Merrill Lynch Reports Third-quarter Net Earnings of $422 Million; 44 Cents Per Diluted Share.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 18, 2001 Includes 6 Cents Per Share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. for September September: see month. 11th Related Expenses Komansky and O'Neal Thank Employees and Clients for Response to September 11th Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. (NYSE NYSE See: New York Stock Exchange : MER mer Among the Cheremi and Udmurt peoples of Russia, a sacred grove where people of several villages gathered periodically to hold religious festivals and sacrifice animals to nature gods. ) today reported third-quarter net earnings of $422 million. Earnings per common share were $0.49 basic and $0.44 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , compared with $1.09 basic and $0.94 diluted in the 2000 third quarter. Third quarter earnings include 6 cents per diluted share of September 11th-related expenses associated with the tragic attack on the World Trade Center. Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before of $475 million, which exclude September 11th-related expenses, were 12% lower than the 2001 second quarter and 46% below last year's third quarter. Third quarter earnings include $152 million in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expenses. Net revenues were $5.1 billion, 8% and 16% lower than the second and year-ago quarters, respectively. The operating pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta profit margin for the quarter was 15.0%, essentially unchanged from the second quarter as reductions in expenses kept pace with the decline in revenues. "While our results are reasonable given a business environment that was deteriorating de·te·ri·o·rate v. de·te·ri·o·rat·ed, de·te·ri·o·rat·ing, de·te·ri·o·rates v.tr. To diminish or impair in quality, character, or value: even before the terrorist attacks of September 11, we are not satisfied with them. We are accelerating actions throughout all of our businesses to improve profit margins," said David H. Komansky, chairman and chief executive officer, and Stan O'Neal E. Stanley "Stan" O'Neal is the present Chief Executive Officer and Chairman of the Board of Merrill Lynch & Co. Inc., having served in numerous senior management positions at the company prior to this appointment. , president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "The near-term near-term adj. Of, for, or involving a short period of time in the near future. environment remains extremely weak, leading to over-capacity throughout the industry. Longer-term, the global forces driving growth in financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. remain in place. We have the market position, the leadership and the strategic resolve to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. these growth opportunities for our clients, shareholders and employees." Messrs. Komansky and O'Neal also said, "After the tragic events of September 11th, all of us at Merrill Lynch extend prayers for those who have suffered loss, and our gratitude Gratitude agrimony traditional symbol for gratitude. [Flower Symbolism: Flora Symbolica, 172] Androcles because he had once extracted a thorn from its paw, the lion refrained from attacking Androcles in the arena. [Rom. Lit. to all those who have lent support. Merrill Lynch employees have worked tirelessly tire·less adj. Not yielding to fatigue; untiring or indefatigable. tire  less·ly adv. to serve
clients and re-establish re-establishVerb to create or set up (an organization, link, etc.) again re-establishment n businesses in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of enormous personal and physical disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. . We are very proud of the determination and teamwork (product, software, tool) Teamwork - A SASD tool from Sterling Software, formerly CADRE Technologies, which supports the Shlaer/Mellor Object-Oriented method and the Yourdon-DeMarco, Hatley-Pirbhai, Constantine and Buhr notations. demonstrated by employees, and thank our clients for their patience Patience, poem Patience: see Pearl, The. patience, card game patience: see solitaire. Patience See also Longsuffering. and loyalty." Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating earnings were $1.9 billion, 35% lower than the first nine months of 2000, on net revenues of $17.1 billion, down 16% from the year-ago period. The effect of declining revenues on operating earnings was limited by a 12% reduction in year-to-date expenses, including a 6% reduction in non-compensation costs. The year-to-date operating pre-tax margin was 17.4%, compared to 21.5% in the year-ago period. On an operating basis, annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. year-to-date return on equity was 12.6%. In the aftermath AFTERMATH. A right to have the last crop of grass or pasturage. 1 Chit. Pr. 181. of September 11th, both of the company's headquarters buildings in the World Financial Center have been inaccessible inaccessible Surgery adjective Unreachable; referring to a lesion that unmanageable by standard surgical techniques–eg, lesions deep in the brain or adjacent to vital structures–ie, not accessible. See Accessible. . We plan to begin reoccupying our North Tower within the next two weeks. Reoccupation of our South Tower will take longer. September 11th-related costs incurred during the quarter are reported in the Corporate segment and discussed further in the "Expenses" section below. These costs are net of applicable insurance recoveries. Additional expenses and recoveries will be recorded in future periods. Business Segment Review: Corporate and Institutional Client Group (CICG CICG Centre International de Conférence de Genève CICG California Institute for County Government CICG Critical Infrastructure Coordination Group (SIPAC) CICG Corporate and Institutional Client Group (Merrill Lynch) ) CICG faced a difficult operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. during the third quarter, characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by continued weak equity markets and sharply reduced investment banking activity. Partially offsetting these factors were favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. conditions in the secondary fixed income markets, following reductions of interest rates by the Federal Reserve. Against this challenging backdrop Backdrop may refer to:
