DEFM14A 1 g15211badefm14a.htm DEFINITIVE PROXY STATEMENT DEFM14A
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
Information Required in Proxy Statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
     
o   Preliminary Proxy Statement
  o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ    Definitive Proxy Statement
   
¨   Definitive Additional Materials
   
¨   Soliciting Material Pursuant to § 240.14a-12
   
Bank of America Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
 
þ    No fee required.
o    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)   Title of each class of securities to which transaction applies:
 
     
 
 
  (2)   Aggregate number of securities to which transaction applies:
 
  (3)   
 
 Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
 
  (4)   
 
 Proposed maximum aggregate value of transaction:
 
  (5)   
 
 Total fee paid:
 
     
 
o   Fee paid previously with preliminary materials.
     
 
 
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)   Amount Previously Paid:
 
  (2)   
 
 Form, Schedule or Registration Statement No.:
 
  (3)   
 
 Filing Party:
 
  (4)   
 
 Date Filed:
 
     
 
 
 


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(BANK OF AMERICA LOGO)   (MERRILL LYNCH LOGO)
 
MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT
 
Dear Stockholder:
 
On September 15, 2008, Merrill Lynch & Co., Inc. and Bank of America Corporation announced a strategic business combination in which a subsidiary of Bank of America will merge with and into Merrill Lynch. If the merger is completed, holders of Merrill Lynch common stock will have a right to receive 0.8595 of a share of Bank of America common stock for each share of Merrill Lynch common stock held immediately prior to the merger. In connection with the merger, Bank of America expects to issue approximately 1.710 billion shares of common stock and 359,100 shares of preferred stock (the terms of which are described starting on page 93).
 
The market value of the merger consideration will fluctuate with the market price of Bank of America common stock. The following table shows the closing sale prices of Bank of America common stock and Merrill Lynch common stock as reported on the New York Stock Exchange on September 12, 2008, the last trading day before public announcement of the merger, and on October 30, 2008, the last practicable trading day before the distribution of this document. This table also shows the implied value of the merger consideration proposed for each share of Merrill Lynch common stock, which we calculated by multiplying the closing price of Bank of America common stock on those dates by 0.8595, the exchange ratio.
 
                         
            Implied Value of One
    Bank of America
  Merrill Lynch
  Share of Merrill Lynch
    Common Stock   Common Stock   Common Stock
 
At September 12, 2008
  $ 33.74     $ 17.05     $ 29.00  
At October 30, 2008
  $ 22.78     $ 17.78     $ 19.58  
 
The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and holders of Merrill Lynch common stock are not expected to recognize any gain or loss for United States federal income tax purposes on the exchange of shares of Merrill Lynch common stock for shares of Bank of America common stock in the merger, except with respect to any cash received instead of fractional shares of Bank of America common stock. However, under some circumstances described in this document, the merger will not qualify as a reorganization, and each of us has agreed that in such circumstances we would complete the merger on a taxable basis.
 
The market prices of both Bank of America common stock and Merrill Lynch common stock will fluctuate before the merger. You should obtain current stock price quotations for Bank of America common stock and Merrill Lynch common stock. Bank of America common stock is quoted on the NYSE under the symbol “BAC.” Merrill Lynch common stock is quoted on the NYSE under the symbol “MER.”
 
At a special meeting of Bank of America stockholders, Bank of America stockholders will be asked to vote on the issuance of Bank of America common stock in the merger and certain other matters. The stock issuance proposal requires the votes cast in favor of such proposal to exceed the votes cast against such proposal at the special meeting by holders of Bank of America common stock and 7% Cumulative Redeemable Preferred Stock, Series B, which we refer to as Series B Preferred Stock, voting together without regard to class.
 
At a special meeting of Merrill Lynch stockholders, Merrill Lynch stockholders will be asked to vote on the adoption of the merger agreement and certain other matters. To adopt the merger agreement and to approve the related certificate amendment requires the affirmative vote of the holders of a majority of the outstanding shares of Merrill Lynch common stock entitled to vote.
 
Holders of Merrill Lynch preferred stock and holders of depositary shares representing Merrill Lynch preferred stock are not entitled to and are not being requested to vote at the Merrill Lynch special meeting.
 
The Bank of America board of directors unanimously recommends that Bank of America stockholders vote FOR the proposal to issue shares of Bank of America common stock in the merger and FOR the other related proposals.
 
The Merrill Lynch board of directors unanimously recommends that Merrill Lynch stockholders vote FOR adoption of the merger agreement and FOR the other related proposals.
 
This document describes the special meetings, the merger, the documents related to the merger and other related matters. Please carefully read this entire document, including “Risk Factors” beginning on page 23 for a discussion of the risks relating to the proposed merger. You also can obtain information about our companies from documents that each of us has filed with the Securities and Exchange Commission.
 
     
-s- Kenneth D. Lewis   -s- John A. Thain
KENNETH D. LEWIS
Chairman, Chief Executive Officer and
President Bank of America Corporation
  JOHN A. THAIN
Chairman and Chief Executive Officer
Merrill Lynch & Co., Inc.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the Bank of America common stock or preferred stock to be issued under this document or determined if this document is accurate or adequate. Any representation to the contrary is a criminal offense.
 
The date of this document is October 31, 2008, and it is first being mailed or otherwise delivered to Bank of America and Merrill Lynch stockholders on or about November 3, 2008.


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(BANK OF AMERICA LOGO)
100 N. Tryon Street
Charlotte, North Carolina 28255
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
 
Bank of America Corporation will hold a special meeting of stockholders in the Palmetto Ballroom of the International Trade Center located at 200 North College St., Charlotte, NC at 11:00 a.m., local time, on December 5, 2008 to consider and vote upon the following matters:
 
  •  a proposal to approve the issuance of shares of Bank of America common stock as contemplated by the Agreement and Plan of Merger, dated as of September 15, 2008, by and between Merrill Lynch & Co., Inc. and Bank of America Corporation, as such agreement may be amended from time to time;
 
  •  a proposal to approve an amendment to the 2003 Key Associate Stock Plan, as amended and restated;
 
  •  a proposal to adopt an amendment to the Bank of America amended and restated certificate of incorporation to increase the number of authorized shares of Bank of America common stock from 7.5 billion to 10 billion; and
 
  •  a proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposals.
 
The Bank of America board of directors has fixed the close of business on October 10, 2008, as the record date for the special meeting. Only Bank of America stockholders of record at that time are entitled to notice of, and to vote at, the special meeting, or any adjournment or postponement of the special meeting. Holders of the Bank of America common stock and Series B Preferred Stock vote together without regard to class and will be entitled to vote at the special meeting. Approval of the issuance of Bank of America common stock and the amendment to the 2003 Key Associate Stock Plan, as amended and restated, which we refer to as the Stock Plan, each requires the votes cast in favor of each such proposal to exceed the votes cast against such proposal at the special meeting, assuming a quorum. Approval of the proposal to increase the number of authorized shares of Bank of America common stock requires the affirmative vote of a majority of the votes represented by the outstanding shares of Bank of America common stock and Series B Preferred Stock entitled to vote at the special meeting, voting together without regard to class. Under Delaware law, the affirmative vote of a majority of the votes represented by the outstanding shares of Bank of America common stock entitled to vote at the special meeting, counted separately as a class without the Series B Preferred Stock, is also required to increase the number of authorized shares of Bank of America common stock.
 
Whether or not you plan to attend the special meeting, please submit your proxy with voting instructions. Please vote as soon as possible by accessing the internet site listed on the Bank of America proxy card, by calling the toll-free number listed on the Bank of America proxy card, or by submitting your proxy card by mail. To submit your proxy by mail, please complete, sign, date and return the accompanying proxy card in the enclosed self-addressed, stamped envelope. This will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any holder of Bank of America common stock who is present at the special meeting may vote in person instead of by proxy, thereby canceling any previous proxy. In any event, a proxy may be revoked in writing at any time before the special meeting in the manner described in the accompanying document.
 
The Bank of America board of directors has unanimously approved the merger and the merger agreement and unanimously recommends that Bank of America stockholders vote “FOR” approval of the issuance of common stock in the merger, “FOR” the amendment to the Stock Plan, “FOR” the increase in authorized shares of common stock and “FOR” the adjournment of the Bank of America special meeting if necessary or appropriate to permit further solicitation of proxies.
 
BY ORDER OF THE BOARD OF DIRECTORS,
 
-s- Alice A. Herald
Alice A. Herald
Corporate Secretary
 
October 31, 2008
 
 
 
YOUR VOTE IS IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY, REGARDLESS
OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING.
 


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REFERENCES TO ADDITIONAL INFORMATION
 
This document incorporates by reference important business and financial information about Bank of America and Merrill Lynch from documents that are not included in or delivered with this document. You can obtain documents incorporated by reference in this document, other than certain exhibits to those documents, by requesting them in writing or by telephone from the appropriate company at the following addresses:
 
     
Bank of America Corporation   Merrill Lynch & Co., Inc.
Bank of America Corporate Center   222 Broadway — 17th Floor
100 N. Tryon Street   New York, New York 10038
Charlotte, North Carolina 28255   Attention: Judith A. Witterschein
Investor Relations   Corporate Secretary
Telephone: (704) 386-5681   Telephone: (212) 670-0432
 
You will not be charged for any of these documents that you request. Bank of America and Merrill Lynch stockholders requesting documents should do so by November 28, 2008, in order to receive them before their respective special meetings.
 
You should rely only on the information contained or incorporated by reference into this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated October 31, 2008, and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document. Neither the mailing of this document to Merrill Lynch stockholders or Bank of America stockholders nor the issuance by Bank of America of shares of Bank of America common stock in connection with the merger will create any implication to the contrary.
 
This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this document regarding Merrill Lynch has been provided by Merrill Lynch and information contained in this document regarding Bank of America has been provided by Bank of America.
 
See “Where You Can Find More Information” on page 123.


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APPENDICES
 
         
APPENDIX A
       
Agreement and Plan of Merger, dated as of September 15, 2008, by and between Merrill Lynch & Co., Inc. and Bank of America Corporation (including Amendment No. 1, dated as of October 21, 2008)
    A-1  
APPENDIX B
       
Stock Option Agreement, dated as of September 15, 2008, by and between Merrill Lynch & Co., Inc. and Bank of America Corporation
    B-1  
APPENDIX C
       
Opinion of J.C. Flowers & Co. LLC
    C-1  
APPENDIX D
       
Opinion of Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC
    D-1  
APPENDIX E
       
Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
    E-1  
APPENDIX F
       
Amendment to Bank of America’s 2003 Key Associate Stock Plan, as Amended and Restated
    F-1  


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QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS
 
Q: What do Merrill Lynch stockholders need to do now?
 
A: After you have carefully read this document and have decided how you wish to vote your shares, please vote your shares promptly. Please vote as soon as possible by accessing the internet site listed on the Merrill Lynch proxy card, by calling the toll-free number listed on the Merrill Lynch proxy card or by submitting your proxy card by mail. If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instruction form included with these materials and forwarded to you by your bank or broker. This voting instruction form provides instructions on voting by mail, telephone or the internet at www.proxyvote.com. Submitting your proxy card or directing your bank or broker to vote your shares will ensure that your shares are represented and voted at the Merrill Lynch special meeting. If you participate in the Merrill Lynch Retirement Accumulation Plan, the Merrill Lynch Employee Stock Ownership Plan or the Merrill Lynch 401(k) Savings & Retirement Plan, and your account has investments in shares of Merrill Lynch common stock, you must provide voting instructions to the plan trustee (either via the proxy card or by internet or telephone) in order for your shares to be voted as you instruct. If no voting instructions are received, the trustees will vote these shares in the same ratio as the shares for which voting instructions have been provided. Your voting instructions will be held in strict confidence. If you participate in the Merrill Lynch Employee Stock Purchase Plan, your shares must be voted in order to count. If you would like to attend the Merrill Lynch special meeting, see “Can I attend the Merrill Lynch special meeting and vote my shares in person?”
 
Q: What do Bank of America stockholders need to do now?
 
A: After you have carefully read this document and have decided how you wish to vote your shares, please vote promptly by accessing the internet site listed on your proxy card, by calling the toll-free number listed on your proxy card or by submitting your proxy card by mail. If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker. Submitting your proxy card or directing your bank or broker to vote your shares will ensure that your shares are represented and voted at the Bank of America special meeting; see “Can I attend the Bank of America special meeting and vote my shares in person?” If you participate in The Bank of America 401(k) Plan, The Bank of America 401(k) Plan for Legacy Companies or the Countrywide Financial Corporation 401(k) Savings and Investment Plan and your account has investments in shares of Bank of America common stock, you must provide voting instructions to the plan trustees (either via the proxy card or by internet or telephone) in order for your shares to be voted as you instruct. If no voting instructions are received, your shares will not be voted. Your voting instructions will be held in strict confidence.
 
Q: Why is my vote as a Merrill Lynch stockholder important?
 
A: If you do not vote by proxy, telephone or internet or vote in person at the Merrill Lynch special meeting, it will be more difficult for Merrill Lynch to obtain the necessary quorum to hold its special meeting. In addition, your failure to vote, by proxy, telephone, internet or in person, will have the same effect as a vote against adoption of the merger agreement and approval of the related certificate amendment. The merger agreement must be adopted and the related certificate amendment must be approved by the holders of a majority of the outstanding shares of Merrill Lynch common stock entitled to vote at a special meeting. The Merrill Lynch board of directors unanimously recommends that you vote to adopt the merger agreement and approve the related certificate amendment.
 
Q: Why is my vote as a Bank of America stockholder important?
 
A: If you do not vote by proxy, telephone or internet or vote in person at the Bank of America special meeting, it will be more difficult for Bank of America to obtain the necessary quorum to hold its special meeting. In addition, your failure to vote, by proxy telephone, internet or in person, will have the same effect as a vote against the proposal to increase the number of authorized shares of Bank of America common stock. The proposal to increase the number of authorized shares of Bank of America common stock must be approved by the holders of a majority of the votes represented by the outstanding shares of Bank of


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America common stock and Series B Preferred Stock entitled to vote at its special meeting, voting together without regard to class. Under Delaware law, the affirmative vote of a majority of the votes represented by the outstanding shares of Bank of America common stock entitled to vote at the special meeting, counted separately as a class without the Series B Preferred Stock, is also required to increase the number of authorized shares of Bank of America common stock. In addition, the proposals to issue Bank of America common stock in the merger and to amend the Stock Plan each require the votes cast in favor of each such proposal to exceed the votes cast against such proposal at the special meeting, assuming a quorum. The Bank of America board of directors unanimously recommends that you vote to approve the issuance of the common stock in the merger, the increase the number of authorized shares of common stock and the amendment to the Stock Plan.
 
Q: If my shares are held in street name by my broker, will my broker automatically vote my shares for me?
 
A: No.  Your broker cannot vote your shares without instructions from you. You should instruct your broker as to how to vote your shares, following the directions your broker provides to you. Please check the voting form used by your broker. Without instructions, your shares will not be voted, which will have the effect described below.
 
Q: What if I abstain from voting or fail to instruct my broker?
 
A: If you are a Merrill Lynch stockholder and you abstain from voting or fail to instruct your broker to vote your shares and the broker submits an unvoted proxy, a “broker non-vote,” the abstention or broker non-vote will be counted toward a quorum at the Merrill Lynch special meeting, but it will have the same effect as a vote against adoption of the merger agreement and against approval of the related certificate amendment. With respect to the proposal to adjourn the special meeting if necessary or appropriate in order to solicit additional proxies, an abstention will have the same effect as a vote against this proposal. If you fail to instruct your broker to vote your shares your broker may vote your shares in its discretion on this proposal.
 
If you are a Bank of America stockholder, an abstention or broker non-vote will be counted toward a quorum at the Bank of America special meeting, but it will have the same effect as a vote against the proposal to increase the number of authorized shares of Bank of America common stock. Abstentions from voting, as well as broker non-votes, are not treated as votes cast and, therefore, will have no effect on the proposal to approve the issuance of shares of Bank of America common stock in the merger or the proposal to amend the Stock Plan, assuming a quorum.
 
Q: Can I attend the Merrill Lynch special meeting and vote my shares in person?
 
A: Yes.  All holders of Merrill Lynch common stock and exchangeable shares (issued by one of Merrill Lynch’s Canadian subsidiaries, each exchangeable into one share of Merrill Lynch common stock), including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the Merrill Lynch special meeting. Holders of record of Merrill Lynch common stock and exchangeable shares as of their respective record dates can vote in person at the Merrill Lynch special meeting. If you are not a stockholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the Merrill Lynch special meeting. If you plan to attend the Merrill Lynch special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted. Merrill Lynch reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification.
 
Q: Can I attend the Bank of America special meeting and vote my shares in person?
 
A: Yes.  All holders of Bank of America common stock and Series B Preferred Stock, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the Bank of America special meeting. Holders of Bank of America common


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stock and Series B Preferred Stock can vote in person at the Bank of America special meeting. If you are not a stockholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the Bank of America special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted. Bank of America reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification.
 
Q: Will Merrill Lynch be required to submit the merger agreement to its stockholders even if the Merrill Lynch board of directors has withdrawn, modified or qualified its recommendation?
 
A: Yes.  Unless the merger agreement is terminated before the Merrill Lynch special meeting, Merrill Lynch is required to submit the merger agreement to its stockholders even if the Merrill Lynch board of directors has withdrawn, modified or qualified its recommendation, consistent with the terms of the merger agreement.
 
Q: Will Bank of America be required to submit the proposal to issue shares of Bank of America common stock in the merger to its stockholders even if the Bank of America board of directors has withdrawn, modified or qualified its recommendation?
 
A: Yes.  Unless the merger agreement is terminated before the Bank of America special meeting, Bank of America is required to submit the proposal to issue shares of Bank of America common stock in the merger to its stockholders even if the Bank of America board of directors has withdrawn, modified or qualified its recommendation, consistent with the terms of the merger agreement.
 
Q: Is the merger expected to be taxable to Merrill Lynch stockholders?
 
A: The merger is currently intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, and holders of Merrill Lynch common stock are not expected to recognize any gain or loss for United States federal income tax purposes on the exchange of shares of Merrill Lynch common stock for shares of Bank of America common stock in the merger, except with respect to cash received instead of fractional shares of Bank of America common stock.
 
However, as discussed below under “Recent Developments,” under some circumstances Merrill Lynch may issue preferred stock to the U.S. Treasury pursuant to the Treasury’s Capital Purchase Program. Because that issuance would prevent the merger from qualifying as a “reorganization,” both Bank of America and Merrill Lynch have agreed that they would waive the tax opinion conditions to completion of the merger that would otherwise apply and complete the merger as a taxable transaction. If the merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, the merger generally will be a taxable transaction to you, and you will generally recognize gain or loss in an amount equal to the difference, if any, between (i) the sum of the value of the Bank of America common stock plus the amount of any cash received instead of fractional shares of Bank of America common stock and (ii) your adjusted tax basis in the shares of Merrill Lynch common stock exchanged in the merger.
 
You should read “United States Federal Income Tax Consequences of the Merger” beginning on page 97 for a more complete discussion of the United States federal income tax consequences of the merger. Tax matters can be complicated and the tax consequences of the merger to you will depend on your particular tax situation. You should consult your tax advisor to determine the tax consequences of the merger to you.
 
Q: If I am a Merrill Lynch stockholder, can I change or revoke my vote?
 
A: Yes.  Regardless of the method you used to cast your vote, if you are a holder of record, you may change your vote by signing and returning a new proxy card with a later date, by calling the toll-free number listed on the Merrill Lynch proxy card or by accessing the internet site listed on the Merrill Lynch proxy card by 11:59 p.m. Eastern time on December 4, 2008, or by attending the Merrill Lynch special meeting and voting by ballot at the special meeting.


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If you are a Merrill Lynch stockholder of record and wish to revoke rather than change your vote, you must send written, signed revocation to Merrill Lynch & Co., Inc., c/o BroadRidge Financial Services, Registered Issuer Client Services Department, 51 Mercedes Way, Edgewood, NY 11717, which must be received by 11:59 p.m. Eastern time on December 4, 2008. You must include your control number.
 
If you hold your shares in street name, and wish to change or revoke your vote, please refer to the information on the voting instruction form included with these materials and forwarded to you by your bank, broker or other holder of record to see your voting options.
 
Any holder of Merrill Lynch common stock entitled to vote in person at the Merrill Lynch special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence of a stockholder at the special meeting will not constitute revocation of a previously given proxy.
 
Q: If I am a Bank of America stockholder, can I change my vote?
 
A: Yes.  You may revoke any proxy at any time before it is voted by signing and returning a proxy card with a later date, delivering a written revocation letter pursuant to the instructions below, or by attending the Bank of America special meeting in person, notifying the Corporate Secretary and voting by ballot at the special meeting. Bank of America stockholders may send their written revocation letter to Bank of America Corporation, Attention: Corporate Secretary, 101 S. Tryon Street, NC1-002-29-01, Charlotte, North Carolina 28255. If you have voted your shares by telephone or through the internet, you may revoke your prior telephone or internet vote by recording a different vote using telephone or internet voting, or by signing and returning a proxy card dated as of a date that is later than your last telephone or internet vote.
 
Any stockholder entitled to vote in person at the Bank of America special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying the Secretary of Bank of America) of a stockholder at the special meeting will not constitute revocation of a previously given proxy.
 
Q: If I am a Merrill Lynch stockholder with shares represented by stock certificates, should I send in my Merrill Lynch stock certificates now?
 
A: No.  You should not send in your Merrill Lynch stock certificates at this time. After the merger, Bank of America will send you instructions for exchanging Merrill Lynch stock certificates for the merger consideration. Unless Merrill Lynch stockholders specifically request to receive Bank of America stock certificates, the shares of Bank of America stock they receive in the merger will be issued in book-entry form. Please do not send in your stock certificates with your proxy card.
 
Q: When do you expect to complete the merger?
 
A: We currently expect to complete the merger on or after December 31, 2008. However, we cannot assure you when or if the merger will occur. We must first obtain the approvals of Merrill Lynch and Bank of America stockholders at the special meetings and the required regulatory approvals described below in “Regulatory Approvals Required for the Merger.”
 
Q: Whom should I call with questions?
 
A: Merrill Lynch stockholders should call Georgeson Inc., Merrill Lynch’s proxy solicitor, toll-free at (866) 873-6990 about the merger and related transactions. Bank of America stockholders should call Laurel Hill Advisory Group, LLC, Bank of America’s proxy solicitor, toll-free at (866) 889-7083.


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SUMMARY
 
This summary highlights material information from this document. It may not contain all of the information that is important to you. We urge you to carefully read the entire document and the other documents to which we refer in order to fully understand the merger and the related transactions. See “Where You Can Find More Information” on page 123. Each item in this summary refers to the page of this document on which that subject is discussed in more detail. We have included page references parenthetically to direct you to a more complete description of the topics presented in this summary.
 
In the Merger, Merrill Lynch Stockholders Will Have a Right to Receive 0.8595 of a Share of Bank of America Common Stock per Share of Merrill Lynch Common Stock (page 76)
 
We are proposing the merger of Merrill Lynch with MER Merger Corporation, referred to as Merger Sub, which is a newly formed wholly owned subsidiary of Bank of America. If the merger is completed, Merrill Lynch will survive as a consolidated subsidiary of Bank of America, and Merrill Lynch common stock will no longer be publicly traded. Under the terms of the merger agreement, holders of Merrill Lynch common stock will have the right to receive 0.8595 of a share of Bank of America common stock for each share of Merrill Lynch common stock held immediately prior to the merger. Bank of America will not issue any fractional shares of Bank of America common stock in the merger. Holders of Merrill Lynch common stock who would otherwise be entitled to a fractional share of Bank of America common stock will instead receive an amount in cash based on the net proceeds from the sale in the open market by the exchange agent, on behalf of all such holders, of the aggregate fractional shares of Bank of America common stock that would otherwise have been issued.
 
Example: If you hold 100 shares of Merrill Lynch common stock, you will have a right to receive 85 shares of Bank of America common stock and a cash payment instead of the 0.95 shares of Bank of America common stock that you otherwise would have received.
 
