<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 22, 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 September 22, 1999, Morgan Stanley Dean Witter & Co. (the
"Registrant") released financial information with respect to the quarter ended
August 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 September 22, 1999
containing financial information for the third quarter
ended August 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: September 22, 1999
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Nine Months Ended
----------------------------- ---------------- -----------------
Aug 31, Aug 31, May 31, Aug 31, May 31, Aug 31, Aug 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
-------- -------- --------- ------- ------- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues
Securities $ 3,810 $ 2,624 $ 4,216 45% (10%) $ 11,913 $ 8,541 39%
Asset Management 598 354 569 69% 5% 1,879 1,605 17%
Credit Services 935 863 872 8% 7% 2,559 2,329 10%
------- ------- ------- -------- --------
Consolidated net revenues $ 5,343 $ 3,841 $ 5,657 39% (6%) $ 16,351 $ 12,475 31%
======= ======= ======= ======== ========
Net income
Securities $ 633 $ 442 $ 829 43% (24%) $ 2,228 $ 1,461 52%
Asset Management 135 0 111 * 22% 393 249 58%
Credit Services 202 184 211 10% (4%) 537 459 17%
------- ------- ------- -------- --------
Income before cumulative
effect of a change in accounting 970 626 1,151 55% (16%) 3,158 2,169 46%
Cumulative effect of a change in
accounting(1) 0 0 0 -- -- 0 (117) *
------- ------- ------- -------- --------
Consolidated net income $ 970 $ 626 $ 1,151 55% (16%) $ 3,158 $ 2,052 54%
======= ======= ======= ======== ========
Preferred stock dividend requirements $ 11 $ 14 $ 10 (21%) 10% $ 33 $ 43 (23%)
======= ======= ======= ======== ========
Earnings applicable to common shares $ 959 $ 612 $ 1,141 57% (16%) $ 3,125 $ 2,009 56%
======= ======= ======= ======== ========
</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-1
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited)
<TABLE>
<CAPTION>
Percentage
Quarter Ended Change From: Nine Months Ended
---------------------------------------- ---------------- ---------------------------
Aug 31, Aug 31, May 31, Aug 31, May 31, Aug 31, Aug 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
------------ ------------ ------------ ------- ------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Basic earnings per
common share
Income before cumulative
effect of a change in
accounting $ 1.74 $ 1.07 $ 2.06 63% (16%) $ 5.65 $ 3.65 55%
Cumulative effect of
a change in accounting $ 0.00 $ 0.00 $ 0.00 -- -- $ 0.00 $ (0.20) *
Net income $ 1.74 $ 1.07 $ 2.06 63% (16%) $ 5.65 $ 3.45 64%
Diluted earnings per
common share
Income before cumulative
effect of a change in
accounting $ 1.65 $ 1.01 $ 1.95 63% (15%) $ 5.35 $ 3.47 54%
Cumulative effect of
a change in accounting $ 0.00 $ 0.00 $ 0.00 -- -- $ 0.00 $ (0.19) *
Net income $ 1.65 $ 1.01 $ 1.95 63% (15%) $ 5.35 $ 3.28 63%
Average common shares
outstanding
Basic 550,056,731 573,170,507 554,146,582 553,362,966 582,105,755
Diluted 580,700,823 604,779,594 586,655,685 584,717,406 613,265,207
Period end common shares
outstanding 559,244,249 582,790,622 566,786,999 559,244,249 582,790,622
Return on common equity 25.9% 18.9% 31.4% 28.9% 20.3%
Return on common equity (1) N/A N/A N/A N/A 21.3%
</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: Nine Months Ended
-------------------------------- ---------------------- --------------------
Aug 31, Aug 31, May 31, Aug 31, May 31, Aug 31, Aug 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