The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real and announced mergers and acquisitions. -- Third quarter pre-tax earnings were $485 million, 6% lower than the second quarter and 43% below the 2000 third quarter, on net revenues of $2.2 billion, 10% below the second quarter and 18% lower than the year-ago quarter. CICG's pre-tax margin was 21.6%, one percentage point above the second quarter and compared with 30.9% in the 2000 third quarter. -- The decline in CICG's revenues was due primarily to a reduction in equity trading and investment banking revenues, which was partially offset by an increase in debt trading revenues. Also contributing to the decline from the year-ago quarter was the absence of gains on investments. -- Equity trading revenues declined from the second quarter primarily as a result of lower transaction volumes, due in part to the closure of markets and business disruption. Revenues were also impacted by reduced volatility prior to September 11 and the continued effect of lower stock prices on revenues from principal-traded markets. -- Debt trading revenues in the third quarter were higher than both the second quarter of this year and the year-ago period. The increase was primarily in derivatives and government bonds, as both businesses benefited from a steepening yield curve and declining interest rates. -- Merrill Lynch continued to demonstrate leadership in equity and debt origination, ranking #1 in global equity and equity-linked with an increased year-to-date market share of 15.5%, and #1 in global debt with an 11.5% market share. Gains in equity market share during the third quarter were driven by leadership in equity-linked products, the global diversity of issuing clients and also by the strength of Merrill Lynch's global distribution capability, which continues to be a source of competitive advantage in difficult markets. -- In mergers and acquisitions, Merrill Lynch increased its year-to-date market share of announced deals to 26.5% and maintained its #2 global ranking. Merrill Lynch has advised on 12 of the largest 25 transactions announced this year. Private Client Group While the uncertain market environment and the usual summer slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. caused a continued reduction in private client transaction volumes for much of the quarter, this uncertainty also continued to underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. the value of Financial Advisors' advice and guidance. Good progress continued to be made in the implementation of a multi-channeled service model, and the benefits of actions taken over the past year to reduce expenses are being realized. -- Third quarter pre-tax earnings were $274 million, 11% lower than the second quarter and 29% below the third quarter of 2000, on net revenues that were 5% and 14% lower at $2.5 billion. The declines in revenues were due to lower transaction volumes and reduced demand for mutual funds, partially offset by an increase in net interest profit. Private Client's pre-tax margin was 11.2%, compared with 11.9% in the second quarter of this year and 13.6% in the year-ago quarter. These overall results continue to reflect a stronger performance in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. than outside. -- In the United States, Private Client pre-tax earnings were $314 million, 4% above the second quarter and 17% below year-ago levels, on net revenues that were down 3% and 11% from the 2001 second quarter and 2000 third quarter, respectively. The solid quarter resulted from the stability of fee-based and interest revenues, which accounted for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. two-thirds of Private Client's U.S. revenue in the 2001 third quarter, combined with actions taken over the last year to reduce expenses. On a year-to-date basis, Private Client's U.S. pre-tax earnings were $988 million, 8% below the comparable 2000 period. The year-to-date pre-tax margin was 15.1%, 80 basis points higher than the year-ago period. -- Outside the United States, Private Client posted a pre-tax loss of $40 million in the third quarter, compared with a pre-tax profit of $11 million in the year-ago quarter, on net revenues that were down 29% from the 2000 third quarter, and 15% from this year's second quarter. Transaction-related commissions represent approximately 50% of non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. revenues. On a year-to-date basis, Private Client's pre-tax loss outside the United States was $51 million, compared with a pre-tax profit of $155 million in the comparable period of 2000. The development of the ultra ultra Member of the extreme right (ultraroyalist) wing of the royalist movement in the French Bourbon Restoration (1815–30). The ultras included large landowners, clericalists, and the former émigré nobility. high net worth client