Morgan Stanley 2010 Annual Report Download - page 222

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Noncontrolling 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 investment in MSCI upon deconsolidation. See Note 1 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 in 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 noncontrolling interests.
Year Ended December 31,
2010 2009
(dollars in millions)
Net income applicable to Morgan Stanley ...................................... $4,703 $1,346
Transfers from the noncontrolling interests:
Increase in paid-in capital in connection with MSSB ......................... — 1,711
Increase in paid-in capital in connection with the MUFG Transaction (see
Note 24) .......................................................... 731 —
Net transfers from noncontrolling interests ..................................... 731 1,711
Change from net income applicable to Morgan Stanley and transfers from noncontrolling
interests .............................................................. $5,434 $3,057
The increase in paid-in capital in connection with MSSB 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 business segment. The excess of the net fair value received by the Company over the increase in
noncontrolling interest associated with Smith Barney is reflected as an increase in paid-in capital. See Note 3 for
further information regarding the MSSB transaction.
In connection with the closing of the transaction between the Company and MUFG to form a joint venture in
Japan (the “MUFG Transaction”) (see Note 24), the Company recorded an after-tax gain of $731 million from
the sale of a noncontrolling interest in its Japanese institutional securities business. The gain was recorded in
Paid-in capital in the Company’s consolidated statements of financial condition at December 31, 2010, and
changes in total equity for the year ended December 31, 2010.
The impact on the Company’s shareholders’ equity from transactions with noncontrolling interests was not
material for fiscal 2008 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 25).
216