<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------------
For the quarterly period ended June 27, 1997
MERRILL LYNCH PREFERRED CAPITAL TRUST II
(Exact name of Registrant as specified in its certificate of trust)
COMMISSION FILE NO.: 1-7182-04
Delaware 13-7108354
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
World Financial Center
North Tower
New York, New York 10281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -----------------------------------------
8% Trust Originated Preferred New York Stock Exchange
Securities ("TOPrS")
(and the related guarantee)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
MERRILL LYNCH PREFERRED FUNDING II, L.P.
(Exact name of Registrant as specified in its certificate of limited
partnership)
COMMISSION FILE NO.: 1-7182-03
Delaware 13-3926165
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
World Financial Center
North Tower
New York, New York 10281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -----------------------------------------
8% Partnership Preferred Securities New York Stock Exchange
(and the related guarantee)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such requirements for the past 90 days. Yes X No
---
As of June 27, 1997, no voting stock was held by non-affiliates of the
Registrants.
===============================================================================
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
MERRILL LYNCH PREFERRED CAPITAL TRUST II
BALANCE SHEET (UNAUDITED)
- ------------------------------------------------------------------------------
JUNE 27,
1997
------------
ASSETS
Investment in partnership securities $ 309,278,400
Income receivable 6,185,568
-------------
Total Assets $ 315,463,968
=============
LIABILITY AND STOCKHOLDERS' EQUITY
Distributions payable $ 6,185,568
-------------
Stockholders' equity:
Preferred securities (8% Trust Originated
Preferred Securities; 12,000,000 authorized,
issued, and outstanding; $25 liquidation
amount per security) 300,000,000
Common securities (8% Trust Common Securities;
371,136 authorized, issued, and outstanding;
$25 liquidation amount per security) 9,278,400
-------------
Total stockholders' equity 309,278,400
-------------
Total Liability and Stockholders' Equity $ 315,463,968
=============
See Notes to Financial Statements
2
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST II
STATEMENT OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
FOR THE THREE FOR THE PERIOD
MONTHS ENDED FEBRUARY 6, 1997
JUNE 27, 1997 TO JUNE 27, 1997
-------------- ----------------
EARNINGS:
<S> <C> <C>
Income on partnership preferred securities $6,185,568 $9,896,909
========== ==========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST II
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
- ------------------------------------------------------------------------------
FOR THE PERIOD
FEBRUARY 6, 1997
TO JUNE 27, 1997
----------------
PREFERRED SECURITIES
Issuance of preferred securities $ 300,000,000
--------------
Balance at June 27, 1997 300,000,000
---------------
COMMON SECURITIES
Issuance of common securities 9,278,400
---------------
Balance at June 27, 1997 9,278,400
---------------
UNDISTRIBUTED EARNINGS
Earnings 9,896,909
Distributions (3,711,341)
Distributions payable (6,185,568)
---------------
Balance at June 27, 1997 -
---------------
Total Stockholders' Equity $ 309,278,400
===============
See Notes to Financial Statements
4
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST II
STATEMENT OF CASH FLOWS (UNAUDITED)
- ------------------------------------------------------------------------------
FOR THE PERIOD
FEBRUARY 6, 1997
TO JUNE 27, 1997
----------------
EARNINGS $ 9,896,909
CASH FLOWS FROM OPERATING ACTIVITIES:
Increase in income receivable (6,185,568)
-------------
Cash provided by operating activities 3,711,341
-------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of partnership securities (309,278,400)
-------------
Cash used in investing activities (309,278,400)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (3,711,341)
Proceeds from issuance of preferred securities 300,000,000
Proceeds from issuance of common securities 9,278,400
-----------
Cash provided by financing activities 305,567,059
-------------
NET CHANGE IN CASH -
CASH, BEGINNING OF PERIOD -
-------------
CASH, END OF PERIOD $ -
=============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Preferred and common distributions of $6,000,000 and $185,568, respectively,
were accrued at June 27, 1997.
