-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V2cfw7vmfRpE5RckBkpxyut5/1sbDRc6YGoa9mORVh+zNO0HEWJMe0/Pi5dE9f66 9lSw7hG1csokTL6FgKDz9g== /in/edgar/work/0000950123-00-006556/0000950123-00-006556.txt : 20000717 0000950123-00-006556.hdr.sgml : 20000717 ACCESSION NUMBER: 0000950123-00-006556 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000713 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN J P & CO INC CENTRAL INDEX KEY: 0000068100 STANDARD INDUSTRIAL CLASSIFICATION: [6022 ] IRS NUMBER: 132625764 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-05885 FILM NUMBER: 673327 BUSINESS ADDRESS: STREET 1: 60 WALL ST CITY: NEW YORK STATE: NY ZIP: 10260 BUSINESS PHONE: 2124832323 MAIL ADDRESS: STREET 1: 500 STANTON CHRISTIANA RD STREET 2: ATTN RANDY REDCAY CITY: NEWARK STATE: DE ZIP: 19713 8-K 1 e8-k.txt J.P. MORGAN & CO. INCORPORATED 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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) July 13, 2000 J.P. MORGAN & CO. INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE 1-5885 13-2625764 (State or other juris- (Commission (IRS Employer diction of incorporation) File Number) Identification No.) 60 WALL STREET, NEW YORK, NEW YORK 10260-0060 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 483-2323 ----------------------------------------------------------------- (Former name or former address, if changed since last report) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ITEM 5. OTHER EVENTS On July 13, 2000, the Registrant issued a press release announcing its earnings for the three-month and six-month periods ended June 30, 2000. A copy of such press release is filed herein as Exhibit 99a. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements NONE. (b) Pro Forma Financial Information NONE. (c) Exhibits 12. Statement re computation of ratios. 99a. Copy of press release of J.P. Morgan & Co. Incorporated dated July 13, 2000. 99b. Morgan Guaranty Trust Company of New York Statement of Condition as of June 30, 2000. 3 SIGNATURES 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 hereunto duly authorized. J.P. MORGAN & CO. INCORPORATED ------------------------------ (REGISTRANT) /s/ Grace B. Vogel ---------------------------- NAME: Grace B. Vogel TITLE: Chief Accounting Officer DATE: July 13, 2000 EX-12 2 ex12.txt STATEMENT RE COMPUTATION OF RATIOS 1 EXHIBIT 12 Computation of Ratio of Earnings to Fixed Charges J.P. Morgan & Co. Incorporated Consolidated
- -------------------------------------------------------------------------------- Six Months Dollars in millions 2000 - -------------------------------------------------------------------------------- Earnings: Net income $1 170 Add: income taxes 630 Less: equity in undistributed income of all affiliates accounted for by the equity method 61 Add: fixed charges, excluding interest on deposits 4 360 - -------------------------------------------------------------------------------- Earnings available for fixed charges, excluding interest on deposits 6 099 Add: interest on deposits 1 099 - -------------------------------------------------------------------------------- Earnings available for fixed charges, including interest on deposits 7 198 - -------------------------------------------------------------------------------- Fixed charges: Interest expense, excluding interest on deposits 4 344 Interest factor in net rental expense 16 - -------------------------------------------------------------------------------- Total fixed charges, excluding interest on deposits 4 360 Add: interest on deposits 1 099 - -------------------------------------------------------------------------------- Total fixed charges, including interest on deposits 5 459 - -------------------------------------------------------------------------------- Ratio of earnings to fixed charges: Excluding interest on deposits 1.40 Including interest on deposits 1.32 - --------------------------------------------------------------------------------
2 EXHIBIT 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends J.P. Morgan & Co. Incorporated Consolidated
- -------------------------------------------------------------------------------- Dollars in millions Six Months 2000 - -------------------------------------------------------------------------------- Earnings: Net income $ 1 170 Add: income taxes 630 Less: equity in undistributed income of all affiliates accounted for by the equity method 61 Add: fixed charges, excluding interest on deposits, and preferred stock dividends 4 389 - -------------------------------------------------------------------------------- Earnings available for fixed charges, excluding interest on deposits 6 128 Add: interest on deposits 1 099 - -------------------------------------------------------------------------------- Earnings available for fixed charges, including interest on deposits 7 227 - -------------------------------------------------------------------------------- Fixed charges: Interest expense, excluding interest on deposits 4 344 Interest factor in net rental expense 16 Preferred stock dividends 29 - -------------------------------------------------------------------------------- Total fixed charges, excluding interest on deposits 4 389 Add: interest on deposits 1 099 - -------------------------------------------------------------------------------- Total fixed charges, including interest on deposits 5 488 - -------------------------------------------------------------------------------- Ratio of earnings to fixed charges: Excluding interest on deposits 1.40 Including interest on deposits 1.32 - --------------------------------------------------------------------------------
