| Merrill Lynch & Co., Inc. | Attachment I | ||||||||||||||||||
| Preliminary Unaudited Earnings Summary | |||||||||||||||||||
| For the Three Months Ended | Percent Inc / (Dec) | ||||||||||||||||||
| (in millions, except per share amounts) |
Dec. 28, |
Sept. 28, |
Dec. 29, |
4Q07 vs. |
4Q07 vs. |
||||||||||||||
| Revenues | |||||||||||||||||||
| Principal transactions | $ | (12,596 | ) | $ | (5,761 | ) | $ | 2,206 |
N/M |
% |
N/M |
% |
|||||||
| Commissions | 1,924 | 1,860 | 1,523 | 3 | 26 | ||||||||||||||
| Investment banking | 1,267 | 1,277 | 1,506 | (1 | ) | (16 | ) | ||||||||||||
| Managed accounts and other fee-based revenues | 1,440 | 1,392 | 1,238 | 3 | 16 | ||||||||||||||
| Earnings from equity method investments(1) | 360 | 281 | 186 | 28 | 94 | ||||||||||||||
| Other (2) | (2,133 | ) | (983 | ) | 651 | N/M | N/M | ||||||||||||
| Subtotal | (9,738 | ) | (1,934 | ) | 7,310 | N/M | N/M | ||||||||||||
| Interest and dividend revenues | 14,170 | 15,636 | 11,318 | (9 | ) | 25 | |||||||||||||
| Less interest expense | 12,624 | 13,322 | 10,243 | (5 | ) | 23 | |||||||||||||
| Net interest profit | 1,546 | 2,314 | 1,075 | (33 | ) | 44 | |||||||||||||
| Total revenues, net of interest expense | (8,192 | ) | 380 | 8,385 | N/M | N/M | |||||||||||||
| Non-interest expenses | |||||||||||||||||||
| Compensation and benefits | 4,339 | 1,979 | 3,298 | 119 | 32 | ||||||||||||||
| Communications and technology | 597 | 499 | 476 | 20 | 25 | ||||||||||||||
| Brokerage, clearing, and exchange fees | 395 | 364 | 293 | 9 | 35 | ||||||||||||||
| Occupancy and related depreciation | 306 | 295 | 247 | 4 | 24 | ||||||||||||||
| Professional fees | 311 | 245 | 263 | 27 | 18 | ||||||||||||||
| Advertising and market development | 249 | 181 | 192 | 38 | 30 | ||||||||||||||
| Office supplies and postage | 64 | 54 | 59 | 19 | 8 | ||||||||||||||
| Other | 467 | 401 | 376 | 16 | 24 | ||||||||||||||
| Total non-interest expenses | 6,728 | 4,018 | 5,204 | 67 | 29 | ||||||||||||||
| Pre-tax (loss)/earnings from continuing operations | (14,920 | ) | (3,638 | ) | 3,181 | N/M | N/M | ||||||||||||
| Income tax (benefit)/expense | (4,623 | ) | (1,258 | ) | 953 | N/M | N/M | ||||||||||||
| Net (loss)/earnings from continuing operations | (10,297 | ) | (2,380 | ) | 2,228 | N/M | N/M | ||||||||||||
| Discontinued operations: | |||||||||||||||||||
| Pre-tax earnings from discontinued operations | 795 | 211 | 175 | 277 | 354 | ||||||||||||||
| Income tax expense | 331 | 72 | 57 | 360 | 481 | ||||||||||||||
| Net earnings from discontinued operations | 464 | 139 | 118 | 234 | 293 | ||||||||||||||
| Net (loss)/earnings | $ | (9,833 | ) | $ | (2,241 | ) | $ | 2,346 | N/M | N/M | |||||||||
| Preferred stock dividends | $ | 73 | $ | 73 | $ | 50 | 0 | 46 | |||||||||||
| Net (loss)/earnings applicable to common stockholders | $ | (9,906 | ) | $ | (2,314 | ) | $ | 2,296 | N/M | N/M | |||||||||
| Basic (loss)/earnings per common share from continuing operations | (12.57 | ) | (2.99 | ) | 2.57 | N/M | N/M | ||||||||||||
| Basic earnings per common share from discontinued operations | 0.56 | 0.17 | 0.14 | 229 | 300 | ||||||||||||||
| Basic (loss)/earnings per common share | $ | (12.01 | ) | $ | (2.82 | ) | $ | 2.71 | N/M | N/M | |||||||||
| Diluted (loss)/earnings per common share from continuing operations | (12.57 | ) | (2.99 | ) | 2.29 | N/M | N/M | ||||||||||||
| Diluted earnings per common share from discontinued operations | 0.56 | 0.17 | 0.12 | 229 | 367 | ||||||||||||||
| Diluted (loss)/earnings per common share | $ | (12.01 | ) | $ | (2.82 | ) | $ | 2.41 | N/M | N/M | |||||||||
| Average shares used in computing earnings per common share | |||||||||||||||||||
| Basic | 825.0 | 821.6 | 847.4 | 0 | (3 | ) | |||||||||||||
| Diluted | 825.0 | 821.6 | 952.2 | 0 | (13 | ) | |||||||||||||
|
Annualized return on average common equity from continuing operations |
N/M | N/M | 24.3 | % | |||||||||||||||
| Annualized return on average common equity | N/M | N/M | 25.6 | % | |||||||||||||||
| N/M = Not Meaningful | |||||||||||||||||||
| Note: Certain prior period amounts have been reclassified to conform to the current period presentation. | |||||||||||||||||||
|
(1) Earnings from equity method investments were previously reported within Other revenues. Prior period amounts have been reclassified to conform to the current period presentation. |
|||||||||||||||||||
| (2) Includes losses related to valuation allowances taken on held-for-sale loans. | |||||||||||||||||||
| Merrill Lynch & Co., Inc. | Attachment II | |||||||||||
| Preliminary Unaudited Earnings Summary | ||||||||||||
