Media Relations: Michele Davis 212-761-9621

Investor Relations: Celeste Mellet Brown 212-761-3896

Morgan Stanley Reports First Quarter 2014:


Net Revenues of $8.9 Billion and Earnings per Diluted Share from Continuing
Operations of $0.72

Excluding DVA,1 Net Revenues were $8.8 Billion and Earnings per Diluted Sharefrom Continuing Operations of $0.682,3

Strong Performance Across All Business Segments; Investment Banking Ranked #1
in Global Announced M&A and #2 in Global Equity and Global IPOs;4 Record
Global Fee Based Asset Flows of $19.0 Billion in Wealth Management

Quarterly Dividend Increased to $0.10 per ShareNEW YORK, April 17, 2014 – Morgan Stanley (NYSE: MS) today reported net revenues of $8.9 billion for the
first quarter ended March 31, 2014 compared with $8.2 billion a year ago. For the current quarter, income fromcontinuing operations applicable to Morgan Stanley was $1.5 billion, or $0.72 per diluted share,5 comparedwith income of $981 million, or $0.49 per diluted share,5 for the same period a year ago.
Results for the current quarter included positive revenue related to changes in Morgan Stanley’s debt-related
credit spreads and other credit factors (Debt Valuation Adjustment, DVA)1 of $126 million, compared withnegative revenue of $317 million a year ago.
Excluding DVA, net revenues for the current quarter were $8.8 billion compared with $8.5 billion a year ago.6
Income from continuing operations applicable to Morgan Stanley was $1.4 billion, or $0.68 per diluted share,compared with income of $1.2 billion, or $0.60 per diluted share, a year ago.3,6Compensation expense was $4.3 billion compared to $4.2 billion a year ago.7 Non-compensation expenses were
$2.3 billion compared to $2.4 billion a year ago.
For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.74
per diluted share,5 compared with net income of $0.48 per diluted share in the first quarter of 2013.5

1

Summary of Firm Results(dollars in millions)Excluding DVA

As Reported

6

Net
Revenues

MS IncomeCont. Ops.

Net
Revenues

MS IncomeCont. Ops.

1Q 2014$8,929

$1,466$8,803$1,391

4Q 2013$7,825$96$8,193$337

1Q 2013$8,150$981$8,467$1,182Business Overview
Institutional Securities net revenues excluding DVA were $4.5 billion8 reflecting continued strength in
Equity sales and trading and Investment Banking, and improved performance in Fixed Income &Commodities sales and trading.



Wealth Management net revenues were $3.6 billion and pre-tax margin was 19%.9 Fee based asset flows
for the quarter were a record $19.0 billion, with total client assets exceeding $1.9 trillion at quarter end.



Investment Management reported net revenues of $740 million with assets under management or
supervision of $382 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “This quarter we generated higher year-over-year
revenues in all three of our business segments, demonstrating the momentum we have built across the Firm. We
continue to execute on our multi-year strategy to deliver consistent returns for our shareholders through revenue
growth and strong expense discipline. We are pleased that this year we will commence a further share repurchaseof up to $1 billion and double our dividend.”2

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

8

As Reported
Net
Pre-Tax
Revenues
IncomeNet
Revenues

Pre-Tax
Income1Q 2014$4,609$1,353$4,483$1,227

4Q 2013$3,323$(1,263)$3,691$(895)

1Q 2013$4,081$799$4,398$1,116

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $1.4 billion compared with $799
million in the first quarter of last year. The quarter’s pre-tax margin was 29% (excluding DVA, 27%).8,9 Income
after the noncontrolling interest allocation and before taxes was $1.3 billion.10 Net revenues for the current
quarter were $4.6 billion compared with $4.1 billion a year ago. DVA resulted in positive revenue of $126
million in the current quarter compared with negative revenue of $317 million a year ago. Excluding DVA, net
revenues for the current quarter were $4.5 billion compared with $4.4 billion a year ago.8 The following
discussion for sales and trading excludes DVA.


