PROSPECTUS SUPPLEMENT
(To Prospectus dated June 2, 1997)
$350,000,000
Morgan Stanley, Dean Witter, Discover & Co.
6 3/8% NOTES DUE 2002
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Interest payable February 1 and August 1
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The Notes are not redeemable prior to maturity. The Notes will be
represented by global notes registered in the name of a nominee of The
Depository Trust Company, as Depositary. Beneficial interests in the Notes
will be shown on, and transfers thereof will be effected only through,
records maintained by the Depositary (with respect to participants'
interests) and its participants. Except as described in the accompanying
Prospectus, Notes in certificated form will not be issued in exchange for
the global notes.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PRICE 99.535% AND ACCRUED INTEREST, IF ANY
Underwriting Discounts Proceeds to
Price to Public(1) and Commissions(2) Company(1)(3)
Per Note. 99.535% .600% 98.935%
Total.... $348,372,500 $2,100,000 $346,272,500
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(1) Plus accrued interest, if any, from July 28, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company estimated at $185,150.
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The Notes are offered, subject to prior sale, when, as and if
accepted by the Underwriters and subject to approval of certain legal matters
by Davis Polk & Wardwell, counsel for the Underwriters. It is expected that
delivery of the Notes will be made on or about July 28, 1997 through the
book-entry facilities of The Depository Trust Company, against payment
therefor in immediately available funds.
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MORGAN STANLEY DEAN WITTER
ABN AMRO CHICAGO CORPORATION
BANC ONE CAPITAL CORPORATION
FIRST UNION CAPITAL MARKETS CORP.
HSBC SECURITIES, INC.
MERRILL LYNCH & CO.
NATIONSBANC CAPITAL MARKETS, INC.
UBS SECURITIES
July 23, 1997
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES. SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE
OFFERING, AND MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES SEE "UNDERWRITERS."
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of
earnings to fixed charges for the Company for the periods indicated. The
fiscal year information combines the historical financial information of Dean
Witter, Discover & Co. ("Dean Witter Discover") for the years ended December
31, 1996, 1995, 1994, 1993 and 1992 with the historical financial information
of Morgan Stanley Group Inc. ("Morgan Stanley") for the fiscal years ended
November 30, 1996, 1995, 1994, 1993 and 1992. The six month information
combines the unaudited historical financial information of Dean Witter
Discover for the six months ended May 31, 1997 and 1996 with the unaudited
historical financial information of Morgan Stanley for the six months ended
May 31, 1997 and 1996.
Six Months
Ended Fiscal Year
May 31, May 31,
1997 1996 1996 1995 1994 1993 1992
------- ------- ---- ---- ---- ---- ----
Ratio of earnings
to fixed charges.. 1.3 1.4 1.3 1.3 1.3 1.4 1.3
For the purpose of calculating the ratio of earnings to fixed
charges, earnings consist of income before income taxes and fixed charges and
fixed charges consist of interest expense, capitalized interest and that
portion of rentals representative of an interest factor. Additionally,
"earnings" in 1992 excludes a nonrecurring gain of $32.1 million from the
initial public offering of 25.7% of SPS Transaction Services, Inc.
DESCRIPTION OF NOTES
The following description of the particular terms of the 6 3/8%
Senior Notes due 2002 (the "Notes") offered hereby (referred to in the
Prospectus as the "Offered Debt Securities") supplements the description of
the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made. In particular, as
used under this caption, the term "Company" means Morgan Stanley, Dean Witter,
Discover & Co. The following summary of the Notes is qualified in its
entirety by reference to the Senior Debt Indenture referred to in the
Prospectus.
General
The Notes will be limited to $350,000,000 in aggregate
principal amount and will mature on August 1, 2002. The Notes will constitute
part of the senior debt of the Company and will rank pari passu with all other
unsecured and unsubordinated debt of the Company. The Notes will be issued in
fully registered form only, in denominations of $1,000 and multiples thereof.
Principal of and interest on the Notes will be payable, and the transfer of
Notes will be registrable, through the Depositary as described under
"Book-Entry Procedures."
Each Note will bear interest from July 28, 1997 at the
applicable annual rate set forth on the cover page of this Prospectus
Supplement, payable semiannually on February 1 and August 1 (each an "Interest
Payment Date"), commencing February 1, 1998, to the person in whose name such
Note is registered at the close of business on the preceding January 15 or
July 15. Such interest will be computed on the basis of a 360-day year of
twelve 30-day months.
