Exhibit 99.1
 
Merrill Lynch & Co., Inc.
 
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.
 
Unaudited Earnings Summary
 
                         
(in millions, except per share amounts)            
 
   
For the Three Months Ended March 31, 2006
    Excluding the Impact of
 		  First Quarter Impact of
 		   
    One-time Compensation
 		  One-time Compensation
 		   
    Expenses   Expenses   GAAP 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  


108

 

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 %


109

 

Exhibit 99.1
 
Merrill Lynch & Co., Inc.
 
Reconciliation of Non-GAAP Measures — Segment Data (unaudited)
 
         
(dollars in millions)    
 
    For the Three
    Months Ended
    March 31,
    2006
 
Global Markets & Investment Banking
       
Total net revenues(a)
  $ 4,567  
         
Pre-tax earnings
    216  
Impact of one-time compensation expenses
    1,369  
         
Pre-tax earnings excluding one-time compensation expenses(b)
    1,585  
Pre-tax profit margin
    4.7 %
Pre-tax profit margin excluding one-time compensation expenses(b)/(a)
    34.7 %
Global Wealth Management
       
Total net revenues(a)
  $ 2,935  
         
Pre-tax earnings
    361  
Impact of one-time compensation expenses
    281  
         
Pre-tax earnings excluding one-time compensation expenses(b)
    642  
Pre-tax profit margin
    12.3 %
Pre-tax profit margin excluding one-time compensation expenses(b)/(a)
    21.9 %
Merrill Lynch Investment Managers
       
Total net revenues(a)
  $ 570  
         
Pre-tax earnings
    113  
Impact of one-time compensation expenses
    109  
         
Pre-tax earnings excluding one-time compensation expenses(b)
    222  
Pre-tax profit margin
    19.8 %
Pre-tax profit margin excluding one-time compensation expenses(b)/(a)
    38.9 %


110