<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): June 25, 1997
Morgan Stanley, Dean Witter, Discover & Co.
-------------------------------------------
(Exact name of Registrant as specified
in its charter)
Delaware 1-11758 36-3145972
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(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 June 25, 1997, Morgan Stanley, Dean Witter, Discover & Co. (the
"Registrant") released financial information with respect to the quarter ended
May 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 June 25, 1997
containing financial information for the quarter
ended May 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: June 25, 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 JUNE 25, 1997
Commission File Number 1-11758
<PAGE>
Exhibit Index
-------------
Exhibit No. Description Page
- ------------- ----------- ----
99.1 Press release of the Registrant dated
June 25, 1997 containing financial
information for the quarter ended
May 31, 1997.
<PAGE>
CONTACT: INVESTOR RELATIONS MEDIA RELATIONS EXHIBIT 99.1
JOHN ANDREWS TIMOTHY LEE
212-762-8131 212-392-8709
JEANMARIE MCFADDEN
212-761-4059
MORGAN STANLEY, DEAN WITTER, DISCOVER REPORTS
SECOND QUARTER NET INCOME UP 4% TO $590 MILLION
BEFORE MERGER-RELATED EXPENSES;
NET REVENUES INCREASE BY 12%
NEW YORK, June 25, 1997--Morgan Stanley, Dean Witter, Discover & Co.
(NYSE:MWD) today reported that net income for the second fiscal quarter, ended
May 31, 1997, excluding the costs associated with its just completed merger,
was $590 million--up 4 percent from last year's second quarter pro forma $568
million. Earnings per share, excluding merger costs, were $.94 on a fully-
diluted basis, 4 percent greater than the $.90 in last year's second quarter.
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.
Second quarter fully-diluted earnings per share, including the effects of
expenses associated with the merger, were $.83. Second quarter fully-diluted
earnings per share, excluding both the expenses associated with the merger and
the amortization of goodwill from previous acquisitions, were $.97--5 percent
ahead of last year's second quarter comparable per share earnings of $.92.
Second quarter net revenues (total revenues less interest expense and the
provision for loan losses) were $3,517 million, a 12 percent advance over last
year's second quarter of $3,128 million. The annualized return on average
common equity for the second fiscal quarter of 1997 was 18.3 percent.
Philip J. Purcell, Chairman, and John J. Mack, President, said in a joint
statement, "We're off to an excellent start. We're very pleased with the
strong revenues in our three primary businesses--securities, asset management
and credit services. There's been a lot to do over the last four months, and
the transition effort has gone exceptionally well. We have a great new company
with record operating results, and we couldn't be more excited about the
future."
Net revenues for the first six months of fiscal 1997 increased 15 percent to
$6,989 million. Excluding merger-related expenses, six month net income of
$1,161 million increased 9 percent over last year's pro forma $1,061 million.
Six-month fully-diluted earnings per share, excluding merger-related expenses,
were $1.85, up 10% from last year's $1.68. Including merger-related expenses,
fully-diluted earnings per share were $1.74.
SECURITIES
The Securities business posted quarterly net income of $312 million, down 13
percent from the record quarter a year earlier:
. Investment banking revenues of $581 million, down slightly from the prior
year period, reflected a decline in equity and debt underwriting revenues
due to lower levels of market activity partially offset by continued
strength in mergers and acquisitions. The Company maintained a leadership
position in announced global M&A transactions. Additionally, it ranked
first in Europe and second worldwide in equity and equity-related
underwritings. The Company also ranked second in both high yield and U.S.
investment grade debt underwriting.*
. Institutional securities reported a strong second quarter, with record
revenues in foreign exchange and near-record revenues in equities.
* Source: Securities Data Corp.--January 1 to May 31, 1997
<PAGE>
. The number of Dean Witter account executives grew to 9,373 at quarter
end, up 237 for the quarter and 648 from a year ago.
. Dean Witter added a record 340,000 new client accounts during the first
six months of the fiscal year, and total client assets rose by $17
billion to a record $271 billion.
ASSET MANAGEMENT
Asset management net income climbed 82 percent to $149 million from last
year's second quarter--buoyed by a substantial mark-to-market gain in the
Company's merchant banking portfolio:
. The Company had approximately $303 billion of assets under management and
administration at quarter end.
. Asset management products offered by the Company to individuals primarily
through InterCapital and Van Kampen American Capital rose to $174
billion--up $6 billion for the quarter and $9 billion for the fiscal
year-to-date.
. Asset management products offered by the Company to institutions
primarily through Morgan Stanley increased $7 billion for the quarter and
by $14 billion for the fiscal year-to-date--to stand at $129 billion.
. Assets under supervision rose to $410 billion reflecting both business
growth and the April acquisition of Barclay's global custody business.
Merchant Banking generated second quarter revenues of $129 million primarily
due to a mark-to-market gain on its holdings of Fort Howard Corp., which
announced that it will merge with James River Corp.
CREDIT AND TRANSACTION SERVICES
Credit and Transaction Services reported strong revenue growth for the
second quarter compared to a year ago. However, net revenues of $737 million
increased only 3 percent from the second quarter of 1996 due to a 49 percent
increase in the provision for loan losses on a managed loan basis. The
increase in the provision was due to higher write-offs.
. Merchant and cardmember fees were $528 million on a managed loan basis,
up 27 percent from last year's second quarter. The increase was
primarily the result of the pricing actions taken in 1996.
. Managed loans of $34.2 billion were up $3.4 billion, or 11 percent, from
the second quarter of 1996.
. Net interest income on a managed loan basis rose 15 percent over last
year's second quarter to $808 million, due to both loan growth and a
modest improvement in the spread on managed consumer loans.
. The NOVUS Network enrolled more than 100,000 new merchant locations
during the quarter and more than 425,000 over the last twelve months.
Merchants signed by NOVUS during the second quarter included Brooks
Brothers, The Baltimore Orioles, the Museum Co. and Garden Botanica.