If any Interest Payment Date falls on a day that is not a
Business Day, the interest payment shall be postponed to the next day that is
a Business Day, and no interest on such payment shall accrue for the period
from and after such Interest Payment Date. If the maturity date of the Notes
falls on a day that is not a Business Day, the payment of interest and
principal may be made on the next succeeding Business Day, and no interest on
such payment shall accrue for the period from and after the maturity date.
Interest payments for the Notes will include accrued interest
from and including the date of issue or from and including the last date in
respect of which interest has been paid, as the case may be, to, but
excluding, the Interest Payment Date or the date of maturity, as the case may
be.
The Notes will not be redeemable prior to maturity and will not
be subject to any sinking fund.
The Senior Debt Indenture permits the defeasance of the Notes
upon the satisfaction of the conditions described under "Description of Debt
Securities -- Discharge, Defeasance and Covenant Defeasance" in the
Prospectus. The Notes are subject to these defeasance provisions.
As used herein, "Business Day" means any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation to close in The
City of New York.
Book-Entry Procedures
Upon issuance, the Notes will each be represented by fully
registered global notes (the "Global Notes" and each a "Global Note"). The
Global Notes will be deposited with, or on behalf of, The Depositary Trust
Company, as Depositary (the "Depositary"), and registered in the name of a
nominee of the Depositary. Unless and until it is exchanged in whole or in
part for Notes in definitive registered form, a Global Note may not be
transferred except as a whole by the Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The Depositary has advised the Company as follows: The
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary holds securities deposited
with it by its participants and facilitates the settlement of transactions
among its participants in such securities through electronic computerized
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. The Depositary's
participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly.
A further description of the Depositary's procedures with
respect to the Global Notes is set forth in the Prospectus under "Global
Securities." The Depositary has confirmed to the Company, the Underwriters and
the Trustee that it intends to follow such procedures.
UNDERWRITERS
Under the terms and subject to the conditions contained in an
Underwriting Agreement dated the date hereof, the Underwriters named below
have severally agreed to purchase, and the Company has agreed to sell to them,
severally, the respective principal amount of the Notes set forth opposite
their names below:
Principal
Name Amount of Notes
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Morgan Stanley & Co. Incorporated...................... $ 43,750,000
ABN AMRO Chicago Corporation........................... 43,750,000
Banc One Capital Corporation........................... 43,750,000
First Union Capital Markets Corp....................... 43,750,000
HSBC Securities, Inc................................... 43,750,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated..... 43,750,000
NationsBanc Capital Markets, Inc....................... 43,750,000
UBS Securities LLC..................................... 43,750,000
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Total............................................. $350,000,000
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The Underwriting Agreement provides that the obligations of the
several Underwriters to pay for and accept delivery of the Notes are subject
to the approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the
Notes if any are taken.
The Underwriters initially propose to offer part of the Notes
directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price that represents a
concession not in excess of .375% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of .250% of the principal amount of the Notes to certain other dealers.
After the initial offering of the Notes, the offering price and other selling
terms may from time to time be varied by the Underwriters.
The Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended, or to contribute to payments the Underwriters may be required to
make in respect thereof.
The Company does not intend to apply for listing of the Notes
on a national securities exchange, but has been advised by Morgan Stanley &
Co. Incorporated ("MS & Co.") that it presently intends to make a market in
the Notes as permitted by applicable laws and regulations. MS & Co. is not
obligated, however, to make a market in the Notes and any such market-making
may be discontinued at any time by MS & Co. at its sole discretion.
Accordingly, no assurance can be given as to the liquidity of, or trading
market for, the Notes.
This Prospectus Supplement and the accompanying Prospectus may
be used by MS & Co. and other affiliates of the Company in connection with
offers and sales of the Notes in market-making transactions at negotiated
prices related to prevailing market prices at the time of sale or otherwise.
MS & Co. and such other affiliates of the Company may act as principal or
agent in such transactions.
MS & Co. is a wholly-owned subsidiary of the Company. MS &
Co.'s participation in the offering of the Notes will be conducted in
compliance with Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc.
The Underwriters do not intend to confirm sales to accounts
over which they exercise discretionary authority.
In order to facilitate the offering of the Notes, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Notes. Specifically, the Underwriters may overallot
in connection with the offering of the Notes, creating a short position in the
Notes for their own accounts. In addition, to cover overallotments or to
stabilize the price of the Notes, the Underwriters may bid for, and purchase,
the Notes in the open market. Finally, in the offering of the Notes, the
underwriting syndicate may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the Notes in the offering if the
syndicate repurchases previously distributed Notes in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the Notes above
independent market levels. The Underwriters are not required to engage in
these activities and may end any of these activities at any time.
