Media Relations: Jeanmarie McFadden 212-761-2433

Investor Relations: Celeste Mellet Brown 212-761-3896

Morgan Stanley Reports First Quarter 2012:


Net Revenues of $6.9 Billion Included the Negative Impact of $2.0 Billion from theTightening of Morgan Stanley’s Debt-Related Credit Spreads (DVA);1 Loss from
Continuing Operations of $0.05 per Diluted Share

Excluding DVA, Net Revenues were $8.9 Billion and Income from Continuing
Operations was $0.71 per Diluted Share2, 3

Broad Based Strength Across Products and Geographic Regions in Fixed Income &Commodities and Equity Sales and Trading; Ranked #1 in Global IPOs, #2 in
Global Announced and Completed M&A; Global Fee Based Asset Flows of $8.7
Billion in Global Wealth Management; Solid Results in Asset Management

NEW YORK, April 19, 2012 – Morgan Stanley (NYSE: MS) today reported net revenues of $6.9 billion for the
first quarter ended March 31, 2012 compared with $7.6 billion a year ago. For the current quarter, the loss fromcontinuing operations applicable to Morgan Stanley was $78 million, or a loss of $0.05 per diluted share4compared with income of $984 million, or $0.51 per diluted share, for the same period a year ago.
Results for the quarter included negative revenue of $2.0 billion compared with negative revenue of $189
million a year ago related to changes in Morgan Stanley’s debt-related credit spreads and other credit factors(Debt Valuation Adjustment, DVA).1
Excluding DVA, net revenues for the current quarter were $8.9 billion compared with $7.8 billion a year ago
and income from continuing operations applicable to Morgan Stanley was $1.4 billion, or $0.71 per diluted,
share, compared with $1.1 billion, or $0.59 a year ago.2 5Compensation expense was $4.4 billion, which included severance expense of $138 million related to staff
reductions,6 compared with $4.3 billion a year ago. Non-compensation expenses of $2.3 billion decreased from
$2.4 billion a year ago.
For the current quarter, the net loss applicable to Morgan Stanley, including discontinued operations, was $0.06
per diluted share, compared with net income of $0.50 per diluted share in the first quarter of 2011.7

1

Summary of Firm Results(dollars in millions)Excluding DVA (2), (3)As Reported

Net
Revenues

MS Earnings
Cont.Ops (1)Net
Revenues

MS Earnings
Cont.Ops (1)1Q 2012$6,935($103)$8,913$1,344

4Q 2011$5,678($254)$5,462($381)

1Q 2011$7,574$752$7,763$866(1)Represents earnings / (loss) from continuing operations applicable to Morgan Stanley common shareholders.
Net revenues for 1Q 2012, 4Q 2011 and 1Q 2011 exclude positive (negative) revenue from DVA of ($1,978) million, $216 million and($189) million, respectively.
(3)
Earnings / (loss) from continuing operations applicable to Morgan Stanley common shareholders for 1Q 2012, 4Q 2011 and 1Q 2011
excludes after-tax DVA impact of ($1,454) million, $127 million and ($116) million, respectively and includes a related allocation of
earnings to Participating Restricted Stock Units of $7 million and $2 million for 1Q 2012 and 1Q 2011, respectively.
(2)

Business Highlights
Sales and trading net revenues were $2.2 billion, or $4.1 billion excluding DVA.8 Fixed Income andCommodities sales and trading net revenues reflected balanced strength across businesses and regions withsolid levels of customer activity and an improved credit environment. Equity sales and trading net
revenues reflected strong performance despite challenging markets.

Investment Banking revenues were $851 million. The Firm ranked #1 in global IPOs and #2 in global
announced and completed M&A.9



Global Wealth Management Group delivered net revenues of $3.4 billion, with global fee based asset flows
of $8.7 billion.



