Capital Profile

Merrill Lynch & Co., Inc. and Subsidiaries (Unaudited)

Equity Capital

At March 28, 2008, equity capital, as defined by Merrill Lynch, was $41.3 billion and comprised of $25.5 billion of common equity, $11.0 billion of preferred stock, and $4.8 billion of trust preferred securities. We define equity capital more broadly than stockholders' equity under U.S. generally accepted accounting principles, as we include other capital instruments with equity-like characteristics such as trust preferred securities. We view trust preferred securities as equity capital because they are either perpetual or have maturities of at least 50 years at issuance. These trust preferred securities represent junior subordinated notes, net of related investments. Junior subordinated notes (related to trust preferred securities) are reported on the Condensed Consolidated Balance Sheets as liabilities for accounting purposes. The related investments are reported as investment securities on the Condensed Consolidated Balance Sheets.

Major components of the changes in our equity capital for the first quarter of 2008 are as follows:

Common Stock

On December 24, 2007, we reached agreements with each of Temasek Capital (Private) Limited ("Temasek") and Davis Selected Advisors LP ("Davis"), on behalf of various investors, to sell an aggregate of 116.7 million shares of newly issued common stock at a price of $48.00 per share, for aggregate proceeds of approximately $5.6 billion. Temasek purchased 55 million shares in December 2007 and the remaining 36.7 million shares in January 2008. In addition, Temasek and its assignees exercised options to purchase an additional 12.5 million shares of our common stock at a purchase price of $48.00 per share in February 2008. Davis purchased 25 million shares in December 2007. See Note 10 to the Condensed Consolidated Financial Statements for additional information.

Preferred Stock

On various dates in January and February 2008, we issued an aggregate of 66,000 shares of newly issued 9% Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock, Series 1, par value $1.00 per share and liquidation preference $100,000 per share, to several long-term investors at a price of $100,000 per share, for an aggregate purchase price of approximately $6.6 billion. See Note 10 to the Condensed Consolidated Financial Statements for additional information.

On April 29, 2008, we issued $2.7 billion of new perpetual 8.625% Non-Cumulative Preferred Stock, Series 8.

The above is excerpted from the Merrill Lynch Form 10-Q for the fiscal year ended March 28, 2008.

Balance Sheet Leverage

Assets-to-equity leverage ratios are commonly used to assess a company's capital adequacy. We believe that a leverage ratio adjusted to exclude certain assets considered to have low risk profiles and assets in customer accounts financed primarily by customer liabilities provides a more meaningful measure of balance sheet leverage in the securities industry than an unadjusted ratio. We calculate adjusted assets by reducing total assets by (1) securities financing transactions and securities received as collateral less trading liabilities net of contractual agreements and (2) segregated cash and securities and separate accounts assets.

As leverage ratios are not risk sensitive, we do not rely on them to measure capital adequacy. When we assess our capital adequacy, we consider more sophisticated measures that capture the risk profiles of the assets, the impact of hedging, off-balance sheet exposures, operational risk and other considerations.

The following table provides calculations of our leverage ratios at March 28, 2008 and December 28, 2007:

(1) Represents junior subordinated notes (related to trust preferred securities), net of related investments. The related investments are reported as investment securities and were $429 million at March 28, 2008 and December 28, 2007.
(2) Equity capital less goodwill and other intangible assets.
(3) Total assets divided by equity capital.
(4) Adjusted assets divided by equity capital.
(5) Tangible adjusted assets divided by tangible equity capital.

The table above does not reflect the impact of the issuance of $2.7 billion of perpetual 8.625% non-cumulative preferred stock on April 29, 2008. On a pro forma basis including that equity issuance, our leverage ratio, adjusted leverage ratio and tangible adjusted leverage ratios would have been 23.8x, 15.2x, and 17.0x, respectively.

The above is excerpted from the Merrill Lynch Form 10-Q for the fiscal year ended March 28, 2008.

Share Repurchases

The table below sets forth the information with respect to purchases made by or on behalf of Merrill Lynch or any "affiliated purchaser" of Merrill Lynch's common stock during the quarter ended March 28, 2008.

(1) No repurchases were made for the quarter ended March 28, 2008

(2) Included in the total number of shares purchased are: (1) shares purchased during the period by participants in the Merrill Lynch 401(k) Savings and Investment Plan ("401(k)") and the Merrill Lynch Retirement Accumulation Plan ("RAP"), (2) shares delivered or attested to in satisfaction of the exercise price by holders of ML & Co. employee stock options (granted under employee stock compensation plans) and (3) Restricted Shares withheld (under the terms of grants under employee stock compensation plans) to offset tax withholding obligations that occur upon vesting and release of Restricted Shares. ML & Co.'s employee stock compensation plans provide that the value of the shares delivered, attested, or withheld, shall be the average of the high and low price of ML & Co.'s common stock (Fair Market Value) on the date the relevant transaction occurs. See Notes 12 and 13 to the 2007 Annual Report for additional information on these plans.