What Holders of Merrill Lynch Stock Options and Other Equity-Based Awards Will Receive (page 76)
 
Upon completion of the merger, Merrill Lynch stock options, restricted shares, restricted share units, capital accumulation units, referred to as cap units, and deferred equity units that are outstanding immediately before completion of the merger will become stock options, restricted shares, restricted share units, cap units and deferred equity units, respectively, of or on shares of Bank of America common stock. The number of common shares subject to these stock options, stock appreciation rights, restricted share units, cap units, and deferred equity units, and the exercise price of the Merrill Lynch stock options, will be adjusted based on the exchange ratio of 0.8595. In addition, the Merrill Lynch 1986 Employee Stock Purchase Plan will be assumed by Bank of America in connection with the merger, with Bank of America common stock being substituted for Merrill Lynch common stock.
 
Treatment of Merrill Lynch Preferred Stock in the Merger (page 77)
 
Upon completion of the merger, (i) each share of Merrill Lynch Floating Rate Non-Cumulative Preferred Stock, Series 1, referred to as Merrill Lynch Preferred Stock Series 1, issued and outstanding immediately prior to completion of the merger will be converted into one share of Bank of America Floating Rate Non-Cumulative Preferred Stock, Series 1, referred to as Bank of America Preferred Stock Series 1, (ii) each share of Merrill Lynch Floating Rate Non-Cumulative Preferred Stock, Series 2, referred to as Merrill Lynch Preferred Stock Series 2, issued and outstanding immediately prior to completion of the merger will be converted into one share of Bank of America Floating Rate Non-Cumulative Preferred Stock, Series 2, referred to as Bank of America Preferred Stock Series 2, (iii) each share of Merrill Lynch 6.375% Non-Cumulative Preferred Stock, Series 3, referred to as Merrill Lynch Preferred Stock Series 3, issued and outstanding immediately prior to completion of the merger will be converted into one share of Bank of America 6.375% Non-Cumulative Preferred Stock, Series 3, referred to as Bank of America Preferred Stock Series 3, (iv) each share of Merrill Lynch Floating Rate Non-Cumulative Preferred Stock, Series 4, referred to as Merrill Lynch Preferred Stock Series 4, issued and outstanding immediately prior to completion of the merger will be converted into one share of Bank of America Floating Rate Non-Cumulative Preferred Stock, Series 4, referred to as Bank of America Preferred Stock Series 4, (v) each share of Merrill Lynch Floating Rate Non-


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Cumulative Preferred Stock, Series 5, referred to as Merrill Lynch Preferred Stock Series 5, issued and outstanding immediately prior to completion of the merger will be converted into one share of Bank of America Floating Rate Non-Cumulative Preferred Stock, Series 5, referred to as Bank of America Preferred Stock Series 5, (vi) each share of Merrill Lynch 6.70% Noncumulative Perpetual Preferred Stock, Series 6, referred to as Merrill Lynch Preferred Stock Series 6, issued and outstanding immediately prior to completion of the merger will be converted into one share of Bank of America 6.70% Noncumulative Perpetual Preferred Stock, Series 6, referred to as Bank of America Preferred Stock Series 6, (vii) each share of Merrill Lynch 6.25% Noncumulative Perpetual Preferred Stock, Series 7, referred to as Merrill Lynch Preferred Stock Series 7, issued and outstanding immediately prior to completion of the merger will be converted into one share of Bank of America 6.25% Noncumulative Perpetual Preferred Stock, Series 7, referred to as Bank of America Preferred Stock Series 7, and (viii) each share of Merrill Lynch 8.625% Non-Cumulative Preferred Stock, Series 8, referred to as Merrill Lynch Preferred Stock Series 8, issued and outstanding immediately prior to completion of the merger will be converted into one share of Bank of America 8.625% Non-Cumulative Preferred Stock, Series 8, referred to as Bank of America Preferred Stock Series 8.
 
The terms of the Bank of America Preferred Stock Series 1, Bank of America Preferred Stock Series 2, Bank of America Preferred Stock Series 3, Bank of America Preferred Stock Series 4, Bank of America Preferred Stock Series 5, Bank of America Preferred Stock Series 6, Bank of America Preferred Stock Series 7, and Bank of America Preferred Stock Series 8 will be substantially identical to the terms of the corresponding series of Merrill Lynch preferred stock, except for the additional voting rights described in “The Merger Agreement — Treatment of Merrill Lynch Preferred Stock,” starting on page 77. We sometimes refer to the Bank of America Preferred Stock Series 1, Bank of America Preferred Stock Series 2, Bank of America Preferred Stock Series 3, Bank of America Preferred Stock Series 4, Bank of America Preferred Stock Series 5, Bank of America Preferred Stock Series 6, Bank of America Preferred Stock Series 7, and Bank of America Preferred Stock Series 8, collectively, as the “New Bank of America Preferred Stock.”
 
Each outstanding share of Merrill Lynch non-convertible preferred stock is presently represented by depositary shares, or Merrill Lynch Depositary Shares, that are listed on the New York Stock Exchange and represent (a) with respect to the Merrill Lynch Preferred Stock Series 6 and Merrill Lynch Preferred Stock Series 7, a one-fortieth interest in a share of Merrill Lynch preferred stock and (b) with respect to the Merrill Lynch Preferred Stock Series 1, Merrill Lynch Preferred Stock Series 2, Merrill Lynch Preferred Stock Series 3, Merrill Lynch Preferred Stock Series 4, Merrill Lynch Preferred Stock Series 5 and Merrill Lynch Preferred Stock Series 8, a one-twelve hundredth interest in a share of Merrill Lynch preferred stock.
 
Each share of 9.00% Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock, Series 2, and the 9.00% Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock, Series 3, outstanding immediately prior to the completion of the merger shall remain issued and outstanding and shall have the rights, privileges, powers and preferences as set forth in Merrill Lynch’s certificate of incorporation, as amended by the certificate amendment described herein.
 
Holders of Merrill Lynch preferred stock and Merrill Lynch Depositary Shares are not entitled to vote on the merger or at the special meeting.
 
Treatment of Exchangeable Shares of Merrill Lynch & Co., Canada Ltd. (page 79)
 
In accordance with the terms of the merger agreement, Merrill Lynch is obligated to redeem the exchangeable shares of Merrill Lynch & Co., Canada Ltd., referred to as Merrill Lynch Canada. The documents governing the exchangeable shares provide that, as a result of the merger being proposed, Merrill Lynch Canada has the right to cause the redemption (or repurchase by an affiliate of Merrill Lynch Canada) of the exchangeable shares in accordance with their terms. Merrill Lynch Canada has determined to exercise its right to redeem the exchangeable shares and its affiliate has determined to exercise its overriding right to purchase the exchangeable shares on the redemption date. The redemption date is the later of the fifth Toronto business day following the date of the special meeting and December 4, 2008. On the redemption date, holders of the exchangeable shares will be required to dispose of them in exchange for Merrill Lynch common stock on a one-for-one basis. The holders of exchangeable shares who receive such Merrill Lynch common stock,


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and continue to hold such Merrill Lynch common stock at the time of the completion of the merger, will subsequently receive the merger consideration in the same manner as other holders of Merrill Lynch common stock. The redemption or repurchase of the exchangeable shares will not, however, be conditional upon the completion of the merger.
 
Holders of Merrill Lynch Canada exchangeable shares are entitled to vote on the merger and at the Merrill Lynch special meeting.
 
Stock Option Agreement (page 91)
 
On September 15, 2008, in connection with the merger agreement, Merrill Lynch granted to Bank of America an irrevocable option to purchase, under certain circumstances, up to 19.9% of its outstanding common shares at a price, subject to certain adjustments, of $17.05 per share.
 
The option is not exercisable until and unless specified events relating to a competing business combination offer take place. In order for Bank of America to exercise its stock option, both an “initial” and a “subsequent” triggering event must occur prior to expiration of the option. Initial triggering events include certain events relating to a competing bid for Merrill Lynch, including: (1) board recommendation of, or entering into an agreement for, a competing acquisition transaction (including a merger or an acquisition of 10% or more of Merrill Lynch’s common stock); (2) announcement of an intention to enter into a competing transaction or to withdraw its recommendation of the merger; (3) any person acquiring 10% or more of Merrill Lynch’s common stock; (4) a bona fide competing acquisition proposal for Merrill Lynch is publicly disclosed; (5) breach of the merger agreement after Merrill Lynch is approached by a third-party bidder; or (6) filing by a third party of a notice with a bank regulatory authority regarding approval of a competing transaction. A subsequent triggering event includes any person acquiring 20% or more of the common stock of Merrill Lynch or the events in (1) above at a 20% level.
 
The Merger Is Currently Intended to Be Tax-Free to Merrill Lynch Stockholders as to the Shares of Bank of America Common Stock They Receive (page 97)
 
The merger is currently intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to our respective obligations to complete the merger that each of Bank of America and Merrill Lynch receive a legal opinion to that effect. As a reorganization, the merger generally will be tax-free to you for United States federal income tax purposes as to the shares of Bank of America common stock you receive in the merger, except for any gain or loss that may result from the receipt of cash instead of fractional shares of Bank of America common stock that you would otherwise be entitled to receive. However, as discussed below under “Recent Developments,” under some circumstances Merrill Lynch may issue preferred stock to the U.S. Treasury pursuant to the Treasury’s Capital Purchase Program. Because that issuance would prevent the merger from qualifying as a “reorganization,” both Bank of America and Merrill Lynch have agreed that they would waive the tax opinion conditions to completion of the merger that would otherwise apply and complete the merger as a transaction that will be taxable to you. If the merger is completed as a taxable transaction, you will generally recognize gain or loss in an amount equal to the difference, if any, between (i) the sum of the value of the Bank of America common stock plus the amount of any cash received instead of fractional shares of Bank of America common stock and (ii) your adjusted tax basis in the shares of Merrill Lynch common stock exchanged in the merger.
 
The United States federal income tax consequences described above may not apply to all holders of Merrill Lynch common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.
 
Comparative Market Prices and Share Information (pages 21 and 117)
 
Bank of America common stock is quoted on the NYSE under the symbol “BAC.” Merrill Lynch common stock is quoted on the NYSE under the symbol “MER.” The following table shows the closing sale prices of Bank of America common stock and Merrill Lynch common stock as reported on the NYSE on September 12, 2008, the last trading day before we announced the merger, and on October 30, 2008, the last practicable trading day before the distribution of this document. This table also shows the implied value of the merger consideration


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proposed for each share of Merrill Lynch common stock, which we calculated by multiplying the closing price of Bank of America common stock on those dates by the exchange ratio of 0.8595.
 
                         
                Implied Value of
 
                One Share of
 
    Bank of America
    Merrill Lynch
    Merrill Lynch
 
    Common Stock     Common Stock     Common Stock  
 
At September 12, 2008
  $ 33.74     $ 17.05     $ 29.00  
At October 30, 2008
  $ 22.78     $ 17.78     $ 19.58  
 
The market price of Bank of America common stock and Merrill Lynch common stock will fluctuate prior to the merger. Merrill Lynch and Bank of America stockholders are urged to obtain current market quotations for the shares prior to making any decision with respect to the merger.
 
Merrill Lynch, Pierce, Fenner & Smith Incorporated Has Provided an Opinion to the Merrill Lynch Board of Directors Regarding the Exchange Ratio (page 56)
 
Merrill Lynch’s financial advisor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, referred to as MLPFS, delivered its opinion to the Merrill Lynch board of directors to the effect that, as of September 14, 2008 and based upon and subject to the various considerations described in its written opinion, the exchange ratio in the merger was fair, from a financial point of view, to the holders of Merrill Lynch common stock.
 
The full text of the written opinion of MLPFS, dated September 14, 2008, which sets forth the assumptions made, procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by MLPFS in rendering its opinion, is attached hereto as Appendix E. Holders of Merrill Lynch common stock are urged to, and should, read the opinion carefully and in its entirety. MLPFS has not assumed any responsibility for updating or revising its opinion based circumstances or events occurring after the date thereof.
 
MLPFS provided its opinion for the use and benefit of the Merrill Lynch board of directors in connection with its consideration of the merger. The MLPFS opinion addresses only the fairness, from a financial point of view, of the exchange ratio in the merger as of September 14, 2008, the date of the MLPFS opinion. The MLPFS opinion does not address the merits of the underlying decision by Merrill Lynch to engage in the merger and does not constitute a recommendation as to how any holder of Merrill Lynch common stock should vote on the proposed merger or any other matter.
 
J.C. Flowers & Co. LLC and Fox-Pitt Kelton Cochran Caronia Waller Have Each Provided an Opinion to the Bank of America Board of Directors Regarding the Exchange Ratio (page 63)
 
Bank of America’s financial advisors, Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC, referred to as FPK, and J.C. Flowers & Co. LLC, referred to as J.C. Flowers, each delivered an opinion to the board of directors of Bank of America to the effect that, as of September 14, 2008, and based upon and subject to the various assumptions, methodologies, limitations and considerations described in such opinion, the exchange ratio to be paid by Bank of America in the merger was fair, from a financial point of view, to Bank of America.
 
The full text of FPK’s written opinion, dated September 14, 2008, is attached hereto as Appendix D. The full text of J.C. Flowers’ written opinion, dated September 14, 2008, is attached hereto as Appendix C. Bank of America stockholders are urged to read each of these opinions carefully and in its entirety for information regarding the assumptions made, methodologies used, factors considered and limitations upon the review undertaken by each of FPK and J.C. Flowers in rendering its opinion. Neither FPK nor J.C. Flowers has assumed any responsibility for updating or revising its opinion based on circumstances or events occurring after the date thereof.
 
Each of FPK and J.C. Flowers provided its opinion for the information of and assistance to the board of directors of Bank of America in connection with its consideration of the merger. Each opinion addresses only the fairness to Bank of America, from a financial point of view, of the exchange ratio to be paid by Bank of America in the merger as of September 14, 2008, the date of each opinion. Neither opinion addresses the underlying business decision of Bank of America to proceed with or effect the merger and related transactions or the relative merits of the merger as compared to other transactions that may have been available to Bank of


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America. Neither opinion constitutes a recommendation to any stockholder of Bank of America as to how such stockholder should vote with respect to the issuance of Bank of America common stock or any other matter.
 
The Merrill Lynch Board of Directors Unanimously Recommends that Merrill Lynch Stockholders Vote “FOR” Adoption of the Merger Agreement and Approval of the Related Certificate Amendment (pages 33 and 51)
 
The Merrill Lynch board of directors believes that the merger is in the best interests of Merrill Lynch and its stockholders and has unanimously approved the merger and the merger agreement and the related certificate amendment. The Merrill Lynch board of directors unanimously recommends that Merrill Lynch stockholders vote “FOR” adoption of the merger agreement and “FOR” approval of the related certificate amendment.
 
To review the background of, and Merrill Lynch’s reasons for, the merger, as well as certain risks related to the merger, see pages 49 through 51, pages 51 through 54, and 23, respectively.
 
The Bank of America Board of Directors Unanimously Recommends that Bank of America Stockholders Vote “FOR” the Approval of the Issuance of Shares of Bank of America Common Stock in the Merger, the Increase in the Number of Authorized Shares of Common Stock and the Amendment to the Stock Plan (pages 29 and 54)
 
The Bank of America board of directors believes that the merger is in the best interests of Bank of America and its stockholders and has unanimously approved the merger and the merger agreement. The Bank of America board of directors unanimously recommends that Bank of America stockholders vote “FOR” the proposal to issue shares of Bank of America common stock in the merger.
 
The Bank of America board of directors also has unanimously approved the proposals to increase the authorized number of shares of Bank of America common stock and amend the Stock Plan. The Bank of America board of directors determined that the proposals are advisable and in the best interests of Bank of America and its stockholders. The Bank of America board of directors unanimously recommends that you vote “FOR” the proposals to increase the authorized number of shares of Bank of America common stock and “FOR” the amendment to the Stock Plan. The approvals of these proposals are not conditions to the consummation of the merger.
 
To review the background of, and Bank of America’s reasons for, the merger, as well as certain risks related to the merger, see pages 49 through 51, pages 54 through 55, and 23, respectively.
 
Merrill Lynch’s Executive Officers and Directors Have Financial Interests in the Merger That Differ From Your Interests (page 73)
 
Merrill Lynch’s executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of Merrill Lynch stockholders. The Merrill Lynch board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending to Merrill Lynch stockholders that the merger agreement be adopted.
 
The Merrill Lynch equity compensation plans and award agreements generally provide for, with respect to employees, the vesting and settlement of equity-based awards upon a termination of a grantee’s employment without “cause” or for “good reason” (as such terms are defined in the applicable equity compensation plan or letter agreement) in connection with the merger and, with respect to non-employee directors, the settlement of equity-based awards upon completion of the merger. Certain equity compensation awards granted to John Thain and Nelson Chai vest automatically upon a change of control. Assuming that the merger is completed on December 31, 2008, the aggregate cash value of unvested or unexercisable stock-based awards as of such date that would be settled or become exercisable due to the completion of the merger that are held as of the date hereof by each of Messrs. Thain, Chai, Gregory Fleming and Robert McCann, each of Merrill Lynch’s three other executive officers (as a group) and Merrill Lynch’s nine non-employee directors (as a group), respectively, is approximately $5,221,176, $1,174,765, $0, $0, $0 and $2,005,813, and the aggregate cash value of unvested or unexercisable stock-based awards as of such date that would not be settled or become exercisable upon completion of the merger but would be settled or become exercisable upon a qualifying termination immediately following the merger that are held as of the date hereof by each of Messrs. Thain, Chai, Fleming and McCann, each of Merrill Lynch’s three


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other executive officers (as a group) and Merrill Lynch’s nine non-employee directors (as a group), respectively, is approximately $3,214,985, $1,144,789, $11,361,207, $9,597,788, $34,555,074 and $0. In both cases, the estimates are based on the closing price of Bank of America’s common stock as of October 30, 2008, and attribute no value to any stock options since all stock options held by these executives would be underwater based on that price. Upon a termination without cause, certain executive officers have the right to retain their options and exercise them until the expiration of their stated term.
 
In connection with entering into the merger agreement, Bank of America agreed that it would work together in good faith with respect to the treatment of certain outstanding Merrill Lynch equity-based awards of certain executive officers of Merrill Lynch, including Mr. Thain. This agreement was in furtherance of discussions held earlier in the day and about which the Merrill Lynch board of directors was informed and was advised that any changes to such Merrill Lynch equity-based awards would be subject to the approval of the Management Development & Compensation Committee of the board of directors of Merrill Lynch. Bank of America has engaged in discussions with each of Messrs. Thain, Fleming, McCann and Montag concerning the terms of their employment following completion of the merger and has discussed certain compensatory arrangements with each of them. These proposed arrangements seek to ensure continued service and align the executives’ interests with the combined company after consummation of the merger. The parties have not entered into any definitive agreements, and there can be no assurance that agreement will be reached with any of the four executives. Any agreements that are entered into will not become effective unless and until the merger is completed.
 
Merrill Lynch executive officers and directors also have rights to indemnification and directors’ and officers’ liability insurance that will survive completion of the merger. Please see “The Merger — Merrill Lynch’s Officers and Directors Have Financial Interests in the Merger” beginning on page 73 for information about these financial interests.
 
Holders of Merrill Lynch Common Stock and Preferred Stock Do Not Have Appraisal Rights (page 69)
 
Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Appraisal rights are not available in all circumstances, and exceptions to these rights are provided under the Delaware General Corporation Law. As a result of one of these exceptions, the holders of Merrill Lynch common stock and preferred stock are not entitled to appraisal rights in the merger.
 
Conditions That Must Be Satisfied or Waived for the Merger to Occur (page 88)
 
Currently, we expect to complete the merger on or after December 31, 2008. As more fully described in this document and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include, among others, receipt of the requisite approvals of each company’s stockholders, the receipt of all required regulatory approvals (including approval by the Board of Governors of the Federal Reserve System), and (in most circumstances) the receipt of legal opinions by each company regarding the United States federal income tax treatment of the merger.
 
The merger is not conditioned upon the approval of the amendment to the Stock Plan or the adoption of the amendment to the Bank of America amended and restated certificate of incorporation to increase the number of authorized shares of Bank of America common stock.
 
We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
 
Termination of the Merger Agreement (page 89)
 
Merrill Lynch and Bank of America may mutually agree to terminate the merger agreement before completing the merger, even after stockholder approval, as long as the termination is approved by each of the Merrill Lynch and Bank of America boards of directors.


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In addition, either Merrill Lynch or Bank of America may decide to terminate the merger agreement, even after stockholder approval,
 
  •  if a governmental entity issues a non-appealable final order prohibiting the merger;
 
  •  if a governmental entity which must grant a regulatory approval as a condition to the merger denies such approval of the merger and such action has become final and non-appealable;
 
  •  if the other party breaches the merger agreement in a way that would entitle the party seeking to terminate the agreement not to consummate the merger, subject to the right of the breaching party to cure the breach within 30 days following written notice (unless it is not possible due to the nature or timing of the breach for the breaching party to cure the breach);
 
  •  if the other party has committed a breach in any material respect of its obligation to use reasonable best efforts to obtain stockholder approval;
 
  •  if the merger has not been completed by September 15, 2009, unless the reason the merger has not been completed by that date is a breach of the merger agreement by the company seeking to terminate the merger agreement; or
 
  •  if Merrill Lynch stockholders do not adopt the merger agreement at the Merrill Lynch special meeting or if Bank of America stockholders do not approve the issuance of Bank of America common stock in the merger at the Bank of America special meeting.
 
Bank of America may terminate the merger agreement if the Merrill Lynch board of directors withdraws or adversely changes its recommendation of the merger, recommends a competing takeover proposal to acquire Merrill Lynch or fails to recommend to Merrill Lynch stockholders that they reject any other competing tender offer or exchange offer or if Merrill Lynch breaches its agreement not to solicit other offers. The stock option agreement remains in effect if the merger agreement is terminated. For a description of the stock option agreement, please refer to “Stock Option Agreement,” beginning on page 91.
 
Regulatory Approvals Required for the Merger (page 70)
 
Both Merrill Lynch and Bank of America have agreed to use reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. These approvals include approval from or notices to the Board of Governors of the Federal Reserve System, referred to as the Federal Reserve Board, the Securities and Exchange Commission, referred to as the SEC, the Financial Industry Regulatory Authority, referred to as FINRA, the Federal Energy Regulatory Commission, referred to as FERC, the Financial Services Authority, referred to as FSA, the Financial Services Agency of Japan, the Commodity Futures Trading Commission, referred to as the CFTC, the Department of Justice, referred to as the DOJ, the Federal Trade Commission, referred to as the FTC, the Federal Deposit Insurance Corporation, referred to as the FDIC, the Utah Department of Financial Institutions, the New York Stock Exchange, referred to as the NYSE, the New York State Banking Department, various state and foreign securities, banking, consumer finance, mortgage banking and insurance authorities, various self-regulatory organizations, the filing of a joint proxy statement with the SEC, filing of a certificate of Merger with the Secretary of State of Delaware, any notices to or filings with the Small Business Administration, referred to as the SBA, and various other federal, state and foreign regulatory authorities or any courts, administrative agencies or commissions or other governmental authorities. Bank of America and Merrill Lynch have completed, or will complete, the filing of applications and notifications to obtain the required regulatory approvals. Although we do not know of any reason why we cannot obtain these regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them.
 
Board of Directors and Management of Bank of America following Completion of the Merger (page 69)
 
Upon completion of the merger, the board of directors of Bank of America will consist of those directors serving immediately prior to the completion of the merger and three directors to be mutually agreed upon by Bank of America and Merrill Lynch from among the people serving as directors of Merrill Lynch immediately prior to the completion of the merger.


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The Rights of Merrill Lynch Stockholders will Change as a Result of the Merger (page 100)
 
The rights of Merrill Lynch stockholders will change as a result of the merger due to differences in Bank of America’s and Merrill Lynch’s governing documents. This document contains descriptions of stockholder rights under each of the Bank of America and Merrill Lynch governing documents, and describes the material differences between them.
 
