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Term
Sheet
To
prospectus dated December 1, 2005,
prospectus
supplement dated December 1, 2005 and
product
supplement no. 3-II dated February 13, 2006
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Term
Sheet to
Product
Supplement No. 3-II
Registration
Statement No. 333-130051
Dated
April 16, 2008; Rule 433
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Structured
Investments |
JPMorgan
Chase & Co.
$
Floating
Rate Notes Linked to the Consumer Price Index due May 1,
2013
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General
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·
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Senior
unsecured obligations of JPMorgan Chase & Co. maturing May 1,
2013.
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·
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Interest
on
the notes will be payable monthly in arrears at a rate per annum
linked to
the year-over-year change in the Consumer
Price Index
(“CPI”), as
described below, multiplied by 1.50, which we refer to as the multiplier.
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·
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The
notes are
designed for investors who seek monthly interest payments linked
to the
year-over-year change in the Consumer Price Index over the term of
the
notes multiplied by 1.50, and full principal protection at
maturity.
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·
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Minimum
denominations of $1,000 and integral multiples
thereof.
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·
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The
terms of the notes as set forth below, to the extent they differ
or
conflict with those set forth in the accompanying product supplement
no.
3-II, will supersede the terms set forth in product supplement no.
3-II.
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·
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The
notes are
expected to price on or about April 29, 2008 and are expected to
settle on
or about May 1, 2008.
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Key
Terms
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Maturity
Date:
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May
1,
2013
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Interest:
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With
respect
to each Interest Period, for each $1,000 principal amount note, the
interest payment will be calculated as follows:
$1,000
x
Interest Rate x (the actual number of days in the Interest
Period/365)
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Interest
Rate:
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A
rate per
annum equal to the year-over-year change in the CPI Rate on each
applicable Determination Date multiplied by 1.50. In no case will
the
Interest Rate for any monthly Interest Period be less than the minimum
Interest Rate of 0.00%.
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CPI
Rate:
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For
any
Interest Period, the year-over-year change in the CPI Rate will be
calculated as follows:
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CPIt
- CPIt-12
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where:
CPIt
is
the CPI
level for the second calendar month prior to the calendar month of
the
applicable Determination Date, which we refer to as the reference
month;
and CPIt-12
is
the CPI
level for the twelfth month prior to the applicable reference
month.
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CPIt-12
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CPI:
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The
non-seasonally adjusted U.S. City Average All Items Consumer Price
Index
for All Urban Consumers, as published on Bloomberg CPURNSA or any
successor source.
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Determination
Dates:
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The
first
business day of the applicable Interest Period. For example, May
1, 2008
is the Determination Date of the CPI Rate with respect to interest
due and
payable on June 1, 2008. On the May 1, 2008 Determination Date, interest
will be based on changes between the CPI Rate in March 2008 and March
2007.
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Interest
Periods:
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The
period
beginning on and including the issue date of the notes and ending
on but
excluding the first Interest Payment Date and each successive period
beginning on and including an Interest Payment Date and ending on
but
excluding the next succeeding Interest Payment Date.
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Interest
Payment Dates:
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Interest,
if
any, will be payable monthly in arrears on the 1st
calendar day
of each month (each such date, an “Interest Payment Date”), commencing
June 1, 2008, to and including the Interest Payment Date corresponding
to
the Maturity Date. If an Interest Payment Date is not a business
day,
payment will be made on the next business day immediately following
such
day, but no additional interest will accrue as a result of the delayed
payment.
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Payment
at
Maturity:
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On
the
Maturity Date, we will pay you the principal amount of your notes
plus any
accrued and unpaid interest.
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CUSIP:
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Investing
in the Floating Rate Notes involves risks. See “Risk Factors” beginning on page
PS-4 of the accompanying product supplement no. 3-II and “Selected Risk
Considerations” beginning on page TS-2 of this term sheet.