. NOVUS also announced a co-branded card program with IGA USA, the
nation's largest voluntary supermarket network.
Total capital (stockholders' equity and long-term debt) at May 31, 1997 was
$33.7 billion, including $12.2 billion of common and preferred stockholders'
equity. Book value per common share was $19.37, based on quarter-end shares of
586,342,798.
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 381
securities branch offices throughout the United States.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
Quarter Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Net revenues
Securities $ 2,145 $ 2,067 4%
Asset Management 635 346 84%
Credit and Transaction Services 737 715 3%
------------ ------------
Consolidated net revenues $ 3,517 $ 3,128 12%
============ ============
Net income
Securities $ 312 $ 357 (13%)
Asset Management 149 82 82%
Credit and Transaction Services 129 129 --
------------ ------------
Consolidated net income $ 590 $ 568 4%
============ ============
Preferred stock dividend requirements$ 18 $ 17 6%
============ ============
Earnings applicable to common shares $ 572 $ 551 4%
============ ============
Merger and restructuring charges $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 509 $ 551 (8%)
============ ============
Earnings per common share
Primary $ 0.85 $ 0.92 (8%)
Fully diluted $ 0.83 $ 0.90 (8%)
Fully diluted, excluding
merger charges $ 0.94 $ 0.90 4%
Fully diluted, excluding merger
and acquisition charges (1) $ 0.97 $ 0.92 5%
Average common shares outstanding
Primary 598,282,535 597,949,948
Fully diluted 611,724,590 610,894,787
Period end common shares outstanding 586,342,798 581,929,723
Return on common equity 18.3% 23.4%
Return on common equity excluding
merger and acquisition charges (1) 21.2% 23.7%
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
Quarter Ended Percentage
May 31, 1997 Feb 28, 1997 Change
------------ ------------ ------------
Net revenues
Securities $ 2,145 $ 2,219 (3%)
Asset Management 635 507 25%
Credit and Transaction Services 737 746 (1%)
------------ ------------
Consolidated net revenues $ 3,517 $ 3,472 1%
============ ============
Net income
Securities $ 312 $ 358 (13%)
Asset Management 149 87 71%
Credit and Transaction Services 129 126 2%
------------ ------------
Consolidated net income $ 590 $ 571 3%
============ ============
Preferred stock dividend requirements$ 18 $ 19 (5%)
============ ============
Earnings applicable to common shares $ 572 $ 552 4%
============ ============
Merger and restructuring charges $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 509 $ 552 (8%)
============ ============
Earnings per common share
Primary $ 0.85 $ 0.93 (9%)
Fully diluted $ 0.83 $ 0.91 (9%)
Fully diluted, excluding
merger charges $ 0.94 $ 0.91 3%
Fully diluted, excluding merger
and acquisition charges (1) $ 0.97 $ 0.95 2%
Average common shares outstanding
Primary 598,282,535 593,495,440
Fully diluted 611,724,590 606,621,425
Period end common shares outstanding 586,342,798 582,335,632
Return on common equity 18.3% 20.7%
Return on common equity excluding
merger and acquisition charges (1) 21.2% 21.6%
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
Six Months Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Net revenues
Securities $ 4,364 $ 4,091 7%
Asset Management 1,142 623 83%
Credit and Transaction Services 1,483 1,381 7%
------------ ------------
Consolidated net revenues $ 6,989 $ 6,095 15%
============ ============
Net income
Securities $ 670 $ 688 (3%)
Asset Management 236 143 65%
Credit and Transaction Services 255 230 11%
------------ ------------
Consolidated net income $ 1,161 $ 1,061 9%
============ ============
Preferred stock dividend requirements$ 37 $ 33 12%
============ ============
Earnings applicable to common shares $ 1,124 $ 1,028 9%
============ ============
Merger and restructuring charges $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 1,061 $ 1,028 3%
============ ============
Earnings per common share
Primary $ 1.78 $ 1.71 4%
Fully diluted $ 1.74 $ 1.68 4%
Fully diluted, excluding
merger charges $ 1.85 $ 1.68 10%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.91 $ 1.69 13%
Average common shares outstanding
Primary 595,600,065 600,468,484
Fully diluted 609,524,101 614,316,613
Period end common shares outstanding 586,342,798 581,929,723
Return on common equity 19.5% 22.1%
Return on common equity excluding
merger and acquisition charges (1) 21.4% 22.3%
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
Quarter Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Investment banking $ 581 $ 604 (4%)
Principal transactions:
Trading 722 680 6%
Investments 136 38 *
Commissions 484 463 5%
Fees:
Asset mgmt, distribution & admin 610 430 42%
Merchant and cardmember 424 354 20%
Servicing 187 185 1%
Interest and dividends 3,197 2,830 13%
Other 35 34 3%
------------ ------------
Total revenues $ 6,376 $ 5,618 13%
Interest expense 2,478 2,251 10%
Provision for consumer loan losses 381 239 59%
------------ ------------
Net revenues $ 3,517 $ 3,128 12%
------------ ------------
Compensation and benefits 1,505 1,314 15%
Occupancy and equipment 127 119 7%
Brokerage, clearing and exchange fees 113 78 45%
Info processing and communications 267 241 11%
Marketing and business development 274 247 11%
Professional services 99 73 36%
Other 175 166 5%
------------ ------------
Total non-interest expenses $ 2,560 $ 2,238 14%
------------ ------------
Income before income taxes 957 890 8%
Income tax expense 367 322 14%
------------ ------------
Net income before merger charges $ 590 $ 568 4%
============ ============
Preferred stock dividend requirements $ 18 $ 17 6%
============ ============
Earnings applicable to common shares $ 572 $ 551 4%
============ ============
Merger and restructuring charges,
