Exhibit 99.1
Merrill Lynch & Co., Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Financial Statements
The accompanying unaudited pro forma condensed consolidated financial statements have been prepared to reflect Merrill Lynch & Co., Inc.’s (“Merrill Lynch”) sale of two of its U.S. bank subsidiaries, Merrill Lynch Bank USA and its consolidated subsidiaries (“MLBUSA”) and Merrill Lynch Bank & Trust Co., FSB and its consolidated subsidiaries (“MLBT-FSB” and together with MLBUSA, the “ML U.S. Banks”), to Bank of America Corporation (“Bank of America”). The ML U.S. Banks were both wholly-owned subsidiaries of Merrill Lynch. Merrill Lynch is a wholly-owned subsidiary of Bank of America.
Both transactions were executed by the sale of shares of the respective entities by Merrill Lynch to Bank of America. The sale price of each entity was equal to its net book value as of the date of transfer. Consideration for the sale of MLBUSA was in the form of a floating rate demand note payable from Bank of America to Merrill Lynch, while MLBT-FSB was sold for cash. The demand note received by Merrill Lynch in connection with the MLBUSA sale had a stated interest rate that was a market rate at the time of sale. The sale of MLBUSA was completed on July 1, 2009. The sale of MLBT-FSB was completed on November 2, 2009.
The unaudited pro forma condensed consolidated statements of operations for the fiscal year ended December 26, 2008 and for the six months ended June 30, 2009 give effect to the sales as if they had occurred on December 29, 2007, the first day of Merrill Lynch’s 2008 fiscal year. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2009 gives effect to the sales as if they had occurred as of that date. The unaudited pro forma condensed consolidated financial statements are subject to the assumptions and adjustments set forth in the accompanying notes. Merrill Lynch management believes that the assumptions used and adjustments made are reasonable. The unaudited pro forma condensed consolidated financial statements are for illustrative and informational purposes only and are not intended to represent, or be indicative of, what Merrill Lynch’s results of operations or financial position would have been had the transactions occurred on the dates indicated. Further, the unaudited pro forma condensed consolidated financial statements should not be considered representative of Merrill Lynch’s future financial position or results of operations.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with:
•   the accompanying notes to the unaudited pro forma condensed consolidated financial statements;
 
•   Merrill Lynch’s Annual Report on Form 10-K for the fiscal year ended December 26, 2008; and
 
•   Merrill Lynch’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2009 and June 30, 2009.

 

 

Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
                                 
    June 30, 2009
    Merrill Lynch   Sale of ML   Pro forma   Merrill Lynch
    Historical (a)   U.S. Banks (b)   Adjustments   Pro forma
ASSETS
                                
 
                                
Cash and cash equivalents
   $ 60,500     $ (41,377 )   $ 4,152 (c)   $ 23,275  
 
                                
Cash and securities segregated for regulatory purposes or deposited with clearing organizations
     27,026       —       —       27,026  
 
                                
Securities financing transactions
                                
Receivables under resale agreements
     71,350       (30 )     —       71,320  
Receivables under securities borrowed transactions
     42,398       —       —       42,398  
 
 
     113,748       (30 )     —       113,718  
 
 
                                
Trading assets, at fair value
                                
Derivative contracts
     63,727       (9 )     —       63,718  
Corporate debt and preferred stock
     22,286       —       —       22,286  
Equities and convertible debentures
     23,678       —       —       23,678  
Non-U.S. governments and agencies
     15,876       —       —       15,876  
Mortgages, mortgage-backed, and asset-backed
     8,291       —       —       8,291  
U.S. Government and agencies
     3,721       —       —       3,721  
Municipals, money markets and physical commodities
     6,044       —       —       6,044  
 
 
     143,623       (9 )     —       143,614  
 
 
                                
Investment securities
     44,552       (5,797 )     —       38,755  
 
                                
Securities received as collateral, at fair value
     11,358       —       —       11,358  
 
                                
Receivables from Bank of America
     3,015       —       8,922 (c)     11,937  
 
                                
Other receivables
                                
 
                                
Customers
     26,424       (43 )     —       26,381  
Brokers and dealers
     4,833       (61 )     —       4,772  
Interest and other
     15,712       (1,198 )     —       14,514  
 
 
     46,969       (1,302 )     —       45,667  
 
 
                                
Loans, notes, and mortgages
     88,279       (49,060 )     —       39,219  
 
                                
Equipment and facilities, net
     2,654       (148 )     —       2,506  
 
                                
Goodwill and other intangible assets
     10,519       (1,090 )     —       9,429  
 
