Morgan Stanley

There is no substitute for the right combination of insight and experience, whether it is seizing new opportunities created by a unified European market, bringing an unprecedented number of technology IPOs to market or continuing to create innovative financial products to match the needs of issuers and investors.

There was perhaps nowhere in the world this past year where change has been more dramatic and the opportunities for growth greater than in Europe. The advent of the euro in early 1999 has ushered in a wave of consolidation and restructuring that crosses traditional boundaries. The single currency is leading to a unified debt market. Companies are seeking financing to restructure and become more competitive. More investors are demanding performance, and the equity markets are gaining in prominence.

Morgan Stanley Dean Witter has been a leader in the growth, restructuring and consolidation of the European markets. Some of the prominent M&A transactions we advised on included: the $66 billion Vodafone/AirTouch merger, which formed the largest mobile telephone company in the world; the $59 billion oil industry merger of Elf Aquitaine with TotalFina; and the $28.5 billion pharmaceutical industry merger of Hoechst and Rhône-Poulenc. We also are an advisor in the proposed merger of SmithKline Beecham and Glaxo Wellcome, announced at the beginning of 2000.

We continued to pioneer the movement to a unified credit market in Europe, acting as lead-manager in euro-denominated debt issues for Fiat, Electricite de Portugal and Suez Lyonnaise des Eaux, which was the largest corporate bond offering ever by a French company. Morgan Stanley is a leader in Europe as well as other parts of the world in applying our insight and experience to create innovative financing structures. We structured and placed a series of complex transactions for Pemex, the Mexican oil company. In Japan, we lead-managed an innovative $5.6 billion equity offering for East Japan Railway and arranged for the first-ever securitization of non-performing real estate loans.

The dot-com phenomenon in the United States was another major trend in 1999. More than 300 technology companies went public this past year, raising more than $33 billion in capital. Morgan Stanley played a central role as the number one underwriter of technology IPOs in the United States and worldwide, working with leaders such as Amazon.com, eBay and Priceline.com. We were the lead-manager in the $2.2 billion IPO for Agilent Technologies, a subsidiary of Hewlett-Packard, and the $2.8 billion secondary offering for Nextel Communications. In an active market for technology mergers and acquisitions, we were the advisor in a number of prominent transactions, including the sale of Broadcast.com to Yahoo! and the acquisition of Netscape by America Online. In addition, as the year 2000 began, we became an advisor in what is perhaps the most widely heralded "new economy" combination to date -- the proposed merger of Time Warner and America Online.