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Merrill Lynch Reports First Quarter 2007 Results: Net Revenues of $9.9 Billion, up 24% from 1Q06

Merrill Lynch (NYSE: MER) today reported strong growth in net earnings and earnings per diluted share for the first quarter of 2007, driven by net revenues of $9.9 billion. Net revenues were up 24% from the prior-year period and up 14% from the fourth quarter of 2006, with increases both year-over-year and sequentially in both Global Markets and Investment Banking (GMI) and Global Wealth Management (GWM), and in all global regions. These are the second-highest quarterly net revenues Merrill Lynch has ever generated, only $51 million lower than in the third quarter of 2006, when net revenues included a $2.0 billion one-time, pre-tax gain arising from the merger of Merrill Lynch Investment Managers (MLIM) with BlackRock, Inc. (NYSE: BLK).

First quarter 2007 net earnings per diluted share were $2.26, up 414% from $0.44 for the first quarter of 2006, or 37% on an operating basis which excludes $1.2 billion, after taxes, of one-time compensation expenses from the 2006 first quarter. Net earnings per diluted share were down 6% from $2.41 for the fourth quarter of 2006. First quarter 2007 net earnings were $2.2 billion, up 354% from the first quarter of 2006, or up 31% excluding the one-time expenses in the prior-year period. Net earnings were down 8% from the fourth quarter of 2006, which included a lower compensation expense ratio. The pre-tax profit margin for the first quarter of 2007 was 31.4%, and the annualized return on average common equity was 23.3%. At the end of the first quarter, book value per share was $41.95, up 13% from the end of the first quarter of 2006 and 1% from the end of 2006.

This was a terrific quarter. In an environment which was volatile at times, we took full advantage of market opportunities and delivered value to our clients and our shareholders, said Stan ONeal, chairman and chief executive officer. Our product capabilities and geographic reach are stronger and broader now than at any point in our history, and we continue to make investments to further enhance our franchise. We remain focused on disciplined growth to capitalize on the positive secular trends we continue to see unfold.

Business Segment Review:

In the first quarter of 2006, Merrill Lynch recorded $1.8 billion, before taxes ($1.2 billion after taxes), in one-time compensation expenses. These expenses were recorded in the business segments as follows: $1.4 billion to Global Markets and Investment Banking, $281 million to Global Wealth Management and $109 million to Merrill Lynch Investment Managers (which ceased to exist as a business segment upon its merger with BlackRock). Comparisons to that period in the following discussion of business segment results exclude the impact of these one-time expenses. A reconciliation of these segment results appears on Attachment III to this release.

Global Markets and Investment Banking (GMI)

GMI generated record revenues, both overall and in each of its three major business lines, for the first quarter of 2007, as the business continued to execute on targeted organic and inorganic investments for diversification and profitable growth, executed with strong operating discipline in a favorable market environment. Non-U.S. revenues, which continue to comprise more than half of GMIs total net revenues, grew significantly faster than U.S. revenues in the period.

    -- GMI's first quarter 2007 net revenues were a record $6.5
       billion, up 43% from the year-ago quarter. Compared with the
       first quarter of 2006, net revenues increased in all three
       major business lines:

        -- Fixed Income, Currencies and Commodities (FICC) net
           revenues increased 36% to a record $2.8 billion driven by
           nearly every major revenue category, as revenues from
           credit products, real estate, interest rate products and
           currencies grew to record levels. Revenues from trading
           commodities also increased significantly. Revenues from
           mortgage-related activities declined, resulting from a
           difficult environment for the origination, securitization
           and trading of non-prime mortgage loans and securities in
           the U.S. Revenues from activities related to U.S. non-prime
           mortgages, in aggregate, comprised less than 1% of Merrill
           Lynch's total net revenues over the past five quarters.

        -- Equity Markets net revenues increased 50% to a record
           $2.4 billion, driven by every major business line,
           including a strong increase from private equity and record
           revenues from both the equity-linked and proprietary
           trading businesses.

