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<- Back to J.P. Morgan Chase & Co. company page. J.P. Morgan Chase & Co. 10-K Reports: 1999 1998 1997 1996 1995 1994 |
| J.P. Morgan Chase & Co. 1999 10-K Report (Partial 10-K shown; subscribers can see the entire 10-K report.) |
0000950123-00-002072.hdr.sgml : 20000309
ACCESSION NUMBER: 0000950123-00-002072
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 7
CONFORMED PERIOD OF REPORT: 19991231
FILED AS OF DATE: 20000308
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MORGAN J P & CO INC
CENTRAL INDEX KEY: 0000068100
STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022]
IRS NUMBER: 132625764
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-05885
FILM NUMBER: 563508
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
10-K
1
J.P. MORGAN & CO. INCORPORATED
1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-5885
J.P. MORGAN & CO. INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 13-2625764
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 Wall Street, New York, NY 10260-0060
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (212) 483-2323
------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock, $2.50 Par Value New York Stock Exchange
Adjustable Rate Cumulative Preferred Stock, New York Stock Exchange
Series A, No Par Value, Stated Value $100
Depositary shares representing a one- New York Stock Exchange
tenth interest in 6 5/8% Cumulative
Preferred Stock, Series H, No Par
Value, Stated Value $500
2.5% Commodity-Indexed Preferred American Stock Exchange
Securities (ComPS(SM)), Series A issued
by J.P. Morgan Index Funding Company I
and guaranteed by J.P. Morgan & Co.
Incorporated
Commodity-Indexed Preferred Securities American Stock Exchange
(ComPS(SM)), Series B issued by J.P.Morgan
Index Funding Company I and guaranteed by
J.P. Morgan & Co. Incorporated, Initial
Face Amount $13
Securities registered pursuant to Section 12(g) of the Act: NONE
2
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes..X.. No.....
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of
J.P. Morgan totaled $17,589,370,207 at February 25, 2000.
The number of shares outstanding of J.P. Morgan's Common Stock, $2.50 Par
Value, at February 25, 2000, 163,053,258 totaled shares.
DOCUMENTS INCORPORATED BY REFERENCE
J.P. Morgan's Annual Report to Stockholders for the year ended December 31,
1999, is incorporated by reference in response to Part I, Items 1, 2, 3, and 4;
Part II, Items 5, 6, 7, 7a, 8, and 9; and Part IV, Item 14 of Form 10-K.
J.P. Morgan's definitive Proxy Statement dated March 8, 2000, is
incorporated by reference in response to Part III, Items 10, 11, 12, and 13 of
Form 10-K.
3
------------------------------
PART I
All references to pages appearing in the J.P. Morgan & Co. Incorporated (J.P.
Morgan) Annual Report to Stockholders for the year ended December 31, 1999,
attached hereto as Exhibit 13, are incorporated herein by reference in
accordance with General Instruction G to Form 10-K. This document shall be
deemed to have been "filed" only to the extent of the material incorporated
herein by reference.
ITEM 1.
Description of business:
Refer to pages 22, 27-36, and 53 of J.P. Morgan's 1999 Annual Report to
Stockholders incorporated herein by reference.(See Exhibit 13 to this Form 10-K)
Number of employees:
Refer to page 114 of J.P. Morgan's 1999 Annual Report to Stockholders
incorporated herein by reference. (See Exhibit 13 to this Form 10-K)
Financial information about foreign and domestic operations:
Refer to pages 50 and 108-109 of J.P. Morgan's 1999 Annual Report to
Stockholders incorporated herein by reference. (See Exhibit 13 to this Form
10-K). Also refer to the subsequent section titled Cross-border and local
outstandings under the regulatory basis.
Distribution of assets, liabilities, and stockholders' equity; interest rates
and interest differential:
Refer to pages 116-118 of J.P. Morgan's 1999 Annual Report to Stockholders
incorporated herein by reference. (See Exhibit 13 to this Form 10-K)
Investment portfolio:
Refer to pages 80-82 of J.P. Morgan's 1999 Annual Report to Stockholders
incorporated herein by reference. (See Exhibit 13 to this Form 10-K.)
4
Loan portfolio:
For significant accounting policies and details regarding our loan portfolio and
impaired loans as of December 31, 1999 and 1998, refer to pages 67-69 and pages
87-90 of J.P. Morgan's 1999 Annual Report to Stockholders incorporated herein by
reference. (See Exhibit 13 to this Form 10-K).
In addition, the table below provides period-end information prior to December
31, 1998 related to our loan portfolio. The information is presented by industry
of borrower and location of booking office as of December 31, 1997, 1996 and
1995.
- --------------------------------------------------------------------------------------------------------------
In millions: December 31 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
Loans in offices in the U.S.
Commercial and industrial $ 1 326 $ 1 878 $ 1 990
Financial institution:
Banks 232 641 729
Other financial institutions 939 902 527
Collateralized by real estate 1 330 324 365
Other, primarily individuals and including
U.S. state and political subdivisions 1 509 1 488 1 666
- --------------------------------------------------------------------------------------------------------------
5 336 5 233 5 277
- --------------------------------------------------------------------------------------------------------------
Loans in offices outside the U.S.