EX-99.A 3 ex99-a.txt COPY OF PRESS RELEASE 1 J.P. Morgan & Co. Incorporated 60 Wall Street New York, NY 10260-0060 NYSE: symbol: JPM - -------------------------------------------------------------------------------- NEWS RELEASE: IMMEDIATE July 13, 2000 J.P. MORGAN REPORTS SECOND QUARTER 2000 EARNINGS J.P. Morgan today reported second quarter net income of $542 million, up from $504 million in the second quarter of 1999. Earnings per share were $2.90, an increase of 15% from $2.52 a year ago. Return on common equity was 20% in the quarter compared with 18% in the second quarter of 1999. Net income for the first half of 2000 was $1.170 billion compared with $1.104 billion in the same period a year ago. Earnings per share were $6.27 compared with $5.53, an increase of 13%. Return on common equity increased to 22% from 20% in the first half 1999. HIGHLIGHTS FOR THE SECOND QUARTER: - - Economic value added (EVA) was $258 million, an increase of 32% from a year ago - - Revenues of $2.479 billion were up 13% in a challenging market environment - - Momentum continued in Asset Management Services, Equities, and Investment Banking and our proprietary activities produced excellent results, offsetting the impact of depressed fixed income and currency markets - - Expenses rose 17% as a result of performance-related compensation and investment in Equities, Investment Banking, and e-finance initiatives - - We repurchased $480 million of common stock (3.8 million shares) during the quarter "Our diversified business mix allowed us to deliver strong results in a tougher market environment," said Douglas A. Warner III, chairman. "Areas of strategic growth - asset management, equities, and investment banking - performed well, and we have a robust pipeline of client activity. At the same time, we maintained our performance discipline and returned significant capital to shareholders." BUSINESS SEGMENT RESULTS Asset Management Services revenues in the second quarter increased 19% to $409 million from a year ago. Revenues from private banking clients grew significantly as a result of new client acquisition and higher revenues from existing clients. Revenues from institutional investment management and our equity investment in American Century also rose. The segment's pre-tax margin expanded to 26% in the first half of 2000 from 19% in the prior-year period. Assets under management grew 13% from a year ago to approximately $372 billion at June 30, 2000. This excludes $113 billion of assets under management at American Century, in which we have a 45% interest. - -------------------------------------------------------------------------------- Press contact: Kristin C. Lemkau 212/648-9583 Investor contact: Ann B. Patton 212/648-9446 2 J.P. Morgan & Co. Incorporated 2 Investment Banking revenues were $426 million, up 4% from last year's strong quarter. Record advisory revenues were driven by strong activity with clients in Europe and in the technology sector. Debt underwriting revenues were lower owing to reduced issuance in the markets. For the first half of 2000, Thompson Financial Securities Data Corporation ranked J.P. Morgan fifth in completed worldwide mergers and acquisitions, with a market share of 20%, up from sixth and 15% in the first half of 1999. In Europe, our share increased from 25% to 36%. We ranked sixth among U.S. lead equity underwriters with a market share of 5.8%, compared with eighth and a market share of 4.4% for the first half of 1999. Equities revenues increased 31% to $504 million over the prior year on strength in both derivatives and cash securities. Revenues from equity derivatives were well diversified across regions and increased as a result of significant trading gains. Revenues from cash equities rose materially on higher volumes and market share gains, particularly in Europe. Interest Rate and Currency Markets revenues declined 31% to $384 million from the prior year quarter owing to lower trading results and client activity across all products. Issuers and investors were cautious throughout much of the quarter because of uncertainty about interest rate policy. Credit Markets revenues were $348 million, 30% below the prior-year quarter. The decline reflected lower underwriting results in both high-grade and high-yield debt, as well as lower trading results, particularly in Latin America. Clients' uncertainty about rising interest rates and equity market volatility slowed issuance and adversely affected our results. Despite these market conditions, the overall quality of our credit portfolio remained high and its risk stable. Equity Investments revenues were $145 million in the second quarter, resulting primarily from gains realized on investments in the financial services sector. The accumulated market appreciation of the portfolio, excluding sales, declined by $65 million in the period. We invested $107 million during the quarter, approximately one-half of which was committed to the financial services and telecommunications industries. Equity Investments revenues were $6 million in the second quarter of 1999. Proprietary Positioning revenues were $283 million in the quarter, up from $23 million a year ago. Total return - reported revenues and the change in net unrealized value - was $277 million compared with $5 million a year ago. We achieved excellent results in several market-neutral trading strategies. Risk levels were unchanged from the first quarter and partially offset risks in other business segments. LabMorgan continued to expand its portfolio of e-finance ventures. Since its inception in March, LabMorgan has received over 1,000 business ideas from outside and within the firm. Of these, 48 are in various stages of validation and acceleration; in addition we continued development of previously launched ventures. 3 J.P. Morgan & Co. Incorporated 3 Significant initiatives announced during the quarter included: - - SynDirect Wireless, the first wireless communication platform for bond issuers and investors; - - FXAll, a multi-dealer, on-line foreign exchange service and Volbroker.com, the first real time global electronic trading service for currency options; - - several fixed income initiatives in Europe and Asia: Coredeal, a European inter-dealer platform for credit products; Bondclick, a European government bond multi-dealer brokerage; and Asia Bond Portal, a multi-dealer platform in Asia. OPERATING EXPENSES Operating expenses were $1.660 billion compared with $1.417 billion in the prior-year quarter, up 17%. The increase was mostly due to higher performance-driven compensation; expenses associated with expanding our Equities and Investment Banking businesses, where we hired approximately 100 experienced bankers, research analysts, and other professionals; and ongoing investment in corporate e-finance initiatives. Business productivity gains continued to help fund our investments. The firm's efficiency ratio was 67% in the second quarter of 2000; compensation expense, which represents two-thirds of our total expenses, remained stable at 44% of revenues. CAPITAL The firm purchased approximately $480 million of its common stock (3.8 million shares) in the second