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<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): September 23, 1997
Morgan Stanley, 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)
1585 Broadway, New York, New York 10036
------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (212) 761-4000
--------------
-------------------------------------------------------------------------
(Former address, if changed since last report.)
<PAGE>
Item 5. Other Events
- ---------------------
On September 23, 1997, Morgan Stanley, Dean Witter, Discover & Co. (the
"Registrant") released financial information with respect to the quarter ended
August 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 September 23, 1997
containing financial information for the quarter
ended August 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.
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
-------------------------------------------
(Registrant)
By: /s/ Ronald T. Carman
-------------------------------------------
Ronald T. Carman
Senior Vice President
Dated: September 23, 1997
<PAGE>
Exhibit Index
-------------
Exhibit No. Description Page
- ------------- ----------- ----
99.1 Press release of the Registrant dated
September 23, 1997 containing financial
information for the quarter ended
August 31, 1997.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
EXHIBITS
TO CURRENT REPORT ON
FORM 8-K DATED SEPTEMBER 23, 1997
Commission File Number 1-11758
<PAGE>
EXHIBIT 99.1
NEWS
- ----
CONTACT: INVESTOR RELATIONS MEDIA RELATIONS
------------------ ---------------
JOHN ANDREWS TIMOTHY LEE
212-762-8131 212-392-8709
JEANMARIE MCFADDEN
212-762-7842
MORGAN STANLEY, DEAN WITTER, DISCOVER
THIRD QUARTER NET INCOME UP 51% TO A RECORD $678 MILLION;
NET REVENUES INCREASE BY 46%
NEW YORK, September 23, 1997 - Morgan Stanley, Dean Witter, Discover & Co. (NYSE
: MWD) today reported record net income of $678 million for the third fiscal
quarter ended August 31, 1997 -- a 51 percent increase from last year's pro
forma third fiscal quarter $450 million. Earnings per share were $1.09 on a
fully-diluted basis, 51 percent greater than the pro forma $.72 in the third
quarter a year ago. Excluding goodwill amortization resulting from
acquisitions, earnings per share were $1.12 on a fully-diluted basis.
Net revenues (total revenues less interest expense and the provision for loan
losses) were a record $4,107 million, 46 percent ahead of $2,807 million in the
third quarter of 1996. The annualized return on average common equity for the
third fiscal quarter of this year was 22.8 percent.
Philip J. Purcell, Chairman, and John J. Mack, President, said in a joint
statement, "We had a terrific quarter, with record or near record earnings
in each of our major businesses -- securities, asset management and credit
services. There's no question that the merger is working exceptionally well.
You can especially see the benefits in investment banking and retail securities.
Our people are working
<PAGE>
together, we're capitalizing on our complementary strengths and we had a great
market environment."
Net revenues for the first nine months of fiscal 1997 rose 25 percent to $11,101
million. Nine month net income, excluding merger related expenses, increased to
$1,839 million, 22 percent higher than last year's pro forma $1,511 million.
Nine month fully-diluted earnings per share, excluding merger-related expenses
and goodwill amortization, were $3.04 up 25% from last year's $2.44. Including
merger-related expenses and goodwill amortization, nine month fully-diluted
earnings per share were $2.84.
The merger of the two firms, which was accounted for as a pooling of interests,
was completed on May 31 after more than 85 percent of the shares outstanding
were voted in favor of the combination.
SECURITIES
The Company's securities business posted record quarterly net income of $359
million, a 32 percent increase from last year:
o Investment banking revenues were up 68 percent, reflecting a doubling in
revenues from mergers and acquisitions as well as strong increases in equity and
debt underwriting. The Company ranked first worldwide and first in Europe in
equity and equity-related underwritings, and maintained its leadership position
in announced global M&A transactions. The Company ranked second in both high
yield and U.S. investment grade debt underwriting.*
*Source: Securities Data Corp. - January 1 to August 31, 1997.
<PAGE>
o Institutional sales and trading achieved record revenues in equities, foreign
exchange and commodities.
o Dean Witter Securities revenues climbed to a record quarterly level,
reflecting strong increases in the sales of equity products through the
branch system.
o The number of Dean Witter account executives grew to 9,634, up 261 for the
quarter and 815 from a year ago.
o Dean Witter's total client assets rose by $17 billion during the quarter and
$34 billion during the first nine months of the fiscal year to a record $288
billion. 518,000 new client accounts have been added since last November.
ASSET MANAGEMENT
Asset management net income was a record $185 million, 153 percent ahead of a
year ago. The increase reflects growth in assets under management, including
growth in the Company's mutual fund business, and substantial gains in its
merchant banking portfolio:
o The Company had approximately $325 billion of assets under management and
supervision at quarter end.
o Retail assets, managed primarily by InterCapital and Van Kampen American
Capital, rose to $186 billion -- up $12 billion for the quarter and $85
billion from a year ago. The increase in assets under management from a year
ago includes last October's acquisition of Van Kampen.
o Institutional assets, managed primarily by Morgan Stanley Asset Management
and Miller Anderson & Sherrerd, increased by $10 billion for the quarter and
$37 billion over the last twelve months -- to stand at $139 billion.
o Assets under administration in the global custody business declined
marginally during the quarter to $403 billion.
<PAGE>
o Merchant Banking generated third quarter investment gains of $166 million.
The largest gain was on its position in Fort James Corp., which was formed
as a result of the merger of Fort Howard Corp. and James River Corp.
CREDIT AND TRANSACTION SERVICES
Credit and Transaction Services net income was $134 million, 29 percent higher
than last year's third fiscal quarter. Net revenues increased by 11 percent to
$765 million despite a 24 percent increase in the provision for loan losses.
