Morgan Stanley (MS) 10-Q 7 Aug 09 2009 Q2 Quarterly report Financial data

Statement Of Financial Position

Statement Of Financial Position Unclassified - Deposit Based Operations (USD $)
In Millions	Jun. 30, 2009	Dec. 31, 2008	Nov. 30, 2008
Assets
Cash and due from banks	$9,184	$13,354	$11,276
Interest bearing deposits with banks	25,822	65,316	67,378
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements	21,643	24,039	25,446
Financial instruments owned, at fair value (approximately $78 billion, $73 billion and $62 billion were pledged to various parties at June 30, 2009, December 31, 2008 and November 30, 2008, respectively):
U.S. government and agency securities	63,717	28,012	20,251
Other sovereign government obligations	26,768	21,084	20,071
Corporate and other debt	87,802	87,294	88,484
Corporate equities	42,582	42,321	37,174
Derivative and other contracts	58,372	89,418	99,766
Investments	8,825	10,385	10,598
Physical commodities	3,343	2,126	2,204
Total financial instruments owned, at fair value	291,409	280,640	278,548
Securities received as collateral, at fair value	9,872	5,231	5,217
Federal funds sold and securities purchased under agreements to resell	121,799	122,709	106,419
Securities borrowed	107,853	88,052	85,785
Receivables:
Customers	28,410	29,265	31,294
Brokers, dealers and clearing organizations	5,098	6,250	7,259
Other loans	5,814	6,547	6,528
Fees, interest and other	11,348	7,258	7,034
Other investments	3,796	3,709	3,309
Premises, equipment and software costs (net of accumulated depreciation of $4,108, $3,073 and $3,003 at June 30, 2009, December 31, 2008 and November 30, 2008, respectively)	6,548	5,095	5,057
Goodwill	6,836	2,256	2,243
Intangible assets (net of accumulated amortization of $272, $208 and $200 at June 30, 2009, December 31, 2008 and November 30, 2008, respectively) (includes $173, $184 and $220 at fair value at June 30, 2009, December 31, 2008 and November 30, 2008, respectively)	5,553	906	947
Other assets	15,972	16,137	15,295
Total assets	676,957	676,764	659,035
Liabilities and Equity
Commercial paper and other short-term borrowings (includes $1,062, $1,246 and $1,412 at fair value at June 30, 2009, December 31, 2008 and November 30, 2008, respectively)	3,030	10,102	10,483
Deposits (includes $9,171, $9,993 and $6,008 at fair value at June 30, 2009, December 31, 2008 and November 30, 2008, respectively)	62,382	51,355	42,755
Financial instruments sold, not yet purchased, at fair value:
U.S. government and agency securities	21,072	11,902	10,156
Other sovereign government obligations	17,244	9,511	9,360
Corporate and other debt	7,150	9,927	9,361
Corporate equities	21,649	16,840	16,547
Derivative and other contracts	43,435	68,554	73,521
Physical commodities	11	33	0
Total financial instruments sold, not yet purchased, at fair value	110,561	116,767	118,945
Obligation to return securities received as collateral, at fair value	9,872	5,231	5,217
Securities sold under agreements to repurchase	91,935	92,213	102,401
Securities loaned	18,002	14,580	14,821
Other secured financings, at fair value	10,148	12,539	12,527
Payables:
Customers	105,731	123,617	115,225
Brokers, dealers and clearing organizations	5,407	1,585	3,141
Interest and dividends	2,674	3,305	2,584
Other liabilities and accrued expenses	18,960	16,179	15,963
Long-term borrowings (includes $35,309, $30,766 and $28,830 at fair value at June 30, 2009, December 31, 2008 and November 30, 2008, respectively)	186,792	179,835	163,437
Liabilities, Total	625,494	627,308	607,499
Commitments and contingencies	0	0	0
Morgan Stanley shareholders' equity:
Preferred stock	9,597	19,168	19,155
Common stock, $0.01 par value; Shares authorized: 3,500,000,000 at June 30, 2009, December 31, 2008 and November 30, 2008; Shares issued: 1,487,850,163 at June 30, 2009, 1,211,701,552 at December 31, 2008 and November 30, 2008; Shares outstanding: 1,359,204,010 at June 30, 2009, 1,074,497,565 at December 31, 2008 and 1,047,598,394 at November 30, 2008	15	12	12
Paid-in capital	9,214	459	1,619
Retained earnings	34,245	36,154	38,096
Employee stock trust	4,163	4,312	3,901
Accumulated other comprehensive loss	(342)	(420)	(125)
Common stock held in treasury, at cost, $0.01 par value; 128,646,153 shares at June 30, 2009, 137,203,987 shares at December 31, 2008 and 164,103,158 shares at November 30, 2008	(6,143)	(6,620)	(7,926)
Common stock issued to employee trust	(4,163)	(4,312)	(3,901)
Total Morgan Stanley shareholders' equity	46,586	48,753	50,831
Non-controlling interests	4,877	703	705
Total equity	51,463	49,456	51,536
Total liabilities and equity	$676,957	$676,764	$659,035

1_Statement Of Financial Positi

Statement Of Financial Position Unclassified - Deposit Based Operations (Parenthetical) (USD $)
	Jun. 30, 2009	Dec. 31, 2008	Nov. 30, 2008
Financial instruments owned, pledged	$78,000,000,000	$73,000,000,000	$62,000,000,000
Premises, equipment and software costs, accumulated depreciation	4,108,000,000	3,073,000,000	3,003,000,000
Intangible assets, accumulated amortization	272,000,000	208,000,000	200,000,000
Intangible assets, fair value	173,000,000	184,000,000	220,000,000
Commercial paper and other short-term borrowings, fair value	1,062,000,000	1,246,000,000	1,412,000,000
Deposits, fair value	9,171,000,000	9,993,000,000	6,008,000,000
Long-term borrowings, fair value	$35,309,000,000	$30,766,000,000	$28,830,000,000
Common stock, par value	0.01	0.01	0.01
Common stock, shares authorized	3,500,000,000	3,500,000,000	3,500,000,000
Common stock, shares issued	1,487,850,163	1,211,701,552	1,211,701,552
Common stock, shares outstanding	1,359,204,010	1,074,497,565	1,047,598,394
Common stock held in treasury, shares	128,646,153	137,203,987	164,103,158

