<PAGE>
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): April 17, 1997
Dean Witter, Discover & Co.
---------------------------
(Exact name of Registrant as specified
in its charter)
Delaware 1-11758 36-3145972
-------------------------------------------------------------------------
(state or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
Two World Trade Center, New York, New York 10048
------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (212) 392-2222
--------------
-------------------------------------------------------------------------
(Former address, if changed since last report.)
<PAGE>
Item 5. Other Events
- ---------------------
On April 17, 1997, Dean Witter, Discover & Co. (the "Registrant")
released financial information with respect to the quarter ended March 31, 1997.
A copy of the press release containing such financial information is annexed as
Exhibit 99.1 to this Report and by this reference incorporated herein and made a
part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- --------------------------------------------------------------------------
99.1 Press release of the Registrant dated April 17, 1997
containing financial information for the quarter
ended March 31, 1997.
<PAGE>
SIGNATURE
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, thereto duly authorized.
DEAN WITTER, DISCOVER & CO.
-----------------------------------
(Registrant)
By: /s/ Ronald T. Carman
-----------------------------------
Ronald T. Carman
Senior Vice President
Dated: April 17, 1997
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DEAN WITTER, DISCOVER & CO.
EXHIBITS
TO CURRENT REPORT ON
FORM 8-K DATED APRIL 17, 1997
Commission File Number 1-11758
<PAGE>
Exhibit Index
-------------
Exhibit No. Description Page
- ------------- ----------- ----
99.1 Press release of the Registrant dated
April 17, 1997 containing financial
information for the quarter ended
March 31, 1997.
<PAGE>
April 17, 1997
Timothy Lee
Corporate Communications
212-392-8709
Amy Pappas
Investor Relations
212-392-6171
DEAN WITTER DISCOVER REPORTS RECORD QUARTERLY
EARNINGS OF $276.3 MILLION
NEW YORK, April 17 -- Dean Witter, Discover & Co. today reported record first
quarter earnings per share of $0.81 on a fully diluted basis, a 16 percent
increase from $0.70 in the first quarter of last year. Net income was $276.3
million, up 12 percent from $245.8 million for first quarter 1996. Net operating
revenues were a record $1.65 billion, a 7 percent advance over last year's first
quarter $1.55 billion. Return on equity was 18.9 percent for the last twelve
months.
Credit Services earnings advanced 18 percent to a record $146.2 million from
$124.3 million for last year's first quarter. Securities earnings of $130.1
million were 7 percent higher than the $121.5 million in the first quarter a
year ago.
During the quarter, the Company completed the acquisition of Lombard Brokerage,
Inc. Lombard has been selected by Barron's as "the best on-line broker" for the
second year in a row.
<PAGE>
"We are very pleased with another record quarter," said Philip J. Purcell,
Chairman and Chief Executive Officer. "In our credit card business, we benefited
from the pricing actions we took last year in response to rising write-offs. In
Securities, we continued to achieve strong earnings and impressive growth in the
number of account executives, new client accounts and assets under management."
SECURITIES
Securities posted strong earnings and continued to grow its business in the
year's first quarter.
. First quarter asset management and administration fees increased 13 percent
from last year's first quarter to $311.6 million. Assets under management and
administration rose to a record $91.6 billion, up $8.2 billion over last
year's first quarter.
. The number of account executives grew to 9,252 at quarter end, an increase of
172 during the quarter and 536 from a year ago, the eighth consecutive
quarterly increase.
. Securities added a record 170,000 new client accounts during this year's first
quarter. Total client assets of $254 billion increased by more than $3 billion
during the quarter and were 11 percent above the end of March 1996.
. Securities renewed its agreement to provide NationsBank with securities
services through September 1998. The agreement extends to the retail
subsidiaries of Boatmen's Bancshares, recently acquired by NationsBank.
Boatsmen's ranks first in marketshare in five states.
Record net operating revenues of $915.1 million were 8 percent above the first
quarter of last year. Operating expenses also increased 8 percent, to $694.5
million, and the profit margin was 14.2 percent. Securities achieved a 40.9
percent return on equity for the trailing twelve month period.
<PAGE>
CREDIT SERVICES
Credit Services reported strong revenues and a substantial increase in quarterly
earnings.
. Merchant and cardmember fees were $515.2 million, on a managed loan basis, up
40 percent from last year's first quarter. The increase was due primarily to
the pricing actions taken over the course of last year.
. Managed loans were up $4.2 billion to $35.2 billion, a 13 percent increase
from the first quarter of 1996.
. Net interest income rose 17 percent over last year's first quarter to $821.8
million, due both to loan growth and an improved spread on consumer loans.
. The NOVUS Network enrolled approximately 100,000 new merchant locations during
the quarter and almost 450,000 over the last twelve months.
. NOVUS announced that it is joining with the Smithsonian Institution to issue
the first affinity card for their members and supporters. It also entered into
an agreement with Universal Studios to launch a new co-branded card and to
make Discover Card and other NOVUS brands the preferred cards of Universal
Studios.
Net operating revenues rose 5 percent from the first quarter of 1996 to $735.3
million despite a 60 percent increase in the provision for loan losses over the
first quarter of 1996. The increase in the provision was due to higher write-
offs. Operating expenses of $501.4 million were flat compared to last year's
first quarter. Credit Services profit margin for the quarter rose from 17.7
percent to 19.9 percent.
During the first quarter, the Company repurchased $27 million of its common
stock. The Company ceased open market repurchases of its common stock at the
time of the announcement of the merger agreement with Morgan Stanley Group Inc.
on February 5, 1997.
<PAGE>
In light of the announcement, the Company's board of directors has formally
rescinded the stock purchase authorization.
Mr. Purcell said, "We're proud of our results and this has also been an historic
quarter for us because of the announcement of our merger with Morgan Stanley.
We're excited about the rest of this year and about the future beyond that."
<PAGE>
EXHIBIT 99.1
DEAN WITTER, DISCOVER & CO.
