<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, 1999
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 January 7, 1999, Morgan Stanley Dean Witter & Co. (the "Registrant")
released financial information with respect to the quarter ended November 30,
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 January 7, 1999
containing financial information for the fourth quarter
ended November 30, 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: January 7, 1999
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Twelve Months Ended
------------------------------------- ---------------- -------------------------
Nov 30, Nov 30, Aug 31, Nov 30, Aug 31, Nov 30, Nov 30, Percentage
1998 1997 1998 1997 1998 1998 1997 Change
----------- ----------- ----------- ------ ------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues
Securities $ 2,505 $ 2,405 $ 2,549 4% (2%) $ 10,834 $ 9,390 15%
Asset Management 636 608 409 5% 56% 2,410 2,476 (3%)
Credit and Transaction Services 828 719 883 15% (6%) 3,200 2,967 8%
----------- ----------- ----------- ----------- -----------
Consolidated net revenues $ 3,969 $ 3,732 $ 3,841 6% 3% $ 16,444 $ 14,833 11%
=========== =========== =========== =========== ===========
Net income
Securities $ 610 $ 620 $ 439 (2%) 39% $ 2,052 $ 1,650 24%
Asset Management 367 111 12 231% 2958% 653 531 23%
Credit and Transaction Services 247 79 175 213% 41% 688 468 47%
----------- ----------- ----------- ----------- -----------
Net income before cumulative effect
of a change in accounting 1,224 810 626 51% 96% 3,393 2,649 28%
Cumulative effect of a change in
accounting(1) 0 0 0 -- -- (117) 0 *
----------- ----------- ----------- ----------- -----------
Consolidated net income $ 1,224 $ 810 $ 626 51% 96% $ 3,276 $ 2,649 24%
=========== =========== =========== =========== ===========
Preferred stock dividend
requirements $ 12 $ 14 $ 14 (14%) (14%) $ 55 $ 66 (17%)
=========== =========== =========== =========== ===========
Earnings applicable to common shares $ 1,212 $ 796 $ 612 52% 98% $ 3,221 $ 2,583 25%
=========== =========== =========== =========== ===========
Merger charges $ 0 $ 0 $ 0 -- -- $ 0 $ 63 *
=========== =========== =========== =========== ===========
Earnings applicable to common shares
after merger charges $ 1,212 $ 796 $ 612 52% 98% $ 3,221 $ 2,520 28%
=========== =========== =========== =========== ===========
Operating results(2)
Securities $ 610 $ 620 $ 439 (2%) 39% $ 2,052 $ 1,650 24%
Asset Management 185 111 12 67% 1442% 471 531 (11%)
Credit and Transaction Services 84 79 175 6% (52%) 525 468 12%
----------- ----------- ----------- ----------- -----------
Operating results $ 879 $ 810 $ 626 9% 40% $ 3,048 $ 2,649 15%
=========== =========== =========== =========== ===========
</TABLE>
(1) Represents the effects of an accounting change adopted in the fourth quarter
(effective December 1, 1997) with respect to the accounting for offering
costs paid by investment advisors of closed end funds where such costs are
not specifically reimbursed through separate advisory contracts. In
addition, quarterly results have been restated.
(2) Excludes the effects of the net gain on sales of businesses and the
cumulative effect of a change in accounting.