quarter under its October 1999 authorization to repurchase up to $3 billion of common stock. The purchases for the first half of 2000 totaled $1.1 billion (9.0 million shares). As of June 30, 2000, approximately $2.5 billion of the authorization had been utilized; we intend to use the remaining $500 million over the next three to nine months, subject to market conditions, business considerations, and other factors. Excess capital averaged $4.1 billion in the quarter compared with $3.7 billion for first quarter of 2000. At June 30, 2000, under the Federal Reserve Board market risk capital guidelines for the calculation of risk-based capital ratios, J.P. Morgan's estimated tier 1 and total risk-based capital ratios were 8.3% and 11.9%, respectively; the estimated leverage ratio was 4.4%. At March 31, 2000, J.P. Morgan's tier 1 and total risk-based capital ratios were 8.3% and 12.0%, respectively, and the leverage ratio was 4.5%. # # # J.P. Morgan is a leading global financial firm that meets critical financial needs for business enterprises, governments, and individuals. The firm advises on corporate strategy and structure, raises capital, makes markets in financial instruments, and manages investment assets. Morgan also commits its own capital to promising enterprises and invests and trades to capture market opportunities. 4 J.P. Morgan & Co. Incorporated 4 This release may contain forward-looking statements. Our statements, which reflect management's beliefs and expectations, are subject to risks and uncertainties that may cause actual results to differ materially from these statements. For a discussion of the risks and uncertainties, please refer to the J.P. Morgan & Co. Incorporated 1999 Annual Report. Management will host a conference call with investors at 9:15 a.m. Eastern time on Thursday, July 13. A live audio webcast of the call will be available on the Internet at http://www.jpmorgan.com/ir/2q2000.html. A replay of the call will be available until Tuesday, July 18. Attached are tables with our segment results; a financial summary; interim consolidated financial statements, which are unaudited; and asset quality tables. J.P. Morgan news releases, including quarterly financial results and a historical financial summary, are available on the Internet at www.jpmorgan.com. 5 5 SEGMENT RESULTS J.P. Morgan & Co. Incorporated The following table presents our current management reporting structure. Results have been restated for all periods, reflecting recent organization changes. Principal changes include the combination of our Credit Markets and Credit Portfolio segments into a single Credit Markets segment. In addition, revenue and expense allocations between Investment Banking and the other segments, primarily Equities and Credit Markets, have been changed to reflect the new organization. Our consolidated results were not impacted.
Increase / Increase / Increase / Second Second First Six Six (Decrease), (Decrease), (Decrease), Quarter Quarter Quarter Months Months 2Q 2000 2Q 2000 YTD 2000 2000 1999 2000 2000 1999 vs. 2Q 1999 vs. 1Q 2000 vs. YTD 1999 ------------------------------------------------------------------------------------------------ INVESTMENT BANKING Total revenues $ 426 $ 409 $ 452 $ 878 $ 736 $ 17 $ (26) $ 142 Total expenses 383 309 409 792 601 74 (26) 191 ------------------------------------------------------------------------------------------------ Pretax income 43 100 43 86 135 (57) -- (49) ------------------------------------------------------------------------------------------------ Pretax EVA 19 75 16 35 88 (56) 3 (53) ------------------------------------------------------------------------------------------------ Average required economic capital 631 563 639 635 523 68 (8) 112 ------------------------------------------------------------------------------------------------ EQUITIES Total revenues 504 385 584 1,088 640 119 (80) 448 Total expenses 297 192 261 558 378 105 36 180 ------------------------------------------------------------------------------------------------ Pretax income 207 193 323 530 262 14 (116) 268 ------------------------------------------------------------------------------------------------ Pretax EVA 162 152 281 443 190 10 (119) 253 ------------------------------------------------------------------------------------------------ Average required economic capital 762 740 732 747 634 22 30 113 ------------------------------------------------------------------------------------------------ INTEREST RATE & CURRENCY MARKETS Total revenues 384 560 489 873 1,209 (176) (105) (336) Total expenses 280 321 334 614 680 (41) (54) (66) ------------------------------------------------------------------------------------------------ Pretax income 104 239 155 259 529 (135) (51) (270) ------------------------------------------------------------------------------------------------ Pretax EVA 15 135 32 47 320 (120) (17) (273) ------------------------------------------------------------------------------------------------ Average required economic capital 1,789 2,017 1,732 1,760 2,058 (228) 57 (298) ------------------------------------------------------------------------------------------------ CREDIT MARKETS Total revenues 348 496 550 898 1,327 (148) (202) (429) Total expenses 164 215 262 426 480 (51) (98) (54) ------------------------------------------------------------------------------------------------ Pretax income 184 281 288 472 847 (97) (104) (375) ------------------------------------------------------------------------------------------------ Pretax EVA 76 94 160 236 474 (18) (84) (238) ------------------------------------------------------------------------------------------------ Average required economic capital 3,709 4,225 3,701 3,705 4,479 (516) 8 (774) ------------------------------------------------------------------------------------------------ EQUITY INVESTMENTS Total revenues 145 6 153 298 (8) 139 (8) 306 Total expenses 26 13 45 71 27 13 (19) 44 ------------------------------------------------------------------------------------------------ Pretax income 119 (7) 108 227 (35) 126 11 262 ------------------------------------------------------------------------------------------------ Pretax EVA 35 (1) 78 113 (60) 36 (43) 173 ------------------------------------------------------------------------------------------------ Average required economic capital 1,661 1,365 1,882 1,772 1,321 296 (221) 