<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 24, 1998
Morgan Stanley Dean Witter & Co.
--------------------------------------
(Exact name of Registrant as specified
in its charter)
Delaware 1-11758 36-3145972
-------------------------------------------------------------------------
(state or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1585 Broadway, New York, New York 10036
------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (212) 761-4000
--------------
-------------------------------------------------------------------------
(Former address, if changed since last report.)
<PAGE>
Item 5. Other Events
- ---------------------
On September 24, 1998, Morgan Stanley Dean Witter & Co. (the
"Registrant") released financial information with respect to the quarter ended
August 31, 1998. A copy of the press release containing such financial
information is annexed as Exhibit 99.1 to this Report and by this reference
incorporated herein and made a part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- --------------------------------------------------------------------------
99.1 Press release of the Registrant dated September 24, 1998
containing financial information for the third quarter
ended August 31, 1998.
<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 & CO.
--------------------------------
(Registrant)
By: /s/ Ronald T. Carman
--------------------------------
Ronald T. Carman
Assistant Secretary
Dated: September 24, 1998
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
---------------------------------------- --------------------------
Aug 31, 1998 Aug 31, 1997 May 31, 1998 Aug 31, 1997 May 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues
Securities $ 2,549 $ 2,621 $ 3,074 (3%) (17%)
Asset Management 409 721 730 (43%) (44%)
Credit and Transaction Services 883 765 795 15% 11%
------------ ------------ ------------
Consolidated net revenues $ 3,841 $ 4,107 $ 4,599 (6%) (16%)
============ ============ ============
Net income
Securities $ 439 $ 359 $ 530 22% (17%)
Asset Management 31 185 157 (83%) (80%)
Credit and Transaction Services 175 134 167 31% 5%
------------ ------------ ------------
Consolidated net income $ 645 $ 678 $ 854 (5%) (24%)
============ ============ ============
Preferred stock dividend requirements$ 14 $ 15 $ 14 (7%) --
============ ============ ============
Earnings applicable to common shares $ 631 $ 663 $ 840 (5%) (25%)
============ ============ ============
Merger charges $ 0 $ 0 $ 0 -- --
============ ============ ============
Earnings applicable to common shares
after merger charges $ 631 $ 663 $ 840 (5%) (25%)
============ ============ ============
Earnings per common share
Basic $ 1.10 $ 1.15 $ 1.44 (4%) (24%)
Diluted $ 1.05 $ 1.09 $ 1.37 (4%) (23%)
Diluted, excluding merger charges $ 1.05 $ 1.09 $ 1.37 (4%) (23%)
Diluted, excluding acq charges (1) $ 1.07 $ 1.12 $ 1.40 (4%) (24%)
Average common shares outstanding
Basic 573,170,507 578,082,806 581,326,618
Diluted 604,779,594 610,019,122 612,625,354
Period end common shares outstanding 582,790,622 591,895,690 587,672,561
Return on common equity 19.3% 22.8% 25.0%
Return on common equity excluding
acquisition charges (1) 19.8% 23.4% 25.5%
</TABLE>
- ------------------------------------------------------------------------------
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
Nine Months Ended Percentage
Aug 31, 1998 Aug 31, 1997 Change
------------ ------------ ------------
Net revenues
Securities $ 8,328 $ 6,985 19%
Asset Management 1,775 1,868 (5%)
Credit and Transaction Services 2,372 2,248 6%
------------ ------------
Consolidated net revenues $ 12,475 $ 11,101 12%
============ ============
Net income
Securities $ 1,441 $ 1,029 40%
Asset Management 308 421 (27%)
