<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): January 7, 1998
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 January 7, 1998, Morgan Stanley, Dean Witter, Discover & Co. (the
"Registrant") released financial information with respect to the quarter ended
November 30, 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 January 7, 1998
containing financial information for the fourth quarter
ended November 30, 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
Assistant Secretary
Dated: January 7, 1998
<PAGE>
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 ANNOUNCES
RECORD 4TH QUARTER AND FULL YEAR NET INCOME;
QUARTERLY DIVIDEND INCREASED 43%
NEW YORK, January 7, 1998 - Morgan Stanley, Dean Witter, Discover & Co. (NYSE:
MWD) today announced record net income of $810 million for the fourth fiscal
quarter ended November 30, 1997 -- a 79 percent increase from last year's
fourth quarter $452 million. Earnings per share were $1.30 on a fully-diluted
basis -- 78 percent greater than $.73 in the fourth quarter a year ago.
Excluding goodwill amortization resulting from acquisitions, earnings per share
were $1.33 on a fully-diluted basis.
Net revenues (total revenues less interest expense and the provision for loan
losses) for the quarter were $3,732 million -- up 22 percent from last year's
fourth quarter $3,049 million. The annualized return on average common equity
for the fourth fiscal quarter was 25.8 percent.
For the fiscal year ended November 30, 1997, the Company announced that net
income, excluding the expenses associated with the merger completed earlier this
year, was $2,649 million -- up 35 percent from last year's $1,963 million.
Fully-diluted earnings per share, excluding both merger-related expenses and the
amortization of
<PAGE>
goodwill from acquisitions, were $4.37 -- 37 percent ahead of last year's
comparable $3.18. Including merger-related expenses and goodwill amortization,
fully-diluted earnings per share increased 32 percent to $4.15 from $3.14 in
1996.
Net revenues for the fiscal year were a record $14,833 million, up 24 percent
from $11,954 million in 1996. The return on average common equity was 22.0
percent.
The Company also announced that its Board of Directors declared a $.20 quarterly
dividend per common share, a 43 percent increase from the previous quarter's
$.14 per common share. The dividend is payable on January 30, 1998 to common
shareholders of record as of January 20, 1998.
Philip J. Purcell, Chairman, and John J. Mack, President, said in a joint
statement, "It was a great year for our new company, with net income of more
than $2.6 billion surpassing all expectations. We were faced with some
difficult markets in the fourth quarter, particularly the continuing financial
problems in Asian markets, but overall we came through with flying colors. Our
people have done an excellent job of serving both our institutional and
individual customers, and the merger is working exceptionally well as we've
gained market share in a number of key areas. We're looking forward to 1998."
FULL YEAR
The Company reported significant gains in each of its three major businesses:
Securities, Asset Management, and Credit and Transaction Services.
Securities net income was a record $1,650 million, 30 percent ahead of 1996.
Net revenues of $9,390 million were up 19 percent, reflecting record
performances in both institutional and retail securities. For the full calendar
year, the Company retained its
<PAGE>
number one rankings in both completed and announced global M&A transactions.
Maintaining its leadership position in underwriting, the Company ranked first
worldwide in equity and equity-related issues, up from third in 1996. It ranked
second in high yield debt, up from sixth last year, and remained third in U.S.
investment grade debt.* Since the completion of the merger, equity underwriting
revenues from sales by Dean Witter account executives more than doubled from the
comparable 1996 period. Dean Witter also added 853 account executives during
the year -- up from 528 last year -- to total 9,946. Dean Witter opened 700,000
new client accounts in 1997 compared to 615,000 in 1996, and total client assets
increased $49 billion to stand at $302 billion on November 30, 1997.
Asset Management net income for the year was a record $531 million -- 93 percent
ahead of 1996. The increase reflects substantial growth in the Company's assets
under management and supervision as well as a record year in merchant banking
and the full year results of Van Kampen American Capital Inc., acquired in
October 1996. On November 30, the Company's assets under management and
supervision stood at $338 billion, an increase of $58 billion from a year
earlier.
Credit and Transaction Services reported $468 million in net income, an 11
percent increase over last year. Net revenues rose 8 percent to $2,967 million
despite a 30 percent rise in the provision for loan losses. Merchant and
cardmember fees increased 22 percent from the prior year. Managed loans of $36
billion were up $2.6 billion, or 8 percent, from 1996 and general purpose credit
card transaction volume increased 6 percent over the same period. The NOVUS
Network enrolled more than 400,000 new merchant locations in 1997. During the
year, Discover Brokerage Direct, the Company's on-line brokerage service,
experienced robust growth in both its account base and number of trades
executed.
- ----------------------------
* Source: Securities Data Corp. - January 1, to December 31, 1997 (reported as
of January 6, 1998)
<PAGE>
FOURTH QUARTER
SECURITIES
The Company's Securities business posted $620 million in net income -- the
second consecutive record quarter and more than double last year's fourth
quarter.
. Investment banking revenues were up 21 percent from 1996, reflecting
increases in equity and debt financing as well as the Company's continued
strength in mergers and acquisitions.
. Institutional sales and trading reported strong results in equities,
commodities and fixed income and achieved its fourth consecutive record
quarter in foreign exchange.
. Individual securities revenues climbed to record levels on the strength of
increased sales of equities and asset management products through the branch
system.
. The number of Dean Witter account executives increased by 312 for the quarter
to 9,946. Total client assets increased $14 billion during the quarter to
stand at $302 billion.
ASSET MANAGEMENT
Asset Management quarterly net income was $111 million, 85 percent ahead of a
year ago. The quarter's increase reflects continued growth in assets under
management, including the Company's mutual fund business, and a strong quarter
in merchant banking.
. Institutional assets, managed primarily by Morgan Stanley Asset Management
and Miller Anderson & Sherrerd, increased by $6 billion for the quarter and
$35 billion from a year ago -- to stand at $145 billion.
. Retail assets, managed primarily by InterCapital and Van Kampen American
Capital rose to $193 billion -- an increase of $7 billion during the quarter
and $23 billion over the last twelve months.
<PAGE>
. In October, the first Morgan Stanley-advised fund sold through Dean Witter
was launched with an impressive $496 million in sales in the first month.