451 ------------------------------------------------------------------------------------------------ PROPRIETARY POSITIONING Total revenues 283 23 188 471 150 260 95 321 Total expenses 53 43 56 109 75 10 (3) 34 ------------------------------------------------------------------------------------------------ Pretax income 230 (20) 132 362 75 250 98 287 ------------------------------------------------------------------------------------------------ Pretax EVA 197 (96) 150 347 (189) 293 47 536 ------------------------------------------------------------------------------------------------ Average required economic capital 489 1,234 496 492 2,415 (745) (7) (1,923) ------------------------------------------------------------------------------------------------ ASSET MANAGEMENT SERVICES Total revenues 409 343 407 816 652 66 2 164 Total expenses 300 268 303 603 525 32 (3) 78 ------------------------------------------------------------------------------------------------ Pretax income 109 75 104 213 127 34 5 86 ------------------------------------------------------------------------------------------------ Pretax EVA 87 56 83 170 91 31 4 79 ------------------------------------------------------------------------------------------------ Average required economic capital 590 556 530 607 554 34 60 53 ------------------------------------------------------------------------------------------------ CORPORATE Total revenues (20) (31) 13 (7) (24) 11 (33) 17 Total expenses 157 56 185 342 218 101 (28) 124 ------------------------------------------------------------------------------------------------ Pretax income (177) (87) (172) (349) (242) (90) (5) (107) ------------------------------------------------------------------------------------------------ Pretax EVA (207) (108) (240) (447) (161) (99) 33 (286) ------------------------------------------------------------------------------------------------ Average required economic capital (1,273) (1,239) (1,198) (1,282) (1,420) (34) (75) 138 ------------------------------------------------------------------------------------------------ CONSOLIDATED Total revenues 2,479 2,191 2,836 5,315 4,682 288 (357) 633 Total expenses 1,660 1,417 1,855 3,515 2,984 243 (195) 531 ------------------------------------------------------------------------------------------------ Pretax income 819 774 981 1,800 1,698 45 (162) 102 ------------------------------------------------------------------------------------------------ Pretax EVA 384 307 560 944 753 77 (176) 191 ------------------------------------------------------------------------------------------------ Average required economic capital 8,358 9,461 8,514 8,436 10,564 (1,103) (156) (2,128) ------------------------------------------------------------------------------------------------
6 6 SEGMENT RESULTS (continued) J.P. Morgan & Co. Incorporated NOTES TO SEGMENT RESULTS TABLE: - -- We define economic value added (EVA) as operating income, adjusted to reflect certain segments on a total return basis, less preferred stock dividends and a charge for the cost of equity capital. The firm's cost of equity capital is currently estimated at 10.5%. - -- Corporate includes revenues and expenses related to Euroclear activities, as follows:
Second Second First Quarter Quarter Quarter Six Months Six Months In millions 2000 1999 2000 2000 1999 - --------------------------------------------------------------------------------------------------------------- Total revenues $81 $65 $76 $157 $130 Total expenses 4 3 9 13 12 - --------------------------------------------------------------------------------------------------------------- Pretax income 77 62 67 144 118 - ---------------------------------------------------------------------------------------------------------------
REQUIRED VERSUS AVAILABLE CAPITAL J.P. Morgan & Co. Incorporated
Second Six Quarter Months In millions 2000 2000 - ------------------------------------------------------------------------------------------ Average common equity $10,897 $10,764 Trust preferred securities 1,150 1,150 Fixed and adjustable preferred stock 444 444 Other adjustments (62) (56) - ------------------------------------------------------------------------------------------ Total available capital 12,429 12,302 - ------------------------------------------------------------------------------------------ Total required economic capital of business segments 9,631 9,718 Corporate 1,283 1,264 Diversification (2,556) (2,546) - ------------------------------------------------------------------------------------------ Total required economic capital 8,358 8,436 - ------------------------------------------------------------------------------------------ Excess available capital 4,071 3,866 - ------------------------------------------------------------------------------------------
ADVISORY AND UNDERWRITING FEES J.P. Morgan & Co. Incorporated
- ------------------------------------------------------------------------------------------------------------------------- ADVISORY UNDERWRITING REVENUE TOTAL ADVISORY AND In millions FEES AND SYNDICATION FEES UNDERWRITING FEES - ------------------------------------------------------------------------------------------------------------------------- Second Quarter 2000 $249 $219 $468 Second Quarter 1999 183 274 457 First Quarter 2000 236 307 543 - ------------------------------------------------------------------------------------------------------------------------- Six Months 2000 485 526 1,011 Six Months 1999 356 491 847 - -------------------------------------------------------------------------------------------------------------------------
7 7 J.P. Morgan & Co. Incorporated FINANCIAL SUMMARY J.P. Morgan & Co. Incorporated - -------------------------------------------------------------------------------- Dollars in millions, except share data
