Morgan Stanley 2010 Annual Report Download - page 98

For further description of these commitments, see Note 13 to the consolidated financial statements and
“Quantitative and Qualitative Disclosures about Market Risk—Credit Risk” in Part II, Item 7A herein.
In the normal course of business, the Company enters into various contractual obligations that may require future
cash payments. Contractual obligations include long-term borrowings, other secured financings, contractual
interest payments, contractual payments on time deposits, operating leases, purchase obligations and expected
contributions for pension and postretirement plans. The Company’s future cash payments associated with certain
of its obligations at December 31, 2010 are summarized below:
Payments Due in:
At December 31, 2010 2011 2012-2013 2014-2015 Thereafter Total
(dollars in millions)
Long-term borrowings(1) ......................... $26,911 $63,343 $38,729 $63,474 $192,457
Other secured financings(1) ....................... 3,207 634 591 2,966 7,398
Contractual interest payments(2) ................... 6,305 10,388 7,852 23,346 47,891
Contractual payments on time deposits(3) ............ 1,909 1,960 185 — 4,054
Operating leases—office facilities(4) ................ 680 1,274 925 2,431 5,310
Operating leases—equipment(4) ................... 313 313 152 203 981
Purchase obligations(5) .......................... 862 569 325 131 1,887
Pension and postretirement plans—expected
contribution(6) ............................... 50 — — — 50
Total(7) ................................... $40,237 $78,481 $48,759 $92,551 $260,028
(1) See Note 11 to the consolidated financial statements. Amounts presented for Other secured financings are financings with original
maturities greater than one year.
(2) Amounts represent estimated future contractual interest payments related to unsecured long-term borrowings and secured long-term
financings based on applicable interest rates at December 31, 2010. Amounts include stated coupon rates, if any, on structured or index-
linked notes.
(3) Amounts represent contractual principal and interest payments related to time deposits primarily held at the Company’s Subsidiary
Banks.
(4) See Note 13 to the consolidated financial statements.
(5) Purchase obligations for goods and services include payments for, among other things, consulting, outsourcing, advertising, sponsorship,
computer and telecommunications maintenance agreements, certain license agreements related to MSSB, and certain transmission,
transportation and storage contracts related to the commodities business. Purchase obligations at December 31, 2010 reflect the minimum
contractual obligation under legally enforceable contracts with contract terms that are both fixed and determinable. These amounts
exclude obligations for goods and services that already have been incurred and are reflected on the Company’s consolidated statements
of financial condition.
(6) See Note 21 to the consolidated financial statements.
(7) Amounts exclude unrecognized tax benefits, as the timing and amount of future cash payments are not determinable at this time (see
Note 22 to the consolidated financial statements for further information).
Regulatory Requirements.
The Company is a financial holding company under the Bank Holding Company Act of 1956 and is subject to the
regulation and oversight of the Federal Reserve. The Federal Reserve establishes capital requirements for the
Company, including well-capitalized standards, and evaluates the Company’s compliance with such capital
requirements. The Office of the Comptroller of the Currency establishes similar capital requirements and
standards for the Company’s national bank subsidiaries. See “Supervision and Regulation—Financial Holding
Company” in Part I, Item 1 and “Other Matters—Regulatory Outlook” herein.
The Company calculates its capital ratios and RWAs in accordance with the capital adequacy standards for
financial holding companies adopted by the Federal Reserve. 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. In December 2007, the U.S. banking regulators published final U.S.
implementing regulation incorporating the Basel II Accord, which requires internationally active banking
organizations, as well as certain of their U.S. bank subsidiaries, to implement Basel II standards over the next
several years. The timeline set out in December 2007 for the implementation of Basel II in the U.S. may be
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