                                
Other assets
     23,985       (4,358 )     —       19,627  
 
 
                                
Total Assets
   $ 576,228     $ (103,171 )   $ 13,074     $ 486,131  
 

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Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
(dollars in millions)
                                 
    June 30, 2009
    Merrill Lynch   Sale of ML   Proforma   Merrill Lynch
    Historical (a)   U.S. Banks (b)   Adjustments   Pro forma
LIABILITIES
                                
Securities financing transactions
                                
Payables under repurchase agreements
   $ 63,748     $ —     $ —     $ 63,748  
Payables under securities loaned transactions
     20,065       —       —       20,065  
 
 
     83,813       —       —       83,813  
 
 
                                
Short-term borrowings
     1,934       (411 )     —       1,523  
 
                                
Deposits
     101,727       (86,757 )     —       14,970  
 
                                
Trading liabilities, at fair value
                                
Derivative contracts
     39,758       (11 )     —       39,747  
Equities and convertible debentures
     12,265       —       —       12,265  
Non-U.S. governments and agencies
     11,411       —       —       11,411  
Corporate debt and preferred stock
     1,078       —       —       1,078  
U.S. Government and agencies
     923       —       —       923  
Municipals, money markets and other
     899       (10 )     —       889  
 
 
     66,334       (21 )     —       66,313  
 
 
                                
Obligation to return securities received as collateral, at fair value
     11,358       —       —       11,358  
 
                                
Payables to Bank of America
     31,756       —       —       31,756  
 
                                
Other payables
                                
Customers
     39,812       —       —       39,812  
Brokers and dealers
     9,447       —       —       9,447  
Interest and other
     24,915       (1,811 )     —       23,104  
 
 
     74,174       (1,811 )     —       72,363  
 
 
                                
Long-term borrowings
     162,965       (1,097 )     —       161,868  
Junior subordinated notes (related to trust preferred securities)
     3,540       —       —       3,540  
 
Total Liabilities
     537,601       (90,097 )     —       447,504  
 
 
                                
Total Stockholders’ Equity
     38,627       (13,074 )     13,074 (c)     38,627  
 
Total Liabilities and Stockholders’ Equity
   $ 576,228     $ (103,171 )   $ 13,074     $ 486,131  
 
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
 

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MERRILL LYNCH & CO., INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
  (a)   Reflects Merrill Lynch’s historical condensed consolidated balance sheet.
 
  (b)   Reflects Merrill Lynch’s transfer of the ML U.S. Banks’ assets and liabilities in connection with the sale of the ML U.S. Banks’ common stock to Bank of America.
 
  (c)   Reflects the receipt of a note receivable from Bank of America equal to the net book value of MLBUSA and the receipt of cash from Bank of America equal to the net book value of MLBT-FSB as of the balance sheet date.

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Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations (Unaudited)
(dollars in millions, except per share amounts)
                                 
    Fiscal Year Ended December 26, 2008  
    Merrill Lynch     ML U.S. Banks             Merrill Lynch  
    Historical     Historical     Pro forma     Pro forma  
    Operating Results (a)     Operating Results (b)     Adjustments     Operating Results  
Revenues
                                
Principal transactions
   $ (27,225 )   $ 399     $ —     $ (26,826 )
Commissions
     6,895       (19 )     —       6,876  
Managed accounts and other fee-based revenues
     5,544       (673 )     —       4,871  
Investment banking
     3,733       (61 )     —       3,672  
Earnings from equity method investments
     4,491       (16 )     —       4,475  
Other
     (10,065 )     8,019       (4,307 )(c)     (6,353 )
 
                        
Subtotal
     (16,627 )     7,649       (4,307 )     (13,285 )
Interest and dividend revenues
     33,383       (3,872 )     239 (d)     29,750  
Less interest expense
     29,349       (1,680 )     —       27,669  
 
                        
Net interest profit
     4,034       (2,192 )     239       2,081  
 
                        
Revenues, net of interest expense
     (12,593 )     5,457       (4,068 )     (11,204 )
 
                        
Non-interest expenses
                                
Compensation and benefits
     14,763       (469 )     —       14,294  
Communications and technology
     2,201       (62 )     24 (e)     2,163  
Brokerage, clearing, and exchange fees
     1,394       (34 )     —       1,360  
Occupancy and related depreciation
     1,267       (86 )     10 (e)     1,191  
Professional fees
     1,058       (47 )     —       1,011  
Advertising and market development
     652       (33 )     —       619  
Office supplies and postage
     215       (15 )     —       200  
Other
     2,402       (278 )     —       2,124  
Payment related to price reset on common stock offering
     2,500       —       —       2,500  
Goodwill impairment charge
     2,300       —       —       2,300  
Restructuring charge
     486       (22 )     —       464  
 