net of taxes $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 509 $ 551 (8%)
============ ============
Earnings per common share:
Primary $ 0.85 $ 0.92 (8%)
Fully diluted $ 0.83 $ 0.90 (8%)
Fully diluted, excluding
merger charges $ 0.94 $ 0.90 4%
Fully diluted, excluding merger
and acquisition charges (1) $ 0.97 $ 0.92 5%
Average common shares outstanding:
Primary 598,282,535 597,949,948
Fully diluted 611,724,590 610,894,787
Return on common equity 18.3% 23.4%
Return on common equity excluding
merger and acquisition charges (1) 21.2% 23.7%
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
F-1
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
Quarter Ended Percentage
May 31, 1997 Feb 28, 1997 Change
------------ ------------ ------------
Investment banking $ 581 $ 522 11%
Principal transactions:
Trading 722 869 (17%)
Investments 136 56 143%
Commissions 484 490 (1%)
Fees:
Asset mgmt, distribution & admin 610 587 4%
Merchant and cardmember 424 436 (3%)
Servicing 187 202 (7%)
Interest and dividends 3,197 3,369 (5%)
Other 35 29 21%
------------ ------------
Total revenues $ 6,376 $ 6,560 (3%)
Interest expense 2,478 2,709 (9%)
Provision for consumer loan losses 381 379 1%
------------ ------------
Net revenues $ 3,517 $ 3,472 1%
------------ ------------
Compensation and benefits 1,505 1,490 1%
Occupancy and equipment 127 128 (1%)
Brokerage, clearing and exchange fees 113 95 19%
Info processing and communications 267 270 (1%)
Marketing and business development 274 288 (5%)
Professional services 99 93 6%
Other 175 180 (3%)
------------ ------------
Total non-interest expenses $ 2,560 $ 2,544 1%
------------ ------------
Income before income taxes 957 928 3%
Income tax expense 367 357 3%
------------ ------------
Net income before merger charges $ 590 $ 571 3%
============ ============
Preferred stock dividend requirements $ 18 $ 19 (5%)
============ ============
Earnings applicable to common shares $ 572 $ 552 4%
============ ============
Merger and restructuring charges,
net of taxes $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 509 $ 552 (8%)
============ ============
Earnings per common share:
Primary $ 0.85 $ 0.93 (9%)
Fully diluted $ 0.83 $ 0.91 (9%)
Fully diluted, excluding
merger charges $ 0.94 $ 0.91 3%
Fully diluted, excluding merger
and acquisition charges (1) $ 0.97 $ 0.95 2%
Average common shares outstanding:
Primary 598,282,535 593,495,440
Fully diluted 611,724,590 606,621,425
Return on common equity 18.3% 20.7%
Return on common equity excluding
merger and acquisition charges (1) 21.2% 21.6%
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
F-1
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
Six Months Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Investment banking $ 1,103 $ 1,062 4%
Principal transactions:
Trading 1,591 1,503 6%
Investments 192 31 *
Commissions 974 911 7%
Fees:
Asset mgmt, distribution & admin 1,197 820 46%
Merchant and cardmember 860 684 26%
Servicing 389 384 1%
Interest and dividends 6,566 5,644 16%
Other 64 60 7%
------------ ------------
Total revenues $ 12,936 $ 11,099 17%
Interest expense 5,187 4,515 15%
Provision for consumer loan losses 760 489 55%
------------ ------------
Net revenues $ 6,989 $ 6,095 15%
------------ ------------
Compensation and benefits 2,995 2,572 16%
Occupancy and equipment 255 239 7%
Brokerage, clearing and exchange fees 208 155 34%
Info processing and communications 537 469 14%
Marketing and business development 562 483 16%
Professional services 192 142 35%
Other 355 345 3%
------------ ------------
Total non-interest expenses $ 5,104 $ 4,405 16%
------------ ------------
Income before income taxes 1,885 1,690 12%
Income tax expense 724 629 15%
------------ ------------
Net income before merger charges $ 1,161 $ 1,061 9%
============ ============
Preferred stock dividend requirements $ 37 $ 33 12%
============ ============
Earnings applicable to common shares $ 1,124 $ 1,028 9%
============ ============
Merger and restructuring charges,
net of taxes $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 1,061 $ 1,028 3%
============ ============
Earnings per common share:
Primary $ 1.78 $ 1.71 4%
Fully diluted $ 1.74 $ 1.68 4%
Fully diluted, excluding
merger charges $ 1.85 $ 1.68 10%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.91 $ 1.69 13%
Average common shares outstanding:
Primary 595,600,065 600,468,484
Fully diluted 609,524,101 614,316,613
Return on common equity 19.5% 22.1%
Return on common equity excluding
merger and acquisition charges (1) 21.4% 22.3%
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
F-1
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
Quarter Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Investment banking $ 581 $ 604 (4%)
Principal transactions:
Trading 722 680 6%
Investments 136 38 *
Commissions 476 463 3%
Fees:
Asset mgmt, distribution & admin 610 430 42%
Servicing 1 3 (67%)
Interest and dividends 2,416 2,167 11%
Other 32 33 (3%)
------------ ------------
Total revenues $ 4,974 $ 4,418 13%
Interest expense 2,191 2,004 9%
Provision for consumer loan losses 3 1 *
------------ ------------
Net revenues $ 2,780 $ 2,413 15%
------------ ------------
Compensation and benefits 1,369 1,195 15%
Occupancy and equipment 112 105 7%
Brokerage, clearing and exchange fees 109 78 40%
Info processing and communications 149 126 18%
Marketing and business development 100 74 35%
Professional services 83 65 28%
Other 111 83 34%
------------ ------------
Total non-interest expenses $ 2,033 $ 1,726 18%
------------ ------------
Income before income taxes 747 687 9%
Income tax expense 286 248 15%
------------ ------------
Net income $ 461 $ 439 5%
============ ============
Comp & benefits as a % of net revenues 49% 50%
Non-comp exps as a % of net revenues 24% 22%
Profit margin (1) 17% 18%
(1) Net income as a % of net revenues.