Bank of America will Hold its Special Meeting on December 5, 2008 (page 27)
 
The Bank of America special meeting will be held on December 5, 2008, at 11:00 a.m., local time, at in the Palmetto Ballroom of the International Trade Center at 200 North College Street, Charlotte, NC. At the special meeting, Bank of America stockholders will be asked to:
 
  •  approve the issuance of Bank of America common stock in the merger;
 
  •  approve the amendment to the Stock Plan;
 
  •  approve a proposal to adopt an amendment to the Bank of America amended and restated certificate of incorporation, to increase the number of authorized shares of Bank of America common stock from 7.5 billion to 10 billion; and
 
  •  approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposals.
 
Record Date.  Only holders of record at the close of business October 10, 2008, will be entitled to vote at the special meeting. Each share of Bank of America common stock and Series B Preferred Stock is entitled to one vote. Holders of common stock and Series B Preferred Stock vote together without regard to class. As of the record date of October 10, 2008, there were 5,021,554,382 shares of Bank of America common stock and 7,667 shares of Series B Preferred Stock entitled to vote at the special meeting.
 
Required Vote.  Approval of the issuance of shares of Bank of America common stock in the merger and the amendment to the Stock Plan each requires the votes cast in favor of each such proposal to exceed the votes cast against such proposal at the special meeting by the holders of the Bank of America common stock and Series B Preferred Stock, voting together without regard to class, assuming a quorum. Because the required vote is based on the votes cast in favor of such proposal exceeding the votes cast against such proposal, your failure to vote, a broker non-vote or an abstention will not be treated as a vote cast and, therefore, will have no effect on these two proposals, assuming a quorum.
 
Approval of the proposal to increase the number of authorized shares of Bank of America common stock requires the affirmative vote of a majority of the votes represented by the outstanding shares of Bank of America common stock and Series B Preferred Stock entitled to vote at the special meeting, voting together without regard to class. Under Delaware law, the affirmative vote of a majority of the votes represented by the outstanding shares of Bank of America common stock entitled to vote at the special meeting, counted separately as a class without the Series B Preferred Stock, is also required to increase the number of authorized shares of Bank of America common stock. Because approval is based on the affirmative vote of a majority of votes represented by shares outstanding, the failure to vote, a broker non-vote or an abstention will have the same effect as a vote against the proposal.
 
If there is a quorum, approval of any necessary or appropriate adjournment of the special meeting requires the votes cast in favor of such proposal to exceed the votes cast against such proposal at the special meeting by the holders of the Bank of America common stock and Series B Preferred Stock, voting together without regard to class. In the absence of a quorum, the special meeting may be adjourned by the approval of the majority of the voting power of the outstanding shares present and entitled to vote at the special meeting.
 
As of the record date, directors and executive officers of Bank of America and their affiliates had the right to vote 36,507,724 shares of Bank of America common stock and no shares of Series B Preferred Stock, or 0.73% of the outstanding Bank of America shares entitled to be voted at the special meeting. We currently


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expect that each of these individuals will vote their shares of Bank of America common stock in favor of the proposals to be presented at the special meeting.
 
Merrill Lynch will Hold its Special Meeting on December 5, 2008 (page 31)
 
The Merrill Lynch special meeting will be held on December 5, 2008, at 8:00 a.m., local time, at Merrill Lynch Headquarters at 4 World Financial Center, New York, NY. At the special meeting, Merrill Lynch stockholders will be asked to:
 
  •  adopt the merger agreement;
 
  •  approve the related certificate amendment; and
 
  •  approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposals.
 
Record Date.  Only holders of record of Merrill Lynch common stock at the close of business October 10, 2008 and holders of record of exchangeable shares at the close of business October 21, 2008, will be entitled to vote at the special meeting. Each share of Merrill Lynch common stock and each exchangeable share (issued by Merrill Lynch Canada and exchangeable into one share of Merrill Lynch common stock) is entitled to one vote. As of the record date of October 10, 2008, there were 1,598,690,442 shares of Merrill Lynch common stock and as of the record date of October 21, 2008, there were 1,436,244 shares of exchangeable stock entitled to vote at the special meeting.
 
Required Vote.  Adoption of the merger agreement and approval of the related certificate amendment each require the affirmative vote of the holders of a majority of the outstanding shares of Merrill Lynch common stock entitled to vote. Because approval is based on the affirmative vote of a majority of shares outstanding, a Merrill Lynch stockholder’s failure to vote, a broker non-vote or an abstention will have the same effect as a vote against adoption of the merger agreement and approval of the related certificate amendment.
 
Approval of any necessary adjournment of the special meeting may be obtained by the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the special meeting. Because approval of such adjournment is based on the affirmative vote of a majority of shares present or represented, abstentions will have the same effect as a vote against this proposal. If you are a registered holder, failure to vote by proxy or in person will have the same effect as a vote against this proposal. If you hold in street name, your broker may vote your shares in its discretion on this proposal.
 
As of the October 10, 2008 record date, directors and executive officers of Merrill Lynch had the right to vote 2,410,356 shares of Merrill Lynch common stock, or 0.15% of the outstanding Merrill Lynch common stock entitled to be voted at the special meeting. We currently expect that each of these individuals will vote their shares of Merrill Lynch common stock in favor of the proposals to be presented at the special meeting.
 
Information about the Companies (page 34)
 
Bank of America Corporation
 
Bank of America Corporation is a Delaware corporation, a bank holding company and a financial holding company under U.S. federal law. Bank of America is one of the world’s largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,000 retail banking offices, more than 18,000 ATMs and award-winning online banking with nearly 24 million active users. The company serves clients in 175 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 80 percent of the Fortune Global 500. As of June 30, 2008, Bank of America had total consolidated assets of approximately $1.7 trillion, total consolidated deposits of approximately $785 billion and total consolidated stockholders’ equity of


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approximately $163 billion. Bank of America is also the parent company of Countrywide Financial Corporation, which Bank of America acquired on July 1, 2008. The principal executive offices of Bank of America are located in the Bank of America Corporate Center, 100 N. Tryon Street, Charlotte, North Carolina 28255, and its telephone number is (704) 386-5681.
 
Additional information about Bank of America and its subsidiaries is included in documents incorporated by reference in this document. See “Where You Can Find More Information” on page 123.
 
MER Merger Corporation
 
Merger Sub is a Delaware corporation and a wholly owned subsidiary of Bank of America and was formed solely for the purpose of consummating the merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. The principal executive offices of Merger Sub are located in the Bank of America Corporate Center, 100 N. Tryon Street, Charlotte, North Carolina, and its telephone number is (704) 386-5681.
 
Merrill Lynch & Co., Inc.
 
Merrill Lynch was formed in 1914 and became a publicly traded company on June 23, 1971. In 1973, it created the holding company, Merrill Lynch & Co., Inc., a Delaware corporation that, through its subsidiaries, is one of the world’s leading capital markets, advisory and wealth management companies with offices in 40 countries and territories and total client assets of approximately $1.6 trillion at June 27, 2008. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes, and it serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. In addition, Merrill Lynch owns a 45% voting interest and approximately half of the economic interest of BlackRock, Inc., one of the world’s largest publicly traded investment management companies with approximately $1.4 trillion in assets under management at June 30, 2008. The principal executive offices of Merrill Lynch are located at 4 World Financial Center, New York, New York 10080, and its telephone number is (212) 449-1000.
 
Additional information about Merrill Lynch and its subsidiaries is included in documents incorporated by reference in this document. See “Where You Can Find More Information” on page 123.


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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF BANK OF AMERICA
 
Set forth below are highlights derived from Bank of America’s audited consolidated financial statements as of and for the years ended December 31, 2003 through 2007, and Bank of America’s unaudited consolidated financial statements as of and for the six months ended June 30, 2008 and 2007. The results of operations for the six months ended June 30, 2008, are not necessarily indicative of the results of operations for the full year or any other interim period. Bank of America management prepared the unaudited information on the same basis as it prepared Bank of America’s audited consolidated financial statements. In the opinion of Bank of America management, this information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of this data for those dates. You should read this information in conjunction with Bank of America’s consolidated financial statements and related notes included in Bank of America’s Annual Report on Form 10-K for the year ended December 31, 2007, and Bank of America’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, which are incorporated by reference in this document and from which this information is derived. See “Where You Can Find More Information” on page 123 and “Recent Developments” on page 35.
 
Bank of America — Summary of Consolidated Financial Data
 
                                                         
    Six Months Ended
       
    June 30,     Years Ended December 31,  
    2008     2007     2007     2006     2005     2004     2003  
    (Dollars in millions, except per share information)  
 
Income statement
                                                       
Net interest income
  $ 20,612     $ 16,659     $ 34,433     $ 34,591     $ 30,737     $ 27,960     $ 20,505  
Noninterest income
    16,706       21,181       31,886       37,989       26,438       22,729       18,270  
Total revenue, net of interest expense
    37,318       37,840       66,319       72,580       57,175       50,689       38,775  
Provision for credit losses
    11,840       3,045       8,385       5,010       4,014       2,769       2,839  
Noninterest expense, before merger and restructuring charges
    18,377       18,126       36,600       34,792       28,269       26,394       20,155  
Merger and restructuring charges
    382       186       410       805       412       618        
Income before income taxes
    6,719       16,483       20,924       31,973       24,480       20,908       15,781  
Income tax expense
    2,099       5,467       5,942       10,840       8,015       6,961       5,019  
Net income
    4,620       11,016       14,982       21,133       16,465       13,947       10,762  
Average common shares issued and outstanding (in thousands)
    4,431,870       4,426,046       4,423,579       4,526,637       4,008,688       3,758,507       2,973,407  
Average diluted common shares issued and outstanding (in thousands)
    4,460,633       4,487,224       4,480,254       4,595,896       4,068,140       3,823,943       3,030,356  
                                                         
Performance ratios
                                                       
Return on average assets
    0.53 %     1.44 %     0.94 %     1.44 %     1.30 %     1.34 %     1.44 %
Return on average common stockholders’ equity
    6.06       16.86       11.08       16.27       16.51       16.47       21.50  
Total ending equity to total ending assets
    9.48       8.85       8.56       9.27       7.86       9.03       6.76  
Total average equity to total average assets
    8.98       8.66       8.53       8.90       7.86       8.12       6.69  
Dividend payout
    134.71       45.71       72.26       45.66       46.61       46.31       39.76  
                                                         
Per common share data
                                                       
Earnings
  $ 0.96     $ 2.47     $ 3.35     $ 4.66     $ 4.10     $ 3.71     $ 3.62  
Diluted earnings
    0.95       2.44       3.30       4.59       4.04       3.64       3.55  
Dividends paid
    1.28       1.12       2.40       2.12       1.90       1.70       1.44  
Book value
    31.11       29.95       32.09       29.70       25.32       24.70       16.86  
                                                         
Market price per share of common stock
                                                       
Closing
  $ 23.87     $ 48.89     $ 41.26     $ 53.39     $ 46.15     $ 46.99     $ 40.22  
High closing
    45.03       54.05       54.05       54.90       47.08       47.44       41.77  
Low closing
    23.87       48.80       41.10       43.09       41.57       38.96       32.82  
                                                         
Market capitalization
  $ 106,292     $ 216,922     $ 183,107     $ 238,021     $ 184,586     $ 190,147     $ 115,926  
                                                         


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    Six Months Ended
       
    June 30,     Years Ended December 31,  
    2008     2007     2007     2006     2005     2004     2003  
    (Dollars in millions, except per share information)  
 
Average balance sheet
                                                       
Total loans and leases
  $ 877,150     $ 727,193     $ 776,154     $ 652,417     $ 537,218     $ 472,617     $ 356,220  
Total assets
    1,759,770       1,541,644       1,602,073       1,466,681       1,269,892       1,044,631       749,104  
Total deposits
    786,813       691,898       717,182       672,995       632,432       551,559       406,233  
Long-term debt
    201,828       153,591       169,855       130,124       97,709       92,303       67,077  
Common stockholders’ equity
    140,849       130,718       133,555       129,773       99,590       84,584       50,035  
Total stockholders’ equity
    158,078       133,569       136,662       130,463       99,861       84,815       50,091  
                                                         
Asset quality
                                                       
Allowance for credit losses(1)
  $ 17,637     $ 9,436     $ 12,106     $ 9,413     $ 8,440     $ 9,028     $ 6,579  
Nonperforming assets measured at historical cost(2)
    9,749       2,392       5,948       1,856       1,603       2,455       3,021  
Allowance for loan and lease losses as a percentage of total loans and leases outstanding measured at historical cost(3)
    1.98 %     1.20 %     1.33 %     1.28 %     1.40 %     1.65 %     1.66 %
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases measured at historical cost
    187       397       207       505       532       390       215  
Net charge-offs
  $ 6,334     $ 2,922     $ 6,480     $ 4,539     $ 4,562     $ 3,113     $ 3,106  
Net charge-offs as a percentage of average loans and leases outstanding measured at historical cost (3,4)
    1.46 %     0.81 %     0.84 %     0.70 %     0.85 %     0.66 %     0.87 %
Nonperforming loans and leases as a percentage of total loans and leases outstanding measured at historical cost(3)
    1.06       0.30       0.64       0.25       0.26       0.42       0.77  
Nonperforming assets as a percentage of total loans, leases and foreclosed properties(2,3)
    1.13       0.32       0.68       0.26       0.28       0.47       0.81  
Ratio of the allowance for loan and lease losses at period end to net charge-offs(4)
    1.34       1.54       1.79       1.99       1.76       2.77       1.98  
                                                         
Capital ratios (period end)
                                                       
Risk-based capital:
                                                       
Tier 1
    8.25 %     8.52 %     6.87 %     8.64 %     8.25 %     8.20 %     8.02 %
Total
    12.60       12.11       11.02       11.88       11.08       11.73       12.05  
Tier 1 Leverage
    6.09       6.33       5.04       6.36       5.91       5.89       5.86  
 
 
(1) Includes the allowance for loan and lease losses, and the reserve for unfunded lending commitments.
 
(2) Balances and ratios do not include nonperforming loans held-for-sale included in other assets and nonperforming available-for-sale debt securities.
 
(3) Ratios do not include loans measured at fair value in accordance with Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” at and for the year ended December 31, 2007 and at and for the periods ended June 30, 2008 and 2007.
 
(4) Net charge-off ratios for the six month periods are calculated on an annualized basis.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF MERRILL LYNCH
 
Set forth below are highlights derived from Merrill Lynch’s audited consolidated financial data as of and for the years ended on the last Friday of 2003 through 2007 and Merrill Lynch’s unaudited consolidated financial data as of and for the six months ended June 27, 2008, and June 29, 2007. The results of operations for the six months ended June 27, 2008, are not necessarily indicative of the results of operations for the full year or any other interim period. The unaudited information was prepared on the same basis as Merrill Lynch’s audited consolidated financial statements. In the opinion of Merrill Lynch management, this information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of this data for those dates. You should read this information in conjunction with Merrill Lynch’s consolidated financial statements and related notes incorporated by reference within Merrill Lynch’s Annual Report on Form 10-K for the year ended December 28, 2007, and Merrill Lynch’s Quarterly Report on Form 10-Q for the quarter ended June 27, 2008, which are incorporated by reference in this document and from which this information is derived. See “Where You Can Find More Information” on page 123 and “Recent Developments” on page 35.
 
Merrill Lynch & Co., Inc. — Summary of Consolidated Financial Data
 
                                                         
    Six Months Ended     Years Ended Last Friday in December  
    June 27,
    June 29,
    2007
    2006
    2005
    2004
    2003
 
    2008     2007     (52 weeks)     (52 weeks)     (52 weeks)     (53 weeks)     (52 weeks)  
    (Dollars in millions, except per share amounts)  
 
Results of Operations
                                                       
Total revenues
  $ 18,742     $ 44,541     $ 62,675     $ 69,352     $ 46,848     $ 31,916     $ 27,392  
Less interest expense
    17,924       25,479       51,425       35,571       21,571       10,416       7,844  
                                                         
Revenues, net of interest expense
    818       19,062       11,250       33,781       25,277       21,500       19,548  
Noninterest expenses
    12,230       13,335       24,081       23,971       18,516       15,992       14,474  
                                                         
Pre-tax (loss)/earnings from continuing operations
    (11,412 )     5,727       (12,831 )     9,810       6,761       5,508       5,074  
Income tax (benefit)/expense
    (4,809 )     1,687       (4,194 )     2,713       1,946       1,244       1,341  
                                                         
Net (loss)/earnings from continuing operations
  $ (6,603 )   $ 4,040     $ (8,637 )   $ 7,097     $ 4,815     $ 4,264     $ 3,733  
                                                         
Pre-tax earnings from discontinued operations
  $ (57 )   $ 391     $ 1,397     $ 616     $ 470     $ 327     $ 146  
Income tax expense (benefit)
    (44 )     134       537       214       169       155       43  
                                                         
Net (loss)/earnings from discontinued operations
  $ (13 )   $ 257     $ 860     $ 402     $ 301     $ 172     $ 103  
                                                         
Net (loss)/earnings applicable to common stockholders(1)
  $ (7,027 )   $ 4,173     $ (8,047 )   $ 7,311     $ 5,046     $ 4,395     $ 3,797  
Financial Position (period end)
                                                       
Total assets
  $ 966,210     $ 1,076,324     $ 1,020,050     $ 841,299     $ 681,015     $ 628,098     $ 480,233  
Short-term borrowings(2)
    282,711       398,759       316,545       284,226       221,389       180,058       111,727  
Deposits
    100,458       82,801       103,987       84,124       80,016       79,746       79,457  
Long-term borrowings
    270,436       226,016       260,973       181,400       132,409       119,513       85,178  
Junior subordinated notes (related to trust preferred securities)
    5,193       4,403       5,154       3,813       3,092       3,092       3,203  
Total stockholders’ equity
    34,778       42,191       31,932       39,038       35,600       31,370       28,884  
Common Share Data (in thousands, except per share amounts)
                                                       
(Loss)/earnings per share:
                                                       
Basic (loss)/earnings per common share from continuing operations
  $ (7.17 )   $ 4.67     $ (10.73 )   $ 7.96     $ 5.32     $ 4.62     $ 4.10  
Basic (loss)/earnings per common share from discontinued operations
    (0.01 )     0.31       1.04       0.46       0.34       0.19       0.12  
                                                         
Basic (loss)/earnings per common share
  $ (7.18 )   $ 4.98     $ (9.69 )   $ 8.42     $ 5.66     $ 4.81     $ 4.22  
                                                         


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    Six Months Ended     Years Ended Last Friday in December  
    June 27,
    June 29,
    2007
    2006
    2005
    2004
    2003
 
    2008     2007     (52 weeks)     (52 weeks)     (52 weeks)     (53 weeks)     (52 weeks)  
    (Dollars in millions, except per share amounts)  
 
Diluted (loss)/earnings per common share from continuing operations
  $ (7.17 )   $ 4.22     $ (10.73 )   $ 7.17     $ 4.85     $ 4.21     $ 3.77  
Diluted (loss)/earnings per common share from discontinued operations
    (0.01 )     0.28       1.04       0.42       0.31       0.17       0.10  
                                                         
Diluted (loss)/earnings per common share
  $ (7.18 )   $ 4.50     $ (9.69 )   $ 7.59     $ 5.16     $ 4.38     $ 3.87  
                                                         
Weighted-average shares outstanding:
                                                       
Basic
    978,463       837,551       830,415       868,095       890,744       912,935       900,711  
Diluted
    978,463       926,778       830,415       962,962       977,736       1,003,779       980,947  
Shares outstanding at period-end
    985,376       862,559       939,112       867,972       919,201       931,826       949,907  
Book value per share
  $ 21.43     $ 43.55     $ 29.34     $ 41.35     $ 35.82     $ 32.99     $ 29.96  
Dividends paid per share
    0.70       0.70       1.40       1.00       0.76       0.64       0.64  
Financial Ratios
                                                       
Pre-tax profit margin from continuing operations
    N/M       30.0 %     N/M       29.0 %     26.7 %     25.6 %     26.0 %
Return on average assets
    N/M       0.4       N/M       0.9       0.7       0.8       0.8  
Return on average common stockholders’ equity from continuing operations
    N/M       21.4       N/M       20.1       15.0       13.8       14.4  
Other Statistics
                                                       
Full-time employees(3)
    60,000       61,900       64,200       56,200       54,600       50,600       48,100  
 
 
N/M = not meaningful
 
(1) Net(loss)/earnings less preferred stock dividends.
 
(2) Consists of payables under repurchase agreements and securities loaned transactions and short-term borrowings.
 
(3) Excludes full-time employees on salary continuation severance of 2,800 and 300 at June 27, 2008 and June 29, 2007, and 700, 100, 200, 100 and 200 at the last Friday in December 2007, 2006, 2005, 2004, and 2003, respectively.

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UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION
 
The following table shows unaudited pro forma combined financial information about the financial condition and results of operations, including per share data and financial ratios, after giving effect to the merger. The unaudited pro forma financial information assumes that the merger is accounted for under the purchase method of accounting with Bank of America treated as the acquirer. Under this method of accounting, the assets and liabilities of Merrill Lynch will be recorded by Bank of America at their estimated fair values as of the date the merger is completed. The table sets forth the information as if the merger had become effective on June 30, 2008, with respect to financial condition data, and on January 1, 2007, with respect to the results of operations data. The unaudited selected pro forma combined financial information has been derived from and should be read in conjunction with the consolidated financial statements and the related notes of both Bank of America and Merrill Lynch, which are incorporated in the document by reference and the more detailed unaudited pro forma condensed combined financial information, including the notes thereto, appearing elsewhere in this document. See “Where You Can Find More Information” on page 123 and “Unaudited Pro Forma Condensed Combined Financial Information” on page 38.
 
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of each period presented, nor the impact of possible business model changes. The unaudited pro forma condensed combined financial information also does not consider any potential impacts of current market conditions on revenues, expense efficiencies, asset dispositions, and share repurchases, among other factors. In addition, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial information, the preliminary allocation of the pro forma purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the merger.
 
                 
    Six Months Ended
    Twelve Months Ended
 
    June 30, 2008     December 31, 2007(1)  
    (Dollars in millions, except per share data)  
 
Pro Forma Combined:
               
Income Statement
               
Net interest income
  $ 22,319     $ 39,925  
Noninterest income
    16,052       37,587  
Total revenue, net of interest expense
    38,371       77,512  
Provision for credit losses
    12,175       8,528  
Noninterest expense before merger and restructuring charges
    30,335       60,889  
Merger and restructuring charges
    827       410  
Income (loss) from continuing operations before income taxes
    (4,966 )     7,685  
Income tax expense (benefit)
    (2,799 )     1,615  
Income (loss) from continuing operations
    (2,167 )     6,070  
Average common shares issued and outstanding (in thousands)
    5,272,859       5,137,321  
Average diluted common shares issued and outstanding (in thousands)
    5,272,859       5,263,289  
Performance ratios
               
Return on average assets
    (0.15 )%     N/M  
Return on average common stockholders’ equity
    (3.38 )%     N/M  
Total equity to total assets (period end)
    7.72 %     N/M  
Total average equity to total average assets
    7.20 %     N/M  
Dividend payout ratio(2)
          212.39  


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    Six Months Ended
    Twelve Months Ended
 
    June 30, 2008     December 31, 2007(1)  
    (Dollars in millions, except per share data)  
 
Per common share data
               
Earnings (loss) from continuing operations
  $ (0.56 )   $ 1.09  
Diluted earnings (loss) from continuing operations
    (0.56 )     1.07  
Cash dividends paid
    1.28       2.40  
Book value
    31.96       N/M  
Average balance sheet
               
Total loans and leases
    953,674       N/M  
Total assets
    2,838,792       N/M  
Total deposits
    890,260       N/M  
Long-term debt
    444,153       N/M  
Common stockholders’ equity
    175,969       N/M  
Total stockholders’ equity
    204,392       N/M  
Capital Ratios
               
Risk-based capital
    7.86 %     N/M  
Tier 1
    12.11 %     N/M  
Total
    4.78 %     N/M  
Leverage
               
 
 
(1) Average balance sheet amounts and capital and other ratios as of December 31, 2007 are not meaningful (N/M) as purchase accounting adjustments were calculated as of June 30, 2008.
 
(2) The pro forma dividend payout ratio is not presented for the six months ended June 30, 2008 as pro forma income from continuing operations for the period is a net loss. If presented, the pro forma dividend payout ratio would be (218.06).
 