. Merchant Banking recorded fourth quarter gains of $64 million, including
gains on its investments in the American Italian Pasta Co., CSG International
and Fort James.
CREDIT AND TRANSACTION SERVICES
For the fourth quarter, net income for Credit and Transaction Services was $79
million, a 9 percent decline from last year. The decline reflects a higher
provision for loan losses and increased marketing and business development
expenses which more than offset increased revenues from higher average managed
loan balances and higher transaction volume.
. On a managed loan basis, net interest income of $822 million rose 8 percent
from the fourth quarter of 1996, while merchant and cardmember fees of $522
million increased 2 percent from the same period.
. The consumer loan net charge-off rate in the fourth quarter increased to 7.21
percent from 6.11 percent a year ago.
. Marketing and business development expenses of $228 million rose 24 percent
from the fourth quarter of 1996, due primarily to higher cardmember rewards
and increased advertising and promotional expenses.
. New merchants enrolled by the NOVUS Network during the fourth quarter
included Guess?, J. Crew, Fila and the Long Island and Metro North Railroads.
Total capital (stockholders' equity and long-term debt) at November 30, 1997 was
$33.6 billion, including $14.0 billion of common and preferred stockholders'
equity. Book value per common share was $22.11, based on quarter-end shares of
594,708,971.
<PAGE>
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 399 securities branch
offices throughout the United States.
# # #
(See Attached Tables)
<PAGE>
Exhibit Index
-------------
Exhibit No. Description Page
- ------------- ----------- ----
99.1 Press release of the Registrant dated
January 7, 1998 containing financial
information for the quarter ended
November 30, 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 JANUARY 7, 1998
Commission File Number 1-11758
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
Quarter Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Net revenues
Securities $ 2,405 $ 2,022 19%
Asset Management 608 357 70%
Credit and Transaction Services 719 670 7%
------------ ------------
Consolidated net revenues $ 3,732 $ 3,049 22%
============ ============
Net income
Securities $ 620 $ 305 103%
Asset Management 111 60 85%
Credit and Transaction Services 79 87 (9%)
------------ ------------
Consolidated net income $ 810 $ 452 79%
============ ============
Preferred stock dividend requirements$ 14 $ 18 (22%)
============ ============
Earnings applicable to common shares $ 796 $ 434 83%
============ ============
Merger and restructuring charges $ 0 $ 0 --
============ ============
Earnings applicable to common shares
after merger charges $ 796 $ 434 83%
============ ============
Earnings per common share
Primary $ 1.33 $ 0.75 77%
Fully diluted $ 1.30 $ 0.73 78%
Fully diluted, excluding
merger charges $ 1.30 $ 0.73 78%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.33 $ 0.74 80%
Average common shares outstanding
Primary 600,038,489 581,408,249
Fully diluted 612,255,249 596,193,194
Period end common shares outstanding 594,708,971 573,623,434
Return on common equity 25.8% 17.6%
Return on common equity excluding
merger and acquisition charges (1) 26.3% 17.9%
(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.
1
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
Quarter Ended Percentage
Nov 30, 1997 Aug 31, 1997 Change
------------ ------------ ------------
Net revenues
Securities $ 2,405 $ 2,621 (8%)
Asset Management 608 721 (16%)
Credit and Transaction Services 719 765 (6%)
------------ ------------
Consolidated net revenues $ 3,732 $ 4,107 (9%)
============ ============
Net income
Securities $ 620 $ 359 73%
Asset Management 111 185 (40%)
Credit and Transaction Services 79 134 (41%)
------------ ------------
Consolidated net income $ 810 $ 678 19%
============ ============
Preferred stock dividend requirements$ 14 $ 15 (7%)
============ ============
Earnings applicable to common shares $ 796 $ 663 20%
============ ============
Merger and restructuring charges $ 0 $ 0 --
============ ============
Earnings applicable to common shares
after merger charges $ 796 $ 663 20%
============ ============
Earnings per common share
Primary $ 1.33 $ 1.11 20%
Fully diluted $ 1.30 $ 1.09 19%
Fully diluted, excluding
merger charges $ 1.30 $ 1.09 19%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.33 $ 1.12 19%
Average common shares outstanding
Primary 600,038,489 597,921,853
Fully diluted 612,255,249 610,187,894
Period end common shares outstanding 594,708,971 591,895,690
Return on common equity 25.8% 22.8%
Return on common equity excluding
merger and acquisition charges (1) 26.3% 23.4%
(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.
2
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
Twelve Months Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Net revenues
Securities $ 9,390 $ 7,887 19%
Asset Management 2,476 1,325 87%
Credit and Transaction Services 2,967 2,742 8%
------------ ------------
Consolidated net revenues $ 14,833 $ 11,954 24%
============ ============
Net income
Securities $ 1,650 $ 1,267 30%
Asset Management 531 275 93%
Credit and Transaction Services 468 421 11%
------------ ------------
Consolidated net income $ 2,649 $ 1,963 35%
============ ============
Preferred stock dividend requirements$ 66 $ 66 --
============ ============
Earnings applicable to common shares $ 2,583 $ 1,897 36%
============ ============
Merger and restructuring charges $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 2,520 $ 1,897 33%
============ ============
Earnings per common share
Primary $ 4.25 $ 3.22 32%
Fully diluted $ 4.15 $ 3.14 32%
Fully diluted, excluding
merger charges $ 4.25 $ 3.14 35%
Fully diluted, excluding merger
and acquisition charges (1) $ 4.37 $ 3.18 37%
Average common shares outstanding
Primary 594,182,885 589,965,774
Fully diluted 609,043,924 605,992,974
Period end common shares outstanding 594,708,971 573,623,434
Return on common equity 22.0% 19.9%
Return on common equity excluding
merger and acquisition charges (1) 23.2% 20.2%
(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.
