EX-99.2 3 a5448312ex99_2.txt EXHIBIT 99.2 Exhibit 99.2 Merrill Lynch & Co., Inc. Attachment I Preliminary Unaudited Earnings Summary Percent For the Three Months Ended Inc / (Dec) ----------------------------- ---------------- 2Q07 2Q07 (in millions, except June 29, March 30, June 30, vs. vs. per share amounts) 2007 2007 2006 1Q07 2Q06 --------- --------- --------- ------- -------- Net Revenues Principal transactions $ 3,548 $ 2,734 $ 1,180 30 % 201 % Commissions 1,786 1,697 1,542 5 16 Investment banking 1,538 1,514 1,221 2 26 Managed accounts and other fee-based revenues 1,411 1,354 1,773 4 (20) Revenues from consolidated investments 133 131 186 2 (28) Other 719 1,083 1,112 (34) (35) --------- --------- --------- Subtotal 9,135 8,513 7,014 7 30 Interest and dividend revenues 14,671 12,962 9,690 13 51 Less interest expense 14,078 11,621 8,531 21 65 --------- --------- --------- Net interest profit 593 1,341 1,159 (56) (49) --------- --------- --------- Total Net Revenues 9,728 9,854 8,173 (1) 19 --------- --------- --------- Non-Interest Expenses Compensation and benefits 4,759 4,887 3,980 (3) 20 Communications and technology 484 480 429 1 13 Brokerage, clearing, and exchange fees 346 310 266 12 30 Occupancy and related depreciation 277 265 249 5 11 Professional fees 245 225 196 9 25 Advertising and market development 201 158 191 27 5 Office supplies and postage 56 59 57 (5) (2) Expenses of consolidated investments 43 59 145 (27) (70) Other 294 316 311 (7) (5) --------- --------- --------- Total Non-Interest Expenses 6,705 6,759 5,824 (1) 15 --------- --------- --------- Earnings Before Income Taxes 3,023 3,095 2,349 (2) 29 Income tax expense 884 937 716 (6) 23 --------- --------- --------- Net Earnings $ 2,139 $ 2,158 $ 1,633 (1) 31 ========= ========= ========= Preferred Stock Dividends $ 72 $ 52 $ 45 38 60 ========= ========= ========= Net Earnings Applicable to Common Stockholders $ 2,067 $ 2,106 $ 1,588 (2) 30 ========= ========= ========= Earnings Per Common Share Basic $ 2.48 $ 2.50 $ 1.79 (1) 39 Diluted $ 2.24 $ 2.26 $ 1.63 (1) 37 Average Shares Used in Computing Earnings Per Common Share Basic 833.8 841.3 885.4 (1) (6) Diluted 923.3 930.2 973.3 (1) (5) Annualized Return on Average Common Equity 22.4% 23.2% 18.6% ---------------------------------------------------------------------- Note: Certain prior period amounts have been reclassified to conform to the current period presentation. 9 Merrill Lynch & Co., Inc. Attachment II Preliminary Unaudited Earnings Summary For the Six Months Ended --------------------- (in millions, except per share June 29, June 30, Percent amounts) 2007 2006 Inc / (Dec) ---------- ---------- ----------- Net Revenues Principal transactions $ 6,282 $ 3,168 98 % Commissions 3,483 3,102 12 Investment banking 3,052 2,244 36 Managed accounts and other fee- based revenues 2,765 3,452 (20) Revenues from consolidated investments 264 290 (9) Other 1,802 1,665 8 ---------- ---------- Subtotal 17,648 13,921 27 Interest and dividend revenues 27,633 18,354 51 Less interest expense 25,699 16,130 59 ---------- ---------- Net interest profit 1,934 2,224 (13) ---------- ---------- Total Net Revenues 19,582 16,145 21 ---------- ---------- Non-Interest Expenses Compensation and benefits 9,646 9,730 (1) Communications and technology 964 882 9 Brokerage, clearing, and exchange fees 656 525 25 Occupancy and related depreciation 542 490 11 Professional fees 470 396 19 Advertising and market development 359 335 7 Office supplies and postage 115 114 1 Expenses of consolidated investments 102 192 (47) Other 610 539 13 ---------- ---------- Total Non-Interest Expenses 13,464 13,203 2 ---------- ---------- Earnings Before Income Taxes 6,118 2,942 108 Income tax expense 1,821 834 118 ---------- ---------- Net Earnings $ 4,297 $ 2,108 104 ========== ========== Preferred Stock Dividends $ 124 $ 88 41 ========== ========== Net Earnings Applicable to Common Stockholders $ 4,173 $ 2,020 107 ========== ========== Earnings Per Common Share Basic $ 4.98 $ 2.28 118 Diluted $ 4.50 $ 2.07 117 Average Shares Used in Computing Earnings Per Common Share Basic 837.6 884.6 (5) Diluted 926.8 977.2 (5) Annualized Return on Average Common Equity 22.8% 11.9% --------------------------------------------------------------------- Note: Certain prior period amounts have been reclassified to conform to the current period presentation. 