================================================================================
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 September 25, 1998
Merrill Lynch Preferred Capital Trust V
(Exact name of Registrant as specified in its certificate of trust)
Commission File No.: 1-7182-10
Delaware 13-7140866
(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
- ------------------- -----------------------------------------
7.28% 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 V, L.P.
(Exact name of Registrant as specified in its certificate of
limited partnership)
Commission File No.: 1-7182-09
Delaware 13-3983474
(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
- ------------------- -----------------------------------------
7.28% Partnership Preferred New York Stock Exchange
Securities (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 September 25, 1998, 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 V
BALANCE SHEET (UNAUDITED)
- --------------------------------------------------------------------------------
SEPTEMBER 25, 1998
------------------
Assets $ --
====
Trust Securities $ --
====
See Note to Balance Sheet
2
<PAGE>
MERRILL LYNCH PREFERRED CAPITAL TRUST V
NOTE TO BALANCE SHEET (UNAUDITED)
SEPTEMBER 25, 1998
- --------------------------------------------------------------------------------
ORGANIZATION AND PURPOSE
Merrill Lynch Preferred Capital Trust V (the "Trust") is a statutory business
trust formed on January 8, 1998 under the laws of the State of Delaware for the
exclusive purposes of (i) issuing the Trust Originated Preferred Securities (the
"Trust Preferred Securities") and the Trust Common Securities (together with the
Trust Preferred Securities, the "Trust Securities") representing undivided
beneficial ownership interests in the assets of the Trust, (ii) purchasing
Partnership Preferred Securities (the "Partnership Preferred Securities")
representing the limited partnership interests of Merrill Lynch Preferred
Funding V, L.P. (the "Partnership") with the proceeds from the sale of the Trust
Securities, and (iii) engaging in only those other activities necessary or
incidental thereto. The Trust has a perpetual existence, subject to certain
termination events as provided in the Declaration of Trust under which it was
formed.
No Trust Securities had been issued as of September 25, 1998. On November 3,
1998, the Trust issued and sold $850 million of 7.28% Trust Preferred Securities
in a public offering and issued and sold its Trust Common Securities to Merrill
Lynch & Co., Inc.(the "Company"). The proceeds from the Trust's sale of the
Trust Securities were used to purchase the Partnership Preferred Securities from
the Partnership. The Partnership Preferred Securities will be redeemable for
cash, at the option of the Partnership, in whole or in part, from time to time,
after September 30, 2008. Upon any redemption of the Partnership Preferred
Securities, the Trust Preferred Securities will be redeemed, in whole or in
part, as applicable. 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.
The Company has paid compensation to the underwriters of the offering of the
Trust Preferred Securities. The Company also has agreed to pay all fees and
expenses related to the organization and operations of the Trust (including any
taxes, duties, assessments or governmental 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 be responsible for all debts and other obligations of the Trust
(other than the Trust Securities). The Company has agreed to indemnify the
trustees and certain other persons.
3
<PAGE>
MERRILL LYNCH PREFERRED FUNDING V, L.P.
BALANCE SHEET (UNAUDITED)
- --------------------------------------------------------------------------------
SEPTEMBER 25, 1998
------------------
Assets $ --
=====
Partnership securities:
Limited partner interest $ 85
General partner interest 15
-----
100
Less: Receivables from partners for subscribed partnership interests (100)
-----
$ --
=====
See Note to Balance Sheet
4
<PAGE>
MERRILL LYNCH PREFERRED FUNDING V, L.P.
NOTE TO BALANCE SHEET (UNAUDITED)
SEPTEMBER 25, 1998
- --------------------------------------------------------------------------------
ORGANIZATION AND PURPOSE
Merrill Lynch Preferred Funding V, L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act on January 8, 1998 for the exclusive purposes of purchasing
certain eligible debt instruments of Merrill Lynch & Co., Inc. (the "Company")
and wholly owned subsidiaries of the Company (the "Affiliate Investment
Instruments") with the proceeds from the sale of Partnership Preferred
Securities (the "Partnership Preferred Securities") to Merrill Lynch Preferred
Capital Trust V (the "Trust") and a capital contribution from the Company in
exchange for the general partnership interest in the Partnership (collectively,
the "Partnership Proceeds"). The Partnership shall have a perpetual existence
subject to certain termination events.
As of September 25, 1998, the Partnership had neither issued Partnership
Preferred Securities nor received a capital contribution from the general
partner. On November 3, 1998, the Partnership sold its Partnership Preferred
Securities to the Trust and received a capital contribution from the Company in
exchange for the general partnership interest. The Partnership Proceeds were
used to purchase debt instruments from the Company and a domestic wholly owned
subsidiary of the Company, retaining 1% in unaffiliated debt securities. The
Partnership Preferred Securities are redeemable for cash, at the option of the
Partnership, in whole or in part, from time to time, after September 30, 2008.
