MANAGEMENT'S DISCUSSION AND ANALYSIS. Simultaneously with the delivery of the financial statements referred to in Sections 6.01(1) and 6.01(2) above, a management’s discussion and analysis describing results of operations of the Borrower in the form customarily prepared by management of the Borrower; and
MANAGEMENT'S DISCUSSION AND ANALYSIS. Certain statements contained in this annual report are forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 that involve a number of risks and uncertainties. Such forward-looking information may be identified by words such as "will," "maybe," "
MANAGEMENT'S DISCUSSION AND ANALYSIS. The section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Time of Sale Disclosure Package describes in all material respects: (i) to the extent applicable, all material trends, demands, commitments, events, uncertainties and risks, and the potential effects thereof, that the Company believes would materially affect liquidity and are reasonably likely to occur; and (ii) all off-balance sheet transactions, arrangements, and obligations, including, without limitation, relationships with unconsolidated entities that are contractually limited to narrow activities that facilitate the transfer of or access to assets by the Company or any of its subsidiaries, such as structured finance entities and special purpose entities that are reasonably likely to have a material effect on the liquidity of the Company or any of its Subsidiaries or the availability thereof or the requirements of the Company or any of its subsidiaries for capital resources.
MANAGEMENT'S DISCUSSION AND ANALYSIS. A written discussion and analysis by management of the financial condition and results of operations of the lines of business conducted by each material Restricted Subsidiary for such accounting period; provided that delivery
MANAGEMENT'S DISCUSSION AND ANALYSIS. A written discussion and analysis by management of the financial condition and results of operations of the lines of business conducted by the Borrower and its Subsidiaries for such accounting period; provided that delivery within the time period specified above of copies of, in the case of Section 5.18(a), the Borrower's Quarterly Report on Form 10 - Q, or, in the case of Section 5.18(b) the Borrower's Annual Report on Form 10 - K, in each case prepared in compliance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy this clause (iii); and
MANAGEMENT'S DISCUSSION AND ANALYSIS. BALANCE SHEET - -------------------------------------------------------------------------------- Trading-related balances accounted for approximately 85% of assets and 64% of liabilities at December 26, 1997. As presented below, securities trading, derivatives dealing, and related activities result in trading asset/liability, resale/repurchase agreement, securities borrowed/loaned transaction, and cer- tain receivable/payable balances. Presented are two pie charts illustrating Xxxxxxx Xxxxx'x trading-related balances as percentages of total assets and total liabilities, respectively. - -------------------------------------------------------------------------------- Assets - -------------------------------------------------------------------------------- Trading Related: Trading Assets 36% Resale Agreements 24 Securities Borrowed 12 Receivables 13 -- 85 Non-Trading-Related 15 -- 100% === - -------------------------------------------------------------------------------- Liabilities - -------------------------------------------------------------------------------- Trading Related: Trading Liabilities 25% Repurchase Agreements 25 Securities Loaned 2 Payables 12 -- 64 Non-Trading-Related 36 100% === Although trading-related balances comprise a significant portion of the bal- ance sheet, the magnitude of these balances do not necessarily convey a sense of the risk profile assumed by Xxxxxxx Xxxxx. Hedging strategies and compli- ance with collateral maintenance policies, as discussed later, mitigate risk exposures. - ------------------------------------------------------------------------------- TRADING ASSETS AND LIABILITIES Trading assets and liabilities principally represent securities purchased ("long" positions) and securities sold but not yet purchased ("short" posi- tions), respectively. Trading assets and liabilities also include receivables and payables that represent the fair value of derivatives (see Note 1 to the Consolidated Financial Statements). Xxxxxxx Xxxxx acts as a market maker in many securities, maintaining a signif- icant amount of trading inventory to facilitate customer transaction flow. To a lesser degree, Xxxxxxx Xxxxx also maintains proprietary trading inventory in seeking to profit from existing or projected market opportunities. Xxxxxxx Xxxxx uses hedging techniques to manage trading inventory market risks (see Note 3 to the Consolidated Financial Statements). A significant portion of trading assets and liabilities, including derivati...