The increase in the provision was driven by higher write-offs.
o Merchant and cardmember fees were $542 million on a managed loan basis, up 22
percent from last year's third quarter. The increase was primarily the result
of the pricing actions taken in 1996.
o Managed loans of $34.9 billion were up $2.7 billion, or 8 percent, from the
third quarter of 1996.
o Net interest income, on a managed loan basis, rose 11 percent over last
year's third quarter to $815 million, in line with average loan growth.
o The NOVUS Network enrolled more than 100,000 new merchant locations during
the quarter. The Indianapolis Colts and the Escada and Donna Karan
International retail chains joined the NOVUS Network.
o Finally, Discover Brokerage Direct, the Company's on-line brokerage service,
reported 84,000 internet trades in August -- nearly triple the monthly volume
of nine months earlier.
Total capital (stockholders' equity and long-term debt) at August 31, 1997 was
$33.4 billion, including $12.8 billion of common and preferred stockholders'
<PAGE>
equity. Book value per common share was $20.25, based on quarter-end shares of
591,895,690.
Morgan Stanley, Dean Witter, Discover & Co. is a global financial services firm
and a market leader in securities, asset management, and credit and transaction
services. The Company has offices in New York, London, Tokyo, Hong Kong and
other principal financial centers around the world and has 390 securities branch
offices throughout the United States.
# # #
(See Attached Tables)
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ------------
<S> <C> <C> <C>
Net revenues
Securities $ 2,621 $ 1,775 48%
Asset Management 721 341 111%
Credit and Transaction Services 765 691 11%
------------ ------------
Consolidated net revenues $ 4,107 $ 2,807 46%
============ ============
Net income
Securities $ 359 $ 273 32%
Asset Management 185 73 153%
Credit and Transaction Services 134 104 29%
------------ ------------
Consolidated net income $ 678 $ 450 51%
============ ============
Preferred stock dividend requirements $ 15 $ 15 --
============ ============
Earnings applicable to common shares $ 663 $ 435 52%
============ ============
Merger and restructuring charges $ 0 $ 0 --
============ ============
Earnings applicable to common shares
after merger charges $ 663 $ 435 52%
============ ============
Earnings per common share
Primary $ 1.11 $ 0.74 50%
Fully diluted $ 1.09 $ 0.72 51%
Fully diluted, excluding
merger charges $ 1.09 $ 0.72 51%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.12 $ 0.73 53%
Average common shares outstanding
Primary 597,921,853 589,024,786
Fully diluted 610,187,894 601,310,453
Period end common shares outstanding 591,895,690 576,822,688
Return on common equity 22.8% 18.1%
Return on common equity excluding
merger and acquisition charges (1) 23.4% 18.3%
</TABLE>
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 May 31, 1997 Change
------------- ------------ ------------
<S> <C> <C> <C>
Net revenues
Securities $ 2,621 $ 2,145 22%
Asset Management 721 638 13%
Credit and Transaction Services 765 737 4%
---------- ------------
Consolidated net revenues $ 4,107 $ 3,520 17%
========== ============
Net income
Securities $ 359 $ 312 15%
Asset Management 185 149 24%
Credit and Transaction Services 134 129 4%
---------- ------------
Consolidated net income $ 678 $ 590 15%
========== ============
Preferred stock dividend requirements $ 15 $ 18 (17%)
========== ============
Earnings applicable to common shares $ 663 $ 572 16%
========== ============
Merger and restructuring charges $ 0 $ 63 *
========== ============
Earnings applicable to common shares
after merger charges $ 663 $ 509 30%
========== ============
Earnings per common share
Primary $ 1.11 $ 0.85 31%
Fully diluted $ 1.09 $ 0.83 31%
Fully diluted, excluding
merger charges $ 1.09 $ 0.94 16%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.12 $ 0.97 15%
Average common shares outstanding
Primary 597,921,853 598,282,535
Fully diluted 610,187,894 611,724,590
Period end common shares outstanding 591,895,690 586,342,798
Return on common equity 22.8% 18.3%
Return on common equity excluding
merger and acquisition charges (1) 23.4% 21.2%
</TABLE>
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ------------
<S> <C> <C> <C>
Net revenues
Securities $ 6,985 $ 5,865 19%
Asset Management 1,868 968 93%
Credit and Transaction Services 2,248 2,072 8%
------------ ------------
Consolidated net revenues $ 11,101 $ 8,905 25%
============ ============
Net income
Securities $ 1,029 $ 961 7%
Asset Management 421 216 95%
Credit and Transaction Services 389 334 16%
------------ ------------
Consolidated net income $ 1,839 $ 1,511 22%
============ ============
Preferred stock dividend requirements $ 52 $ 48 8%
============ ============
Earnings applicable to common shares $ 1,787 $ 1,463 22%
============ ============
Merger and restructuring charges $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 1,724 $ 1,463 18%
============ ============
Earnings per common share
Primary $ 2.91 $ 2.45 19%
Fully diluted $ 2.84 $ 2.41 18%
Fully diluted, excluding
merger charges $ 2.95 $ 2.41 22%
Fully diluted, excluding merger
and acquisition charges (1) $ 3.04 $ 2.44 25%
Average common shares outstanding
Primary 593,418,453 596,045,322
Fully diluted 607,875,297 608,420,103
Period end common shares outstanding 591,895,690 576,822,688
Return on common equity 20.6% 20.7%
Return on common equity excluding
merger and acquisition charges (1) 22.1% 21.0%
</TABLE>
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ -----------
<S> <C> <C> <C>
Investment banking $ 818 $ 486 68%
Principal transactions:
Trading 778 534 46%
Investments 206 29 610%
Commissions 559 417 34%
Fees:
Asset mgmt, distribution & admin fees 656 423 55%
Merchant and cardmember 433 366 18%
Servicing 196 207 (5%)
Interest and dividends 3,570 3,035 18%
Other 41 29 41%
------------ ------------
