<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 24, 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 June 24, 1999, Morgan Stanley Dean Witter & Co. (the "Registrant")
released financial information with respect to the quarter ended May 31, 1999. A
copy of the press release containing such financial information is annexed as
Exhibit 99.1 to this Report and by this reference incorporated herein and made a
part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- --------------------------------------------------------------------------
99.1 Press release of the Registrant dated June 24, 1999
containing financial information for the second quarter
ended May 31, 1999.
<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: June 24, 1999
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Six Months Ended
------------------------------------ ----------------- -----------------------
May 31, May 31, Feb 28, May 31, Feb 28, May 31, May 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
---------- ---------- ---------- ------- ------- ---------- ---------- ----------
<S>
Net revenues <C> <C> <C> <C> <C> <C> <C> <C>
Securities $ 4,216 $ 3,142 $ 3,887 34% 8% $ 8,103 $ 5,917 37%
Asset Management 569 674 712 (16%) (20%) 1,281 1,251 2%
Credit Services 872 783 752 11% 16% 1,624 1,466 11%
---------- ---------- ---------- ---------- ----------
Consolidated net revenues $ 5,657 $ 4,599 $ 5,351 23% 6% $ 11,008 $ 8,634 27%
========== ========== ========== ========== ==========
Net income
Securities $ 829 $ 537 $ 766 54% 8% $ 1,595 $ 1,019 57%
Asset Management 111 144 147 (23%) (24%) 258 249 4%
Credit Services 211 171 124 23% 70% 335 275 22%
---------- ---------- ---------- ---------- ----------
Income before cumulative effect
of a change in accounting 1,151 852 1,037 35% 11% 2,188 1,543 42%
Cumulative effect of a
change in accounting(1) 0 0 0 -- -- 0 (117) *
---------- ---------- ---------- ---------- ----------
Consolidated net income $ 1,151 $ 852 $ 1,037 35% 11% $ 2,188 $ 1,426 53%
========== ========== ========== ========== ==========
Preferred stock dividend
requirements $ 10 $ 14 $ 11 (29%) (9%) $ 21 $ 29 (28%)
========== ========== ========== ========== ==========
Earnings applicable to
common shares $ 1,141 $ 838 $ 1,026 36% 11% $ 2,167 $ 1,397 55%
========== ========== ========== ========== ==========
</TABLE>
(1) Represents the effects of an accounting change adopted in the fourth
quarter of fiscal 1998(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.
Note: The accompanying information includes the operating results of Discover
Brokerage Direct, the Company's provider of electronic brokerage services,
within Securities financial results. Previously, the Company had included
Discover Brokerage Direct's results within its Credit Services segment.
The segment data of prior periods has been restated to reflect this
change.
F - 1
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Six Months Ended
--------------------------------------- ---------------- -------------------------
May 31, May 31, Feb 28, May 31, Feb 28, May 31, May 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
------------ ----------- ------------ ------- ------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Basic earnings per common share
Income before cumulative effect
of a change in accounting $ 2.06 $ 1.44 $ 1.85 43% 11% $ 3.91 $ 2.59 51%
Cumulative effect of a change in
accounting $ 0.00 $ 0.00 $ 0.00 -- -- $ 0.00 $ (0.20) *
Net income $ 2.06 $ 1.44 $ 1.85 43% 11% $ 3.91 $ 2.39 64%
Diluted earnings per common share
Income before cumulative effect
of a change in accounting $ 1.95 $ 1.37 $ 1.76 42% 11% $ 3.71 $ 2.47 50%
Cumulative effect of a change in
accounting $ 0.00 $ 0.00 $ 0.00 -- -- $ 0.00 $ (0.19) *
Net income $ 1.95 $ 1.37 $ 1.76 42% 11% $ 3.71 $ 2.28 63%
Average common shares outstanding
Basic 554,146,582 581,326,618 553,935,578 553,788,197 583,502,306
Diluted 586,655,685 612,625,354 584,593,156 585,508,185 614,179,415
Period end common shares
outstanding 566,786,999 587,672,561 570,589,670 566,786,999 587,672,561
Return on common equity 31.4% 25.2% 29.5% 30.5% 21.0%
Return on common equity (1) N/A N/A N/A N/A 22.6%
</TABLE>
(1) Excludes the cumulative effect of a change in accounting in the quarter
ended February 28, 1998.