F - 1
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Twelve Months Ended
------------------------------------- ---------------- -------------------------
Nov 30, Nov 30, Aug 31, Nov 30, Aug 31, Nov 30, Nov 30, Percentage
1998 1997 1998 1997 1998 1998 1997 Change
----------- ----------- ----------- ------ ------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Basic earnings per common share
Net income before cumulative effect
of a change in accounting $ 2.16 $ 1.37 $ 1.07 58% 102% $ 5.80 $ 4.38 32%
Cumulative effect of a change
in accounting $ 0.00 $ 0.00 $ 0.00 -- -- $ (0.20) $ 0.00 *
Net income $ 2.16 $ 1.37 $ 1.07 58% 102% $ 5.60 $ 4.38 28%
Diluted earnings per common share
Net income before cumulative effect
of a change in accounting $ 2.07 $ 1.30 $ 1.01 59% 105% $ 5.52 $ 4.16 33%
Cumulative effect of a change
in accounting $ 0.00 $ 0.00 $ 0.00 -- -- $ (0.19) $ 0.00 *
Net income $ 2.07 $ 1.30 $ 1.01 59% 105% $ 5.33 $ 4.16 28%
Excluding gain on sales of
businesses and merger charges(1) $ 1.49 $ 1.30 $ 1.01 15% 48% $ 4.95 $ 4.27 16%
Average common shares outstanding
Basic 560,108,890 580,985,871 573,170,507 575,822,725 574,818,233
Diluted 585,533,337 612,092,405 604,779,594 606,294,065 606,306,475
Period end common shares
outstanding 565,670,808 594,708,971 582,790,622 565,670,808 594,708,971
Return on common equity excluding the
cumulative effect of a change in
accounting 37.2% 25.8% 18.7% 25.2% 22.0%
Return on common equity excluding gain
on sales of businesses and merger
charges(1) 27.0% 25.8% 18.7% 22.7% 22.6%
</TABLE>
- ---------------
(1) Excludes from net income the effects of the net gain on sales of businesses,
expenses associated with the merger of Dean Witter, Discover & Co. and
Morgan Stanley Group Inc. and the cumulative effect of a change in
accounting.
F - 2
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Twelve Months Ended
------------------------------------- ---------------- -------------------------
Nov 30, Nov 30, Aug 31, Nov 30, Aug 31, Nov 30, Nov 30, Percentage
1998 1997 1998 1997 1998 1998 1997 Change
----------- ----------- ----------- ------ ------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment banking $ 733 $ 773 $ 819 (5%) (11%) $ 3,340 $ 2,694 24%
Principal transactions:
Trading 798 822 499 (3%) 60% 3,291 3,191 3%
Investments 90 65 (174) 38% 152% 89 463 (81%)
Commissions 587 553 608 6% (3%) 2,353 2,086 13%
Fees:
Asset management, distribution and
administration 714 652 718 10% (1%) 2,849 2,505 14%
Merchant and cardmember 377 411 438 (8%) (14%) 1,647 1,704 (3%)
Servicing 270 180 255 50% 6% 928 762 22%
Interest and dividends 4,007 3,447 4,283 16% (6%) 16,436 13,583 21%
Other 44 36 52 22% (15%) 198 144 38%
----------- ----------- ----------- ----------- -----------
Total revenues 7,620 6,939 7,498 10% 2% 31,131 27,132 15%
Interest expense 3,438 2,854 3,377 20% 2% 13,514 10,806 25%
Provision for consumer loan losses 213 353 280 (40%) (24%) 1,173 1,493 (21%)
----------- ----------- ----------- ----------- -----------
Net revenues 3,969 3,732 3,841 6% 3% 16,444 14,833 11%
----------- ----------- ----------- ----------- -----------
Compensation and benefits 1,222 1,175 1,609 4% (24%) 6,636 6,019 10%
Occupancy and equipment 152 137 148 11% 3% 583 526 11%
Brokerage, clearing and exchange fees 136 122 160 11% (15%) 552 460 20%
Information processing and communications 307 294 291 4% 5% 1,140 1,080 6%
Marketing and business development 477 324 354 47% 35% 1,411 1,179 20%
Professional services 217 132 176 64% 23% 677 451 50%
Other 197 191 193 3% 2% 745 770 (3%)
----------- ----------- ----------- ----------- -----------
Total non-interest expenses 2,708 2,375 2,931 14% (8%) 11,744 10,485 12%
----------- ----------- ----------- ----------- -----------
Gain on sales of businesses 685 0 0 * * 685 0 *
----------- ----------- ----------- ----------- -----------