Credit and Transaction Services 441 389 13%
------------ ------------
Consolidated net income $ 2,190 $ 1,839 19%
============ ============
Preferred stock dividend requirements$ 43 $ 52 (17%)
============ ============
Earnings applicable to common shares $ 2,147 $ 1,787 20%
============ ============
Merger charges $ 0 $ 63 *
============ ============
Earnings applicable to common shares
after merger charges $ 2,147 $ 1,724 25%
============ ============
Earnings per common share
Basic $ 3.69 $ 3.00 23%
Diluted $ 3.51 $ 2.85 23%
Diluted, excluding merger charges $ 3.51 $ 2.96 19%
Diluted, excluding acq charges (1) $ 3.59 $ 3.05 18%
Average common shares outstanding
Basic 582,105,755 574,048,186
Diluted 613,265,207 605,565,186
Period end common shares outstanding 582,790,622 591,895,690
Return on common equity 21.5% 20.6%
Return on common equity excluding
acquisition charges (1) 22.0% 22.1%
- --------------------------------------------------------------------------------
(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 & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
---------------------------------------- --------------------------
Aug 31, 1998 Aug 31, 1997 May 31, 1998 Aug 31, 1997 May 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment banking $ 819 $ 818 $ 988 -- (17%)
Principal transactions:
Trading 499 778 1,091 (36%) (54%)
Investments (174) 206 101 (184%) (272%)
Commissions 608 559 611 9% --
Fees:
Asset mgmt, distribution & admin 718 656 741 9% (3%)
Merchant and cardmember 438 433 404 1% 8%
Servicing 255 196 232 30% 10%
Interest and dividends 4,283 3,570 4,213 20% 2%
Other 52 41 47 27% 11%
------------ ------------ ------------
Total revenues $ 7,498 $ 7,257 $ 8,428 3% (11%)
Interest expense 3,377 2,765 3,554 22% (5%)
Provision for consumer loan losses 280 385 275 (27%) 2%
------------ ------------ ------------
Net revenues $ 3,841 $ 4,107 $ 4,599 (6%) (16%)
------------ ------------ ------------
Compensation and benefits 1,609 1,849 2,017 (13%) (20%)
Occupancy and equipment 148 134 143 10% 3%
Brokerage, clearing and exchange fees 126 130 132 (3%) (5%)
Info processing and communications 291 249 275 17% 6%
Marketing and business development 354 293 286 21% 24%
Professional services 176 127 156 39% 13%
Other 193 219 190 (12%) 2%
------------ ------------ ------------
Total non-interest expenses $ 2,897 $ 3,001 $ 3,199 (3%) (9%)
------------ ------------ ------------
Income before income taxes 944 1,106 1,400 (15%) (33%)
Income tax expense 299 428 546 (30%) (45%)
------------ ------------ ------------
Net income $ 645 $ 678 $ 854 (5%) (24%)
============ ============ ============
Preferred stock dividend requirements $ 14 $ 15 $ 14 (7%) --
============ ============ ============
Earnings applicable to common shares $ 631 $ 663 $ 840 (5%) (25%)
============ ============ ============
Merger charges $ 0 $ 0 $ 0 -- --
============ ============ ============
Earnings applicable to common shares
after merger charges $ 631 $ 663 $ 840 (5%) (25%)
============ ============ ============
Earnings per common share:
Basic $ 1.10 $ 1.15 $ 1.44 (4%) (24%)
Diluted $ 1.05 $ 1.09 $ 1.37 (4%) (23%)
Diluted, excluding merger charges $ 1.05 $ 1.09 $ 1.37 (4%) (23%)
Diluted, excluding acq charges (1) $ 1.07 $ 1.12 $ 1.40 (4%) (24%)
Average common shares outstanding:
Basic 573,170,507 578,082,806 581,326,618
Diluted 604,779,594 610,019,122 612,625,354
Return on common equity 19.3% 22.8% 25.0%
Return on common equity excluding
acquisition charges (1) 19.8% 23.4% 25.5%
</TABLE>
- ------------------------------------------------------------------------------
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
MORGAN STANLEY DEAN WITTER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
