Merrill Lynch & Co., Inc.   Exhibit 99.4
 
Reconciliation of Non-GAAP Measures
Merrill Lynch adopted Statement of Financial Accounting Standards No. 123 (as revised in 2004) for stock-based employee compensation during the first quarter of 2006. Additionally, as a result of a comprehensive review of the retirement provisions in its stock-based compensation plans, Merrill Lynch also modified the retirement eligibility requirements of existing stock awards in order to facilitate transition to more stringent retirement eligibility requirements for future stock awards. These modifications and the adoption of the new accounting standard required Merrill Lynch to accelerate the recognition of compensation expenses for affected stock awards, resulting in the “one-time compensation expenses.” These changes represent timing differences and are not economic in substance.
During the third quarter of 2006, Merrill Lynch completed the merger of its Merrill Lynch Investment Managers business with BlackRock, Inc. Merrill Lynch recognized a gain associated with this merger along with other non-recurring expenses, collectively “Impact of BlackRock Merger”.
Management believes that while the results excluding these one-time compensation expenses and the impact of the BlackRock merger are considered non-GAAP measures, they depict the operating performance of the company more clearly and enable more appropriate period-to-period comparisons.
                                 
Unaudited Earnings Summary   For the Year Ended December 29, 2006 (1)  
    Excluding One-time                    
    Compensation     Impact of One-time              
    Expenses & Impact of     Compensation     Impact of        
(in millions, except per share amounts)   BlackRock Merger     Expenses     BlackRock Merger     GAAP Basis  
Net Revenues (a)
   $ 32,424     $ —     $ 1,969     $ 34,393  
 
                        
 
                                
Non-Interest Expenses
                                
Compensation and benefits (b)
     15,086       1,759       144       16,989  
Non-compensation expenses (c)
     7,077       —       58       7,135  
 
                        
Total Non-Interest Expenses
     22,163       1,759       202       24,124  
 
                        
Earnings From Continuing Operations Before Income
Taxes (d)
     10,261       (1,759 )     1,767       10,269  
Income Tax Expense (e)
     2,796       (582 )     662       2,876  
 
                        
Net Earnings From Continuing Operations
   $ 7,465     $ (1,177 )   $ 1,105     $ 7,393  
 
                        
 
                                
Earnings From Discontinued Operations Before Income
Taxes
   $ 157       —       —     $ 157  
Income Tax Expense
     51       —       —       51  
 
                        
Net Earnings From Discontinued Operations
   $ 106     $ —     $ —     $ 106  
 
                        
Net Earnings
   $ 7,571     $ (1,177 )   $ 1,105     $ 7,499  
 
                        
Preferred Stock Dividends
   $ 188     $ —     $ —     $ 188  
 
                        
Net Earnings Applicable to Common Stockholders
   $ 7,383     $ (1,177 )   $ 1,105     $ 7,311  
 
                        
 
                                
Basic earnings per common share from continuing operations
   $ 8.40     $ (1.37) (2)   $ 1.27 (2)   $ 8.30  
Basic earnings per common share from discontinued operations
     0.12       —       —       0.12  
 
                        
Basic earnings per common share
   $ 8.52     $ (1.37 )   $ 1.27     $ 8.42  
 
                                
Diluted earnings per common share from continuing operations
   $ 7.57     $ (1.23 )   $ 1.14     $ 7.48  
Diluted earnings per common share from discontinued operations
     0.11       —       —       0.11  
 
                        
Diluted earnings per share
   $ 7.68     $ (1.23) (2)   $ 1.14 (2)   $ 7.59  
 
                                
Average Shares Used in Computing Earnings Per Common Share
                                
Basic
     866.7       1.4       —       868.1  
Diluted
     961.5       1.5       —       963.0  
 
                 
Financial Ratios   For the Year Ended (1)
    December 29, 2006
    Excluding One-time    
    Compensation    
    Expenses & Impact of    
    BlackRock Merger   GAAP Basis
Ratio of compensation and benefits to net revenues (b)/(a)
     46.5 %     49.4 %
Ratio of non-compensation expenses to net revenues (c)/(a)
     21.8 %     20.7 %
Effective Tax Rate from continuing operations (e)/(d)
     27.2 %     28.0 %
Pre-tax Profit Margin from continuing operations (d)/(a)
     31.6 %     29.9 %
 
Average Common Equity
   $ 34,354     $ 34,354  
Impact of one-time compensation expenses and the BlackRock merger
     (130 )     —  
 
                
Average Common Equity
     34,224       34,354  
Return on Average Common Equity
     21.6 %     21.3 %
 
(1)   For purposes of comparison with previously published results, data excluding the impact of the one-time compensation expenses and the BlackRock merger assumes the impact is limited to the first and third quarter of 2006, respectively.
 
