Morgan Stanley 2009 Annual Report Download - page 201

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Non-controlling Interests.
Deconsolidation of Subsidiaries.
During 2009, the Company deconsolidated MSCI in connection with the Company’s disposition of its remaining
ownership interest in MSCI and recognized an after-tax gain of approximately $279 million. The Company did
not retain any investments in MSCI upon deconsolidation. See Note 23 for further information on discontinued
operations.
During fiscal 2008, the Company deconsolidated certain subsidiaries and recognized gains of approximately $70
million, included in Other revenues on the consolidated statements of income.
Changes in the Company’s Ownership Interest in Subsidiaries.
The following table presents the effect on the Company’s shareholders’ equity from changes in ownership of
subsidiaries resulting from transactions with non-controlling interests.
2009
(dollars in millions)
Net income applicable to Morgan Stanley .......................................... $1,346
Transfers from non-controlling interests:
Increase in paid-in capital in connection with MSSB ............................. 1,711
Net transfers from non-controlling interests ......................................... 1,711
Change from net income attributable to Morgan Stanley and transfers from non-controlling
interests ................................................................... $3,057
The increase in paid-in capital results from Citi’s equity interest in MSSB, to which the Company had
contributed certain businesses associated with the Company’s Global Wealth Management Group. The excess of
the preliminary net fair value received by the Company over the increase in non-controlling interest associated
with Smith Barney is reflected as an increase in paid-in capital. See Note 3 for further information regarding the
MSSB transaction.
The impact on the Company’s shareholders’ equity from transactions with non-controlling interests was not
material for fiscal 2008, fiscal 2007 and the one month ended December 31, 2008.
During fiscal 2008, the Company recorded pre-tax gains of approximately $1.5 billion, in connection with sales
of its shares in MSCI as part of secondary offerings. Such gains are included in discontinued operations (see Note
23). During fiscal 2007, the Company recorded $239 million as an addition to paid-in capital associated with the
initial public offering (“IPO”) of MSCI.
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