Nine Months Ended Percentage
Aug 31, 1998 Aug 31, 1997 Change
------------ ------------ ------------
Investment banking $ 2,607 $ 1,921 36%
Principal transactions:
Trading 2,493 2,369 5%
Investments (1) 398 (100%)
Commissions 1,766 1,533 15%
Fees:
Asset mgmt, distribution & admin 2,135 1,853 15%
Merchant and cardmember 1,270 1,293 (2%)
Servicing 658 582 13%
Interest and dividends 12,429 10,136 23%
Other 154 108 43%
------------ ------------
Total revenues $ 23,511 $ 20,193 16%
Interest expense 10,076 7,952 27%
Provision for consumer loan losses 960 1,140 (16%)
------------ ------------
Net revenues $ 12,475 $ 11,101 12%
------------ ------------
Compensation and benefits 5,414 4,844 12%
Occupancy and equipment 431 389 11%
Brokerage, clearing and exchange fees 377 338 12%
Info processing and communications 833 786 6%
Marketing and business development 934 855 9%
Professional services 460 319 44%
Other 549 579 (5%)
------------ ------------
Total non-interest expenses $ 8,998 $ 8,110 11%
------------ ------------
Income before income taxes 3,477 2,991 16%
Income tax expense 1,287 1,152 12%
------------ ------------
Net income $ 2,190 $ 1,839 19%
============ ============
Preferred stock dividend requirements $ 43 $ 52 (17%)
============ ============
Earnings applicable to common shares $ 2,147 $ 1,787 20%
============ ============
Merger charges $ 0 $ 63 *
============ ============
Earnings applicable to common shares
after merger charges $ 2,147 $ 1,724 25%
============ ============
Earnings per common share:
Basic $ 3.69 $ 3.00 23%
Diluted $ 3.51 $ 2.85 23%
Diluted, excluding merger charges $ 3.51 $ 2.96 19%
Diluted, excluding acq charges (1) $ 3.59 $ 3.05 18%
Average common shares outstanding:
Basic 582,105,755 574,048,186
Diluted 613,265,207 605,565,186
Return on common equity 21.5% 20.6%
Return on common equity excluding
acquisition charges (1) 22.0% 22.1%
- ------------------------------------------------------------------------------
(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 & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
---------------------------------------- --------------------------
Aug 31, 1998 Aug 31, 1997 May 31, 1998 Aug 31, 1997 May 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment banking $ 819 $ 818 $ 988 -- (17%)
Principal transactions:
Trading 499 778 1,091 (36%) (54%)
Investments (174) 206 101 (184%) (272%)
Commissions 599 550 602 9% --
Asset mgmt, distribution & admin fees 718 656 741 9% (3%)
Interest and dividends 3,601 2,758 3,540 31% 2%
Other 41 38 44 8% (7%)
------------ ------------ ------------
Total revenues $ 6,103 $ 5,804 $ 7,107 5% (14%)
Interest expense 3,145 2,462 3,303 28% (5%)
------------ ------------ ------------
Net revenues $ 2,958 $ 3,342 $ 3,804 (11%) (22%)
------------ ------------ ------------
Compensation and benefits 1,464 1,713 1,870 (15%) (22%)
Occupancy and equipment 128 118 125 8% 2%
Brokerage, clearing and exchange fees 122 126 127 (3%) (4%)
Info processing and communications 171 141 161 21% 6%
Marketing and business development 118 101 121 17% (2%)
Professional services 150 103 132 46% 14%
Other 138 146 132 (5%) 5%
------------ ------------ ------------
Total non-interest expenses $ 2,291 $ 2,448 $ 2,668 (6%) (14%)
------------ ------------ ------------
Income before income taxes 667 894 1,136 (25%) (41%)
Income tax expense 197 350 449 (44%) (56%)
------------ ------------ ------------
Net income $ 470 $ 544 $ 687 (14%) (32%)
============ ============ ============
Comp & benefits as a % of net revenues 49% 51% 49%
Non-comp exps as a % of net revenues 28% 22% 21%
Profit margin (1) 16% 16% 18%
</TABLE>
- -------------------------------------------------
(1) Net income as a % of net revenues.