businesses is encouraging, which validates the firm's strategy to focus non-U.S. Private Client business on this segment. -- Total assets in client accounts were $1.5 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. , including $1.3 trillion of assets in Private Client accounts. Net new money attracted into Private Client accounts globally during the quarter was $13 billion. -- The U.S. Financial Advisory Center has surpassed its 2001 enrollment goal of 500,000 accounts. Client satisfaction and retention continue to be high, and revenue velocity on enrolled accounts has increased. Similar initiatives outside the United States are also progressing well. Merrill Lynch Investment Managers (MLIM MLIM Merrill Lynch Investment Managers (UK) ) Although MLIM's financial results were affected by a market-driven decline in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. , investment performance and net flows remained solid. -- Third quarter pre-tax earnings were $91 million, 17% lower than the second quarter and 39% below the 2000 third quarter, on revenues of $515 million, 8% and 16% below last quarter and the year-ago quarter, respectively. MLIM's pre-tax margin was 17.7% compared with 19.4% last quarter and 24.4% in the 2000 third quarter. -- Assets under management totaled $507 billion at the end of the third quarter, 5% below second quarter levels, as $33 billion in market depreciation and foreign exchange movements more than offset $4 billion in net new money during the quarter. Adjusting for the cumulative impact of money transferred to bank deposits, assets under management are 15% lower than at the end of the 2000 third quarter. Revenues related to $81 billion of retail money market assets under management are included in Private Client's results. -- Although the composition of assets under management has shifted slightly towards fixed income products over the past year as equity market valuations have declined, there has been no significant deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in MLIM's revenue yield per asset under management. This relative stability underscores the benefit of actions taken to expand MLIM's range of higher margin products. Third-Quarter Income Statement Review: Revenues Net revenues were $5.1 billion, 8% below the second quarter and 16% lower than the 2000 third quarter. Commission revenues were $1.2 billion, down 12% from the second quarter and 26% below the 2000 third quarter, due primarily to a global decline in client transaction volumes, particularly in equities and mutual funds. Over the past year, commission revenues have also decreased as clients have opened asset-priced accounts, paying fees in place of commissions. Principal transaction revenues decreased 17% from the second quarter and 35% from the third quarter of 2000, to $759 million. These decreases are due primarily to significantly lower revenues from equities and equity derivatives In finance, an equity derivative is a class of financial instruments whose value is at least partly derived from one or more underlying equity securities. Market participants trade equity derivatives in order to transfer or transform certain risks associated with the , which were partially offset by higher debt trading revenues. Underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. revenues were $543 million, down 18% from the second quarter and 8% lower than the 2000 third quarter. The revenue impact of a steep year-over-year decline in global origination activity was limited by the market share gains that Merrill Lynch has made, particularly in equity underwriting. Strategic advisory revenues increased 10% from the 2000 third quarter, to $294 million. Asset management and portfolio service fees were $1.3 billion, virtually unchanged from the second quarter and 5% below the third quarter of 2000. The decrease from the year-ago quarter reflects primarily a market-driven decline in assets under management and lower valuations of assets in asset-priced accounts. Fees on these accounts are calculated based on asset valuations at the beginning of each quarter. Other revenues were $129 million, down $189 million from the 2000 third quarter due to lower gains on investments. Net interest profit was $879 million, $63 million higher than the second quarter and $109 million higher than the year-ago quarter. Expenses Compensation and benefits expenses, which include $152 million of severance costs, decreased 7% from the second quarter and 12% from the 2000 third quarter to $2.8 billion. Compensation and benefits expenses were 53.6% of net revenues for the third quarter of 2001 (50.6% excluding severance costs), compared to 51.2% in the year-ago quarter (50.1% excluding severance costs). Non-compensation operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. decreased 7% from the second quarter and 4% from the 2000 third quarter. Details of significant changes in non-compensation operating expenses from the third quarter of 2000 follow: -- occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy and related depreciation was $280 million, up 12%, as a result of increased rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. and other occupancy expenses; -- advertising and market development expenses declined $40 million, or 20%, due primarily to reduced spending on travel and advertising. Travel expenses fell during the quarter due to normal seasonality, curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. of non-essential non-essential Adjective not absolutely necessary non-essential adj → unnötig n non-essentials → nicht (lebens)notwendige Dinge pl travel after September 11 and actions taken to reduce