Morgan Stanley 2010 Annual Report Download - page 224

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
From discontinued operations ......................... 41 — — —
Earnings (loss) applicable to common shareholders plus assumed
conversions ......................................... 3,710 (907) 1,495 (1,624)
Weighted average common shares outstanding ............... 1,362 1,185 1,028 1,002
Effect of dilutive securities:
Stock options and RSUs(2) ........................... 5 — 3 —
Equity Units(1)(3) .................................. 44 — — —
Series B Preferred Stock ............................. — — 42 —
Weighted average common shares outstanding and common stock
equivalents .......................................... 1,411 1,185 1,073 1,002
Earnings (loss) per diluted common share:
Income (loss) from continuing operations .................... $ 2.44 $ (0.82) $ 0.95 $ (1.60)
Net gain (loss) from discontinued operations ................. 0.19 0.05 0.44 (0.02)
Earnings (loss) per diluted common share ............... $ 2.63 $ (0.77) $ 1.39 $ (1.62)
(1) See Note 15 for further information on Equity Units.
(2) RSUs that are considered participating securities participate in all of the earnings of the Company in the computation of basic EPS, and
therefore, such RSUs are not included as incremental shares in the diluted calculation.
(3) Prior to the quarter ended June 30, 2010, the Company included the Equity Units in the diluted EPS calculation using the more dilutive
of the two-class method or the treasury stock method. The Equity Units participated in substantially all of the earnings of the Company
(i.e., any earnings above $0.27 per quarter) in basic EPS (assuming a full distribution of earnings of the Company), and therefore, the
Equity Units generally would not have been included as incremental shares in the diluted calculation under the treasury stock
method. Beginning in the quarter ended June 30, 2010, and prior to the redemption of the junior subordinated debentures underlying the
Equity Units and issuance of common stock in the third quarter of 2010, the Company included the Equity Units in the diluted EPS
calculation using the more dilutive of the two-class method or the if-converted method. See Note 2 on the Company’s method for
calculating EPS.
The following securities were considered antidilutive and, therefore, were excluded from the computation of
diluted EPS:
Number of Antidilutive Securities Outstanding at End of Period: 2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
(shares in millions)
RSUs and PSUs ................................................. 38 62 50 72
Stock options ................................................... 67 82 81 99
Equity Units(1) .................................................. — 116 116 116
Warrant issued to U.S. Treasury .................................... — — 65 65
Series B Preferred Stock .......................................... 311 311 — 311
Total ...................................................... 416 571 312 663
(1) See Note 2 and Note 15 for additional information on the Equity Units regarding the change in methodology to the if-converted method
and the redemption of the junior subordinated debentures underlying the Equity Units and issuance of common stock.
218