<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Merrill Lynch & Co., Inc.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2740599
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(State of incorporation or organization) (I.R.S. employer
identification no.)
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
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(Address of principal executive offices) (zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
- ------------------- ------------------------------
Depositary Shares, each New York Stock Exchange
representing a
one-four hundredth
interest in a share
of 9% Cumulative
Preferred Stock, Series A,
par value $1.00 per share
Securities to be registered pursuant to Section 12(g) of the Act:
9% Cumulative Preferred Stock,
Series A, par value $1.00 per share
-----------------------------------
(Title of class)
<PAGE>
Item 1. Description of Registrant's Securities to be Registered.
-------------------------------------------------------
The descriptions of the general terms and provisions of the 9% Cumulative
Preferred Stock, Series A, par value $1.00 per share (the "Preferred Stock") of
Merrill Lynch & Co., Inc. and the Depositary Shares, each representing a one-
four hundredth interest in a share of Preferred Stock (the "Depositary Shares"),
to be registered hereunder set forth in the Prospectus Supplement and the
Prospectus, each dated October 27, 1994, attached hereto as Exhibit 99(e), are
hereby incorporated by reference into this Registration Statement.
Item 2. Exhibits.
--------
99(a)* Form of certificate representing the Preferred Stock
99(b)* Form of Depositary Receipt (attached as Exhibit A to Exhibit
99(d) hereto)
99(c)* Certificate of Designations of the registrant establishing
the rights, preferences, privileges, qualifications,
restrictions and limitations relating to the Preferred Stock
99(d)* Deposit Agreement, dated as of November 3, 1994, among the
registrant, Citibank, N.A. as Depositary and the holders
from time to time of the Depositary Receipts
99(e) Prospectus Supplement and Prospectus, each dated October 27,
1994.
----------
* Previously filed
Other securities issued by Merrill Lynch & Co., Inc. are listed on the
New York Stock Exchange.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
MERRILL LYNCH & CO., INC.
By: /s/ Gregory T. Russo
---------------------------
Gregory T. Russo
Secretary
Date: November 14, 1994
3
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
MERRILL LYNCH & CO., INC.
EXHIBITS
TO
FORM 8-A/A DATED NOVEMBER 14, 1994
Commission File No. 1-7182
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Page No.
- ---------- -------
99(a)* Form of certificate representing the Preferred Stock
99(b)* Form of Depositary Receipt (attached as Exhibit A to
Exhibit 99(d) hereto)
99(c)* Certificate of Designations of the registrant
establishing the rights, preferences, privileges,
qualifications, restrictions and limitations relating
to the Preferred Stock
99(d)* Deposit Agreement, dated as of November 3, 1994, among
the registrant, Citibank, N.A. as Depositary and the
holders from time to time of the Depositary Receipts
99(e) Prospectus Supplement and Prospectus, each dated
October 27, 1994.
- ----------
* Previously filed
<PAGE>
EXHIBIT 99(E)
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 27, 1994)
LOGO
MERRILL LYNCH & CO., INC.
16,000,000 DEPOSITARY SHARES
EACH REPRESENTING A ONE-FOUR HUNDREDTH INTEREST IN A SHARE OF
9% CUMULATIVE PREFERRED STOCK, SERIES A
---------------
Each of the 16,000,000 Depositary Shares offered hereby (the "Depositary
Shares") represents a one-four hundredth ownership interest in a share of 9%
Cumulative Preferred Stock, Series A, $10,000 liquidation preference per share
(the "Series A Preferred Stock"), of Merrill Lynch & Co., Inc. (the
"Company"), deposited with the Depositary (as defined herein) and, through the
Depositary, entitles the holder to all proportional rights and preferences of
the Series A Preferred Stock represented thereby (including dividend, voting,
redemption and liquidation rights). The Depositary Shares are evidenced by the
Depositary Receipts (as defined herein). See "Description of Depositary
Shares".
Dividends on the Series A Preferred Stock are cumulative from the date of
original issue and are payable quarterly on March 30, June 30, September 30
and December 30 of each year, commencing December 30, 1994, at the rate per
annum of 9% of the $10,000 liquidation preference per share, equivalent to
$2.25 per annum per Depositary Share. See "Description of Series A Preferred
Stock--Dividends" and "Description of Depositary Shares--Dividends and Other
Distributions".
The Series A Preferred Stock is not redeemable prior to December 30, 2004.