See Notes to Financial Statements
5
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST II
NOTES TO FINANCIAL STATEMENTS
JUNE 27, 1997 (UNAUDITED)
---------------------------------------------------------------------------
1. ORGANIZATION AND PURPOSE
Merrill Lynch Preferred Capital Trust II (the "Trust") is a statutory
business trust formed under the laws of the State of Delaware on January 16,
1997 for the exclusive purposes of (i) issuing its preferred and common
securities (the "Trust Preferred Securities" and the "Trust Common
Securities", respectively), (ii) purchasing partnership preferred securities
(the "Partnership Preferred Securities"), representing the limited
partnership interest of Merrill Lynch Preferred Funding II, L.P. (the
"Partnership"), with the proceeds from the sale of Trust Preferred and
Common Securities, and (iii) engaging in only those other activities
necessary or incidental thereto.
Merrill Lynch & Co., Inc. (the "Company") has paid compensation to the
underwriters of the offering of the Trust Preferred Securities. The Company
also has agreed to (i) pay all fees and expenses related to the organization
and operations of the Trust (including taxes, duties, assessments, or
government charges of whatever nature (other than withholding taxes) imposed
by the United States or any other domestic taxing authority upon the Trust)
and the offering of the Trust Preferred Securities and (ii) be responsible
for all debts and other obligations of the Trust (other than with respect to
the Trust Preferred and Common Securities). The Company has agreed to
indemnify the trustees and certain other persons.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements are presented in accordance with generally accepted
accounting principles, which require management to make estimates that
affect reported amounts and disclosure of contingencies in the financial
statements. Actual results could differ from those estimates.
INVESTMENT
The investment in Partnership Preferred Securities represents a limited
partnership interest in the Partnership and is recorded at cost. As of
June 27, 1997, the carrying value of the investment approximates its fair
value. Income on the Partnership Preferred Securities is accrued when
earned.
INCOME TAXES
The Trust does not incur any income tax liabilities. Such liabilities are
incurred directly by the security holders.
6
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST II
NOTES TO FINANCIAL STATEMENTS
JUNE 27, 1997 (UNAUDITED)
---------------------------------------------------------------------------
3. INVESTMENT IN PARTNERSHIP PREFERRED SECURITIES
The Trust holds 12,371,136 8% Partnership Preferred Securities, $25
liquidation preference per security. The interest payment dates and
redemption provisions of the Partnership Preferred Securities, which are
redeemable on or after March 30, 2007 at the option of the Partnership,
correspond to the distribution payment dates and redemption provisions of
the Trust Preferred Securities. Upon any redemption of the Partnership
Preferred Securities, the Trust Preferred Securities will be redeemed. The
Company has guaranteed, on a subordinated basis, the payment of
distributions by the Partnership on the Partnership Preferred Securities if,
as, and when declared out of funds legally available and payments upon
liquidation of the Partnership or the redemption of the Partnership
Preferred Securities to the extent of funds legally available.
4. STOCKHOLDERS' EQUITY
TRUST PREFERRED SECURITIES
The Trust issued 12,000,000 8% Trust Preferred Securities, $25 liquidation
amount per security in a public offering on February 6, 1997. The Trust
Preferred Securities are redeemable on or after March 30, 2007 at the option
of the Trust, in whole or in part, at a redemption price equal to $25 per
security. Distributions on the Trust Preferred Securities are cumulative
from the date of original issue and are payable quarterly if, as, and when
the Trust has funds available for payment. Holders of the Trust Preferred
Securities have limited voting rights and are not entitled to vote to
appoint, remove or replace, or to increase or decrease the number of,
trustees, which voting rights are vested exclusively in the holder of the
Trust Common Securities. Under certain circumstances, the Trust Preferred
Securities have preferential rights to payment relative to the Trust Common
Securities.
The Company has guaranteed, on a subordinated basis, the payment in full of
all distributions and other payments on the Trust Preferred Securities to
the extent that the Trust has funds legally available. This guarantee and
the partnership distribution guarantee are subordinated to all other
liabilities of the Company and rank pari passu with the most senior
preferred stock of the Company.