10 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 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 For the Six Months Ended Summary June 30, 2006 ------------------------------- ------------------------------------- Excluding the First Quarter Impact of Impact of One-time One-time (in millions, except per share Compensation Compensation GAAP amounts) Expenses Expenses Basis ------------------------------------- Net Revenues (a) $ 16,145 $ - $ 16,145 ------------- ------------- --------- Non-Interest Expenses Compensation and benefits (b) 7,971 1,759 9,730 Non-compensation expenses (c) 3,473 - 3,473 ------------- ------------- --------- Total Non-Interest Expenses 11,444 1,759 13,203 ------------- ------------- --------- Earnings Before Income Taxes (d) 4,701 (1,759) 2,942 Income Tax Expense (e) 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 ---------------------------------------------------------------------- Financial Ratios For the Six Months Ended June 30, 2006 ------------------------------- --------------------------- Excluding the Impact of One-time Compensation Expenses GAAP Basis --------------------------- Ratio of compensation and benefits to net revenues (b)/(a) 49.4% 60.3% Ratio of non-compensation expenses to net revenues (c)/(a) 21.5% 21.5% Effective Tax Rate (e)/(d) 30.1% 28.3% Pre-tax Profit Margin (d)/(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% 11 Merrill Lynch & Co., Inc. Attachment IV Preliminary Segment Data (unaudited) Percent For the Three Months Ended Inc / (Dec) ---------------------------------------------- 2Q07 2Q07 June 29, March 30, June 30, vs. vs. (dollars in millions) 2007 2007 2006 1Q07 2Q06 --------- --------- --------- ------- ------- Global Markets & Investment Banking Global Markets FICC $ 2,618 $ 2,801 $ 1,691 (7) % 55 % Equity Markets 2,148 2,386 1,863 (10) 15 --------- --------- --------- Total Global Markets net revenues 4,766 5,187 3,554 (8) 34 Investment Banking (1) Origination: Debt 479 591 401 (19) 19 Equity 547 363 315 51 74 Strategic Advisory Services 397 399 296 (1) 34 --------- --------- --------- Total Investment Banking net revenues 1,423 1,353 1,012 5 41 --------- --------- --------- Total net revenues (a) 6,189 6,540 4,566 (5) 36 --------- --------- --------- Pre-tax earnings 2,102 2,343 1,465 (10) 43 Impact of one-time compensation expenses - - - --------- --------- --------- Pre-tax earnings excluding one- time compensation expenses (b) 2,102 2,343 1,465 (10) 43 Pre-tax profit margin 34.0% 35.8% 32.1% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 34.0% 35.8% 32.1% --------------------------------------------------------------------- Global Wealth Management Global Private Client Fee-based revenues $ 1,602 $ 1,539 $ 1,443 4 11 Transactional and origination revenues 1,007 903 881 12 14 Net interest profit and related hedges(2) 587 604 533 (3) 10 Other revenues 117 97 77 21 52 --------- --------- --------- Total Global Private Client net revenues 3,313 3,143 2,934 5 13 --------- --------- --------- Global Investment Management net revenues 305 261 139 17 119 --------- --------- --------- Total net revenues (a) 3,618 3,404 3,073 6 18 --------- --------- --------- Pre-tax earnings 1,011 842 729 20 39 Impact of one-time compensation expenses - - - --------- --------- --------- Pre-tax earnings excluding one- time compensation expenses (b) 1,011 842 729 20 39 Pre-tax profit margin 27.9% 24.7% 23.7% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 