Financial Summary
(in millions, except share data)
(unaudited)
Three Months %
Ended March 31, Increase
1997 1996 (Decrease)
----------- ----------- -----------
Total revenues
Credit Services $ 1,404.9 $ 1,201.1 17%
Securities 1,038.8 965.1 8%
----------- -----------
Total Dean Witter, Discover & Co. $ 2,443.7 $ 2,166.2 13%
=========== ===========
Net operating revenues (1)
Credit Services $ 735.3 $ 701.0 5%
Securities 915.1 846.5 8%
----------- -----------
Total Dean Witter, Discover & Co. $ 1,650.4 $ 1,547.5 7%
=========== ===========
Net income
Credit Services $ 146.2 $ 124.3 18%
Securities 130.1 121.5 7%
----------- -----------
Total Dean Witter, Discover & Co. $ 276.3 $ 245.8 12%
=========== ===========
Earnings per share (2)
Primary net income per share $ 0.81 0.71 14%
Primary avg common shares o/s (3) 339,369,778 348,279,692
Fully diluted net income per share $ 0.81 0.70 16%
Fully diluted avg common shares o/s (3) 339,380,448 349,628,396
Common shares o/s at period end 324,809,410 335,007,860
(1) Net operating revenues is total revenues minus interest expense and the
provision for losses on receivables.
(2) All share and per share data have been restated for the two-for-one
common stock split.
(3) Primary dilution is based on average share price for the period. Fully
diluted is based on the higher of average or ending share price for
the period.
<PAGE>
DEAN WITTER, DISCOVER & CO.
Consolidated Income Data
(in millions, except share data)
(unaudited, Managed loan basis)
Three Months %
Ended March 31, Increase
1997 1996 (Decrease)
----------- ----------- -----------
Merchant and cardmember fees $ 515.2 $ 367.5 40%
Commissions 305.6 300.7 2%
Asset management and admin. fees 311.6 274.9 13%
Servicing fees 0.0 0.0 --
Principal transactions 118.0 118.9 (1%)
Investment banking 79.5 64.7 23%
Other 28.5 24.8 15%
----------- -----------
Total non-interest revenues 1,358.4 1,151.5 18%
----------- -----------
Interest revenue 1,516.3 1,354.6 12%
Interest expense 618.1 579.6 7%
----------- -----------
Net interest income 898.2 775.0 16%
Provision for losses on receivables 606.2 379.0 60%
----------- -----------
Net credit income 292.0 396.0 (26%)
----------- -----------
Net operating revenues 1,650.4 1,547.5 7%
----------- -----------
Employee compensation and benefits 616.3 570.3 8%
Marketing and business development 186.7 191.9 (3%)
Info. processing and communications 192.5 182.1 6%
Facilities and equipment 64.0 61.2 5%
Other 136.4 141.6 (4%)
----------- -----------
Total non-interest expenses 1,195.9 1,147.1 4%
----------- -----------
Income before income taxes 454.5 400.4 14%
Income tax expense 178.2 154.6 15%
----------- -----------
Net income $ 276.3 $ 245.8 12%
=========== ===========
Primary net income per share (1) $ 0.81 0.71 14%
Primary avg common shares o/s(1) 339,369,778 348,279,692
Fully diluted net income per share(1)$ 0.81 0.70 16%
Fully diluted avg common shares o/s(1) 339,380,448 349,628,396
Oper exp as a % of net oper revenues 72.5% 74.1%
Effective tax rate 39.2% 38.6%
(1) All share and per share data have been restated for the two-for-one
common stock split.
F-1
<PAGE>
DEAN WITTER, DISCOVER & CO.
Credit Services Summarized Income Data
(in millions)
(unaudited, Managed loan basis)
Three Months %
Ended March 31, Increase
1997 1996 (Decrease)
----------- ----------- -----------
Merchant and cardmember fees $ 515.2 $ 367.5 40%
Servicing fees 0.0 0.0 --
Other 1.5 5.1 --
----------- -----------
Total non-interest revenues 516.7 372.6 39%
----------- -----------
Interest revenue 1,319.2 1,168.4 13%
Interest expense 497.4 464.0 7%
----------- -----------
Net interest income 821.8 704.4 17%
Provision for loan losses 603.2 376.0 60%
----------- -----------
Net credit income 218.6 328.4 (33%)
----------- -----------
Net operating revenues 735.3 701.0 5%
----------- -----------
Employee compensation and benefits 139.5 124.2 12%
Marketing and business development 157.3 164.4 (4%)
Info. processing and communications 113.2 114.4 (1%)
Facilities and equipment 14.9 14.8 1%
Other 76.5 85.8 (11%)
----------- -----------
Total non-interest expenses 501.4 503.6 --
----------- -----------
Income before income taxes 233.9 197.4 18%
Income tax expense 87.7 73.1 20%
----------- -----------
Net income $ 146.2 $ 124.3 18%
=========== ===========
Oper exp as a % of net oper revenues 68.2% 71.8%
Profit margin (1) 19.9% 17.7%
Effective tax rate 37.5% 37.0%
(1) Profit margin is defined as net income as a percentage
of net operating revenues.
F-2
<PAGE>
DEAN WITTER, DISCOVER & CO.