On and after that date, the Series A Preferred Stock will be redeemable at the
option of the Company, in whole at any time or from time to time in part, at a
redemption price equal to $10,000 per share (equivalent to $25 per Depositary
Share), plus accrued and unpaid dividends (whether or not declared) to the
date fixed for redemption. For a description of the rights and preferences of
the Series A Preferred Stock, see "Description of Series A Preferred Stock".
Application will be made to list the Depositary Shares on the New York Stock
Exchange. The Series A Preferred Stock will not be listed on any securities
exchange and the Company does not expect that there will be any trading market
for the Series A Preferred Stock except as represented by the Depositary
Shares. Trading of the Depositary Shares on the New York Stock Exchange is
expected to commence within a 30-day period after the initial delivery of the
Depositary Shares. See "Underwriting".
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT(2)(3) COMPANY(1)(3)(4)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Depositary Share............... $25.00 $.7875 $24.2125
- --------------------------------------------------------------------------------
Total(5)........................... $400,000,000 $12,600,000 $387,400,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued dividends, if any, from November 3, 1994 to the date of
delivery.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933. See "Underwriting".
(3) The applicable underwriting discount will be $.50 per Depositary Share
offered hereby with respect to any Depositary Share sold to certain
institutions. To the extent of such sales, the actual total Underwriting
Discount will be less, and the actual total Proceeds to the Company will
be greater, than the amounts shown in the table.
(4) Before deducting expenses payable by the Company.
(5) The Company has granted to the several Underwriters an option, exercisable
within 30 days from the date of this Prospectus Supplement, to purchase up
to an additional 1,000,000 Depositary Shares to cover over-allotments, if
any. If the option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to the Company will be $425,000,000,
$13,387,500 and $411,612,500, respectively. See "Underwriting".
---------------
The Depositary Shares are offered by the several Underwriters, subject to
prior sale, when, as and if issued to and accepted by them and subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected
that delivery of the Depositary Receipts evidencing the Depositary Shares will
be made in New York, New York on or about November 3, 1994.
---------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
A. G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
---------------
The date of this Prospectus Supplement is October 27, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEPOSITARY
SHARES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES.
S-2
<PAGE>
RECENT DEVELOPMENTS
The following summary of certain consolidated financial information
concerning the Company was derived from, and is qualified in its entirety by
reference to, the financial information and data contained in the Company's
Current Report on Form 8-K dated October 18, 1994, Quarterly Report on Form
10-Q for the quarter ended July 1, 1994, and Annual Report on Form 10-K for
the year ended December 31, 1993. See "Incorporation of Certain Documents by
Reference" in the accompanying Prospectus. The Current Report on Form 8-K,
dated October 18, 1994, which includes preliminary unaudited financial
information for the quarter ended September 30, 1994, will be superseded by
the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1994. The condensed consolidated financial statements contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended July 1, 1994 and
the results of operations contained in the Company's Current Report on Form 8-
K dated October 18, 1994 are unaudited; however, in the opinion of management
of the Company, all adjustments (consisting only of normal recurring accruals
and, in 1993, a non-recurring charge related to the Company's decision not to
occupy certain office space) necessary for a fair statement of the results of
operations have been included.
The Company conducts its business in highly volatile markets. Consequently,
the Company's results can be affected by many factors, including general
market conditions, the liquidity of secondary markets, the level and
volatility of interest rates and currency values, the valuation of securities
positions, competitive conditions, and the size, number, and timing of
transactions. In periods of unfavorable market activity, profitability can be
adversely affected because certain expenses remain relatively fixed. As a
result, net earnings and revenues can vary significantly from period to
period. Thus, interim results may not necessarily be representative of the
full year results of operations.
<TABLE>
<CAPTION>
Income Statement Information NINE MONTHS ENDED
- ---------------------------- -------------------------------
SEPTEMBER 24, SEPTEMBER 30,
1993 1994
-------------- --------------
(IN THOUSANDS, EXCEPT RATIOS)
-------------------------------
<S> <C> <C>
Revenues........................................ $ 12,062,041 $ 13,749,334
Net revenues(/1/)............................... $ 7,800,233 $ 7,531,792
Earnings before income taxes and cumulative
effect of change in accounting principle...... $ 1,827,528 $ 1,474,392
Cumulative effect of change in accounting prin-
ciple(/2/)..................................... $ (35,420) $ --
Net earnings.................................... $ 1,011,700 $ 855,147
Ratio of earnings to combined fixed charges and
preferred stock dividend requirements(/3/)..... 1.4 --
<CAPTION>
DECEMBER 31, JULY 1,
Balance Sheet Information 1993 1994
- ------------------------- -------------- --------------
(IN THOUSANDS)
-------------------------------
<S> <C> <C>
Total assets(/4/)(/5/).......................... $ 152,910,362 $ 174,006,536
Long-term borrowings(/4/)(/6/).................. $ 13,468,900 $ 15,289,293
Stockholders' equity(/4/)....................... $ 5,485,913 $ 5,628,394
</TABLE>
- --------
Notes--
(1) Net revenues are revenues net of interest expense.
