Morgan Stanley 1999 Annual Report Download - page 46

99 AR |page 44 November 30, 1999, no borrowings were outstanding under the
MSIL Facility.
On June 7, 1999, Morgan Stanley Dean Witter Japan
Limited (‘’MSDWJL’’), the Company’s Tokyo-based broker-dealer
subsidiary, entered into a committed revolving credit facility, guar-
anteed by the Company, that provides funding to support general
liquidity needs, including support of MSDWJL’s unsecured borrow-
ings (the ‘’MSDWJL Facility’’). Under the terms of the MSDWJL
Facility, a syndicate of banks is committed to provide up to 60 bil-
lion Japanese yen. At November 30, 1999, no borrowings were out-
standing under the MSDWJL Facility.
RFC maintains a senior bank credit facility to support the
issuance of asset-backed commercial paper in the amount of $2.6
billion. Under the terms of the asset-backed commercial paper pro-
gram, certain assets of RFC were subject to a lien in the amount of
$2.6 billion at November 30, 1999. RFC has never borrowed from
its senior bank credit facility.
The Company anticipates that it will utilize the MSDW
Facility, the MS&Co. Facility, the MSIL Facility or the MSDWJL
Facility for short-term funding from time to time (see Note 5 to the
consolidated financial statements).
Fiscal 1999 and Subsequent Activity
During fiscal 1999, the Company issued senior notes aggregating
$7,626 million, including non-U.S. dollar currency notes aggregat-
ing $2,490 million, primarily pursuant to its public debt shelf reg-
istration statements. These notes have maturities from 2000 to
2029 and a weighted average coupon interest rate of 4.8% at
November 30, 1999; the Company has entered into certain trans-
actions to obtain floating interest rates based primarily on short-
term LIBOR trading levels. At November 30, 1999, the aggregate
outstanding principal amount of the Company’s Senior
Indebtedness (as defined in the Company’s public debt shelf regis-
tration statements) was approximately $49.9 billion. Between
November 30, 1999 and January 31, 2000, the Company issued
additional debt obligations aggregating approximately $5,093 mil-
lion. These notes have maturities from 2000 to 2014.
Effective December 1999, the Company’s Board of
Directors authorized the Company to purchase, subject to market
conditions and certain other factors, an additional $1 billion of the
Company’s common stock for capital management purposes. The
Company also has a separate ongoing repurchase authorization in
connection with awards granted under its equity-based compensa-
tion plans. During fiscal 1999, the Company purchased $2,374
million of its common stock. Subsequent to November 30, 1999
and through January 31, 2000, the Company purchased an addi-
tional $406 million of its common stock; the unused portion of the
capital management common stock repurchase authorization at
January 31, 2000 was approximately $1,098 million (without giv-
ing effect to any outstanding put options).
In an effort to enhance its ongoing stock repurchase pro-
gram, the Company may sell put options on shares of its common
stock to third parties. These put options entitle the holder to sell
shares of the Company’s common stock to the Company on certain
dates at specified prices. As of November 30, 1999, put options
were outstanding on an aggregate of 1,000,000 shares of the Com-
pany’s common stock. These put options expire in February 2000.
The Company may elect cash settlement of the put options instead
of taking delivery of the stock.
Effective March 1, 1999, the Company redeemed all of
the outstanding 7.82% Capital Units and 7.80% Capital Units. The
aggregate principal amount of the Capital Units redeemed was
$352 million. During fiscal 1999, the Company repurchased in a
series of transactions in the open market $64 million of the $134
million outstanding 8.03% Capital Units. The Company has retired
these repurchased Capital Units.
In January 2000, the Company and Morgan Stanley
Finance, plc, a U.K. subsidiary, called for redemption all of the
outstanding 9.00% Capital Units on February 28, 2000. The
aggregate principal amount of the Capital Units to be redeemed is
$144 million.
On May 5, 1999, the Company’s shelf registration state-
ment for the issuance of an additional $12 billion of debt securi-
ties, units, warrants or purchase contracts, or any combination
thereof in the form of units or preferred stock, became effective.
At November 30, 1999, certain assets of the Company,
such as real property, equipment and leasehold improvements of
$2.2 billion and goodwill and other intangible assets of $1.3 bil-
lion, were illiquid. In addition, included in other assets are approx-
imately $1.9 billion of aircraft that the Company has acquired in
connection with its aircraft financing activities. Certain equity
investments made in connection with the Company’s private equity
and other principal investment activities, high-yield debt securities,
emerging market debt, certain collateralized mortgage obligations