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
Nine Months Ended Percentage
Aug 31, 1998 Aug 31, 1997 Change
------------ ------------ ------------
<S> <C> <C> <C>
Investment banking $ 2,607 $ 1,921 36%
Principal transactions:
Trading 2,493 2,369 5%
Investments (1) 398 (100%)
Commissions 1,740 1,515 15%
Asset mgmt, distribution & admin fees 2,135 1,853 15%
Interest and dividends 10,291 7,776 32%
Other 138 100 38%
------------ ------------
Total revenues $ 19,403 $ 15,932 22%
Interest expense 9,300 7,079 31%
------------ ------------
Net revenues $ 10,103 $ 8,853 14%
------------ ------------
Compensation and benefits 4,980 4,437 12%
Occupancy and equipment 375 343 9%
Brokerage, clearing and exchange fees 365 330 11%
Info processing and communications 479 432 11%
Marketing and business development 350 297 18%
Professional services 387 261 48%
Other 391 386 1%
------------ ------------
Total non-interest expenses $ 7,327 $ 6,486 13%
------------ ------------
Income before income taxes 2,776 2,367 17%
Income tax expense 1,027 917 12%
------------ ------------
Net income $ 1,749 $ 1,450 21%
============ ============
Comp & benefits as a % of net revenues 49% 50%
Non-comp exps as a % of net revenues 23% 23%
Profit margin (1) 17% 16%
</TABLE>
- ------------------------------------------------
(1) Net income as a % of net revenues.
F - 2
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
---------------------------------------- --------------------------
Aug 31, 1998 Aug 31, 1997 May 31, 1998 Aug 31, 1997 May 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 438 $ 433 $ 404 1% 8%
Servicing 255 196 232 30% 10%
Commissions 9 9 9 -- --
Other 11 3 3 267% 267%
------------ ------------ ------------
Total non-interest revenues $ 713 $ 641 $ 648 11% 10%
Interest revenue 682 812 673 (16%) 1%
Interest expense 232 303 251 (23%) (8%)
------------ ------------ ------------
Net interest income 450 509 422 (12%) 7%
Provision for consumer loan losses 280 385 275 (27%) 2%
------------ ------------ ------------
Net credit income 170 124 147 37% 16%
------------ ------------ ------------
Net revenues $ 883 $ 765 $ 795 15% 11%
------------ ------------ ------------
Compensation and benefits 145 136 147 7% (1%)
Occupancy and equipment 20 16 18 25% 11%
Brokerage, clearing and exchange fees 4 4 5 -- (20%)
Info processing and communications 120 108 114 11% 5%
Marketing and business development 236 192 165 23% 43%
Professional services 26 24 24 8% 8%
Other 55 73 58 (25%) (5%)
------------ ------------ ------------
Total non-interest expenses $ 606 $ 553 $ 531 10% 14%
------------ ------------ ------------
Income before income taxes 277 212 264 31% 5%
Income tax expense 102 78 97 31% 5%
------------ ------------ ------------
Net income $ 175 $ 134 $ 167 31% 5%
============ ============ ============
Comp & benefits as a % of net revenues 16% 18% 18%
Non-comp exps as a % of net revenues 52% 55% 48%
Profit margin (1) 20% 18% 21%
</TABLE>
- ----------------------------------------
(1) Net income as a % of net revenues.