Total revenues $ 7,257 $ 5,526 31%
Interest expense 2,765 2,412 15%
Provision for consumer loan losses 385 307 25%
------------ ------------
Net revenues $ 4,107 $ 2,807 46%
------------ ------------
Compensation and benefits 1,849 1,170 58%
Occupancy and equipment 134 122 10%
Brokerage, clearing and exchange fees 130 76 71%
Info processing and communications 249 247 1%
Marketing and business development 293 247 19%
Professional services 127 84 51%
Other 219 165 33%
------------ ------------
Total non-interest expenses $ 3,001 $ 2,111 42%
------------ ------------
Income before income taxes 1,106 696 59%
Income tax expense 428 246 74%
------------ ------------
Net income before merger charges $ 678 $ 450 51%
============ ============
Preferred stock dividend requirements $ 15 $ 15 --
============ ============
Earnings applicable to common shares $ 663 $ 435 52%
============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 0 --
============ ============
Earnings applicable to common shares
after merger charges $ 663 $ 435 52%
============ ============
Earnings per common share:
Primary $ 1.11 $ 0.74 50%
Fully diluted $ 1.09 $ 0.72 51%
Fully diluted, excluding
merger charges $ 1.09 $ 0.72 51%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.12 $ 0.73 53%
Average common shares outstanding:
Primary 597,921,853 589,024,786
Fully diluted 610,187,894 601,310,453
Return on common equity 22.8% 18.1%
Return on common equity excluding
merger and acquisition charges (1) 23.4% 18.3%
</TABLE>
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 1
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 May 31, 1997 Change
--------------- ------------ ------------
<S> <C> <C> <C>
Investment banking $ 818 $ 581 41%
Principal transactions:
Trading 778 722 8%
Investments 206 136 51%
Commissions 559 484 15%
Fees:
Asset mgmt, distribution & admin 656 610 8%
Merchant and cardmember 433 424 2%
Servicing 196 186 5%
Interest and dividends 3,570 3,197 12%
Other 41 36 14%
------------ ------------
Total revenues $ 7,257 $ 6,376 14%
Interest expense 2,765 2,478 12%
Provision for consumer loan losses 385 378 2%
------------ ------------
Net revenues $ 4,107 $ 3,520 17%
------------ ------------
Compensation and benefits 1,849 1,505 23%
Occupancy and equipment 134 127 6%
Brokerage, clearing and exchange fees 130 113 15%
Info processing and communications 249 267 (7%)
Marketing and business development 293 274 7%
Professional services 127 99 28%
Other 219 178 23%
------------ ------------
Total non-interest expenses $ 3,001 $ 2,563 17%
------------ ------------
Income before income taxes 1,106 957 16%
Income tax expense 428 367 17%
------------ ------------
Net income before merger charges $ 678 $ 590 15%
============ ============
Preferred stock dividend requirements $ 15 $ 18 (17%)
============ ============
Earnings applicable to common shares $ 663 $ 572 16%
============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 63 *
============ ============
Earnings applicable to common shares
after merger charges $ 663 $ 509 30%
============ ============
Earnings per common share:
Primary $ 1.11 $ 0.85 31%
Fully diluted $ 1.09 $ 0.83 31%
Fully diluted, excluding
merger charges $ 1.09 $ 0.94 16%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.12 $ 0.97 15%
Average common shares outstanding:
Primary 597,921,853 598,282,535
Fully diluted 610,187,894 611,724,590
Return on common equity 22.8% 18.3%
Return on common equity excluding
merger and acquisition charges (1) 23.4% 21.2%
</TABLE>
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 1
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------- ----------
<S> <C> <C> <C>
Investment banking $ 1,921 $ 1,548 24%
Principal transactions:
Trading 2,369 2,037 16%
Investments 398 60 563%
Commissions 1,533 1,328 15%
Fees:
Asset mgmt, distribution & admin 1,853 1,243 49%
Merchant and cardmember 1,293 1,050 23%
Servicing 582 585 (1%)
Interest and dividends 10,136 8,679 17%
Other 108 94 15%
------------ ------------
Total revenues $ 20,193 $ 16,624 21%
Interest expense 7,952 6,927 15%
Provision for consumer loan losses 1,140 792 44%
------------ ------------
Net revenues $ 11,101 $ 8,905 25%
------------ ------------
Compensation and benefits 4,844 3,742 29%
Occupancy and equipment 389 361 8%
Brokerage, clearing and exchange fees 338 231 46%
Info processing and communications 786 716 10%
Marketing and business development 855 730 17%
Professional services 319 226 41%
Other 579 513 13%
------------ ------------
Total non-interest expenses $ 8,110 $ 6,519 24%
------------ ------------
Income before income taxes 2,991 2,386 25%
Income tax expense 1,152 875 32%
------------ ------------
Net income before merger charges $ 1,839 $ 1,511 22%
============ ============
Preferred stock dividend requirements $ 52 $ 48 8%
============ ============
Earnings applicable to common shares $ 1,787 $ 1,463 22%
============ ============
Merger and restructuring charges,
net of taxes $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 1,724 $ 1,463 18%
============ ============
Earnings per common share:
Primary $ 2.91 $ 2.45 19%
Fully diluted $ 2.84 $ 2.41 18%
Fully diluted, excluding
merger charges $ 2.95 $ 2.41 22%
Fully diluted, excluding merger
and acquisition charges (1) $ 3.04 $ 2.44 25%
Average common shares outstanding:
Primary 593,418,453 596,045,322
Fully diluted 607,875,297 608,420,103
Return on common equity 20.6% 20.7%
Return on common equity excluding
merger and acquisition charges (1) 22.1% 21.0%
</TABLE>
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 1
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ------------
<S> <C> <C> <C>
Investment banking $ 818 $ 486 68%
Principal transactions:
Trading 778 534 46%
Investments 206 29 610%
Commissions 550 417 32%
Asset mgmt, distribution & admin fees 656 423 55%
Interest and dividends 2,758 2,359 17%
Other 38 28 36%
