-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MenNN3enckKHTl0gEkfDSpJP75flAdkc05kgceZJQ3jJaYvX+YYcMmXCussgRATb T9Rjlp/VGPGJNHz6zanfEA== /in/edgar/work/0000065100-00-000022/0000065100-00-000022.txt : 20000719 0000065100-00-000022.hdr.sgml : 20000719 ACCESSION NUMBER: 0000065100-00-000022 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000718 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000718 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH & CO INC CENTRAL INDEX KEY: 0000065100 STANDARD INDUSTRIAL CLASSIFICATION: [6211 ] IRS NUMBER: 132740599 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07182 FILM NUMBER: 674810 BUSINESS ADDRESS: STREET 1: 4 WORLD FINANCIAL CTR CITY: NEW YORK STATE: NY ZIP: 10080 BUSINESS PHONE: 2124491000 MAIL ADDRESS: STREET 1: 4 WORLD FINANCIAL CTR CITY: NEW YORK STATE: NY ZIP: 10080 8-K 1 0001.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- 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 18, 2000 - -------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 1-7182 13-2740599 - -------------------------------------------------------------------------------- (State or Other (Commission (I.R.S. Employer Jurisdiction of File Number) Identification No.) Incorporation) 4 World Financial Center, New York, New York 10080 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (212) 449-1000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS - --------------------- Filed herewith is the Preliminary Unaudited Earnings Summary for the three- and six-month periods ended June 30, 2000 and supplemental quarterly information, as contained in a press release dated July 18, 2000, for Merrill Lynch & Co., Inc. ("Merrill Lynch"). 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 Merrill Lynch's business is such that the results for any interim period are not necessarily indicative of the results for a full year. Preferred stockholders' equity, common stockholders' equity, long-term borrowings, and preferred securities issued by subsidiaries as of June 30, 2000 were approximately $425 million, $15.3 billion, $61.5 billion, and $2.7 billion, respectively. On July 18, 2000, Merrill Lynch reported quarterly net earnings of $902 million, the second-highest quarterly net earnings ever, up 34% from the $673 million reported in the 1999 second quarter. Earnings per common share were $2.29 basic and $2.01 diluted, compared with $1.80 basic and $1.57 diluted in the 1999 second quarter. The company also announced that its Board of Directors approved a two-for-one common stock split and a 7% increase in the quarterly cash dividend from $0.30 to $0.32 per share on a pre-split basis. The stock split will be effected in the form of a 100% common stock dividend, payable August 31, 2000 to common shareholders of record on August 4, 2000. The increased dividend, which follows the $0.03 increase to $0.30 declared on April 17, 2000, will be payable August 24, 2000 to common shareholders of record on August 4, 2000. The quarterly cash dividend is 19% higher than the first quarter 2000 dividend. Annualized return on average common equity in the second quarter was approximately 24.3%. The pre-tax profit margin for the quarter was 20.6%. These results were achieved against the backdrop of a market environment that was less robust than that of the previous quarter. Merrill Lynch's net earnings of $1.9 billion for the first half of the year were a record, over 50% higher than the first half of 1999. The associated pre-tax profit margin of 21.2% is the highest for the first half of any year since 1993. Annualized return on average common equity was 27.6% for the first six months, nearly 3 percentage points higher than at this point last year. 2 BUSINESS SEGMENT REVIEW: CORPORATE AND INSTITUTIONAL CLIENT GROUP o CICG posted strong results. Net revenues were $3.2 billion, up 33% from the second quarter of 1999. The strength of Merrill Lynch's global equity franchise was underscored by strong results in cash trading, equity derivatives, and equity underwriting. o Merrill Lynch retained its position as the leading underwriter of total debt and equity securities in both the US and global markets, with second-quarter market shares of 15.8% and 12.2%, respectively, according to Thomson Financial Data. o Merrill Lynch participated in numerous landmark investment banking transactions