MORGAN STANLEY DEAN WITTER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
Nine Months Ended Percentage
Aug 31, 1998 Aug 31, 1997 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 1,270 $ 1,293 (2%)
Servicing 658 582 13%
Commissions 26 18 44%
Other 16 8 100%
------------ ------------
Total non-interest revenues $ 1,970 $ 1,901 4%
Interest revenue 2,138 2,360 (9%)
Interest expense 776 873 (11%)
------------ ------------
Net interest income 1,362 1,487 (8%)
Provision for consumer loan losses 960 1,140 (16%)
------------ ------------
Net credit income 402 347 16%
------------ ------------
Net revenues $ 2,372 $ 2,248 6%
------------ ------------
Compensation and benefits 434 407 7%
Occupancy and equipment 56 46 22%
Brokerage, clearing and exchange fees 12 8 50%
Info processing and communications 354 354 --
Marketing and business development 584 558 5%
Professional services 73 58 26%
Other 158 193 (18%)
------------ ------------
Total non-interest expenses $ 1,671 $ 1,624 3%
------------ ------------
Income before income taxes 701 624 12%
Income tax expense 260 235 11%
------------ ------------
Net income $ 441 $ 389 13%
============ ============
Comp & benefits as a % of net revenues 18% 18%
Non-comp exps as a % of net revenues 52% 54%
Profit margin (1) 19% 17%
- ----------------------------------------
(1) Net income as a % of net revenues.
F - 3
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
---------------------------------------- --------------------------
Aug 31, 1998 Aug 31, 1997 May 31, 1998 Aug 31, 1997 May 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 577 $ 542 $ 519 6% 11%
Servicing 0 0 0 -- --
Commissions 9 9 9 -- --
Other 9 4 3 125% 200%
------------ ------------ ------------
Total non-interest revenues $ 595 $ 555 $ 531 7% 12%
Interest revenue 1,365 1,322 1,321 3% 3%
Interest expense 500 507 502 (1%) --
------------ ------------ ------------
Net interest income 865 815 819 6% 6%
Provision for consumer loan losses 577 605 555 (5%) 4%
------------ ------------ ------------
Net credit income 288 210 264 37% 9%
------------ ------------ ------------
Net revenues $ 883 $ 765 $ 795 15% 11%
------------ ------------ ------------
Compensation and benefits 145 136 147 7% (1%)
Occupancy and equipment 20 16 18 25% 11%
Brokerage, clearing and exchange fees 4 4 5 -- (20%)
Info processing and communications 120 108 114 11% 5%
Marketing and business development 236 192 165 23% 43%
Professional services 26 24 24 8% 8%
Other 55 73 58 (25%) (5%)
------------ ------------ ------------
Total non-interest expenses $ 606 $ 553 $ 531 10% 14%
------------ ------------ ------------
Income before income taxes 277 212 264 31% 5%
Income tax expense 102 78 97 31% 5%
------------ ------------ ------------
Net income $ 175 $ 134 $ 167 31% 5%
============ ============ ============
Comp & benefits as a % of net revenues 16% 18% 18%
Non-comp exps as a % of net revenues 52% 55% 48%
Profit margin (1) 20% 18% 21%
</TABLE>
- ----------------------------------------
(1) Net income as a % of net revenues.
MORGAN STANLEY DEAN WITTER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
Nine Months Ended Percentage
Aug 31, 1998 Aug 31, 1997 Change
------------ ------------ ------------
Fees:
Merchant and cardmember $ 1,629 $ 1,618 1%
Servicing 0 0 --
Commissions 26 18 44%
Other 14 9 56%
------------ ------------
Total non-interest revenues $ 1,669 $ 1,645 1%
Interest revenue 4,048 3,906 4%
Interest expense 1,529 1,484 3%
------------ ------------
Net interest income 2,519 2,422 4%
Provision for consumer loan losses 1,816 1,819 --
------------ ------------
Net credit income 703 603 17%
------------ ------------
Net revenues $ 2,372 $ 2,248 6%
------------ ------------
Compensation and benefits 434 407 7%
Occupancy and equipment 56 46 22%
Brokerage, clearing and exchange fees 12 8 50%
Info processing and communications 354 354 --
Marketing and business development 584 558 5%
Professional services 73 58 26%
Other 158 193 (18%)
------------ ------------
Total non-interest expenses $ 1,671 $ 1,624 3%
------------ ------------
Income before income taxes 701 624 12%
Income tax expense 260 235 11%
------------ ------------
Net income $ 441 $ 389 13%
============ ============
Comp & benefits as a % of net revenues 18% 18%
Non-comp exps as a % of net revenues 52% 54%
Profit margin (1) 19% 17%
- ----------------------------------------
(1) Net income as a % of net revenues.
