Morgan Stanley 2010 Annual Report Download - page 133

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Introduction and Basis of Presentation.
The Company. Morgan Stanley, a financial holding company, is a global financial services firm that maintains
significant market positions in each of its business segments—Institutional Securities, Global Wealth
Management Group and Asset Management. Unless the context otherwise requires, the terms “Morgan Stanley”
and the “Company” mean Morgan Stanley and its consolidated subsidiaries.
A summary of the activities of each of the Company’s business segments is as follows:
Institutional Securities provides capital raising; financial advisory services, including advice on mergers and
acquisitions, restructurings, real estate and project finance; corporate lending; sales, trading, financing and
market-making activities in equity and fixed income securities and related products, including foreign
exchange and commodities; and investment activities.
Global Wealth Management Group, which includes the Company’s 51% interest in Morgan Stanley Smith
Barney Holdings LLC (“MSSB”) (see Note 3), provides brokerage and investment advisory services to
individual investors and small-to-medium sized businesses and institutions covering various investment
alternatives; financial and wealth planning services; annuity and other insurance products; credit and other
lending products; cash management services; retirement services; and trust and fiduciary services and
engages in fixed income principal trading, which primarily facilitates clients’ trading or investments in such
securities.
Asset Management provides a broad array of investment strategies that span the risk/return spectrum across
geographies, asset classes and public and private markets to a diverse group of clients across the
institutional and intermediary channels as well as high net worth clients (see “Discontinued Operations—
Retail Asset Management Business” herein).
Change in Fiscal Year-End.
On December 16, 2008, the Board of Directors of the Company approved a change in the Company’s fiscal
year-end from November 30 to December 31 of each year. This change to the calendar year reporting cycle
began January 1, 2009. As a result of the change, the Company had a one-month transition period in December
2008.
Included in this report are the Company’s consolidated statements of financial condition at December 31, 2010
and December 31, 2009; the consolidated statements of income, comprehensive income, cash flows and changes
in total equity for the 12 months ended December 31, 2010 (“2010”), December 31, 2009 (“2009”) and
November 30, 2008 (“fiscal 2008”) and the one month ended December 31, 2008.
Discontinued Operations.
Retail Asset Management Business. On June 1, 2010, the Company completed the sale of substantially all of its
retail asset management business (“Retail Asset Management”), including Van Kampen Investments, Inc., to
Invesco Ltd. (“Invesco”). The Company received $800 million in cash and approximately 30.9 million shares of
Invesco stock upon the sale, resulting in a cumulative after-tax gain of $682 million, of which approximately
$570 million was recorded in 2010. The remaining gain, representing tax basis benefits, was recorded in the
quarter ended December 31, 2009. The results of Retail Asset Management are reported as discontinued
operations within the Asset Management business segment for all periods presented through the date of sale.
The Company recorded the 30.9 million shares as securities available for sale. In the fourth quarter of 2010, the
Company sold its investment in Invesco, resulting in a pre-tax gain of $102 million recorded in Other revenues.
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