3
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
Quarter Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Investment banking $ 773 $ 638 21%
Principal transactions:
Trading 822 622 32%
Investments 65 26 150%
Commissions 553 440 26%
Fees:
Asset mgmt, distribution & admin 652 474 38%
Merchant and cardmember 411 413 --
Servicing 180 208 (13%)
Interest and dividends 3,447 2,599 33%
Other 36 34 6%
------------ ------------
Total revenues $ 6,939 $ 5,454 27%
Interest expense 2,854 2,013 42%
Provision for consumer loan losses 353 392 (10%)
------------ ------------
Net revenues $ 3,732 $ 3,049 22%
------------ ------------
Compensation and benefits 1,175 1,310 (10%)
Occupancy and equipment 137 130 5%
Brokerage, clearing and exchange fees 122 85 44%
Info processing and communications 294 269 9%
Marketing and business development 324 278 17%
Professional services 132 105 26%
Other 191 168 14%
------------ ------------
Total non-interest expenses $ 2,375 $ 2,345 1%
------------ ------------
Income before income taxes 1,357 704 93%
Income tax expense 547 252 117%
------------ ------------
Net income before merger charges $ 810 $ 452 79%
============ ============
Preferred stock dividend requirements $ 14 $ 18 (22%)
============ ============
Earnings applicable to common shares $ 796 $ 434 83%
============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 0 --
============ ============
Earnings applicable to common shares
after merger charges $ 796 $ 434 83%
============ ============
Earnings per common share:
Primary $ 1.33 $ 0.75 77%
Fully diluted $ 1.30 $ 0.73 78%
Fully diluted, excluding
merger charges $ 1.30 $ 0.73 78%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.33 $ 0.74 80%
Average common shares outstanding:
Primary 600,038,489 581,408,249
Fully diluted 612,255,249 596,193,194
Return on common equity 25.8% 17.6%
Return on common equity excluding
merger and acquisition charges (1) 26.3% 17.9%
(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.
4
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
Quarter Ended Percentage
Nov 30, 1997 Aug 31, 1997 Change
------------ ------------ ------------
Investment banking $ 773 $ 818 (6%)
Principal transactions:
Trading 822 778 6%
Investments 65 206 (68%)
Commissions 553 559 (1%)
Fees:
Asset mgmt, distribution & admin 652 656 (1%)
Merchant and cardmember 411 433 (5%)
Servicing 180 196 (8%)
Interest and dividends 3,447 3,570 (3%)
Other 36 41 (12%)
------------ ------------
Total revenues $ 6,939 $ 7,257 (4%)
Interest expense 2,854 2,765 3%
Provision for consumer loan losses 353 385 (8%)
------------ ------------
Net revenues $ 3,732 $ 4,107 (9%)
------------ ------------
Compensation and benefits 1,175 1,849 (36%)
Occupancy and equipment 137 134 2%
Brokerage, clearing and exchange fees 122 130 (6%)
Info processing and communications 294 249 18%
Marketing and business development 324 293 11%
Professional services 132 127 4%
Other 191 219 (13%)
------------ ------------
Total non-interest expenses $ 2,375 $ 3,001 (21%)
------------ ------------
Income before income taxes 1,357 1,106 23%
Income tax expense 547 428 28%
------------ ------------
Net income before merger charges $ 810 $ 678 19%
============ ============
Preferred stock dividend requirements $ 14 $ 15 (7%)
============ ============
Earnings applicable to common shares $ 796 $ 663 20%
============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 0 --
============ ============
Earnings applicable to common shares
after merger charges $ 796 $ 663 20%
============ ============
Earnings per common share:
Primary $ 1.33 $ 1.11 20%
Fully diluted $ 1.30 $ 1.09 19%
Fully diluted, excluding
merger charges $ 1.30 $ 1.09 19%
Fully diluted, excluding merger
and acquisition charges (1) $ 1.33 $ 1.12 19%
Average common shares outstanding:
Primary 600,038,489 597,921,853
Fully diluted 612,255,249 610,187,894
Return on common equity 25.8% 22.8%
Return on common equity excluding
merger and acquisition charges (1) 26.3% 23.4%
(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.
5
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
Twelve Months Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Investment banking $ 2,694 $ 2,186 23%
Principal transactions:
Trading 3,191 2,659 20%
Investments 463 86 438%
Commissions 2,086 1,768 18%
Fees:
Asset mgmt, distribution & admin 2,505 1,717 46%
Merchant and cardmember 1,704 1,463 16%
Servicing 762 793 (4%)
Interest and dividends 13,583 11,278 20%
Other 144 128 13%
------------ ------------
Total revenues $ 27,132 $ 22,078 23%
Interest expense 10,806 8,940 21%
Provision for consumer loan losses 1,493 1,184 26%
------------ ------------
Net revenues $ 14,833 $ 11,954 24%
------------ ------------
Compensation and benefits 6,019 5,052 19%
Occupancy and equipment 526 491 7%
Brokerage, clearing and exchange fees 460 316 46%
Info processing and communications 1,080 985 10%
Marketing and business development 1,179 1,008 17%
Professional services 451 331 36%
Other 770 681 13%
------------ ------------
Total non-interest expenses $ 10,485 $ 8,864 18%
------------ ------------
Income before income taxes 4,348 3,090 41%
Income tax expense 1,699 1,127 51%
------------ ------------
Net income before merger charges $ 2,649 $ 1,963 35%
============ ============
Preferred stock dividend requirements $ 66 $ 66 --
============ ============
Earnings applicable to common shares $ 2,583 $ 1,897 36%
============ ============
Merger and restructuring charges,
net of taxes $ 63 $ 0 *
============ ============
Earnings applicable to common shares
after merger charges $ 2,520 $ 1,897 33%
============ ============
Earnings per common share:
Primary $ 4.25 $ 3.22 32%
Fully diluted $ 4.15 $ 3.14 32%
Fully diluted, excluding
merger charges $ 4.25 $ 3.14 35%
Fully diluted, excluding merger
and acquisition charges (1) $ 4.37 $ 3.18 37%
Average common shares outstanding:
Primary 594,182,885 589,965,774
Fully diluted 609,043,924 605,992,974
Return on common equity 22.0% 19.9%
Return on common equity excluding
merger and acquisition charges (1) 23.2% 20.2%
(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.