F - 4
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Segment and Statistical Data
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
---------------------------------------- --------------------------
Aug 31, 1998 Aug 31, 1997 May 31, 1998 Aug 31, 1997 May 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
MSDW
Period end common shares outstanding 582,790,622 591,895,690 587,672,561 (2%) (1%)
Book value per common share $ 22.37 $ 20.25 $ 22.15 10% 1%
Shareholder's equity (millions) (1) $ 14,042 $ 12,787 $ 14,225 10% (1%)
Total capital (millions) (2) $ 36,865 $ 33,417 $ 36,604 10% 1%
SECURITIES ($ billions)
Individual Securities
Financial advisors 10,753 9,843 10,650 9% 1%
Client assets $ 392 $ 361 $ 425 9% (8%)
Institutional Securities (3)
Mergers and acquisitions announced
transactions (4)
MSDW global market volume $ 450.1 $ 146.8 $ 195.9
Rank 3 3 4
Worldwide equity & related issues (4)
MSDW global market volume $ 23.2 $ 19.6 $ 15.0
Rank 1 1 1
ASSET MANAGEMENT ($ billions)
Assets under mgmt and administration
Products offered primarily to indivs
Mutual funds
Equity $ 64 $ 65 $ 73 (2%) (12%)
Fixed income 55 51 52 8% 6%
Money markets 35 29 33 21% 6%
------------ ------------ ------------
Total mutual funds 154 145 158 6% (3%)
ICS Assets 16 13 17 23% (6%)
Other 30 28 31 7% (3%)
Products offered primarily to
institutional clients
Mutual funds 52 45 43 16% 21%
Separate accts, pooled vehicle and
other arrangements 104 94 125 11% (17%)
Total assets under management $ 356 $ 325 $ 374 10% (5%)
</TABLE>
- ------------------------------------------------------------
(1) Includes preferred and common equity.
(2) Includes preferred equity, capital units and non-current portion of long-
term debt.
(3) Source: Securities Data Corp.
(4) Information is year to date and stated on a calendar year basis.
F - 5
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
---------------------------------------- --------------------------
Aug 31, 1998 Aug 31, 1997 May 31, 1998 Aug 31, 1997 May 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period end $ 17,657 $ 21,493 $ 17,913 (18%) (1%)
Average 17,416 21,684 18,293 (20%) (5%)
Managed consumer loans (1)
Period end $ 34,228 $ 34,868 $ 34,091 (2%) --
Average $ 34,076 $ 34,620 $ 34,479 (2%) (1%)
Interest yield 15.19% 14.83% 14.79% 0.36 pp 0.40 pp
Interest spread 9.06% 8.62% 8.63% 0.44 pp 0.43 pp
Net charge-off rate 6.56% 6.61% 6.58% (0.05 pp) (0.02 pp)
Delinquency rate (over 30 days) 7.19% 7.47% 7.07% (0.28 pp) 0.12 pp
General purpose credit card
accounts (in millions) 38 40 38
NOVUS Network increase in merchant
locations (in thousands) 106 101 101
</TABLE>
- ----------------------------------------------------------
(1) Includes owned and securitized consumer loans.