Income before income taxes and
cumulative effect of a change
in accounting 1,946 1,357 910 43% 114% 5,385 4,348 24%
Income tax expense 722 547 284 32% 154% 1,992 1,699 17%
----------- ----------- ----------- ----------- -----------
Net income before cumulative effect of
a change in accounting 1,224 810 626 51% 96% 3,393 2,649 28%
Cumulative effect of a change in
accounting(1) 0 0 0 -- -- (117) 0 *
----------- ----------- ----------- ----------- -----------
Net income $ 1,224 $ 810 $ 626 51% 96% $ 3,276 $ 2,649 24%
=========== =========== =========== =========== ===========
Preferred stock dividend requirements $ 12 $ 14 $ 14 (14%) (14%) $ 55 $ 66 (17%)
=========== =========== =========== =========== ===========
Earnings applicable to common shares $ 1,212 $ 796 $ 612 52% 98% $ 3,221 $ 2,583 25%
=========== =========== =========== =========== ===========
Merger charges $ 0 $ 0 $ 0 -- -- $ 0 $ 63 *
=========== =========== =========== =========== ===========
Earnings applicable to common shares
after merger charges $ 1,212 $ 796 $ 612 52% 98% $ 3,221 $ 2,520 28%
=========== =========== =========== =========== ===========
</TABLE>
(1) Represents the effects of an accounting change adopted in the fourth quarter
(effective December 1, 1997) with respect to the accounting for offering
costs paid by investment advisors of closed end funds where such costs are
not specifically reimbursed through separate advisory contracts. In
addition, quarterly results have been restated.
F - 3
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Twelve Months Ended
------------------------------------- ---------------- -------------------------
Nov 30, Nov 30, Aug 31, Nov 30, Aug 31, Nov 30, Nov 30, Percentage
1998 1997 1998 1997 1998 1998 1997 Change
----------- ----------- ----------- ------ ------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment banking $ 733 $ 773 $ 819 (5%) (11%) $ 3,340 $ 2,694 24%
Principal transactions:
Trading 798 822 499 (3%) 60% 3,291 3,191 3%
Investments 90 65 (174) 38% 152% 89 463 (81%)
Commissions 577 544 599 6% (4%) 2,317 2,059 13%
Asset management, distribution and
admininistration fees 713 652 718 9% (1%) 2,848 2,505 14%
Interest and dividends 3,405 2,679 3,601 27% (5%) 13,696 10,455 31%
Other 44 32 41 38% 7% 182 132 38%
----------- ----------- ----------- ----------- -----------
Total revenues 6,360 5,567 6,103 14% 4% 25,763 21,499 20%
Interest expense 3,219 2,554 3,145 26% 2% 12,519 9,633 30%
----------- ----------- ----------- ----------- -----------
Net revenues 3,141 3,013 2,958 4% 6% 13,244 11,866 12%
----------- ----------- ----------- ----------- -----------
Compensation and benefits 1,091 1,038 1,464 5% (25%) 6,071 5,475 11%
Occupancy and equipment 135 119 128 13% 5% 510 462 10%
Brokerage, clearing and exchange fees 134 118 156 14% (14%) 538 448 20%
Information processing and communications 187 170 171 10% 9% 666 602 11%
Marketing and business development 137 96 118 43% 16% 487 393 24%
Professional services 192 117 150 64% 28% 579 378 53%
Other 139 125 138 11% 1% 529 511 4%
----------- ----------- ----------- ----------- -----------
Total non-interest expenses 2,015 1,783 2,325 13% (13%) 9,380 8,269 13%
----------- ----------- ----------- ----------- -----------
Gain on sales of businesses 323 0 0 * * 323 0 *
----------- ----------- ----------- ----------- -----------
Income before income taxes 1,449 1,230 633 18% 129% 4,187 3,597 16%
Income tax expense 472 499 182 (5%) 159% 1,482 1,416 5%
----------- ----------- ----------- ----------- -----------
Net income $ 977 $ 731 $ 451 34% 117% $ 2,705 $ 2,181 24%
=========== =========== =========== =========== ===========
Compensation and benefits as
a % of net revenues 35% 34% 49% 46% 46%
Non-compensation expenses as
a % of net revenues 29% 25% 29% 25% 24%
Profit margin (1) 31% 24% 15% 20% 18%
</TABLE>
- ---------------
(1) Net income as a % of net revenues.
