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MORGAN STANLEY DEAN WITTER *1998 ANNUAL REPORT
*EIGHTEEN *
streams and our ability to manage risk make us less subject to market volatility. Our
global commitment and expertise position us to take full advantage of the continu-
ing trend of globalization. Our capacity for innovation enables us to serve our clients
in an increasingly complex financial marketplace. And as the consolidation of the
financial services industry continues, we believe we have the range of products and
broad distribution channels that will enable us to continue to gain market share.
These capabilities and strategies are the source of considerable financial strength.
Underlying them is a capital base that is one of the largest in our industry.At fiscal
year-end, our shareholders’ equity stood at $14.1 billion, significantly higher than
any of our U.S. securities industry competitors. Our total capital (including long-
term debt) was $38 billion.The diversity and growth potential of our revenue stream
mean we should continue to generate substantial capital internally.This was partic-
ularly evident in 1998 as we were able to repurchase approximately $3 billion of our
stock. Because we have three profitable businesses (securities, asset management and
credit services), a broad institutional and individual customer base,a global presence
and a strong stream of continuing revenues,we believe our earnings will be less sub-
ject to volatility than many of our competitors.
In November, Moody’s upgraded our credit rating to Aa3, which brought indepen-
dent confirmation of our financial strength and the continued success of our
strategy.We believe the timing of this affirmation was particularly significant. It
came when many of our competitors had suffered setbacks in the difficult environ-
ment and had their ratings downgraded or placed on negative credit watch. In its
analysis of our upgrade, Moody’s echoed most of the same themes that we have
emphasized in this letter:namely,that our performance,capabilities and strategy have
set us apart from most of our competitors.
98
97
96
37,922
figure 12
33,577
31,152
*Excludes the current portion of long-term debt
and includes Capital Units and Preferred Securities
Issued by Subsidiaries.
TOTAL CAPITAL*
(in millions of U.S. dollars)
98
97
96
16,444
figure 13
14,833
12,023
NET REVENUES
(in millions of U.S. dollars)