Morgan Stanley 2010 Annual Report Download - page 217

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
recent 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, 2010 and December 31, 2009, approximately $19.5 billion and $14.7 billion,
respectively, of net assets of consolidated subsidiaries may be restricted as to the payment of cash dividends and
advances to the parent company.
15. Total Equity.
Morgan Stanley Shareholders’ Equity.
Common Stock.Changes in shares of common stock outstanding for 2010, 2009, fiscal 2008 and the one
month ended December 31, 2008 were as follows (share data in millions):
2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
Shares outstanding at beginning of period ......................... 1,361 1,074 1,056 1,048
Public offerings and other issuances of common stock ............... 116 276 — —
Net impact of stock option exercises and other share issuances ........ 46 13 57 26
Treasury stock purchases(1) .................................... (11) (2) (65) —
Shares outstanding at end of period .............................. 1,512 1,361 1,048 1,074
(1) Treasury stock purchases include 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 2010 and 2009 the Company did not purchase any of its common stock as part of its
share repurchase program. At December 31, 2010, 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 to a wholly owned subsidiary of CIC for approximately $5,579 million. Each Equity
Unit had a stated amount of $1,000 per unit consisting of: (i) an undivided beneficial ownership interest in a trust
preferred security of Morgan Stanley Capital Trust A (“Series A Trust”), Morgan Stanley Capital Trust B
(“Series B Trust”) or Morgan Stanley Capital Trust C (“Series C Trust”) (each a “Morgan Stanley Capital Trust”
and, collectively, the “Trusts”) with an initial liquidation amount of $1,000; and (ii) a stock purchase contract
relating to the common stock, par value of $0.01 per share, of the Company. A substantial portion of the
investment proceeds from the offering of the Equity Units was treated as Tier 1 capital for regulatory capital
purposes.
In the first quarter of fiscal 2008, the Company issued junior subordinated debt securities for a total of
$5,579,173,000 in exchange for $5,579,143,000 in aggregate proceeds from the sale of the trust preferred
securities by the Trusts and $30,000 in trust common securities issued equally by the Trusts. The Company
elected to fair value the junior subordinated debentures pursuant to the fair value option accounting guidance.
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