(3) Bank of America’s historical per share data is as of or for the year ended December 31, 2007, and the six months ended June 30, 2008, and Merrill Lynch’s comparable information is as of or for the year ended December 28, 2007 and the six months ended June 27, 2008.

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COMPARATIVE PER SHARE DATA
 
The following table sets forth for Bank of America common stock and Merrill Lynch common stock certain historical, pro forma and pro forma-equivalent per share financial information. In accordance with requirements of the SEC, the pro forma and pro forma-equivalent per share information gives effect to the merger as if the merger had been effective on the dates presented, in the case of the book value data, and as if the merger had become effective on January 1, 2007, in the case of the net income and dividends paid data. The unaudited pro forma data in the tables assume that the merger is accounted for using the purchase method of accounting and represents a current preliminary estimate based on available information of the combined company’s results of operations. The pro forma financial adjustments record the assets and liabilities of Merrill Lynch at their preliminary estimated fair values and are subject to adjustment as additional information becomes available and as additional analyses are performed. See “Unaudited Pro Forma Condensed Combined Financial Information” on page 38. The information in the following table is based on, and should be read together with, the historical financial information that we have presented in our prior filings with the SEC. See “Where You Can Find More Information” on page 123.
 
We anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses and revenue enhancement opportunities. The unaudited pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the impact of possible business model changes as a result of current market conditions which may impact revenues, expense efficiencies, asset dispositions, share repurchases and other factors. It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during these periods nor is it indicative of the results of operations in future periods or the future financial position of the combined company. The Comparative Per Share Data Table for the six months ended June 2008 and the year ended December 2007 combines the historical income per share data of Bank of America and subsidiaries and Merrill Lynch and subsidiaries giving effect to the merger as if the merger had become effective on January 1, 2007, using the purchase method of accounting. The pro forma adjustments are based upon available information and certain assumptions that the Bank of America management believes are reasonable. Upon completion of the merger, the operating results of Merrill Lynch will be reflected in the consolidated financial statements of Bank of America on a prospective basis.
 
                                 
    Comparative Per Share Data  
                      Per
 
    Bank of
          Pro Forma
    Equivalent
 
    America(1)     Merrill Lynch(1)     Combined(2)     MER Share(3)  
Income (loss) from continuing operations for the year ended December 2007:
                               
Basic
  $ 3.35     $ (10.73 )   $ 1.09     $ 0.94  
Diluted
    3.30       (10.73 )     1.07       0.92  
Income (loss) from continuing operations for the six months ended June 2008:
                               
Basic
    0.96       (7.17 )     (0.56 )     (0.48 )
Diluted
    0.95       (7.17 )     (0.56 )     (0.48 )
Dividends Paid:
                               
For the year ended December 2007
    2.40       1.40       2.40       2.06  
For the six months ended June 2008
    1.28       0.70       1.28       1.10  
Book Value(4):
                               
As of year-end December 2007
    32.09       29.34       N/M       N/M  
As of month-end June 2008
    31.11       21.43       31.96       27.47  
 
 
(1) Bank of America’s historical per share data is as of or for the year ended December 31, 2007, and the six months ended June 30, 2008, and Merrill Lynch’s comparable information is as of or for the year ended December 28, 2007, and the six months ended June 27, 2008.
 
(2) Does not reflect the impact of business model changes as a result of current market conditions which may impact revenues, expense efficiencies, asset dispositions and share repurchases, among other factors, that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results.
 
(3) Reflects Merrill Lynch shares at the exchange ratio of 0.8595.
 
(4) Book value as of December 31, 2007, is not meaningful (N/M) as purchase accounting adjustments were calculated as of June 30, 2008.


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
This document contains or incorporates by reference a number of forward-looking statements, including statements about the financial conditions, results of operations, earnings outlook and prospects of Bank of America, Merrill Lynch and the potential combined company and may include statements for the period following the completion of the merger. You can find many of these statements by looking for words such as “plan,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “potential,” “possible” or other similar expressions.
 
The forward-looking statements involve certain risks and uncertainties. The ability of either Bank of America or Merrill Lynch to predict results or the actual effects of its plans and strategies, or those of the combined company, is subject to inherent uncertainty. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include those set forth on page 23 under “Risk Factors,” as well as, among others, the following:
 
  •  those discussed and identified in public filings with the SEC made by Bank of America or Merrill Lynch;
 
  •  completion of the merger is dependent on, among other things, receipt of stockholder and regulatory approvals, the timing of which cannot be predicted with precision and which may not be received at all;
 
  •  the extent and duration of continued economic and market disruptions and governmental regulatory proposals to address these disruptions;
 
  •  the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
 
  •  the integration of Merrill Lynch’s business and operations with those of Bank of America may take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse results relating to Merrill Lynch’s or Bank of America’s existing businesses;
 
  •  the anticipated cost savings and other synergies of the merger may take longer to be realized or may not be achieved in their entirety, and attrition in key client, partner and other relationships relating to the merger may be greater than expected;
 
  •  decisions to restructure, divest or eliminate business units or otherwise change the business mix of either company;
 
  •  the risk of new and changing regulation and/or regulatory actions in the U.S. and internationally; and
 
  •  the exposure to litigation, including the possibility that litigation relating to the merger agreement and related transactions could delay or impede the completion of the merger.
 
Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this document or the date of any document incorporated by reference in this document.
 
All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this document and attributable to Bank of America or Merrill Lynch or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this document. Except to the extent required by applicable law or regulation, Bank of America and Merrill Lynch undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.


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RISK FACTORS
 
In addition to the other information included and incorporated by reference in this document, stockholders should consider the matters described below in determining whether to adopt the merger agreement and approve the related certificate amendment in the case of Merrill Lynch stockholders, and approve the issuance of Bank of America common stock in the merger, the amendment to the Stock Plan and the increase in the number of authorized shares of Bank of America common stock in the case of Bank of America stockholders.
 
Because the market price of Bank of America common stock will fluctuate, Merrill Lynch stockholders cannot be sure of the market value of the merger consideration they will receive.
 
Upon completion of the merger, each share of Merrill Lynch common stock will be converted into merger consideration consisting of 0.8595 of a share of Bank of America common stock. The market value of the merger consideration may vary from the closing price of Bank of America common stock on the date we announced the merger, on the date that this document was mailed to Merrill Lynch stockholders, on the date of the special meeting of the Merrill Lynch stockholders and on the date we complete the merger and thereafter. Any change in the market price of Bank of America common stock prior to completion of the merger will affect the market value of the merger consideration that Merrill Lynch stockholders will receive upon completion of the merger. Accordingly, at the time of the special meeting, Merrill Lynch stockholders will not know or be able to calculate the market value of the merger consideration they would receive upon completion of the merger. Neither company is permitted to terminate the merger agreement or resolicit the vote of Merrill Lynch stockholders solely because of changes in the market prices of either company’s stock. There will be no adjustment to the merger consideration for changes in the market price of either shares of Bank of America common stock or shares of Merrill Lynch common stock. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations. Many of these factors are beyond our control. You should obtain current market quotations for shares of Bank of America common stock and for shares of Merrill Lynch common stock.
 
We may fail to realize all of the anticipated benefits of the merger.
 
The success of the merger will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining the businesses of Bank of America and Merrill Lynch. However, to realize these anticipated benefits and cost savings, we must successfully combine the businesses of Bank of America and Merrill Lynch. If we are not able to achieve these objectives, the anticipated benefits and cost savings of the merger may not be realized fully or at all or may take longer to realize than expected.
 
Bank of America and Merrill Lynch have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Merrill Lynch and Bank of America during such pre-merger transition period and for an undetermined period after consummation of the merger.
 
The market price of Bank of America common stock after the merger may be affected by factors different from those affecting the shares of Merrill Lynch or Bank of America currently.
 
The businesses of Bank of America and Merrill Lynch differ in important respects and, accordingly, the results of operations of the combined company and the market price of the combined company’s shares of common stock may be affected by factors different from those currently affecting the independent results of operations of Bank of America and Merrill Lynch. For a discussion of the businesses of Bank of America and Merrill Lynch and of certain factors to consider in connection with those businesses, see the documents


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incorporated by reference in this document and referred to under “Where You Can Find More Information” beginning on page 123.
 
Merrill Lynch stockholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.
 
Merrill Lynch’s stockholders currently have the right to vote in the election of the board of directors of Merrill Lynch and on other matters affecting Merrill Lynch. When the merger occurs, each Merrill Lynch stockholder that receives shares of Bank of America common stock will become a stockholder of Bank of America with a percentage ownership of the combined organization that is much smaller than the stockholder’s percentage ownership of Merrill Lynch. It is expected that the former stockholders of Merrill Lynch as a group will own less than 23% of the outstanding shares of Bank of America immediately after the merger. Because of this, Merrill Lynch’s stockholders will have less influence on the management and policies of Bank of America than they now have on the management and policies of Merrill Lynch.
 
Termination of the merger agreement could negatively impact Merrill Lynch.
 
If the merger agreement is terminated, there may be various consequences including:
 
  •  Merrill Lynch’s businesses may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger; and
 
  •  the market price of Merrill Lynch common stock might decline to the extent that the current market price reflects a market assumption that the merger will be completed.
 
If the merger agreement is terminated and Merrill Lynch’s board of directors seeks another merger or business combination, Merrill Lynch stockholders cannot be certain that Merrill Lynch will be able to find a party willing to pay an equivalent or more attractive price than the price Bank of America has agreed to pay in the merger.
 
The opinions obtained by Merrill Lynch and Bank of America from their respective financial advisors will not reflect changes in circumstances between signing the merger agreement and the merger.
 
Neither Merrill Lynch nor Bank of America has obtained updated opinions as of the date of this document from its financial advisors. Changes in the operations and prospects of Bank of America or Merrill Lynch, general market and economic conditions and other factors that may be beyond the control of Bank of America and Merrill Lynch, and on which each financial advisor’s opinion was based, may significantly alter the value of Bank of America or Merrill Lynch or the prices of shares of Bank of America common stock or Merrill Lynch common stock by the time the merger is completed. None of the opinions speaks as of the time the merger will be completed or as of any date other than the date of such opinions. Because neither Merrill Lynch nor Bank of America currently anticipates asking any of its financial advisors to update its respective opinion, none of the opinions will address the fairness of the exchange ratio from a financial point of view at the time the merger is completed. Each of the Merrill Lynch board of directors’ recommendation that Merrill Lynch stockholders vote “FOR” adoption of the merger agreement and “FOR” approval of the related certificate amendment, and the Bank of America board of directors’ recommendation that Bank of America stockholders vote “FOR” approval of the issuance of shares of Bank of America common stock in the merger, however, is as of the date of this document. For a description of the opinions that Merrill Lynch and Bank of America received from their respective financial advisors, please refer to “The Merger — Opinion of Merrill Lynch’s Financial Advisor” and “The Merger — Opinions of Bank of America’s Financial Advisors”. For a description of the other factors considered by Merrill Lynch’s board of directors and Bank of America’s board of directors in determining to approve the merger, please refer to “The Merger — Merrill Lynch’s Reasons for the Merger; Recommendation of the Merrill Lynch Board of Directors” and “The Merger — Bank of America’s Reasons for the Merger; Recommendation of the Bank of America Board of Directors”.


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The merger agreement limits Merrill Lynch’s ability to pursue alternatives to the merger.
 
The merger agreement contains “no shop” provisions that, subject to limited exceptions, limit Merrill Lynch’s ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of the company. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Merrill Lynch from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger, or might result in a potential competing acquiror’s proposing to pay a lower per share price to acquire Merrill Lynch than it might otherwise have proposed to pay. Merrill Lynch can consider and participate in discussions and negotiations with respect to an alternative proposal so long as the Merrill Lynch board of directors determines in good faith (after consultation with legal counsel) that failure to do so would cause it to violate its fiduciary duties to Merrill Lynch stockholders under applicable law.
 
The merger is subject to the receipt of consents and approvals from government entities that may impose conditions that could have an adverse effect on the combined company following the merger.
 
Before the merger may be completed, various approvals or consents must be obtained from the Federal Reserve Board and various domestic and foreign bank regulatory, securities, antitrust, insurance and other authorities. These governmental entities, including the Federal Reserve Board, may impose conditions on the completion of the merger or require changes to the terms of the merger. Although Bank of America and Merrill Lynch do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of Bank of America following the merger, any of which might have a material adverse effect on Bank of America following the merger.
 
The merger is subject to closing conditions, including stockholder approval, that, if not satisfied or waived, will result in the merger not being completed, which may result in material adverse consequences to Merrill Lynch’s business and operations.
 
The merger is subject to closing conditions, including the approval of Merrill Lynch and Bank of America stockholders that, if not satisfied, will prevent the merger from being completed. The closing condition that Merrill Lynch stockholders adopt the merger agreement, and the closing condition that Bank of America stockholders approve the issuance of Bank of America common stock in the merger, may not be waived under applicable law and must be satisfied for the merger to be completed. Merrill Lynch currently expects that all directors and executive officers of Merrill Lynch will vote their shares of Merrill Lynch common stock in favor of the proposals presented at the special meeting. Bank of America currently expects that all directors and officers of Bank of America will vote their shares of Bank of America common stock in favor of the proposals presented at the special meeting. If Merrill Lynch’s stockholders do not adopt the merger agreement or if Bank of America’s stockholders do not approve the issuance of Bank of America common stock in the merger and the merger is not completed, the resulting failure of the merger could have a material adverse impact on Merrill Lynch’s business and operations. In addition to the required approvals and consents from governmental entities and the approval of Merrill Lynch and Bank of America stockholders, the merger is subject to a number of other conditions beyond Bank of America’s and Merrill Lynch’s control that may prevent, delay or otherwise materially adversely affect its completion. We cannot predict whether and when these other conditions will be satisfied. See “The Merger Agreement — Conditions to Complete the Merger” beginning on page 88.
 
Merrill Lynch officers and directors have financial interests in the merger that differ from the interests of Merrill Lynch stockholders.
 
Merrill Lynch’s executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of Merrill Lynch’s stockholders. The members of the Merrill Lynch board of directors were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending to Merrill Lynch stockholders that the merger


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agreement be adopted. Please see “The Merger — Merrill Lynch’s Officers and Directors Have Financial Interests in the Merger” beginning on page 73 for information about these financial interests.
 
The shares of Bank of America common stock to be received by Merrill Lynch stockholders as a result of the merger will have different rights from the shares of Merrill Lynch common stock.
 
Upon completion of the merger, Merrill Lynch stockholders will become Bank of America stockholders and their rights as stockholders will be governed by the certificate of incorporation and bylaws of Bank of America. The rights associated with Merrill Lynch common stock are different from the rights associated with Bank of America common stock. Please see “Comparison of Stockholders’ Rights” beginning on page 100 for a discussion of the different rights associated with Bank of America common stock.
 
The merger may be a taxable transaction to you.
 
The merger is currently intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and holders of Merrill Lynch common stock are not expected to recognize any gain or loss for United States federal income tax purposes on the exchange of shares of Merrill Lynch common stock for shares of Bank of America common stock in the merger, except with respect to cash received instead of fractional shares of Bank of America common stock. However, if Merrill Lynch issues preferred stock to the U.S. Treasury pursuant to the CPP, the merger will not qualify as a reorganization, and the parties have agreed to waive the tax opinion closing conditions. In the event that the merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, the merger generally will be a taxable transaction to you, and you will generally recognize gain or loss in an amount equal to the difference, if any, between (i) the sum of the value of the Bank of America common stock plus the amount of any cash received instead of fractional shares of Bank of America common stock and (ii) your adjusted tax basis in the shares of Merrill Lynch common stock exchanged in the merger. You should read “United States Federal Income Tax Consequences of the Merger” beginning on page 97 for a more complete discussion of the United States federal income tax consequences of the merger. Tax matters can be complicated and the tax consequences of the merger to you will depend on your particular tax situation. You should consult your tax advisor to determine the tax consequences of the merger to you.


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THE BANK OF AMERICA SPECIAL MEETING
 
This section contains information about the special meeting of Bank of America stockholders that has been called to consider and approve the issuance of shares of Bank of America common stock in the merger, the amendment to the Stock Plan and the increase in the number of authorized shares of Bank of America common stock.
 
Together with this document, Bank of America is also sending you a notice of the special meeting and a form of proxy that is solicited by the Bank of America board of directors. The special meeting will be held on December 5, 2008, at 11:00 a.m., local time, in the Palmetto Ballroom of the International Trade Center at 200 North College St., Charlotte, NC.
 
Matters to Be Considered
 
The purpose of the special meeting is to vote on
 
  •  a proposal for approval of the issuance of shares of Bank of America common stock to the stockholders of Merrill Lynch in the merger;
 
  •  a proposal to approve an amendment to the Stock Plan;
 
  •  a proposal to adopt an amendment to the Bank of America amended and restated certificate of incorporation to increase the number of authorized shares of Bank of America common stock from 7.5 billion to 10 billion; and
 
  •  a proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposals.
 
Proxies
 
Each copy of this document mailed to holders of Bank of America common stock and Series B Preferred Stock is accompanied by a form of proxy with instructions for voting by mail, by telephone or through the internet. If you hold stock in your name as a stockholder of record and are voting by mail, you should complete and return the proxy card accompanying this document to ensure that your vote is counted at the special meeting, or at any adjournment or postponement of the special meeting, regardless of whether you plan to attend the special meeting. You may also vote your shares by telephone or through the internet. Information and applicable deadlines for voting by telephone or through the internet are set forth in the enclosed proxy card instructions.
 
If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker.
 
If you hold stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by signing and returning a proxy card with a later date, delivering a written revocation letter to Bank of America’s Secretary, or by attending the special meeting in person, notifying the Secretary, and voting by ballot at the special meeting. If you have voted your shares by telephone or through the internet, you may revoke your prior telephone or internet vote by recording a different vote, or by signing and returning a proxy card dated as of a date that is later than your last telephone or internet vote.
 
Any stockholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying the Secretary) of a stockholder at the special meeting will not constitute revocation of a previously given proxy.
 
Written notices of revocation and other communications about revoking your proxy should be addressed to:
Bank of America Corporation
101 S. Tryon Street
NC1-002-29-01
Charlotte, North Carolina 28255
  Attention:  Alice A. Herald
Corporate Secretary


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If your shares are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies.
 
All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via internet or telephone. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” approval of the issuance of shares of Bank of America common stock in the merger, “FOR” approval of the amendment to the Stock Plan, “FOR” approval of the charter amendment to increase the number of authorized shares of Bank of America common stock and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the proposals. According to the Bank of America restated bylaws, business to be conducted at a special meeting of stockholders may only be brought before the meeting by means of Bank of America’s notice of the meeting or otherwise properly brought before the meeting by or at the direction of the Bank of America board of directors. No matters other than the matters described in this document are anticipated to be presented for action at the special meeting or at any adjournment or postponement of the special meeting.
 
Solicitation of Proxies
 
Bank of America will bear the entire cost of soliciting proxies from its stockholders. In addition to solicitation of proxies by mail, Bank of America will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of Bank of America common stock and Series B Preferred Stock and secure their voting instructions. Bank of America will reimburse the record holders for their reasonable expenses in taking those actions. Bank of America has also made arrangements with Laurel Hill Advisory Group, LLC to assist it in soliciting proxies and has agreed to pay them $50,000, plus reasonable expenses for these services. If necessary, Bank of America may use several of its regular employees, who will not be specially compensated, to solicit proxies from Bank of America stockholders, either personally or by telephone, facsimile, letter or other electronic means.
 
Record Date
 
The close of business on October 10, 2008, has been fixed as the record date for determining the Bank of America stockholders entitled to receive notice of and to vote at the special meeting. At that time, 5,021,554,382 shares of Bank of America common stock were outstanding, held by approximately 259,955 holders of record, and 7,667 shares of Series B Preferred Stock, held by approximately 30 holders of record.
 
Voting Rights and Vote Required
 
The presence, in person or by proxy, of the holders of a majority of the aggregate number of outstanding shares of Bank of America common stock and Series B Preferred Stock entitled to vote is necessary to constitute a quorum at the special meeting. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
 
Approval of the issuance of shares of Bank of America common stock in the merger and the amendment to the Stock Plan each requires the votes cast in favor of each such proposal to exceed the votes cast against such proposal at the special meeting by the holders of the Bank of America common stock and Series B Preferred Stock, voting together without regard to class, assuming a quorum. Because the required vote is based on the votes cast in favor of such proposal exceeding the votes cast against such proposal, your failure to vote, a broker non-vote or an abstention will not be treated as a vote cast and, therefore, will have no effect on these proposals, assuming a quorum.
 
Approval of the proposal to increase the number of authorized shares of Bank of America common stock requires the affirmative vote of a majority of the votes represented by the outstanding shares of Bank of America common stock and Series B Preferred Stock entitled to vote at the special meeting, voting together without regard to class. Under Delaware law, the affirmative vote of a majority of the votes represented by the


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outstanding shares of Bank of America common stock entitled to vote at the special meeting, counted separately as a class without the Series B Preferred Stock, is also required to increase the number of authorized shares of Bank of America common stock. Because approval is based on the affirmative vote of a majority of votes represented by shares outstanding, the failure to vote, a broker non-vote or an abstention will have the same effect as a vote against.
 
If there is a quorum, approval of any necessary or appropriate adjournment of the special meeting requires the votes cast in favor of such proposal to exceed the votes cast against such proposal at the special meeting by the holders of the Bank of America common stock and Series B Preferred Stock, voting together without regard to class. In the absence of a quorum, the special meeting may be adjourned by the approval of the majority of the voting power of the outstanding shares present and entitled to vote at the special meeting.
 
If you participate in The Bank of America 401(k) Plan, The Bank of America 401(k) Plan for Legacy Companies or the Countrywide Financial Corporation 401(k) Savings and Investment Plan and your account has investments in shares of Bank of America common stock, you must provide voting instructions to the plan trustees (either via the proxy card or by internet or telephone) in order for your shares to be voted as you instruct. If no voting instructions are received, your shares will not be voted. Your voting instructions will be held in strict confidence.
 
The Bank of America board of directors urges Bank of America stockholders to promptly vote by: completing, dating, and signing the accompanying proxy card and to return it promptly in the enclosed postage-paid envelope; calling the toll-free number listed in the proxy card instructions if voting by telephone; or accessing the internet site listed in the proxy card instructions if voting through the internet. If you hold your stock in “street name” through a bank or broker, please vote by following the voting instructions of your bank or broker.
 
Stockholders will vote at the meeting by ballot. Votes cast at the meeting, in person or by proxy, will be tallied by Bank of America’s Inspector of Election.
 
As of the record date:
 
  •  Directors and executive officers of Bank of America had the right to vote 36,507,724 shares of Bank of America common stock and no shares of Series B Preferred Stock, or 0.73% of the outstanding Bank of America shares entitled to vote at the special meeting. We currently expect that each of these individuals will vote their shares of Bank of America common stock in favor of the proposals to be presented at the special meeting.
 
Recommendation of the Bank of America Board of Directors
 
The Bank of America board of directors has unanimously approved and adopted the merger agreement and the transactions it contemplates, including the merger. The Bank of America board of directors determined that the merger, merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Bank of America and its stockholders and unanimously recommends that you vote “FOR” approval of the issuance of shares of Bank of America common stock in the merger. See “The Merger — Bank of America’s Reasons for the Merger; Recommendation of the Bank of America Board of Directors” on page 54 for a more detailed discussion of the Bank of America board of directors’ recommendation.
 
The Bank of America board of directors also has unanimously approved the proposals to increase the authorized number of shares of Bank of America common stock and amend the Stock Plan. The Bank of America board of directors determined that the proposals are advisable and in the best interests of Bank of America and its stockholders. The Bank of America board of directors unanimously recommends that you vote “FOR” the proposals to increase the authorized number of shares of Bank of America common stock and to approve the amendment to the Stock Plan.


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Attending the Meeting
 
All holders of Bank of America common stock and Series B Preferred Stock, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Stockholders of record can vote in person at the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted. We reserve the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification.


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THE MERRILL LYNCH SPECIAL MEETING
 
This section contains information about the special meeting of Merrill Lynch stockholders that has been called to consider and adopt the merger agreement and to approve the related certificate amendment.
 