Asset Management reported net revenues of $533 million and assets under management or supervision of$304 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, "This quarter is further evidence that Morgan
Stanley has rebounded from the financial crisis of 2008 and is in a significantly stronger position. Revenues of$8.9 billion, excluding the impact of DVA, were higher on both a year-over-year and a quarter-over-quarter basis.
Of particular note was the strength in sales and trading, which showed broad-based gains across products andregions. In addition, our global alliance with MUFG continues to strengthen, with improving operating
performance in our securities joint venture in Japan and continued loan growth in the U.S. On the near horizon,
we are intensely focused on completing the transition of Morgan Stanley Smith Barney to the new, state-of-the-art
technology platform this summer, as well as maintaining a conservative capital and liquidity profile as wenavigate global markets."2

Summary of Institutional Securities Results(dollars in millions)Excluding DVA (1)As Reported

Net
Revenues

Pre-Tax
IncomeNet
Revenues

Pre-Tax
Income$3,023($312)$5,001$1,666

4Q 2011$2,071($778)$1,855($994)

1Q 2011$3,568$432$3,757$621

1Q 2012(1)

Net revenues for 1Q 2012, 4Q 2011 and 1Q 2011 exclude positive (negative) revenue from DVA of ($1,978) million, $216 million and($189) million, respectively.

INSTITUTIONAL SECURITIESInstitutional Securities reported a pre-tax loss from continuing operations of $312 million compared with pre-tax
income of $432 million in the first quarter of last year. Net revenues for the current quarter were $3.0 billion
compared with $3.6 billion a year ago. DVA resulted in negative revenue of $2.0 billion in the current quartercompared with negative revenue of $189 million a year ago. Excluding DVA, net revenues for the current quarter
were $5.0 billion compared with $3.8 billion a year ago. Due to the impact of DVA in the comparative periods,
the following discussion for sales and trading excludes DVA.


Advisory and equity underwriting revenues declined from a year ago on lower levels of market activity.
Fixed income underwriting revenues increased from a year ago reflecting growth in investment grade, highyield bond and loan fees.

Fixed income and commodities sales and trading net revenues of $2.6 billion increased 34% from a year ago,reflecting increased contributions from most products, with particular strength in interest rates, commodities
and corporate credit.8

Equity sales and trading net revenues of $1.8 billion increased 6% from the prior year reflecting solid
performance across all regions with notable growth in electronic and retail volumes.8

Other sales and trading net losses were $286 million compared with losses of $460 million in the prior year.
Results for the current quarter primarily reflected losses on economic hedges related to the Firm’s long-term
debt and costs related to the amount of liquidity held.



Other revenues were $58 million compared with negative revenues of $602 million in the first quarter of lastyear. Results for the prior year quarter included a loss of $655 million arising from the Firm’s 40% stake in a
Japanese securities joint venture (Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. or MUMSS) controlled
and managed by our partner, Mitsubishi UFJ Financial Group, Inc.



Compensation expense for the current quarter6 was $2.1 billion. The reported compensation to net revenue
ratio was 70%; excluding DVA, this ratio was 42%.10 Non-compensation expenses of $1.2 billion were
essentially unchanged from a year ago.

Morgan Stanley’s average trading Value-at-Risk measured at the 95% confidence level was $84 million
compared with $123 million in the fourth quarter of 2011.

3

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

Pre-Tax
Income1Q 2012$3,414$387

4Q 2011$3,219$238

1Q 2011$3,404$344

GLOBAL WEALTH MANAGEMENT GROUP
Global Wealth Management Group reported pre-tax income from continuing operations of $387 million
compared with $344 million in the first quarter of last year. The quarter’s pre-tax margin was 11%.11 Income
after the noncontrolling interest allocation to Citigroup Inc. and before taxes was $313 million.12


Net revenues of $3.4 billion were essentially unchanged from a year ago as higher asset management and net
interest revenues were mostly offset by lower commissions.

Compensation expense for the current quarter was $2.1 billion with a compensation to net revenue ratio of
62%. Non-compensation expenses were $922 million compared with $951 million a year ago.



Total client assets were $1.7 trillion at quarter end. Client assets in fee-based accounts were $531 billion, or
30% of total client assets. Global fee based asset flows for the quarter were $8.7 billion.



