Morgan Stanley Increases Reserve for Coleman Litigation by $100 million

New York —

Morgan Stanley (NYSE: MWD) announced today that it is necessary to increase its reserve with respect to the Coleman litigation by $100 million from $260 million to $360 million. The $100 million increase will impact the Company's previously announced preliminary results for the first quarter of 2005 as follows: net income will be reduced to $1,402 million from $1,468 million; earnings per share on a basic and diluted basis will be reduced by $0.06 to $1.31 (basic) and $1.29 (diluted), respectively; return on average common equity will be reduced to 19.7% from 20.7%; and the Company's pre-tax profit margin will be reduced to 30.5% from 32%. The Company intends to file its Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2005, which will contain full financial results for the first quarter of 2005, with the Securities and Exchange Commission on or about April 6, 2005.

Morgan Stanley is a global financial services firm and a market leader in securities, investment management and credit services. With more than 600 offices in 28 countries, Morgan Stanley connects people, ideas and capital to help clients achieve their financial aspirations.