F-2
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
Quarter Ended Percentage
May 31, 1997 Feb 28, 1997 Change
------------ ------------ ------------
Investment banking $ 581 $ 522 11%
Principal transactions:
Trading 722 869 (17%)
Investments 136 56 143%
Commissions 476 489 (3%)
Fees:
Asset mgmt, distribution & admin 610 587 4%
Servicing 1 2 (50%)
Interest and dividends 2,416 2,602 (7%)
Other 32 27 19%
------------ ------------
Total revenues $ 4,974 $ 5,154 (3%)
Interest expense 2,191 2,426 (10%)
Provision for consumer loan losses 3 2 50%
------------ ------------
Net revenues $ 2,780 $ 2,726 2%
------------ ------------
Compensation and benefits 1,369 1,355 1%
Occupancy and equipment 112 113 (1%)
Brokerage, clearing and exchange fees 109 95 15%
Info processing and communications 149 142 5%
Marketing and business development 100 96 4%
Professional services 83 75 11%
Other 111 124 (10%)
------------ ------------
Total non-interest expenses $ 2,033 $ 2,000 2%
------------ ------------
Income before income taxes 747 726 3%
Income tax expense 286 281 2%
------------ ------------
Net income $ 461 $ 445 4%
============ ============
Comp & benefits as a % of net revenues 49% 50%
Non-comp exps as a % of net revenues 24% 24%
Profit margin (1) 17% 16%
(1) Net income as a % of net revenues.
F-2
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
Six Months Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Investment banking $ 1,103 $ 1,062 4%
Principal transactions:
Trading 1,591 1,503 6%
Investments 192 31 *
Commissions 965 911 6%
Fees:
Asset mgmt, distribution & admin 1,197 820 46%
Servicing 3 6 (50%)
Interest and dividends 5,018 4,322 16%
Other 59 59 --
------------ ------------
Total revenues $ 10,128 $ 8,714 16%
Interest expense 4,617 3,996 16%
Provision for consumer loan losses 5 4 25%
------------ ------------
Net revenues $ 5,506 $ 4,714 17%
------------ ------------
Compensation and benefits 2,724 2,332 17%
Occupancy and equipment 225 211 7%
Brokerage, clearing and exchange fees 204 155 32%
Info processing and communications 291 245 19%
Marketing and business development 196 139 41%
Professional services 158 120 32%
Other 235 190 24%
------------ ------------
Total non-interest expenses $ 4,033 $ 3,392 19%
------------ ------------
Income before income taxes 1,473 1,322 11%
Income tax expense 567 491 15%
------------ ------------
Net income $ 906 $ 831 9%
============ ============
Comp & benefits as a % of net revenues 49% 49%
Non-comp exps as a % of net revenues 24% 22%
Profit margin (1) 16% 18%
(1) Net income as a % of net revenues.
F-2
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
Quarter Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 424 $ 354 20%
Servicing 186 182 2%
Commissions 8 0 *
Other 3 1 *
------------ ------------
Total non-interest revenues $ 621 $ 537 16%
Interest revenue 781 663 18%
Interest expense 287 247 16%
------------ ------------
Net interest income 494 416 19%
Provision for consumer loan losses 378 238 59%
------------ ------------
Net credit income 116 178 (35%)
------------ ------------
Net revenues $ 737 $ 715 3%
------------ ------------
Compensation and benefits 136 119 14%
Occupancy and equipment 15 14 7%
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 118 115 3%
Marketing and business development 174 173 1%
Professional services 16 8 100%
Other 64 83 (23%)
------------ ------------
Total non-interest expenses $ 527 $ 512 3%
------------ ------------
Income before income taxes 210 203 3%
Income tax expense 81 74 9%
------------ ------------
Net income $ 129 $ 129 --
============ ============
Comp & benefits as a % of net revenues 18% 17%
Non-comp exps as a % of net revenues 53% 55%
Profit margin (1) 18% 18%
(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)
Quarter Ended Percentage
May 31, 1997 Feb 28, 1997 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 424 $ 436 (3%)
Servicing 186 200 (7%)
Commissions 8 1 *
Other 3 2 50%
------------ ------------
Total non-interest revenues $ 621 $ 639 (3%)
Interest revenue 781 767 2%
Interest expense 287 283 1%
------------ ------------
Net interest income 494 484 2%
Provision for consumer loan losses 378 377 --
------------ ------------
Net credit income 116 107 8%
------------ ------------
Net revenues $ 737 $ 746 (1%)
------------ ------------
Compensation and benefits 136 135 1%
Occupancy and equipment 15 15 --
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 118 128 (8%)
Marketing and business development 174 192 (9%)
Professional services 16 18 (11%)
Other 64 56 14%
------------ ------------
Total non-interest expenses $ 527 $ 544 (3%)
------------ ------------
Income before income taxes 210 202 4%
Income tax expense 81 76 7%
------------ ------------
Net income $ 129 $ 126 2%
============ ============
Comp & benefits as a % of net revenues 18% 18%
Non-comp exps as a % of net revenues 53% 55%
Profit margin (1) 18% 17%
(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)
Six Months Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 860 $ 684 26%
Servicing 386 378 2%
Commissions 9 0 *
Other 5 1 *
------------ ------------
Total non-interest revenues $ 1,260 $ 1,063 19%
Interest revenue 1,548 1,322 17%
Interest expense 570 519 10%
------------ ------------
Net interest income 978 803 22%
Provision for consumer loan losses 755 485 56%
------------ ------------
Net credit income 223 318 (30%)
------------ ------------
Net revenues $ 1,483 $ 1,381 7%
------------ ------------
Compensation and benefits 271 240 13%
Occupancy and equipment 30 28 7%
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 246 224 10%
Marketing and business development 366 344 6%
Professional services 34 22 55%
Other 120 155 (23%)
------------ ------------
Total non-interest expenses $ 1,071 $ 1,013 6%
------------ ------------
Income before income taxes 412 368 12%
Income tax expense 157 138 14%
------------ ------------
Net income $ 255 $ 230 11%
============ ============
Comp & benefits as a % of net revenues 18% 17%
Non-comp exps as a % of net revenues 54% 56%
Profit margin (1) 17% 17%
(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)
Quarter Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 528 $ 417 27%
Servicing 0 0 --
Commissions 8 0 *
Other 4 2 100%
------------ ------------
Total non-interest revenues $ 540 $ 419 29%
Interest revenue 1,299 1,150 13%
Interest expense 491 445 10%
------------ ------------
Net interest income 808 705 15%
Provision for consumer loan losses 611 409 49%
------------ ------------
Net credit income 197 296 (33%)
------------ ------------
Net revenues $ 737 $ 715 3%
------------ ------------
Compensation and benefits 136 119 14%
Occupancy and equipment 15 14 7%
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 118 115 3%
Marketing and business development 174 173 1%
Professional services 16 8 100%
Other 64 83 (23%)
------------ ------------
Total non-interest expenses $ 527 $ 512 3%
------------ ------------
Income before income taxes 210 203 3%
Income tax expense 81 74 9%
------------ ------------
Net income $ 129 $ 129 --
============ ============
Comp & benefits as a % of net revenues 18% 17%
Non-comp exps as a % of net revenues 53% 55%
Profit margin (1) 18% 18%
(1) Net income as a % of net revenues.
