Morgan Stanley 2009 Annual Report Download - page 224

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(3) Income from continuing operations for the Institutional Securities business segment includes correction of prior-period errors of $171
million ($120 million after-tax), $0.11 per diluted share, due to the reversal of valuation adjustments related to interest rate derivatives,
and a cumulative negative adjustment of $120 million ($84 million after-tax), $0.08 per diluted share, resulting from incorrect valuations
of a London-based trader’s positions. The positive adjustment of $171 million related to fiscal 2006. The negative adjustment of $120
million increased income from continuing operations on a pre-tax basis by $45 million and $75 million in fiscal 2007 and fiscal 2008,
respectively. The Company does not believe the adjustments, which were recorded in the period identified, were material to those
consolidated financial statements after considering both the quantitative amount and qualitative factors as related to the affected financial
statements.
(4) The results of the Institutional Securities business segment for fiscal 2007 included a $25 million advisory fee related to the Discover
Spin-off that was eliminated in consolidation.
Net Interest
Institutional
Securities
Global Wealth
Management
Group
Asset
Management
Intersegment
Eliminations Total
(dollars in millions)
2009
Interest and dividends .................... $ 6,588 $1,114 $ 27 $ (27) $ 7,702
Interest expense ........................ 6,503 453 101 (345) 6,712
Net interest ........................ $ 85 $ 661 $(74) $ 318 $ 990
Fiscal 2008
Interest and dividends .................... $38,330 $1,239 $153 $ (43) $39,679
Interest expense ........................ 35,908 305 206 (107) 36,312
Net interest ........................ $ 2,422 $ 934 $ (53) $ 64 $ 3,367
Fiscal 2007
Interest and dividends .................... $59,126 $1,221 $ 65 $(343) $60,069
Interest expense ........................ 57,066 511 94 (388) 57,283
Net interest ........................ $ 2,060 $ 710 $ (29) $ 45 $ 2,786
One Month Ended December 31, 2008
Interest and dividends .................... $ 1,222 $ 66 $ 11 $ (2) $ 1,297
Interest expense ........................ 1,107 15 10 (8) 1,124
Net interest ........................ $ 115 $ 51 $ 1 $ 6 $ 173
Total Assets(1)
Institutional
Securities
Global Wealth
Management
Group
Asset
Management Total
(dollars in millions)
At December 31, 2009 ............................. $719,232 $44,154 $ 8,076 $771,462
At December 31, 2008 ............................. $639,866 $24,273 $12,625 $676,764
(1) Corporate assets have been fully allocated to the Company’s business segments.
The Company operates in both U.S. and non-U.S. markets. The Company’s non-U.S. business activities are
principally conducted through European and Asian locations. The following tables present selected income
statement information and total assets of the Company’s operations by geographic area. The selected income
statement information and total assets disclosed in the following tables reflect the regional view of the
Company’s consolidated net revenues, income (loss) from continuing operations before income taxes, net income
(loss) applicable to Morgan Stanley and total assets, on a managed basis, based on the following methodology:
• Institutional Securities: advisory and equity underwriting—client location, debt underwriting—revenue
recording location, sales and trading—trading desk location.
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