Statement Of Income Interest Ba

Statement Of Income Interest Based Revenue (USD $)
In Millions, except Share data	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Revenues:
Investment banking	$1,281	$1,288	$2,167	$2,259
Principal transactions:
Trading	1,971	2,094	3,062	4,888
Investments	(115)	(308)	(1,387)	(824)
Commissions	975	1,116	1,747	2,381
Asset management, distribution and administration fees	1,282	1,473	2,266	2,946
Other	505	315	836	1,224
Total non-interest revenues	5,899	5,978	8,691	12,874
Interest and dividends	1,393	9,196	3,917	21,906
Interest expense	1,881	9,063	4,251	20,851
Net interest	(488)	133	(334)	1,055
Net revenues	5,411	6,111	8,357	13,929
Non-interest expenses:
Compensation and benefits	3,875	3,108	5,911	6,911
Occupancy and equipment	376	325	715	614
Brokerage, clearing and exchange fees	290	421	559	891
Information processing and communications	317	300	603	605
Marketing and business development	127	196	244	391
Professional services	405	487	727	852
Other	640	388	1,125	776
Total non-interest expenses	6,030	5,225	9,884	11,040
(Losses) income from continuing operations before income taxes	(619)	886	(1,527)	2,889
(Benefit from) provision for income taxes	(333)	192	(1,037)	785
(Loss) income from continuing operations	(286)	694	(490)	2,104
Discontinued operations:
Gain from discontinued operations (including gain on disposal of $499 million in the three and six months ended June 30, 2009)	515	761	537	797
Provision for income taxes	196	296	204	310
Gain on discontinued operations	319	465	333	487
Net income (loss)	33	1,159	(157)	2,591
Net (loss) income applicable to non-controlling interests	(116)	16	(129)	35
Net income (loss) applicable to Morgan Stanley	149	1,143	(28)	2,556
(Losses) earnings applicable to Morgan Stanley common shareholders	(1,256)	1,062	(1,834)	2,374
Amounts applicable to Morgan Stanley:
(Losses) income from continuing operations	(159)	689	(345)	2,084
Net gain from discontinued operations after tax	308	454	317	472
Net income (loss) applicable to Morgan Stanley	$149	$1,143	($28)	$2,556
(Losses) earnings per basic common share:
(Loss) income from continuing operations	-1.37	0.61	($2)	1.86
Gain on discontinued operations	0.27	0.41	0.29	0.43
(Loss) earnings per basic common share	-1.1	1.02	-1.71	2.29
(Losses) earnings per diluted common share:
(Loss) income from continuing operations	-1.37	0.61	($2)	1.85
Gain on discontinued operations	0.27	0.41	0.29	0.43
(Losses) earnings per diluted common share	-1.1	1.02	-1.71	2.28
Average common shares outstanding:
Basic	1,138,444,490	1,041,178,821	1,075,092,850	1,037,760,625
Diluted	1,138,444,490	1,044,720,912	1,075,092,850	1,041,873,895

2_Statement Of Income Interest

Statement Of Income Interest Based Revenue (Parenthetical) (USD $)
In Millions	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Gain from discontinued operations, gain on disposal	$499	$0	$499	$0

Statement Of Other Comprehensiv

Statement Of Other Comprehensive Income (USD $)
In Millions	3 Months Ended Jun. 30, 2009		3 Months Ended Jun. 30, 2008		6 Months Ended Jun. 30, 2009		6 Months Ended Jun. 30, 2008
Net income (loss)	$33		$1,159		($157)		$2,591
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	118	[2]	(92)	[2]	58	[2]	(50)	[2]
Net change in cash flow hedges	5	[3]	6	[3]	8	[3]	9	[3]
Amortization of net loss related to pension and postretirement benefits	5	[4]	5	[4]	12	[4]	10	[4]
Amortization of prior service credit related to pension and postretirement benefits	(1)	[1]	(1)	[1]	(3)	[1]	(2)	[1]
Comprehensive income (loss)	160		1,077		(82)		2,558
Net income (loss) applicable to non-controlling interests	(116)		16		(129)		35
Other comprehensive income (loss) applicable to non-controlling interests	(3)		(5)		(3)		(5)
Comprehensive income applicable to Morgan Stanley	$279		$1,066		$50		$2,528
[1]Amounts are net of provision for (benefit from) income taxes of $(1) million for the quarter ended June 30, 2008. Amounts are net of provision for (benefit from) income taxes of $(1) million and $(2) million for the six month periods ended June 30, 2009 and June 30, 2008, respectively.
[2]Amounts are net of provision for (benefit from) income taxes of $(241) million and $(5) million for the quarters ended June 30, 2009 and June 30, 2008, respectively. Amounts are net of provision for (benefit from) income taxes of $(211) million and $(166) million for the six month periods ended June 30, 2009 and June 30, 2008, respectively.
[3]Amounts are net of provision for (benefit from) income taxes of $2 million and $4 million for the quarters ended June 30, 2009 and June 30, 2008, respectively. Amounts are net of provision for (benefit from) income taxes of $4 million and $6 million for the six month periods ended June 30, 2009 and June 30, 2008, respectively.
[4]Amounts are net of provision for income taxes of $5 million and $3 million for the quarters ended June 30, 2009 and June 30, 2008, respectively. Amounts are net of provision for income taxes of $9 million and $6 million for the six month periods ended June 30, 2009 and June 30, 2008, respectively.

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect Deposit Based Operations (USD $)
In Millions	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008	Dec. 31, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$33	$1,159	($157)	$2,591
Adjustments to reconcile net income (loss) to net cash (used for) provided by operating activities:
Compensation payable in common stock and options			627	1,279
Depreciation and amortization			363	238
(Gain) on business dispositions			(480)	(1,500)
Impairment charges			408	0
Changes in assets and liabilities:
Cash deposited with clearing organizations or segregated under federal and other regulations or requirements			2,396	(6,357)
Financial instruments owned, net of financial instruments sold, not yet purchased			(16,344)	52,926
Securities borrowed			(19,801)	(31,718)
Securities loaned			3,422	(61,770)
Receivables and other assets			(2,462)	13,496
Payables and other liabilities			(10,073)	82,799
Federal funds sold and securities purchased under agreements to resell			910	(3,095)
Securities sold under agreements to repurchase			(278)	(13,668)
Net cash (used for) provided by operating activities			(41,469)	35,221
Net (payments for) proceeds from:
Premises, equipment and software costs			(1,879)	(973)
Business acquisitions, net of cash acquired			(1,860)	(174)
Business dispositions			565	1,523
Net cash (used for) provided by investing activities			(3,174)	376
Net (payments for) proceeds from:
Short-term borrowings			(7,072)	(10,206)
Derivatives financing activities			(71)	146
Other secured financings			(2,391)	2,529
Deposits			11,027	3,394
Excess tax benefits associated with stock-based awards			11	63
Net proceeds from:
Morgan Stanley public offerings of common stock			6,212	0
Issuance of common stock			29	264
Issuance of long-term borrowings			28,805	26,685
Payments for:
Repayments of long-term borrowings			(24,675)	(20,783)
Redemption of Series D Preferred Stock			(10,000)	0
Repurchases of common stock for employee tax withholding			(19)	(64)
Cash dividends			(1,078)	(626)
Net cash (used for) provided by financing activities			778	1,402
Effect of exchange rate changes on cash and cash equivalents			201	1,105
Net (decrease) increase in cash and cash equivalents			(43,664)	38,104
Cash and cash equivalents, at beginning of period			78,670	24,659
Cash and cash equivalents, at end of period	35,006	62,763	35,006	62,763	78,670
Cash and cash equivalents include:
Cash and due from banks			9,184	7,317	13,354
Interest bearing deposits with banks			25,822	55,446	65,316
Cash and cash equivalents, at end of period	$35,006	$62,763	$35,006	$62,763	$78,670