F - 4
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Twelve Months Ended
------------------------------------- ---------------- -------------------------
Nov 30, Nov 30, Aug 31, Nov 30, Aug 31, Nov 30, Nov 30, Percentage
1998 1997 1998 1997 1998 1998 1997 Change
----------- ----------- ----------- ------ ------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 377 $ 411 $ 438 (8%) (14%) $ 1,647 $ 1,704 (3%)
Servicing 270 180 255 50% 6% 928 762 22%
Commissions 10 9 9 11% 11% 36 27 33%
Asset management, distribution and
administration 1 0 0 * * 1 0 *
Other 0 4 11 * * 16 12 33%
----------- ----------- ----------- ----------- -----------
Total non-interest revenues 658 604 713 9% (8%) 2,628 2,505 5%
Interest revenue 602 768 682 (22%) (12%) 2,740 3,128 (12%)
Interest expense 219 300 232 (27%) (6%) 995 1,173 (15%)
----------- ----------- ----------- ----------- -----------
Net interest income 383 468 450 (18%) (15%) 1,745 1,955 (11%)
Provision for consumer loan losses 213 353 280 (40%) (24%) 1,173 1,493 (21%)
----------- ----------- ----------- ----------- -----------
Net credit income 170 115 170 48% -- 572 462 24%
----------- ----------- ----------- ----------- -----------
Net revenues 828 719 883 15% (6%) 3,200 2,967 8%
----------- ----------- ----------- ----------- -----------
Compensation and benefits 131 137 145 (4%) (10%) 565 544 4%
Occupancy and equipment 17 18 20 (6%) (15%) 73 64 14%
Brokerage, clearing and exchange fees 2 4 4 (50%) (50%) 14 12 17%
Information processing and communications 120 124 120 (3%) -- 474 478 (1%)
Marketing and business development 340 228 236 49% 44% 924 786 18%
Professional services 25 15 26 67% (4%) 98 73 34%
Other 58 66 55 (12%) 5% 216 259 (17%)
----------- ----------- ----------- ----------- -----------
Total non-interest expenses 693 592 606 17% 14% 2,364 2,216 7%
----------- ----------- ----------- ----------- -----------
Gain on sales of businesses 362 0 0 * * 362 0 *
----------- ----------- ----------- ----------- -----------
Income before income taxes 497 127 277 291% 79% 1,198 751 60%
Income tax expense 250 48 102 421% 145% 510 283 80%
----------- ----------- ----------- ----------- -----------
Net income $ 247 $ 79 $ 175 213% 41% $ 688 $ 468 47%
=========== =========== =========== =========== ===========
Compensation and benefits as
a % of net revenues 16% 19% 16% 18% 18%
Non-compensation expenses as
a % of net revenues 68% 63% 52% 56% 56%
Profit margin (1) 30% 11% 20% 22% 16%
</TABLE>
- ---------------
(1) Net income as a % of net revenues.
