<PAGE> 1
1
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
--------------
Date of Report (Date of earliest event reported) May 5, 1998
J.P. MORGAN & CO. INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 1-5885 13-2625764
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
60 WALL STREET, NEW YORK, NEW YORK 10260-0060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 483-2323
-----------------------------------------------------------------
(Former name or former address, if changed since last report)
===========================================================================
<PAGE> 2
2
ITEM 5. OTHER EVENTS
On May 5, 1998, the Registrant issued a press release announcing that
they had a briefing on such date in New York for institutional
investors and securities analysts. At such meeting, executives of J.P.
Morgan & Co. Incorporated discussed the firm's strategy and several key
business initiatives. A copy of such press release is filed herein as
exhibit 99.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
NONE.
(b) Pro Forma Financial Information
NONE.
(c) Exhibits
12. Statement re computation of ratios - three months
ended March 31, 1998.
99. Copy of press release of J.P. Morgan & Co.
Incorporated dated May 5, 1998.
<PAGE> 3
3
SIGNATURES
Pursuant to the requirements 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.
J.P. MORGAN & CO. INCORPORATED
------------------------------
(REGISTRANT)
/s/ Grace B. Vogel
----------------------------
NAME: Grace B. Vogel
TITLE: Chief Accounting Officer
DATE: May 5, 1998
<PAGE> 1
1
EXHIBIT 12
Computation of Ratio of Earnings to Fixed Charges
J.P. Morgan & Co. Incorporated
Consolidated
<TABLE>
<CAPTION>
Three months
Dollars in millions 1998
- --------------------------------------------------------------------------------
<S> <C>
Earnings:
Net income $237
Add: income taxes 128
Less: equity in undistributed income
of all affiliates accounted for by
the equity method 1
Add: fixed charges, excluding interest
on deposits 2 155
- --------------------------------------------------------------------------------
Earnings available for fixed charges,
excluding interest on deposits 2 519
Add: interest on deposits 790
- --------------------------------------------------------------------------------
Earnings available for fixed charges,
including interest on deposits 3 309
- --------------------------------------------------------------------------------
Fixed charges:
Interest expense, excluding interest on
deposits 2 136
Interest factor in net rental expense 19
- --------------------------------------------------------------------------------
Total fixed charges, excluding interest
on deposits 2 155
Add: interest on deposits 790
- --------------------------------------------------------------------------------
Total fixed charges, including interest
on deposits 2 945
- --------------------------------------------------------------------------------
Ratio of earnings to fixed charges:
Excluding interest on deposits 1.17(a)
Including interest on deposits 1.12(a)
- --------------------------------------------------------------------------------
</TABLE>
(a) For the three months ended March 31, 1998, the ratio of earnings to fixed
charges, excluding the after tax charge of $129 million ($215 million before
tax) related to restructuring of business activities, was 1.23 excluding
interest on deposits and 1.17 including interest on deposits.
<PAGE> 2
2
EXHIBIT 12
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
J.P. Morgan & Co. Incorporated
Consolidated
<TABLE>
<CAPTION>
Three Months
Dollars in millions 1998
- --------------------------------------------------------------------------------
<S> <C>
Earnings:
Net income $237
Add: income taxes 128
Less: equity in undistributed income
of all affiliates accounted for by
the equity method 1
Add: fixed charges, excluding interest
on deposits and preferred stock
dividends 2 155
- --------------------------------------------------------------------------------
Earnings available for fixed charges,
excluding interest on deposits 2 519
Add: interest on deposits 790
- --------------------------------------------------------------------------------
Earnings available for fixed charges,
including interest on deposits 3 309
- --------------------------------------------------------------------------------
Fixed charges:
Interest expense, excluding interest on
deposits 2 136
Interest factor in net rental expense 19
Preferred stock dividends 14
- --------------------------------------------------------------------------------
Total fixed charges, excluding interest
on deposits 2 169
Add: interest on deposits 790
- --------------------------------------------------------------------------------
Total fixed charges, including interest
on deposits 2 959
- --------------------------------------------------------------------------------
Ratio of earnings to fixed charges:
Excluding interest on deposits 1.16(a)
Including interest on deposits 1.12(a)
- --------------------------------------------------------------------------------
</TABLE>
(a) For the three months ended March 31, 1998, the ratio of earnings to
combined fixed charges and preferred stock dividends, excluding the after tax
charge of $129 million ($215 million before tax) related to restructuring of
business activities, was 1.22 excluding interest on deposits and 1.16 including
interest on deposits.
