Merrill LYNCH & Co. (MER) 10-K 2007 FY Annual report

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 of 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.

During the third quarter of 2006, Merrill Lynch completed the merger of its Merrill Lynch Investment Managers business with BlackRock, Inc. Merrill Lynch recognized a gain associated with this merger along with other non-recurring expenses, collectively “Impact of BlackRock Merger”.

Management believes that while the results excluding these one-time compensation expenses and the impact of the BlackRock merger are considered non-GAAP measures, they depict the operating performance of the company more clearly and enable more appropriate period-to-period comparisons.

Earnings Summary

	For the Year Ended December 29, 2006 (1)
	Excluding One-time
	Compensation		Impact of One-time
	Expenses & Impact of		Compensation			Impact of
(in millions, except per share amounts)	BlackRock Merger		Expenses			BlackRock Merger		GAAP Basis
Revenues, net of interest expense	$	31,812	$	—		$	1,969	$	33,781
Non-interest expenses
Compensation and benefits		14,964		1,759			144		16,867
Non-compensation expenses		7,046		—			58		7,104
Total non-interest expenses		22,010		1,759			202		23,971
Pre-tax earnings from continuing operations		9,802		(1,759	)		1,767		9,810
Income tax expense		2,633		(582	)		662		2,713
Net earnings from continuing operations	$	7,169	$	(1,177	)	$	1,105	$	7,097
Pre-tax earnings from discontinued operations	$	616	$	—		$	—	$	616
Income tax expense		214		—			—		214
Net earnings from discontinued operations	$	402	$	—		$	—	$	402
Net earnings	$	7,571	$	(1,177	)	$	1,105	$	7,499
Preferred stock dividends	$	188	$	—		$	—	$	188
Net earnings applicable to common stockholders	$	7,383	$	(1,177	)	$	1,105	$	7,311
Basic earnings per common share from continuing operations	$	8.06	$	(1.37	)	$	1.27	$	7.96
Basic earnings per common share from discontinued operations		0.46		—			—		0.46
Basic earnings per common share	$	8.52	$	(1.37	)	$	1.27	$	8.42
Diluted earnings per common share from continuing operations	$	7.26	$	(1.23	)	$	1.14	$	7.17
Diluted earnings per common share from discontinued operations		0.42		—			—		0.42
Diluted earnings per common share	$	7.68	$	(1.23	)	$	1.14	$	7.59
Average shares used in computing earnings per common share
Basic		866.7		1.4			—		868.1
Diluted		961.5		1.5			—		963.0

Financial Ratios

	For the Year Ended (1)
	December 29, 2006
	Excluding One-time
	Compensation
	Expenses & Impact of
	BlackRock Merger			GAAP Basis
Ratio of compensation and benefits to net revenues		47.0	%		49.9	%
Ratio of non-compensation and benefits to net revenues		22.1	%		21.0	%
Effective tax rate		26.9	%		27.7	%
Pre-tax profit margin		30.8	%		29.0	%
Average common equity	$	34,354		$	34,354
Impact of one-time compensation expenses and the BlackRock merger		(130	)		—
Average common equity		34,224			34,354
Annualized return on average common equity from continuing operations		20.4	%		20.1	%
Annualized return on average common equity		21.6	%		21.3	%

(1) For purposes of comparison with previously published results, data excluding the impact of the one-time compensation expenses and the BlackRock merger assumes the impact is limited to the first and third quarter of 2006, respectively.

Segment Data

	For the Year Ended
	Dec. 28,			Dec. 29,			Percent
(dollars in millions)	2007			2006			Inc / (Dec)
Global Markets & Investment Banking
Global Markets
FICC	$	(15,873	)	$	7,552			N/M	%
Equity Markets		8,286			6,730			23
Total Global Markets net revenues		(7,587	)		14,282			N/M
Investment Banking(1)
Origination:
Debt		1,550			1,704			(9	)
Equity		1,629			1,220			34
Strategic Advisory Services		1,740			1,099			58
Total Investment Banking net revenues		4,919			4,023			22
Total net revenues		(2,668	)		18,305			N/M
Pre-tax earnings / (loss) from continuing operations		(16,345	)		5,292			N/M
Impact of one-time compensation expenses		—			1,369			N/M
Pre-tax earnings / (loss) from continuing operations excluding one-time compensation expenses		(16,345	)		6,661			N/M
Pre-tax profit margin		N/M			28.9	%
Pre-tax profit margin excluding one-time compensation expenses		N/M			36.4	%
Global Wealth Management
Global Private Client
Fee-based revenues	$	6,278		$	5,499			14
Transactional and origination revenues		3,887			3,397			14
Net interest profit and related hedges(2)		2,318			2,103			10
Other revenues		416			301			38
Total Global Private Client net revenues		12,899			11,300			14
Global Investment Management net revenues		1,122			541			107
Total net revenues		14,021			11,841			18
Pre-tax earnings from continuing operations		3,630			2,290			59
Impact of one-time compensation expenses		—			281			N/M
Pre-tax earnings from continuing operations excluding one- time compensation expenses		3,630			2,571			41
Pre-tax profit margin		25.9	%		19.3	%
Pre-tax profit margin excluding one-time compensation expenses		25.9	%		21.7	%
Merrill Lynch Investment Managers
Total net revenues	$	—		$	1,900			N/M
Pre-tax earnings from continuing operations		—			637			N/M
Impact of one-time compensation expenses		—			109			N/M
Pre-tax earnings from continuing operations excluding one- time compensation expenses		—			746			N/M
Pre-tax profit margin		—			33.5	%
Pre-tax profit margin excluding one-time compensation expenses		—			39.3	%
Corporate
Total net revenues	$	(103	)	$	1,735			N/M
Impact of BlackRock merger		—			1,969			N/M
Total net revenues excluding the BlackRock merger		(103	)		(234	)		(56	)
Pre-tax earnings / (loss) from continuing operations		(116	)		1,591			N/M
Impact of BlackRock merger		—			(1,767	)		N/M
Pre-tax earnings / (loss) from continuing operations excluding the BlackRock merger		(116	)		(176	)		(34	)
Total
Total net revenues	$	11,250		$	33,781			(67	)
Impact of BlackRock merger		—			1,969			N/M
Total net revenues excluding the BlackRock merger		11,250			31,812			(65	)
Pre-tax earnings / (loss) from continuing operations		(12,831	)		9,810			N/M
Impact of BlackRock merger		—			(1,767	)		N/M
Impact of one-time compensation expenses		—			1,759			N/M
Pre-tax earnings / (loss) from continuing operations excluding BlackRock merger and one-time compensation expenses		(12,831	)		9,802			N/M
Pre-tax profit margin		N/M			29.0	%
Pre-tax profit margin excluding BlackRock merger and one- time compensation expenses		N/M			30.8	%

N/M  =	Not Meaningful
Note:	Certain prior period amounts have been reclassified to conform to the current period presentation.
(1)	A portion of Origination revenue is recorded in Global Wealth Management.
(2)	Includes interest component of non-qualifying derivatives which are included in Other Revenues.