during the second quarter, highlighting our global execution strength in difficult markets. Merrill Lynch acted as: - joint manager for the $10.6 billion AT&T Wireless initial public offering of 360 million "tracking shares", the largest US IPO to date. - sole manager for Solectron's $3.5 billion issuance of Liquid Yield Option Notes ("LYONs"), the largest LYONs ever issued and the largest primary convertible debt offering by a US issuer. - lead financial advisor to Bestfoods in its acquisition by Unilever, creating a preeminent global food and consumer goods company. - exclusive financial advisor to Canal Plus S.A. in its three-way merger with Seagram Co. and Vivendi S.A., creating a new global media giant. - financial advisor to NTT Communications Corp. in its acquisition of Verio Inc., the largest cash deal to date in the Internet or networking industry. o Merrill Lynch announced an agreement to merge with Herzog Heine Geduld, a leading Nasdaq market maker. The transaction, which closed last week, will expand Merrill Lynch's market-making activity in Nasdaq and other over-the-counter stocks and enhance its leading global equity franchise. o Merrill Lynch joined with others to create BondBook LLC, an electronic bond trading system that will pioneer a change in the structure of the fixed-income markets. 3 PRIVATE CLIENT GROUP o Private Client net revenues for the second quarter were up 14% from the second quarter of 1999. In the US, net revenues were up 12% from the prior year, and internationally, net revenues were up 27%. This growth was driven primarily by increased volumes of equity and mutual fund transactions. o Total client assets were $1.8 trillion at the end of the second quarter of 2000, relatively unchanged from the end of the first quarter. Client assets in asset-priced accounts continued to grow, rising 3% to $209 billion in the second quarter primarily due to continued momentum in Unlimited Advantage (Service Mark) and Merrill Lynch Consults (Registered Trademark). o The flow of net new money into private client accounts slowed as a result of significantly increased seasonal outflows associated with clients' payment of income taxes. In addition, lower IPO activity reduced the overall amount of private wealth created from the record levels seen in the previous quarter. A total of $18 billion in net new money was added to client accounts during the quarter, comprising $11 billion in US private client and $7 billion in international private client. o Two-thirds of a million clients now have online access to their accounts through Merrill Lynch OnLine (Service Mark) or ML Direct (Service Mark), compared with less than 250,000 a year ago. o The implementation of our US banking strategy gained momentum. Deposits in Merrill Lynch's US banks reached $19 billion, more than double the amount outstanding at the end of the first quarter. o Merrill Lynch and HSBC Holdings plc joined forces in a 50/50 partnership to create the first global online investment and banking services company. The new company strategically combines Merrill Lynch's leading investment capabilities and award-winning research team with HSBC's strong global presence, client relationships, and processing capabilities. o Merrill Lynch continued to grow its worldwide financial consultant force, which grew by 700 to 19,300 at the end of the second quarter. MERRILL LYNCH INVESTMENT MANAGERS o The financial performance of our asset management business continues to strengthen. Net revenues for the quarter were up 14% over the second quarter of 1999. o Excluding retail money market funds, which declined as a result of the implementation of our US banking strategy, assets under management grew 11% 4 from the same period last year. At quarter end, total assets under management were $555 billion. o Investment Managers had net new money of $18 billion, excluding the retail money market outflows. o Investment performance continues to improve, reflecting tangible results from the integration and growth of our global asset management business. INCOME STATEMENT REVIEW: REVENUES Net revenues were $6.7 billion, up 23% from the 1999 second quarter, as new highs were reached in asset management and portfolio service fees, underwriting fees, and net interest income. Principal transactions and strategic advisory service fees demonstrated solid growth. Commission