travel costs; -- brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. , clearing, and exchange fees were $219 million, up $13 million due to an increase in transaction volumes from the year-ago period; -- professional fees decreased 22%, to $115 million, due largely to reduced spending on employment and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" ; and -- other expenses were 11% lower, at $253 million, due to lower business activity and a reduction in provisions for various business matters. September 11th-related expenses of $88 million ($53 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ), which are net of an insurance receivable of $50 million, include estimated costs related to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of leases and damaged assets in lower Manhattan Lower Manhattan is the southernmost part of the island of Manhattan, the main island and center of business and government of the City of New York. Lower Manhattan is generally defined as the area delineated on the north by Chambers Street, on the west by the Hudson River (North ; the purchase of replacement equipment; and the temporary relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of approximately 9,000 employees which required reconfiguring technology, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and alternative office facilities, and providing transportation. Merrill Mer·rill , James 1926-1995. American poet whose works include Divine Comedies (1976), which won a Pulitzer Prize. Lynch's year-to-date effective tax rate was 31.4%. Staffing Merrill Lynch's global full-time full-time adj. Employed for or involving a standard number of hours of working time: a full-time administrative assistant. full employees totaled 65,900 at the end of the quarter. The decline of 6,100 since year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2000 is due primarily to the implementation of various strategic outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. initiatives announced during 2000, the sale or exit of selected businesses, managed reduction of staff, attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: , and reduced hiring. Merrill Lynch continues to selectively hire talented professionals into each of its businesses. *** David H. Komansky, chairman and chief executive officer; Stan O'Neal, president and chief operating officer; and Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs H. Patrick, chief financial officer, will host a conference call today at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to discuss the company's third-quarter operating results. A live audio webcast of the conference call will be available through the Investor Relations Investor relations The process by which the corporation communicates with its investors. website at www.ir.ml.com. On-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front replay of the webcast will be available from approximately 1:00 p.m. EDT today. *** Merrill Lynch is one of the world's leading financial management and advisory companies with offices in 43 countries and total client assets of approximately $1.5 trillion. As an investment bank, it is the top global underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. of debt and equity securities and a leading strategic advisor to corporations, governments, institutions, and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets Financial assets Claims on real assets. . For more information on Merrill Lynch, please visit www.ml.com. *** Merrill Lynch may make or publish forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. about management expectations, strategic objectives, business prospects, anticipated financial performance, 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 Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , actions and initiatives by current and potential competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , the effect of current and future legislation or regulation, and additional factors described in Merrill Lynch's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and subsequent reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. and Form 10-Q Form 10-Q See 10-Q. , which are available at the SEC's website, www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Merrill Lynch undertakes no responsibility to update or revise any forward-looking statements.
Merrill Lynch & Co., Inc. Attachment I
Preliminary Unaudited Earnings Summary
For the Three Months Ended % Inc/(Dec)
(in millions, except Sept.28, Jun.29, Sept.29, 3Q01 vs.
per share amounts) 2001 2001 2000 2Q01 3Q00
Net Revenues
Commissions $1,204 $1,362 $1,624 (11.6)% (25.9)%
Principal transactions 759 911 1,160 (16.7) (34.6)
Investment banking
Underwriting 543 662 590 (18.0) (8.0)
Strategic advisory 294 313 268 (6.1) 9.7
Asset management and
portfolio service fees 1,337 1,356 1,414 (1.4) (5.4)
Other 129 153 318 (15.7) (59.4)
Subtotal 4,266 4,757 5,374 (10.3) (20.6)
Interest and dividend
revenues 4,663 5,563 5,474 (16.2) (14.8)
Less interest expense 3,784 4,747 4,704 (20.3) (19.6)
Net interest profit 879 816 770 7.7 14.2
Total Net Revenues 5,145 5,573 6,144 (7.7) (16.3)
Non-Interest Expenses
Compensation and benefits 2,757 2,977 3,146 (7.4) (12.4)
Comm. and technology 529 568 542 (6.9) (2.4)
Occupancy and
related depreciation 280 270 251 3.7 11.6
Advert. and market dev. 165 202 205 (18.3) (19.5)
Brok.,clrg.,and exch. fees 219 243 206 (9.9) 6.3
Professional fees 115 151 147 (23.8) (21.8)
Goodwill amortization 53 51 52 3.9 1.9
Other 253 259 284 (2.3) (10.9)
Total Non-Interest Expenses 4,371 4,721 4,833 (7.4) (9.6)
Operating Earnings Before
Inc. Taxes and Div. on Pref.
