Morgan Stanley 2015 Annual Report Download - page 50

At
December 31, 2015
At
December 31, 2014
Tangible book value per common share(14) .................................. $ 30.26 $ 28.26
EMEA—Europe, Middle East and Africa.
DVA—Debt valuation adjustment represents the change in the fair value of certain of the Company’s long-term and short-
term borrowings resulting from the fluctuation in its credit spreads and other credit factors.
N/M—Not Meaningful.
(1) The Institutional Securities business segment’s net income applicable to noncontrolling interests was $133 million, $109
million and $278 million in 2015, 2014 and 2013, respectively. The Wealth Management business segment’s net income
applicable to noncontrolling interests was $221 million in 2013. The Investment Management business segment’s net
income applicable to noncontrolling interests was $19 million, $91 million and $182 million in 2015, 2014 and 2013,
respectively. See Note 15 to the consolidated financial statements in Item 8 for further information.
(2) Pre-tax profit margin is a non-GAAP financial measure that the Company considers to be a useful measure to the
Company and investors to assess operating performance. Percentages represent income from continuing operations
before income taxes as a percentage of net revenues.
(3) The computation of average common equity for each business segment is determined using the Company’s Required
Capital framework, an internal capital adequacy measure (see “Liquidity and Capital Resources—Regulatory
Requirements—Required Capital” herein). The calculation of each business segment’s return on average common equity
equals net income applicable to Morgan Stanley less preferred dividends as a percentage of each business segment’s
average common equity. The effective tax rates used in the computation of each business segment’s return on average
common equity were determined on a separate legal entity basis. Average common equity and the return on average
common equity for each business segment are non-GAAP financial measures that the Company considers to be useful
measures to the Company and investors to assess capital adequacy and to allow better comparability of period-to-period
operating performance, respectively.
(4) The calculation of return on average common equity equals consolidated net income applicable to Morgan Stanley less
preferred dividends as a percentage of average common equity. To determine the return on average common equity,
excluding DVA, and excluding DVA and net discrete tax benefits, both the numerator and denominator were adjusted to
exclude those items. Average common equity, the return on average common equity, and average common equity and
the return on average common equity, both excluding DVA, and excluding DVA and net discrete tax benefits, are non-
GAAP financial measures that the Company considers useful for investors to assess capital adequacy and to allow better
comparability of period-to-period operating performance.
(5) For a discussion regarding the geographic methodology for net revenues, see Note 21 to the consolidated financial
statements in Item 8.
(6) For a discussion of Global Liquidity Reserve, see “Liquidity and Capital Resources—Liquidity Risk Management
Framework—Global Liquidity Reserve” herein.
(7) For a discussion of the Company’s methods for calculating its risk-based capital ratios, see “Liquidity and Capital
Resources—Regulatory Requirements” herein.
(8) See Note 14 to the consolidated financial statements in Item 8 for information on the Tier 1 leverage ratio.
(9) Amounts exclude the Investment Management business segment’s proportionate share of assets managed by entities in
which it owns a minority stake and assets for which fees are not generated. For 2015, amounts include $4.6 billion of
inflows related to the transfer of certain portfolio managers and their portfolios from the Wealth Management business
segment to the Investment Management business segment.
(10) For a discussion of the Company’s net discrete tax benefits, see “Supplemental Financial Information and Disclosures—
Income Tax Matters” herein.
(11) The impact of DVA on average common equity and average tangible common equity was $(637) million, $(1,108)
million and $(1,057) million in 2015, 2014 and 2013, respectively. The impact of net discrete tax benefits on average
common equity and average tangible common equity was approximately $434 million, $713 million and $146 million in
2015, 2014 and 2013, respectively.
(12) The impact of DVA on return on average common equity was 0.7%, 0.7% and (0.6)% in 2015, 2014 and 2013,
respectively. The impact of net discrete tax benefits on return on average common equity was 0.8%, 3.3% and 0.6% in
2015, 2014 and 2013, respectively.
44