revenues were $1.6 billion, up 3% from the 1999 second quarter, mainly due to higher mutual fund sales. The growth in Unlimited Advantage (Service Mark) and other asset-priced services resulted in the shift of some revenues previously recorded as commissions to asset management and portfolio service fees. Principal transaction revenues rose 33% from the 1999 second quarter to $1.4 billion, led by higher equity and equity derivatives trading volumes. Investment banking revenues were $1.1 billion, up 20% from the second quarter a year ago, primarily as a result of record underwriting revenues and higher strategic advisory service revenues associated with increased merger and acquisition activity. Asset management and portfolio service fees increased 22% from the 1999 second quarter to a new quarterly high of $1.4 billion. Asset management fees were up 10% from the comparable period a year ago. Portfolio service fees increased 51% from the 1999 second quarter as assets in asset-priced accounts continued to grow, principally those related to Unlimited Advantage (Service Mark) and Merrill Lynch Consults (Registered Trademark). Other revenues were up 55% from the second quarter of 1999 to $272 million, primarily due to increased income from investments. Net interest profit was $863 million, up $321 million from the second quarter a year ago. The year-over-year increase was due to increased customer-lending balances, higher dividend revenues, and changes in the asset/liability composition. 5 EXPENSES Compensation and benefits were up 26% from the 1999 second quarter to $3.4 billion, as increased profitability led to higher incentive compensation, but were down 10% from the first quarter of 2000. Compensation and benefits were 51.4% of net revenues for the second quarter of 2000, compared to 52.5% in the previous quarter. Non-compensation expenses were virtually unchanged from the previous quarter and up 12% from the second quarter of 1999. These expenses were 28.0% of net revenues for the second quarter compared to 30.9% for the comparable period in 1999. Details on changes in non-compensation expenses follow: o communications and technology expenses were unchanged from the first quarter at $579 million. The 8% increase from the 1999 second quarter is the result of higher technology-related depreciation and increased communication maintenance costs. o occupancy and related depreciation was $256 million, virtually unchanged from the 2000 first quarter and up 10% from the 1999 second quarter. o advertising and market development expenses rose 7% from the previous quarter and 30% from the comparable quarter in 1999 to $262 million. The increases are the result of higher business development expenses and sales promotion costs associated with increased business activity. In addition, higher advertising costs contributed to the year-over-year increase. o brokerage, clearing, and exchange fees were $196 million, up 15% from the second quarter a year ago, mainly due to increased transaction volume. o professional fees increased 13% from the prior quarter and 16% from the 1999 second quarter to $166 million, due to higher employment service fees, partially offset by lower consulting fees. In addition, higher legal fees contributed to the year-over-year increase. o goodwill amortization was $54 million in the second quarter of 2000. Other expenses were $363 million, down 9% from the previous quarter. The effective tax rate in the quarter was 31.0%. 6 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS - --------------------------------------------------------------------------- (c) Exhibits -------- (99) Additional Exhibits (i) Preliminary Unaudited Earnings Summary for the three- and six-month periods ended June 30, 2000 and supplemental quarterly information 7 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. ------------------------------------ (Registrant) By: /s/ Thomas H. Patrick -------------------------------- Thomas H. Patrick Executive Vice President and Chief Financial Officer Date: July 18, 2000 8 EXHIBIT INDEX Exhibit No. Description Page - ----------- ----------- ---- (99) Additional Exhibits (i) Preliminary Unaudited Earnings Summary for the three- and six-month periods ended June 30, 2000 and supplemental quarterly information 10-14 9 EX-99 2 0002.txt PRELIMINARY UNAUDITED EARNINGS SUMMARY