TRUST COMMON SECURITIES
The Trust issued 371,136 8% Trust Common Securities, $25 liquidation amount
per security, to the Company on February 6, 1997. The Trust Common
Securities are redeemable on or after March 30, 2007 at the option of the
Trust, in whole or in part, at a redemption price equal to $25 per security.
7
<PAGE>
MERRILL LYNCH PREFERRED FUNDING II, L.P.
BALANCE SHEET (UNAUDITED)
- ------------------------------------------------------------------------------
JUNE 27,
1997
------------
ASSETS
Investments:
Affiliate debentures $ 360,218,400
U.S. Treasury bills 3,714,304
-------------
Total 363,932,704
Interest receivable 7,204,368
-------------
Total Assets $ 371,137,072
=============
LIABILITY AND PARTNERS' CAPITAL
Distributions payable $ 7,204,368
-------------
Partners' capital:
Limited partnership interest 309,278,400
General partnership interest 54,654,304
-------------
Total partners' capital 363,932,704
-------------
Total Liability and Partners' Capital $ 371,137,072
=============
See Notes to Financial Statements
8
<PAGE>
MERRILL LYNCH PREFERRED FUNDING II, L.P.
STATEMENT OF EARNINGS (UNAUDITED)
- -------------------------------------------------------------------------------
FOR THE THREE FOR THE PERIOD
MONTHS ENDED FEBRUARY 6, 1997
JUNE 27, 1997 TO JUNE 27, 1997
------------- ----------------
Interest income:
Affiliate debentures $ 7,204,368 $11,526,989
U.S. Treasury bills 50,387 75,304
------------ -----------
Earnings $ 7,254,755 $11,602,293
============ ===========
See Notes to Financial Statements
9
<PAGE>
MERRILL LYNCH PREFERRED FUNDING II, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
- -------------------------------------------------------------------------------
FOR THE PERIOD
FEBRUARY 6, 1997
TO JUNE 27, 1997
----------------
LIMITED PARTNER'S CAPITAL
Issuance of preferred securities $ 309,278,400
Net income allocated to limited partner 9,896,909
Distribution (3,711,341)
Preferred distribution payable (6,185,568)
--------------
Balance at June 27, 1997 309,278,400
---------------
GENERAL PARTNER'S CAPITAL
Capital contribution 54,579,000
Net income allocated to general partner 1,705,384
Distribution (611,280)
Distribution payable (1,018,800)
--------------
Balance at June 27, 1997 54,654,304
--------------
TOTAL PARTNERS' CAPITAL $ 363,932,704
==============
See Notes to Financial Statements
10
<PAGE>
MERRILL LYNCH PREFERRED FUNDING II, L.P.
STATEMENT OF CASH FLOWS (UNAUDITED)
- ------------------------------------------------------------------------------
FOR THE PERIOD
FEBRUARY 6, 1997
TO JUNE 27, 1997
----------------
EARNINGS $ 11,602,293
CASH FLOWS FROM OPERATING ACTIVITIES:
Accretion of U.S. Treasury bills (75,304)
Increase in interest receivable (7,204,368)
------------
Cash provided by operating activities 4,322,621
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of affiliate debentures (360,218,400)
Purchase of U.S. Treasury bills (3,639,000)
------------
Cash used in investing activities (363,857,400)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (4,322,621)
Proceeds from issuance of preferred securities 309,278,400
Capital contribution - general partner 54,579,000
------------
Cash provided by financing activities 359,534,779
------------
NET CHANGE IN CASH -
CASH, BEGINNING OF PERIOD -
------------
CASH, END OF PERIOD $ -
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Distributions of $7,204,368 were accrued at June 27, 1997.