6
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
Quarter Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Investment banking $ 773 $ 638 21%
Principal transactions:
Trading 822 622 32%
Investments 65 26 150%
Commissions 544 440 24%
Asset mgmt, distribution & admin fees 652 474 38%
Interest and dividends 2,679 1,899 41%
Other 32 33 (3%)
------------ ------------
Total revenues $ 5,567 $ 4,132 35%
Interest expense 2,554 1,753 46%
------------ ------------
Net revenues $ 3,013 $ 2,379 27%
------------ ------------
Compensation and benefits 1,038 1,186 (12%)
Occupancy and equipment 119 113 5%
Brokerage, clearing and exchange fees 118 85 39%
Info processing and communications 170 143 19%
Marketing and business development 96 94 2%
Professional services 117 89 31%
Other 125 104 20%
------------ ------------
Total non-interest expenses $ 1,783 $ 1,814 (2%)
------------ ------------
Income before income taxes 1,230 565 118%
Income tax expense 499 200 150%
------------ ------------
Net income $ 731 $ 365 100%
============ ============
Comp & benefits as a % of net revenues 34% 50%
Non-comp exps as a % of net revenues 25% 26%
Profit margin (1) 24% 15%
(1) Net income as a % of net revenues.
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
7
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
Quarter Ended Percentage
Nov 30, 1997 Aug 31, 1997 Change
------------ ------------ ------------
Investment banking $ 773 $ 818 (6%)
Principal transactions:
Trading 822 778 6%
Investments 65 206 (68%)
Commissions 544 550 (1%)
Asset mgmt, distribution & admin fees 652 656 (1%)
Interest and dividends 2,679 2,758 (3%)
Other 32 38 (16%)
------------ ------------
Total revenues $ 5,567 $ 5,804 (4%)
Interest expense 2,554 2,462 4%
------------ ------------
Net revenues $ 3,013 $ 3,342 (10%)
------------ ------------
Compensation and benefits 1,038 1,713 (39%)
Occupancy and equipment 119 118 1%
Brokerage, clearing and exchange fees 118 126 (6%)
Info processing and communications 170 141 21%
Marketing and business development 96 101 (5%)
Professional services 117 103 14%
Other 125 146 (14%)
------------ ------------
Total non-interest expenses $ 1,783 $ 2,448 (27%)
------------ ------------
Income before income taxes 1,230 894 38%
Income tax expense 499 350 43%
------------ ------------
Net income $ 731 $ 544 34%
============ ============
Comp & benefits as a % of net revenues 34% 51%
Non-comp exps as a % of net revenues 25% 22%
Profit margin (1) 24% 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.
8
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
Twelve Months Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Investment banking $ 2,694 $ 2,186 23%
Principal transactions:
Trading 3,191 2,659 20%
Investments 463 86 438%
Commissions 2,059 1,768 16%
Asset mgmt, distribution & admin fees 2,505 1,717 46%
Interest and dividends 10,455 8,580 22%
Other 132 125 6%
------------ ------------
Total revenues $ 21,499 $ 17,121 26%
Interest expense 9,633 7,909 22%
------------ ------------
Net revenues $ 11,866 $ 9,212 29%
------------ ------------
Compensation and benefits 5,475 4,569 20%
Occupancy and equipment 462 432 7%
Brokerage, clearing and exchange fees 448 316 42%
Info processing and communications 602 512 18%
Marketing and business development 393 296 33%
Professional services 378 280 35%
Other 511 390 31%
------------ ------------
Total non-interest expenses $ 8,269 $ 6,795 22%
------------ ------------
Income before income taxes 3,597 2,417 49%
Income tax expense 1,416 875 62%
------------ ------------
Net income $ 2,181 $ 1,542 41%
============ ============
Comp & benefits as a % of net revenues 46% 50%
Non-comp exps as a % of net revenues 24% 24%
Profit margin (1) 18% 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.
9
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
Quarter Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 411 $ 413 --
Servicing 180 208 (13%)
Commissions 9 0 *
Other 4 1 300%
------------ ------------
Total non-interest revenues $ 604 $ 622 (3%)
Interest revenue 768 700 10%
Interest expense 300 260 15%
------------ ------------
Net interest income 468 440 6%
Provision for consumer loan losses 353 392 (10%)
------------ ------------
Net credit income 115 48 140%
------------ ------------
Net revenues $ 719 $ 670 7%
------------ ------------
Compensation and benefits 137 124 10%
Occupancy and equipment 18 17 6%
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 124 126 (2%)
Marketing and business development 228 184 24%
Professional services 15 16 (6%)
Other 66 64 3%
------------ ------------
Total non-interest expenses $ 592 $ 531 11%
------------ ------------
Income before income taxes 127 139 (9%)
Income tax expense 48 52 (8%)
------------ ------------
Net income $ 79 $ 87 (9%)
============ ============
Comp & benefits as a % of net revenues 19% 19%
Non-comp exps as a % of net revenues 63% 61%
Profit margin (1) 11% 13%
(1) Net income as a % of net revenues.
10
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
Quarter Ended Percentage
Nov 30, 1997 Aug 31, 1997 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 411 $ 433 (5%)
Servicing 180 196 (8%)
Commissions 9 9 --
Other 4 3 33%
------------ ------------
Total non-interest revenues $ 604 $ 641 (6%)
Interest revenue 768 812 (5%)
Interest expense 300 303 (1%)
------------ ------------
Net interest income 468 509 (8%)
Provision for consumer loan losses 353 385 (8%)
------------ ------------
Net credit income 115 124 (7%)
------------ ------------
Net revenues $ 719 $ 765 (6%)
------------ ------------
Compensation and benefits 137 136 1%
Occupancy and equipment 18 16 13%
Brokerage, clearing and exchange fees 4 4 --
Info processing and communications 124 108 15%
Marketing and business development 228 192 19%
Professional services 15 24 (38%)
Other 66 73 (10%)
------------ ------------
Total non-interest expenses $ 592 $ 553 7%
------------ ------------
Income before income taxes 127 212 (40%)
Income tax expense 48 78 (38%)
------------ ------------
Net income $ 79 $ 134 (41%)
============ ============
Comp & benefits as a % of net revenues 19% 18%
Non-comp exps as a % of net revenues 63% 55%
Profit margin (1) 11% 18%
(1) Net income as a % of net revenues.
