Morgan Stanley 2009 Annual Report Download - page 202

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
14. Earnings per Common Share.
Basic EPS is computed by dividing income available to Morgan Stanley common shareholders by the weighted
average number of common shares outstanding for the period. Common shares outstanding include common
stock and vested restricted stock unit awards where recipients have satisfied either the explicit vesting terms or
retirement eligibility requirements. Diluted EPS reflects the assumed conversion of all dilutive securities. The
Company calculates EPS using the two-class method (see Note 2) and determines whether instruments granted in
share-based payment transactions are participating securities. The following table presents the calculation of
basic and diluted EPS (in millions, except for per share data):
2009 Fiscal 2008 Fiscal 2007
One Month
Ended
December 31,
2008
Basic EPS:
Income (loss) from continuing operations ...................... $1,193 $1,158 $2,200 $(1,295)
Net gain on discontinued operations .......................... 213 620 1,049 10
Net income (loss) ......................................... 1,406 1,778 3,249 (1,285)
Net income applicable to non-controlling interests ............... 60 71 40 3
Net income (loss) applicable to Morgan Stanley ................. 1,346 1,707 3,209 (1,288)
Less: Preferred dividends (Series A Preferred Stock) ............. (45) (53) (68) (15)
Less: Preferred dividends (Series B Preferred Stock) ............. (784) — — (200)
Less: Preferred dividends (Series C Preferred Stock) ............. (68) — — (30)
Less: Partial Redemption of Series C Preferred Stock ............. (202) — — —
Less: Preferred dividends (Series D Preferred Stock) ............. (212) (44) — (63)
Less: Amortization and acceleration of issuance discount for
Series D Preferred Stock (see Note 13) ...................... (932) (15) — (13)
Less: Allocation of earnings to unvested restricted stock units(1) .... (10) (94) (165) (15)
Less: Allocation of undistributed earnings to Equity Units ......... — (6) — —
Net (loss) income applicable to Morgan Stanley common
shareholders ........................................... $ (907) $1,495 $2,976 $(1,624)
Weighted average common shares outstanding .................. 1,185 1,028 1,002 1,002
(Loss) earnings per basic common share:
Income (loss) from continuing operations ...................... $(0.93) $ 0.92 $ 1.98 $ (1.63)
Net gain on discontinued operations .......................... 0.16 0.53 0.99 0.01
(Loss) earnings per basic common share ............... $(0.77) $ 1.45 $ 2.97 $ (1.62)
Diluted EPS:
(Loss) earnings applicable to Morgan Stanley common
shareholders ........................................... $ (907) $1,495 $2,976 $(1,624)
Weighted average common shares outstanding .................. 1,185 1,028 1,002 1,002
Effect of dilutive securities:
Stock options and restricted stock units(1) ................. — 3 23 —
Series B Preferred Stock ............................... — 42 — —
Weighted average common shares outstanding and common stock
equivalents ............................................ 1,185 1,073 1,025 1,002
(Loss) earnings per diluted common share:
(Loss) income from continuing operations ..................... $(0.93) $ 0.88 $ 1.94 $ (1.63)
Net gain on discontinued operations .......................... 0.16 0.51 0.96 0.01
(Loss) earnings per diluted common share ............. $(0.77) $ 1.39 $ 2.90 $ (1.62)
(1) Restricted stock units that are considered participating securities participate in all of the earnings of the Company in the computation of
basic EPS, and therefore, such restricted stock units are not included as incremental shares in the diluted calculation.
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