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
In Millions	Preferred Stock [Member]	Common Stock	Paid-in Capital	Retained Earnings	Employee Stock Trust	Accumulated Other Comprehensive Income (Loss)	Common Stock Held in Treasury at Cost	Common Stock Issued to Employee Trust	Non-controlling Interest	Other Morgan Stanley Common Equity	Total
BEGINNING BALANCE at Dec. 31, 2007	$1,100	$12							$1,571	$30,665	$33,348
Net income									35	2,556	2,591
Dividends									(33)	(622)	(655)
Issuance of common stock										264	264
Repurchases of common stock										(64)	(64)
Compensation payable in common stock and options										1,446	1,446
Net excess tax benefits (shortfall) associated with stock-based awards										(12)	(12)
Employee tax withholdings and other										(4)	(4)
Net change in cash flow hedges										9	9	[1]
Pension and other postretirement adjustments										8	8
Foreign currency translation adjustments									(5)	(45)	(50)
Other										(60)	(60)
Increases in non-controlling interests related to MSSB transaction									66		66
Decreases in non-controlling interests related to disposition of a subsidiary									(514)		(514)
Other increases in non-controlling interests									7		7
ENDING BALANCE at Jun. 30, 2008	1,100	12							1,127	34,141	36,380
BEGINNING BALANCE at Mar. 31, 2008	1,100	12
ENDING BALANCE at Jun. 30, 2008	1,100	12
BEGINNING BALANCE at Dec. 31, 2008	19,168	12	459	36,154	4,312	(420)	(6,620)	(4,312)	703		49,456
Net income				(28)					(129)		(157)
Dividends				(747)					(11)		(758)
Issuance of common stock			(176)				217				41
Repurchases of common stock							(19)				(19)
Morgan Stanley public offerings of common stock		3	6,209								6,212
Preferred stock extinguished and exchanged for common stock	(503)		705	(202)							0
Repurchase of Series D preferred stock	(9,068)			(932)							(10,000)
Gain on MSSB transaction			1,711								1,711
Compensation payable in common stock and options			333		(149)		279	149			612
Net excess tax benefits (shortfall) associated with stock-based awards			(27)								(27)
Net change in cash flow hedges						8					8	[1]
Pension and other postretirement adjustments						9					9
Foreign currency translation adjustments						61			(3)		58
Increases in non-controlling interests related to MSSB transaction									4,533		4,533
Decreases in non-controlling interests related to disposition of a subsidiary									(229)		(229)
Other increases in non-controlling interests									13		13
ENDING BALANCE at Jun. 30, 2009	$9,597	$15	$9,214	$34,245	$4,163	($342)	($6,143)	($4,163)	$4,877		$51,463
[1]Amounts are net of provision for (benefit from) income taxes of $2 million and $4 million for the quarters ended June 30, 2009 and June 30, 2008, respectively. Amounts are net of provision for (benefit from) income taxes of $4 million and $6 million for the six month periods ended June 30, 2009 and June 30, 2008, respectively.