First Second Quarter Quarter Six Months -------------------------------------- ---------------- ---------------------------- 2000 1999 2000 2000 1999 -------------------------------------- ---------------- ---------------------------- Net Income $542 $504 $628 $1,170 $1,104 Economic value added (EVA) - after taxes 258 195 358 616 480 Per common share: Net income Basic $3.10 $2.71 $3.62 $6.66 $5.94 Diluted 2.90 2.52 3.37 6.27 5.53 Dividends declared 1.00 0.99 1.00 2.00 1.98 Book value 60.76 57.60 59.82 - ----------------------------------------------------------------------------------------------------------------------------------- Common shares issued and outstanding at period-end 159,869,519 175,949,606 162,502,847 - ----------------------------------------------------------------------------------------------------------------------------------- Weighted-average number of common and dilutive potential common shares outstanding 183,730,614 196,539,342 183,589,900 183,660,257 196,461,040 - ----------------------------------------------------------------------------------------------------------------------------------- Dividends declared on common stock $160 $175 $163 $323 $350 Dividends declared on preferred stock 10 9 9 19 18 - ----------------------------------------------------------------------------------------------------------------------------------- Annualized rate of return on average common stockholders' equity 19.6% 18.0% 23.4% 21.5% 20.1% As % of period-end total assets: Common equity 4.2% 4.1% 3.8% Total equity 4.4 4.4 4.1 - ----------------------------------------------------------------------------------------------------------------------------------- Regulatory capital ratios (a) Tier 1 risk-based capital ratio 8.3% 8.4% 8.3% Total risk-based capital ratio 11.9 12.5 12.0 Leverage ratio 4.4 4.5 4.5 Risk-adjusted assets (a) 142,614 142,477 141,064 - ----------------------------------------------------------------------------------------------------------------------------------- Average balances Debt investment securities (b) $7,263 $29,512 $12,684 $9,973 $31,660 Loans 26,399 25,552 26,654 26,527 26,527 Total interest-earning assets 194,807 192,306 185,561 190,184 194,761 Total assets 271,250 266,145 260,458 265,853 268,142 Total interest-bearing liabilities 184,591 189,071 176,304 180,447 189,740 Total liabilities 259,659 254,446 249,133 254,395 256,567 Common stockholders' equity 10,897 11,005 10,631 10,764 10,881 Total stockholders' equity 11,591 11,699 11,325 11,458 11,575 Net interest earnings before credit loss 394 445 470 864 855 provisions (fully taxable basis) Net yield on interest-earning assets 0.81% 0.93% 1.02% 0.91% 0.89% - ----------------------------------------------------------------------------------------------------------------------------------- Employees at period-end 15,988 14,902 15,622 - -----------------------------------------------------------------------------------------------------------------------------------
(a) Regulatory capital ratios and risk-adjusted assets are estimates at June 30, 2000. (b) Average debt investment securities are computed on historical amortized cost, excluding the effects of SFAS No. 115 adjustments. 8 8 J.P. Morgan & Co. Incorporated CONSOLIDATED STATEMENT OF INCOME J.P. Morgan & Co. Incorporated - -------------------------------------------------------------------------------- In millions, except share data
Three months ended ----------------------------------------------------------------------- June 30 June 30 Increase/ March 31 Increase/ 2000 1999 (Decrease) 2000 (Decrease) ----------------------------------------------------------------------- NET INTEREST REVENUE Interest revenue $3,244 $2,713 $531 $3,031 $213 Interest expense 2,865 2,288 577 2,578 287 - --------------------------------------------------------------------------------------------------------------------------------- Net interest revenue 379 425 (46) 453 (74) Reversal of provision for loan losses (4) (105) 101 - (4) - --------------------------------------------------------------------------------------------------------------------------------- Net interest revenue after loan loss provisions 383 530 (147) 453 (70) NONINTEREST REVENUES Trading revenue 906 803 103 950 (44) Advisory and underwriting fees 468 457 11 543 (75) Investment management fees 303 260 43 276 27 Fees and commissions 232 191 41 284 (52) Investment securities revenue/(loss) 128 (29) 157 157 (29) Other revenue/(loss) 59 (a) (21) (a) 80 173 (a) (114) - --------------------------------------------------------------------------------------------------------------------------------- Total noninterest revenues 2,096 1,661 435 2,383 (287) Total revenues, net 2,479 2,191 288 2,836 (357) OPERATING EXPENSES Employee compensation and benefits 1,097 970 127 1,300 (203) Net occupancy 81 80 1 82 (1) Technology and communications 246 231 15 258 (12) Other expenses 236 136 100 215 21 - --------------------------------------------------------------------------------------------------------------------------------- Total operating expenses 1,660 1,417 243 1,855 (195) Income before income taxes 819 774 45 981 (162) Income taxes 277 270 7 353 (76) - --------------------------------------------------------------------------------------------------------------------------------- Net income 542 504 38 628 (86) PER COMMON SHARE Net income: Basic $3.10 $2.71 $0.39 $3.62 ($0.52) Diluted 2.90 2.52 0.38 3.37 (0.47) Dividends declared 1.00 0.99 0.01 1.00 - - ---------------------------------------------------------------------------------------------------------------------------------
(a) Includes a provision for credit losses on lending commitments of $37 million, $35 million and $1 million for the three months ended June 30, 2000 and 1999, and March 31, 2000, respectively. 9 9 J.P. Morgan & Co. Incorporated CONSOLIDATED STATEMENT OF INCOME J.P. Morgan & Co. Incorporated - -------------------------------------------------------------------------------- In millions, except share data