JPMorgan
Chase & Co. has filed a registration statement (including a prospectus) with
the Securities and Exchange Commission, or SEC, for the offering to which this
term sheet relates. Before you invest, you should read the prospectus in that
registration statement and the other documents relating to this offering that
JPMorgan Chase & Co. has filed with the SEC for more complete information
about JPMorgan Chase & Co. and this offering. You may get these documents
without cost by visiting EDGAR on the SEC website at www.sec.gov. Alternatively,
JPMorgan Chase & Co., any agent or any dealer participating in this offering
will arrange to send you the prospectus, each prospectus supplement, product
supplement no. 3-II and this term sheet if you so request by calling toll-free
866-535-9248.
You
may
revoke your offer to purchase the notes at any time prior to the time at which
we accept such offer by notifying the applicable agent. We reserve the right
to
change the terms of, or reject any offer to purchase the notes prior to their
issuance. In the event of any changes to the terms of the notes, we will notify
you and you will be asked to accept such changes in connection with your
purchase. You may also choose to reject such changes in which case we may reject
your offer to purchase.
Neither
the
Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the notes or passed upon the accuracy or the adequacy
of this term sheet or the accompanying prospectus supplement and prospectus,
and
product supplement no. 3-II. Any representation to the contrary is a criminal
offense.
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Price
to Public
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Fees
and Commissions (1)
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Proceeds
to Us
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Per
note
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$
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$
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$
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Total
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$
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$
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$
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J.P.
Morgan
Securities Inc., which we refer to as JPMSI, acting as agent for
JPMorgan
Chase & Co., will receive a commission that will depend on market
conditions on the pricing date. In no event will that commission,
which
includes structuring and development fees, exceed $15.00 per $1,000
principal amount note. See "Underwriting" beginning on page PS-14 of
the accompanying product supplement no. 3-II.
For
a
different portion of the notes to be sold in this offering, an
affiliated
bank will receive a fee and another affiliate will receive a structuring
and development fee. In no event will the total amount of these
fees
exceed $15.00 per $1,000 principal amount
note.
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The
notes are
not bank deposits and are not insured by the Federal Deposit Insurance
Corporation or any other governmental agency, nor are they obligations of,
or
guaranteed by, a bank.
JPMorgan
April
16,
2008
Additional
Terms Specific to the Notes
You
should read
this term sheet together with the prospectus dated December 1, 2005, as
supplemented by the prospectus supplement dated December 1, 2005, relating
to
our Series E medium-term notes of which these notes are a part, and the more
detailed information contained in product supplement no. 3-II dated
February 13,
2006. This
term sheet, together with the documents listed below, contains the terms of
the
notes and supersedes all other prior or contemporaneous oral statements as
well
as any other written materials including preliminary or indicative pricing
terms, correspondence, trade ideas, structures for implementation, sample
structures, fact sheets, brochures or other educational materials of ours.
You
should
carefully consider, among other things, the matters set forth in “Risk Factors”
in the accompanying product supplement no. 3-II, as the notes involve risks
not
associated with conventional debt securities. We
urge you to
consult your investment, legal, tax, accounting and other advisers before you
invest in the notes.
You
may access these documents on the SEC website at www.sec.gov as follows (or
if
such address has changed, by reviewing our filings for the relevant date on
the
SEC website)
| · |
Product
supplement no. 3-II dated February 13, 2006:
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| · |
Prospectus
supplement dated December 1,
2005:
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| · |
Prospectus
dated December 1, 2005:
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Our
Central Index Key, or CIK, on the SEC website is 19617. As used in this term
sheet, the “Company,” “we,” “us” or “our” refers to JPMorgan Chase &
Co.
Supplemental
Information Relating to the Terms of the Notes
For
purposes of the notes, the following sentence will replace the last sentence
of
the first paragraph under “General Terms of Notes — Payment Upon an Event of
Default” in the accompanying product supplement no. 3-II:
“In
such case, interest will be calculated on the basis of a 365-day year and the
actual number of days in such adjusted Interest Period and will be based on
the
CPI Rate on the Determination Date immediately preceding such adjusted Interest
Period.”