Notes to Financial Statements

Notes to Financial Statements
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
1.Basis of Presentation and Summary of Significant Accounting Policies.	1. Basis of Presentation and Summary of Significant Accounting Policies. The Company.Morgan Stanley (or the Company) is a global financial services firm that maintains significant market positions in each of its business segmentsInstitutional Securities, Global Wealth Management Group and Asset Management. A summary of the activities of each of the Companys business segments is as follows: Institutional Securities includes capital raising; financial advisory services, including advice on mergers and acquisitions, restructurings, real estate and project finance; corporate lending; sales, trading, financing and market-making activities in equity and fixed income securities and related products, including foreign exchange and commodities; and investment activities. Global Wealth Management Group, which includesthe Companys 51% interestin Morgan Stanley Smith Barney Holdings LLC (MSSB), provides brokerage and investment advisory services covering various investment alternatives; financial and wealth planning services; annuity and other insurance products; credit and other lending products; cash management services; retirement services; and trust and fiduciary services. Asset Management provides global asset management products and services in equity, fixed income, alternative investments, which includes hedge funds and funds of funds, and merchant banking, which includes real estate, private equity and infrastructure, to institutional and retail clients through proprietary and third-party distribution channels. Asset Management also engages in investment activities. Discontinued Operations. MSCI.InMay 2009, the Companydivested all of its remaining ownership interest in MSCI Inc.(MSCI). The results of MSCI are reported as discontinued operations for all periods presented. The results of MSCI were formerly included in the continuing operations of the Institutional Securities business segment. See Note19 for additional information on discontinued operations. Basis of Financial Information.The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require the Company to make estimates and assumptions regarding the valuations of certain financial instruments, the valuation of goodwill, the outcome of litigation and tax matters, incentive-based accruals and other matters that affect the condensed consolidated financial statements and related disclosures. The Company believes that the estimates utilized in the preparation of the condensed consolidated financial statements are prudent and reasonable. Actual results could differ materially from these estimates. Certain reclassifications have been made to prior-period amounts to conform to the current periods presentation. All material intercompany balances and transactions have been eliminated. The condensed consolidated financial statements should be read in conjunction with the Companys consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended November30, 2008 (the Form 10-K). The condensed consolidated financial stateme
2.Morgan Stanley Smith Barney Holdings LLC.	2. Morgan Stanley Smith Barney Holdings LLC. On May31, 2009 (the Closing Date), the Company and Citigroup Inc. (Citi) consummated the previously announced combination of the Companys Global Wealth Management Group and the businesses of Citis Smith Barney in the U.S., Quilter in the U.K., and Smith Barney Australia (Smith Barney). In addition to the Companys contribution of respective businesses to MSSB, the Company paid Citi $2,755million in cash. The combined businesses operate as Morgan Stanley Smith Barney Holdings LLC (MSSB), which the Company consolidates. Pursuant to the terms of the amended contribution agreement, certain businesses of Smith Barney and Morgan Stanley will be contributed to MSSB subsequent to May31, 2009 (the delayed contribution businesses). Citi will own the delayed contribution businesses until they are transferred to MSSB and gains and losses from such businesses will be allocated to the Companys and Citis respective share of MSSBs gains and losses. The Company owns 51% and Citi owns 49% of MSSB, with the Company appointing four directors to the MSSB board and Citi appointing two directors. As part of the acquisition, the Company has the option (i) following the third anniversary of the Closing Date to purchase a portion of Citis interest in MSSB representing 14% of the total outstanding MSSB interests, (ii)following the fourth anniversary of the Closing Date to purchase a portion of Citis interest in MSSB representing an additional 15% of the total outstanding MSSB interests and (iii)following the fifth anniversary of the Closing Date to purchase the remainder of Citis interest in MSSB. The Company may call all of Citis interest in MSSB upon a change in control of Citi. Citi may put all of its interest in MSSB to the Company upon a change in control of the Company or following the later of the sixth anniversary of the Closing Date and the one-year anniversary of the Companys exercise of the call described in clause (ii)above. The purchase price for the call and put rights described above is the fair market value of the purchased interests determined pursuant to an appraisal process. Pursuant to the amended contribution agreement, dated as of May29, 2009, and the Managed Futures Contribution and Interest Purchase Agreement, dated as of July31, 2009, Citi contributed its managed futures business and certain related proprietary trading positions to MSSB on July 31, 2009, and the Company paid Citi approximately $300million in connection with this transfer. The Company accounted for this transaction using the acquisition method of accounting. As this acquisition was recently completed, the Company is in the process of valuing the assets acquired and liabilities assumed. As of May31, 2009, the Company includes MSSB in its condensed consolidated financial statements. The results of MSSB are included within the Global Wealth Management Group business segment. See Note 11 for further information on MSSB. The Company accounted for the transaction using the acquisition method of accounting. The fair value of the total consideration transferred to Citi amounted to approximately $6,087 million and the prelimin
3.Fair Value Disclosures.	3. Fair Value Disclosures. Fair Value Measurements. A description of the valuation techniques applied to the Companys major categories of assets and liabilities measured at fair value on a recurring basis follows. Financial Instruments Owned and Financial Instruments Sold, Not Yet Purchased U.S. Government and Agency Securities U.S. Treasury Securities.U.S. treasury securities are valued using quoted market prices. Valuation adjustments are not applied. Accordingly, U.S. treasury securities are generally categorized in Level1 of the fair value hierarchy. U.S. Agency Securities.U.S. agency securities are comprised of two main categories consisting of agency issued debt and mortgage pass-throughs. Non-callable agency issued debt securities are generally valued using quoted market prices. Callable agency issued debt securities are valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. Mortgage pass-throughs include certain To-be-announced (TBA) securities and mortgage pass-through pools. TBA securities are generally valued using quoted market prices or are benchmarked thereto. Fair value ofmortgage pass-through pools are model driven with respect to spreads of the comparable TBA security. Actively traded non-callable agency issued debt securities and TBA securities are categorized in Level 1 of the fair value hierarchy. Callable agency issued debt securities and mortgage pass-through certificates are generally categorized in Level 2 of the fair value hierarchy. Other Sovereign Government Obligations Foreign sovereign government obligations are valued using quoted prices in active markets when available. To the extent quoted prices are not available, fair value is determined based on a valuation model that has as inputs interest rate yield curves, cross-currency basis index spreads, and country credit spreads for structures similar to the bond in terms of issuer, maturity and seniority. These bonds are generally categorized in Levels 1 or 2 of the fair value hierarchy. Corporate and Other Debt State and Municipal Securities.The fair value of state and municipal securities is estimated using recently executed transactions, market price quotations and pricing models that factor in, where applicable, interest rates, bond or credit default swap spreads and volatility. These bonds are generally categorized in Level 2 of the fair value hierarchy. Residential Mortgage-Backed Securities (RMBS), Commercial Mortgage-Backed Securities (CMBS), and other Asset-Backed Securities (ABS).RMBS, CMBS and other ABS may be valued based on external price or spread data. When position-specific external price data are not observable, the valuation is based on prices of comparable bonds. Valuation levels of RMBS and CMBS indices are used as an additional data point for benchmarking purposes or to price outright index positions. Fair value for retainedinterests in securitized financial assets(in the form of one or more tranches of the securitization) is determined usingobservable pricesor,in cases where observablepr