Sec. Issued by Subsidiaries 774 852 1,311 (9.2) (41.0)
Income tax expense 251 262 378 (4.2) (33.6)
Dividends on pref.
sec. issued by subsidiaries 48 49 48 - -
Operating Earnings, Before
September 11 Expenses $ 475 $ 541 $ 885 (12.2) (46.3)
Expenses related to
September 11, net of tax 53 - - N/M N/M
Net Earnings $ 422 $ 541 $ 885 (22.0) (52.3)
Preferred Stock Dividends $ 10 $ 9 $ 10 - -
Oper. Earnings Per Common Share
Basic $0.55 $ 0.63 $ 1.09 (12.7) (49.5)
Diluted $0.50 $ 0.56 $ 0.94 (10.7) (46.8)
Earnings Per Common Share
Basic $0.49 $ 0.63 $ 1.09 (22.2) (55.0)
Diluted $0.44 $ 0.56 $ 0.94 (21.4) (53.2)
Average Shares
Basic 845.8 841.4 805.9 0.5 5.0
Diluted 934.5 943.8 929.0 (1.0) 0.6
Annualized Return on Average
Common Equity-Oper. Basis 9.1% 10.7% 21.6%
Note: Certain prior period amounts have been restated to conform
to the current period presentation.
Merrill Lynch & Co., Inc. Attachment II
Preliminary Unaudited Earnings Summary
For the Nine Months Ended
(in millions, except Sept.28, Sept.29, % Inc
per share amounts) 2001 2000 /(Dec)
Net Revenues
Commissions $4,071 $ 5,431 (25.0)%
Principal transactions 3,410 4,746 (28.2)
Investment banking
Underwriting 1,834 1,994 (8.0)
Strategic advisory 891 947 (5.9)
Asset management and
portfolio service fees 4,072 4,217 (3.4)
Other 446 849 (47.5)
Subtotal 14,724 18,184 (19.0)
Interest and dividend
revenues 16,459 15,007 9.7
Less interest expense 14,055 12,690 10.8
Net interest profit 2,404 2,317 3.8
Total Net Revenues 17,128 20,501 (16.5)
Non-Interest Expenses
Compensation and benefits 8,978 10,572 (15.1)
Comm. and technology 1,695 1,710 (0.9)
Occupancy and related
depreciation 820 762 7.6
Advert. and market dev. 575 713 (19.4)
Brok., clrg., and exch. fees 697 672 3.7
Professional fees 408 462 (11.7)
Goodwill amortization 156 162 (3.7)
Other 822 1,039 (20.9)
Total Non-Interest Expenses 14,151 16,092 (12.1)
Operating Earnings Before
Inc. Taxes and Div. on Pref.
Sec. Issued by Subsidiaries 2,977 4,409 (32.5)
Income tax expense 941 1,356 (30.6)
Dividends on pref. sec.
issued by subsidiaries 146 146 -
Operating Earnings, Before
September 11 Expenses $1,890 $ 2,907 (35.0)
Expenses related to
September 11, net of tax 53 - N/M
Net Earnings $1,837 $ 2,907 (36.8)
Preferred Stock Dividends $ 29 $ 29 -
Oper. Earnings Per Common Share
Basic $ 2.21 $ 3.63 (39.1)
Diluted $ 1.99 $ 3.18 (37.4)
Earnings Per Common Share
Basic $ 2.15 $ 3.63 (40.8)
Diluted $ 1.93 $ 3.18 (39.3)
Average Shares
Basic 839.8 793.7 5.8
Diluted 938.8 905.0 3.7
Annualized Return on Average
Common Equity-Oper. Basis 12.6% 25.9%
Note: Certain prior period amounts have been restated to conform
to the current period presentation.
