J. P. Morgan Contract With the Pinnacle Alliance

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May 13, 1996


J.P. Morgan, Computer Sciences Corporation, Andersen Consulting, AT&T
Solutions, and Bell Atlantic Network Integration today announced an
agreement in principle to form a strategic alliance, the first of its
kind, to manage parts of Morgan's global technology infrastructure.
The Pinnacle Alliance, as the new consortium will be known, is
designed to expand Morgan's access to world-class technological
resources and build its competitive strength as a leader in global
finance. The value of the seven-year agreement is estimated at more
than $2 billion. A final agreement will be negotiated within the next
few months.

The agreement will give Morgan added flexibility to tailor technology
use to changing business needs, capitalizing on the Alliance's
substantial processing capacity and economies of scale to make
technology costs more variable. Morgan also will be able to tape the
technological expertise of the Alliance to support the firm's new
business and product development activities.

The Pinnacle Alliance will manage activities that represent about a
third of Morgan's $1 billion of annual technology expenditures. The
Alliance will manage the firm's data centers in New York, London, and
Delaware; distributed computing operations (such as desktop support
and local area networks) and voice and data services in New York,
Delaware, London, and Paris; and certain internal corporate
applications in the United States and Europe. All of the
approximately 900 Morgan employees in areas covered by the agreement
will remain in their jobs as employees of one of the Alliance firms.

"Technology is critical to J.P. Morgan's success -- so critical, and
on so many specialized, fast-developing fronts, that no one firm can
be a leader in all of them," said Douglas A. Warner III, chairman
J.P. Morgan. "Teaming up with these firms will put us at the
forefront of creative, flexible management of technology -- increasing
our ability to exploit new technologies, manage costs, and create
competitive advantage."

John M. Mickel, lead executive of the Pinnacle Alliance, said: "We
are delighted to enter into this working partnership with J.P. Morgan.
This is truly a landmark agreement for the information technology
industry. Pinnacle brings together organizations that are leaders in
their fields and marks a new approach in providing sophisticated
technology support services."

Morgan expects to achieve aggregate savings of approximately 15
percent on projected technology costs over the life of the agreement,
after an estimated $100 million transition expense mainly related to
the sale of certain technology equipment to Alliance firms, training,
and other personnel expenses. The transition expense is expected to
be recorded in the 1996 third quarter upon completion of an agreement.

Peter A. Miller, co-head of Corporate Technology at J.P. Morgan, said:
"The Alliance will give us access to the bench strength of leading
firms to meet the growing technology needs of our global business. It
also will free up our internal technologists to focus on strategies and
innovations that give Morgan a competitive edge." The Alliance is
designed to be seamlessly integrated with Morgan's global technology
management structure. Among the features of the Alliance is the
establishment of a Alliance Operating Team, comprising executives from
each of the Alliance companies and J.P. Morgan, which will allocate
resources and manage the activities of the Alliance. "The formation
a management team made up of key executives from all the companies is
a first for a technology services agreement," said John Mickel.
team's job will be to make sure that Morgan's needs get prompt
attention and that the Alliance moves fast to help Morgan seize new

The agreement will take the form of a service contract between J.P.
Morgan and Computer Sciences Corporation; CSC in turn will have
contracts with other members of the Alliance spelling out their roles.
The primary responsibilities of each Alliance company will include:

  • J.P. Morgan - Responsible for setting the
    strategic direction for
    the Alliance.

  • Computer Sciences Corporation - Lead company in the
    Alliance, with
    overall responsibility for data centers and mainframe, midrange,
    and distributed operations worldwide.

  • Andersen Consulting - Responsible for applications
    development and
    maintenance support.

  • AT&T Solutions - Responsible for global network

  • Bell Atlantic Network Integration - Responsible for
    distributed computing services in the United States, such as
    desktops, local area networks, and servers.

Information on the Alliance companies

J.P. Morgan is a leading global banking firm that serves clients with
complex financial needs through an integrated range of advisory,
financing, trading, and investment capabilities. Headquartered in New
York, it employs 15,000 professionals in 28 countries. Revenues in
1995 were $5.9 billion, net income was $1.3 billion.

Computer Sciences Corporation had $ 4.2 billion in annual revenue for
the 12 months ended March 29, 1996. The company is headquartered in
El Segundo, California, and has 34,000 employees worldwide providing
clients with a wide range of professional services, including
management consulting, business reengineering, and information systems
consulting and integration, and outsourcing.

Bell Atlantic Network Integration, a subsidiary of Bell Atlantic
Corporation, offers services covering the full life-cycle of the
planning, deployment, and management of enterprise networks. This
includes the consulting, integration, outsourcing, and ongoing support
of enterprise networks. Bell Atlantic Corporation is at the forefront
of the new communications, entertainment, and information industry. In
the mid-Atlantic region, the company is the premier provider of local
telecommunications and advanced services. Globally, it is one of the
largest investors in the high-growth wireless communication

Andersen Consulting is a $4.2 billion global management and technology
consulting organization whose mission is to help its clients change to
be more successful. The organization works with clients from a wide
range of industries to link their people, processes, and technologies
to their strategies. Andersen Consulting has more than 38,000 persons
in 47 countries.

AT&T Solutions is the professional services division of the AT&T
Corporation, the worldwide leader in providing telecommunications
services to businesses and consumers. AT&T Solutions offers services
that are linked to providing seamless solutions and maximizing the
application of electronic commerce. With headquarters in Washington,
D.C., AT&T Solutions has more than 11,000 business and technology
professionals located around the world providing service to more than
200 clients.

Key facts on the Alliance agreement

Scope and definitions

The agreement covers Morgan's data centers in New York, London, and
Delaware; distributed computing operations (such as desktop support
and local area networks) and voice and data services in New York,
Delaware, London, and Paris; and certain corporate applications in the
United States and Europe.

  • Data Centers are facilities equipped with mainframe and midrange
    computers and related equipment designed to handle the large-scale
    processing associated mainly with the sale and trading of
    securities, foreign exchange, and other financial instruments.

  • Distributed computing operations are functions that support the
    servers, local area networks, and desktop workstations that provide
    electronic mail, network connections, and personal computer
    productivity tools that are used daily by Morgan professionals.

  • Voice and data services support Morgan's global data networks,
    telephone systems in offices and trading floors, and video
    teleconferencing facilities.

  • Corporate applications support firmwide functions such as payroll
    and financial reporting.

All other technology services at Morgan are excluded from the
agreement, including technology strategy and management, systems
planning, vendor management and industry relations, and development
and maintenance of trading applications and other business-specific
systems. Technology support for the firm's Private Banking and
Investment Management activities and for the Euroclear Operations
Centre also are excluded.


Although considerably larger in scope, the Alliance agreement builds
on earlier pioneering efforts by J.P. Morgan to strike innovative
service agreements with technology providers. In 1992 Morgan reached
separate agreements with AT&T, MCI and British Telecom to operate
certain data and voice communication networks, and last year Morgan
contracted with IBM for technology support in Tokyo.

The impact on people

The treatment of people was one of the top priorities Morgan
considered when selecting an Alliance partner. Morgan's technologists
have a unique set of financial industry and Morgan-specific skills
that are critical to the success of this venture.

The agreement does not eliminate any jobs. Most of the approximately
900 Morgan employees within the scope of the agreement (representing
about 45% of our current staff of technologists) will receive a job
offer from one of the Alliance companies and will continue to work at
Morgan locations. A small number of Morgan employees covered by the
agreement will remain with the firm to manage Morgan's role in the


Media contact:

    Michele Melillo, Hill and Knowlton, Inc., (212) 885-0481

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