(2)   EPS calculated using weighted average shares for the year.

 

 

Merrill Lynch & Co., Inc.
 
Reconciliation of Non-GAAP Measures
Merrill Lynch adopted Statement of Financial Accounting Standards No. 123 (as revised in 2004) for stock-based employee compensation during the first quarter 2006. Additionally, as a result of a comprehensive review of the retirement provisions in its stock-based compensation plans, Merrill Lynch also modified the retirement eligibility requirements of existing stock awards in order to facilitate transition to more stringent retirement eligibility requirements for future stock awards. These modifications and the adoption of the new accounting standard required Merrill Lynch to accelerate the recognition of compensation expenses for affected stock awards, resulting in the “one-time compensation expenses.” These changes represent timing differences and are not economic in substance. Management believes that while the results excluding the one-time expenses are considered non-GAAP measures, they depict the operating performance of the company more clearly and enable more appropriate period-to-period comparisons.
 
                         
Unaudited Earnings Summary   For the Six Months Ended June 30, 2006  
    Excluding the Impact of     First Quarter Impact of        
    One-time Compensation     One-time Compensation        
(in millions, except per share amounts)   Expenses     Expenses     GAAP Basis  
Net Revenues (a)
   $ 16,016     $ —     $ 16,016  
 
                  
 
                        
Non-Interest Expenses
                        
Compensation and benefits (b)
     7,961       1,759       9,720  
Non-compensation expenses (c)
     3,419       —       3,419  
 
                  
Total Non-Interest Expenses
     11,380       1,759       13,139  
 
                  
Earnings From Continuing Operations Before Income Taxes (d)
     4,636       (1,759 )     2,877  
Income Tax Expense (e)
     1,394       (582 )     812  
 
                  
Net Earnings From Continuing Operations
   $ 3,242     $ (1,177 )   $ 2,065  
 
                  
 
                        
Earnings From Discontinued Operations Before Income Taxes
   $ 65     $ —     $ 65  
Income Tax Expense
     22       —       22  
 
                  
Net Earnings From Discontinued Operations
   $ 43     $ —     $ 43  
 
                  
Net Earnings
   $ 3,285     $ (1,177 )   $ 2,108  
 
                  
Preferred Stock Dividends
   $ 88     $ —     $ 88  
 
                  
Net Earnings Applicable to Common Stockholders
   $ 3,197     $ (1,177 )   $ 2,020  
 
                  
 
                        
Basic earnings per common share from continuing operations
   $ 3.58     $ (1.35 )   $ 2.23  
Basic earnings per common share from discontinued operations
     0.05       —       0.05  
 
                  
Basic earnings per common share
   $ 3.63     $ (1.35 )   $ 2.28  
 
                        
Diluted earnings per common share from continuing operations
   $ 3.24     $ (1.21 )   $ 2.03  
Diluted earnings per common share from discontinued operations
     0.04       —       0.04  
 
                  
Diluted earnings per common share
   $ 3.28     $ (1.21 )   $ 2.07  
 
                        
Average Shares Used in Computing Earnings Per Common Share
                        
Basic
     881.7       2.9       884.6  
Diluted
     974.4       2.8       977.2  
 
                 
Financial Ratios   For the Six Months Ended
    June 30, 2006
    Excluding the    
    Impact of One-time    
    Compensation    
    Expenses   GAAP Basis
Ratio of compensation and benefits to net revenues (b)/(a)
     49.7 %     60.7 %
Ratio of non-compensation expenses to net revenues (c)/(a)
     21.3 %     21.3 %
Effective Tax Rate from continuing operations (e)/(d)
     30.1 %     28.2 %
Pre-tax Profit Margin from continuing operations (d)/(a)
     28.9 %     18.0 %
 
Average Common Equity
   $ 33,831     $ 33,831  
Average impact of one-time compensation expenses
     (145 )     —  
 
                
Average Common Equity
     33,686       33,831  
Annualized Return on Average Common Equity
     19.0 %     11.9 %

 

 

Merrill Lynch & Co., Inc.
 