27.9% 24.7% 23.7% --------------------------------------------------------------------- Merrill Lynch Investment Managers Total net revenues (a) $ - $ - $ 630 N/M N/M Pre-tax earnings - - 240 N/M N/M Impact of one-time compensation expenses - - - N/M N/M --------- --------- --------- Pre-tax earnings excluding one- time compensation expenses (b) - - 240 N/M N/M Pre-tax profit margin - - 38.1% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) - - 38.1% --------------------------------------------------------------------- Corporate Total net revenues$ (79) $ (90) $ (96) 12 18 Pre-tax earnings (90) (90) (85) - (6) --------------------------------------------------------------------- Total Total net revenues (a) $ 9,728 $ 9,854 $ 8,173 (1) 19 Pre-tax earnings 3,023 3,095 2,349 (2) 29 Impact of one-time compensation expenses - - - --------- --------- --------- Pre-tax earnings excluding one- time compensation expenses (b) 3,023 3,095 2,349 (2) 29 Pre-tax profit margin 31.1% 31.4% 28.7% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 31.1% 31.4% 28.7% --------------------------------------------------------------------- Preliminary Segment Data (unaudited) For the Six Months Ended ------------------- June 29, June 30, Percent (dollars in millions) 2007 2006 Inc / (Dec) --------- --------- ----------- Global Markets & Investment Banking Global Markets FICC $ 5,419 $ 3,749 45% Equity Markets 4,534 3,450 31 --------- --------- Total Global Markets net revenues 9,953 7,199 38 Investment Banking (1) Origination: Debt 1,070 829 29 Equity 910 552 65 Strategic Advisory Services 796 553 44 --------- --------- Total Investment Banking net revenues 2,776 1,934 44 --------- --------- Total net revenues (a) 12,729 9,133 39 --------- --------- Pre-tax earnings 4,445 1,681 164 Impact of one-time compensation expenses - 1,369 N/M --------- --------- Pre-tax earnings excluding one- time compensation expenses (b) 4,445 3,050 46 Pre-tax profit margin 34.9% 18.4% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 34.9% 33.4% -------------------------------------------------------------------- Global Wealth Management Global Private Client Fee-based revenues $ 3,141 $ 2,815 12 Transactional and origination revenues 1,910 1,757 9 Net interest profit and related hedges(2) 1,191 1,060 12 Other revenues 214 133 61 --------- --------- Total Global Private Client net revenues 6,456 5,765 12 --------- --------- Global Investment Management net revenues 566 243 133 --------- --------- Total net revenues (a) 7,022 6,008 17 --------- --------- Pre-tax earnings 1,853 1,090 70 Impact of one-time compensation expenses - 281 N/M --------- --------- Pre-tax earnings excluding one- time compensation expenses (b) 1,853 1,371 35 Pre-tax profit margin 26.4% 18.1% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 26.4% 22.8% -------------------------------------------------------------------- Merrill Lynch Investment Managers Total net revenues (a) $ - $ 1,200 N/M Pre-tax earnings - 353 N/M Impact of one-time compensation expenses - 109 N/M --------- --------- Pre-tax earnings excluding one- time compensation expenses (b) - 462 N/M Pre-tax profit margin - 29.4% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) - 38.5% -------------------------------------------------------------------- Corporate Total net revenues $ (169) $ (196) 14 Pre-tax earnings (180) (182) 1 -------------------------------------------------------------------- Total Total net revenues (a) $ 19,582 $ 16,145 21 Pre-tax earnings 6,118 2,942 108 Impact of one-time compensation expenses - 1,759 N/M --------- --------- Pre-tax earnings excluding one- time compensation expenses (b) 6,118 4,701 30 Pre-tax profit margin 31.2% 18.2% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 31.2% 29.1% -------------------------------------------------------------------- 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 the Global Wealth Management segment. (2) Includes interest component of non-qualifying derivatives which are included in Other Revenues. 