The 17,193 global representatives at quarter end achieved average annualized revenue per global
representative of $787,000. Total client assets per global representative were $101 million.

6

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

Pre-Tax
Income1Q 2012

$533

$128

4Q 2011$424$78

1Q 2011

$622

$125

ASSET MANAGEMENT
Asset Management reported pre-tax income from continuing operations of $128 million compared with $125
million in last year’s first quarter.13 The quarter’s pre-tax margin was 24%.11 Income after the noncontrollinginterest allocation and before taxes was $63 million.


Net revenues were $533 million compared with $622 million a year ago primarily reflecting lower gains on
principal investments in the Merchant Banking business.14

Compensation expense for the current quarter was $218 million with a compensation to net revenue ratio of
41%. Non-compensation expenses of $187 million decreased from $244 million a year ago.



Assets under management or supervision at March 31, 2012 of $304 billion increased from $276 billion ayear ago. The increase primarily reflected net customer inflows in Morgan Stanley’s liquidity funds.

6

4

CAPITAL
Morgan Stanley’s Tier 1 capital ratio, under Basel I, was approximately 16.8% and Tier 1 common ratio wasapproximately 13.2% at March 31, 2012.15
At March 31, 2012, book value and tangible book value per common share were $30.74 and $27.37,16
respectively, based on approximately 2.0 billion shares outstanding.
The annualized return on average common equity from continuing operations, excluding DVA, for the current
quarter was 9.2%.17

OTHER MATTERS
The effective tax rate from continuing operations for the current quarter was 26.5% compared with 27.8% in theprior year first quarter.18
The Firm declared a $0.05 quarterly dividend per common share. The dividend is payable on May 15, 2012 tocommon shareholders of record on April 30, 2012.
During the current quarter, the Firm announced that it reached an agreement to sell Quilter Holdings Ltd., its
stand-alone UK mass-affluent business. This transaction, and the first phase of the previously announced
disposition of Saxon, closed on April 2, 2012.
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 1,300 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, 2011 and other items throughout the Form 10-K, and theCompany’s Current Reports on Form 8-K, including any amendments thereto.

5

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

Income (loss) per diluted share amounts, excluding DVA, are non-GAAP financial measures that the Firm considers usefulfor 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 income (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):

Income (loss) per diluted share applicable to MS – Non-GAAP
DVA impact - 1Q12 DVA of ($1,978), net of tax benefit of $524
Income (loss) per diluted share applicable to MS – GAAP

1Q12
$0.71
$(0.76)$(0.05)

1Q11$0.59$(0.08)$0.51

Average diluted shares – Non-GAAP
DVA impact
Average diluted shares – GAAP

1,903
(26)
1,877

1,472
0
1,472

3

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 othercompanies. Whenever we refer to a non-GAAP financial measure, we will also generally present, the most directlycomparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of thedifferences between the non-GAAP financial measure we reference with such comparable GAAP financial measure.
4

Includes preferred dividends and other adjustments related to the calculation of earnings per share of approximately $25
million for the quarter ended March 31, 2012 and $232 million for the quarter ended March 31, 2011. Refer to page 3 ofMorgan Stanley’s Financial Supplement accompanying this release for the calculation of earnings per share.
5

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

Income (loss) applicable to MS – Non-GAAP
DVA impact - 1Q12 DVA of ($1,978), net of tax benefit of $524
Income (loss) applicable to MS – GAAP6

1Q12$1,376$(1,454)
$(78)

4Q11
$(356)$127$(229)

1Q11$1,100$(116)$984

The severance expense is associated with the Firm’s reduction in force in January 2012 and is recorded in the businesssegments’ results as follows: Institutional Securities: $108 million, Global Wealth Management: $25 million and AssetManagement: $5 million.

67

Discontinued operations for the current quarter primarily reflected an after tax loss related to Saxon (reported in theInstitutional Securities business segment) and the operating results of Quilter Holdings Ltd. (reported in the Global WealthManagement business segment).