Together with this document, Merrill Lynch is also sending you a notice of the special meeting and a form of proxy that is solicited by the Merrill Lynch board of directors. The special meeting will be held on December 5, 2008, at 8:00 a.m., local time, at Merrill Lynch headquarters, 4 World Financial Center, New York, NY, 10038.
 
Matters to Be Considered
 
The purpose of the special meeting is to vote on:
 
  •  a proposal for adoption of the merger agreement;
 
  •  a proposal to amend the restated certificate of incorporation of Merrill Lynch, contingent upon the approval of the foregoing proposal and satisfaction of all other conditions to the closing of the merger set forth in the merger agreement, and effective immediately prior to the effective time of the merger, to provide that holders of 9.00% Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock, Series 2 and 9.00% Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock, Series 3 will vote together as a single class with holders of Merrill Lynch common stock on all matters presented for a vote of such holders and will be entitled to 600 votes per share; and
 
  •  a proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposals.
 
The certificate amendment is a technical change necessitated by the fact that the series of convertible preferred stock will remain Merrill Lynch securities (though they will be convertible into Bank of America common stock) immediately following the completion of the merger, and will not impact the current voting rights of the existing holders of Merrill Lynch common stock.
 
Proxies
 
Each copy of this document mailed to holders of Merrill Lynch common stock is accompanied by a form of proxy with instructions for voting. If you hold stock in your name as a stockholder of record, you may complete, sign, date and mail your proxy card in the enclosed postage paid return envelope as soon as possible, vote by telephone by calling the toll-free number listed on the Merrill Lynch proxy card, vote by accessing the internet site listed on the Merrill Lynch proxy card or vote in person at the Merrill Lynch special meeting. If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instruction form included with these materials and forwarded to you by your bank or broker. This voting instruction form provides instructions on voting by mail, telephone or the internet at www.proxyvote.com. To vote using the proxy card you must sign, date and return it in the enclosed postage-paid envelope. Instructions on how to vote by telephone or by the internet are included with your proxy card.
 
If you are a holder of record, to change your vote, you must:
 
  •  mail a new signed proxy card with a later date to Merrill Lynch & Co., Inc., c/o BroadRidge Financial Services, 51 Mercedes Way, Edgewood, NY 11717 which must be received by 11:59 p.m. Eastern time on December 4, 2008;
 
  •  Vote by calling the toll-free number listed on the Merrill Lynch proxy card or accessing the internet site listed on the Merrill Lynch proxy card by 11:59 p.m. Eastern time on December 4, 2008; or
 
  •  attend the special meeting and vote in person.
 
If you wish to revoke rather than change your vote, you must send written, signed revocation to Merrill Lynch & Co., Inc., c/o BroadRidge Financial Services, Registered Issuer Client Services Department,


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51 Mercedes Way, Edgewood, NY 11717 which must be received by 11:59 p.m. Eastern time on December 4, 2008. You must include your control number.
 
If you hold shares in street name, and wish to change or revoke your vote, please refer to the information on the voting instruction form included with these materials and forwarded to you by your bank, broker or other holder of record to see your voting options.
 
All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” adoption of the merger agreement, “FOR” approval of the related certificate amendment and “FOR” approval of the proposal to adjourn the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt the merger agreement.
 
According to the Merrill Lynch restated bylaws, business to be conducted at a special meeting of stockholders may only be brought before the meeting by means of Merrill Lynch’s notice of the meeting or otherwise properly brought before the meeting by or at the direction of the Merrill Lynch board of directors. No matters other than the matters described in this document are anticipated to be presented for action at the special meeting or at any adjournment or postponement of the special meeting.
 
Merrill Lynch stockholders with shares represented by stock certificates should not send Merrill Lynch stock certificates with their proxy cards. After the merger is completed, holders of Merrill Lynch common stock will be mailed a transmittal form with instructions on how to exchange their Merrill Lynch stock certificates for the merger consideration. Unless Merrill Lynch stockholders specifically request to receive Bank of America stock certificates, the shares of Bank of America stock they receive in the merger will be issued in book-entry form.
 
Solicitation of Proxies
 
Merrill Lynch will bear the entire cost of soliciting proxies from you. In addition to solicitation of proxies by mail, Merrill Lynch will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of Merrill Lynch common stock and secure their voting instructions. Merrill Lynch will reimburse the record holders for their reasonable expenses in taking those actions. Merrill Lynch has also made arrangements with Georgeson Inc. to assist it in soliciting proxies and has agreed to pay them approximately $50,000 plus reasonable expenses for these services. If necessary, Merrill Lynch may use several of its regular employees, who will not be specially compensated, to solicit proxies from Merrill Lynch stockholders, either personally or by telephone, facsimile, letter or other electronic means.
 
Record Date
 
The close of business on October 10, 2008 and October 21, 2008 has been fixed as the record date for determining the Merrill Lynch common stockholders and holders of exchangeable shares issued by Merrill Lynch Canada, respectively, entitled to receive notice of and to vote at the special meeting. At that time, 1,598,690,442 shares of Merrill Lynch common stock and 1,436,244 exchangeable shares (issued by Merrill Lynch Canada each exchangeable into one share of Merrill Lynch common stock) were outstanding, held by approximately 11,819 holders of record of Merrill Lynch common stock and 2,405 holders of record of exchangeable shares.
 
Voting Rights and Vote Required
 
The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Merrill Lynch common stock entitled to vote is necessary to constitute a quorum at the special meeting. Abstentions will be counted for the purpose of determining whether a quorum is present.
 
Adoption of the merger agreement and approval of the related certificate amendment require the affirmative vote of the holders of a majority of the outstanding shares of Merrill Lynch common stock entitled to vote at the special meeting. You are entitled to one vote for each share of Merrill Lynch common stock and


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for each exchangeable share you held as of the applicable record date. Holders of shares of Merrill Lynch preferred stock and holders of depositary shares representing Merrill Lynch preferred stock are not entitled to vote on the merger or otherwise at the special meeting.
 
Because the affirmative vote of the holders of a majority of the outstanding shares of Merrill Lynch common stock entitled to vote at the special meeting is needed for us to proceed with the merger, the failure to vote by proxy or in person will have the same effect as a vote against the merger. Abstentions also will have the same effect as a vote against the merger. Accordingly, the Merrill Lynch board of directors urges Merrill Lynch stockholders to promptly vote by completing, dating, and signing the accompanying proxy card and to return it promptly in the enclosed postage-paid envelope, or, if you hold your stock in “street name” through a bank or broker, by following the voting instructions of your bank or broker. If you hold stock in your name as a stockholder of record, you may complete, sign, date and mail your proxy card in the enclosed postage paid return envelope as soon as possible, vote by calling the toll-free number listed on the Merrill Lynch proxy card, vote by accessing the internet site listed on the Merrill Lynch proxy card or vote in person at the Merrill Lynch special meeting. If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instruction form included with these materials and forwarded to you by your bank or broker. This voting instruction form provides instructions on voting by mail, telephone or on the internet.
 
Approval of the proposal to adjourn or postpone the meeting, if necessary or appropriate, for the purpose of soliciting additional proxies requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the special meeting. Because approval of this proposal requires the affirmative vote of a majority of shares present or represented, abstentions will have the same effect as a vote against this proposal. If you are a registered holder, failure to vote by proxy or in person will have the same effect as a vote against this proposal. If you hold in street name, your broker may vote your shares in its discretion on this proposal.
 
Stockholders will vote at the meeting by ballot. Votes cast at the meeting, in person or by proxy, will be tallied by Merrill Lynch’s tabulator and certified by its inspector of election.
 
As of the October 10, 2008 record date, directors and executive officers of Merrill Lynch had the right to vote 2,410,356 shares of Merrill Lynch common stock, or 0.15% of the outstanding Merrill Lynch common stock at that date. We currently expect that each of these individuals will vote their shares of Merrill Lynch common stock in favor of the proposals to be presented at the special meeting.
 
Recommendation of the Merrill Lynch Board of Directors
 
The Merrill Lynch board of directors has unanimously approved the merger agreement and the transactions it contemplates, including the merger. The Merrill Lynch board of directors determined that the merger, merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Merrill Lynch and its stockholders and unanimously recommends that you vote “FOR” adoption of the merger agreement and “FOR” approval of the related certificate amendment. See “The Merger — Merrill Lynch’s Reasons for the Merger; Recommendation of the Merrill Lynch Board of Directors” on page 51 for a more detailed discussion of the Merrill Lynch board of directors’ recommendation.
 
Attending the Meeting
 
All holders of Merrill Lynch common stock and holders of exchangeable shares, including holders of record and stockholders who hold their stock through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Only stockholders of record on the applicable record date can vote in person at the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted. We reserve the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification.


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INFORMATION ABOUT THE COMPANIES
 
Bank of America Corporation
 
Bank of America is a Delaware corporation, a bank holding company and a financial holding company under U.S. federal law. Bank of America is one of the world’s largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,000 retail banking offices, more than 18,000 ATMs and award-winning online banking with nearly 24 million active users. The company serves clients in 175 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 80 percent of the Fortune Global 500. As of June 30, 2008, Bank of America had total consolidated assets of approximately $1.7 trillion, total consolidated deposits of approximately $785 billion and total consolidated stockholders’ equity of approximately $163 billion. Bank of America is also the parent company of Countrywide Financial Corporation, which Bank of America acquired on July 1, 2008. The principal executive offices of Bank of America are located in the Bank of America Corporate Center, 100 N. Tryon Street, Charlotte, North Carolina 28255, and its telephone number is (704) 386-5681.
 
Additional information about Bank of America and its subsidiaries is included in documents incorporated by reference in this document. See “Where You Can Find More Information” on page 123.
 
MER Merger Corporation
 
Merger Sub, a wholly owned subsidiary of Bank of America, was formed solely for the purpose of consummating the merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. The principal executive offices of Merger Sub are located in the Bank of America Corporate Center, 100 N. Tryon Street, Charlotte, North Carolina, and its telephone number is (704) 386-5681.
 
Merrill Lynch & Co., Inc.
 
Merrill Lynch was formed in 1914 and became a publicly traded company on June 23, 1971. In 1973, it created the holding company, Merrill Lynch & Co., Inc., a Delaware corporation that, through its subsidiaries, is one of the world’s leading capital markets, advisory and wealth management companies with offices in 40 countries and territories and total client assets of approximately $1.5 trillion at September 26, 2008. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes, and it serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. In addition, Merrill Lynch owns a 45% voting interest and approximately half of the economic interest of BlackRock, Inc., one of the world’s largest publicly traded investment management companies with approximately $1.3 trillion in assets under management at September 30, 2008. The principal executive offices of Merrill Lynch are located at 4 World Financial Center, New York, New York 10080, and its telephone number is (212) 449-1000.
 
Additional information about Merrill Lynch and its subsidiaries is included in documents incorporated by reference in this document. See “Where You Can Find More Information” on page 123.


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RECENT DEVELOPMENTS
 
Bank of America Corporation — Unaudited
 
Third Quarter Earnings
 
On October 6, 2008, Bank of America announced third quarter earnings of $1.18 billion, or $0.15 per diluted share, compared to $3.70 billion, or $0.82 per diluted share, earned in the third quarter of 2007.
 
Bank of America’s third quarter earnings were impacted by, among other things, a significant increase in provision expense, as credit costs continued to rise, partially offset by advances in various income categories as a result of the acquisition of Countrywide Financial Corporation on July 1, 2008 and LaSalle Bank.
 
Bank of America’s Tier 1 Capital Ratio, based on preliminary data, was 7.50% at September 30, 2008 down from 8.22% at September 30, 2007. The decrease was due to the impact of Bank of America’s $21 billion cash purchase of LaSalle Bank in October 2007 and lower net income in 2008. After giving effect to the October 10, 2008 issuance of common stock in an underwritten public offering in exchange for net proceeds of $9,759,750,000 and the anticipated October issuance of preferred stock and warrants to the U.S. Treasury in exchange for proceeds of $15 billion (each discussed under “— Other Developments” below), Bank of America’s Tier 1 Capital Ratio would have been 9.40% at September 30, 2008.
 
Other Developments
 
On October 3, 2008, President Bush signed into law the Emergency Economic Stabilization Act of 2008 (the “EESA”). Pursuant to the EESA, the U.S. Treasury has the authority to, among other things, invest in financial institutions and purchase mortgages, mortgage-backed securities and certain other financial instruments from financial institutions, in an aggregate amount up to $700 billion, for the purpose of stabilizing and providing liquidity to the U.S. financial markets. On October 14, 2008, the U.S. Treasury announced a plan, referred to as the Capital Purchase Program, or the CPP, to invest up to $250 billion of this $700 billion amount in certain eligible U.S. banks, thrifts and their holding companies in the form of non-voting, senior preferred stock initially paying quarterly dividends at a 5% annual rate. In the event the U.S. Treasury makes any such senior preferred investment in any company it will also receive 10-year warrants to acquire common shares of the company having an aggregate market price of 15% of the amount of the senior preferred investment. In connection with Treasury’s 2008 announcement, Bank of America was identified as one of the nine financial institutions (including Merrill Lynch) that agreed in principle to participate in the first $125 billion of Treasury investments. As a result, on October 26, 2008, Bank of America entered into a purchase agreement with the U.S. Treasury pursuant to which it will issue to the U.S. Treasury $15 billion of a new series of preferred stock of Bank of America. In connection with this investment, Bank of America has also agreed to issue to the U.S. Treasury warrants to purchase approximately 73 million shares of Bank of America common stock at an exercise price of $30.79 per share. This investment is expected to be completed on or about October 28, 2008. If the merger is completed prior to Treasury making an investment in Merrill Lynch as described below under “— Merrill Lynch & Co Developments — Unaudited — Recent Developments,” Treasury will purchase from Bank of America an additional $10 billion of a new series of preferred stock of Bank of America and receive warrants to purchase approximately 49 million shares, all on the same terms applicable to the $15 billion investment.
 
On October 8, 2008, Bank of America announced a settlement in principle with the SEC, the New York State Attorney General’s office, and a coalition of other state regulators represented by the North American Securities Administrators Association under which it has established a repurchase and compensation program with respect to certain auction rate securities purchased prior to specified dates in February 2008 and either held by certain of its retail brokerage customers or sold by those customers at a loss between February 11, 2008 and October 8, 2008. Bank of America had previously announced a substantially similar settlement with the Massachusetts Securities Division on September 10, 2008. Bank of America will pay a $50 million penalty in connection with the settlement, and neither admits nor denies allegations of wrongdoing.


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On October 10, 2008, Bank of America issued 455 million shares of common stock at a public offering price of $22.00 per share in an underwritten public offering. The net proceeds of the offering to Bank of America, after underwriting discounts and commissions, were $9,759,750,000.
 
Merrill Lynch & Co. — Unaudited
 
Third Quarter Earnings
 
On October 16, 2008, Merrill Lynch announced a net loss from continuing operations for the third quarter of $5.1 billion, or $5.56 per diluted share, compared to a net loss from continuing operations of $2.4 billion, or $2.99 per diluted share, in the third quarter of 2007.
 
Merrill Lynch’s third quarter results were impacted by, among other things, net write-downs of $5.7 billion resulting from the previously announced sale of U.S. super senior ABS CDOs and the termination and potential settlement of related hedges with monoline guarantor counterparties; a net pre-tax gain of $4.3 billion from the previously announced sale of Merrill Lynch’s 20% ownership stake in Bloomberg, L.P.; net write-downs of $3.8 billion principally from severe market dislocations in September; net gains of $2.8 billion due to the impact of the widening of Merrill Lynch’s credit spreads on the carrying value of certain of its long-term debt liabilities, which was similarly impacted by the severe market movements in September; and net losses of $2.6 billion resulting primarily from completed and planned asset sales across residential and commercial mortgage exposures.
 
Other Developments
 
On August 21, 2008, Merrill Lynch announced a settlement in principle with the SEC, the New York State Attorney General’s office, and a coalition of other state regulators represented by the North American Securities Administrators Association under which it has established a repurchase and compensation program with respect to certain auction rate securities purchased prior to specified dates in February 2008 and either held by certain of its retail brokerage customers or sold by those customers at a loss between February 13, 2008 and August 21, 2008. Merrill Lynch will pay a $125 million penalty in connection with the settlement, and neither admits nor denies allegations of wrongdoing.
 
After discussions with Treasury and Bank of America, Merrill Lynch has determined that, in view of the pending merger with Bank of America, it will not sell securities to the U.S. Treasury under the CPP at this time, but may do so in the future under certain circumstances. As a result, Merrill Lynch has entered into a purchase agreement that provides for delayed settlement for a sale of $10 billion of a new series of Merrill Lynch preferred stock and warrants to purchase 64,991,334 shares of Merrill Lynch Common Stock at an exercise price of $23.08 per share. The agreement provides that the closing will take place on the earlier of (i) the second business day following termination of the Merger Agreement with Bank of America and (ii) a date during the period beginning on January 2, 2009 and ending on January 31, 2009 if the Merger Agreement is still in effect but the merger has not been completed by the specified date, but, in the case of either (i) or (ii), in no event later than January 31, 2009. In addition, prior to January 2, 2009, if the Merger Agreement is still in effect but the merger is not been completed, Merrill Lynch has the right, after consultation with the Federal Reserve and Bank of America, to request that the U.S. Treasury consummate the CPP investment on or prior to January 1, 2009. The Purchase Agreement will terminate at 12:01 am on February 1, 2009 if the investment has not been made by that date.
 
Completion of the CPP investment prior to the termination of the Merger Agreement is subject to Bank of America’s approval. Bank of America has agreed it will not unreasonably withhold or delay its consent. After January 1, 2009, Bank of America may not withhold its consent if, after consulting with Bank of America, Merrill Lynch reasonably determines that the failure to obtain the CPP investment would have a material adverse impact on Merrill Lynch. After January 30, 2009 until 12:01 a.m. on February 1, 2009, Merrill Lynch will have the unilateral right to obtain the CPP investment and Bank of America has consented in advance to the investment at such time if the merger has not been completed at that date.


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Because the merger will not qualify as a “reorganization” within the meaning of 368(a) of the Code if Merrill Lynch obtains the CPP investment, Bank of America and Merrill Lynch have also agreed that, if Merrill Lynch does obtain the CPP investment, they will each waive their closing conditions relating to the tax treatment of the merger and complete the merger on a taxable basis. Both companies have also agreed to grant such other waivers and/or amend the merger agreement as may be required to permit the CPP investment on the agreed terms.
 
Also, on October 14, 2008, the FDIC announced a new program, the Temporary Liquidity Guarantee Program, under which specific categories of newly issued senior unsecured debt issued by eligible financial institutions on or before June 30, 2009 would be guaranteed until June 30, 2012. This program also provides deposit insurance for funds in non-interest bearing transaction deposit accounts at FDIC-insured institutions. Merrill Lynch has agreed to participate in the Temporary Liquidity Guarantee Program.
 
On October 29, 2008, Merrill Lynch and Bank of America, N.A., a wholly owned subsidiary of Bank of America, entered into a $10 billion committed unsecured bank revolving credit facility with borrowings guaranteed under the Temporary Liquidity Guarantee Program. This facility will be available to Merrill Lynch until January 30, 2009 but may expire at an earlier date if the merger with Bank of America is terminated or consummated prior to January 30, 2009 or Merrill Lynch elects to participate in the CPP. If Merrill Lynch participates in the CPP, the proceeds received from the U.S. Treasury will be used to repay in full any outstanding amounts owed under this facility.
 


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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
 
The following unaudited pro forma condensed combined financial information and explanatory notes present the impact of the merger of Bank of America and Merrill Lynch on the companies’ respective historical financial positions and results of operations under the purchase method of accounting with Bank of America treated as the acquirer. Under this method of accounting, the assets and liabilities of Merrill Lynch will be recorded by Bank of America at their estimated fair values as of the date the merger is completed. The unaudited pro forma condensed combined financial information combines the historical financial information of Bank of America and Merrill Lynch as of and for the six months ended June 30, 2008, and June 27, 2008, respectively, and for the year ended December 31, 2007, and December 28, 2007, respectively. The unaudited pro forma condensed combined balance sheet as of June 30, 2008, assumes the merger was completed on that date. The unaudited pro forma condensed combined statements of income give effect to the merger as if the merger had been completed on January 1, 2007.
 
The merger agreement was announced on September 15, 2008, and provides for each outstanding share of Merrill Lynch common stock other than shares beneficially owned by Merrill Lynch and Bank of America to be converted into the right to receive 0.8595 of a share of Bank of America common stock. Shares of Merrill Lynch preferred stock will be converted on a one-for-one basis into Bank of America preferred stock having the same terms (to the fullest extent possible) as the corresponding Merrill Lynch preferred stock, except for the shares of Merrill Lynch convertible preferred stock, which will remain issued and outstanding and will have the rights, privileges, powers and preferences as set forth in the surviving company’s certificate of incorporation, as amended. The unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with the historical consolidated combined financial statements and the related notes of both Bank of America and Merrill Lynch, which are incorporated in the document by reference. See “Where You Can Find More Information” on page 123.
 
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of each period presented, nor the impact of possible business model changes. The unaudited pro forma condensed combined financial information also does not consider any potential impacts of current market conditions on revenues, expense efficiencies, asset dispositions, and share repurchases, among other factors. In addition, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial information, the allocation of the pro forma purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the merger. During the past few weeks, market conditions have been extremely volatile and a number of significant events have occurred including actions taken by the federal government. These items may have a significant impact on a number of items (e.g., whole loans held-for-sale, mortgage-backed and other securities, etc.) which will affect the actual purchase price allocation that will be recorded upon completion of the merger. For more information on these items, see the discussion “Recent Developments” on page 35.


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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2008 AND JUNE 27, 2008
 
The following unaudited pro forma condensed combined balance sheet combines the historical balance sheets of Bank of America and Merrill Lynch assuming the companies had been combined on June 30, 2008, on a purchase accounting basis.
 
