Term sheet |
Term Sheet to Product Supplement No. 68-I Registration Statement No. 333-130051 Dated May 6, 2008; Rule 433 |
Structured |
JPMorgan Chase & Co. $ 10.0% (equivalent to 20.0% per annum) Reverse Exchangeable Notes due December 1, 2008 Linked to the Least Performing Common Stock of Apple Inc., Google Inc., Microsoft Corporation and QUALCOMM Incorporated The actual interest rate will be determined on the Pricing Date and will not be less than 10.0% (equivalent to 20.0% per annum) |
General
Key Terms
Reference Stocks: |
The common stock of Apple Inc., Google Inc., Microsoft Corporation and QUALCOMM Incorporated (each such common stock, a Reference Stock, and together, the Reference Stocks). Upon the occurrence of certain corporate events with respect to the issuers of the Reference Stocks, the Reference Stocks may change during the term of the notes. See General Terms of Notes Anti-dilution Adjustments Reorganization Events in the accompanying product supplement no. 68-I for further information about changes to the Reference Stocks. |
Interest Rate: |
At least 10.0% (equivalent to 20.0% per annum) during the term of the notes, paid monthly and calculated on a 30/360 basis. The actual interest rate will be determined on the Pricing Date and will not be less than 10.0% (equivalent to 20.0% per annum). |
Protection Amount: |
For each Reference Stock, an amount that represents 30.0% of the applicable Initial Share Price of such Reference Stock, subject to adjustments. Please see The Reference Stocks Initial Share Prices, Protection Amounts and Physical Delivery Amounts below for the Protection Amount for each Reference Stock. |
Maturity Date: |
December 1, 2008 |
Pricing Date: |
On or about May 27, 2008 |
Settlement Date: |
On or about May 30, 2008 |
Observation Date: |
November 25, 2008 |
CUSIP: |
48123MY22 |
Interest Payment Date: |
Interest on the notes will be payable monthly in arrears on the last calendar day of each month, except the final interest payment, which will be payable on the Maturity Date (each such date, an Interest Payment Date), commencing June 30, 2008, to and including the Interest Payment Date corresponding to the Maturity Date. See Selected Purchase Considerations Monthly Interest Payments in this term sheet for more information. |
Payment at Maturity: |
You will receive $1,000 for each $1,000 principal amount note plus any accrued and unpaid interest at maturity unless (a) a Trigger Event has occurred and (b) the Cash Value of the Physical Delivery Amount for the Least Performing Reference Stock is less than $1,000, in which case in lieu of $1,000 in cash you will receive the Physical Delivery Amount (or, at our election, the Cash Value thereof) for the Least Performing Reference Stock. The market value of the shares of the Least Performing Reference Stock delivered to you as the Physical Delivery Amount or the Cash Value thereof will be less than the principal amount of your notes and may be zero. Accordingly, you may lose some or all of your principal if you invest in the notes. |
Trigger Event: |
A Trigger Event occurs if, on any day during the Monitoring Period, the closing price of any Reference Stock has declined, as compared to that particular Reference Stocks Initial Share Price, by more than that Reference Stocks Protection Amount. |
Least Performing Reference Stock: |
The Reference Stock with either (i) the greatest percentage decrease between its Initial Share Price and its Final Share Price, as compared to the percentage decreases or increases between the respective Initial Share Prices and Final Share Prices of the other Reference Stocks, or, (ii) if the Final Share Price of each of the Reference Stocks has appreciated in value as compared to its respective Initial Share Price, the lowest percentage increase between such Reference Stocks Initial Share Price and its Final Share Price, as compared to the percentage increases between the respective Initial Share Prices and Final Share Prices of the other Reference Stocks. The determination of the single Least Performing Reference Stock may be affected by the occurrence of certain corporate events affecting such Reference Stock. See General Terms of Notes Anti-dilution Adjustments. |
Monitoring Period: |
The period from the Pricing Date to and including the Observation Date. |
Physical Delivery Amount: |
