SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 16, 1997
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Merrill Lynch & Co., Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-7182 13-2740599
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
World Financial Center, North Tower, New York, New York 10281-1332
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
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________________________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report.)
<PAGE>
Item 5. Other Events
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Filed herewith is the Preliminary Unaudited Earnings Summary, as contained in a
press release dated July 15, 1997, for Merrill Lynch & Co., Inc. ("ML & Co.")
for the three- and six-month periods ended June 27, 1997. The results of
operations set forth therein for such periods are unaudited. All adjustments,
consisting only of normal recurring accruals, that are in the opinion of
management, necessary for a fair presentation of the results of operations for
the periods presented have been included. The nature of ML & Co.'s business is
such that the results for any interim period are not necessarily indicative of
the results for a full year.
ML & Co. reported on July 15, 1997 the highest quarterly net earnings in its
history. Second quarter 1997 earnings were $481 million, 11% above the 1996
second quarter and 3% above the previous record of $465 million in the 1997
first quarter.
Earnings per common share were $1.24 primary and $1.23 fully diluted in the 1997
second quarter. Primary and fully diluted earnings per common share were $1.09
in the 1996 second quarter and $1.17 in the 1997 first quarter, restated on a
post-split basis. Return on average common equity approximated 28.5% for the
1997 second quarter, compared with 29.2% in the 1996 second quarter and 28.3% in
the 1997 first quarter.
2nd Quarter Revenues
Net revenues rose 17% from the 1996 second quarter to a record $4.0 billion with
increases in all revenue categories. Quarterly revenue records were achieved in
principal transactions, investment banking, and asset management and portfolio
service fees.
Commission revenues were $1.1 billion, up 11% from the 1996 second quarter due
primarily to increases in global listed securities volume. Principal
transactions revenues rose 27% from a year ago to $1.2 billion, primarily
attributable to higher revenues from equities and equity derivatives,
fixed-income products, and interest rate and currency swaps. Non-U.S. trading
revenues continued to be strong, accounting for approximately 42% of total
principal transactions revenues.
Investment banking revenues increased 8% to $625 million, due to record
strategic services revenues related to mergers and acquisitions. Underwriting
revenues were down slightly from record levels in second quarter 1996,
particularly for equity underwriting.
Asset management and portfolio service fees were $670 million, up 21% from the
1996 second quarter. Continued growth in asset management and other fee-based
products, such as Merrill Lynch Consults(Registered Trademark), Asset Power
(Registered Trademark), and Mutual Fund Advisor(Service Mark), contributed to
the increase.
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<PAGE>
Other revenues were up 13% from a year ago to $157 million. Net interest profit
increased 24% to $286 million.
2nd Quarter Expenses
Non-interest expenses increased 19% from the 1996 second quarter to $3.2
billion. The largest expense category, compensation and benefits, was up 15% to
$2.0 billion due mainly to higher incentive compensation tied to profitability
and to increased headcount. Compensation and benefits expense improved to 50.5%
of net revenues in the 1997 second quarter versus 51.5% in the comparable 1996
quarter.
Facilities-related costs, which include communications and equipment rental,
occupancy, and depreciation and amortization, rose 15% in the aggregate to $402
million as increased business volumes, continued emphasis on technology
initiatives, and expansion of facilities worldwide led to higher costs.
Professional fees increased 41% to $197 million, primarily due to higher
management and systems consulting costs related to various strategic market
development and technology projects. Advertising and market development expense
was up 25% to $156 million, due in part to increased international travel.
Brokerage, clearing, and exchange fees rose 11% to $112 million due to higher
global securities trading volume. Other expenses were up 37% to $312 million.
The increase was attributable to provisions for various business activities,
including $30 million for a settlement with the Orange County District
Attorney's office and $45 million for certain client claims arising in Asia.
The 1997 second quarter effective tax rate was 37.0%, compared with 37.9% a year
ago.
Preferred stockholders' equity, common stockholders' equity, long-term
borrowings, preferred securities issued by subsidiaries, and book value per
common share as of June 27, 1997 were approximately $.4 billion, $6.9 billion,
$34.0 billion, $.6 billion, and $20.85, respectively.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits.
(99) Additional Exhibits
(i) Preliminary Unaudited Earnings Summary for the three-
and six-month periods ended June 27, 1997.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
MERRILL LYNCH & CO., INC.
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(Registrant)
By: /s/ Joseph T. Willett
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Joseph T. Willett
Senior Vice President
Chief Financial Officer
Date: July 16, 1997
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
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(99) Additional Exhibits
(i) Preliminary Unaudited Earnings Summary for the 6-7
three- and six-month periods ended June 27, 1997.
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Exhibit 99(i)
Merrill Lynch & Co., Inc.