Securities Summarized Income Data
(in millions)
(unaudited, GAAP and Managed loan basis)
Three Months %
Ended March 31, Increase
1997 1996 (Decrease)
----------- ----------- -----------
Commissions $ 305.6 $ 300.7 2%
Asset management and admin. fees 311.6 274.9 13%
Principal transactions 118.0 118.9 (1%)
Investment banking 79.5 64.7 23%
Other 27.0 19.7 37%
----------- -----------
Total non-interest revenues 841.7 778.9 8%
----------- -----------
Interest revenue 197.1 186.2 6%
Interest expense 120.7 115.6 4%
----------- -----------
Net interest income 76.4 70.6 8%
Provision for losses on receivables 3.0 3.0 --
----------- -----------
Net credit income 73.4 67.6 9%
----------- -----------
Net operating revenues 915.1 846.5 8%
----------- -----------
Employee compensation and benefits 476.8 446.1 7%
Marketing and business development 29.4 27.5 7%
Info. processing and communications 79.3 67.7 17%
Facilities and equipment 49.1 46.4 6%
Other 59.9 55.8 7%
----------- -----------
Total non-interest expenses 694.5 643.5 8%
----------- -----------
Income before income taxes 220.6 203.0 9%
Income tax expense 90.5 81.5 11%
----------- -----------
Net income $ 130.1 $ 121.5 7%
=========== ===========
Oper exp as a % of net oper revenues 75.9% 76.0%
Profit margin (1) 14.2% 14.4%
Effective tax rate 41.0% 40.1%
(1) Profit margin is defined as net income as a percentage
of net operating revenues.
F-3
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Data
(in millions)
(unaudited, Managed loan basis)
FOR THE QUARTER ENDED
3/31/97 12/31/96 9/30/96
----------- ----------- -----------
Merchant and cardmember fees $ 515.2 $ 563.8 $ 462.8
Commissions 305.6 294.3 264.3
Asset management and admin. fees 311.6 299.3 289.8
Servicing fees 0.0 0.0 0.0
Principal transactions 118.0 108.9 107.0
Investment banking 79.5 78.1 45.7
Other 28.5 28.8 20.7
----------- ----------- -----------
Total non-interest revenues 1,358.4 1,373.2 1,190.3
----------- ----------- -----------
Interest revenue 1,516.3 1,494.1 1,426.7
Interest expense 618.1 613.4 599.5
----------- ----------- -----------
Net interest income 898.2 880.7 827.2
Provision for losses on receivables 606.2 639.0 491.5
----------- ----------- -----------
Net credit income 292.0 241.7 335.7
----------- ----------- -----------
Net operating revenues 1,650.4 1,614.9 1,526.0
----------- ----------- -----------
Employee compensation and benefits 616.3 559.2 525.8
Marketing and business development 186.7 253.6 209.9
Info. processing and communications 192.5 209.5 190.2
Facilities and equipment 64.0 67.4 63.8
Other 136.4 161.6 143.3
----------- ----------- -----------
Total non-interest expenses 1,195.9 1,251.3 1,133.0
----------- ----------- -----------
Income before income taxes 454.5 363.6 393.0
Income tax expense 178.2 135.8 154.0
----------- ----------- -----------
Net income $ 276.3 $ 227.8 $ 239.0
=========== =========== ===========
F-4
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Data
(in millions)
(unaudited, Managed loan basis)
FOR THE QUARTER ENDED
6/30/96 3/31/96 12/31/95
----------- ----------- -----------
Merchant and cardmember fees $ 419.5 $ 367.5 $ 379.7
Commissions 303.8 300.7 273.8
Asset management and admin. fees 285.8 274.9 258.6
Servicing fees 0.0 0.0 0.0
Principal transactions 114.5 118.9 111.1
Investment banking 57.6 64.7 48.8
Other 33.5 24.8 24.1
----------- ----------- -----------
Total non-interest revenues 1,214.7 1,151.5 1,096.1
----------- ----------- -----------
Interest revenue 1,366.7 1,354.6 1,337.9
Interest expense 582.8 579.6 580.5
----------- ----------- -----------
Net interest income 783.9 775.0 757.4
Provision for losses on receivables 456.9 379.0 421.3
----------- ----------- -----------
Net credit income 327.0 396.0 336.1
----------- ----------- -----------
Net operating revenues 1,541.7 1,547.5 1,432.2
----------- ----------- -----------
Employee compensation and benefits 552.9 570.3 496.9
Marketing and business development 201.4 191.9 224.0
Info. processing and communications 185.9 182.1 191.5
Facilities and equipment 63.7 61.2 61.9
Other 149.7 141.6 165.3
----------- ----------- -----------
Total non-interest expenses 1,153.6 1,147.1 1,139.6
----------- ----------- -----------
Income before income taxes 388.1 400.4 292.6
Income tax expense 149.3 154.6 114.5
----------- ----------- -----------
Net income $ 238.8 $ 245.8 $ 178.1
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Data
(in millions)
(unaudited, Managed loan basis)
FOR THE QUARTER ENDED
9/30/95 6/30/95 3/31/95
----------- ----------- -----------
Merchant and cardmember fees $ 322.5 $ 298.8 $ 271.6
Commissions 266.2 247.9 234.6
Asset management and admin. fees 251.7 251.0 245.5
Servicing fees 0.0 0.0 0.0
Principal transactions 121.6 120.8 125.4
Investment banking 45.1 48.7 38.9
Other 16.3 26.1 27.0
----------- ----------- -----------
Total non-interest revenues 1,023.4 993.3 943.0
----------- ----------- -----------
Interest revenue 1,280.1 1,240.9 1,155.3
Interest expense 554.1 566.9 521.9
----------- ----------- -----------
Net interest income 726.0 674.0 633.4
Provision for losses on receivables 298.2 242.4 208.8
----------- ----------- -----------
Net credit income 427.8 431.6 424.6
----------- ----------- -----------
Net operating revenues 1,451.2 1,424.9 1,367.6
----------- ----------- -----------
Employee compensation and benefits 511.5 489.5 483.7
Marketing and business development 204.4 159.0 147.7
Info. processing and communications 169.9 171.7 154.4
Facilities and equipment 60.8 58.4 54.4
Other 148.9 161.0 165.1
----------- ----------- -----------
Total non-interest expenses 1,095.5 1,039.6 1,005.3
----------- ----------- -----------