F-4
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
Quarter Ended Percentage
May 31, 1997 Feb 28, 1997 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 528 $ 548 (4%)
Servicing 0 0 --
Commissions 8 1 *
Other 4 1 *
------------ ------------
Total non-interest revenues $ 540 $ 550 (2%)
Interest revenue 1,299 1,285 1%
Interest expense 491 486 1%
------------ ------------
Net interest income 808 799 1%
Provision for consumer loan losses 611 603 1%
------------ ------------
Net credit income 197 196 1%
------------ ------------
Net revenues $ 737 $ 746 (1%)
------------ ------------
Compensation and benefits 136 135 1%
Occupancy and equipment 15 15 --
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 118 128 (8%)
Marketing and business development 174 192 (9%)
Professional services 16 18 (11%)
Other 64 56 14%
------------ ------------
Total non-interest expenses $ 527 $ 544 (3%)
------------ ------------
Income before income taxes 210 202 4%
Income tax expense 81 76 7%
------------ ------------
Net income $ 129 $ 126 2%
============ ============
Comp & benefits as a % of net revenues 18% 18%
Non-comp exps as a % of net revenues 53% 55%
Profit margin (1) 18% 17%
(1) Net income as a % of net revenues.
F-4
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
Six Months Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 1,076 $ 791 36%
Servicing 0 0 --
Commissions 9 0 *
Other 5 2 *
------------ ------------
Total non-interest revenues $ 1,090 $ 793 37%
Interest revenue 2,584 2,277 13%
Interest expense 977 893 9%
------------ ------------
Net interest income 1,607 1,384 16%
Provision for consumer loan losses 1,214 796 53%
------------ ------------
Net credit income 393 588 (33%)
------------ ------------
Net revenues $ 1,483 $ 1,381 7%
------------ ------------
Compensation and benefits 271 240 13%
Occupancy and equipment 30 28 7%
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 246 224 10%
Marketing and business development 366 344 6%
Professional services 34 22 55%
Other 120 155 (23%)
------------ ------------
Total non-interest expenses $ 1,071 $ 1,013 6%
------------ ------------
Income before income taxes 412 368 12%
Income tax expense 157 138 14%
------------ ------------
Net income $ 255 $ 230 11%
============ ============
Comp & benefits as a % of net revenues 18% 17%
Non-comp exps as a % of net revenues 54% 56%
Profit margin (1) 17% 17%
(1) Net income as a % of net revenues.
F-4
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
5/31/97 2/28/97 11/30/96
------------ ------------ ------------
Investment banking $ 581 $ 522 $ 638
Principal transactions:
Trading 722 869 622
Investments 136 56 26
Commissions 484 490 440
Fees:
Asset mgmt, distribution & admin 610 587 474
Merchant and cardmember 424 436 413
Servicing 187 202 211
Interest and dividends 3,197 3,369 2,599
Other 35 29 30
------------ ------------ ------------
Total revenues $ 6,376 $ 6,560 $ 5,453
Interest expense 2,478 2,709 2,013
Provision for consumer loan losses 381 379 393
------------ ------------ ------------
Net revenues $ 3,517 $ 3,472 $ 3,047
------------ ------------ ------------
Compensation and benefits 1,505 1,490 1,310
Occupancy and equipment 127 128 130
Brokerage, clearing and exchange fees 113 95 85
Info processing and communications 267 270 269
Marketing and business development 274 288 278
Professional services 99 93 105
Other 175 180 166
Relocation charge 0 0 0
------------ ------------ ------------
Total non-interest expenses $ 2,560 $ 2,544 $ 2,343
------------ ------------ ------------
Income before income taxes 957 928 704
Income tax expense 367 357 252
------------ ------------ ------------
Net income before merger charges $ 590 $ 571 $ 452
============ ============ ============
Preferred stock dividend requirements $ 18 $ 19 $ 18
============ ============ ============
Earnings applicable to common shares $ 572 $ 552 $ 434
============ ============ ============
Merger and restructuring charges,
net of taxes $ 63 $ 0 $ 0
============ ============ ============
Earnings applicable to common shares
after merger charges $ 509 $ 552 $ 434
============ ============ ============
F-5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
8/31/96 5/31/96 2/28/96
------------ ------------ ------------
Investment banking $ 486 $ 604 $ 458
Principal transactions:
Trading 534 680 823
Investments 29 38 (7)
Commissions 417 463 448
Fees:
Asset mgmt, distribution & admin 423 430 390
Merchant and cardmember 366 354 330
Servicing 209 185 199
Interest and dividends 3,035 2,830 2,814
Other 27 34 26
------------ ------------ ------------
Total revenues $ 5,526 $ 5,618 $ 5,481
Interest expense 2,412 2,251 2,264
Provision for consumer loan losses 309 239 250
------------ ------------ ------------
Net revenues $ 2,805 $ 3,128 $ 2,967
------------ ------------ ------------
Compensation and benefits 1,170 1,314 1,258
Occupancy and equipment 122 119 120
Brokerage, clearing and exchange fees 76 78 77
Info processing and communications 247 241 228
Marketing and business development 247 247 236
Professional services 84 73 69
Other 163 166 179
Relocation charge 0 0 0
------------ ------------ ------------
Total non-interest expenses $ 2,109 $ 2,238 $ 2,167
------------ ------------ ------------
Income before income taxes 696 890 800
Income tax expense 246 322 307
------------ ------------ ------------
Net income before merger charges $ 450 $ 568 $ 493
============ ============ ============
