect parent, Credit Suisse Group, or CSG, acquired Donaldson, Lufkin & Jenrette, Inc., or
DLJ. CSG is a global financial services company, providing a comprehensive range of insurance, banking and investment banking products. Credit Suisse First Boston LLC, CSG's principal U.S. registered
broker-dealer subsidiary (formerly known as Credit Suisse First Boston Corporation), became a subsidiary of DLJ, and DLJ changed its name to Credit Suisse First Boston (USA), Inc. When we use
the terms "we," "our" and the "Company," we mean, after the DLJ acquisition, Credit Suisse First Boston (USA), Inc. and its consolidated subsidiaries and, prior to the DLJ acquisition, DLJ and
its consolidated subsidiaries.

CSG
operates through two business units, the Credit Suisse Financial Services business unit and the Credit Suisse First Boston business unit, or CSFB. Credit Suisse First Boston, a Swiss
bank, is our indirect parent and consists principally of CSFB. We are part of CSFB, which consists of the institutional securities and financial services businesses. The institutional securities
business provides financial advisory and capital raising services and sales and trading for users and suppliers of capital around the world. The financial services business provides international
asset management services to institutional, mutual fund and private investors and financial advisory services to high-net-worth individuals and corporate investors.

For
2003, the businesses of CSFB ranked:



1

---



We
file annual, quarterly and current reports and other information with the Securities and Exchange Commission, or SEC. Our SEC filings are available to the public over the internet on
the SEC's website atwww.sec.gov.You may also view our annual, quarterly and current reports on our website at www.csfb.com(under "Company Information")
as soon as is reasonably practicable after the report is electronically filed with, or furnished to, the SEC.
The information on our website is not incorporated by reference into this Annual Report.

OPERATIONAL STRUCTURE

We operate and manage our business through two segments: the Institutional Securities segment, which provides financial advisory and capital raising services and
sales and trading, and the Financial Services
segment, which consists of the operations of Private Client Services, a financial advisory business serving high-net-worth individuals and corporate investors.

The
Institutional Securities segment is operated and managed through three operating divisions:



The
Financial Services segment consists of Private Client Services, a financial advisory business serving high-net-worth individuals and corporate investors with
a wide range of CSFB and third-party investment management products and services.

Effective
January 1, 2004, our operations were reorganized to move the private equity and private fund groups to the Financial Services segment, which was renamed Wealth &
Asset Management. The operations of Institutional Securities now include debt and equity underwriting and financial advisory services and the equity and fixed income trading businesses. The discussion
below presents our segments as organized and managed in 2003.

2

---

PRODUCTS AND SERVICES

Our principal products and activities by business segment are set forth below:



Institutional Securities



We engage in a broad range of equity activities for investors around the world, including sales, trading, brokerage and market-making in U.S. and international
equity and equity-related securities, equity derivatives, convertible securities, forwards, futures and options, traded on exchanges and over the counter. We also engage in proprietary trading
activities when we identify market opportunities in the price or value attributed to assets, companies, industries or economies. Equity-related activities include:



3

---





We engage in trading a broad range of financial instruments, including U.S. Treasury and government agency securities, foreign sovereign government securities and
U.S. and foreign investment-grade and high-yield corporate bonds, money market instruments, foreign exchange and mortgage-backed and other asset-backed securities. We offer a full range of
derivatives products for the financing, risk management and investment needs of our customers. Our fixed income business covers sovereign government, corporate and institutional customers. We generate
net revenues from our fixed income business in the form of commissions and spreads. We earn greater spreads in less liquid markets than we do in large, highly liquid markets. We also take proprietary
positions through market making and trading in fixed income securities and derivatives. In addition, CSFB syndicates loans and enters into commitments to extend credit to investment-grade and
non-investment-grade borrowers through branches of Credit Suisse First Boston.

Key
fixed income products and channels include:



4

---



Prime Services.We also engage in dealer-to-dealer financing and cover proprietary and client short
positions through securities borrowing and lending arrangements. We finance certain equity positions through stock lending and equity repurchase agreements and make margin loans to customers. We
participate in these transactions globally and have an established prime brokerage business to attract client borrowings of cash and securities. We facilitate multi-currency financing, clearance,
settlement and custody of securities transactions and provide brokerage services for our customers on major futures and options exchanges worldwide, providing flexible solutions for client needs and
enabling clients to use more than one broker for the execution of trading strategies but one prime broker for efficient margining and consolidated position reporting.



The Investment Banking division's activities include financial advisory services regarding mergers and acquisitions and other matters and origination and
underwriting of equity and fixed income securities. Through the Private Equity Group, the Investment Banking division also conducts worldwide private equity investment activities. CSFB underwrites and
syndicates bank lending facilities and provides bridge financing.

We
maintain offices in select major cities through which investment banking activities are conducted. The Investment Banking division has established industry groups with a broad range
of dedicated industry specialists. The industry group structure facilitates the delivery of specialist information and services to our clients on a global basis. The Investment Banking division's
clients include U.S. and international public and private corporations, sovereign governments, supranational and national agencies and public sector entities.

Principal
Investment Banking division products and services include:



5

---



Private Equity.The Private Equity Group invests primarily in unlisted or illiquid equity or equity-related securities in
privately negotiated transactions, making private equity investments across the entire capital structure, from venture capital equity to investments in the largest leveraged buyouts. In addition to
debt and equity investments in companies, the Private Equity Group manages private equity funds and invests in real estate and third-party managed private equity funds. Investments are made directly
or through a variety of investment vehicles. As of December 31, 2003, CSFB managed or advised funds and proprietary private equity portfolios with committed capital of approximately
$30.2 billion, and the Company managed or advised funds and proprietary private equity portfolios with committed capital of approximately $23.2 billion. As of December 31, 2003,
CSFB had global investments in private equity for its own account of approximately $1.9 billion and had unfunded commitments of approximately $1.6 billion. As of December 31,
2003, the Company had private equity investments for its own account of approximately $1.1 billion and had unfunded commitments of approximately $1.3 billion.

Our
principal funds groups include leveraged corporate private equity funds, mezzanine investment funds, real estate investment funds, venture capital funds, secondary funds, which
purchase existing interests in private equity funds and direct private equity investments, and the customized fund investment group.

Our
private equity activities generate revenues through an annual management fee, generally a percentage of a fund's committed capital or invested capital. In addition, after a minimum
return for investors has been achieved, we may receive an increased share of a fund's income and gains based on a percentage of the income and gains from the fund's investments. Operating income may
also be derived from realized and unrealized gains or losses on the investment. Our private equity business is a long-term business, and an investment may be held for a number of years
before disposition.

Effective
January 1, 2004, our operations were reorganized to move the private equity and private fund groups to the Financial Services segment, which was renamed Wealth &
Asset Management.



CSFB provides equity and fixed income research, economic analyses, technical market and quantitative analyses and investment strategy recommendations covering
both equity and fixed income markets. CSFB's analysts, strategists and economists provide research services to institutional and high-net-worth individual clients globally
through traditional and online channels.

Equity
research analyzes more than 2,300 companies and a broad range of industries, with in-depth coverage of U.S. and foreign issuers and market and economic trends. Fixed
income research provides comprehensive investment analysis on investment-grade and high-yield debt issuers, research on a variety of structured products, global economic analysis,
macroeconomic analysis on developed and emerging market countries and fundamental and technical analysis on a wide range of securities and market sectors. For information about the regulation and
management of our research activities, see "U.S. Regulation and Supervision."

Financial Services



Private Client Services provides financial advice to high-net-worth and corporate investors with significant financial resources and
specialized investment needs. In addition, Private Client Services serves as a distribution channel for a wide range of CSFB and third-party investment management products and services. Private Client
Services had 286 investment advisors and managed or advised clients on approximately $59 billion in assets as of December 31, 2003.

6

---

OPERATING ENVIRONMENT AND COMPETITION

CSFB believes that the long-term outlook for leaders in the investment banking industry is generally positive, although the industry is volatile and
subject to periodic market downturns worldwide or in particular geographic regions. Competition has resulted in significant pressure on margins, particularly in the cash equities businesses and equity
and debt underwriting, and there has been a trend towards increased capital commitments to secure mandates. The global "bulge bracket," or top tier, investment banks are likely to be more successful
than other firms, and there is continuing consolidation in the financial services industry. One of the principal macroeconomic trends affecting the investment banking industry is greater capital
formation, which is produced by aging demographics, pension reforms and wealth creation. Consolidation and convergence, driven by a blurring of traditional product and geographic boundaries,
deregulation and the importance of scale and efficiency, have also created benefits for global full-service providers such as CSFB. Technology has led to productivity improvements and new
distribution and business models, more demanding and better-informed customers and the need to balance productivity gains with investment requirements.

The
financial services business, including asset management, is viewed as a growth sector. Despite a challenging market environment, the underlying fundamentals and demographics continue
to support the sector. CSFB believes that there will be positive net new asset or organic growth opportunities within this sector over the next several years. Despite this positive outlook for the
business, increased competition, higher research costs, required advancements in technology, growth in client needs and globalization are trends that place greater pressure on margins and increase the
need for scale within full-service asset management organizations. This growth, together with major external changes such as technological innovation and increased volatility and
complexity in world markets, is changing the way the industry delivers services, manages investments and measures risk.

CSFB
faces intense competition from various types of firms in all aspects of its business and throughout the world. The principal competitive factors influencing CSFB's business are its
reputation in the market place, its client relationships, its mix of market and product capabilities, and its ability to attract and retain highly skilled employees.

In
investment banking, CSFB competes with brokers and dealers in securities and commodities, investment banking firms, commercial banks and other firms offering financial services. There
is increased fragmentation in market share, partly due to lower volumes of business and increased competition for market share. CSFB is subject to continued and increasing competitive pressure to make
loans or otherwise commit capital, such as through block trades, to clients. CSFB has also experienced significant price competition in certain of its businesses, which has reduced profit margins on
certain products or in certain markets. Competition from alternative trading systems is reducing fees and commissions.

In
asset management, CSFB's major competitors are the asset management subsidiaries of financial services firms, U.S. mutual and institutional fund managers and European fund managers.
Despite the trend towards globalization in the asset management industry, competition is most significant in individual geographic locations. For the private equity business, as private equity funds
grow and proliferate, competition to raise private capital and to find and secure attractive investments is accelerating.

CSFB
continues to build upon its position as a top-tier global investment bank, while seeking to improve financial results and placing high priority on controls, risk
management and the firm's brand and reputation. CSFB will continue to focus on providing its clients with the highest quality of service across all business areas. Strategic priorities include being a
market leader in its core businesses, seeking revenue growth opportunities, focusing on key customers across geographic regions, applying its capital efficiently to maximize returns and minimize
risks, and focusing on markets and products that are profitable or that contribute to the profitability of CSFB's franchise.

7

---

CSFB
is committed to complying fully with the new laws and regulations that have been enacted following the high-profile bankruptcies and corporate and accounting scandals
that have so adversely affected investor confidence. As a top-tier investment firm, CSFB acknowledges its commitment to its role as a gatekeeper in the financial markets. In furtherance of
that commitment, CSFB has taken steps to strengthen that role, including implementing a framework to protect the integrity and quality of its research in compliance with regulations and evolving best
practices for research, compliance with restrictions on allocation of shares in initial public offerings to directors and officers of public companies and a vigorous review of ways to enhance
professionalism and integrity in the conduct of its businesses. CSFB remains committed to adhering to the highest professional standards and providing top quality execution and investment performance,
while developing and retaining outstanding investment professionals.

FINANCE, ADMINISTRATION AND OPERATIONS

Included within finance, administration and operations are various support departments, including treasury, controllers, credit, risk management, corporate
services, information technology, tax, legal and compliance, human resources and operations. These departments support our businesses through the processing of securities, derivatives, foreign
exchange and commodities transactions; receipt and delivery of funds and securities; safeguarding of customers' securities; internal financial controls, including management of global expenses,
capital structure and funding; and our efforts at ensuring compliance with regulatory and legal requirements. Certain of these areas also assist in the management and monitoring of the risks
associated with our business activities.

CSFB
has global business continuity and disaster recovery plans should the firm's employees be unable to gain access to or use significant offices or facilities or in the event of severe
disruptions to the infrastructure that supports the firm's businesses, including information technology, communications and other systems.

EMPLOYEES

As of December 31, 2003, we had 8,283 employees based in the United States and 423 employees based outside the United States. These figures include
contractors as well as employees.

U.S. REGULATION AND SUPERVISION

Our business is, and the securities and commodity futures and options industries generally are, subject to extensive regulation in the United States and
elsewhere. As a matter of public policy, regulatory bodies in the United States and the rest of the world are charged with safeguarding the integrity of the securities and other financial markets and
with protecting the interests of customers participating in those markets.

In
the United States, the SEC is the federal agency primarily responsible for the regulation of broker-dealers, investment advisers and investment companies, and the Commodity Futures
Trading Commission, or the CFTC, is the federal agency primarily responsible for, among other things, the regulation of futures commission merchants and commodity trading advisers. In addition, the
Department of the Treasury has the authority to promulgate rules relating to U.S. Treasury and government agency securities, and the Municipal Securities Rulemaking Board has the authority to
promulgate rules relating to municipal securities. The Board of Governors of the Federal Reserve System, or the Board, promulgates regulations applicable to certain securities credit transactions. In
addition, broker-dealers are subject to regulation by industry self-regulatory organizations, including the National Association of Securities Dealers, Inc., or the NASD, and the
New York Stock Exchange, or the NYSE, and by state authorities. Because we are also engaged in futures activities, our U.S. broker-dealer affiliates are subject to industry self-regulatory
organizations such as the National Futures Association, or the NFA.

8

---

Credit Suisse First Boston LLC, or CSFB LLC, our principal wholly owned subsidiary, is a broker-dealer registered with the SEC and a number of states, the District of Columbia and Puerto
Rico and with the CFTC as a futures commission merchant and commodity trading advisor. As a result of these registrations, and memberships in self-regulatory organizations such as the
NASD, the NYSE and the NFA, our business is subject to overlapping regulation covering all aspects of its securities, commodities and futures activities. Such regulations cover matters including:



A
particular focus of the applicable regulations concerns the relationship between broker-dealers and their customers. As a result, U.S. broker-dealers may be required in some instances
to make suitability determinations as to certain customer transactions, are frequently limited in the amounts that they may charge customers and generally cannot trade ahead of their customers. U.S.
broker-dealers must also make certain required disclosures to their customers.

As
a registered futures commission merchant, our broker-dealer is subject to the requirements of the CFTC under the Commodity Exchange Act. These requirements include the provision of
certain disclosure documents, generally impose prohibitions against trading ahead of customers and other fraudulent trading practices, and include provisions as to the handling of customer funds and
reporting and recordkeeping requirements.

Our
businesses include legal entities registered and regulated as investment advisers under the U.S. Investment Advisers Act of 1940, as amended, and the SEC's rules and regulations
thereunder. CSFB provides asset management services primarily to individuals, corporations and public pension funds. For pension fund clients, we are subject to the Employee Retirement Income Security
Act of 1974, as amended, and similar state statutes. These regulations provide, among other things, for the way in which client assets should be managed. In addition, these regulations impose
limitations on the ability of investment advisors to charge performance-based or non-refundable fees to clients, recordkeeping and recording requirements, disclosure requirements and
limitations on principal transactions between an adviser or its affiliates and advisory clients, as well as general anti-fraud prohibitions. Finally, because some of the investment
vehicles we advise are commodity pools, we are subject to the Commodity Exchange Act for such clients.

Our
operations may be materially affected not only by regulations applicable to them as financial market intermediaries, but also by regulations of general application. For example, the
volume of our underwriting business could be affected by, among other things, existing and proposed tax legislation,

9

---

antitrust
policy and other governmental regulations and policies (including the interest rate policies of the Board) and changes in interpretation and enforcement of various laws that affect the
business and financial communities. From time to time, various forms of anti-takeover legislation and legislation that could affect the benefits associated with financing leveraged
transactions with high-yield securities have been proposed that, if enacted, could adversely affect the volume of merger and acquisition and private equity businesses, which in turn could
adversely affect our underwriting, advisory and trading revenues.

In
2002 and 2003, the NASD, the NYSE and the SEC adopted rules relating to the independence of research and research analysts. The NASD and NYSE rules are intended to address a number of
potential conflicts of interest relating to equity research. Regulation Analyst Certification, adopted by the SEC, applies to research reports involving equity or debt securities and requires research
analysts to make specific certifications in connection with both research report issuances and public appearances.

As
part of changing practices in the investment banking industry and CSFB's commitment to ensuring the independence of its research, CSFB has voluntarily made a number of changes in its
equity research activities, including realigning its research department to report to the Head of the Legal and Compliance Department and Vice Chairman for Research for CSFB, adopting new rules on
securities ownership by analysts and implementing new procedures for communication between analysts and investment bankers. Further, pursuant to a settlement with various U.S. regulators regarding,
among other things, research analyst independence, CSFB adopted internal structural and operational reforms that augment the steps it had already taken to ensure research analyst independence. See
"Legal Proceedings" in Part I, Item 3.

In
October 2001, the U.S. Congress enacted the USA PATRIOT Act, or the Patriot Act. The Patriot Act required the Department of Treasury to develop and adopt final regulations that
impose anti-money-laundering compliance obligations on financial institutions; Treasury delegated this authority to the Financial Crimes Enforcement Network, or FinCEN, one of its bureaus.
As a bank holding company, CSFB was previously subject to anti-money-laundering compliance obligations arising from the Bank Secrecy Act, or BSA.

The
Patriot Act and the BSA have several core components. First, financial institutions, as defined by the Patriot Act, must implement an anti-money-laundering compliance
program that: (1) includes policies, procedures and controls designed to detect and prevent money laundering or other suspicious activity; (2) designates
anti-money-laundering compliance officers; (3) provides anti-money-laundering training to staff; and (4) ensures that an independent audit of the
anti-money-laundering program is conducted on an annual basis. Second, financial institutions must implement a customer identification and verification program; for foreign bank clients,
financial institutions are required to gather certain additional information about the foreign bank, including its agent for service of process in the United States. Third, financial institutions must
conduct enhanced due diligence, where appropriate, for correspondent accounts for foreign financial institutions and private banking accounts for non-U.S. persons. Fourth, financial
institutions must file suspicious activity reports regarding potential money laundering or other suspicious activity. Fifth, the Patriot Act created new rights and obligations pertaining to
information sharing between financial institutions and the government and between and among financial institutions.

CSFB
is subject to similar compliance obligations in other countries in which it operates and has implemented a global anti-money-laundering compliance program.

In
addition, because we are an indirect wholly owned subsidiary of each of CSG and Credit Suisse First Boston, our activities are subject to significant bank regulatory restrictions on
our operations. These restrictions are imposed pursuant to, among other enactments, the International Banking Act of 1978, or IBA, the Bank Holding Company Act of 1956, or BHCA, the Gramm-Leach-Bliley
Act of 1999, or GLBA, and the regulations and interpretations of the Board and other applicable regulators. For example, pursuant to the IBA, the BHCA imposes significant restrictions on our
operations and on

10

---

our
worldwide holdings of equity in companies operating in the United States. Historically, our activities were principally limited to activities that the Board found to be a proper incident to
banking or managing or controlling banks or an exemption applied (such as certain "grandfather rights" accorded to segments within the Credit Suisse First Boston legal entity pursuant to the IBA).
Moreover, prior Board approval was generally required to engage in new activities and to make non-banking acquisitions in the United States.

The
GLBA, which was signed into law in 1999 and became effective in most respects in 2000, significantly modified these restrictions. Once the GLBA took effect, qualifying bank holding
companies and foreign banks qualifying as "financial holding companies" were permitted to engage in a substantially broader range of non-banking activities in the United States, including
insurance, securities, private equity and other financial activities, in many cases without prior notice to, or approval from, the Board or any other U.S. banking regulator. The GLBA does not
authorize banks or their affiliates to engage in commercial activities that are not financial in nature or incidental thereto without other specific legal authority or exemption.

Certain
provisions of the BHCA governing the acquisition of U.S. banks were not affected by the GLBA. Accordingly, as was the case prior to enactment of the GLBA, CSG is required to
obtain the prior approval of the Board before acquiring, directly or indirectly, the ownership or control of more than 5% of any class of voting shares of any U.S. bank or bank holding company.

The
GLBA and the regulations issued thereunder contain a number of other provisions that could affect our operations and the operations of all financial institutions. One such provision
relates to the
financial privacy of consumers. In addition, the so-called "push-out" provisions of GLBA will narrow the exclusion of banks from the definitions of "broker" and "dealer" under
the Securities Exchange Act of 1934, or Exchange Act. The SEC granted a series of temporary exemptions that delayed the required implementation of these push-out provisions. The narrowed
"dealer" definition took effect in September 2003, and the narrowed "broker" definition is currently expected to take effect in November 2004. As a result, it is likely that certain
securities activities currently conducted by Credit Suisse First Boston's New York branch will need to be restructured or transferred to one or more U.S. registered broker-dealer affiliates.

We
believe that we have been in compliance in all material respects with the regulations described herein.

Capital Requirements

As a registered broker-dealer and member firm of various self-regulatory organizations, CSFB LLC is subject to the uniform net capital rule,
Rule 15c3-1 of the Exchange Act. This rule requires broker-dealers to maintain a specified level of minimum net capital in relatively liquid form. Our OTC derivatives dealer
subsidiary, Credit Suisse First Boston Capital LLC, is also subject to the uniform net capital rule but calculates its net capital requirements based on value at risk pursuant to Appendix F of
Rule 15c3-1. CSFB LLC is also subject to the net capital requirements of the CFTC and various commodity exchanges. See Note 8 of the consolidated financial statements in
Part II, Item 8.

The
SEC and various self-regulatory organizations impose rules that require notification when net capital falls below certain criteria, dictate the ratio of subordinated debt
to equity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, the SEC's uniform net
capital rule imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals
of capital.

Compliance
with net capital requirements of these and other regulators could limit those operations of our subsidiaries that require the intensive use of capital, such as underwriting
and trading

11

---

activities
and the financing of customer account balances, and also could restrict our ability to withdraw capital from our regulated subsidiaries, which in turn could limit our ability to pay
dividends and make payments on our debt obligations.

Certain
other of our subsidiaries are subject to capital adequacy requirements. As of December 31, 2003, our subsidiaries complied with all applicable regulatory capital adequacy
requirements.

CERTAIN FACTORS THAT MAY AFFECT OUR RESULTS OF OPERATIONS

Our businesses are materially affected by conditions in the financial markets and economic conditions generally. In addition, our businesses are exposed to a
variety of risks that could materially affect our results of operations, including those described below. See "Quantitative and Qualitative Disclosures about Market Risk" in Part II, Item 7A
for a description of how CSFB manages risk.

Market Risk

As an integrated investment bank, we are materially affected by conditions in the financial markets and economic conditions generally in the United States and
around the world. In addition, our results of operations in the past have been, and in the future may continue to be, materially affected by other factors of a global nature.



Our large trading and investment (other than trading) positions in the debt and equity markets, and in private equity, mortgage and other assets, can be adversely
affected by volatility in the financial markets, that is, the degree to which prices fluctuate over a particular period in a particular market, regardless of market levels. Such volatility can also
lead to losses relating to our trading and hedging products, including swaps, futures, options and structured products. To the extent that we own assets, or have net long positions, in any of those
markets, a downturn in those markets could result in losses from a decline in the value of our net long positions. Conversely, to the extent that we have sold assets that we do not own, or have net
short positions, in any of those markets, an upturn in those markets could expose us to potentially unlimited losses as we attempt to cover our net short positions by acquiring assets in a rising
market. We may from time to time have a trading strategy of holding a long position in one asset and a short position in another, from which we expect to earn operating income based on changes in the
relative value of the two assets. If, however, the relative value of the two assets changes in a direction or manner that we did not anticipate or against which we are not hedged, we might realize a
loss in those paired positions. Such losses, if significant, could adversely affect our results of operations.



Difficult market and economic conditions and geopolitical uncertainties in 2002 and 2003 had a negative impact on our investment banking business as the slowdown
in global economic growth continued. Despite improved market conditions and some signs that the economy is beginning to recover, adverse market or economic conditions could continue to reduce the
number and size of investment banking transactions in which we provide underwriting, mergers and acquisitions advice and other services and therefore adversely affect our financial advisory fees and
underwriting fees. Market declines in the United States and elsewhere would likely lead to a decline in the volume of securities trades that we execute for customers and, therefore, have an adverse
effect on the revenues we receive from commissions and spreads. Certain of our businesses, particularly structured and credit products, high-yield and fixed income trading, have benefited
in recent years from low or declining interest rates, and increasing or high interest rates may have an adverse effect on the results of these businesses. In addition, adverse market or economic
conditions could negatively affect our private equity investments.

12

---

If
a private equity investment in a company or an investment fund substantially declines in value, we may potentially lose some or all of any management or similar fees, may not receive any increased
share of the income and gains from such investment (to which we are entitled when the return on such investment exceeds certain threshold returns), may be obligated to return to investors previously
received excess carried interest payments and may lose our pro rata share of the capital invested in that company and other companies in the same fund. Further, it may become more difficult to dispose
of the investment. Even investments that are performing well may prove difficult to exit in weak initial public offering markets. In certain circumstances, depending on the size of the investment, the
nature of the company's problems or other factors, we may become involved in disputes or legal proceedings relating to the investment, and our reputation or our ability to sponsor private equity
investment funds in the future could be adversely affected.

Our
results could also be adversely affected by a downturn in particular sectors. In the real estate sector, we finance and acquire principal positions in a number of real estate and
real estate-related products for major participants in the commercial and residential real estate markets, and we securitize and trade in a wide range of real estate and real estate-related products,
including agency mortgage-backed securities. In addition, in the past we have made, and in the future we may make, significant commitments to provide investment banking advisory and underwriting
services to certain sectors such as technology and telecommunications, and decreasing economic growth generally with respect to these sectors has negatively affected our operating income and may
continue to do so in the future.

Terrorist
attacks, military conflicts and economic or political sanctions could continue to have a material adverse effect on economic and market conditions, market volatility and
financial activity, including in businesses in which we operate.



We could be exposed to increased losses in activities such as arbitrage, market-making, block and proprietary trading, private equity and underwriting. We have
committed substantial amounts of capital to these businesses, which may require us to take large positions in the securities of a particular company or companies in a particular sector, country or
region. The trend in all major capital markets is toward larger and more frequent commitments of capital. These concentrations of risk could increase our losses due to our sizable securities holdings.



If any of the instruments and strategies we use to hedge our exposure to various types of risk is not effective, we may incur losses. Many of our strategies are
based on historical trading patterns and correlations, and unexpected market developments may affect our hedging strategies in all market environments or against all types of risk. We may only be
partially hedged or our hedging strategies may not be fully effective in mitigating our risk. In addition, gains and losses resulting from ineffective hedges are recorded in principal
transactions-net in our consolidated statements of operations, and this may lead to volatility in our reported earnings.



In addition to the potentially adverse effects on our businesses described above, market risk could exacerbate the other risks that we face. For example, if we
were to incur substantial trading losses, our need for liquidity could rise sharply while access to liquidity could be impaired. In conjunction with a market downturn, our customers and counterparties
could also incur substantial losses of their own, thereby weakening their financial condition and increasing our credit risk to them.

13

---

Credit Risk

We are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations. This risk may arise, for example,
from holding securities of third parties as collateral; entering into swap or other derivative contracts under which counterparties have long-term obligations to make payments to us; and
extending credit to our clients through margin loans or other arrangements.

In
recent years, we have significantly expanded our use of swaps and other derivatives and we may continue to do so, both in types of products and in volume of transactions, in
particular through our OTC derivatives dealer subsidiary. As a result, our credit exposures have increased, and may continue to increase, in amount and duration. In addition, we have experienced, due
to competitive factors, pressure to assume longer-term credit risk, to extend credit against less liquid collateral and to price derivatives instruments more aggressively based on the
credit risks that we take.

Although
we regularly review credit exposure to specific clients and counterparties and to specific industries, countries and regions that we believe may present credit concerns, default
risk may arise from events or circumstances that are difficult to foresee or detect, such as fraud. We may also fail to receive full information with respect to the trading risks of a counterparty. In
addition, concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions because the commercial soundness of many financial
institutions may be closely related as a result of credit, trading, clearing or other relationships between institutions. This risk is sometimes referred to as "systemic risk" and may adversely affect
financial intermediaries, such as clearing agencies, clearinghouses, banks, securities firms and exchanges with which we interact on a daily basis, and could adversely affect us.

Country,
regional and political risks are components of market risk as well as credit risk. Financial markets and economic conditions generally in the United States and around the world
have in the past been, and in the future may continue to be, materially affected by such risks. Economic or political pressures in a country or region, including those arising from local market
disruptions, currency crises and monetary controls, may adversely affect the ability of clients or counterparties located in that country or region to obtain foreign exchange or credit and, therefore,
to perform their obligations to us. The political, economic or other circumstances of the countries in which we operate may have an adverse impact on our results of operations.

Liquidity Risk

Liquidity, or ready access to funds, is essential to our businesses. We depend on continuous access to the debt capital and money markets to finance
day-to-day operations. An inability to raise money in the long-term or short-term debt capital
markets, or an inability to access the repurchase and securities lending markets, could have a substantial negative effect on our liquidity. Our ability to borrow in the debt markets could be impaired
by factors that are not specific to us, such as severe disruption of the financial markets or negative views about the financial services industry generally. In addition, lenders could develop a
negative perception of our long-term or short-term financial prospects if, for example:



If
we were unable to borrow in the debt capital markets, or access the repurchase and securities lending markets, we would likely need to liquidate assets, such as our investment and
trading portfolios, to meet maturing liabilities. Our ability to liquidate portfolios could be adversely affected by a market

14

---

downturn.
In certain market environments, such as when there is market volatility or uncertainty, overall market liquidity may decline. In a time of reduced liquidity, we may be unable to sell some of
our assets, or we may have to sell assets at depressed prices, either of which could adversely affect our results of operations. In addition, our ability to sell assets may be impaired if other market
participants are seeking to sell similar assets at the same time.

Regulatory
and other legal restrictions may limit our ability to transfer funds freely either to or from our indirect parent, Credit Suisse First Boston, our subsidiaries and other
affiliates of those companies. In particular, a substantial number of those entities, including our broker-dealer subsidiaries, are subject to laws and regulations that authorize regulatory bodies to
block or reduce the flow of funds to us, or that prohibit such transfers altogether in certain circumstances. These laws and regulations may hinder our ability to access funds that we need to make
payments on our obligations.

Our
borrowing costs and our access to the debt capital and money markets depend significantly on our credit ratings. These ratings are assigned by ratings agencies, which may reduce or
withdraw their ratings or place us on "credit watch" with negative implications at any time. Credit ratings are important to us when competing in certain markets and when seeking to engage in
longer-term transactions, including OTC derivatives. A reduction in our credit ratings could increase our borrowing costs and limit our access to capital markets. This, in turn, could
reduce our liquidity and negatively impact our operating results.

Operational Risk

Operational risk is the risk of adverse effects upon our businesses as a consequence of conducting operations in an improper or inadequate manner, or as a result
of external factors. In general, our businesses face a wide variety of operational risks. We face risk arising from organizational factors, such as change of management and other personnel, data flow,
communication, coordination and allocation of responsibilities. Policy and process risk arises from weakness in or non-compliance with policies and critical processes involving
documentation, due diligence, settlement and payment. Technology risk stems from dependencies on information technology and the telecommunications infrastructure and risks arising from
e-commerce activities. We face risks arising from human error and external factors such as fraud. Finally, we face risks from physical threats to our or our third-party suppliers'
facilities or employees and business disruption. In particular, if there is a disruption in the infrastructure supporting our businesses and/or the areas in which they or third-party suppliers are
situated, such as interruptions in electrical, communications, transportation or other services, our ability to conduct our operations may be negatively affected. Any of such risks could have an
adverse effect on our results of operations.

Our
businesses are exposed to risk from potential non-compliance with policies on securities transactions and settlements and payment processes. There have been a number of
highly publicized cases involving fraud or other misconduct by employees in the financial services industry in recent years, and we run the risk that employee misconduct could occur. Misconduct by
employees could include engaging in unauthorized activities or binding us to transactions that exceed authorized limits or present unacceptable risks, which, in either case, may result in unknown and
unmanaged risks or losses. Employee misconduct could also involve the improper use or disclosure of confidential information, which could result in regulatory sanction and serious reputational or
financial harm. It is not always possible to deter employee misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.

We
also face operational risk from potential losses caused by a breakdown in information, communication, transaction settlement, clearance and processing procedures. As an integrated
investment bank, we rely heavily on our financial, accounting and other data processing systems, which are varied and complex. If any of these systems does not operate properly or is disabled,
including as a

15

---

result
of terrorist attacks or other unforeseeable events, we could suffer financial loss, a disruption of our businesses, liability to our clients, regulatory intervention or reputational damage. The
inability of our systems to accommodate an increasing volume of transactions could also constrain our ability to expand our businesses.

Legal and Regulatory Risks

We face significant legal risks in our businesses, and the volume and amount of damages claimed in litigation, regulatory proceedings and other adversarial
proceedings against financial services firms are increasing. These risks include disputes over the terms of transactions in which we act as principal, disputes concerning the adequacy or
enforceability of documents relating to our transactions, potential liability under securities or other laws for materially false or misleading statements made in connection with securities and other
transactions in which we act as underwriter, placement agent or financial advisor, potential liability for the "fairness opinions" and other advice we provide to participants in corporate
transactions, and disputes over the terms and conditions of complex trading arrangements. We also face the possibility that counterparties in complex or risky trading transactions will claim that we
improperly failed to tell them of the risks or that they were not authorized or permitted to enter into these transactions with us and that their obligations to us are not enforceable.

We
face risks relating to investment suitability determinations, disclosure obligations and performance expectations with respect to the products or services we provide, which could lead
to significant losses or reputational damage. We have in place policies and practices to monitor and, to some extent, control the risks that may arise in delivering products or services to clients. We
attempt to ensure that any investment or risk management product or service we provide to our clients is appropriate based on our relationship with that client.

We
are also subject to claims arising from disputes with employees for, among other things, alleged discrimination or harassment. These risks often may be difficult to assess or quantify
and their existence and magnitude often remain unknown for substantial periods of time.

As
a participant in the financial services industry, we are subject to extensive regulation by governmental agencies, supervisory authorities and self-regulatory
organizations. Such regulation is becoming increasingly more extensive and complex. The requirements imposed by our regulators are designed to ensure the integrity of the financial markets and to
protect customers and
other third parties who deal with us. These regulations often serve to limit our activities, including through net capital, customer protection and market conduct requirements, and restrictions on the
businesses in which we may operate or invest. Despite our best efforts to comply with applicable regulations, there are a number of risks, particularly in areas where applicable regulations may be
unclear. The authorities have the power to bring administrative or judicial proceedings against us, which could result, among other things, in suspension or revocation of our licenses, cease and
desist orders, fines, civil penalties, criminal penalties or other disciplinary action that could materially harm our results of operations. Such proceedings could also result in serious reputational
harm. Such authorities have increased resources and are choosing to bring more enforcement actions against companies in our industry.

It
is inherently difficult to predict the outcome of many of the litigations, regulatory proceedings and other adversarial proceedings involving our businesses, particularly those cases
in which the matters are brought on behalf of various classes of claimants, seek damages of unspecified or indeterminate amounts or involve novel legal claims. In presenting our consolidated financial
statements, management makes estimates regarding the outcome of legal, regulatory and arbitration matters and takes a charge to income when losses with respect to such matters are probable and can be
reasonably estimated. Charges, other than those taken periodically for costs of defense, are not established for matters when losses cannot be reasonably estimated. Estimates, by their nature, are
based on judgment and currently

16

---

available
information and involve a variety of factors, including, but not limited to, the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal
counsel and other advisers, our defenses and our experience in similar cases or proceedings.

In
addition, the SEC and other federal and state regulators are increasingly scrutinizing complex, structured finance transactions and have brought enforcement actions against a number
of financial institutions in connection with such transactions. In some of those actions, clients of the financial institutions are alleged to have engaged in accounting, disclosure or other
violations of the securities laws, and the financial institutions are alleged to have facilitated these improprieties by entering into transactions with the clients. While CSFB has policies and
procedures intended to ensure that all transactions, including structured transactions, into which we enter comply with applicable laws and regulations, it is possible that certain of these
transactions could give rise to litigation or enforcement actions.

Changes
in laws, rules or regulations affecting our operations, or in the interpretation or enforcement of such laws, rules and regulations, may adversely affect our results. We may be
materially affected not only by regulations applicable to us as an integrated investment bank, but also by regulations of general application. For example, our businesses have been, and are likely to
continue to be, affected by, among other things, existing and proposed tax legislation, adoption of new accounting standards, antitrust and competition policies, corporate governance initiatives and
other governmental regulations and polices and changes in the interpretation or enforcement of existing laws and rules that affect the business and financial communities. These new laws and
initiatives affect us directly and indirectly through their effect on the activities of our clients. In particular, the Sarbanes-Oxley Act of 2002 and rules of the SEC, the NYSE and the Nasdaq
National Market, or NASDAQ, have significantly altered
the duties and obligations relating to, among other things, corporate governance and financial disclosure for SEC-reporting companies. To the extent that private companies elect not to
engage in initial public offerings, or IPOs, in order to avoid being subject to these provisions, our equity new issuances business and our potential for exiting certain private equity investments may
be adversely affected. In addition, these requirements have diverted the focus of some companies from capital markets transactions, such as securities offerings and acquisition or disposition
transactions, and as long as such diversion exists, our investment banking business may be adversely affected.

For
a description of the legal proceedings and regulatory examinations to which we are subject, see "Legal Proceedings" in Part I, Item 3.

Competition and Conflicts of Interest

We face intense competition that could affect our business and results of operations. Consolidation, both in the form of mergers and acquisitions and by way of
alliances and cooperation, is increasing competition. New competitors, including internet-based financial services providers and non-financial companies, are entering the market.
Competition in this environment is based on many factors, including the products and services offered, pricing, distribution systems, customer service, brand recognition, perceived financial strength
and the willingness to use capital to serve client needs. Consolidation has created a number of firms that, like us, have the ability to offer a wide range of products. Some of these firms may be able
to offer a broader range of products than we do, or offer such products at more competitive prices. U.S. federal financial reform legislation significantly expands the activities permissible for
financial services firms in the United States. This legislation may accelerate consolidation, increase the capital base and geographic reach of our competitors and increase competition in the
financial services industry, which could adversely affect our results of operations. For further information relating to the regulation of our businesses, see "U.S. Regulation and
Supervision."