F - 2
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Six Months Ended
--------------------------------------- ---------------- -------------------------
May 31, May 31, Feb 28, May 31, Feb 28, May 31, May 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
------------ ----------- ------------ ------- ------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment banking $ 1,022 $ 988 $ 957 3% 7% $ 1,979 $ 1,788 11%
Principal transactions:
Trading 1,926 1,091 1,691 77% 14% 3,617 1,994 81%
Investments 150 101 265 49% (43%) 415 173 140%
Commissions 789 611 665 29% 19% 1,454 1,158 26%
Fees:
Asset management, distribution &
administration 765 741 714 3% 7% 1,479 1,417 4%
Merchant and cardmember 357 404 341 (12%) 5% 698 832 (16%)
Servicing 310 232 253 34% 23% 563 403 40%
Interest and dividends 3,689 4,213 3,480 (12%) 6% 7,169 8,146 (12%)
Other 46 47 39 (2%) 18% 85 102 (17%)
------------ ----------- ------------ ------------ ------------
Total revenues 9,054 8,428 8,405 7% 8% 17,459 16,013 9%
Interest expense 3,278 3,554 2,877 (8%) 14% 6,155 6,699 (8%)
Provision for consumer loan losses 119 275 177 (57%) (33%) 296 680 (56%)
------------ ----------- ------------ ------------ ------------
Net revenues 5,657 4,599 5,351 23% 6% 11,008 8,634 27%
------------ ----------- ------------ ------------ ------------
Compensation and benefits 2,413 2,017 2,363 20% 2% 4,776 3,805 26%
Occupancy and equipment 153 143 146 7% 5% 299 283 6%
Brokerage, clearing and exchange
fees 127 135 114 (6%) 11% 241 256 (6%)
Information processing and
communications 315 275 309 15% 2% 624 542 15%
Marketing and business development 381 286 395 33% (4%) 776 580 34%
Professional services 191 156 162 22% 18% 353 284 24%
Other 219 190 190 15% 15% 409 355 15%
------------ ----------- ------------ ------------ ------------
Total non-interest expenses 3,799 3,202 3,679 19% 3% 7,478 6,105 22%
------------ ----------- ------------ ------------ ------------
Income before income taxes and
cumulative effect of a change
in accounting 1,858 1,397 1,672 33% 11% 3,530 2,529 40%
Income tax expense 707 545 635 30% 11% 1,342 986 36%
------------ ----------- ------------ ------------ ------------
Income before cumulative effect
of a change in accounting 1,151 852 1,037 35% 11% 2,188 1,543 42%
Cumulative effect of a change in
accounting (1) 0 0 0 -- -- 0 (117) *
------------ ----------- ------------ ------------ ------------
Net income $ 1,151 $ 852 $ 1,037 35% 11% $ 2,188 $ 1,426 53%
============ =========== ============ ============ ============
Preferred stock dividend
requirements $ 10 $ 14 $ 11 (29%) (9%) $ 21 $ 29 (28%)
============ =========== ============ ============ ============
Earnings applicable to common
shares $ 1,141 $ 838 $ 1,026 36% 11% $ 2,167 $ 1,397 55%
============ =========== ============ ============ ============
</TABLE>
(1) Represents the effects of an accounting change adopted in the fourth
quarter of fiscal 1998(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.