4.Collateralized Transactions.	4. Collateralized Transactions. Securities purchased under agreements to resell (reverse repurchase agreements) and Securities sold under agreements to repurchase (repurchase agreements), principally government and agency securities, are carried at the amounts at which the securities subsequently will be resold or reacquired as specified in the respective agreements; such amounts include accrued interest. Reverse repurchase agreements and repurchase agreements are presented on a net-by-counterparty basis, when appropriate. The Companys policy is generally to take possession of securities purchased under agreements to resell. Securities borrowed and Securities loaned are carried at the amounts of cash collateral advanced and received in connection with the transactions. Other secured financings include the liabilities related to transfers of financial assets that are accounted for as financings rather than sales, consolidated VIEs where the Company is deemed to be the primary beneficiary, and certain equity-referenced securities and loans where in all instances these liabilities are payable solely from the cash flows of the related assets accounted for as Financial instruments owned (see Note5). The Company pledges its financial instruments owned to collateralize repurchase agreements and other securities financings. Pledged financial instruments that can be sold or repledged by the secured party are identified as Financial instruments owned (pledged to various parties) in the condensed consolidated statements of financial condition. The carrying value and classification of financial instruments owned by the Company that have been loaned or pledged to counterparties where those counterparties do not have the right to sell or repledge the collateral were as follows: At June30, 2009 At December31, 2008 At November30, 2008 (dollars in millions) Financial instruments owned: U.S. government and agency securities $ 12,576 $ 9,134 $ 7,701 Other sovereign government obligations 6,096 2,570 626 Corporate and other debt 13,809 21,850 33,037 Corporate equities 7,050 4,388 5,726 Total $ 39,531 $ 37,942 $ 47,090 The Company enters into reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions to, among other things, acquire securities to cover short positions and settle other securities obligations, to accommodate customers needs and to finance the Companys inventory positions. The Company also engages in securities financing transactions for customers through margin lending. Under these agreements and transactions, the Company either receives or provides collateral, including U.S. government and agency securities, other sovereign government obligations, corporate and other debt, and corporate equities. The Company receives collateral in the form of securities in connection with reverse repurchase agreements, securities borrowed and derivative transactions, and customer margin loans. In many cases, the Company is permitted to sell or
5.Securitization Activities and Variable Interest Entities.	5. Securitization Activities and Variable Interest Entities. Securitization Activities and Qualifying Special Purpose Entities. Securitization Activities.In a securitization transaction, the Company transfers assets (generally commercial or residential mortgage loans or U.S. agency securities) to a special purpose entity (an SPE), sells to investors most of the beneficial interests, such as notes or certificates, issued by the SPE and in many cases retains other beneficial interests. In many securitization transactions involving commercial mortgage loans, the Company transfers a portion of the assets transferred to the SPE with unrelated parties transferring the remaining assets. The purchase of the transferred assets by the SPE is financed through the sale of these interests. In some of these transactions, primarily involving residential mortgage loans in the U.S. and Europe and commercial mortgage loans in Europe, the Company serves as servicer for some or all of the transferred loans. In many securitizations, particularly involving residential mortgage loans, the Company also enters into derivative transactions, primarily interest rate swaps or interest rate caps, with the SPE. In most of these transactions, the SPE meets the criteria to be a QSPE under the accounting guidance for the transfer and servicing of financial assets. The Company does not consolidate QSPEs if they meet certain criteria regarding the types of assets and derivatives they may hold, the activities in which they may engage and the range of discretion they may exercise in connection with the assets they hold. The determination of whether an SPE meets the criteria to be a QSPE requires considerable judgment, particularly in evaluating whether the permitted activities of the SPE are significantly limited and in determining whether derivatives held by the SPE are passive and not excessive. The primary risk retained by the Company in connection with these transactions generally is limited to the beneficial interests issued by the SPE that are owned by the Company, with the risk highest on the most subordinate class of beneficial interests. Where the QSPE criteria are met, these beneficial interests generally are included in Financial instruments ownedCorporate and other debt and are measured at fair value. The Company does not provide additional support in these transactions through contractual facilities, such as liquidity facilities, guarantees, or similar derivatives. Although not obligated, the Company generally makes a market in the securities issued by SPEs in these transactions. In these market-making transactions, the Company offers to buy these securities from, and sell these securities to, investors. Securities purchased through these market-making activities are not considered to be retained interests, although these beneficial interests generally are included in Financial instruments ownedCorporate and other debt securities and are measured at fair value. The Company enters into derivatives, generally interest rate swaps and interest rate caps with a senior payment priority in many securitization transactions. The risks associated with the
6.Goodwill and Net Intangible Assets.	6. Goodwill and Net Intangible Assets. Goodwill and net intangible assets increased during the quarter and six month period ended June30, 2009 primarily due to the acquisition of Smith Barney that was accounted for using the acquisition method of accounting (see Note 2). The Company tests goodwill for impairment on an annual basis and on an interim basis when certain events or circumstances exist. The Company tests for impairment at the reporting unit level, which is generally one level below its business segments. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit with its respective book value. If the estimated fair value exceeds the book value, goodwill at the reporting unit level is not deemed to be impaired. If the estimated fair value is below book value, however, further analysis is required to determine the amount of the impairment. The estimated fair values of the reporting units are generally determined utilizing methodologies that incorporate price-to-book, price-to-earnings and assets under management multiples of certain comparable companies. The Company completed its annual goodwill impairment testing as of June1, 2009 and June1, 2008, which did not result in any goodwill impairment. Changes in the carrying amount of the Companys goodwill and intangible assets for the one month period ended December31, 2008 and the six month period ended June30, 2009 were as follows: Institutional Securities Global Wealth ManagementGroup Asset Management Total (dollars in millions) Goodwill: Balance at November30, 2008 $ 800 $ 272 $ 1,171 $ 2,243 Foreign currency translation adjustments and other 13 13 Balance at December31, 2008 813 272 1,171 2,256 Foreign currency translation adjustments and other 4 4 Goodwill acquired during the period(1) 5,029 5,029 Goodwill disposed of during the period(2) (453 ) (453 ) Balance at June30, 2009 $ 364 $ 5,301 $ 1,171 $ 6,836 Institutional Securities Global Wealth ManagementGroup Asset Management Total (dollars in millions) Net Intangible Assets: Amortizable net intangible assets at November30, 2008 $ 334 $ $ 393 $ 727 Foreign currency translation adjustments and other 3 3 Amortization expense (4 ) (4 ) (8 ) Amortizable net intangible assets at December31, 2008 333 389 722 Mortgage servicing rights (see Note 5) 184 184 Balance of net intangible assets at December31, 2008 $ 517 $ $ 389 $ 906 Amortizable net intangible assets at December31, 2008 $ 333 $ $ 389 $ 722 Foreign currency translation adjustments and other
