EX-99.1: RECONCILIATION OF NON-GAAP MEASURES
Published on August 3, 2007
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 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. 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
| (In millions, except per share amounts) | ||||||||||||
| For the Six Months Ended June 30, 2006 | ||||||||||||
|
Excluding One-time |
Impact of One-time |
|||||||||||
|
Compensation |
Compensation |
|||||||||||
| Expenses(1) | Expenses(1) | GAAP Basis | ||||||||||
|
Net Revenues(a) |
$ | 16,145 | $ | - | $ | 16,145 | ||||||
|
Non-Interest
Expenses
|
||||||||||||
|
Compensation and benefits(b)
|
7,971 | 1,759 | 9,730 | |||||||||
|
Non-compensation expenses
|
3,473 | - | 3,473 | |||||||||
|
Total Non-Interest
Expenses
|
11,444 | 1,759 | 13,203 | |||||||||
|
Earnings Before Income
Taxes(c)
|
4,701 | (1,759 | ) | 2,942 | ||||||||
|
Income Tax Expense(d)
|
1,416 | (582 | ) | 834 | ||||||||
|
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 | |||||
|
Earnings Per Common
Share
|
||||||||||||
|
Basic
|
$ | 3.63 | $ | (1.35 | ) | $ | 2.28 | |||||
|
Diluted
|
$ | 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 | |||||||||
112
Financial
Ratios (unaudited)
| (dollars in millions) | ||||||||
|
For the Six Months Ended |
||||||||
| June 30, 2006 | ||||||||
|
Excluding One-time |
||||||||
| Compensation Expenses(1) | GAAP Basis | |||||||
|
Ratio of compensation and benefits
to net revenues(b)/(a)
|
49.4 | % | 60.3 | % | ||||
|
Effective Tax Rate(d)/(c)
|
30.1 | % | 28.3 | % | ||||
|
Pre-tax Profit Margin(c)/(a)
|
29.1 | % | 18.2 | % | ||||
|
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 | % | ||||
| (1) | For purposes of comparison with previously published results, data excluding the impact of the one-time compensation expenses for the first six months of 2006 assumes the impact of the one-time compensation expenses is limited to the first quarter of 2006. |
113
Exhibit 99.1
Merrill
Lynch & Co., Inc.
Segment
Data (unaudited)
| (dollars in millions) | ||||
|
For the Six |
||||
|
Months Ended |
||||
| June 30, 2006 | ||||
|
Global Markets &
Investment Banking
|
||||
|
Global Markets
|
||||
|
FICC
|
$ | 3,749 | ||
|
Equity Markets
|
3,450 | |||
|
Total Global Markets net
revenues
|
7,199 | |||
|
Investment
Banking(1)
|
||||
|
Origination:
|
||||
|
Debt
|
829 | |||
|
Equity
|
552 | |||
|
Strategic Advisory Services
|
553 | |||
|
Total Investment Banking net
revenues
|
1,934 | |||
|
Total net revenues(a)
|
9,133 | |||
|
Pre-tax earnings
|
1,681 | |||
|
Impact of one-time compensation
expenses
|
1,369 | |||
|
Pre-tax earnings excluding one-time
compensation expenses(b)
|
3,050 | |||
|
Pre-tax profit margin
|
18.4 | % | ||
|
Pre-tax profit margin excluding
one-time compensation expenses(b)/(a)
|
33.4 | % | ||
|
Global Wealth
Management
|
||||
|
Global Private Client
|
||||
|
Fee-based revenues
|
$ | 2,815 | ||
|
Transactional and origination
revenues
|
1,757 | |||
|
Net interest profit and related
hedges(2)
|
1,060 | |||
|
Other revenues
|
133 | |||
|
Total Global Private Client net
revenues
|
5,765 | |||
|
Global Investment Management net
revenues
|
243 | |||
|
Total net revenues(a)
|
6,008 | |||
|
Pre-tax earnings
|
1,090 | |||
|
Impact of one-time compensation
expenses
|
281 | |||
|
Pre-tax earnings excluding one-time
compensation expenses(b)
|
1,371 | |||
|
Pre-tax profit margin
|
18.1 | % | ||
|
Pre-tax profit margin excluding
one-time compensation expenses(b)/(a)
|
22.8 | % | ||
|
Merrill Lynch Investment
Managers
|
||||
|
Total net revenues(a)
|
$ | 1,200 | ||
|
Pre-tax earnings
|
353 | |||
|
Impact of one-time compensation
expenses
|
109 | |||
|
Pre-tax earnings excluding one-time
compensation expenses(b)
|
462 | |||
|
Pre-tax profit margin
|
29.4 | % | ||
|
Pre-tax profit margin excluding
one-time compensation expenses(b)/(a)
|
38.5 | % | ||
|
Corporate
|
||||
|
Total net revenues
|
$ | (196 | ) | |
|
Pre-tax earnings
|
(182 | ) | ||
|
Total
|
||||
|
Total net revenues(a)
|
$ | 16,145 | ||
|
Pre-tax earnings
|
2,942 | |||
|
Impact of one-time compensation
expenses
|
1,759 | |||
|
Pre-tax earnings excluding one-time
compensation expenses(b)
|
4,701 | |||
|
Pre-tax profit margin
|
18.2 | % | ||
|
Pre-tax profit margin excluding
one-time compensation expenses(b)/(a)
|
29.1 | % | ||
| (1) | A portion of Origination revenue is recorded in the Global Wealth Management segment. | |
| (2) | Includes interest component of non-qualifying derivatives which are included in Other Revenues. |
114