Six months ended ----------------------------------------------------------------- June 30 June 30 Increase/ 2000 1999 (Decrease) ----------------------------------------------------------------- NET INTEREST REVENUE Interest revenue $6,275 $5,470 $805 Interest expense 5,443 4,656 787 - --------------------------------------------------------------------------------------------------------------------------- Net interest revenue 832 814 18 Reversal of provision for loan losses (4) (105) 101 - --------------------------------------------------------------------------------------------------------------------------- Net interest revenue after loan loss provisions 836 919 (83) NONINTEREST REVENUES Trading revenue 1,856 1,937 (81) Advisory and underwriting fees 1,011 847 164 Investment management fees 579 506 73 Fees and commissions 516 405 111 Investment securities revenue/ (loss) 285 (70) 355 Other revenue 232 (a) 138 (a) 94 - --------------------------------------------------------------------------------------------------------------------------- Total noninterest revenues 4,479 3,763 716 Total revenues, net 5,315 4,682 633 OPERATING EXPENSES Employee compensation and benefits 2,397 2,066 331 Net occupancy 163 162 1 Technology and communications 504 478 26 Other expenses 451 278 173 - --------------------------------------------------------------------------------------------------------------------------- Total operating expenses 3,515 2,984 531 Income before income taxes 1,800 1,698 102 Income taxes 630 594 36 - --------------------------------------------------------------------------------------------------------------------------- Net income 1,170 1,104 66 PER COMMON SHARE Net income: Basic $6.66 $5.94 $0.72 Diluted 6.27 5.53 0.74 Dividends declared 2.00 1.98 0.02 - ---------------------------------------------------------------------------------------------------------------------------
(a) Includes a provision for credit losses on lending commitments of $38 million and $35 million for the six months ended June 30, 2000 and 1999, respectively. 10 10 J.P. Morgan & Co. Incorporated CONSOLIDATED BALANCE SHEET (PRELIMINARY) J.P. Morgan & Co. Incorporated - --------------------------------------------------------------------------------
In millions, except share data June 30 March 31 December 31 2000 2000 1999 ------------------------------------------- ASSETS Cash and due from banks $ 2,498 $ 1,901 $ 2,463 Interest-earning deposits with banks 4,705 5,198 2,345 Debt investment securities available-for-sale 5,920 8,600 14,286 Equity investment securities 1,738 1,938 1,734 Trading account assets (including derivative receivables of $39,554 at June 2000, $47,194 at March 2000 and $43,658 at December 1999) 124,391 139,067 117,592 Securities purchased under agreements to resell ($41,910 at June 2000, $42,491 at March 2000 and $34,470 at December 1999) and federal funds sold 43,010 42,916 35,970 Securities borrowed 33,359 33,690 34,716 Loans, net of allowance for loan losses of $283 at June 2000, $290 at March 2000 and $281 at December 1999 26,898 26,870 26,568 Accrued interest and accounts receivable 6,654 6,979 10,119 Premises and equipment, net of accumulated depreciation of $1,361 at June 2000, $1,325 at March 2000 and $1,319 at December 1999 2,038 2,005 1,997 Other assets 14,695 15,398 13,108 - --------------------------------------------------------------------------------------------------------------------------------- Total assets 265,906 284,562 260,898 - --------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Deposits (including interest-bearing deposits of $43,873 at June 2000, $45,715 at March 2000 and $43,922 at December 1999) 46,511 47,334 45,319 Trading account liabilities (including derivative payables of $40,222 at June 2000, $46,235 at March 2000 and $44,976 at December 1999) 81,324 89,895 80,417 Securities sold under agreements to repurchase ($67,228 at June 2000, $73,811 at March 2000 and $58,950 at December 1999) and federal funds purchased 67,600 74,641 59,693 Commercial paper 8,152 8,734 11,854 Other liabilities for borrowed money 9,709 10,140 10,258 Accounts payable and accrued expenses 10,313 9,977 10,621 Long-term debt not qualifying as risk-based capital 18,025 20,126 19,048 Other liabilities, including allowance for credit losses of $163 at June 2000, $126 at March 2000 and $125 at December 1999 6,383 5,883 5,897 - --------------------------------------------------------------------------------------------------------------------------------- 248,017 266,730 243,107 Liabilities qualifying as risk-based capital: Long-term debt 4,988 5,059 5,202 Company-obligated mandatorily redeemable preferred securities of subsidiaries 1,150 1,150 1,150 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities 254,155 272,939 249,459 STOCKHOLDERS' EQUITY Preferred stock (authorized shares: 10,000,000) Adjustable rate cumulative preferred stock, $100 par value (issued and outstanding: 2,444,300) 244 244 244 Variable cumulative preferred stock, $1,000 par value (issued and outstanding: 250,000) 250 250 250 Fixed cumulative preferred stock, $500 par value (issued and outstanding: 400,000) 200 200 200 Common stock, $2.50 par value (authorized shares: 500,000,000; issued: 200,998,455 at June 2000, March 2000 and December 1999) 502 502 502 Capital surplus 1,229 1,247 1,249 Common stock issuable under stock award plans 2,152 1,951 2,002 Retained earnings 11,717 11,354 10,908 Accumulated other comprehensive income: Net unrealized gains on investment securities, net of taxes 53 119 44 Foreign currency translation, net of taxes (14) (16) (18) - --------------------------------------------------------------------------------------------------------------------------------- 16,333 15,851 15,381 Less: treasury stock (41,128,936 common shares and 15,000 preferred shares at June 2000, 38,495,608 common shares at March 2000 and 36,200,897 common shares at December 1999) at cost 4,582 4,228 3,942 - --------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 11,751 11,623 11,439 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity 265,906 284,562 260,898 - ---------------------------------------------------------------------------------------------------------------------------------
11 11 CREDIT EXPOSURES (PRELIMINARY) J.P. Morgan & Co. Incorporated CREDIT EXPOSURE (PRELIMINARY)
June 30, 2000 December 31, 1999 ---------------------------------------- ------------------------------------------ In billions Carrying value Fair value Carrying value Fair value ----------------------------------------------------------------------------------------------------------------------------- Derivatives $39.6 (a) $39.6 $43.7 (a) $43.7 Loans and lending commitments 26.7 (b) 27.0 26.4 (b) 26.5 ----------------------------------------------------------------------------------------------------------------------------- Total credit exposures (c) 66.3 66.6 70.1 70.2 -----------------------------------------------------------------------------------------------------------------------------
