EX-99.1: RECONCILIATION OF NON-GAAP MEASURES
Published on May 5, 2006
Exhibit 99.1
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.
Preliminary Unaudited Earnings Summary
| (dollars in millions, except per share amounts) | ||||||||||||||
| For the Three Months Ended March 31, 2006 | ||||||||||||||
| Excluding the Impact of | First Quarter Impact of | |||||||||||||
| One-time Compensation | One-time | |||||||||||||
| Expenses | Compensation Expenses | GAAP Basis | ||||||||||||
|
Net Revenues
|
$ | 7,962 | $ | - | $ | 7,962 | ||||||||
|
Non-Interest Expenses
|
||||||||||||||
|
Compensation and benefits
|
3,991 | 1,759 | 5,750 | |||||||||||
|
Non-compensation expenses
|
1,619 | - | 1,619 | |||||||||||
|
Total Non-Interest Expenses
|
5,610 | 1,759 | 7,369 | |||||||||||
|
Earnings Before Income Taxes
|
2,352 | (1,759 | ) | 593 | ||||||||||
|
Income Tax Expense
|
700 | (582 | ) | 118 | ||||||||||
|
Net Earnings
|
$ | 1,652 | $ | (1,177 | ) | $ | 475 | |||||||
|
Preferred Stock Dividends
|
$ | 43 | $ | - | $ | 43 | ||||||||
|
Net Earnings Applicable to Common Stockholders
|
$ | 1,609 | $ | (1,177 | ) | $ | 432 | |||||||
|
Earnings Per Common Share
|
||||||||||||||
|
Basic
|
$ | 1.83 | $ | (1.34 | ) | $ | 0.49 | |||||||
|
Diluted
|
$ | 1.65 | $ | (1.21 | ) | $ | 0.44 | |||||||
|
Average Shares Used in Computing Earnings Per Common Share
|
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|
Basic
|
878.0 | 5.7 | 883.7 | |||||||||||
|
Diluted
|
975.4 | 5.7 | 981.1 | |||||||||||
Financial Ratios
| (dollars in millions) | For the Three Months Ended March 31, 2006 | |||||||||
| Excluding the Impact | ||||||||||
| of One-time | ||||||||||
| Compensation Expenses | GAAP Basis | |||||||||
|
Compensation and benefits(a)
|
$ | 3,991 | $ | 5,750 | ||||||
|
Net Revenues(b)
|
7,962 | 7,962 | ||||||||
|
Ratio of compensation and benefits to net revenues(a)/(b)
|
50.1 | % | 72.2 | % | ||||||
|
Income Tax Expense(a)
|
$ | 700 | $ | 118 | ||||||
|
Earnings Before Income Taxes(b)
|
2,352 | 593 | ||||||||
|
Effective Tax Rate(a)/(b)
|
29.8 | % | 19.9 | % | ||||||
|
Earnings Before Income Taxes(a)
|
$ | 2,352 | $ | 593 | ||||||
|
Net Revenues(b)
|
7,962 | 7,962 | ||||||||
|
Pre-tax Profit Margin(a)/(b)
|
29.5 | % | 7.4 | % | ||||||
|
Average Common Equity
|
$ | 33,800 | $ | 33,800 | ||||||
|
Average impact of one-time compensation expenses
|
(145 | ) | - | |||||||
|
Average Common Equity(a)
|
33,655 | 33,800 | ||||||||
|
Annualized Net Earnings Applicable to Common Stockholders(b)
|
6,436 | 1,728 | ||||||||
|
Annualized Return on Average Common Equity(b)/(a)
|
19.1 | % | 5.1 | % | ||||||
Business Segment Data
| (dollars in millions) | For the Three Months Ended | ||||||||||||
| March 31, | April 1, | ||||||||||||
| 2006 | 2005 | % Inc/ (Dec) | |||||||||||
|
Global Markets & Investment Banking
|
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|
Total net revenues(a)
|
$ | 4,553 | $ | 3,317 | 37% | ||||||||
|
Pre-tax earnings
|
212 | 1,124 | (81 | ) | |||||||||
|
Impact of one-time compensation expenses
|
1,369 | - | N/M | ||||||||||
|
Pre-tax earnings excluding one-time compensation expenses(b)
|
1,581 | 1,124 | 41 | ||||||||||
|
Pre-tax profit margin
|
4.7 | % | 33.9 | % | |||||||||
|
Pre-tax profit margin excluding one-time compensation
expenses(b)/(a)
|
34.7 | % | 33.9 | % | |||||||||
|
Global Private Client
|
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|
Total net revenues(a)
|
$ | 2,939 | $ | 2,603 | 13 | ||||||||
|
Pre-tax earnings
|
365 | 510 | (28 | ) | |||||||||
|
Impact of one-time compensation expenses
|
281 | - | N/M | ||||||||||
|
Pre-tax earnings excluding one-time compensation expenses(b)
|
646 | 510 | 27 | ||||||||||
|
Pre-tax profit margin
|
12.4 | % | 19.6 | % | |||||||||
|
Pre-tax profit margin excluding one-time compensation
expenses(b)/(a)
|
22.0 | % | 19.6 | % | |||||||||
|
Merrill Lynch Investment Managers
|
|||||||||||||
|
Total net revenues(a)
|
$ | 570 | $ | 413 | 38 | ||||||||
|
Pre-tax earnings
|
113 | 127 | (11 | ) | |||||||||
|
Impact of one-time compensation expenses
|
109 | - | N/M | ||||||||||
|
Pre-tax earnings excluding one-time compensation expenses(b)
|
222 | 127 | 75 | ||||||||||
|
Pre-tax profit margin
|
19.8 | % | 30.8 | % | |||||||||
|
Pre-tax profit margin excluding one-time compensation
expenses(b)/(a)
|
38.9 | % | 30.8 | % | |||||||||
N/M = Not Meaningful