Exhibit 99.1
Merrill Lynch & Co., Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Financial Statements
Unaudited Pro Forma Condensed Consolidated Financial Statements
The accompanying unaudited pro forma condensed consolidated financial statements have been prepared to reflect the merger of Merrill Lynch & Co., Inc. (“Merrill Lynch”) and Banc of America Securities Holdings Corporation (“BAS Holdings,” and together with its subsidiaries “BASH”), with Merrill Lynch as the surviving entity. Merrill Lynch and BAS Holdings are both wholly-owned subsidiaries of Bank of America Corporation (“Bank of America”). No consideration was paid by Merrill Lynch in connection with the merger. Banc of America Securities LLC (“BAS”), a Delaware limited liability company and a wholly-owned subsidiary of BAS Holdings, is registered as a broker-dealer and an investment advisor with the Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority and various exchanges. Subsequent to the merger, BAS was merged into Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned broker-dealer subsidiary of Merrill Lynch.
In accordance with the accounting guidance for business combinations involving entities under common control, Merrill Lynch’s consolidated financial statements will include the historical results of BASH as if the merger had occurred as of January 1, 2009, the date at which both entities were first under the common control of Bank of America. The assets and liabilities acquired in connection with the BASH merger will be recorded at their historical carrying values. The merger was completed on November 1, 2010.
The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2009 and for the six months ended June 30, 2010 and June 30, 2009 give effect to the merger as if it had occurred on January 1, 2009. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2010 gives effect to the merger as if it had occurred as of that date. The unaudited pro forma condensed consolidated financial statements are subject to the assumptions and adjustments set forth in the accompanying notes. Merrill Lynch’s management believes that the assumptions used and adjustments made are reasonable. The unaudited pro forma condensed consolidated financial statements are for illustrative and informational purposes only and are not intended to represent, or be indicative of, what Merrill Lynch’s consolidated results of operations or financial position would have been had the transaction occurred on the dates indicated. Further, the unaudited pro forma condensed consolidated financial statements should not be considered representative of Merrill Lynch’s future consolidated financial position or results of operations.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with:
| • | The accompanying notes to the unaudited pro forma condensed consolidated financial statements; | |
| • | Merrill Lynch’s Annual Report on Form 10-K for the year ended December 31, 2009; and | |
| • | Merrill Lynch’s Quarterly Report on Form 10-Q for the quarterly periods ended June 30, 2010 and March 31, 2010. |
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Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
| June 30, 2010 | ||||||||||||||||
| Merrill Lynch | BASH | Eliminations, Reclassifications | Merrill Lynch | |||||||||||||
| (dollars in millions) | Historical (a) | Historical (b) | and Adjustments | Pro Forma | ||||||||||||
ASSETS | ||||||||||||||||
| Cash and cash equivalents | $ | 15,778 | $ | 72 | $ | (16 | )(d) | $ | 15,834 | |||||||
| Cash and securities segregated for regulatory purposes or deposited with clearing organizations | 11,542 | 1,035 | (1,010 | )(d) | 11,567 | |||||||||||
| Securities financing transactions | ||||||||||||||||
| Receivables under resale agreements | 88,993 | 134,048 | (11,788 | )(c) | 157,372 | |||||||||||
| (53,881 | )(d) | |||||||||||||||
| Receivables under securities borrowed transactions | 51,455 | 21,831 | (6,007 | )(c) | 67,279 | |||||||||||
