Media Relations: Michele Davis 212-761-9621

Investor Relations: Celeste Mellet Brown 212-761-3896

Morgan Stanley Reports Third Quarter 2013:


Net Revenues of $7.9 Billion and Earnings per Diluted Share from Continuing
Operations of $0.44

Excluding DVA,1 Net Revenues were $8.1 Billion and Earnings per Diluted Sharefrom Continuing Operations of $0.502,3

Continued Strength in Equity Sales & Trading; Investment Banking Top Three
Performance in Global Completed M&A and Global IPOs;4 Wealth Management
Pre-Tax Margin of 19%;5 Strong Results in Investment Management

NEW YORK, October 18, 2013 – Morgan Stanley (NYSE: MS) today reported net revenues of $7.9 billion for
the third quarter ended September 30, 2013 compared with $5.3 billion a year ago. For the current quarter,
income from continuing operations applicable to Morgan Stanley was $888 million, or $0.44 per diluted share,6
compared with a loss of $1.0 billion, or a loss of $0.55 per diluted share,6 for the same period a year ago.
Results for the current quarter included negative revenue related to changes in Morgan Stanley’s debt-related
credit spreads and other credit factors (Debt Valuation Adjustment, DVA)1 of $171 million, compared with
$2.3 billion a year ago.
Excluding DVA, net revenues for the current quarter were $8.1 billion compared with $7.5 billion a year ago
and income from continuing operations applicable to Morgan Stanley was $1.0 billion, or $0.50 per diluted
share, compared with income of $560 million, or $0.28 per diluted share, a year ago.3,7Compensation expense of $4.0 billion was relatively unchanged from a year ago. Non-compensation expenses of$2.6 billion decreased from $2.8 billion in the prior year primarily due to the absence of non-recurring WealthManagement integration expenses in the prior year quarter.
For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.45
per diluted share, compared with a loss of $0.55 per diluted share in the third quarter of 2012.6

1

Summary of Firm Results(dollars in millions)Excluding DVA

As Reported

7

Net
Revenues

MS IncomeCont. Ops.

Net
Revenues

MS IncomeCont. Ops.

3Q 2013$7,932$888$8,103$1,0092Q 2013$8,503$1,009$8,328$898

3Q 2012$5,280$(1,008)$7,542$560

Business Overview
Institutional Securities net revenues excluding DVA8 were $3.9 billion reflecting strong performance inEquity sales and trading, solid results in Investment Banking and lower results in Fixed Income &Commodities sales and trading.



Wealth Management net revenues were $3.5 billion and pre-tax margin was 19%.5 Fee based asset flows
for the quarter were $15.0 billion and total client assets were $1.8 trillion at quarter end.



Investment Management reported net revenues of $828 million with assets under management or
supervision of $360 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “Our results point to the increased consistency,
strength and balance we are deriving from our business model. Our strategy to combine a world class investmentbank with the stability of the largest U.S. wealth management franchise and strong investment management isenabling us to deliver exceptional advice and execution for our clients as well as stronger returns for ourshareholders. Overall, our stronger year-over-year revenues and net income reflect the progress we have made toposition the Firm well for the future.”2

Summary of Institutional Securities Results(dollars in millions)Excluding DVA

8

As Reported
Net
Pre-Tax
Revenues
IncomeNet
Revenues

Pre-Tax
Income3Q 2013$3,686$3,857$542

2Q 2013$4,346$960$4,171$785

3Q 2012$1,481$(1,928)$3,743$334$371

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $371 million compared with a pretax loss of $1.9 billion in the third quarter of last year. Net revenues for the current quarter were $3.7 billion
compared with $1.5 billion a year ago. DVA resulted in negative revenue of $171 million in the current quartercompared with $2.3 billion a year ago. Excluding DVA, net revenues for the current quarter were $3.9 billion
compared with $3.7 billion a year ago.8 The quarter’s pre-tax margin was 10% (excluding DVA, 14%).5,8
Income after the noncontrolling interest allocation and before taxes was $323 million.9 The following discussion
for sales and trading excludes DVA.


Advisory revenues of $275 million declined from $339 million a year ago reflecting lower levels ofcompleted market activity. Equity underwriting revenues were $236 million compared with $199 million ayear ago reflecting increased client activity. Fixed income underwriting revenues were $481 million
compared with $431 million a year ago reflecting growth in investment grade bond and loan fees.

