Morgan Stanley 2009 Annual Report Download - page 195

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Morgan Stanley Derivative Products Inc. (“MSDP”), a derivative products subsidiary rated Aa2 by Moody’s
Investors Service, Inc. (“Moody’s”) and AAA by Standard & Poor’s Ratings Services, a Division of the
McGraw-Hill Companies Inc. (“S&P”), maintains certain operating restrictions that have been reviewed by
Moody’s and S&P. On December 21, 2009, MSDP was downgraded from a triple-A rating to Aa2 rating by
Moody’s but maintained its AAA rating by S&P. The downgrade did not significantly impact the Company’s
results of operations or financial condition. MSDP is operated such that creditors of the Company should not
expect to have any claims on the assets of MSDP, unless and until the obligations to its own creditors are
satisfied in full. Creditors of MSDP should not expect to have any claims on the assets of the Company or any of
its affiliates, other than the respective assets of MSDP.
The regulatory capital requirements referred to above, and certain covenants contained in various agreements
governing indebtedness of the Company, may restrict the Company’s ability to withdraw capital from its
subsidiaries. As of December 31, 2009 and December 31, 2008, approximately $14.7 billion and $13.6 billion,
respectively, of net assets of consolidated subsidiaries may be restricted as to the payment of cash dividends and
advances to the parent company.
13. Total Equity.
Morgan Stanley Shareholders’ Equity.
Common Stock. Changes in shares of common stock outstanding for 2009, fiscal 2008 and the one month
ended December 31, 2008 were as follows (share data in millions):
2009
Fiscal
2008
One Month
Ended
December 31,
2008
Shares outstanding at beginning of period ................................. 1,074 1,056 1,048
Public offerings of common stock ....................................... 276 — —
Net impact of stock option exercises and other share issuances ................ 13 57 26
Treasury stock purchases(1) ............................................ (2) (65) —
Shares outstanding at end of period ...................................... 1,361 1,048 1,074
(1) Treasury stock purchases includes repurchases of common stock for employee tax withholding.
Treasury Shares. In December 2006, the Company announced that its Board of Directors had authorized the
repurchase of up to $6 billion of the Company’s outstanding common stock. The share repurchase program
considers, among other things, business segment capital needs, as well as equity-based compensation and benefit
plan requirements. During 2009 and the one month ended December 31, 2008, the Company did not purchase
any of its common stock as part of its share repurchase program. During fiscal 2008, the Company repurchased
$711 million of the common stock as part of the share repurchase program at an average cost of $18.14 per share.
As of December 31, 2009, the Company had approximately $1.6 billion remaining under its current share
repurchase authorization. Share repurchases by the Company are subject to regulatory approval.
CIC Investment. In December 2007, the Company sold Equity Units that included contracts to purchase
Company common stock (see “Stock Purchase Contracts” herein) to a wholly owned subsidiary of CIC for
approximately $5,579 million. As a result of the transaction with Mitsubishi UFJ Financial Group, Inc.
(“MUFG”) described under “Stock Purchase Contracts” below, upon settlement of the Equity Units, CIC will be
entitled to receive 116,062,911 shares of the Company’s common stock, subject to anti-dilution adjustments. In
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