Income before income taxes 355.7 385.3 362.3
Income tax expense 137.0 147.8 140.2
----------- ----------- -----------
Net income $ 218.7 $ 237.5 $ 222.1
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Credit Services Income Data
(in millions)
(unaudited, Managed loan basis)
FOR THE QUARTER ENDED
3/31/97 12/31/96 9/30/96
----------- ----------- -----------
Merchant and cardmember fees $ 515.2 $ 563.8 $ 462.8
Servicing fees 0.0 0.0 0.0
Other 1.5 1.4 1.1
----------- ----------- -----------
Total non-interest revenues 516.7 565.2 463.9
----------- ----------- -----------
Interest revenue 1,319.2 1,301.5 1,235.9
Interest expense 497.4 494.8 479.3
----------- ----------- -----------
Net interest income 821.8 806.7 756.6
Provision for loan losses 603.2 636.0 488.7
----------- ----------- -----------
Net credit income 218.6 170.7 267.9
----------- ----------- -----------
Net operating revenues 735.3 735.9 731.8
----------- ----------- -----------
Employee compensation and benefits 139.5 132.1 129.8
Marketing and business development 157.3 210.6 187.5
Info. processing and communications 113.2 132.3 123.6
Facilities and equipment 14.9 18.1 15.6
Other 76.5 81.0 83.2
----------- ----------- -----------
Total non-interest expenses 501.4 574.1 539.7
----------- ----------- -----------
Income before income taxes 233.9 161.8 192.1
Income tax expense 87.7 60.0 72.1
----------- ----------- -----------
Net income $ 146.2 $ 101.8 $ 120.0
=========== =========== ===========
F-5
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Credit Services Income Data
(in millions)
(unaudited, Managed loan basis)
FOR THE QUARTER ENDED
6/30/96 3/31/96 12/31/95
----------- ----------- -----------
Merchant and cardmember fees $ 419.5 $ 367.5 $ 379.7
Servicing fees 0.0 0.0 0.0
Other 1.2 5.1 1.0
----------- ----------- -----------
Total non-interest revenues 420.7 372.6 380.7
----------- ----------- -----------
Interest revenue 1,176.8 1,168.4 1,131.5
Interest expense 460.7 464.0 453.7
----------- ----------- -----------
Net interest income 716.1 704.4 677.8
Provision for loan losses 454.0 376.0 415.6
----------- ----------- -----------
Net credit income 262.1 328.4 262.2
----------- ----------- -----------
Net operating revenues 682.8 701.0 642.9
----------- ----------- -----------
Employee compensation and benefits 119.3 124.2 119.2
Marketing and business development 174.0 164.4 201.2
Info. processing and communications 116.9 114.4 115.5
Facilities and equipment 15.4 14.8 13.7
Other 94.1 85.8 89.2
----------- ----------- -----------
Total non-interest expenses 519.7 503.6 538.8
----------- ----------- -----------
Income before income taxes 163.1 197.4 104.1
Income tax expense 59.7 73.1 41.8
----------- ----------- -----------
Net income $ 103.4 $ 124.3 $ 62.3
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Credit Services Income Data
(in millions)
(unaudited, Managed loan basis)
FOR THE QUARTER ENDED
9/30/95 6/30/95 3/31/95
----------- ----------- -----------
Merchant and cardmember fees $ 322.5 $ 298.8 $ 271.6
Servicing fees 0.0 0.0 0.0
Other 0.9 0.4 0.3
----------- ----------- -----------
Total non-interest revenues 323.4 299.2 271.9
----------- ----------- -----------
Interest revenue 1,075.8 1,025.2 961.6
Interest expense 426.8 418.9 394.7
----------- ----------- -----------
Net interest income 649.0 606.3 566.9
Provision for loan losses 295.8 240.5 205.6
----------- ----------- -----------
Net credit income 353.2 365.8 361.3
----------- ----------- -----------
Net operating revenues 676.6 665.0 633.2
----------- ----------- -----------
Employee compensation and benefits 112.3 104.8 102.3
Marketing and business development 187.6 132.0 124.5
Info. processing and communications 107.2 105.4 90.9
Facilities and equipment 13.5 12.1 11.8
Other 77.1 85.4 91.1
----------- ----------- -----------
Total non-interest expenses 497.7 439.7 420.6
----------- ----------- -----------
Income before income taxes 178.9 225.3 212.6
Income tax expense 66.9 84.7 80.6
----------- ----------- -----------
Net income $ 112.0 $ 140.6 $ 132.0
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Securities Income Data
(in millions)
(unaudited, GAAP and Managed loan basis)
FOR THE QUARTER ENDED
3/31/97 12/31/96 9/30/96
----------- ----------- -----------
Commissions $ 305.6 $ 294.3 $ 264.3
Asset management and admin. fees 311.6 299.3 289.8
Principal transactions 118.0 108.9 107.0
Investment banking 79.5 78.1 45.7
Other 27.0 27.4 19.6
----------- ----------- -----------
Total non-interest revenues 841.7 808.0 726.4
----------- ----------- -----------
Interest revenue 197.1 192.6 190.8
Interest expense 120.7 118.6 120.2
----------- ----------- -----------
Net interest income 76.4 74.0 70.6
Provision for losses on receivables 3.0 3.0 2.8
----------- ----------- -----------
Net credit income 73.4 71.0 67.8
----------- ----------- -----------
Net operating revenues 915.1 879.0 794.2
----------- ----------- -----------
Employee compensation and benefits 476.8 427.1 396.0
Marketing and business development 29.4 43.0 22.4
Info. processing and communications 79.3 77.2 66.6
Facilities and equipment 49.1 49.3 48.2
Other 59.9 80.6 60.1
----------- ----------- -----------
Total non-interest expenses 694.5 677.2 593.3
----------- ----------- -----------
Income before income taxes 220.6 201.8 200.9
Income tax expense 90.5 75.8 81.9
----------- ----------- -----------
Net income $ 130.1 $ 126.0 $ 119.0
=========== =========== ===========
F-6
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Securities Income Data
(in millions)
(unaudited, GAAP and Managed loan basis)
FOR THE QUARTER ENDED
6/30/96 3/31/96 12/31/95
----------- ----------- -----------
Commissions $ 303.8 $ 300.7 $ 273.8