Commercial and industrial 12 576 12 026 10 045
Financial institution:
Banks 3 419 2 853 1 447
Other financial institutions 4 805 4 522 3 013
Collateralized by real estate 1 153 364 281
Foreign governments and official
institutions 693 811 1 042
Other, primarily individuals and including
U.S. state and political subdivisions 3 596 2 311 2 348
- --------------------------------------------------------------------------------------------------------------
26 242 22 887 18 176
- --------------------------------------------------------------------------------------------------------------
Total loans 31 578 28 120 23 453
- --------------------------------------------------------------------------------------------------------------
Impaired Loans
In addition, the following table presents impaired loans - net of charge-offs -
organized by the location of the counterparty as of December 31, 1997, 1996 and
1995.
- ---------------------------------------------------------------------------------------------------------
In millions: December 31 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
Counterparties in the U.S.
Commercial and industrial $ 12 $ 83 $ 59
Other 16 17 31
- ---------------------------------------------------------------------------------------------------------
28 100 90
- ---------------------------------------------------------------------------------------------------------
Counterparties outside the U.S.
Commercial and industrial 44 6 8
Banks 28 1 1
Other 13 13 18
- ---------------------------------------------------------------------------------------------------------
85 20 27
- ---------------------------------------------------------------------------------------------------------
Total impaired loans 113 120 117
- ---------------------------------------------------------------------------------------------------------
Certain reclassifications were made to the above table to conform with the
categorization used in Bank regulatory filings. The above amounts are
categorized on the same basis as the impaired loans disclosure in J.P. Morgan's
1999 Annual Report to Stockholders incorporated herein by reference. (See
Exhibit 13 to this Form 10-K.)
5
The following table presents an analysis of the changes in impaired loans for
the periods ended prior to December 31, 1998.
- ------------------------------------------------------------------------------------------------------
In millions 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
Impaired loans, January 1 $120 $117 $219
- ------------------------------------------------------------------------------------------------------
Additions to impaired loans 123 123 124
Less:
Repayments of principal, net of additional advances (21) (57) (113)
Impaired loans returning to accrual status (48) - -
Charge-offs:(a)
Commercial and industrial (21) (30) (39)
Banks and other financial institutions (17) - -
Other (2) (9) (16)
Interest and other credits (7) (11) (12)
Sales and swaps of loans (14) (13) (46)
- ------------------------------------------------------------------------------------------------------
Impaired loans, December 31 113 120 117
- ------------------------------------------------------------------------------------------------------
Summary of loan loss experience:
For significant accounting policies and details regarding our loan loss
experience for the years ended December 31, 1999, 1998 and 1997, refer to pages
67-69 and pages 91-92 of J.P. Morgan's 1999 Annual Report to Stockholders
incorporated herein by reference. (See Exhibit 13 to this Form 10-K). In
addition, the tables below provide a summary of credit loss experience for the
years ended December 31, 1996 and 1995.
Allowances for credit losses
Prior to December 31, 1996, our reserves and allowances for credit losses were
displayed in the aggregate as a reduction of loans in our Consolidated balance
sheet. Beginning December 31, 1996, in accordance with the American Institute
of Certified Public Accountants (AICPA) Banks and Savings Institutions Audit
Guide, the aggregate allowance was apportioned and displayed as a reduction to
loans, as a reduction of trading assets related to determining the fair value of
our derivatives portfolio, and as other liabilities related to off-balance-sheet
lending commitments. Amounts were allocated based on assigning specific
counterparty, industry, and country allocations based on product or balance
sheet caption of the underlying counterparty exposure; amounts related to the
general component were proportionally allocated to balance sheet captions based
on an assessment of the level of risk of the underlying exposures.
6
The following table summarizes the activity of the allowance for loan losses for
the years ended December 31, 1996 and 1995.
- ------------------------------------------------------------------------------------------------------
In millions 1996 1995 (d)
- ------------------------------------------------------------------------------------------------------
Beginning balance, January 1 $ 1 130 (c) $ 1 131
- ------------------------------------------------------------------------------------------------------
Reclassifications in the U.S. (198) -
Reclassifications outside the U.S. (352) -
- ------------------------------------------------------------------------------------------------------
(550) (c) -
- ------------------------------------------------------------------------------------------------------
Recoveries:
Counterparties in the U.S. 20 37
Counterparties outside the U.S. 5 17
- ------------------------------------------------------------------------------------------------------
25 54
- ------------------------------------------------------------------------------------------------------
Charge-offs:
Counterparties in the U.S. (36) (45)
Counterparties outside the U.S.