                        
Total non-interest expenses
     29,238       (1,046 )     34       28,226  
 
                        
Pre-tax (loss) from continuing operations
     (41,831 )     6,503       (4,102 )     (39,430 )
Income tax (benefit)
     (14,280 )     2,575       (1,682 )     (13,387 )
 
                        
Net (loss) from continuing operations
   $ (27,551 )   $ 3,928     $ (2,420 )   $ (26,043 )
 
                        
Basic (loss) per common share from continuing operations (f)
   $ (24.82 )                   $ (23.59 )
Diluted (loss) per common share from continuing operations (f)
   $ (24.82 )                   $ (23.59 )
Average shares used in computing (losses) per common share
                                
Basic
     1,225.6                       1,225.6  
Diluted
     1,225.6                       1,225.6  
 
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.    
 

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Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
(dollars in millions)
                                 
    Six Months Ended June 30, 2009  
    Merrill Lynch     ML U.S. Banks             Merrill Lynch  
    Historical     Historical     Pro forma     Pro forma  
    Operating Results (a)     Operating Results (b)     Adjustments     Operating Results  
Revenues
                                
Principal transactions
   $ 4,263     $ 6     $ —     $ 4,269  
Commissions
     2,733       (9 )     —       2,724  
Managed accounts and other fee-based revenues
     2,121       (325 )     —       1,796  
Investment banking
     1,468       (14 )     —       1,454  
Earnings from equity method investments
     94       (21 )     —       73  
Other
     1,043       (271 )     —       772  
 
                        
Subtotal
     11,722       (634 )     —       11,088  
Interest and dividend revenues
     6,819       (1,583 )     61 (d)     5,297  
Less interest expense
     6,424       (337 )     —       6,087  
 
                        
Net interest profit
     395       (1,246 )     61       (790 )
 
                        
Revenues, net of interest expense
     12,117       (1,880 )     61       10,298  
 
                        
Non-interest expenses
                                
Compensation and benefits
     6,436       (218 )     —       6,218  
Communications and technology
     894       (29 )     11 (e)     876  
Occupancy and related depreciation
     553       (42 )     3 (e)     514  
Brokerage, clearing, and exchange fees
     492       (16 )     —       476  
Advertising and market development
     159       (13 )     —       146  
Professional fees
     248       (15 )     —       233  
Office supplies and postage
     77       (5 )     —       72  
Other
     902       (251 )     —       651  
 
                        
Total non-interest expenses
     9,761       (589 )     14       9,186  
 
                        
Pre-tax earnings from continuing operations
     2,356       (1,291 )     47       1,112  
Income tax expense
     516       (466 )     19       69  
 
                        
Net earnings from continuing operations
   $ 1,840     $ (825 )   $ 28     $ 1,043  
 
                        
Basic earnings per common share from continuing operations (g)
     N/A                       N/A  
Diluted earnings per common share from continuing operations (g)
     N/A                       N/A  
 
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.
 

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MERRILL LYNCH & CO., INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(a)   Reflects Merrill Lynch’s historical condensed consolidated statements of operations.
 
(b)   Reflects the elimination of the historical revenues and expenses of the ML U.S. Banks from Merrill Lynch’s historical operating results.
 
(c)   Reflects an adjustment for losses on intercompany sales to other Merrill Lynch entities of MLBUSA’s available-for-sale securities that were reported within MLBUSA’s stand alone financial statements for fiscal year 2008. The intercompany losses were eliminated in consolidation within Merrill Lynch’s historical operating results.
 
(d)   Represents interest imputed on the note receivable from Bank of America in connection with the sale of MLBUSA. Interest was imputed as if the sale had occurred on December 29, 2007, the first day of Merrill Lynch’s 2008 fiscal year.
 
(e)   Reflects adjustments associated with certain allocated costs related to the ML U.S. Banks. Such allocated costs will be retained by Merrill Lynch as they represent certain corporate expenses that will not be transferred with the ML U.S. Banks in connection with the sale to Bank of America.
 
(f)   Includes the impact of preferred stock dividends of $2,869 million for the fiscal year ended December 26, 2008.
 
(g)   Earnings per share data is not provided for the six months ended June 30, 2009 as Merrill Lynch was a wholly-owned subsidiary of Bank of America during that period.

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