Merrill Lynch Reports Strong Second Quarter

Remember that $30 million that Merrill Lynch & Co. agreed to pay Orange County, ending the criminal probe of the big investment house’s involvement in the county’s monumental bankruptcy?

Merrill Lynch shareholders probably won’t be giving it much thought.

Merrill reported Tuesday that it turned a record $481-million profit in its second quarter, exceeding the most optimistic projections. That’s 16 times the amount of the settlement with Orange County prosecutors. The results exceeded an averaged forecast of 91 cents a share.

Merrill shares rose $2.38 to close at $66.06 on the New York Stock Exchange.

To look at it another way, this year on average, Merrill had a daily profit of more than $5 million, making the $30-million settlement less than six days’ net income.

Merrill Lynch’s $481-million net income translated to $1.24 per share, 11% higher than in the April-June quarter in 1996, when it earned $433 million, or $1.09 per share.

Merrill Lynch, America’s biggest investment company, was the chief brokerage employed by former Orange County Treasurer Robert L. Citron. It sold Citron most of the interest rate-sensitive securities that contributed to a $1.6-billion loss and in December 1994 pushed the county into the biggest municipal bankruptcy in history.

At a Glance:

PaineWebber Group Inc. also reported higher second-quarter profit. The fourth-largest U.S. brokerage firm (based on number of brokers) said net income rose to $93.1 million, or 91 cents a share, from $92.2 million, or 90 cents a share, a year earlier. PaineWebber’s profit beat the average forecast of 80 cents a share.

And brokerage Smith Barney’s parent, Travelers Group, reported that second-quarter profit rose 15% to $662.9 million, or $1 a share, from $575.7 million, or 88 cents a share, in the year-earlier period. The latest quarter included investment gains of $5.7 million, compared with investment losses of $58.8 million a year earlier.

Pfizer Inc. and Johnson & Johnson posted higher second-quarter earnings, setting the tone for what’s expected to be a good quarter for most of the drug industry.

Pfizer said earnings rose 16% to $457 million, or 35 cents a share, up from $394 million, or 31 cents a share, adjusted for a 2-for-1 stock split in July.

J&J; said earnings rose 15%, in line with estimates, to $909 million, or 68 cents a share, from $791 million, or 60 cents a share, in the year-earlier quarter.

Enron Corp. posted a $420-million second-quarter net loss stemming from costs of settling a natural gas contract dispute and a charge tied to its unprofitable gasoline-additives business. That equaled a $1.71-a-share loss, compared with profit of $117 million, or 46 cents a share, a year ago.

Coca-Cola Enterprises Inc. said its second-quarter earnings rose 29% to $111 million, or 29 cents a share, from pro forma results of $86 million, or 23 cents, in the year-earlier period.

Raytheon Co. reported second-quarter profit of $209.5 million, or 89 cents a share, compared with $209.4 million, or 88 cents a share, a year earlier.

Honeywell Inc.’s second-quarter earnings rose 18% to $98.4 million, or 77 cents per share, up from $83.3 million, or 66 cents a share, from the same quarter last year.

Boise Cascade Corp. posted a second-quarter net loss of $16.2 million, or 53 cents a share, from $16.9 million, or 55 cents, in the year-ago quarter.

Bowater Inc. reported second-quarter earnings of $7.1 million, or 16 cents per share, compared with $42.4 million, or 96 cents, a year ago.

Hertz Corp. said second-quarter earnings rose 36% to $53.9 million, or 50 cents a share, from $39.5 million, or 36 cents a share, in the year-earlier period.

Host Marriott Services reported second-quarter net income of $5.1 million, or 14 cents per share, compared with $3.3 million, or 9 cents, a year ago.

Xylan Corp. reported second-quarter net income of $7.1 million, or 15 cents per share, including a one-time income tax benefit of $4 million, or 8 cents a share. This compares with net income of $2.9 million, or 6 cents, a year ago.

Genentech Inc. said second-quarter earnings rose 10% of $23.8 million, or 19 cents a share, up from $21.7 million, or 18 cents, a year ago.

Amgen Inc. said second-quarter earnings rose 12% to $200 million, or 72 cents a shares, up from $179 million, or 64 cents, a year earlier.

Mirage Resorts Inc.’s second-quarter earnings rose 20% to $48.9 million, or 26 cents a share, from $40.6 million, or 21 cents, a year earlier.