Morgan Stanley 2010 Annual Report Download - page 57

Real Estate Investments. The Company recorded gains (losses) in the following business segments related to
real estate investments. These amounts exclude investments associated with certain deferred compensation and
employee co-investment plans.
2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
(dollars in billions)
Institutional Securities
Continuing operations(1) ................................... $0.2 $(0.8) $(1.2) $(0.1)
Discontinued operations(2) .................................. (1.2) — — —
Total Institutional Securities ............................. (1.0) (0.8) (1.2) (0.1)
Asset Management:
Continuing operations(3) ................................... 0.5 (0.5) (0.6) —
Discontinued operations(2) .................................. — (0.6) (0.5) —
Total Asset Management ................................ 0.5 (1.1) (1.1) —
Amounts applicable to noncontrolling interests ...................... 0.5 — — —
Total ........................................... $(1.0) $(1.9) $(2.3) $(0.1)
(1) Gains (losses) related to net realized and unrealized gains (losses) from the Company’s limited partnership investments in real estate
funds and are reflected in Principal transactions—Investments in the consolidated statements of income.
(2) On March 31, 2010, the Board of Directors authorized a plan of disposal by sale for Revel. The results of Revel, including the estimated
loss from the planned disposal, are reported as discontinued operations for all periods presented within the Institutional Securities
business segment. In the Asset Management business segment, amounts related to the disposition of Crescent Real Estate Equities
Limited Partnership (“Crescent”), which was disposed in the fourth quarter of 2009 (see Note 1 to the consolidated financial statements).
(3) Gains (losses) related to net realized and unrealized gains (losses) from real estate investments in the Company’s merchant banking
business and are reflected in Principal transactions—Investments in the consolidated statements of income.
See “Other Matters—Real Estate” herein for further information.
Income Tax Benefit. The Company recognized tax benefits of $382 million related to the reversal of U.S.
deferred tax liabilities associated with prior-years’ undistributed earnings of certain non-U.S. subsidiaries that
were determined to be indefinitely reinvested abroad, $345 million associated with the remeasurement of net
unrecognized tax benefits and related interest based on new information regarding the status of federal and state
examinations, and $277 million associated with the planned repatriation of non-U.S. earnings at a cost lower than
originally estimated. The Company recognized a tax benefit of $331 million in 2009, resulting from the cost of
anticipated repatriation of non-U.S. earnings at lower than previously estimated tax rates.
Morgan Stanley Debt. Net revenues reflected negative revenues of $873 million, $5.5 billion and $0.2 billion in
2010, 2009 and the one month ended December 31, 2008, respectively, from the tightening of the Company’s
credit spreads, and gains of $5.6 billion in fiscal 2008 from the widening of the Company’s credit spreads on
certain long-term and short-term borrowings, including structured notes and junior subordinated debentures that
are accounted for at fair value.
In addition, in 2009, fiscal 2008 and the one month ended December 31, 2008, the Company recorded gains of
approximately $491 million, $2.3 billion and $73 million, respectively, from repurchasing its debt in the open
market. In fiscal 2008, the Company also recorded mark-to-market gains of approximately $1.4 billion on certain
swaps previously designated as hedges of a portion of the Company’s long-term debt. These swaps were no
longer considered hedges once the related debt was repurchased by the Company (i.e., the swaps were
“de-designated” as hedges). During the period the swaps were hedging the debt, changes in fair value of these
instruments were generally offset by adjustments to the basis of the debt being hedged.
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