MORGAN STANLEY DEAN WITTER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
Nine Months Ended Percentage
Aug 31, 1998 Aug 31, 1997 Change
------------ ------------ ------------
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period end $ 17,657 $ 21,493 (18%)
Average 19,135 21,318 (10%)
Managed consumer loans (1)
Period end $ 34,228 $ 34,868 (2%)
Average $ 35,115 $ 34,393 2%
Interest yield 14.90% 14.84% 0.06 pp
Interest spread 8.72% 8.69% 0.03 pp
Net charge-off rate 6.89% 6.86% 0.03 pp
Delinquency rate (over 30 days) 7.19% 7.47% (0.28 pp)
General purpose credit card
accounts (in millions) 38 40
NOVUS Network increase in merchant
locations (in thousands) 297 302
- ----------------------------------------------------------
(1) Includes owned and securitized consumer loans.
F - 6
<PAGE>
CONTACT: INVESTOR RELATIONS MEDIA RELATIONS
------------------ ---------------
JOHN ANDREWS JEANMARIE MCFADDEN
212-762-8131 212-762-7842
TIMOTHY LEE
212-392-8709
MORGAN STANLEY DEAN WITTER REPORTS
$645 MILLION IN THIRD QUARTER NET INCOME
DESPITE DIFFICULT GLOBAL MARKETS
NEW YORK, September 24, 1998 -- Morgan Stanley Dean Witter & Co. (NYSE: MWD)
today reported net income of $645 million for the third fiscal quarter ended
August 31, 1998 -- a 5 percent decline from $678 million in last year's third
quarter. Diluted earnings per share were $1.05 -- down 4 percent from $1.09 a
year ago.
Third quarter net revenues (total revenues less interest expense and the
provision for loan losses) were $3,841 million, 6 percent below a year ago. The
annualized return on average common equity for the third fiscal quarter was 19.3
percent.
As the Company previously reported, third quarter net income was reduced by
approximately $110 million because of losses associated with difficult
conditions in global capital markets. The losses occurred in certain credit
sensitive trading activities and in connection with an institutional leveraged
emerging markets debt portfolio.
Philip J. Purcell, Chairman, and John J. Mack, President, said in a joint
statement, "Our Company continued to perform very well despite the turmoil in
global financial markets. The diverse revenue streams from our three major
businesses-- securities, asset management and credit cards, allowed us to post
strong earnings in a difficult market environment."
<PAGE>
Net income increased to $2,190 million for the first nine months of fiscal 1998,
19 percent higher than last year's $1,839 million./1/ Nine-month diluted
earnings per share were $3.51, up 19 percent from last year's $2.96. Nine-month
net revenues rose 12 percent to $12,475 million and the nine month annualized
return on average common equity was 21.5 percent.
SECURITIES
The Company's Securities business posted net income of $439 million, a 22
percent increase from the third quarter of 1997. These results were buoyed by a
near-record performance in individual securities and a solid performance in
institutional securities.
. Individual securities reported a near-record third quarter, with higher
revenues from the distribution of asset management products and increased net
interest income.
. The number of financial advisors in the Company's individual securities
business, which includes Private Client Services (PCS), rose to 10,753 -- an
increase of 103 for the quarter and 910 over the last twelve months. Total
client assets of $392 billion were $31 billion higher than a year ago,
although they declined by $33 billion during the quarter due largely to
lower stock prices.
. Investment banking had a strong quarter, driven by record revenues from
mergers and acquisitions, which offset a decline in underwriting activity.
For the first eight months of calendar 1998, the Company ranked first in
worldwide equity and equity-related underwritings and maintained a leadership
position in global M&A, and high yield and U.S. investment grade debt
underwriting./2/
. Institutional sales and trading reported mixed third quarter results. Equity
trading and foreign exchange each achieved the second best quarter ever and
commodities had record results. Fixed income revenues, however, were
adversely affected by difficult global market conditions near the end of the
- ------------------------------------
/1/ All amounts for the nine months ended August 31, 1997 exclude merger-related
expenses.
/2/ Source: Securities Data Corp. -- Jan 1 to August 31, 1998.
<PAGE>
quarter which included a widening of spreads on credit sensitive products and
a decrease in market liquidity. European results were excellent, although
slightly lower than the record second quarter performance. Results in most of
Asia continued to reflect the reduced economic activity in the region,
although the Company's performance in Japan was very strong.
