Morgan Stanley 2009 Annual Report Download - page 51

In August 2009, under the terms of the CPP securities purchase agreement, the Company repurchased the Warrant
from the U.S. Treasury for $950 million. The repurchase of the Series D Preferred Stock in the amount of $10.0
billion and the Warrant for $950 million reduced the Company’s total equity by $10,950 million in 2009.
In addition, during 2009, the Company issued common stock for approximately $6.9 billion in two registered
public offerings in May and June 2009. MUFG elected to participate in both offerings, and in one of the
offerings, MUFG received $0.7 billion of common stock in exchange for 640,909 shares of the Company’s Series
C Preferred Stock.
See Note 13 to the consolidated financial statements for further discussion of these capital-related transactions.
Business Segments.
Substantially all of the Company’s operating revenues and operating expenses can be directly attributed to its
business segments. Certain revenues and expenses have been allocated to each business segment, generally in
proportion to its respective revenues or other relevant measures.
As a result of treating certain intersegment transactions as transactions with external parties, the Company
includes an Intersegment Eliminations category to reconcile the business segment results to the Company’s
consolidated results. Income before taxes in Intersegment Eliminations primarily represents the effect of timing
differences associated with the revenue and expense recognition of commissions paid by the Asset Management
business segment to the Global Wealth Management Group business segment associated with sales of certain
products and the related compensation costs paid to the Global Wealth Management Group business segment’s
global representatives. Intersegment eliminations also reflect the effect of fees paid by the Institutional Securities
business segment to the Global Wealth Management Group business segment related to the bank deposit
program. Losses before income taxes recorded in Intersegment Eliminations were $11 million, $17 million, $84
million and $1 million in 2009, fiscal 2008, fiscal 2007 and the one month ended December 31, 2008,
respectively.
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