------------ ------------
Total revenues $ 5,804 $ 4,276 36%
Interest expense 2,462 2,160 14%
------------ ------------
Net revenues $ 3,342 $ 2,116 58%
------------ ------------
Compensation and benefits 1,713 1,051 63%
Occupancy and equipment 118 108 9%
Brokerage, clearing and exchange fees 126 76 66%
Info processing and communications 141 124 14%
Marketing and business development 101 63 60%
Professional services 103 71 45%
Other 146 93 57%
------------ ------------
Total non-interest expenses $ 2,448 $ 1,586 54%
------------ ------------
Income before income taxes 894 530 69%
Income tax expense 350 184 90%
------------ ------------
Net income $ 544 $ 346 57%
============ ============
Comp & benefits as a % of net revenues 51% 50%
Non-comp exps as a % of net revenues 22% 25%
Profit margin (1) 16% 16%
(1) Net income as a % of net revenues.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
</TABLE>
F - 2
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 May 31, 1997 Change
------------ ------------ ------------
<S> <C> <C> <C>
Investment banking $ 818 $ 581 41%
Principal transactions:
Trading 778 722 8%
Investments 206 136 51%
Commissions 550 476 16%
Asset mgmt, distribution & admin fees 656 610 8%
Interest and dividends 2,758 2,416 14%
Other 38 33 15%
------------ ------------
Total revenues $ 5,804 $ 4,974 17%
Interest expense 2,462 2,191 12%
------------ ------------
Net revenues $ 3,342 $ 2,783 20%
------------ ------------
Compensation and benefits 1,713 1,369 25%
Occupancy and equipment 118 112 5%
Brokerage, clearing and exchange fees 126 109 16%
Info processing and communications 141 149 (5%)
Marketing and business development 101 100 1%
Professional services 103 83 24%
Other 146 114 28%
------------ ------------
Total non-interest expenses $ 2,448 $ 2,036 20%
------------ ------------
Income before income taxes 894 747 20%
Income tax expense 350 286 22%
------------ ------------
Net income $ 544 $ 461 18%
============ ============
Comp & benefits as a % of net revenues 51% 49%
Non-comp exps as a % of net revenues 22% 24%
Profit margin (1) 16% 17%
(1) Net income as a % of net revenues.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
</TABLE>
F - 2
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Nine Months Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ------------
<S> <C> <C> <C>
Investment banking $ 1,921 $ 1,548 24%
Principal transactions:
Trading 2,369 2,037 16%
Investments 398 60 563%
Commissions 1,515 1,328 14%
Asset mgmt, distribution & admin fees 1,853 1,243 49%
Interest and dividends 7,776 6,681 16%
Other 100 92 9%
------------ ------------
Total revenues $ 15,932 $ 12,989 23%
Interest expense 7,079 6,156 15%
------------ ------------
Net revenues $ 8,853 $ 6,833 30%
------------ ------------
Compensation and benefits 4,437 3,383 31%
Occupancy and equipment 343 319 8%
Brokerage, clearing and exchange fees 330 231 43%
Info processing and communications 432 369 17%
Marketing and business development 297 202 47%
Professional services 261 191 37%
Other 386 286 35%
------------ ------------
Total non-interest expenses $ 6,486 $ 4,981 30%
------------ ------------
Income before income taxes 2,367 1,852 28%
Income tax expense 917 675 36%
------------ ------------
Net income $ 1,450 $ 1,177 23%
============ ============
Comp & benefits as a % of net revenues 50% 50%
Non-comp exps as a % of net revenues 23% 23%
Profit margin (1) 16% 17%
(1) Net income as a % of net revenues.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
</TABLE>
F - 2
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ------------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 433 $ 366 18%
Servicing 196 207 (5%)
Commissions 9 0 *
Other 3 1 200%
--------- ---------
Total non-interest revenues $ 641 $ 574 12%
Interest revenue 812 676 20%
Interest expense 303 252 20%
--------- ---------
Net interest income 509 424 20%
Provision for consumer loan losses 385 307 25%
--------- ---------
Net credit income 124 117 6%
--------- ---------
Net revenues $ 765 $ 691 11%
--------- ---------
Compensation and benefits 136 119 14%
Occupancy and equipment 16 14 14%
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 108 123 (12%)
Marketing and business development 192 184 4%
Professional services 24 13 85%
Other 73 72 1%
--------- ---------
Total non-interest expenses $ 553 $ 525 5%
--------- ---------
Income before income taxes 212 166 28%
Income tax expense 78 62 26%
--------- ---------
Net income $ 134 $ 104 29%
========= =========
Comp & benefits as a % of net revenues 18% 17%
Non-comp exps as a % of net revenues 55% 59%
Profit margin (1) 18% 15%
</TABLE>
(1) Net income as a % of net revenues.
F - 3
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 May 31, 1997 Change
------------ ------------ ------------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 433 $ 424 2%
Servicing 196 186 5%
Commissions 9 8 13%
Other 3 3 --
----------- -----------
Total non-interest revenues $ 641 $ 621 3%
Interest revenue 812 781 4%
Interest expense 303 287 6%
----------- -----------
Net interest income 509 494 3%
Provision for consumer loan losses 385 378 2%
----------- -----------
Net credit income 124 116 7%
----------- -----------
Net revenues $ 765 $ 737 4%
----------- -----------
Compensation and benefits 136 136 --
Occupancy and equipment 16 15 7%
Brokerage, clearing and exchange fees 4 4 --
Info processing and communications 108 118 (8%)
Marketing and business development 192 174 10%
Professional services 24 16 50%
Other 73 64 14%
----------- -----------
Total non-interest expenses $ 553 $ 527 5%
----------- -----------
Income before income taxes 212 210 1%
Income tax expense 78 81 (4%)
----------- -----------
Net income $ 134 $ 129 4%
=========== ===========
Comp & benefits as a % of net revenues 18% 18%
Non-comp exps as a % of net revenues 55% 53%
Profit margin (1) 18% 18%
</TABLE>
(1) Net income as a % of net revenues.