Merrill Lynch & Co., Inc. Attachment III
Preliminary Segment Data (unaudited)
For the Three For the Nine
Months Ended Months Ended
Sept.28, Jun.29, Sept.29, Sept.28, Sept.29,
(dollars in millions) 2001 2001 2000 2001 2000
Corp. and Inst. Client Group
Non-interest revenues $1,866 $2,109 $2,391 $6,926 $ 8,504
Net interest profit 382 401 352 1,064 1,156
Total net revenues 2,248 2,510 2,743 7,990 9,660
Operating earnings
before inc. taxes and
div. on pref. sec.
issued by subsidiaries 485 515 847 1,975 3,041
Pre-tax profit margin 21.6% 20.5% 30.9% 24.7% 31.5%
Private Client Group
Non-interest revenues $1,952 $2,170 $2,432 $6,402 $ 8,064
Net interest profit 500 410 413 1,335 1,178
Total net revenues 2,452 2,580 2,845 7,737 9,242
Operating earnings
before inc. taxes and
div. on pref. sec.
issued by subsidiaries 274 307 388 937 1,228
Pre-tax profit margin 11.2% 11.9% 13.6% 12.1% 13.3%
Merrill Lynch Investment Managers
Non-interest revenues $ 500 $ 546 $ 592 $1,600 $ 1,790
Net interest profit 15 15 23 45 57
Total net revenues 515 561 615 1,645 1,847
Operating earnings
before inc. taxes and
div. on pref. sec.
issued by subsidiaries 91 109 150 301 403
Pre-tax profit margin 17.7% 19.4% 24.4% 18.3% 21.8%
Corporate
Non-interest revenues $ (52) $ (68) $ (41) $ (204) $ (174)
Net interest profit (18) (10) (18) (40) (74)
Total net revenues (70) (78) (59) (244) (248)
Oper. earnings (loss) before
inc. taxes and div. on
pref. sec. issued by
subsidiaries (76) (79) (74) (236) (263)
Total
Non-interest revenues $4,266 $4,757 $5,374 $14,724 $18,184
Net interest profit 879 816 770 2,404 2,317
Total net revenues 5,145 5,573 6,144 17,128 20,501
Operating earnings
before inc. taxes
and div. on pref. sec.
issued by subsidiaries 774 852 1,311 2,977 4,409
Pre-tax profit margin 15.0% 15.3% 21.3% 17.4% 21.5%
Note: Certain prior period amounts have been restated to conform
to the current period presentation.
Merrill Lynch & Co., Inc. Attachment IV
Consolidated Quarterly Earnings
(unaudited) (in millions)
3Q00 4Q00 1Q01 2Q01 3Q01
Net Revenues
Commissions
Listed &
over-the-counter
securities $ 901 $ 884 $ 885 $ 779 $ 673
Mutual funds 518 475 441 408 355
Other 205 187 179 175 176
Total 1,624 1,546 1,505 1,362 1,204
Principal transactions 1,160 1,249 1,740 911 759
Investment banking
Underwriting 590 674 629 662 543
Strategic advisory 268 434 284 313 294
Total 858 1,108 913 975 837
Asset management and
portfolio service fees
Asset management fees 578 585 545 548 514
Portfolio service fees 567 596 574 544 559
Account fees 127 123 124 126 125
Other fees 142 167 136 138 139
Total 1,414 1,471 1,379 1,356 1,337
Other 318 118 164 153 129
Subtotal 5,374 5,492 5,701 4,757 4,266
Interest and dividend
revenues 5,474 6,169 6,233 5,563 4,663
Less interest expense 4,704 5,396 5,524 4,747 3,784
Net interest profit 770 773 709 816 879
Total Net Revenues 6,144 6,265 6,410 5,573 5,145
Non-Interest Expenses
Compensation and
benefits 3,146 3,158 3,244 2,977 2,757
Comm. and technology 542 610 598 568 529
Occupancy and related
depreciation 251 244 270 270 280
Advert. and market dev. 205 226 208 202 165
Brok., clrg., and exch.
fees 206 221 235 243 219
Professional fees 147 175 142 151 115
Goodwill amortization 52 55 52 51 53
Other 284 268 310 259 253
Total Non-Interest
Expenses 4,833 4,957 5,059 4,721 4,371
Operating Earnings Before Inc.
Taxes and Div. on Pref. Sec.
Issued by Subsidiaries 1,311 1,308 1,351 852 774
Income tax expense 378 382 428 262 251
Dividends on pref. sec.
issued by subsidiaries 48 49 49 49 48
Operating Earnings, Before
September 11 Expenses $ 885 $ 877 $ 874 $ 541 $ 475
Per Common Share Data
3Q00 4Q00 1Q01 2Q01 3Q01
Operating earnings -
Basic $1.09 $1.07 $1.04 $0.63 $0.55
Operating earnings -
Diluted 0.94 0.93 0.92 0.56 0.50
Dividends paid 0.16 0.16 0.16 0.16 0.16
Book value 20.70 21.95 23.28 24.02 24.38 est
Note: Certain prior period amounts have been restated to conform
to the current period presentation.