7.Long-Term Borrowings.	7. Long-Term Borrowings. The Companys long-term borrowings included the following components: AtJune30, 2009 AtDecember31, 2008 AtNovember30, 2008 (dollars in millions) Senior debt $ 171,847 $ 165,181 $ 148,959 Subordinated debt 4,279 4,342 4,212 Junior subordinated debentures 10,666 10,312 10,266 Total $ 186,792 $ 179,835 $ 163,437 During the six month period ended June30, 2009, the Company issued notes with a principal amount of approximately $27 billion. The amount included non-U.S. dollar currency notes aggregating approximately $1.1 billion. These notes include the public issuance of $5.5 billion of senior unsecured notes that were not guaranteed by the Federal Deposit Insurance Corporation (FDIC). During the six month period ended June30, 2009, $24.7 billion of notes were repaid. The weighted average maturity of the Companys long-term borrowings, based upon stated maturity dates, was approximately 5.8 years and 6.3 years as of June30, 2009 and December31, 2008, respectively. A subsidiary of the Company has loans outstanding of approximately $2.5 billion under third party financing related to Crescent Real Estate Equities Limited Partnership (Crescent). These loans are non-recourse and are secured only by Crescents assets. Approximately $2.0billion of the third party financing is with a single lender (the Lender) to whom the Company has provided credit support with respect to limited exceptions to the non-recourse provisions for the maximum amount of $125 million. Such Lender financing, which was originally scheduled to mature on August3, 2009, has been extended until November2, 2009. The subsidiary is currently in discussions with the Lender regarding the orderly transfer of collateral and asset operations and other related matters. FDIC Temporary Liquidity Guarantee Program (TLGP). As of June30, 2009, the Company had commercial paper and long-term debt outstanding of $0.7 billion and $23.8 billion, respectively, under the TLGP. As of December31, 2008, the Company had commercial paper and long-term debt outstanding of $6.4 billion and $9.8 billion, respectively, under the TLGP. These borrowings are senior unsecured debt obligations of the Company and guaranteed by the FDIC under the TLGP. The FDIC has concluded that the guarantee is backed by the full faith and credit of the U.S. government.
8.Derivative Instruments and Hedging Activities.	8. Derivative Instruments and Hedging Activities. The Company trades, makes markets and takes proprietary positions globally in listed futures, OTC swaps, forwards, options and other derivatives referencing, among other things, interest rates, currencies, investment grade and non-investment grade corporate credits, loans, bonds, U.S. and other sovereign securities, emerging market bonds and loans, credit indices, asset-backed security indices, property indices, mortgage-related and other asset-backed securities and real estate loan products. The Company uses these instruments for trading, as well as for asset and liability management. The Company manages its trading positions by employing a variety of risk mitigation strategies. These strategies include diversification of risk exposures and hedging. Hedging activities consist of the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). The Company manages the market risk associated with its trading activities on a Company-wide basis, on a worldwide trading division level and on an individual product basis. The Company incurs credit risk as a dealer in OTC derivatives. Credit risk with respect to derivative instruments arises from the failure of a counterparty to perform according to the terms of the contract. The Companys exposure to credit risk at any point in time is represented by the fair value of the derivative contracts reported as assets. The fair value of a derivative represents the amount at which the derivative could be exchanged in an orderly transaction between market participants, and is further described in Notes1 and 3 to the condensed consolidated financial statements. In connection with its derivative activities, the Company may enter into master netting agreements and collateral arrangements with counterparties. These agreements provide the Company with the ability to offset a counterpartys rights and obligations, request additional collateral when necessary or liquidate the collateral in the event of counterparty default. The table below presents a summary by counterparty credit rating and remaining contract maturity of the fair value of OTC derivatives in a gain position as of June30, 2009. Fair value is presented in the final column net of collateral received (principally cash and U.S. government and agency securities): OTC Derivative ProductsFinancial Instruments Owned(1) Years to Maturity Cross-Maturity and CashCollateral Netting(3) NetExposure Post-Cash Collateral NetExposure Post- Collateral Credit Rating(2) Lessthan1 1-3 3-5 Over 5 (dollars in millions) AAA $ 1,063 $ 3,407 $ 4,767 $ 11,507 $ (8,850 ) $ 11,894 $ 11,445 AA 7,438 8,192 6,517 17,216 (27,411 ) 11,952 9,635 A 9,423 12,152 8,283 24,435 (42,978 ) 11,315 9,790 BBB 3,510 4,463 2,678 6,886 (8,974 ) 8,563 6,590 Non-investment grade 3,547 4,507 3,188 4,901
9.Commitments, Guarantees and Contingencies.	9. Commitments, Guarantees and Contingencies. Commitments. The Companys commitments associated with outstanding letters of credit and other financial guarantees obtained to satisfy collateral requirements, investment activities, corporate lending and financing arrangements, mortgage lending and margin lending as of June30, 2009 and December31, 2008 are summarized below by period of expiration. Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements: Years to Maturity Total at June30, 2009 Less than 1 1-3 3-5 Over5 (dollars in millions) Letters of credit and other financial guarantees obtained to satisfy collateral requirements $ 699 $ 4 $ $ 2 $ 705 Investment activities 1,053 774 431 54 2,312 Primary lending commitmentsInvestment grade(1)(2) 8,511 16,344 10,631 270 35,756 Primary lending commitmentsNon-investment grade(1)(2) 480 2,877 2,224 409 5,990 Secondary lending commitments(1) 33 69 84 43 229 Commitments for secured lending transactions 735 1,107 1,972 3,814 Forward starting reverse repurchase agreements(3) 71,708 71,708 Commercial and residential mortgage-related commitments(1) 1,738 1,738 Underwriting commitments 2,094 2,094 Other commitments(4) 408 201 150 759 Total $ 87,459 $ 21,376 $ 15,492 $ 778 $ 125,105 (1) These commitments are recorded at fair value within Financial instruments owned and Financial instruments sold, not yet purchased in the condensed consolidated statements of financial condition (see Note 3). (2) This amount includes commitments to asset-backed commercial paper conduits of $444 million as of June30, 2009, of which $267million have maturities of less than one year and $177 million of which have maturities of three to five years. (3) The Company enters into forward starting securities purchased under agreements to resell (agreements that have a trade date as of or prior to June30, 2009 and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations. These agreements primarily settle within three business days and as of June30, 2009, $66.4billion of the $71.7 billion settled with three business days. (4) Amount includes a $200 million lending facility to a real estate fund sponsored by the Company. During the quarter ended June30, 2009, the Company recorded a $131 million mark-to-market loss on this facility in the Asset Management business segment. Years to Maturity Total at December31, 2008 Less than 1 1-3 3-5 Over 5 (dollars in millions) Letters of credit and other financial guarantees obtained to satisfy collateral requirements $ 1,983 $