ASSET MANAGEMENT
Asset Management's third quarter net income was $31 million compared to $185
million a year ago. The results reflect losses that occurred in connection with
a leveraged emerging markets debt portfolio and the impact on revenues of a
decline in assets under management associated with lower market values.
. The Company had $356 billion of assets under management and supervision at
the end of the third quarter, an increase of $31 billion, or 10 percent, over
a year ago.
. Retail assets were $14 billion ahead of a year ago, but declined by $6
billion for the quarter -- to stand at $200 billion. Institutional assets
were up $17 billion compared to a year ago, but were down $12 billion for the
quarter --to stand at $156 billion. Positive net sales in both retail and
institutional businesses in the third quarter partially offset the quarter-
to-quarter declines in market value.
. In June, the Company completed a $1.8 billion initial public offering of the
Van Kampen Senior Income Trust. The offering was the second largest in
history for a closed-end fund.
. The Private Equity Group recognized third quarter investment gains of $129
million compared with $166 million a year ago. These results were driven by
the successful IPO of Equant, a global data communications company.
CREDIT AND TRANSACTION SERVICES
Credit and Transaction Services net income increased 31 percent from the third
quarter of last year to a record $175 million.
. Net revenues rose to a record $883 million -- 15 percent higher than the
third quarter of 1997. Non-interest revenues rose 7 percent to $595 million
as a result of increased revenues from late and overlimit fees and from
increased merchant
<PAGE>
discount revenues on higher sales volume. Net credit income rose by 37
percent to $288 million as a result of increased net interest income as well
as a lower provision for loan losses following the sale of the Company's
Prime Option portfolio in the second quarter of this year.
. Managed consumer loans of $34.2 billion increased $600 million from the end
of the third quarter of 1997, after adjusting for last quarter's sale of the
Prime Option portfolio.
. The consumer loan charge-off rate, on a managed loan basis, was 6.56 percent
this quarter compared to 6.61 percent a year ago.
. In August, NOVUS Services announced an exclusive agreement with Intuit Inc.
that will enable taxpayers who use Intuit software to prepare and file their
federal taxes to also use a Discover Card or other NOVUS Cards to pay the
IRS.
. NOVUS Services reached agreement with the Busch Entertainment Corporation to
offer a co-branded NOVUS card early next year. Busch hosts approximately 20
million guests annually in nine locations including its Sea World and Busch
Gardens theme parks. New merchants enrolled by the NOVUS Network during the
quarter included British Airways, Princess Cruise Lines and Commonwealth
Edison.
. Discover Brokerage Direct, the Company's on-line broker, continued to grow
its account base in the third quarter. It also recently introduced an on-line
research service for its customers and became the first brokerage firm to
offer 24-hour/five-day-a-week internet trading of U.S. Treasuries.
On September 21, David W. Nelms, formerly vice chairman of MBNA America Bank,
became president and chief operating officer of NOVUS Services, which includes
Discover Card.
<PAGE>
Total capital (stockholders' equity and long-term debt) at August 31, 1998 was
$36.9 billion, including $14.0 billion of common and preferred stockholders'
equity. Book value per common share was $22.37, based on quarter-end shares
outstanding of 582,790,622.
The Company has repurchased approximately 31.5 million shares of its common
stock since the February 1998 announcement of its $3 billion stock repurchase
authorization.
Morgan Stanley Dean Witter & 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 429 securities branch
offices throughout the United States.
# # #
(See Attached Schedules)
This release may contain forward-looking statements. These statements, which
reflect management's beliefs and expectations, are subject to risks and
uncertainties that may cause actual results to differ materially. For a
discussion of the risks and uncertainties that may affect the Company's future
results, please see "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's 1997 Annual Report to Shareholders
and in the Company's Quarterly Reports on Form 10-Q for fiscal 1998.