Selected
Purchase Considerations
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·
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PRESERVATION
OF CAPITAL AT MATURITY —
You
will
receive at least 100% of the principal amount of your notes if you
hold
the notes to maturity, regardless of the year-over-year change in
the CPI.
Because the notes are our senior unsecured obligations, payment of
any
amount at maturity is subject to our ability to pay our obligations
as
they become due.
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| · |
MONTHLY
INTEREST PAYMENTS —
The
notes
offer monthly interest payments at the applicable Interest Rate,
which may
be zero. Interest, if any, will be payable monthly in arrears on
the
1st
calendar day
of each month (each such date, an “Interest Payment Date”), commencing
June 1, 2008, to and including the Interest Payment Date corresponding
to
the Maturity Date. Interest will be payable to the holders of record
at
the close of business on the date 15 calendar days prior to the applicable
Interest Payment Date. The monthly interest payments are affected
by, and
contingent upon, the year-over-year change in the CPI. The yield
on the
notes may be less than the overall return you would receive from
a
conventional debt security that you could purchase today with the
same
maturity as the notes. If an Interest Payment Date is not a business
day,
payment will be made on the next business day immediately following
such
day, but no additional interest will accrue as a result of the delayed
payment.
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INFLATION
PROTECTION—
The
return
on the notes is linked to the performance of the Consumer Price Index,
which measures the change in average prices of consumer goods over
time,
multiplied by 1.50.
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TAX
TREATMENT —
You
should review carefully the section “Certain U.S. Federal Income Tax
Consequences” in the accompanying product supplement no. 3-II. Subject to
the limitations described therein, and based on certain factual
representations received from us, in the opinion of our special tax
counsel, Davis Polk & Wardwell, the notes should be treated for U.S.
federal income tax purposes as “variable rate debt instruments.”
Accordingly, interest paid on the notes will generally be taxable
to you
as ordinary interest income at the time it accrues or is received
in
accordance with your method of accounting for U.S. federal income
tax
purposes. In general, gain or loss realized on the sale, exchange
or other
disposition of the notes will be capital gain or loss.
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JPMorgan
Structured Investments —
Floating
Rate Notes Linked to the Consumer Price
Index
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TS-1
Selected
Risk Considerations
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·
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RETURN
ON THE NOTES COULD EQUAL ZERO —
You will
receive an interest payment for the applicable Interest Period based
on a
rate per annum equal to the year-over-year change in the CPI, multiplied
by 1.50, subject to the minimum Interest Rate of 0.00%. Therefore,
in the
event of a year-over-year decrease in the CPI (or no change in the
CPI),
such as in periods of deflation, you will not receive an interest
payment
for the applicable Interest Period.
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·
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FLOATING
RATE NOTES DIFFER FROM FIXED RATE NOTES —
The rate of
interest paid by us on the notes for each Interest Period will be
equal to
the CPI Rate multiplied by 1.50, which may be less than returns otherwise
payable on debt securities issued by us with similar maturities.
You
should consider, among other things, the overall potential annual
percentage rate of interest to maturity of the notes as compared
to other
investment alternatives.
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·
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CERTAIN
BUILT-IN COSTS ARE LIKELY TO ADVERSELY AFFECT THE VALUE OF THE NOTES
PRIOR
TO MATURITY —
While
the
payment at maturity described in this term sheet is based on the
full
principal amount of your notes, the original issue price of the notes
includes the agent’s commission and the cost of hedging our obligations
under the notes through one or more of our affiliates. As a result,
the
price, if any, at which JPMSI will be willing to purchase notes from
you
in secondary market transactions, if at all, will likely be lower
than the
original issue price, and any sale prior to the maturity date could
result
in a substantial loss to you. The notes are not designed to be short-term
trading instruments. Accordingly, you should be able and willing
to hold
your notes to maturity.
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·
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LACK
OF LIQUIDITY —
The
notes
will not be listed on any securities exchange. JPMSI intends to offer
to
purchase the notes in the secondary market but is not required to
do so.