| For the Year Ended | ||||||||||||
| (in millions, except per share amounts) |
Dec. 28, |
Dec. 29, |
Percent |
|||||||||
| Revenues | ||||||||||||
| Principal transactions | $ | (12,067 | ) | $ | 7,248 | N/M | % | |||||
| Commissions | 7,284 | 5,985 | 22 | |||||||||
| Investment banking | 5,582 | 4,648 | 20 | |||||||||
| Managed accounts and other fee-based revenues | 5,465 | 6,273 | (13 | ) | ||||||||
| Earnings from equity method investments(1) | 1,325 | 556 | 138 | |||||||||
|
Other(2) |
(1,888 | ) | 2,883 | N/M |
|
|||||||
| Subtotal | 5,701 | 27,593 | (79 | ) | ||||||||
| Interest and dividend revenues | 56,974 | 39,790 | 43 | |||||||||
| Less interest expense | 51,425 | 35,571 | 45 | |||||||||
| Net interest profit | 5,549 | 4,219 | 32 | |||||||||
| Gain on merger | - | 1,969 | N/M | |||||||||
| Total revenues, net of interest expense | 11,250 | 33,781 | (67 | ) | ||||||||
| Non-interest expenses | ||||||||||||
| Compensation and benefits | 15,903 | 16,867 | (6 | ) | ||||||||
| Communications and technology | 2,057 | 1,838 | 12 | |||||||||
| Brokerage, clearing, and exchange fees | 1,415 | 1,096 | 29 | |||||||||
| Occupancy and related depreciation | 1,139 | 991 | 15 | |||||||||
| Professional fees | 1,027 | 885 | 16 | |||||||||
| Advertising and market development | 785 | 686 | 14 | |||||||||
| Office supplies and postage | 233 | 225 | 4 | |||||||||
| Other | 1,522 | 1,383 | 10 | |||||||||
| Total non-interest expenses | 24,081 | 23,971 | 0 | |||||||||
| Pre-tax (loss)/earnings from continuing operations | (12,831 | ) | 9,810 | N/M | ||||||||
| Income tax (benefit)/expense | (4,194 | ) | 2,713 | N/M | ||||||||
| Net (loss)/earnings from continuing operations | (8,637 | ) | 7,097 | N/M | ||||||||
| Discontinued operations: | ||||||||||||
| Pre-tax earnings from discontinued operations | 1,397 | 616 | 127 | |||||||||
| Income tax expense | 537 | 214 | 151 | |||||||||
| Net earnings from discontinued operations | 860 | 402 | 114 | |||||||||
| Net (loss)/earnings | $ | (7,777 | ) | $ | 7,499 | N/M | ||||||
| Preferred stock dividends | $ | 270 | $ | 188 | 44 | |||||||
| Net (loss)/earnings applicable to common stockholders | $ | (8,047 | ) | $ | 7,311 | N/M | ||||||
| Basic (loss)/earnings per common share from continuing operations | (10.73 | ) | 7.96 | N/M | ||||||||
| Basic earnings per common share from discontinued operations | 1.04 | 0.46 | 126 | |||||||||
| Basic (loss)/earnings per common share | $ | (9.69 | ) | $ | 8.42 | N/M | ||||||
| Diluted (loss)/earnings per common share from continuing operations | (10.73 | ) | 7.17 | N/M | ||||||||
| Diluted earnings per common share from discontinued operations | 1.04 | 0.42 | 148 | |||||||||
| Diluted (loss)/earnings per common share | $ | (9.69 | ) | $ | 7.59 | N/M | ||||||
| Average shares used in computing earnings per common share | ||||||||||||
| Basic | 830.4 | 868.1 | (4 | ) | ||||||||
| Diluted | 830.4 | 963.0 | (14 | ) | ||||||||
|
Annualized return on average common equity from continuing operations |
N/M | 20.1 | % | |||||||||
| Annualized return on average common equity | N/M | 21.3 | % | |||||||||
| Note: Certain prior period amounts have been reclassified to conform to the current period presentation. | ||||||||||||
|
(1) Earnings from equity method investments were previously reported within Other revenues. Prior period amounts have been reclassified to conform to the current period presentation. |
||||||||||||
| (2) Includes losses related to valuation allowances taken on held-for-sale loans. | ||||||||||||
| Merrill Lynch & Co., Inc. | Attachment III | |||||||
| 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) |
||||||||||||
| (in millions, except per share amounts) |
Excluding One-time |
Impact of One-time |
Impact of |
GAAP Basis | |||||||||
| Revenues, net of interest expense | $ | 31,812 | $ | - | $ | 1,969 | $ | 33,781 | |||||
| Non-interest expenses | |||||||||||||
| Compensation and benefits | 14,964 | 1,759 | 144 | 16,867 | |||||||||
| Non-compensation expenses | 7,046 | - | 58 | 7,104 | |||||||||
| Total non-interest expenses | 22,010 | 1,759 | 202 | 23,971 | |||||||||
| Pre-tax earnings from continuing operations | 9,802 | (1,759 | ) | 1,767 | 9,810 | ||||||||
| Income tax expense | 2,633 | (582 | ) | 662 | 2,713 | ||||||||
| Net earnings from continuing operations | $ | 7,169 | $ | (1,177 | ) | $ | 1,105 | $ | 7,097 | ||||
| Pre-tax earnings from discontinued operations | $ | 616 | $ | - | $ | - | $ | 616 | |||||
| Income tax expense | 214 | - | - | 214 | |||||||||
| Net earnings from discontinued operations | $ | 402 | $ | - | $ | - | $ | 402 | |||||