11
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
Twelve Months Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 1,704 $ 1,463 16%
Servicing 762 793 (4%)
Commissions 27 0 *
Other 12 3 300%
------------ ------------
Total non-interest revenues $ 2,505 $ 2,259 11%
Interest revenue 3,128 2,698 16%
Interest expense 1,173 1,031 14%
------------ ------------
Net interest income 1,955 1,667 17%
Provision for consumer loan losses 1,493 1,184 26%
------------ ------------
Net credit income 462 483 (4%)
------------ ------------
Net revenues $ 2,967 $ 2,742 8%
------------ ------------
Compensation and benefits 544 483 13%
Occupancy and equipment 64 59 8%
Brokerage, clearing and exchange fees 12 0 *
Info processing and communications 478 473 1%
Marketing and business development 786 712 10%
Professional services 73 51 43%
Other 259 291 (11%)
------------ ------------
Total non-interest expenses $ 2,216 $ 2,069 7%
------------ ------------
Income before income taxes 751 673 12%
Income tax expense 283 252 12%
------------ ------------
Net income $ 468 $ 421 11%
============ ============
Comp & benefits as a % of net revenues 18% 18%
Non-comp exps as a % of net revenues 56% 58%
Profit margin (1) 16% 15%
(1) Net income as a % of net revenues.
12
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
Quarter Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 522 $ 510 2%
Servicing 0 0 --
Commissions 9 0 *
Other 1 0 *
------------ ------------
Total non-interest revenues $ 532 $ 510 4%
Interest revenue 1,340 1,221 10%
Interest expense 518 463 12%
------------ ------------
Net interest income 822 758 8%
Provision for consumer loan losses 635 598 6%
------------ ------------
Net credit income 187 160 17%
------------ ------------
Net revenues $ 719 $ 670 7%
------------ ------------
Compensation and benefits 137 124 10%
Occupancy and equipment 18 17 6%
Brokerage, clearing and exchange fees 4 0 *
Info processing and communications 124 126 (2%)
Marketing and business development 228 184 24%
Professional services 15 16 (6%)
Other 66 64 3%
------------ ------------
Total non-interest expenses $ 592 $ 531 11%
------------ ------------
Income before income taxes 127 139 (9%)
Income tax expense 48 52 (8%)
------------ ------------
Net income $ 79 $ 87 (9%)
============ ============
Comp & benefits as a % of net revenues 19% 19%
Non-comp exps as a % of net revenues 63% 61%
Profit margin (1) 11% 13%
(1) Net income as a % of net revenues.
13
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
Quarter Ended Percentage
Nov 30, 1997 Aug 31, 1997 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 522 $ 542 (4%)
Servicing 0 0 --
Commissions 9 9 --
Other 1 4 (75%)
------------ ------------
Total non-interest revenues $ 532 $ 555 (4%)
Interest revenue 1,340 1,322 1%
Interest expense 518 507 2%
------------ ------------
Net interest income 822 815 1%
Provision for consumer loan losses 635 605 5%
------------ ------------
Net credit income 187 210 (11%)
------------ ------------
Net revenues $ 719 $ 765 (6%)
------------ ------------
Compensation and benefits 137 136 1%
Occupancy and equipment 18 16 13%
Brokerage, clearing and exchange fees 4 4 --
Info processing and communications 124 108 15%
Marketing and business development 228 192 19%
Professional services 15 24 (38%)
Other 66 73 (10%)
------------ ------------
Total non-interest expenses $ 592 $ 553 7%
------------ ------------
Income before income taxes 127 212 (40%)
Income tax expense 48 78 (38%)
------------ ------------
Net income $ 79 $ 134 (41%)
============ ============
Comp & benefits as a % of net revenues 19% 18%
Non-comp exps as a % of net revenues 63% 53%
Profit margin (1) 11% 18%
(1) Net income as a % of net revenues.
14
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
Twelve Months Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 2,140 $ 1,747 22%
Servicing 0 0 --
Commissions 27 0 *
Other 10 2 400%
------------ ------------
Total non-interest revenues $ 2,177 $ 1,749 24%
Interest revenue 5,246 4,685 12%
Interest expense 2,002 1,811 11%
------------ ------------
Net interest income 3,244 2,874 13%
Provision for consumer loan losses 2,454 1,881 30%
------------ ------------
Net credit income 790 993 (20%)
------------ ------------
Net revenues $ 2,967 $ 2,742 8%
------------ ------------
Compensation and benefits 544 483 13%
Occupancy and equipment 64 59 8%
Brokerage, clearing and exchange fees 12 0 *
Info processing and communications 478 473 1%
Marketing and business development 786 712 10%
Professional services 73 51 43%
Other 259 291 (11%)
------------ ------------
Total non-interest expenses $ 2,216 $ 2,069 7%
------------ ------------
Income before income taxes 751 673 12%
Income tax expense 283 252 12%
------------ ------------
Net income $ 468 $ 421 11%
============ ============
Comp & benefits as a % of net revenues 18% 18%
Non-comp exps as a % of net revenues 56% 58%
Profit margin (1) 16% 15%
(1) Net income as a % of net revenues.