Equity sales and trading net revenues of $1.7 billion increased from $1.3 billion in the prior year quarterreflecting strong performance across products and regions.10

Fixed Income & Commodities sales and trading net revenues were $835 million compared with $1.5 billion ayear ago. Results reflect lower client activity and market volumes across all products.10



Investment revenues were $337 million compared with $74 million in the prior year quarter. Results for thecurrent quarter were driven primarily by a gain resulting from the disposition of an investment in an insurance
broker.



Other revenues were $138 million compared with $64 million in the third quarter of last year, due principallyto the equity investment in our Japanese joint venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.



Compensation expense for the current quarter of $1.6 billion compared with $1.7 billion in the prior year
quarter. Non-compensation expenses of $1.7 billion were relatively unchanged from a year ago.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $52
million compared with $61 million in the second quarter of 2013 and $63 million in the third quarter of theprior year.11

3

Summary of Wealth Management Results(dollars in millions)
Net
Revenues

Pre-Tax
Income3Q 2013$3,481$668

2Q 2013$3,531$655

3Q 2012$3,222$247

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $668 million compared with $247
million in the third quarter of last year. The quarter’s pre-tax margin was 19%.5 Net revenues for the current
quarter were $3.5 billion compared with $3.2 billion a year ago. Results for the current quarter do not include anoncontrolling interest allocation to Citigroup Inc. (Citi) following the completed acquisition of the WealthManagement Joint Venture, whereas the prior year quarter included a noncontrolling interest allocation to Citi of$9 million.12


Asset management fee revenues of $1.9 billion increased 6% from last year’s third quarter primarilyreflecting an increase in fee based assets and positive flows, partially offset by lower referral fees from Citi.

Transactional revenues13 of $1.0 billion increased from $952 million a year ago reflecting higher trading
revenues and increased commissions and fees, partly offset by lower investment banking revenues.

Compensation expense for the current quarter of $2.0 billion was relatively unchanged from a year ago. Noncompensation expenses of $796 million decreased from $1.0 billion a year ago driven primarily by theabsence of non-recurring integration costs reported in the prior year quarter,14 and continued expense
discipline.

Total client assets were $1.8 trillion at quarter end. Client assets in fee based accounts of $652 billion
increased 22% compared with the prior year quarter. Fee based asset flows for the quarter were $15.0 billion.



Wealth Management representatives of 16,517 increased from 16,378 as of September 30, 2012. Averageannualized revenue per representative of $848,000 and total client assets per representative of $110 million
increased 8% and 7%, respectively, compared with the prior year quarter.

4

Summary of Investment Management Results(dollars in millions)
Net
Revenues

Pre-Tax
Income3Q 2013

$828

$300

2Q 2013

$673

$160

3Q 2012

$631

$198

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $300 million compared with pretax income of $198 million in last year’s third quarter.15 The quarter’s pre-tax margin was 36%.5 Income after
the noncontrolling interest allocation and before taxes was $236 million.


Net revenues of $828 million increased from $631 million in the prior year driven by gains on investments in
the Merchant Banking and Real Estate Investing businesses, reflecting stronger investment performance,
favorable market conditions and the benefit of carried interest.16,17

Compensation expense for the current quarter of $332 million increased from $241 million a year ago on
higher revenues. Non-compensation expenses of $196 million were relatively unchanged from a year ago.



Assets under management or supervision at September 30, 2013 of $360 billion increased from $331 billion ayear ago primarily reflecting market appreciation and positive flows. The business recorded net flows of $1.8
billion in the current quarter.

CAPITAL
Morgan Stanley’s Tier 1 capital ratio under Basel I was approximately 15.3% and Tier 1 common ratio wasapproximately 12.6% at September 30, 2013.18
At September 30, 2013, book value and tangible book value per common share were $32.13 and $26.96,19
respectively, based on approximately 2.0 billion shares outstanding.

OTHER MATTERS
The effective tax rate from continuing operations for the current quarter was 25.3%. The quarter includes a
discrete net tax benefit of $73 million that is attributable to tax planning strategies to optimize foreign tax credit
utilization as a result of the anticipated repatriation of earnings from certain non-U.S. subsidiaries.
Firmwide deposits increased by approximately $21 billion during the quarter as a result of the contractual transfer
of deposits from Citi subsequent to the closing of the acquisition of the remaining 35% interest of the WealthManagement Joint Venture.
During the quarter ended September 30, 2013, the Firm repurchased approximately $123 million of its common
stock or approximately 4.5 million shares.
The Firm declared a $0.05 quarterly dividend per common share, payable on November 15, 2013 to commonshareholders of record on October 31, 2013.