Merrill Lynch & Co., Inc. Attachment V
Percentage of Quarterly Net Revenues (unaudited)
3Q00 4Q00 1Q01 2Q01 3Q01
Net Revenues
Commissions
Listed & over-the-counter
securities 14.7% 14.1% 13.8% 14.0% 13.1%
Mutual funds 8.4% 7.6% 6.9% 7.3% 6.9%
Other 3.3% 3.0% 2.8% 3.1% 3.4%
Total 26.4% 24.7% 23.5% 24.4% 23.4%
Principal transactions 18.9% 19.9% 27.1% 16.3% 14.8%
Investment banking
Underwriting 9.6% 10.8% 9.8% 11.9% 10.6%
Strategic advisory 4.4% 6.9% 4.4% 5.6% 5.7%
Total 14.0% 17.7% 14.2% 17.5% 16.3%
Asset management and
portfolio service fees
Asset management fees 9.4% 9.3% 8.5% 9.8% 10.0%
Portfolio service fees 9.2% 9.5% 9.0% 9.8% 10.9%
Account fees 2.1% 2.0% 1.9% 2.3% 2.4%
Other fees 2.3% 2.7% 2.1% 2.4% 2.7%
Total 23.0% 23.5% 21.5% 24.3% 26.0%
Other 5.2% 1.9% 2.6% 2.9% 2.4%
Subtotal 87.5% 87.7% 88.9% 85.4% 82.9%
Interest and dividend
revenues 89.1% 98.5% 97.2% 99.8% 90.6%
Less interest expense 76.6% 86.2% 86.1% 85.2% 73.5%
Net interest profit 12.5% 12.3% 11.1% 14.6% 17.1%
Total Net Revenues 100.0% 100.0% 100.0% 100.0% 100.0%
Non-Interest Expenses
Compensation and benefits 51.2% 50.4% 50.6% 53.4% 53.6%
Comm. and technology 8.8% 9.7% 9.3% 10.2% 10.3%
Occupancy and related
depreciation 4.1% 3.9% 4.2% 4.8% 5.4%
Advert. and market dev. 3.3% 3.6% 3.2% 3.6% 3.2%
Brok., clrg., and exch. fees 3.4% 3.5% 3.7% 4.4% 4.3%
Professional fees 2.4% 2.8% 2.2% 2.7% 2.2%
Goodwill amortization 0.8% 0.9% 0.8% 0.9% 1.0%
Other 4.7% 4.3% 4.9% 4.7% 5.0%
Total Non-Interest Expenses 78.7% 79.1% 78.9% 84.7% 85.0%
Operating Earnings Before Income
Taxes and Div. on Pref. Sec.
Issued by Subsidiaries 21.3% 20.9% 21.1% 15.3% 15.0%
Income tax expense 6.1% 6.1% 6.7% 4.7% 4.9%
Dividends on pref. sec.
issued by subsidiaries 0.8% 0.8% 0.8% 0.9% 0.9%
Operating Earnings, Before
September 11 Expenses 14.4% 14.0% 13.6% 9.7% 9.2%
Other Financial Data
3Q00 4Q00 1Q01 2Q01 3Q01
Non-interest expense excluding
compensation and benefits
to net revenues 27.5% 28.7% 28.3% 31.3% 31.4%
Compensation and benefits to
pre-tax operating earnings before
compensation and benefits 70.6% 70.7% 70.6% 77.7% 78.1%
Common shares outstanding (in mil.):
Weighted-average - basic 805.9 811.9 832.2 841.4 845.8
Weighted-average - diluted 929.0 930.7 938.0 943.8 934.5
Period-end 809.1 814.6 838.4 843.8 847.5
Merrill Lynch & Co., Inc. Attachment VI
Supplemental Data (unaudited) (dollars in billions)
3Q00 4Q00 1Q01 2Q01 3Q01
Client Assets
Private Client
U.S. $1,417 $1,337 $1,254 $1,318 $1,171
Non - U.S. 148 140 131 136 127
Total Private Client Assets 1,565 1,477 1,385 1,454 1,298
MLIM direct sales (1) 203 204 179 181 170
Total Client Assets $1,768 $1,681 $1,564 $1,635 $1,468
Assets Under Management (2) $571 $557 $525 $533 $507
Retail 269 250 233 230 214
Institutional 257 262 250 260 252
Private Investors 45 45 42 43 41
U.S. 350 333 319 325 310
Non-U.S. 221 224 206 208 197
Equity 337 321 282 286 253
Fixed Income 101 108 118 118 119
Money Market 133 128 125 129 135
U.S. Bank Deposits $38 $55 $66 $67 $70