For each Reference Stock, the number of shares of such Reference Stock, per $1,000 principal amount note, equal to $1,000 divided by the Initial Share Price of such Reference Stock, subject to adjustments. Please see The Reference Stocks Initial Share Prices, Protection Amounts and Physical Delivery Amounts below for the Physical Delivery Amount for each Reference Stock. |
Initial Share Price: |
For each Reference Stock, the closing price of the Reference Stock on the Pricing Date. Please see The Reference Stocks Initial Share Prices, Protection Amounts and Physical Delivery Amounts below for the Initial Share Price for each Reference Stock.The Initial Share Price is subject to adjustments and any Reference Stock issuer may be changed in certain circumstances. See Description of Notes Payment at Maturity and General Terms of Notes Anti-dilution Adjustments in the accompanying product supplement no. 68-I for further information about these adjustments. |
Final Share Price: |
For each Reference Stock, the closing price of such Reference Stock on the Observation Date. |
| Subject to postponement in the event of a market disruption event and as described under Description of Notes Payment at Maturity in the accompanying product supplement no. 68-I. |
Investing in the Reverse Exchangeable Notes involves a number of risks. See Risk Factors beginning on page PS-6 of the accompanying product supplement no. 68-I and Selected Risk Considerations beginning on page TS-2 of this term sheet.
Neither the SEC 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 supplements and prospectus. Any representation to the contrary is a criminal offense.
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Price to Public |
Fees and Commissions (1) |
Proceeds to Us |
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Per note |
$ |
$ |
$ |
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Total |
$ |
$ |
$ |
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(1) | If the notes priced today, J.P. Morgan Securities Inc.,
which we refer to as JPMSI, acting as agent for JPMorgan Chase & Co., would
receive a commission of approximately $37.50 per $1,000 principal amount note
and would use a portion of that commission to allow selling concessions to
other dealers of approximately $26.25 per $1,000 principal amount note. The
concessions of approximately $26.25 include concessions to be allowed to
selling dealers and concessions to be allowed to an arranging dealer. The
actual commission received by JPMSI may be less than $37.50 and will depend on
market conditions on the Pricing Date. In no event will the commission
received by JPMSI, which includes concessions to be paid to other dealers,
exceed $60.00 per $1,000 principal amount note. See Underwriting beginning
on page PS-28 of the accompanying product supplement no. 68-I . The total aggregate principal amount of notes being offered by this term sheet may not be purchased by investors in the offering. Under these circumstances, JPMSI will retain the unsold portion of the offering and has agreed to hold such notes for investment for a period of at least 30 days. The unsold portion of notes will not exceed 15% of the aggregate principal amount of notes. Any unsold portion may affect the supply of the notes available for secondary trading and, therefore, could adversely affect the price of the notes in the secondary market. Circumstances may occur in which our interests or those of our affiliates could be in conflict with your interests. |
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
May 6, 2008
Additional Terms Specific to the Notes
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, each prospectus supplement, product supplement no. 68-I and any 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. 68-I 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.
You should read this term sheet together with the prospectus dated December 1, 2005, as supplemented by the prospectus supplement dated October 12, 2006 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. 68-I dated February 7, 2007. 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. 68-I, 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):
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.
Selected Purchase Considerations
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JPMorgan
Structured Investments |
TS-1 |
Selected Risk Considerations
An investment in the notes involves significant risks. Investing in the notes is not equivalent to investing directly in one or more of the Reference Stocks. These risks are explained in more detail in the Risk Factors section of the accompanying product supplement no. 68-I dated February 7, 2007.