F - 5
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Twelve Months Ended
------------------------------------- ---------------- -------------------------
Nov 30, Nov 30, Aug 31, Nov 30, Aug 31, Nov 30, Nov 30, Percentage
1998 1997 1998 1997 1998 1998 1997 Change
----------- ----------- ----------- ------ ------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 522 $ 522 $ 577 -- (10%) $ 2,151 $ 2,140 1%
Servicing 0 0 0 -- -- 0 0 --
Commissions 10 9 9 11% 11% 36 27 33%
Asset management, distribution and
administration 1 0 0 * * 1 0 *
Other 3 1 9 200% (67%) 17 10 70%
----------- ----------- ----------- ----------- -----------
Total non-interest revenues 536 532 595 1% (10%) 2,205 2,177 1%
Interest revenue 1,289 1,340 1,365 (4%) (6%) 5,337 5,246 2%
Interest expense 475 518 500 (8%) (5%) 2,004 2,002 --
----------- ----------- ----------- ----------- -----------
Net interest income 814 822 865 (1%) (6%) 3,333 3,244 3%
Provision for consumer loan losses 522 635 577 (18%) (10%) 2,338 2,454 (5%)
----------- ----------- ----------- ----------- -----------
Net credit income 292 187 288 56% 1% 995 790 26%
----------- ----------- ----------- ----------- -----------
Net revenues 828 719 883 15% (6%) 3,200 2,967 8%
----------- ----------- ----------- ----------- -----------
Compensation and benefits 131 137 145 (4%) (10%) 565 544 4%
Occupancy and equipment 17 18 20 (6%) (15%) 73 64 14%
Brokerage, clearing and exchange fees 2 4 4 (50%) (50%) 14 12 17%
Information processing and communications 120 124 120 (3%) -- 474 478 (1%)
Marketing and business development 340 228 236 49% 44% 924 786 18%
Professional services 25 15 26 67% (4%) 98 73 34%
Other 58 66 55 (12%) 5% 216 259 (17%)
----------- ----------- ----------- ----------- -----------
Total non-interest expenses 693 592 606 17% 14% 2,364 2,216 7%
----------- ----------- ----------- ----------- -----------
Gain on sales of businesses 362 0 0 * * 362 0 *
----------- ----------- ----------- ----------- -----------
Income before income taxes 497 127 277 291% 79% 1,198 751 60%
Income tax expense 250 48 102 421% 145% 510 283 80%
----------- ----------- ----------- ----------- -----------
Net income $ 247 $ 79 $ 175 213% 41% $ 688 $ 468 47%
=========== =========== =========== =========== ===========
Compensation & benefits as
a % of net revenues 16% 19% 16% 18% 18%
Non-compensation expenses as
a % of net revenues 68% 63% 52% 56% 56%
Profit margin (1) 30% 11% 20% 22% 16%
</TABLE>
- ----------
(1) Net income as a % of net revenues.
F - 6
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Segment and Statistical Data
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
------------------------------------------- ----------------------------
Nov 30, 1998 Nov 30, 1997 Aug 31, 1998 Nov 30, 1997 Aug 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
MSDW
Period end common shares outstanding 565,670,808 594,708,971 582,790,622 (5%) (3%)
Book value per common share $ 23.88 $ 22.11 $ 22.13 8% 8%
Shareholder's equity (millions) (1) $ 14,519 $ 13,956 $ 13,904 4% 4%
Total capital (millions) (2) $ 37,922 $ 33,577 $ 36,727 13% 3%
SECURITIES ($ billions)
Individual Securities
Financial advisors 11,238 10,157 10,753 11% 5%
Client assets $ 438 $ 378 $ 392 16% 12%
Institutional Securities (3)
Mergers and acquisitions announced
transactions (4)
MSDW global market volume $ 622.3 $ 339.7 $ 450.1
Rank 3 1 3
Worldwide equity and related issues (4)
MSDW global market volume $ 32.6 $ 33.5 $ 23.2
Rank 3 1 1
ASSET MANAGEMENT ($ billions)
Assets under managememt and administration