Assets in Asset-Priced Accounts $220 $209 $193 $208 $189
Net New Money
Private Client Accounts
U.S. $28 $32 $24 $1 $10
Non-U.S. 7 6 4 4 3
Total 35 38 28 5 13
Assets Under Management(3) $1 $12 $7 $4 $4
Debt and Equity Underwriting(2)(4)
Global Volume $109 $79 $134 $125 $93
Global Market Share 13.3% 11.6% 12.5% 11.5% 11.4%
U.S. Volume $77 $55 $113 $102 $76
U.S. Market Share 15.2% 13.0% 16.1% 13.5% 12.4%
Completed Mergers and Acquisitions(2)(4)
Global Value $196 $203 $267 $117 $116
Global Market Share 26.1% 20.9% 37.3% 23.2% 25.7%
Full-Time Employees 72,700 72,000 70,300 68,200 65,900
Private Client Financial
Advisors 20,200 20,200 19,500 18,600 18,000
(1) Reflects funds managed by MLIM not sold through Private Client
channels.
(2) Certain prior period amounts have been restated to conform to the
current period presentation.
(3) Adjusted to exclude the impact of transferring funds to U.S. bank
deposits.
(4) Full credit to book manager. Market shares derived from Thomson
Financial Securities Data statistics.
Merrill Lynch & Co., Inc. Attachment VI
Supplemental Data
(unaudited) (dollars in billions)
3Q00 4Q00 1Q01 2Q01 3Q01
Client Assets
Private Client
U.S. $ 1,417 $ 1,337 $ 1,254 $ 1,318 $ 1,171
Non - U.S. 148 140 131 136 127
Total Private
Client
Assets 1,565 1,477 1,385 1,454 1,298
MLIM direct
sales (1) 203 204 179 181 170
Total Client
Assets $ 1,768 $ 1,681 $ 1,564 $ 1,635 $ 1,468
Assets Under
Management(2) $ 571 $ 557 $ 525 $ 533 $ 507
Retail 269 250 233 230 214
Institutional 257 262 250 260 252
Private
Investors 45 45 42 43 41
U.S. 350 333 319 325 310
Non-U.S. 221 224 206 208 197
Equity 337 321 282 286 253
Fixed Income 101 108 118 118 119
Money Market 133 128 125 129 135
U.S. Bank
Deposits $ 38 $ 55 $ 66 $ 67 $ 70
Assets in
Asset-Priced
Accounts $ 220 $ 209 $ 193 $ 208 $ 189
Net New Money
Private Client Accounts
U.S. $ 28 $ 32 $ 24 $ 1 $ 10
Non-U.S. 7 6 4 4 3
Total 35 38 28 5 13
Assets Under
Management(3) $ 1 $ 12 $ 7 $ 4 $ 4
Debt and Equity Underwriting(2)(4)
Global Volume $ 109 $ 79 $ 134 $ 125 $ 93
Global
Market Share 13.3% 11.6% 12.5% 11.5% 11.4%
U.S. Volume $ 77 $ 55 $ 113 $ 102 $ 76
U.S. Market
Share 15.2% 13.0% 16.1% 13.5% 12.4%
Completed Mergers and Acquisitions(2)(4)
Global Value $ 196 $ 203 $ 267 $ 117 $ 116
Global Market
Share 26.1% 20.9% 37.3% 23.2% 25.7%
Full-Time
Employees 72,700 72,000 70,300 68,200 65,900
Private Client
Financial
Advisors 20,200 20,200 19,500 18,600 18,000
(1) Reflects funds managed by MLIM not sold through Private Client
channels.
(2) Certain prior period amounts have been restated to conform to
the current period presentation.
(3) Adjusted to exclude the impact of transferring funds to U.S.
bank deposits.
(4) Full credit to book manager. Market shares derived from Thomson
Financial Securities Data statistics.
For more information, please contact: Investor Relations Phone: 212-421-0370 Merrill Lynch & Co., Inc. Fax: 212-371-2192 investor_relations@ml.com www.ir.ml.com |
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