--------- --------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment banking $ 1,207 $ 819 $ 1,022 47% 18% $ 3,186 $ 2,607 22%
Principal transactions:
Trading 1,184 499 1,926 137% (39%) 4,801 2,493 93%
Investments 78 (174) 150 145% (48%) 493 (1) *
Commissions 729 608 789 20% (8%) 2,183 1,766 24%
Fees:
Asset management,
distribution
and administration 799 718 765 11% 4% 2,278 2,135 7%
Merchant and cardmember 392 438 357 (11%) 10% 1,090 1,270 (14%)
Servicing 313 255 310 23% 1% 876 658 33%
Interest and dividends 4,961 4,283 3,689 16% 34% 12,130 12,429 (2%)
Other 39 52 46 (25%) (15%) 124 154 (19%)
--------- --------- --------- --------- ---------
Total revenues 9,702 7,498 9,054 29% 7% 27,161 23,511 16%
Interest expense 4,246 3,377 3,278 26% 30% 10,401 10,076 3%
Provision for consumer loan
losses 113 280 119 (60%) (5%) 409 960 (57%)
--------- --------- --------- --------- ---------
Net revenues 5,343 3,841 5,657 39% (6%) 16,351 12,475 31%
--------- --------- --------- --------- ---------
Compensation and benefits 2,302 1,609 2,413 43% (5%) 7,078 5,414 31%
Occupancy and equipment 166 148 153 12% 8% 465 431 8%
Brokerage, clearing and
exchange fees 128 160 127 (20%) 1% 369 416 (11%)
Information processing and
communications 325 291 315 12% 3% 949 833 14%
Marketing and business
development 408 354 381 15% 7% 1,184 934 27%
Professional services 214 176 191 22% 12% 567 460 23%
Other 237 193 219 23% 8% 646 548 18%
--------- --------- --------- --------- ---------
Total non-interest
expenses 3,780 2,931 3,799 29% (1%) 11,258 9,036 25%
--------- --------- --------- --------- ---------
Income before income taxes
and cumulative effect
of a change in accounting 1,563 910 1,858 72% (16%) 5,093 3,439 48%
Income tax expense 593 284 707 109% (16%) 1,935 1,270 52%
--------- --------- --------- --------- ---------
Income before cumulative
effect of a
change in accounting 970 626 1,151 55% (16%) 3,158 2,169 46%
Cumulative effect of a change
in accounting (1) 0 0 0 -- -- 0 (117) *
--------- --------- --------- --------- ---------
Net income $ 970 $ 626 $ 1,151 55% (16%) $ 3,158 $ 2,052 54%
========= ========= ========= ========= =========
Preferred stock dividend
requirements $ 11 $ 14 $ 10 (21%) 10% $ 33 $ 43 (23%)
========= ========= ========= ========= =========
Earnings applicable to
common shares $ 959 $ 612 $ 1,141 57% (16%) $ 3,125 $ 2,009 56%
========= ========= ========= ========= =========
</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: Nine Months Ended
----------------------------------- ------------------ --------------------
Aug 31, Aug 31, May 31, Aug 31, May 31, Aug 31, Aug 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
---------- ---------- ----------- --------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment banking $ 1,207 $ 819 $ 1,022 47% 18% $ 3,186 $ 2,607 22%
Principal transactions:
Trading 1,184 499 1,926 137% (39%) 4,801 2,493 93%
Investments 78 (174) 150 145% (48%) 493 (1) *
Commissions 729 608 789 20% (8%) 2,183 1,766 24%
Asset management, distribution and
administration fees 799 718 765 11% 4% 2,278 2,135 7%
Interest and dividends 4,415 3,603 3,167 23% 39% 10,506 10,297 2%
Other 39 51 46 (24%) (15%) 124 150 (17%)
--------- --------- -------- ------- --------
Total revenues 8,451 6,124 7,865 38% 7% 23,571 19,447 21%
Interest expense 4,043 3,146 3,080 29% 31% 9,779 9,301 5%
--------- --------- -------- ------- --------
Net revenues 4,408 2,978 4,785 48% (8%) 13,792 10,146 36%
--------- --------- -------- ------- --------
Compensation and benefits 2,170 1,468 2,290 48% (5%) 6,704 4,991 34%