See Notes to Financial Statements
11
<PAGE>
MERRILL LYNCH PREFERRED FUNDING II, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 27, 1997 (UNAUDITED)
---------------------------------------------------------------------------
1. ORGANIZATION AND PURPOSE
Merrill Lynch Preferred Funding II, L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act on January 16, 1997 for the exclusive purpose of purchasing
certain eligible debt instruments of Merrill Lynch & Co., Inc. (the
"Company") and wholly-owned subsidiaries of the Company with the proceeds
from the sale of (i) its preferred securities (the "Partnership Preferred
Securities"), representing a limited partner interest, to Merrill Lynch
Preferred Capital Trust II (the "Trust") and (ii) a capital contribution
from the Company in exchange for the general partnership interest in the
Partnership.
The Company, in its capacity as sole general partner of the Partnership, has
agreed to (i) pay all fees and expenses related to the organization and
operations of the Partnership (including taxes, duties, assessments, or
government charges (other than withholding taxes) imposed by the United
States or any other domestic taxing authority upon the Partnership) and (ii)
be responsible for all debts and other obligations of the Partnership (other
than with respect to the Partnership Preferred Securities). The Company has
also agreed to indemnify certain officers and agents of the Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements are presented in accordance with generally accepted
accounting principles, which require management to make estimates that
affect reported amounts and disclosure of contingencies in the financial
statements. Actual results could differ from those estimates.
INVESTMENTS
The Partnership's investments in affiliate debentures and U.S. Treasury
bills are classified as held-to-maturity and are recorded at accreted cost.
As of June 27, 1997, the carrying value of these investments approximates
their fair value.
INCOME TAXES
The Partnership does not incur any income tax liabilities. Such liabilities
are incurred directly by the partners.
3. INVESTMENT IN AFFILIATE DEBENTURES
The Partnership holds debentures of the Company and a wholly-owned
subsidiary of the Company. The debentures have a term of approximately 20
years and bear interest at 8% per annum. The interest payment dates and
redemption provisions of the debentures, which are redeemable at the option
of the Company and its subsidiary on or after March 30, 2007, correspond to
the distribution payment dates and redemption provisions of the Partnership
Preferred Securities. Interest and redemption payments on the subsidiary
debenture are guaranteed by the Company on a subordinated basis.
12
<PAGE>
MERRILL LYNCH PREFERRED FUNDING II, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 27, 1997 (UNAUDITED)
--------------------------------------------------------------------------
4. PARTNERS' CAPITAL
The Partnership issued 12,371,136 8% Partnership Preferred Securities, $25
liquidation preference per security, to the Trust on February 6, 1997.
Distributions on the Partnership Preferred Securities are cumulative from
the date of original issue and are payable quarterly if, as, and when
declared by the general partner. The Partnership Preferred Securities are
redeemable on or after March 30, 2007 at the option of the Partnership, at a
redemption price equal to $25 per security. Except as provided in the
Limited Partnership Agreement and Partnership Preferred Securities Guarantee
Agreement, and as otherwise provided by law, the holders of the Partnership
Preferred Securities have no voting rights.
The Company has guaranteed the payment of distributions by the Partnership
on the Partnership Preferred Securities if, as, and when declared out of
funds legally available and payments upon liquidation of the Partnership or
the redemption of the Partnership Preferred Securities to the extent of
funds legally available. This guarantee is subordinated to all other
liabilities of the Company and ranks pari passu with the most senior
preferred stock of the Company.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
-----------------------------------------------------------------------
Merrill Lynch Preferred Capital Trust II (the "Trust") is a statutory
business trust formed under the Delaware Business Trust Act, as amended,
pursuant to a declaration of trust and the filing of a certificate of trust with
the Secretary of State on January 16, 1997, which was subsequently amended by an
amended and restated declaration of trust dated as of February 4, 1997. The
Trust exists for the exclusive purposes of (i) issuing trust securities,
consisting of 8% Trust Originated Preferred Securities (the "TOPrS") and trust
common securities (the "Trust Common Securities"), representing undivided
beneficial ownership interests in the assets of the Trust, (ii) investing the
gross proceeds of the trust securities in 8% Partnership Preferred Securities
(the "Partnership Preferred Securities") issued by Merrill Lynch Preferred
Funding II, L.P. (the "Partnership"), and (iii) engaging in only those other
activities necessary or incidental thereto.