| 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 | $ | 8.06 | $ | (1.37 | ) | $ | 1.27 | $ | 7.96 | ||||
| Basic earnings per common share from discontinued operations | 0.46 | - | - | 0.46 | |||||||||
| Basic earnings per common share | $ | 8.52 | $ | (1.37 | ) | $ | 1.27 | $ | 8.42 | ||||
| Diluted earnings per common share from continuing operations | $ | 7.26 | $ | (1.23 | ) | $ | 1.14 | $ | 7.17 | ||||
| Diluted earnings per common share from discontinued operations | 0.42 | - | - | 0.42 | |||||||||
| Diluted earnings per common share | $ | 7.68 | $ | (1.23 | ) | $ | 1.14 | $ | 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 |
GAAP Basis | |||
|
|
||||
| Ratio of compensation and benefits to net revenues | 47.0% | 49.9% | ||
| Ratio of non-compensation and benefits to net revenues | 22.1% | 21.0% | ||
| Effective tax rate | 26.9% | 27.7% | ||
| Pre-tax profit margin | 30.8% | 29.0% | ||
| 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 | ||
|
Annualized return on average common equity from continuing operations |
20.4% | 20.1% | ||
| Annualized 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. |
||||
| Merrill Lynch & Co., Inc. | Attachment IV | |||||||||||||||||||||||||||||
| Preliminary Segment Data (unaudited) | ||||||||||||||||||||||||||||||
| For the Three Months Ended | Percent Inc / (Dec) | For the Year Ended | ||||||||||||||||||||||||||||
| (dollars in millions) |
Dec. 28, |
Sept. 28, |
Dec. 29, |
4Q07 vs. |
4Q07 vs. |
Dec. 28, |
Dec. 29, |
Percent |
||||||||||||||||||||||
| Global Markets & Investment Banking | ||||||||||||||||||||||||||||||
| Global Markets | ||||||||||||||||||||||||||||||
| FICC | $ | (15,155 | ) | $ | (5,764 | ) | $ | 2,152 | N/M |
% |
N/M |
% |
|
$ | (15,873 | ) | $ | 7,552 | N/M | % | ||||||||||
| Equity Markets | 2,171 | 1,581 | 1,761 | 37 | 23 | 8,286 | 6,730 | 23 | ||||||||||||||||||||||
| Total Global Markets net revenues | (12,984 | ) | (4,183 | ) | 3,913 | N/M | N/M | (7,587 | ) | 14,282 | N/M | |||||||||||||||||||
| Investment Banking (1) | ||||||||||||||||||||||||||||||
| Origination: | ||||||||||||||||||||||||||||||
| Debt | 217 | 276 | 532 | (21 | ) | (59 | ) | 1,550 | 1,704 | (9 | ) | |||||||||||||||||||
| Equity | 375 | 344 | 475 | 9 | (21 | ) | 1,629 | 1,220 | 34 | |||||||||||||||||||||
| Strategic Advisory Services | 559 | 385 | 286 | 45 | 95 | 1,740 | 1,099 | 58 | ||||||||||||||||||||||
| Total Investment Banking net revenues | 1,151 | 1,005 | 1,293 | 15 | (11 | ) | 4,919 | 4,023 | 22 | |||||||||||||||||||||
| Total net revenues | (11,833 | ) | (3,178 | ) | 5,206 | N/M | N/M | (2,668 | ) | 18,305 | N/M | |||||||||||||||||||
| Pre-tax earnings / (loss) from continuing operations | (15,877 | ) | (4,612 | ) | 2,477 | N/M | N/M | (16,345 | ) | 5,292 | N/M | |||||||||||||||||||
| Impact of one-time compensation expenses | - | - | - | N/M | N/M | - | 1,369 | N/M | ||||||||||||||||||||||
| Pre-tax earnings / (loss) from continuing operations excluding one-time compensation expenses | (15,877 | ) | (4,612 | ) | 2,477 | N/M | N/M | (16,345 | ) | 6,661 | N/M | |||||||||||||||||||
| Pre-tax profit margin | N/M | N/M | 47.6 | % | N/M | 28.9 | % | |||||||||||||||||||||||
| Pre-tax profit margin excluding one-time compensation expenses | N/M | N/M | 47.6 | % | N/M | 36.4 | % | |||||||||||||||||||||||
| Global Wealth Management | ||||||||||||||||||||||||||||||
| Global Private Client | ||||||||||||||||||||||||||||||
| Fee-based revenues | $ | 1,656 | $ | 1,605 | $ | 1,442 | 3 | 15 | $ | 6,278 | $ | 5,499 | 14 | |||||||||||||||||
| Transactional and origination revenues | 972 | 989 | 917 | (2 | ) | 6 | 3,887 | 3,397 | 14 | |||||||||||||||||||||
| Net interest profit and related hedges(2) | 565 | 584 | 558 | (3 | ) | 1 | 2,318 | 2,103 | 10 | |||||||||||||||||||||
| Other revenues | 116 | 90 | 94 | 29 | 23 | 416 | 301 | 38 | ||||||||||||||||||||||
| Total Global Private Client net revenues | 3,309 | 3,268 | 3,011 | 1 | 10 | 12,899 | 11,300 | 14 | ||||||||||||||||||||||
| Global Investment Management net revenues | 286 | 270 | 211 | 6 | 36 | 1,122 | 541 | 107 | ||||||||||||||||||||||
| Total net revenues | 3,595 | 3,538 | 3,222 | 2 | 12 | 14,021 | 11,841 | 18 | ||||||||||||||||||||||
| Pre-tax earnings from continuing operations | 914 | 953 | 705 | (4 | ) | 30 | 3,630 | 2,290 | 59 | |||||||||||||||||||||
| Impact of one-time compensation expenses | - | - | - | N/M | N/M | - | 281 | N/M | ||||||||||||||||||||||
| Pre-tax earnings from continuing operations excluding one-time compensation expenses | 914 | 953 | 705 | (4 | ) | 30 | 3,630 | 2,571 | 41 | |||||||||||||||||||||