5

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking,securities, investment management and wealth management services. The Firm’s employees serve clientsworldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 43
countries. For further information about Morgan Stanley, please visit www.morganstanley.com.
A financial summary follows. Financial, statistical and business-related information, as well as information
regarding business and segment trends, is included in the Financial Supplement. Both the earnings release andthe Financial Supplement are available online in the Investor Relations section at www.morganstanley.com.

###(See Attached Schedules)
The information above contains forward-looking statements. Readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the date on which they are made and whichreflect management's current estimates, projections, expectations or beliefs and which are subject to risks anduncertainties that may cause actual results to differ materially. For a discussion of additional risks anduncertainties that may affect the future results of the Company, please see “Forward-Looking Statements”
immediately preceding Part I, Item 1, “Competition” and “Supervision and Regulation” in Part I, Item 1,“Risk Factors” in Part I, Item 1A, “Legal Proceedings” in Part I, Item 3, “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative andQualitative Disclosures about Market Risk” in Part II, Item 7A, each of the Company's Annual Report on
Form 10-K for the year ended December 31, 2012 and other items throughout the Form 10-K, theCompany’s Quarterly Reports on Form 10-Q, and the Company’s Current Reports on Form 8-K, including
any amendments thereto.

6

1

Represents the change in the fair value of certain of Morgan Stanley’s long-term and short-term borrowings resulting fromfluctuations in its credit spreads and other credit factors (commonly referred to as “DVA”).

2

From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings
releases, earnings conference calls, financial presentations and otherwise. For these purposes, “GAAP” refers to generally
accepted accounting principles in the United States. The Securities and Exchange Commission (SEC) defines a “non-GAAP
financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flowsthat is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measurecalculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by Morgan Stanley areprovided as additional information to investors in order to provide them with greater transparency about, or an alternative
method for assessing our financial condition and operating results. These measures are not in accordance with, or asubstitute for GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies.
Whenever we refer to a non-GAAP financial measure, we will also generally present the most directly comparable financial
measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the nonGAAP financial measure we reference and such comparable GAAP financial measure.
3

Earnings (loss) per diluted share amounts, excluding DVA, are non-GAAP financial measures that the Firm considers
useful for investors to allow better comparability of period-to-period operating performance. Such exclusions are provided todifferentiate revenues associated with Morgan Stanley borrowings, regardless of whether the impact is either positive, or
negative, that result solely from fluctuations in credit spreads and other credit factors. The reconciliation of earnings (loss)
per diluted share from continuing operations applicable to Morgan Stanley common shareholders and average diluted sharesfrom a non-GAAP to GAAP basis is as follows (shares and DVA are presented in millions):

Earnings (loss) per diluted share from cont. ops. – Non-GAAP
DVA impact
Earnings (loss) per diluted share from cont. ops. – GAAP
Average diluted shares – Non-GAAP
DVA impact
Average diluted shares – GAAP

4

3Q 2013$0.50($0.06)$0.44

3Q 2012$0.28($0.83)($0.55)

1,965
0
1,965

1,924
(35)
1,889

Source: Thomson Reuters – for the period of January 1, 2013 to September 30, 2013.

5

Pre-tax margin is a non-GAAP financial measure that the Firm considers useful for investors to assess operating
performance. Pre-tax margin represents income (loss) from continuing operations before taxes divided by net revenues.
6

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the third quarter of2013 and 2012 of approximately $26 million and $24 million, respectively. Refer to page 3 of Morgan Stanley’s Financial
Supplement accompanying this release for the calculation of earnings per share.