Occupancy and equipment 150 130 141 15% 6% 425 380 12%
Brokerage, clearing and exchange
fees 128 160 127 (20%) 1% 369 416 (11%)
Information processing and
communications 202 175 206 15% (2%) 600 489 23%
Marketing and business development 155 135 167 15% (7%) 471 377 25%
Professional services 184 151 160 22% 15% 485 388 25%
Other 189 140 167 35% 13% 504 395 28%
--------- --------- -------- ------- --------
Total non-interest expenses 3,178 2,359 3,258 35% (2%) 9,558 7,436 29%
--------- --------- -------- ------- --------
Income before income taxes and
cumulative effect of a change
in accounting 1,230 619 1,527 99% (19%) 4,234 2,710 56%
Income tax expense 462 177 587 161% (21%) 1,613 1,000 61%
--------- --------- -------- ------- --------
Income before cumulative effect
of a change in accounting 768 442 940 74% (18%) 2,621 1,710 53%
Cumulative effect of a change in
accounting (1) 0 0 0 -- -- 0 (117) *
--------- --------- -------- ------- --------
Net income $ 768 $ 442 $ 940 74% (18%) $ 2,621 $ 1,593 65%
========= ========= ======== ======= ========
Compensation and benefits as a %
of net revenues 49% 49% 48% 49% 49%
Non-compensation expenses as a %
of net revenues 23% 30% 20% 21% 24%
Profit margin (2) 17% 15% 20% 19% 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>
Quarter Ended Percentage Change From: Nine Months Ended
-------------------------------- ----------------------- -------------------
Aug 31, Aug 31, May 31, Aug 31, May 31, Aug 31, Aug 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
-------- --------- ----------- --------- ------------ ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 392 $ 438 $ 357 (11%) 10% $ 1,090 $ 1,270 (14%)
Servicing 313 255 310 23% 1% 876 658 33%
Other 0 1 0 * -- 0 4 *
------- ------- -------- -------- --------
Total non-interest revenues 705 694 667 2% 6% 1,966 1,932 2%
Interest revenue 546 680 522 (20%) 5% 1,624 2,132 (24%)
Interest expense 203 231 198 (12%) 3% 622 775 (20%)
------- ------- -------- -------- --------
Net interest income 343 449 324 (24%) 6% 1,002 1,357 (26%)
Provision for consumer loan losses 113 280 119 (60%) (5%) 409 960 (57%)
------- ------- -------- -------- --------
Net credit income 230 169 205 36% 12% 593 397 49%
------- ------- -------- -------- --------
Net revenues 935 863 872 8% 7% 2,559 2,329 10%
------- ------- -------- -------- --------
Compensation and benefits 132 141 123 (6%) 7% 374 423 (12%)
Occupancy and equipment 16 18 12 (11%) 33% 40 51 (22%)
Information processing and
communications 123 116 109 6% 13% 349 344 1%
Marketing and business development 253 219 214 16% 18% 713 557 28%
Professional services 30 25 31 20% (3%) 82 72 14%
Other 48 53 52 (9%) (8%) 142 153 (7%)
------- ------- -------- -------- --------
Total non-interest expenses 602 572 541 5% 11% 1,700 1,600 6%
------- ------- -------- -------- --------
Income before income taxes 333 291 331 14% 1% 859 729 18%
Income tax expense 131 107 120 22% 9% 322 270 19%
------- ------- -------- -------- --------
Net income $ 202 $ 184 $ 211 10% (4%) $ 537 $ 459 17%
======= ======= ======== ======== ========
Compensation and benefits as a %
of net revenues 14% 16% 14% 15% 18%
Non-compensation expenses as a %
of net revenues 50% 50% 48% 52% 51%
Profit margin (1) 22% 21% 24% 21% 20%
</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: Nine Months Ended
------------------------------- -------------------- ---------------------
Aug 31, Aug 31, May 31, Aug 31, May 31, Aug 31, Aug 31, Percentage
1999 1998 1999 1998 1999 1999 1998 Change
--------- --------- --------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 541 $ 575 $ 494 (6%) 10% $ 1,508 $ 1,627 (7%)