| Pre-tax profit margin | 25.4 | % | 26.9 | % | 21.9 | % | 25.9 | % | 19.3 | % | ||||||||||||||||||||
| Pre-tax profit margin excluding one-time compensation expenses | 25.4 | % | 26.9 | % | 21.9 | % | 25.9 | % | 21.7 | % | ||||||||||||||||||||
| Merrill Lynch Investment Managers | ||||||||||||||||||||||||||||||
| Total net revenues | $ | - | $ | - | $ | - | N/M | N/M | $ | - | $ | 1,900 | N/M | |||||||||||||||||
| Pre-tax earnings from continuing operations | - | - | - | N/M | N/M | - | 637 | N/M | ||||||||||||||||||||||
| Impact of one-time compensation expenses | - | - | - | N/M | N/M | - | 109 | N/M | ||||||||||||||||||||||
| Pre-tax earnings from continuing operations excluding one-time compensation expenses | - | - | - | N/M | N/M | - | 746 | N/M | ||||||||||||||||||||||
| Pre-tax profit margin | - | - | - | - | 33.5 | % | ||||||||||||||||||||||||
| Pre-tax profit margin excluding one-time compensation expenses | - | - | - | - | 39.3 | % | ||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||
| Total net revenues | $ | 46 | $ | 20 | $ | (43 | ) | 130 | N/M | $ | (103 | ) | $ | 1,735 | N/M | |||||||||||||||
| Impact of BlackRock merger | - | - | - | N/M | N/M | - | 1,969 | N/M | ||||||||||||||||||||||
| Total net revenues excluding the BlackRock merger | 46 | 20 | (43 | ) | 130 | N/M | (103 | ) | (234 | ) | (56 | ) | ||||||||||||||||||
| Pre-tax earnings / (loss) from continuing operations | 43 | 21 | (1 | ) | 105 | N/M | (116 | ) | 1,591 | N/M | ||||||||||||||||||||
| Impact of BlackRock merger | - | - | - | N/M | N/M | - | (1,767 | ) | N/M | |||||||||||||||||||||
| Pre-tax earnings / (loss) from continuing operations excluding the BlackRock merger | 43 | 21 | (1 | ) | 105 | N/M | (116 | ) | (176 | ) | (34 | ) | ||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||
| Total net revenues | $ | (8,192 | ) | $ | 380 | $ | 8,385 | N/M | N/M | $ | 11,250 | $ | 33,781 | (67 | ) | |||||||||||||||
| Impact of BlackRock merger | - | - | - | N/M | N/M | - | 1,969 | N/M | ||||||||||||||||||||||
| Total net revenues excluding the BlackRock merger | (8,192 | ) | 380 | 8,385 | N/M | N/M | 11,250 | 31,812 | (65 | ) | ||||||||||||||||||||
| Pre-tax earnings / (loss) from continuing operations | (14,920 | ) | (3,638 | ) | 3,181 | N/M | N/M | (12,831 | ) | 9,810 | N/M | |||||||||||||||||||
| Impact of BlackRock merger | - | - | - | N/M | N/M | - | (1,767 | ) | N/M | |||||||||||||||||||||
| Impact of one-time compensation expenses | - | - | - | N/M | N/M | - | 1,759 | N/M | ||||||||||||||||||||||
| Pre-tax earnings / (loss) from continuing operations excluding BlackRock merger and one-time compensation expenses | (14,920 | ) | (3,638 | ) | 3,181 | N/M | N/M | (12,831 | ) | 9,802 | N/M | |||||||||||||||||||
| Pre-tax profit margin | N/M | N/M | 37.9 | % | N/M | 29.0 | % | |||||||||||||||||||||||
| Pre-tax profit margin excluding BlackRock merger and one-time compensation expenses | N/M | N/M | 37.9 | % | N/M | 30.8 | % | |||||||||||||||||||||||
| N/M = Not Meaningful | ||||||||||||||||||||||||||||||
| Note: Certain prior period amounts have been reclassified to conform to the current period presentation. | ||||||||||||||||||||||||||||||
| (1) A portion of Origination revenue is recorded in Global Wealth Management. | ||||||||||||||||||||||||||||||
| (2) Includes interest component of non-qualifying derivatives which are included in Other Revenues in Attachments I & II. | ||||||||||||||||||||||||||||||
| Merrill Lynch & Co., Inc. | Attachment V | |||||||||||||||||
| Consolidated Quarterly Earnings (unaudited) | (in millions) | |||||||||||||||||
| 4Q06 | 1Q07 | 2Q07 | 3Q07 | 4Q07 | ||||||||||||||
| Revenues |
|
|
|
|
|
|||||||||||||
| Principal transactions | $ | 2,206 | $ | 2,734 | $ | 3,556 | $ | (5,761 | ) | $ | (12,596 | ) | ||||||
| Commissions | ||||||||||||||||||
| Listed and over-the-counter securities | 978 | 1,134 | 1,195 | 1,279 | 1,294 | |||||||||||||
| Mutual funds | 485 | 521 | 541 | 522 | 570 | |||||||||||||
| Other | 60 | 58 | 51 | 59 | 60 | |||||||||||||
| Total | 1,523 | 1,713 | 1,787 | 1,860 | 1,924 | |||||||||||||
| Investment banking | ||||||||||||||||||
| Underwriting | 1,218 | 1,113 | 1,130 | 895 | 717 | |||||||||||||
| Strategic advisory | 288 | 397 | 398 | 382 | 550 | |||||||||||||
| Total | 1,506 | 1,510 | 1,528 | 1,277 | 1,267 | |||||||||||||
| Managed accounts and other fee-based revenues | ||||||||||||||||||
| Portfolio service fees | 795 | 832 | 860 | 904 | 902 | |||||||||||||
| Asset management fees | 141 | 136 | 152 | 150 | 179 | |||||||||||||