12 Merrill Lynch & Co., Inc. Attachment V Consolidated Quarterly (in millions) Earnings (unaudited) 2Q06 3Q06 4Q06 1Q07 2Q07 ------- ------- ------- ------- ------- Net Revenues Principal transactions $ 1,180 $ 1,673 $ 2,193 $ 2,734 $ 3,548 Commissions Listed and over- the-counter securities 982 824 912 1,066 1,127 Mutual funds 470 426 485 521 541 Other 90 88 115 110 118 ------- ------- ------- ------- ------- Total 1,542 1,338 1,512 1,697 1,786 Investment banking Underwriting 924 660 1,227 1,117 1,140 Strategic advisory 297 262 287 397 398 ------- ------- ------- ------- ------- Total 1,221 922 1,514 1,514 1,538 Managed accounts and other fee-based revenues Portfolio service fees 797 801 833 872 892 Asset management fees 641 657 150 145 161 Account fees 114 113 115 111 118 Other fees 221 211 207 226 240 ------- ------- ------- ------- ------- Total 1,773 1,782 1,305 1,354 1,411 Revenues from consolidated investments 186 210 70 131 133 Other 1,112 773 821 1,083 719 ------- ------- ------- ------- ------- Subtotal 7,014 6,698 7,415 8,513 9,135 Interest and dividend revenues 9,690 10,690 11,544 12,962 14,671 Less interest expense 8,531 9,452 10,350 11,621 14,078 ------- ------- ------- ------- ------- Net interest profit 1,159 1,238 1,194 1,341 593 Gain on merger - 1,969 - - - ------- ------- ------- ------- ------- Total Net Revenues 8,173 9,905 8,609 9,854 9,728 ------- ------- ------- ------- ------- Non-Interest Expenses Compensation and benefits 3,980 3,949 3,324 4,887 4,759 Communications and technology 429 485 477 480 484 Brokerage, clearing, and exchange fees 266 278 294 310 346 Occupancy and related depreciation 249 259 249 265 277 Professional fees 196 224 264 225 245 Advertising and market development 191 164 193 158 201 Office supplies and postage 57 53 59 59 56 Expenses of consolidated investments 145 142 46 59 43 Other 311 223 347 316 294 ------- ------- ------- ------- ------- Total Non-Interest Expenses 5,824 5,777 5,253 6,759 6,705 ------- ------- ------- ------- ------- Earnings Before Income Taxes 2,349 4,128 3,356 3,095 3,023 Income tax expense 716 1,083 1,010 937 884 ------- ------- ------- ------- ------- Net Earnings $ 1,633 $ 3,045 $ 2,346 $ 2,158 $ 2,139 ------------------------------------------------- --------------- Per Common Share Data 2Q06 3Q06 4Q06 1Q07 2Q07 ------- ------- ------- ------- ------- Earnings - Basic $ 1.79 $ 3.50 $ 2.71 $ 2.50 $ 2.48 Earnings - Diluted 1.63 3.17 2.41 2.26 2.24 Dividends paid 0.25 0.25 0.25 0.35 0.35 Book value 37.18 40.22 41.35 42.25 43.55 est. ---------------------------------------------------------------------- Note: Certain prior period amounts have been reclassified to conform to the current period presentation. 13 Merrill Lynch & Co., Inc. Attachment VI Percentage of Quarterly Net Revenues (unaudited) 2Q06 3Q06 4Q06 1Q07 2Q07 ------- ------- ------- ------- ------- Net Revenues Principal transactions 14.4% 16.9% 25.5% 27.7% 36.5% Commissions Listed and over-the- counter securities 12.0% 8.3% 10.6% 10.8% 11.6% Mutual funds 5.8% 4.3% 5.6% 5.3% 5.6% Other 1.1% 0.9% 1.4% 1.1% 1.2% ------- ------- ------- ------- ------- Total 18.9% 13.5% 17.6% 17.2% 18.4% Investment banking Underwriting 11.3% 6.7% 14.3% 11.3% 11.7% Strategic advisory 3.6% 2.6% 3.3% 4.0% 4.1% ------- ------- ------- ------- ------- Total 14.9% 9.3% 17.6% 15.3% 15.8% Managed accounts and other fee-based revenues Portfolio service fees 9.8% 8.1% 9.7% 8.8% 9.2% Asset management fees 7.8% 6.6% 1.7% 1.5% 1.7% Account fees 1.4% 1.1% 1.3% 1.1% 1.2% Other fees 2.7% 2.2% 2.5% 2.3% 2.4% ------- ------- ------- ------- ------- Total 21.7% 18.0% 15.2% 13.7% 14.5% Revenues from consolidated investments 2.3% 2.1% 0.8% 1.3% 1.4% Other 13.6% 7.8% 9.4% 11.2% 7.3% ------- ------- ------- ------- ------- Subtotal 85.8% 67.6% 86.1% 86.4% 