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: Six Months Ended
------------------------------------ ----------------- -----------------------
May 31, May 31, Feb 28, May 31, Feb 28, May 31, May 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
---------- ---------- ---------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment banking $ 1,022 $ 988 $ 957 3% 7% $ 1,979 $ 1,788 11%
Principal transactions:
Trading 1,926 1,091 1,691 77% 14% 3,617 1,994 81%
Investments 150 101 265 49% (43%) 415 173 140%
Commissions 789 611 665 29% 19% 1,454 1,158 26%
Asset management, distribution and
administration fees 765 741 714 3% 7% 1,479 1,417 4%
Interest and dividends 3,167 3,542 2,924 (11%) 8% 6,091 6,694 (9%)
Other 46 45 39 2% 18% 85 99 (14%)
---------- ---------- ---------- ---------- ----------
Total revenues 7,865 7,119 7,255 10% 8% 15,120 13,323 13%
Interest expense 3,080 3,303 2,656 (7%) 16% 5,736 6,155 (7%)
---------- ---------- ---------- ---------- ----------
Net revenues 4,785 3,816 4,599 25% 4% 9,384 7,168 31%
---------- ---------- ---------- ---------- ----------
Compensation and benefits 2,290 1,873 2,244 22% 2% 4,534 3,523 29%
Occupancy and equipment 141 127 134 11% 5% 275 250 10%
Brokerage, clearing and exchange
fees 127 135 114 (6%) 11% 241 256 (6%)
Information processing and
communications 206 164 192 26% 7% 398 314 27%
Marketing and business
development 167 126 149 33% 12% 316 242 31%
Professional services 160 132 141 21% 13% 301 237 27%
Other 167 132 148 27% 13% 315 255 24%
---------- ---------- ---------- ---------- ----------
Total non-interest expenses 3,258 2,689 3,122 21% 4% 6,380 5,077 26%
---------- ---------- ---------- ---------- ----------
Income before income taxes and
cumulative effect of a change
in accounting 1,527 1,127 1,477 35% 3% 3,004 2,091 44%
Income tax expense 587 446 564 32% 4% 1,151 823 40%
---------- ---------- ---------- ---------- ----------
Income before cumulative effect
of a change in accounting 940 681 913 38% 3% 1,853 1,268 46%
Cumulative effect of a change in
accounting(1) 0 0 0 -- -- 0 (117) *
---------- ---------- ---------- ---------- ----------
Net income $ 940 $ 681 $ 913 38% 3% $ 1,853 $ 1,151 61%
========== ========== ========== ========== ==========
Compensation and benefits
as a % of net revenues 48% 49% 49% 48% 49%
Non-compensation expenses
as a % of net revenues 20% 21% 19% 20% 22%
Profit margin (2) 20% 18% 20% 20% 16%
</TABLE>
- --------------------------
(1) Represents the effects of an accounting change adopted in the fourth
quarter of fiscal 1998(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.
(2) Net income as a % of net revenues.
F - 4
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Credit Services Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Six Months Ended
------------------------------------ ----------------- -----------------------
May 31, May 31, Feb 28, May 31, Feb 28, May 31, May 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
---------- ---------- ---------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 357 $ 404 $ 341 (12%) 5% $ 698 $ 832 (16%)
Servicing 310 232 253 34% 23% 563 403 40%
Other 0 2 0 * * 0 3 *
---------- ---------- ---------- ---------- ----------
Total non-interest revenues 667 638 594 5% 12% 1,261 1,238 2%
Interest revenue 522 671 556 (22%) (6%) 1,078 1,452 (26%)
Interest expense 198 251 221 (21%) (10%) 419 544 (23%)
---------- ---------- ---------- ---------- ----------
Net interest income 324 420 335 (23%) (3%) 659 908 (27%)
Provision for consumer loan
losses 119 275 177 (57%) (33%) 296 680 (56%)
---------- ---------- ---------- ---------- ----------
Net credit income 205 145 158 41% 30% 363 228 59%
---------- ---------- ---------- ---------- ----------
Net revenues 872 783 752 11% 16% 1,624 1,466 11%
---------- ---------- ---------- ---------- ----------
Compensation and benefits 123 144 119 (15%) 3% 242 282 (14%)
Occupancy and equipment 12 16 12 (25%) -- 24 33 (27%)
Information processing and
communications 109 111 117 (2%) (7%) 226 228 (1%)
Marketing and business
development 214 160 246 34% (13%) 460 338 36%
Professional services 31 24 21 29% 48% 52 47 11%
Other 52 58 42 (10%) 24% 94 100 (6%)
---------- ---------- ---------- ---------- ----------
Total non-interest expenses 541 513 557 5% (3%) 1,098 1,028 7%
---------- ---------- ---------- ---------- ----------
Income before income taxes 331 270 195 23% 70% 526 438 20%
Income tax expense 120 99 71 21% 69% 191 163 17%
---------- ---------- ---------- ---------- ----------
Net income $ 211 $ 171 $ 124 23% 70% $ 335 $ 275 22%
========== ========== ========== ========== ==========
Compensation and benefits
as a % of net revenues 14% 18% 16% 15% 19%
Non-compensation expenses as
a % of net revenues 48% 47% 58% 53% 51%
Profit margin (1) 24% 22% 16% 21% 19%
</TABLE>
- -----------------------------------
(1) Net income as a % of net revenues.