Asset management and admin. fees 285.8 274.9 258.6
Principal transactions 114.5 118.9 111.1
Investment banking 57.6 64.7 48.8
Other 32.3 19.7 23.1
----------- ----------- -----------
Total non-interest revenues 794.0 778.9 715.4
----------- ----------- -----------
Interest revenue 189.9 186.2 206.4
Interest expense 122.1 115.6 126.9
----------- ----------- -----------
Net interest income 67.8 70.6 79.5
Provision for losses on receivables 2.9 3.0 5.6
----------- ----------- -----------
Net credit income 64.9 67.6 73.9
----------- ----------- -----------
Net operating revenues 858.9 846.5 789.3
----------- ----------- -----------
Employee compensation and benefits 433.6 446.1 377.7
Marketing and business development 27.4 27.5 22.8
Info. processing and communications 69.0 67.7 76.0
Facilities and equipment 48.3 46.4 48.2
Other 55.6 55.8 76.1
----------- ----------- -----------
Total non-interest expenses 633.9 643.5 600.8
----------- ----------- -----------
Income before income taxes 225.0 203.0 188.5
Income tax expense 89.6 81.5 72.7
----------- ----------- -----------
Net income $ 135.4 $ 121.5 $ 115.8
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Securities Income Data
(in millions)
(unaudited, GAAP and Managed loan basis)
FOR THE QUARTER ENDED
9/30/95 6/30/95 3/31/95
----------- ----------- -----------
Commissions $ 266.2 $ 247.9 $ 234.6
Asset management and admin. fees 251.7 251.0 245.5
Principal transactions 121.6 120.8 125.4
Investment banking 45.1 48.7 38.9
Other 15.4 25.7 26.7
----------- ----------- -----------
Total non-interest revenues 700.0 694.1 671.1
----------- ----------- -----------
Interest revenue 204.3 215.7 193.7
Interest expense 127.2 148.0 127.2
----------- ----------- -----------
Net interest income 77.1 67.7 66.5
Provision for losses on receivables 2.5 1.9 3.2
----------- ----------- -----------
Net credit income 74.6 65.8 63.3
----------- ----------- -----------
Net operating revenues 774.6 759.9 734.4
----------- ----------- -----------
Employee compensation and benefits 399.2 384.7 381.4
Marketing and business development 16.8 27.0 23.2
Info. processing and communications 62.7 66.3 63.5
Facilities and equipment 47.3 46.3 42.6
Other 71.8 75.6 74.0
----------- ----------- -----------
Total non-interest expenses 597.8 599.9 584.7
----------- ----------- -----------
Income before income taxes 176.8 160.0 149.7
Income tax expense 70.1 63.1 59.6
----------- ----------- -----------
Net income $ 106.7 $ 96.9 $ 90.1
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Consolidated Income Data
(in millions, except share data)
(unaudited, GAAP basis)
Three Months %
Ended March 31, Increase
1997 1996 (Decrease)
----------- ----------- -----------
Merchant and cardmember fees $ 405.3 $ 320.5 26%
Commissions 305.6 300.7 2%
Asset management and admin. fees 311.6 274.9 13%
Servicing fees 208.6 200.3 4%
Principal transactions 118.0 118.9 (1%)
Investment banking 79.5 64.7 23%
Other 28.6 24.8 15%
----------- -----------
Total non-interest revenues 1,457.2 1,304.8 12%
----------- -----------
Interest revenue 986.5 861.4 15%
Interest expense 414.9 390.7 6%
----------- -----------
Net interest income 571.6 470.7 21%
Provision for losses on receivables 378.4 228.0 66%
----------- -----------
Net credit income 193.2 242.7 (20%)
----------- -----------
Net operating revenues 1,650.4 1,547.5 7%
----------- -----------
Employee compensation and benefits 616.3 570.3 8%
Marketing and business development 186.7 191.9 (3%)
Info. processing and communications 192.5 182.1 6%
Facilities and equipment 64.0 61.2 5%
Other 136.4 141.6 (4%)
----------- -----------
Total non-interest expenses 1,195.9 1,147.1 4%
----------- -----------
Income before income taxes 454.5 400.4 14%
Income tax expense 178.2 154.6 15%
----------- -----------
Net income $ 276.3 $ 245.8 12%
=========== ===========
Primary net income per share (1) $ 0.81 0.71 14%
Primary avg common shares o/s(1) 339,369,778 348,279,692
Fully diluted net income per share(1)$ 0.81 0.70 16%
Fully diluted avg common shares o/s(1) 339,380,448 349,628,396
Oper exp as a % of net oper revenues 72.5% 74.1%
Effective tax rate 39.2% 38.6%
(1) All share and per share data have been restated for the two-for-one
common stock split.
F-7
<PAGE>
DEAN WITTER, DISCOVER & CO.
Credit Services Summarized Income Data
(in millions)
(unaudited, GAAP basis)
Three Months %
Ended March 31, Increase
1997 1996 (Decrease)
----------- ----------- -----------
Merchant and cardmember fees (1) $ 405.3 $ 320.5 26%
Servicing fees (1) 208.6 200.3 4%
Other 1.6 5.1 --
----------- -----------
Total non-interest revenues 615.5 525.9 17%
----------- -----------
Interest revenue (1) 789.4 675.2 17%
Interest expense (1) 294.2 275.1 7%
----------- -----------
Net interest income 495.2 400.1 24%
Provision for loan losses (1) 375.4 225.0 67%
----------- -----------
Net credit income 119.8 175.1 (32%)
----------- -----------
Net operating revenues 735.3 701.0 5%
----------- -----------
Employee compensation and benefits 139.5 124.2 12%
Marketing and business development 157.3 164.4 (4%)
Info. processing and communications 113.2 114.4 (1%)
Facilities and equipment 14.9 14.8 1%
Other 76.5 85.8 (11%)
----------- -----------
Total non-interest expenses 501.4 503.6 --
----------- -----------
Income before income taxes 233.9 197.4 18%
Income tax expense 87.7 73.1 20%
----------- -----------
Net income $ 146.2 $ 124.3 18%
=========== ===========
Oper exp as a % of net oper revenues 68.2% 71.8%
Profit margin (2) 19.9% 17.7%
Effective tax rate 37.5% 37.0%
(1) Period-to-period comparisons for these line items are significantly
affected by the relative levels of securitized assets.