17

---



In the highly competitive environment arising from globalization and convergence in the financial services industry, a reputation for financial strength and integrity is critical to our
ability to attract and maintain customers. Our reputation could be harmed if we fail adequately to promote and market our brand. Our reputation could also be damaged if, as we increase our client base
and the scale of our businesses, our comprehensive procedures and controls dealing with conflicts of interest fail, or appear to fail, to address conflicts of interest. Furthermore, our reputation
could in the future be damaged as a result of, among other things, employee misconduct, a decline in results, adverse legal or regulatory action against us or a downturn in financial markets or the
financial services industry in general.

Our
performance is largely dependent on the talents and efforts of highly skilled individuals. Competition in the financial services industry for qualified employees is intense. We also
compete for employees with companies outside the financial services industry. Competition with non-financial services companies in particular may intensify when compensation within our
industry decreases in adverse markets or economies. We have devoted considerable resources to recruiting, training and compensating employees. Our continued ability to compete effectively in our
businesses depends on our ability to attract new employees and to retain and motivate our existing employees.

We
compete with brokers and dealers in securities and commodities, investment banking firms, commercial banks and other firms offering financial services. Investment banking has also
experienced significant price competition in certain of its businesses, which has reduced profit margins on certain products or in certain markets. In addition, as private equity funds grow and
proliferate, competition to raise private capital and to find and secure attractive investments is accelerating.

We
face competitive challenges from new trading technologies. Securities and futures transactions are now being conducted through the internet and other alternative,
non-traditional trading systems, and it appears that the trend toward alternative trading systems will continue and probably accelerate. A dramatic increase in computer-based or other
electronic trading may adversely affect our commission and trading revenues, exclude our businesses from certain transaction flows, reduce our participation in the trading markets and the associated
access to market information and lead to the creation of new and stronger competitors. We may also be required to make additional expenditures to develop or invest in new trading systems or otherwise
to invest in technology to maintain our competitive position.

Acquisition Risk

Acquisition of financial services businesses has been an important element of CSFB's strategy, and, when appropriate, CSFB expects to consider additional
acquisitions in the future. Even though CSFB reviews the records of companies it plans to acquire, such reviews are inherently incomplete and it is generally not feasible for CSFB to review in detail
all such records. Even an in-depth review of records may not reveal existing or potential problems or permit CSFB to become familiar enough with a business to assess fully its capabilities
and deficiencies. As a result, CSFB may assume unanticipated liabilities, or an acquisition may not perform as well as expected. CSFB faces the risk that the returns on acquisitions will not support
the expenditures or indebtedness incurred to acquire such businesses, or the capital expenditures needed to develop such businesses.

Integration Risk

We and CSFB face the risk that we will not be able to integrate acquisitions into our existing operations effectively. Integration may be hindered by, among other
things, differing procedures, business practices and technology systems, and difficulties in adapting an acquired company into our organizational structure. If we are unable to address these
challenges effectively, our results of operations could be adversely affected.

18

---

Item 2: Properties

Our principal offices consist of the following properties:

|Location                |                          | Owned/Leased |        | Lease Expiration |      | Approximate
Square Feet
|----------------------- | ------------------------ | ------------ | ------ | ---------------- | ---- | -----------------------
|New York City, New York |                          |              |        |                  |      |                        
|                        | Eleven Madison Avenue(1) |              | Leased |                  | 2017 |                        
|                        | One Madison Avenue(2)    |              | Leased |                  | 2020 |                        
|                        | 315 Park Avenue South    |              | Leased |                  | 2017 |                        

---

In
addition, we lease approximately 832,000 square feet for our other offices in the United States. The leases for these properties expire at various dates through 2025. For additional
information on our leases, see Note 16 of the consolidated financial statements in Part II, Item 8.

In
2003, in connection with the sale of the Pershing unit, we transferred approximately 1,134,000 square feet of domestic and international regional office space, including offices
leased in Jersey City and Florham Park, New Jersey and owned in Florham Park, New Jersey.

We
believe that our existing facilities are adequate for our current and future needs.

Item 3: Legal Proceedings

We are involved in a number of judicial, regulatory and arbitration proceedings (including those described below and actions that have been separately described
in previous filings) concerning matters arising in connection with the conduct of our businesses. Some of these actions have been brought on behalf of various classes of claimants and, unless
otherwise specified, seek damages of material and/or indeterminate amounts. We believe, based on currently available information and advice of counsel, that the results of such proceedings, in the
aggregate, will not have a material adverse effect on our financial condition but might be material to operating results for any particular period, depending, in part, upon the operating results for
such period. We intend to defend ourselves vigorously against all of the claims asserted in these matters.

In re Issuer Plaintiff Initial Public Offering Fee Antitrust Litigation

Since November 1998, several lawsuits have been filed in the U.S. District Court for the Southern District of New York against CSFB LLC, an affiliate and
numerous other brokerage firms, alleging that the defendant broker-dealers conspired to fix the "fee" paid for underwriting certain IPO securities by setting the underwriters' fee or "spread" at 7%,
in violation of the federal antitrust laws. The lawsuits purport to be class actions brought on behalf of classes of persons and entities that purchased and issued securities in those IPOs.

In
February 1999, the district court consolidated the various cases in a single litigation, captionedIn re Public Offering Fee Antitrust
Litigation. On April 29, 1999, the defendant underwriters filed a motion to dismiss the complaint as a matter of law.

Meanwhile,
beginning in August 2000, several other complaints were filed on behalf of issuers of stock in IPOs containing the same allegations of an industry-wide
conspiracy to fix IPO underwriting fees. By order dated April 10, 2001, the district court consolidated the issuer complaints.

19

---

On
February 14, 2001, the district court dismissed the purchaser plaintiffs' claims on the ground that those plaintiffs lacked legal standing to assert antitrust claims. By order
dated December 13, 2002, the U.S. Court of Appeals for the Second Circuit vacated the district court's decision and remanded the action to the district court for consideration of the additional
grounds for dismissal asserted in the motion to dismiss.

On
July 6, 2001, the issuer plaintiffs filed a consolidated issuer complaint, naming numerous defendants, including CSFB LLC and the Company, under the caption In re Issuer Plaintiff Initial Public Offering Fee Antitrust
Litigation. On September 28, 2001, the defendants moved to dismiss the consolidated
issuer complaint. On September 25, 2002, the district court denied the defendants' motion to dismiss and defendants sought leave to file an interlocutory appeal of that decision. On
January 17, 2003, the district court issued an order deferring a ruling on the defendants' motion until the district court reached a decision, upon remand, of the motion to dismiss the
consolidated purchaser complaint.

On
March 26, 2003, defendants filed a motion to dismiss in both the consolidated issuer and consolidated purchaser cases on the grounds of implied immunity. The district court
denied that motion in an order dated June 26, 2003.

By
order dated February 24, 2004, the district court granted defendants' motion to dismiss the plaintiffs' claims for damages in the consolidated purchaser case, but denied
defendants' motion to dismiss plaintiffs' claims for injunctive relief in that case.

Governmental/Regulatory Inquiries Relating to IPO Allocation/Research-related Practices

In early 2002, in connection with industry-wide investigations into research analyst practices and certain IPO allocation practices, CSFB received
subpoenas and/or requests for information from the following governmental and regulatory bodies: (1) the New York State Attorney General, or NYAG; (2) the Massachusetts Secretary of the
Commonwealth Securities Division, or MSD; (3) the SEC; (4) the NASD; (5) the NYSE; and (6) the United States Attorneys' Office for the Southern District of New York, or
SDNY. The SEC, NASD and NYSE have conducted a joint investigation.

CSFB
cooperated fully with these investigations and produced a significant volume of documents, consisting primarily of e-mails, compensation-related information and research
reports. During these investigations, the NASD, NYAG and MSD took testimony from various present and
former employees of CSFB. The investigations focused primarily on equity research independence and the allocation of certain IPO shares to senior executives of the firm's clients (a practice that
regulators have referred to as "spinning").

On
April 28, 2003, CSFB and other Wall Street firms finalized a global settlement with a coalition of state and federal regulators and self-regulatory organizations to
settle these investigations, or the Global Settlement. Consistent with an agreement in principle that had first been announced in December 2002, CSFB agreed, without admitting or denying the
allegations, to pay a total of $200 million, consisting of (a) $150 million to settle enforcement actions based on alleged violations of certain federal and state securities laws
and NASD and NYSE rules and (b) $50 million to fund independent, third-party research to clients over five years. CSFB also agreed to implement significant, industry-wide
procedural and structural reforms to its business practices relating to both research analyst independence and the allocation of shares in IPOs.

On
October 31, 2003, the U.S. District Court for the Southern District of New York approved the Global Settlement. The "state" portion of the Global Settlement consists of CSFB's
agreements with each of the state regulators within the North American Securities Administrators Association, or NASAA; CSFB has officially executed its settlement agreements with nearly all of the
NASAA members and continues to negotiate the final terms of its agreements with the balance.

20

---

On
May 30, 2003, CSFB (and the other banks that participated in the Global Settlement) received a subpoena from the SEC and a document request from the NYSE, each of which seeks
e-mails of a number of employees and certain other documents relating primarily to equity research. (The NASD issued a similar request but has since withdrawn that request.) The SEC and
NYSE requests are part of those entities' investigations into whether individual employees (rather than CSFB itself) should be held liable for supervisory or other failures in connection with equity
research practices during the time period that was the subject of the investigations discussed above. CSFB has produced documents responsive to the SEC and NYSE requests.

CSFB
is not aware of any material developments in connection with the previously disclosed investigation by the NYAG of whether potential wrongdoing by individuals occurred during the
time period covered by the Global Settlement.

Additionally,
CSFB is not aware of any material developments in connection with the previously disclosed governmental and regulatory inquiries concerning the firm's preservation and
production of documents in 2000 in response to then-pending investigations into the firm's allocation of shares in IPOs and subsequent transactions and commissions.

Litigation Relating to IPO Allocation/Research-related Practices

Since January 2001, CSFB LLC, an affiliate and several other investment banks have been named as defendants in a large number of putative class action
complaints filed in the U.S. District Court for the Southern District of New York concerning IPO allocation practices. On April 19, 2002, the plaintiffs filed consolidated amended complaints
alleging various violations of the federal securities laws resulting from alleged material omissions and misstatements in registration statements and prospectuses for the IPOs and, in some cases,
follow-on offerings, and with respect to transactions in the aftermarket. The complaints contain allegations that the registration statements and prospectuses either omitted or
misrepresented material information about commissions paid to investment banks and aftermarket transactions by certain customers that received allocations of shares in the IPOs. The complaints also
allege that misleading analyst reports were issued to support the issuers' allegedly manipulated stock price and that such reports failed to disclose the alleged allocation practices or that analysts
were allegedly subject to conflicts of interest. On July 1, 2002, CSFB LLC, an affiliate and other defendants moved to dismiss the consolidated class action complaints. On February 19,
2003, the district court denied the motion as to CSFB LLC, an affiliate and the other defendant investment banks, as well as with respect to certain issuer and individual defendants. In
June 2003, the plaintiffs in this litigation announced a proposed settlement of their claims against the issuer defendants and the issuers' officers and directors named in the litigation. On
September 2, 2003, the plaintiffs filed an omnibus motion for class certification in all of these actions. By agreement among the parties and the district court, six cases were selected as
focus cases for class certification purposes. The underwriter defendants opposed class certification in the six focus cases on February 24, 2004. Briefing on the class certification motion is
expected to conclude on April 12, 2004.

Since
March 2001, CSFB LLC and several other investment banks have been named as defendants in a number of putative class actions filed with the U.S. District Court for the
Southern District of New York, alleging violations of the federal and state antitrust laws in connection with alleged practices in allocation of shares in IPOs in which such investment banks were a
lead or co-managing underwriter. The amended complaint in these lawsuits, which have now been consolidated into a single action, alleges that the underwriter defendants have engaged in an
illegal antitrust conspiracy to require customers, in exchange for IPO allocations, to pay non-competitively determined commissions on transactions in other securities, to purchase an
issuer's shares in follow-on offerings, and to commit to purchase other less desirable securities. The complaint also alleges that the underwriter defendants conspired to require
customers, in exchange for IPO allocations, to agree to make aftermarket purchases of the IPO securities at a price higher than the offering price, as a precondition to receiving

21

---

an
allocation. These alleged "tie-in" arrangements are further alleged to have artificially inflated the market price for the securities. On May 24, 2002, CSFB LLC and the other
defendants moved to dismiss the amended complaint. On November 3, 2003, the district court granted the motion to dismiss and dismissed the action with prejudice as to all defendants. On
December 3, 2003, the plaintiffs filed a notice of appeal to appeal the district court's decision.

On
November 15, 2002, the Company was sued in the U.S. District Court for the Southern District of New York on behalf of a putative class of issuers in IPOs for which its
affiliate, Donaldson, Lufkin & Jenrette Securities Corporation, or DLJSC, acted as underwriter. The complaint alleges that the issuers' IPOs were underpriced, and that DLJSC allocated the
underpriced IPO stock to certain of its favored clients and subsequently shared in portions of the profits of such favored clients pursuant to side agreements or understandings. This purported conduct
is alleged to have been in breach of the underwriting agreements between DLJSC and those issuers. On September 12, 2003, the Company filed a motion to dismiss the complaint. By order dated
March 9, 2004, the district court denied the Company's motion to dismiss as to three of plaintiff's claims, but granted the motion as to plaintiff's claim for unjust enrichment.

Several
putative class action lawsuits have been filed against CSFB LLC in the wake of publicity surrounding various governmental and regulatory investigations that led to the Global
Settlement. Thus far, cases have been brought against CSFB LLC in the U.S. District Courts for the Southern District of New York and the District of Massachusetts on behalf of purchasers of shares of
Atmel Corporation, Agilent Technologies, Inc., AOL Time Warner Inc., Amazon.com, Razorfish, Inc., Lantronix, Inc., Synopsys, Inc., Winstar, Inc. and Covad
Communications Co. The complaints generally assert claims under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and Section 20(a) of the
Exchange Act. A purported class action has also been filed in Missouri state court relating to analyst research.

A
purchaser of shares of Clarent Corporation has filed an individual action in the Superior Court of the State of California for the County of Los Angeles alleging fraud, negligence and
negligent misrepresentation in connection with CSFB's research coverage of that company. An action has also been filed in the Superior Court of the State of California for the County of Santa Clara on
behalf of a class of purchasers of several issuers. That complaint alleges that CSFB LLC violated Section 17200 of California's Business and Professions Code, which prohibits unfair business
practices. On March 2, 2004, that case was dismissed without prejudice.

The
Amazon.com and Covad Communications actions have been dismissed on motions to dismiss; Covad is currently on appeal to the U.S. Court of Appeals for the Second Circuit.

The
actions relating to AOL Time Warner Inc., Agilent Technologies, Inc., Synopsys, Inc., Winstar, Inc., and Razorfish, Inc. have all been separately
consolidated in the U.S. District Court for the District of Massachusetts. Motions to dismiss have been or will be filed in each of these actions. CSFB LLC has also filed a motion to dismiss in a
consumer fraud action brought by the West Virginia Attorney General relating to analyst research.

Enron-related Litigation and Inquiries

Numerous actions have been filed against CSFB LLC and its affiliates relating to Enron Corp. or its affiliates. On April 8, 2002, CSFB and certain other
investment banks were named as defendants along with, among others, Enron, Enron executives and directors, and external law and accounting firms in two putative class action complaints filed in the
U.S. District Court for the Southern District of Texas. The first,Newby, et al. v. Enron Corp., et al., was filed by purchasers of Enron securities and
alleges violations of the federal securities laws. The second,Tittle, et al. v. Enron Corp., et al., was filed by Enron employees who participated in
various Enron employee savings plans and alleges violations of the Employment Retirement Income Security Act and the Racketeering Influenced and Corrupt

22

---

Organizations
Act and state law negligence and civil conspiracy claims. A motion by CSFB LLC and its affiliates to dismiss the complaint inNewbywas
denied in December 2002, and CSFB LLC and its affiliates have since answered the complaint, denying all liability. On May 8, 2002, CSFB LLC and its affiliates moved to dismiss the Tittlecomplaint, and the district court granted that motion in full on September 30, 2003, thereby dismissing the action in its entirety as to
CSFB LLC and its affiliates. In both cases, plaintiffs filed motions for class certification that are pending before the district court. On May 14, 2003, the lead plaintiff in Newbyfiled an
amended complaint that, among other things, names as defendants additional CSFB entities, expands the putative class to include
purchasers of certain Enron-related securities, and alleges additional violations of the federal securities laws. On May 28, 2003, the lead plaintiff in Newbyfiled an amended motion for class
certification of a more broadly defined class based on the amended complaint; that motion is pending before the
district court. On June 18, 2003, CSFB LLC and its affiliates moved to dismiss the new claims and new entities asserted in the amended complaint; that motion is also pending before the district
court.

Several
actions filed against CSFB LLC and its affiliates and other parties have been consolidated or coordinated with theNewbyaction
and stayed as to the filing of amended or responsive pleadings pending the district court's decision on class certification inNewbyand Tittle. Similarly
consolidated or coordinated withNewbyand stayed have been several actions against
Arthur Andersen, LLP, or Andersen, and other defendants, in which Andersen brought claims for contribution against CSFB LLC and its affiliates and other parties as third-party defendants. The
consolidated and coordinated cases are now proceeding into discovery along withNewby.

Additional
Enron-related actions have been filed in various federal and state courts against CSFB LLC and its affiliates, along with other parties, including: (i) a complaint by
two investment funds that purchased certain Enron-related securities alleging insider trading and other violations of California law; (ii) a complaint by investment funds or fund owners that
purchased senior secured notes issued by Osprey Trust and Osprey Trust I alleging violations of California law and fraud, deceit and negligent misrepresentation; (iii) an action by AUSA Life
Insurance Company, Inc. and eleven other insurance company plaintiffs alleging violations of state securities laws, common law fraud and civil conspiracy in connection with securities offerings
by certain Enron-related entities; (iv) a complaint by purchasers of Enron, Marlin, Osprey, and Montclare Trust securities alleging violations of state securities laws, fraud, deceit, and civil
conspiracy; (v) a complaint by an Alabama municipal retirement system alleging violations of the federal and Alabama state securities laws, as well as fraud and unjust enrichment;
(vi) a putative class action brought on behalf of holders of Enron common and preferred stock asserting claims of breach of fiduciary duty, aiding and assisting breach of fiduciary duty,
negligent misrepresentation and fraud; and (vii) a putative class action brought on behalf of purchasers of the common stock of NewPower Holdings, Inc. alleging violations of the federal
securities laws.

In
December 2001, Enron filed a petition for Chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of New York. On September 12, 2002, the bankruptcy
court entered an order allowing discovery by a court-appointed examiner from more than 100 institutions, including CSFB LLC and its affiliates. CSFB LLC and its affiliates have produced documents and
made witnesses available for private sworn statements, subject to a confidentiality order. The bankruptcy examiner completed the investigation and, on November 4, 2003, filed a final report
that contained the examiner's conclusions with respect to several parties, including CSFB LLC and its affiliates. Enron has brought four adversary proceedings against CSFB LLC and its affiliates,
seeking avoidance and recovery of various alleged preferential, illegal and fraudulent transfers; disallowance and equitable subordination of CSFB LLC and its affiliates' claims in the bankruptcy
proceedings; recharacterization of one transaction as a loan and related declaratory relief, avoidance of security interests, and turnover and recovery of property; and damages, attorneys' fees and
costs for alleged aiding and abetting of breaches of fiduciary duty by Enron employees and civil conspiracy. CSFB LLC and its affiliates have filed, or expect to file, motions to dismiss these
complaints.

23

---

On
May 28, 2003, the courts presiding over the consolidated Enron litigation and over the Enron bankruptcy proceedings jointly ordered the following parties to participate in
non-binding mediation: plaintiffs inNewby,Tittleand the cases comprising the multi-
district litigation proceedings in Texas; eleven financial institutions, including CSFB; and Enron and its affiliated debtors (including representatives of the Official Committee of Unsecured
Creditors). The courts appointed Senior Judge William C. Conner of the U.S. District Court for the Southern District of New York as mediator. Several mediation sessions have been held but have failed
to produce a broad settlement. An additional mediation session is scheduled for May 2004.

CSFB
has received requests for information from certain U.S. Congressional committees and continues to receive requests for information and/or subpoenas from certain governmental and
regulatory agencies regarding Enron and its affiliates. We continue to cooperate fully with such inquiries and requests.

AmeriServe Food Distribution Inc. Litigation

On or about January 31, 2000, AmeriServe Food Distribution, Inc., or AmeriServe, its parent company, Nebco Evans Holding Company, and related
corporations filed Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware. The Company and certain of its affiliates have been involved in litigation relating to AmeriServe.

On
or about November 28, 2000, holders of certain AmeriServe secured notes commenced an adversary proceeding in the bankruptcy court, seeking to subordinate a claim filed by DLJ
Capital Funding, a wholly owned subsidiary of our immediate parent company, Credit Suisse First Boston Inc., or CSFBI, to the secured noteholders' claims. In 2003, DLJ Capital Funding settled
with the last remaining plaintiff in this action.

On
December 27, 2000, GSC Recovery, Inc., or GSC, filed a complaint in the Superior Court of New Jersey, Law Division, Morris County, against DLJSC, certain of its
affiliates, and certain officers, directors and other individuals and entities. GSC's claims arise out of alleged misrepresentations and omissions relating to GSC's purchases of certain unsecured
AmeriServe notes issued in 1997 and 1998. In June 2003, the defendants moved for summary judgment on all claims, and that motion remains pending before the court.

On
November 8, 2001, Ronald A. Rittenmeyer, in his capacity as plan administrator of the AFD Fund, the post-confirmation estate of the bankruptcy cases of AmeriServe
and its affiliates, filed a complaint in the County Court of Dallas, Texas against the Company and certain of its affiliates and certain officers, directors and other individuals and entities. In or
about December 2003, CSFB reached an agreement with the plaintiff to settle this matter.

NCFE-related Litigation

Since February 2003, lawsuits have been filed against CSFB LLC with respect to services that it rendered to National Century Financial
Enterprises, Inc. and its affiliates, or NCFE. From January 1996 to May 2002, CSFB LLC acted as a placement agent for bonds issued by NCFE that were to be collateralized by
health-care receivables, and in July 2002, as a placement agent for a sale of NCFE preferred stock. NCFE filed for bankruptcy protection in November 2002.

In
these lawsuits, which have been filed in Arizona, Ohio, New Jersey and New York federal courts, investors in NCFE's bonds and preferred stock have sued numerous defendants, including
the founders and directors of NCFE, the trustees for the bond issuances, NCFE's auditors and law firm, the rating agencies that rated NCFE's bonds, and NCFE's placement agents, including CSFB LLC. The
allegations include claims for breach of contract, negligence, fraud, and violation of federal and state securities laws. A motion to consolidate all the lawsuits was filed with the Judicial Panel on

24

---

Multidistrict
Litigation, or MDL, and by orders dated November 13, 2003 and January 5, 2004, the MDL panel consolidated the matters and transferred them to the U.S. District Court for
the Southern District of Ohio for pre-trial purposes. CSFB LLC has filed, or expects to file, motions to dismiss in each of these cases.

U.K. Insurance Litigation

On August 7, 2003, a syndicate of insurance companies filed Consolidated Particulars of Claims against CSG, CSFB LLC and the Company in the London
Commercial Court alleging that certain excess liability insurance policies provided to these entities should be invalidated. These insurance policies are intended to provide coverage for damages,
expenses, or settlements in excess of designated deductibles and below designated caps resulting from certain legal proceedings involving CSG or its subsidiaries. The insurance syndicate alleges that
these insurance policies should be invalidated based on certain purported misrepresentations and misleading statements made by CSG and CSFB to the insurance syndicate in connection with the
underwriting of the policies.

Mutual Fund Investigations

CSFB LLC and certain of its current and former affiliates have received subpoenas and requests for information from various regulators including the SEC as part
of the industry-wide investigation relating to the practices of mutual funds and their customers. We are cooperating fully with such requests.

Adelphia Communications Corporation Litigation

On July 6, 2003, a creditors' committee filed an adversary proceeding on behalf of Adelphia Communications Corporation, or Adelphia, against certain
lenders and investment banks, including the Company and certain affiliates. The complaint asserts claims against the CSFB entities and numerous other defendants under state law, bankruptcy law and the
BHCA. The complaint seeks, as against the
CSFB entities, the disallowance and/or subordination of claims or liens against Adelphia (and its assets) in its bankruptcy proceedings, and an unspecified amount of compensatory and punitive damages.

In
addition, CSFB LLC and an affiliate have been named in six civil actions brought by investors in Adelphia debt and/or equity securities concerning alleged misstatements in certain
Adelphia securities offerings. These complaints have been consolidated in the U.S. District Court for the Southern District of New York. CSFB LLC and its affiliate have filed, or expect to file,
motions to dismiss in each of these cases.

Item 4: Submission of Matters to a Vote of Security Holders

Pursuant to General Instruction I of Form 10-K, the information required by Item 4 is omitted.

25

---

PART II

Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

All of our common equity securities are owned indirectly by CSG.

Item 6: Selected Financial Data

The Selected Consolidated Financial Data table is set forth on the following page.

26

---

Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations

SELECTED CONSOLIDATED FINANCIAL DATA(1)
Credit Suisse First Boston (USA), Inc. and Subsidiaries

|                                                                                                                                                                                               |                                    | As of and for the
Year Ended December 31,
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | -----------------------------------------
|
|
|Consolidated Statement of Operations Data:                                                                                                                                                     |                                    |                                          
|Revenues:                                                                                                                                                                                      |                                    |                                          
|Total net revenues                                                                                                                                                                             |                                    | $                                        
|Expenses:                                                                                                                                                                                      |                                    |                                          
|                                                                                                                                                                                               | Employee compensation and benefits |                                          
|                                                                                                                                                                                               | Other expenses                     |                                          
|                                                                                                                                                                                               |                                    |                                          
|Total expenses                                                                                                                                                                                 |                                    |                                          
|Income (loss) from continuing operations before provision (benefit) for income taxes, discontinued operations, extraordinary item and cumulative effect of a change in accounting principle(2) |                                    |                                          
|Provision (benefit) for income taxes                                                                                                                                                           |                                    |                                          
|Income (loss) from continuing operations before discontinued operations, extraordinary item and cumulative effect of a change in accounting principle(2)                                       |                                    |                                          
|Net income (loss)                                                                                                                                                                              |                                    | $                                        
|Consolidated Statement of Financial Condition Data:                                                                                                                                            |                                    |                                          
|Total assets                                                                                                                                                                                   |                                    | $                                        
|Long-term borrowings                                                                                                                                                                           |                                    |                                          
|Redeemable trust securities                                                                                                                                                                    |                                    |                                          
|Total stockholders' equity                                                                                                                                                                     |                                    | $                                        

---

Prior year numbers have been restated to reflect the contribution by CSFBI, a
subsidiary of CSG, of Credit Suisse First Boston Management LLC, or Management
LLC, to us in March 2003. The transfer was accounted for at historical cost in a manner similar to pooling-of-interest accounting because Management LLC and we were
under the common control of CSFBI at the time of the transfer. The Company has restated financial information to reflect the results of operations, financial condition, cash flows and changes in
stockholders' equity of Management LLC as if the Company had acquired it on November 3, 2000, the date that the Company was acquired by CSFBI.

27

---

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We serve institutional, corporate, government and high-net-worth individual clients. Our businesses include securities underwriting, sales
and trading, financial advisory services, private equity investments, full-service brokerage services, derivatives and risk management products and investment research. We are part of the
Credit Suisse First Boston business unit, which we call CSFB, of Credit Suisse Group, or CSG, and our results do not reflect the overall performance of CSFB or CSG. We were acquired on
November 3, 2000 by CSFBI, a subsidiary of CSG. No adjustments of the historical carrying values of our assets and liabilities to reflect the acquisition of DLJ by CSFBI were recorded in our
historical financial statements. Similarly, although the acquisition of DLJ gave rise to goodwill and intangible assets, none of the goodwill and intangible assets were "pushed down" to us. The
goodwill and intangible assets associated with the DLJ acquisition were recorded in the financial statements of CSG and our parent companies, CSFBI and Credit Suisse First Boston, and do not affect
our results of operations.

When
we use the terms "we," "our," "us" and the "Company," we mean Credit Suisse First Boston (USA), Inc., a Delaware corporation, and its consolidated subsidiaries and, prior to
the DLJ acquisition, DLJ, a Delaware corporation, and its consolidated subsidiaries.

The
Company's principal operations are located in the United States. The Company's foreign revenues are not significant.

BUSINESS ENVIRONMENT

Our principal business activities, investment banking and private equity, securities underwriting and sales and trading, are, by their nature, highly competitive
and subject to general market conditions that include volatile trading markets and fluctuations in the volume of new issues and public and private mergers and acquisitions activities and the value of
securities. Consequently, our results have been, and are likely to continue to be, subject to wide fluctuations reflecting the impact of many factors beyond our control, including securities market
conditions, the level and volatility of interest rates, competitive conditions, the size and timing of transactions and the geopolitical environment.

The
U.S. economy improved in 2003, fueled by low interest rates, tax cuts and improved corporate earnings, and reflected a more stable geopolitical environment in the latter half of the
year. The major stock market indices recorded their first year of positive returns since 1999 as the Dow Jones Industrial Average rose 25%, the Standard & Poor's 500 stock index rose 26% and
the NASDAQ composite index rose 50% for the year ended December 31, 2003.

The
fixed income markets managed positive returns in 2003, but returns were well below the gains posted during the previous three years, when bonds outperformed stocks.
High-yield and investment-grade bond prices increased, reflecting a more favorable credit outlook for debt issuers as a result of the improving economy. The fixed income markets
experienced interest rate volatility during the third quarter over concerns that the Federal Reserve Board would raise its federal funds rate target, which prompted a sell-off in the U.S.
Treasury market. In August, Treasury prices rebounded when the Federal Reserve Board left the federal funds rate at 1%, its lowest point since 1958, and reassured the market that it intended to
maintain a low interest rate policy.

Underwriting
activity from both equity and fixed income products increased compared with 2002, while mergers and acquisitions activity also began to show signs of recovery in the second
half of 2003. The dollar value of U.S. equity and equity-related underwriting for the year ended December 31, 2003 increased 17% compared with 2002, due primarily to proceeds from convertible
bond offerings, which were 60% higher than in 2002. The dollar value of proceeds from IPOs in the United States for the year ended December 31, 2003 decreased 39% compared with the 2002;
however, the number of IPOs

28

---

increased
in the second half of 2003 compared with the first half of the year, reflecting increased demand. The dollar value of U.S. debt underwriting for the year ended December 31, 2003
climbed 19% compared with 2002 as both homeowners and companies took advantage of low interest rates by refinancing. The dollar value of announced mergers and acquisitions in the United States for the
year ended December 31, 2003 increased 20% compared with 2002, reflecting increased activity in the second half of 2003. The dollar value of completed mergers and acquisitions in the United
States for the year ended December 31, 2003 decreased 20%, however, compared with 2002, as many announced deals did not close.

MANAGEMENT OVERVIEW

The Company is part of CSFB and reflects CSFB's strategy. In 2003, the Company and CSFB continued to focus on increasing productivity, improving results and
developing an ownership culture. The Company and CSFB focused on improved profitability, controls and risk management. In 2003, market and economic conditions improved but remained challenging and
very competitive. Certain of CSFB's market share and rankings declined in 2003, in part reflecting aggressive price competition in a lower business-volume market environment and a determination to
focus on higher-margin, more profitable business. The Company has taken significant steps to achieve a more flexible cost base,
reduce the portfolio of non-continuing legacy business and focus on its core businesses. Net revenues in 2003 were essentially flat compared with 2002, with improved fixed income revenues
offset by declining revenues from the investment banking, equity and financial services businesses. Net income of $1.3 billion represented a significant increase compared with 2002, principally
due to the $852 million after-tax gain from the sale of Pershing in 2003 and continued cost control. Net revenues and expenses decreased significantly across our businesses in 2002
compared to 2001, and the Company had a net loss of $253 million in 2002 compared to a net loss of $215 million in 2001.

The
Company and CSFB have responded to very challenging economic and market conditions and competitive pressures by focusing on improving financial results and placing a high priority on
controls, risk management and CSFB's brand and reputation. The Company and CSFB expect to seek revenue growth opportunities, particularly in proprietary trading of equity and fixed income securities,
prime services and derivatives and with larger investment banking clients. The Company and CSFB expect to increase their risk profile in a disciplined way to take advantage of market opportunities.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In order to prepare the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or U.S.
GAAP, we must make estimates and assumptions based on judgment and available information. The reported amounts of assets and liabilities and revenues and expenses are affected by these estimates and
assumptions. Actual results could differ from these estimates, and the differences could be material.

Our
significant accounting policies and a discussion of new accounting pronouncements are disclosed in Note 1 of the consolidated financial statements in Part II, Item 8.
We believe that the critical accounting policies discussed below involve the most complex judgments and assessments. We believe that the estimates and assumptions used in the preparation of the
consolidated financial statements are prudent, reasonable and consistently applied.

Fair Value

As is the normal practice in our industry, the values we report in the consolidated financial statements with respect to Financial instruments owned and Financial
instruments sold not yet purchased are in most cases based on fair value, with related unrealized and realized gains or losses

29

---

included
in the consolidated statements of operations. Commercial mortgage whole loans and certain residential mortgage whole loans held for sale are carried at the lower of aggregate cost or fair
value.

Fair
value may be objective, as is the case for exchange-traded instruments, for which quoted prices in price-efficient and liquid markets generally exist, or as is the case where a
financial instrument's fair value is derived from actively quoted prices or pricing parameters or alternative pricing sources with a reasonable level of price transparency. For financial instruments
that trade infrequently and have little price transparency, fair value may be subjective and require varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors,
pricing assumptions and other risks affecting the specific instrument. In such circumstances, valuation is based on management's best estimate of fair value. In addition, valuation of financial
instruments ordinarily based on quoted prices may be distorted in times of market dislocation.



Control processes are applied to ensure that the fair value of the financial instruments reported in our consolidated financial statements, including those
derived from pricing models, are appropriate and measured on a reliable basis. The Company bases fair value on observable market prices or market-based parameters whenever possible. In the absence of
observable market prices or market-based parameters in an active market or from comparable market transactions, or other observable data supporting fair value based on a model at the inception of a
contract, fair value is based on the transaction price. Control processes are designed to ensure that the valuation approach is appropriate and the assumptions are reasonable.

Control
processes include the approval of new products, review of profit and loss, risk monitoring and review, price verification procedures and reviews of models used to price financial
instruments by senior management and personnel with relevant expertise who are independent of the trading and investment functions.

The
Company also has agreements with certain counterparties to exchange collateral based on the fair value of derivatives contracts. Through this process, one or both parties provide the
other party with the fair value of these derivatives contracts in order to determine the amount of collateral required. This exchange of information provides additional support for the Company's
derivatives contracts valuations. As part of the Company's OTC derivatives business, the Company and other participants provide pricing information to aggregation services that compile this data and
provide this information to subscribers. This information is considered in the determination of fair value for certain OTC derivatives.

For
further discussion of our risk management policies and procedures, see "Quantitative and Qualitative Disclosures About Market Risk" in Part II, Item 7A.

30

---



For purposes of valuation, we categorize our financial instruments as cash products, derivatives contracts and private equity investments. As of
December 31, 2003 and 2002, the fair value of cash products, derivatives contracts and private equity investments was:

|                           |       | As of December 31,
|-------------------------- | ----- | ------------------
|
|
|
|Cash products              |       | $                 
|Derivatives contracts      |       |                   
|Private equity investments |       |                   
|                           |       |                   
|                           | Total |                   
|                           |       |                   



The vast majority of our financial instruments owned and financial instruments sold not yet purchased are considered cash trading instruments. The fair value of
the vast majority of these financial instruments is based on quoted market prices in active markets or observable market parameters or is derived from such prices or parameters. These include U.S.
government and agency securities, commercial paper, most investment-grade corporate debt, most high-yield debt securities, most mortgage-backed securities and listed equities.

In
addition, we hold positions in cash products that are thinly traded or for which no market prices are available, and which have little or no price transparency. These products include
certain high-yield debt securities, distressed debt securities, mortgage loans, certain mortgage-backed and asset-backed securities, certain CDOs and equity securities that are not
publicly traded. The techniques used to determine fair value for these instruments are based on the type of product. Some of these valuation techniques require us to exercise a substantial amount of
judgment, for example, in determining the likely future cash flows or default recovery on distressed debt instruments or asset-backed obligations or the likely impact of country or market risk on
various investments. Valuation techniques for certain of these products are described more fully below.

For
certain high-yield debt securities that are thinly traded or for which market prices are not available, valuation is based on recent market transactions, taking into
account changes in the creditworthiness of the issuer, and pricing models to derive yields reflecting the perceived risk of the issuer or country rating and the maturity of the security. Such
valuation may involve judgment.

Financial
instruments held in the distressed portfolio are typically issued by private companies under significant financial burden and/or near bankruptcy. Because of the less liquid
nature of these financial instruments, valuation techniques often include earnings-multiple analyses, similar market transactions and default recovery analyses. These factors contribute to significant
subjectivity in the valuation of these financial instruments.

The
mortgage loan portfolio primarily includes residential and commercial mortgage loans that are either purchased or originated with the intent to securitize. For residential mortgage
loans, valuations are based on pricing factors specific to loan level attributes, such as loan-to-value ratios, current balance and liens. The commercial real estate loans are
valued using origination spreads, incorporating loan-to-value ratios, debt service coverage ratios, geographic location, prepayment protection and

31

---

current
yield curves. In addition, current written offers or contract prices are considered in the valuation process.

Values
of residential and commercial mortgage-backed securities and other asset-backed securities that are not based on quoted market prices or prices at which similarly structured and
collateralized securities trade between dealers and to and from customers are valued using pricing models employing prepayment scenarios and Monte Carlo simulations.

CDOs
are structured securities based on underlying portfolios of asset-backed securities, certain residential and commercial mortgage securities, high-yield and investment
grade corporate bonds, leveraged loans and other debt obligations. These instruments are split into various structured tranches, and each tranche is priced based upon its individual rating and the
value or cash flow of the underlying collateral supporting the structure. Values are derived using pricing models that involve projected cash flows, default recovery analysis and other assumptions,
and such valuations involve judgment.

For
convertible securities that are thinly traded or for which no market prices are available, internal models are used to derive fair value. The terms and conditions of the security are
factored into the model, along with market inputs such as underlying equity price, equity price volatility and credit spread. Certain adjustments are made to the derived theoretical values for high
concentration levels and low trading volumes.