F - 5
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Credit Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Six Months Ended
------------------------------------ ----------------- -----------------------
May 31, May 31, Feb 28, May 31, Feb 28, May 31, May 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
---------- ---------- ---------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 494 $ 519 $ 473 (5%) 4% $ 967 $ 1,052 (8%)
Servicing 0 0 0 -- -- 0 0 --
Other 0 2 0 * -- 0 3 *
---------- ---------- ---------- ---------- ----------
Total non-interest revenues 494 521 473 (5%) 4% 967 1,055 (8%)
Interest revenue 1,221 1,319 1,181 (7%) 3% 2,402 2,679 (10%)
Interest expense 449 502 451 (11%) -- 900 1,029 (13%)
---------- ---------- ---------- ---------- ----------
Net interest income 772 817 730 (6%) 6% 1,502 1,650 (9%)
Provision for consumer loan
losses 394 555 451 (29%) (13%) 845 1,239 (32%)
---------- ---------- ---------- ---------- ----------
Net credit income 378 262 279 44% 35% 657 411 60%
---------- ---------- ---------- ---------- ----------
Net revenues 872 783 752 11% 16% 1,624 1,466 11%
---------- ---------- ---------- ---------- ----------
Compensation and benefits 123 144 119 (15%) 3% 242 282 (14%)
Occupancy and equipment 12 16 12 (25%) -- 24 33 (27%)
Information processing and
communications 109 111 117 (2%) (7%) 226 228 (1%)
Marketing and business
development 214 160 246 34% (13%) 460 338 36%
Professional services 31 24 21 29% 48% 52 47 11%
Other 52 58 42 (10%) 24% 94 100 (6%)
---------- ---------- ---------- ---------- ----------
Total non-interest expenses 541 513 557 5% (3%) 1,098 1,028 7%
---------- ---------- ---------- ---------- ----------
Income before income taxes 331 270 195 23% 70% 526 438 20%
Income tax expense 120 99 71 21% 69% 191 163 17%
---------- ---------- ---------- ---------- ----------
Net income $ 211 $ 171 $ 124 23% 70% $ 335 $ 275 22%
========== ========== ========== ========== ==========
Compensation and benefits
as a % of net revenues 14% 18% 16% 15% 19%
Non-compensation expenses
as a % of net revenues 48% 47% 58% 53% 51%
Profit margin (1) 24% 22% 16% 21% 19%
</TABLE>
- -----------------------------------
(1) Net income as a % of net revenues.
F - 6
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Information and Statistical Data
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
---------------------------------------- --------------------------
May 31, 1999 May 31, 1998 Feb 28, 1999 May 31, 1998 Feb 28, 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
MSDW
Period end common shares outstanding 566,786,999 587,672,561 570,589,670 (4%) (1%)
Book value per common share $ 26.00 $ 21.95 $ 24.93 18% 4%
Shareholder's equity (millions) (1) $ 15,749 $ 14,106 $ 15,237 12% 3%
Total capital (millions) (2) $ 40,007 $ 36,604 $ 39,388 9% 2%
SECURITIES ($ billions)
Private Client Group
Financial advisors 11,764 10,650 11,453 10% 3%
Client assets $ 510 $ 425 $ 470 20% 8%
Institutional Securities (3)
Mergers and acquisitions announced
transactions (4)
MSDW global market volume $ 308.3 $ 195.9 $ 109.7
Rank 3 4 2
Worldwide equity and related issues (4)
MSDW global market volume $ 21.9 $ 15.0 $ 10.5
Rank 1 1 1
ASSET MANAGEMENT ($ billions)
Assets under management and
administration
Products offered primarily to
individuals
Mutual funds
Equity $ 84 $ 73 $ 77 15% 9%
Fixed income 56 52 56 8% --
Money markets 42 33 41 27% 2%
------------ ------------ ------------
Total mutual funds 182 158 174 15% 5%
ICS Assets 21 17 20 24% 5%
Other 35 31 33 13% 6%
------------ ------------ ------------
Sub-total Individual 238 206 227 16% 5%
------------ ------------ ------------
Products offered primarily to
institutional clients
Mutual funds 33 34 34 (3%) (3%)
Separate accounts, pooled vehicle and
other arrangements 131 134 124 (2%) 6%
------------ ------------ ------------
Sub-total Institutional 164 168 158 (2%) 4%
------------ ------------ ------------
Total assets under management
and administration $ 402 $ 374 $ 385 7% 4%
============ ============ ============
</TABLE>
- -------------
(1) Includes preferred and common equity and preferred securities issued by
subsidiaries.