Products offered primarily to individuals
Mutual funds
Equity $ 75 $ 69 $ 64 9% 17%
Fixed income 57 52 55 10% 4%
Money markets 37 29 35 28% 6%
------------ ------------ ------------
Total mutual funds 169 150 154 13% 10%
ICS Assets 19 14 16 36% 19%
Other 31 29 30 7% 3%
Products offered primarily to
institutional clients
Mutual funds 54 30 52 80% 4%
Separate accounts, pooled vehicle and
other arrangements 103 115 104 (10%) (1%)
Total assets under management $ 376 $ 338 $ 356 11% 6%
</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 - 7
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Twelve Months Ended
------------------------------------ -------------------- -------------------------
Nov 30, Nov 30, Aug 31, Nov 30, Aug 31, Nov 30, Nov 30, Percentage
1998 1997 1998 1997 1998 1998 1997 Change
----------- ----------- ---------- --------- --------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period end $ 15,996 $ 20,917 $ 17,657 (24%) (9%) $ 15,996 $ 20,917 (24%)
Average $ 16,822 $ 21,186 $ 17,416 (21%) (3%) $ 18,557 $ 21,285 (13%)
Managed consumer loans (1)
Period end $ 32,502 $ 35,950 $ 34,228 (10%) (5%) $ 32,502 $ 35,950 (10%)
Average $ 33,126 $ 35,298 $ 34,076 (6%) (3%) $ 34,619 $ 34,619 --
Interest yield 14.72% 14.79% 15.19% (0.07 pp) (0.47 pp) 14.86% 14.83% 0.03 pp
Interest spread 8.71% 8.58% 9.06% 0.13 pp (0.35 pp) 8.70% 8.66% 0.04 pp
Net charge-off rate 6.94% 7.21% 6.56% (0.27 pp) 0.38 pp 6.90% 6.95% (0.05 pp)
Delinquency rate (over 30 days) 6.53% 6.98% 7.19% (0.45 pp) (0.66 pp) 6.53% 6.98% (0.45 pp)
General purpose credit card
transaction volume
(in billions) $ 58 $ 56 4%
General purpose credit card
accounts (in millions) 38 40 (5%)
General purpose credit card
active accounts (in millions) 22 23 (4%)
General purpose average
receivables per average active
account (actual $) $ 1,486 $ 1,382 7%
NOVUS Network increase in merchant
locations (in thousands) 394 405 (3%)
</TABLE>
- ----------
(1) Includes owned and securitized consumer loans.
F - 8
<PAGE>
Exhibit 99.1
Contact: Investor Relations Media Relations
John Andrews Jeanmarie McFadden
212-762-8131 212-762-7842
MORGAN STANLEY DEAN WITTER REPORTS
RECORD FOURTH QUARTER AND FULL YEAR NET INCOME;
ADDITIONAL $1 BILLION SHARE BUYBACK AUTHORIZED;
QUARTERLY DIVIDEND INCREASED 20%
NEW YORK, January 7, 1999 -- Morgan Stanley Dean Witter & Co. (NYSE: MWD) today
reported record net income of $1,224 million and diluted earnings per share of
$2.07 for the fourth fiscal quarter ended November 30, 1998. Excluding a net
after tax gain of $345 million from the sales of businesses, net operating
income was $879 million -- also a record and 9 percent ahead of last year's
fourth quarter $810 million. Diluted earnings per share, excluding the net gain,
were $1.49 -- up 15 percent from $1.30 a year ago.
In the fourth quarter, the Company recorded a net gain of $345 million from the
sales of the Company's Global Custody business, its interest in SPS Transaction
Services Inc.'s operations and certain BRAVO receivables.
Net income for the full fiscal year was $3,276 million and diluted earnings per
share were $5.33. Excluding the $345 million net gain from sales of businesses
and a $117 million after tax charge resulting from the cumulative effect of an
accounting change, net operating income was a record $3,048 million, 15 percent
1
<PAGE>
higher than last year's $2,649 million./1/ Diluted earnings per share, excluding
both the net gain and the cumulative effect of the accounting change, were $4.95
- -- up 16 percent from last year's $4.27.