        -- Investment Banking net revenues increased 47% to a record
           $1.4 billion, as record revenues in debt origination were
           complemented by strong growth in revenues from both merger
           and acquisition advisory services and equity origination.

    -- Pre-tax earnings for GMI were $2.3 billion, up 48% from the
       year-ago quarter, driven by the strong revenue growth. The
       first quarter 2007 pre-tax profit margin was 35.8%, up from
       34.7% in the prior-year period.

Global Wealth Management (GWM)

GWM generated strong revenue and pre-tax earnings growth in the first quarter of 2007. The growth was driven by Global Private Client (GPC), which increased its net revenues year-over-year for the tenth consecutive quarter, as well as by the contribution of Global Investment Management (GIM), including earnings from Merrill Lynchs investment in BlackRock. GPC continues to focus on delivering a superior product and service offering, positioning Merrill Lynch Financial Advisors (FAs) as essential partners to their clients. GPC also continues to invest in technology to further enhance both the efficiency and effectiveness of the FA force, and to invest in growing the FA census globally.

    -- GWM's first quarter 2007 net revenues were $3.4 billion, up 16%
       from the first quarter of 2006:

        -- GPC's net revenues increased 11% to $3.1 billion, driven by
           every major revenue category, including record fee-based
           revenues, which reflected higher asset values and net flows
           into annuitized-revenue products. Transaction and
           origination revenues also increased, driven by new issue
           origination activity, and net interest revenues grew to a
           new record level.

        -- GIM's net revenues increased 151% to $261 million, due
           primarily to revenues from Merrill Lynch's investment in
           BlackRock, which began to contribute to revenues during the
           2006 fourth quarter, as well as increases in revenues from
           Merrill Lynch's ownership positions in other investment
           management companies and the business that creates
           alternative investment products for GPC clients.

        -- Pre-tax earnings for GWM in the first quarter of 2007 were
           $842 million, up 31% from the first quarter of 2006, driven
           by the growth in revenues. The pre-tax profit margin was
           24.7%, up from 21.9% in the prior-year period, driven by
           the impact of the investment in BlackRock.

        -- Turnover among FAs, especially top-producing FAs, remained
           low. FA headcount reached 15,930 at quarter-end, as GPC
           continued to exercise discipline in recruiting and training
           high-quality FAs.

        -- Client assets in products that generate annuitized revenues
           ended the quarter at $633 billion, up 13% from the first
           quarter of 2006, and total client assets in GWM accounts
           were a record $1.6 trillion, up 10%. Net inflows of client
           assets into annuitized-revenue products were $16 billion
           for the first quarter, and total net new money was $16
           billion.

        -- On January 29, Merrill Lynch announced that it had reached
           a definitive agreement to acquire First Republic Bank
           (NYSE: FRC), a private banking and wealth management firm
           focused on high-net-worth individuals and their businesses,
           for approximately $1.8 billion in cash and stock.

Merrill Lynch Investment Managers (MLIM)

On September 29, 2006, Merrill Lynch merged MLIM with BlackRock in exchange for a total of 65 million common and preferred shares in the newly combined BlackRock, representing an economic interest of approximately half. Following the merger, the MLIM business segment ceased to exist, and under the equity method of accounting, an estimate of the net earnings associated with Merrill Lynchs ownership position in BlackRock is recorded in the GIM portion of the GWM segment. For the first quarter of 2006, MLIMs net revenues were $570 million, and its pre-tax earnings were $222 million.

Additional Items:

Compensation Expenses

Compensation and benefits expenses were $4.9 billion, or 49.6% of net revenues for the first quarter of 2007. Excluding the one-time compensation expenses in the first quarter of 2006, compensation and benefits expenses for that prior-year period were $4.0 billion, or 50.1% of net revenues.

Non-compensation Expenses

Overall, non-compensation expenses were $1.9 billion for the first quarter of 2007, up 15% from the year-ago quarter. Total non-compensation expenses decreased 3% sequentially primarily due to lower professional fees and litigation provisions.