(2) Includes preferred and common equity, preferred securities issued by
subsidiaries, 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.
Financial Information and Statistical Data
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Six Months Ended
------------------------------------ -------------------- -----------------------
May 31, May 31, Feb 28, May 31, Feb 28, May 31, May 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
---------- ---------- ---------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CREDIT SERVICES
Owned consumer loans
Period end $ 14,588 $ 17,913 $ 15,529 (19%) (6%) $ 14,588 $ 17,913 (19%)
Average $ 14,664 $ 18,293 $ 16,420 (20%) (11%) $ 15,533 $ 20,003 (22%)
Managed consumer loans (1)
Period end $ 32,805 $ 34,091 $ 32,134 (4%) 2% $ 32,805 $ 34,091 (4%)
Average $ 32,258 $ 34,479 $ 32,900 (6%) (2%) $ 32,575 $ 35,641 (9%)
Interest yield 14.39% 14.79% 14.06% (0.40 pp) 0.33 pp 14.23% 14.76% (0.53 pp)
Interest spread 8.81% 8.64% 8.41% 0.17 pp 0.40 pp 8.61% 8.55% 0.06 pp
Net charge-off rate 5.55% 6.58% 6.28% (1.03 pp) (0.73 pp) 5.91% 7.05% (1.14 pp)
Delinquency rate (over 30 days) 5.94% 7.07% 7.08% (1.13 pp) (1.14 pp) 5.94% 7.07% (1.13 pp)
General purpose credit card
accounts (in millions) 37 38 37 37 38
Discover/NOVUS Network increase in
merchant locations (in thousands) 138 101 100 238 191
</TABLE>
- -------------------------
(1) Includes owned and securitized consumer loans.
F - 8
<PAGE>
EXHBIT 99.1
Contact: Investor Relations Media Relations
John Beneke Jon Diat
212-762-7282 212-762-7843
MORGAN STANLEY DEAN WITTER ANNOUNCES
RECORD QUARTERLY OPERATING RESULTS OF $1.15 BILLION;
EARNINGS PER SHARE UP 42%
NEW YORK, June 24, 1999 -- Morgan Stanley Dean Witter & Co. (NYSE:MWD) today
reported record operating results of $1,151 million for the quarter ended May
31, 1999 -- a 35 percent increase from $852 million in last year's second
quarter. Diluted earnings per share were $1.95 -- up 42 percent from $1.37 a
year ago.
Second quarter net revenues (total revenues less interest expense and the
provision for loan losses) increased to a record $5.7 billion -- 23 percent
higher than a year ago. The annualized return on average common equity for the
second quarter was 31.4 percent.
Philip J. Purcell, Chairman, and John J. Mack, President, said in a joint
statement, "We had another terrific quarter. Operating results were up 35
percent, and were almost twice as high as they were at the time of our merger -
two years ago. Our Company is clearly reaping the benefits of the breadth and
depth of our franchises, both in the U.S. and in markets around the globe. The
period has been an active one for both our individual and institutional
customers. Our securities business continued its record breaking pace, and we
were pleased by the robust transaction volume and the significant improvement in
the credit quality of our credit card portfolio."
Operating results rose to $2,188 million for the first six months of fiscal
1999, 42 percent higher than $1,543 million a year ago./1/ Six-month diluted
earnings per share were $3.71,
- ----------------
/1/ All amounts for the six month period ended May 31, 1998 exclude a $117
million charge resulting from an accounting change. See Page F-1 of
Financial Summary, Note 1.
1
<PAGE>
up 50 percent from last year's $2.47. Six-month net revenues rose 27 percent to
$11.0 billion. The annualized six-month return on average common equity was 30.5
percent.