(2) Net earnings for 1993 have been reduced by $35,420,000 for the adoption of
Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits".
(3) The ratio of earnings to combined fixed charges and preferred stock
dividend requirements for the nine months ended September 30, 1994 is not
available as of the date of this Prospectus Supplement. For the six months
ended July 1, 1994, the ratio of earnings to combined fixed charges and
preferred stock dividend requirements was 1.3. For the purpose of
calculating the ratio of earnings to combined fixed charges and preferred
stock dividend requirements, "earnings" consists of earnings from
continuing operations before income taxes and fixed charges. "Fixed
charges" consists of interest costs, that portion of rentals estimated to
be representative of the interest factor, amortization of debt expenses,
and preferred stock dividend requirements of majority-owned subsidiaries.
(4) Certain information as of September 30, 1994 is not available as of the
date of this Prospectus Supplement.
(5) On January 1, 1994, the Company adopted Financial Accounting Standards
Board Interpretation No. 39, "Offsetting of Amounts Related to Certain
Contracts," which increased assets and liabilities at July 1, 1994 by
approximately $13,500,000,000.
(6) To finance its diverse activities, the Company and certain subsidiaries
borrow substantial amounts of short-term funds on a regular basis.
Although the amount of short-term borrowings significantly varies with the
level of general business activity, on July 1, 1994, $623,101,000 of bank
loans and $13,932,942,000 of commercial paper were outstanding. In
addition, certain of the Company's subsidiaries lend securities and enter
into repurchase agreements to obtain financing. At July 1, 1994, cash
deposits for securities loaned and securities sold under agreements to
repurchase amounted to $1,525,237,000 and $60,081,702,000, respectively.
From July 2, 1994 to October 25, 1994, long-term borrowings, net of
repayments and repurchases, increased in the amount of approximately
$577,993,000.
S-3
<PAGE>
RESULTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1994
Financial markets, strong throughout 1993 and the first six weeks of 1994,
weakened as a result of rising interest rates, unsettled currency markets,
volatile stock and bond markets, and investor caution. The broad market
decline, initially triggered by an increase in short-term interest rates in
February 1994 by the Federal Reserve, continued during the remainder of the
period ended September 30, 1994. As a result, volumes in institutional and
retail investor business activities decreased industrywide. These conditions
affected the Company's 1994 third quarter results. Net earnings were $231.6
million in the 1994 third quarter, down 8% from the 1994 second quarter and 36%
from the 1993 third quarter. Net revenues in the 1994 third quarter were $2,302
million, down 4% from the 1994 second quarter and 13% from the 1993 third
quarter, while non-interest expenses were $1,913 million, down 3% from the 1994
second quarter and 4% from the 1993 third quarter.
For the first nine months of 1994, net earnings were $855.1 million, down
$156.6 million (15%) from $1,011.7 million reported in last year's record nine-
month period. Net earnings for the 1993 nine-month period included a $35.4
million cumulative effect charge (net of $25.1 million of applicable income tax
benefits) related to the adoption of Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits." Earnings
before the cumulative effect of the change in accounting principle decreased
18% from $1,047.1 million reported in the comparable 1993 period. Earnings per
common share for the first nine months of 1994 were $3.98 primary and $3.97
fully diluted versus $4.45 primary and $4.42 fully diluted ($4.61 primary and
$4.58 fully diluted, before the 1993 cumulative effect charge) in the prior
year's period. As previously reported, 1993 nine-month results included a non-
recurring pretax lease charge totaling $103.0 million ($59.7 million after
income taxes) related to the Company's decision not to occupy certain office
space at its World Financial Center Headquarters ("Headquarters") facility. An
agreement to sublet this space was entered into in the 1993 fourth quarter.
Total revenues increased 14% from the 1993 nine-month period to $13,749
million. Net revenues (revenues after interest expense) decreased 3% to $7,532
million for the first nine months of 1994.