For comparative information on a managed loan basis, see page F-2.
(2) Profit margin is defined as net income as a percentage
of net operating revenues.
F-8
<PAGE>
DEAN WITTER, DISCOVER & CO.
Securities Summarized Income Data
(in millions)
(unaudited, GAAP and Managed loan basis)
Three Months %
Ended March 31, Increase
1997 1996 (Decrease)
----------- ----------- -----------
Commissions $ 305.6 $ 300.7 2%
Asset management and admin. fees 311.6 274.9 13%
Principal transactions 118.0 118.9 (1%)
Investment banking 79.5 64.7 23%
Other 27.0 19.7 37%
----------- -----------
Total non-interest revenues 841.7 778.9 8%
----------- -----------
Interest revenue 197.1 186.2 6%
Interest expense 120.7 115.6 4%
----------- -----------
Net interest income 76.4 70.6 8%
Provision for losses on receivables 3.0 3.0 --
----------- -----------
Net credit income 73.4 67.6 9%
----------- -----------
Net operating revenues 915.1 846.5 8%
----------- -----------
Employee compensation and benefits 476.8 446.1 7%
Marketing and business development 29.4 27.5 7%
Info. processing and communications 79.3 67.7 17%
Facilities and equipment 49.1 46.4 6%
Other 59.9 55.8 7%
----------- -----------
Total non-interest expenses 694.5 643.5 8%
----------- -----------
Income before income taxes 220.6 203.0 9%
Income tax expense 90.5 81.5 11%
----------- -----------
Net income $ 130.1 $ 121.5 7%
=========== ===========
Oper exp as a % of net oper revenues 75.9% 76.0%
Profit margin (1) 14.2% 14.4%
Effective tax rate 41.0% 40.1%
(1) Profit margin is defined as net income as a percentage
of net operating revenues.
F-9
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Data
(in millions)
(unaudited, GAAP basis)
FOR THE QUARTER ENDED
3/31/97 12/31/96 9/30/96
----------- ----------- -----------
Merchant and cardmember fees $ 405.3 $ 460.6 $ 379.5
Commissions 305.6 294.3 264.3
Asset management and admin. fees 311.6 299.3 289.8
Servicing fees 208.6 204.5 222.7
Principal transactions 118.0 108.9 107.0
Investment banking 79.5 78.1 45.7
Other 28.6 28.8 20.7
----------- ----------- -----------
Total non-interest revenues 1,457.2 1,474.5 1,329.7
----------- ----------- -----------
Interest revenue 986.5 968.9 893.7
Interest expense 414.9 405.4 390.4
----------- ----------- -----------
Net interest income 571.6 563.5 503.3
Provision for losses on receivables 378.4 423.1 307.0
----------- ----------- -----------
Net credit income 193.2 140.4 196.3
----------- ----------- -----------
Net operating revenues 1,650.4 1,614.9 1,526.0
----------- ----------- -----------
Employee compensation and benefits 616.3 559.2 525.8
Marketing and business development 186.7 253.6 209.9
Info. processing and communications 192.5 209.5 190.2
Facilities and equipment 64.0 67.4 63.8
Other 136.4 161.6 143.3
----------- ----------- -----------
Total non-interest expenses 1,195.9 1,251.3 1,133.0
----------- ----------- -----------
Income before income taxes 454.5 363.6 393.0
Income tax expense 178.2 135.8 154.0
----------- ----------- -----------
Net income $ 276.3 $ 227.8 $ 239.0
=========== =========== ===========
F-10
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Data
(in millions)
(unaudited, GAAP basis)
FOR THE QUARTER ENDED
6/30/96 3/31/96 12/31/95
----------- ----------- -----------
Merchant and cardmember fees $ 345.6 $ 320.5 $ 343.6
Commissions 303.8 300.7 273.8
Asset management and admin. fees 285.8 274.9 258.6
Servicing fees 191.5 200.3 162.6
Principal transactions 114.5 118.9 111.1
Investment banking 57.6 64.7 48.8
Other 33.5 24.8 24.2
----------- ----------- -----------
Total non-interest revenues 1,332.3 1,304.8 1,222.7
----------- ----------- -----------
Interest revenue 863.3 861.4 905.0
Interest expense 379.7 390.7 402.8
----------- ----------- -----------
Net interest income 483.6 470.7 502.2
Provision for losses on receivables 274.2 228.0 292.7
----------- ----------- -----------
Net credit income 209.4 242.7 209.5
----------- ----------- -----------
Net operating revenues 1,541.7 1,547.5 1,432.2
----------- ----------- -----------
Employee compensation and benefits 552.9 570.3 496.9
Marketing and business development 201.4 191.9 224.0
Info. processing and communications 185.9 182.1 191.5
Facilities and equipment 63.7 61.2 61.9
Other 149.7 141.6 165.3
----------- ----------- -----------
Total non-interest expenses 1,153.6 1,147.1 1,139.6
----------- ----------- -----------
Income before income taxes 388.1 400.4 292.6
Income tax expense 149.3 154.6 114.5
----------- ----------- -----------
Net income $ 238.8 $ 245.8 $ 178.1
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Data
(in millions)
(unaudited, GAAP basis)
FOR THE QUARTER ENDED
9/30/95 6/30/95 3/31/95
----------- ----------- -----------
Merchant and cardmember fees $ 285.8 $ 265.6 $ 240.3
Commissions 266.2 247.9 234.6
Asset management and admin. fees 251.7 251.0 245.5
Servicing fees 187.8 174.2 172.3
Principal transactions 121.6 120.8 125.4
Investment banking 45.1 48.7 38.9
Other 16.2 26.1 27.0
----------- ----------- -----------
Total non-interest revenues 1,174.4 1,134.3 1,084.0
----------- ----------- -----------
Interest revenue 844.2 812.6 757.2
