8-K: Current report filing
Published on January 9, 2002
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 2002
- --------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-7182 13-2740599
- --------------------------------------------------------------------------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
4 World Financial Center, New York, New York 10080
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
- --------------------
Merrill Lynch today reported it has taken decisive action to position
the company for improved profitability and growth, including the resizing of
selected businesses and other structural changes. These actions, which will lead
to an estimated fourth quarter $2.2 billion pre-tax charge ($1.7 billion after
tax), are expected to yield substantial benefits, including annualized expense
savings of approximately $1.4 billion. A substantial amount of these savings is
expected to flow through to earnings; a portion will be reinvested in priority
growth initiatives.
Major components of the charge, some of which are still in process,
are:
o Workforce reductions of approximately 9,000 through a combination of
divestitures, voluntary separation and managed reductions. Approximately
half of the reductions are associated with divestitures and
discontinued businesses; the remainder results from voluntary separation,
or targeted actions in selected businesses. Approximately $1.2 billion
of the charge is associated with severance costs related to workforce
reductions, and other staff-related costs.
o Real estate initiatives, including the consolidation of private client
offices in the U.S., Europe, Asia and Australia and the closure or
subletting of excess office space in the U.S. Approximately $500 million of
the charge is associated with real estate initiatives.
o Technology initiatives, including the write-down of certain technology
assets. Approximately $300 million of the charge is associated with
technology initiatives.
o Other business rationalization costs, which comprise $200 million of the
charge.
Outside the U.S., Merrill Lynch has sold or significantly refocused
private client businesses in Canada, South Africa and Australia, and
consolidated selected offices in other regions. The firm will also be refocusing
its private client business in Japan. The most significant charge in the U.S.
private client business relates to the write-down of technology assets
associated with the platform that delivers client account information, research
and news to financial advisors' desktops.
In Global Markets and Investment Banking, previously known as the
Corporate and Institutional Client Group, selected businesses have been resized
in line with expectations of market activity and client demand.
Merrill Lynch Investment Managers is consolidating the investment
management platform into two regions and combining its Asian and European
management structures. The Canadian retail funds business was sold as an
integral part of the private client divestiture in Canada, and the retail asset
management business in Japan has been substantially restructured while
maintaining the institutional business there.
2
Corporate level items include a write-down associated with the cost of
subletting space in the south tower of the World Financial Center in New York
that Merrill Lynch will not fully reoccupy due to reduced real estate
requirements.
Revenues associated with businesses that have been sold or
discontinued represent less than 3% of annual firm revenues in 2001.
Fourth quarter operating earnings per diluted share are expected to be
between $0.48 and $0.50, excluding the charge but including September
11th-related expenses. Fourth quarter net revenues are expected to be
approximately 8% below the 2001 third quarter, due in particular to lower debt
trading revenues and reduced investment banking activity.
Also contributing to lower revenues was continued business disruption
in the aftermath of the September 11th terrorist attack, in particular the
relocation during the quarter of trading, investment banking and research
personnel back into the company's World Financial Center headquarters.
The fourth quarter's operating results demonstrated continued progress
in containing expenses. Excluding September 11th-related expenses and an
increase in litigation costs due to certain settlements during the fourth
quarter, non-compensation expenses are expected to be approximately 10% below
the 2000 fourth quarter as the firm continued to realize the benefits of margin
improvement actions, and as travel and other expenses related to business
activity remained subdued.
The company will report its fourth quarter and full year operating
results during the week of January 21, 2002.
* * * *
David H. Komansky, chairman and chief executive officer; Stan O'Neal,
president and chief operating officer; and Thomas H. Patrick, chief financial
officer, hosted a conference call today with the investment community to discuss
this announcement. On-demand replay of the conference call can be accessed
through the Investor Relations website at http://www.ir.ml.com. The information
on Merrill Lynch's website is not part of or incorporated by reference in this
report.
* * * *
Merrill Lynch may make or publish forward-looking statements about
management expectations, strategic objectives, business prospects, anticipated
expense savings and financial results, and other similar matters. A variety of
factors, many of which are beyond Merrill Lynch's control, could cause actual
results and experience to differ materially from the expectations expressed in
these statements. These factors include, but are not limited to, financial
market volatility, actions and initiatives by current and potential competitors,
the effect of current and future legislation or regulation, and additional
factors described in Merrill Lynch's Annual Report on Form 10-K and subsequent
reports on Form 8-K and Form 10-Q, which are available at the SEC's website,
http://www.sec.gov.
3
Merrill Lynch undertakes no responsibility to update or revise any
forward-looking statements.
4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
MERRILL LYNCH & CO., INC.
----------------------------------------------
(Registrant)
By: /s/ Andrea L. Dulberg
----------------------------------------------
Andrea L. Dulberg
Secretary
Date: January 9, 2002
5