Servicing 0 0 0 -- -- 0 0 --
Other 0 1 0 * -- 0 4 *
--------- --------- --------- --------- ----------
Total non-interest
revenues 541 576 494 (6%) 10% 1,508 1,631 (8%)
Interest revenue 1,250 1,363 1,221 (8%) 2% 3,652 4,042 (10%)
Interest expense 466 499 449 (7%) 4% 1,366 1,528 (11%)
--------- --------- --------- --------- ----------
Net interest income 784 864 772 (9%) 2% 2,286 2,514 (9%)
Provision for consumer
loan losses 390 577 394 (32%) (1%) 1,235 1,816 (32%)
--------- --------- --------- --------- ----------
Net credit income 394 287 378 37% 4% 1,051 698 51%
--------- --------- --------- --------- ----------
Net revenues 935 863 872 8% 7% 2,559 2,329 10%
--------- --------- --------- --------- ----------
Compensation and benefits 132 141 123 (6%) 7% 374 423 (12%)
Occupancy and equipment 16 18 12 (11%) 33% 40 51 (22%)
Information processing and
communications 123 116 109 6% 13% 349 344 1%
Marketing and business
development 253 219 214 16% 18% 713 557 28%
Professional services 30 25 31 20% (3%) 82 72 14%
Other 48 53 52 (9%) (8%) 142 153 (7%)
--------- --------- --------- --------- ----------
Total non-interest expenses 602 572 541 5% 11% 1,700 1,600 6%
--------- --------- --------- --------- ----------
Income before income taxes 333 291 331 14% 1% 859 729 18%
Income tax expense 131 107 120 22% 9% 322 270 19%
--------- --------- --------- --------- ----------
Net income $ 202 $ 184 $ 211 10% (4%) $ 537 $ 459 17%
========= ========= ========= ========= ==========
Compensation and benefits as
a % of net revenues 14% 16% 14% 15% 18%
Non-compensation expenses as
a % of net revenues 50% 50% 48% 52% 51%
Profit margin (1) 22% 21% 24% 21% 20%
</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:
--------------------------------------------- ------------------------
Aug 31, Aug 31, May 31, Aug 31, May 31,
1999 1998 1999 1998 1999
---------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
MSDW
Period end common shares outstanding 559,244,249 582,790,622 566,786,999 (4%) (1%)
Book value per common share $ 26.53 $ 22.13 $ 26.00 20% 2%
Shareholder's equity (millions) (1) $ 15,845 $ 13,904 $ 15,749 14% 1%
Total capital (millions) (2) $ 38,740 $ 36,727 $ 40,007 5% (3%)
SECURITIES ($ billions)
Private Client Group
Global financial advisors 12,309 10,791 12,038 14% 2%
Client assets $ 529 $ 392 $ 513 35% 3%
Institutional Securities (3)
Mergers and acquisitions
announced transactions (4)
MSDW global market volume $ 588.2 $ 450.1 $ 308.3
Rank 2 3 3
Worldwide equity and related issues (4)
MSDW global market volume $ 34.2 $ 23.2 $ 21.9
Rank 2 1 1
ASSET MANAGEMENT ($ billions)
Assets under management and administration
Products offered primarily to individuals
Mutual funds
Equity $ 87 $ 64 $ 84 36% 4%
Fixed income 55 55 56 -- (2%)
Money markets 44 35 42 26% 5%
------------- ------------- -------------
Total mutual funds 186 154 182 21% 2%
ICS Assets 23 16 21 44% 10%
Other 38 30 38 27% --
------------- ------------- -------------
Sub-total Individual 247 200 241 24% 2%
------------- ------------- -------------
Products offered primarily to
institutional clients
Mutual funds 36 32 33 13% 9%
Separate accounts, pooled vehicle
and other arrangements 132 121 131 9% 1%
------------- ------------- -------------
Sub-total Institutional 168 153 164 10% 2%
------------- ------------- -------------
Total assets under management and
administration $ 415 $ 353 $ 405 18% 2%
============= ============= =============
</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: Nine Months Ended