Commissions revenues increased 7% from the 1993 nine-month period to $2,232
million on the strength of higher mutual fund, commodity, and listed securities
transactions commissions. Mutual fund commissions benefited from increased
distribution fees and redemption fees earned on mutual funds sold in prior
periods. Sales of third-party mutual funds were up from a year ago; however,
transactions in such funds declined during the 1994 second and third quarters
relative to the 1994 first quarter. Sales of mutual funds managed by the
Company have increased from the 1993 nine-month period. Commissions on listed
securities benefited from higher trading volume. Other commissions revenues
advanced principally as a result of higher revenues from commodity transactions
partially offset by lower commissions from money market instruments.
Interest and dividend revenues for the first nine months of 1994 rose 38% to
$6,956 million. Interest expense, which includes dividend expense, increased
46% to $6,218 million. Net interest profit decreased 7% to $738 million due
primarily to an increase in short-term interest rates and a general flattening
of the yield curve, which is the difference between short-term and long-term
interest rates. As a result, interest spreads declined, while financing and
hedging costs increased from the comparable 1993 period.
Principal transactions revenues decreased 16% from the 1993 nine-month period
to $1,881 million as a result of rising interest rates and lower volumes. For
the first nine months of 1994, fixed-income and foreign exchange trading
revenues, in the aggregate, decreased 16% to $1,432 million. Lower revenues
from corporate bonds and preferred stock, non-U.S. governments and agencies
securities, foreign exchange trading, and money market instruments, were
partially offset by higher revenues from swaps and derivatives, municipal
securities, mortgage-backed securities, and U.S. Government and agency
securities. Equity and commodity trading revenues, in the aggregate, declined
16% to $449 million as lower trading revenues and a loss in convertible
securities were partially offset by higher revenues from trading in commodities
and foreign equities.
S-4
<PAGE>
Investment banking revenues totaled $1,012 million, down 23% in the 1994
nine-month period. Underwriting activity was slow as domestic volume
industrywide declined 29% from the comparable 1993 period. Lower underwriting
revenues were reported in most categories, including equities, corporate bonds
and preferred stock, convertible securities, and municipal bonds. Strategic
services revenues, which include merger and acquisition fees and advisory fees,
benefited from increased merger and acquisition advisory assignments in various
industries.
Asset management and portfolio service fees increased 15% to $1,308 million
principally as a result of growth in stock and bond fund assets under
management. Other revenues rose 63% from the 1993 nine-month period to $360
million due to net realized investment gains in the 1994 period, compared with
net investment losses in the comparable 1993 period.
Non-interest expenses increased 1% over the corresponding 1993 period to
$6,057 million (3% excluding the non-recurring pretax lease charge of $103.0
million). Compensation and benefits expense, which represented approximately
63% of non-interest expenses, was virtually unchanged from the 1993 nine-month
period. Higher salary and benefit expenses related to an increase in the number
of full-time employees were offset by lower levels of variable compensation.
Compensation and benefits expense, as a percentage of net revenues, was 50.8%
in the first nine months of 1994, compared with 49.2% in the corresponding 1993
period.
Occupancy costs decreased 28% from the corresponding 1993 period (7%
excluding the non-recurring pretax lease charge of $103.0 million), benefiting
from continued relocation of support staff to lower cost facilities and reduced
space requirements at the Headquarters facility. Other facilities-related
costs, which include communications and equipment rental expense and
depreciation and amortization expense, rose 11% primarily due to the increased
use of market data and news services, and higher depreciation expense from the
acquisition of technology-related equipment.
Advertising and market development expenses rose 8% from the 1993 nine-month
period as a result of increased travel costs related to international business
activity and higher recognition program costs. These expenses were partially
offset by reductions in advertising costs. Professional fees were up 37% from
the year-ago period due primarily to increased system consulting fees related
to technology improvements. Brokerage, clearing, and exchange fees were up 22%
from last year's nine-month period reflecting increased clearinghouse fees
related to risk management activities in volatile markets and higher commodity
trading volume. Other expenses advanced 6% due, in part, to increased
provisions related to various business activities.
Income tax expense totaled $619 million for the first nine months of 1994,
down 21% from the year earlier period due primarily to lower profitability. The
effective tax rate for the 1994 nine-month period was 42.0% versus 42.7% in the
comparable 1993 period.
CERTAIN BALANCE SHEET INFORMATION AS OF JULY 1, 1994
Balance sheet information as of September 30, 1994 is not available as of the
date of this Prospectus Supplement. On January 1, 1994, the Company adopted
Financial Accounting Standards Board Interpretation No. 39 ("Interpretation No.
39"), "Offsetting of Amounts Related to Certain Contracts." Interpretation No.