15
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
11/30/97 8/31/97 5/31/97
------------ ------------ ------------
Investment banking $ 773 $ 818 $ 581
Principal transactions:
Trading 822 778 722
Investments 65 206 136
Commissions 553 559 484
Fees:
Asset mgmt, distribution & admin 652 656 610
Merchant and cardmember 411 433 424
Servicing 180 196 186
Interest and dividends 3,447 3,570 3,197
Other 36 41 36
------------ ------------ ------------
Total revenues $ 6,939 $ 7,257 $ 6,376
Interest expense 2,854 2,765 2,478
Provision for consumer loan losses 353 385 378
------------ ------------ ------------
Net revenues $ 3,732 $ 4,107 $ 3,520
------------ ------------ ------------
Compensation and benefits 1,175 1,849 1,505
Occupancy and equipment 137 134 127
Brokerage, clearing and exchange fees 122 130 113
Info processing and communications 294 249 267
Marketing and business development 324 293 274
Professional services 132 127 99
Other 191 219 178
------------ ------------ ------------
Total non-interest expenses $ 2,375 $ 3,001 $ 2,563
------------ ------------ ------------
Income before income taxes 1,357 1,106 957
Income tax expense 547 428 367
------------ ------------ ------------
Net income before merger charges $ 810 $ 678 $ 590
============ ============ ============
Preferred stock dividend requirements $ 14 $ 15 $ 18
============ ============ ============
Earnings applicable to common shares $ 796 $ 663 $ 572
============ ============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 0 $ 63
============ ============ ============
Earnings applicable to common shares
after merger charges $ 796 $ 663 $ 509
============ ============ ============
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
16
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
2/28/97 11/30/96 8/31/96
------------ ------------ ------------
Investment banking $ 522 $ 638 $ 486
Principal transactions:
Trading 869 622 534
Investments 56 26 29
Commissions 490 440 417
Fees:
Asset mgmt, distribution & admin 587 474 423
Merchant and cardmember 436 413 366
Servicing 200 208 207
Interest and dividends 3,369 2,599 3,035
Other 31 34 29
------------ ------------ ------------
Total revenues $ 6,560 $ 5,454 $ 5,526
Interest expense 2,709 2,013 2,412
Provision for consumer loan losses 377 392 307
------------ ------------ ------------
Net revenues $ 3,474 $ 3,049 $ 2,807
------------ ------------ ------------
Compensation and benefits 1,490 1,310 1,170
Occupancy and equipment 128 130 122
Brokerage, clearing and exchange fees 95 85 76
Info processing and communications 270 269 247
Marketing and business development 288 278 247
Professional services 93 105 84
Other 182 168 165
------------ ------------ ------------
Total non-interest expenses $ 2,546 $ 2,345 $ 2,111
------------ ------------ ------------
Income before income taxes 928 704 696
Income tax expense 357 252 246
------------ ------------ ------------
Net income before merger charges $ 571 $ 452 $ 450
============ ============ ============
Preferred stock dividend requirements $ 19 $ 18 $ 15
============ ============ ============
Earnings applicable to common shares $ 552 $ 434 $ 435
============ ============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 0 $ 0
============ ============ ============
Earnings applicable to common shares
after merger charges $ 552 $ 434 $ 435
============ ============ ============
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
17
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
5/31/96 2/29/96 11/30/95
------------ ------------ ------------
Investment banking $ 604 $ 458 $ 551
Principal transactions:
Trading 680 823 330
Investments 38 (7) 39
Commissions 463 448 414
Fees:
Asset mgmt, distribution & admin 430 390 350
Merchant and cardmember 354 330 306
Servicing 182 196 173
Interest and dividends 2,830 2,814 2,562
Other 37 28 21
------------ ------------ ------------
Total revenues $ 5,618 $ 5,480 $ 4,746
Interest expense 2,251 2,264 1,917
Provision for consumer loan losses 238 247 256
------------ ------------ ------------
Net revenues $ 3,129 $ 2,969 $ 2,573
------------ ------------ ------------
Compensation and benefits 1,314 1,258 1,110
Occupancy and equipment 119 120 116
Brokerage, clearing and exchange fees 78 77 72
Info processing and communications 241 228 241
Marketing and business development 247 236 255
Professional services 73 69 60
Other 167 181 170
------------ ------------ ------------
Total non-interest expenses $ 2,239 $ 2,169 $ 2,024
------------ ------------ ------------
Income before income taxes 890 800 549
Income tax expense 322 307 194
------------ ------------ ------------
Net income before merger charges $ 568 $ 493 $ 355
============ ============ ============
Preferred stock dividend requirements $ 17 $ 16 $ 16
============ ============ ============
Earnings applicable to common shares $ 551 $ 477 $ 339
============ ============ ============
Merger and restructuring charges,
net of taxes $ 0 $ 0 $ 0
============ ============ ============
Earnings applicable to common shares
after merger charges $ 551 $ 477 $ 339
============ ============ ============
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
18
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Consolidated Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
8/31/95
------------
Investment banking $ 398
Principal transactions:
Trading 478
Investments 69
Commissions 395
Fees:
Asset mgmt, distribution & admin 347
Merchant and cardmember 283
Servicing 178
Interest and dividends 2,742
Other 24
------------
Total revenues $ 4,914
Interest expense 2,131
Provision for consumer loan losses 166
------------
Net revenues $ 2,617
------------
Compensation and benefits 1,084
Occupancy and equipment 116
Brokerage, clearing and exchange fees 73
Info processing and communications 219
Marketing and business development 215
Professional services 58
Other 171
------------
Total non-interest expenses $ 1,936
------------
Income before income taxes 681
Income tax expense 237
------------
Net income before merger charges $ 444
============
Preferred stock dividend requirements $ 17
============
Earnings applicable to common shares $ 427
============
Merger and restructuring charges,
net of taxes $ 0
============
Earnings applicable to common shares
after merger charges $ 427
============
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
19
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
11/30/97 8/31/97 5/31/97
------------ ------------ ------------
Investment banking $ 773 $ 818 $ 581
Principal transactions:
Trading 822 778 722
Investments 65 206 136
Commissions 544 550 476
Asset mgmt, distribution & admin fees 652 656 610