Advisory revenues of $336 million increased from $251 million a year ago reflecting higher levels of M&A
activity. Equity underwriting revenues of $315 million increased from $283 million a year ago reflecting
higher IPO volumes. Fixed income underwriting revenues of $485 million increased from $411 million ayear ago reflecting an increase in loan fees.

Equity sales and trading net revenues of $1.7 billion increased from $1.6 billion a year ago reflecting higher
levels of client activity across products and particularly strong performance in prime brokerage.11



Fixed Income & Commodities sales and trading net revenues of $1.7 billion increased from $1.5 billion ayear ago.11 Results reflect strong performance in commodities and solid results in credit and securitized
products, despite lower volumes across most fixed income businesses.



Other sales and trading net losses of $244 million compared with net revenues of $72 million a year ago,
primarily reflecting costs related to the Firm’s long-term funding.

Compensation expense of $1.9 billion and non-compensation expenses of $1.4 billion for the current quarter
were relatively unchanged from a year ago.7

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $50
million compared with $51 million in the fourth quarter of 2013.12

3

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

Pre-Tax
Income1Q 2014$3,622$691

4Q 2013$3,732$709

1Q 2013$3,470$597

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $691 million compared with $597
million in the first quarter of last year. The quarter’s pre-tax margin was 19%.9 Net revenues for the current
quarter were $3.6 billion compared with $3.5 billion a year ago.


Asset management fee revenues of $2.0 billion increased from $1.9 billion a year ago primarily reflecting an
increase in fee based assets and positive flows.

Transactional revenues13 of $1.0 billion decreased from $1.1 billion a year ago primarily reflecting lower
closed-end fund and other new issue activity.



Net interest income of $539 million increased from $413 million a year ago on higher deposit and loanbalances.

Compensation expense for the current quarter of $2.2 billion increased from $2.1 billion a year ago on higher
revenues.7 Non-compensation expenses of $762 million decreased from $808 million a year ago reflecting
continued expense discipline.

Total client assets exceeded $1.9 trillion at quarter end. Client assets in fee based accounts of $724 billion
increased 17% compared with the prior year quarter. Fee based asset flows for the quarter were $19.0 billion.



Wealth Management representatives of 16,426 increased from 16,284 as of March 31, 2013. Averageannualized revenue per representative of $881,000 and total client assets per representative of $118 million
increased 4% and 7%, respectively, compared with the prior year quarter.

Since the second quarter of 2013, net income no longer includes a noncontrolling interest allocation to Citigroup
Inc. (Citi) following the completed acquisition of the Wealth Management Joint Venture. The prior year quarter
included a noncontrolling interest allocation to Citi of $121 million.14

4

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

Pre-Tax
Income1Q 2014

$740

$263

4Q 2013

$842

$337

1Q 2013

$645

$187

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $263 million compared with pretax income of $187 million in the first quarter of last year.15 The quarter’s pre-tax margin was 36%.9 Income
after the noncontrolling interest allocation and before taxes was $209 million.


Net revenues of $740 million increased from $645 million in the prior year. Results primarily reflect higher
gains on investments in Merchant Banking and higher results in Traditional Asset Management, partly offset
by lower gains on investments in Real Estate Investing.16

Compensation expense for the current quarter of $285 million increased from $259 million a year ago.7 Noncompensation expenses of $192 million decreased from $199 million a year ago.



Assets under management or supervision at March 31, 2014 of $382 billion increased from $341 billion ayear ago primarily reflecting market appreciation and positive flows. The business recorded net flows of $6.0
billion in the current quarter.