Interest expense 374.7 384.4 352.9
----------- ----------- -----------
Net interest income 469.5 428.2 404.3
Provision for losses on receivables 192.7 137.6 120.7
----------- ----------- -----------
Net credit income 276.8 290.6 283.6
----------- ----------- -----------
Net operating revenues 1,451.2 1,424.9 1,367.6
----------- ----------- -----------
Employee compensation and benefits 511.5 489.5 483.7
Marketing and business development 204.4 159.0 147.7
Info. processing and communications 169.9 171.7 154.4
Facilities and equipment 60.8 58.4 54.4
Other 148.9 161.0 165.1
----------- ----------- -----------
Total non-interest expenses 1,095.5 1,039.6 1,005.3
----------- ----------- -----------
Income before income taxes 355.7 385.3 362.3
Income tax expense 137.0 147.8 140.2
----------- ----------- -----------
Net income $ 218.7 $ 237.5 $ 222.1
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Credit Services Income Data
(in millions)
(unaudited, GAAP basis)
FOR THE QUARTER ENDED
3/31/97 12/31/96 9/30/96
----------- ----------- -----------
Merchant and cardmember fees $ 405.3 $ 460.6 $ 379.5
Servicing fees 208.6 204.5 222.7
Other 1.6 1.4 1.1
----------- ----------- -----------
Total non-interest revenues 615.5 666.5 603.3
----------- ----------- -----------
Interest revenue 789.4 776.3 702.9
Interest expense 294.2 286.8 270.2
----------- ----------- -----------
Net interest income 495.2 489.5 432.7
Provision for loan losses 375.4 420.1 304.2
----------- ----------- -----------
Net credit income 119.8 69.4 128.5
----------- ----------- -----------
Net operating revenues 735.3 735.9 731.8
----------- ----------- -----------
Employee compensation and benefits 139.5 132.1 129.8
Marketing and business development 157.3 210.6 187.5
Info. processing and communications 113.2 132.3 123.6
Facilities and equipment 14.9 18.1 15.6
Other 76.5 81.0 83.2
----------- ----------- -----------
Total non-interest expenses 501.4 574.1 539.7
----------- ----------- -----------
Income before income taxes 233.9 161.8 192.1
Income tax expense 87.7 60.0 72.1
----------- ----------- -----------
Net income $ 146.2 $ 101.8 $ 120.0
=========== =========== ===========
F-11
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Credit Services Income Data
(in millions)
(unaudited, GAAP basis)
FOR THE QUARTER ENDED
6/30/96 3/31/96 12/31/95
----------- ----------- -----------
Merchant and cardmember fees $ 345.6 $ 320.5 $ 343.6
Servicing fees 191.5 200.3 162.6
Other 1.2 5.1 1.1
----------- ----------- -----------
Total non-interest revenues 538.3 525.9 507.3
----------- ----------- -----------
Interest revenue 673.4 675.2 698.6
Interest expense 257.6 275.1 275.9
----------- ----------- -----------
Net interest income 415.8 400.1 422.7
Provision for loan losses 271.3 225.0 287.1
----------- ----------- -----------
Net credit income 144.5 175.1 135.6
----------- ----------- -----------
Net operating revenues 682.8 701.0 642.9
----------- ----------- -----------
Employee compensation and benefits 119.3 124.2 119.2
Marketing and business development 174.0 164.4 201.2
Info. processing and communications 116.9 114.4 115.5
Facilities and equipment 15.4 14.8 13.7
Other 94.1 85.8 89.2
----------- ----------- -----------
Total non-interest expenses 519.7 503.6 538.8
----------- ----------- -----------
Income before income taxes 163.1 197.4 104.1
Income tax expense 59.7 73.1 41.8
----------- ----------- -----------
Net income $ 103.4 $ 124.3 $ 62.3
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Credit Services Income Data
(in millions)
(unaudited, GAAP basis)
FOR THE QUARTER ENDED
9/30/95 6/30/95 3/31/95
----------- ----------- -----------
Merchant and cardmember fees $ 285.8 $ 265.6 $ 240.3
Servicing fees 187.8 174.2 172.3
Other 0.8 0.4 0.3
----------- ----------- -----------
Total non-interest revenues 474.4 440.2 412.9
----------- ----------- -----------
Interest revenue 639.9 596.9 563.5
Interest expense 247.5 236.4 225.7
----------- ----------- -----------
Net interest income 392.4 360.5 337.8
Provision for loan losses 190.2 135.7 117.5
----------- ----------- -----------
Net credit income 202.2 224.8 220.3
----------- ----------- -----------
Net operating revenues 676.6 665.0 633.2
----------- ----------- -----------
Employee compensation and benefits 112.3 104.8 102.3
Marketing and business development 187.6 132.0 124.5
Info. processing and communications 107.2 105.4 90.9
Facilities and equipment 13.5 12.1 11.8
Other 77.1 85.4 91.1
----------- ----------- -----------
Total non-interest expenses 497.7 439.7 420.6
----------- ----------- -----------
Income before income taxes 178.9 225.3 212.6
Income tax expense 66.9 84.7 80.6
----------- ----------- -----------
Net income $ 112.0 $ 140.6 $ 132.0
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Securities Income Data
(in millions)
(unaudited, GAAP and Managed loan basis)
FOR THE QUARTER ENDED
3/31/97 12/31/96 9/30/96
----------- ----------- -----------
Commissions $ 305.6 $ 294.3 $ 264.3
Asset management and admin. fees 311.6 299.3 289.8
Principal transactions 118.0 108.9 107.0
Investment banking 79.5 78.1 45.7
