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EARNINGS

Full-Year Nets Down at Merrill Lynch, Hutton

January 29, 1985

Merrill Lynch & Co., the nation's largest brokerage concern, reported that its 1984 net income plummeted 59%, although it managed to post a profit in the fourth quarter, compared to a loss a year earlier.

E. F. Hutton Group Inc., the fifth-largest investment firm, said its net income for the year sank 52% despite an 187% spurt in fourth-quarter earnings.

Both firms cited poor market conditions.

Merrill Lynch said net income for 1984 totaled $95.3 million, compared to $230.2 million in 1983. Revenue rose 6.2% to $6 billion from $5.7 billion.

Fourth-quarter net income was $29.6 million, compared to a loss of $42.1 million in the same period a year ago. Revenue for the three months rose 18% to $1.6 billion from $1.4 billion in 1983.

"We have come through an exceedingly difficult year. It was marked by reluctance of individual investors to participate in the equity markets, by high volatility in fixed income markets and by extreme competitive conditions in virtually all financial-services sectors," company Chairman Roger E. Birk said.

The company said that it has nearly 2,300 fewer employees than a year ago and has more than halved the annual growth rate of fixed and semi-fixed expenses compared to the 1980-1983 period.

Hutton said net income for the year fell to $52.7 million from $110.6 million in 1983. Revenue rose 27% to $2.8 billion from $2.2 billion.

The year's results reflect substantially lower retail activity and sharply reduced corporate underwriting volume, Chairman and Chief Executive Robert Fomon said.

Hutton said its fourth-quarter net income came to $24.3 million, up from $8.5 million reported a year earlier. Discounting the reserve last year, profit increased a more modest 38% from $17.6 million, it said. Revenue soared 57% to $895 million from $571 million last year.

The late-year jump in net income came largely from a reserve the company provided in 1983 for Baldwin-United Corp. annuity policies.

Contributing to the sharply higher revenue was a $64-million increase in interest income over last year from higher inventories and resale agreements, Hutton said.

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