Exhibit 99(i) MERRILL LYNCH & CO., INC. PRELIMINARY UNAUDITED EARNINGS SUMMARY For the Three Months Ended Percent Inc / (Dec) --------------------------------------- ------------------- June 30, March 31, June 25, 2Q00 vs. 2Q00 vs. (in millions, except per share amounts) 2000 2000 1999 1Q00 2Q99 -------- --------- -------- -------- -------- NET REVENUES Commissions $ 1,642 $ 2,152 $ 1,592 (23.7)% 3.1% Principal transactions 1,420 1,787 1,064 (20.5) 33.5 Investment banking 1,087 996 908 9.1 19.7 Asset management and portfolio service fees 1,413 1,390 1,159 1.7 21.9 Other 272 238 175 14.3 55.4 ------- ------- ------- Subtotal 5,834 6,563 4,898 (11.1) 19.1 Interest and dividend revenues 5,065 4,463 3,732 13.5 35.7 Less interest expense 4,202 3,779 3,190 11.2 31.7 ------- ------- ------- Net interest profit 863 684 542 26.2 59.2 TOTAL NET REVENUES 6,697 7,247 5,440 (7.6) 23.1 ------- ------- ------- NON-INTEREST EXPENSES Compensation and benefits 3,443 3,808 2,729 (9.6) 26.2 Communications and technology 579 578 536 0.2 8.0 Occupancy and related depreciation 256 250 232 2.4 10.3 Advertising and market development 262 244 201 7.4 30.3 Brokerage, clearing, and exchange fees 196 192 170 2.1 15.3 Professional fees 166 147 143 12.9 16.1 Goodwill amortization 54 56 56 (3.6) (3.6) Other 363 397 342 (8.6) 6.1 ------- ------- ------- TOTAL NON-INTEREST EXPENSES 5,319 5,672 4,409 (6.2) 20.6 ------- ------- ------- EARNINGS BEFORE INCOME TAXES AND DIVIDENDS ON PREFERRED SECURITIES ISSUED BY SUBSIDIARIES 1,378 1,575 1,031 (12.5) 33.7 Income tax expense 427 489 310 (12.7) 37.7 Dividends on preferred securities issued by subsidiaries 49 49 48 - 2.1 ------- ------- ------- NET EARNINGS $ 902 $ 1,037 $ 673 (13.0) 34.0 ======= ======= ======= Preferred stock dividends $ 10 $ 9 $ 9 11.1 11.1 ------- ------- ------- NET EARNINGS APPLICABLE TO COMMON STOCKHOLDERS $ 892 $ 1,028 $ 664 (13.2) 34.3 ======= ======= ======= EARNINGS PER COMMON SHARE Basic $ 2.29 $ 2.69 $ 1.80 (14.9) 27.2 Diluted 2.01 2.38 1.57 (15.5) 28.0 AVERAGE SHARES Basic 389.1 381.6 368.3 2.0 5.6 Diluted 443.7 432.4 421.3 2.6 5.3
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Exhibit 99(i) MERRILL LYNCH & CO., INC. PRELIMINARY UNAUDITED EARNINGS SUMMARY For the Six Months Ended ------------------------ June 30, June 25, Percent (in millions, except per share amounts) 2000 1999 Inc / (Dec) -------- -------- ----------- NET REVENUES Commissions $ 3,794 $ 3,159 20.1% Principal transactions 3,207 2,509 27.8 Investment banking 2,083 1,540 35.3 Asset management and portfolio service fees 2,803 2,268 23.6 Other 510 308 65.6 -------- -------- Subtotal 12,397 9,784 26.7 Interest and dividend revenues 9,528 7,413 28.5 Less interest expense 7,981 6,491 23.0 -------- -------- Net interest profit 1,547 922 67.8 TOTAL NET REVENUES 13,944 10,706 30.2 -------- -------- NON-INTEREST EXPENSES Compensation and benefits 7,251 5,490 32.1 Communications and technology 1,157 1,016 13.9 Occupancy and related depreciation 506 459 10.2 Advertising and market development 506 353 43.3 Brokerage, clearing, and exchange fees 388 324 19.8 Professional fees 313 261 19.9 Goodwill amortization 110 113 (2.7) Other 760 663 14.6 -------- -------- TOTAL NON-INTEREST EXPENSES 10,991 8,679 26.6 -------- -------- EARNINGS BEFORE INCOME TAXES AND DIVIDENDS ON PREFERRED SECURITIES ISSUED BY SUBSIDIARIES 2,953 2,027 45.7 Income tax expense 916 648 41.4 Dividends on preferred securities issued by subsidiaries 98 97 1.0 -------- -------- NET EARNINGS $ 1,939 $ 1,282 51.2 ======== ======== Preferred stock dividends $ 19 $ 19 - -------- -------- NET EARNINGS APPLICABLE TO COMMON STOCKHOLDERS $ 1,920 $ 1,263 52.0 ======== ======== EARNINGS PER COMMON SHARE Basic $ 4.98 $ 3.45 44.3 Diluted 4.38 3.02 45.0 AVERAGE SHARES Basic 385.4 366.2 5.2 Diluted 438.0 418.5 4.7