| 140,448 | 155,879 | (71,676 | ) | 224,651 | ||||||||||||
| Trading assets, at fair value | 147,453 | 65,594 | (13 | )(d) | 213,034 | |||||||||||
| Investment securities | 24,195 | — | 13 | (d) | 24,208 | |||||||||||
| Securities received as collateral, at fair value | 20,952 | — | — | 20,952 | ||||||||||||
| Receivables from Bank of America | 34,364 | — | (5,927 | )(c) | 83,439 | |||||||||||
| 55,002 | (d) | |||||||||||||||
| Other receivables | 36,847 | 12,860 | (223 | )(c) | 49,496 | |||||||||||
| 12 | (d) | |||||||||||||||
| Loans, notes, and mortgages | 32,576 | — | — | 32,576 | ||||||||||||
| Equipment and facilities, net | 1,847 | — | — | 1,847 | ||||||||||||
| Goodwill and other intangible assets | 8,791 | 985 | — | 9,776 | ||||||||||||
| Other assets | 17,638 | 216 | (470 | )(d) | 17,384 | |||||||||||
Total Assets | $ | 492,431 | $ | 236,641 | $ | (24,308 | ) | $ | 704,764 | |||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
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Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
| June 30, 2010 | ||||||||||||||||
| Merrill Lynch | BASH | Eliminations, Reclassifications | Merrill Lynch | |||||||||||||
| (dollars in millions) | Historical (a) | Historical (b) | and Adjustments | Pro Forma | ||||||||||||
LIABILITIES | ||||||||||||||||
| Securities financing transactions | ||||||||||||||||
| Payables under repurchase agreements | $ | 83,134 | $ | 169,791 | $ | (5,895 | )(c) | $ | 232,498 | |||||||
| (14,532 | )(d) | |||||||||||||||
| Payables under securities loaned transactions | 13,474 | 773 | (97 | )(c) | 14,150 | |||||||||||
| 96,608 | 170,564 | (20,524 | ) | 246,648 | ||||||||||||
| Short-term borrowings | 6,801 | 15,386 | (3,020 | )(d) | 19,167 | |||||||||||
| Deposits | 12,961 | — | — | 12,961 | ||||||||||||
| Trading liabilities, at fair value | 84,986 | 30,851 | — | 115,837 | ||||||||||||
| Obligation to return securities received as collateral, at fair value | 20,952 | — | — | 20,952 | ||||||||||||
| Payables to Bank of America | 25,584 | — | (18,633 | )(c) | 27,945 | |||||||||||
| 20,994 | (d) | |||||||||||||||
| Other payables | 65,497 | 9,811 | 680 | (c) | 75,445 | |||||||||||
| (477 | )(d) | |||||||||||||||
| (66 | )(e) | |||||||||||||||
| Long-term borrowings | 131,734 | 3,328 | (3,328 | )(d) | 131,734 | |||||||||||
| Junior subordinated notes (related to trust preferred securities) | 3,563 | — | — | 3,563 | ||||||||||||
Total Liabilities | 448,686 | 229,940 | (24,374 | ) | 654,252 | |||||||||||
STOCKHOLDERS’ EQUITY | 43,745 | 6,701 | 66 | (e) | 50,512 | |||||||||||
Total Liabilities and Stockholders’ Equity | $ | 492,431 | $ | 236,641 | $ | (24,308 | ) | $ | 704,764 | |||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
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MERRILL LYNCH & CO., INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| (a) | Reflects Merrill Lynch’s historical condensed consolidated balance sheet. | |
| (b) | Reflects BASH’s historical condensed consolidated balance sheet. | |
| (c) | Reflects the elimination of intercompany balances between Merrill Lynch and BASH. | |
| (d) | Reflects reclassifications of BASH’s historical information to conform to Merrill Lynch’s condensed consolidated balance sheet presentation. | |
| (e) | Reflects the recalculation of income tax liabilities as of June 30, 2010. |
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Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
| Year Ended December 31, 2009 | ||||||||||||||||
| Merrill Lynch | BASH | Eliminations, Reclassifications | Merrill Lynch | |||||||||||||
| (dollars in millions) | Historical (a) | Historical (b) | and Adjustments | Pro Forma | ||||||||||||
Revenues | ||||||||||||||||
| Principal transactions | $ | 3,953 | $ | 1,329 | $ | (162 | )(d) | $ | 5,120 | |||||||
| Commissions | 5,885 | 31 | 92 | (d) | 6,008 | |||||||||||