93.9% Interest and dividend revenues 118.6% 107.9% 134.1% 131.5% 150.8% Less interest expense 104.4% 95.4% 120.2% 117.9% 144.7% ------- ------- ------- ------- ------- Net interest profit 14.2% 12.5% 13.9% 13.6% 6.1% Gain on merger 0.0% 19.9% 0.0% 0.0% 0.0% ------- ------- ------- ------- ------- Total Net Revenues 100.0% 100.0% 100.0% 100.0% 100.0% ------- ------- ------- ------- ------- Non-Interest Expenses Compensation and benefits 48.7% 39.9% 38.6% 49.6% 48.9% Communications and technology 5.2% 4.9% 5.5% 4.9% 5.0% Brokerage, clearing, and exchange fees 3.3% 2.8% 3.4% 3.1% 3.6% Occupancy and related depreciation 3.0% 2.6% 2.9% 2.7% 2.8% Professional fees 2.4% 2.3% 3.1% 2.3% 2.5% Advertising and market development 2.3% 1.7% 2.2% 1.6% 2.1% Office supplies and postage 0.7% 0.5% 0.7% 0.6% 0.6% Expenses of consolidated investments 1.8% 1.4% 0.5% 0.6% 0.4% Other 3.9% 2.2% 4.1% 3.2% 3.0% ------- ------- ------- ------- ------- Total Non-Interest Expenses 71.3% 58.3% 61.0% 68.6% 68.9% ------- ------- ------- ------- ------- Earnings Before Income Taxes 28.7% 41.7% 39.0% 31.4% 31.1% Income tax expense 8.7% 11.0% 11.7% 9.5% 9.1% ------- ------- ------- ------- ------- Net Earnings 20.0% 30.7% 27.3% 21.9% 22.0% ------------------------------------------------------ --------------- Common shares outstanding (in millions): 2Q06 3Q06 4Q06 1Q07 2Q07 ------- ------- ------- ------- ------- Weighted-average - basic 885.4 855.8 847.4 841.3 833.8 Weighted-average - diluted 973.3 945.3 952.2 930.2 923.3 Period-end 898.1 883.3 868.0 876.9 862.6 ---------------------------------------------------------------------- Note: Certain prior period amounts have been reclassified to conform to the current period presentation. 14 Merrill Lynch & Co., Inc. Attachment VII Supplemental Data (unaudited) (dollars in billions) 2Q06 3Q06 4Q06 1Q07 2Q07 -------- -------- -------- -------- -------- Client Assets U.S. $ 1,370 $ 1,412 $ 1,483 $ 1,503 $ 1,550 Non - U.S. 124 130 136 145 153 -------- -------- -------- -------- -------- Total Client Assets 1,494 1,542 1,619 1,648 1,703 Assets in Annuitized-Revenue Products 559 578 613 633 668 ------------------------------------------------------------------ Net New Money All Client Accounts (1) $ 7 $ 14 $ 22 $ 16 $ 9 Annuitized- Revenue Products (1) (2) 10 7 18 16 12 ------------------------------------------------------------------ Balance Sheet Information: (3) Short-term Borrowings $ 17.5 $ 14.3 $ 18.1 $ 20.2 $ 20.0 Deposits 79.4 77.9 84.1 84.9 82.8 Long-term Borrowings 140.0 160.4 181.4 205.4 226.3 Junior Subordinated Notes (related to trust preferred securities) 3.1 3.1 3.8 3.5 4.4 Stockholders' Equity: (3) Preferred Stockholders' Equity 3.1 3.1 3.1 4.7 4.6 Common Stockholders' Equity 33.4 35.6 35.9 37.0 37.6 -------- -------- -------- -------- -------- Total Stockholders' Equity 36.5 38.7 39.0 41.7 42.2 ------------------------------------------------------------------ Full-Time Employees (4) 56,000 55,300(5) 56,200 60,300 61,900 Private Client Financial Advisors (6) 15,520 15,700 15,880 15,930 16,200 ------------------------------------------------------------------ Note: Certain prior period amounts have been reclassified to conform to the current period presentation. (1) GWM 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 2Q07. (4) Excludes 300 full-time employees on salary continuation severance at the end of 2Q06, 200 at the end of 3Q06, 100 at the end of 4Q06, 200 at the end of 1Q07, and 300 at the end of 2Q07. (5) Excludes 2,400 MLIM employees that moved over to BlackRock at the end of 3Q06. (6) Includes 140 Financial Advisors associated with the Mitsubishi UFJ joint venture at the end of 2Q06, 150 at the end of 3Q06 and 4Q06, 160 at the end of 1Q07, and 170 at the end of 2Q07. CONTACT: Merrill Lynch Media Relations: Jessica Oppenheim, 212-449-2107 jessica_oppenheim@ml.com or Investor Relations: Jonathan Blum, 866-607-1234 investor_relations@ml.com 15