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Exhibit 99(i) MERRILL LYNCH & CO., INC. - -------------------------------------------------------------------------------------------------------------------- CONSOLIDATED QUARTERLY EARNINGS [UNAUDITED] (in millions) - -------------------------------------------------------------------------------------------------------------------- 2Q99 3Q99 4Q99 1Q00 2Q00 ------------------------------------------------------ NET REVENUES Commissions $1,592 $1,440 $1,735 $2,152 $1,642 Principal transactions 1,064 1,059 794 1,787 1,420 Investment banking 908 948 1,125 996 1,087 Asset management and portfolio service fees 1,159 1,183 1,301 1,390 1,413 Other 175 117 296 238 272 --------------------------------------------------------------------------------------------------------------- Subtotal 4,898 4,747 5,251 6,563 5,834 Interest and dividend revenues 3,732 3,665 4,019 4,463 5,065 Less interest expense 3,190 3,144 3,375 3,779 4,202 --------------------------------------------------------------------------------------------------------------- Net interest profit 542 521 644 684 863 --------------------------------------------------------------------------------------------------------------- TOTAL NET REVENUES 5,440 5,268 5,895 7,247 6,697 NON-INTEREST EXPENSES Compensation and benefits 2,729 2,746 2,916 3,808 3,443 Communications and technology 536 481 541 578 579 Occupancy and related depreciation 232 230 252 250 256 Advertising and market development 201 190 236 244 262 Brokerage, clearing, and exchange fees 170 170 184 192 196 Professional fees 143 144 163 147 166 Goodwill amortization 56 57 57 56 54 Other 342 359 386 397 363 --------------------------------------------------------------------------------------------------------------- TOTAL NON-INTEREST EXPENSES 4,409 4,377 4,735 5,672 5,319 EARNINGS BEFORE INCOME TAXES AND DIVIDENDS ON PREFERRED SECURITIES ISSUED BY SUBSIDIARIES 1,031 891 1,160 1,575 1,378 Income tax expense 310 271 346 489 427 Dividends on preferred securities issued by subsidiaries 48 48 50 49 49 --------------------------------------------------------------------------------------------------------------- NET EARNINGS $ 673 $ 572 $ 764 $1,037 $ 902 Preferred stock dividends 9 10 9 9 10 --------------------------------------------------------------------------------------------------------------- NET EARNINGS APPLICABLE TO COMMON STOCKHOLDERS $ 664 $ 562 $ 755 $1,028 $ 892 =============================================================================================================== - -------------------------------------------------------------------------------------------------------------------- PER COMMON SHARE DATA - -------------------------------------------------------------------------------------------------------------------- 2Q99 3Q99 4Q99 1Q00 2Q00 ------------------------------------------------------ Basic $ 1.80 $ 1.52 $ 2.03 $ 2.69 $ 2.29 Diluted 1.57 1.34 1.80 2.38 2.01 Dividends paid 0.27 0.27 0.27 0.27 0.30 Book value 29.87 31.49 33.20 36.37 39.04 est. - --------------------------------------------------------------------------------------------------------------------
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Exhibit 99(i) MERRILL LYNCH & CO., INC. - -------------------------------------------------------------------------------------------------------------------- PERCENTAGE OF QUARTERLY NET REVENUES [UNAUDITED] - -------------------------------------------------------------------------------------------------------------------- 2Q99 3Q99 4Q99 1Q00 2Q00 ------------------------------------------------------ NET REVENUES Commissions 29.3% 27.3% 29.4% 29.7% 24.5% Principal transactions 19.6% 20.1% 13.5% 24.7% 21.2% Investment banking 16.7% 18.0% 19.1% 13.7% 16.2% Asset management and portfolio service fees 21.3% 22.5% 22.1% 19.2% 21.1% Other 3.1% 2.2% 5.0% 3.3% 4.1% --------------------------------------------------------------------------------------------------------------- Subtotal 90.0% 90.1% 89.1% 90.6% 87.1% Interest and dividend revenues 68.6% 69.6% 68.2% 61.6% 75.6% Less interest expense 58.6% 59.7% 57.3% 52.2% 62.7% --------------------------------------------------------------------------------------------------------------- Net interest profit 10.0% 9.9% 10.9% 9.4% 12.9% --------------------------------------------------------------------------------------------------------------- TOTAL NET REVENUES 100.0% 100.0% 100.0% 100.0% 100.0% NON-INTEREST EXPENSES Compensation and benefits 50.2% 52.1% 49.5% 52.5% 51.4% Communications and technology 9.9% 9.1% 9.2% 8.0% 8.6% Occupancy and related depreciation 4.3% 4.4% 4.3% 3.4% 3.8% Advertising and market development 3.7% 3.6% 4.0% 3.4% 3.9% Brokerage, clearing, and exchange fees 3.1% 3.2% 3.1% 2.6% 2.9% Professional fees 2.6% 2.7% 2.8% 2.0% 2.5% Goodwill amortization 1.0% 1.1% 1.0% 0.8% 0.8% Other 