Morgan Stanley 1999 Annual Report Download - page 89

page 87 |99 AR
As of November 30, 1999, the Company had approximately $3.1 bil-
lion of earnings attributable to foreign subsidiaries for which no pro-
visions have been recorded for income tax that could occur upon repa-
triation. Except to the extent such earnings can be repatriated tax
efficiently, they are permanently invested abroad. It is not practicable
to determine the amount of income taxes payable in the event all such
foreign earnings are repatriated, since such liability, if any, is depen-
dent on circumstances existing if and when remittance occurs.
Deferred income taxes reflect the net tax effects of
temporary differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when such differences are
expected to reverse. Significant components of the Company’s
deferred tax assets and liabilities at November 30, 1999 and 1998
are as follows:
NOV. 30, NOV. 30,
(dollars in millions) 1999 1998
Deferred tax assets:
Employee compensation and benefit plans $1,486 $1,289
Loan loss allowance 282 371
Other valuation and liability allowances 593 604
Deferred expenses 163 —
Other 303 167
Total deferred tax assets 2,827 2,431
Deferred tax liabilities:
Prepaid commissions 217 239
Valuation of inventory, investments
and receivables 188 127
Other 194 237
Total deferred tax liabilities 599 603
Net deferred tax assets $2,228 $1,828
Cash paid for income taxes was $1,736 million, $1,591 million and
$1,251 million in fiscal 1999, 1998 and 1997, respectively.
15 SEGMENT AND GEOGRAPHIC INFORMATION
In fiscal 1999, the Company adopted SFAS No. 131, “Disclosures
about Segments of an Enterprise and Related Information.” The
adoption of this statement did not have an effect on the Company’s
financial position, results of operations, earnings per share or cash
flows. This statement establishes new standards for disclosures
that relate to business operating segments (“segments”). The seg-
ment data for prior periods has been restated to reflect the adop-
tion of SFAS No. 131. In addition, the operating results of Morgan
Stanley Dean Witter Online (“MSDW Online”), the Company’s
provider of electronic brokerage services, is included within the
Securities segment. Previously, the Company had included MSDW
Online’s results within its Credit Services segment.
The Company structures its segments primarily based
upon the nature of the financial products and services provided to
customers and the Company’s management organization. The
Company operates in three business segments: Securities, Asset
Management and Credit Services through which it provides a wide
range of financial products and services to its customers.
The Company’s Securities business includes securities
underwriting, distribution and trading; merger, acquisition, restruc-
turing, real estate, project finance and other corporate finance advi-
sory activities; full-service and online brokerage services; research
services; the trading of foreign exchange and commodities, as well
as derivatives on a broad range of asset categories, rates and
indices; securities lending; and private equity activities. The
Company’s Asset Management business provides global asset man-
agement advice and services to investors through a variety of prod-
uct lines and brand names, including Morgan Stanley Dean Witter
Advisors, Van Kampen Investments, Morgan Stanley Dean Witter
Investment Management and Miller Anderson & Sherrerd. The
Company’s Credit Services business includes the issuance of the
Discover Card, the Discover Platinum Card, the Morgan Stanley
Dean Witter Card, the Private Issue Card and co-branded and affin-
ity cards; and the operation of the Discover/NOVUS Network, a pro-
prietary network of merchant and cash access locations.