| Managed accounts and other fee-based revenues | 4,315 | — | — | 4,315 | ||||||||||||
| Investment banking | 3,573 | 1,985 | — | 5,558 | ||||||||||||
| Earnings from equity method investments | 1,686 | — | (7 | )(d) | 1,679 | |||||||||||
| Other | 3,242 | 114 | 4 | (c) | 3,403 | |||||||||||
| 43 | (d) | |||||||||||||||
| Subtotal | 22,654 | 3,459 | (30 | ) | 26,083 | |||||||||||
| Interest and dividend revenues | 11,405 | 4,121 | (93 | )(c) | 15,467 | |||||||||||
| 34 | (d) | |||||||||||||||
| Less interest expense | 10,773 | 1,361 | (93 | )(c) | 12,041 | |||||||||||
| Net interest profit | 632 | 2,760 | 34 | 3,426 | ||||||||||||
Revenues, net of interest expense | 23,286 | 6,219 | 4 | 29,509 | ||||||||||||
Non-interest expenses | ||||||||||||||||
| Compensation and benefits | 12,040 | 1,271 | 20 | (d) | 13,331 | |||||||||||
| Communications and technology | 1,918 | 72 | 25 | (d) | 2,015 | |||||||||||
| Occupancy and related depreciation | 1,189 | 126 | — | 1,315 | ||||||||||||
| Brokerage, clearing, and exchange fees | 1,046 | 349 | (308 | )(d) | 1,087 | |||||||||||
| Advertising and market development | 363 | — | 33 | (d) | 396 | |||||||||||
| Professional fees | 607 | 84 | 78 | (d) | 769 | |||||||||||
| Office supplies and postage | 161 | — | 12 | (d) | 173 | |||||||||||
| Other | 2,064 | 226 | 4 | (c) | 2,434 | |||||||||||
| 140 | (d) | |||||||||||||||
Total non-interest expenses | 19,388 | 2,128 | 4 | 21,520 | ||||||||||||
Pre-tax earnings from continuing operations | 3,898 | 4,091 | — | 7,989 | ||||||||||||
| Income tax (benefit) expense | (838 | ) | 1,487 | — | 649 | |||||||||||
Net earnings from continuing operations | $ | 4,736 | $ | 2,604 | $ | — | $ | 7,340 | ||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income.
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Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
| Six Months Ended June 30, 2010 | ||||||||||||||||
| Merrill Lynch | BASH | Eliminations, Reclassifications | Merrill Lynch | |||||||||||||
| (dollars in millions) | Historical (a) | Historical (b) | and Adjustments | Pro Forma | ||||||||||||
Revenues | ||||||||||||||||
| Principal transactions | $ | 5,318 | $ | 853 | $ | (33 | )(d) | $ | 6,138 | |||||||
| Commissions | 2,927 | — | 39 | (d) | 2,966 | |||||||||||
| Managed accounts and other fee-based revenues | 2,212 | — | — | 2,212 | ||||||||||||
| Investment banking | 1,383 | 1,091 | — | 2,474 | ||||||||||||
| Earnings from equity method investments | 377 | — | — | 377 | ||||||||||||
| Other | 2,303 | 53 | (22 | )(d) | 2,334 | |||||||||||
| Subtotal | 14,520 | 1,997 | (16 | ) | 16,501 | |||||||||||
| Interest and dividend revenues | 2,817 | 1,937 | (30 | )(c) | 4,740 | |||||||||||
| 16 | (d) | |||||||||||||||
| Less interest expense | 4,093 | 914 | (30 | )(c) | 4,977 | |||||||||||
| Net interest (expense) profit | (1,276 | ) | 1,023 | 16 | (237 | ) | ||||||||||
Revenues, net of interest expense | 13,244 | 3,020 | — | 16,264 | ||||||||||||
Non-interest expenses | ||||||||||||||||
| Compensation and benefits | 7,320 | 767 | — | 8,087 | ||||||||||||
| Communications and technology | 922 | 39 | 12 | (d) | 973 | |||||||||||
| Occupancy and related depreciation | 623 | 79 | — | 702 | ||||||||||||
| Brokerage, clearing, and exchange fees | 542 | 112 | (104 | )(d) | 550 | |||||||||||
| Advertising and market development | 179 | — | 20 | (d) | 199 | |||||||||||
| Professional fees | 321 | 37 | 36 | (d) | 394 | |||||||||||
| Office supplies and postage | 77 | — | — | 77 | ||||||||||||
| Other | 1,102 | 66 | 36 | (d) | 1,204 | |||||||||||
Total non-interest expenses | 11,086 | 1,100 | — | 12,186 | ||||||||||||
Pre-tax earnings from continuing operations | 2,158 | 1,920 | — | 4,078 | ||||||||||||
| Income tax expense | 529 | 708 | (66 | )(e) | 1,171 | |||||||||||
Net earnings from continuing operations | $ | 1,629 | $ | 1,212 | $ | 66 | $ | 2,907 | ||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income.