Our derivatives contracts consist of OTC and exchange-traded derivatives, and the fair value of these as of December 31, 2003 and 2002 was as follows:

|                |       | As of December 31,
|--------------- | ----- | ------------------
|
|
|
|Exchange-traded |       | $                 
|OTC             |       |                   
|                |       |                   
|                | Total |                   
|                |       |                   

The
fair value of exchange-traded derivatives is typically derived from the observable exchange price and/or observable market parameters. Our primary exchange-traded derivatives include
futures and certain option agreements. OTC derivatives include forwards, swaps and options on foreign exchange, interest rates, equities and credit products. Fair values for OTC derivatives are
determined on the basis of internally developed proprietary models using various input parameters. The input parameters include those characteristics of the derivative that have a bearing on the
economics of the instrument and market parameters. In well-established derivatives markets, the use of a particular model may be widely accepted. For example, the Black-Scholes model is
widely used to calculate the fair value of many types of options. These models are used to calculate the fair value of OTC derivatives and to facilitate the effective risk management of the portfolio.
The determination of the fair value of many derivatives involves only limited subjectivity because the required input parameters are observable in the marketplace. For other more complex derivatives,
subjectivity relating to the determination of input parameters reduces price transparency. Specific areas of subjectivity include long-dated volatilities on OTC option transactions and
recovery rate assumptions for credit derivatives transactions. Uncertainty of pricing assumptions and liquidity are also considered as part of the valuation process. Because of these uncertainties, we
do not recognize a dealer profit or unrealized gain at the inception of a derivatives transaction unless the valuation underlying the unrealized gain is evidenced by quoted market prices in an active
market, observable prices of other current market transactions or other observable data supporting a valuation technique in accordance with Emerging

32

---

Issues
Task Force Issue No. 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management
Activities." As of December 31, 2003 and 2002, most of the replacement values reported in our consolidated statements of financial condition were derived using observable input parameters. For
further information on the fair value of derivatives as of December 31, 2003 and 2002, see "DerivativesSources and Maturities of OTC Derivatives" and Note 10 of
the consolidated financial statements in Part II, Item 8.



Private equity and other long-term investments include direct investments and investments in partnerships that make private equity and related
investments in various portfolio companies and funds. Private equity investments and other long-term investments consist of both publicly traded securities and private securities. Publicly
traded investments are valued based upon readily available market quotes with appropriate adjustments for liquidity as a result of holding large blocks and/or having trading restrictions. Private
securities, which generally have no readily available market or may be otherwise restricted as to resale, are valued taking into account a number of factors, such as the most recent round of financing
involving unrelated new investors, earnings-multiple analyses using comparable companies or discounted cash flow analysis.

The
Company categorizes its private equity investments into three categories, CSFB-managed funds, direct investments and funds managed by third parties. The
following table sets forth the fair value of our private equity investments by category as of December 31, 2003 and 2002:

|                               |       | As of December 31, |    
|------------------------------ | ----- | ------------------ | ---
|
|
|
|CSFB-managed funds             |       | $                  | 839
|Direct investments             |       |                    | 5  
|Funds managed by third parties |       |                    | 279
|                               |       |                    |    
|                               | Total |                    | $  
|                               |       |                    |    

CSFB-Managed Funds.CSFB-managed funds are partnerships and related "side by side" direct investments
for which CSFB acts as the fund's advisor and makes investment decisions. As of December 31, 2003 and 2002, approximately 80% and 85%, respectively, of CSFB-managed fund investments
were in private securities. The fair value of our
investments in CSFB-managed fund of funds partnerships is based on the valuation received from the underlying fund manager.

Direct Investments.Direct investments are generally debt and equity securities that are not made through or "side by side"
CSFB-managed funds and consist of public and private securities. These investments are priced in accordance with the procedures for CSFB-managed or third party managed funds.

Funds Managed by Third Parties.Funds managed by third parties are investments by CSFB as a limited partner in a fund managed
by an external fund manager. The fair value of these funds is based on the valuation received from the general partner of the fund.

Deferred Tax Assets

We recognize deferred tax assets and liabilities for the estimated future tax effects of operating loss carry-forwards and temporary differences between the
carrying amounts of existing assets and liabilities and their respective tax bases as of the balance sheet date.

33

---

The
realization of deferred tax assets on temporary differences is dependent upon the generation of taxable income during the periods in which those temporary differences become
deductible. The realization of deferred tax assets on net operating losses is dependent upon the generation of taxable income during the periods prior to their expiration, if any. Periodically,
management evaluates whether deferred tax assets can be realized. If management considers it more likely than not that all or a portion of a deferred tax asset will not be realized, a corresponding
valuation allowance is established. In evaluating whether deferred tax assets can be realized, management considers projected future taxable income, the scheduled reversal of deferred tax liabilities
and tax planning strategies.

This
evaluation requires significant management judgment, primarily with respect to projected taxable income. The estimate of future taxable income can never be predicted with certainty.
It is derived from budgets and strategic business plans but is dependent on numerous factors, some of which are beyond our control. Substantial variance of actual results from estimated future taxable
profits, or changes in our estimate of future taxable profits, could lead to changes in deferred tax assets being realizable or considered realizable, and would require a corresponding adjustment to
the valuation allowance.

As
of December 31, 2003, we had deferred tax assets resulting from temporary differences that could reduce taxable income in future periods. The consolidated statements of
financial condition as of December 31, 2003 and 2002 include deferred tax assets of $1.7 billion and $2.1 billion, respectively, and deferred tax liabilities of
$372 million and $336 million, respectively. Due to uncertainty concerning our ability to generate the necessary amount and mix of state and local taxable income in future periods, we
maintained a valuation allowance against our deferred state and local tax assets in the amount of $36 million and $46 million as of December 31, 2003 and 2002, respectively. For
further information on the temporary differences that generate deferred tax assets, see Note 4 of the consolidated financial statements in Part II, Item 8.

Litigation Contingencies

From time to time, we are involved in a variety of legal, regulatory and arbitration matters in connection with the conduct of our business. It is inherently
difficult to predict the outcome of many of these matters, particularly those cases in which the matters are brought on behalf of various classes of claimants, seek damages of unspecified or
indeterminate amounts or involve novel legal claims. In presenting our consolidated financial statements, management makes estimates regarding the outcome of legal, regulatory and arbitration matters
and takes a charge to income when losses with respect to such matters are probable and can be reasonably estimated. Charges, other than those taken periodically for cost of defense, are not
established for matters when losses cannot be reasonably estimated. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including,
but not limited to, the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel and other advisers, our defenses and our experience in similar
cases or proceedings. For a discussion of legal proceedings, see "Legal Proceedings" in Part I, Item 3.

RECENT DEVELOPMENTS

CSFBI, our immediate parent company, intends to transfer the high-net-worth business of Credit Suisse Asset Management, LLC, or CSAM, a
wholly owned subsidiary of CSFBI, to us as a capital contribution of approximately $200 million on March 31, 2004, and this business will be part of our Private Client Services business.
The transfer of this business will be accounted for at historical cost in a manner similar to pooling-of-interest accounting because CSAM and we will be under the common
control of CSFBI at the time of transfer. Beginning with our financial statements for the first quarter of 2004, we will present restated financial information for all periods presented to reflect the
results of operations, financial condition, cash flows and changes in stockholders' equity of the CSAM

34

---

high-net-worth
business as if we had acquired it on November 3, 2000, the date that we were acquired by CSFBI. The transferred assets of this business consist
principally of goodwill and intangible assets relating primarily to CSAM's acquisition of Warburg Pincus Asset Management in 1999. In December 2003, CSAM wrote down the value of its
high-net-worth intangible assets, resulting in a pre-tax loss of $200 million and an after-tax loss of $130 million. We will reflect this
loss in our operating results when we restate our results of operations for the year ended December 31, 2003 in our Annual Report on Form 10-K for the year ended
December 31, 2004.

ACQUISITIONS AND DIVESTITURES

In March 2003, CSFBI transferred to us as a capital contribution of $75 million Management LLC, which engages in derivatives transactions and holds
a portfolio of private equity, distressed assets and real estate investments.

In
May 2003, we sold Pershing to The Bank of New York Company, Inc. and reported a pre-tax gain of approximately $1.3 billion and an
after-tax gain of $852 million.

In
June 2003, we acquired Volaris Advisors, a New York-based equity-options strategies firm providing yield-enhancement and volatility management services, to enhance
the services of the Private Client Services business.

In
November 2003, we sold our 50 percent interest in DLJdirectSFG Securities Inc., a Japanese online broker, and
recorded a pre-tax gain of $115 million and an after-tax gain of $74 million.

In
November 2003, we acquired a majority interest in an entity that operates as a lender under FNMA programs and the commercial mortgage banking operations of Standard Mortgage
Corporation. As a result of these acquisitions, we originate, sell and service commercial mortgage loans and hold a license under the FNMA Delegated Underwriting and Servicing program.

In
December 2003, we sold DLJ International Group Limited, an indirect subsidiary, to Credit Suisse First Boston (International) Holding AG, an indirect subsidiary of CSG. The
subsidiary's assets were sold at their carrying value of $500 million.

See
Note 19 of the consolidated financial statements in Part II, Item 8 for additional information on the goodwill arising from our acquisitions.

RESULTS OF OPERATIONS

The transfer to us of Management LLC was accounted for at historical cost in a manner similar to pooling-of-interest accounting because
Management LLC and we were under the common control of CSFBI at the time of the transfer. We have restated financial information for all periods presented to reflect the results of operations,
financial condition, cash flows and changes in stockholders' equity of Management LLC as if we had acquired it on November 3, 2000, the date that we were acquired by CSFBI. Our 2002 results
(including legacy private equity and distressed businesses included in Elimination and Other) and those of the Fixed Income business of the Institutional Securities segment were adversely impacted by
the transfer to us of Management LLC.

The
assets and liabilities of Pershing as of December 31, 2002 have been presented as Assets held for sale and Liabilities held for sale, respectively, in the consolidated
statements of financial condition. The results of operations for Pershing, including the gain on the sale, for all periods presented have been presented as Discontinued operations in the consolidated
statements of operations. The presentation of the Pershing results as Discontinued operations for the periods presented resulted in a decrease in commission revenues and net interest and a material
decrease in the Financial Services segment net revenues and net income as the Pershing business contributed materially to that segment.

35

---

The
following table sets forth a summary of our financial results:

|                                                                                                                                                                         |  | For the Year Ended December 31, |      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | -----
|
|
|Total net revenues                                                                                                                                                       |  | $                               | 4,993
|Total expenses                                                                                                                                                           |  |                                 | 4,214
|                                                                                                                                                                         |  |                                 |      
|Income (loss) from continuing operations, before provision (benefit) for income taxes, discontinued operations and cumulative effect of a change in accounting principle |  |                                 | 779  
|Provision (benefit) for income taxes                                                                                                                                     |  |                                 | 317  
|                                                                                                                                                                         |  |                                 |      
|Income (loss) from continuing operations before discontinued operations and cumulative effect of a change in accounting principle                                        |  |                                 | 462  
|Income from discontinued operations, net of income tax provision of $485, $47 and $49 in 2003, 2002 and 2001, respectively                                               |  |                                 | 876  
|Cumulative effect of a change in accounting principle, net of income tax (benefit) provision of $(5) and $0.3 in 2003 and 2001, respectively                             |  |                                 | (9   
|                                                                                                                                                                         |  |                                 |      
|Net income (loss)                                                                                                                                                        |  | $                               | 1,329
|                                                                                                                                                                         |  |                                 |      

Substantially
all of our inventory is marked to market daily and, therefore, the value of such inventory and our net revenues are subject to fluctuations based on market movements. In
addition, net revenues derived from our less liquid assets may fluctuate significantly depending on the revaluation or sale of these investments in any given period. We also regularly enter into large
transactions as part of our proprietary and other trading businesses, and the number and size of such transactions may affect our results of operations in a given period.

Interest
income (expense) is accrued at the stated coupon rate for coupon-bearing financial instruments, and for non-coupon-bearing financial instruments, interest income is
recognized by accreting the discount or premium over the life of the instrument. For coupon-bearing financial instruments purchased at a discount or premium, the difference between interest income
(expense) accrued at the stated coupon rate and interest income (expense) determined on an effective yield basis is included in principal transactions-net in the consolidated statements of
operations.

We
use interest rate swaps to hedge the interest rate exposure associated with certain resale and repurchase agreements. These interest rate swaps are carried at fair value while the
resale and repurchase agreements are carried at contract amounts, with interest income (expense) accruing over the term of the agreement. As a result, increases and decreases in the value of the
interest rate swaps are not offset by decreases and increases in the value of the resale and repurchase agreements until the securities are repurchased or sold. Therefore, our net revenues are subject
to fluctuations from period to period.

Our
businesses are materially affected by conditions in the financial markets and economic conditions generally, including geopolitical events. Unpredictable or adverse market and
economic conditions have adversely affected and may in the future adversely affect our results of operations. See "BusinessCertain Factors That May Affect Our Results of Operations" in
Part I, Item 1.

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

The Company recorded net income of $1.3 billion for the year ended December 31, 2003 compared to a net loss of $253 million in 2002. The
significant improvement in net income reflected

36

---

the
after-tax gain of $852 million from the sale of Pershing, included in income from discontinued operations, and an after-tax gain of $74 million on the sale of
the Company's 50% stake in a Japanese online broker in 2003. The results for the year ended December 31, 2002 have been restated from the previously reported net income of $261 million
to reflect the transfer of Management LLC. In 2002, Management LLC had a net loss of $514 million and a pre-tax loss of $786 million, consisting of approximately
$550 million in pre-tax losses on interest rate swaps that hedged certain securities positions and resale and repurchase agreements held by CSFB LLC and approximately
$330 million in pre-tax losses from certain legacy private equity and distressed asset investments. Also included in the 2002 results is an after-tax gain of
$330 million from the sale of three broker-dealers, CSFBdirectLLC, DLJdirectLtd. and
Autranet, LLC, an after-tax charge of $124 million for the agreement in principle with various U.S. regulators relating to research analyst independence and the allocation of IPO
shares to corporate executives and directors, an after-tax charge of $293 million for private litigation involving research analyst independence, certain IPO allocation practices,
Enron and other related litigation and an after-tax charge of $98 million for severance as part of a CSFB cost-reduction initiative.

Total
net revenues increased $43 million, or 1%, to $5.0 billion for the year ended December 31, 2003, as principal transactions and net interest revenues were
higher than in 2002. Principal transactions improved primarily due to gains on interest rate swaps that hedged certain securities positions and resale and repurchase agreements compared to significant
losses on these swaps in 2002. Principal transactions also improved as a result of increased revenues from OTC equity derivatives, convertible securities and private equity and decreased write-downs
on legacy assets. Net interest income benefited from decreased financing costs, reflecting the low interest rates in the period. These increases were partially offset by investment banking and
advisory, commissions and other revenues, all of which declined compared to 2002. The decline in investment banking and advisory revenues reflected the industry-wide reduction in completed
mergers and acquisitions and reduced IPO activity, particularly in the first half of 2003. Commissions declined primarily as a result of lower single-stock trading volumes and competitive pricing
pressure in equity cash products. Other revenues for 2003 included a pre-tax gain of $115 million from the sale of the 50% stake in the Japanese online broker, while other revenues
for 2002 reflected a pre-tax gain of $528 million from the sale of the three broker-dealers discussed above. Net revenues excluding these gains increased 10% for the year ended
December 31, 2003 compared with 2002.

Total
expenses decreased 22% for the year ended December 31, 2003 compared to the year ended December 31, 2002. The decrease was principally due to reduced litigation
charges, lower compensation expenses and substantial completion of retention awards. Excluding 2002 litigation charges of $600 million, expenses declined 13%. See "Expenses."

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

The Company recorded a net loss of $253 million for the year ended December 31, 2002 compared to a net loss of $215 million in 2001, with
both revenues and expenses declining. The results for the year ended December 31, 2002 included pre-tax losses of $786 million in Management LLC offset in part by an
after-tax gain of $330 million from the sale of three broker-dealers, CSFBdirectLLC,
DLJdirectLtd. and Autranet, LLC. Net income for the year ended December 31, 2001 included an after-tax gain of approximately
$116 million from the assignment of the lease and the sale of leasehold improvements of the Company's former headquarters at 277 Park Avenue.

Total
net revenues decreased $1.5 billion, or 24%, to $5.0 billion for the year ended December 31, 2002, primarily because of reduced principal transactions and
investment banking revenues. Declines in principal transactions resulted primarily from lower revenues from equity derivatives, NASDAQ equities, interest rate swaps that hedged certain securities
positions and resale and repurchase agreements, asset-backed trading, mortgages and private equity and distressed investments. The decreased revenues in NASDAQ equities were partially offset by
increased commission revenue due to

37

---

a
change in the pricing structure from one based on trading, in which revenues were generally derived from the difference between the bid and ask prices, to one based on commissions. The decline in
investment banking revenues reflects depressed market conditions and reduced mergers and acquisitions and equity issuance activity. Net revenues, excluding the pre-tax gains of
$528 million from the sale of the broker-dealers and the pre-tax gain of $179 million from the assignment of the lease and sale of leasehold improvements at 277 Park Avenue,
declined 30% for the year ended December 31, 2002 compared to the year ended December 31, 2001. The Company's net revenues for the year ended December 31, 2002 benefited from
decreased financing costs, reflecting the low interest rates in the period.

Total
expenses for the year ended December 31, 2002 decreased from 2001, primarily as a result of reduced headcount, continuing cost-reduction efforts and the impact
from the sale of the three broker-dealers. Expenses included charges in the fourth quarter of 2002 of $150 million for severance related to a CSFB cost-reduction initiative,
$150 million for the agreement in principle with various regulators involving research analyst independence and the allocation of IPO shares to corporate executives and directors and
$450 million for private litigation involving research analyst independence, certain IPO allocation practices, Enron and other related litigation. Expenses for 2001 included a charge of
$492 million, primarily related to bonus and severance payments, guaranteed compensation and retention awards, and a $100 million charge related to the settlement with the SEC and the
NASD of their investigations into the allocation of shares in IPOs and subsequent securities transactions and commissions. See "Expenses."

Results by Segment

The discussion of net revenues is presented by segment. We operate and manage our business through two principal operating segments: the Institutional Securities
segment and the Financial Services segment. The Institutional Securities segment consists of the Investment Banking, Equity and Fixed Income divisions. Our segments are managed based on types of
products and services offered and their related client bases. We evaluate the performance of our segments based primarily on income (loss) from continuing operations before provision (benefit) for
income taxes, discontinued operations and cumulative effect of a change in accounting principle.

Revenues
are evaluated in the aggregate, including an assessment of trading gains and losses and the related interest income and expense attributable to financing and hedging positions.
Therefore, individual revenue categories may not be indicative of the performance of the total Institutional Securities segment results.

For
divisional reporting of net revenues and expenses, equity capital market underwriting fees are shared between the Investment Banking division and the Equity division and debt capital
market underwriting fees are shared between the Investment Banking division and the Fixed Income division.

The
cost structure of each of our segments is broadly similar to that of the Company as a whole, and, consequently, the discussion of expenses is presented on a company-wide
basis. The Company allocates to its segments a pro rata share of certain centrally managed costs, such as leased facilities and equipment costs, employee benefits and certain general overhead expenses
based upon specified amounts, usage criteria or agreed rates, and allocates interest expense based upon the type of asset. The allocation of some costs, such as incentive bonuses, has been estimated.

Effective
January 1, 2004, our operations were reorganized to move the private equity and private fund groups to the Financial Services segment, which was renamed Wealth &
Asset Management. The operations of Institutional Securities now include debt and equity underwriting and financial advisory services and the equity and fixed income trading businesses. The discussion
below presents our segment results as organized and managed in 2003.

38

---

The following table sets forth the net revenues, total expenses and income (loss) from continuing operations before provision (benefit) for income taxes, discontinued operations, and the
cumulative effect of a change in accounting principle, of the Company's segments:

Institutional SecuritiesInvestment
Banking

Equity

Fixed Income

Institutional
Securities

Financial
Services(In millions)December 31, 2003:Total net revenues

$
1,501

$
1,204

$
1,918

$
4,623

$
233Total expenses


1,116


1,023


1,425


3,564


268Income (loss)

$
385

$
181

$
493

$
1,059

$
(35
)December 31, 2002:Total net revenues

$
1,645

$
1,336

$
1,623

$
4,604

$
277Total expenses


1,471


1,082


1,506


4,059


323Income (loss)

$
174

$
254

$
117

$
545

$
(46
)December 31, 2001:Total net revenues

$
1,817

$
1,970

$
2,023

$
5,810

$
403Total expenses


2,003


1,427


1,658


5,088


438Income (loss)

$
(186
)
$
543

$
365

$
722

$
(35
)




The Institutional Securities segment consists of the Investment Banking, Equity and Fixed Income divisions. The Investment Banking division raises and invests
capital and provides financial advice to companies throughout the United States and abroad. Through the Investment Banking division, we manage and underwrite offerings of securities, arrange private
placements, provide financial advisory and other services, pursue private equity investments in a variety of areas and provide venture capital to companies. The Equity division trades equity
securities and equity-related derivatives. The Fixed Income division trades fixed income securities and fixed income-related derivatives.



Total net revenues for the Institutional Securities segment were $4.6 billion for each of the years ended December 31, 2003 and 2002. Net revenues
were flat, reflecting an increase in Fixed Income net revenues, offset by declines in Investment Banking and Equity net revenues. Net revenues for the year ended December 31, 2002 have been
restated from the previously reported net revenues of $5.1 billion to reflect losses in Management LLC from interest rate swaps that hedged certain securities positions and resale and
repurchase agreements.

Investment
Banking net revenues decreased 9% to $1.5 billion, reflecting the industry-wide reduction in completed mergers and acquisitions. Equity new issuance and
placement fees on private fund investments were also lower compared to 2002. This decline was partially offset by improved net revenues from private equity, high-yield new issuances and
fees from restructurings and other advisory activities. Included in the investment banking results above are the results from our active private equity business. Active private equity revenue consists
of management fees and net investment gains and losses, which include realized and unrealized gains and losses, including carried interest or override, net interest and other revenues. Net revenues
from our active private equity business for the years ended December 31, 2003 and 2002, respectively, were $343 million, with $186 million in net investment gains and
$157 million in management fees, and $215 million, with $37 million in net

39

---

investment
gains and $178 million in management fees. Net revenues from our private fund group for the years ended December 31, 2003 and 2002, respectively, were $83 million and
$131 million.

Equity
net revenues decreased 10% to $1.2 billion, primarily because of reduced revenues from our listed and OTC customer business as a result of lower volumes due to market
uncertainty in the first quarter of 2003, lower trading revenues from proprietary equity derivatives and reduced revenues from new equity issuances due to weak demand. These decreases were partially
offset by increased revenues from convertible securities due to tighter credit spreads and higher trading revenues from our OTC equity derivatives customer business as a result of improved market
conditions and increased transaction flows for derivatives products beginning in the second quarter of 2003.

Fixed
Income net revenues increased 18% to $1.9 billion, reflecting a favorable trading, underwriting, origination and securitization environment driven by low interest rates and
interest rate volatility. This increase resulted in part from gains on interest rate swaps that hedged certain securities positions and resale and repurchase agreements compared to significant losses
on these swaps in 2002. In addition, listed derivatives net revenues increased as a result of higher volumes. Revenues from high-yield new issuances improved as industry-wide
high-yield underwriting activity increased. Commercial mortgage-backed securities revenues increased and primary asset-backed securities revenues were higher due to increased
origination and securitization activity. Secondary asset-backed securities trading revenues improved because 2002 reflected the loss of $106 million due to the writedown of asset-backed notes
issued by affiliates of NCFE. Distressed debt trading results were higher, reflecting investor demand for higher-yielding securities. Investment-grade debt trading was strong but down from the very
high levels in 2002 when many investors moved to higher-credit quality issuers in the wake of several corporate scandals. Trading and underwriting revenues from residential mortgages decreased.
High-yield secondary trading revenues remained strong but were lower than in 2002.



Net revenues for the Institutional Securities segment were $4.6 billion and $5.8 billion for the years ended December 31, 2002 and 2001,
respectively, a decrease of 21%, reflecting declines across all divisions. Net revenues for the year ended December 31, 2002 have been restated from the previously reported net revenues of
$5.1 billion to reflect losses in Management LLC from interest rate swaps that hedged certain securities positions and resale and repurchase agreements. The contribution of Management LLC did
not have a significant effect on results for the year ended December 31, 2001.

Investment
Banking net revenues decreased 9% to $1.6 billion, primarily due to the industry-wide slowdown in mergers and acquisitions and equity underwriting
activities. The decline was partially offset by increases in underwriting of high-yield and other fixed income securities. Net revenues from our active private equity business for the
years ended December 31, 2002 and 2001, respectively, were $215 million, with $37 million in net investment gains and $178 million in management fees, and
$18 million, with $172 million in net investment losses and $190 million in management fees. Net revenues from our private fund group for the years ended December 31, 2002
and 2001, respectively, were $131 million and $106 million.

Equity
net revenues declined 32% to $1.3 billion, primarily due to lower revenues from our equity cash products and equity derivatives trading. The decreases in equity net
revenues reflected the overall decline in the U.S. equity markets that discouraged new issuances, reduced transaction flows and lowered demand for derivatives products. Convertible bonds were
negatively impacted by corporate defaults, primarily in the telecommunications and energy sectors.

Fixed
Income net revenues decreased 20% to $1.6 billion and included losses on interest rate swaps that hedged certain securities positions and resale and repurchase agreements
and a loss of $106 million due to the writedown of asset-backed notes issued by affiliates of NCFE. These losses

40

---

were
partially offset by improved results in investment-grade debt trading. A weakened broader corporate bond market led to increased volatility, higher transaction volumes and wider credit spreads,
which created market-making opportunities in investment-grade products and generated higher net revenues.



The Financial Services segment consists of Private Client Services, a financial advisory business serving high-net-worth individuals and
corporate investors with a wide range of CSFB and third-party investment management products and services. The presentation of the Pershing results, including the gain on the sale in the second
quarter of 2003, as Discontinued operations in the consolidated statements of operations for the periods presented resulted in a material decrease in the Financial Services segment net revenues and
net income as the Pershing business contributed materially to that segment.



Net revenues for the Financial Services segment decreased 16% to $233 million, primarily reflecting declines in new issuance revenues from equity capital
markets and lower commission revenues as a result of lower transaction volumes and reduced fee revenue due to a decline in assets under management.



Net revenues for the Financial Services segment decreased 31% to $277 million, reflecting a weak equity market environment, with customer trading and
assets under management declining.

Expenses

The normal operating cost structure of each of our segments is broadly similar to that of the Company as a whole. Merger-related and certain other costs and
charges, which were significant, do not represent normal operating costs and are not allocated to the segments. For these reasons, the discussion of expenses is presented on a company-wide
basis.

The
following table sets forth employee compensation and benefits expenses, other expenses and total expenses of the Company:

For the Year Ended
December 31,2003

2002

2001Employee compensation and benefits

$
2,774

$
3,068

$
4,341Other expenses


1,440


2,358


2,603Total expenses

$
4,214

$
5,426

$
6,944




Total expenses decreased $1.2 billion, or 22%, to $4.2 billion for the year ended December 31, 2003 compared to the year ended
December 31, 2002. The decrease was principally due to reduced litigation
charges, lower compensation expenses and substantial completion of retention awards. Excluding $600 million of litigation charges in 2002 relating to the agreement in principle with U.S.
regulators and private litigation involving research analyst independence and other matters discussed below, expenses declined 13%.

41

---

As
is normal in the financial services industry, a significant portion of compensation expense is a bonus amount rewarded shortly after year end. Our bonuses are based upon a number of
factors, including the profitability of each business segment and market conditions. From time to time, we guarantee certain minimum compensation levels to attract new employees or to retain existing
employees. A portion of our bonuses is in the form of non-cash incentive compensation, which consists of awards of CSG shares under a CSG share plan, options to acquire shares and ROE
units tied to CSFB's return on equity, generally over a three-year period. In the third quarter of 2003, we adopted accounting rules on the expensing of share options and introduced a
general three-year vesting period for share awards, in line with our long-term service and retention strategy and industry practice. As a result, we increased the amount of
compensation in the form of shares rather than providing alternative forms of non-cash incentive compensation. If we had not changed the vesting, compensation expense for 2003 would have
been $406 million higher. For additional information on our share-based compensation, see Notes 1, 3 and 15 of the consolidated financial statements in Part II, Item 8.

Employee
compensation and benefits declined 10% for the year ended December 31, 2003 compared to the year ended December 31, 2002 due to reduced headcount resulting in
lower salary and incentive compensation expense and the effect of the change in vesting for share awards. Employee compensation and benefits expenses for 2002 included a charge in the fourth quarter
of $150 million for severance in connection with a CSFB cost-reduction initiative. The declines were partially offset by increases in employee-elected deferred compensation tied to
certain equity indices and ROE units, both of which increased during 2003. No liability was accrued for ROE units for the year ended December 31, 2002.

Other
expenses consist principally of occupancy and equipment rental; brokerage, clearing and exchange fees; communications; professional fees and merger-related costs of retention
awards, all of which declined except for brokerage, clearing and exchange fees, which increased in line with improved trading revenues. Other expenses decreased 39% for the year ended
December 31, 2003 compared to the year ended December 31, 2002, primarily as a result of lower litigation charges, reduced headcount and reduced merger-related costs, reflecting the
substantial completion of retention awards in the second quarter of 2003. The reduction in litigation charges reflects a release of reserves related to the settlement of certain Ameriserve litigation
and the fourth quarter 2002 charges of $150 million for the agreement in principle with various U.S. regulators relating to research analyst independence and the allocation of IPO shares to
corporate executives and directors and $450 million for private litigation involving research analyst independence, certain IPO allocation practices, Enron and other related litigation.



Total expenses declined $1.5 billion, or 22%, to $5.4 billion for the year ended December 31, 2002 compared to the year ended
December 31, 2001. The decrease was principally due to CSFB's continuing cost-reduction efforts and the impact of the sale of the three broker-dealers in the first quarter of 2002.
Total expenses declined significantly, offset in part by litigation and other charges taken in 2002.

Employee
compensation and benefits declined 29% in 2002 due to significant headcount reductions during 2002 and significantly lower bonus payments compared to 2001. Employee compensation
and benefits expenses for 2002 included a charge in the fourth quarter of approximately $150 million for severance in connection with a CSFB cost-reduction initiative. Expenses for
the year ended December 31, 2001 included a charge of $492 million, primarily related to bonus and severance, guaranteed compensation and retention award payments, reflecting
terminations in connection with CSFB's 2001 $1 billion cost-cutting initiative.

42

---

Other
expenses declined 9% in 2002 from 2001, primarily as a result of reduced headcount, lower levels of business, decreased discretionary spending, including advertising,
communications, travel and entertainment, and continuing cost-reduction efforts, offset in part by increased litigation charges. In the fourth quarter of 2002, the Company took a charge of
$150 million for the agreement in principle with various U.S. regulators relating to research analyst independence and the allocation of IPO shares to corporate executives and directors and an
additional charge of $450 million for private litigation involving research analyst independence, certain IPO allocation practices, Enron and other related litigation. In 2001, the Company took
a $100 million charge relating to the settlement with the SEC and the NASD of their investigations into the allocation of shares in IPOs and subsequent securities transactions and commissions.
Merger-related and restructuring costs declined from $476 million to $338 million, or 29%, in 2002, primarily as a result of lower retention award costs, reflecting terminations and
forfeitures.

Provision for Taxes



The provision (benefit) for income taxes from continuing operations for the years ended December 31, 2003 and 2002 was $317 million and
$(134) million, respectively. The benefit for income taxes from continuing operations for the year ended December 31, 2002 has been restated from the previously reported provision for
income taxes from continuing operations of $137 million to reflect the contribution of Management LLC, which had significant losses in 2002. Excluded from the provision (benefit) for income
taxes for the years ended December 31, 2003 and 2002 was a provision of $485 million and $47 million, respectively, from discontinued operations and a benefit of $5 million
for the year ended December 31, 2003 related to the cumulative effect of a change in accounting principle as a result of our adoption of Financial Accounting Standards Board, or FASB,
Interpretation, or FIN, No. 46, "Consolidation of Variable Interest Entities," or FIN 46. See Note 5 of the consolidated financial statements in Part II, Item 8.

The
effective tax rate for continuing operations changed from a benefit of 28.5% in 2002 to a provision of 40.8% in 2003. The change in the effective tax rate was due primarily to losses
from Management LLC in 2002. See Note 4 of the consolidated financial statements in Part II, Item 8.



The benefit for income taxes from continuing operations for the years ended December 31, 2002 and 2001 was $134 million and $155 million,
respectively. Excluded from the benefit for income taxes for the years ended December 31, 2002 and 2001 was a provision of $47 million and $49 million, respectively, from
discontinued operations and a provision of $300 thousand for the year ended December 31, 2001 related to the cumulative effect of a change in accounting principle.

The
effective tax rate from continuing operations changed from a benefit of 33.6% in 2001 to a benefit of 28.5% in 2002. The change in the effective tax rate was due primarily to tax
benefits received in 2001 from state and local taxes compared to 2002, when the Company had state and local income tax expenses.

Employee Benefit Plan

We participate in a defined benefit pension plan for individuals employed on or before December 31, 1999. For the years ended December 31, 2003,
2002 and 2001, we contributed $38 million, $41 million
and $27 million, respectively, to the pension plan. As of September 30, 2003, the valuation date of the pension plan, the fair value of the plan assets was less than the benefit
obligation by $190 million. We made a contribution of $150 million in January 2004.

43

---

To
determine our obligations with respect to the pension plan, we are required to make certain actuarial assumptions and estimates, including the expected investment return on plan
assets and the discount rate. The assumption of the expected long-term rate of return on plan assets is based on historical real rates of return of the various asset classes, weighted
based on the target asset allocation percentages for each major category of plan assets. We lowered the expected long-term rate of return on plan assets to 8.5% for 2003 from 9% for 2002.
The discount rate is used to discount the liability for expected future benefit payments and is determined using certain AA and AAA bond indices. We lowered the discount rate to 6.00% for 2003 from
6.25% for 2002. See Note 14 of the consolidated financial statements in Part II, Item 8 for additional information, including quantitative data and recent changes relating to the defined
benefit pension plan and other plans.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity Management Oversight

We believe that maintaining access to liquidity is fundamental for firms operating in the financial services industry. We have therefore established a
comprehensive process for the management and oversight of our capital, liquidity and funding strategies. CSFB's Capital Allocation and Risk Management Committee, or CARMC, has primary oversight
responsibility for these functional disciplines. CARMC periodically reviews and approves our liquidity management policies and targets and reviews our liquidity position and other key risk indicators.
The Corporate Treasury department is responsible for the management of capital, liquidity, long-term funding and a portion of the Company's short-term funding, as well as
relationships with creditor banks and investors. It also maintains regular contact with rating agencies and regulators on these and other issues. See "Liquidity Risk" in "BusinessCertain
Factors That May Affect Our Results of Operations" in Part I, Item I.

Balance Sheet

Significant portions of our assets are highly liquid, with the majority consisting of securities inventories and collateralized receivables, which fluctuate
depending on the levels of proprietary trading and customer business. Collateralized receivables consist primarily of securities purchased under agreements to resell and securities borrowed, both of
which are primarily secured by U.S. government and agency securities and marketable corporate debt and equity securities. In addition, we have significant receivables from customers, brokers, dealers
and others, which turn over frequently. To meet client needs as a securities dealer, we carry significant levels of trading inventories.

In
addition to these liquid assets, as part of our investment banking and fixed income markets activities, we also maintain positions in less liquid assets, such as certain mortgage
whole loans, distressed securities, high-yield debt securities, asset-backed securities and private equity investments. These assets may be relatively illiquid at times, especially during
periods of market stress. We typically fund a significant portion of less liquid assets, such as private equity investments, with long-term borrowings and stockholders' equity. Mortgage
whole loans, distressed securities, high-yield debt and asset-backed securities are generally financed with a combination of short-term unsecured financing or repurchase
agreements, long-term borrowings and stockholders' equity.

Because
of changes relating to customer needs, economic and market conditions and proprietary trading and other strategies, our total assets or the individual components of total assets
may vary significantly from period to period. As of December 31, 2003 and 2002, our total assets were $241.3 billion and $236.1 billion, respectively.

Included
below is a discussion of our long-term contractual obligations, off-balance sheet arrangements and less liquid assets.

44

---

Funding Sources and Strategy

The majority of our assets are funded by collateralized short-term borrowings, which include securities sold under agreements to repurchase and
securities loaned. Other significant funding sources include: commercial paper; short-term borrowings from affiliates; payables to customers, brokers, dealers and others;
long-term borrowings; and stockholders' equity.
Short-term funding is generally obtained at rates related to the federal funds rate, LIBOR or other money market indices, while long-term funding is generally obtained at fixed
and floating rates related to U.S. Treasury securities or LIBOR, depending upon prevailing market conditions. We continually aim to broaden our funding base by geography, investor and funding
instrument.

The
majority of our unsecured funding originates largely from two sources: we borrow from affiliates (principally Credit Suisse First Boston) and we issue debt securities directly to the
market. We lend funds as needed to our operating subsidiaries and affiliates on both a senior and subordinated basis, the latter typically to meet capital requirements of regulated subsidiaries. We
generally try to ensure that loans to our operating subsidiaries and affiliates have maturities equal to or shorter than the maturities of our market borrowings.

Liquidity Planning and Measurement

We maintain a large secondary source of liquidity, principally through our broker-dealers and various other operating subsidiaries. We have historically been able
to access significant liquidity through the secured funding markets (securities sold under agreements to repurchase, securities loaned and other collateralized financing arrangements), even in periods
of market stress. We continually monitor overall liquidity by tracking the extent to which unencumbered marketable assets and alternative unsecured funding sources exceed both contractual obligations
and anticipated contingent commitments.

The
principal measure we use to monitor our liquidity position is the "liquidity barometer," which estimates the time period over which the adjusted market value of unencumbered assets
plus committed revolving credit facilities exceeds the aggregate value of our maturing unsecured liabilities plus anticipated contingent commitments. The adjusted market value of unencumbered assets
includes a reduction from market value, or "haircut," reflecting the amount that could be realized by pledging an asset as collateral to a third-party lender in a secured funding transaction.
Contingent commitments include letters of credit, guarantees, commitments to invest in private equity funds and collateralization requirements related to credit ratings. Our objective, as mandated by
CARMC, is to ensure that the liquidity barometer equals or exceeds one year. We believe this will enable us to carry out our business plans during extended periods of market stress, while minimizing,
to the extent possible, disruptions to our business.