8

Sales & Trading net revenues, including Fixed Income and Commodities (FIC) and Equity Sales & 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 & Trading, including FIC and Equity Sales & Trading
net revenues from a non-GAAP to GAAP basis is as follows (amounts are presented in millions):

9

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

1Q12
$4,141$(1,978)$2,163

1Q11$3,208$(189)$3,019FIC Sales & Trading – Non-GAAP
DVA impact
FIC Sales & Trading – GAAP

$2,594$(1,597)$997$1,936$(159)$1,777

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

$1,833$(381)$1,452$1,732$(30)$1,702

Source: Thomson Reuters – for the period of January 1, 2012 to March 31, 2012 as of April 3, 2012.

10

The compensation to net revenue ratio is calculated as compensation expense of $2,108 million divided by net revenue of$3,023 million. Excluding DVA, the denominator is increased by $1,978 million. The compensation to net revenue ratio
excluding DVA is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors
use to assess operating performance.
11

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

12

Morgan Stanley owns 51% of the Morgan Stanley Smith Barney joint venture (MSSB), which is consolidated. The results
related to the 49% interest retained by Citigroup Inc. are reported in net income (loss) applicable to noncontrolling interestson page 9 of Morgan Stanley’s Financial Supplement accompanying this release.
13

Results for the first quarter of 2012 and 2011 included pre-tax income of $65 million and $28 million, respectively, related
to principal investments held by certain consolidated real estate funds. The limited partnership interests in these funds arereported in net income (loss) applicable to noncontrolling interests on page 11 of Morgan Stanley’s Financial Supplement
accompanying this release.
14

Results for the current quarter included gains of $67 million compared with gains of $42 million in the prior year quarter
related to principal investments held by certain consolidated real estate funds.

15

The Firm calculates its Tier 1 capital ratio and risk-weighted assets in accordance with the capital adequacy standards forfinancial holding companies adopted by the Federal Reserve Board. These standards are based upon a framework describedin the International Convergence of Capital Measurement and Capital Standards, July 1988, as amended, also referred to as
Basel I. In accordance with the Federal Reserve Board’s definition, Tier 1 common capital is defined as Tier 1 capital lessnon-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 April 19, 2012 (the date of this release) and could be subject to revision in Morgan Stanley’s Quarterly Reporton Form 10-Q for the quarter ended March 31, 2012.

7

16

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 and including only the Firm’s share of MSSB’s
goodwill and intangible assets. Tangible book value per common share equals tangible common equity divided by period
end common shares outstanding.

17

The return on average common equity is calculated as annualized earnings applicable to Morgan Stanley commonshareholders from continuing operations, prior to the allocation of income to Participating Restricted Stock Units, divided byaverage common equity. The return on average common equity excluding DVA is a non-GAAP financial measure that the
Firm considers to be a useful measure that the Firm and investors use to assess operating performance. The reconciliation ofincome (loss) from continuing operations applicable to Morgan Stanley common shareholders and average common equityfrom a non-GAAP to GAAP basis are as follows (amounts are presented in millions):

Income (loss) applicable to MS common shareholders – Non-GAAP
DVA impact
Income (loss) applicable to MS common shareholders – GAAP

1Q12
$1,352$(1,454)$(102)

Average common equity – Non-GAAP
Inception to date, net of tax DVA impact
Average common equity – GAAP

$59,033$1,452$60,48518

For the quarter ended March 31, 2011, the Firm’s effective tax rate from continuing operations of 27.8% excluded discrete
tax gains of approximately $700 million associated with the sale of Revel Entertainment Group, LLC and the MUMSS loss
noted above.

