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Merrill Lynch To Include Both GAAP and Pro Forma Earnings Estimates in All U.S. Equity Research Reports.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 23, 2002

Merrill Lynch (NYSE:MER) today announced additional enhancements to its fundamental equity research products.

Effective immediately, Merrill Lynch is requiring all U.S. equity research reports to include earnings based on generally accepted accounting principles (GAAP) in addition to any pro forma earnings that companies may report.

Furthermore, when GAAP earnings differ significantly from pro forma earnings, those differences will be discussed and evaluated in the body of the research report.

There is significant individual and institutional interest in the quality and nature of corporate earnings. Merrill Lynch has determined that approximately 75% of companies in the S&P 500 use some form of pro forma earnings on a routine basis. Pro forma numbers typically exclude a variety of charges incurred by a company that may not relate to its core business. The use of pro forma has been criticized because the numbers being excluded may be subject to inconsistent standards. Therefore, to address these growing concerns, Merrill Lynch will now provide investors with the ability to compare estimated earnings across companies and sectors on both a GAAP and pro forma basis.

"We believe that by including both GAAP and pro forma data we are enhancing the value of Merrill Lynch research by providing more transparency for investors," said Deepak Raj, senior vice president and head of Merrill Lynch Global Equity Research. "This additional information will enable our clients to make better informed long-term investment decisions."

Merrill Lynch is already providing its clients with detailed accounting reports to help interpret corporate financial statements. Harvard Business School Professor David Hawkins, who is also an accounting consultant to Merrill Lynch research, writes these accounting reports. The firm has also recently published several special reports on the impact of expensing stock options and additional studies on pension funds and quality of earnings measures will follow. Merrill Lynch research will continue to evaluate GAAP earnings to determine if there are other relevant factors that may be needed to help investors measure a company's true performance.

Merrill Lynch is one of the world's leading financial management and advisory companies, with offices in 37 countries and total client assets of about $1.4 trillion. As an investment bank, it is a top global underwriter of debt and equity securities and a leading strategic advisory 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. For more information on Merrill Lynch, please visit
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Comment:Merrill Lynch To Include Both GAAP and Pro Forma Earnings Estimates in All U.S.
Publication:Business Wire
Geographic Code:4EUUK
Date:Jul 23, 2002
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