Morgan Stanley 2015 Annual Report Download - page 254

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Transactions with Subsidiaries.
The Parent Company has transactions with its consolidated subsidiaries determined on an agreed-upon basis and has
guaranteed certain unsecured lines of credit and contractual obligations on certain of its consolidated subsidiaries. Certain
reclassifications have been made to prior-period amounts to conform to the current year’s presentation.
Parent Company’s Long-Term Borrowings.
At
December 31,
2015
At
December 31,
2014
(dollars in millions)
Senior debt ...................................................................... $130,817 $ 130,533
Subordinated debt ................................................................ 13,274 13,208
Total ......................................................................... $144,091 $ 143,741
Guarantees.
In the normal course of its business, the Parent Company guarantees certain of its subsidiaries’ obligations under derivative
and other financial arrangements. The Parent Company records Trading assets and Trading liabilities, which include
derivative contracts, at fair value on its condensed statements of financial condition.
The Parent Company also, in the normal course of its business, provides standard indemnities to counterparties on behalf of
its subsidiaries for taxes, including U.S. and foreign withholding taxes, on interest and other payments made on derivatives,
securities and stock lending transactions, and certain annuity products. These indemnity payments could be required based on
a change in the tax laws or change in interpretation of applicable tax rulings. Certain contracts contain provisions that enable
the Parent Company to terminate the agreement upon the occurrence of such events. The maximum potential amount of
future payments that the Parent Company could be required to make under these indemnifications cannot be estimated. The
Parent Company has not recorded any contingent liability in its condensed financial statements for these indemnifications
and believes that the occurrence of any events that would trigger payments under these contracts is remote.
The Parent Company has issued guarantees on behalf of its subsidiaries to various U.S. and non-U.S. exchanges and
clearinghouses that trade and clear securities and/or futures contracts. Under these guarantee arrangements, the Parent
Company may be required to pay the financial obligations of its subsidiaries related to business transacted on or with the
exchanges and clearinghouses in the event of a subsidiary’s default on its obligations to the exchange or the clearinghouse.
The Parent Company has not recorded any contingent liability in its condensed financial statements for these arrangements
and believes that any potential requirements to make payments under these arrangements are remote.
The Parent Company guarantees certain debt instruments and warrants issued by subsidiaries. The debt instruments and
warrants totaled $9.1 billion and $10.0 billion at December 31, 2015 and December 31, 2014, respectively. In connection
with subsidiary lease obligations, the Parent Company has issued guarantees to various lessors. At December 31, 2015 and
December 31, 2014, the Parent Company had $1.1 billion and $1.3 billion of guarantees outstanding, respectively, under
subsidiary lease obligations, primarily in the U.K.
Finance Subsidiary.
The Parent Company fully and unconditionally guarantees the securities issued by Morgan Stanley Finance LLC, a 100%-
owned finance subsidiary.
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