MANAGEMENT'S DISCUSSION AND ANALYSIS. The purpose of this discussion is to focus on information about the Corporation's financial condition and results of operations which is not otherwise apparent from the consolidated financial statements included in this annual report. Reference should be made to those statements and the selected financial data presented elsewhere in this report for an understanding of the following discussion and analysis. -------------------------------------------------------------------------------- FINANCIAL CONDITION -------------------------------------------------------------------------------- SOURCES AND USES OF FUNDS TRENDS 1997 Increase (Decrease) 1996 Increase (Decrease) 1995 Average -------- ---------- Average -------- ---------- Average Balance Amount % Balance Amount % Balance ------- ------ - ------- ------ - ------- (Thousands of Dollars) Funding uses: Interest earning assets: Loans: Commercial $ 43,844 $ 2,077 4.97% $ 41,767 $ 524 1.27% $ 41,243 Mortgage 64,104 5,192 8.81 58,912 1,658 2.90 57,254 Consumer 23,575 1,150 5.13 22,425 (271) (1.19) 22,696 --------- --------- --------- --------- --------- 131,523 8,419 6.84 123,104 1,911 1.58 121,193 Less: Allowance for loan losses (1774) (97) 5.78 (1,677) (101) 6.41 (1,576) --------- --------- --------- --------- --------- 129,749 8,322 6.85 121,427 1,810 1.51 119,617 Securities 71,952 (713) (.98) 72,665 9,805 15.60 62,860 Funds sold 3,098 (1,009) (24.57) 4,107 114 2.85 3,993 --------- --------- --------- --------- --------- 75,050 (1,722) (2.24) 76,772 9,919 14.84 66,853 Total interest earning assets 204,799 6,600 3.33 198,199 11,729 6.29 186,470 Other assets 12,732 1,318 11.55 11,414 716 6.69 10,698 --------- --------- --------- --------- --------- Total uses $ 217,531 $ 7,918 3.78 $ 209,613 $ 12,445 6.31 $ 197,168 ========= ========= ========= ========= ========= Funding sources: Deposits: Demand $ 21,727 $ 1,399 6.88 $ 20,328 $ 1,146 5.97 $ 19,182 Interest bearing demand 26,118 188 .73 25,930 425 1.67 25,505 Savings 21,055 (1,069) (4.83) 22,124 (59) (.27) 22,183 Time under $100,000 101,767 3,773 3.85 97,994 6,547 7.16 91,447 --------- --------- --------- --------- --------- Total core deposits 170,667 4,291 2.58 166,376 8,059 5.09 158,317 Time over $100,000 15,445 1,062 7.38 14,383 2,037 16.50 12,346 --------- --------- --------- --------- --------- Total deposits 186,112 5,353 2.96 180,759 10,096 5.92 170,663 Other liabilities 3,604 193 5.66 3,411 222 6.96 3,189 Stockholders' equity 27,815 2,372 9.32 25,44...
MANAGEMENT'S DISCUSSION AND ANALYSIS. NON-INTEREST EXPENSES - ------------------------------------------------------------------------------- (in millions) 1997 1996 1995 - ------------------------------------------------------------------------------ Compensation and benefits $ 7,962 $ 6,704 $5,270 Communications and equipment rental 669 559 487 Occupancy 491 508 449 Depreciation and amortization 446 411 367 Professional fees 813 582 425 Advertising and market development 597 514 398 Brokerage, clearing, and exchange fees 505 413 361 Other 1,136 859 697 ------- ------- ------ Total non-interest expenses, excluding compensation and benefits 4,657 3,846 3,184 Non-interest expenses, excluding compensation and benefits: ------- ------- ------ ------- ------- ------ Total non-interest expenses $12,619 $10,550 $8,454 ======= ======= ====== Compensation and benefits as a percentage of net revenues 50.8% 51.1% 51.3% Compensation and benefits as a percentage of pretax earnings before compensation and benefits 72.3% 72.3% 74.4% - ------------------------------------------------------------------------------ Non-interest expenses in 1997 were up 20% over the prior year. The largest expense category, compensation and benefits, increased 19% from 1996 due to higher incentive and production-related compensation and a 14% increase in the number of full-time employees. Incentive compensation rose as a result of increased profitability, while production-related compensation was up due to strong business volume. Full-time employees totaled 56,600 at year-end 1997, compared with 49,800 at the previous year-end. Headcount increased due to acquisitions, strategic business expansion, and growth in existing businesses. The ratio of support employees and sales assistants to producers increased from 1.51 in 1996 to 1.57 in 1997. Communications and equipment rental expense was up 20% from 1996 due to increased business volume, higher technology maintenance costs, and expanded use of market data services. Occupancy costs decreased 3%, reflecting a nonre- curring pretax charge in 1996 of $40 million related to the resolution of Olympia & York's bankruptcy that affected ML & Co.'s long-term sublease agree- ment in the World Financial Center, partially offset by increased costs related to international growth. Depreciation and amortization expense rose 9% from 1996 primarily as a result of purchases of technology-related equipment during 1997. Higher systems and management consulting costs related to various technology pr...