--------------------------------- ------------------- --------------------
Aug 31, Aug 31, May 31, Aug 31, May 31, Aug 31, Aug 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 $ 16,557 $ 17,657 $ 14,588 (6%) 13% $ 16,557 $ 17,657 (6%)
Average $ 15,311 $ 17,416 $ 14,664 (12%) 4% $ 15,458 $ 19,135 (19%)
Managed consumer loans (1)
Period end $ 34,381 $ 34,228 $ 32,805 -- 5% $ 34,381 $ 34,228 --
Average $ 33,379 $ 34,076 $ 32,258 (2%) 3% $ 32,845 $ 35,115 (6%)
Interest yield 14.30% 15.19% 14.39% (0.89 pp) (0.09 pp) 14.25% 14.90 % (0.65 pp)
Interest spread 8.61% 9.06% 8.81% (0.45 pp) (0.20 pp) 8.61% 8.72 % (0.11 pp)
Net charge-off rate 5.29% 6.56% 5.55% (1.27 pp) (0.26 pp) 5.70% 6.89 % (1.19 pp)
Delinquency rate
(over 30 days) 6.34% 7.19% 5.94% (0.85 pp) 0.40 pp 6.34% 7.19 % (0.85 pp)
Discover Financial Services transaction
volume (in billions) $ 18.3 $ 14.7 $ 16.3 24% 12% $ 50.1 $ 42.7 17%
General purpose credit
card accounts (in millions) 37.4 38.0 37.5 (2%) -- 37.4 38.0 (2%)
Discover/NOVUS Network increase
in merchant locations (in thousands) 117 106 138 355 297
</TABLE>
_________________________________________
(1) Includes owned and securitized consumer loans.
F - 8
<PAGE>
Exhibit 99.1
Contact: Investor Relations Media Relations
John Beneke Jeanmarie McFadden
212-762-7282 212-762-7842
MORGAN STANLEY DEAN WITTER ANNOUNCES
QUARTERLY NET INCOME OF $970 MILLION;
EARNINGS PER SHARE UP 63%
NEW YORK, September 22, 1999 -- Morgan Stanley Dean Witter & Co. (NYSE:MWD)
today reported net income of $970 million for the quarter ended August 31, 1999
- -- a 55 percent increase from $626 million in last year's third quarter.
Diluted earnings per share were $1.65 -- up 63 percent from $1.01 a year ago.
Third quarter net revenues (total revenues less interest expense and the
provision for loan losses) increased to $5.3 billion -- 39 percent higher than
last year's third quarter. The annualized return on average common equity for
the third quarter was 25.9 percent.
Philip J. Purcell, Chairman, and John J. Mack, President, said in a joint
statement, "Morgan Stanley Dean Witter had another excellent quarter. We
continued to benefit from the diversity of our revenue streams and strong global
presence, with record revenues in investment banking and impressive quarters in
our private client group and worldwide equity. Our securities business has done
particularly well in the active European markets and has maintained a leadership
position in markets throughout the world. We are also pleased with the renewed
growth of our Discover Card franchise."
In the first nine months of fiscal 1999, net income was $3,158 million, 46
percent higher than $2,169 million a year ago./1/ Nine-month diluted earnings
per share were $5.35, up 54 percent from last year's $3.47 and net revenues rose
31 percent to $16.4 billion over the
- ----------------
/1/ All amounts for the nine-month period ended August 31, 1998 exclude a $117
million charge resulting from an accounting change. See Page F-1 of Financial
Summary, Note 1.
1
<PAGE>
same period. The annualized return on average common equity was 28.9 percent for
the first nine months of 1999.
SECURITIES
Securities net income for the third quarter increased to $633 million, up 43
percent from a year ago. This increase primarily reflects a strong quarter from
the Company's institutional securities business.
. Institutional securities third quarter results included records in investment
banking and commodities and an outstanding quarter for equities.
Internationally, the Company's European businesses made significant
contributions to the quarter's results.