Non-compensation expenses as a percentage of net revenues further decreased, to 19.0% in the 2007 first quarter, from 20.4% in the 2006 first quarter. Details of the significant changes in non-compensation expenses from the first quarter of 2006 are as follows:

  • Brokerage, clearing, and exchange fees were $310 million, up 20% due primarily to higher transaction volumes.
  • Occupancy costs and related depreciation were $265 million, up 10% due principally to higher office rental expenses and office space added via acquisitions.
  • Professional fees were $225 million, an increase of 13% due to higher legal and other professional fees associated with increased business activity levels.
  • Advertising and market development costs were $158 million, up 10% due primarily to higher travel expenses associated with increased business activity levels.
  • Expenses of consolidated investments totaled $59 million, up from $47 million due principally to increased expenses associated with the related increase in revenues from consolidated investments.
  • Other expenses were $316 million, up 39% due primarily to increased minority interest expenses associated with private equity investments and increased charitable contributions; partially offset by lower litigation provisions.

Income Taxes

Merrill Lynchs first quarter effective tax rate was 30.3%, compared with 19.9% for the first quarter of 2006, or 29.8% excluding the one-time compensation expenses.

Share Repurchases

As part of its active management of equity capital, Merrill Lynch repurchased 22.4 million shares of its common stock for $2.0 billion during the first quarter of 2007, leaving $1.2 billion remaining of the $5 billion repurchase program authorized in October 2006.

Staffing

Merrill Lynchs full-time employees totaled 60,300 at the end of the first quarter of 2007, a net increase of 4,100 during the quarter, due principally to the acquisition of the First Franklin mortgage origination and servicing platforms at the beginning of the quarter.

Jeff Edwards, senior vice president and chief financial officer, will host a conference call today at 11:00 a.m. ET to discuss the companys 2007 first quarter results. The conference call can be accessed via a live audio webcast available through the Investor Relations website at www.ir.ml.com or by dialing (888) 810-0245 (U.S. callers) or (706) 634-0180 (non-U.S. callers). On-demand replay of the webcast will be available from approximately 2:00 p.m. ET today at the same web address.

Merrill Lynch is one of the world's leading wealth management, capital markets and advisory companies with offices in 37 countries and territories and total client assets of approximately $1.6 trillion. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the worlds largest publicly traded investment management companies with more than $1 trillion in assets under management. For more information on Merrill Lynch, please visit www.ml.com.

Merrill Lynch may make forward-looking statements, including, for example, statements about management expectations, strategic objectives, growth opportunities, business prospects, investment banking pipelines, anticipated financial results, the impact of off balance sheet arrangements, significant contractual obligations, anticipated results of litigation and regulatory investigations and proceedings, and other similar matters. These forward-looking statements are not statements of historical facts and represent only Merrill Lynchs beliefs regarding future performance, which is inherently uncertain. There are a variety of factors, many of which are beyond Merrill Lynchs control, which affect the operations, performance, business strategy and results and could cause its actual results and experience to differ materially from the expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to, financial market volatility; actions and initiatives taken by current and potential competitors; general economic conditions; the effect of current, pending and future legislation, regulation, and regulatory actions; and the other additional factors described in the Risk Factors section of Merrill Lynchs Annual Report on Form 10-K for the fiscal year ended December 29, 2006 and also disclosed from time to time in its subsequent reports on Form 10-Q and 8-K, which are available on the Merrill Lynch Investor Relations website at www.ir.ml.com and at the SECs website, www.sec.gov.

Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Merrill Lynch does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made. The reader should, however, consult any further disclosures Merrill Lynch may make in its future filings of its reports on Form 10-K, Form 10-Q and Form 8-K.

Merrill Lynch may also, from time to time, disclose financial information on a non-GAAP basis where management believes this information will be valuable to investors in gauging the quality of Merrill Lynchs financial performance and identifying trends.

Merrill Lynch & Co., Inc.Attachment I
Preliminary Unaudited Earnings Summary
For the Three Months EndedPercent Inc / (Dec)

(in millions, except per share amounts)

March 30,December 29,March 31,1Q07 vs.1Q07 vs.