CAPITAL
Morgan Stanley’s Common Equity Tier 1 capital ratio was approximately 14.1% and its Tier 1 capital ratio wasapproximately 15.6% at March 31, 2014. Effective January 1, 2014, the Firm became subject to the U.S. BaselIII final rule. Certain requirements in this rule are fully in effect while others are subject to transitional provisions
that, without regard to any impact on capital from future earnings and any issuances of securities qualifying as
regulatory capital, are expected to reduce the Firm’s regulatory capital over the next several years.17
At March 31, 2014, book value and tangible book value per common share were $32.38 and $27.41,18
respectively, based on approximately 2.0 billion shares outstanding.

OTHER MATTERS
The effective tax rate from continuing operations for the current quarter was 33.0%, reflecting the geographic mixof earnings.
During the quarter ended March 31, 2014, the Firm repurchased approximately $150 million of its common stock
or approximately 4.9 million shares. The Firm announced a share repurchase of up to $1.0 billion of common
stock beginning in the second quarter of 2014 through the end of the first quarter of 2015.
The Firm increased its quarterly dividend to $0.10 per share from $0.05 per share, payable on May 15, 2014 tocommon shareholders of record on April 30, 2014.

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)
This earnings release contains forward-looking statements. Readers are cautioned not to place undue relianceon forward-looking statements, which speak only as of the date on which they are made and which reflect
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 in the Company's Annual Report on Form 10K for the year ended December 31, 2013 and other items throughout the Form 10-K 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

1Q 2014
$0.68
$0.04
$0.72

1Q 2013$0.60$(0.11)
$0.49

1,969
0
1,969

1,940
0
1,940

Source: Thomson Reuters – for the period of January 1, 2014 to March 31, 2014 as of April 1, 2014.

5

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the first quarter of2014 and 2013 of approximately $56 million and $26 million, respectively. Refer to page 3 of Morgan Stanley’s Financial
Supplement accompanying this release for the calculation of earnings per share.

7

6

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

1Q 2014$8,803$126$8,9294Q 2013$8,193$(368)$7,825

1Q 2013$8,467$(317)$8,150$1,391$75$1,466$337$(241)$96$1,182$(201)$981

7

The first quarter of 2013 included severance expense of $132 million associated with the Firm’s reduction in force inJanuary 2013 which was reflected in the business segments’ results as follows: Institutional Securities: $113 million, WealthManagement: $15 million and Investment Management: $4 million.
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):

Net revenues – Non-GAAP
DVA impact
Net revenues – GAAP
Pre-tax income (loss) – Non-GAAP
DVA impact
Pre-tax income (loss) – GAAP

1Q 2014$4,483$126$4,6094Q 2013$3,691$(368)$3,323

1Q 2013$4,398$(317)$4,081$1,227$126$1,353$(895)$(368)$(1,263)$1,116$(317)$799

9

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.
10

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

8

11

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):

1Q 2014

1Q 2013

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

$3,115$126$3,241$3,178$(317)$2,861FIC Sales & Trading – Non-GAAP
DVA impact
FIC Sales & Trading – GAAP

$1,654$76$1,730$1,515$(238)$1,277

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

$1,705$50$1,755$1,591$(79)$1,512

12

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, 2013. Refer to page 7 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.
13

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

14

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%. In the quarter ended March 31, 2013, Citi’s
results related to its 35% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests on
page 8 of Morgan Stanley’s Financial Supplement accompanying this release.

15

Results for the first quarter of 2014 and 2013 included pre-tax income of $54 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

Net revenues for the current quarter included gains of $54 million compared with gains of $52 million in the prior year firstquarter related to investments held by certain consolidated real estate funds.