F - 3
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Nine Months Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ------------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 1,293 $ 1,050 23%
Servicing 582 585 (1%)
Commissions 18 0 *
Other 8 2 300%
---------- ----------
Total non-interest revenues $ 1,901 $ 1,637 16%
Interest revenue 2,360 1,998 18%
Interest expense 873 771 13%
---------- ----------
Net interest income 1,487 1,227 21%
Provision for consumer loan losses 1,140 792 44%
---------- ----------
Net credit income 347 435 (20%)
---------- ----------
Net revenues $ 2,248 $ 2,072 8%
---------- ----------
Compensation and benefits 407 359 13%
Occupancy and equipment 46 42 10%
Brokerage, clearing and exchange fees 8 0 *
Info processing and communications 354 347 2%
Marketing and business development 558 528 6%
Professional services 58 35 66%
Other 193 227 (15%)
---------- ----------
Total non-interest expenses $ 1,624 $ 1,538 6%
---------- ----------
Income before income taxes 624 534 17%
Income tax expense 235 200 18%
---------- ----------
Net income $ 389 $ 334 16%
========== ==========
Comp & benefits as a % of net revenues 18% 17%
Non-comp exps as a % of net revenues 54% 57%
Profit margin (1) 17% 16%
</TABLE>
(1) Net income as a % of net revenues.
F - 3
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
-------------- ---------------- ------------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 542 $ 446 22%
Servicing 0 0 --
Commissions 9 0 *
Other 4 0 *
------------ ------------
Total non-interest revenues $ 555 $ 446 24%
Interest revenue 1,322 1,187 11%
Interest expense 507 455 11%
------------ ------------
Net interest income 815 732 11%
Provision for consumer loan losses 605 487 24%
------------ ------------
Net credit income 210 245 (14%)
------------ ------------
Net revenues $ 765 $ 691 11%
------------ ------------
Compensation and benefits 136 119 14%
Occupancy and equipment 16 14 14%
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 108 123 (12%)
Marketing and business development 192 184 4%
Professional services 24 13 85%
Other 73 72 1%
------------ ------------
Total non-interest expenses $ 553 $ 525 5%
------------ ------------
Income before income taxes 212 166 28%
Income tax expense 78 62 26%
------------ ------------
Net income $ 134 $ 104 29%
============ ============
Comp & benefits as a % of net revenues 18% 17%
Non-comp exps as a % of net revenues 55% 59%
Profit margin (1) 18% 15%
(1) Net income as a % of net revenues.
</TABLE>
F - 4
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 May 31, 1997 Change
------------- ------------- ----------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 542 $ 528 3%
Servicing 0 0 --
Commissions 9 8 13%
Other 4 4 --
---------- ----------
Total non-interest revenues $ 555 $ 540 3%
Interest revenue 1,322 1,299 2%
Interest expense 507 491 3%
---------- ----------
Net interest income 815 808 1%
Provision for consumer loan losses 605 611 (1%)
---------- ----------
Net credit income 210 197 7%
---------- ----------
Net revenues $ 765 $ 737 4%
---------- ----------
Compensation and benefits 136 136 --
Occupancy and equipment 16 15 7%
Brokerage, clearing and exchange fees 4 4 --
Info processing and communications 108 118 (8%)
Marketing and business development 192 174 10%
Professional services 24 16 50%
Other 73 64 14%
---------- ----------
Total non-interest expenses $ 553 $ 527 5%
---------- ----------
Income before income taxes 212 210 1%
Income tax expense 78 81 (4%)
---------- ----------
Net income $ 134 $ 129 4%
========== ==========
Comp & benefits as a % of net revenues 18% 18%
Non-comp exps as a % of net revenues 55% 53%
Profit margin (1) 18% 18%
(1) Net income as a % of net revenues.
</TABLE>
F - 4
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
Nine Months Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ -----------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 1,618 $ 1,237 31%
Servicing 0 0 --
Commissions 18 0 *
Other 9 2 350%
----------- ----------
Total non-interest revenues $ 1,645 $ 1,239 33%
Interest revenue 3,906 3,464 13%
Interest expense 1,484 1,348 10%
----------- ----------
Net interest income 2,422 2,116 14%
Provision for consumer loan losses 1,819 1,283 42%
----------- ----------
Net credit income 603 833 (28%)
----------- ----------
Net revenues $ 2,248 $ 2,072 8%
----------- ----------
Compensation and benefits 407 359 13%
Occupancy and equipment 46 42 10%
Brokerage, clearing and exchange fees 8 0 *
Info processing and communications 354 347 2%
Marketing and business development 558 528 6%
Professional services 58 35 66%
Other 193 227 (15%)
----------- ----------
Total non-interest expenses $ 1,624 $ 1,538 6%
----------- ----------
Income before income taxes 624 534 17%
Income tax expense 235 200 18%
----------- ----------
Net income $ 389 $ 334 16%
=========== ==========
Comp & benefits as a % of net revenues 18% 17%
Non-comp exps as a % of net revenues 54% 57%
Profit margin (1) 17% 16%
(1) Net income as a % of net revenues.