SECURITIES
Securities net income increased to a record $829 million, up 54 percent from the
second quarter of 1998./2/ This increase reflects outstanding performances
across all of the Company's securities businesses.
o The quarter marked a new high for institutional securities, including
records in equities, investment banking and commodities, and the second
best quarter for fixed income. Our European and Asian businesses made
significant contributions to our record results.
o Institutional sales and trading reported outstanding results in a market
environment that was more challenging than the first quarter. Equities
benefited from high levels of customer activity and volatility in
the global equity markets. Fixed income had an excellent quarter despite
heightened concerns over accelerating inflation in the U.S.
o Investment banking's performance was driven by record revenues from mergers
and acquisitions, combined with excellent results in equity and debt
underwriting. For the first five months of calendar 1999, the Company
ranked first in the underwriting of worldwide equity and equity related
issues and maintained strong leadership positions in announced global M&A
transactions, and U.S. investment grade and high yield debt underwritings.
/3/
o The private client group (formerly individual securities) achieved record
quarterly revenues, driven primarily by increased sales of listed and
over-the-counter equities, and higher revenues from the distribution of
asset management products.
o The number of financial advisors in the Company's private client group rose
to 11,764, an increase of 311 during the quarter and more than 1,100 over
the last twelve months. Client assets rose to $510 billion -- $85 billion
higher than a year ago.
o Discover Brokerage Direct, the Company's on-line brokerage service,
achieved record account growth, and trading volume that was 78 percent
higher than a year ago.
- ----------------
/2/ Securities includes the results of Discover Brokerage Direct which were
previously reported in Credit Services.
/3/ Source: Securities Data Corp. - January 1 to May 31, 1999.
2
<PAGE>
ASSET MANAGEMENT
Asset Management posted second quarter net income of $111 million -- down 23
percent from a year ago. The decline was due to lower investment gains for the
Company's Private Equity Group.
o While net income was down, fees on asset management products increased to
a record level in the second quarter.
o The Company had $402 billion of assets under management and administration
at the end of the second quarter -- an increase of $28 billion, or 7
percent, over a year ago.
o Retail assets increased $11 billion during the quarter and $32 billion from
a year ago -- to stand at $238 billion. Institutional assets increased $6
billion for the quarter to stand at $164 billion, and were $4 billion below
last year's level.
o Private Equity recognized second quarter investment gains of $29 million
compared to $100 million a year ago.
CREDIT SERVICES
Credit Services net income increased by 23 percent to $211 million, compared to
$171 million a year ago -- primarily reflecting the continued improvement in
credit quality.
o Credit quality improved substantially from a year ago, with the consumer
loan charge-off rate declining to 5.55 percent from 6.58 percent. The over-
30-day delinquency rate declined to 5.94 percent compared to 7.07 percent
a year ago.
o Managed consumer loans of $32.8 billion increased $1.7 billion from last
year's second quarter after adjusting for the sales of receivables
associated with Prime Option, SPS and BRAVO.
o Merchant and cardmember fees increased by 11% (taking into account the
sales of businesses) on record quarterly transaction volume.
o Marketing and business development expenses increased 34 percent to $214
million largely as a result of the launch and continued promotion of the
Discover Platinum Card and a higher level of cardmember rewards due to
increased transaction volume.
o The Discover/NOVUS Network enrolled 138,000 new merchant locations during
the second quarter, a 37% increase from last year's enrollment.
3
<PAGE>
The Company repurchased approximately 11 million shares of its common stock
since fiscal year end. The Company also announced that its Board of Directors
declared a $.24 quarterly dividend per common share. The dividend is payable on
July 30, 1999 to common shareholders of record on July 16, 1999.
Total capital at May 31, 1999 was $40.0 billion, including $15.7 billion of
common and preferred shareholders' equity and preferred securities issued by
subsidiaries. Book value per common share was $26.00, based on period end shares
outstanding of 566,786,999.
Morgan Stanley Dean Witter & Co. is a global financial services firm and a
market leader in securities, asset management and credit services. The Company
has offices in New York, London, Tokyo, Hong Kong, and other principal financial
centers around the world and has 456 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 1998 Annual Report to Shareholders
and the Company's Quarterly Reports on Form 10-Q for fiscal 1999.
4