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JPMorgan
Structured Investments |
TS-2 |
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JPMorgan
Structured Investments |
TS-3 |
Examples of Hypothetical Payment at Maturity for Each $1,000 Principal Amount Note
The following table illustrates hypothetical payments at maturity on a $1,000 investment in the notes, based on a range of hypothetical Final Share Prices for the Least Performing Reference Stock and assuming that the closing price of each Reference Stock did not decline, as compared to its respective Initial Share Price, by more than its respective Protection Amount on any day from the Pricing Date to and including the Observation Date, except as indicated in the column titled Hypothetical lowest closing price of the common stock of Apple Inc. during the Monitoring Period. The following table assumes that the Least Performing Reference Stock will be the common stock of Apple Inc. and that the common stock of Apple Inc. will be the least performing Reference Stock at all times during the term of the notes. We make no representation or warranty as to which of the Reference Stocks will be the Least Performing Reference Stock for the purposes of calculating your actual payment at maturity. In addition, you may receive shares of a Reference Stock at maturity that never experiences a decline from its Initial Share Price in excess of the Protection Amount during the Monitoring Period. The numbers appearing in the table below have been rounded for ease of analysis. For more information see Selected Purchase Considerations Your Return at Maturity May Be Based on a Reference Stock That Did Not Experience a Decline in Excess of Its Protection Amount During the Monitoring Period.
For this table of hypothetical payments at maturity, we have also assumed the following:
the Initial Share Price (Apple. Inc.): |
$185.00 |
the Protection Amount (Apple. Inc.): $55.50 |
the Interest Rate: |
10.0% (equivalent to 20.0% per annum) |
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Hypothetical lowest closing price of the common stock of Apple Inc. during the Monitoring Period |
Hypothetical Final Share Price of the Least Performing Reference Stock (Apple Inc.) |
Payment at Maturity |
Total Value of Payment Received at Maturity* |
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$185.00 |
$370.00 |
$1,000.00 |
$1,000.00 |
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$185.00 |
$194.25 |
$1,000.00 |
$1,000.00 |
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$185.00 |
$185.00 |
$1,000.00 |
$1,000.00 |
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$129.50 |
$129.50 |
$1,000.00 |
$1,000.00 |
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$92.50 |
$194.25 |
$1,000.00 |
$1,000.00 |
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$92.50 |
$175.75 |
5 shares of Apple Inc. |
$950.00 |
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$92.50 |
$92.50 |
5 shares of Apple
Inc. |
$500.00 |
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$46.25 |
$46.25 |
5 shares of Apple
Inc. |
$250.00 |
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$0.00 |
$0.00 |
5 shares of Apple
Inc. |
$0.00 |
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* | Note that you will receive at maturity any accrued and unpaid interest in cash, in addition to either shares of the Least Performing Reference Stock (or, at our election, the Cash Value thereof) or the principal amount of your note in cash. Also note that if you receive the Physical Delivery Amount, the total value of payment received at maturity shown in the table above includes the value of any fractional shares, which will be paid in cash. |
The following examples illustrate how the total value of payments received at maturity set forth in the table above are calculated.
Example 1: During the Monitoring Period, none of the Reference Stocks close at a price which reflects a decline of more than their respective Protection Amounts. Because Apple Inc. is the Least Performing Reference Stock and because its Final Share Price of $370.00 exceeds its Initial Share Price of $185.00, you will receive a payment at maturity of $1,000 per $1,000 principal amount note.
Example 2: During the Monitoring Period, Apple Inc. was the first Reference Stock to close at a level below its Initial Share Price minus the Protection Amount. On the Observation Date, Apple Inc., still the Least Performing Reference Stock, recovers to a Final Share Price of $194.25. Because the Final Share Price of the Least Performing Reference Stock is above its Initial Share Price, you will receive $1,000 per $1,000 principal amount note at maturity even though a Trigger Event occurred.
Example 3: During the Monitoring Period, Apple Inc. was the first Reference Stock to close at a level below its Initial Share Price minus the Protection Amount. On the Observation Date, Apple Inc., still the Least Performing Reference Stock, recovers to a Final Share Price of $175.75. Because at least one of the Reference Stocks had a closing price that had declined from its Initial Share Price by more than its Protection Amount, and because the Final Share Price of the Least Performing Reference Stock is less than its Initial Share Price, you will receive the Physical Delivery Amount of the Least Performing Reference Stock, or, at our election, the Cash Value thereof, at maturity. Because the Final Share Price of the Least Performing Reference Stock is $175.75, the total value of your final payment at maturity, whether in cash or shares of the Least Performing Reference Stock, is $950.00.