2007200620064Q061Q06
Net Revenues
Principal transactions $ 2,734  $ 2,193  $ 1,988  25  % 38 

%

Commissions 1,697  1,512  1,560  12 
Investment banking 1,514  1,514  1,023  48 
Managed accounts and other fee-based revenues 1,354  1,305  1,679  (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 Revenues9,8548,6097,972 14  24 
Non-Interest Expenses
Compensation and benefits 4,887  3,324  5,750  47  (15)
Communications and technology 480  477  453 
Brokerage, clearing, and exchange fees 310  294  259  20 
Occupancy and related depreciation 265  249  241  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 
Other 316  347  228  (9) 39 
Total Non-Interest Expenses6,7595,2537,379 29  (8)
Earnings Before Income Taxes3,0953,356593 (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 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.
Merrill Lynch & Co., Inc.                               Attachment IIReconciliation of Non-GAAP MeasuresMerrill Lynch adopted Statement of Financial Accounting Standards No.123 (as revised in 2004) for stock-based employee compensation duringthe first quarter 2006. Additionally, as a result of a comprehensivereview of the retirement provisions in its stock-based compensationplans, Merrill Lynch also modified the retirement eligibilityrequirements of existing stock awards in order to facilitatetransition to more stringent retirement eligibility requirements forfuture stock awards. These modifications and the adoption of the newaccounting standard required Merrill Lynch to accelerate therecognition of compensation expenses for affected stock awards,resulting in the "one-time compensation expenses." These changesrepresent timing differences and are not economic in substance.Management believes that while the results excluding the one-timeexpenses are considered non-GAAP measures, they depict the operatingperformance of the company more clearly and enable more appropriateperiod-to-period comparisons.
Preliminary Unaudited Earnings SummaryFor the Three Months Ended March 31, 2006
Excluding the Impact ofFirst Quarter Impact of
(in millions, except perOne-timeOne-time
share amounts)CompensationCompensationGAAP
ExpensesExpensesBasis
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 Expenses5,6201,7597,379
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 878.05.7883.7
Diluted 975.45.7981.1
Financial Ratios

For the Three Months Ended

March 31, 2006
Excluding the Impact of One-time Compensation ExpensesGAAP 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 Equity19.1%5.1%
Merrill Lynch & Co., Inc.Attachment III
Preliminary Segment Data (unaudited)
For the Three Months Ended

Percent Inc / (Dec)

March 30,December 29,March 31,1Q07 vs.1Q07 vs.
(dollars in millions) 2007200620064Q061Q06
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  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  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  % 11  %
Transactional and origination revenues 903  890  861 

Net interest profit and related hedges (2)

604  569  527  15 
Other revenues 97  94  56  73 
Total Global Private Client net revenues 3,143  3,076  2,831  11 
Global Investment Management net revenues 261  211  104  24  151 

Total net revenues(a)

3,404  3,287  2,935  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 
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.
Merrill Lynch & Co., Inc.Attachment IV
Consolidated Quarterly Earnings (unaudited) (in millions)
1Q062Q063Q064Q061Q07
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 Revenues7,9728,1739,9058,6099,854
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 Expenses7,3795,8245,7775,2536,759
Earnings Before Income Taxes5932,3494,1283,3563,095
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
1Q062Q063Q064Q061Q07
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.
Merrill Lynch & Co., Inc.Attachment V
Percentage of Quarterly Net Revenues (unaudited)
1Q062Q063Q064Q061Q07
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 Revenues100.0%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 Expenses92.6%71.3%58.3%61.0%68.6%
Earnings Before Income Taxes7.4%28.7%41.7%39.0%31.4%
Income tax expense 1.4% 8.7% 11.0% 11.7% 9.5%
Net Earnings6.0%20.0%30.7%27.3%21.9%
Common shares outstanding (in millions):
1Q062Q063Q064Q061Q07
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.
Merrill Lynch & Co., Inc.Attachment VI
Supplemental Data (unaudited) (dollars in billions)
1Q062Q063Q064Q061Q07
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  $ $ 14  $ 22  $ 16 
Annuitized-Revenue Products (1) (2) 13  10  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.

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