| Account fees | 114 | 109 | 115 | 117 | 120 | |||||||||||||
| Other fees | 188 | 207 | 222 | 221 | 239 | |||||||||||||
| Total | 1,238 | 1,284 | 1,349 | 1,392 | 1,440 | |||||||||||||
| Earnings from equity method investments(1) | 186 | 309 | 375 | 281 | 360 | |||||||||||||
| Other (2) | 651 | 841 | 387 | (983 | ) | (2,133 | ) | |||||||||||
| Subtotal | 7,310 | 8,391 | 8,982 | (1,934 | ) | (9,738 | ) | |||||||||||
| Interest and dividend revenues | 11,318 | 12,721 | 14,447 | 15,636 | 14,170 | |||||||||||||
| Less interest expense | 10,243 | 11,509 | 13,970 | 13,322 | 12,624 | |||||||||||||
| Net interest profit | 1,075 | 1,212 | 477 | 2,314 | 1,546 | |||||||||||||
| Total revenues, net of interest expense | 8,385 | 9,603 | 9,459 | 380 | (8,192 | ) | ||||||||||||
| Non-Interest Expenses | ||||||||||||||||||
| Compensation and benefits | 3,298 | 4,854 | 4,731 | 1,979 | 4,339 | |||||||||||||
| Communications and technology | 476 | 479 | 482 | 499 | 597 | |||||||||||||
| Brokerage, clearing, and exchange fees | 293 | 310 | 346 | 364 | 395 | |||||||||||||
| Occupancy and related depreciation | 247 | 265 | 273 | 295 | 306 | |||||||||||||
| Professional fees | 263 | 226 | 245 | 245 | 311 | |||||||||||||
| Advertising and market development | 192 | 155 | 200 | 181 | 249 | |||||||||||||
| Office supplies and postage | 59 | 59 | 56 | 54 | 64 | |||||||||||||
| Other | 376 | 354 | 300 | 401 | 467 | |||||||||||||
| Total Non-Interest Expenses | 5,204 | 6,702 | 6,633 | 4,018 | 6,728 | |||||||||||||
| Pre-tax earnings/(loss) from continuing operations | 3,181 | 2,901 | 2,826 | (3,638 | ) | (14,920 | ) | |||||||||||
| Income tax expense/(benefit) | 953 | 871 | 816 | (1,258 | ) | (4,623 | ) | |||||||||||
| Net earnings/(loss) from continuing operations | 2,228 | 2,030 | 2,010 | (2,380 | ) | (10,297 | ) | |||||||||||
| Discontinued operations: | ||||||||||||||||||
| Pre-tax earnings from discontinued operations | 175 | 194 | 197 | 211 | 795 | |||||||||||||
| Income tax expense | 57 | 66 | 68 | 72 | 331 | |||||||||||||
| Net earnings from discontinued operations | 118 | 128 | 129 | 139 | 464 | |||||||||||||
| Net earnings/(loss) | $ | 2,346 | $ | 2,158 | $ | 2,139 | $ | (2,241 | ) | $ | (9,833 | ) | ||||||
| Per Common Share Data | ||||||||||||||||||
| 4Q06 | 1Q07 | 2Q07 | 3Q07 | 4Q07 | ||||||||||||||
| Earnings/(loss) from continuing operations - Basic | $ | 2.57 | $ | 2.35 | $ | 2.32 | $ | (2.99 | ) | $ | (12.57 | ) | ||||||
| Earnings/(loss) from continuing operations - Diluted | 2.29 | 2.12 | 2.10 | (2.99 | ) | (12.57 | ) | |||||||||||
| Dividends paid | 0.25 | 0.35 | 0.35 | 0.35 | 0.35 | |||||||||||||
| Book value | 41.35 | 42.25 | 43.55 | 39.60 |
29.37 est. |
|||||||||||||
| Note: Certain prior period amounts have been reclassified to conform to the current period presentation. | ||||||||||||||||||
|
(1) Earnings from equity method investments were previously reported within Other revenues. Prior period amounts have been reclassified to conform to the current period presentation. |
||||||||||||||||||
| (2) Includes losses related to valuation allowances taken on held-for-sale loans. | ||||||||||||||||||
| Merrill Lynch & Co., Inc. | Attachment VI | |||||||||||||
| Percentage of Quarterly Net Revenues (unaudited) | ||||||||||||||
| 4Q06 | 1Q07 | 2Q07 | 3Q07 | 4Q07 | ||||||||||
| Revenues |
|
|
|
|
|
|||||||||
| Principal transactions | 26.3 | % | 28.5 | % | 37.6 | % | N/M | N/M | ||||||
| Commissions | ||||||||||||||
| Listed and over-the-counter securities | 11.7 | % | 11.8 | % | 12.6 | % | N/M | N/M | ||||||
| Mutual funds | 5.8 | % | 5.4 | % | 5.7 | % | N/M | N/M | ||||||
| Other | 0.7 | % | 0.6 | % | 0.6 | % | N/M | N/M | ||||||
| Total | 18.2 | % | 17.8 | % | 18.9 | % | N/M | N/M | ||||||
| Investment banking | ||||||||||||||
| Underwriting | 14.5 | % | 11.6 | % | 11.9 | % | N/M | N/M | ||||||
| Strategic advisory | 3.4 | % | 4.1 | % | 4.2 | % | N/M | N/M | ||||||
| Total | 17.9 | % | 15.7 | % | 16.1 | % | N/M | N/M | ||||||
| Managed accounts and other fee-based revenues | ||||||||||||||
| Portfolio service fees | 9.5 | % | 8.7 | % | 9.1 | % | N/M | N/M | ||||||
| Asset management fees | 1.7 | % | 1.4 | % | 1.6 | % | N/M | N/M | ||||||
| Account fees | 1.4 | % | 1.1 | % | 1.2 | % | N/M | N/M | ||||||
| Other fees | 2.2 | % | 2.2 | % | 2.4 | % | N/M | N/M | ||||||
| Total | 14.8 | % | 13.4 | % | 14.3 | % | N/M | N/M | ||||||
| Earnings from equity method investments | 2.2 | % | 3.2 | % | 4.0 | % | N/M | N/M | ||||||
| Other | 7.8 | % | 8.8 | % | 4.1 | % | N/M | N/M | ||||||
| Subtotal | 87.2 | % | 87.4 | % | 95.0 | % | N/M | N/M | ||||||