The Partnership is a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act, as amended, pursuant to an agreement of limited
partnership and the filing of a certificate of limited partnership with the
Secretary of State on January 16, 1997, which was subsequently amended by an
amended and restated agreement of limited partnership dated February 6, 1997.
Merrill Lynch & Co., Inc. (the "Company") is the sole general partner of the
Partnership. The Partnership is managed by the general partner and exists for
the exclusive purposes of (i) issuing its partnership interests, consisting of
the Company's general partner interest and the Partnership Preferred Securities,
(ii) investing the proceeds thereof in certain eligible securities of the
Company and wholly owned subsidiaries of the Company (the "Affiliate Investment
Instruments") and certain eligible debt securities, and (iii) engaging in only
those other activities necessary or incidental thereto.
The Registrants' activities are limited to issuing securities and
investing the proceeds as described above. Since the Trust was organized on
January 16, 1997, its activities, as specified in its declaration of trust, have
been limited to the issuance of the TOPrS and the Trust Common Securities, the
investing of the proceeds in the Partnership Preferred Securities, and the
payment of distributions on the TOPrS and the Trust Common Securities in
accordance with their terms. Since the Partnership was organized on January 16,
1997, its activities, as specified in its agreement of limited partnership, have
been limited to the issuance of the Partnership Preferred Securities, the
receipt of a capital contribution from the Company, as general partner, the
investment of the proceeds in Affiliate Investment Instruments and certain
eligible debt securities, and the payment of distributions on the Partnership
Preferred Securities.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
The Registrants know of no material legal proceedings involving the Trust,
the Partnership, or the assets of either of them.
ITEM 2. CHANGES IN SECURITIES
---------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not applicable.
ITEM 5. OTHER INFORMATION
-----------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
4.1 Certificate of Trust, dated January 16, 1997, of the Trust
(incorporated by reference to Exhibit 4.1 to Registration
Statement on Form S-3 (No. 333-20137) (the "Registration
Statement"))
4.2 Amended and Restated Declaration of Trust, dated as of
February 4, 1997, of the Trust (incorporated by reference to
Exhibit 4.2 to the Trust's Quarterly Report on Form 10-Q for
the period ended March 28, 1997 (File No. 1-7182-04))
4.3 Certificate of Limited Partnership, dated as of January 16,
1997, of the Partnership (incorporated by reference to Exhibit
4.3 to the Registration Statement)
4.4 Amended and Restated Agreement of Limited Partnership, dated
as of February 6, 1997, of the Partnership (incorporated by
reference to Exhibit 4.4 to the Partnership's Quarterly Report
on Form 10-Q for the period ended March 28, 1997 (File No.
1-7182-03))
4.5 Form of Trust Preferred Securities Guarantee Agreement between
the Company and The Chase Manhattan Bank, as guarantee trustee
(incorporated by reference to Exhibit 4.5 to the Registration
15
<PAGE>
Statement)
4.6 Form of Partnership Preferred Securities Guarantee Agreement
between the Company and The Chase Manhattan Bank, as guarantee
trustee (incorporated by reference to Exhibit 4.6 to the
Registration Statement)
4.7 Form of Subordinated Debenture Indenture between the Company
and The Chase Manhattan Bank, as trustee (incorporated by
reference to Exhibit 4.7 to the Registration Statement)
4.8 Form of Affiliate Debenture Guarantee Agreement between the
Company and The Chase Manhattan Bank, as guarantee trustee
(incorporated by reference to Exhibit 4.8 to the Registration
Statement)
4.9 Form of Trust Preferred Security (included in Exhibit 4.2
above)
4.10 Form of Partnership Preferred Security (included in Exhibit
4.4 above)
4.11 Form of Subordinated Debenture (incorporated by reference
to Exhibit 4.11 to the Registration Statement)
12 Computation of Ratios of Earnings to Combined Fixed Charges
and Preferred Securities Dividends
27 Financial Data Schedules*
------------------
*The Financial Data Schedules to be contained in Exhibit 27 are
required to be submitted only in the Registrants' electronic filing of
this Form 10-Q by means of the EDGAR system.