Preferred stock dividend requirements $ 15 $ 17 $ 16
============ ============ ============
Earnings applicable to common shares $ 435 $ 551 $ 477
============ ============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 0 $ 0
============ ============ ============
Earnings applicable to common shares
after merger charges $ 435 $ 551 $ 477
============ ============ ============
F-5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
11/30/95 8/31/95 5/31/95
------------ ------------ ------------
Investment banking $ 551 $ 398 $ 321
Principal transactions:
Trading 330 478 556
Investments 39 69 (6)
Commissions 414 395 386
Fees:
Asset mgmt, distribution & admin 350 347 345
Merchant and cardmember 306 283 260
Servicing 177 182 179
Interest and dividends 2,562 2,742 2,549
Other 17 21 29
------------ ------------ ------------
Total revenues $ 4,746 $ 4,915 $ 4,619
Interest expense 1,917 2,131 2,040
Provision for consumer loan losses 258 168 127
------------ ------------ ------------
Net revenues $ 2,571 $ 2,616 $ 2,452
------------ ------------ ------------
Compensation and benefits 1,110 1,084 960
Occupancy and equipment 116 116 109
Brokerage, clearing and exchange fees 72 73 77
Info processing and communications 241 219 219
Marketing and business development 255 215 187
Professional services 60 58 63
Other 168 170 181
Relocation charge 0 0 0
------------ ------------ ------------
Total non-interest expenses $ 2,022 $ 1,935 $ 1,796
------------ ------------ ------------
Income before income taxes 549 681 656
Income tax expense 194 237 240
------------ ------------ ------------
Net income before merger charges $ 355 $ 444 $ 416
============ ============ ============
Preferred stock dividend requirements $ 16 $ 17 $ 16
============ ============ ============
Earnings applicable to common shares $ 339 $ 427 $ 400
============ ============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 0 $ 0
============ ============ ============
Earnings applicable to common shares
after merger charges $ 339 $ 427 $ 400
============ ============ ============
F-5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
2/28/95
------------
Investment banking $ 284
Principal transactions:
Trading 327
Investments 19
Commissions 323
Fees:
Asset mgmt, distribution & admin 331
Merchant and cardmember 260
Servicing 158
Interest and dividends 2,610
Other 38
------------
Total revenues $ 4,350
Interest expense 2,074
Provision for consumer loan losses 171
------------
Net revenues $ 2,105
------------
Compensation and benefits 818
Occupancy and equipment 112
Brokerage, clearing and exchange fees 67
Info processing and communications 207
Marketing and business development 208
Professional services 68
Other 193
Relocation charge 59
------------
Total non-interest expenses $ 1,732
------------
Income before income taxes 373
Income tax expense 144
------------
Net income before merger charges $ 229
============
Preferred stock dividend requirements $ 16
============
Earnings applicable to common shares $ 213
============
Merger and restructuring charges,
net of taxes $ 0
============
Earnings applicable to common shares
after merger charges $ 213
============
F-5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
5/31/97 2/28/97 11/30/96
------------ ------------ ------------
Investment banking $ 581 $ 522 $ 638
Principal transactions:
Trading 722 869 622
Investments 136 56 26
Commissions 476 489 440
Fees:
Asset mgmt, distribution & admin 610 587 474
Servicing 1 2 3
Interest and dividends 2,416 2,602 1,899
Other 32 27 29
------------ ------------ ------------
Total revenues $ 4,974 $ 5,154 $ 4,131
Interest expense 2,191 2,426 1,753
Provision for consumer loan losses 3 2 1
------------ ------------ ------------
Net revenues $ 2,780 $ 2,726 $ 2,377
------------ ------------ ------------
Compensation and benefits 1,369 1,355 1,186
Occupancy and equipment 112 113 113
Brokerage, clearing and exchange fees 109 95 85
Info processing and communications 149 142 143
Marketing and business development 100 96 94
Professional services 83 75 89
Other 111 124 102
Relocation charge 0 0 0
------------ ------------ ------------
Total non-interest expenses $ 2,033 $ 2,000 $ 1,812
------------ ------------ ------------
Income before income taxes 747 726 565
Income tax expense 286 281 200
------------ ------------ ------------
Net income $ 461 $ 445 $ 365
============ ============ ============
F-6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
8/31/96 5/31/96 2/28/96
------------ ------------ ------------
Investment banking $ 486 $ 604 $ 458
Principal transactions:
Trading 534 680 823
Investments 29 38 (7)
Commissions 417 463 448
Fees:
Asset mgmt, distribution & admin 423 430 390
Servicing 2 3 3
Interest and dividends 2,359 2,167 2,155
Other 26 33 26
------------ ------------ ------------
Total revenues $ 4,276 $ 4,418 $ 4,296
Interest expense 2,160 2,004 1,992
Provision for consumer loan losses 2 1 3
------------ ------------ ------------
Net revenues $ 2,114 $ 2,413 $ 2,301
------------ ------------ ------------
Compensation and benefits 1,051 1,195 1,137
Occupancy and equipment 108 105 106
Brokerage, clearing and exchange fees 76 78 77
Info processing and communications 124 126 119
Marketing and business development 63 74 65
Professional services 71 65 55
Other 91 83 107
Relocation charge 0 0 0
------------ ------------ ------------
Total non-interest expenses $ 1,584 $ 1,726 $ 1,666
------------ ------------ ------------