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 serves as the sole general partner of the Partnership. The Company,
in its capacity as General Partner of the Partnership, has agreed to pay all
fees and expenses related to the organization and operations of the Partnership
(including any 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 Partnership) and the offering of the
Partnership Preferred Securities and be responsible for all debts and other
obligations of the Partnership (other than with respect to the Partnership
Preferred Securities). The General Partner has agreed to indemnify certain
officers and agents of the Partnership.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Merrill Lynch Preferred Capital Trust V (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 8, 1998, which was subsequently amended by an
amended and restated declaration of trust dated as of October 29, 1998. As of
September 25, 1998, the Trust had no assets or operations. The Trust exists for
the exclusive purposes of (i) issuing trust securities, consisting of 7.28%
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, which TOPrS and Trust Common Securities
were issued on November 3, 1998, (ii) investing the gross proceeds of the trust
securities in 7.28% Partnership Preferred Securities (the "Partnership Preferred
Securities") issued by Merrill Lynch Preferred Funding V, 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 8, 1998, which was subsequently amended by an
amended and restated agreement of limited partnership dated November 3, 1998. As
of September 25, 1998, the Partnership had no assets or operations. 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,
which were issued on November 3, 1998, (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 8, 1998, 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 8,
1998, 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 are anticipated to include the payment of
distributions on the Partnership Preferred Securities.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
As of September 25, 1998, neither the Trust nor the Parnership had any
assets or operations. On November 3, 1998, the Trust invested the gross proceeds
from the sale of the Trust Common Securities and the TOPrS in the Partnership
Preferred Securities (the "Trust Assets"). The Partnership, in turn, invested
the proceeds from the sale of the Partnership Preferred Securities and a capital
contribution from the Company in certain Affiliate Investment Instruments and
eligible securities (the "Partnership Assets"). To the extent the Partnership
has funds available from the Partnership Assets, the general partner of the
Partnership may declare distributions to the Trust, as holder of the Partnership
Preferred Securities. The Trust's ability to pay distributions to the holders of
the TOPrS is dependent on its receipt of distributions on the Trust Assets from
the Partnership. Therefore, upon the receipt by the Partnership of payments from
the Partnership Assets and the distribution thereof to the Trust, the Trust will
pass through such payments to the holders of the TOPrS.
6
<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 8, 1998, of the Trust
(incorporated by reference to Exhibit 4.1 to the Trust's Quarterly
Report on Form 10-Q for the period ended June 26, 1998 (File No.
333-44173-04))
4.2 Form of Amended and Restated Declaration of Trust, of the Trust
(incorporated by reference to Exhibit 4.2 to Registration Statement
on Form S-3 (File No. 333-42859) (the "Registration Statement"))
4.3 Certificate of Limited Partnership, dated as of January 8, 1998, of
the Partnership (incorporated by reference to Exhibit 4.2 to the
Partnership's Quarterly Report on Form 10-Q for the period ended
June 26, 1998 (File No. 333-44173-03))
4.4 Form of Amended and Restated Agreement of Limited Partnership, of
the Partnership (incorporated by reference to Exhibit 4.4 to the
Registration Statement)
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
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)
7
<PAGE>
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)
27 Financial Data Schedules*
(b) Reports on Form 8-K
None.
- ----------
* 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.
8
<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 9th day of November,
1998.
MERRILL LYNCH PREFERRED CAPITAL TRUST V*
By: /s/ THERESA LANG
-------------------------------------
Name: Theresa Lang
Title: Regular Trustee
By: /s/ STANLEY SCHAEFER
-------------------------------------
Name: Stanley Schaefer
Title: Regular Trustee
MERRILL LYNCH PREFERRED FUNDING V, L.P.*
By: MERRILL LYNCH & CO., INC., as General
Partner
By: /s/ THERESA LANG
-------------------------------------
Name: Theresa Lang
Title: Senior Vice President and Treasurer
- ----------
* There is no principal executive officer(s), principal financial officer,
controller, principal accounting officer or board of directors of the
Registrant. The Trustees of the Registrant (which include the Regular
Trustees, the Property Trustee and the Delaware Trustee) together exercise
all powers and perform all functions with respect to the Registrant.
9
<PAGE>
INDEX TO EXHIBITS
Exhibits
27 Financial Data Schedules
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001052635
<NAME> MERRILL LYNCH PREFERRED FUNDING V, L.P.
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-25-1998
<PERIOD-START> DEC-27-1997
<PERIOD-END> SEP-25-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
85
<COMMON> 15
<OTHER-SE> (100)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001052636
<NAME> MERRILL LYNCH PREFERRED CAPITAL TRUST V
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-25-1998
<PERIOD-START> DEC-27-1997
<PERIOD-END> SEP-25-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