7

7

Net revenues and income (loss) from continuing operations applicable to Morgan Stanley, excluding DVA, are non-GAAP
financial measures that the Firm considers useful for investors to allow for better comparability of period-to-period operating
performance. The reconciliation of net revenues and income (loss) from continuing operations applicable to Morgan Stanleyfrom a non-GAAP to GAAP basis is as follows (amounts are presented in millions):

Firm net revenues – Non-GAAP
DVA impact
Firm net revenues – GAAP
Income (loss) applicable to MS – Non-GAAP
DVA after-tax impact
Income (loss) applicable to MS – GAAP

3Q 2013$8,103$(171)$7,932

2Q 2013$8,328$175$8,503

3Q 2012$7,542$(2,262)$5,280$1,009$(121)
$888

$898
$111
$1,009$560$(1,568)$(1,008)8

Institutional Securities net revenues and pre-tax income (loss), excluding DVA, are non-GAAP financial measures that the
Firm considers useful for investors to allow for better comparability of period-to-period operating performance. The
reconciliation of net revenues and pre-tax income (loss) from a non-GAAP to GAAP basis is as follows (amounts arepresented in millions):
3Q 2013

2Q 2013

3Q 2012

Net revenues – Non-GAAP
DVA impact
Net revenues – GAAP

$3,857$(171)$3,686$4,171$175$4,346$3,743$(2,262)$1,481Pre-tax income (loss) – Non-GAAP
DVA impact
Pre-tax income (loss) – GAAP

$542$(171)
$371

$785
$175
$960

$334
$(2,262)$(1,928)9

Noncontrolling interests reported in the Institutional Securities business segment primarily represents the allocation to
MUFG of Morgan Stanley MUFG Securities Co., Ltd., which the Firm consolidates.

8

10

Sales and trading net revenues, including Fixed Income & Commodities (FIC) and Equity sales and trading net revenues
excluding DVA, are non-GAAP financial measures that the Firm considers useful for investors to allow better comparabilityof period-to-period operating performance. The reconciliation of sales and trading, including FIC and Equity sales andtrading net revenues from a non-GAAP to GAAP basis is as follows (amounts are presented in millions):
3Q 2013

3Q 2012

Sales & Trading – Non-GAAP
DVA impact
Sales & Trading – GAAP

$2,390$(171)$2,219$2,636$(2,262)$374

FIC Sales & Trading – Non-GAAP
DVA impact
FIC Sales & Trading – GAAP

$835$(141)$694$1,458$(1,621)$(163)

Equity Sales & Trading – Non-GAAP
DVA impact
Equity Sales & Trading – GAAP

$1,710$(30)$1,680$1,341$(641)$700

11

VaR represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred
trading days in the Firm’s trading positions if the portfolio were held constant for a one-day period. Further discussion of thecalculation of VaR and the limitations of the Firm’s VaR methodology is disclosed in Part II, Item 7A “Quantitative andQualitative Disclosures about Market Risk” included in Morgan Stanley’s Annual Report on Form 10-K for the year ended
December 31, 2012. Refer to page 7 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.
12

On June 28, 2013, the Firm completed the purchase of the remaining 35% interest in the Morgan Stanley Smith Barney
Joint Venture from Citi, increasing the Firm’s interest from 65% to 100%. During the quarter ended September 30, 2012,
Morgan Stanley completed the purchase of an additional 14% stake in the Morgan Stanley Smith Barney Joint Venture from
Citi, increasing the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest
were reported in net income (loss) applicable to nonredeemable noncontrolling interests on page 8 of Morgan Stanley’s
Financial Supplement accompanying this release.

13

Transactional revenues include investment banking, trading and commissions and fee revenues.

14

In the third quarter of 2012, Wealth Management non-compensation expenses reflected approximately $176 million of
non-recurring costs associated with the Morgan Stanley Wealth Management integration and the purchase of the additional
14% stake in the Joint Venture.

15

Results for the third quarter of 2013 and 2012 included pre-tax income of $65 million and $50 million, respectively, related
to investments held by certain consolidated real estate funds. The limited partnership interests in these funds are reported in
net income (loss) applicable to noncontrolling interests on page 10 of Morgan Stanley’s Financial Supplement accompanying
this release.
16

Results for the current quarter included gains of $67 million compared with gains of $51 million in the prior year quarter
related to investments held by certain consolidated real estate funds.

17

Carried interest represents an additional allocation of fund income to the Firm, as general partner upon exceeding
cumulative fund performance thresholds.