| Interest and dividend revenues | 135.0 | % | 132.5 | % | 152.7 | % | N/M | N/M | ||||||
| Less interest expense | 122.2 | % | 119.9 | % | 147.7 | % | N/M | N/M | ||||||
| Net interest profit | 12.8 | % | 12.6 | % | 5.0 | % | N/M | N/M | ||||||
| Total revenues, net of interest expense | 100.0 | % | 100.0 | % | 100.0 | % | N/M | N/M | ||||||
| Non-Interest Expenses | ||||||||||||||
| Compensation and benefits | 39.3 | % | 50.5 | % | 50.0 | % | N/M | N/M | ||||||
| Communications and technology | 5.7 | % | 5.0 | % | 5.1 | % | N/M | N/M | ||||||
| Brokerage, clearing, and exchange fees | 3.5 | % | 3.2 | % | 3.7 | % | N/M | N/M | ||||||
| Occupancy and related depreciation | 2.9 | % | 2.8 | % | 2.9 | % | N/M | N/M | ||||||
| Professional fees | 3.1 | % | 2.4 | % | 2.6 | % | N/M | N/M | ||||||
| Advertising and market development | 2.3 | % | 1.6 | % | 2.1 | % | N/M | N/M | ||||||
| Office supplies and postage | 0.7 | % | 0.6 | % | 0.6 | % | N/M | N/M | ||||||
| Other | 4.6 | % | 3.7 | % | 3.1 | % | N/M | N/M | ||||||
| Total Non-Interest Expenses | 62.1 | % | 69.8 | % | 70.1 | % | N/M | N/M | ||||||
| Pre-tax earnings/loss from continuing operations | 37.9 | % | 30.2 | % | 29.9 | % | N/M | N/M | ||||||
| Income tax expense/benefit | 11.3 | % | 9.1 | % | 8.7 | % | N/M | N/M | ||||||
| Net earnings from continuing operations | 26.6 | % | 21.1 | % | 21.2 | % | N/M | N/M | ||||||
| Discontinued operations: | ||||||||||||||
| Pre-tax earnings from discontinued operations | 2.1 | % | 2.0 | % | 2.1 | % | N/M | N/M | ||||||
| Income tax expense | 0.7 | % | 0.7 | % | 0.7 | % | N/M | N/M | ||||||
| Net earnings from discontinued operations | 1.4 | % | 1.3 | % | 1.4 | % | N/M | N/M | ||||||
| Net earnings/loss | 28.0 | % | 22.4 | % | 22.6 | % | N/M | N/M | ||||||
| Common shares outstanding (in millions): | ||||||||||||||
| 4Q06 | 1Q07 | 2Q07 | 3Q07 | 4Q07 | ||||||||||
| Weighted-average - basic | 847.4 | 841.3 | 833.8 | 821.6 | 825.0 | |||||||||
| Weighted-average - diluted | 952.2 | 930.2 | 923.3 | 821.6 | 825.0 | |||||||||
| Period-end | 868.0 | 876.9 | 862.6 | 855.4 | 939.1 | |||||||||
| N/M = Not Meaningful | ||||||||||||||
| Note: Certain prior period amounts have been reclassified to conform to the current period presentation. | ||||||||||||||
| Merrill Lynch & Co., Inc. | Attachment VII | ||||||||||||||||
| Supplemental Data (unaudited) | (dollars in billions) | ||||||||||||||||
| 4Q06 | 1Q07 | 2Q07 | 3Q07 | 4Q07 | |||||||||||||
| Client Assets | |||||||||||||||||
| U.S. | $ | 1,483 | $ | 1,503 | $ | 1,550 | $ | 1,601 | $ | 1,586 | |||||||
| Non - U.S. | 136 | 145 | 153 | 161 | 165 | ||||||||||||
| Total Client Assets | 1,619 | 1,648 | 1,703 | 1,762 | 1,751 | ||||||||||||
| Assets in Annuitized-Revenue Products | 611 | 627 | 662 | 691 | 655 | ||||||||||||
| Net New Money | |||||||||||||||||
| All Client Accounts (1) | $ | 22 | $ | 16 | $ | 9 | $ | 26 | $ | 30 | |||||||
| Annuitized-Revenue Products (1) (2) | 18 | 16 | 12 | 10 | - | ||||||||||||
| Balance Sheet Information: (3) | |||||||||||||||||
| Short-term Borrowings | $ | 18.1 | $ | 20.2 | $ | 20.1 | $ | 27.1 | $ | 24.9 | |||||||
| Deposits | 84.1 | 84.9 | 82.8 | 95.0 | 104.0 | ||||||||||||
| Long-term Borrowings | 181.4 | 205.4 | 226.0 | 264.9 | 261.9 | ||||||||||||
| Junior Subordinated Notes (related to trust preferred securities) | 3.8 | 3.5 | 4.4 | 5.2 | 5.2 | ||||||||||||
| Stockholders' Equity: (3) | |||||||||||||||||
| Preferred Stockholders' Equity | 3.1 | 4.7 | 4.6 | 4.8 | 4.4 | ||||||||||||
| Common Stockholders' Equity | 35.9 | 37.0 | 37.6 | 33.8 | 27.6 | ||||||||||||
| Total Stockholders' Equity | 39.0 | 41.7 | 42.2 | 38.6 | 32.0 | ||||||||||||
| Full-Time Employees (4) | 56,200 | 60,300 | 61,900 | 64,200 | 64,200 | ||||||||||||
| Financial Advisors (5) | 15,880 | 15,930 | 16,200 | 16,610 | 16,740 | ||||||||||||
| Note: Certain prior period amounts have been reclassified to conform to the current period presentation. | |||||||||||||||||
| (1) |
Net new money excludes flows associated with the Institutional Advisory Division which serves certain small- and middle-market companies, as well as net inflows at BlackRock from distribution channels other than Merrill Lynch. |
||||||||||||||||
|
|
|||||||||||||||||
| (2) | Includes both net new client assets into annuitized-revenue products, as well as existing client assets transferred into annuitized-revenue products. | ||||||||||||||||
| (3) | Balance Sheet Information and Stockholders' Equity are estimated for 4Q07. | ||||||||||||||||
| (4) |