10.Regulatory Requirements.	10. Regulatory Requirements. Morgan Stanley.In September 2008, the Company became a financial holding company subject to the regulation and oversight of the Board of Governors of the Federal Reserve System (the Fed). The Fed establishes capital requirements for the Company, including well-capitalized standards, and evaluates the Companys compliance with such capital requirements. The Office of the Comptroller of the Currency establishes similar capital requirements and standards for the Companys national banks. Prior to September 2008, the Company was a consolidated supervised entity (CSE) as defined by the SEC and subject to SEC regulation. The Company calculates its capital ratios and risk-weighted assets (RWAs) in accordance with the capital adequacy standards for financial holding companies adopted by the Fed. These standards are based upon a framework described in the International Convergence of Capital Measurement and Capital Standards, July 1988, as amended, also referred to as Basel I. During fiscal 2008, the Company calculated capital requirements on a consolidated basis in accordance with the Revised Framework, dated June 2004 (the Basel II Accord) as interpreted by the SEC. The Basel II Accord is designed to be a risk-based capital adequacy approach, which allows for the use of internal estimates of risk components to calculate regulatory capital. In December 2007, the U.S. banking regulators published a final Basel II Accord that requires internationally active banking organizations, as well as certain of its U.S. bank subsidiaries, to implement BaselII standards over the next several years. The Company will be required to implement these Basel II standards as a result of becoming a financial holding company in September 2008. As of June30, 2009, the Company was in compliance with Basel I capital requirements with ratios of Tier 1 capital to RWAs of 15.8% and total capital to RWAs of 17.1% (6% and 10% being well-capitalized for regulatory purposes, respectively). In addition, financial holding companies are also subject to a Tier 1 leverage ratio (5% being well-capitalized for regulatory purposes) as defined by the Fed. The Company calculated its Tier 1 leverage ratio as Tier 1 capital divided by adjusted average total assets (which reflects adjustments for disallowed goodwill, certain intangible assets and deferred tax assets). The adjusted average total assets are derived using weekly balances for the calendar quarter. This ratio as of June30, 2009 was 6.5%. The following table summarizes the capital measures for the Company at June30, 2009 and March31, 2009 (dollars in millions): June30, 2009 March31, 2009 Balance Ratio Balance Ratio Tier 1 capital $ 43,817 15.8 % $ 48,085 16.7 % Total capital 47,348 17.1 % 52,354 18.2 % Risk-weighted assets 276,750 288,262 Adjusted average assets 678,073 677,856 Tier 1 leverage 6.5 % 7.1 % The Companys Significant U.S. Bank Operating Subsidiaries.The Companys U.S. bank operating subsidiaries are subject to various regulatory capital
11.Total Equity.	11. Total Equity. Morgan Stanley Shareholders Equity. Treasury Shares.During the six month periods ended June30, 2009 and June30, 2008, the Company did not purchase any of its common stock through the capital management share repurchase program. China Investment Corporation Investment.In December 2007, the Company sold Equity Units that included contracts to purchase Company common stock to a wholly owned subsidiary of CIC for gross proceeds of approximately $5,579 million. As a result of the MUFG Transaction referred to below, upon settlement of the Equity Units, CIC will be entitled to receive 116,062,911 shares of the Companys common stock, subject to anti-dilution adjustments. In June 2009, to maintain its pro rata share in the Companys share capital, CIC participated in the Companys registered public offering of 85,890,277 shares by purchasing 45,290,576 shares of the Companys common stock. CIC is a passive financial investor and has no special rights of ownership nor a role in the management of the Company. A substantial portion of the investment proceeds from the offering of the Equity Units was treated as Tier 1 capital for regulatory capital purposes. For a more detailed summary of the Equity Units, including the junior subordinated debentures issued to support trust common and trust preferred securities and the stock purchase contracts, refer to Note 11 to the consolidated financial statements for the fiscal year ended November30, 2008 included in the Form 10-K. Prior to the Companys sale to Mitsubishi UFJ Financial Group, Inc. (MUFG) of certain preferred stock for an aggregate purchase price of $9 billion on October13, 2008 (MUFG Transaction), the impact of the Equity Units was reflected in the Companys earnings per diluted common share using the treasury stock method. There was no dilutive impact for the quarter and six month period ended June30, 2008. Effective October13, 2008, as a result of the adjustment to the Equity Units due to the MUFG Transaction, the Equity Units are now deemed to be participating securities in that the Equity Units have the ability to participate in any dividends the Company declares on common shares above $0.27 per share during any quarterly reporting period via an increase in the number of common shares to be delivered upon settlement of the stock purchase contracts. During the quarter and six month period ended June30, 2009, no common dividends above $0.27 per share were declared. The Equity Units do not share in any losses of the Company for purposes of calculating EPS. Therefore, if the Company incurs a loss in any reporting period, losses will not be allocated to the Equity Units in the EPS calculation. See Note 1 for further discussion on the two-class method and Note 12 for the dilutive impact for the quarter and six month period ended June30, 2009. Common Equity Offerings.During the quarter ended June30, 2009, the Company issued common stock for approximately $6.9 billion in two registered public offerings. In connection with one of the offerings, MUFG received $0.7 billion of common stock in exchange for 640,909 shares of the Companys Series C Preferred Stock. Pref
12.Earnings per Common Share.	12. Earningsper Common Share. Basic EPS is computed by dividing income available 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 restricted stock unit awards where recipients have satisfied either the explicit vesting terms or retirement-eligible requirements. Diluted EPS reflects the assumed conversion of all dilutive securities. The Company calculates EPS using the two-class method (see Note 1) and determines whether instruments granted in share-based payment transactions are participating securities. The following table presents the calculation of basic and diluted EPS (in millions, except for per share data): Three Months Ended June30, Six Months Ended June30, 2009 2008 2009 2008 Basic EPS: (Loss) income from continuing operations $ (286 ) $ 694 $ (490 ) $ 2,104 Net gain on discontinued operations 319 465 333 487 Net income (loss) 33 1,159 (157 ) 2,591 Net income (loss) applicable to non-controlling interests (116 ) 16 (129 ) 35 Net income (loss) applicable to Morgan Stanley 149 1,143 (28 ) 2,556 Less: Preferred dividends (Series A Preferred Stock) (11 ) (11 ) (22 ) (25 ) Less: Preferred dividends (Series B Preferred Stock) (196 ) (392 ) Less: Preferred dividends (Series C Preferred Stock) (13 ) (42 ) Less: Partial Redemption of Series C Preferred Stock (202 ) (202 ) Less: Preferred dividends (Series D Preferred Stock) (87 ) (212 ) Less: Amortization and acceleration of issuance discount for Series D Preferred Stock (see Note 11) (892 ) (932 ) Less: Allocation of earnings to unvested restricted stock units(1) (4 ) (70 ) (4 ) (157 ) Net income (loss) applicable to Morgan Stanley common shareholders $ (1,256 ) $ 1,062 $ (1,834 ) $ 2,374 Weighted average common shares outstanding 1,138 1,041 1,075 1,038 (Losses) earnings per basic common share: (Loss) income from continuing operations $ (1.37 ) $ 0.61 $ (2.00 ) $ 1.86 Net gain on discontinued operations 0.27 0.41 0.29 0.43 (Losses) earnings per basic common share $ (1.10 ) $ 1.02 $ (1.71 ) $ 2.29 Diluted EPS: (Losses) earnings applicable to Morgan Stanley common shareholders $ (1,256 ) $ 1,062 $ (1,834 ) $ 2,374 Weighted average common shares outstanding 1,138 1,041 1,075 1,038 Effect of dilutive securities: Stock options
13.Interest and Dividends and Interest Expense.	13. Interest and Dividends and Interest Expense. Details of Interest and dividends revenue and Interest expense were as follows (dollars in millions): Three Months Ended June30, Six Months Ended June30, 2009 2008 2009 2008 Interest and dividends(1): Financial instruments owned(2) $ 867 $ 1,470 $ 2,435 $ 4,346 Receivables from other loans 13 196 101 458 Interest bearing deposits with banks 63 491 176 947 Federal funds sold and securities purchased under agreements to resell and securities borrowed 133 4,096 577 8,835 Other 317 2,943 628 7,320 Total Interest and dividends revenues $ 1,393 $ 9,196 $ 3,917 $ 21,906 Interest expense(1): Commercial paper and other short-term borrowings $ $ 147 $ 37 $ 379 Deposits 100 158 250 396 Long-term debt 1,387 1,899 2,859 4,072 Securities sold under agreements to repurchase and securities loaned 394 3,745 857 8,255 Other 3,114 248 7,749 Total Interest expense 1,881 9,063 4,251 20,851 Net interest and dividends revenues $ (488 ) $ 133 $ (334 ) $ 1,055 (1) Interest income and expense and dividend income are recorded within the condensed consolidated statements of income depending on the nature of the instrument and related market conventions. When interest and dividends are included as a component of the instruments fair value, interest and dividends are included within Principal transactionstrading revenues or Principal transactionsinvestment revenues. Otherwise, they are included within Interest and dividends income or Interest expense. (2) Interest expense on Financial instruments sold, not yet purchased is reported as a reduction of Interest and dividends revenues.