Contractual Obligations

The following table sets forth future cash payments on our contractual obligations pursuant to long-term borrowings and operating leases as of
December 31, 2003:

Contractual Obligations Expiration Per PeriodLess than
1 year

1-3
years

4-5
years

Over
5 years

Total(In millions)Long-term borrowings

$
2,239

$
6,308

$
5,887

$
9,887

$
24,321Operating leases


155


296


268


1,197


1,916Total contractual obligations

$
2,394

$
6,604

$
6,155

$
11,084

$
26,237


45

---

Our
long-term borrowings are unsecured. As of December 31, 2003, the weighted average maturity of our long-term borrowings was approximately
5.5 years. Our lease obligations are primarily for our principal offices in New York City and other locations. The operating lease obligations in the table above include $24 million in
contractual obligations related to certain information technology, equipment leases and software licenses and exclude $342 million in sublease revenue. We had no capital lease or purchase
obligations as of December 31, 2003.

For
information on these and other material commitments, see Notes 6, 7, 16 and 17 of the consolidated financial statements in Part II, Item 8. For information on commitments
under our pension arrangements, see Note 14 of the consolidated financial statements in Part II, Item 8.

The
following table sets forth our commercial paper and other short-term unsecured borrowings:

December 31, 2003

December 31, 2002(In millions)Bank loans

$
527

$
76Commercial paper


1,052


2,082Loans from affiliates(1)


14,482


9,775Total

$
16,061

$
11,933


---

Credit Facilities

We maintain a 364-day $1.0 billion committed unsecured revolving credit facility with a syndicate of banks available to us as borrower. This
facility, which is guaranteed by CSG, extends through May 2004. As part of our liquidity management strategy, we are moving from syndicated unsecured facilities to bilateral secured facilities,
which offer a number of benefits, and consequently we do not expect to renew this facility. As of December 31, 2003, CSFB LLC maintained two 364-day committed secured revolving
credit facilities totaling $450 million, with maturities in 2004, and, in February 2004, it entered into a third facility for $250 million, maturing in 2005. These facilities
require CSFB LLC to pledge unencumbered marketable securities to secure any borrowings. Borrowings under each facility would bear interest at short-term rates related to either the federal
funds rate or LIBOR and can be used for general corporate purposes. The facilities contain customary covenants that we believe will not impair our ability to obtain funding. As of December 31,
2003, no borrowings were outstanding under any of the facilities.

Long-term Funding

We issue long-term debt through U.S. and Euromarket medium-term note programs, as well as syndicated and privately placed offerings around
the world.

Under
our currently effective $10.0 billion shelf registration statement on file with the SEC, which was established in April 2002 and allows us to issue from time to time
senior and subordinated debt securities and warrants to purchase such securities, we had as of March 29, 2004 approximately $2.5 billion available for issuance.

For
the year ended December 31, 2003, we issued both medium-term notes and longer-dated fixed income securities to extend the maturity profile of our debt. These
included $1.2 billion in medium-term and index-linked notes, $1.0 billion of 3.875% notes due 2009, $1.0 billion of 5.5% notes due 2013 and $300 million of
6.125% notes due 2011 off of our shelf registration statement and

46

---

$1.5 billion
in medium-term notes under a $5.0 billion Euromarket program established in July 2001. In January 2004, we issued $1.0 billion of 5.125%
notes due 2014 off of our shelf registration statement.

During
the year ended December 31, 2003, we repaid approximately $3.5 billion of medium-term notes and $23 million of structured notes.

Credit Ratings

Our access to the debt capital markets and our borrowing costs depend significantly on our credit ratings. These ratings are assigned by agencies, which may
raise, lower or withdraw their ratings or place us on "credit watch" with positive or negative implications at any time. Credit ratings are important to us when competing in certain markets and when
seeking to engage in longer-term transactions, including OTC derivatives. We believe agencies consider several factors in determining our credit ratings, including earnings performance,
business mix, market position, financial strategy, level of capital, risk management policies and practices, our affiliation with CSFB and CSG and management team, in addition to the broader outlook
for the financial services industry.

A
reduction in our credit ratings could limit our access to capital markets, increase our borrowing costs, require us to provide additional collateral in connection with OTC derivatives
contracts, and allow counterparties to terminate transactions under certain of our trading and collateralized financing contracts. This, in turn, could reduce our liquidity and negatively impact our
operating results and financial position. Our liquidity planning takes into consideration those contingent events associated with a reduction in our credit ratings.

Because
the majority of our OTC derivatives arrangements are with affiliates, the amount of collateral that we would have been required to post pursuant to such contracts in the event of
a one-notch downgrade of our senior long-term debt credit rating was not material as of December 31, 2003.

At
March 29, 2004, our ratings and ratings outlooks were as follows:

|                             |  | Long-Term Debt |  | Commercial
Paper |  | Outlook 
|---------------------------- |  | -------------- |  | ---------------- |  | --------
|Fitch Ratings                |  | AA-            |  | F-1+             |  | Negative
|Moody's Investors Service(1) |  | Aa3            |  | P-1              |  | Stable  
|Standard & Poor's            |  | A+             |  | A-1              |  | Stable  

---

Capital Resources

Certain of our businesses are capital intensive. In addition to normal operating requirements, capital is required to cover financing and regulatory capital
charges on securities inventories, private equity investments and investments in fixed assets. Our overall capital needs are regularly reviewed to ensure that our capital base can appropriately
support the anticipated needs of our business and the regulatory and other capital requirements of our subsidiaries. Based upon these analyses, we believe that our capitalization is adequate for
current operating levels.



Our principal wholly owned subsidiary, CSFB LLC, is a registered broker-dealer, registered futures commission merchant and member firm of the NYSE. As such, it is
subject to the NYSE's net capital rule, which conforms to the uniform net capital rule pursuant to Rule 15c3-1 of the Exchange Act. Under the alternative method permitted by this
rule, its required net capital may not be less than two

47

---

percent
of aggregate debit balances arising from customer transactions or four percent of segregated funds, whichever is greater. If a member firm's capital is less than four percent of aggregate
debit balances, the NYSE may require the firm to reduce its business. If a member firm's capital is less than five percent of aggregate debit balances, the NYSE may prevent the firm from expanding its
business and declaring cash dividends. As of December 31, 2003, CSFB LLC's net capital of approximately $3.5 billion was 59% of aggregate debit balances and in excess of the minimum
requirement by approximately $3.4 billion.

Our
OTC derivatives dealer subsidiary, Credit Suisse First Boston Capital LLC, is also subject to the uniform net capital rule, but calculates its net capital requirements based on value
at risk pursuant to Appendix F of Rule 15c3-1. As of December 31, 2003, Credit Suisse First Boston Capital LLC's net capital of $180 million, allowing for
market and credit risk exposure of $37 million and $49 million, respectively, was in excess of the minimum net capital requirement by $160 million. Credit Suisse First Boston
Capital LLC operates pursuant to the (k)(2)(ii) exemptive provisions of Rule 15c3-3 of the Exchange Act, and, accordingly, all customer transactions are cleared through an
affiliated broker-dealer on a fully disclosed basis.

Certain
of our other subsidiaries are subject to capital adequacy requirements. As of December 31, 2003, our subsidiaries complied with all applicable regulatory capital adequacy
requirements.

Cash Flows

Our consolidated statements of cash flows classify cash flows into three broad categories: cash flows from operating activities, investing activities and
financing activities. These statements should be read in conjunction with "Related Party Transactions" as well as Note 3 of the consolidated financial statements in Part II,
Item 8.

We
present the consolidated statements of cash flows for all periods presented as if Pershing were part of our continuing operations until its sale in May 2003 and show the assets
and liabilities of Pershing as of December 31, 2002 as if they were not presented as Assets held for sale and Liabilities held for sale in the consolidated statement of financial condition and
the results of operations of Pershing as if they were not presented as Discontinued operations in the consolidated statement of operations.

Our
cash flows are complex and frequently bear little relation to our net income and net assets, particularly because the Company is a wholly owned subsidiary of CSG, a global financial
institution that may choose to allocate cash among its subsidiaries for reasons independent of the Company's activities. As a result, we believe that traditional cash flow analysis is not a
particularly useful method to evaluate our liquidity position as discussed above. Cash flow analysis may, however, assist in highlighting certain macro trends and strategic initiatives in our
business.



Cash and cash equivalents decreased $146 million to $334 million as of December 31, 2003. Cash used in operating activities was
$8.8 billion. The change in cash used in operating activities reflected a net increase in operating assets and operating liabilities of $9.6 billion, which occurred in the normal course
of operations as a result of changes in customer needs, market conditions and proprietary trading and other strategies.

Cash
of $1.1 billion was used for investing activities. Prior to the acquisition of DLJ, CSFBI issued its own debt to fund its operating, investment and financing needs. The
Company now provides most of this funding, resulting in increases in receivables from affiliates of $3.5 billion. We received $2.0 billion in cash as a result of the Pershing sale,
$500 million in cash as a result of the sale of DLJ International Group Limited and $170 million in cash as a result of the sale of
DLJdirectSFG Securities Inc.

48

---

Cash
provided by financing activities was $9.8 billion. The changes are due to increases in net collateralized financing arrangements of $4.1 billion, an increase of
$4.1 billion in short-term borrowings used primarily to fund normal operating activities and an increase of $5.0 billion in long-term borrowings to meet cash
needs of operating activities, to provide funding to affiliates as part of the Company's investing activities and to repay $3.6 billion in long-term borrowings.



Cash and cash equivalents, including $1.2 billion in cash and cash equivalents classified in assets held for sale, decreased $1.3 billion to
$480 million as of December 31, 2002. Cash used in operating activities was $9.4 billion. The change in cash used in operating activities reflected a net decrease in operating
assets and operating liabilities of $9.7 billion, which occurred in the normal course of operations as a result of changes in customer needs, market conditions and proprietary trading and other
strategies.

Cash
of $7.3 billion was used for investing activities. Because the Company now provides most of the funding for CSFBI's operating, investment and financing needs, receivables
from affiliates increased $7.8 billion.

Cash
provided by financing activities was $16.7 billion. The changes are due to increases in net collateralized financing arrangements of $7.0 billion used primarily to
fund normal operating activities and increases of $10.4 billion in long-term borrowings and an increase of $2.9 billion in short-term borrowings primarily to
provide funding to affiliates as part of the Company's investing and other activities and to repay $3.9 billion in long-term borrowings.

OFF-BALANCE SHEET ARRANGEMENTS

We enter into off-balance sheet arrangements in the ordinary course of business. Off-balance sheet arrangements are transactions,
agreements or other contractual arrangements with, or for the benefit of, an entity that is not consolidated with an issuer, and which include guarantees and similar arrangements, retained or
contingent interests in assets transferred to an unconsolidated entity, and obligations and liabilities (including contingent obligations and liabilities) under material variable interests in
unconsolidated entities for the purpose of providing financing, liquidity, market risk or credit risk support.

We
have not entered into any derivatives contracts indexed or linked to the stock of CSG.

Guarantees

In the ordinary course of our business, we provide guarantees and indemnifications that contingently obligate us to make payments to the guaranteed or indemnified
party based on changes in an asset,
liability or equity security of the guaranteed or indemnified party. We may also be contingently obligated to make payments to a guaranteed party based on another entity's failure to perform, or we
may have an indirect guarantee of the indebtedness of others. Guarantees we provide include customary indemnifications to purchasers in conjunction with the sale of assets or businesses; to investors
in private equity funds sponsored by the firm regarding potential obligations of employees to return amounts previously paid as carried interest; and to investors in our securities and other
arrangements to provide "gross up" payments if there is a withholding or deduction because of a tax assessment or other governmental charge. From time to time, we also guarantee the obligations of
subsidiaries of CSG that are not our consolidated subsidiaries, and these guarantees are included in the scope of the disclosure requirements of FIN No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," or FIN 45.

49

---



FIN 45 requires disclosure of our maximum potential payment obligations under certain guarantees to the extent that it is possible to estimate them and requires recognition of a
liability for the fair value of guaranteed obligations for guarantees issued or amended after December 31, 2002. The recognition of these liabilities did not have a material effect on our
financial position or results of operations. For disclosure of our estimable maximum payment obligations under certain guarantees and related information, see Note 17 of the consolidated
financial statements in Part II, Item 8.

Retained or Contingent Interests in Assets Transferred to Unconsolidated Entities

We originate and purchase commercial and residential mortgages and sell these assets directly or through affiliates to special purpose entities that are, in most
cases, qualified special purpose entities, or QSPEs. These QSPEs issue securities that are backed by the assets transferred to the QSPEs and pay a return based on the returns on those assets.
Investors in these mortgage-backed securities typically have recourse to the assets in the QSPE. The investors and the QSPEs have no recourse to our assets.

These
QSPEs are sponsored by our subsidiaries. Our principal broker-dealer subsidiary, CSFB LLC, underwrites and makes markets in these mortgage-backed securities. Under Statement of
Financial Accounting Standards, or SFAS, No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement
No. 125," or SFAS 140, a QSPE is not required to be consolidated with the transferor. Our mortgage-backed securitization activities are generally structured to use QSPEs, and the assets
and liabilities transferred to QSPEs are not included in our financial statements.

We
may retain interests in these securitized assets if CSFB LLC holds the assets in connection with its underwriting or market-making activities. Retained interests in securitized
financial assets are included at fair value in the consolidated statements of financial condition. Any changes in the fair value of these retained interests are recognized in the consolidated
statements of operations. We engage in these securitization activities to meet the needs of clients as part of our fixed income activities, to earn fees and to sell financial assets. These
securitization activities do not provide a material source of our liquidity, capital resources or credit risk or market risk support. See Note 5 of the consolidated financial statements in
Part II, Item 8, which includes quantitative information on our securitization activities and retained interests.

Variable Interest Entities

We are involved with various entities in the normal course of business that may be deemed to be variable interest entities, or VIEs, including VIEs that issue
CDOs.

We
purchase loans and other debt obligations from and on behalf of clients primarily for the purpose of securitization. The loans and other debt obligations are transferred by us
directly, or indirectly through affiliates, to QSPEs or to VIEs that issue CDOs. CSFB LLC structures, underwrites and makes a market in these CDOs, and we may have retained interests in these CDOs in
connection with CSFB LLC's underwriting and market-making activities. We engage in these CDO transactions to meet the needs of clients, to earn fees and to sell financial assets. These CDO
transactions do not provide a material source of our liquidity, capital resources or credit risk or market risk support.

FIN
46 requires us to consolidate all VIEs for which we are the primary beneficiary, defined as the entity that will absorb a majority of expected losses, receive a majority of the
expected residual returns, or both. In December 2003, the FASB modified FIN 46, through the issuance of FIN 46R, to address various implementation issues that had arisen since the issuance of
FIN 46 and to provide companies the option to defer the adoption of FIN 46 for certain VIEs to periods ending after March 15, 2004. As of December 31, 2003, with the exception of certain
private equity funds that were a subject of the deferral, we consolidated all VIEs under FIN 46 for which we are the primary beneficiary, all of which

50

---

were
related to our CDO activities. We also have interests in CDO VIEs that are not required to be consolidated because we are not the primary beneficiary. See Notes 1 and 5 of the consolidated
financial statements in Part II, Item 8.

OTHER COMMITMENTS

We have commitments under a variety of arrangements that are not recorded as liabilities in our consolidated statements of financial condition. These commitments
are in addition to guarantees and other arrangements discussed in "Off-Balance Sheet Arrangements." These commitments include standby letters of credit, standby resale
agreement facilities that commit us to enter into resale agreements with customers at market rates, commitments to invest in various partnerships that make private equity and related investments in
various portfolio companies and in other private equity funds and commitments to enter into forward resale agreements. See Note 16 of the consolidated financial statements in Part II,
Item 8.

RELATED PARTY TRANSACTIONS

CSG, through CSFBI, owns all of our outstanding voting common stock. We are involved in significant financing and other transactions, and have significant related
party balances, with Credit Suisse First Boston and certain affiliates. We generally enter into these transactions in the ordinary course of business and believe that these transactions are on market
terms that could be obtained from unrelated third parties. See "Derivatives" and Notes 3 and 17 of the consolidated financial statements in Part II, Item 8 for more information.

Certain
of our directors, officers and employees and those of our affiliates and their subsidiaries maintain margin accounts with CSFB LLC and other affiliated broker-dealers in the
ordinary course of business. In addition, certain of such directors, officers and employees had investments or commitments to invest in various private funds sponsored by us, pursuant to which we have
made loans to such directors, officers and employees, to the extent permitted by law. CSFB LLC and other affiliated broker-dealers, from time to time and in the ordinary course of business, enter
into, as principal, transactions involving the purchase or sale of securities from or to such directors, officers and employees and members of their immediate families.

LESS LIQUID ASSETS

Certain of our assets, including private equity and other long-term investments, distressed securities, high-yield debt, mortgage whole
loans and other non-investment-grade debt, are not highly liquid or trade in markets that have periods of volatility and illiquidity. The values of most of the more illiquid assets are
reported at fair value, and the determination of fair value is based on management's best estimate and depends on varying factors. See "Critical Accounting Policies and
EstimatesFair Value" for further information on the determination of fair value of these more illiquid assets.

Private Equity Activities

Our private equity and other long-term investment activities include direct investments and investments in partnerships that make private equity and
related investments in various portfolio companies and funds. These investments are primarily in unlisted or illiquid equity or equity-related securities and are carried at fair value based on a
number of factors. See "BusinessProducts and ServicesInstitutional SecuritiesInvestment BankingPrivate Equity" in Part I, Item 1,
"Critical Accounting Policies and EstimatesFair Value" and Notes 1 and 7 of the consolidated financial statements in Part II, Item 8 for more information. As of
December 31, 2003 and 2002, we had investments in private equity and other long-term investments of $1.1 billion and $1.0 billion,

51

---

respectively,
and we had commitments to invest up to an additional $1.3 billion and $1.7 billion as of December 31, 2003 and 2002, respectively.

High-Yield Debt, Mortgage Whole Loans and Other Non-Investment-Grade Financial Instruments

We underwrite, trade and hold high-yield debt, which includes distressed debt; mortgage whole loans; loan participations; legacy distressed financial
instruments; and other non-investment-grade financial instruments. Due to credit considerations, liquidity of secondary trading markets and vulnerability to general economic conditions,
these financial instruments and loans generally involve greater risk than investment-grade financial instruments. We record high-yield debt, residential mortgage whole loans, legacy
distressed financial instruments and other non-investment-grade financial instruments at fair value, with the exception of certain residential mortgage whole loans that are held for sale
and are carried at the lower of cost or fair value. We record commercial mortgage whole loans held for sale and loan participations at the lower of cost or fair value. Timing of the securitization of
our mortgage whole loan inventory will affect the size of our positions at any given time. The following table sets forth our positions in these instruments as of December 31, 2003 and 2002:

|                                                 |       | December 31, 2003 |       | December 31, 2002
|------------------------------------------------ | ----- | ----------------- | ----- | -----------------
|
|
|High-yield and distressed debt                   |       | $                 | 1,551 |                  
|Mortgage whole loans                             |       |                   | 9,101 |                  
|Loan participations                              |       |                   | 70    |                  
|Legacy distressed financial instruments          |       |                   | 171   |                  
|Other non-investment-grade financial instruments |       |                   |      |                  
|                                                 |       |                   |       |                  
|                                                 | Total |                   | $     | 10,893           
|                                                 |       |                   |       |                  

DERIVATIVES

We enter into various transactions involving derivatives. We use derivatives contracts for both trading and hedging purposes and to provide products for our
clients. These derivatives include options, forwards, futures and swaps. In general, derivatives are contractual agreements that derive their values from the performance of underlying assets, interest
or currency exchange rates or a variety of indices. Most of our derivatives transactions are considered trading positions. See Note 10 of the consolidated financial statements in
Part II, Item 8 for more information.

52

---

Sources and Maturities of OTC Derivatives

The following table sets forth the distributions, by maturity, of substantially all of our exposure with respect to OTC derivatives as of December 31,
2003, after taking into account the effect of netting agreements. Fair values were determined on the basis of pricing models and other valuation methods. See "Critical Accounting Policies
and EstimatesFair Value" and Notes 1, 10 and 17 of the consolidated financial statements in Part II, Item 8 for more information.

|                     |       | Assets
Maturity Distribution as of December 31, 2003
|-------------------- | ----- | ----------------------------------------------------
|
|
|Options              |       | $                                                   
|Forward contracts(1) |       |                                                     
|Swaps                |       |                                                     
|                     |       |                                                     
|                     | Total |                                                     
|                     |       |                                                     
|                     |       |                                                     
|
|
|
|Options              |       | $                                                   
|Forward contracts    |       |                                                     
|Swaps                |       |                                                     
|                     |       |                                                     
|                     | Total |                                                     
|                     |       |                                                     

---

The
following table sets forth as of December 31, 2003 substantially all of our exposure with respect to OTC derivatives, by counterparty credit rating and with
affiliates, after taking into account the effect of netting agreements.

|Credit Rating(1)            |       | December 31, 2003
|--------------------------- | ----- | -----------------
|
|AAA                         |       | $                
|AA+/AA                      |       |                  
|AA-                         |       |                  
|A+/A/A-                     |       |                  
|BBB+/BBB/BBB-               |       |                  
|BB+ or lower                |       |                  
|Unrated                     |       |                  
|Derivatives with affiliates |       |                  
|                            |       |                  
|                            | Total |                  
|                            |       |                  

---

53

---

Derivatives With Related Parties

We enter into a substantial number of derivatives transactions with related parties. The following table sets forth derivatives transactions with related parties
consisting primarily of interest rate swaps, credit default swaps and foreign exchange forward contracts. The fair values of derivatives contracts outstanding with related parties as of
December 31, 2003 and 2002 were as follows.

|                  |       | December 31, 2003 |       | December 31, 2002
|----------------- | ----- | ----------------- | ----- | -----------------
|
|
|Options           |       | $                 | 70    |                  
|Forward contracts |       |                   | 13    |                  
|Swaps             |       |                   | 1,827 |                  
|                  |       |                   |       |                  
|                  | Total |                   | $     | 1,910            
|                  |       |                   |       |                  

See
Notes 3 and 10 of the consolidated financial statements in Part II, Item 8 for more information.

Item 7A: Quantitative and Qualitative Disclosures About Market Risk

GENERAL

We are part of CSFB and our risks are managed as part of the global CSFB business unit. The CSFB risk management process is designed to ensure that there are
sufficient independent controls to measure, monitor and control risks in accordance with CSFB's control strategy and in consideration of industry best practices. The primary responsibility for risk
management lies with CSFB's senior business line managers. They are held accountable for all risks associated with their businesses, including counterparty risk, market risk, liquidity risk, legal
risk, operating risk and reputational risk.

CSFB
believes that it has effective procedures for measuring and managing the risks associated with its business activities. CSFB cannot completely predict all market developments and
CSFB's risk management cannot fully protect against all types of risks. Unforeseen market developments or unexpected movements or disruption in one or more markets can result in losses due to events
such as
adverse changes in inventory values, a decrease in liquidity of trading positions, greater earnings volatility or increased credit risk exposure. Such losses could have a material adverse effect on
our and CSFB's results of operations and financial condition.

RISK MANAGEMENT

CSFB pursues a comprehensive approach to risk management. The primary objectives of its risk management strategy are to preserve its capital base, to optimize the
allocation of capital, to foster a proactive risk culture and to protect CSFB's reputation. Significant personnel and technological resources are used to support experienced decision-makers and to
ensure that CSFB remains a leader in risk management. CSFB is exposed to many types of risks, and many businesses present more than one risk.

The
Board of Directors of Credit Suisse First Boston, the Swiss bank, is ultimately responsible for the determination of general risk policy and risk management organization and for
approving the overall market risk limit as recommended by CARMC. CARMC is responsible for formulating and implementing risk management strategies, allocating risk capital, approving market risk
management policies and procedures, establishing, recommending and approving certain market risk limits (depending on level) and approving limit excesses within its own authority, and approving stress
tests and scenario analysis definitions. CARMC meets on a monthly basis and on an ad hoc basis as needed. In addition, in 2003, the Board of Directors of Credit Suisse First Boston established a Risk
Committee

54

---

that
will provide additional oversight and assume responsibility for approving certain limits in the future.

Strategic
Risk Management, or SRM, is part of the independent risk oversight function of CSFB and is responsible for assessing the overall risk profile of CSFB on a global basis and
recommending corrective action where appropriate. SRM acts as the "risk conscience" of CSFB in respect of all risks that could have a material economic impact.

Risk
Measurement and Management, or RMM, is responsible for the measurement and reporting of all credit risk and market risk data and the coordination of Operational Risk Management for
CSFB. RMM consolidates exposures arising from all trading portfolios and geographic centers on a daily basis.

Credit
Risk Management, or CRM, is responsible for approving all credit risk assumed by CSFB. This includes the credit analysis of counterparties and issuers, the setting and approval of
credit limits, the approval of transactions, the assessment and management of impaired assets and the establishment of
CSFB's policies and strategy on counterparty and country credit risk. In addition, CRM has oversight responsibility for concentrated positions in trading inventory. Unusual risks and specific policies
and procedures are reviewed and approved by CARMC.

CRM's
responsibilities are carried out by senior officers within the CRM function who provide dedicated coverage to each of CSFB's major businesses. Each of these CRM units is organized
along regional lines, and in some cases further organized along industry or other lines of specialty, such as leveraged and project finance.

CRM,
SRM and RMM are all independent of the front office. CRM and SRM report to the Chief Financial Officer of CSFB. RMM reports to SRM.

Other
business-specific risks are managed primarily through designated groups and committees within the different operating divisions. Before any new activity is undertaken, the New
Business Committee is required to review the proposed business, its structure and its infrastructure requirements and ensure that all material risks 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 with (a) selected executive officers who have overall responsibility for oversight in their respective
regions, (b) regional oversight managers who assist the executive officers with this responsibility and (c) a country manager in each country to manage local oversight issues. Management
at the regional oversight and country levels concentrates on regulatory and reputational issues, supervising legal entities and supporting management in its efforts to improve the control environment.

The
Corporate Treasury Department of CSFB is responsible for managing CSFB's liquidity risk.

Economic
capital represents the emerging best practice for measuring and reporting all quantifiable risks. It is called "economic" capital because it measures risk in terms of economic
realities rather than regulatory or accounting rules. CSFB uses an economic capital model, or ERC, as a consistent and comprehensive risk management tool and also as an important element in the
capital management and planning process and an element in the performance measurement process. Representing CSFB's standard for assessing risk, ERC considerably strengthens CSFB's ability to manage
its risk profile on a consolidated basis and to assess the risk-bearing capacity in relation to the financial resources. By providing a common language and terminology for risk across
CSFB, ERC has also increased risk transparency and knowledge sharing across CSFB. As with other risk measures, ERC's primary merit is its ability to provide meaningful signals regarding risk trends
over time. The

55

---

ERC
model is designed to measure all quantifiable risks associated with CSFB's activities on a consistent and comprehensive basis.

For
further information on the risks we face in our business, see "BusinessCertain Factors That May Affect Our Results of Operations" in Part I, Item 1.

Market Risk

Market risk can be described as the potential change in the value of a trading portfolio resulting from the movement of market rates, prices and volatilities. A
typical transaction or position may be exposed to a number of different market risks. Types of market risks include interest rate risk, foreign currency exchange rate risk, equity risk and commodity
price risk. Interest rate risk can arise from changes in the level, slope and curvature of the yield curve; changes in the implied volatility of interest rate derivatives; changes in the rate of
mortgage prepayments; and changes in credit spreads. Foreign currency exchange rate risk can arise from changes in spot prices and the implied volatility of currency derivatives. Equity risk can arise
from changes in the price of individual equity securities and equity indices, changes in the implied volatility of equity derivatives and dividend risk. We do not have material commodity price risk.

CSFB
devotes considerable resources to ensuring that market risk is comprehensively captured, accurately modeled and effectively managed. The RMM department consolidates exposures
arising from all trading portfolios in all geographic centers and calculates and reports CSFB's global aggregate risk exposure on a daily basis. To achieve this, RMM uses a number of complementary
risk measurement techniques, including value-at-risk, or VAR, and scenario analysis. VAR is a statistical estimate of the potential loss arising from a portfolio using a
predetermined confidence level and holding period, using market movements determined from historical data. Scenario analysis estimates the potential immediate loss from significant changes in market
parameters that are modeled on past extreme events and hypothetical scenarios. In addition, RMM uses the ERC model to estimate the impact of severe market movements and to attribute internal capital
usage. As markets have grown more complex, sophisticated modeling has become increasingly important for sound risk assessment and risk/return analysis.



CSFB has used a VAR methodology to model market risk since 1995. The CSFB VAR methodology uses assumptions and estimates that CSFB believes are reasonable, but
different assumptions or estimates could result in different estimates of VAR.

CSFB's
VAR is defined as the 99th percentile greatest loss that may be expected in a portfolio over a ten-day holding period. In general, a rolling two-year
period of historical data is used to derive the market movements used for this calculation. These parameters and procedures currently meet the quantitative and qualitative requirements prescribed by
the Basel Committee on Banking Supervision, the Swiss Federal Banking Commission and other leading banking regulators. The methodology is subject to continuous review to ensure that it remains
relevant to the business being conducted, captures all significant trading risks, is consistent across risk types and meets or exceeds regulatory and industry standards.

VAR
as a risk measure quantifies the loss on a portfolio under normal market conditions and is not intended to measure risk associated with unusually severe market moves. The VAR
methodology also assumes that past data can be used to predict future events. VAR calculated for a ten-day period does not fully capture the market risk of trading positions that cannot be
liquidated or hedged within ten days. During periods of pronounced market disruption outside the 99th percentile, other techniques, such as scenario and ERC analysis, become more important tools than
VAR for monitoring risk exposures.

56

---



At CSFB, market risk limits are structured at three levels: an overall market risk VAR limit for CSFB as a whole; market risk limits by division (such as the
Fixed Income division); and market risk limits by business line within a division (such as foreign exchange trading within the Fixed Income division). Asset class VAR limits may also be used to
control exposure within a particular risk type.

The
three-level VAR limit structure described above represents CSFB's official limit framework. Limits at lower levels (such as by region, business line, trading desk or trader) are
sometimes imposed by trading management and are used to assist trading management to identify potential risk concentrations. RMM monitors and reports compliance with the official limit framework and
also provides assistance to ensure compliance with lower level risk flags, as required.

CSFB
uses various other types of limits to control potential risk concentrations. These include, among others, country exposure limits, direct exposure limits for certain higher risk
positions, scenario limits and ERC limits.



The VAR data presented below has been scaled down using a one-day holding period. The one-day VAR data below shows the market risk
exposures of our trading positions as of December 31, 2003 and 2002. Due to the benefit of diversification, total VAR is less than the sum of the individual components.

Market risk exposures in trading portfolios (unaudited)

|                                   |                         | 2003 |    |     |    |     |   
|---------------------------------- | ----------------------- | ---- | -- | --- | -- | --- | --
|
|
|99%, one-day VAR, in $ millions(2) |                         |      |    |     |    |     |   
|                                   | Interest rate risk      |      | 33 |     | 51 |     | 42
|                                   | Equity risk             |      | 11 |     | 22 |     | 16
|                                   |                         |      |    |     |    |     |   
|                                   | Subtotal                |      | 44 |     | 73 |     | 58
|                                   | Diversification benefit |      |   | (3) |   | (3) |  
|                                   |                         |      |    |     |    |     |   
|                                   | Total                   |      | 28 |     | 92 |     | 46
|                                   |                         |      |    |     |    |     |   

---

The
Company's one-day, 99% VAR increased $8 million, or 19%, as of December 31, 2003 from December 31, 2002. The increase in VAR primarily reflects a
change in the structure of our interest rate portfolio. This was partially offset by both the impact of the introduction of a refined methodology for mortgages in the third quarter of 2003, which led
to a reduction in reported VAR, and a reduction in the market volatility observed over the last two years in the fourth quarter of 2003, as volatile third quarter 2001 data was not included in the
rolling two-year data used to determine VAR.

57

---



We do not have material foreign exchange or commodity price risk on our trading portfolio.

The
comparison of daily revenue fluctuations with the daily VAR estimate is the primary method used to test the accuracy of the VAR model. Backtesting is performed at various levels of
the trading portfolio, from CSFB down to more specific business lines. A backtesting exception occurs when the daily loss exceeds the daily VAR estimate. Results of the process at the aggregate level
demonstrated three exceptions when comparing the 99% one-day VAR with the backtesting profit and loss in 2003. An accurate model for the one-day, 99% VAR should have between
zero and four backtesting exceptions on an annual basis. Backtesting profit and loss is a subset of actual trading revenue and includes only the profit and loss effects relevant to the VAR model,
excluding fees, commissions, certain provisions and any trading subsequent to the previous night's positions. It is appropriate to compare this measure with VAR for backtesting purposes because VAR
assesses only the potential change in position value due to overnight movements in financial market variables such as prices, interest rates and volatilities. The graph below illustrates the
relationship between daily backtesting profit and loss and daily VAR for the Company in 2003.

RELATIONSHIP BETWEEN BACKTESTING P&L AND VAR ESTIMATE DURING 2003
(unaudited)

GRAPHIC

58

---

Trading
revenue used in the histogram below entitled "2003 vs. 2002 Distribution of Daily Trading Revenue (unaudited)" is the actual daily trading revenue, which includes not only
backtesting profit
and loss but also fees, commissions, certain provisions and the profit and loss effects associated with any trading subsequent to the previous night's positions. The histogram below shows the
distribution of daily trading revenue for substantially all of the Company's trading activities.

2003 vs 2002 DISTRIBUTION OF
DAILY TRADING REVENUE (unaudited)
$ millions

GRAPHIC

---



Sensitivity analysis is used to quantify the market risk in non-trading portfolios. It is generally defined as a measure of the potential changes in a
portfolio's fair value created by changes in one or multiple financial market rates or prices, including interest rates, foreign exchange rates and equity and commodity prices. The results can be
focused to show the impact of an adverse shift in a single interest rate or to show the effects of many simultaneous changes. The market risk exposures of the Company's positions as of
December 31, 2002 have been restated to reflect the transfer of Management LLC in the first quarter of 2003.

We
have equity risk on our non-trading financial instruments portfolio, which consists of our private equity investments. We measure equity risk on our private equity
investments using a sensitivity analysis that estimates the potential decline in the recorded value of the investments resulting from a 10% decline in the equity markets of G-22 nations
and a 20% decline in the equity markets of non-G-22 nations. As of December 31, 2003, the estimated impact on pre-tax income as a result of the decline was a
decrease of
approximately $112 million compared to a decrease of approximately $96 million as of December 31, 2002.

We
measure interest rate risk on non-trading positions using sensitivity analysis that estimates the potential change in the value of the non-trading portfolio
resulting from a 50 basis points decline in the interest rates of G-22 nations and a 200 basis points decline in the interest rates of non-G-22 nations. Due to the
current low levels of U.S. interest rates, the calculation of non-trading portfolio interest rate

59

---

risk
was changed from a 100 basis points decline to a 50 basis points decline in interest rates for G-22 nations during the second quarter of 2003. As of December 31, 2003, the
estimated impact on pre-tax income as a result of the decline was an increase of approximately $55 million compared to an increase of approximately $28 million as of
December 31, 2002.

We
do not have material foreign exchange or commodity price risk on our non-trading portfolio.



VAR is designed to measure market risk in normal market environments. CSFB complements this with a scenario-based risk measure that examines the potential effects
of changes in market conditions, corresponding to exceptional but plausible events, on its financial condition. The results of the analysis are used to manage exposures on a CSFB-wide
basis, as well as at the portfolio level. Scenario analysis involves the revaluation of major portfolios to arrive at a measure of the profit or loss that CSFB may suffer under a particular scenario.
Scenario analysis is therefore an essential component of CSFB's market risk measurement framework for both trading and non-trading portfolios.

Global
scenarios aim to capture the risk of severe disruption to all major markets and are related to historic events such as those involving the equity markets in 1987, the U.S. real
estate market in 1990, the bond markets in 1994 and the credit markets in 1998. Business level scenarios aim to capture portfolio-specific risks by employing scenarios based on
non-parallel yield curve shifts, changes in correlations and other pricing assumptions.

Credit Risk



CRM is responsible for managing CSFB's portfolio of credit risk and establishes broad policies and guidelines governing CSFB's credit risk appetite. CRM is headed
by the Chief Credit Officer, who reports directly to the Chief Financial Officer of CSFB.



The counterparty risk portion of credit risk is determined by the likelihood of a counterparty not fulfilling its contractual obligations to CSFB and thus
creating a partial or total loss. To assess the probability of default, CSFB utilizes a counterparty rating scale which approximates that used by the major public rating agencies (ranging from AAA as
the best to D as the worst) and applies this grading measure against all of its counterparties. CSFB takes a proactive approach to rating each of its counterparties and, as a result, internal ratings
may deviate from those assigned by public rating agencies.



Credit authority is delegated by the Chief Credit Officer to specific senior CRM personnel based on each person's knowledge, experience and capability. These
delegations of credit authority are reviewed periodically. Credit authorization is separated from line functions. CARMC, in addition to its responsibilities for market risk described above, is also
responsible for maintaining credit policies and processes, evaluating country, counterparty and transaction risk issues, applying senior level oversight for the credit review process and ensuring
global consistency and quality of the credit portfolio. CARMC regularly reviews credit limits measuring country, geographic region and product concentrations, as well as impaired assets and
recommended loan loss provisions.

60

---



All counterparties are assigned a credit rating as noted above. The intensity and depth of analysis is related to the amount, duration and level of risk being
proposed together with the perceived credit quality of the counterparty or issuer in question. Analysis consists of a quantitative and qualitative portion and strives to be forward looking,
concentrating on economic trends and financial fundamentals. In addition, analysts make use of peer analysis, industry comparisons and other quantitative tools. Any final rating requires the
consideration of qualitative factors relating to the company, its industry and management.

In
addition to the aforementioned analysis, all counterparty ratings are subject to the rating of the country in which the counterparty is domiciled. Analysis of key sovereign and
economic issues for all jurisdictions is undertaken and these are considered when assigning the rating and risk profile for individual counterparties.



For financial reporting purposes, specific credit loss provisions are established for loans that are impaired. Impaired loans are individually evaluated and a
provision is established when the discounted cash flow, fair market value of collateral or fair market value of the loan is lower than the carrying value of that loan.



The inherent loss allowance is for all loans not specifically identified as impaired which, on a portfolio basis, are considered to contain probable inherent
loss. The loan valuation allowance is established by analyzing historical default probabilities, historical recovery assumptions, internal risk rating, and current economic conditions.



Credit risk associated with CSFB's lending and other credit-related activities (letters of credit, guarantees and unfunded commitments) is measured in terms of
the notional amount of the loan and/or commitment. Exposures are reported and analyzed daily. Each facility is approved by senior CRM personnel who are experienced in making lending decisions and is
covered by a legal agreement that is appropriate for the type of transaction.

CSFB
manages the size of its credit exposure arising from lending and credit-related activities through loan sales, credit derivatives and securitizations.



