Our consolidated financial performance for the year was strong. Revenues were up 9%, the first increase in revenues since 2000. While higher revenues reflected, in part, a better environment, I believe our focus on improving our market share with clients also contributed to the stronger performance. Profits before tax were up 22% as a result of our focus on costs in addition to the growth in revenues. Net income increased 27%, and earnings per share increased 28%.

Looking behind consolidated results to the particular businesses, Institutional Securities drove the increase in profits for the firm as a whole. In particular, fixed income had a record year with revenues up 65%, 40% higher than the prior record year of 2001. Results in our equity and investment banking businesses were relatively unchanged from the prior year, with revenues up 2% and down 4%, respectively.

The Individual Investor Group also had significantly better financial results in 2003. While revenues were relatively flat (down 2%), profits before tax were up 317%. Over the last three years, we have reorganized and improved every aspect of the business, including how we train our advisors, define our customer segments, report our financial results and reward our financial advisors. We believe we have set the foundation for growth in a business that has significant secular growth opportunities given the demographics in our country.

The performance in Discover® and Investment Management was not up to our expectations in 2003. Starting with Discover, we have emphasized for the last several years our key priority: improving credit quality. While there were more positive signs toward the end of the year, Discover's charge-offs were up from 6.19% on a managed basis in 2002 to 6.60% in 2003. A strong focus on costs mitigated much of this increase, resulting in a decline in revenues and profits before taxes of 7% from 2002's record levels.

With competitors pursuing growth at what we believe to be sub-par economic returns, our average outstanding managed balances grew by only 2% this year. While we believe an improved economic outlook and significant changes in credit risk management will contribute to lower losses in the coming quarters, the competitive environment is much more difficult to forecast. As a result, we are not anticipating significant portfolio growth throughout most of 2004.

Investment Management revenues and profits were down 8% and 22%, respectively. Cost reductions of 2% did not offset the reduction in revenues. The decline in revenues reflects the earlier decline in market values globally as well as net outflows of customer assets, both resulting in fewer assets under management. We were not satisfied with our market share of new assets. In particular, investment performance in our institutional fixed income area and negative publicity surrounding sales of affiliated funds drove underperformance in attracting new assets. Many steps were taken to address these issues, and we expect to improve our market share of new assets in 2004.

Even with a more favorable economic outlook, financial strength continues to be a key objective for the firm. In the last 12 months, we have improved our liquidity position, lowered reliance on short-term funding and reduced our leverage. We continue to believe financial strength, represented in a strong balance sheet and a diversified source of earnings, is a competitive advantage for the firm.

Looking at the months ahead, our success in capturing client wallet share will be the key factor in driving relative financial performance. However, given the extraordinary effort and expense associated with reducing our cost structure, maintaining cost discipline is almost as important. As was true in 2003, the legal and regulatory environment makes it difficult to forecast expense levels.

I believe that as we move forward, there will be two key drivers to wealth creation in financial services: Financial institutions with returns higher than the cost of capital and high growth in book value will create the most wealth for shareholders over the long term. In 2003, with a 16.5% return on equity and 13% growth in book value per share, I believe the company made a very significant contribution to the wealth of its owners.