(a) Carried at fair value on the balance sheet with changes in fair value recorded in the income statement. Includes credit valuation adjustment at June 30, 2000 and December 31, 1999, of $605 million and $670 million, respectively. (b) Amount net of allowance for credit losses of $446 million as of June 30, 2000 and $406 million as of December 31, 1999. Carrying value excludes the notional value of lending commitments, which are off-balance-sheet instruments. (c) Substantially all credit risk related to derivatives, loans, and lending commitment exposures are managed by the Credit Markets segment. CREDIT EXPOSURE BEFORE AND AFTER COLLATERAL (PRELIMINARY)
After collateral and netting(b) -------------------------------------------- June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999 In billions Gross Exposure Gross Exposure Net Exposure Net Exposure ---------------------------------------------------------------------------------------------------------------------- Derivatives $39.6 (a) $43.7 (a) $34.0 (a) $37.7 (a) Loans (c) 27.2 26.8 19.7 18.9 ----------------------------------------------------------------------------------------------------------------------
(a) Includes the benefit of master netting agreements of $88.6 billion and $107.6 billion at June 30, 2000 and December 31, 1999, respectively. (b) Collateral held consisting of highly rated liquid securities (U.S. government securities) and cash was as follows: derivatives - $5.6 billion (June 30, 2000) and $6 billion (December 31, 1999); and loans - $7.5 billion (June 30, 2000) and $7.9 billion (December 31, 1999). (c) Before allowance for credit losses. COUNTERPARTY CREDIT QUALITY (PRELIMINARY)
Loans and lending Derivatives commitments ----------------------------------------- -------------------------------------------- June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999 --------------------------------------------------------------------------------------------------------------------------- AAA, AA 53 % 52 % 44 % 43 % A 31 31 27 29 BBB 10 12 18 18 BB or below 6 5 11 10 --------------------------------------------------------------------------------------------------------------------------- 100 100 100 100 ---------------------------------------------------------------------------------------------------------------------------
Estimated percentages of credit exposures by counterparty credit rating based on internal credit ratings. Ratings of AAA, AA, A and BBB represent investment-grade ratings and are analogous to those of public rating agencies in the United States. Credit exposures reflect the benefits of master netting agreements, collateral, and purchased credit protection (i.e. credit derivatives). EQUITY INVESTMENT SECURITIES J.P. Morgan & Co. Incorporated The following table shows gross unrealized gains and losses, a comparison of the cost, fair value and carrying value of marketable, nonmarketable, and SBIC (small business investment company) securities portfolios of J.P. Morgan consolidated. A substantial portion of these are included in our Equity Investments segment.
In millions: June 30 Marketable Nonmarketable SBIC securities --------------------------------------------------------------------------------------------------------------------------- Accounting Fair value through equity Cost Fair value through earnings --------------------------------------------------------------------------------------------------------------------------- Cost $353 $688 $300 --------------------------------------------------------------------------------------------------------------------------- Gross unrealized gains 124 51 284 Gross unrealized losses (10) (6) (1) --------------------------------------------------------------------------------------------------------------------------- Net unrealized gains 114 45 283 --------------------------------------------------------------------------------------------------------------------------- Fair value 467 733 583 --------------------------------------------------------------------------------------------------------------------------- Carrying value on balance sheet 467 688 583 ---------------------------------------------------------------------------------------------------------------------------
12 12 J.P. Morgan & Co. Incorporated ASSET QUALITY IMPAIRED LOANS J.P. Morgan & Co. Incorporated
- -------------------------------------------------------------------------------------------------------------------------------- June 30, March 31, June 30, In millions 2000 2000 1999 - -------------------------------------------------------------------------------------------------------------------------------- Impaired loans: Commercial and industrial $122 $117 (a) $38 Other 18 23 29 - -------------------------------------------------------------------------------------------------------------------------------- Total impaired loans 140 140 67 - --------------------------------------------------------------------------------------------------------------------------------
(a) The increase during the first quarter of 2000 primarily relates to the addition of one European counterparty. ALLOWANCES FOR CREDIT LOSSES J.P. Morgan & Co. Incorporated
Allowance for loan losses - ------------------------------------------------------------------------------------------------------------------------------------ Second Quarter Six Months Ended Second Quarter Six Months Ended In millions 2000 June 30, 2000 1999 June 30, 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Beginning balance $290 $281 $447 $470 - ------------------------------------------------------------------------------------------------------------------------------------ (Reversal of provision for loan losses) (4) (4) (105) (105) - ------------------------------------------------------------------------------------------------------------------------------------ Recoveries 3 12 1 6 Charge-offs: (a) Commercial and industrial - - (7) (10) Other, primarily other financial institutions (6) (6) (1) (26) - ------------------------------------------------------------------------------------------------------------------------------------ Net (charge-offs) / recoveries (3) 6 (7) (30) - ------------------------------------------------------------------------------------------------------------------------------------ Ending balance 283 283 335 335 - ------------------------------------------------------------------------------------------------------------------------------------
(a) Charge-offs include losses on loan sales of $5 million for the three months ended June 30, 1999. Charge-offs include losses on loan sales of $30 million for the six months ended June 30, 1999.