9

18

The Firm calculates its Tier 1 capital, Tier 1 capital ratios and risk-weighted assets (“RWAs”) in accordance with thecapital adequacy standards for financial holding companies adopted by the Federal Reserve Board. 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. On January 1, 2013, the U.S. banking regulators’ rules to implement the BaselCommittee’s market risk capital framework, commonly referred to as “Basel 2.5”, became effective, which increases capitalrequirements for securitizations and correlation trading within the Firm’s trading book, as well as incorporating add-ons forstressed VaR and incremental risk requirement. The Firm’s Tier 1 capital, Tier 1 capital ratios and RWAs for the quarters
ended September 30, 2013 and June 30, 2013 were calculated under this revised framework. The Firm’s Tier 1 capital, Tier
1 capital ratios and RWAs for prior quarters have not been recalculated under this revised framework. In accordance with
the Federal Reserve Board’s definition, Tier 1 common capital is defined as Tier 1 capital less non-common elements in Tier
1 capital, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities
and mandatory convertible preferred securities. These computations are preliminary estimates as of October 18, 2013 (thedate of this release) and could be subject to revision in Morgan Stanley’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2013.

19

Tangible common equity and tangible book value per common share are non-GAAP financial measures that the Firm
considers to be useful measures of capital adequacy. Tangible common equity equals common equity less goodwill andintangible assets net of allowable mortgage servicing rights deduction. Tangible book value per common share equals
tangible common equity divided by period end common shares outstanding.

10

MORGAN STANLEY
Quarterly Financial Summary(unaudited, dollars in millions, except for per share data)

Sept 30, 2013
Net revenues
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated net revenues
Income (loss) from continuing operations before tax
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated income (loss) from continuing operations before tax
Income (loss) applicable to Morgan Stanley
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated income (loss) applicable to Morgan Stanley

$

$

$

$

$

Quarter Ended
June 30, 2013

3,686
3,481
828
(63)
7,932

$

4,346
3,531
673
(47)
8,503

$

371
668
300
0
1,339

$

960
655
160
0
1,775

$

$

$

$
$

582
326
101
0
1,009
803

$

$

Percentage Change From:
June 30, 2013
Sept 30, 2012

Sept 30, 2012

Nine Months Ended
Sept 30, 2013
Sept 30, 2012

1,481
3,222
631
(54)
5,280

(15%)
(1%)
23%
(34%)
(7%)

149%
8%
31%
(17%)
50%

$

(1,928)247
198
0(1,483)

(61%)
2%
88%
-(25%)

*
170%
52%
-*

$

(45%)
32%
34%
-(12%)
10%

*
167%
30%
-*
*

$

$
$

(1,273)161
104
0(1,008)(1,047)$$

12,121
10,482
2,146(156)
24,593

$

2,129
1,920
647
0
4,696

$

$

$
$

1,546
1,012
320
0
2,878
2,619

$

$

Percentage
Change

7,948
9,709
1,620
(131)
19,146

53%
8%
32%
(19%)
28%

(1,769)
1,060
369
(4)
(344)

*
81%
75%
*
*

$
$

(1,201)
537
143
(4)
(525)
(599)

*
88%
124%
*
*
*

$

$

Earnings (loss) applicable to Morgan Stanley common shareholders

$
$

323
430
135
0
888
880

Earnings per basic share:
Income from continuing operations
Discontinued operations
Earnings per basic share

$
$
$

0.45
0.01
0.46

$
$
$

0.44
(0.02)
0.42$$$(0.55)(0.55)

2%
*
10%

*
*
*

$
$
$

1.39
(0.02)
1.37$$$(0.32)(0.32)***

Earnings per diluted share:
Income from continuing operations
Discontinued operations
Earnings per diluted share

$
$
$

0.44
0.01
0.45

$
$
$

0.43
(0.02)
0.41$$$(0.55)(0.55)

2%
*
10%

*
*
*

$
$
$

1.36
(0.02)
1.34$$$(0.32)(0.32)***

Financial Metrics:
Return on average common equityfrom continuing operations
Return on average common equity

5.6%
5.7%

5.4%
5.2%

*
*

5.8%
5.7%

*
*

Return on average common equityfrom continuing operations excluding DVA
Return on average common equity excluding DVA