. Investment banking's performance was driven by record revenues from mergers
and acquisitions, combined with strong results in equity underwriting. For
the first eight months of calendar 1999, the Company ranked second in
announced global M&A transactions and worldwide equity and equity related
underwriting, and maintained a strong leadership position in U.S. investment
grade debt underwriting./2/
. Institutional sales and trading also had an excellent quarter. Equities
continued to benefit from high levels of customer activity and strong trading
results in global markets. Commodities posted record revenues capitalizing on
the quarter's rally in energy prices. Fixed income achieved solid results
considering wider credit spreads and concerns over the possibility of higher
inflation.
. The private client group achieved strong quarterly revenues, driven primarily
by increased sales of equities and fixed income securities, and higher
revenues from the distribution of asset management products.
. The number of global financial advisors in the Company's private client group
(including AB Asesores' financial advisors) rose to 12,309, an increase of
271 during the quarter and more than 1,500 over the last twelve months.
Client assets rose to $529 billion -- $137 billion higher than a year ago.
- ---------------------
/2/ Source: Securities Data Corp. - January 1 to August 31, 1999.
2
<PAGE>
. At Discover Brokerage Direct, the Company's on-line brokerage service, new
account growth more than doubled and trading volume increased 55% from the
third quarter of 1998. DBD also continued to expand its client services
through the introduction of extended hours trading in certain NASDAQ and S&P
stocks.
ASSET MANAGEMENT
Asset Management posted third quarter net income of $135 million compared to a
breakeven quarter a year ago. Last year's third quarter results were adversely
impacted by losses that occurred in connection with an institutional leveraged
emerging markets debt portfolio. This year's earnings benefited from continued
growth in assets under management.
. The Company had $415 billion of assets under management and administration at
the end of the third quarter -- an increase of $62 billion, or 18 percent,
over a year ago.
. Retail assets increased $6 billion during the quarter and have increased $47
billion from a year ago to stand at $247 billion. Institutional assets
increased $4 billion during the quarter and have increased $15 billion from a
year ago to stand at $168 billion.
. The Company's new MSDW International and Van Kampen Technology funds
together raised nearly $700 million in assets during the quarter.
. The Company also reached an agreement with Sanwa Bank to distribute MSDW
asset management products and services to retail customers through Sanwa
distribution channels in Japan.
. The Private Equity group recognized third quarter investment gains of $41
million compared to $129 million a year ago.
CREDIT SERVICES
Credit Services net income increased by 10 percent to $202 million, compared to
$184 million in the third quarter of 1998 -- largely reflecting the continued
improvement in credit quality and record transaction volume.
. Credit quality improved substantially from last year, with the consumer loan
net charge-off rate falling to 5.29 percent from 6.56 percent. The over-30-
day delinquency rate declined to 6.34 percent compared to 7.19 percent a year
ago.
3
<PAGE>
. Transaction volume surged 24% to a record $18.3 billion driven by increased
sales volume and balance transfers.
. Managed consumer loans rose to $34.4 billion -- $2.8 billion higher than a
year ago after adjusting for the sales of receivables associated with Prime
Option, SPS and BRAVO.
. Marketing and business development expenses increased 16 percent to $253
million primarily as a result of the continued promotion of Discover Platinum
and a higher level of cardmember rewards due to increased transaction volume.
. The Discover/ NOVUS Network enrolled 117,000 new merchant locations during
the quarter -- a 10 percent increase from the third quarter enrollment a year
ago.
. In August, the Company announced the launch of its Morgan Stanley Dean Witter
credit card in the United Kingdom.
The Company has repurchased approximately 20 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
October 29, 1999 to common shareholders of record on October 15, 1999.
Total capital at August 31, 1999 was $38.7 billion, including $15.8 billion of
common and preferred shareholders' equity and preferred securities issued by
subsidiaries. Book value per common share was $26.53, based on period end
shares outstanding of 559,244,249.
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 464 securities branch offices throughout the
United States.
Access this press release on-line @www.msdw.com
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(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.