Fourth quarter net revenues (total revenues less interest expense and the
provision for loan losses) were $4.0 billion -- 6 percent ahead of a year ago.
The annualized return on average common equity for the fourth fiscal quarter,
excluding the net gain, was 27 percent.
Full year net revenues rose 11 percent to a record $16.4 billion and the
twelve-month return on average common equity, excluding the net gain and the
cumulative effect of the accounting change, was 22.7 percent.
Philip J. Purcell, Chairman, and John J. Mack, President, said in a joint
statement, "We are extremely proud of these results. Our strategy is to build
diverse revenue streams based on strong, established franchises, and it is
working. We achieved a full year record performance despite some very difficult
market conditions. This is a tribute to our culture which emphasizes commitment
to customers and effective risk management throughout the firm. We have gained
market share across the board in our securities business, continued to grow our
asset management business, and our Discover Card(R) continues to be a strong,
highly profitable franchise. The recent upgrading by Moody's of our credit
rating to Aa3 is independent confirmation of our financial strength and the
continued success of our strategy."
The Company announced that its Board of Directors authorized the purchase,
subject to market conditions and certain other factors, of an additional $1
billion of
- ----------
/1/ Net income and diluted earnings per share for the fiscal year ended November
30, 1997 exclude merger-related expenses.
2
<PAGE>
the Company's common stock. The Board of Directors also authorized the ongoing
repurchase of the Company's common stock in connection with awards granted under
the Company's equity-based compensation plans. The Company has repurchased
approximately 43.1 million shares of its common stock since the February 1998
announcement of its $3 billion stock repurchase authorization.
The Company also announced that its Board of Directors declared a $.24 quarterly
dividend per common share, a 20 percent increase from the previous quarter's
$.20 per common share. The dividend is payable on January 29, 1999 to common
shareholders of record as of January 19, 1999.
FOURTH QUARTER
SECURITIES
The Company's Securities business posted $610 million in net income, compared to
last year's fourth quarter record $620 million.
. Investment banking's solid quarterly performance was driven by higher
revenues from mergers and acquisitions, which offset an industry-wide
decrease in underwriting activity.
. Institutional sales and trading reported strong fourth quarter results.
Equity trading had record results and foreign exchange achieved its second
best quarter ever. Fixed income revenues, however, were adversely affected
by the difficult global market conditions during the quarter, including a
widening of credit spreads and decreased market liquidity. Internationally,
the Company achieved strong performances in Europe and Japan, while results
in the rest of Asia continued to reflect the region's reduced economic
activity.
. The influential European publication, International Financing Review,
------------------------------
recently recognized the Company's performance in the securities business by
naming it Bank of the Year, Bond House of the Year and Equity House of the
Year. It was the first time that one company has won three top awards in a
single year.
. Individual securities revenues increased from last year's fourth quarter on
3
<PAGE>
higher revenues from the distribution of asset management products,
increased net interest income and increased customer trading activities,
primarily in over-the-counter equities.
. The number of financial advisors in the Company's individual securities
business rose by 485 in the quarter to 11,238. Total client assets increased
by $46 billion -- more than offsetting a third quarter decline -- to stand
at $438 billion at fiscal year end.
ASSET MANAGEMENT
Asset Management quarterly net operating income, excluding the net gain from the
sale of the Global Custody business, was $185 million -- a 67 percent increase
from a year ago.
. The Company's total assets under management and administration increased by
$20 billion during the quarter to stand at $376 billion at fiscal year end.
. Retail assets increased $19 billion for the quarter and $26 billion from a
year ago -- to stand at $219 billion. Institutional assets increased $1
billion for the quarter and $12 billion from last year -- to stand at $157
billion.
. Private Equity recorded net investment gains of $54 million compared with
$64 million in the fourth quarter a year ago. This result includes a gain
on the Company's position in Jefferson Smurfit.