14.Other Revenues.	14. Other Revenues. In fiscal 2008, the Company sold Morgan Stanley Wealth Management S.V., S.A.U., its Spanish onshore mass affluent wealth management business. Other revenues for the six month period ended June30, 2008 included $748 million related to the sale.
15.Employee Benefit Plans.	15. Employee Benefit Plans. The Company maintains various pension and benefit plans for eligible employees. The components of the Companys net periodic benefit expense for its pension and postretirement plans were as follows: ThreeMonths EndedJune30, Six Months EndedJune30, 2009 2008 2009 2008 (dollars in millions) Service cost, benefits earned during the period $ 32 $ 28 $ 63 $ 56 Interest cost on projected benefit obligation 40 37 80 74 Expected return on plan assets (31 ) (33 ) (61 ) (66 ) Net amortization of prior service costs (1 ) (2 ) (4 ) (4 ) Net amortization of actuarial loss 10 8 21 16 Net periodic benefit expense $ 50 $ 38 $ 99 $ 76
16.Income Taxes.	16. Income Taxes. The Company is under continuous examination by the Internal Revenue Service (the IRS) and other tax authorities in certain countries, such as Japan and the U.K., and states in which the Company has significant business operations, such as New York. The IRS and Japanese tax authorities are expected to conclude the field work portion of their respective examinations during 2009. During 2009, the Company expects to come to conclusion with the U.K. tax authorities on issues through tax year 2007, including those in appeals. The Company regularly assesses the likelihood of additional assessments in each of the taxing jurisdictions resulting from these and subsequent years examinations. The Company has established unrecognized tax benefits that the Company believes are adequate in relation to the potential for additional assessments. Once established, the Company adjusts unrecognized tax benefits only when more information is available or when an event occurs necessitating a change. The Company believes that the resolution of tax matters will not have a material effect on the condensed consolidated statements of financial condition of the Company, although a resolution could have a material impact on the Companys condensed consolidated statements of income for a particular future period and on the Companys effective income tax rate for any period in which such resolution occurs. It is reasonably possible that significant changes in the gross balance of unrecognized tax benefits may occur within the next twelve months. At this time, however, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits and impact on the effective tax rate over the next twelve months.
17.Segment and Geographic Information.	17. Segment and Geographic Information. The Company structures its segments primarily based upon the nature of the financial products and services provided to customers and the Companys management organization. The Company provides a wide range of financial products and services to its customers in each of its business segments: Institutional Securities, Global Wealth Management Group and Asset Management. For further discussion of the Companys business segments, see Note1. Revenues and expenses directly associated with each respective segment are included in determining their operating results. Other revenues and expenses that are not directly attributable to a particular segment are allocated based upon the Companys allocation methodologies, generally based on each segments respective net revenues, non-interest expenses or other relevant measures. As a result of treating certain intersegment transactions as transactions with external parties, the Company includes an Intersegment Eliminations category to reconcile the business segment results to the Companys consolidated results. Income before taxes in Intersegment Eliminations primarily represents the effect of timing differences associated with the revenue and expense recognition of commissions paid by the Asset Management business segment to the Global Wealth Management Group business segment associated with sales of certain products and the related compensation costs paid to the Global Wealth Management Group business segments global representatives. Selected financial information for the Companys business segments is presented below: Three Months Ended June30, 2009 Institutional Securities GlobalWealth Management Group Asset Management Intersegment Eliminations Total (dollars in millions) Total non-interest revenues $ 3,600 $ 1,763 $ 643 $ (107 ) $ 5,899 Net interest (636 ) 160 (68 ) 56 (488 ) Net revenues $ 2,964 $ 1,923 $ 575 $ (51 ) $ 5,411 Loss from continuing operations before income taxes $ (307 ) $ (71 ) $ (239 ) $ (2 ) $ (619 ) Benefit from income taxes (173 ) (29 ) (130 ) (1 ) (333 ) Loss from continuing operations (134 ) (42 ) (109 ) (1 ) (286 ) Discontinued operations(1): Gain from discontinued operations (including gain on disposal of $499million) 515 515 Provision for income taxes 196 196 Gain on discontinued operations 319 319 Net income (loss) $ 185 $ (42 ) $ (109 ) $ (1 ) $ 33 Net income (loss) applicable to non-controlling interests $ 3 $ (118 ) $ (1 ) $ $ (116 )
18.Joint Venture.	18. Joint Venture. Japan Securities Joint Venture.On March26, 2009, MUFG and the Company announced that they had signed a memorandum of understanding to form a securities joint venture between Mitsubishi UFJ Securities Co., Ltd. and MSJS. Both parties will work to conclude definitive agreements regarding the joint venture with a targeted closing date prior to the end of March 2010. The joint venture is subject to the execution of the definitive agreements and to regulatory approvals and other customary closing conditions. In addition, on June30, 2009, MUFG and the Company announced the creation of a loan marketing joint venture in the Americas starting initially in the U.S., subject to regulatory approvals and other customary closing conditions, and business referral arrangements in Asia, Europe, the Middle East and Africa. MUFG and the Company also entered into a referral agreement for commodities transactions executed outside of Japan and a transfer of personnel between MUFG and the Company for the sharing of best practices and expertise.
19.Discontinued Operations.	19. Discontinued Operations. MSCI.MSCI is a provider of investment decision support tools to investment institutions worldwide. In the quarter ended June30, 2008 and September30, 2008, the Company sold approximately 53million of its MSCI shares in two secondary offerings (see Note 20 to the consolidated financial statements for the fiscal year ended November30, 2008 included in the Form 10-K for further information.) In May 2009, the Company sold all of its remaining 28million shares in MSCI in a secondary offering. In the quarter ended June30, 2009, the Company received net proceeds of approximately $573 million and recognized a pre-tax gain of approximately $499 million ($310 million after-tax), net of underwriting discounts, commissions and offering expenses. The table below provides information regarding the MSCI secondary offerings (amounts in millions): Three Months EndedJune30, Six Months EndedJune30, 2009 2008 2009 2008 Net proceeds $ 573 $ 780 $ 573 $ 780 Net revenues 555 849 651 948 Pre-tax gain 499 732 499 732 The pre-tax gain on discontinued operations related to MSCI (including revenues in conjunction with secondary offerings) was $515 million and $537 million for the quarter and six month period ended June30, 2009 and $761 million and $797 million for the quarter and six month period ended June30, 2008. The results of MSCI prior to the divestiture are included within discontinued operations for all periods presented and recorded within the Institutional Securities business segment.
20.Subsequent Events.	20. Subsequent Events. TheCompany has updated its subsequent events disclosurethroughAugust 7, 2009, thefiling date of this Form 10-Q Report. See Note 2 for information on the MSSB transaction completed on July 31, 2009. See Note 11 for information regarding the Companys agreement reached on August 5, 2009 to repurchase the warrant issued to U.S. Treasury.

Document Information

Document Information
	6 Months Ended Jun. 30, 2009 USD / shares
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Amendment Description	N.A.
Document Period End Date	2009-06-30

Entity Information

Entity Information (USD $)
	6 Months Ended Jun. 30, 2009	Jul. 31, 2009	May. 31, 2008
Entity [Text Block]
Trading Symbol	MS
Entity Registrant Name	MORGAN STANLEY
Entity Central Index Key	0000895421
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,359,166,836
Entity Public Float			$48,765,826,243