9

17

Beginning with the first quarter of 2014, the Firm calculates its Common Equity Tier 1 capital and Tier 1 capital (and thenumerator of the related Common Equity Tier 1 and Tier 1 risk-based capital ratios) using the U.S. Basel III final rule’s
definition of capital and regulatory deductions and adjustments, subject to transitional provisions. In the first quarter of2014, the Firm calculated the denominator of its risk-based capital ratios using credit risk-weighted assets (RWAs)
determined under the Basel I-based rules and market RWAs determined under the existing market risk rules known as “Basel2.5.” The Firm’s capital takes into consideration regulatory capital requirements as well as capital required for organic
growth, acquisitions and other business needs. These computations are preliminary estimates as of April 17, 2014 (the dateof this release) and could be subject to revision in Morgan Stanley’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2014. The methods for calculating the Firm’s risk-based capital ratios will change through 2022 as aspects of the
U.S. Basel III final rule are phased in and as the Firm begins calculating RWAs using the U.S. Basel III advanced approaches
in the second quarter of 2014, subject to a capital floor consisting of the Basel I-based and Basel 2.5 rules through December
31, 2014 and the U.S. Basel III standardized approach from January 1, 2015.

18

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)

Mar 31, 2014
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
Earnings (loss) applicable to Morgan Stanley common shareholders

$

4,609
3,622
740
(42)
8,929

$

$

1,353
691
263
0
2,307

$

$

$

925
423
118
0
1,466

$

1,449

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

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

Quarter Ended
Dec 31, 2013
$

$

$

$

$

3,323
3,732
842
(72)
7,825

(1,263)
709
337
0
(217)

Mar 31, 2013
$

$

$

$

$

Percentage Change From:
Dec 31, 2013
Mar 31, 2013

4,081
3,470
645
(46)
8,150

39%
(3%)
(12%)
42%
14%

13%
4%
15%
9%
10%

799
597
187
0
1,583

*
(3%)
(22%)
-*

69%
16%
41%
-46%

*
(11%)
(36%)
-*

44%
65%
40%
-49%

$

(563)
476
183
0
96

$

641
256
84
0
981

$

36

$

936

*

55%

0.73
0.02
0.75

$
$
$

0.02
0.02

$
$
$

0.50
(0.01)
0.49

*
*
*

46%
*
53%

0.72
0.02
0.74

$
$
$

0.02
0.02

$
$
$

0.49
(0.01)
0.48

*
*
*

47%
*
54%

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

8.9%
9.2%

0.3%
0.2%

6.3%
6.2%

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

8.3%
8.5%

1.8%
1.7%

7.5%
7.4%

Common Equity Tier 1 capital ratio (transitional)
Tier 1 capital ratio (transitional)

14.1%
15.6%

12.8%
15.7%

11.5%
13.9%

Book value per common share
Tangible book value per common share

$
$

32.38
27.41

$
$

32.24
27.16

$
$

31.21
27.38

Notes: - Beginning with the first quarter of 2014, the Firm calculates its Common Equity Tier 1 capital and Tier 1 capital (and the numerator of the related Common Equity Tier 1 and Tier 1 risk-based
capital ratios) using the U.S. Basel III final rule’s definition of capital and regulatory deductions and adjustments, subject to transitional provisions. For information on the calculation of regulatory
capital and ratios for prior periods, please refer to Part 2, Item 7 "Regulatory Requirements" in Morgan Stanley's Annual Report on Form 10-K for the year ended December 31, 2013. Prior
periods have not been recast to reflect the new requirements.
- Results for the quarters ended March 31, 2014, December 31, 2013 and March 31, 2013, include positive (negative) revenue of $126 million, $(368) million and $(317) 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.
- Common Equity Tier 1 capital ratio (transitional) and the Tier 1 capital ratio (transitional) equals Common Equity Tier 1 capital divided by risk-weighted assets (RWAs) and Tier 1 capital
divided by RWAs, respectively.
- 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 and related End Notes 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

Mar 31, 2014

Quarter Ended
Dec 31, 2013

Mar 31, 2013

$

$

$

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:

1,559
1,512
523
1,166
2,499
284
7,543

1,224
2,694
338
1,167
2,346
199
7,968

(16%)
96%
(31%)
4%
2%
(20%)
14%

7%
10%
6%
4%
9%
14%
8%

1,343
1,035
308
8,929

1,099
817
282
7,825

1,388
1,206
182
8,150

22%
27%
9%
14%

(3%)
(14%)
69%
10%

4,305

3,992

4,214

8%

2%

359
443
424
147
452
492
2,317

369
411
446
190
548
2,086
4,050

377
428
448
134
440
526
2,353

(3%)
8%
(5%)
(23%)
(18%)
(76%)
(43%)

(5%)
4%
(5%)
10%
3%
(6%)
(2%)

6,622

8,042

6,567

(18%)

1%

$

2,307
762
1,545
39
1,584
0
79
1,505
56
1,449

$

(217)
(402)
185
(12)
173
0
89
84
48
36

$

1,583
333
1,250
(19)
1,231
122
147
962
26
936

*
*
*
*
*
-(11%)
*
17%
*

46%
129%
24%
*
29%
*
(46%)
56%
115%
55%

$

1,466
39
1,505

$

96
(12)
84

$

981
(19)
962

*
*
*

49%
*
56%

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

1,308
2,962
359
1,216
2,549
227
8,621

Percentage Change From:
Dec 31, 2013
Mar 31, 2013

$

26%
48%
26%
33.0%

$

*
51%
52%
*

$

19%
52%
29%
21.0%

- Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure to assess operating performance.
- In the quarter ended March 31, 2014, discontinued operations included a pre-tax gain on sale of $45 million ($40 million after tax) and other operating results
related to Canterm Canadian Terminals, Inc. (reported in the Institutional Securities business segment).
- The quarter ended December 31, 2013 included a discrete tax benefit of approximately $192 million consisting of $100 million related to the remeasurement ofreserves and related interest based on new information regarding the status of certain tax authority examinations and $92 million related to the establishmentof a deferred tax asset associated with the reorganization of certain non-U.S. legal entities.
- For the quarter ended March 31, 2013, the income tax provision from continuing operations included a net tax benefit of approximately $142 million consistingof a $81 million benefit resulting from a retroactive change in U.S. tax law and $61 million discrete net tax benefit from the remeasurement of reserves andrelated interest (reported in the Institutional Securities business segment).
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MORGAN STANLEY
Quarterly Earnings Per Share(unaudited, dollars in millions, except for per share data)

Quarter Ended
Dec 31, 2013

Mar 31, 2014

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 (loss) from continuing operations applicable to Morgan Stanley, prior to allocation of income toParticipating Restricted Stock Units

$

1,545
0
79
79
1,466
54
-

$

1,412

Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders$

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

2
1,410

$

Average basic common shares outstanding (millions)

1,449

$

48

$

39
0
39
0
39

Earnings (loss) applicable to Morgan Stanley common shareholders

185
0
89
89
96
48
-

Mar 31, 2013

0
48

1,924

36

*
-(11%)
(11%)
*
13%
--

24%
*
(46%)
(71%)
49%
125%
--

*

48%

2
955

*
*

-48%

(19)
0
(19)
0
(19)

*
-*
-*

*
-*
-*

936

*

55%

1,901

1%

1%

957

$

(12)
0
(12)
0
(12)
$

1,250
122
147
269
981
24
-

$

1,905

Percentage Change From:
Dec 31, 2013
Mar 31, 2013

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

$
$
$

0.73
0.02
0.75

$
$
$

0.02
0.02

$
$
$

0.50
(0.01)
0.49

*
*
*

46%
*
53%

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

$

1,410

$

48

$

955

*

48%

(19)

*

*

936

*

55%

1,940

--

1%

0.49
(0.01)
0.48

*
*
*

47%
*
54%

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

39

Earnings (loss) applicable to Morgan Stanley common shareholders$

Average diluted common shares outstanding and common stock equivalents (millions)

1,449

(12)
$

1,969

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

$
$
$

0.72
0.02
0.74

36

$

1,970

$
$
$

0.02
0.02

$
$
$

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 13of the Financial Supplement and Note 15 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2013.

13