</TABLE>
F - 4
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
8/31/97 5/31/97 2/28/97
---------- ---------- -----------
<S> <C> <C> <C>
Investment banking $ 818 $ 581 $ 522
Principal transactions:
Trading 778 722 869
Investments 206 136 56
Commissions 559 484 490
Fees:
Asset mgmt, distribution & admin 656 610 587
Merchant and cardmember 433 424 436
Servicing 196 186 200
Interest and dividends 3,570 3,197 3,369
Other 41 36 31
-------- -------- ---------
Total revenues $ 7,257 $ 6,376 $ 6,560
Interest expense 2,765 2,478 2,709
Provision for consumer loan losses 385 378 377
-------- -------- ---------
Net revenues $ 4,107 $ 3,520 $ 3,474
-------- -------- ---------
Compensation and benefits 1,849 1,505 1,490
Occupancy and equipment 134 127 128
Brokerage, clearing and exchange fees 130 113 95
Info processing and communications 249 267 270
Marketing and business development 293 274 288
Professional services 127 99 93
Other 219 178 182
-------- -------- ---------
Total non-interest expenses $ 3,001 $ 2,563 $ 2,546
-------- -------- ---------
Income before income taxes 1,106 957 928
Income tax expense 428 367 357
-------- -------- ---------
Net income before merger charges $ 678 $ 590 $ 571
======== ======== =========
Preferred stock dividend requirements $ 15 $ 18 $ 19
======== ======== =========
Earnings applicable to common shares $ 663 $ 572 $ 552
======== ======== =========
Merger and restructuring charges,
net of taxes $ 0 $ 63 $ 0
======== ======== =========
Earnings applicable to common shares
after merger charges $ 663 $ 509 $ 552
======== ======== =========
</TABLE>
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
11/30/96 8/31/96 5/31/96
--------- -------- --------
<S> <C> <C> <C>
Investment banking $ 638 $ 486 $ 604
Principal transactions:
Trading 622 534 680
Investments 26 29 38
Commissions 440 417 463
Fees:
Asset mgmt, distribution & admin 474 423 430
Merchant and cardmember 413 366 354
Servicing 208 207 182
Interest and dividends 2,599 3,035 2,830
Other 34 29 37
------- ------- -------
Total revenues $ 5,454 $ 5,526 $ 5,618
Interest expense 2,013 2,412 2,251
Provision for consumer loan losses 392 307 238
------- ------- -------
Net revenues $ 3,049 $ 2,807 $ 3,129
------- ------- -------
Compensation and benefits 1,310 1,170 1,314
Occupancy and equipment 130 122 119
Brokerage, clearing and exchange fees 85 76 78
Info processing and communications 269 247 241
Marketing and business development 278 247 247
Professional services 105 84 73
Other 168 165 167
------- ------- -------
Total non-interest expenses $ 2,345 $ 2,111 $ 2,239
------- ------- -------
Income before income taxes 704 696 890
Income tax expense 252 246 322
------- ------- -------
Net income before merger charges $ 452 $ 450 $ 568
======= ======= =======
Preferred stock dividend requirements $ 18 $ 15 $ 17
======= ======= =======
Earnings applicable to common shares $ 434 $ 435 $ 551
======= ======= =======
Merger and restructuring charges,
net of taxes $ 0 $ 0 $ 0
======= ======= =======
Earnings applicable to common shares
after merger charges $ 434 $ 435 $ 551
======= ======= =======
</TABLE>
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
2/29/96 11/30/95 8/31/95
-------- -------- --------
<S> <C> <C> <C>
Investment banking $ 458 $ 551 $ 398
Principal transactions:
Trading 823 330 478
Investments (7) 39 69
Commissions 448 414 395
Fees:
Asset mgmt, distribution & admin 390 350 347
Merchant and cardmember 330 306 283
Servicing 196 173 178
Interest and dividends 2,814 2,562 2,742
Other 28 21 24
------- ------- -------
Total revenues $ 5,480 $ 4,746 $ 4,914
Interest expense 2,264 1,917 2,131
Provision for consumer loan losses 247 256 166
------- ------- -------
Net revenues $ 2,969 $ 2,573 $ 2,617
------- ------- -------
Compensation and benefits 1,258 1,110 1,084
Occupancy and equipment 120 116 116
Brokerage, clearing and exchange fees 77 72 73
Info processing and communications 228 241 219
Marketing and business development 236 255 215
Professional services 69 60 58
Other 181 170 171
------- ------- -------
Total non-interest expenses $ 2,169 $ 2,024 $ 1,936
------- ------- -------
Income before income taxes 800 549 681
Income tax expense 307 194 237
------- ------- -------
Net income before merger charges $ 493 $ 355 $ 444
======= ======= =======
Preferred stock dividend requirements $ 16 $ 16 $ 17
======= ======= =======
Earnings applicable to common shares $ 477 $ 339 $ 427
======= ======= =======
Merger and restructuring charges,
net of taxes $ 0 $ 0 $ 0
======= ======= =======
Earnings applicable to common shares
after merger charges $ 477 $ 339 $ 427
======= ======= =======
</TABLE>
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
5/31/95
--------
Investment banking $ 321
Principal transactions:
Trading 556
Investments (6)
Commissions 386
Fees:
Asset mgmt, distribution & admin 345
Merchant and cardmember 260
Servicing 175
Interest and dividends 2,549
Other 35
-------
Total revenues $ 4,621
Interest expense 2,040
Provision for consumer loan losses 126
-------
Net revenues $ 2,455
-------
Compensation and benefits 960
Occupancy and equipment 109
Brokerage, clearing and exchange fees 77
Info processing and communications 219
Marketing and business development 187
Professional services 63
Other 184
-------
Total non-interest expenses $ 1,799
-------
Income before income taxes 656
Income tax expense 240
-------
Net income before merger charges $ 416
=======
Preferred stock dividend requirements $ 16
=======
Earnings applicable to common shares $ 400
=======
Merger and restructuring charges,
net of taxes $ 0
=======
Earnings applicable to common shares
after merger charges $ 400
=======
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
8/31/97 5/31/97 2/28/97
------- ------- -------
<S> <C> <C> <C>
Investment banking $ 818 $ 581 $ 522
Principal transactions:
Trading 778 722 869
Investments 206 136 56
Commissions 550 476 489
Asset mgmt, distribution & admin fees 656 610 587
Interest and dividends 2,758 2,416 2,602
Other 38 33 29
------- ------- -------
Total revenues $ 5,804 $ 4,974 $ 5,154
Interest expense 2,462 2,191 2,426