Credit risk associated with CSFB's trading and derivatives business is measured against counterparty limits on at least a daily basis. Credit risk is defined in
terms of mark-to-market replacement value and potential exposure to maturity. The latter is based on the volatility of the underlying market factors such as interest and
foreign exchange rates.

To
minimize credit risk, CSFB enters into master netting agreements, which reduce risk by permitting the closeout and netting of transactions with the same counterparty upon the
occurrence of certain events. In addition, CSFB reduces credit risk by obtaining collateral based upon an individual assessment of counterparties. Generally, CSFB accepts collateral in the form of
cash, treasury instruments issued by G-7 countries and other marketable securities.

61

---

Country Risk

Country risk is the risk of a substantial, systemic loss of value in the financial assets of a country or group of countries, which may be caused by dislocations
in the credit, equity and/or currency markets. CSFB's major operating divisions all assume country risk in a variety of ways. The setting of limits for this risk is the responsibility of CARMC based
on recommendations of CRM, SRM and CSFB's economists.

Country
limits for emerging markets are approved by the Board of Directors of CSG, following recommendations from CARMC. The measurement of exposures against country limits is undertaken
by RMM, with weekly reports to senior management and monthly reports to CARMC. For trading positions, country risk is a function of the mark-to-market exposure and currency of
the position, while for loans and related facilities, country risk is a function of the amount and currency that CSFB has lent or committed to lend. The day-to-day management
of country exposure is assigned to each of the core businesses in accordance with its business authorizations and limit allocations. RMM and CRM provide independent oversight to ensure that the core
businesses operate within their limits. CRM is responsible for periodically adjusting these limits to reflect changing credit fundamentals and business volumes. The designation of countries as
"G-10 and other industrialized countries" and "emerging market countries" is reviewed on a regular basis by CARMC and is submitted to the Board of Directors of CSG for approval.

Operational Risk

The definition of operational risk used by CSG is "the risk of loss resulting from inadequate or failed internal processes, people and systems or from external
events." Business and strategic risk are specifically excluded from this definition.

Operational
risk is inherent in many aspects of CSFB's activities and comprises a large number of disparate risks. While market or credit risk is often chosen for the prospect of gain,
operational risk is not normally chosen willingly, but is accepted as a necessary consequence of doing business. In comparison to market or credit risk, the sources of operational risk are difficult
to identify comprehensively and the amount of risk is also intrinsically difficult to measure. CSFB therefore manages operational risk differently from market or credit risks. Operational risk is
controlled through a network of controls, procedures, reports and responsibilities.

CSG
uses a group-wide framework to monitor and control such risks. CSFB operates within this framework. CSFB has longstanding resources in place to deal with the many aspects
of operational risk control (such as a substantial internal audit function reporting to CSG and an operations risk management function covering operations, product control and information technology,
which are CSFB's key process-dependent departments). CSFB's primary aim is the early identification, prevention and mitigation of operational risks, as well as timely and meaningful management
reporting.

CSFB
has continued to develop its operational risk framework. The key initiatives have included further enhancement of the governance structure for managing operational risk; continued
development of key risk indicators reporting; additional improvements to the established control self-assessment process; and further development of a centralized operational risk loss
database. In conjunction with CSG, CSFB has also enhanced its ERC methodology to align it further with the expected Basel II requirements of the Advanced Measurement Approach.

Settlement Risk

Settlement risk arises whenever the settlement of a transaction results in timing differences between the disbursement of cash or securities and the receipt of
countervalue from the counterparty.

62

---

This
risk arises whenever transactions settle on a "free of payment" basis and is especially relevant when operating across time zones.

In
those instances where market convention and/or products preclude a value-for-value exchange, CSFB manages its risk through confirmation and affirmation of
transaction details with counterparties. In addition, it actively manages the timing of settlement instructions to its agents and the reconciliation of incoming payments in order to reduce the window
of exposure. CRM considers these factors in deciding counterparty risk limits.

Legal Risk

CSFB faces significant legal risks in its businesses. Legal risks in the investment banking business include, among other things, disputes over the terms of
trades and other transactions in which CSFB acts as principal; securities law disclosure and other liability in connection with transactions pursuant to which CSFB acts as underwriter, placement agent
or financial adviser; the unenforceability or inadequacy of the documentation for some of the transactions in which CSFB participates; investment suitability concerns; compliance with the laws and
regulations (including change in laws or regulations) of the many countries in which CSFB does business; and disputes with its employees. Some of these transactions or disputes result in potential or
actual litigation and arbitration that CSFB must incur legal expenses to defend.

The
investment banking business is subject to extensive regulation by governmental and self-regulatory organizations around the world. A failure to comply with these
regulations could result in regulatory investigations, fines, and restrictions on some of CSFB's business activities or other sanctions. CSFB seeks to minimize legal risk through the adoption of
compliance and other policies and procedures, continuing to refine controls over business practices and behavior, extensive employee training sessions, the use of appropriate legal documentation, and
the involvement of the Legal and Compliance Department, outside legal counsel and the CSFB Global Compliance Committee, made up of some of the firm's most senior officers. See
"BusinessCertain Factors That May Affect Our Results of OperationsLegal and Regulatory Risks" in Part I, Item 1.

Reputational Risk

CSFB's policy is to avoid any action or transaction that brings with it a potentially unacceptable level of risk to CSFB's reputation.

Reputational
risk may arise from a variety of sources, including the nature or purpose of a proposed transaction, the identity or nature of a potential client, the regulatory or
political climate in which the business will be transacted or significant public attention surrounding the transaction itself. Where the presence of these or other factors gives rise to potential
reputational risk for CSFB, the relevant business proposal is required to be submitted to CSFB's reputational risk review process. This involves a review of the proposal by senior business management
and its subsequent referral to a reputational risk approver, who is independent of CSFB's business divisions and who has authority to approve, reject, or impose conditions on CSFB's participation.

Liquidity Risk

Our liquidity risk is managed as a part of CSFB's global liquidity policy. CSFB's liquidity policy focuses on the proven stability of its unsecured funding
sources, which include CSFB-sourced deposits as well as access to customer funds sourced by affiliates. The deposit base provides CSFB with substantial sources of liquidity that are well
diversified and primarily driven by customer relationships rather than price. These deposits provide a stable source of funds. We also regularly access the capital markets through our commercial paper
program, medium-term note programs and issues of senior debt and other securities. Additionally, the Company maintains an unsecured revolving credit facility with

63

---

various
banks. We and CSFB also have access to additional liquidity through our subsidiary broker-dealers, which have the capacity to increase their funding through the secured funding markets
(repurchase agreements and other collateralized arrangements). These secured funding markets have proven reliable in high stress conditions. This secondary source of liquidity is potentially available
as alternative funding to meet business plans and commercial commitments. CSFB LLC also has access on a committed basis to secured lending facilities with various banks. CSFB regularly stress tests
its liquidity using scenarios designed to represent highly adverse conditions. See "Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and
Capital ResourcesLiquidity Planning and Measurement" in Part II, Item 7 for a discussion of how we monitor our liquidity position.

Item 8: Financial Statements and Supplementary Data

Our consolidated financial statements, together with the notes thereto and the Independent Auditor's report thereon, are set forth on pages F-1 to
F-52 of this Annual Report on Form 10-K. In addition, the supplementary financial information on selected quarterly financial data is set forth on page F-52
of this Annual Report.

Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There were no changes in or disagreements with accountants on accounting and financial disclosure.

Item 9A: Controls and Procedures

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. There are inherent limitations to
the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even
effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of the evaluation, our Chief Executive Officer
and Chief Financial and Accounting Officer concluded that the design and operation of these disclosure controls and procedures were effective in all material respects to provide reasonable assurance
that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. There were no changes in our
internal control over financial reporting that occurred during the quarter ended December 31, 2003 that materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

64

---



PART III

Item 10: Directors and Executive Officers of the Registrant

Pursuant to General Instruction I of Form 10-K, the Company is not required to provide the information required by Item 10.

Set
forth below is information as of March 29, 2004 with respect to our directors and executive officers.

|Name               |  | Age |  | Position                                       
|------------------ |  | --- |  | -----------------------------------------------
|Brian D. Finn      |  | 43  |  | Director, President and Chief Executive Officer
|David C. Fisher    |  | 57  |  | Chief Financial and Accounting Officer         
|Eileen K. Murray   |  | 46  |  | Director, Managing Director                    
|Barbara A. Yastine |  | 44  |  | Director, Managing Director                    
|Brady W. Dougan    |  | 44  |  | Managing Director                              
|Gary G. Lynch      |  | 53  |  | Managing Director and General Counsel          
|Lewis H. Wirshba   |  | 47  |  | Managing Director and Treasurer                

BRIAN D. FINN.Mr. Finn is a member of the Credit Suisse Group Executive Board and is Co-President,
Institutional Securities of CSFB, a position he has held since November 2002. He is a member of the most senior executive board of CSFB, which we refer to as the CSFB Operating Committee. Prior
to assuming his current roles, he was a member of the Office of the Chairman. Mr. Finn joined CSFB in April 2002 from Clayton, Dubilier & Rice. Before joining Clayton,
Dubilier & Rice in 1997, he was a Managing Director and Co-Head of Mergers & Acquisitions at CSFB.

DAVID C. FISHER.Mr. Fisher served as Global Head of Financial Control of CSFB from 1999 to 2004. Mr. Fisher
joined CSFB from Bankers Trust Corporation, where he was Controller from 1998 to 1999. From 1985 to 1998, Mr. Fisher worked for Salomon Brothers Inc, where he was Controller for the
majority of his tenure.

EILEEN K. MURRAY.Ms. Murray was appointed the Head of Global Technology and Operations of CSFB in
February 2002 and Head of Product Control in November 2002. Ms. Murray is also a member of the CSFB Operating Committee. Ms. Murray joined CSFB in February 2002 from
Morgan Stanley, where she was Chief Administrative Officer for the Institutional Securities Group. Ms. Murray joined Morgan Stanley in 1984 as a Senior Analyst in the Controllers Department.
Prior to the merger of Morgan Stanley and Dean Witter, she was Controller and Treasurer.

BARBARA A. YASTINE.Ms. Yastine is a member of the Credit Suisse Group Executive Board. She is also the Chief
Financial Officer of CSFB and is a member of the CSFB Operating Committee. Ms. Yastine joined CSFB in November 2002 from Citigroup, where she was the Chief Financial Officer of the
Global Corporate Investment Bank. Ms. Yastine joined Citigroup in 1987, and while there held a variety of other key finance and management positions.

BRADY W. DOUGAN.Mr. Dougan is a member of the Credit Suisse Group Executive Board. He is Co-President,
Institutional Securities of CSFB and is a member of the CSFB Operating Committee. Prior to assuming his current roles, Mr. Dougan was Global Head of the Securities Division from 2001 to 2002
and Head of the Equities Division from 1996 to 2001. Mr. Dougan served as Co-Head of the Global Debt Capital Markets Group at CSFB and Co-Head of the Credit Suisse
Financial Products'

65

---

marketing
efforts in the Americas from 1993 to 1996. Mr. Dougan joined CSFB in 1990 from Bankers Trust Corporation.

GARY G. LYNCH.Mr. Lynch is Global General Counsel, Head of the Legal and Compliance Department and Vice Chairman for
Research of CSFB, and is a member of the CSFB Operating Committee. Mr. Lynch joined CSFB in October 2001 from Davis Polk & Wardwell, where he had been a partner since 1989.
Mr. Lynch was Director of the Enforcement Division at the SEC from 1985 to 1989.

LEWIS H. WIRSHBA.Mr. Wirshba is Corporate Treasurer of CSFB, a position he has held since 1996, and has served as
Global Head of CSFB's New Business Department since March 2000. He joined CSFB in 1986 from the Treasurer's office of General Motors.

Effective
April 1, 2004, Paul C. Wirth will be Chief Financial and Accounting Officer of the Company. Mr. Wirth was appointed Global Controller and Chief Accounting Officer
of CSFB in February 2004. Mr. Wirth joined CSFB from Deloitte & Touche.

Code of Conduct

CSG has adopted a code of conduct that governs our directors, officers and employees, including our Chief Executive Officer and our Chief Financial and Accounting
Officer. You may request a copy of the code of conduct, at no cost, by writing us at One Madison Avenue, New York, NY 10010, Attention: Corporate Secretary, or by telephoning the Corporate Secretary
at (212) 325 2000.

Item 11: Executive Compensation

Pursuant to General Instruction I of Form 10-K, the information required by Item 11 is omitted.

Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Pursuant to General Instruction I of Form 10-K, the information required by Item 12 is omitted.

Item 13: Certain Relationships and Related Transactions

Pursuant to General Instruction I of Form 10-K, the information required by Item 13 is omitted.

Item 14: Principal Accountant Fees and Services

The following table presents fees billed to the Company by KPMG LLP for the years ended December 31, 2003 and 2002:

|                      |                              | December 31, 2003 |       | December 31, 2002
|--------------------- | ---------------------------- | ----------------- | ----- | -----------------
|
|Audit fees(1)         |                              | $                 | 4,640 |                  
|Audit-related fees(2) |                              |                   | 620   |                  
|                      |                              |                   |       |                  
|                      | Audit and audit-related fees |                   |       | 5,260            
|Tax fees(3)           |                              |                   | 57    |                  
|All other fees(4)     |                              |                   | 300   |                  
|                      |                              |                   |       |                  
|                      |                              | Total fees        |       | $                
|                      |                              |                   |       |                  

---

66

---



Pre-approval Policy

We are not subject to a requirement to maintain an audit committee. CSG's audit committee has adopted a pre-approval policy that applies to all of its
subsidiaries, including the Company. The audit committee's policy limits the scope of services that may be provided to the Company by KPMG LLP, its independent auditor, to pre-approved
audit and certain permissible non-audit services, including audit-related services, tax services and other services. The audit committee may also approve particular services on a
case-by-case basis. The independent auditor and management are required to periodically report to the audit committee regarding the extent of services provided by the
independent auditor and the fees for the services performed to date.

67

---



PART IV

Item 15: Exhibits, Financial Statement Schedule, and Reports on Form 8-K



The
consolidated financial statements required to be filed in this Annual Report are listed on page F-1 hereof.

The
financial statement schedule required to be filed in this Annual Report is listed on page F-1 hereof. The required schedule appears on pages F-53 through
F-57 hereof.

An
exhibit list has been filed as part of this Annual Report beginning on page E-1 and is incorporated herein by reference.



On
October 9, 2003, we filed a Current Report on Form 8-K filing the Form of Note for our Five-Year Contingent Protection Securities due
September 30, 2008 Linked to the S&P 500® Index.

On
November 4, 2003, we filed a Current Report on Form 8-K reporting that CSG released its financial results for the three and nine months ended
September 30, 2003, including for CSFB, and reporting information on our expected results.

On
November 17, 2003, we filed a Current Report on Form 8-K reporting that Moody's Investors Service changed the ratings outlook for our Aa3 senior debt rating
to stable from negative.

On
December 1, 2003, we filed a Current Report on Form 8-K filing the Form of Note for our Five-Year Contingent Protection Securities due
November 26, 2008 Linked to the S&P 500® Index.

On
February 12, 2004, we filed a Current Report on Form 8-K, attaching a CSG press release on CSG's fourth-quarter and year-end financial results,
including for CSFB, and reporting information on our expected results.

68

---



INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

|                                                                              |                                                                       | Page
|----------------------------------------------------------------------------- | --------------------------------------------------------------------- | ----
|CONSOLIDATED FINANCIAL STATEMENTS                                             |                                                                       |     
|Credit Suisse First Boston (USA), Inc. and Subsidiaries                       |                                                                       |     
|                                                                              | Independent Auditors' Report                                          |     
|                                                                              | Consolidated Statements of Financial Condition                        |     
|                                                                              | Consolidated Statements of Operations                                 |     
|                                                                              | Consolidated Statements of Changes in Stockholders' Equity            |     
|                                                                              | Consolidated Statements of Cash Flows                                 |     
|                                                                              | Notes to Consolidated Financial Statements                            |     
|                                                                              | 1. Summary of Significant Accounting Policies                         |     
|                                                                              | 2. Discontinued Operations                                            |     
|                                                                              | 3. Related Party Transactions                                         |     
|                                                                              | 4. Income Taxes                                                       |     
|                                                                              | 5. Transfers and Servicing of Financial Assets                        |     
|                                                                              | 6. Borrowings                                                         |     
|                                                                              | 7. Private Equity and Other Long-Term Investments                     |     
|                                                                              | 8. Net Capital                                                        |     
|                                                                              | 9. Cash and Securities Segregated Under Federal and Other Regulations |     
|                                                                              | 10. Derivatives Contracts                                             |     
|                                                                              | 11. Financial Instruments With Off-Balance Sheet Risk                 |     
|                                                                              | 12. Concentrations of Credit Risk                                     |     
|                                                                              | 13. Stockholders' Equity                                              |     
|                                                                              | 14. Employee Benefit Plans                                            |     
|                                                                              | 15. Share-Based Compensation                                          |     
|                                                                              | 16. Leases and Commitments                                            |     
|                                                                              | 17. Guarantees                                                        |     
|                                                                              | 18. Industry Segment and Geographic Data                              |     
|                                                                              | 19. Goodwill and Identifiable Intangible Assets                       |     
|                                                                              | 20. Legal Proceedings                                                 |     
|                                                                              | 21. Quarterly Data (Unaudited)                                        |     
|FINANCIAL STATEMENT SCHEDULE                                                  |                                                                       |     
|Schedule 1Condensed Financial Statements of Registrant (Parent Company Only) |                                                                       |     
|                                                                              | Condensed Statements of Financial Condition                           |     
|                                                                              | Condensed Statements of Operations                                    |     
|                                                                              | Condensed Statements of Cash Flows                                    |     
|                                                                              | Notes to Condensed Financial Statements                               |     

F-1

---

INDEPENDENT AUDITORS' REPORT

The
Board of Directors and Stockholders
Credit Suisse First Boston (USA), Inc.

We
have audited the accompanying consolidated statements of financial condition of Credit Suisse First Boston (USA), Inc. and subsidiaries as of December 31, 2003 and 2002,
and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2003, and
the related financial statement schedule. These consolidated financial statements and related financial statement schedule are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and related financial statement schedule based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Credit Suisse First Boston (USA), Inc.
and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31,
2003, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As
discussed in Note 1 to the consolidated financial statements, in 2003 the Company changed its method of accounting for variable interest entities and share-based compensation.

/s/
KPMG LLP
New York, New York

February 20,
2004

F-2

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(In millions)

ASSETS

|                                                                                                                         |                                                 | December 31, 2003 |        | December 31, 2002
|------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------- | ----------------- | ------ | -----------------
|Cash and cash equivalents                                                                                                |                                                 | $                 | 334    |                  
|Collateralized short-term financings:                                                                                    |                                                 |                   |        |                  
|                                                                                                                         | Securities purchased under agreements to resell |                   |        | 50,388           
|                                                                                                                         | Securities borrowed                             |                   |        | 77,999           
|Receivables:                                                                                                             |                                                 |                   |        |                  
|                                                                                                                         | Customers                                       |                   |        | 2,859            
|                                                                                                                         | Brokers, dealers and other                      |                   |        | 6,673            
|Financial instruments owned (includes securities pledged as collateral of $47,565 and $49,695, respectively):            |                                                 |                   |        |                  
|                                                                                                                         | U.S. government and agencies                    |                   |        | 31,781           
|                                                                                                                         | Corporate debt                                  |                   |        | 12,761           
|                                                                                                                         | Mortgage whole loans                            |                   |        | 9,101            
|                                                                                                                         | Equities                                        |                   |        | 15,161           
|                                                                                                                         | Commercial paper                                |                   |        | 641              
|                                                                                                                         | Private equity and other long-term investments  |                   |        | 1,123            
|                                                                                                                         | Derivatives contracts                           |                   |        | 5,573            
|                                                                                                                         | Other                                           |                   |        | 3,765            
|Net deferred tax asset                                                                                                   |                                                 |                   | 1,286  |                  
|Office facilities and property at cost (net of accumulated depreciation and amortization of $865 and $749, respectively) |                                                 |                   | 468    |                  
|Goodwill                                                                                                                 |                                                 |                   | 338    |                  
|Loans receivable from parent and affiliates                                                                              |                                                 |                   | 19,460 |                  
|Other assets and deferred amounts                                                                                        |                                                 |                   | 1,634  |                  
|Assets held for sale                                                                                                     |                                                 |                   |       |                  
|                                                                                                                         |                                                 |                   |        |                  
|                                                                                                                         | Total assets                                    |                   | $      | 241,345          
|                                                                                                                         |                                                 |                   |        |                  

See
accompanying notes to consolidated financial statements.

F-3

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition (Continued)

(In millions, except share data)

LIABILITIES AND STOCKHOLDERS' EQUITY

|                                                                                              |                                                                                                                                     | December 31,
2003 |        | December 31,
2002 |  
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------ | ----------------- | -
|Commercial paper and short-term borrowings                                                    |                                                                                                                                     | $                 | 16,061 |                   | $
|Collateralized short-term financings:                                                         |                                                                                                                                     |                   |        |                   |  
|                                                                                              | Securities sold under agreements to repurchase                                                                                      |                   |        | 110,667           |  
|                                                                                              | Securities loaned                                                                                                                   |                   |        | 27,708            |  
|Payables:                                                                                     |                                                                                                                                     |                   |        |                   |  
|                                                                                              | Customers                                                                                                                           |                   |        | 4,278             |  
|                                                                                              | Brokers, dealers and other                                                                                                          |                   |        | 5,410             |  
|Financial instruments sold not yet purchased:                                                 |                                                                                                                                     |                   |        |                   |  
|                                                                                              | U.S. government and agencies                                                                                                        |                   |        | 23,700            |  
|                                                                                              | Corporate debt                                                                                                                      |                   |        | 2,523             |  
|                                                                                              | Equities                                                                                                                            |                   |        | 5,231             |  
|                                                                                              | Derivatives contracts                                                                                                               |                   |        | 3,955             |  
|                                                                                              | Other                                                                                                                               |                   |        | 336               |  
|Obligation to return securities received as collateral                                        |                                                                                                                                     |                   | 1,955  |                   |  
|Accounts payable and accrued expenses                                                         |                                                                                                                                     |                   | 2,836  |                   |  
|Other liabilities                                                                             |                                                                                                                                     |                   | 2,944  |                   |  
|Long-term borrowings                                                                          |                                                                                                                                     |                   | 24,321 |                   |  
|Liabilities held for sale                                                                     |                                                                                                                                     |                   |       |                   |  
|                                                                                              |                                                                                                                                     |                   |        |                   |  
|                                                                                              | Total liabilities                                                                                                                   |                   |        | 231,925           |  
|                                                                                              |                                                                                                                                     |                   |        |                   |  
|Stockholders' Equity:                                                                         |                                                                                                                                     |                   |        |                   |  
|Preferred stock, 50,000,000 shares authorized:                                                |                                                                                                                                     |                   |        |                   |  
|                                                                                              | Series B preferred stock, at $50.00 per share liquidation preference (88,500 shares issued and outstanding as of December 31, 2002) |                   |        |                  |  
|Common stock ($0.10 par value; 50,000 shares authorized; 1,100 shares issued and outstanding) |                                                                                                                                     |                   |       |                   |  
|Paid-in capital                                                                               |                                                                                                                                     |                   | 7,645  |                   |  
|Retained earnings                                                                             |                                                                                                                                     |                   | 1,933  |                   |  
|Accumulated other comprehensive loss                                                          |                                                                                                                                     |                   | (158   | )                 |  
|                                                                                              |                                                                                                                                     |                   |        |                   |  
|                                                                                              | Total stockholders' equity                                                                                                          |                   |        | 9,420             |  
|                                                                                              |                                                                                                                                     |                   |        |                   |  
|                                                                                              | Total liabilities and stockholders' equity                                                                                          |                   | $      | 241,345           |  
|                                                                                              |                                                                                                                                     |                   |        |                   |  

See
accompanying notes to consolidated financial statements.

F-4

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In millions)

|                                                                                                                                                                        |                                                                                            | For the Year Ended December 31,                          |      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | -------------------------------------------------------- | -----
|
|Revenues:                                                                                                                                                               |                                                                                            |                                                          |      
|                                                                                                                                                                        | Principal transactions-net                                                                 |                                                          | $    
|                                                                                                                                                                        | Investment banking and advisory                                                            |                                                          |      
|                                                                                                                                                                        | Commissions                                                                                |                                                          |      
|                                                                                                                                                                        | Interest and dividends, net of interest expense of $4,447, $5,436 and $9,923, respectively |                                                          |      
|                                                                                                                                                                        | Other                                                                                      |                                                          |      
|                                                                                                                                                                        |                                                                                            |                                                          |      
|                                                                                                                                                                        |                                                                                            | Total net revenues                                       |      
|                                                                                                                                                                        |                                                                                            |                                                          |      
|Expenses:                                                                                                                                                               |                                                                                            |                                                          |      
|                                                                                                                                                                        | Employee compensation and benefits                                                         |                                                          |      
|                                                                                                                                                                        | Occupancy and equipment rental                                                             |                                                          |      
|                                                                                                                                                                        | Brokerage, clearing and exchange fees                                                      |                                                          |      
|                                                                                                                                                                        | Communications                                                                             |                                                          |      
|                                                                                                                                                                        | Professional fees                                                                          |                                                          |      
|                                                                                                                                                                        | Merger-related costs                                                                       |                                                          |      
|                                                                                                                                                                        | Other operating expenses                                                                   |                                                          |      
|                                                                                                                                                                        |                                                                                            |                                                          |      
|                                                                                                                                                                        |                                                                                            | Total expenses                                           |      
|                                                                                                                                                                        |                                                                                            |                                                          |      
|Income (loss) from continuing operations before provision (benefit) for income taxes, discontinued operations and cumulative effect of a change in accounting principle |                                                                                            |                                                          | 779  
|Provision (benefit) for income taxes                                                                                                                                    |                                                                                            |                                                          | 317  
|                                                                                                                                                                        |                                                                                            |                                                          |      
|Income (loss) from continuing operations before discontinued operations and cumulative effect of a change in accounting principle                                       |                                                                                            |                                                          | 462  
|Discontinued operations:                                                                                                                                                |                                                                                            |                                                          |      
|                                                                                                                                                                        | Income from discontinued operations                                                        |                                                          |      
|                                                                                                                                                                        | Provision for income taxes                                                                 |                                                          |      
|                                                                                                                                                                        |                                                                                            |                                                          |      
|                                                                                                                                                                        |                                                                                            | Income from discontinued operations, net of income taxes |      
|                                                                                                                                                                        |                                                                                            |                                                          |      
|Income (loss) before cumulative effect of a change in accounting principle                                                                                              |                                                                                            |                                                          | 1,338
|Cumulative effect of a change in accounting principle, net of income tax (benefit) provision of $(5) and $0.3 in 2003 and 2001, respectively                            |                                                                                            |                                                          | (9   
|                                                                                                                                                                        |                                                                                            |                                                          |      
|Net income (loss)                                                                                                                                                       |                                                                                            | $                                                        | 1,329
|                                                                                                                                                                        |                                                                                            |                                                          |      

See
accompanying notes to consolidated financial statements.

F-5

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity

For the Years Ended December 31, 2003, 2002 and 2001

(In millions)

|                                                                                      |                            | Preferred
Stock |      | Common
Stock |   | CSFBdirectCommon
Stock |  | Paid-in
Capital |    | Retained
Earnings |   | Accumulated
Other
Comprehensive
Income (Loss) |   | Total |      
|------------------------------------------------------------------------------------- | -------------------------- | --------------- | ---- | ------------ | - | ---------------------- |  | --------------- | -- | ----------------- | - | --------------------------------------------- | - | ----- | -----
|Balances as of December 31, 2000                                                      |                            | $               | 375  |              | $ |                       |  | $               | 2  |                   | $ | 5,334                                         |   | $     | 1,105
|Net loss                                                                              |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       | (215 
|Foreign currency translation adjustment                                               |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       |     
|Change in accounting principle (SFAS 133)                                             |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       |     
|Increase in pension liability, net of income tax benefit of $(34)                     |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       |     
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|                                                                                      | Total comprehensive loss   |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|Capital contribution of CSFB Capital Holdings, Inc                                    |                            |                 |     |              |   |                       |  |                 |   |                   |   | 34                                            |   |       |     
|Retirement of CSFBdirectstock                                                         |                            |                 |     |              |   |                       |  |                 | (2 | )                 |   | 2                                             |   |       |     
|Redemption of Series A preferred stock                                                |                            |                 | (200 | )            |   |                       |  |                 |   |                   |   |                                              |   |       |     
|Tender offer for Series B preferred stock                                             |                            |                 | (170 | )            |   |                       |  |                 |   |                   |   |                                              |   |       | (8   
|Preferred stock dividends                                                             |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       | (23  
|CSG share plan activity, net of tax effect of $(37)                                   |                            |                 |     |              |   |                       |  |                 |   |                   |   | 956                                           |   |       |     
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|Balances as of December 31, 2001                                                      |                            |                 | 5    |              |   |                       |  |                 |   |                   |   | 6,326                                         |   |       | 859  
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|Net loss                                                                              |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       | (253 
|Foreign currency translation adjustment                                               |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       |     
|Increase in pension liability, net of income tax benefit of $(49)                     |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       |     
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|                                                                                      | Total comprehensive loss   |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|Capital contribution by CSFBI                                                         |                            |                 |     |              |   |                       |  |                 |   |                   |   | 300                                           |   |       |     
|Redemption of Series B preferred stock                                                |                            |                 | (1   | )            |   |                       |  |                 |   |                   |   |                                              |   |       |     
|CSG share plan activity, net of tax effect of $7                                      |                            |                 |     |              |   |                       |  |                 |   |                   |   | 653                                           |   |       |     
|Preferred stock dividends                                                             |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       | (2   
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|Balances as of December 31, 2002                                                      |                            |                 | 4    |              |   |                       |  |                 |   |                   |   | 7,279                                         |   |       | 604  
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|Net income                                                                            |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       | 1,329
|Foreign currency translation adjustment                                               |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       |     
|Increase in pension liability, net of income tax benefit of $(2)                      |                            |                 |     |              |   |                       |  |                 |   |                   |   |                                              |   |       |     
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|                                                                                      | Total comprehensive income |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|Capital contribution by CSFBI                                                         |                            |                 |     |              |   |                       |  |                 |   |                   |   | 75                                            |   |       |     
|Redemption of Series B preferred stock                                                |                            |                 | (4   | )            |   |                       |  |                 |   |                   |   |                                              |   |       |     
|CSG share plan activity, net of tax effect of $27                                     |                            |                 |     |              |   |                       |  |                 |   |                   |   | 325                                           |   |       |     
|Tax charge associated with an investment previously recorded through equity and other |                            |                 |     |              |   |                       |  |                 |   |                   |   | (34                                           | ) |       |     
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      
|Balances as of December 31, 2003                                                      |                            | $               |     |              | $ |                       |  | $               |   |                   | $ | 7,645                                         |   | $     | 1,933
|                                                                                      |                            |                 |      |              |   |                        |  |                 |    |                   |   |                                               |   |       |      

See accompanying notes to consolidated financial statements.

F-6

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2003, 2002 and 2001

(In millions)

|                                      |                                                                                                    | 2003                                                           |        | 2002  |        | 2001   |     
|------------------------------------- | -------------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------ | ----- | ------ | ------ | ----
|Cash flows from operating activities: |                                                                                                    |                                                                |        |       |        |        |     
|                                      | Net income (loss)                                                                                  |                                                                | $      | 1,329 |        | $      | (253
|                                      | Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |                                                                |        |       |        |        |     
|                                      |                                                                                                    | Net pre-tax gain on sale of certain broker-dealer subsidiaries |        |       |       |        |     
|                                      |                                                                                                    | Pre-tax gain on sale of Pershing                               |        |       | (1,324 | )      |     
|                                      |                                                                                                    | Pre-tax gain on sale of DLJdirectSFG Securities Inc.           |        |       | (115   | )      |     
|                                      |                                                                                                    | Depreciation and amortization                                  |        |       | 223    |        |     
|                                      |                                                                                                    | CSG share plan activity                                        |        |       | 352    |        |     
|                                      |                                                                                                    | Deferred taxes                                                 |        |       | 318    |        |     
|                                      |                                                                                                    | Other, net                                                     |        |       | (63    | )      |     
|                                      | Change in operating assets and operating liabilities:                                              |                                                                |        |       |        |        |     
|                                      |                                                                                                    | Securities borrowed                                            |        |       | (6,703 | )      |     
|                                      |                                                                                                    | Receivables from customers                                     |        |       | (1,780 | )      |     
|                                      |                                                                                                    | Receivables from brokers, dealers and other                    |        |       | 364    |        |     
|                                      |                                                                                                    | Financial instruments owned                                    |        |       | (8,107 | )      |     
|                                      |                                                                                                    | Other assets and Other liabilities, net                        |        |       | 1,025  |        |     
|                                      |                                                                                                    | Securities loaned                                              |        |       | 3,530  |        |     
|                                      |                                                                                                    | Payables to customers                                          |        |       | 1,350  |        |     
|                                      |                                                                                                    | Payables to brokers, dealers and other                         |        |       | (3,279 | )      |     
|                                      |                                                                                                    | Financial instruments sold not yet purchased                   |        |       | 3,371  |        |     
|                                      |                                                                                                    | Obligation to return securities received as collateral         |        |       | 1,059  |        |     
|                                      |                                                                                                    | Accounts payable and accrued expenses                          |        |       | (397   | )      |     
|                                      |                                                                                                    |                                                                |        |       |        |        |     
|Net cash used in operating activities |                                                                                                    |                                                                | (8,847 | )     |        | (9,425 | )   
|                                      |                                                                                                    |                                                                |        |       |        |        |     

See
accompanying notes to consolidated financial statements.

F-7

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

For the Years Ended December 31, 2003, 2002 and 2001

(In millions)

|                                                           |                                   | 2003                                                                                                   |        | 2002 |        | 2001   |  
|---------------------------------------------------------- | --------------------------------- | ------------------------------------------------------------------------------------------------------ | ------ | ---- | ------ | ------ | -
|Cash flows from investing activities:                      |                                   |                                                                                                        |        |      |        |        |  
|                                                           | Net (payments for) proceeds from: |                                                                                                        |        |      |        |        |  
|                                                           |                                   | Loans receivable from parent and affiliates                                                            |        |      | (3,535 | )      |  
|                                                           |                                   | Sale of broker-dealer subsidiaries                                                                     |        |      |       |        |  
|                                                           |                                   | Sale of Pershing                                                                                       |        |      | 2,000  |        |  
|                                                           |                                   | Sale of DLJ International Group Limited                                                                |        |      | 500    |        |  
|                                                           |                                   | Sale of DLJdirectSFG Securities Inc.                                                                   |        |      | 170    |        |  
|                                                           |                                   | Office facilities                                                                                      |        |      | (178   | )      |  
|                                                           |                                   | Purchase of Holt Value Associates, LP, net of cash                                                     |        |      | (8     | )      |  
|                                                           |                                   | Purchase of Volaris Advisors, net of cash                                                              |        |      | (16    | )      |  
|                                                           |                                   | Purchase of Investment Property Mortgage, LLC and related assets, net of cash                          |        |      | (34    | )      |  
|                                                           |                                   |                                                                                                        |        |      |        |        |  
|Net cash used in investing activities                      |                                   |                                                                                                        | (1,101 | )    |        | (7,291 | )
|                                                           |                                   |                                                                                                        |        |      |        |        |  
|Cash flows from financing activities:                      |                                   |                                                                                                        |        |      |        |        |  
|                                                           | Net proceeds from (payments for): |                                                                                                        |        |      |        |        |  
|                                                           |                                   | Commercial paper and short-term borrowings                                                             |        |      | 4,128  |        |  
|                                                           |                                   | Redemption of preferred trust securities                                                               |        |      |       |        |  
|                                                           |                                   | Redemption of Series A preferred stock                                                                 |        |      |       |        |  
|                                                           |                                   | Repurchase of Series B preferred stock                                                                 |        |      | (4     | )      |  
|                                                           |                                   | Capital contribution of CSFB Capital Holdings, Inc.                                                    |        |      |       |        |  
|                                                           |                                   | Capital contribution by CSFBI                                                                          |        |      | 75     |        |  
|                                                           |                                   | Securities sold under agreements to repurchase, net of securities purchased under agreements to resell |        |      | 4,139  |        |  
|                                                           |                                   | CSFBdirectcommon stock                                                                                 |        |      |       |        |  
|                                                           |                                   | Issuances of long-term borrowings                                                                      |        |      | 5,029  |        |  
|                                                           |                                   | Redemptions and maturities of long-term borrowings                                                     |        |      | (3,565 | )      |  
|                                                           |                                   | Subordinated loan agreements                                                                           |        |      |       |        |  
|                                                           |                                   | Cash dividends                                                                                         |        |      |       |        |  
|                                                           |                                   |                                                                                                        |        |      |        |        |  
|Net cash provided by financing activities                  |                                   |                                                                                                        | 9,802  |      |        | 16,661 |  
|                                                           |                                   |                                                                                                        |        |      |        |        |  
|Decrease in cash and cash equivalents                      |                                   |                                                                                                        | (146   | )    |        | (55    | )
|Cash and cash equivalents included in assets held for sale |                                   |                                                                                                        |       |      |        | (1,218 | )
|                                                           |                                   |                                                                                                        |        |      |        |        |  
|Cash and cash equivalents as of the beginning of period    |                                   |                                                                                                        | 480    |      |        | 1,753  |  
|                                                           |                                   |                                                                                                        |        |      |        |        |  
|Cash and cash equivalents as of the end of period          |                                   | $                                                                                                      | 334    |      | $      | 480    |  
|                                                           |                                   |                                                                                                        |        |      |        |        |  
|SUPPLEMENTAL DISCLOSURES                                   |                                   |                                                                                                        |        |      |        |        |  
|Cash payments for interest                                 |                                   | $                                                                                                      | 4,741  |      | $      | 4,915  |  
|Cash payments for income taxes, net of (refunds)           |                                   | $                                                                                                      | 161    |      | $      | 155    |  

See
accompanying notes to consolidated financial statements.

F-8

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2003

1. Summary of Significant Accounting Policies

The Company

The consolidated financial statements include Credit Suisse First Boston (USA), Inc., formerly known as Donaldson, Lufkin and Jenrette, Inc.
("DLJ"), and its subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated. The Company is an indirect wholly owned subsidiary of Credit Suisse Group
("CSG"), which acquired DLJ on November 3, 2000. Any unexercised or unvested share options of DLJ as of the closing date were converted into CSG share options. After the acquisition, DLJ
changed its name to Credit Suisse First Boston (USA), Inc.