                                                 
                    Purchase
           
    Bank of America
    Merrill Lynch
    Reporting
  Accounting
        Pro Forma
 
    June 30, 2008     June 27, 2008     Reclassifications   Adjustments         June 30, 2008  
    (Dollars in millions)  
Assets
                                               
Cash
  $ 39,127     $ 31,211     $ 13,363     (1)               $ 83,701  
Cash and securities segregated for regulatory purposes or deposited with clearing organizations
          26,228       (26,228 )   (1)                  
Time deposits placed and other short-term investments
    7,649                                     7,649  
Federal funds sold and securities purchased under agreements to resell
    107,070       224,958       (56,938 )   (2)                 275,090  
Securities borrowed
          129,426       56,938     (2)                 186,364  
Trading account assets
    167,837       217,639       (86,492 )   (3)                 298,984  
Derivative assets
    42,039             86,492     (3)                 129,586  
                      1,055     (4)                    
Securities
    249,859       71,286       12,865     (1)         (A)     334,010  
Securities received as collateral
          51,505       6,315     (5)                 57,820  
Loans and leases
    870,464       79,772                   (5,405 )   (B)     944,831  
Allowance for credit losses
    (17,130 )     (602 )                 100     (B)     (17,632 )
                                                 
Loans and leases, net of allowance for credit losses
    853,334       79,170                   (5,305 )         927,199  
Premises and equipment, net
    11,627       3,142                               14,769  
Mortgage servicing rights
    4,577             273     (6)                 4,850  
Goodwill
    77,760             4,616     (7)     (4,616 )   (C)     91,243  
                                  13,483     (C)        
Intangible assets
    9,603             442     (7)     (442 )   (D)     17,103  
                                  7,500     (D)        
Goodwill and other intangible assets
          5,058       (5,058 )   (7)                  
Other receivables
                                               
Customers
          70,798       (70,798 )   (8)                  
Brokers and dealers
          17,300       (17,300 )   (8)                  
Interest and other
          32,684       (32,684 )   (8)                  
                                                 
Total other receivables
          120,782       (120,782 )                      
Other receivables
                120,782     (8)                 140,276  
                      19,494     (9)                    
Other assets
    146,393       5,805       (1,055 )   (4)     (930 )   (E)     116,226  
                      (273 )   (6)     (3,905 )   (F)        
                      (6,315 )   (5)                    
                      (19,494 )   (9)                    
                      (4,000 )   (10)                    
                                                 
Total assets
  $ 1,716,875     $ 966,210     $ (4,000 )       $ 5,785         $ 2,684,870  
                                                 
Liabilities
                                               
Deposits in domestic offices:
                                               
Noninterest-bearing
  $ 199,587     $     $ 1,768     (11)               $ 201,355  
Interest-bearing
    497,631             70,296     (11)                 567,927  
Deposits in foreign offices:
                                               
Noninterest-bearing
    3,432             814     (11)                 4,246  
Interest-bearing
    84,114             27,580     (11)                 111,694  
                                                 
Total deposits
    784,764             100,458                       885,222  
Deposits
          100,458       (100,458 )   (11)                  
Federal funds purchased and securities sold under agreements to repurchase
    238,123       197,881       (14,768 )   (12)                 421,236  
Securities loaned
          65,691       14,768     (12)                 80,459  
Trading account liabilities
    70,806       105,976       (65,908 )   (13)                 110,874  
Obligation to return securities received as collateral
          51,505       6,315     (14)                 57,820  
Derivative liabilities
    21,095             65,908     (13)                 87,478  
                      475     (15)                    
Commercial paper and other short-term borrowings
    177,753       19,139                               196,892  
Accrued expenses and other liabilities
    55,038             (6,315 )   (14)   $ 2,550     (G)     7,512  
                      (4,000 )   (10)                    
                      (39,761 )   (16)                    
Other payables
                                               
Customers
          65,633       (65,633 )   (17)                  
Brokers and dealers
          15,743       (15,743 )   (17)                  
Interest and other
          33,777       (33,777 )   (17)                  
                                                 
Total other payables
          115,153       (115,153 )                      
Other payables
                115,153     (17)                 154,439  
                      (475 )   (15)                    
                      39,761     (16)                    
Junior subordinated notes (related to trust preferred securities)
          5,193       (5,193 )   (18)                  
Long-term debt
    206,605       270,436       5,193     (18)     (6,500 )   (H)     475,734  
                                                 
Total liabilities
    1,554,184       931,432       (4,000 )         (3,950 )         2,477,666  
                                                 
Stockholders’ equity
                                               
Preferred stock
    24,151       13,666                               37,817  
Shares exchangeable into common stock
          39       (39 )   (19)                  
Common stock
    61,109       1,885       31,200     (19)     (8,819 )   (I)     91,956  
                      39     (19)     30,847     (I)        
                      (24,305 )   (19)                    
Paid-in capital
          31,200       (31,200 )   (19)                  
Retained earnings
    79,920       15,978                   (15,978 )   (I)     79,920  
Accumulated other comprehensive loss
    (1,864 )     (3,685 )                 3,685     (I)     (1,864 )
Treasury stock
          (24,305 )     24,305     (19)                  
Other
    (625 )                                 (625 )
                                                 
Total stockholders’ equity
    162,691       34,778                 9,735           207,204  
                                                 
Total liabilities and stockholders’ equity
  $ 1,716,875     $ 966,210     $ (4,000 )       $ 5,785         $ 2,684,870  
                                                 
 
See accompanying notes to unaudited pro forma condensed combined financial statements.


39


Table of Contents

 
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 2008 AND JUNE 27, 2008
 
The following unaudited pro forma condensed combined statement of income combines the historical statements of income of Bank of America and Merrill Lynch assuming the companies combined on January 1, 2007, on a purchase accounting basis.
 
                                                 
                    Purchase
     
    Bank of America
    Merrill Lynch
    Reporting
  Accounting
  Pro Forma
 
    June 30, 2008     June 27, 2008     Reclassifications   Adjustments   June 30, 2008  
    (Dollars in millions, except per share data)  
 
Interest income
                                               
Interest and fees on loans and leases
  $ 27,536     $     $ 3,097     (20)   $ 350     (B)   $ 30,983  
Interest on debt securities
    5,674             1,940     (20)                 7,614  
Federal funds sold and securities purchased under agreements to resell
    2,008             10,587     (20)                 12,595  
Trading account assets
    4,593             3,489     (20)                 8,082  
Other interest income
    2,075             2,032     (20)                 4,107  
Interest and dividend revenues
          19,396       (19,396 )   (20)                  
                                                 
Total interest income
    41,886       19,396       1,749           350           63,381  
Interest expense
                                               
Deposits
    8,108             2,014     (21)                 10,122  
Short-term borrowings
    7,229             10,011     (21)                 17,240  
Trading account liabilities
    1,589             954     (21)                 3,957  
                      1,414     (20)                    
Long-term debt
    4,348             4,945     (21)     450     (H)     9,743  
Interest expense
          17,924       (17,924 )   (21)                  
                                                 
Total interest expense
    21,274       17,924       1,414           450           41,062  
Net interest income
    20,612       1,472       335           (100 )         22,319  
Noninterest income
                                               
Card income
    7,090                                     7,090  
Service charges
    5,035                                     5,035  
Investment and brokerage services
    2,662             3,700     (22)                 9,216  
                      2,854     (23)                    
Commissions
          3,700       (3,700 )   (22)                  
Managed accounts and other fee-based revenues
          2,854       (2,854 )   (23)                  
Investment banking income
    1,171       2,075                               3,246  
Equity investment income
    1,646       542                               2,188  
Trading account profits (losses)
    (1,426 )           (6,501 )   (24)                 (7,927 )
Principal transactions
          (6,501 )     6,501     (24)                  
Mortgage banking income
    890                                     890  
Gain on sales of debt securities
    352                                     352  
Other income (loss)
    (714 )     (3,324 )                             (4,038 )
                                                 
Total noninterest income
    16,706       (654 )                         16,052  
                                                 
Total revenue, net of interest expense
    37,318       818       335           (100 )         38,371  
Provision for credit losses
    11,840             335     (20)                 12,175  
Noninterest expense
                                               
Personnel
    9,146       7,687                               16,833  
Occupancy
    1,697       637       (14 )   (25)                 2,320  
Equipment
    768             14     (25)                 782  
Marketing
    1,208       342                               1,550  
Professional fees
    647       505                               1,152  
Amortization of intangibles
    893             52     (26)     173     (D)     1,118  
Data processing
    1,150             683     (27)                 1,833  
Telecommunications
    526             438     (27)                 964  
Communications and technology
          1,121       (1,121 )   (27)                  
Brokerage, clearing and exchange fees
          757                               757  
Office supplies and postage
          112       (112 )   (28)                  
Other general operating
    2,342       624       112     (28)                 3,026  
                      (52 )   (26)                    
Merger and restructuring charges
    382       445                               827  
                                                 
Total noninterest expense
    18,759       12,230                 173           31,162  
Income (losses) from continuing operations before income taxes
    6,719       (11,412 )               (273 )         (4,966 )
Income tax expense (benefit)
    2,099       (4,809 )                 (89 )   (F)     (2,799 )
                                                 
Net income (loss) from continuing operations
    4,620     $ (6,603 )   $         $ (184 )         (2,167 )
                                                 
Income (loss) from continuing operations available to common stockholders
  $ 4,244     $ (7,014 )   $         $ (184 )       $ (2,954 )
                                                 
Per common share data
                                               
Earnings (losses) from continuing operations
  $ 0.96     $ (7.17 )                           $ (0.56 )
Diluted earnings (losses) from continuing operations
  $ 0.95     $ (7.17 )                           $ (0.56 )
Dividends paid
  $ 1.28     $ 0.70                             $ 1.28  
Weighted average shares outstanding (in thousands):
                                               
Basic
    4,431,870       978,463                   (137,474 )   (J)     5,272,859  
Diluted
    4,460,633       978,463                   (166,237 )   (J)     5,272,859  
 
See accompanying notes to unaudited pro forma condensed combined financial statements.


40


Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2007 AND DECEMBER 28, 2007
 
The following unaudited pro forma condensed combined statement of income combines the historical statements of income of Bank of America and Merrill Lynch assuming the companies had been combined on January 1, 2007, on a purchase accounting basis.
 
                                                 
                    Purchase
     
    Bank of America
    Merrill Lynch
    Reporting
  Accounting
  Pro Forma
 
    December 31, 2007     December 28, 2007     Reclassifications   Adjustments   December 31, 2007  
    (Dollars in millions, except per share data)  
Interest income
                                               
Interest and fees on loans and leases
  $ 55,681     $     $ 6,181     (20)   $ 700     (B)   $ 62,562  
Interest on debt securities
    9,784             4,927     (20)                 14,711  
Federal funds sold and securities purchased under agreements to resell
    7,722             31,589     (20)                 39,311  
Trading account assets
    9,417             9,290     (20)                 18,707  
Other interest income
    4,700             5,298     (20)                 9,998  
Interest and dividend revenues
          56,974       (56,974 )   (20)                  
                                                 
Total interest income
    87,304       56,974       311           700           145,289  
Interest expense
                                               
Deposits
    18,093             5,864     (21)                 23,957  
Short-term borrowings
    21,975             28,786     (21)                 50,761  
Trading account liabilities
    3,444             5,023     (21)                 8,635  
                      168     (20)                    
Long-term debt
    9,359             11,752     (21)     900     (H)     22,011  
Interest expense
          51,425       (51,425 )   (21)                  
                                                 
Total interest expense
    52,871       51,425       168           900           105,364  
Net interest income
    34,433       5,549       143           (200 )         39,925  
Noninterest income
                                               
Card income
    14,077                                     14,077  
Service charges
    8,908                                     8,908  
Investment and brokerage services
    5,147             7,284     (22)                 17,896  
                      5,465     (23)                    
Commissions
          7,284       (7,284 )   (22)                  
Managed accounts and other fee-based revenues
          5,465       (5,465 )   (23)                  
Investment banking income
    2,345       5,582                               7,927  
Equity investment income
    4,064       1,627                               5,691  
Trading account profits (losses)
    (5,131 )           (12,067 )   (24)                 (17,198 )
                                                 
Principal transactions
          (12,067 )     12,067     (24)                  
Mortgage banking income
    902                                     902  
Gain on sales of debt securities
    180                                     180  
Other income (loss)
    1,394       (2,190 )                             (796 )
                                                 
Total noninterest income
    31,886       5,701                           37,587  
                                                 
Total revenue, net of interest expense
    66,319       11,250       143           (200 )         77,512  
Provision for credit losses
    8,385             143     (20)               8,528  
Noninterest expense
                                               
Personnel
    18,753       15,903                               34,656  
Occupancy
    3,038       1,139       (27 )   (25)                 4,150  
Equipment
    1,391             27     (25)                 1,418  
Marketing
    2,356       785                               3,141  
Professional fees
    1,174       1,027                               2,201  
Amortization of intangibles
    1,676             242     (26)     208     (D)     2,126  
Data processing
    1,962             1,217     (27)                 3,179  
Telecommunications
    1,013             840     (27)                 1,853  
Communications and technology
          2,057       (2,057 )   (27)                  
Brokerage, clearing and exchange fees
          1,415                               1,415  
Office supplies and postage
          233       (233 )   (28)                  
Other general operating
    5,237       1,522       233     (28)                 6,750  
                      (242 )   (26)                    
Merger and restructuring charges
    410                                   410  
                                                 
Total noninterest expense
    37,010       24,081                 208           61,299  
Income (losses) from continuing operations before income taxes
    20,924       (12,831 )               (408 )         7,685  
Income tax expense (benefit)
    5,942       (4,194 )                 (133 )   (F)     1,615  
                                                 
Net income (loss) from continuing operations
    14,982       (8,637 )               (275 )         6,070  
Income (loss) from continuing operations available to common stockholders
  $ 14,800     $ (8,907 )   $         $ (275 )       $ 5,618  
                                                 
Per common share data
                                               
Earnings (losses) from continuing operations
  $ 3.35     $ (10.73 )                           $ 1.09  
Diluted earnings (losses) from continuing operations
  $ 3.30     $ (10.73 )                           $ 1.07  
Dividends paid
  $ 2.40     $ 1.40                             $ 2.40  
Weighted average shares outstanding (in thousands):
                                               
Basic
    4,423,579       830,415                   (116,673 )   (J)     5,137,321  
Diluted
    4,480,254       830,415                   (47,380 )   (J)     5,263,289  
 
See accompanying notes to unaudited pro forma condensed combined financial statements.


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Note 1 — Basis of Pro Forma Presentation
 
The unaudited pro forma condensed combined financial information related to the merger is included for the year ended December 31, 2007, and as of and for the six months ended June 30, 2008. As indicated in Exhibit 99.1 to Bank of America’s Form 8-K dated September 15, 2008, Bank of America agreed to acquire Merrill Lynch for $50 billion. This purchase price was calculated based upon the closing price of Bank of America common stock of $33.74 on Friday, September 12, 2008. However, for accounting purposes, generally accepted accounting principles requires that the average closing price for the two days before the announcement, the day of the announcement, and the two days following the announcement be used to calculate the purchase price, resulting in an average stock price of $30.02. The pro forma adjustments included herein solely reflect, as of June 27, 2008, the conversion of Merrill Lynch common stock into Bank of America common stock using an exchange ratio of 0.8595 of a share of Bank of America common stock for each of the approximately 1.2 billion shares of Merrill Lynch common stock and share-based compensation awards. Also, Merrill Lynch preferred stock of approximately $13.7 billion, outstanding at June 27, 2008, has been converted into Bank of America preferred stock on a one-for-one basis. The pro forma purchase price included herein does not consider changes to Merrill Lynch’s common and preferred stock subsequent to June 27, 2008. Additionally, the pro forma accounting, including the determination of goodwill does not consider the results of operations, including certain transactions that have occurred subsequent to June 27, 2008. For additional information on these subsequent events, see Note 18, Subsequent Events to the condensed consolidated financial statements in Merrill Lynch’s quarterly report on Form 10-Q for the period ended June 27, 2008. The pro forma purchase price, goodwill and earnings per share amounts will change based upon these events and the results of operations between June 27, 2008 and the actual merger date.
 
The merger will be accounted for using the purchase method of accounting; accordingly, Bank of America’s cost to acquire Merrill Lynch will be allocated to the assets (including identifiable intangible assets) and liabilities (including executory contracts and other commitments) of Merrill Lynch at their respective fair values on the data the merger is complete.
 
The unaudited pro forma condensed combined financial information includes preliminary estimated adjustments to record the assets and liabilities of Merrill Lynch at their respective estimated fair values and represents management’s estimates based on available information. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after the merger is completed and after completion of a final analysis to determine the estimated fair values of Merrill Lynch’s tangible and identifiable intangible assets, and liabilities. Accordingly, the final purchase accounting adjustments and integration charges may be materially different from the pro forma adjustments presented in the document. Increases or decreases in the estimated fair values of the net assets, commitments, executory contracts, and other items of Merrill Lynch as compared to the information shown in the document may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact the statement of operations due to adjustments in yield and/or amortization of the adjusted assets or liabilities.
 
The unaudited pro forma condensed combined balance sheet includes a preliminary estimate of the exit and termination costs which will be recorded in purchase accounting related to the total estimated $2 billion after-tax ($3 billion pre-tax) merger related costs that will be incurred to combine the operations of Bank of America and Merrill Lynch. These preliminary estimates of merger related charges will result from action taken with respect to both Bank of America and Merrill Lynch operations, facilities, and associates. The charges will be recorded based on the nature and timing of these integration actions. Accordingly, the unaudited pro forma condensed combined statements of operations do not include the impact of these charges. See Note 4 — Merger Related Charges for a further discussion of these charges.
 
Certain amounts in the historical consolidated financial statements of Bank of America and Merrill Lynch have been reclassified to conform to the combined company’s classification. Discontinued operations reported in Merrill Lynch’s historical consolidated statements of operations have been excluded as this information is not required in the unaudited pro forma condensed combined statements of operations. The unaudited pro forma condensed combined financial information is presented in this document for illustrative purposes only and does not necessarily indicate the results of operations or the combined financial position that would have


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resulted had the merger been completed at the beginning of the applicable period presented, nor the impact of possible business model changes as a result of current market conditions which may impact revenues, expense efficiencies, asset dispositions, share repurchases and other factors. Additionally, the unaudited pro forma condensed combined financial information is not indicative of the results of operations in future periods or the future financial position of the combined company.
 
The unaudited pro forma condensed combined financial information as of and for the period ended June 30, 2008, and for the year ended December 31, 2007, excludes the impact of Bank of America’s acquisition of Countrywide Financial Corporation on July 1, 2008, as the acquisition of Countrywide Financial Corporation was not material to Bank of America’s total assets and net income from continuing operations. Additionally, the unaudited pro forma condensed combined financial information has been prepared assuming the merger with Merrill Lynch will occur prior to January 1, 2009 and accordingly, this information has been prepared under Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations.” On January 1, 2009, SFAS No. 141 (revised 2007), “Business Combinations” (SFAS 141R) becomes effective. If the merger closes on January 1, 2009, or later, the acquisition will be accounted for under SFAS 141R. The primary changes under SFAS 141R include the purchase price will be determined based upon Bank of America’s closing stock price on the date the merger closes, all exit and termination costs will be expensed, the loan portfolio will be recorded at fair value and contingent assets and liabilities will be recorded at fair value.
 
Note 2 — Reporting Reclassifications
 
Balance Sheet
 
  Adjustment to reclassify Merrill Lynch’s cash and securities segregated for regulatory purposes or deposited with clearing organizations into cash or securities to conform to Bank of America’s classification.
 
  Adjustment to reclassify Bank of America’s securities borrowed included in federal funds sold and securities purchased under agreements to resell into securities borrowed to conform to the combined company’s classification.
 
  Adjustment to reclassify Merrill Lynch’s derivative contracts included in trading account assets into derivative assets to conform to Bank of America’s classification.
 
  Adjustment to reclassify Merrill Lynch’s derivative contracts included in other assets into derivative assets to conform to Bank of America’s classification.
 
  Adjustment to reclassify Bank of America’s securities received as collateral included in other assets to securities received as collateral to conform to the combined company’s classification.
 
  Adjustment to reclassify Merrill Lynch’s mortgage servicing rights included in other assets to mortgage servicing rights to conform to Bank of America’s classification.
 
  Adjustment to reclassify Merrill Lynch’s goodwill and intangible assets to conform to Bank of America’s classification.
 
  Adjustment to reclassify Merrill Lynch’s customers, brokers and dealers and interest and other receivables into other receivables to conform to the combined company’s classification.
 
  Adjustment to reclassify Bank of America’s other receivables included in other assets to other receivables to conform to the combined company’s classification.
 
  10  Adjustment to reclassify Bank of America’s deferred tax liabilities to deferred tax assets to conform to the combined company’s classification.
 
  11  Adjustment to reclassify Merrill Lynch’s deposits to conform to Bank of America’s classification.
 
  12  Adjustment to reclassify Bank of America’s securities loaned included in federal funds purchased and securities sold under agreements to repurchase into securities loaned to conform to the combined company’s classification.
 
  13  Adjustment to reclassify Merrill Lynch’s derivative contracts included in trading account liabilities into derivative liabilities to conform to Bank of America’s classification.


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  14  Adjustment to reclassify Bank of America’s obligation to return securities received as collateral included in other liabilities to securities received as collateral to conform to the combined company’s classification.
 
  15  Adjustment to reclassify Merrill Lynch’s derivative contracts included in other payables into derivative liabilities to conform to Bank of America’s classification.
 
  16  Adjustment to reclassify Bank of America’s other payables included in accrued expenses and other liabilities to other payables to conform to the combined company’s classification.
 
  17  Adjustment to reclassify Merrill Lynch’s customers, brokers and dealers and interest and other payables into other payables to conform to the combined company’s classification.
 
  18  Adjustment to reclassify Merrill Lynch’s junior subordinated notes (related to trust preferred securities) into long-term debt to conform to Bank of America’s classification.
 
  19  Adjustment to reclassify Merrill Lynch’s shares exchangeable to common stock, paid-in capital and treasury stock to common stock to conform to Bank of America’s classification.
 
Income Statement
 
  20  Adjustment to reclassify Merrill Lynch’s interest and dividend revenues to interest income: interest and fees on loans and leases, interest on debt securities, federal funds sold and securities purchased under agreements to resell, trading account assets, other interest income, interest expense: trading account liabilities or provision for credit losses to conform to Bank of America’s classification.
 
  21  Adjustment to reclassify Merrill Lynch’s interest expense to interest expense: deposits, short-term borrowings, trading account liabilities or long-term debt to conform to Bank of America’s classification.
 
  22  Adjustment to reclassify Merrill Lynch’s commissions income to investment and brokerage services income to conform to Bank of America’s classification.
 
  23  Adjustment to reclassify Merrill Lynch’s managed accounts and other fee-based revenues to investment and brokerage services income to conform to Bank of America’s classification.
 
  24  Adjustment to reclassify Merrill Lynch’s principal transactions to trading account profits (losses) to conform to Bank of America’s classification.
 
  25  Adjustment to reclassify Merrill Lynch’s equipment expense included in occupancy expense to equipment expense to conform to Bank of America’s classification.
 
  26  Adjustment to reclassify Merrill Lynch’s amortization of intangibles included in other general operating expense to amortization of intangibles to conform to Bank of America’s classification.
 
  27  Adjustment to reclassify Merrill Lynch’s data processing and communications expense included in communication and technology expense to data processing expense and telecommunications expense to conform to Bank of America’s classification.
 
  28  Adjustment to reclassify Merrill Lynch’s office supplies and postage expense to other general operating expense to conform to Bank of America’s classification.
 
Note 3 — Preliminary Purchase Accounting Allocation
 
The unaudited pro forma condensed combined financial information for the merger includes the unaudited pro forma condensed combined balance sheet as of June 30, 2008 assuming the merger was completed on June 30, 2008. The unaudited pro forma condensed combined income statements for the six months ended June 30, 2008 and the year ended December 31, 2007 were prepared assuming the merger was completed on January 1, 2007.
 
The unaudited pro forma condensed combined financial information reflects the issuance of approximately 1.0 billion shares of Bank of America common stock and share-based compensation awards and preferred stock of approximately $13.7 billion. The common stock, share-based compensation awards and preferred stock issued in the exchange was valued using the methodology discussed in Note 1 above.


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The merger will be accounted for using the purchase method of accounting; accordingly, Bank of America’s cost to acquire Merrill Lynch will be allocated to the assets (including identifiable intangible assets) and liabilities of Merrill Lynch at their respective estimated fair values as of the acquisition date. Accordingly, the pro forma purchase price was preliminarily allocated to the assets acquired and the liabilities assumed based on their estimated fair values as summarized in the following table.
 
                 
Preliminary Pro Forma Purchase Price Allocation (unaudited)
           
(Dollars in billions, except per share amounts)            
 
Pro Forma Purchase price
               
Merrill Lynch common stock and share-based compensation awards exchanged (in billions)
    1.193          
Exchange ratio
    0.8595          
                 
Total shares of Bank of America’s common stock exchanged (in billions)
    1.025          
Purchase price per share of Bank of America’s common stock(1)
  $ 30.02          
                 
            $ 30.8  
Merrill Lynch preferred stock converted to Bank of America preferred stock
            13.7  
                 
Total Pro Forma Purchase Price(2)
            44.5  
                 
Preliminary allocation of the pro forma purchase price
               
Merrill Lynch stockholders’ equity
            34.8  
Merrill Lynch goodwill and intangible assets
            (5.1 )
Adjustments to reflect assets acquired and liabilities assumed at fair value:
               
Loans and leases, net
            (5.3 )
Intangible assets
            7.5  
Other assets
            (0.9 )
Accrued expenses and exit, termination and other liabilities
            (2.6 )
Long-term debt
            6.5  
Deferred taxes
            (3.9 )
                 
Fair value of net assets acquired
            31.0  
                 
Preliminary pro forma goodwill resulting from the merger
          $ 13.5  
                 
 
 
(1) The value of the shares of common stock exchanged with Merrill Lynch stockholders was based upon the average of the closing prices of Bank of America’s common stock for the period commencing two trading days before and ending two trading days after September 15, 2008, the date of the merger agreement.
 
(2) The pro forma purchase price included herein does not consider changes to Merrill Lynch’s common and preferred stock subsequent to June 27, 2008. Additionally, the pro forma accounting, including the determination of goodwill does not consider the results of operations, including certain transactions that have occurred subsequent to June 27, 2008. For additional information on these subsequent events, see Note 18, Subsequent Events to the condensed consolidated financial statements in Merrill Lynch’s quarterly report on Form 10-Q for the period ended June 27, 2008. The pro forma purchase price, goodwill and earnings per share amounts will change based upon these events and the results of operations between June 27, 2008 and the actual merger date.
 