Reconciliation of Non-GAAP Measures
Merrill Lynch adopted Statement of Financial Accounting Standards No. 123 (as revised in 2004) for stock-based employee compensation during the first quarter 2006. Additionally, as a result of a comprehensive review of the retirement provisions in its stock-based compensation plans, Merrill Lynch also modified the retirement eligibility requirements of existing stock awards in order to facilitate transition to more stringent retirement eligibility requirements for future stock awards. These modifications and the adoption of the new accounting standard required Merrill Lynch to accelerate the recognition of compensation expenses for affected stock awards, resulting in the “one-time compensation expenses.” These changes represent timing differences and are not economic in substance. Management believes that while the results excluding the one-time expenses are considered non-GAAP measures, they depict the operating performance of the company more clearly and enable more appropriate period-to-period comparisons.
 
                         
Unaudited Earnings Summary   For the Three Months Ended March 31, 2006  
            First Quarter        
    Excluding the Impact of     Impact of One-time        
    One-time Compensation     Compensation        
(in millions, except per share amounts)   Expenses     Expenses     GAAP Basis  
Net revenues (a)
   $ 7,907     $ —     $ 7,907  
 
                  
 
                        
Non-interest expenses
                        
Compensation and benefits (b)
     3,986       1,759       5,745  
Non-compensation expenses (c)
     1,601       —       1,601  
 
                  
Total non-interest expenses
     5,587       1,759       7,346  
 
                  
Earnings from continuing operations before income taxes (d)
     2,320       (1,759 )     561  
Income tax expense (e)
     696       (582 )     114  
 
                  
Net earnings from continuing operations
   $ 1,624     $ (1,177 )   $ 447  
 
                  
 
                        
Earnings from discontinued operations before income taxes
   $ 32     $ —     $ 32  
Income tax expense
     4       —       4  
 
                  
Net earnings from discontinued operations
   $ 28     $ —     $ 28  
 
                  
Net earnings
   $ 1,652     $ (1,177 )   $ 475  
 
                  
Preferred stock dividends
   $ 43     $ —     $ 43  
 
                  
Net earnings applicable to common stockholders
   $ 1,609     $ (1,177 )   $ 432  
 
                  
 
                        
Basic earnings per common share from continuing operations
   $ 1.80     $ (1.34 )   $ 0.46  
Basic earnings per common share from discontinued operations
     0.03       —       0.03  
 
                  
Basic earnings per common share
   $ 1.83     $ (1.34 )   $ 0.49  
 
                  
Diluted earnings per common share from continuing operations
   $ 1.62     $ (1.21 )   $ 0.41  
Diluted earnings per common share from discontinued operations
     0.03       —       0.03  
 
                  
Diluted earnings per common share
   $ 1.65     $ (1.21 )   $ 0.44  
 
                  
 
                        
Average shares used in computing earnings per common share
                        
Basic
     878.0       5.7       883.7  
Diluted
     975.4       5.7       981.1  
 
                 
Financial Ratios   For the Three Months Ended
    March 31, 2006
    Excluding the    
    Impact of One-time    
    Compensation    
    Expenses   GAAP Basis
Ratio of compensation and benefits to net revenues (b)/(a)
     50.4 %     72.7 %
Ratio of non-compensation and benefits to net revenues (c)/(a)
     20.2 %     20.2 %
Effective tax rate from continuing operations (e)/(d)
     30.0 %     20.3 %
Pre-tax profit margin from continuing operations (d)/(a)
     29.3 %     7.1 %
 
Average common equity
   $ 33,800     $ 33,800  
Impact of the BlackRock merger
     (145 )     —  
 
                
Average common equity
     33,655       33,800  
Annualized return on average common equity
     19.1 %     5.1 %