Excludes 100 full-time employees on salary continuation severance at the end of 4Q06, 200 at the end of 1Q07, 300 at the end of 2Q07 400 at the end of 3Q07, and 700 at the end of 4Q07. |
||||||||||||||||
| (5) |
Includes 150 Financial Advisors associated with the Mitsubishi UFJ joint venture at the end of 4Q06, 160 at the end of 1Q07 and 170 at the end of 2Q07, 3Q07 and 4Q07. |
||||||||||||||||
| Merrill Lynch & Co., Inc. | Attachment VIII | |||||||||||||||||
| (Unaudited) | (dollars in millions) | |||||||||||||||||
| Net Exposures as of Sept. 28, 2007 |
Gain/(Loss) Reported in Income(1) |
Other Net Changes in Net Exposures(2) |
Net Exposures as of Dec. 28, 2007(5) |
|||||||||||||||
| U.S. ABS CDO net exposures: | ||||||||||||||||||
| U.S. Super senior ABS CDO net exposures: | ||||||||||||||||||
| High-grade | $ | 8,925 | $ | (5,531 | ) | $ | 986 | $ | 4,380 | |||||||||
| Mezzanine | 5,237 | (2,912 | ) | (141 | ) | 2,184 | ||||||||||||
| CDO-squared | 630 | (280 | ) | (79 | ) | 271 | ||||||||||||
|
Total super senior ABS CDO net exposures(3) |
14,792 | (8,723 | ) | 766 | 6,835 | |||||||||||||
| Secondary trading (4) | 1,026 | (1,141 | ) | (1,882 | ) | (1,997 | ) | |||||||||||
| Total U.S. ABS CDO-related net exposures | $ | 15,818 | $ | (9,864 | ) | $ | (1,116 | ) | $ | 4,838 | ||||||||
| (1) |
Primarily represents unrealized losses on net exposures. Amounts exclude credit valuation adjustments of negative $2.6 billion related to financial guarantor exposures on U.S. super senior ABS CDOs. See table regarding financial guarantor exposures. |
|||||||||||||||||
| (2) |
Primarily consists of principal amortization for U.S. super senior ABS CDO net exposures, as well as changes in hedges and increases due to ineffective hedges. |
|||||||||||||||||
| (3) |
For total U.S. super senior ABS CDOs, long exposures (including associated gains and losses reported in income and other net changes in net exposures) were $46.1 billion and $30.4 billion at September 28, 2007 and December 28, 2007, respectively. Short exposures (including associated gains and losses reported in income and other net changes in net exposures) were $31.3 billion and $23.6 billion at September 28, 2007 and December 28, 2007. Short exposures primarily consist of purchases of credit default swap protection from various third parties, including monoline financial guarantors, insurers and other market participants. |
|||||||||||||||||
| (4) | Previously disclosed as "Other retained and warehouse net exposures." | |||||||||||||||||
|
(5) |
Hedges are affected by a variety of factors that impact the degree of their effectiveness. These factors may include differences in attachment point, timing of cash flows, control rights, litigation, limited recourse to counterparties and other basis risks. |
|||||||||||||||||
| U.S. Super Senior ABS CDOs as of Dec. 28, 2007 | ||||||||||||||||||||
|
Notional(1) |
Mark-to-Market Prior
to Credit Valuation Adjustments |
Notional, net of Mark-to-Market Prior to Credit Valuation Adjustments |
Credit Valuation Adjustments | Carrying Value | ||||||||||||||||
| Credit Default Swaps with Financial Guarantors (2): | ||||||||||||||||||||
|
By counterparty credit quality (3): |
||||||||||||||||||||
| AAA | $ | (13,237 | ) | $ | 4,133 | $ | (9,104 | ) | $ | (679 | ) | $ | 3,454 | |||||||
| AA | - | - | - | - | - | |||||||||||||||
| A | - | - | - | - | - | |||||||||||||||
| BBB | - | - | - | - | - | |||||||||||||||
| Non-investment grade or unrated | (6,664 | ) | 1,929 | (4,735 | ) | (1,929 | ) | - | ||||||||||||
| Total financial guarantor exposures for ABS CDOs | $ | (19,901 | ) | $ | 6,062 | $ | (13,839 | ) | $ | (2,608 | ) | $ | 3,454 | |||||||
| (1) |
Represents gross notional amount of credit default swaps purchased as protection for U.S. super senior ABS CDOs. Amounts do not include counterparty exposure with financial guarantors for other asset classes. |
|||||||||||||||||||
| (2) |
Excludes the benefit of $2.0 billion (notional) of credit default swaps purchased from unrelated third parties as protection for exposure to financial guarantors, as well as the related positive mark-to-market adjustments. |
|||||||||||||||||||
| (3) | Represents rating agency credit ratings. | |||||||||||||||||||
| Merrill Lynch & Co., Inc. | Attachment IX | |||||||||||||||
| (Unaudited) | (dollars in millions) | |||||||||||||||
|
Net
Exposures as of Sept. 28, 2007 |
Gain/(Loss) Reported in Income (1) |
Other Net Changes in Net Exposures (2) |
Net
Exposures as of Dec. 28, 2007 |
|||||||||||||
|
Residential Mortgage-Related Net Exposures
(excluding U.S. Banks investment securities portfolio): |
||||||||||||||||