The preliminary pro forma purchase accounting allocation included in the unaudited pro forma condensed combined financial information is as follows:
 
  A  Preliminary adjustments, primarily to record equity method and other investments at their estimated fair values. Certain of these adjustments, totaling approximately $3 billion primarily related to publicly traded equity method investments resulted in an increase in fair value based on quoted prices. Other adjustments, totaling approximately $3.0 billion related to the write down in fair value of residential mortgage-backed securities and other investments that due to current market conditions may not be traded in active markets. For these illiquid investments, after


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consideration of market events subsequent to June 30, 2008, fair value was estimated based upon discounted cash flows. The adjustments reflected herein are based on current assumptions and valuations which are subject to change.
 
  B  Preliminary adjustments totaling approximately $5.3 billion, including a life of loan loss estimate of $3.9 billion for impaired loans and a market interest rate adjustment of $1.4 billion on the entire loan portfolio. The preliminary adjustments record residential and commercial impaired loans at their estimated fair values primarily based upon the present value of expected future cash flows, including life of loan loss forecasts, based upon current market interest and default rates, as well as residential and commercial non-impaired loans at their estimated present value of amounts to be received using current market interest rates. For non-impaired loans, Merrill Lynch’s existing allowance for loan losses was retained. The effect of these adjustments is to increase interest income and decrease provision for loan losses for the impaired portfolio by approximately $350 million and $700 million for the six months ended June 30, 2008, and the twelve months ended December 31, 2007, respectively. The entire amount has been recorded as an adjustment to interest income pending a detailed loan by loan review. The adjustments reflected herein are based on current assumptions and valuations which are subject to change.
 
  C  Adjustments to write off historical Merrill Lynch goodwill and record pro forma goodwill created as a result of the merger.
 
  D  Adjustments to write off historical Merrill Lynch other intangible assets and record preliminary estimates of core deposit (approximately $500 million), customer (approximately $4 billion) and trade name (approximately $3 billion) intangible assets resulting from the merger. Preliminary estimates of the fair values of the intangibles were based on discounted present value of future cash flows resulting from the existing customer relationships including consideration of potential attrition in these relationships. Preliminary estimates of the fair value for these intangibles are subject to change upon completion of a formal third party valuation. The impact of the intangible assets is to increase amortization of intangibles by approximately $173 million and $208 million for the six months ended June 30, 2008, and the twelve months ended December 31, 2007, net of amounts already included in Merrill Lynch’s historical statement of operations, respectively. The nature, amount and amortization method of various possible identified intangibles are being studied by management. The adjustments reflected herein are based on current assumptions and valuations which are subject to change. Material changes are possible when our analysis is completed.
 
  E  Preliminary adjustments, primarily to record decreases to other assets, including deferred costs (approximately $250 million) and pension and other postretirement benefits/liabilities (approximately $650 million) at their estimated fair values. The adjustments reflected herein are based on current assumptions and valuations, including the write-off of deferred costs and changes in benefit plan assumptions based upon market conditions, which are subject to change.
 
  F  Preliminary adjustments to record the tax effect of the pro forma adjustments at an estimated 32.5% effective tax rate, as well as estimated adjustments to write-off Merrill Lynch deferred tax assets related to share-based compensation awards. The 32.5% rate represents the estimated blended statutory rates of the U.S. (including states) at 37% and non-U.S. taxing jurisdictions (primarily the U.K.) at 28%. The estimated net adjustment to Merrill Lynch deferred tax assets primarily relates to the elimination of deferred taxes attributable to unvested awards to employees of share-based compensation (approximately $1.7 billion) and the establishment of deferred taxes related to the purchase accounting adjustments (approximately $2.2 billion). The adjustments reflected herein are based on current assumptions and valuations which are subject to change.
 
  G  Preliminary adjustments to record approximately $2.5 billion related to certain contractual change in control obligations for Merrill Lynch associates. The adjustments reflected herein are based on current assumptions and valuations which are subject to change.


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  H  Preliminary adjustments to record debt at its estimated fair value based upon current credit and current interest rates. The impact of the adjustments was to increase interest expense by approximately $450 million and approximately $900 million for the six months ended June 30, 2008, and the twelve months ended December 31, 2007, respectively. The adjustments reflected herein are based on current assumptions and valuations which are subject to change.
 
  I  Preliminary adjustments to eliminate Merrill Lynch historical stockholders’ equity and reflect Bank of America’s capitalization of Merrill Lynch.
 
  J  Weighted average shares were calculated using the historical weighted average shares outstanding of Bank of America and Merrill Lynch, adjusted using the exchange ratio, to the equivalent shares of Bank of America common stock, for the year ended December 31, 2007, and six months ended June 30, 2008. Earnings per share (EPS) data have been computed based on the combined historical income of Bank of America, income from continuing operations for Merrill Lynch and the impact of purchase accounting adjustments. For periods in which the pro forma combined company had a net loss from continuing operations or net income from continuing operations the impact of dilutive equity instruments have been excluded or included, respectively, as part of the diluted EPS calculation.
 
Note 4 — Merger Related Charges
 
In connection with the merger, the plan to integrate Bank of America’s and Merrill Lynch’s operations is still being developed. The total integration costs have been preliminarily estimated to be approximately $2 billion after tax or approximately $3 billion pre-tax. Approximately $1.5 billion (pre-tax basis) is estimated to be capitalized, with a corresponding increase to goodwill, in purchase accounting, including costs for serverance of Merrill Lynch personnel and closure of Merrill Lynch vacant facilities. The specific details of these plans will continue to be refined over the next several months. Currently, our merger integration team is assessing the two companies’ operations, including information systems, premises, equipment, benefit plans, supply chain methodologies, service contracts and personnel to determine optimum strategies to realize cost savings. The remaining approximately $1.5 billion (pre-tax basis) is estimated to relate to Bank of America merger costs, including costs for severance of Bank of America personnel, as well as Merrill Lynch and Bank of America associate retention costs, conversion costs, and communication costs, and will be recorded based upon the nature and timing of these activities. These remaining costs are not reflected in the unaudited pro forma condensed combined statements of income.
 
Our merger integration decisions will impact certain existing Merrill Lynch facilities (both leased and owned), information systems, supplier contracts and costs associated with the involuntary termination of personnel. Additionally, as part of our formulation of the merger integration plan, certain actions regarding existing Bank of America information systems, premises, equipment, benefit plans, supply chain methodologies, supplier contracts and involuntary termination of personnel may be taken. To the extent there are costs associated with these actions, the costs will be recorded based on the nature and timing of these integration actions. We expect that such decisions will be completed shortly after the merger. Restructuring charges will be recorded based on the nature and timing of these integration actions.
 
Included in the costs described above, during the combination of the two companies we will incur additional integration costs consisting of employee retention agreements, conversion costs and incremental communication costs to customers and associates, among other costs. It is expected that these costs will be incurred over a three-year period after completion of the merger. These costs will be expensed as incurred.
 
Note 5 — Estimated Annual Cost Savings
 
Estimated annual cost savings of approximately $4 billion after-tax or approximately $7 billion pre-tax, when fully phased in after the merger, represent our estimate only and may not be indicative of the actual


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amount of the cost savings the combined company actually achieves. These amounts do not include the possible impacts of revenue opportunities. These amounts consist of:
 
                 
    Annual Pre-Tax Cost Savings    
 
Overlapping Businesses and Infrastructure
  $ 4,450     million   (A)
Corporate Staff Functions
    1,500     million   (B)
Occupancy
    500     million   (C)
Other
    550     million   (D)
                 
Total
  $ 7,000     million    
                 
 
 
(A) Overlapping businesses, including certain capital markets and asset management activities, and related infrastructure, including technology and operations functions, are projected to result in cost savings due to the elimination of redundant systems and software, the elimination of redundant operational support and activities and reduced personnel costs for the combined company.
 
(B) Corporate staff function cost savings are projected to occur from reduced personnel costs and elimination of duplicative corporate and administrative functions.
 
(C) Occupancy costs savings are projected to result from consolidation of personnel into a reduced number of office facilities and leased space.
 
(D) Other cost savings result from miscellaneous items, including vendor leverage purchasing efficiencies, not included in the above categories.
 
Note 6 — Other Items
 
In addition to the pro forma adjustments included in our Unaudited Pro Forma Condensed Combined Financial Statements, we anticipate recording certain liabilities with a corresponding increase to goodwill in purchase accounting under the guidance of EITF 95-3. When evaluating Merrill Lynch’s credit derivative positions, we considered overall exposure when combined with Bank of America. In that regard, where we determined that we had redundant positions or where combined counterparty or industry concentrations exceeded desired levels, we have preliminarily estimated breakage costs of terminating the Merrill Lynch credit derivatives to be approximately $1.4 billion. These estimates are based upon current assumptions and valuations which are subject to change as we complete a position by position review of the Merrill Lynch credit derivatives.


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THE MERGER
 
Background of the Merger
 
Management and the boards of directors of both Bank of America and Merrill Lynch regularly review and consider potential strategic options for their companies in light of their respective performance, business needs and the challenges and opportunities presented by the economic and industry environment. As part of this process, senior management of both companies have met informally from time to time with senior management of other financial institutions, including each other, regarding industry trends and strategic considerations. Among these considerations has been the possibility of a combination of Bank of America and Merrill Lynch.
 
During the week of September 8, 2008, the prices of publicly traded shares of many major financial services companies declined significantly as speculation and reports about financial difficulties at Lehman Brothers Holdings, Inc. began to circulate. On September 10, 2008, Lehman Brothers pre-announced a $3.9 billion net loss for its third quarter of 2008, as well as a number of initiatives to bolster its financial viability; however, the equity markets remained volatile. Merrill Lynch’s common stock price declined by approximately 36 percent during that week. On the morning of Friday, September 12, 2008, the Merrill Lynch board of directors held an informational conference call. During the conference call, senior management of Merrill Lynch updated the directors on recent market conditions, developments relating to Lehman Brothers’ financial viability, and the status of, and certain considerations with respect to, Merrill Lynch’s capital, liquidity and business results, Merrill Lynch’s recent stock performance and potential rating agency actions. The Merrill Lynch board of directors urged senior management to continue to evaluate the potential impact of these market developments on Merrill Lynch and the possible courses of action Merrill Lynch might pursue in response to various possible scenarios, and stressed the need for Merrill Lynch to be prepared to act quickly as events unfolded.
 
On Saturday morning, September 13, 2008, John Thain, Chairman and Chief Executive Officer of Merrill Lynch, contacted Ken Lewis, Chairman, Chief Executive Officer and President of Bank of America. Mr. Thain told Mr. Lewis that, in light of the extremely distressed conditions in the financial services industry generally and the investment banking industry in particular, he believed that it might be beneficial to both companies to explore one or more potential investment or other transactions between Merrill Lynch and Bank of America. Mr. Lewis agreed that such discussions could be in both companies’ best interests and agreed to meet with Mr. Thain later that day in New York City.
 
On Saturday afternoon, Messrs. Lewis and Thain met in New York City. The two executives discussed the unprecedented market environment that had triggered significant dislocations, the near-bankruptcy of The Bear Stearns Companies Inc. and the apparently imminent bankruptcy of Lehman Brothers. Mr. Thain proposed to Mr. Lewis that Bank of America consider acquiring a 9.9% equity stake in Merrill Lynch and provide a credit facility to Merrill Lynch. Mr. Lewis responded that Bank of America was not interested in acquiring a minority stake in Merrill Lynch, but that Bank of America would be interested in discussing a potential business combination with Merrill Lynch. Mr. Lewis expressed his view of the strategic fit between the two organizations and his belief that the combination of the two companies would result in a leading position in retail brokerage and wealth management, significantly enhanced investment banking capabilities and global scale in investment management. Messrs. Thain and Lewis agreed to further discuss both alternatives.
 
Following that afternoon meeting, and in view of the need to move expeditiously in light of the apparently imminent bankruptcy of Lehman Brothers and deteriorating market conditions, both companies began to arrange meetings among members of management and their advisors to discuss the challenges and benefits of a transaction and to undertake their respective business, financial, operational and legal due diligence investigations. The discussions among Bank of America, Merrill Lynch and their management teams and advisors, as well as their due diligence investigations, continued throughout the night and into the next day and night.


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Also on Saturday, representatives of Merrill Lynch engaged in exploratory discussions regarding a transaction with two other large financial services companies, including with respect to the potential for a minority investment and credit facility with one company and for a business combination with the other company. The discussions regarding a potential minority investment did not result in the development of a transaction that the senior management of Merrill Lynch or its board of directors determined to be as favorable to Merrill Lynch or its stockholders as the combination proposed with Bank of America. After meeting with the other company, Merrill Lynch did not pursue further discussions regarding a potential combination because senior management of Merrill Lynch concluded that such a transaction was not readily achievable.
 
Early in the morning of Sunday, September 14, 2008, Messrs. Thain and Lewis met in New York City. At this meeting, Messrs. Thain and Lewis discussed the results of the due diligence investigations conducted by their companies’ respective representatives. Mr. Lewis and Mr. Thain discussed the strategic rationale for a business combination of Bank of America and Merrill Lynch and considered how the businesses of Merrill Lynch and Bank of America would complement each other. At the conclusion of the meeting, Messrs. Thain and Lewis agreed to have representatives of Merrill Lynch and Bank of America and their respective legal advisors pursue the negotiation of the terms of the agreements that would govern the proposed business combination transaction.
 
Later that day, the Merrill Lynch board of directors held an informational conference call. In addition to the directors, Shearman & Sterling LLP, counsel to Merrill Lynch, and Cravath, Swaine & Moore LLP, counsel to the non-employee directors, participated in the conference call. On the conference call, Mr. Thain updated the directors on the meetings held over the weekend between government officials and senior executives at leading financial services companies to provide financial assistance to Lehman Brothers, the exploratory discussions with two other institutions regarding the potential for a strategic transaction, the status of discussions with Bank of America regarding the proposed business combination transaction, and the status of, and certain considerations with respect to, Merrill Lynch’s capital, liquidity and business results and the potential impact on Merrill Lynch of the expected public announcements regarding the expected bankruptcy filing by Lehman Brothers and the reported liquidity issues facing American International Group. The Merrill Lynch board of directors indicated their agreement that representatives of Merrill Lynch and its legal advisors continue negotiating the terms of the proposed merger with Bank of America and its legal advisors with a view to reaching an agreement that could be presented to the Merrill Lynch board of directors that evening, particularly in light of the market uncertainties and related risks Merrill Lynch would be expected to face when the markets opened the next day. Mr. Thain proposed that the Merrill Lynch board of directors plan to meet at 6:00 p.m. that evening, and subsequently left the conference call together with the other representatives of Merrill Lynch and their advisors. The non-employee directors continued the conference call in executive session with their independent counsel for purposes of discussing the proposed business combination transaction with Bank of America and the alternatives available to Merrill Lynch.
 
From September 13, 2008 through September 14, 2008, representatives of Merrill Lynch met several times with representatives of Bank of America to discuss valuation and pricing for shares of Merrill Lynch common stock in any proposed business combination transaction. During these discussions, representatives of Merrill Lynch indicated that Merrill Lynch would be seeking a significant premium to the closing price of $17.05 for shares of Merrill Lynch common stock on the NYSE on September 12, 2008, as well as an appropriate multiple of book value. These discussions resulted in the parties’ agreement to present to their respective boards a proposed transaction having a price of $29.00 for each share of Merrill Lynch common stock, which equated to an exchange ratio of 0.8595 based on the closing price for shares of Bank of America common stock on the NYSE on September 12, 2008.
 
In the late afternoon on Sunday, the Bank of America board of directors met with members of Bank of America senior management and its outside advisors. Bank of America senior management reviewed with the Bank of America board of directors information regarding Bank of America, Merrill Lynch and the terms of the proposed transaction. Bank of America senior management and the company’s financial advisors, J.C. Flowers and FPK, presented the Bank of America board of directors with the findings of their due diligence investigation of Merrill Lynch and additional information, including financial information regarding the two companies and the transaction as more fully described below under the heading “— Opinion of Bank


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of America’s Financial Advisors”. Each of J.C. Flowers and FPK orally advised the Bank of America board of directors, and indicated that it was prepared to render a written opinion to the same effect, that, as of such date and based upon and subject to the assumptions made, methodologies used, factors considered and limitations upon their review as described in their respective opinions and other matters as J.C. Flowers and FPK considered relevant, the proposed exchange ratio to be paid by Bank of America in the merger was fair, from a financial point of view, to Bank of America. Bank of America’s general counsel and Wachtell, Lipton, Rosen & Katz, counsel to Bank of America, discussed with the Bank of America board of directors the legal standards applicable to its decisions and actions with respect to the proposed transaction and reviewed the legal terms of the proposed merger. Following review and discussion among the members of the Bank of America board of directors, including consideration of the factors described under “— Bank of America’s Reasons for the Merger; Recommendation of the Bank of America Board of Directors,” the Bank of America board of directors unanimously determined that the transaction was in the best interests of Bank of America and its stockholders and voted unanimously to approve the merger agreement, the stock option agreement and the transactions contemplated by those agreements.
 
Shortly after the start of the Bank of America board meeting, the Merrill Lynch board of directors met with members of Merrill Lynch’s senior management and Merrill Lynch’s financial advisors and outside legal advisors. Merrill Lynch senior management reviewed with the Merrill Lynch board of directors information regarding Bank of America, Merrill Lynch and the terms of the proposed transaction and updated the directors on developments in the discussions with representatives of Bank of America since the adjournment of the conference call earlier in the day. Merrill Lynch senior management apprised the Merrill Lynch board of directors of its due diligence investigations of Bank of America. MLPFS reviewed its financial analyses regarding the proposed merger with the Merrill Lynch board of directors as more fully described below under the heading “— Opinion of Merrill Lynch’s Financial Advisor.” MLPFS then rendered to the Merrill Lynch board of directors its oral opinion, which opinion was subsequently confirmed in writing, that as of September 14, 2008, based upon the assumptions made, matters considered and limits of such review, as set forth in its opinion, the exchange ratio in the merger was fair from a financial point of view to holders of Merrill Lynch common stock. In addition, Shearman & Sterling LLP reviewed with the Merrill Lynch board of directors the legal terms of the proposed merger and the legal standards applicable to its decisions and actions with respect to the proposed transaction. Following review and discussion among the members of the Merrill Lynch board of directors, including consideration of the factors described under “— Merrill Lynch’s Reasons for the Merger; Recommendation of the Merrill Lynch Board of Directors,” the Merrill Lynch board of directors determined that the merger was advisable and in the best interests of Merrill Lynch and its stockholders, and the Merrill Lynch board of directors voted unanimously to approve the merger agreement, the stock option agreement and the transactions contemplated by those agreements.
 
Following approval of each board of directors, the parties and their counsel continued to work to finalize and document the legal terms of the definitive agreements for the transaction, and early in the morning on September 15, 2008, the parties entered into the merger agreement and the stock option agreement and the transaction was announced in a press release issued by Bank of America.
 
Merrill Lynch’s Reasons for the Merger; Recommendation of the Merrill Lynch Board of Directors
 
The Merrill Lynch board of directors consulted with Merrill Lynch’s management, as well as its legal and financial advisors, in its evaluation of the merger. In reaching its conclusion to adopt the merger agreement and in determining that the merger is advisable and in the best interests of Merrill Lynch and its stockholders, the Merrill Lynch board of directors considered a number of factors, including the following factors:
 
  •  Strategic and Other Business Advantages
 
  •  that Bank of America is one of the largest financial institutions in the world, with significant scale and strength in the commercial and consumer banking arena that uniquely compliments Merrill Lynch’s global wealth management and global markets and investment banking businesses;


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  •  the breadth and diversity of Bank of America’s businesses and operations, as well as its strong capital position, funding capabilities and liquidity positions Bank of America (and the combined company) optimally within the current and evolving financial services landscape;
 
  •  the board of directors’ belief, based upon its understanding of Bank of America’s business and operations, that the combined company will provide strong support for Merrill Lynch’s existing operations, as well as new opportunities to leverage the complementary nature of the respective businesses, customers, products and skills of Merrill Lynch and Bank of America;
 
  •  the combined company’s diverse business and geographic mix will have leading global positions in commercial and consumer banking, retail brokerage and wealth management, sales and trading and investment management;
 
  •  Business Condition and Prospects of Merrill Lynch
 
  •  its understanding of Merrill Lynch’s business, operations, financial condition, liquidity and capital positions, earnings, and prospects as discussed above under “Background of the Merger” and below under “Opinion of Merrill Lynch’s Financial Advisor”;
 
  •  its consideration of potential strategic alternatives based upon periodic assessments undertaken by Merrill Lynch and its advisors, including the contacts and discussions during the period from September 12 through September 14, 2008, between Merrill Lynch and other parties, including Bank of America;
 
  •  the significant decline in stock prices of financial services firms generally in the weeks preceding the board’s decision to approve the merger and, in particular, of Merrill Lynch common stock, which declined approximately 36% during the one-week period prior to the decision of the Merrill Lynch board of directors;
 
  •  statements during the week of September 8, 2008, by credit rating agencies suggesting the possibility of further credit ratings downgrades for financial services companies that had suffered severe declines in the trading price of their common stock;
 
  •  the risk of Merrill Lynch’s credit ratings being further downgraded and the potential effect such actions would have on certain of Merrill Lynch’s businesses and its liquidity position and funding capabilities;
 
  •  the current and prospective environment in which Merrill Lynch operates, which reflects challenging and uncertain investment banking industry conditions and risks that the Merrill Lynch board of directors expected to persist, including:
 
  •  the volatile valuations and illiquidity of certain financial assets and exposures;
 
  •  the circumstances under which Bear Stearns agreed to enter into a business combination with JPMorgan Chase & Co. in which Bear Stearns faced the prospect of a bankruptcy filing that would have resulted in Bear Stearns stockholders receiving no value for their common shares;
 
  •  management’s belief that the United States federal government would not provide financial support to Lehman Brothers or any potential acquiror of Lehman Brothers and the anticipated bankruptcy filing of Lehman Brothers and its likely effects on its stockholders and other companies within the investment banking industry;
 
  •  the reported liquidity issues facing AIG International Group, Inc. and its reported need to secure significant financing in the very near-term in order to avoid bankruptcy;
 
  •  generally uncertain national and international economic conditions;
 
as well as the competitive environment for financial institutions generally, and the potential effects of these factors on Merrill Lynch;
 
  •  Form and Value of Per Share Merger Consideration


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  •  the all stock and fixed exchange ratio aspects of the merger consideration, which would allow Merrill Lynch stockholders to participate in a portion of any improvement in the Merrill Lynch business and synergies resulting from the merger, and the value to Merrill Lynch stockholders represented by that consideration;
 
  •  the fact that Merrill Lynch stockholders’ pro forma ownership of the combined company would be approximately 25%;
 
  •  the exchange ratio of 0.8595 of a share of Bank of America common stock to be received in respect of each share of Merrill Lynch common stock represented a 70.1% premium to the closing price of Merrill Lynch common stock on September 12, 2008 (based on the closing price of Bank of America common stock on that date);
 
  •  Terms of the Merger Agreement and the Stock Option Agreement
 
  •  the provisions imposing restrictions on Merrill Lynch from soliciting or pursuing alternative transactions;
 
  •  the stock option agreement that allows Bank of America, upon the occurrence of certain specified events, to exercise an option to purchase from Merrill Lynch up to 19.9% of Merrill Lynch’s outstanding shares of common stock at a price of $17.05;
 
  •  the aggregate total profit that Bank of America may realize under the stock option agreement is capped at $2 billion, representing approximately 4% of the total transaction value;
 
  •  that Bank of America has the right to match the terms of any third party proposal to acquire Merrill Lynch;
 
  •  the Merrill Lynch board of directors may change its recommendation in the event it receives a superior proposal; provided, that Merrill Lynch must convene a special meeting of Merrill Lynch stockholders to vote on the transaction with Bank of America regardless of whether it changes its recommendation;
 
  •  that Merrill Lynch will have the right to have three mutually agreed upon members of the board of directors of Merrill Lynch serve on the combined company’s board of directors;
 
  •  the merger is expected to be treated as a tax-free exchange for Merrill Lynch stockholders; subsequent to the execution of the merger agreement, the board of directors of Merrill Lynch agreed that, in connection with the potential issuance of preferred stock to the U.S. Treasury, the merger may be treated as a taxable transaction;
 
  •  Opinion of Financial Advisor
 
  •  the financial presentation of Merrill Lynch, Pierce, Fenner & Smith Incorporated, including its opinion dated September 14, 2008, to the Merrill Lynch board of directors to the effect that, as of the date of the opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the exchange ratio of 0.8595 of a share of Bank of America common stock to be received in respect of each share of Merrill Lynch common stock pursuant to the merger agreement was fair from a financial point of view to Merrill Lynch’s stockholders; subsequent to rendering its opinion, MLPFS confirmed that the tax-free nature of the merger was not a material factor in its analysis. See “— Opinion of Merrill Lynch’s Financial Advisor”;
 
  •  Potential Risks
 
  •  the need to obtain stockholder and regulatory approvals to complete the merger, and the likelihood that such approvals are obtained by the first anniversary of the date of the merger agreement, at which time either party could terminate the merger agreement;


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  •  the possibility that the merger might not be completed as a result of failure to receive regulatory approvals or satisfy other closing conditions, including securing approvals from stockholders of Merrill Lynch and Bank of America;
 
  •  the possibility that the implied market value of the per share merger consideration could decrease prior to the closing of the merger if the per share trading price of Bank of America common stock decreases;
 
  •  the potential impact of the transaction on Merrill Lynch employees and other key constituencies;
 
  •  Additional Considerations
 
  •  the historical and current market prices of Bank of America common stock and Merrill Lynch common stock as well as comparative valuation analyses for the two companies;
 
  •  the challenges of integrating Merrill Lynch’s businesses, operations and workforce with those of Bank of America, and the risks associated with achieving anticipated cost savings and other synergies;
 
  •  that there are no dissenters’ rights applicable to the proposed merger; and
 
  •  that the Merrill Lynch directors and executive officers have interests in the merger that are in addition to or different from their financial interests as Merrill Lynch stockholders. See “- Merrill Lynch’s Officers and Directors Have Financial Interests in the Merger”.
 