8

MORGAN STANLEY
Quarterly Financial Summary(unaudited, dollars in millions)

Quarter Ended
Dec 31, 2011

Mar 31, 2012
Net revenues
Institutional Securities
Global Wealth Management Group
Asset Management
Intersegment Eliminations
Consolidated net revenues

3,023
3,414
533
(35)
6,935

$

(312)
387
128
0
203

$

$

$

(296)
193
25
0
(78)

Earnings (loss) applicable to Morgan Stanley common shareholders$

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

Income (loss) from continuing operations before tax
Institutional Securities
Global Wealth Management Group
Asset Management
Intersegment Eliminations
Consolidated income (loss) from continuing operations before tax
Income (loss) applicable to Morgan Stanley
Institutional Securities
Global Wealth Management Group
Asset Management
Intersegment Eliminations
Consolidated income (loss) applicable to Morgan Stanley

$

2,071
3,219
424
(36)
5,678

$

(778)
238
78
0
(462)

$

$

$

(366)
131
6
0
(229)

(119)

$

$
$
$

(0.05)(0.01)(0.06)$$$(0.05)(0.01)(0.06)$$$$

Financial Metrics:
Return on average common equityfrom continuing operations
Return on average common equity
Tier 1 common capital ratio
Tier 1 capital ratio
Book value per common share
Tangible book value per common share

Mar 31, 2011

$
$

3,568
3,404
622
(20)
7,574

46%
6%
26%
3%
22%

(15%)
-(14%)
(75%)
(8%)

432
344
125
0
901

60%
63%
64%
-*

*
13%
2%
-(77%)

$

734
182
68
0
984

19%
47%
*
-66%

*
6%
(63%)
-*

(275)

$

736

57%

*

$
$
$

(0.14)(0.01)(0.15)$$$

0.52(0.01)
0.51

64%
-60%

*
-*

$
$
$

(0.14)(0.01)(0.15)$$$

0.51(0.01)
0.50

64%
-60%

*
-*

$

$

$

$

*
*

*
*

6.3%
6.2%

13.2%
16.8%

12.7%
16.3%

8.9%
14.4%

30.74
27.37

Percentage Change From:
Dec 31, 2011
Mar 31, 2011

$
$

31.42
27.95

$
$

31.45
26.97

Notes: - Results for the quarters ended March 31, 2012, December 31, 2011 and March 31, 2011 include positive (negative) revenue of $(1,978) million, $216 million
and $(189) million, respectively, related to the movement in Morgan Stanley's credit spreads and other credit factors on certain long-term and short-term debt.
- Income (loss) applicable to Morgan Stanley represents consolidated income (loss) from continuing operations applicable to Morgan Stanley before gain (loss)
from discontinued operations.
- The return on average common equity and tangible book value per common share are non-GAAP measures that the Firm considers to be a useful measurethat the Firm and investors use to assess operating performance and capital adequacy.
- Tier 1 common capital ratio equals Tier 1 common equity divided by Risk Weighted Assets (RWA).
- Tier 1 capital ratio equals Tier 1 capital divided by RWA. See page 4 of the financial supplement for additional information related to this calculation.
- 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.

9

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

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

Mar 31, 2012

Quarter Ended
Dec 31, 2011

Mar 31, 2011

$

$

$

(12%)

149%
(39%)
2%
7%
12%
29%

(19%)
(74%)
(18%)
3%
*
(8%)

1,542
1,601
(59)
6,935

1,685
1,417
268
5,678

1,859
1,853
6
7,574

(8%)
13%
*
22%

(17%)
(14%)
*
(8%)

4,431

3,793

4,285

17%

3%

392
403
459
146
412
489
2,301

383
379
471
160
487
467
2,347

397
401
440
142
403
605
2,388

2%
6%
(3%)
(9%)
(15%)
5%
(2%)

(1%)
-4%
3%
2%
(19%)
(4%)

6,732

6,140

6,673

10%

1%

$

203
54
149
(15)
134
228
(94)
25
(119)

$

(462)
(297)
(165)
(19)
(184)
66
(250)
25
(275)

$

901
(244)
1,145
(15)
1,130
162
968
232
736

*
*
*
21%
*
*
62%
-57%

(77%)
*
(87%)
-(88%)
41%
*
(89%)
*

$

(78)
(16)
(94)

$

(229)
(21)
(250)

$

984
(16)
968

66%
24%
62%

*
-*

Total non-interest expenses

Effective tax rate from continuing operations

1%

2,977
329
1,439
2,083
(474)
7,568

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

Pre-tax profit margin
Compensation and benefits as a % of net revenues
Non-compensation expenses as a % of net revenues