<PAGE> 1
May 5, 1998
J.P. Morgan briefs investors and analysts on strategy and performance
At a briefing today in New York for institutional investors and
securities analysts, executives of J.P. Morgan & Co. Incorporated discussed the
firm's strategy for generating superior long-term returns for stockholders.
Morgan's chairman, Douglas A. Warner III, hosted the meeting, which focused on
several key business initiatives:
- - Peter Hancock, head of Fixed Income, outlined Morgan's integration of
lending and fixed income activities and the significant potential to
increase the firm's return on equity through transformation of its
credit business. With its leading credit, distribution, derivatives,
and securitization skills, he said, Morgan is well positioned to assist
clients in accessing credit in new ways as rapid changes in the global
capital and credit markets gather momentum. He described significant
opportunities to increase revenues; to reduce by an estimated $1.5
billion over the next two years the capital employed in credit
activities; and to redeploy capital for higher returns.
- - Clayton Rose, head of the firm's Equities group, gave an update on J.P.
Morgan's rapidly growing equities business. Morgan is ranked fifth
among lead underwriters of equity issues in the United States in 1998
to date. The firm has more than recouped its $1.8 billion investment in
building its equities capabilities since the early 1990s, Rose said,
with roughly 80% of the investment completed. Gains in market share and
operating leverage are expected to continue to improve margins, with
revenues estimated to grow 25% annually over the next several years and
costs to rise at less than half that rate.
- - Ramon de Oliveira, head of Morgan's Asset Management Services group,
reviewed the firm's global institutional investment management
franchise, its operating plan to expand margins, and its strategic plan
to increase assets under management. He estimated 15% to 20% annual
growth in assets under management (excluding market appreciation) over
the next three years from the year-end level of $257 billion, with
expenses rising at 5% to 7% over the same period. Morgan had completed
a two-year investment program to strengthen its investment platform, he
said, highlighting the firm's business partnership with American
<PAGE> 2
Century Companies and the early success of efforts to jointly market
highly competitive defined- contribution pension plan services. He
noted recent innovative mutual fund alliances with Deka in Germany and
Banques Populaires in France and said that similar alliances are being
actively explored in Japan and other markets of strategic importance.
Morgan is consistently ranked among the top managers of equity, bond,
and international assets for institutions, with a competitive position
based on consistent, disciplined investment philosophy and superior
investment performance.
- - Tony Mayer, chief financial officer, discussed Morgan's plans to
improve the firm's productivity through specific cost-control
initiatives. The objective, he said, is to identify $300 million to
$500 million of savings annually in 1998 and 1999 (including the $250
million announced in this year's first quarter) to fund business
growth, and to improve the firm's efficiency ratio (the ratio of
expenses to revenues) from 71% currently to the mid-sixties range.
Warner summed up with remarks on the firm's strategic positioning in a
time of industry change. "Our fundamental strategy has not changed: to be our
clients' number one provider of sophisticated financial services. Our momentum
is excellent. We are now at a point in our evolution where we are markedly
shifting our mindset - from a drive for strategic transformation to an
uncompromising drive for superior performance. We're out to capture the rewards
of leadership."
J.P. Morgan is a leading global financial firm that meets critical
financial needs for business enterprises, governments, and individuals. The firm
advises on corporate strategy and structure, raises capital, makes markets in
financial instruments, and manages investment assets. Morgan also commits its
own capital to promising enterprises and invests and trades to capture market
opportunities.
# # #
Estimates or targets may differ from actual results and are subject to risks and
uncertainties, as discussed in J.P. Morgan's 1997 Annual Report filed with the
Securities and Exchange Commission.
