EX-99.2 3 a5380435ex99_2.txt EXHIBIT 99.2 Exhibit 99.2 Merrill Lynch & Co., Inc. Attachment I Preliminary Unaudited Earnings Summary Percent Inc / For the Three Months Ended (Dec) -------------------------------- --------- (in millions, except per 1Q07 1Q07 share amounts) March 30, December 29, March 31, vs. vs. 2007 2006 2006 4Q06 1Q06 --------- ------------ --------- ---- ---- Net Revenues Principal transactions $ 2,734 $ 2,193 $1,988 25 % 38 % Commissions 1,697 1,512 1,560 12 9 Investment banking 1,514 1,514 1,023 0 48 Managed accounts and other fee-based revenues 1,354 1,305 1,679 4 (19) Revenues from consolidated investments 131 70 104 87 26 Other 1,083 821 553 32 96 --------- ------------ --------- Subtotal 8,513 7,415 6,907 15 23 Interest and dividend revenues 12,962 11,544 8,664 12 50 Less interest expense 11,621 10,350 7,599 12 53 --------- ------------ --------- Net interest profit 1,341 1,194 1,065 12 26 --------- ------------ --------- Total Net Revenues 9,854 8,609 7,972 14 24 --------- ------------ --------- Non-Interest Expenses Compensation and benefits 4,887 3,324 5,750 47 (15) Communications and technology 480 477 453 1 6 Brokerage, clearing, and exchange fees 310 294 259 5 20 Occupancy and related depreciation 265 249 241 6 10 Professional fees 225 264 200 (15) 13 Advertising and market development 158 193 144 (18) 10 Expenses of consolidated investments 59 46 47 28 26 Office supplies and postage 59 59 57 0 4 Other 316 347 228 (9) 39 --------- ------------ --------- Total Non-Interest Expenses 6,759 5,253 7,379 29 (8) --------- ------------ --------- Earnings Before Income Taxes 3,095 3,356 593 (8) 422 Income tax expense 937 1,010 118 (7) 694 --------- ------------ --------- Net Earnings $ 2,158 $ 2,346 $ 475 (8) 354 ========= ============ ========= Preferred Stock Dividends $ 52 $ 50 $ 43 4 21 ========= ============ ========= Net Earnings Applicable to Common Stockholders $ 2,106 $ 2,296 $ 432 (8) 388 ========= ============ ========= Earnings Per Common Share Basic $ 2.50 $ 2.71 $ 0.49 (8) 410 Diluted $ 2.26 $ 2.41 $ 0.44 (6) 414 Average Shares Used in Computing Earnings Per Common Share Basic 841.2 847.4 883.7 (1) (5) Diluted 930.2 952.2 981.1 (2) (5) Annualized Return on Average Common Equity 23.3% 25.6% 5.1% --------------------------------------------------------------------- Note: Certain prior period amounts have been reclassified to conform to the current period presentation. 12 Merrill Lynch & Co., Inc. Attachment II 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 For the Three Months Ended March 31, 2006 --------------------------- ----------------------------------------- Excluding the First Quarter Impact of Impact of (in millions, except per One-time One-time share amounts) Compensation Compensation GAAP Expenses Expenses Basis ------------------- ------------- ------- Net Revenues (a) $7,972 $ - $7,972 ------------------ ------------ ------- Non-Interest Expenses Compensation and benefits (b) 3,991 1,759 5,750 Non-compensation expenses (c) 1,629 - 1,629 ------------------ ------------ ------- Total Non-Interest Expenses 5,620 1,759 7,379 ------------------ ------------ ------- Earnings Before Income Taxes (d) 2,352 (1,759) 593 Income Tax Expense (e) 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 Basic 878.0 5.7 883.7 Diluted 975.4 5.7 981.1 Financial Ratios --------------------------------- For the Three Months Ended March 31, 2006 ----------------------------------- Excluding the Impact of One- time Compensation Expenses GAAP Basis ----------------- ---------------- Ratio of compensation and benefits to net revenues (b)/(a) 50.1% 72.1% Ratio of non-compensation expenses to net revenues (c)/(a) 20.4% 20.4% Effective Tax Rate (e)/(d) 29.8% 19.9% Pre-tax Profit Margin (d)/(a) 29.5% 7.4% ---------------------------------------------------- ---------------- Average