Even if there is a secondary market, it may not provide enough liquidity
to allow you to trade or sell the notes easily. Because other dealers
are
not likely to make a secondary market for the notes, the price at
which
you may be able to trade your notes is likely to depend on the price,
if
any, at which JPMSI is willing to buy the
notes.
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·
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MANY
ECONOMIC AND MARKET FACTORS WILL IMPACT THE VALUE OF THE NOTES
—
In
addition
to the level of the CPI on any day, the value of the notes will be
affected by a number of economic and market factors that may either
offset
or magnify each other, including:
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| · |
the
expected
volatility in the CPI;
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the
time to
maturity of the notes;
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interest
and
yield rates in the market generally, as well as the volatility of
those
rates;
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fluctuations
in the prices of various consumer goods and energy
resources;
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inflation
and
expectations concerning inflation;
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a
variety of
economic, financial, political, regulatory or judicial events;
and
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our
creditworthiness, including actual or anticipated downgrades in our
credit
ratings.
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What
is the Consumer Price Index?
The
CPI for
purposes of the notes is the non-seasonally adjusted U.S. City Average All
Items
Consumer Price Index for All Urban Consumers, reported monthly by the Bureau
of
Labor Statistics of the U.S. Labor Department (the “BLS”) and published on
Bloomberg CPURNSA or any successor source. For additional information about
the
CPI see “Description of Notes - The Consumer Price Index” in the accompanying
product supplement no. 3-II.
Hypothetical
Interest Rates Based on Historical CPI Levels
Provided
below are
historical levels of the CPI as reported by the BLS for the period from January
2001 to March 2008. Also provided below are the hypothetical Interest Rates
for
hypothetical interest payments in the calendar months from April 2002 to June
2008 that
would have
resulted from the historical levels of the CPI presented below, based on the
multiplier of 1.50. We obtained the historical information included below from
Bloomberg Financial Markets and we make no representation or warranty as to
the
accuracy of completeness of the information so obtained from Bloomberg Financial
Markets. The numbers appearing in the following table and example have been
rounded for ease of analysis.
The
historical
levels of the CPI should not be taken as an indication of future levels of
the
CPI, and no assurance can be given as to the level of the CPI for any reference
month. The hypothetical Interest Rates that follow are intended to illustrate
the effect of general trends in the CPI on the amount of interest payable to
you
on the notes and assume that the change in the CPI will be measured on a
year-over-year basis. However, the CPI may not increase or decrease over the
term of the notes in accordance with any of the trends depicted by the
historical information in the table below, and the size and frequency of any
fluctuations in the CPI level over the term of the notes, which we refer to
as
the volatility of the CPI, may be significantly different than the historical
volatility of the CPI indicated in the table. As a result, the hypothetical
Interest Rates depicted in the table below should not be taken as an indication
of the actual Interest Rates that will be paid with regard to the Interest
Periods over the term of the notes.
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JPMorgan
Structured Investments —
Floating
Rate Notes Linked to the Consumer Price
Index
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TS-2
Hypothetical
Interest Calculation
For
example, if May
1, 2008 were a Determination Date, the hypothetical Interest Rate would be
5.97%
per annum, resulting in a hypothetical $5.07 interest payment per $1,000
principal amount note for the hypothetical Interest Period from May 1, 2008
to
June 1, 2008. This monthly interest payment is calculated as
follows:
$1,000
x 5.97% x
(31/365) = $5.07
The
Interest Rate
of 5.97% per annum is calculated by multiplying the CPI Rate multiplied by
1.50.
The CPI Rate is calculated based on the percent change in the CPI for the one
year period from March 2007 (205.352) to March 2008 (213.528) as follows:
|
CPI
Rate =
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213.528
—
205.352
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=
3.98% per
annum
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205.352
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Multiplying
the CPI
Rate of 3.98% by 1.50 results in the hypothetical Interest Rate applicable
for
that month of 5.97% per annum. The example above is simplified and the
calculation is rounded for ease of analysis.
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JPMorgan
Structured Investments —
Floating
Rate Notes Linked to the Consumer Price
Index
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TS-3