6.2%
6.4%

4.6%
4.4%

3.5%
3.4%

6.1%
6.0%

4.9%
4.9%

Tier 1 common capital ratio
Tier 1 capital ratio

12.6%
15.3%

11.8%
14.1%

13.9%
16.9%

Book value per common share
Tangible book value per common share

$
$

32.13
26.96

$
$

31.48
26.27

$
$

30.53
26.65

Notes: - Effective January 1, 2013, in accordance with U.S. banking regulators’ rules, the Firm implemented the Basel Committee’s market risk capital framework, commonly referred to as “Basel 2.5”.
- Results for the quarters ended September 30, 2013, June 30, 2013 and September 30, 2012, include positive (negative) revenue of $(171) million, $175 million and $(2,262) million, respectively, related to the movement in Morgan Stanley's
credit spreads and other credit factors on certain long-term and short-term debt (Debt Valuation Adjustment, DVA).
- The return on average common equity metrics, return on average common equity excluding DVA metrics and tangible book value per common share are non-GAAP measures that the Firm considers to be useful measures to assess
operating performance and capital adequacy.
- Tier 1 common capital ratio equals Tier 1 common equity divided by risk-weighted assets (RWAs).
- Tier 1 capital ratio equals Tier 1 capital divided by RWAs.
- Book value per common share equals common equity divided by period end common shares outstanding.
- Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
- See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.

11

MORGAN STANLEY
Quarterly Consolidated Income Statement Information(unaudited, dollars in millions)

Revenues:
Investment banking
Trading
Investments
Commissions and fees
Asset management, distribution and admin. fees
Other
Total non-interest revenues

Sept 30, 2013

Quarter Ended
June 30, 2013

Sept 30, 2012

$

$

$

Interest income
Interest expense
Net interest
Net revenues
Non-interest expenses:
Compensation and benefits
Non-compensation expenses:
Occupancy and equipment
Brokerage, clearing and exchange fees
Information processing and communications
Marketing and business development
Professional services
Other
Total non-compensation expenses

Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations
Gain (loss) from discontinued operations after tax
Net income (loss) applicable to Morgan Stanley
Pre-tax profit margin
Compensation and benefits as a % of net revenues
Non-compensation expenses as a % of net revenues
Effective tax rate from continuing operations

Notes:

1,303
2,894
188
1,217
2,404
293
8,299

1,152
607
290
988
2,257
141
5,435

(11%)
(22%)
*
(11%)
(1%)
(30%)
(6%)

1%
*
151%
9%
6%
45%
44%

Nine Months Ended
Sept 30, 2013
Sept 30, 2012
$

3,687
7,847
1,254
3,465
7,140
700
24,093$

Percentage
Change

3,319
5,478
438
3,205
6,677
403
19,520

11%
43%
186%
8%
7%
74%
23%

1,311
1,200
111
7,932

1,422
1,218
204
8,503

1,379
1,534
(155)
5,280

(8%)
(1%)
(46%)
(7%)

(5%)
(22%)
*
50%

4,131
3,631
500
24,593

4,244
4,618
(374)
19,146

(3%)
(21%)
*
28%

3,968

4,105

3,928

(3%)

1%

12,28911,989

3%

375
416
405
151
449
829
2,625

377
456
470
163
458
699
2,623

386
359
493
138
476
983
2,835

(1%)
(9%)
(14%)
(7%)
(2%)
19%
--

(3%)
16%
(18%)
9%
(6%)
(16%)
(7%)

1,131
1,300
1,323
448
1,347
2,059
7,608

1,152
1,167
1,439
439
1,365
1,939
7,501

(2%)
11%
(8%)
2%
(1%)
6%
1%

6,593

6,728

6,763

(2%)

(3%)

19,897

19,490

2%

$

1,339
339
1,000
18
1,018
0
112
906
26
880

$

1,775
555
1,220
(29)
1,191
100
111
980
177
803

$

(1,483)
(525)
(958)
2
(956)
8
59
(1,023)24(1,047)

(25%)
(39%)
(18%)
*
(15%)
*
1%
(8%)
(85%)
10%

*
*
*
*
*
*
90%
*
8%
*

$

4,696
1,226
3,470
(30)
3,440
222
370
2,848
229
2,619

$

(344)
(247)
(97)
25
(72)
8
446
(526)
73
(599)

*
*
*
*
*
*
(17%)
*
*
*

$

888
18
906

$

1,009
(29)
980

$

(1,008)(15)(1,023)

(12%)
*
(8%)

*
*
*

$

2,878
(30)
2,848

$

(525)
(1)
(526)

*
*
*

Total non-interest expenses
Income (loss) from continuing operations before taxes
Income tax provision / (benefit) from continuing operations
Income (loss) from continuing operations
Gain (loss) from discontinued operations after tax
Net income (loss)
Net income applicable to redeemable noncontrolling interests
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) applicable to Morgan Stanley
Preferred stock dividend / Other
Earnings (loss) applicable to Morgan Stanley common shareholders

