Morgan Stanley 2014 Annual Report Download - page 272

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
16. Earnings per Common Share.
Basic EPS is computed by dividing earnings (loss) applicable 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 and determines whether instruments granted in share-based payment
transactions are participating securities (see Note 2). The following table presents the calculation of basic and
diluted EPS (in millions, except for per share data):
2014 2013 2012
Basic EPS:
Income from continuing operations .................................... $3,681 $3,656 $ 757
Income (loss) from discontinued operations ............................. (14) (43) (41)
Net income ....................................................... 3,667 3,613 716
Net income applicable to redeemable noncontrolling interests ............... — 222 124
Net income applicable to nonredeemable noncontrolling interests ............ 200 459 524
Net income applicable to Morgan Stanley ............................... 3,467 2,932 68
Less: Preferred dividends (Series A Preferred Stock) ...................... (45) (44) (44)
Less: Preferred dividends (Series C Preferred Stock) ...................... (52) (52) (52)
Less: Preferred dividends (Series E Preferred Stock) ...................... (61) (18) —
Less: Preferred dividends (Series F Preferred Stock) ...................... (58) (6) —
Less: Preferred dividends (Series G Preferred Stock) ...................... (24) — —
Less: Preferred dividends (Series H Preferred Stock) ...................... (50) — —
Less: Preferred dividends (Series I Preferred Stock) ....................... (21) — —
Less: Wealth Management JV redemption value adjustment (see Note 3) ...... — (151) —
Less: Allocation of (earnings) loss to participating RSUs(1):
From continuing operations ...................................... (4) (6) (2)
Earnings (loss) applicable to Morgan Stanley common shareholders .......... $3,152 $2,655 $ (30)
Weighted average common shares outstanding ........................... 1,924 1,906 1,886
Earnings (loss) per basic common share:
Income from continuing operations .................................... $ 1.65 $ 1.42 $ 0.02
Income (loss) from discontinued operations ............................. (0.01) (0.03) (0.04)
Earnings (loss) per basic common share ............................ $ 1.64 $ 1.39 $ (0.02)
Diluted EPS:
Earnings (loss) applicable to Morgan Stanley common shareholders .......... $3,152 $2,655 $ (30)
Weighted average common shares outstanding ........................... 1,924 1,906 1,886
Effect of dilutive securities:
Stock options and RSUs(1) ...................................... 47 51 33
Weighted average common shares outstanding and common stock
equivalents ..................................................... 1,971 1,957 1,919
Earnings (loss) per diluted common share:
Income from continuing operations .................................... $ 1.61 $ 1.38 $ 0.02
Income (loss) from discontinued operations ............................. (0.01) (0.02) (0.04)
Earnings (loss) per diluted common share ........................... $ 1.60 $ 1.36 $ (0.02)
(1) 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.
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