Morgan Stanley 2010 Annual Report Download - page 223

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
16. 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 RSUs 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):
2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
Basic EPS:
Income (loss) from continuing operations .................... $5,463 $1,324 $1,238 $(1,269)
Net gain (loss) from discontinued operations ................. 239 82 540 (16)
Net income (loss) ....................................... 5,702 1,406 1,778 (1,285)
Net income applicable to noncontrolling interests ............. 999 60 71 3
Net income (loss) applicable to Morgan Stanley .............. 4,703 1,346 1,707 (1,288)
Less: Preferred dividends (Series A Preferred Stock) ........... (45) (45) (53) (15)
Less: Preferred dividends (Series B Preferred Stock) ........... (784) (784) — (200)
Less: Preferred dividends (Series C Preferred Stock) ........... (52) (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(1) ......................... — (932) (15) (13)
Less: Allocation of earnings to participating RSUs(2):
From continuing operations ........................... (108) (10) (69) (15)
From discontinued operations ......................... (7) — (25) —
Less: Allocation of undistributed earnings to Equity Units(1):
From continuing operations ........................... (101) — (6) —
From discontinued operations ......................... (12) — — —
Earnings (loss) applicable to Morgan Stanley common
shareholders ......................................... $3,594 $ (907) $1,495 $(1,624)
Weighted average common shares outstanding ............... 1,362 1,185 1,028 1,002
Earnings (loss) per basic common share:
Income (loss) from continuing operations .................... $ 2.48 $ (0.82) $ 1.00 $ (1.60)
Net gain (loss) from discontinued operations ................. 0.16 0.05 0.45 (0.02)
Earnings (loss) per basic common share ................. $ 2.64 $ (0.77) $ 1.45 $ (1.62)
Diluted EPS:
Earnings (loss) applicable to Morgan Stanley common
shareholders ......................................... $3,594 $ (907) $1,495 $(1,624)
Impact on income of assumed conversions:
Assumed conversions of Equity Units(1)(3)
From continuing operations ........................... 75 — — —
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