Interest and dividends 2,679 2,758 2,416
Other 32 38 33
------------ ------------ ------------
Total revenues $ 5,567 $ 5,804 $ 4,974
Interest expense 2,554 2,462 2,191
------------ ------------ ------------
Net revenues $ 3,013 $ 3,342 $ 2,783
------------ ------------ ------------
Compensation and benefits 1,038 1,713 1,369
Occupancy and equipment 119 118 112
Brokerage, clearing and exchange fees 118 126 109
Info processing and communications 170 141 149
Marketing and business development 96 101 100
Professional services 117 103 83
Other 125 146 114
------------ ------------ ------------
Total non-interest expenses $ 1,783 $ 2,448 $ 2,036
------------ ------------ ------------
Income before income taxes 1,230 894 747
Income tax expense 499 350 286
------------ ------------ ------------
Net income $ 731 $ 544 $ 461
============ ============ ============
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
20
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
2/28/97 11/30/96 8/31/96
------------ ------------ ------------
Investment banking $ 522 $ 638 $ 486
Principal transactions:
Trading 869 622 534
Investments 56 26 29
Commissions 489 440 417
Asset mgmt, distribution & admin fees 587 474 423
Interest and dividends 2,602 1,899 2,359
Other 29 33 28
------------ ------------ ------------
Total revenues $ 5,154 $ 4,132 $ 4,276
Interest expense 2,426 1,753 2,160
------------ ------------ ------------
Net revenues $ 2,728 $ 2,379 $ 2,116
------------ ------------ ------------
Compensation and benefits 1,355 1,186 1,051
Occupancy and equipment 113 113 108
Brokerage, clearing and exchange fees 95 85 76
Info processing and communications 142 143 124
Marketing and business development 96 94 63
Professional services 75 89 71
Other 126 104 93
------------ ------------ ------------
Total non-interest expenses $ 2,002 $ 1,814 $ 1,586
------------ ------------ ------------
Income before income taxes 726 565 530
Income tax expense 281 200 184
------------ ------------ ------------
Net income $ 445 $ 365 $ 346
============ ============ ============
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
21
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
5/31/96 2/29/96 11/30/95
------------ ------------ ------------
Investment banking $ 604 $ 458 $ 551
Principal transactions:
Trading 680 823 330
Investments 38 (7) 39
Commissions 463 448 414
Asset mgmt, distribution & admin fees 430 390 350
Interest and dividends 2,167 2,155 1,943
Other 36 28 22
------------ ------------ ------------
Total revenues $ 4,418 $ 4,295 $ 3,649
Interest expense 2,004 1,992 1,677
------------ ------------ ------------
Net revenues $ 2,414 $ 2,303 $ 1,972
------------ ------------ ------------
Compensation and benefits 1,195 1,137 999
Occupancy and equipment 105 106 103
Brokerage, clearing and exchange fees 78 77 72
Info processing and communications 126 119 126
Marketing and business development 74 65 50
Professional services 65 55 48
Other 84 109 103
------------ ------------ ------------
Total non-interest expenses $ 1,727 $ 1,668 $ 1,501
------------ ------------ ------------
Income before income taxes 687 635 471
Income tax expense 248 243 164
------------ ------------ ------------
Net income $ 439 $ 392 $ 307
============ ============ ============
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
22
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Quarterly Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
FOR THE QUARTER ENDED
8/31/95
------------
Investment banking $ 398
Principal transactions:
Trading 478
Investments 69
Commissions 395
Asset mgmt, distribution & admin fees 347
Interest and dividends 2,134
Other 23
------------
Total revenues $ 3,844
Interest expense 1,902
------------
Net revenues $ 1,942
------------
Compensation and benefits 979
Occupancy and equipment 104
Brokerage, clearing and exchange fees 73
Info processing and communications 113
Marketing and business development 50
Professional services 47
Other 99
------------
Total non-interest expenses $ 1,465
------------
Income before income taxes 477
Income tax expense 161
------------
Net income $ 316
============
Note: Certain reclassifications have been made to prior period amounts to
conform to the current presentation.
23
<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
11/30/97 8/31/97 5/31/97
------------ ------------ ------------
Fees:
Merchant and cardmember $ 522 $ 542 $ 528
Servicing 0 0 0
Commissions 9 9 8
Other 1 4 4
------------ ------------ ------------
Total non-interest revenues $ 532 $ 555 $ 540
Interest revenue 1,340 1,322 1,299
Interest expense 518 507 491
------------ ------------ ------------
Net interest income 822 815 808
Provision for consumer loan losses 635 605 611
------------ ------------ ------------
Net credit income 187 210 197
------------ ------------ ------------
Net revenues $ 719 $ 765 $ 737
------------ ------------ ------------
Compensation and benefits 137 136 136
Occupancy and equipment 18 16 15
Brokerage, clearing and exchange fees 4 4 4
Info processing and communications 124 108 118
Marketing and business development 228 192 174
Professional services 15 24 16
Other 66 73 64
------------ ------------ ------------
Total non-interest expenses $ 592 $ 553 $ 527
------------ ------------ ------------
Income before income taxes 127 212 210
Income tax expense 48 78 81
------------ ------------ ------------
Net income $ 79 $ 134 $ 129
============ ============ ============
24
<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
2/28/97 11/30/96 8/31/96
------------ ------------ ------------
Fees:
Merchant and cardmember $ 548 $ 510 $ 446
Servicing 0 0 0
Commissions 1 0 0
Other 1 0 0
------------ ------------ ------------
Total non-interest revenues $ 550 $ 510 $ 446
Interest revenue 1,285 1,221 1,187
Interest expense 486 463 455
------------ ------------ ------------
Net interest income 799 758 732
Provision for consumer loan losses 603 598 487
------------ ------------ ------------
Net credit income 196 160 245
------------ ------------ ------------
Net revenues $ 746 $ 670 $ 691
------------ ------------ ------------
Compensation and benefits 135 124 119
Occupancy and equipment 15 17 14
Brokerage, clearing and exchange fees 0 0 0
Info processing and communications 128 126 123
Marketing and business development 192 184 184
Professional services 18 16 13
Other 56 64 72
------------ ------------ ------------
Total non-interest expenses $ 544 $ 531 $ 525
------------ ------------ ------------
Income before income taxes 202 139 166
Income tax expense 76 52 62
------------ ------------ ------------
Net income $ 126 $ 87 $ 104
============ ============ ============
25
<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