Example 4: During the Monitoring Period, Apple Inc. was the first Reference Stock to close at a level below its Initial Share Price minus the Protection Amount. On the Observation Date, Apple Inc., still the Least Performing Reference Stock, declines further to a Final Share Price of $46.25. Because at least one of the Reference Stocks had a closing price that had declined from its Initial Share Price by more than its Protection Amount, and because the Final Share Price of the Least Performing Reference Stock is less than its Initial Share Price, you will receive the Physical Delivery Amount of the Least Performing Reference Stock, or, at our election, the Cash Value thereof, at maturity. Because the Final Share Price of the Least Performing Reference Stock is $46.25, the total value of your final payment at maturity, whether in cash or shares of the Least Performing Reference Stock, is $250.00.
Regardless of the performance of the Least Performing Reference Stock or the payment you receive at maturity, you will receive interest payments, for each $1,000 principal amount note, in the aggregate amount of approximately $100.00 over the term of the notes. If we priced the notes on May 5, 2008, you would have received 5 shares of Apple Inc. common stock or, at our election, the Cash Value thereof, at maturity, assuming that Apple Inc. common stock was the Least Performing Reference Stock and provided that Apple Inc. common stocks Final Share Price declined from its Initial Share Price and the closing price of at least one Reference Stock declined by more than 30%, as compared to its Initial Share Price on at least one day during the Monitoring Period. The actual number of shares of each Reference Stock or the Cash Value thereof you may receive at maturity and the actual Protection Amount of each Reference Stock may be more or less than the amounts displayed in the hypothetical examples and the chart above and will depend in part on the closing price of each Reference Stock on the Pricing Date.
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JPMorgan
Structured Investments |
TS-4 |
The Reference Stocks
Public Information
All information contained herein on the Reference Stocks and on the Reference Stock issuers is derived from publicly available sources and is provided for informational purposes only. Companies with securities registered under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, are required to periodically file certain financial and other information specified by the SEC. Information provided to or filed with the SEC by a Reference Stock issuer pursuant to the Exchange Act can be located by reference to the SEC file number provided below and can be accessed through www.sec.gov. We do not make any representation that these publicly available documents are accurate or complete. The Reference Stocks may be modified in the case of certain corporate events. See The Reference Stocks beginning on page PS-14 of the accompanying product supplement no. 68-I for more information.
Initial Share Prices, Protection Amounts and Physical Delivery Amounts
The table below sets forth the four issuers of the Reference Stocks, as well as the ticker symbol for each Reference Stock and the U.S. exchange on which each Reference Stock is listed. See General Terms of Notes Anti-dilution Adjustments.
The table below indicates the Initial Share Price, Protection Amount and Physical Delivery Amount for each Reference Stock, in each case subject to adjustments. The Initial Share Price, Protection Amount and Physical Delivery Amount for each Reference Stock will be determined on the Pricing Date.
Ticker Symbol |
Issuer | Exchange | Initial Share Price |
Protection Amount |
Physical Delivery Amount |
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AAPL |
Apple Inc. |
NASDAQ |
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GOOG |
Google Inc. |
NASDAQ |
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MSFT |
Microsoft Corporation |
NASDAQ |
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QCOM |
QUALCOMM Incorporated |
NASDAQ |
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Historical Information of the Reference Stocks
The graphs contained in this term sheet set forth the historical performance of each Reference Stock based on the weekly closing price (in U.S. dollars) of that Reference Stock from January 3, 2003 through May 2, 2008, and for Google Inc. from August 20, 2004 through May 2, 2008. We obtained the closing prices and other market information in this term sheet from Bloomberg Financial Markets, without independent verification. The closing prices and this other information may be adjusted by Bloomberg Financial Markets for corporate actions such as public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg Financial Markets.