MANAGEMENT'S DISCUSSION AND ANALYSIS. ASIA AND PACIFIC (in millions) 1997 1996 1995 - -------------------------------------------------------------------------------- Total revenues $ 586 $ 395 $ 228 Net revenues $ 582 $ 394 $ 227 Earnings before income taxes $ 16 $ 41 $ 7 Total assets $ 797 $ 335 $ 240 Total full-time employees 1,690 1,300 1,060 - -------------------------------------------------------------------------------- Xxxxxxx Xxxxx serves a broad retail and institutional client base throughout the Asia and Pacific region. In mainland China, the focus is principally on institutional business opportunities, while in other locations, such as China's special autonomous region of Hong Kong, Korea, Singapore, Taiwan, and Malaysia, both retail and institutional activities are conducted. Xxxxxxx Xxxxx has a trading presence and exchange memberships in virtually all financial markets in the region. During 1997, Xxxxxxx Xxxxx obtained a dealing/underwriting license in Taiwan and opened its first office in the Philippines. Total and net revenues in the region were both up 48% from 1996. Revenues dur- ing the first half of 1997 benefited from strong trading volume and investment banking activity. Revenues then declined in the 1997 second half as currency devaluations across the region significantly affected equity and debt markets, particularly in Hong Kong and Singapore. The continued drop in the regional currencies caused significant problems for Asian issuers of U.S. dollar- denominated debt and significantly weakened the emerging secondary market. Earnings before income taxes decreased 61% from 1996 due to provisions for certain client claims in Singapore and increased expenses associated with the growth in the regional expansion, partially offset by higher trading revenues. Total and net revenues in the Asia and Pacific region in 1996 were up 73% and 74% from 1995, respectively. Earnings before income taxes rose almost six-fold from 1995. Results in the region benefited from increased investment banking revenues, while the integration of Xxxxx New Court added significantly to equity trading activities. In addition, increased commissions on regional equities and mutual funds also contributed to higher revenues. - -------------------------------------------------------------------------------- AUSTRALIA AND NEW ZEALAND (in millions) 1997 1996 1995 - -------------------------------------------------------------------------------- Total revenues $ 272 $ 151 $163 Net revenues $ 229 $ 88 $ 66 Ear...
MANAGEMENT'S DISCUSSION AND ANALYSIS. Xxxxxxx Xxxxx'x senior long-term debt, preferred stock, and Trust Originated Preferred Securities(Service Xxxx) ("TOPrS"(Registered Trademark)) were rated by recognized credit rating agencies at December 26, 1997 as follows: - -------------------------------------------------------------------------------- SENIOR PREFERRED STOCK DEBT AND TOPrS RATING AGENCY RATINGS RATINGS - -------------------------------------------------------------------------------- Duff & Xxxxxx Credit Rating Co. AA AA- Fitch IBCA, Inc. AA AA- The Japan Bond Research Institute AA Not Rated Xxxxx'x Investors Service, Inc. Aa3 aa3 Standard & Poor's AA- A Thomson BankWatch, Inc. AA+ Not Rated - -------------------------------------------------------------------------------- Approximately $75.2 billion of indebtedness at December 26, 1997 is considered senior indebtedness as defined under various indentures. As part of an overall liquidity management strategy, Xxxxxxx Xxxxx'x insurance subsidiaries regularly review the funding requirements of their contractual obligations for in-force, fixed-rate life insurance and annuity contracts as well as expected future acquisition and maintenance expenses for all contracts. The insurance subsidiaries market primarily variable life insurance and variable annuity products. These products are not subject to the interest rate, asset/liability matching, or credit risks attributable to fixed- rate products, thereby reducing the insurance subsidiaries' risk profile and liquidity demands. At December 26, 1997, approximately 84% of invested assets of insurance subsidiaries were considered liquid by management. - -------------------------------------------------------------------------------- CAPITAL RESOURCES AND CAPITAL ADEQUACY - -------------------------------------------------------------------------------- Among U.S. institutions engaged primarily in the global securities business, Xxxxxxx Xxxxx is one of the most highly capitalized, with $7.9 billion in com- mon equity and $425 million in preferred stock at December 26, 1997 (see "Stockholders' Equity" in the "Balance Sheet" section). In 1997, a trust subsidiary of ML & Co. issued $300 million of TOPrS. These subsidiary-issued preferred securities, along with $327 million of preferred securities outstanding in other subsidiaries, further strengthen Xxxxxxx Xxxxx'x equity capital base. Subsequent to year-end 1997, $750 million of TOPrS were issued by another trust subsidiary (see Note 6 to the Consoli...
