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. 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 1998 1997 1996 Average Increase (Decrease) Average Increase (Decrease) Average Balance Amount % Balance Amount % Balance ------- ------ - ------- ------ - ------- (Thousands of Dollars) Funding uses: Interest earning assets: Loans: Commercial $ 59,804 $ (4,263) (6.65)% $ 64,067 $ 1,658 2.66% $ 62,409 Mortgage 91,533 4,918 5.68 86,615 6,542 8.17 80,073 Consumer 38,441 2,613 7.29 35,828 3,735 11.64 32,093 --------- --------- --------- --------- --------- 189,778 3,268 1.75 186,510 11,935 6.84 174,575 Less: Allowance for loan losses (2,446) (67) (2.82) (2,379) (66) (2.85) (2,313) --------- --------- --------- --------- --------- 187,332 3,201 1.74 184,131 11,869 6.89 172,262 Interest bearing deposits with banks 514 369 254.48 145 10 7.41 135 Securities 121,725 3,314 2.80 118,411 (1,608) (1.34) 120,019 Funds sold 10,719 3,526 49.02 7,193 (1,647) (18.63) 8,840 --------- --------- --------- --------- --------- 132,958 7,209 5.73 125,749 (3,245) (2.52) 128,994 Total interest earning assets 320,290 10,410 3.36 309,880 8,624 2.86 301,256 Other assets 18,005 817 4.75 17,188 1,060 6.57 16,128 --------- --------- --------- --------- --------- Total uses $ 338,295 $ 11,227 3.43 $ 327,068 $ 9,684 3.05 $ 317,384 ========= ========= ========= ========= ========= Funding sources: Deposits: Demand $ 30,719 $ 875 2.93 $ 29,844 $ 1,715 6.10 $ 28,129 Interest bearing demand 49,199 2,511 5.38 46,688 418 .90 46,270 Savings 32,796 6,936 26.82 25,860 (1,254) (4.62) 27,114 Time under $100,000 153,928 (4,935) (3.11) 158,863 4,332 2.80 154,531 --------- --------- --------- --------- --------- Total core deposits 266,642 5,387 2.06 261,255 5,211 2.04 256,044 Time over $100,000 22,977 3,005 15.05 19,972 842 4.40 19,130 --------- --------- --------- --------- --------- Total deposits 289,619 8,392 2.98 281,227 6,053 2.20 275,174 Other liabilities 4,228 (164) (3.73) 4,392 25...
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. 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: ------- ------- ------ ------- ------ 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 projects and other strategic market studies led to a 40% increase in profes- sional ...
MANAGEMENT'S DISCUSSION AND ANALYSIS. STRATEGIC PRIORITIES - -------------------------------------------------------------------------------- During 1997, Xxxxxxx Xxxxx announced an organizational structure that matches the manner in which services are provided to clients. Xxxxxxx Xxxxx is now organized along four key strategic priorities: Corporate and Institutional Client, U.S. Private Client, International Private Client, and Asset Manage- ment. These business priorities and their activities are summarized below. Presented is a pie chart showing Xxxxxxx Xxxxx'x percentage of net revenues by strategic priority. - -------------------------------------------------------------------------------- Percentage of Net Revenues By Strategic Priority - -------------------------------------------------------------------------------- Corporate and Institutional Client 42% U.S. Private Client 45% International Private Client 6% Asset Management 7% For further information on Xxxxxxx Xxxxx'x business activities, see "Business of Xxxxxxx Xxxxx--Description of Business Activities". - -------------------------------------------------------------------------------- CORPORATE AND INSTITUTIONAL CLIENT The Corporate and Institutional Client group provides a broad array of xxxxx- cial services, including securities trading, investment banking, and advisory services to financial institutions, corporations, and governments worldwide. The group raises capital for its clients on favorable terms, through securi- ties underwriting and loan syndication, and has been the leading underwriter of global debt and equity for nine consecutive years, according to SDC. The Corporate and Institutional Client group also manages risk and investment returns by tailoring investments and structuring derivatives to meet clients' needs. The group is also a leading provider of merger and acquisition advisory services and, in 1997, ranked first in the U.S. and third in global announced transactions, according to SDC. - -------------------------------------------------------------------------------- U.S. PRIVATE CLIENT The U.S. Private Client group provides a wide range of financial services and products, advice, and execution to individuals, small businesses, and employee benefit plans. These products and services are provided through approximately 13,300 Financial Consultants, who assist clients in managing their assets. The Cash Management Account(Registered Trademark) service for individuals and the Working Capital Management(Service Xx...
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. 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. Trading Related: Trading Assets 36% Resale Agreements 24 Securities Borrowed 12 Receivables 13 -- 85 Non-Trading-Related 15 -- 100% === 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 derivatives, represents xxxxxx of other trading positions. Many short U.S. Government securities and futures positions, for example, hedge various interest-sensitive trading assets. Hedg- ing techniques at the trading unit level are supplemented by corporate risk management policies and procedures. For a description of risk management poli- cies and procedu...