Preliminary Unaudited Earnings Summary
<TABLE>
<CAPTION>
For Three Months Ended Increase / (Decrease)
June 27, March 28, June 28, 2Q97 Versus
[In millions, except per share amounts] 1997 1997 1996 1Q97 2Q96
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Commissions $1,078 $1,115 $ 970 (3.3)% 11.2%
Interest and Dividends 4,330 3,848 3,040 12.5 42.4
Principal Transactions 1,151 1,063 908 8.2 26.7
Investment Banking 625 608 580 2.8 7.8
Asset Management and Portfolio Service Fees 670 646 553 3.7 21.2
Other 157 171 139 (8.2) 12.8
------ ------ ------ ------ ------
Total Revenues 8,011 7,451 6,190 7.5 29.4
Interest Expense 4,044 3,610 2,810 12.0 43.9
------ ------ ------ ------ ------
Net Revenues 3,967 3,841 3,380 3.3 17.3
------ ------ ------ ------ ------
Non-Interest Expenses:
Compensation and Benefits 2,004 1,988 1,741 0.8 15.1
Communications and Equipment Rental 170 158 137 7.8 24.2
Occupancy 124 120 113 3.4 9.8
Depreciation and Amortization 108 105 98 2.5 9.7
Professional Fees 197 198 140 (0.1) 40.6
Advertising and Market Development 156 144 124 7.9 25.3
Brokerage, Clearing, and Exchange Fees 112 118 101 (5.2) 10.7
Other 312 244 228 27.8 36.9
------ ------ ------ ------ ------
Total Non-Interest Expenses 3,183 3,075 2,682 3.5 18.6
------ ------ ------ ------ ------
Earnings Before Income Taxes and Dividends
on Preferred Securities Issued by Subsidiaries 784 766 698 2.4 12.4
Income Tax Expense 290 291 265 (0.4) 9.7
Dividends on Preferred Securities Issued
by Subsidiaries 13 10 -- 30.1 N/M
------ ------ ------ ------ ------
Net Earnings $ 481 $ 465 $ 433 3.5 11.1
====== ====== ====== ====== ======
Preferred Stock Dividends $ 9 $ 10 $ 11 (8.9) (16.9)
------ ------ ------ ------ ------
Net Earnings Applicable to Common
Stockholders $ 472 $ 455 $ 422 3.8 11.9
====== ====== ====== ====== ======
Earnings per Common Share (A):
Primary $1.24 $1.17 $1.09 6.0 13.8
Fully Diluted $1.23 $1.17 $1.09 5.1 12.8
Average Shares (A):
Primary 379.4 389.1 385.9 (2.5) (1.7)
Fully Diluted 384.4 389.1 385.9 (1.2) (0.4)
</TABLE>
(A) All share and per share amounts have been restated for the two-for-one
common stock split, effected in the form of a 100% stock dividend, paid on
May 30, 1997.
Note: Percentages are based on actual numbers before rounding.
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<PAGE>
Exhibit 99(i)
Merrill Lynch & Co., Inc.
Preliminary Unaudited Earnings Summary
<TABLE>
<CAPTION>
For Six Months Ended
June 27, June 28,
[In millions, except per share amounts] 1997 1996 Inc / (Dec)
--------- ---------- -----------
<S> <C> <C> <C>
Revenues:
Commissions $ 2,193 $ 1,959 11.9%
Interest and Dividends 8,178 6,050 35.2
Principal Transactions 2,215 1,891 17.1
Investment Banking 1,233 958 28.8
Asset Management and Portfolio Service Fees 1,316 1,090 20.7
Other 327 261 25.5
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Total Revenues 15,462 12,209 26.6
Interest Expense 7,654 5,568 37.5
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Net Revenues 7,808 6,641 17.6
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Non-Interest Expenses:
Compensation and Benefits 3,991 3,432 16.3
Communications and Equipment Rental 328 268 22.5
Occupancy 244 229 6.7
Depreciation and Amortization 213 196 8.5
Professional Fees 395 270 45.9
Advertising and Market Development 300 239 25.7
Brokerage, Clearing, and Exchange Fees 230 207 10.8
Other 556 431 28.8
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Total Non-Interest Expenses 6,257 5,272 18.7
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Earnings Before Income Taxes and Dividends
on Preferred Securities Issued by Subsidiaries 1,551 1,369 13.3
Income Tax Expense 581 526 10.5
Dividends on Preferred Securities Issued
by Subsidiaries 23 -- N/M
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Net Earnings $ 947 $ 843 12.3
======= ======= =======
Preferred Stock Dividends $ 20 $ 23 (13.3)
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Net Earnings Applicable to Common
Stockholders $ 927 $ 820 13.1
======= ======= =======
Earnings per Common Share (A):
Primary $ 2.41 $ 2.11 14.2
Fully Diluted $ 2.40 $ 2.11 13.7
Average Shares (A):
Primary 384.2 388.7 (1.1)
Fully Diluted 386.8 389.2 (0.6)
</TABLE>
(A) All share and per share amounts have been restated for the two-for-one
common stock split, effected in the form of a 100% stock dividend, paid on
May 30, 1997.
Note: Percentages are based on actual numbers before rounding.
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