Common Equity $33,800 $33,800 Average impact of one-time compensation expenses (145) - ----------------- ---------------- Average Common Equity 33,655 33,800 Annualized Return on Average Common Equity 19.1% 5.1% 13 Merrill Lynch & Co., Inc. Attachment III Preliminary Segment Data (unaudited) Percent Inc For the Three Months Ended / (Dec) -------------------------------- ----------- 1Q07 1Q07 March 30, December 29, March 31, vs. vs. (dollars in millions) 2007 2006 2006 4Q06 1Q06 --------- ------------ --------- ----- ----- Global Markets & Investment Banking Global Markets FICC $ 2,801 $ 2,303 $ 2,058 22% 36% Equity Markets 2,386 1,761 1,587 35 50 --------- ------------ --------- Total Global Markets net revenues 5,187 4,064 3,645 28 42 Investment Banking (1) Origination: Debt 591 540 428 9 38 Equity 363 475 237 (24) 53 Strategic Advisory Services 399 286 257 40 55 --------- ------------ --------- Total Investment Banking net revenues 1,353 1,301 922 4 47 --------- ------------ --------- Total net revenues (a) 6,540 5,365 4,567 22 43 --------- ------------ --------- Pre-tax earnings 2,343 2,598 216 (10) 985 Impact of one-time compensation expenses - - 1,369 N/M N/M --------- ------------ --------- Pre-tax earnings excluding one-time compensation expenses (b) 2,343 2,598 1,585 (10) 48 Pre-tax profit margin 35.8% 48.4% 4.7% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 35.8% 48.4% 34.7% --------------------------------------------------------------------- Global Wealth Management Global Private Client Fee-based revenues $ 1,539 $ 1,523 $ 1,387 1 % 11 % Transactional and origination revenues 903 890 861 1 5 Net interest profit and related hedges (2) 604 569 527 6 15 Other revenues 97 94 56 3 73 --------- ------------ --------- Total Global Private Client net revenues 3,143 3,076 2,831 2 11 --------- ------------ --------- Global Investment Management net revenues 261 211 104 24 151 --------- ------------ --------- Total net revenues(a) 3,404 3,287 2,935 4 16 --------- ------------ --------- Pre-tax earnings 842 759 361 11 133 Impact of one-time compensation expenses - - 281 N/M N/M --------- ------------ --------- Pre-tax earnings excluding one-time compensation expenses(b) 842 759 642 11 31 Pre-tax profit margin 24.7% 23.1% 12.3% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 24.7% 23.1% 21.9% --------------------------------------------------------------------- Merrill Lynch Investment Managers Total net revenues(a) $ - $ - $ 570 N/M %N/M % --------- ------------ --------- Pre-tax earnings - - 113 N/M N/M Impact of one-time compensation expenses - - 109 N/M N/M --------- ------------ --------- Pre-tax earnings excluding one-time compensation expenses(b) - - 222 N/M N/M Pre-tax profit margin 19.8% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 38.9% --------------------------------------------------------------------- Corporate Total net revenues $ (90) $ (43) $ (100) (109)% 10 % --------- ------------ --------- Pre-tax earnings (90) (1) (97) N/M 7 --------------------------------------------------------------------- Total Total net revenues (a)$ 9,854 $ 8,609 $ 7,972 14 % 24 % --------- ------------ --------- Pre-tax earnings 3,095 3,356 593 (8) 422 Impact of one-time compensation expenses - - 1,759 N/M N/M --------- ------------ --------- Pre-tax earnings excluding one-time compensation expenses(b) 3,095 3,356 2,352 (8) 32 Pre-tax profit margin 31.4% 39.0% 7.4% Pre-tax profit margin excluding one-time compensation expenses (b)/(a) 31.4% 39.0% 29.5% --------------------------------------------------------------------- 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. 