Other 27.0 27.4 19.6
----------- ----------- -----------
Total non-interest revenues 841.7 808.0 726.4
----------- ----------- -----------
Interest revenue 197.1 192.6 190.8
Interest expense 120.7 118.6 120.2
----------- ----------- -----------
Net interest income 76.4 74.0 70.6
Provision for losses on receivables 3.0 3.0 2.8
----------- ----------- -----------
Net credit income 73.4 71.0 67.8
----------- ----------- -----------
Net operating revenues 915.1 879.0 794.2
----------- ----------- -----------
Employee compensation and benefits 476.8 427.1 396.0
Marketing and business development 29.4 43.0 22.4
Info. processing and communications 79.3 77.2 66.6
Facilities and equipment 49.1 49.3 48.2
Other 59.9 80.6 60.1
----------- ----------- -----------
Total non-interest expenses 694.5 677.2 593.3
----------- ----------- -----------
Income before income taxes 220.6 201.8 200.9
Income tax expense 90.5 75.8 81.9
----------- ----------- -----------
Net income $ 130.1 $ 126.0 $ 119.0
=========== =========== ===========
F-12
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Securities Income Data
(in millions)
(unaudited, GAAP and Managed loan basis)
FOR THE QUARTER ENDED
6/30/96 3/31/96 12/31/95
----------- ----------- -----------
Commissions $ 303.8 $ 300.7 $ 273.8
Asset management and admin. fees 285.8 274.9 258.6
Principal transactions 114.5 118.9 111.1
Investment banking 57.6 64.7 48.8
Other 32.3 19.7 23.1
----------- ----------- -----------
Total non-interest revenues 794.0 778.9 715.4
----------- ----------- -----------
Interest revenue 189.9 186.2 206.4
Interest expense 122.1 115.6 126.9
----------- ----------- -----------
Net interest income 67.8 70.6 79.5
Provision for losses on receivables 2.9 3.0 5.6
----------- ----------- -----------
Net credit income 64.9 67.6 73.9
----------- ----------- -----------
Net operating revenues 858.9 846.5 789.3
----------- ----------- -----------
Employee compensation and benefits 433.6 446.1 377.7
Marketing and business development 27.4 27.5 22.8
Info. processing and communications 69.0 67.7 76.0
Facilities and equipment 48.3 46.4 48.2
Other 55.6 55.8 76.1
----------- ----------- -----------
Total non-interest expenses 633.9 643.5 600.8
----------- ----------- -----------
Income before income taxes 225.0 203.0 188.5
Income tax expense 89.6 81.5 72.7
----------- ----------- -----------
Net income $ 135.4 $ 121.5 $ 115.8
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
Quarterly Securities Income Data
(in millions)
(unaudited, GAAP and Managed loan basis)
FOR THE QUARTER ENDED
9/30/95 6/30/95 3/31/95
----------- ----------- -----------
Commissions $ 266.2 $ 247.9 $ 234.6
Asset management and admin. fees 251.7 251.0 245.5
Principal transactions 121.6 120.8 125.4
Investment banking 45.1 48.7 38.9
Other 15.4 25.7 26.7
----------- ----------- -----------
Total non-interest revenues 700.0 694.1 671.1
----------- ----------- -----------
Interest revenue 204.3 215.7 193.7
Interest expense 127.2 148.0 127.2
----------- ----------- -----------
Net interest income 77.1 67.7 66.5
Provision for losses on receivables 2.5 1.9 3.2
----------- ----------- -----------
Net credit income 74.6 65.8 63.3
----------- ----------- -----------
Net operating revenues 774.6 759.9 734.4
----------- ----------- -----------
Employee compensation and benefits 399.2 384.7 381.4
Marketing and business development 16.8 27.0 23.2
Info. processing and communications 62.7 66.3 63.5
Facilities and equipment 47.3 46.3 42.6
Other 71.8 75.6 74.0
----------- ----------- -----------
Total non-interest expenses 597.8 599.9 584.7
----------- ----------- -----------
Income before income taxes 176.8 160.0 149.7
Income tax expense 70.1 63.1 59.6
----------- ----------- -----------
Net income $ 106.7 $ 96.9 $ 90.1
=========== =========== ===========
<PAGE>
DEAN WITTER, DISCOVER & CO.
STATISTICAL SUMMARY
Year-to-date
March 31, 1997 March 31, 1996
------------- -------------
Consolidated
Equity at end of period (millions) $ 5,460.3 $ 4,912.7
Return on average equity (1) 18.9% 19.1%
Pro forma book value per share-EOP(2)$ 16.81 $ 15.12
Invstmt in SPSTSI-EOP mkt val (mil) $ 320.0 $ 617.5
Credit Services ($millions)
Managed loans
Average $ 35,624.7 $ 31,388.4
End of period $ 35,225.0 $ 31,045.9
Interest yield 14.8% 14.7%
Interest spread 8.7% 8.4%
Net charge-off rate 6.9% 4.7%
Average total earning assets $ 37,140.4 $ 32,799.6
Avg tot earning assets net int margin 9.0% 8.6%
General purpose credit card mgd loans
Average $ 31,676.5 $ 27,455.9
End of period $ 31,379.5 $ 27,252.2
Net charge-off rate 7.0% 4.8%
Owned loans - EOP $ 21,966.5 $ 18,784.0
General purpose credit card accts (mil) 39.2 36.7
NOVUS Network incr in merch loc. (thou) 99 81
Securities ($billions)
Account executives 9,252 8,716
Total client assets $ 254.4 $ 228.5
Assets under management and administration
Equity funds $ 38.4 $ 32.4
Fixed income funds 23.5 24.6
Money market funds 26.6 23.7
Investment management services 3.1 2.7
Total $ 91.6 $ 83.4
ICS Assets $ 11.1 $ 9.5
(1) Twelve month trailing return on average equity.
(2) Per share data has been restated for the two-for-one common stock
split.
F-13