(b) Reports on Form 8-K
None.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants have duly caused this report to be
signed on their behalf by the undersigned, thereunto duly authorized on the
7th day of August, 1997.
MERRILL LYNCH PREFERRED CAPITAL TRUST II
By: /s/ THERESA LANG
----------------------------------------
Name: Theresa Lang
Title: Regular Trustee (Principal Financial
Officer of the Trust)
By: /s/ STANLEY SCHAEFER
----------------------------------------
Name: Stanley Schaefer
Title: Regular Trustee
MERRILL LYNCH PREFERRED FUNDING II, L.P.
By: MERRILL LYNCH & CO., INC., as General Partner
By: /s/ THERESA LANG
-----------------------------------------
Name: Theresa Lang
Title: Senior Vice President and Treasurer
(Principal Financial Officer of the
Partnership)
17
<PAGE>
EXHIBIT 12
<TABLE>
<CAPTION>
MERRILL LYNCH PREFERRED CAPITAL TRUST II
MERRILL LYNCH PREFERRED FUNDING II, L.P.
COMPUTATION OF RATIOS OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED SECURITIES DISTRIBUTIONS
(DOLLARS IN MILLIONS)
FOR THE PERIOD MARCH 29, 1997 TO JUNE 27, 1997
-----------------------------------------------------
MERRILL LYNCH PREFERRED MERRILL LYNCH PREFERRED
CAPITAL TRUST II FUNDING II, L.P.
------------------------ ------------------------
<S> <C> <C>
Earnings $6,185,568 $7,254,755
========== ==========
Fixed charges $ - $ -
Preferred securities distribution
requirements 6,000,000 6,185,568
---------- ----------
Total combined fixed charges and
preferred securities distributions $6,000,000 $6,185,568
========== ==========
Ratio of earnings to combined
fixed charges and preferred
securities distributions 1.03 1.17
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FEBRUARY 6, 1997 TO JUNE 27, 1997
-----------------------------------------------------
MERRILL LYNCH PREFERRED MERRILL LYNCH PREFERRED
CAPITAL TRUST II FUNDING II, L.P.
------------------------- ------------------------
<S> <C> <C>
Earnings $9,986,909 $11,602,293
========== ===========
Fixed charges $ - $ -
Preferred securities distribution
requirements 9,600,000 9,896,909
---------- ----------
Total combined fixed charges and
preferred securities distributions $9,600,000 $9,896,909
========== ==========
Ratio of earnings to combined
fixed charges and preferred
securities distributions 1.04 1.17
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001031003
<NAME> MERRILL LYNCH PREFERRED CAPTIAL TRUST II
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-26-1997
<PERIOD-START> FEB-6-1997
<PERIOD-END> JUN-27-1997
<CASH> 0
<SECURITIES> 309,278,400
<RECEIVABLES> 6,185,568
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 315,463,968
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 315,463,968
<CURRENT-LIABILITIES> 6,185,568
<BONDS> 0
0
300,000,000
<COMMON> 9,278,400
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 315,463,968
<SALES> 0
<TOTAL-REVENUES> 9,896,909
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,896,909
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,896,909
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,896,909
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001031002
<NAME> MERRILL LYNCH PREFERRED FUNDING II, L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-26-1997
<PERIOD-START> FEB-6-1997
<PERIOD-END> JUN-27-1997
<CASH> 0
<SECURITIES> 363,932,704
<RECEIVABLES> 7,204,368
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 371,137,072
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 371,137,072
<CURRENT-LIABILITIES> 7,204,368
<BONDS> 0
0
309,278,400
<COMMON> 54,654,304
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 371,137,072
<SALES> 0
<TOTAL-REVENUES> 11,602,293
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,602,293
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,602,293
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,602,293
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