Income before income taxes 530 687 635
Income tax expense 184 248 243
------------ ------------ ------------
Net income $ 346 $ 439 $ 392
============ ============ ============
F-6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
11/30/95 8/31/95 5/31/95
------------ ------------ ------------
Investment banking $ 551 $ 398 $ 321
Principal transactions:
Trading 330 478 556
Investments 39 69 (6)
Commissions 414 395 386
Fees:
Asset mgmt, distribution & admin 350 347 345
Servicing 4 4 4
Interest and dividends 1,943 2,134 1,983
Other 17 19 28
------------ ------------ ------------
Total revenues $ 3,648 $ 3,844 $ 3,617
Interest expense 1,677 1,902 1,818
Provision for consumer loan losses 2 2 1
------------ ------------ ------------
Net revenues $ 1,969 $ 1,940 $ 1,798
------------ ------------ ------------
Compensation and benefits 999 979 861
Occupancy and equipment 103 104 98
Brokerage, clearing and exchange fees 72 73 77
Info processing and communications 126 113 121
Marketing and business development 50 50 61
Professional services 48 47 50
Other 100 97 106
Relocation charge 0 0 0
------------ ------------ ------------
Total non-interest expenses $ 1,498 $ 1,463 $ 1,374
------------ ------------ ------------
Income before income taxes 471 477 424
Income tax expense 164 161 152
------------ ------------ ------------
Net income $ 307 $ 316 $ 272
============ ============ ============
F-6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
2/28/95
------------
Investment banking $ 284
Principal transactions:
Trading 327
Investments 19
Commissions 323
Fees:
Asset mgmt, distribution & admin 331
Servicing 3
Interest and dividends 2,068
Other 39
------------
Total revenues $ 3,394
Interest expense 1,864
Provision for consumer loan losses 2
------------
Net revenues $ 1,528
------------
Compensation and benefits 721
Occupancy and equipment 101
Brokerage, clearing and exchange fees 67
Info processing and communications 114
Marketing and business development 72
Professional services 56
Other 115
Relocation charge 59
------------
Total non-interest expenses $ 1,305
------------
Income before income taxes 223
Income tax expense 86
------------
Net income $ 137
============
F-6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
FOR THE QUARTER ENDED
5/31/97 2/28/97 11/30/96
------------ ------------ ------------
Fees:
Merchant and cardmember $ 528 $ 548 $ 510
Servicing 0 0 0
Commissions 8 1 0
Other 4 1 0
------------ ------------ ------------
Total non-interest revenues $ 540 $ 550 $ 510
Interest revenue 1,299 1,285 1,221
Interest expense 491 486 463
------------ ------------ ------------
Net interest income 808 799 758
Provision for consumer loan losses 611 603 598
------------ ------------ ------------
Net credit income 197 196 160
------------ ------------ ------------
Net revenues $ 737 $ 746 $ 670
------------ ------------ ------------
Compensation and benefits 136 135 124
Occupancy and equipment 15 15 17
Brokerage, clearing and exchange fees 4 0 0
Info processing and communications 118 128 126
Marketing and business development 174 192 184
Professional services 16 18 16
Other 64 56 64
------------ ------------ ------------
Total non-interest expenses $ 527 $ 544 $ 531
------------ ------------ ------------
Income before income taxes 210 202 139
Income tax expense 81 76 52
------------ ------------ ------------
Net income $ 129 $ 126 $ 87
============ ============ ============
F-7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
FOR THE QUARTER ENDED
8/31/96 5/31/96 2/28/96
------------ ------------ ------------
Fees:
Merchant and cardmember $ 446 $ 417 $ 374
Servicing 0 0 0
Commissions 0 0 0
Other 0 2 0
------------ ------------ ------------
Total non-interest revenues $ 446 $ 419 $ 374
Interest revenue 1,187 1,150 1,127
Interest expense 455 445 448
------------ ------------ ------------
Net interest income 732 705 679
Provision for consumer loan losses 487 409 387
------------ ------------ ------------
Net credit income 245 296 292
------------ ------------ ------------
Net revenues $ 691 $ 715 $ 666
------------ ------------ ------------
Compensation and benefits 119 119 121
Occupancy and equipment 14 14 14
Brokerage, clearing and exchange fees 0 0 0
Info processing and communications 123 115 109
Marketing and business development 184 173 171
Professional services 13 8 14
Other 72 83 72
------------ ------------ ------------
Total non-interest expenses $ 525 $ 512 $ 501
------------ ------------ ------------
Income before income taxes 166 203 165
Income tax expense 62 74 64
------------ ------------ ------------
Net income $ 104 $ 129 $ 101
============ ============ ============
F-7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
FOR THE QUARTER ENDED
11/30/95 8/31/95 5/31/95
------------ ------------ ------------
Fees:
Merchant and cardmember $ 344 $ 320 $ 290
Servicing 0 0 0
Commissions 0 0 0
Other 1 1 1
------------ ------------ ------------
Total non-interest revenues $ 345 $ 321 $ 291
Interest revenue 1,050 1,023 981
Interest expense 413 402 393
------------ ------------ ------------
Net interest income 637 621 588
Provision for consumer loan losses 380 266 225
------------ ------------ ------------
Net credit income 257 355 363
------------ ------------ ------------
Net revenues $ 602 $ 676 $ 654
------------ ------------ ------------
Compensation and benefits 111 105 99
Occupancy and equipment 13 12 11
Brokerage, clearing and exchange fees 0 0 0
