Morgan Stanley 2010 Annual Report Download - page 53

Financial Information and Statistical Data (dollars in millions, except where noted and per share amounts)—
(Continued).
2010 2009(1)
Fiscal
2008
One Month
Ended
December 31,
2008
Fee-based assets as a percentage of total client assets ............. 28% 24% 25% 25%
Client assets per global representative(20) ..................... $ 93 $ 86 $ 65 $ 66
Bank deposits (dollars in billions)(21) ......................... $113 $ 112 $ 36 $ 39
Pre-tax profit margin(16) ................................... 9% 6% 16% 29%
Asset Management(13):
Assets under management or supervision (dollars in billions) ...... $279 $ 266 $ 287 $ 290
Pre-tax profit margin(16) ................................... 27% N/M N/M N/M
N/M—Not Meaningful.
N/A—Not Applicable. Information is not comparable.
(1) Information includes MSSB effective from May 31, 2009 (see Note 3 to the consolidated financial statements).
(2) See Note 1 to the consolidated financial statements for information on discontinued operations.
(3) For the calculation of basic and diluted earnings per share (“EPS”), see Note 16 to the consolidated financial statements.
(4) In 2010, regional net revenues, primarily in the Americas, were negatively impacted by the tightening of the Company’s credit spreads,
which resulted in the increase in the fair value of certain of the Company’s long-term and short-term structured notes. In 2009, regional
net revenues, primarily in Europe, Middle East and Africa, were negatively impacted by the tightening of the Company’s credit spreads.
For a discussion of the Company’s methodology used to allocate revenues among the regions, see Note 23 to the consolidated financial
statements.
(5) The computation of average common equity for each business segment in 2010 is determined using the Company’s Required Capital
framework (“Required Capital Framework”), an internal capital adequacy measure (see “Liquidity and Capital Resources—Required
Capital” herein). Business segment capital prior to 2010 has not been restated under this framework. As a result, the business segments’
return on average common equity from continuing operations prior to 2010 is not available. The Required Capital framework will evolve
over time in response to changes in the business and regulatory environment and to incorporate enhancements in modeling techniques.
The return on average common equity uses income from continuing operations applicable to Morgan Stanley less preferred dividends as
a percentage of average common equity. The effective tax rates used in the computation of business segment return on average common
equity were determined on a separate entity basis. Excluding the effect of the discrete tax benefits in 2010, the return on average common
equity for the Institutional Securities business segment would have been 13% (see “Executive Summary—Significant Items” herein).
(6) Book value per common share equals common shareholders’ equity of $47,614 million at December 31, 2010, $37,091 million at
December 31, 2009, $31,676 million at November 30, 2008 and $29,585 million at December 31, 2008, divided by common shares
outstanding of 1,512 million at December 31, 2010, 1,361 million at December 31, 2009, 1,048 million at November 30, 2008 and
1,074 million at December 31, 2008. Book value per common share in 2010 included a benefit of approximately $1.40 per share due to
the issuance of 116 million shares of common stock corresponding to the mandatory redemption of the junior subordinated debentures
underlying $5.6 billion of equity units (see “Other Matters—Redemption of CIC Equity Units and Issuance of Common Stock” herein).
(7) Tangible common equity is a non-Generally Accepted Accounting Principle (“GAAP”) financial measure that the Company considers to
be a useful measure that the Company and investors use to assess capital adequacy. For a discussion of tangible common equity, see
“Liquidity and Capital Resources—The Balance Sheet” herein.
(8) Tangible book value per common share is a non-GAAP financial measure that the Company considers to be a useful measure that the
Company and investors use to assess capital adequacy. Tangible book value per common share equals tangible common equity divided
by period-end common shares outstanding.
(9) For a discussion of the effective income tax rate, see “Executive Summary—Significant Items” herein.
(10) Worldwide employees at December 31, 2010 and December 31, 2009 include additional worldwide employees of businesses contributed
by Citigroup, Inc. (“Citi”) related to MSSB.
(11) For a discussion of average liquidity, see “Liquidity and Capital Resources—Liquidity Management Policies—Liquidity Reserves”
herein.
(12) Tier 1 common ratio is a non-GAAP financial measure that the Company considers to be a useful measure that the Company and
investors use to assess capital adequacy. For a discussion of total capital ratio, Tier 1 capital ratio and Tier 1 leverage ratio, see
“Liquidity and Capital Resources—Regulatory Requirements” herein. For a discussion of Tier 1 common ratio, see “Liquidity and
Capital Resources—The Balance Sheet” herein.
(13) Amount excludes substantially all of the Company’s retail asset management business (“Retail Asset Management”) that was sold to
Invesco Ltd. (“Invesco”) (see “Executive Summary—Significant Items” herein).
(14) Revenues and expenses associated with these assets are included in the Company’s Asset Management and Global Wealth Management
Group business segments.
(15) Amounts include Asset Management’s proportionate share of assets managed by entities in which it owns a minority stake.
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