Components of the allowance for loan losses - ----------------------------------------------------------------------------------------------------------------------------------- June 30, March 31, June 30, In millions 2000 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------------- Specific counterparty components in the U.S. $ 9 $ 13 $ 6 Specific counterparty components outside the U.S. 66 33 8 - ----------------------------------------------------------------------------------------------------------------------------------- Total specific counterparty 75 46 14 Expected loss 208 244 321 - ----------------------------------------------------------------------------------------------------------------------------------- Total allowance 283 290 335 - -----------------------------------------------------------------------------------------------------------------------------------
Allowance for credit losses on lending commitments* - ------------------------------------------------------------------------------------------------------------------------------------ Second Quarter Six Months Ended Second Quarter Six Months Ended In millions 2000 June 30, 2000 1999 June 30, 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Beginning balance $126 $125 $125 $125 - ------------------------------------------------------------------------------------------------------------------------------------ Provision for credit losses 37 38 35 35 - ------------------------------------------------------------------------------------------------------------------------------------ Ending balance 163 163 160 160 - ------------------------------------------------------------------------------------------------------------------------------------
Components of the allowance for credit losses on lending commitments* - ------------------------------------------------------------------------------------------------------------------------------------ June 30, March 31, June 30, In millions 2000 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Specific counterparty components in the U.S. $ 19 $ 19 $ 17 Specific counterparty components outside the U.S. 4 4 3 - ------------------------------------------------------------------------------------------------------------------------------------ Total specific counterparty 23 23 20 Expected loss 140 103 140 - ------------------------------------------------------------------------------------------------------------------------------------ Total allowance 163 126 160 - ------------------------------------------------------------------------------------------------------------------------------------
* Includes commitments to extend credit, standby letters of credit, and guarantees. EX-99.B 4 ex99-b.txt STATEMENT OF CONDITION 1 Exhibit 99b. J.P. Morgan & Co. Incorporated CONSOLIDATED STATEMENT OF CONDITION (PRELIMINARY) Morgan Guaranty Trust Company of New York - --------------------------------------------------------------------------------
In millions, except share data June 30 December 31 2000 1999 --------------------------------- ASSETS Cash and due from banks $ 2,463 $ 2,382 Interest-earning deposits with banks 4,538 2,266 Debt investment securities available-for-sale carried at fair value 2,578 4,992 Trading account assets 81,572 84,786 Securities purchased under agreements to resell and federal funds sold 22,535 19,094 Securities borrowed 13,371 9,700 Loans, net of allowance for loan losses of $282 at June 2000 and $280 at December 1999 26,609 26,072 Accrued interest and accounts receivable 5,236 4,426 Premises and equipment, net of accumulated depreciation of $1,152 at June 2000 and $1,113 at December 1999 1,777 1,810 Other assets 12,510 12,138 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets 173,189 167,666 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Noninterest-bearing deposits: In offices in the U.S. 1,019 907 In offices outside the U.S. 1,639 501 Interest-bearing deposits: In offices in the U.S. 3,605 4,256 In offices outside the U.S. 43,278 42,052 - ----------------------------------------------------------------------------------------------------------------------------------- Total deposits 49,541 47,716 Trading account liabilities 71,202 72,066 Securities sold under agreements to repurchase and federal funds purchased 17,860 13,610 Other liabilities for borrowed money 4,921 5,482 Accounts payable and accrued expenses 7,688 6,310 Long-term debt not qualifying as risk-based capital 5,297 6,224 Other liabilities, including allowance for credit losses of $163 at June 2000 and $125 at December 1999 3,152 2,719 - ----------------------------------------------------------------------------------------------------------------------------------- 159,661 154,127 Long-term debt qualifying as risk-based capital 2,876 2,944 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 162,537 157,071 STOCKHOLDER'S EQUITY Preferred stock, $100 par value (authorized shares: 2,500,000) - - Common stock, $25 par value (authorized shares: 11,000,000; issued and outstanding: 10,599,027) 265 265 Surplus 3,305 3,305 Undivided profits 7,050 6,975 Accumulated other comprehensive income: Net unrealized gains on investment securities, net of taxes 45 67 Foreign currency translation, net of taxes (13) (17) - ----------------------------------------------------------------------------------------------------------------------------------- Total stockholder's equity 10,652 10,595 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholder's equity 173,189 167,666 - -----------------------------------------------------------------------------------------------------------------------------------
Member of the Federal Reserve System and the Federal Deposit Insurance Corporation. -----END PRIVACY-ENHANCED MESSAGE-----