------- ------- -------
Net revenues $ 3,342 $ 2,783 $ 2,728
------- ------- -------
Compensation and benefits 1,713 1,369 1,355
Occupancy and equipment 118 112 113
Brokerage, clearing and exchange fees 126 109 95
Info processing and communications 141 149 142
Marketing and business development 101 100 96
Professional services 103 83 75
Other 146 114 126
------- ------- -------
Total non-interest expenses $ 2,448 $ 2,036 $ 2,002
------- ------- -------
Income before income taxes 894 747 726
Income tax expense 350 286 281
------- ------- -------
Net income $ 544 $ 461 $ 445
======= ======= =======
</TABLE>
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
11/30/96 8/31/96 5/31/96
-------- ------- -------
<S> <C> <C> <C>
Investment banking $ 638 $ 486 $ 604
Principal transactions:
Trading 622 534 680
Investments 26 29 38
Commissions 440 417 463
Asset mgmt, distribution & admin fees 474 423 430
Interest and dividends 1,899 2,359 2,167
Other 33 28 36
------- ------- -------
Total revenues $ 4,132 $ 4,276 $ 4,418
Interest expense 1,753 2,160 2,004
------- ------- -------
Net revenues $ 2,379 $ 2,116 2,414
------- ------- -------
Compensation and benefits 1,186 1,051 1,195
Occupancy and equipment 113 108 105
Brokerage, clearing and exchange fees 85 76 78
Info processing and communications 143 124 126
Marketing and business development 94 63 74
Professional services 89 71 65
Other 104 93 84
------- ------- -------
Total non-interest expenses $ 1,814 $ 1,586 $ 1,727
------- ------- -------
Income before income taxes 565 530 687
Income tax expense 200 184 248
------- ------- -------
Net income $ 365 $ 346 $ 439
======= ======= =======
</TABLE>
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
2/29/96 11/30/95 8/31/95
------- -------- -------
<S> <C> <C> <C>
Investment banking $ 458 $ 551 $ 398
Principal transactions:
Trading 823 330 478
Investments (7) 39 69
Commissions 448 414 395
Asset mgmt, distribution & admin fees 390 350 347
Interest and dividends 2,155 1,943 2,134
Other 28 22 23
------- -------- -------
Total revenues $ 4,295 $ 3,649 $ 3,844
Interest expense 1,992 1,677 1,902
------- -------- -------
Net revenues $ 2,303 $ 1,972 $ 1,942
------- -------- -------
Compensation and benefits 1,137 999 979
Occupancy and equipment 106 103 104
Brokerage, clearing and exchange fees 77 72 73
Info processing and communications 119 126 113
Marketing and business development 65 50 50
Professional services 55 48 47
Other 109 103 99
------- -------- -------
Total non-interest expenses $ 1,668 $ 1,501 $ 1,465
------- -------- -------
Income before income taxes 635 471 477
Income tax expense 243 164 161
------- -------- -------
Net income $ 392 $ 307 $ 316
======= ======== =======
</TABLE>
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
5/31/95
-------
<S> <C>
Investment banking $ 321
Principal transactions:
Trading 556
Investments (6)
Commissions 386
Asset mgmt, distribution & admin fees 345
Interest and dividends 1,983
Other 33
-------
Total revenues $ 3,618
Interest expense 1,818
-------
Net revenues $ 1,800
-------
Compensation and benefits 861
Occupancy and equipment 98
Brokerage, clearing and exchange fees 77
Info processing and communications 121
Marketing and business development 61
Professional services 50
Other 108
-------
Total non-interest expenses $ 1,376
-------
Income before income taxes 424
Income tax expense 152
-------
Net income $ 272
=======
</TABLE>
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
F - 6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
8/31/97 5/31/97 2/28/97
------- ------- --------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 542 $ 528 $ 548
Servicing 0 0 0
Commissions 9 8 1
Other 4 4 1
------- ------- --------
Total non-interest revenues $ 555 $ 540 $ 550
Interest revenue 1,322 1,299 1,285
Interest expense 507 491 486
------- ------- --------
Net interest income 815 808 799
Provision for consumer loan losses 605 611 603
------- ------- --------
Net credit income 210 197 196
------- ------- --------
Net revenues $ 765 $ 737 $ 746
------- ------- --------
Compensation and benefits 136 136 135
Occupancy and equipment 16 15 15
Brokerage, clearing and exchange fees 4 4 0
Info processing and communications 108 118 128
Marketing and business development 192 174 192
Professional services 24 16 18
Other 73 64 56
------- ------- --------
Total non-interest expenses $ 553 $ 527 $ 544
------- ------- --------
Income before income taxes 212 210 202
Income tax expense 78 81 76
------- ------- --------
Net income $ 134 $ 129 $ 126
======= ======= ========
</TABLE>
F - 7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
11/30/96 8/31/96 5/31/96
-------- ------- -------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 510 $ 446 $ 417
Servicing 0 0 0
Commissions 0 0 0
Other 0 0 2
------- ------- -------
Total non-interest revenues $ 510 $ 446 $ 419
Interest revenue 1,221 1,187 1,150
Interest expense 463 455 445
------- ------- -------
Net interest income 758 732 705
Provision for consumer loan losses 598 487 409
------- ------- -------
Net credit income 160 245 296
------- ------- -------
Net revenues $ 670 $ 691 $ 715
------- ------- -------
Compensation and benefits 124 119 119
Occupancy and equipment 17 14 14
Brokerage, clearing and exchange fees 0 0 0
Info processing and communications 126 123 115
Marketing and business development 184 184 173
Professional services 16 13 8
Other 64 72 83
------- ------- -------
Total non-interest expenses $ 531 $ 525 $ 512
------- ------- -------
Income before income taxes 139 166 203
Income tax expense 52 62 74
------- ------- -------
Net income $ 87 $ 104 $ 129
======= ======= =======
</TABLE>
F - 7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
2/29/96 11/30/95 8/31/95
------- -------- -------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 374 $ 344 $ 320
Servicing 0 0 0
Commissions 0 0 0
Other 0 1 1
-------- ------- -------
Total non-interest revenues $ 374 $ 345 $ 321
Interest revenue 1,127 1,050 1,023
Interest expense 448 413 402
-------- ------- -------
Net interest income 679 637 621
Provision for consumer loan losses 387 380 266