CSG
accounted for the acquisition using the purchase method of accounting. However, because the Company had significant preferred stock and public debt outstanding at the time of the
acquisition, no adjustments of the historical carrying values of the Company's assets and liabilities to reflect the acquisition were recorded in the Company's historical financial statements.
Similarly, although the acquisition gave rise to goodwill and intangible assets, none of the goodwill and intangible assets were "pushed down" to the Company. The goodwill and intangible assets
associated with the acquisition were recorded in the financial statements of CSG and do not affect the Company's results of operations.

On
November 3, 2000, in conjunction with the closing of the acquisition, the Company's immediate parent, Credit Suisse First Boston, Inc. ("CSFBI"), transferred all of the
outstanding shares of Credit Suisse First Boston LLC ("CSFB LLC"), formerly Credit Suisse First Boston Corporation, a U.S. registered broker-dealer that was a direct wholly owned subsidiary of CSFBI,
to the Company in exchange for newly issued shares of the Company. CSFB LLC became a direct wholly owned subsidiary of the Company. Because the transfer of CSFB LLC was between entities under common
control, it has been accounted for at historical cost in the accompanying consolidated financial statements. Accordingly, the operating results of CSFB LLC have been included in the Company's
consolidated financial statements from November 3, 2000, the date of the transfer.

The
Company is a leading integrated investment bank serving institutional, corporate, government and high-net-worth individual clients. The Company's products and
services include securities underwriting, sales and trading, financial advisory services, private equity investments, full service brokerage services, derivatives and risk management products and
investment research.

Basis of financial information.To prepare consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America, management must make estimates and assumptions. The reported amounts of assets and liabilities and revenues and expenses are
affected by these estimates and assumptions, the most significant of which are discussed in the notes to the consolidated financial statements and related disclosures. Estimates, by their nature, are
based on judgment and available information. Therefore, actual results could differ materially from these estimates.

The
Company consolidates all entities in which it has a controlling financial interest, which is typically all, or a majority of, the voting interest. The Company also consolidates
entities that are variable interest entities ("VIEs") when it is determined to be the primary beneficiary under Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46,
"Consolidation of Variable Interest Entities" ("FIN 46"). See Note 5 for more information. Entities in which the Company holds 20% to 50% of the voting rights or has the ability to exercise
significant influence, other than private

F-9

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

1. Summary of Significant Accounting Policies (Continued)

equity
investments which are carried at amounts which approximate fair value, are accounted for under Accounting Principles Board ("APB") Opinion No. 18, "The Equity Method of Accounting for
Investments in Common Stock." In cases where the Company has a voting interest of less than 20% and does not have significant influence, the investment is carried at cost.

Prior
year numbers have been restated to reflect the transfer by CSFBI of Credit Suisse First Boston Management LLC ("Management LLC") to the Company on March 20, 2003. The
transfer of Management LLC has been accounted for at historical cost in a manner similar to pooling-of-interest accounting because Management LLC and the Company were under the
common control of CSFBI at the time of the transfer. The Company's financial information reflects the results of operations, financial condition, cash flows and changes in stockholders' equity as if
the Company had acquired Management LLC on November 3, 2000, the date that the Company was acquired by CSFBI.

Certain
reclassifications have been made to prior year consolidated financial statements to conform to the 2003 presentation.

On
May 1, 2003, the Company sold its Pershing unit ("Pershing") to The Bank of New York Company, Inc. and recorded a pre-tax gain of approximately
$1.3 billion and an after-tax gain of $852 million in the second quarter of 2003. The Pershing operations are presented as Discontinued operations for all periods presented
in the consolidated statement of operations and as Assets held for sale and Liabilities held for sale as of December 31, 2002 in the consolidated statement of financial condition. The
consolidated statements of cash flows present the Company's cash flows as if the assets and liabilities of Pershing were not presented as Assets held for sale and Liabilities held for sale in the
consolidated statement of financial condition. Therefore, the cash flows pertaining to discontinued operations have not been reported separately in the consolidated statements of cash flows.

Cash and cash equivalents.Cash and cash equivalents include all demand deposits held in banks and
certain highly liquid investments with maturities of 90 days or less, other than those held for sale in the ordinary course of business.

Collateralized short-term financings.The Company enters into transactions involving
securities sold under agreements to repurchase ("repurchase agreements") and securities purchased under agreements to resell ("resale agreements") and securities borrowing and securities lending
transactions as part of the Company's matched-book activities to accommodate clients, finance the Company's trading inventory, obtain securities for settlement and earn interest spreads.

Repurchase
agreements and resale agreements are treated as collateralized financing arrangements and are carried at contract amounts that reflect the amounts at which the securities will
be subsequently repurchased or resold. Interest on such contract amounts is accrued and is included in the consolidated statements of financial condition in receivables from and payables to brokers,
dealers and other. The Company takes possession of the securities purchased under resale agreements and obtains additional collateral when the market value falls below the contract value. The Company
nets certain repurchase agreements and resale agreements with the same counterparty in the consolidated statements of financial condition when the requirements of FIN No. 41, "Offsetting of
Amounts Relating to Certain Repurchase and Reverse Repurchase Agreements," are satisfied.

F-10

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

1. Summary of Significant Accounting Policies (Continued)

The
Company uses interest rate swaps to hedge the interest rate exposure associated with certain resale and repurchase agreements. These interest rate swaps are carried at fair value
while the resale and repurchase agreements are carried at contract amounts, with interest income (expense) accruing over the term of the agreement. As a result, increases and decreases in the value of
the interest rate swaps are not offset by decreases and increases in the value of the resale and repurchase agreements until the securities are repurchased or sold.

Securities
borrowing and securities lending transactions are recorded at the amount of cash collateral advanced or received. For securities borrowed, the Company deposits cash, letters
of credit or other collateral with the lender. For securities loaned, the Company receives cash or other collateral from the borrower generally in excess of the market value of securities loaned. The
Company monitors the market value of securities borrowed and loaned daily and obtains or refunds collateral as necessary.

Financial instruments.Substantially all of the Company's financial instruments (with the exception
of commercial mortgage loans and certain residential mortgages that are held for sale) are carried at fair value. Fair value is estimated at a specific point in time, based on relevant market
information or the value of the underlying financial instrument.

Mortgage whole loans.Residential mortgage whole loans are generally carried at fair value with the
changes in fair value included in principal transactions-net in the consolidated statements of operations with the exception of certain residential mortgage whole loans that are held for
sale, including residential loans originated by the Company, which are carried at the lower of cost
or fair value. Commercial mortgage whole loans are carried at the lower of aggregate cost or fair value. The amount by which aggregate cost exceeds fair value is reflected in principal
transactions-net in the consolidated statements of operations. Management determines fair value by taking into consideration, among other things, the use of discounted cash flows or model
pricing. Purchases and sales of mortgage whole loans are recorded on a settlement date basis. Interest is accrued on all mortgage whole loans with the exception of those that are 120 days
delinquent, as reported by the servicer.

Fair value.The determination of fair value is fundamental to the Company's financial condition and
results of operations and, in certain circumstances, requires management to make complex judgments. Fair value is based generally on listed market prices or broker or dealer price quotations. If
prices are not readily determinable or if liquidating the Company's positions is reasonably expected to affect market prices, fair value is based on either internal valuation models or management's
estimate of amounts that could be realized under current market conditions, assuming an orderly liquidation over a reasonable period of time. Certain financial instruments, including
over-the-counter ("OTC") derivatives contracts, are valued using pricing models that consider, among other factors, contractual and market prices, correlations, time value,
credit, yield curve, volatility factors and/or prepayment rates of the underlying positions. The use of different pricing models and assumptions could produce materially different estimates of fair
value.

Derivatives instrumentstrading.All trading derivatives instruments are carried at fair
value with changes in realized and unrealized gains and losses and interest flows included in principal transactions-net in the consolidated statements of operations. Cash flows from these
derivatives instruments are included as operating activities in the consolidated statements of cash flows. See Note 10 for more information.

F-11

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

1. Summary of Significant Accounting Policies (Continued)

Derivatives instrumentsnontrading.The Company manages its interest rate exposure on its
fixed rate debt by using interest rate swaps that qualify for hedge accounting under Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended ("SFAS 133"). These financial instruments are accounted for as fair value hedges, with changes in the fair value of both the derivative and the hedged item
included in principal transactionsnet in the consolidated statements of operations. Interest flows on both the Company's borrowings and the related fair value hedges are included in
interest income (expense) in the consolidated statements of operations. Other derivatives contracts used for hedging purposes that do not qualify as hedges under SFAS 133 are carried at fair
value with realized and unrealized gains and losses and interest flows included in principal transactions-net in the consolidated statements of operations. Cash flows from these
derivatives are included in operating activities in the consolidated statements of cash flows. See Note 10 for more information.

Variable prepaid forwards.Variable prepaid forward contracts ("VPFs") are a form of OTC hybrid
transaction pursuant to which the Company purchases a variable number of shares of common stock from a customer on a forward basis. At inception, the Company pays the customer a dollar amount based on
the underlying value of the common stock. At the maturity of the transaction, the Company receives a variable number of shares (or an amount in cash equal to the value of such variable number of
shares, with a maximum share cap) from the customer based on the market price of the shares at maturity. VPFs allow customers to monetize their stock position and provide market risk protection
through an equity collar that, among other things, protects the customer against decreases in the value of the underlying common stock. The VPFs are generally long-dated and have
maturities of three to ten years. In accordance with SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" ("SFAS 149"), all VPFs entered into prior
to July 1, 2003 and those entered into after June 30, 2003 that do not meet the definition of a derivatives instrument are included in other financial instruments owned in the
consolidated statements of financial condition and had a fair value of $3.1 billion and $2.8 billion as of December 31, 2003 and 2002, respectively. VPFs entered into after
June 30, 2003 that meet the definition of a derivatives instrument are reported as derivative contracts in the consolidated statement of financial condition and had a fair value of
$485 million as of December 31, 2003. All VPFs are carried at fair value.

Private equity and other long-term investments.Private equity and other
long-term investments generally have no readily available market or may be otherwise restricted as to resale under the Securities Act of 1933; therefore, these investments are carried at
amounts which approximate fair value. Fair value for private equity and other long-term investments is based upon a number of factors, including readily available market quotes with
appropriate adjustments for liquidity due to holding large blocks and/or having trading restrictions, the most recent round of financings, earnings-multiple analyses using comparable companies,
discounted cash flow analysis or valuations received from the general partner of a third-party managed fund. Changes in net unrealized appreciation/depreciation arising from changes in fair value and
gains and losses realized upon sale are reflected in principal transactions-net in the consolidated statements of operations. The Company's subsidiaries manage many private equity
partnerships. When the investment performance on CSFB-managed private equity partnerships exceeds specific thresholds, the Company may be entitled to receive a carried interest
distribution. Carried interest gains are based on the cumulative investment performance over the life of

F-12

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

1. Summary of Significant Accounting Policies (Continued)

each
partnership. The Company may be required to return carried interest gains previously distributed by the partnership if the investment underperforms following the distribution of carried interest
gains. See Notes 7 and 17 for more information.

Office facilities and property.Office facilities are carried at cost and are depreciated on a
straight-line basis over their estimated useful life of three to eight years. Leasehold improvements are amortized over the lesser of the useful life of the improvement or term of the
lease. Office facilities and property includes real estate owned that was reclassified to held for use in 2003 in accordance with SFAS No. 144, "Accounting for Impairment or Disposal of
Long-Lived Assets" ("SFAS 144").

Goodwill and identifiable intangible assets.Goodwill represents the amount by which the purchase
price exceeds the fair value of the net tangible and intangible assets of an acquired company on the date of acquisition. Through December 31, 2001, goodwill was amortized over a
20-year life on a straight-line basis. On January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), which
requires goodwill and indefinite-lived intangible assets to be reviewed annually for impairment instead of being amortized to earnings. Intangible assets that do not have indefinite lives, principally
software and customer lists, are amortized over their useful lives and reviewed for impairment. These intangible assets are included in Other assets and deferred amounts in the consolidated statements
of financial condition.

Principal transactions.Principal securities transactions are recorded on a trade date basis.
Unrealized gains and losses and realizations on trading in securities, private equity investments and derivatives contracts and interest flows on the Company's trading derivatives contracts are
reflected in principal transactions-net in the consolidated statements of operations.

Investment banking underwriting revenues and fees.Investment banking underwriting revenues and fees,
net of syndicate expenses, arising from securities offerings in which the Company acts as an underwriter or agent, are recorded in investment banking and advisory in the consolidated statements of
operations. Investment banking revenues from fees earned for providing merger and acquisition and other advisory services are also recorded in investment banking and advisory in the consolidated
statements of operations. Investment banking fees are recorded at the time the transactions are substantially completed. Management fees earned by the Company from managing private equity funds are
included in investment banking and advisory revenues.

Commissions.Commissions are recorded in the consolidated statements of operations on a trade date
basis.

Interest income (expense).Interest income (expense) includes interest income (expense) on the
Company's financial instruments owned, financial instruments sold not yet purchased and long-term and short-term borrowings, including interest income (expense) on resale
agreements and repurchase agreements and securities borrowing and securities lending transactions.

Interest
income (expense) is accrued at the stated coupon rate for coupon-bearing financial instruments, and for non-coupon-bearing financial instruments, interest income is
recognized by accreting the discount or premium over the life of the instrument. For coupon-bearing financial instruments purchased at a discount or premium, the difference between interest income
(expense)

F-13

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

1. Summary of Significant Accounting Policies (Continued)

accrued
at the stated coupon rate and interest income (expense) determined on an effective yield basis is included in principal transactions-net in the consolidated statements of
operations.

Merger-related costs.Merger-related costs represent retention awards related to the DLJ acquisition.
The Company expects to charge $10 million against earnings in 2004 related to the remaining retention awards.

Consolidation of VIEs.In January 2003, the FASB issued FIN 46, which requires the Company to
consolidate all VIEs for which it is the primary beneficiary, defined as the entity that will absorb a majority of expected losses, receive a majority of the expected residual returns, or both. In
December 2003, the FASB modified FIN 46, through the issuance of FIN 46R, to address various implementation issues that had arisen since the issuance of FIN 46 and to provide companies the
option to defer the adoption of FIN 46 for certain VIEs to periods ending after March 15, 2004. As of December 31, 2003, with the exception of certain private equity funds that were a
subject of the deferral, the Company consolidated all VIEs under FIN 46 for which it is the primary beneficiary, all of which were related to its collateralized debt obligation ("CDO") activities. See
Note 5 for more information.

Securitization.The Company securitizes commercial and residential mortgages, which it originates and
purchases, and loans and other debt obligations, which it purchases from third parties. The Company may retain interests in these securitized assets in connection with its underwriting and
market-making activities. Retained interests in securitized financial assets are included at fair value in financial instruments owned in the consolidated statements of financial condition. Any
changes in the fair value of these retained interests are recognized in the consolidated statements of operations. The fair values of retained interests are determined using present value of estimated
future cash flows valuation techniques that incorporate assumptions that market participants customarily use in their estimates of values. See Note 5 for more information.

Share-based Compensation.In August 2003, the Company adopted the fair value recognition
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), as amended by SFAS No. 148, "Accounting for Stock-Based CompensationTransition and
Disclosure," using the prospective method. Under the prospective method, the Company recognizes compensation expense over the vesting period for all share option and share awards granted under the
Credit Suisse Group International Share Plan for services provided after January 1, 2003.

Share
option awards granted in or before January 2003 for services provided in prior years, if not subsequently modified, will continue to be accounted for under the recognition
and measurement provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and no compensation expense has been or will be recognized for those option awards,
which had no intrinsic value on the date of grant. Share awards with no vesting requirements granted in or before January 2003 for services provided in prior years were expensed during the year
the services were provided. For share awards granted with vesting requirements, compensation expense is recognized over the vesting period.

If
the Company had applied the fair-value based method under SFAS 123 to all equity-based awards in each period, net income (loss) would have decreased (increased) for
the years ended

F-14

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

1. Summary of Significant Accounting Policies (Continued)

December 31,
2003, 2002 and 2001 due to the expense related to share options. The following table reflects this pro forma effect:

|                                                                                                                                           |  | For the Year Ended December 31, |      
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | -----
|
|
|Net income (loss), as reported                                                                                                             |  | $                               | 1,329
|Add: Share-based employee compensation expense, net of related tax effects, included in reported net income                                |  |                                 | 208  
|Deduct: Share-based employee compensation expense, net of related tax effects, determined under the fair-value based method for all awards |  |                                 | 228  
|                                                                                                                                           |  |                                 |      
|Pro forma net income (loss)                                                                                                                |  | $                               | 1,309
|                                                                                                                                           |  |                                 |      

---

In
September 2003, CSG amended the Credit Suisse Group International Share Plan and introduced three-year vesting for share option and share awards granted as part of
incentive compensation. The imposition of three-year vesting is intended to improve employee retention and long-term performance. For additional information on share-based
compensation, see Note 15.

Income taxes.The Company is included in the consolidated federal income tax return and combined
state and local income tax returns filed by CSFBI. CSFBI allocates federal, state and local income taxes to its subsidiaries on a separate return basis.

The
Company accounts for income taxes under the provisions of SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, deferred income taxes are
recorded for the future tax consequences of events that have been recognized in the financial statements or tax returns, based upon enacted tax laws and rates. Deferred tax assets are recognized
subject to management's judgment that realization is more likely than not. See Note 4 for more information.

New Accounting Pronouncements

In January 2003, the FASB issued FIN 46, which requires the Company to consolidate all VIEs for which it is the primary beneficiary, defined as the entity
that will absorb a majority of expected losses, receive a majority of the expected residual returns, or both. In December 2003, the FASB modified FIN 46, through the issuance of FIN 46R, to
address various implementation issues that had arisen since the issuance of FIN 46 and to provide companies the option to defer the adoption of FIN 46 for certain VIEs to periods ending after
March 15, 2004. As of December 31, 2003, with the exception of certain private equity funds that were a subject of the deferral, the Company consolidated all VIEs under FIN 46 for which
it is the primary beneficiary, all of which were related to its CDO activities. The cumulative effect of the Company's adoption of FIN 46 for VIEs created before February 1, 2003 was an
after-tax loss of $9 million reported in the consolidated statement of operations as cumulative effect of a change in accounting principle. The cumulative effect is determined by
recording the assets,

F-15

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

1. Summary of Significant Accounting Policies (Continued)

liabilities
and non-controlling interests in the VIE at their carrying amounts as of the date of consolidation. The difference between the net amount added to the consolidated statement of
financial condition and the amount of previously recognized interest represents the cumulative effect. The effect of the Company's adoption of FIN 46 for VIEs created after January 31, 2003 are
included in the consolidated statement of operations in income (loss) from continuing operations before provision (benefit) for income taxes, discontinued operations and cumulative effect of a change
in accounting principle. The Company is continuing to review and assess potential VIEs that may be required to be consolidated under FIN 46R. See Note 5 for more information.

In
April 2003, the FASB issued SFAS 149, which amends and clarifies financial accounting and reporting for derivatives instruments, including certain derivatives
instruments embedded in other contracts and for hedging activities under SFAS 133. SFAS 149 clarifies under what circumstances a contract with an initial net investment meets the
characteristic of a derivatives instrument, amends the regular-way security trades exception to when-issued securities or other securities that do not yet exist and requires
disclosure in the statements of cash flows when a derivatives instrument contains a financing element. SFAS 149 is effective for contracts entered into or modified after June 30, 2003,
except for forward purchases or sales of when-issued securities or other securities that do not yet exist, the new provisions of which should be applied to both existing contracts
outstanding as of June 30, 2003 and new contracts entered into after June 30, 2003. The adoption of SFAS 149 resulted in the reporting of forward purchases and sales of
when-issued securities as derivatives contracts in the consolidated statements of financial condition. The adoption also resulted in VPFs entered into after June 30, 2003 that meet
the definition of a derivatives instrument being reported as derivatives contracts in the consolidated statements of financial condition. There was no material impact on the statement of cash flows as
a result of the adoption of SFAS 149.

In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150").
SFAS 150 establishes standards for an issuer's classification of certain financial instruments that have both liability and equity characteristics and imposes additional disclosure
requirements. SFAS 150 applies to financial instruments entered into or modified after May 31, 2003 and is effective for fiscal periods beginning after June 15, 2003. The adoption
of SFAS 150 did not have an impact on the Company's financial condition, results of operations or cash flows.

In
December 2003, the FASB revised SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" ("SFAS 132R"). SFAS 132R retained
the disclosure requirements from the original statement and requires additional disclosures. SFAS 132R is effective for financial statements with fiscal years ending after December 15,
2003 and the interim disclosures are required for periods beginning after December 15, 2003. The Company has adopted the new disclosure requirements of SFAS 132R. See Note 14 for
more information.

In
January 2004, the FASB issued FASB Staff Position ("FSP") 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act ("Medicare Act") ("FSP 106-1"). The Medicare Act became law in December 2003 and introduced both a Medicare prescription drug benefit and a federal subsidy to
sponsors of retiree health-care plans that provide a benefit that is at least "actuarially equivalent" to the Medicare benefit. FSP 106-1 allows companies with postretirement
healthcare plans that provide a prescription drug benefit to defer

F-16

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

1. Summary of Significant Accounting Policies (Continued)

recognition
of the prescription drug provisions of the Medicare Act. The deferral election suspends the application of the measurement and the disclosure requirements of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions" ("SFAS 106") until authoritative guidance is issued. The Medicare Act is effective for interim or annual financial
statements with fiscal years ending after December 7, 2003. The Company has elected to defer the accounting for the Medicare Act and is still evaluating its impact. See Note 14 for more
information.

2. Discontinued Operations

In accordance with SFAS 144, the Company presented the assets and liabilities of Pershing as of December 31, 2002 as Assets held for sale and
Liabilities held for sale in the consolidated statements of financial condition. As of December 31, 2002, Assets held for sale were $11.5 billion and Liabilities held for sale were
$10.9 billion. The operating results of the Pershing unit, including the gain on the sale, for all periods presented are presented as Discontinued operations in the consolidated statements of
operations.

The
following table summarizes the results of operations of Pershing, excluding the gain on the sale, for the years ended December 31, 2003, 2002 and 2001:

|                   |                                                         | For the Year Ended December 31,
|------------------ | ------------------------------------------------------- | -------------------------------
|
|
|Total net revenues |                                                         | $                              
|Total expenses     |                                                         |                                
|                   |                                                         |                                
|                   | Income from discontinued operations before income taxes |                                
|                   |                                                         |                                

3. Related Party Transactions

CSG, through CSFBI, owns all of the Company's outstanding voting common stock. The Company is involved in significant financing and other transactions, and has
significant related party balances, with Credit Suisse First Boston, a Swiss bank subsidiary of CSG and an indirect parent of the Company, and certain of its subsidiaries and affiliates. The Company
generally enters into these transactions in the ordinary course of business and believes that these transactions are generally on market terms that could be obtained from unrelated third parties.

The
following table sets forth the Company's related party assets and liabilities as of December 31, 2003 and 2002. The Company has presented the assets and liabilities of
Pershing as of December 31, 2002 as Assets held for sale and Liabilities held for sale in the consolidated statements of financial

F-17

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

3. Related Party Transactions (Continued)

condition
and has excluded from the table below transactions between Pershing, which was sold in the second quarter of 2003, and any CSG affiliate, including the Company.

|                                                                 |                   | December 31,
2003 |        | December 31,
2002
|---------------------------------------------------------------- | ----------------- | ----------------- | ------ | -----------------
|
|ASSETS                                                           |                   |                   |        |                  
|Securities purchased under agreements to resell                  |                   | $                 | 8,071  |                  
|Securities borrowed                                              |                   |                   | 1,688  |                  
|Receivables from customers                                       |                   |                   | 297    |                  
|Receivables from brokers, dealers and other                      |                   |                   | 1,168  |                  
|Derivatives contracts                                            |                   |                   | 1,910  |                  
|Net deferred tax asset                                           |                   |                   | 1,286  |                  
|Taxes receivable (included in Other assets and deferred amounts) |                   |                   |       |                  
|Loans receivable from parent and affiliates                      |                   |                   | 19,460 |                  
|                                                                 |                   |                   |        |                  
|                                                                 | Total assets      |                   | $      | 33,880           
|                                                                 |                   |                   |        |                  
|LIABILITIES                                                      |                   |                   |        |                  
|Short-term borrowings                                            |                   | $                 | 14,482 |                  
|Securities sold under agreements to repurchase                   |                   |                   | 16,651 |                  
|Securities loaned                                                |                   |                   | 16,425 |                  
|Payables to brokers, dealers and other                           |                   |                   | 581    |                  
|Derivatives contracts                                            |                   |                   | 824    |                  
|Taxes payable (included in Other liabilities)                    |                   |                   | 311    |                  
|Intercompany payables (included in Other liabilities)            |                   |                   | 211    |                  
|                                                                 |                   |                   |        |                  
|                                                                 | Total liabilities |                   | $      | 49,485           
|                                                                 |                   |                   |        |                  

Included
in the consolidated statements of operations are revenues and expenses resulting from various securities trading, investment banking and financing activities with certain
affiliates, as well as fees for administrative services performed by the Company under the terms of various service agreements. Service fees earned are treated as a reduction of other operating
expenses in the consolidated statements of operations.

F-18

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

3. Related Party Transactions (Continued)

The following table sets forth the Company's related party revenues and expenses, excluding transactions with Pershing, for the years ended December 31,
2003, 2002 and 2001:

|                                                   |                    | For the Year Ended December 31, |     
|-------------------------------------------------- | ------------------ | ------------------------------- | ----
|
|
|Principal transactionsnet (derivatives contracts) |                    | $                               | 515 
|Commissions                                        |                    |                                 | (44 
|Net interest expense                               |                    |                                 | (111
|                                                   |                    |                                 |     
|                                                   | Total net revenues |                                 | $   
|                                                   |                    |                                 |     
|Other operating expenses                           |                    | $                               | (229
|                                                   |                    |                                 |     
|                                                   | Total expenses     |                                 | $   
|                                                   |                    |                                 |     

The
following table sets forth revenues and expenses of Pershing with respect to related party transactions with the Company for the years ended December 31, 2003, 2002 and 2001.
The operating results of Pershing for these periods are presented as Discontinued operations in the consolidated statements of operations.

|                                |                              | For the Year Ended December 31, |   
|------------------------------- | ---------------------------- | ------------------------------- | --
|
|
|Commissions                     |                              | $                               | 2 
|Net interest revenues (expense) |                              |                                 | (1
|                                |                              |                                 |   
|                                | Total net revenues (expense) |                                 | $ 
|                                |                              |                                 |   

For
the years ended December 31, 2003 and 2001, Pershing had no revenues from CSG, its subsidiaries and affiliates outside the Company. For the year ended December 31,
2002, Pershing had revenues of $17 million from CSG, its subsidiaries and affiliates outside the Company. For the years ended December 31, 2003, 2002 and 2001, Pershing had no expenses
with respect to related party transactions with CSG, its subsidiaries and affiliates outside the Company.

The
Company sold at cost, without recourse, to CSFBI, the right, title and interest in certain assets with an aggregate value of $303 million, $342 million and
$216 million for the years ended December 31, 2003, 2002 and 2001, respectively.

On
June 30, 2003, the management of certain private equity funds with approximately $4.1 billion of committed capital was transferred to the Company's private equity
business from the Company's affiliate, Credit Suisse Asset Management. Credit Suisse Asset Management reimburses the private equity business for all costs and expenses incurred by the Company in
connection with managing the funds.

In
December 2003, as part of the continuing effort to rationalize the organizational structure since the DLJ acquisition, the Company sold DLJ International Group Limited, an
indirect subsidiary of the

F-19

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

3. Related Party Transactions (Continued)

Company,
to Credit Suisse First Boston (International) Holding AG at fair market value of $500 million.

The
Credit Suisse Group International Share Plan provides for the grant of equity-based awards to Company employees based on CSG shares pursuant to which employees of the Company may be
granted, as compensation, share or other equity-based awards as compensation for services performed. CSFBI purchases shares from CSG to satisfy these awards, but CSFBI does not require reimbursement
from the Company; therefore, amounts are considered a capital contribution to the Company and credited to paid-in-capital. Amounts contributed by CSFBI relating to compensation
expense for the years ended December 31, 2003, 2002 and 2001 were $352 million, $660 million and $919 million, respectively. See Notes 1 and 15 for further information on
the Company's share-based compensation.

Certain
of the Company's directors, officers and employees and those of the Company's affiliates and their subsidiaries maintain margin accounts with CSFB LLC in the ordinary course of
business. In addition, certain of such directors, officers and employees had investments or commitments to invest in various private equity funds sponsored by the Company, pursuant to which the
Company has made loans to such directors, officers and employees, to the extent permitted by law. CSFB LLC, from time to time and in the ordinary course of business, enters into, as principal,
transactions involving the purchase or sale of securities from or to such directors, officers and employees and members of their immediate families.

The
Company is included in the consolidated federal income tax return and combined state and local income tax returns filed by CSFBI. See Note 4 for more information.

4. Income Taxes

The Company is included in the consolidated federal income tax return and combined state and local income tax returns filed by CSFBI. CSFBI allocates federal,
state and local income taxes to its subsidiaries on a separate return basis, pursuant to a tax sharing arrangement. Any resulting liability will be paid to CSFBI. CSFBI allocated to the Company a
current income tax benefit of $1 million, a current income tax benefit of $422 million and a current income tax provision of $174 million for the years ended December 31,
2003, 2002 and 2001, respectively, and a deferred income tax provision of $318 million, a deferred income tax provision of $288 million and a deferred income tax benefit of
$329 million for the years ended December 31, 2003, 2002 and 2001, respectively, related to continuing operations.

In
2003 and 2002, the Company paid $161 million and $155 million, respectively, in income taxes, and in 2001, the Company received $436 million in refunds.

F-20

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

4. Income Taxes (Continued)

Provision
(benefit) for income taxes from continuing operations included in the consolidated statements of operations includes the following:

|                                                                |                 | For the Year Ended December 31, |    
|--------------------------------------------------------------- | --------------- | ------------------------------- | ---
|
|
|Current:                                                        |                 |                                 |    
|                                                                | U.S. federal    |                                 | $  
|                                                                | Foreign         |                                 |    
|                                                                | State and local |                                 |    
|                                                                |                 |                                 |    
|                                                                |                 | Total current                   |    
|                                                                |                 |                                 |    
|Deferred:                                                       |                 |                                 |    
|                                                                | U.S. federal    |                                 |    
|                                                                |                 |                                 |    
|                                                                |                 | Total deferred                  |    
|                                                                |                 |                                 |    
|Provision (benefit) for income taxes from continuing operations |                 | $                               | 317
|                                                                |                 |                                 |    

Excluded
from the table above is a provision for income taxes for the years ended December 31, 2003, 2002 and 2001 of $485 million, $47 million and
$49 million, respectively, related to discontinued operations and an income tax benefit of $5 million and an income tax provision of $300 thousand for the years ended
December 31, 2003 and 2001, respectively, related to the cumulative effects of changes in accounting principles.

The
following table summarizes the difference between the federal statutory tax rate and the effective tax rate related to continuing operations for the years ended December 31,
2003, 2002 and 2001:

|                                                                |                             | For the Year Ended December 31,                          |    
|--------------------------------------------------------------- | --------------------------- | -------------------------------------------------------- | ---
|
|
|
|Computed "expected" tax provision (benefit)                     |                             | $                                                        | 272
|                                                                | Increase (decrease) due to: |                                                          |    
|                                                                |                             | Dividend exclusion                                       |    
|                                                                |                             | Goodwill and intangibles                                 |    
|                                                                |                             | Entertainment expense                                    |    
|                                                                |                             | State and local taxes, net of federal income tax effects |    
|                                                                |                             | Other                                                    |    
|                                                                |                             |                                                          |    
|Provision (benefit) for income taxes from continuing operations |                             | $                                                        | 317
|                                                                |                             |                                                          |    

F-21

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

4. Income Taxes (Continued)

Deferred
tax assets and deferred tax liabilities are generated by the following temporary differences:

|                                                    |                                                                             | December 31,
2003              |       | December 31,
2002 |      
|--------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------ | ----- | ----------------- | -----
|
|Deferred tax assets:                                |                                                                             |                                |       |                   |      
|                                                    | Inventory                                                                   |                                | $     | 171               |      
|                                                    | Investments                                                                 |                                |       | 267               |      
|                                                    | Other liabilities and accrued expenses, primarily compensation and benefits |                                |       | 1,196             |      
|                                                    | Office facilities                                                           |                                |       | 24                |      
|                                                    | State and local taxes                                                       |                                |       | 36                |      
|                                                    |                                                                             |                                |       |                   |      
|                                                    |                                                                             | Total deferred tax assets      |       |                   | 1,694
|                                                    |                                                                             |                                |       |                   |      
|Deferred tax liabilities:                           |                                                                             |                                |       |                   |      
|                                                    | Inventory                                                                   |                                |       | 55                |      
|                                                    | Investments                                                                 |                                |       | 228               |      
|                                                    | Office facilities                                                           |                                |       | 51                |      
|                                                    | Other                                                                       |                                |       | 38                |      
|                                                    |                                                                             |                                |       |                   |      
|                                                    |                                                                             | Total deferred tax liabilities |       |                   | 372  
|                                                    |                                                                             |                                |       |                   |      
|Deferred tax assets net of deferred tax liabilities |                                                                             |                                | 1,322 |                   |      
|Valuation allowance for state and local taxes       |                                                                             |                                | (36   | )                 |      
|                                                    |                                                                             |                                |       |                   |      
|Net deferred tax asset                              |                                                                             | $                              | 1,286 |                   | $    
|                                                    |                                                                             |                                |       |                   |      

Management
has determined that the realization of the recognized gross deferred tax assets of $1.7 billion and $2.1 billion as of December 31, 2003 and 2002,
respectively, is more likely than not based on anticipated future taxable income. In addition, for federal income tax purposes, the Company has planning strategies available that enhance its ability
to utilize these tax benefits. However, if estimates of future taxable income are reduced, the amount of the deferred tax asset considered realizable could also be reduced. Further, due to uncertainty
concerning the Company's ability to generate the necessary amount and mix of state and local taxable income in future periods, the Company maintains a valuation allowance against its deferred state
and local tax asset in the amount of $36 million and $46 million as of December 31, 2003 and 2002, respectively.

5. Transfers and Servicing of Financial Assets

As of December 31, 2003 and 2002, the fair market value of assets that the Company pledged to counterparties was $163.7 billion and
$147.0 billion, respectively, of which $47.6 billion and $49.7 billion, respectively, are included in financial instruments owned in the consolidated statements of financial
condition.

The
Company has also received similar assets as collateral that the Company has the right to re-pledge or sell. The Company routinely re-pledges or lends these
assets to third parties. As of December 31, 2003 and 2002, the fair market value of the assets pledged to the Company was

F-22

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

5. Transfers and Servicing of Financial Assets (Continued)

$162.3 billion
and $142.1 billion, respectively, of which $154.3 billion and $129.1 billion, respectively, was sold or repledged.

Securitization Activities

The Company originates and purchases commercial and residential mortgages for the purpose of securitization. The Company sells these mortgage loans to qualified
special purpose entities ("QSPEs"). These QSPEs issue securities that are backed by the assets transferred to the QSPEs and pay a return based on the returns on those assets. Investors in these
mortgage-backed securities typically have recourse to the assets in the QSPE. The investors and the QSPEs have no recourse to the Company's assets. CSFB LLC is an underwriter of, and makes a market
in, these securities.

The
Company purchases loans and other debt obligations from clients for the purpose of securitization. The loans and other debt obligations are sold by the Company directly, or
indirectly through affiliates, to QSPEs or other VIEs that issue CDOs. CSFB LLC structures, underwrites and makes a market in these CDOs.

The
Company may retain interests in these securitized assets in connection with its underwriting and market-making activities. The Company's exposure in its securitization activities is
limited to its retained interests. Retained interests in securitized financial assets are included at fair value in financial instruments owned in the consolidated statements of financial condition.
Any changes in the fair value of these retained interests are recognized in the consolidated statements of operations. The fair values of retained interests are determined using present value of
estimated future cash flows valuation techniques that incorporate assumptions that market participants customarily use in their estimates of values.

The
following table presents the proceeds and gain or loss related to the securitization of commercial mortgage loans, residential mortgage loans and CDOs for the years ended
December 31, 2003, 2002 and 2001:

|                                  |  | For the Year Ended
December 31, 2003 |       | For the Year Ended
December 31, 2002 |   | For the Year Ended
December 31, 2001
|--------------------------------- |  | ------------------------------------ | ----- | ------------------------------------ | - | ------------------------------------
|
|
|Proceeds from new securitizations |  | $                                    | 7,024 |                                      | $ | 32,299                              
|Gain (loss) on
securitizations(1) |  | $                                    | 244   |                                      | $ | (94                                 

---

F-23

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

5. Transfers and Servicing of Financial Assets (Continued)

Excluded
from the table above are proceeds of $40.3 billion related to the securitization of agency mortgage-backed securities for the year ended
December 31, 2003. For the year ended December 31, 2003, the Company realized gains of $45 million from these securitizations.

Key
economic assumptions used in measuring at the date of securitization the fair value of the retained interests resulting from securitizations completed during the years ended
December 31, 2003 and 2002 were as follows:

|                                                           |  | For the Year Ended December 31, 2003 |  | For the Year Ended December 31, 2002
|---------------------------------------------------------- |  | ------------------------------------ |  | ------------------------------------
|
|Weighted-average life (in years)                           |  | 2.8                                  |  | 4.5                                 
|Prepayment speed assumption ("PSA") (in rate per annum)(3) |  | N/A                                  |  | 200 PSA
to
325 PSA                  
|Cash flow discount rate (in rate per annum)(4)             |  | 7.8-12.8%                            |  | 4.2-37.5%                           
|Expected credit losses (in rate per annum)(5)              |  |                                     |  |                                    

The
following table sets forth the fair value of retained interests from securitizations as of December 31, 2003, key economic assumptions used to determine the fair value and the
sensitivity of the fair value to immediate adverse changes in those assumptions:

|                                                 |                                               | December 31, 2003 |    
|------------------------------------------------ | --------------------------------------------- | ----------------- | ---
|
|
|Carrying amount/fair value of retained interests |                                               | $                 | 203
|Weighted-average life (in years)                 |                                               |                   | 2.2
|PSA (in rate per annum)(3)                       |                                               |                   | N/A
|                                                 | Impact on fair value of 10% adverse change    |                   |    
|                                                 | Impact on fair value of 20% adverse change    |                   |    
|Cash flow discount rate (in rate per annum)(4)   |                                               |                   | 9.7
|                                                 | Impact on fair value of 10% adverse change    |                   | $  
|                                                 | Impact on fair value of 20% adverse change    |                   | $  
|Expected credit losses (in rate per annum)(5)    |                                               |                   |   
|                                                 | Impact on fair value of 10% adverse change(6) |                   | $  
|                                                 | Impact on fair value of 20% adverse change(6) |                   | $  

---

F-24

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

5. Transfers and Servicing of Financial Assets (Continued)

These
sensitivities are hypothetical and do not reflect the benefits of hedging activities and therefore should be used with caution. Changes in fair value based on a 10% or 20%
variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of a variation in a
particular assumption on the fair value of the retained interests is calculated without changing any other assumption. In practice, changes in one assumption may result in changes in other assumptions
(for example, increases in market interest rates may result in lower prepayments and increased credit losses), which may magnify or counteract the sensitivities.