Info processing and communications 115 106 98
Marketing and business development 205 165 126
Professional services 12 11 13
Other 68 73 75
------------ ------------ ------------
Total non-interest expenses $ 524 $ 472 $ 422
------------ ------------ ------------
Income before income taxes 78 204 232
Income tax expense 30 76 88
------------ ------------ ------------
Net income $ 48 $ 128 $ 144
============ ============ ============
F-7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
FOR THE QUARTER ENDED
2/28/95
------------
Fees:
Merchant and cardmember $ 292
Servicing 0
Commissions 0
Other (1)
------------
Total non-interest revenues $ 291
Interest revenue 912
Interest expense 370
------------
Net interest income 542
Provision for consumer loan losses 256
------------
Net credit income 286
------------
Net revenues $ 577
------------
Compensation and benefits 97
Occupancy and equipment 11
Brokerage, clearing and exchange fees 0
Info processing and communications 93
Marketing and business development 136
Professional services 12
Other 78
------------
Total non-interest expenses $ 427
------------
Income before income taxes 150
Income tax expense 58
------------
Net income $ 92
============
F-7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited)
Quarter Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
MSDWD
Period end common shares outstanding 586,342,798 581,929,723
Book value per common share $ 19.37 $ 16.34
Shareholder's equity (millions) $ 12,162 $ 10,235
Total capital (millions) (1) $ 33,667 $ 28,019
SECURITIES ($ billions)
Brokerage
Dean Witter account executives 9,373 8,725
Dean Witter client assets $ 271 $ 234
Capital markets (2)
Mergers and acquisitions announced
transactions (3)
MSDWD global market volume $ 85.6 $ 98.5
Rank 3 1
Worldwide equity & related issues (3)
MSDWD global market volume $ 9.7 $ 11.7
Rank 2 1
ASSET MANAGEMENT (billions)
Assets under mgmt and administration
Products offered primarily to indivs
Mutual funds
Equity $ 62 $ 35 77%
Fixed income 49 24 104%
Money markets 28 23 22%
------------ ------------
Total mutual funds 139 82 70%
ICS Assets 12 10 20%
Other 23 10 130%
Products offered primarily to
institutional clients
Mutual funds 41 31 32%
Separate accts, pooled vehicle and
other arrangements 88 71 24%
Total assets under management $ 303 $ 204 49%
Global assets under custody $ 410 $ 130 *
(1) Includes capital units and non-currrent 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)
Quarter Ended Percentage
May 31, 1997 Feb 28, 1997 Change
------------ ------------ ------------
MSDWD
Period end common shares outstanding 586,342,798 582,335,632
Book value per common share $ 19.37 $ 18.70
Shareholder's equity (millions) $ 12,162 $ 11,841
Total capital (millions) (1) $ 33,667 $ 33,466
SECURITIES ($ billions)
Brokerage
Dean Witter account executives 9,373 9,136
Dean Witter client assets $ 271 $ 261
Capital markets (2)
Mergers and acquisitions announced
transactions (3)
MSDWD global market volume $ 85.6 $ 31.7
Rank 3 3
Worldwide equity & related issues (3)
MSDWD global market volume $ 9.7 $ 5.7
Rank 2 1
ASSET MANAGEMENT (billions)
Assets under mgmt and administration
Products offered primarily to indivs
Mutual funds
Equity $ 62 $ 58 7%
Fixed income 49 50 (2%)
Money markets 28 27 4%
------------ ------------
Total mutual funds 139 135 3%
ICS Assets 12 11 9%
Other 23 22 5%
Products offered primarily to
institutional clients
Mutual funds 41 38 8%
Separate accts, pooled vehicle and
other arrangements 88 84 5%
Total assets under management $ 303 $ 290 4%
Global assets under custody $ 410 $ 152 *
(1) Includes capital units and non-currrent 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
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period End $ 21,143 $ 18,146 17%
Average 20,937 17,884 17%
Managed consumer loans (1)
Period End $ 34,167 $ 30,806 11%
Average $ 34,032 $ 30,215 13%
Interest yield 14.85% 14.89% (0.04 bp)
Interest spread 8.72% 8.63% 0.09 bp
Net charge-off rate 7.07% 5.22% 1.85 bp
Delinquency rate (over 30 days) 6.90% 5.79% 1.11 bp
General purpose credit card
accounts (in millions) 40 38
NOVUS Network new merchant
locations (in thousands) 108 119
(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
May 31, 1997 Feb 28, 1997 Change
------------ ------------ ------------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period End $ 21,143 $ 20,856 1%
Average 20,937 21,315 (2%)
Managed consumer loans (1)
Period End $ 34,167 $ 33,986 1%
Average $ 34,032 $ 34,512 (1%)
Interest yield 14.85% 14.86% (0.01 bp)
Interest spread 8.72% 8.73% (0.01 bp)
Net charge-off rate 7.07% 6.91% 0.16 bp
Delinquency rate (over 30 days) 6.90% 7.49% (0.59 bp)
General purpose credit card
accounts (in millions) 40 39
NOVUS Network new merchant
locations (in thousands) 108 92
(1) Includes owned and securitized consumer loans
F-9
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
Six Months Ended Percentage
May 31, 1997 May 31, 1996 Change
------------ ------------ ------------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period End
Average
Managed consumer loans (1)
Period End
Average
Interest yield 14.85% 14.92% (0.07 bp)
Interest spread 8.73% 8.55% 0.18 bp
Net charge-off rate 6.98% 5.00% 1.98 bp
Delinquency rate (over 30 days) 6.90% 5.79% 1.11 bp
General purpose credit card
accounts (in millions) 40 38
NOVUS Network new merchant
locations (in thousands) 201 194
(1) Includes owned and securitized consumer loans
F-9