-------- ------- -------
Net credit income 292 257 355
-------- ------- -------
Net revenues $ 666 $ 602 $ 676
-------- ------- -------
Compensation and benefits 121 111 105
Occupancy and equipment 14 13 12
Brokerage, clearing and exchange fees 0 0 0
Info processing and communications 109 115 106
Marketing and business development 171 205 165
Professional services 14 12 11
Other 72 68 73
-------- ------- -------
Total non-interest expenses $ 501 $ 524 $ 472
-------- ------- -------
Income before income taxes 165 78 204
Income tax expense 64 30 76
-------- ------- -------
Net income $ 101 $ 48 $ 128
======== ======= =======
</TABLE>
F - 7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
5/31/95
--------
<S> <C>
Fees:
Merchant and cardmember $ 290
Servicing 0
Commissions 0
Other 1
-------
Total non-interest revenues $ 291
Interest revenue 981
Interest expense 393
-------
Net interest income 588
Provision for consumer loan losses 225
-------
Net credit income 363
-------
Net revenues $ 654
-------
Compensation and benefits 99
Occupancy and equipment 11
Brokerage, clearing and exchange fees 0
Info processing and communications 98
Marketing and business development 126
Professional services 13
Other 75
-------
Total non-interest expenses $ 422
-------
Income before income taxes 232
Income tax expense 88
-------
Net income $ 144
=======
</TABLE>
F - 7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ----------
<S> <C> <C> <C>
MSDWD
Period end common shares outstanding 591,895,690 576,822,688 3%
Book value per common share $ 20.25 $ 16.85 20%
Shareholder's equity (millions) $ 12,787 $ 10,513 22%
Total capital (millions) (1) $ 33,417 $ 29,241 14%
SECURITIES ($ billions)
Brokerage
Dean Witter account executives 9,634 8,819 9%
Dean Witter client assets $ 288 $ 234 23%
Capital markets (2)
Mergers and acquisitions announced
transactions (3)
MSDWD global market volume $ 146.8 $ 133.2 10%
Rank 3 1
Worldwide equity & related issues (3)
MSDWD global market volume $ 19.6 $ 15.4 27%
Rank 1 3
ASSET MANAGEMENT (billions)
Assets under mgmt and administration
Products offered primarily to indivs
Mutual funds
Equity $ 65 $ 34 91%
Fixed income 51 24 113%
Money markets 29 24 21%
----------- -----------
Total mutual funds 145 82 77%
ICS Assets 13 10 30%
Other 28 9 211%
Products offered primarily to
institutional clients
Mutual funds 45 32 41%
Separate accts, pooled vehicle and
other arrangements 94 70 34%
Total assets under management $ 325 $ 203 60%
Global assets under custody $ 403 $ 132 205%
</TABLE>
(1) Includes Capital Units and non-current portion of long-term debt.
(2) Source: Securities Data Corp.
(3) Information is year to date and stated on a calendar year basis.
F - 8
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Percentage
Aug 31, 1997 May 31, 1997 Change
------------ ------------ ----------
<S> <C> <C> <C>
MSDWD
Period end common shares outstanding 591,895,690 586,342,798 1%
Book value per common share $ 20.25 $ 19.37 5%
Shareholder's equity (millions) $ 12,787 $ 12,156 5%
Total capital (millions) (1) $ 33,417 $ 33,661 (1%)
SECURITIES ($ billions)
Brokerage
Dean Witter account executives 9,634 9,373 3%
Dean Witter client assets $ 288 $ 271 6%
Capital markets (2)
Mergers and acquisitions announced
transactions (3)
MSDWD global market volume $ 146.8 $ 85.6 71%
Rank 3 3
Worldwide equity & related issues (3)
MSDWD global market volume $ 19.6 $ 9.7 102%
Rank 1 2
ASSET MANAGEMENT (billions)
Assets under mgmt and administration
Products offered primarily to indivs
Mutual funds
Equity $ 65 $ 62 5%
Fixed income 51 49 4%
Money markets 29 28 4%
------------ ------------
Total mutual funds 145 139 4%
ICS Assets 13 12 8%
Other 28 23 22%
Products offered primarily to
institutional clients
Mutual funds 45 41 10%
Separate accts, pooled vehicle and
other arrangements 94 88 7%
Total assets under management $ 325 $ 303 7%
Global assets under custody $ 403 $ 410 (2%)
</TABLE>
(1) Includes Capital Units and non-current portion of long-term debt.
(2) Source: Securities Data Corp.
(3) Information is year to date and stated on a calendar year basis.
F-8
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
Quarter Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ----------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period End $ 21,493 $ 18,828 14%
Average 21,684 18,448 18%
Managed consumer loans (1)
Period End $ 34,868 $ 32,159 8%
Average $ 34,620 $ 31,401 10%
Interest yield 14.83% 14.80% 0.03 bp
Interest spread 8.62% 8.61% 0.01 bp
Net charge-off rate 6.61% 5.55% 1.06 bp
Delinquency rate (over 30 days) 7.47% 6.42% 1.05 bp
General purpose credit card
accounts (in millions) 40 38
NOVUS Network new merchant
locations (in thousands) 101 109
(1) Includes owned and securitized consumer loans
F - 9
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
Quarter Ended Percentage
Aug 31, 1997 May 31, 1997 Change
------------ ------------ ----------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period End $ 21,493 $ 21,143 2%
Average 21,684 20,937 4%
Managed consumer loans (1)
Period End $ 34,868 $ 34,167 2%
Average $ 34,620 $ 34,032 2%
Interest yield 14.83% 14.85% (0.02 bp)
Interest spread 8.62% 8.72% (0.10 bp)
Net charge-off rate 6.61% 7.07% (0.46 bp)
Delinquency rate (over 30 days) 7.47% 6.90% 0.57 bp
General purpose credit card
accounts (in millions) 40 40
NOVUS Network new merchant
locations (in thousands) 101 108
(1) Includes owned and securitized consumer loans
F - 9
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
Nine Months Ended Percentage
Aug 31, 1997 Aug 31, 1996 Change
------------ ------------ ------------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period End
Average
Managed consumer loans (1)
Period End
Average
Interest yield 14.84% 14.88% (0.04 bp)
Interest spread 8.69% 8.57% 0.12 bp
Net charge-off rate 6.86% 5.19% 1.67 bp
Delinquency rate (over 30 days) 7.47% 6.42% 1.05 bp
General purpose credit card
accounts (in millions) 40 38
NOVUS Network new merchant
locations (in thousands) 302 302
(1) Includes owned and securitized consumer loans
F - 9
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