The above is excerpted from the Merrill Lynch Form 10-Q for the fiscal year ended March 28, 2008.

Long-term Capital

Our long-term capital sources include equity capital, long-term borrowings and certain deposits in bank subsidiaries that we consider to be long-term or stable in nature.

At March 28, 2008 and December 28, 2007 total long-term capital consisted of the following:

(1) Merrill Lynch issued an additional $2.7 billion of 8.625% non-cumulative, perpetual fixed rate preferred stock on April 29, 2008, which is not included in the table.
(2) Represents junior subordinated notes (related to trust preferred securities), net of related investments. The related investments are reported as investment securities and were $429 million at March 28, 2008 and December 28, 2007.
(3) Excludes junior subordinated notes (related to trust preferred securities), the current portion of long-term borrowings and the long-term portion of other subsidiary financing that is non-recourse to or not guaranteed by ML & Co. Borrowings that mature in more than one year, but contain provisions whereby the holder has the option to redeem the obligations within one year, are reflected as the current portion of long-term borrowings and are not included in long-term capital.
(4) Includes $72,855 million and $13,838 million of deposits in U.S. and non-U.S. banking subsidiaries, respectively, at March 28, 2008, and $70,246 million and $14,789 million of deposits in U.S. and non-U.S. banking subsidiaries, respectively, at December 28, 2007 that we consider to be long-term based on our liquidity models.

At March 28, 2008, our long-term capital sources of $293.0 billion exceeded our estimated long-term capital requirements. See Risk Management - Liquidity Risk for additional information.

The above is excerpted from the Merrill Lynch Form 10-Q for the fiscal year ended March 28, 2008.

Liquidity Risk Management

We define liquidity risk as the potential inability to meet financial obligations, on- or off-balance sheet, as they come due.

Our primary liquidity objectives are to ensure liquidity through market cycles and periods of financial stress and to ensure that all funding requirements and unsecured debt obligations that mature within one year can be met without issuing new unsecured debt or requiring liquidation of business assets. In managing liquidity, we place significant emphasis on monitoring the near term cash flow profiles and exposures through extensive scenario analysis and stress testing. To achieve our objectives, we have established a set of liquidity management practices that are outlined below:

• Maintain excess liquidity in the form of unencumbered liquid assets and committed credit facilities;
• Match asset and liability profiles appropriately;
• Perform scenario analysis and stress testing; and
• Maintain a well formulated and documented contingency funding plan, including access to lenders of last resort.

Consistent with our objectives, we maintain excess liquidity at ML & Co. and selected subsidiaries in the form of cash and high quality unencumbered liquid assets, which represent our "Global Liquidity Sources" and serve as our primary source of liquidity risk protection. As of March 28, 2008 and December 28, 2007, the aggregate Global Liquidity Sources were $210 billion and $200 billion, respectively, consisting of the following:

The excess liquidity pool is maintained at, or readily available to, ML & Co. and can be deployed to meet cash outflow obligations under stressed liquidity conditions. The excess liquidity pool includes cash and cash equivalents, investments in short-term money market mutual funds, U.S. government and agency obligations and other liquid securities. At March 28, 2008 and December 28, 2007, the total carrying value of the excess liquidity pool, net of related hedges, was $82 billion and $79 billion, respectively, which included liquidity sources at subsidiaries that we believe are available to ML & Co. without restrictions.

At March 28, 2008 and December 28, 2007, unencumbered liquid assets of $57 billion in the form of unencumbered investment grade asset-backed securities and prime residential mortgages were available at our regulated bank subsidiaries to meet potential deposit obligations, business activity demands and stressed liquidity needs of the bank subsidiaries. At March 28, 2008 and December 28, 2007, our non-bank subsidiaries, including broker-dealer subsidiaries, maintained $71 billion and $64 billion, respectively, of unencumbered securities, including $11 billion of customer margin securities at March 28, 2008 and $10 billion at December 28, 2007.

In addition to the Global Liquidity Sources, we maintain credit facilities that are available to cover regular and contingent funding needs.

The above is excerpted from the Merrill Lynch Form 10-Q for the fiscal year ended March 28, 2008.