Commercial and industrial (1) (6)
Banks and other financial institutions - -
Other (2) (4)
- ------------------------------------------------------------------------------------------------------
(39) (55)
- ------------------------------------------------------------------------------------------------------
Net charge-offs(a) (14) (1)
- ------------------------------------------------------------------------------------------------------
Ending balance, December 31 566 1,130
- ------------------------------------------------------------------------------------------------------
International portion of the allowance, December 31 389 (b) 716
- ------------------------------------------------------------------------------------------------------
(a) Net charge-offs as a percentage of average loans were 0.05%, and 0.01%
for 1996 and 1995, respectively.
(b) Not reflected in the above table are transfers to the international
portion of the allowance from the domestic portion of $23 million in
1996.
(c) Balance at January 1, 1996 represents the aggregate allowance.
Reclassifications represent the estimated apportionment of the aggregate
allowance at December 31, 1995 as well as changes across balance sheet
captions for allowances during 1996. Reclassifications had no impact on
net income and, accordingly, were not shown on the Consolidated
statement of income. Subsequent to July 1, 1998, reclassifications
across balance sheet captions for allowances are reflected as provisions
or reversals of provisions in the Consolidated statement of income. If
reclassifications prior to July 1, 1998 were included in the
Consolidated statement of income, these captions would change as
follows, with no impact on net income: in 1996, Provision for loan
losses would decrease by $307 million, Trading revenue would decrease by
$196 million, and Other revenue would decrease by $111 million.
(d) 1995 summarizes the activity of the aggregate allowance for credit
losses that was shown as a reduction of loans in 1995.
The following table summarizes the activity of the allowance for credit losses
on lending commitments for the year ended December 31, 1996.
- -------------------------------------------------------------------------
In millions 1996
- -------------------------------------------------------------------------
Beginning balance, January 1 $ -
- -------------------------------------------------------------------------
Reclassifications in the U.S. 111
Reclassifications outside the U.S. 89
- -------------------------------------------------------------------------
200 (b)
- -------------------------------------------------------------------------
Ending balance, December 31 200
- -------------------------------------------------------------------------
International portion of the allowance, December 31(a) 89
- -------------------------------------------------------------------------
(a) Not reflected in the above table are transfers to the international portion
of the allowance from the domestic portion of $89 million in 1996.
(b) Refer to note (c) to the table above.
7
The following table displays our allowances for loan losses and credit losses on
lending commitments by component as of December 31, 1996.
- --------------------------------------------------------------------------------------------------------------
Lending
In millions: Loans commitments
- --------------------------------------------------------------------------------------------------------------
Specific counterparty components in the U.S. $86 $31
Specific counterparty components outside the U.S. 28 31
- --------------------------------------------------------------------------------------------------------------
Total specific counterparty 114 62
- --------------------------------------------------------------------------------------------------------------
Expected loss (a) 452 138
- --------------------------------------------------------------------------------------------------------------
Total 566 200
- --------------------------------------------------------------------------------------------------------------
(a)During 1999, we revised our model for calculating expected credit losses to
incorporate factors for estimating loss previously included in our country,
industry, expected loss, and general components of our allowances. For
disclosure purposes, the country, industry, expected loss, and general
components of prior periods have been aggregated and included in the expected
loss caption in the above table.
The following table displays our aggregate allowance for credit losses by
component as of December 31, 1995
- ---------------------------------------------------------------------------------------
In millions: 1995
Specific counterparty components in the U.S. $142
Specific counterparty components outside the U.S. 59
- ---------------------------------------------------------------------------------------
Total specific counterparty 201
- ---------------------------------------------------------------------------------------
Expected loss (a) 929
- ---------------------------------------------------------------------------------------
Total 1 130
- ---------------------------------------------------------------------------------------
(a)During 1999, we revised our model for calculating expected credit losses to
incorporate factors for estimating loss previously included in our country,
industry, expected loss, and general components of our allowances. For
disclosure purposes, the country, industry, expected loss, and general
components of prior periods have been aggregated and included in the expected
loss caption in the above table.
Deposits:
Refer to page 93 and pages 116-118 of J.P. Morgan's 1999 Annual Report to
Stockholders incorporated herein by reference. (See Exhibit 13 to this Form
10-K)
Return on equity and assets:
Refer to pages 114 and 115 of J.P. Morgan's 1999 Annual Report to Stockholders
incorporated herein by reference. (See Exhibit 13 to this Form 10-K)
Short-term borrowings:
Refer to page 94 of J.P. Morgan's 1999 Annual Report to Stockholders
incorporated herein by reference. (See Exhibit 13 to this Form 10-K)
Cross-border and local outstandings under the regulatory basis:
The following presents our cross-border and local outstandings under the
regulatory basis established by the Federal Financial Institutions Examination
Council (FFIEC). Bank regulatory rules differ from management's view in the
treatment of credit derivatives, trading account short positions, and the use of
fair value versus cost of investment securities. In addition, management does
not net local funding or liabilities against any local exposures as allowed by
the FFIEC. Refer to page 50 of J.P. Morgan's 1999 Annual Report to Stockholders
incorporated herein by reference as Exhibit 13 to this Form 10-K for more
information on exposures based on the management view.
8
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