6.2% 6.9% 6.4% 5.6% 5.5% --------------------------------------------------------------------------------------------------------------- TOTAL NON-INTEREST EXPENSES 81.0% 83.1% 80.3% 78.3% 79.4% EARNINGS BEFORE INCOME TAXES AND DIVIDENDS ON PREFERRED SECURITIES ISSUED BY SUBSIDIARIES 19.0% 16.9% 19.7% 21.7% 20.6% Income tax expense 5.7% 5.1% 5.9% 6.7% 6.4% Dividends on preferred securities issued by subsidiaries 0.9% 0.9% 0.8% 0.7% 0.7% --------------------------------------------------------------------------------------------------------------- NET EARNINGS 12.4% 10.9% 13.0% 14.3% 13.5% Preferred stock dividends 0.2% 0.2% 0.2% 0.1% 0.2% --------------------------------------------------------------------------------------------------------------- NET EARNINGS APPLICABLE TO COMMON STOCKHOLDERS 12.2% 10.7% 12.8% 14.2% 13.3% =============================================================================================================== - -------------------------------------------------------------------------------------------------------------------- OTHER FINANCIAL DATA - -------------------------------------------------------------------------------------------------------------------- 2Q99 3Q99 4Q99 1Q00 2Q00 ------------------------------------------------------ Non-interest expenses excluding compensation and benefits to net revenues 30.9% 31.0% 30.9% 25.7% 28.0% Compensation and benefits to pre-tax earnings before compensation and benefits 72.6% 75.5% 71.5% 70.7% 71.4% Effective tax rate 30.1% 30.4% 29.8% 31.0% 31.0% --------------------------------------------------------------------------------------------------------------- Common shares outstanding (in millions): Weighted-average - basic 368.3 370.3 372.0 381.6 389.1 Weighted-average - diluted 421.3 419.1 420.6 432.4 443.7 Period-end 369.0 370.8 372.8 386.1 392.0 - --------------------------------------------------------------------------------------------------------------------
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Exhibit 99(i) MERRILL LYNCH & CO., INC. SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------------------------------- (dollars in billions - unaudited) ----------------------------------------------------------------------------------------------------------------- 2Q99 3Q99 4Q99 1Q00 2Q00 -------------------------------------------------------- PRELIMINARY SEGMENT INFORMATION (dollars in millions): NET REVENUES Corporate and Institutional Client $2,379 $2,329 $2,329 $3,370 $3,164 Private Client 2,636 2,507 2,950 3,406 3,013 Investment Managers 542 523 709 619 616 Corporate (117) (91) (93) (148) (96) -------------------------------------------------------- TOTAL $5,440 $5,268 $5,895 $7,247 $6,697 ======================================================== --------------------------------------------------------------------------------------------------------------- CLIENT ASSETS $1,530 $1,514 $1,696 $1,791 $1,772 ASSETS UNDER MANAGEMENT(1): $516 $514 $557 $568 $555 Retail 268 268 280 291 271 Institutional 248 246 277 277 284 U.S. 310 304 324 333 328 Non-U.S. 206 210 233 235 227 Equity 272 271 307 310 316 Fixed Income 102 100 99 100 100 Money Market 142 143 151 158 139 U.S. BANK DEPOSITS $3 $5 $6 $7 $19 ASSETS IN ASSET-PRICED ACCOUNTS $116 $131 $168 $203 $209 --------------------------------------------------------------------------------------------------------------- DEBT AND EQUITY UNDERWRITING(1)(2) Global Volume $107 $108 $85 $103 $88 Global Market Share 11.7% 13.5% 13.9% 11.3% 12.2% U.S. Volume $83 $86 $67 $83 $71 U.S. Market Share 14.0% 16.8% 16.7% 14.3% 15.8% COMPLETED MERGERS AND ACQUISITIONS(1)(2) Global Value $161 $97 $159 $178 $518 Global Market Share 22.2% 22.1% 19.3% 29.8% 44.8% --------------------------------------------------------------------------------------------------------------- FULL-TIME EMPLOYEES 64,000 66,000 67,200 68,600 70,700 FINANCIAL CONSULTANTS AND OTHER INVESTMENT PROFESSIONALS 18,400 18,700 19,000 19,400 20,200 ----------------------------------------------------------------------------------------------------------------- (1) Certain prior period amounts have been restated to conform to the current period presentation. (2) Full credit to book manager. Market shares derived from Thomson Financial Securities Data statistics.
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