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Merrill Lynch & Co., Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
| Six Months Ended June 30, 2009 | ||||||||||||||||
| Eliminations, | ||||||||||||||||
| Merrill Lynch | BASH | Reclassifications | Merrill Lynch | |||||||||||||
| (dollars in millions) | Historical (a) | Historical (b) | and Adjustments | Pro Forma | ||||||||||||
Revenues | ||||||||||||||||
| Principal transactions | $ | 4,086 | $ | 797 | $ | (51 | )(d) | $ | 4,832 | |||||||
| Commissions | 3,006 | — | 76 | (d) | 3,082 | |||||||||||
| Managed accounts and other fee-based revenues | 2,220 | — | — | 2,220 | ||||||||||||
| Investment banking | 1,468 | 996 | — | 2,464 | ||||||||||||
| Earnings from equity method investments | 94 | — | (3 | )(d) | 91 | |||||||||||
| Other | 1,068 | 68 | (22 | )(d) | 1,114 | |||||||||||
| Subtotal | 11,942 | 1,861 | — | 13,803 | ||||||||||||
| Interest and dividend revenues | 6,826 | 2,224 | (48 | )(c) | 9,002 | |||||||||||
| Less interest expense | 6,424 | 694 | (48 | )(c) | 7,070 | |||||||||||
| Net interest profit | 402 | 1,530 | — | 1,932 | ||||||||||||
Revenues, net of interest expense | 12,344 | 3,391 | — | 15,735 | ||||||||||||
Non-interest expenses | ||||||||||||||||
| Compensation and benefits | 6,689 | 963 | 15 | (d) | 7,667 | |||||||||||
| Communications and technology | 897 | 42 | 10 | (d) | 949 | |||||||||||
| Occupancy and related depreciation | 585 | 64 | 3 | (d) | 652 | |||||||||||
| Brokerage, clearing, and exchange fees | 532 | 242 | (212 | )(d) | 562 | |||||||||||
| Advertising and market development | 161 | — | 18 | (d) | 179 | |||||||||||
| Professional fees | 255 | 31 | 38 | (d) | 324 | |||||||||||
| Office supplies and postage | 80 | — | 7 | (d) | 87 | |||||||||||
| Other | 957 | 151 | 121 | (d) | 1,229 | |||||||||||
Total non-interest expenses | 10,156 | 1,493 | — | 11,649 | ||||||||||||
Pre-tax earnings from continuing operations | 2,188 | 1,898 | — | 4,086 | ||||||||||||
| Income tax expense | 479 | 682 | (97 | )(e) | 1,064 | |||||||||||
Net earnings from continuing operations | $ | 1,709 | $ | 1,216 | $ | 97 | $ | 3,022 | ||||||||
See Notes to Unaudited Pro Forma Condensed Statements of Income.
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MERRILL LYNCH & CO., INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| (a) | Reflects Merrill Lynch’s historical condensed consolidated statements of income. |
| (b) | Reflects BASH’s historical condensed consolidated statements of income. |
| (c) | Reflects the elimination of intercompany balances between Merrill Lynch and BASH. |
| (d) | Reflects reclassification of BASH’s historical information to conform to Merrill Lynch’s condensed consolidated statement of income presentation. |
| (e) | Reflects the recalculation of income tax expense for the six months ended June 30, 2010 and June 30, 2009. |
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