Since the commencement of trading of each Reference Stock, the price of such Reference Stock has experienced significant fluctuations. The historical performance of each Reference Stock should not be taken as an indication of future performance, and no assurance can be given as to the closing prices of each Reference Stock during the term of the notes. We cannot give you assurance that the performance of each Reference Stock will result in the return of any of your initial investment. We make no representation as to the amount of dividends, if any, that each Reference Stock issuer will pay in the future. In any event, as an investor in the notes, you will not be entitled to receive dividends, if any, that may be payable on each Reference Stock.
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JPMorgan
Structured Investments |
TS-5 |
Apple Inc. (Apple)
According to its publicly available filings with the SEC, Apple designs, manufactures and markets personal computers, portable digital music players and mobile communication devices and sells a variety of related software, services, peripherals and networking solutions. The common stock of Apple, no par value, is listed on The NASDAQ Stock Market, which we refer to as the Relevant Exchange for purposes of Apple in the accompanying product supplement no. 68-I. Apples SEC file number is 000-10030.
Historical Information of the Common Stock of Apple
The following graph sets forth the historical performance of the common stock of Apple based on the weekly closing price (in U.S. dollars) of the common stock of Apple from January 3, 2003 through May 2, 2008. The closing price of the common stock of Apple on May 5, 2008 was $184.72.
Google Inc. (Google)
According to its publicly available filings with the SEC, Google is a global technology leader focused on improving the ways people connect with information. Googles innovations in web search and advertising have made their web site a top internet destination. The class A common stock of Google, par value $0.001 per share (which we refer to as the common stock of Google), is listed on The NASDAQ Stock Market, which we refer to as the Relevant Exchange for purposes of Google in the accompanying product supplement no. 68-I. Googles SEC file number is 000-50726.
Historical Information of the Common Stock of Google
The following graph sets forth the historical performance of the common stock of Google based on the weekly closing price (in U.S. dollars) of the common stock of Google from August 20, 2004 through May 2, 2008. The common stock of Google commenced trading on The NASDAQ Stock Market on August 19, 2004. The closing price of the common stock of Google on May 5, 2008 was $594.90.
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JPMorgan
Structured Investments |
TS-6 |
Microsoft Corporation (Microsoft)
According to its publicly available filings with the SEC, Microsoft develops, manufactures, licenses, and supports a range of software products for computing devices, and provides consulting and product support services. Microsoft also sells video game consoles and games, digital music and entertainment devices, PC games, and peripherals. The common stock of Microsoft, par value $0.00000625 per share, is listed on The NASDAQ Stock Market, which we refer to as the Relevant Exchange for purposes of Microsoft in the accompanying product supplement no. 68-I. Microsofts SEC file number is 000-14278 .
Historical Information of the Common Stock of Microsoft
The following graph sets forth the historical performance of the common stock of Microsoft based on the weekly closing price (in U.S. dollars) of the common stock of Microsoft from January 3, 2003 through May 2, 2008. The closing price of the common stock of Microsoft on May 5, 2008 was $29.08.
QUALCOMM Incorporated (QUALCOMM)
According to its publicly available filings with the SEC, QUALCOMM designs, manufactures, has manufactured on its behalf and markets digital wireless telecommunications products and services based on its CDMA technology and other technologies. QUALCOMM, through its subsidiaries, develops and supplies CDMA-based integrated circuits and system software for wireless voice and data communications, multimedia functions and global positioning system products, grants licenses to use portions of its intellectual property portfolio, and offers mobile communication products and services, software and software development aimed at support and delivery of wireless applications. The common stock of QUALCOMM, par value $0.0001 per share, is listed on The NASDAQ Stock Market, which we refer to as the Relevant Exchange for purposes of QUALCOMM in the accompanying product supplement no. 68-I. QUALCOMMs SEC file number is 000-19528.
Historical Information of the Common Stock of QUALCOMM
The following graph sets forth the historical performance of the common stock of QUALCOMM based on the weekly closing price (in U.S. dollars) of the common stock of QUALCOMM from January 3, 2003 through May 2, 2008. The closing price of the common stock of QUALCOMM on May 5, 2008 was $43.93.
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JPMorgan
Structured Investments |
TS-7 |