The foregoing discussion of the information and factors considered by the Merrill Lynch board of directors is not exhaustive, but includes the material factors that the Merrill Lynch board of directors considered. In view of the wide variety of factors considered in connection with its evaluation of the merger and related transactions and the complexity of these matters, the Merrill Lynch board of directors did not find it useful, and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of the Merrill Lynch board of directors may have given different weight to different factors. The Merrill Lynch board of directors conducted an overall analysis of the factors described above, including discussions with, and questioning of, the management of Merrill Lynch and Merrill Lynch’s legal and financial advisors, and reached the consensus that the merger, was advisable and in the best interests of Merrill Lynch and Merrill Lynch stockholders.
 
Bank of America’s Reasons for the Merger; Recommendation of the Bank of America Board of Directors
 
The Bank of America board of directors consulted with Bank of America management as well as financial and legal advisors and determined that the merger is in the best interests of Bank of America and Bank of America stockholders. In reaching its conclusion to approve the merger agreement, the Bank of America board considered a number of factors, including the following material factors:
 
  •  its understanding of Bank of America’s business, operations, financial condition, earnings and prospects and of Merrill Lynch’s business, operations, financial condition, earnings and prospects;
 
  •  its understanding of the current and prospective environment in which Bank of America and Merrill Lynch operate, including economic and market conditions, the competitive environment and the likely impact of these factors on Bank of America and Merrill Lynch;
 
  •  the review by the Bank of America board of directors with its legal advisors of the structure of the merger and the financial and other terms of the merger and stock option agreement, including the review by the Bank of America board of directors with its financial advisors of the exchange ratio, and the expectation of Bank of America’s legal advisors that the merger will qualify as a transaction of a type that is generally tax-free for U.S. federal income tax purposes;
 
  •  the fact that the complementary nature of the respective customer bases, business products and skills of Bank of America and Merrill Lynch is expected to result in substantial opportunities to distribute


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  products and services to a broader customer base and across businesses and to enhance the capabilities of both companies;
 
  •  the potential expense saving opportunities, as a result of overlapping business and infrastructure, corporate staff functions, occupancy and other cost savings from miscellaneous items, currently estimated by Bank of America’s management to be approximately $7 billion per year on a pre-tax basis when fully realized, as well as potential incremental revenue opportunities;
 
  •  the challenges of successfully integrating Merrill Lynch’s businesses, operations and workforce with those of Bank of America and the costs of combining the two companies and achieving the anticipated cost savings, including an anticipated restructuring charge of $3 billion on a pre-tax basis and assumed amortization expense of $450 million per-annum on a pre-tax basis;
 
  •  the fact that application of such potential expense savings and other transaction-related assumptions and adjustments to the combined net income forecasts for Bank of America and Merrill Lynch made by various third-party brokerage firms and published as consensus estimates by First Call would result in the combination being 3.0% dilutive in 2009 and breakeven in 2010;
 
  •  the reports of Bank of America management and the financial presentation by J.C. Flowers and FPK to Bank of America’s board of directors concerning the operations, financial condition and prospects of Merrill Lynch and the expected financial impact of the merger on the combined company;
 
  •  the likelihood that the regulatory and stockholder approvals needed to complete the transaction will be obtained in a timely manner and that the regulatory approvals will be obtained without the imposition of adverse conditions;
 
  •  the historical and current market prices of Bank of America common stock and Merrill Lynch common stock, as well as the financial analyses prepared by J.C. Flowers and FPK;
 
  •  the opinions delivered to the Bank of America board of directors by each of J.C. Flowers and FPK to the effect that, as of the date of the opinion and based upon and subject to the assumptions made, methodologies used, factors considered and limitations upon its review described in its opinion and such other matters as J.C. Flowers and FPK considered relevant, the exchange ratio to be paid by Bank of America was fair, from a financial point of view, to Bank of America;
 
  •  the potential impact of the transaction on the capital levels and credit rating of Bank of America; and
 
  •  the need and ability to retain key Merrill Lynch personnel.
 
The Bank of America board of directors considered all of these factors as a whole and, on balance, concluded that they supported a favorable determination to enter into the merger agreement.
 
The foregoing discussion of the information and factors considered by the Bank of America board of directors is not exhaustive, but includes all material factors considered by the Bank of America board of directors. In view of the wide variety of factors considered by the Bank of America board of directors in connection with its evaluation of the merger and the complexity of these matters, the Bank of America board of directors did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. The Bank of America board of directors evaluated the factors described above and reached a consensus that the merger was advisable and in the best interests of Bank of America and its stockholders. In considering the factors described above, individual members of the Bank of America board of directors may have given different weights to different factors.
 
The Bank of America board of directors determined that the transaction was in the best interests of Bank of America and it stockholders, and the board voted unanimously to approve the merger agreement and recommends that Bank of America stockholders vote “FOR” the issuance of Bank of America common stock in the merger.


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Opinion of Merrill Lynch’s Financial Advisor
 
Merrill Lynch retained MLPFS to act as its financial advisor with respect to the merger. In connection with that engagement, Merrill Lynch requested that MLPFS evaluate the fairness, from a financial point of view, of the exchange ratio in the merger. At the meeting of the Merrill Lynch board of directors on September 14, 2008, MLPFS rendered its oral opinion to the Merrill Lynch board of directors, which opinion was subsequently confirmed in writing, that as of September 14, 2008, based upon the assumptions made, matters considered and limits of such review, as set forth in its opinion, the exchange ratio in the merger was fair from a financial point of view to the holders of such shares.
 
The full text of MLPFS’s written opinion, which sets forth material information relating to such opinion, including the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by MLPFS, is attached as Appendix E and is incorporated into this document by reference in its entirety. This description of MLPFS’s opinion is qualified in its entirety by reference to, and should be reviewed together with, the full text of the opinion. Holders of Merrill Lynch common stock are urged to read the opinion and consider it carefully. MLPFS has consented to the inclusion in this document of its opinion and of the summary of that opinion set forth below.
 
MLPFS’s opinion is addressed to the Merrill Lynch board of directors and addresses only the fairness, from a financial point of view, of the exchange ratio in the merger as of the date of the opinion. The opinion is for the use and benefit of the Merrill Lynch board of directors, does not address the merits of the underlying decision by Merrill Lynch to engage in the merger and does not constitute a recommendation to any stockholder as to how such stockholder should vote on the merger or any matter related thereto. In addition, Merrill Lynch has not asked MLPFS to address, and the opinion does not address the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of Merrill Lynch, other than the holders of the shares of Merrill Lynch common stock. In rendering the opinion, MLPFS expressed no view or opinion with respect to the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation payable to or to be received by any officers, directors, or employees of any parties to the merger, or any class of such persons, relative to the consideration to be received by the holders of the shares of Merrill Lynch common stock pursuant to the merger agreement, which consideration was determined through negotiations between Bank of America and Merrill Lynch.
 
In arriving at its opinion, MLPFS, among other things:
 
  •  reviewed certain publicly available business and financial information relating to Merrill Lynch and Bank of America that MLPFS deemed to be relevant;
 
  •  reviewed certain information relating to the business, earnings, cash flow, assets, liabilities, issuer ratings and overall liquidity position and general prospects of Merrill Lynch and Bank of America, as well as the amount and timing of the cost savings and related expenses expected to result from the merger (referred to as the Expected Cost Savings) furnished to MLPFS by Merrill Lynch;
 
  •  conducted discussions with members of senior management and representatives of Merrill Lynch and Bank of America concerning the matters described in the bullet-points above, as well as their respective businesses and prospects before and after giving effect to the merger and the Expected Cost Savings;
 
  •  reviewed the market prices and valuation multiples for shares of Merrill Lynch common stock and the shares of Bank of America common stock and compared them with those of certain publicly traded companies that MLPFS deemed to be relevant;
 
  •  reviewed the results of operations of Merrill Lynch and Bank of America and compared them with those of certain publicly traded companies that MLPFS deemed to be relevant;
 
  •  compared the proposed financial terms of the merger with the financial terms of certain other transactions that MLPFS deemed to be relevant;


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  •  participated in certain discussions and negotiations among representatives of Merrill Lynch and Bank of America and their financial and legal advisors;
 
  •  reviewed the potential pro forma impact of the merger;
 
  •  reviewed drafts dated September 14, 2008, of the merger agreement and the stock option agreement; and
 
  •  reviewed such other financial studies and analyses and took into account such other matters as MLPFS deemed necessary, including MLPFS’s assessment of general economic, market and monetary conditions.
 
In preparing its opinion, MLPFS assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to it, discussed with or reviewed by or for it, or that was publicly available, and MLPFS did not assume any responsibility for independently verifying such information or undertaking an independent evaluation or appraisal of any of the assets or liabilities of Merrill Lynch or Bank of America, nor was MLPFS furnished with any such evaluation or appraisal. MLPFS did not evaluate the solvency or fair value of Merrill Lynch or Bank of America under any state or federal laws relating to bankruptcy, insolvency or similar matters. In addition, MLPFS did not assume any obligation to conduct any physical inspection of the properties or facilities of Merrill Lynch or Bank of America. With respect to any prospective information furnished to or discussed with MLPFS by Merrill Lynch or Bank of America, MLPFS assumed that such information was reasonably prepared and reflected the best currently available estimates and judgment of Merrill Lynch’s or Bank of America’s management. With respect to the Expected Cost Savings furnished to or discussed with MLPFS by Merrill Lynch or Bank of America, MLPFS assumed that they had been reasonably prepared and reflected the best then currently available estimates and judgment of Merrill Lynch’s or Bank of America’s management as to the expected future financial performance of Merrill Lynch or Bank of America, as the case may be, and the Expected Cost Savings. MLPFS further assumed that the merger will qualify as a tax-free reorganization for U.S. federal income tax purposes. MLPFS also assumed that the final forms of the merger agreement and the stock option agreement would be substantially similar to the last drafts MLPFS reviewed. Subsequent to rendering its opinion, MLPFS confirmed to the board of directors of Merrill Lynch that the tax-free nature of the merger was not a material factor in its analysis.
 
MLPFS’s opinion was necessarily based upon market, economic and other conditions as they existed and could be evaluated on the date of the opinion, and upon the information made available to MLPFS as of the date of the opinion. MLPFS has no obligation to update its opinion to take into account events occurring after the date that its opinion was delivered to Merrill Lynch. MLPFS assumed that in the course of obtaining the necessary regulatory or other consents or approvals (contractual or otherwise) for the merger, no restrictions, including any divestiture requirements or amendments or modifications, will be imposed that will have a material adverse effect on the contemplated benefits of the merger.
 
In connection with the preparation of the opinion, MLPFS was neither authorized by Merrill Lynch or Merrill Lynch’s board of directors to solicit, nor did MLPFS solicit, third party indications of interest for the acquisition of all or any part of Merrill Lynch.
 
MLPFS’s Financial Analyses
 
At the meeting of the Merrill Lynch board of directors held on September 14, 2008, MLPFS presented certain financial analyses accompanied by delivery of its written materials in connection with the delivery of its oral opinion at that meeting and its subsequent written opinion. The following is a summary of the material financial analyses performed by MLPFS in arriving at its opinion. Some of the financial analyses summarized below include information presented in tabular format. In order to understand fully the financial analyses performed by Merrill Lynch, the tables must be read together with the accompanying text of each summary. The tables alone do not constitute a complete description of the financial analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by Merrill Lynch. To the extent the following quantitative information reflects market data, except as otherwise indicated, Merrill Lynch


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based this information on market data as they existed prior to September 12, 2008. This information, therefore, does not necessarily reflect current or future market conditions.
 
Transaction Multiples Analysis.  Based on the exchange ratio and the closing market price of Bank of America common stock on September 12, 2008, MLPFS calculated that each share of Merrill Lynch common stock would be converted into Bank of America common stock with an implied market value of $29.00, representing a premium of 70.1% to the closing price of Merrill Lynch common stock on September 12, 2008, and a premium of 29.3% and 13.76% to the average closing prices of Merrill Lynch common stock for the five and thirty days ending on September 12, respectively, and a discount of 21.9% and 39.6% to the average closing prices of Merrill Lynch common stock for the six months and one year ending on September 12, 2008. MLPFS also calculated that the $29 implied market value represented 11.1 times the mean publicly available consensus analyst estimates from Reuters (accessed via Factset) (“consensus estimates”) for Merrill Lynch’s 2009 earnings per share, 1.52 times Merrill Lynch’s estimated book value (provided by Merrill Lynch management) at September 30, 2008 and 1.81 times Merrill Lynch’s estimated tangible book value (provided by SNL Financial) at such date. Reuters is a recognized data service that publishes compilations of earnings estimates by selected research analysts regarding companies of interest to institutional investors. Book values, tangible book values and share numbers were each based on information provided by SNL Financial. SNL Financial is a recognized data service that collects, standardizes and disseminates relevant financial, market and mergers and acquisitions data.
 
Comparable Companies Analysis.  MLPFS reviewed and compared certain financial information and trading statistics of Merrill Lynch to corresponding financial information and trading statistics for the following publicly traded corporations in the financial services industry, consisting of the following broker-dealers:
 
  •  UBS AG
 
  •  Goldman Sachs Group, Inc.
 
  •  Credit Suisse Group
 
  •  Deutsche Bank AG
 
  •  Morgan Stanley
 
In addition, MLPFS reviewed and compared certain financial information and trading statistics of Bank of America to corresponding financial information and trading statistics for the following publicly traded corporations in the banking industry, consisting of the following large capitalization money centers and regional banks:
 
  •  JPMorgan Chase & Co.
 
  •  Wells Fargo & Company
 
  •  Citigroup Inc.
 
  •  U.S. Bancorp


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The following table compares selected financial information and trading statistics of Merrill Lynch with corresponding mean data for the above-listed companies, which data is based on financial data at or for the period ending June 30, 2008, consensus estimates for 2009 earnings per share and projected earnings per share growth rates from Reuters and market prices as of September 12, 2008.
 
                                 
    Market
                   
    Value
    Price/
    Price/Tang.
    Price/
 
Name
  ($BN)     Book     Book     09 EPS  
 
Broker-Dealers:
                               
UBS
  $ 60.9       1.50 x     2.15 x     8.9 x
Goldman Sachs
    60.7       1.58       1.81       8.5  
Credit Suisse
    52.2       1.46       2.04       8.7  
Deutsche Bank
    43.6       0.92       1.27       6.6  
Morgan Stanley
    41.3       1.24       1.40       6.7  
Mean
            1.34 x     1.73 x     7.9 x
Median
            1.46       1.81       8.5  
Merrill Lynch(1)
  $ 24.6       0.80 x     0.95 x     6.5 x
Lehman Brothers
  $ 2.5       0.13 x     0.17 x     1.6 x
 
 
(1) Price to book value and price to tangible book value ratios as estimated by Merrill Lynch as at September 26, 2008, are 0.89x and 1.07x, respectively.
 
The following table compares selected financial information and trading statistics of Bank of America with corresponding mean data for the above-listed companies, which data is based on financial data at or for the period ending June 30, 2008, consensus estimates for 2009 earnings per share and market prices as of September 12, 2008.
 
                                 
    Market
                   
    Value
    Price/
    Price/Tang.
    Price/
 
Name
  ($BN)     Book     Book     09 EPS  
 
Money Center/Regional Banks:
                               
JPMorgan Chase
  $ 141.5       1.11 x     1.84 x     12.5 x
Wells Fargo
    113.5       2.37       3.34       15.4  
Citigroup
    97.8       0.90       1.76       8.1  
U.S. Bancorp
    58.9       2.90       5.44       14.0  
Mean
            1.82 x     3.09 x     12.5 x
Median
            1.74       2.59       13.2  
Bank of America
  $ 153.9       1.08 x     2.67 x     10.3 x
 
The companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of Merrill Lynch or Bank of America, as the case may be. However, no company used in the comparable company analyses described above is identical to Merrill Lynch or Bank of America. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the merger, public trading or other values of the companies to which they are being compared. Mathematical analyses, such as determining the mean or median, are not of themselves meaningful methods of using comparable company data.
 
Historical Market-for-Market Exchange Ratio Analysis.  MLPFS also analyzed the historical exchange ratio that existed between Merrill Lynch common stock and Bank of America common stock at selected


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intervals during the past three years to illustrate the implied exchange ratio between the companies’ common stock at such intervals. The results of MLPFS’s analysis are set forth in the following table:
 
         
    Historical Implied
 
Trading Period
  Exchange Ratio  
 
September 12, 2008 Market Price
    0.505  
5 Day Average Market Price
    0.674  
30 Day Average Market Price
    0.812  
6 Month Average Market Price
    1.132  
1 Year Average Market Price
    1.247  
3 Year Average Market Price
    1.495  
 
MLPFS also calculated the implied deal value per share at such intervals. The results of its analysis are set forth in the following table:
 
         
    Implied Deal
 
Trading Period
  Value  
 
September 12, 2008 Market Price
  $ 29.00  
5 Day Average Market Price
  $ 28.61  
30 Day Average Market Price
  $ 26.61  
6 Month Average Market Price
  $ 28.15  
1 Year Average Market Price
  $ 33.02  
3 Year Average Market Price
  $ 39.20  
 
Discounted Dividend Analysis.  MLPFS performed a discounted dividend analysis to estimate a range of present values per share of Merrill Lynch common stock. The valuation range was determined by adding (i) the present value of Merrill Lynch’s earnings available for dividends, net of earnings necessary to maintain Merrill Lynch’s tangible common equity to tangible assets ratio at 3.0% (equivalent to an 11% Tier 1 Ratio) through December 31, 2013, and (ii) the present value of the “terminal value” of Merrill Lynch common stock. In calculating the terminal value of Merrill Lynch common stock, MLPFS applied multiples ranging from 7.0x to 11.0x to year 2014 forecasted earnings. The present value of the dividend stream and terminal value were calculated using discount rates ranging from 18.0% to 22.0%, which are rates MLPFS viewed as the appropriate range for a company with Merrill Lynch’s risk characteristics.
 
In performing this analysis, MLPFS used the Reuters consensus earnings per share estimate of $2.62 for Merrill Lynch for 2009. After 2009, earnings per share were assumed to increase annually at 6.25%, the Reuters consensus projected earnings growth rate for Merrill Lynch. The analysis assumed an annual asset growth rate of 3% for Merrill Lynch. The discounted dividend analysis also assumed that Merrill Lynch is not required to record any additional asset write-downs or other adverse mark-to-market adjustments after the third quarter of 2009.
 
Using the foregoing criteria and assumptions, MLPFS calculated the following range of implied equity values per share of Merrill Lynch common stock:
 
                             
Terminal EPS
    Discount Rate  
Multiple
    18.0%     20.0%     22.0%  
 
  7.0x     $ 23.90     $ 22.87     $ 21.93  
  8.0x     $ 25.24     $ 24.10     $ 23.06  
  9.0x     $ 26.57     $ 25.33     $ 24.19  
  10.0x     $ 27.91     $ 26.56     $ 25.33  
  11.0x     $ 29.25     $ 27.79     $ 26.46  
 
MLPFS also performed a discounted dividend analysis to estimate a range of present values per share of Bank of America common stock. The valuation range was determined by adding (i) the present value of Bank of America’s earnings available for dividends, net of earnings necessary to maintain Bank of America’s tangible common equity to tangible assets ratio at 6.0% through December 31, 2013, and (ii) the present value


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of the “terminal value” of Bank of America common stock. In calculating the terminal value of Bank of America common stock, MLPFS applied multiples ranging from 9.0x to 13.0x to year 2014 forecasted earnings. The present value of the dividend stream and terminal value were calculated using discount rates ranging from 11.0% to 15.0%, which are rates MLPFS viewed as the appropriate range for a company with Bank of America’s risk characteristics.
 
In performing this analysis, MLPFS used the Reuters consensus earnings per share estimate of $3.26 for Bank of America for 2009. After 2009, earnings per share were assumed to increase annually at 6.6%, the Reuters consensus projected earnings growth rate for Bank of America. The analysis assumed an annual asset growth rate of 3% for Bank of America.
 
Using the foregoing criteria and assumptions, MLPFS calculated the following range of implied equity values per share of Bank of America common stock:
 
                             
Terminal EPS
    Discount Rate  
Multiple
    11.0%     13.0%     15.0%  
 
  9.0x     $ 32.97     $ 30.22     $ 27.73  
  10.0x     $ 35.76     $ 32.77     $ 30.07  
  11.0x     $ 38.55     $ 35.32     $ 32.40  
  12.0x     $ 41.33     $ 37.87     $ 34.74  
  13.0x     $ 44.12     $ 40.42     $ 37.08  
 
Pro Forma Merger Analysis.  MLPFS prepared illustrative pro forma analyses of the potential financial impact of the merger assuming the same consensus Reuters 2009 earnings and long term growth estimates used above and Bank of America’s closing stock price on September 12, 2008. The pro forma analysis also assumed based upon, among other data, the Expected Cost Savings furnished to MLPFS from Merrill Lynch (which data may differ from those provided by Bank of America to its financial advisors), that:
 
  •  the combined entity will achieve $2.4 billion in pre-tax synergies, 75% realized in 2009 and 100% realized in 2010;
 
  •  amortizable intangibles will represent 20% of total goodwill, amortized over 10 years on a straight line basis;
 
  •  total restructuring charges will be equal to $2.4 billion pre-tax;
 
  •  a $5.0 billion pre-tax purchase accounting mark to market adjustment, with one-half of that amount amortizable over 10 years; and
 
  •  certain Tier 1 capital adjustments.
 
Based on these assumptions, MLPFS determined that the proposed transaction would be 0.8% accretive to GAAP earnings per share in 2009 and 2.8% accretive to GAAP earnings per share in 2010.
 
The summary set forth above does not purport to be a complete description of the analyses performed by MLPFS in arriving at its opinion. The fact that any specific analysis has been referred to in the summary above or in this document is not meant to indicate that such analysis was given more weight than any other analysis. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances; therefore, such an opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, MLPFS did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, MLPFS believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without considering al