Morgan Stanley 1999 Annual Report Download - page 36

Non-Interest Expenses
FISCAL FISCAL FISCAL
(dollars in millions) 1999 1998 1997
Compensation and benefits $ 648 $ 659 $ 659
Occupancy and equipment 96 97 77
Brokerage, clearing and
exchange fees 107 198 142
Information processing and
communications 92 87 95
Marketing and business
development 127 125 119
Professional services 137 135 88
Other 138 91 136
Total non-interest expenses $1,345 $1,392 $1,316
Fiscal 1999’s total non-interest expenses decreased 3% to $1,345
million. Within the non-interest expense category, employee com-
pensation and benefits expense decreased 2%, reflecting lower costs
due to the sale of the Company’s Global Custody business in fiscal
1998, partially offset by higher incentive compensation costs based
on higher fiscal 1999 revenues and earnings. Excluding compensa-
tion and benefits expense, non-interest expenses decreased $36 mil-
lion. Occupancy and equipment expense was comparable to the prior
year, as higher occupancy costs at certain office locations were off-
set by lower costs due to the Company’s sale of its Global Custody
business. Brokerage, clearing and exchange fees decreased 46%,
primarily attributable to commissions paid in fiscal 1998 in connec-
tion with the Company’s launch of the Van Kampen Senior Income
Trust mutual fund and lower sales of closed-end funds through the
non-proprietary distribution channel. In addition, lower agent bank
costs were incurred in fiscal 1999 due to the Company’s sale of its
Global Custody business. These decreases were partially offset by a
higher level of deferred commission amortization. Information pro-
cessing and communications costs increased 6%, primarily due to
increased costs associated with the Company’s information technol-
ogy infrastructure, as well as higher market data costs. These
increases were partially offset by lower costs due to the Company’s
sale of its Global Custody business. Marketing and business devel-
opment expenses increased 2%, as higher costs due to business
growth, including new product launches, were partially offset by
lower costs due to the Company’s sale of its Global Custody business.
Professional services expense increased 1%, as higher consulting
fees were partially offset by lower legal expenses and lower costs due
to the Company’s sale of its Global Custody business. Other expenses
increased 52%, reflecting the impact of a higher level of business
activity on various operating expenses, as well as costs associated
with the consolidation of certain office locations.
Fiscal 1998’s total non-interest expenses increased 6% to
$1,392 million. Within the non-interest expense category,
employee compensation and benefits expense was comparable to
the prior year. Occupancy and equipment expense increased 26%,
principally reflecting the reclassification of certain expenses asso-
ciated with VK, as well as additional office space and higher occu-
pancy costs at certain locations. Brokerage, clearing and exchange
fees increased 39%, primarily reflecting commissions paid in con-
nection with the Company’s launch of the Van Kampen Senior
Income Trust mutual fund, higher closed-end fund sales through
the non-proprietary distribution channel, and a higher level of
deferred commission amortization. Information processing and
communications costs decreased 8% due to the reclassification of
certain expenses associated with VK, as well as lower allocated
communications costs. Marketing and business development
expense increased 5%, primarily reflecting higher costs due to
business growth, including new product launches. Professional ser-
vices expense increased 53%, primarily reflecting higher consult-
ing and subadvisory costs. Other expenses decreased 33%, which
primarily reflects a lower level of allocated expenses.
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