Variable Interest Entities

FIN 46 requires the Company to consolidate all VIEs for which it is the primary beneficiary, defined as the entity that will absorb a majority of expected losses,
receive a majority of the expected residual returns, or both. In December 2003, the FASB modified FIN 46, through the issuance of FIN 46R, to address various implementation issues
that had arisen since the issuance of FIN 46 and to provide companies the option to defer the adoption of FIN 46 for certain VIEs to periods ending after March 15, 2004. As of
December 31, 2003, with the exception of certain private equity funds that were a subject of the deferral, the Company consolidated all VIEs under FIN 46 for which it is the primary
beneficiary, all of which were related to certain CDO activities described below. The cumulative effect of the Company's adoption of FIN 46 for VIEs created before February 1, 2003 was an
after-tax loss of $9 million reported in the consolidated statement of operations as
cumulative effect of a change in accounting principle. The cumulative effect is determined by recording the assets, liabilities and non-controlling interests in the VIE at their carrying
amounts as of the date of consolidation. The difference between the net amount added to the consolidated statement of financial condition and the amount of previously recognized interest represents
the cumulative effect. The effect of the Company's adoption of FIN 46 for VIEs created after January 31, 2003 are included in the consolidated statement of operations in income (loss) from
continuing operations before provision (benefit) for income taxes, discontinued operations and cumulative effect of a change in accounting principle.

The
Company has variable interests in several CDO VIEs. As described under "Securitization Activities," in the normal course of its business, the Company purchases loans and
other debt

F-25

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

5. Transfers and Servicing of Financial Assets (Continued)

obligations
from and on behalf of clients primarily for the purpose of securitization. These assets are sold to and warehoused by affiliates and, at the end of a warehousing period, the assets are
sold to VIEs or QSPEs for securitization. The Company engages in these transactions to meet the needs of clients, to earn fees and to sell financial assets. The purpose of these CDO VIEs is to provide
investors a return based on the underlying debt instruments of the CDO VIEs. In connection with its underwriting and market-making activities, the Company may retain interests in the CDO VIEs. The CDO
entities may have actively managed ("open") portfolios or static or unmanaged ("closed") portfolios. The closed CDO transactions are typically structured to use QSPEs, which are not consolidated in
the Company's financial statements.

The
Company has consolidated all CDO VIEs for which it is the primary beneficiary. As of December 31, 2003, the Company recorded $901 million, the carrying amount of the
consolidated assets of these CDO VIEs that are collateral for the VIE obligations. The beneficial interests of these consolidated CDO VIEs are payable solely from the cash flows of the related
collateral, and the creditors of these VIEs do not have recourse to the Company in the event of default.

The
Company retains significant debt and equity interests in open CDO VIEs that are not consolidated because the Company is not the primary beneficiary. The total assets in these CDO
VIEs as of December 31, 2003 were $3.6 billion. The Company's maximum exposure to loss as of December 31, 2003 was $165 million, which was the amount of its retained
interests, carried at fair value, in financial instruments owned.

Certain
of the Company's private equity funds may also be subject to FIN 46R. The Company is typically the general partner and investment adviser to these funds, certain of which are
offered as investment products to the Company's personnel. The Company did not consolidate these private equity funds as of December 31, 2003 in accordance with the effective date and
transition provisions of FIN 46. Management is currently working on finalizing its analysis of the application of FIN 46R to these private equity funds as of March 31, 2004.

6. Borrowings

Short-term borrowings are generally demand obligations with interest approximating the federal funds rate, LIBOR or other money market indices. Such
borrowings are generally used to facilitate the securities settlement process, finance financial instruments owned and finance securities purchased by customers on margin. As of December 31,
2003 and 2002, there were no short-term borrowings secured by Company-owned securities.

F-26

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

6. Borrowings (Continued)

The
following table sets forth the Company's short-term borrowings and their weighted average interest rates:

|                                            |                             | Short-term borrowings
December 31, |        | Weighted average interest rates
December 31, |  
|------------------------------------------- | --------------------------- | ---------------------------------- | ------ | -------------------------------------------- | -
|
|
|Bank loans, including loans from affiliates |                             | $                                  | 15,009 |                                              | $
|Commercial paper                            |                             |                                    | 1,052  |                                              |  
|                                            |                             |                                    |        |                                              |  
|                                            | Total short-term borrowings |                                    | $      | 16,061                                       |  
|                                            |                             |                                    |        |                                              |  

The
Company has two commercial paper programs exempt from registration under the Securities Act of 1933 that allow the Company to issue up to $7.0 billion in commercial paper.

The
following table sets forth the Company's long-term borrowings as of December 31, 2003 and 2002:

|                                                                   |                            | December 31, 2003 |        | December 31, 2002
|------------------------------------------------------------------ | -------------------------- | ----------------- | ------ | -----------------
|
|Senior notes 3.875%-8.00%, due various dates through 2032          |                            | $                 | 16,791 |                  
|Medium-term notes 0.97%-7.528%, due various dates through 2032     |                            |                   | 7,391  |                  
|Structured borrowings 7.06%-7.335%, due various dates through 2014 |                            |                   | 139    |                  
|                                                                   |                            |                   |        |                  
|                                                                   | Total long-term borrowings |                   | $      | 24,321           
|                                                                   |                            |                   |        |                  
|Current maturities of long-term borrowings                         |                            | $                 | 2,239  |                  
|                                                                   |                            |                   |        |                  

In
April 2002, the Company filed with the Securities and Exchange Commission ("SEC") a shelf registration statement that allows the Company to issue from time to time up to
$10.0 billion of senior and subordinated debt securities, and warrants to purchase such securities. Under that shelf registration statement, the Company had, as of March 29, 2004,
approximately $2.5 billion available for issuance.

For
the years ended December 31, 2003, 2002 and 2001, interest paid on all borrowings and financing arrangements, including repurchase agreements, was $4.7 billion,
$4.9 billion and $9.4 billion, respectively. As of December 31, 2003 and 2002, long-term borrowings included unrealized appreciation of approximately
$808 million and $1.2 billion, respectively, associated with fair value hedges under SFAS 133. As of December 31, 2003 and 2002, the Company had entered into interest rate
and currency swaps of $16.6 billion and $15.0 billion, respectively, on the Company's long-term borrowings for hedging purposes. Substantially all of these swaps qualified as
fair value hedges under SFAS 133. See Note 10 for more information.

F-27

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

6. Borrowings (Continued)

The
following table sets forth scheduled maturities of all long-term borrowings as of December 31, 2003 and 2002:

December 31, 2003

December 31, 2002(In millions)2003

$


$
3,5892004


2,239


2,2032005


3,134


2,6582006


3,174


2,3142007


2,499


2,4122008


3,388


2,0212009-2032


9,887


7,897Total

$
24,321

$
23,094


The
Company maintains a 364-day $1.0 billion committed unsecured revolving credit facility with a syndicate of banks available to the Company as borrower. This
facility, which is guaranteed by CSG, extends through May 2004. As of December 31, 2003, CSFB LLC maintained two 364-day committed secured revolving credit facilities
totaling $450 million, with maturities in 2004, and in February 2004, it entered into a third facility for $250 million, maturing in 2005. These facilities require CSFB LLC to
pledge unencumbered marketable securities to secure any borrowings. Borrowings under each facility would bear interest at short-term rates related to either the federal funds rate or LIBOR
and can be used for general corporate purposes. The facilities contain customary covenants that the Company believes will not impair its ability to obtain funding. As of December 31, 2003, no
borrowings were outstanding under any of the facilities.

2003 Financings:

In the year ended December 31, 2003, the Company issued both medium-term notes and longer-dated fixed income securities to extend the maturity
profile of the Company's debt. For the year ended December 31, 2003, the Company issued $1.2 billion in medium-term and index-linked notes, $1.0 billion of 3.875%
notes due 2009, $1.0 billion of 5.5% notes due 2013 and $300 million of 6.125% notes due 2011 under its $10.0 billion shelf registration statement established in April 2002
and $1.5 billion in medium-term notes under a $5.0 billion Euromarket program established in July 2001.

During
the year ended December 31, 2003, the Company repaid approximately $3.5 billion of medium-term notes and $23 million of structured notes.

2002 Financings:

In the year ended December 31, 2002, the Company issued both medium-term notes and longer-dated fixed income securities to extend the maturity
profile of the Company's debt. For the year ended December 31, 2002, the Company issued $2.75 billion of 6.5% notes due 2012, $1.75 billion of 5.75% notes due 2007,
$1.0 billion of 7.125% notes due 2032, $1.4 billion of 4.625% notes due 2008 and $2.7 billion in medium-term notes. For the year ended December 31, 2002, the
Company issued $822 million in medium-term notes under a $5.0 billion Euromarket program established in July 2001.

F-28

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

6. Borrowings (Continued)

During
2002, approximately $3.2 billion of medium-term notes, $650 million of senior notes, $10 million of structured notes and $5 million of
other long-term borrowings were repaid.

7. Private Equity and Other Long-Term Investments

Private equity and other long-term investments include direct investments and investments in partnerships that make private equity and related
investments in various portfolio companies and funds. The Company categorizes its private equity and other long-term investments into three categories, CSFB-managed funds,
direct investments and funds managed by third parties. These investments generally have no readily available market or may be otherwise restricted as to resale under the Securities Act of 1933;
therefore, these investments are carried at amounts which approximate fair value.

The
Company's subsidiaries manage many private equity partnerships (the "Funds"). When the investment performance on CSFB-managed Funds exceeds specific thresholds, the
Company and certain other general partners (the "GPs") may be entitled to receive a carried interest distribution. Carried interest distributions are based on the cumulative investment performance of
each
Fund at the time the distribution is made. As a result, the Company, in its capacity as a GP (or general partner or managing member of a GP), may be obligated to return to investors in the Funds all
or a portion of the carried interest distributions received by the GPs if the GPs have received excess carried interest payments over the life of the Funds under the governing documents of the Funds.
The amount of such contingent obligation is based upon the performance of the Funds but cannot exceed the amount received by the GPs. As of December 31, 2003 and 2002, the maximum amount of
such contingent obligations was $252 million and $155 million, respectively, assuming the Funds' remaining investments were worthless. Assuming the Funds' remaining investments were sold
at their current carrying values as of December 31, 2003 and 2002, the contingent obligations would have been $6 million and $31 million, respectively.

In
addition, pursuant to certain contractual arrangements, the Company is obligated to make cash payments to certain investors in certain Funds if specified performance thresholds are
not met by such Funds. As of December 31, 2003 and 2002, the maximum amount of such contingent obligations was $46 million and $37 million, respectively, assuming the Funds'
remaining investments were worthless. Assuming the Funds' remaining investments were sold at their current carrying values as of December 31, 2003, there would have been no contingent
obligation. The contingent obligation as of December 31, 2002 would have been $1 million.

As
of December 31, 2003 and 2002, the Company had investments in private equity and other long-term investments of $1.1 billion and $1.0 billion,
respectively, and had commitments to invest up to an additional $1.3 billion and $1.7 billion as of December 31, 2003 and 2002, respectively. The cost of these investments was
$1.5 billion and $1.4 billion as of December 31, 2003 and 2002, respectively. Changes in net unrealized appreciation/depreciation arising from changes in fair value and the gain
or loss realized upon sale are reflected in principal transactions-net in the consolidated statements of operations.

F-29

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

8. Net Capital

The Company's principal wholly owned subsidiary, CSFB LLC, is a registered broker-dealer, registered futures commission merchant and member firm of the New York
Stock Exchange Inc. ("NYSE"). As such, it is subject to the NYSE's net capital rule, which conforms to the uniform net capital rule pursuant to Rule 15c3-1 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Under the alternative method permitted by this rule, the required net capital may not be less than two percent of aggregate debit balances
arising from customer transactions or four percent of segregated funds, whichever is greater. If a member firm's net capital is less than four percent of aggregate debit balances, the NYSE may require
the firm to reduce its business. If a member firm's net capital is less than five percent of aggregate debit balances, the NYSE may prevent the firm from expanding its business and declaring cash
dividends. As of December 31, 2003, CSFB LLC's net capital of approximately $3.5 billion was 59% of aggregate debit balances and in excess of the minimum requirement by approximately
$3.4 billion.

The
Company's OTC derivatives dealer subsidiary, Credit Suisse First Boston Capital LLC ("CSFB Capital LLC"), is also subject to the uniform net capital rule, but calculates its net
capital based on value at risk under Appendix F of Rule 15c3-1 under the Exchange Act. As of December 31, 2003, CSFB Capital LLC's net capital of $180 million,
allowing for market and credit risk exposure of $37 million and $49 million, respectively, was in excess of the minimum net capital requirement by $160 million. CSFB Capital LLC
operates pursuant to the (k)(2)(ii) exemptive provisions of Rule 15c3-3 of the Exchange Act, and, accordingly, all customer transactions are cleared through CSFB LLC on a
fully disclosed basis.

Certain
other subsidiaries are subject to capital adequacy requirements. As of December 31, 2003, the Company and its subsidiaries complied with all applicable regulatory capital
adequacy requirements.

9. Cash and Securities Segregated Under Federal and Other Regulations

In compliance with the Commodity Exchange Act, CSFB LLC segregates funds deposited by customers and funds accruing to customers as a result of trades or
contracts. As of December 31, 2003 and 2002, cash and securities aggregating $2.6 billion and $1.8 billion, respectively, were segregated or secured by CSFB LLC in separate
accounts exclusively for the benefit of customers.

In
accordance with the SEC's no-action letter dated November 3, 1998, CSFB LLC computed a reserve requirement for the proprietary accounts of introducing
broker-dealers. As of December 31, 2003 and 2002, CSFB LLC segregated securities aggregating $196 million and $41 million, respectively, on behalf of introducing broker-dealers.

In
addition, CSFB LLC segregated U.S. Treasury securities with a market value of $3.3 billion and $2.3 billion as of December 31, 2003 and 2002, respectively, in a
special reserve bank account exclusively for the benefit of customers as required by Rule 15c3-3 of the Exchange Act.

F-30

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

10. Derivatives Contracts

The Company uses derivatives contracts for trading and hedging purposes and to provide products for clients. These derivatives include options, forwards, futures
and swaps.

Non-trading Derivatives

The Company manages its interest rate exposure on its fixed rate debt by using interest rate swaps. These swaps are considered hedging instruments and qualify as
fair value hedges under SFAS 133. For qualifying fair value hedges, the changes in fair value of both the hedging instrument and the underlying debt are included in principal
transactions-net and the interest flows are included in interest income (expense) in the consolidated statements of operations.

The
effectiveness of a qualifying hedging relationship is evaluated using quantitative measures of correlation. If a hedge relationship is not found to be highly effective, the hedge
relationship no longer qualifies for hedge accounting under SFAS 133. As such, any subsequent gains or losses attributable to the hedged item cease to be recognized, while the subsequent
changes in the derivatives instrument's fair value are recognized in earnings, in each reporting period. In addition, the fair value adjustment of the debt due to hedge accounting is amortized over
the remaining life of the debt as a yield adjustment.

The
gains and losses related to the ineffective component of the fair value hedges were not material for the years ended December 31, 2003, 2002 and 2001.

Other
derivatives used for hedging purposes that do not qualify as hedges under SFAS 133 are carried at fair value with changes in value and interest flows included in principal
transactions-net in the consolidated statements of operations. For the years ended December 31, 2003, 2002 and 2001, the Company recognized a pre-tax gain of
$1 million, $4 million and $8 million, respectively, for these derivatives.

The
cumulative effect of adopting SFAS 133 as of January 1, 2001, representing the initial re-evaluation of derivatives, was a gain of $1 million
reported in the consolidated statement of operations for the year ended December 31, 2001 separately as cumulative effect of a change in accounting principle and an after-tax loss
of $1 million included in accumulated other comprehensive loss.

Trading Derivatives

The Company enters into various transactions using derivatives for trading purposes, to hedge trading exposures or to provide products to its clients. These
derivatives include options, forwards, futures and swaps. Trading derivative contracts are carried at fair value with changes in unrealized and realized gains and losses and interest flows included in
principal transactions-net in the consolidated statements of operations.



The Company writes option contracts specifically designed to meet customer needs, for trading purposes or for hedging purposes. The options do not expose the
Company to credit risk because the Company, not its counterparty, is obligated to perform. At the beginning of the contract period, the

F-31

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

10. Derivatives Contracts (Continued)

Company
receives a cash premium. During the contract period, the Company bears the risk of unfavorable changes in the value of the financial instruments underlying the options. To manage this market
risk, the Company purchases or sells cash or derivative financial instruments on a proprietary basis. Such purchases and sales may include debt and equity securities, forward and futures contracts,
swaps and options.

The
Company also purchases options to meet customer needs, for trading purposes or for hedging purposes. With purchased options, the Company gets the right, for a fee, to buy or sell the
underlying instrument at a fixed price on or before a specified date. The underlying instruments for these options include fixed income securities, equities, foreign currencies and interest rate
instruments or indices. The counterparties to these option contracts are reviewed to determine whether they are creditworthy.



The Company enters into forward purchases and sales contracts for mortgage-backed securities, foreign currencies and commitments to buy or sell commercial and
residential mortgages. In addition, the Company enters into futures contracts on equity-based indices and other financial instruments, as well as options on futures contracts.

Because
forward contracts are subject to the financial reliability of the counterparty, the Company is exposed to credit risk. To mitigate this credit risk, the Company limits
transactions with specific counterparties, reviews credit limits and adheres to internally established credit extension policies.

For
futures contracts and options on futures contracts, the change in the market value is settled with a clearing broker in cash each day. As a result, the credit risk with the clearing
broker is limited to the net positive change in the market value for a single day, which is recorded in receivables (payables) from (to) brokers, dealers and others in the consolidated statements of
financial condition.



The Company's swap agreements consist primarily of interest rate, equity and credit default swaps. Interest rate swaps are contractual agreements to exchange
interest rate payments based on agreed notional amounts and maturity. Equity swaps are contractual agreements to receive the appreciation or depreciation in value based on a specific strike price on
an equity instrument in exchange for paying another rate, which is usually based on an index or interest rate movements. Credit default swaps are contractual agreements in which one counterparty pays
a periodic fee in return for a contingent payment by the other counterparty following a credit event of a reference entity. A credit event is commonly defined as bankruptcy, insolvency, receivership,
material adverse restructuring of debt, or failure to meet payment obligations when due. Swaps are reported at fair value.

F-32

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

10. Derivatives Contracts (Continued)

Quantitative Disclosures for All Derivatives

The fair values of all derivatives contracts outstanding as of December 31, 2003 and 2002 were as follows:

December 31, 2003

December 31, 2002Assets

Liabilities

Assets

Liabilities(In millions)Options

$
2,892

$
2,756

$
830

$
1,110Forward contracts (including VPFs)


695


257


719


655Swaps


1,986


942


2,407


1,084Total

$
5,573

$
3,955

$
3,956

$
2,849


These
assets and liabilities are included as derivatives contracts in financial instruments owned/sold not yet purchased, respectively, in the consolidated statements of financial
condition.

11. Financial Instruments With Off-Balance Sheet Risk

In the normal course of business, the Company's customer and trading activities include executing, settling and financing various securities and financial
instrument transactions. To execute these transactions, the Company purchases and sells (including "short sales") securities, and purchases and sells forward contracts primarily for mortgage-backed
securities, foreign currencies and financial futures. If the customer or counterparty to the transaction is unable to fulfill its contractual obligations, and margin requirements are not sufficient to
cover losses, the Company may be exposed to off-balance-sheet risk. In these situations, the Company may be required to purchase or sell financial instruments at prevailing market prices,
which may not fully cover the obligations of its customers or counterparties. This risk is limited by requiring customers and counterparties to maintain margin collateral that complies with regulatory
and internal guidelines.

As
part of the Company's financing and securities settlement activities, the Company uses securities as collateral to support various secured financing sources. If the counterparty does
not meet its contractual obligation to return securities used as collateral, the Company may be exposed to the risk of reacquiring the securities at prevailing market prices to satisfy its
obligations. The Company controls this risk by monitoring the market value of financial instruments pledged each day and by requiring collateral levels to be adjusted in the event of excess market
exposure.

The
Company enters into forward contracts under which securities and currencies are delivered or received in the future at a specified price or yield. If counterparties are unable to
perform under the terms of the contracts or if the value of the securities, currency or interest rates change, the Company is exposed to risk. Such risk is controlled by monitoring the market value of
the financial instrument contracted for each day and by reviewing the creditworthiness of the counterparties.

The
settlement of the above transactions is not expected to have a material adverse effect on the Company's consolidated financial statements. For additional information on certain
off-balance sheet arrangements, see Notes 5 and 17.

F-33

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

12. Concentrations of Credit Risk

The Company is engaged in various securities trading and brokerage activities servicing a diverse group of domestic and foreign corporations, governments and
institutional and individual investors. A substantial portion of the Company's transactions are executed with and on behalf of institutional investors, including other brokers and dealers, mortgage
brokers, commercial banks, U.S. agencies, mutual funds, hedge funds and other financial institutions. These transactions are generally collateralized. Credit risk is the potential for loss resulting
from the default by a counterparty of its obligations. Exposure to credit risk is generated by securities and currency settlements, contracting derivatives and forward transactions with customers and
dealers, and the holding in inventory of bonds and/or loans. The Company uses various means to manage its credit risk. The creditworthiness of all counterparties is analyzed at the outset of a credit
relationship with the Company. These counterparties are subsequently reviewed on a periodic basis. The Company sets a maximum exposure limit for each counterparty, as well as for groups or classes of
counterparties. Furthermore, the Company enters into master netting agreements when feasible and demands collateral from certain counterparties or for certain types of credit transactions.

The
Company's customer securities activities are transacted either in cash or on a margin basis, in which the Company extends credit to the customer. The Company seeks to control the
risks associated with its customer activities by requiring customers to maintain margin collateral to comply with various regulatory and internal guidelines. The Company monitors required margin
levels each day and requires customers to deposit additional collateral, or reduce positions, when necessary.

13. Stockholders' Equity

On March 20, 2003, the Company's immediate parent company, CSFBI, transferred Management LLC to the Company as a capital contribution of
$75 million. The transfer of Management LLC has been accounted for at historical cost in a manner similar to pooling-of-interest
accounting because Management LLC and the Company were under the common control of CSFBI at the time of the transfer. The Company has restated financial information to reflect the results of
operations, financial condition, cash flows and changes in stockholders' equity as if the Company had acquired Management LLC on November 3, 2000, the date that the Company was acquired by
CSFBI.

On
February 28, 2003, the Company redeemed the remaining 88,500 shares of its Fixed/Adjustable Rate Cumulative Preferred Stock, Series B (liquidation preference of $50.00
per share) at par plus accrued and unpaid dividends.

On
December 31, 2002, CSFBI contributed $150 million to Management LLC.

On
September 30, 2002, CSFBI contributed all of the issued and outstanding shares of Madison Purchasing Corp. ("MMP") to the Company in order to achieve certain administrative
efficiencies. Simultaneous with the contribution of MMP to the Company, MMP was merged with Donaldson Leasing Corp., a subsidiary of the Company. MMP is the surviving entity. The effect of this
contribution on stockholder's equity was an increase of $14 thousand in paid-in capital.

On
August 1, 2002, CSFBI contributed $150 million to Management LLC.

F-34

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

13. Stockholders' Equity (Continued)

On
July 3, 2002, the Company purchased 1,500 shares of Fixed/Adjustable Rate Cumulative Preferred Stock, Series B (liquidation preference of $50.00 per share) for $50.00
per share plus accrued and unpaid dividends.

On
December 31, 2001, the Company redeemed at par ($50 per share) its 4 million shares of Fixed/Adjustable Rate Cumulative Preferred Stock, Series A, plus accrued
and unpaid dividends to the redemption date.

On
November 29, 2001, pursuant to a tender offer, the Company purchased 3.41 million of its 3.5 million shares of Fixed/Adjustable Rate Cumulative Preferred Stock,
Series B (liquidation preference of $50.00 per share) for $52.20 per share plus accrued and unpaid dividends to the purchase date. The Company recorded the excess of the purchase price over the
carrying value of $8 million in retained earnings in 2001.

On
August 21, 2001, a tender offer was completed for the outstanding shares of CSFBdirectcommon stock. As a result of the change
in capital structure brought about by the acquisition by CSFBI of all of the outstanding shares of the Company's voting common stock and the acquisition of
CSFBdirectnon-voting stock, 1,100 shares of the Company's common stock were issued to CSFBI.

In
February 2001, CSFBI transferred CSFB Capital Holdings, Inc. to the Company as a capital contribution of $34 million. CSFB Capital Holdings, Inc. is the
parent of CSFB Capital LLC.

14. Employee Benefit Plans

The Company provides retirement and postretirement benefits to its U.S. and certain non-U.S. employees through participation in defined benefit and
defined contribution pension plans and other plans. The Company's measurement date for its pension and other postretirement benefit plans is September 30.

Pension Plans

The Company participates in a non-contributory defined benefit pension plan (the "Qualified Plan") available to individuals employed before
January 1, 2000. The Company also provides a non-contributory, non-qualified, unfunded plan (the "Supplemental Plan"), which provides benefits to certain senior
employees and Qualified Plan participants whose benefits may be limited by tax regulations. Benefits under these pension plans are based on years of service and employee compensation. Contributions to
the Qualified Plan are made as required by the Internal Revenue Code and applicable law but not in excess of the amounts deductible by the Company for income tax purposes. Company contributions to the
Qualified Plan were $38 million, $41 million and $27 million for the years ended December 31, 2003, 2002 and 2001, respectively.

The
Company also participates in a defined contribution employee benefit plan, which primarily covers the Company's U.S. full-time and certain part-time
employees. Employees hired on or after January 1, 2000 also receive a pension contribution in the defined
contribution employee benefit plan. Company contributions were $55 million, $59 million and $59 million for the years ended December 31, 2003, 2002 and 2001, respectively.

F-35

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

14. Employee Benefit Plans (Continued)

In
November 2003, the Company changed its retirement benefits to link them to the performance of the Credit Suisse First Boston business unit, effective January 1, 2004. As
a result, certain individuals no longer accrue benefits under the Qualified Plan but will participate in the defined contribution employee benefit plan similar to employees hired on or after
January 1, 2000. In the fourth quarter of 2003, the Company recorded a pre-tax charge of $4 million due to the curtailment of future benefits for certain individuals as a
result of this change in retirement benefits. Because the financial statement disclosures that follow were determined as of the measurement date of September 30, 2003, they do not reflect the
effects of this curtailment.

Other Postretirement Plans

In addition, the Company provides certain subsidized unfunded health-care benefits for eligible retired employees (the "Other Plans"). Employees hired
prior to July 1, 1988 become eligible for these benefits if they meet minimum age and service requirements and are eligible for retirement benefits. The plan sponsor has the right to modify or
terminate these benefits. As of December 31, 2003 and 2002, the aggregate accumulated postretirement benefit obligation was $67 million and $44 million, respectively.

In
2003, the Medicare Act was signed into law and introduced both a Medicare prescription drug benefit and a federal subsidy to sponsors of retiree health-care plans that
provide a benefit that is at least "actuarially equivalent" to the Medicare benefit. In accordance with FSP 106-1, the Company has elected to defer the application of the measurement and
disclosure requirements of SFAS 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" until authoritative guidance is issued. Accordingly, amounts related to the net
periodic postretirement benefit costs do not reflect the effects of the Medicare Act. The Company may be required to restate amounts reported in this Annual Report in future periods. The Medicare Act
is not expected to have a material effect on the Company's consolidated financial statements.

The
following table presents the pension expense by component for the Qualified Plan for the years ended September 30, 2003, 2002 and 2001:

For the Year Ended September 30,2003

2002

2001(In millions)Components of Net Periodic Benefit Cost:Service cost

$
26

$
24

$
21Interest cost


31


28


25Expected return on plan assets


(37
)

(36
)

(33
)Amortization of unrecognized transition asset


(2
)

(2
)

(2
)Amortization of prior service cost


1





Recognized net actuarial loss


9


1


Net periodic benefit cost

$
28

$
15

$
11


F-36

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

14. Employee Benefit Plans (Continued)

The
following table presents the pension expense for the Supplemental Plan and postretirement health-care expense for the Other Plans by component for the years ended
September 30, 2003, 2002 and 2001:

For the Year Ended September 30,2003

2002

2001(In millions)Components of Net Periodic Benefit Cost:Service cost

$
3

$
2

$
1Interest cost


6


4


4Amortization of unrecognized transition obligation


1


1


1Amortization of prior service cost


(1
)

(1
)

Recognized net actuarial loss (gain)


2


4


(1
)Net periodic benefit cost

$
11

$
10

$
5


The
following table presents on a weighted average basis the assumptions used in determining the net periodic benefit costs for the Qualified Plan, the Supplemental Plan and the Other
Plans for the years ended September 30, 2003, 2002 and 2001:

For the Year Ended September 30,2003

2002

2001Discount rate

6.25
%
7.00
%
7.50
%Rate of compensation increase

4.00
%
5.50
%
5.50
%Expected rate of return(1)

8.50
%
9.00
%
9.00
%


---

F-37

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

14. Employee Benefit Plans (Continued)

The
following table reconciles the changes in the projected benefit obligation and the fair value of the plan assets and summarizes the funded status for the Qualified Plan, the
Supplemental Plan and the Other Plans. Amounts shown are as of the measurement date, which is September 30, 2003 and 2002:

|                                                   |  | Qualified |      | Supplemental and Other |  
|-------------------------------------------------- |  | --------- | ---- | ---------------------- | -
|
|
|Change in Benefit Obligation                       |  |           |      |                        |  
|Benefit obligation as of beginning of period       |  | $         | 517  |                        | $
|Service cost                                       |  |           | 26   |                        |  
|Interest cost                                      |  |           | 31   |                        |  
|Participant contributions                          |  |           |     |                        |  
|Amendments                                         |  |           | 2    |                        |  
|Actuarial loss                                     |  |           | 16   |                        |  
|Acquisitions                                       |  |           |     |                        |  
|Benefits paid                                      |  |           | (17  | )                      |  
|                                                   |  |           |      |                        |  
|Benefit obligation as of the end of period         |  | $         | 575  |                        | $
|                                                   |  |           |      |                        |  
|Change in Plan Assets                              |  |           |      |                        |  
|Fair value of assets as of the beginning of period |  | $         | 313  |                        | $
|Actual return on plan assets                       |  |           | 51   |                        |  
|Participant contributions                          |  |           |     |                        |  
|Employer contributions                             |  |           | 38   |                        |  
|Benefits paid                                      |  |           | (17  | )                      |  
|                                                   |  |           |      |                        |  
|Fair value of assets as of the end of period       |  | $         | 385  |                        | $
|                                                   |  |           |      |                        |  
|Funded Status                                      |  |           |      |                        |  
|Funded status                                      |  | $         | (190 | )                      | $
|Benefits paid                                      |  |           |     |                        |  
|Unrecognized transition (asset)/obligation         |  |           | (3   | )                      |  
|Unrecognized prior service cost                    |  |           | 5    |                        |  
|Unrecognized net actuarial loss                    |  |           | 276  |                        |  
|                                                   |  |           |      |                        |  
|Prepaid/(accrued) benefit cost                     |  | $         | 88   |                        | $
|                                                   |  |           |      |                        |  

As
of September 30, 2003, the fair value of the plan assets was less than the benefit obligation. The Company made a payment of $150 million to the Qualified Plan in
January 2004.

The
assumptions used in determining the projected benefit obligation and the projected health-care postretirement benefit obligation as of September 30, 2003 and 2002
were:

|                              |  | 2003 |   | 2002 |  
|----------------------------- |  | ---- | - | ---- | -
|Discount rate                 |  | 6.00 | % | 6.25 | %
|Rate of compensation increase |  | 4.00 | % | 4.00 | %

F-38

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

14. Employee Benefit Plans (Continued)

The
accumulated benefit obligation for the Qualified Plan was $533 million and $463 million as of September 30, 2003 and 2002, respectively. The accumulated benefit
obligation for the Supplemental Plans was $33 million and $28 million as of September 30, 2003 and 2002, respectively. As of September 30, 2003, the Company had a prepaid
benefit cost of $88 million related to the Qualified Plan consisting of $148 million in an unfunded accumulated benefit obligation, an intangible asset of $5 million and
$231 million in accumulated other comprehensive loss. As of September 30, 2002, the Company had a prepaid benefit cost of $77 million related to the Qualified Plan consisting of
$150 million in an unfunded accumulated benefit obligation, an intangible asset of $4 million and $223 million in accumulated other comprehensive loss.

The
Company had an unfunded accumulated benefit obligation as of the valuation date in 2003 and 2002. In accordance with SFAS No. 87, "Employers' Accounting for Pensions," the
Company recorded an additional after-tax charge of $4 million and $90 million for the years ended December 31, 2003 and 2002, respectively, in accumulated other
comprehensive loss in the consolidated statements of financial condition. The charge in 2002 was due to the decline in market conditions and the corresponding decline in the value of the Qualified
Plan assets, falling interest rates and a decrease in the discount rate used in the calculation of the pension liability that combined to produce an unfunded accumulated benefit obligation.

The
investment policies and strategies of the Qualified Plan are determined by a committee made up of the Company's senior management. The policy is based on long-term goals
and is therefore not frequently revised. However, senior management regularly monitors actual allocation compared to the policy. The current asset allocation goal is to achieve an asset mix of
approximately 31% in domestic equities; 15% in international equities; 33% in fixed income securities, including 5% in high-yield securities; 10% in real estate; 10% in alternate
investments (primarily hedge funds); and 1% in cash. Contributions to the Qualified Plan are made as required by the Internal Revenue Code and applicable law but not in excess of the amounts
deductible by the Company for income tax purposes.

The
following table presents the percentage of the fair value of the plan assets as of September 30, 2003 and 2002 by type of asset:

Qualified2003

2002Asset Allocation:Equity securities

41
%
40
%Fixed income securities

33

36Real estate

9

9Cash

17

15Total

100
%
100
%


In
determining the accumulated postretirement health-care benefit obligation and the net periodic postretirement costs for 2003, the Company assumed health-care
rate increases for 2003 and 2004 of 7.00% and 6.50%, respectively. The ultimate trend rate of increase of 4.75% is expected to be achieved in 2008. Assumed health-care cost trend rates
have a significant effect on the amounts reported for the

F-39

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

14. Employee Benefit Plans (Continued)

health-care
benefits. A 1% change in assumed health-care cost trend rates would have the following effects:

1% increase

1% decrease(In millions)Effect on benefit obligation at end of year

$
10

$
(8
)Effect on total of service and interest costs for year

$
1

$
(1
)


Certain
key employees of the Company also participate in the following compensation and other arrangements: investments in selected private equity activities of the Company funded by
deferred compensation and recourse and non-recourse leveraged loans provided by the Company; non-qualified deferred compensation plans that include managed investments; and
other non-qualified plans that are funded by the Company with insurance contracts. The investments, including the leverage factor, and the amounts accrued by the Company under these plans
are included in the consolidated statements of financial condition. The employee-related assets were $1.1 billion and $1.2 billion as of December 31, 2003 and 2002, respectively,
and are included in other assets and deferred amounts in the consolidated statements of financial condition. Related liabilities for deferred compensation plans were $1.3 billion and
$0.9 billion, respectively, as of December 31, 2003 and 2002 and are included in other liabilities in the consolidated statements of financial condition. Gains and losses on these assets
and liabilities are recorded in the consolidated statements of operations.

15. Share-Based Compensation

The Company participates in the Credit Suisse Group International Share Plan (the "Plan"). The Plan grants share option and share awards to certain employees
based on the fair market value of CSG shares at the time of grant.

Option Reduction Program

In September 2003, CSG completed its option reduction program, which entitled employees to exchange on a value-for-value basis
certain existing share option awards for new share option or share awards. In accordance with SFAS 123, the Company did not recognize any compensation expense as a result of that exchange. The
new share option and share awards have a one-year service period and the options expire seven years from the grant date.

Share Awards

In September 2003, CSG amended the Plan and introduced three-year vesting for share awards granted as part of incentive compensation.
Compensation expense is recognized over the vesting period. For share awards that are not part of incentive compensation, compensation expense is recognized over a vesting period of one to five years.

Share
awards granted in or before January 2003 for services provided in prior years were expensed during the year the services were provided if there were no vesting requirements.
For share awards with vesting requirements, compensation expense was recognized over a vesting period of one to five years.

F-40

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

15. Share-Based Compensation (Continued)

The
following table reflects the weighted-average fair value of share awards at the grant date, including share awards granted as part of the option reduction program in 2003:

|                                          |  | 2003 |       | 2002(1) |   | 2001(1)
|----------------------------------------- |  | ---- | ----- | ------- | - | -------
|Weighted-average fair value at grant date |  | $    | 28.00 |         | $ | 32.08  

---

The
number of share awards granted during the years ended December 31, 2003, 2002 and 2001 was 28 million, of which 11 million were granted as part of the option
reduction program in 2003, 8 million and 12 million, respectively. The number of share awards outstanding as of December 31, 2003, 2002 and 2001 was 48 million,
30 million and 40 million, respectively.

Share Option Awards

In August 2003, the Company adopted the fair value recognition provisions of SFAS 123, effective January 1, 2003, to account for its
stock-based compensation. For additional information, see Note 1.

In
September 2003, CSG amended the Plan and introduced three-year vesting for share option awards granted as part of incentive compensation. The Company will expense
all such share options over a three-year vesting period. For share option awards that are not part of incentive compensation, compensation expense is recognized over a vesting period of
two to four years. These awards expire ten years from the grant date.

Share
option awards granted in or before January 2003 for service provided in prior years were accounted for under the provisions of APB 25, and, therefore, no compensation
expense was recognized for these awards. These share option awards have a vesting period of two to four years and expire ten years from the grant date.

The
number of share option awards outstanding as of December 31, 2003, 2002 and 2001 was 33 million, of which 1 million relate to the option reduction program in
2003, 46 million and 27 million, respectively. The number of share option awards exercisable as of December 31, 2003, 2002 and 2001 was 21 million, 10 million and
1 million, respectively.