1,214

968
140
1,149
2,004
98
5,410

Non-interest expenses:
Compensation and benefits

Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations
Gain (loss) from discontinued operations after tax
Net income (loss) applicable to Morgan Stanley

1,051

2,407
85
1,177
2,152
110
6,994

Interest income
Interest expense
Net interest
Net revenues

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 (loss) applicable to noncontrolling interests
Net income (loss) applicable to Morgan Stanley
Preferred stock dividend / Other
Earnings (loss) applicable to Morgan Stanley common shareholders

1,063

Percentage Change From:
Dec 31, 2011
Mar 31, 2011

$

$

$

3%
64%
33%

*
67%
41%

12%
57%
32%

26.5%

*

*

Notes: - Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating
performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
- For the quarter ended March 31, 2012, discontinued operations primarily reflected an after-tax loss related to the first phase of the previously announced
disposition of Saxon (reported in the Institutional Securities business segment) and the operating results of Quilter Holdings Ltd., (Quilter) (reported in the
Global Wealth Management business segment).
- The quarter ended December 31, 2011, Principal Transactions - Trading included a loss of $1,742 million related to the MBIA settlement (MBIA).
- Other revenues for the quarter ended March 31, 2011, included a loss of approximately $655 million related to the 40% stake in a Japanese securities joint
venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. ("MUMSS") controlled and managed by our partner, Mitsubishi UFJ Financial Group Inc.
- The quarter ended March 31, 2011 included a discrete net tax benefit of $447 million from the remeasurement of a deferred tax asset and the reversal of a
related valuation allowance that are both associated with the sale of Revel Entertainment Group, LLC (Revel). Excluding this discrete tax gain and tax
benefit of $230 million related to the MUMSS loss, the effective tax rate for the quarter was 27.8%.
- Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).
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MORGAN STANLEY
Quarterly Earnings Per Share(unaudited, dollars in millions, except for per share data)
01/00/00 00:00
Quarter Ended
Mar 31, 2012

Income (loss) from continuing operations
Net income (loss) from continuing operations applicable to noncontrolling interest
Income from continuing operations applicable to Morgan Stanley
Less: Preferred Dividends
Less: MUFG preferred stock conversion
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income to Participating
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

$

149
227
(78)
(24)
-

$

(102)

$

Gain (loss) from discontinued operations after tax
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

(1)
(103)

$

Average basic common shares outstanding (millions)

(119)

(165)
64
(229)
(24)
-

Mar 31, 2011

$

(253)

$

(15)
(1)
(16)
0
(16)

Earnings (loss) applicable to Morgan Stanley common shareholders

Percentage Change From:

Dec 31, 2011

(1)
(254)

1,877

(275)

Mar 31, 2011

*
*
66%
---

(87%)
41%
*
89%
--

60%

*

(12)
752

-59%

92%
*

(15)
(1)
(16)
0
(16)

21%
50%
24%
-24%

------

736

57%

*

1,456

1%

29%

1,145
161
984
(220)
764

$

(19)
(2)
(21)
0
(21)
$

Dec 31, 2011

$

1,850

Earnings per basic share:
Income from continuing operations
Discontinued operations
Earnings per basic share$$$(0.05)(0.01)(0.06)$$$(0.14)(0.01)(0.15)$$$

0.52(0.01)
0.51

64%
-60%

*
-*

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

$

(103)

$

(254)

$

752

59%

*

$

(103)

$

(254)

$

752

59%

*

(16)

24%

--

736

57%

*

1,472

1%

28%

0.51
(0.01)
0.50

64%
-60%

*
-*

Diluted EPS Adjustments:
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders(16)

Earnings (loss) applicable to common shareholders plus assumed conversions$

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

(119)

(21)
$

1,877

Earnings per diluted share:
Income from continuing operations
Discontinued operations
Earnings per diluted share$$$(0.05)(0.01)(0.06)

(275)

$

1,850

$
$
$

(0.14)(0.01)(0.15)$$$

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, seepage 14 of the financial supplement and Note 2 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2011.

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