| U.S. Sub-prime: | ||||||||||||||||
| Warehouse lending | $ | 734 | $ | 4 | $ | (601 | ) | $ | 137 | |||||||
| Whole loans | 2,951 | (520 | ) | (1,437 | ) | 994 | ||||||||||
| Residuals | 1,635 | (808 | ) | 28 | 855 | |||||||||||
| Residential mortgage-backed securities | 343 | (267 | ) | 647 | 723 | |||||||||||
| Total U.S. sub-prime | 5,663 | (1,591 | ) | (1,363 | ) | 2,709 | ||||||||||
| U.S. Alt-A (3) | 2,984 | (399 | ) | 102 | 2,687 | |||||||||||
| U.S. Prime (3) (4) | 28,318 | 13 | (142 | ) | 28,189 | |||||||||||
| Non-U.S. (3) | 11,824 | (507 | ) | (1,735 | ) | 9,582 | ||||||||||
| Mortgage servicing rights (5) |
436 |
(56 |
) |
9 |
389 |
|||||||||||
|
Total residential mortgage-related net exposures
(excluding U.S. Banks investment securities portfolio) |
$ |
49,225 |
$ |
(2,540 |
) | $ |
(3,129 |
) | $ |
43,556 |
||||||
| (1) | Primarily represents unrealized losses on net exposures. | |||||||||||||||
| (2) |
Represents purchases, sales, hedges, paydowns, changes in loan commitments and related funding. |
|||||||||||||||
| (3) | Includes warehouse lending, whole loans, residuals and residential mortgage-backed securities. | |||||||||||||||
| (4) |
Includes $9.7 billion of prime loans originated by First Republic Bank, a wholly owned subsidiary, and approximately $12 billion of prime loans originated with GPC clients. |
|||||||||||||||
| (5) |
Mortgage servicing rights are reported at the lower of amortized cost or market; management's estimate of fair value is $475 million at December 28, 2007. |
|||||||||||||||
|
Net
Exposures as of Sept. 28, 2007 |
Gain/(Loss) Reported in Income (1) |
Unrealized
Gain/(Loss) Included in OCI (pre-tax) (2) |
Other Net Changes in Net Exposures (3) |
Net
Exposures as of Dec. 28, 2007 |
|||||||||||||||
|
U.S. Banks Investment Securities Portfolio (4) |
|||||||||||||||||||
|
Sub-prime residential mortgage-related net exposures, including securities in Conduits (5): |
|||||||||||||||||||
| Sub-prime residential mortgage-backed securities | $ | 4,985 | $ | (178 | ) | $ | (454 | ) | $ | (443 | ) | $ | 3,910 | ||||||
| ABS CDOs | 715 | (362 | ) | 43 | (145 | ) | 251 | ||||||||||||
| Total sub-prime residential mortgage-related securities | 5,700 | (540 | ) | (411 | ) | (588 | ) | 4,161 | |||||||||||
|
Other net exposures, including securities in Conduits (5): |
|||||||||||||||||||
| Alt-A residential mortgage-backed securities | 7,944 | (195 | ) | (511 | ) | (118 | ) | 7,120 | |||||||||||
| Commercial mortgage-backed securities | 6,831 | (81 | ) | (179 | ) | (780 | ) | 5,791 | |||||||||||
| Prime residential mortgage-backed securities | 5,193 | (40 | ) | (139 | ) | (840 | ) | 4,174 | |||||||||||
| Non-residential asset-backed securities | 1,238 | (3 | ) | (20 | ) | (1 | ) | 1,214 | |||||||||||
| Non-residential CDOs | 979 | (10 | ) | (42 | ) | (24 | ) | 903 | |||||||||||
| Other | 263 | - | (8 | ) | (15 | ) | 240 | ||||||||||||
|
Total investment securities portfolio in U.S. Banks
(including securities in Conduits) |
$ | 28,148 | $ | (869 | ) | $ | (1,310 | ) | $ | (2,366 | ) | $ | 23,603 | ||||||
|
(1) |
Primarily represents unrealized losses on net exposures. |
||||||||||||||||||
|
(2) |
Represents write-downs on SFAS 115 investment securities, which are reported net of taxes in Other Comprehensive (Loss)/Income ("OCI"). The cumulative, pre-tax balance in OCI was approximately negative $2.2 billion as of December 28, 2007. |
||||||||||||||||||
|
(3) |
Primarily represents principal paydowns and sales. |
||||||||||||||||||
|
(4) |
Excludes securities acquired in connection with the acquisition of First Republic Bank, a wholly owned subsidiary. Such securities did not include any sub-prime securities and virtually all have been sold prior to year end resulting in immaterial gains. |
||||||||||||||||||
|
(5) |
Represents securities reported on the balance sheet in the U.S. banks investment securities portfolio, as well as securities recorded off-balance sheet in Conduits, to which a U.S. bank subsidiary has liquidity and credit facilities outstanding. In the event of a disruption in the commercial paper market, the Conduits may draw upon their liquidity facility and sell certain of their assets to Merrill Lynch. The total amount of securities in Conduits was $4.2 billion and $0 at September 28, 2007 and December 28, 2007, respectively. |
||||||||||||||||||
CONTACT:
Merrill Lynch
Media Relations:
Jessica
Oppenheim, 212-449-2107
jessica_oppenheim@ml.com
or
Investor
Relations:
Sara Furber, 866-607-1234
investor_relations@ml.com
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