Morgan Stanley 2009 Annual Report Download - page 157

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Impairment losses of approximately $24 million were also included in discontinued operations related to
premises and equipment of an entity sold by the Company in 2009.
There were no liabilities measured at fair value on a non-recurring basis during 2009.
There were no assets or liabilities measured at fair value on a non-recurring basis for which the Company
recognized an impairment charge during the one month ended December 31, 2008.
Fiscal 2008.
Carrying Value at
November 30, 2008
Fair Value Measurements Using:
Total
Losses for
Fiscal 2008(1)
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(dollars in millions)
Receivables—Other
loans(2) ................. $ 634 $— $ 70 $ 564 $(121)
Other investments(3) ........ 164 — — 164 (62)
Premises, equipment and
software costs(4) ......... 91 — — 91 (15)
Goodwill(5) ............... — — — — (673)
Intangible assets(6) ......... 219 — — 219 (46)
Other assets(7) ............. 777 — — 777 (44)
Total ..................... $1,885 $— $ 70 $1,815 $(961)
(1) Impairment losses are recorded within Other expenses in the consolidated statement of income except for impairment losses related to
Receivables—Other loans and Other investments, which are included in Other revenues.
(2) Impairment losses for loans held for investment were calculated based upon the fair value of the underlying collateral. The fair value of
the collateral was determined using external indicative bids, if available, or internal expected recovery models.
(3) Impairment losses recorded were determined primarily using discounted cash flow models.
(4) The impairment charge relates to the fixed income business, which is a reporting unit within the Institutional Securities business segment.
(5) The impairment charge relates to the fixed income business, which is a reporting unit within the Institutional Securities business segment.
The fair value of the fixed income business was estimated by comparison to similar companies using their publicly traded price-to-book
multiples as the basis for valuation. The impairment charge resulted from declines in the credit and mortgage markets in general, which
caused significant declines in the stock market capitalization in the fourth quarter of fiscal 2008, and hence, a decline in the fair value of
the fixed income business (see Note 7).
(6) Impairment losses of $21 million recorded within the Institutional Securities business segment primarily related to intellectual property
rights. Impairment losses of $25 million recorded within the Asset Management business segment primarily related to management
contract intangibles (see Note 7).
(7) Buildings and property were written down to their fair value resulting in an impairment charge of $30 million. Fair values were generally
determined using discounted cash flow models or third-party appraisals and valuations. A deferred commission asset associated with
certain mutual fund sales commissions was written down to its fair value, resulting in an impairment of $14 million. The fair value was
determined using a discounted cash flow model. These charges relate to the Asset Management business segment.
In addition to the impairment losses included in the table above, impairment losses of approximately $277
million (of which, $34 million related to Other investments, $6 million related to Intangible assets and $237
million related to Other assets) were included in discontinued operations related to Crescent (see Note 23).
There were no liabilities measured at fair value on a non-recurring basis during fiscal 2008.
Financial Instruments Not Measured at Fair Value.
Some of the Company’s financial instruments are not measured at fair value on a recurring basis but nevertheless
are recorded at amounts that approximate fair value due to their liquid or short-term nature. Such financial assets
and financial liabilities include: Cash and due from banks, Interest bearing deposits with banks, Cash deposited
with clearing organizations or segregated under federal and other regulations or requirements, Federal funds sold
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