5/31/96 2/29/96 11/30/95
------------ ------------ ------------
Fees:
Merchant and cardmember $ 417 $ 374 $ 344
Servicing 0 0 0
Commissions 0 0 0
Other 2 0 1
------------ ------------ ------------
Total non-interest revenues $ 419 $ 374 $ 345
Interest revenue 1,150 1,127 1,050
Interest expense 445 448 413
------------ ------------ ------------
Net interest income 705 679 637
Provision for consumer loan losses 409 387 380
------------ ------------ ------------
Net credit income 296 292 257
------------ ------------ ------------
Net revenues $ 715 $ 666 $ 602
------------ ------------ ------------
Compensation and benefits 119 121 111
Occupancy and equipment 14 14 13
Brokerage, clearing and exchange fees 0 0 0
Info processing and communications 115 109 115
Marketing and business development 173 171 205
Professional services 8 14 12
Other 83 72 68
------------ ------------ ------------
Total non-interest expenses $ 512 $ 501 $ 524
------------ ------------ ------------
Income before income taxes 203 165 78
Income tax expense 74 64 30
------------ ------------ ------------
Net income $ 129 $ 101 $ 48
============ ============ ============
26
<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
8/31/95
------------
Fees:
Merchant and cardmember $ 320
Servicing 0
Commissions 0
Other 1
------------
Total non-interest revenues $ 321
Interest revenue 1,023
Interest expense 402
------------
Net interest income 621
Provision for consumer loan losses 266
------------
Net credit income 355
------------
Net revenues $ 676
------------
Compensation and benefits 105
Occupancy and equipment 12
Brokerage, clearing and exchange fees 0
Info processing and communications 106
Marketing and business development 165
Professional services 11
Other 73
------------
Total non-interest expenses $ 472
------------
Income before income taxes 204
Income tax expense 76
------------
Net income $ 128
============
27
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited)
Quarter Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
MSDWD
Period end common shares outstanding 594,708,971 573,623,434 4%
Book value per common share $ 22.11 $ 18.17 22%
Shareholder's equity (millions) $ 13,956 $ 11,565 21%
Total capital (millions) (1) $ 33,577 $ 31,019 8%
SECURITIES ($ billions)
Brokerage
Dean Witter account executives 9,946 9,093 9%
Dean Witter client assets $ 302 $ 254 19%
Capital markets (2)
Mergers and acquisitions announced
transactions (3)
MSDWD global market volume $ 339.7 $ 237.6 43%
Rank 1 1
Worldwide equity & related issues (3)
MSDWD global market volume $ 33.5 $ 21.9 53%
Rank 1 3
ASSET MANAGEMENT ($billions)
Assets under mgmt and
administration
Products offered primarily
to individuals
Mutual funds
Equity $ 69 $ 57 21%
Fixed income 52 50 4%
Money markets 29 25 16%
------------ ------------
Total mutual funds 150 132 14%
ICS Assets 14 10 40%
Other 29 28 4%
Products offered primarily to
institutional clients
Mutual funds 30 25 20%
Separate accts, pooled vehicle and
other arrangements 115 85 35%
Total assets under management $ 338 $ 280 21%
Global assets under custody (4) $ 377 $ 144 162%
(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.
(4) Includes assets subject to Barclays' clients agreeing to convert.
28
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited)
Quarter Ended Percentage
Nov 30, 1997 Aug 31, 1997 Change
------------ ------------ ------------
MSDWD
Period end common shares outstanding 594,708,971 591,895,690 --
Book value per common share $ 22.11 $ 20.25 9%
Shareholder's equity (millions) $ 13,956 $ 12,787 9%
Total capital (millions) (1) $ 33,577 $ 33,417 --
SECURITIES ($ billions)
Brokerage
Dean Witter account executives 9,946 9,634 3%
Dean Witter client assets $ 302 $ 288 5%
Capital markets (2)
Mergers and acquisitions announced
transactions (3)
MSDWD global market volume $ 339.7 $ 146.8 131%
Rank 1 3
Worldwide equity & related issues (3)
MSDWD global market volume $ 33.5 $ 19.6 71%
Rank 1 1
ASSET MANAGEMENT ($billions)
Assets under mgmt and
administration
Products offered primarily
to individuals
Mutual funds
Equity $ 69 $ 65 6%
Fixed income 52 51 2%
Money markets 29 29 --
------------ ------------
Total mutual funds 150 145 3%
ICS Assets 14 13 8%
Other 29 28 4%
Products offered primarily to
institutional clients
Mutual funds 30 30 --%
Separate accts, pooled vehicle and
other arrangements 115 109 6%
Total assets under management $ 338 $ 325 4%
Global assets under custody (4) $ 377 $ 403 (6%)
(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.
(4) Includes assets subject to Barclays' clients agreeing to convert.
29
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
Quarter Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period end $ 20,917 $ 20,085 4%
Average 21,186 19,370 9%
Managed consumer loans (1)
Period end $ 35,950 $ 33,316 8%
Average $ 35,298 $ 32,666 8%
Interest yield 14.79% 14.80% (0.01 bp)
Interest spread 8.58% 8.66% (0.08 bp)
Net charge-off rate 7.21% 6.11% 1.10 bp
Delinquency rate (over 30 days) 6.98% 7.26% (0.28 bp)
(1) Includes owned and securitized consumer loans.
30
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
Quarter Ended Percentage
Nov 30, 1997 Aug 31, 1997 Change
------------ ------------ ------------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period end $ 20,917 $ 21,493 (3%)
Average 21,186 21,684 (2%)
Managed consumer loans (1)
Period end $ 35,950 $ 34,868 3%
Average $ 35,298 $ 34,620 2%
Interest yield 14.79% 14.83% (0.04 bp)
Interest spread 8.58% 8.62% (0.04 bp)
Net charge-off rate 7.21% 6.61% 0.60 bp
Delinquency rate (over 30 days) 6.98% 7.47% (0.49 bp)
(1) Includes owned and securitized consumer loans.
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MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
Twelve Months Ended Percentage
Nov 30, 1997 Nov 30, 1996 Change
------------ ------------ ------------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period end $ 20,917 $ 20,085 4%
Average 21,285 18,705 14%
Managed consumer loans (1)
Period end $ 35,950 $ 33,316 8%
Average $ 34,619 $ 31,036 12%
Interest yield 14.83% 14.86% (0.03 bp)
Interest spread 8.66% 8.60% 0.06 bp
Net charge-off rate 6.95% 5.43% 1.52 bp
Delinquency rate (over 30 days) 6.98% 7.26% (0.28 bp)
General purpose credit card
transaction volume (in billions) 56 53 6%
General purpose credit card
accounts (in millions) 40 39 3%
General purpose credit card
active accounts (in millions) 23 24 (4%)
General purpose avg receivables
per avg active acct (actual $) $ 1,382 $ 1,238 12%
NOVUS Network increase in merchant
locations (in thousands) 405 419 (3%)
(1) Includes owned and securitized consumer loans.
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