Morgan Stanley 2009 Annual Report Download - page 80

As of December 31, 2009, the aggregate outstanding principal amount of the Company’s senior indebtedness (as
defined in the Company’s senior debt indentures) was approximately $179 billion (including guaranteed
obligations of the indebtedness of subsidiaries) compared with $172 billion as of December 31, 2008. The
increase in the amount of senior indebtedness was primarily due to new issuances, partially offset by a decrease
in commercial paper and other short-term borrowings.
Equity Capital-Related Transactions.
In June 2009, the Company repurchased the 10,000,000 shares of Series D Preferred Stock issued to the U.S.
Treasury under the CPP at the liquidation preference amount plus accrued and unpaid dividends, for an aggregate
repurchase price of $10,086 million.
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 Warrant was previously issued to the U.S. Treasury for the purchase
of 65,245,759 shares of the Company’s common stock at an exercise price of $22.99 per share. The repayment of
the Series D Preferred Stock in the amount of $10.0 billion, completed in June 2009, and the Warrant repurchase in
the amount of $950 million reduced the Company’s total equity by $10,950 million in 2009.
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 transactions.
Equity Capital Management Policies.
The Company’s senior management views equity capital as an important source of financial strength. The
Company actively manages its consolidated equity capital position based upon, among other things, business
opportunities, capital availability and rates of return together with internal capital policies, regulatory
requirements and rating agency guidelines and, therefore, in the future may expand or contract its equity capital
base to address the changing needs of its businesses. The Company attempts to maintain total equity, on a
consolidated basis, at least equal to the sum of its operating subsidiaries’ equity.
As of December 31, 2009, the Company’s equity capital (which includes shareholders’ equity and junior
subordinated debentures issued to capital trusts) was $57,282 million, a decrease of $1,783 million from
December 31, 2008, primarily due to the repayment of the Series D Preferred Stock and the Warrant repurchase,
partially offset by the Company’s common stock offerings.
As of December 31, 2009, the Company had approximately $1.6 billion remaining under its current share
repurchase program out of the $6 billion authorized by the Board in December 2006. The share repurchase
program is for capital management purposes and considers, among other things, business segment capital needs
as well as equity-based compensation and benefit plan requirements. Share repurchases by the Company are
subject to regulatory approval. During 2009, the Company did not repurchase common stock as part of its capital
management share repurchase program (see also “Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities” in Part II, Item 5).
The Board determines the declaration and payment of dividends on a quarterly basis. In January 2010, the
Company announced that its Board declared a quarterly dividend per common share of $0.05 (see Note 27 to the
consolidated financial statements). The Company also announced that its Board declared a quarterly dividend of
$255.56 per share of Series A Floating Rate Non-Cumulative Preferred Stock (represented by depositary shares,
each representing 1/1,000th interest in a share of preferred stock and each having a dividend of $0.25556); a
quarterly dividend of $25.00 per share of Series B Preferred Stock and a quarterly dividend of $25.00 per share
of Series C Preferred Stock.
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