The
following table reflects the weighted-average fair values of share option awards at the grant date, including options granted as part of the option reduction program in 2003:

|                                                          |  | 2003 |       | 2002(1) |   | 2001(1)
|--------------------------------------------------------- |  | ---- | ----- | ------- | - | -------
|Weighted-average fair values of options at the grant date |  | $    | 10.44 |         | $ | 8.67   

---

F-41

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

15. Share-Based Compensation (Continued)

The fair value of share option awards was estimated using the Black-Scholes option pricing model. The following table reflects the weighted-average assumptions
for the calculation of the fair value of the share option awards granted, including share option awards granted as part of the option reduction program in 2003:

|                         |  | 2003    |   | 2002(1) |   | 2001(1) |  
|------------------------ |  | ------- | - | ------- | - | ------- | -
|Expected dividend yield  |  | 0.54    | % | 1.88    | % | 2.75    | %
|Expected life of options |  | 4 years |   | 5 years |   | 5 years |  
|Expected volatility      |  | 48.00   | % | 44.34   | % | 37.50   | %
|Risk-free interest rate  |  | 1.28    | % | 1.86    | % | 3.00    | %

---

16. Leases and Commitments

The following table sets forth the Company's minimum operating lease commitments as of December 31, 2003:

Period

(In millions)2004

$
1552005


1512006


1452007


1382008


1302009-2025


1,197Total(1)

$
1,916


---

F-42

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

16. Leases and Commitments (Continued)

The
following table sets forth certain of the Company's long-term commitments, including the current portion as of December 31, 2003:

|                             |                   | Commitment Expiration Per Period |       |      
|---------------------------- | ----------------- | -------------------------------- | ----- | -----
|
|
|Standby resale agreements(1) |                   | $                                |      |      
|Private equity(2)            |                   |                                  | 184   |      
|Resale agreements(3)         |                   |                                  | 7,576 |      
|                             |                   |                                  |       |      
|                             | Total commitments |                                  | $     | 7,760
|                             |                   |                                  |       |      

---

The
Company has access to standby letters of credit of $95 million and $543 million as of December 31, 2003 and 2002, respectively, in order to satisfy counterparty
collateral requirements.

The
Company had no capital lease or purchase obligations as of December 31, 2003. For information about certain of the Company's additional commitments, see Notes 6, 7 and 17.

17. Guarantees

In the ordinary course of business, the Company enters into guarantee contracts as guarantor. FIN No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45") requires disclosure by a guarantor of its maximum potential payment obligations under certain of its
guarantees to the extent that it is possible to estimate them. FIN 45 also requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligations
undertaken in issuing such guarantee, including its ongoing obligation to stand ready to perform over the term of the guarantee in the event that certain events or conditions occur. With certain
exceptions, these liability recognition requirements apply to any new guarantees entered into, or current guarantees that are modified, after December 31, 2002.

The
guarantees covered by FIN 45 may require the Company to make payments to the guaranteed party based on changes related to an asset, a liability or an equity security of the
guaranteed party. The Company may also be contingently required to make payments to the guaranteed party based on another entity's failure to perform under an agreement, or the Company may have an
indirect guarantee of the indebtedness of others, even though the payment to the guaranteed party may not be based on changes related to an asset, liability or equity security of the guaranteed party.

F-43

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

17. Guarantees (Continued)

In
addition, FIN 45 covers certain indemnification agreements that contingently require the Company to make payments to the indemnified party based on changes related to an asset,
liability or equity security of the indemnified party, such as an adverse judgment in a lawsuit or the imposition of additional taxes due to either a change in the tax law or an adverse interpretation
of the tax law.

The
following table sets forth the maximum quantifiable contingent liability associated with guarantees covered by FIN 45 as of December 31, 2003 by maturity:

|                         |  | Guarantee of Commitment
Expiration Per Period |       | 
|------------------------ |  | --------------------------------------------- | ----- | 
|
|
|Performance guarantees   |  | $                                             |      | 
|Derivatives              |  |                                               | 3,064 | 
|Related party guarantees |  |                                               |      | 
|                         |  |                                               |       | 
|Total guarantees         |  | $                                             | 3,064 | 
|                         |  |                                               |       | 

Performance Guarantees

In the ordinary course of business, the Company enters into contracts that would require it, as the guarantor, to make payments to the guaranteed party based on a
third party's failure to perform under
an agreement. As of December 31, 2003, the Company had a maximum contingent liability of $744 million under performance guarantees.



As part of the Company's commercial mortgage activities, the Company sells certain commercial mortgages that it has originated to FNMA and agrees to bear a
percentage of the losses should the borrowers fail to perform. The Company also issues guarantees that require it to reimburse FNMA for losses on certain whole loans underlying mortgage-backed
securities issued by FNMA, and as of December 31, 2003, recorded liabilities of $7 million related to these guarantees. The Company's maximum potential exposure related to these
guarantees, assuming all the borrowers failed to perform, was $403 million as of December 31, 2003.



As part of the Company's residential mortgage securitization activities, the Company at times guarantees the collection by the servicer and remittance to the
securitization trust of prepayment penalties. As of December 31, 2003, the Company's maximum exposure under the guarantees, assuming that the servicers fail to collect and remit every
prepayment penalty, was $341 million.

Derivatives

In the ordinary course of business, the Company enters into OTC contracts that meet the definition of a guarantee under FIN 45. Included in this category are
certain written OTC put option

F-44

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

17. Guarantees (Continued)

contracts,
pursuant to which the counterparty can potentially force the Company to acquire the underlying financial instrument or require the Company to make a cash payment in an amount equal to the
decline in value of the financial instrument underlying the OTC put option. Also included in this category are credit derivatives that may subject the Company to credit spread or issuer default risk
because the change in credit spreads or the credit quality of the underlying financial instrument may obligate the Company to make a payment. The Company seeks to manage these OTC derivatives
exposures by engaging in various hedging strategies to reduce its exposure.

FIN
45 does not require disclosures about derivatives instruments if they can be cash settled and the Company has no basis to conclude that it is probable that the counterparties held
the underlying instruments related to the derivatives instrument at the inception of the contract. Derivatives meeting both of these criteria are not disclosed in the table above.

As
of December 31, 2003, the Company recorded $205 million in derivatives that met the definition of a guarantee under FIN 45. These are reflected as derivatives contracts
in the consolidated statements of financial condition. The maximum gross contingent liability, excluding any potential offset from hedging activities of these contracts, is $7.7 billion, of
which $5.4 billion is with CSG affiliates, and represents the obligation of the Company in the event that all the underlying securities are worthless, the likelihood of which the Company
believes is remote. For a further discussion of the Company's risk management activities, see Note 10.

Related Party Guarantees

For purposes of FIN 45, related party guarantees refer to any guarantees issued by the Company for obligations of any company ("affiliates") controlled by CSG,
the Company's ultimate parent, unless it is one of the Company's consolidated subsidiaries. Guarantees issued by the Company for the obligations of its consolidated subsidiaries are excluded because
they do not create any incremental liability.

The
Company issues guarantees to customers with respect to certain obligations of its affiliates in the ordinary course of business, including, but not limited to, certain derivatives
transactions. Failure to perform by an affiliate would require the Company to perform under the guarantee. The maximum contingent liability of future payments of guarantees issued to counterparties of
affiliates as of December 31, 2003 was $3.7 billion. While the maximum contingent liability represents possible future payments under the guarantees, the Company believes that the
likelihood of nonperformance by these affiliates is remote. Excluded from the maximum contingent liability above are certain guarantees for which an estimate cannot be made because the exposure is
unlimited and therefore impossible to estimate.

Guarantees Related to Private Equity Activities

As part of its private equity activities, the Company provides guarantees related to carried interest and performance thresholds. The amounts of such guarantees
are included in the contingent obligations disclosed in Note 7.

F-45

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

17. Guarantees (Continued)

Other Guarantees

The Company has certain guarantees for which its maximum contingent liability cannot be quantified. These guarantees are not reflected in the table above and are
discussed below.



In connection with sales of certain assets or businesses, the Company has provided purchasers customary indemnification provisions based on changes in an
underlying asset or liability relating to the assets sold. These indemnification provisions are negotiated with the purchaser of the assets or businesses and vary in their scope and duration. These
indemnification provisions generally shift the risk of certain unquantifiable and unknowable loss contingencies (e.g., relating to litigation, tax and intellectual property matters) from the purchaser
to the seller, as known or quantifiable loss contingencies generally are reflected in the value of the assets or businesses being sold. The Company has determined that it is not possible to make an
estimate of the maximum contingent liability under these indemnification provisions. To date, the Company's actual payments arising from these indemnification provisions have been in connection with
litigation matters and have not been material.



The Company provides indemnifications to certain counterparties in connection with its normal operating activities. The Company has determined that it is not
possible to make an estimate of the maximum amount it could be obligated to pay. As a normal part of issuing its own securities, the Company typically agrees to reimburse holders for additional tax
withholding charges or assessments resulting from changes in applicable tax laws or the interpretation of those laws. Securities that include these agreements to pay additional amounts generally also
include a related redemption or call provision if the obligation to pay the additional amounts results from a change in law or its interpretation and the obligation cannot be avoided by the issuer
taking reasonable steps to avoid the payment of additional amounts. Since such potential obligations are dependent on future changes in tax laws, the related liabilities the Company may incur as a
result of such changes cannot be reasonably estimated. In light of the related call provisions typically included, the Company does not expect any potential liabilities in respect of tax
gross-ups to be material.



The Company is a member of numerous securities exchanges and clearinghouses, and may, as a result of its membership arrangements, be required to perform if
another member defaults. The Company has determined that it is not possible to estimate the maximum amount of these obligations and believes that any potential requirement to make payments under these
arrangements is remote.

F-46

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

18. Industry Segment and Geographic Data

The Company operates and manages its businesses through two operating segments: the Institutional Securities segment, consisting of the Investment Banking, Equity
and Fixed Income divisions, and the Financial Services segment.

The
Company's segments are managed based on types of products and services offered and their related client bases. The Company evaluates the performance of its segments based primarily
on income (loss) before income taxes, discontinued operations and cumulative effect of a change in accounting principle.

The
Institutional Securities segment consists of:



The
Financial Services segment consists of Private Client Services, a financial advisory business serving high-net-worth individuals and corporate investors with
a wide range of CSFB and third-party investment management products and services. The presentation of Pershing results, including the gain on the sale in the second quarter of 2003, as Discontinued
operations in the consolidated statements of operations for the periods presented resulted in a material decrease in the Financial Services segment net revenues and net income as the Pershing business
contributed materially to that segment.

The
transfer of Management LLC was accounted for at historical cost in a manner similar to pooling-of-interest accounting because Management LLC and the Company
were under the common control of CSFBI at the time of the transfer. The Company has restated financial information for all periods presented to reflect the results of operations, financial condition,
cash flows and changes in stockholders' equity of Management LLC as if the Company had acquired it on November 3, 2000, the date the Company was acquired by CSFBI. The Company's 2002 results
(including legacy private equity and distressed businesses included in Elimination and Other) and those of the Fixed Income business of the Institutional Securities segment were adversely impacted by
the transfer of Management LLC to the Company.

The
Company allocates to its segments a pro rata share of certain centrally managed costs, such as leased facilities and equipment costs, employee benefits and certain general overhead
expenses based upon specified amounts, usage criteria or agreed rates, and allocates interest expense based upon the type of asset. The segmental allocation of some costs, such as incentive bonuses,
is estimated.

F-47

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

18. Industry Segment and Geographic Data (Continued)

The
following table sets forth the net revenues excluding net interest, net interest revenue (expense), total net revenues, total expenses and income (loss) from continuing operations
before provision (benefit) for income taxes, discontinued operations and cumulative effect of a change in accounting principle and assets of the Company's segments and reconciles the Company's segment
totals to the Company's consolidated statements of operations and consolidated statements of financial condition.

|                                       |  | Institutional Securities |       |   |   |        |   |   |         |   |   |         | 
|-------------------------------------- |  | ------------------------ | ----- | - | - | ------ | - | - | ------- | - | - | ------- | 
|
|
|December 31, 2003:                     |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Net revenues excluding net interest    |  | $                        | 1,450 |   | $ | 1,070  |   | $ | (137    | ) | $ | 2,383   | 
|Net interest revenue (expense)         |  |                          | 51    |   |   | 134    |   |   | 2,055   |   |   | 2,240   | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Total net revenues                     |  |                          | 1,501 |   |   | 1,204  |   |   | 1,918   |   |   | 4,623   | 
|Total expenses                         |  |                          | 1,116 |   |   | 1,023  |   |   | 1,425   |   |   | 3,564   | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Income (loss)(1)                       |  | $                        | 385   |   | $ | 181    |   | $ | 493     |   | $ | 1,059   | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Segment assets as of December 31, 2003 |  | $                        | 1,717 |   | $ | 66,685 |   | $ | 172,667 |   | $ | 241,069 | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|December 31, 2002:                     |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Net revenues excluding net interest    |  | $                        | 1,622 |   | $ | 1,273  |   | $ | (250    | ) | $ | 2,645   | 
|Net interest revenue (expense)         |  |                          | 23    |   |   | 63     |   |   | 1,873   |   |   | 1,959   | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Total net revenues                     |  |                          | 1,645 |   |   | 1,336  |   |   | 1,623   |   |   | 4,604   | 
|Total expenses                         |  |                          | 1,471 |   |   | 1,082  |   |   | 1,506   |   |   | 4,059   | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Income (loss)(1)                       |  | $                        | 174   |   | $ | 254    |   | $ | 117     |   | $ | 545     | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Segment assets as of December 31, 2002 |  | $                        | 1,489 |   | $ | 52,935 |   | $ | 169,692 |   | $ | 224,116 | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|December 31, 2001:                     |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Net revenues excluding net interest    |  | $                        | 1,855 |   | $ | 2,128  |   | $ | 827     |   | $ | 4,810   | 
|Net interest revenue (expense)         |  |                          | (38   | ) |   | (158   | ) |   | 1,196   |   |   | 1,000   | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Total net revenues                     |  |                          | 1,817 |   |   | 1,970  |   |   | 2,023   |   |   | 5,810   | 
|Total expenses                         |  |                          | 2,003 |   |   | 1,427  |   |   | 1,658   |   |   | 5,088   | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Income (loss)(1)                       |  | $                        | (186  | ) | $ | 543    |   | $ | 365     |   | $ | 722     | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 
|Segment assets as of December 31, 2001 |  | $                        | 3,146 |   | $ | 47,408 |   | $ | 153,477 |   | $ | 204,031 | 
|                                       |  |                          |       |   |   |        |   |   |         |   |   |         | 

---

F-48

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

18. Industry Segment and Geographic Data (Continued)

The following are net revenues from continuing operations by geographic region:

For the Year Ended December 31,2003

2002

2001(In millions)United States

$
4,979

$
4,947

$
6,425Foreign


14


3


57Total

$
4,993

$
4,950

$
6,482


F-49

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

19. Goodwill and Identifiable Intangible Assets

On January 1, 2002, the Company adopted SFAS 142, which addresses the initial recognition and measurement of intangible assets acquired outside a
business combination and the recognition and measurement of goodwill and other intangible assets subsequent to acquisition. Under the standard, goodwill and indefinite-lived intangible assets are
reviewed annually for impairment instead of being amortized to earnings. Intangible assets that do not have indefinite lives will continue to be amortized over their useful lives and reviewed for
impairment.

As
of December 31, 2003 and 2002, the Company had $338 million and $301 million, respectively, of goodwill. As of December 31, 2003 and 2002, the Company had
identifiable intangible assets (primarily software and customer lists, which are being amortized over useful lives ranging from five to 20 years) of $38 million and $28 million,
respectively, included in other assets and deferred amounts in the consolidated statements of financial condition.

The
Company allocated goodwill to its reporting units, completed the transitional impairment test of goodwill as of January 1, 2002 and determined that there was no impairment to
goodwill. Subsequent goodwill impairment testing showed no impairment and had no effect on the Company's consolidated financial condition or results of operations as of December 31, 2003. There
have been no events or circumstances occurring subsequent to these impairment tests that would more likely than not have resulted in the fair values of the Company's reporting units being below the
carrying values.

The
following table sets forth reported net income, as adjusted to exclude goodwill amortization expense:

|                              |  | For the Year Ended December 31, |      
|----------------------------- |  | ------------------------------- | -----
|
|
|Net income (loss) as reported |  | $                               | 1,329
|                              |  |                                 |      
|Net income (loss) as adjusted |  | $                               | 1,329
|                              |  |                                 |      

In
November 2003, the Company's subsidiary, Column Financial, Inc. ("CFI"), acquired a majority interest in Investment Property Mortgage, L.L.C. ("IPM"), and certain assets
and liabilities of Standard Mortgage Corporation ("SMC"). IPM was a joint venture between SMC and Hibernia National Bank that operated as a lender under FNMA programs. At closing, CFI contributed the
assets and liabilities
acquired from SMC to IPM; IPM was converted into a Delaware limited liability company and was renamed Column Guaranteed LLC ("CGL"). CGL originates, sells and services commercial
mortgage loans, holds a license under the FNMA Delegated Underwriting and Servicing program and is a Federal Home Loan Mortgage Corporation Program Plus approved seller/servicer and a Federal Housing
Administration Title II mortgagee regulated by the Department of Housing and Urban Development. The acquisition was accounted for as a purchase. In connection with the acquisition, the Company
recorded approximately $13 million of goodwill and approximately $10 million of intangible assets, primarily related to the license.

In
June 2003, the Company completed its acquisition of Volaris Advisors, a New York-based equity-options strategies firm providing yield-enhancement and volatility
management services, to enhance the services of the Private Client Services business. In connection with the acquisition, the

F-50

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

19. Goodwill and Identifiable Intangible Assets (Continued)

Company
recorded approximately $14 million of goodwill and approximately $2 million of intangible assets, primarily related to computer software, computer base and trade names and
trademarks.

On
January 31, 2002, the Company acquired the assets of Holt Value Associates, L.P., a leading provider of independent research and valuation services to asset managers, which was
integrated with CSFBEdge,the Company's online research and valuation database service. This acquisition was accounted for as a purchase. In connection
with the acquisition, the Company recorded approximately $59 million of goodwill and $24 million of intangible assets, primarily related to software and customer lists.

20. Legal Proceedings

The Company is involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of its
businesses. These actions have been brought on behalf of various classes of claimants and, unless otherwise specified, seek damages of material and/or indeterminate amounts. The Company believes,
based on currently available information and advice of counsel, that the results of such proceedings, in the aggregate, will not have a material adverse effect on its financial condition but might be
material to operating results for any particular period, depending, in part, upon the operating results for such period.

It
is inherently difficult to predict the outcome of many of these matters. In presenting the consolidated financial statements, management makes estimates regarding the outcome of these
matters and records a reserve and takes a charge to income when losses with respect to such matters are probable and can be reasonably estimated. Estimates, by their nature, are based on judgment and
currently available information and involve a variety of factors, including, but not limited to, the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of
legal counsel, the Company's defenses and its experience in similar cases or proceedings. In accordance with SFAS No. 5, "Accounting for Contingencies" ("SFAS 5"), the Company recorded in 2002
a reserve of $150 million for the agreement in principle with various U.S. regulators relating to research analyst independence and the allocation of IPO shares to corporate executives and
directors and a $450 million reserve for private litigation involving research analyst independence, certain IPO allocation practices, Enron and other related litigation. In 2003, the Company
paid approximately $150 million with respect to the agreement with the U.S. regulators relating to research analyst independence and the allocation of IPO shares to corporate executives and
directors. The $450 million reserve recorded in 2002 related to the private litigation discussed above was management's best estimate of the potential exposure pursuant to SFAS 5 related to
this private litigation as of December 31, 2003.

F-51

---

CREDIT SUISSE FIRST BOSTON (USA), INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2003

21. Quarterly Data (Unaudited)

The following table presents total net revenues, income before provision for income taxes, and net income (loss):

|                                            |  | 2003 Fiscal Quarter |       | For the Year
Ended
December 31,
2003
|------------------------------------------- |  | ------------------- | ----- | ------------------------------------
|
|
|Total net revenues                          |  | $                   | 1,189 |                                     
|Income (loss) from continuing operations(2) |  |                     | 90    |                                     
|Income from discontinued operations(3)      |  |                     | 37    |                                     
|Net income (loss)                           |  | $                   | 83    |                                     

|                                            |  | 2002 Fiscal Quarter |       | For the Year
Ended
December 31,
2002
|------------------------------------------- |  | ------------------- | ----- | ------------------------------------
|
|
|Total net revenues                          |  | $                   | 1,979 |                                     
|Income (loss) from continuing operations(2) |  |                     | 525   |                                     
|Income from discontinued operations(3)      |  |                     | 42    |                                     
|Net income (loss)                           |  | $                   | 366   |                                     

---

F-52

---

SCHEDULE I

CREDIT SUISSE FIRST BOSTON (USA), INC.

(Parent Company only)

Condensed Statements of Financial Condition

(In millions, except share data)

|                                                                                              |                                                                                                                                     | December 31,                               |       
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------
|
|ASSETS                                                                                        |                                                                                                                                    
|Cash and cash equivalents                                                                     |                                                                                                                                     | $                                          | 1     
|Receivables from brokers, dealers and other                                                   |                                                                                                                                     |                                            | 99    
|Derivatives contracts                                                                         |                                                                                                                                     |                                            | 1,124 
|Private equity and other long-term investments                                                |                                                                                                                                     |                                            | 32    
|Receivables from parent and affiliates                                                        |                                                                                                                                     |                                            | 20,551
|Receivables from subsidiaries                                                                 |                                                                                                                                     |                                            | 10,492
|Investment in subsidiaries, at equity                                                         |                                                                                                                                     |                                            | 6,454 
|Net deferred tax asset                                                                        |                                                                                                                                     |                                            | 302   
|Goodwill                                                                                      |                                                                                                                                     |                                            | 59    
|Other assets and deferred amounts                                                             |                                                                                                                                     |                                            | 698   
|                                                                                              |                                                                                                                                     |                                            |       
|                                                                                              |                                                                                                                                     | Total assets                               |       
|                                                                                              |                                                                                                                                     |                                            |       
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                          |                                                                                                                                    
|Commercial paper and short-term borrowings                                                    |                                                                                                                                     | $                                          | 4,243 
|Payables to brokers, dealers and other                                                        |                                                                                                                                     |                                            | 325   
|Derivatives contracts                                                                         |                                                                                                                                     |                                            | 72    
|Accounts payable and accrued expenses                                                         |                                                                                                                                     |                                            | 859   
|Other liabilities                                                                             |                                                                                                                                     |                                            | 682   
|Long-term borrowings                                                                          |                                                                                                                                     |                                            | 24,211
|                                                                                              |                                                                                                                                     |                                            |       
|                                                                                              |                                                                                                                                     | Total liabilities                          |       
|                                                                                              |                                                                                                                                     |                                            |       
|Stockholders' Equity:                                                                         |                                                                                                                                     |                                            |       
|Preferred Stock, 50,000,000 shares authorized:                                                |                                                                                                                                     |                                            |       
|                                                                                              | Series B preferred stock, at $50.00 per share liquidation preference (88,500 shares issued and outstanding as of December 31, 2002) |                                            |       
|Common stock ($0.10 par value; 50,000 shares authorized; 1,100 shares issued and outstanding) |                                                                                                                                     |                                            |      
|Paid-in capital                                                                               |                                                                                                                                     |                                            | 7,645 
|Retained earnings                                                                             |                                                                                                                                     |                                            | 1,933 
|Accumulated other comprehensive loss                                                          |                                                                                                                                     |                                            | (158  
|                                                                                              |                                                                                                                                     |                                            |       
|                                                                                              | Total stockholders' equity                                                                                                          |                                            |       
|                                                                                              |                                                                                                                                     |                                            |       
|                                                                                              |                                                                                                                                     | Total liabilities and stockholders' equity |       
|                                                                                              |                                                                                                                                     |                                            |       

See
accompanying notes to condensed financial statements.

F-53

---

CREDIT SUISSE FIRST BOSTON (USA), INC.

(Parent Company only)

Condensed Statements of Operations

(In millions)

|                                                                                                                                                    |                                                                                      | For the Year Ended December 31, |      
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------------- | -----
|
|
|Revenues:                                                                                                                                           |                                                                                      |                                 |      
|                                                                                                                                                    | Principal transactions-net                                                           |                                 | $    
|                                                                                                                                                    | Investment banking and advisory                                                      |                                 |      
|                                                                                                                                                    | Interest and dividends, net of interest expense of $476, $628 and $391, respectively |                                 |      
|                                                                                                                                                    | Other                                                                                |                                 |      
|                                                                                                                                                    |                                                                                      |                                 |      
|                                                                                                                                                    |                                                                                      | Total net revenues              |      
|                                                                                                                                                    |                                                                                      |                                 |      
|Expenses:                                                                                                                                           |                                                                                      |                                 |      
|                                                                                                                                                    | Employee compensation and benefits                                                   |                                 |      
|                                                                                                                                                    | Merger-related costs                                                                 |                                 |      
|                                                                                                                                                    | Other operating expenses                                                             |                                 |      
|                                                                                                                                                    |                                                                                      |                                 |      
|                                                                                                                                                    |                                                                                      | Total expenses                  |      
|                                                                                                                                                    |                                                                                      |                                 |      
|Loss before income tax benefit, equity in undistributed net income (loss) of subsidiaries and cumulative effect of a change in accounting principle |                                                                                      |                                 | (225 
|Income tax benefit                                                                                                                                  |                                                                                      |                                 | (111 
|                                                                                                                                                    |                                                                                      |                                 |      
|Loss before equity in undistributed net income (loss) of subsidiaries, extraordinary item and cumulative effect of a change in accounting principle |                                                                                      |                                 | (114 
|Equity in undistributed net income (loss) of subsidiaries                                                                                           |                                                                                      |                                 | 1,443
|                                                                                                                                                    |                                                                                      |                                 |      
|Income (loss) before cumulative effect of a change in accounting principle                                                                          |                                                                                      |                                 | 1,329
|Cumulative effect of a change in accounting principle, net of income tax provision of $0.3 in 2001                                                  |                                                                                      |                                 |     
|                                                                                                                                                    |                                                                                      |                                 |      
|Net income (loss)                                                                                                                                   |                                                                                      | $                               | 1,329
|                                                                                                                                                    |                                                                                      |                                 |      

See
accompanying notes to condensed financial statements.

F-54

---

CREDIT SUISSE FIRST BOSTON (USA), INC.

(Parent Company only)

Condensed Statements of Cash Flows

(In millions)

|                                                      |                                   | For the Years Ended December 31,                    |                                               
|----------------------------------------------------- | --------------------------------- | --------------------------------------------------- | ----------------------------------------------
|
|Net cash provided by (used in) operating activities   |                                   | $                                                   | 729                                           
|                                                      |                                   |                                                     |                                               
|Cash flows from investing activities:                 |                                   |                                                     |                                               
|                                                      | Net proceeds from (payments for): |                                                     |                                               
|                                                      |                                   | Note receivable from parent                         |                                               
|                                                      |                                   | Receivable from parent and affiliates               |                                               
|                                                      |                                   | Receivables from subsidiaries                       |                                               
|                                                      |                                   | Investment in subsidiaries                          |                                               
|                                                      |                                   | Purchase of subsidiary                              |                                               
|                                                      |                                   | Other assets                                        |                                               
|                                                      |                                   |                                                     |                                               
|Net cash used in investing activities                 |                                   |                                                     | (4,801                                        
|                                                      |                                   |                                                     |                                               
|Cash flows from financing activities:                 |                                   |                                                     |                                               
|                                                      | Net proceeds from (payments for): |                                                     |                                               
|                                                      |                                   | Commercial paper and short-term borrowings          |                                               
|                                                      |                                   | Redemption of 8.42% junior subordinated debentures  |                                               
|                                                      |                                   | Issuance (repayments) of:                           |                                               
|                                                      |                                   |                                                     | CSFBdirectcommon stock                        
|                                                      |                                   |                                                     | Series A preferred stock                      
|                                                      |                                   |                                                     | Series B preferred stock                      
|                                                      |                                   |                                                     | Issuance of long-term borrowings              
|                                                      |                                   |                                                     | Redemptions/maturities of long-term borrowings
|                                                      |                                   | Subordinated loan from subsidiaries                 |                                               
|                                                      |                                   | Dividends from affiliates                           |                                               
|                                                      |                                   | Dividends paid                                      |                                               
|                                                      |                                   | Capital contribution of CSFB Capital Holdings, Inc. |                                               
|                                                      |                                   | Capital contribution by CSFBI                       |                                               
|                                                      |                                   |                                                     |                                               
|Net cash provided by financing activities             |                                   |                                                     | 4,069                                         
|                                                      |                                   |                                                     |                                               
|Decrease in cash and cash equivalents                 |                                   |                                                     | (3                                            
|                                                      |                                   |                                                     |                                               
|Cash and cash equivalents as of the beginning of year |                                   |                                                     | 4                                             
|                                                      |                                   |                                                     |                                               
|Cash and cash equivalents as of the end of year       |                                   | $                                                   | 1                                             
|                                                      |                                   |                                                     |                                               

See
accompanying notes to condensed financial statements.

F-55

---

CREDIT SUISSE FIRST BOSTON (USA), INC.

(Parent Company only)

Notes to Condensed Financial Statements

December 31, 2003

1. Basis of Presentation

The condensed financial statements of Credit Suisse First Boston (USA), Inc. (the "Parent Company") should be read in conjunction with the consolidated
financial statements of Credit Suisse First Boston (USA), Inc. and subsidiaries (the "Company") and the notes thereto. Investments in subsidiaries are accounted for under the equity method.

2. Related Party Transactions

As of December 31, 2003 and 2002, the Parent Company had receivables from subsidiaries of $10.5 billion and $8.6 billion, respectively. The
receivables arose in the ordinary course of business. Changes in this balance are due to changes in the size and timing of transactions. Substantially all receivables from subsidiaries provide for
interest based on federal funds rates.

As
of December 31, 2003 and 2002, the Parent Company had receivables from parent (CSFBI) and affiliates of $20.6 billion and $18.5 billion, respectively. Prior to
the acquisition of DLJ, CSFBI issued its own debt to fund its operations. The Parent Company is now providing most of this funding, resulting in the increase in receivables from parent and affiliates.
Dividends declared to the Parent Company by its consolidated subsidiaries were $350 million and $400 million for the years ended December 31, 2003 and 2002, respectively. There
are no restrictions on the payment of dividends, except for those stipulated in certain debt agreements and those applicable to brokers and dealers, which provide for certain minimum amounts of
capital to be maintained to satisfy regulatory requirements in the Company's broker-dealer subsidiaries. Under certain circumstances, the amount of excess capital that can be withdrawn is limited. The
regulatory requirements are designed to measure the general financial integrity and liquidity of broker-dealers and provide minimum acceptable net capital levels to satisfy commitments to customers.
Unless an adequate level of capital is maintained, regulated broker-dealer subsidiaries would be prohibited from paying dividends to the Parent Company.

3. Guarantees

In the ordinary course of business, the Parent Company enters into guarantee contracts. On December 31, 2002, the Parent Company adopted the new disclosure
requirements for these guarantees in accordance with FIN 45. Beginning on January 1, 2003, the Parent Company adopted the recognition requirements of FIN 45 whereby the Parent Company
recognizes a liability at the inception of certain guarantees for obligations it has undertaken in issuing the guarantee, including its ongoing obligation to stand ready to perform over the term of
the guarantee in the event that certain events or conditions occur. With certain exceptions, these recognition requirements apply to any new guarantees entered into or current guarantees that are
modified after December 31, 2002.

Guarantees
issued by the Parent Company are disclosed in the consolidated financial statement disclosures (see Note 17 to the consolidated financial statements) except for
guarantees issued by the Parent Company on behalf of its consolidated subsidiaries, which are included in the Parent Company only disclosures.

F-56

---

CREDIT SUISSE FIRST BOSTON (USA), INC.

(Parent Company only)

Notes to Condensed Financial Statements (Continued)

December 31, 2003

3. Guarantees (Continued)

Related Party Guarantees

For purposes of Parent Company only condensed financial statements, related party guarantees include guarantees issued by the Parent Company for obligations of
its consolidated subsidiaries. Guarantees issued by the Parent Company for the obligations of companies controlled by CSG, the Parent Company's ultimate parent, excluding the Company that are not
consolidated subsidiaries are disclosed in the notes to the Company's consolidated financial statements.

The
Parent Company issues guarantees to customers with respect to certain obligations of its consolidated subsidiaries in the ordinary course of business, including, but not limited to,
certain derivatives transactions. Failure to perform by a consolidated subsidiary would require the Parent Company to perform under the guarantee. The maximum contingent liability of future payments
of guarantees issued to counterparties of consolidated subsidiaries as of December 31, 2003 was $2.3 billion. While the maximum contingent liability may be indicative of the extent to
which such guarantees are used, the Parent Company believes that the likelihood of nonperformance by these consolidated subsidiaries is remote. Excluded from the maximum contingent liability are
certain guarantees for which an estimate cannot be made because the exposure is unlimited and therefore impossible to estimate or because the exposure is unquantifiable.

F-57

---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized, on the 30th day of March, 2004.

| |  | CREDIT SUISSE FIRST BOSTON (USA), INC.
| |  | --------------------------------------
| |  | By:                                   

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

|Name                                    |  | Title                                                                               |  | Date          
|--------------------------------------- |  | ----------------------------------------------------------------------------------- |  | --------------
|                                        |  |                                                                                     |  |               
|/s/BRIAN D. FINNBrian D. Finn           |  | Director, President and Chief Executive Officer (Principal Executive Officer)       |  | March 30, 2004
|/s/DAVID C. FISHERDavid C. Fisher       |  | Chief Financial and Accounting Officer (Principal Financial and Accounting Officer) |  | March 30, 2004
|/s/EILEEN K. MURRAYEileen K. Murray     |  | Director                                                                            |  | March 30, 2004
|/s/BARBARA A. YASTINEBarbara A. Yastine |  | Director                                                                            |  | March 30, 2004

II-1

---



INDEX TO EXHIBITS

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                                                          
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2              |  | Transaction Agreement dated as of January 7, 2003, between Registrant and The Bank of New York Company, Inc., as amended by Amendment dated as of April 30, 2003 (incorporated by reference to
Exhibit 10.1 of the Registrant's Current Report on Form 8-K dated February 19, 2003 and Exhibit 2.1 of the Registrant's Current Report on Form 8-K dated May 2, 2003).
|3.1            |  | Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 2001).                                                                                                                                                                
|3.2            |  | By-laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).                                                                                                                                                                                                     
|4              |  | The instruments defining the rights of holders of long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to Section(b)(4)(iii)(A) of Item 601 of Regulation S-K. The Registrant hereby agrees to furnish copies
of these instruments to the Securities and Exchange Commission upon request.                                          
|10.1           |  | Agreement of Lease, dated July 28, 1995, between Metropolitan Life Insurance Company and CSFB LLC, as tenant, on Eleven Madison Avenue, New York, New York (incorporated by reference to Exhibit 10.28 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000).                                                                  
|10.2           |  | Amendment of Lease, dated May 17, 1996, between Metropolitan Life Insurance Company and CSFB LLC, as tenant, on Eleven Madison Avenue, New York, New York (incorporated by reference to Exhibit 10.29 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000).                                                                   
|10.3           |  | Agreement of Lease, dated September 10, 1997, between Metropolitan Life Insurance Company and CSFB LLC, as tenant, on Eleven Madison Avenue, New York, New York (incorporated by reference to Exhibit 10.30 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000).                                                             
|10.4           |  | Modification of Lease, dated February 5, 1998, between Metropolitan Life Insurance Company and CSFB LLC, as tenant, on Eleven Madison Avenue, New York, New York (incorporated by reference to Exhibit 10.31 of the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 2000).                                                            
|10.5           |  | Second Modification of Lease, dated June 12, 2000, between Metropolitan Life Insurance Company and CSFB LLC, as tenant, on Eleven Madison Avenue, New York, New York (incorporated by reference to Exhibit 10.32 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000).                                                        
|10.6           |  | Third Modification of Lease, dated September 18, 2000, between Metropolitan Life Insurance Company and CSFB LLC, as tenant, on Eleven Madison Avenue, New York, New York (incorporated by reference to Exhibit 10.33 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000).                                                    
|10.7           |  | Fourth Modification of Lease, dated November 13, 2000, between Metropolitan Life Insurance Company and CSFB LLC, as tenant, on Eleven Madison Avenue, New York, New York (incorporated by reference to Exhibit 10.34 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000).                                                    

E-1

---

|10.8  |  | Agreement of Sublease, dated August 31, 1999 between GFT Apparel Corp. and CSFB LLC, as subtenant, on Eleven Madison Avenue, New York, New York (incorporated by reference to Exhibit 10.35 of the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000).            
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.9  |  | Lease dated as of October 30, 2001, between Registrant, as landlord, and The Port Authority of New York and New Jersey, on One Madison Avenue (incorporated by reference to Exhibit 10.16 of the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001).              
|10.10 |  | Lease dated as of March 14, 2002, between Registrant, as landlord, and Standard Chartered Bank, on One Madison Avenue (incorporated by reference to Exhibit 10.15 of the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002).                                      
|10.11 |  | Lease dated as of April 26, 2002, between Registrant, as landlord, and Marsh, Inc., on One Madison Avenue (incorporated by reference to Exhibit 10.16 of the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002).                                                  
|10.12 |  | Amended and Restated Lease, dated as December 17, 2003, between Metropolitan Life Insurance Company and the Registrant, as tenant, on One Madison Avenue, New York, New York.*                                                                                                                      
|10.13 |  | Agreement of Lease, dated August 15, 2000, between TM Park Avenue Associates and CSFB LLC, as tenant, on 315 Park Avenue South, New York, New York (incorporated by reference to Exhibit 10.63 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000).         
|10.14 |  | First Amendment to the Lease between CSFB LLC, as tenant, and TM Park Avenue Associates dated August 16, 2000, on 315 Park Avenue South, New York, New York (incorporated by reference to Exhibit 10.35 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 2001).
|12    |  | Computation of ratio of earnings to fixed charges.*                                                                                                                                                                                                                                                 
|21    |  | Pursuant to General Instruction I of Form 10-K, the list of subsidiaries of the Company is omitted.                                                                                                                                                                                                 
|23    |  | Consent of KPMG LLP.*                                                                                                                                                                                                                                                                               
|24    |  | Power of Attorney.*                                                                                                                                                                                                                                                                                 
|31.1  |  | Rule 13a-14(a) certification of Chief Executive Officer.*                                                                                                                                                                                                                                           
|31.2  |  | Rule 13a-14(a) certification of Chief Financial and Accounting Officer.*                                                                                                                                                                                                                            
|32    |  | Section 1350 certifications.*                                                                                                                                                                                                                                                                       

---

E-2

---