1,160
2,259
728
1,080
2,390
204
7,821

Percentage Change From:
June 30, 2013
Sept 30, 2012

$

17%
50%
33%
25.3%

$

21%
48%
31%
31.3%

$

*
74%
54%
35.4%

$

19%
50%
31%
26.1%

$

*
63%
39%
71.8%

- Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure to assess operating performance.
- The quarter ended September 30, 2013 includes a discrete net tax benefit of $73 million that is attributable to tax planning strategies to optimize foreign tax credit utilization as a result of the anticipatedrepatriation of earnings from certain non-U.S. subsidiaries.
- The quarter ended September 30, 2012 included an out-of-period net income tax provision of approximately $82 million, primarily related to the overstatement of tax benefits associated withrepatriated earnings of a foreign subsidiary in 2010.
- Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs). In the quarter ended June 30, 2013 and nine months ended September 30, 2013, the Firm
recorded a negative adjustment of approximately $151 million related to the purchase of the remaining interest in the Morgan Stanley Smith Barney Joint Venture. This adjustment negatively impacted thecalculation of basic and fully diluted earnings per share.
12

MORGAN STANLEY
Quarterly Earnings Per Share(unaudited, dollars in millions, except for per share data)

Quarter Ended
June 30, 2013

Sept 30, 2013

Income (loss) from continuing operations
Net income applicable to redeemable noncontrolling interests
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) from continuing operations applicable to noncontrolling interests
Income (loss) from continuing operations applicable to Morgan Stanley
Less: Preferred Dividends
Less: Morgan Stanley Smith Barney Joint Venture Redemption Adjustment
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income toParticipating Restricted Stock Units
Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders

$

1,000
0
112
112
888
24
864

2
862

$

Gain (loss) from discontinued operations after tax
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
Earnings (loss) applicable to Morgan Stanley common shareholders$

Average basic common shares outstanding (millions)

880

$

834

$

18
0
18
0
18
$

1,220
100
111
211
1,009
24
151

Sept 30, 2012

2
832

1,909

803

(18%)
*
1%
(47%)
(12%)
-*

*
*
168%
124%
*
---

4%

*

0
(1,032)

-4%

*
*

2
17
(15)
0
(15)

*
-*
-*

*
*
*
-*

(1,047)

10%

*

1,889

--

1%

(1,032)

$

(29)
0
(29)
0
(29)
$

(958)
8
42
50
(1,008)
24
-

$

1,908

Percentage Change From:
June 30, 2013 Sept 30, 2012

Nine Months Ended
Sept 30, 2013
Sept 30, 2012

$

3,470
222
370
592
2,878
72
151

$

2,655

$

6
2,649

(597)

$

(30)
0
(30)
0
(30)
$

2,619

(97)
8
420
428
(525)
72
-

$

1,906

Percentage
Change

*
*
(12%)
38%
*
-*
*

1
(598)

*
*

25
26
(1)
0
(1)

*
*
*
-*

(599)

*

1,884

1%

Earnings per basic share:
Income from continuing operations
Discontinued operations
Earnings per basic share

$
$
$

0.45
0.01
0.46

$
$
$

0.44
(0.02)
0.42$$$(0.55)(0.55)

2%
*
10%

*
*
*

$
$
$

1.39
(0.02)
1.37$$$(0.32)(0.32)***

Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders

$

862

$

832

$

(1,032)

4%

*

$

2,649

$

(598)

*

(15)

*

*

(1)

*

(1,047)

10%

*

(599)

*

1,889

1%

4%

1,884

4%

(0.55)(0.55)

2%
*
10%

*
*
*

(0.32)(0.32)***

Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
Earnings (loss) applicable to Morgan Stanley common shareholders

18$

Average diluted common shares outstanding and common stock equivalents (millions)
Earnings per diluted share:
Income from continuing operations
Discontinued operations
Earnings per diluted share

880

(29)
$

1,965

$
$
$

0.44
0.01
0.45

803

$

1,951

$
$
$

0.43
(0.02)
0.41

$
$
$

(30)
$

2,619

$

1,952

$
$
$

1.36
(0.02)
1.34$$$

Notes: - The Firm calculates earnings per share using the two-class method as described under the accounting guidance for earnings per share. For further discussion of the Firm's earnings per share calculations, see page 14 of the financial supplement
and Note 15 to the consolidated financial statements in the Firm's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.

13