14 Merrill Lynch & Co., Inc. Attachment IV Consolidated Quarterly Earnings (unaudited) (in millions) 1Q06 2Q06 3Q06 4Q06 1Q07 -------- ------- -------- --------- ----------- Net Revenues Principal transactions $ 1,988 $1,180 $ 1,673 $ 2,193 $ 2,734 Commissions Listed and over- the-counter securities 948 982 824 912 1,066 Mutual funds 490 470 426 485 521 Other 122 90 88 115 110 -------- ------- -------- --------- ----------- Total 1,560 1,542 1,338 1,512 1,697 Investment banking Underwriting 778 924 660 1,227 1,117 Strategic advisory 245 297 262 287 397 -------- ------- -------- --------- ----------- Total 1,023 1,221 922 1,514 1,514 Managed accounts and other fee-based revenues Portfolio service fees 747 797 801 833 872 Asset management fees 619 641 657 150 145 Account fees 111 114 113 115 111 Other fees 202 221 211 207 226 -------- ------- -------- --------- ----------- Total 1,679 1,773 1,782 1,305 1,354 Revenues from consolidated investments 104 186 210 70 131 Other 553 1,112 773 821 1,083 -------- ------- -------- --------- ----------- Subtotal 6,907 7,014 6,698 7,415 8,513 Interest and dividend revenues 8,664 9,690 10,690 11,544 12,962 Less interest expense 7,599 8,531 9,452 10,350 11,621 -------- ------- -------- --------- ----------- Net interest profit 1,065 1,159 1,238 1,194 1,341 Gain on merger - - 1,969 - - -------- ------- -------- --------- ----------- Total Net Revenues 7,972 8,173 9,905 8,609 9,854 -------- ------- -------- --------- ----------- Non-Interest Expenses Compensation and benefits 5,750 3,980 3,949 3,324 4,887 Communications and technology 453 429 485 477 480 Brokerage, clearing, and exchange fees 259 266 278 294 310 Occupancy and related depreciation 241 249 259 249 265 Professional fees 200 196 224 264 225 Advertising and market development 144 191 164 193 158 Expenses of consolidated investments 47 145 142 46 59 Office supplies and postage 57 57 53 59 59 Other 228 311 223 347 316 -------- ------- -------- --------- ----------- Total Non-Interest Expenses 7,379 5,824 5,777 5,253 6,759 -------- ------- -------- --------- ----------- Earnings Before Income Taxes 593 2,349 4,128 3,356 3,095 Income tax expense 118 716 1,083 1,010 937 -------- ------- -------- --------- ----------- Net Earnings $ 475 $1,633 $ 3,045 $ 2,346 $ 2,158 ------------------------------------------------ --------------------- Per Common Share Data 1Q06 2Q06 3Q06 4Q06 1Q07 -------- ------- -------- --------- ----------- Earnings - Basic $ 0.49 $ 1.79 $ 3.50 $ 2.71 $ 2.50 Earnings - Diluted 0.44 1.63 3.17 2.41 2.26 Dividends paid 0.25 0.25 0.25 0.25 0.35 Book value 37.19 37.18 40.22 41.35 41.95 est. ---------------------------------------------------------------------- Note: Certain prior period amounts have been reclassified to conform to the current period presentation. 15 Merrill Lynch & Co., Inc. Attachment V Percentage of Quarterly Net Revenues (unaudited) 1Q06 2Q06 3Q06 4Q06 1Q07 ------ ------ ------ ------ ------ Net Revenues Principal transactions 24.9% 14.4% 16.9% 25.5% 27.7% Commissions Listed and over-the-counter securities 11.9% 12.0% 8.3% 10.6% 10.8% Mutual funds 6.1% 5.8% 4.3% 5.6% 5.3% Other 1.6% 1.1% 0.9% 1.4% 1.1% ------ ------ ------ ------ ------ Total 19.6% 18.9% 13.5% 17.6% 17.2% Investment banking Underwriting 9.8% 11.3% 6.7% 14.3% 11.3% Strategic advisory 3.1% 3.6% 2.6% 3.3% 4.0% ------ ------ ------ ------ ------ Total 12.9% 14.9% 9.3% 17.6% 15.3% Managed accounts and other fee- based revenues Portfolio service fees 9.4% 9.8% 8.1% 9.7% 8.8% Asset management fees 7.8% 7.8% 6.6% 1.7% 1.5% Account fees 1.4% 1.4% 1.1% 1.3% 1.1% Other fees 2.5% 2.7% 2.2% 2.5% 2.3% ------ ------ ------ ------ ------ Total 21.1% 21.7% 18.0% 15.2% 13.7% Revenues from consolidated investments 1.3% 2.3% 2.1% 0.8% 1.3% Other 6.8% 13.6% 7.8% 9.4% 11.2% ------ ------ ------ ------ ------ Subtotal 86.6% 85.8% 67.6% 86.1% 86.4% Interest and dividend revenues 108.7% 118.6% 107.9% 134.1% 131.5% Less interest expense 95.3% 104.4% 95.4% 120.2% 117.9% ------ ------ ------ ------ ------ Net interest profit 13.4% 14.2% 12.5% 13.9% 13.6% Gain on merger 0.0% 0.0% 19.9% 0.0% 0.0% ------ ------ ------ ------ ------ Total Net Revenues 100.0% 100.0% 100.0% 100.0% 100.0% ------ ------ ------ ------ ------ Non-Interest Expenses Compensation and benefits 72.1% 48.7% 39.9% 38.6% 49.6% Communications and technology 5.7% 5.2% 4.9% 5.5% 4.9% Brokerage, clearing, and exchange fees 3.2% 3.3% 2.8% 3.4% 3.1% Occupancy and related depreciation 3.0% 3.0% 2.6% 2.9% 2.7% Professional fees 2.5% 2.4% 2.3% 3.1% 2.3% Advertising and market development 1.8% 2.3% 1.7% 2.2% 1.6% Expenses of consolidated investments 0.6% 1.8% 1.4% 0.5% 0.6% Office supplies and postage 0.7% 0.7% 0.5% 0.7% 0.6% Other 3.0% 3.9% 2.2% 4.1% 3.2% ------ ------ ------ ------ ------ Total Non-Interest Expenses 92.6% 71.3% 58.3% 61.0% 68.6% ------ ------ ------ ------ ------ Earnings Before Income Taxes 7.4% 28.7% 41.7% 39.0% 31.4% Income tax expense 1.4% 8.7% 11.0% 11.7% 9.5% ------ ------ ------ ------ ------ Net Earnings 6.0% 20.0% 30.7% 27.3% 21.9% -------------------------------------------------------- ------------- Common shares outstanding (in millions): 1Q06 2Q06 3Q06 4Q06 1Q07 ------ ------ ------ ------ ------ Weighted-average - basic 883.7 885.4 855.8 847.4 841.2 Weighted-average - diluted 981.1 973.3 945.3 952.2 930.2 Period-end 933.4 898.1 883.3 868.0 876.5 ---------------------------------------------------------------------- Note: Certain prior period amounts have been reclassified to conform to the current period presentation. 16 Merrill Lynch & Co., Inc. Attachment VI Supplemental Data (unaudited) (dollars in billions) 1Q06 2Q06 3Q06 4Q06 1Q07 --------- -------- -------- -------- ---------- Client Assets U.S. $ 1,381 $ 1,370 $ 1,412 $ 1,483 $ 1,503 Non - U.S. 121 124 130 136 145 --------- -------- -------- -------- ---------- Total Client Assets 1,502 1,494 1,542 1,619 1,648 Assets in Annuitized-Revenue Products 560 559 578 613 633 -------------------------------------------------------------------- Net New Money All Client Accounts (1) $ 18 $ 7 $ 14 $ 22 $ 16 Annuitized- Revenue Products (1) (2) 13 10 7 18 16 -------------------------------------------------------------------- Balance Sheet Information: (3) Short-term Borrowings $ 14.4 $ 17.5 $ 14.3 $ 18.1 $ 22.1 Deposits 81.1 79.4 77.9 84.1 84.9 Long-term Borrowings 134.7 140.0 160.4 181.4 205.2 Junior Subordinated Notes (related to trust preferred securities) 3.1 3.1 3.1 3.8 3.5 Stockholders' Equity: (3) Preferred Stockholders' Equity 3.1 3.1 3.1 3.1 4.7 Common Stockholders' Equity 34.7 33.4 35.6 35.9 36.7 --------- -------- -------- -------- ---------- Total Stockholders' Equity 37.8 36.5 38.7 39.0 41.4 -------------------------------------------------------------------- Full-Time Employees (4) 55,500 56,000 55,300 (5) 56,200 60,300 Private Client Financial Advisors (6) 15,350 15,520 15,700 15,880 15,930 -------------------------------------------------------------------- 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 outflows in the Amvescap retirement business and the Advest acquisition prior to its system conversion in early March 2006. Net new money also excludes 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. Includes net flows from the majority of annuitized-revenue products but excludes flows in the Amvescap retirement business, as well as certain other annuitized-revenue products. (3) Balance Sheet Information and Stockholders' Equity are estimated for 1Q07. (4) Excludes 300 full-time employees on salary continuation severance at the end of 1Q06 and 2Q06, 200 at the end of 3Q06, 100 at the end of 4Q06, and 200 at the end of 1Q07. (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, and 160 at the end of 1Q07. 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 Fax: 212-449-7461 www.ir.ml.com 17