CREDIT AND TRANSACTION SERVICES
Credit and Transaction Services fourth quarter net operating income, excluding
the net gain on sales of its interests in SPS's operations and certain BRAVO
receivables, was $84 million -- a 6 percent increase from last year. On a
managed loan basis, income was favorably impacted by a lower provision for loan
losses. Marketing and business development expenses increased as a result of the
Company's increased investment in its core Discover brand.
. As part of the Company's focus on growth of the Discover Card franchise, it
changed the name of its credit card business from NOVUS Services to
Discover Financial Services.
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. On January 1, Discover Financial Services launched the Discover Platinum
Card -- a new premium credit card featuring double Cashback Bonus award
opportunities, low balance transfer and annual percentage rates, no annual
fee, expanded credit lines and enhanced services.
. Credit quality, on a managed loan basis, improved from last year's fourth
quarter. The consumer loan charge-off rate declined to 6.94 percent from
7.21 percent last year, and the rate of loans delinquent over 30 days was
6.53 percent compared to 6.98 percent a year ago.
. Discover Brokerage Direct, the Company's Internet brokerage service, had
record trading volume in the fourth quarter. DBD launched a number of new
products and services, including a mutual fund marketplace. DBD also
commenced self-clearing activities which are expected to substantially
reduce operating expenses.
FULL YEAR
SECURITIES
The Company's Securities business posted record net income of $2,052 million, a
24 percent increase from fiscal 1997. Net revenues were up 15 percent to $10.8
billion, reflecting record performances in both the institutional and individual
securities businesses.
In institutional securities, the Company achieved record results in investment
banking, equities, foreign exchange and commodities. For the calendar year, the
Company maintained a leadership position in announced global M&A transactions
with the dollar volume of its announced transactions increasing by more than 80
percent. The Company also maintained leadership positions in the underwriting
of worldwide equity and equity-related issues, high yield debt and U.S.
investment grade debt. The Company ranked first in the underwriting of U.S.
equity and equity related issues./2/ In equity research, the Company
ranked number one on a weighted average basis and had the greatest number of
first team positions in the 1998 Institutional Investor Research All-American
----------------------
Poll.
In individual securities, growth in the number of financial advisors
accelerated,
- --------
/2/ Source: Securities Data Corp. - January 1, to December 31, 1998 (reported as
of January 6, 1999)
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increasing by a record 1,081 for the year -- after last year's 862 advance -- to
total 11,238. Individual securities also achieved a record net increase of
455,000 customer accounts to a total of approximately 4 million, and total
client assets increased $60 billion to stand at $438 billion at fiscal year end.
ASSET MANAGEMENT
Asset Management's net income for the year was $653 million. Excluding the net
gain on the sale of its Global Custody business, net operating income was $471
million -- down 11 percent from 1997. The decline from last year's record
earnings was attributable to a one time loss reported in the third quarter
related to an institutional leveraged emerging markets debt portfolio. For the
year, the Company continued to grow its assets under management and
administration. At fiscal year end, these assets stood at $376 billion, an
increase of $38 billion from a year earlier.
CREDIT AND TRANSACTION SERVICES
Credit and Transaction Services reported net income of $688 million. Excluding
the net gain from the sales of businesses, net operating income was $525
million--a 12 percent increase from last year. Net revenues rose 8 percent to
$3.2 billion. Managed loans of $32.5 billion increased by 2 percent for the
year, after adjusting for the sales of the Prime Option, SPS and BRAVO
receivables. Credit card transaction volume increased 4 percent and the NOVUS
Network enrolled nearly 400,000 merchant locations during 1998. During the year,
Discover Brokerage Direct continued to expand the range of services it offers to
its growing client base, including on-line equity research and 24-hour trading
in government securities.
Total capital (shareholders' equity and long-term debt) at November 30, 1998 was
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$37.9 billion, including $14.5 billion of common and preferred shareholders'
equity. Book value per common share was $23.88, based on period-end shares
outstanding of 565,670,808.
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 438 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.
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