39 affects the financial statement presentation of balances related to swap,
forward, and other similar exchange or conditional type contracts, and certain
unconditional type contracts. Prior to the adoption of Interpretation No. 39,
the Company followed industry practice in reporting balances related to certain
types of contracts on a net basis. Unrealized gains and losses for swap,
forward, and other similar contracts were reported net on the balance sheet by
contract type, while certain receivables and payables related to resale and
repurchase agreements were reported net by counterparty. The effect of
Interpretation No. 39 increased assets and liabilities at July 1, 1994 by
approximately $13.5 billion.
S-5
<PAGE>
The Company believes that its equity base is adequate relative to the level
and composition of its assets and the mix of its businesses.
In the normal course of business, the Company underwrites, trades, and holds
non-investment grade securities in connection with its market-making,
investment banking, and derivative structuring activities. These activities are
subject to risks related to the creditworthiness of the issuers and the
liquidity of the market for such securities, in addition to the usual risks
associated with investing in, extending credit, underwriting, and trading in
investment grade instruments.
At July 1, 1994, the fair value of long and short non-investment grade
trading inventories amounted to $3,507 million and $474 million, respectively,
and in the aggregate (i.e., the sum of long and short trading inventories),
represented 4.2% of aggregate consolidated trading inventories.
At July 1, 1994, the carrying value of the extensions of credit provided to
corporations entering into leveraged transactions aggregated $249 million
(excluding unutilized revolving lines of credit and other lending commitments
of $54 million), consisting primarily of senior term and subordinated
financings to 36 medium-sized corporations. At July 1, 1994, the Company had no
bridge loans outstanding. Loans to highly leveraged corporations are carried at
unpaid principal balances less a reserve for estimated losses. The allowance
for loan losses is estimated based on a review of each loan, and consideration
of economic, market, and credit conditions. Subsequent to July 1, 1994, the
Company committed to loan up to $126 million to a non-investment grade
counterparty. The Company has participated $111 million of this commitment to
third parties, and has funded approximately $8 million of its remaining $15
million commitment. Direct equity investments made in conjunction with the
Company's investment and merchant banking activities aggregated $288 million at
July 1, 1994, representing investments in 80 enterprises. Equity investments in
privately-held corporations for which sale is restricted by government or
contractual requirements are carried at the lower of cost or estimated net
realizable value. At July 1, 1994, the Company held interests in partnerships,
totaling $96 million (recorded on the cost basis), that invest in highly
leveraged transactions and non-investment grade securities. Prior to July 1,
1994, the Company had a co-investment arrangement to enter into direct equity
investments. At July 1, 1994, the additional co-investment commitments were $12
million. At July 1, 1994, the Company also committed to invest an additional
$29 million in partnerships that invest in leveraged transactions. Subsequent
to July 1, 1994, the Company committed to invest up to $50 million over a five-
year period in another partnership that invests in leveraged transactions.
The Company's insurance subsidiaries hold non-investment grade securities. At
July 1, 1994, non-investment grade insurance investments were $431 million,
representing 6.8% of total insurance investments. At July 1, 1994, non-
investment grade securities of insurance subsidiaries were classified as
trading or available-for-sale and were carried at fair value.
At July 1, 1994, the largest non-investment grade concentration consisted of
various issues of a Latin American sovereign totaling $375 million, of which
$95 million represented on-balance-sheet hedges for off-balance-sheet
instruments. No single industry sector accounted for more than 19% of total
non-investment grade positions. At July 1, 1994, the Company held an aggregate
carrying value of $257 million in debt and equity securities of issuers in
various stages of bankruptcy proceedings. Approximately 63% of this amount
resulted from the Company's market-making activities.
S-6
<PAGE>
DESCRIPTION OF SERIES A PREFERRED STOCK
The following description of the particular terms of the shares of Series A
Preferred Stock offered hereby supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of
Preferred Stock set forth in the accompanying Prospectus, to which description
reference is hereby made. Certain terms not defined in this description are
defined in the Prospectus.
GENERAL
The Series A Preferred Stock offered hereby is a single series consisting of
up to 42,500 shares. The holders of Series A Preferred Stock will have no
preemptive rights. The Series A Preferred Stock, upon issuance against full
payment of the purchase price therefor, will be fully paid and nonassessable.
The Series A Preferred Stock will, on the date of original issuance, rank on
a parity as to payment of dividends and distribution of assets upon
dissolution, liquidation or winding up of the Company with each other
outstanding series of Preferred Stock. See "Description of Preferred Stock" in
the Prospectus. The Series A Preferred Stock, together with each other series
of Preferred Stock, will rank prior to the Common Stock and any other stock of
the Company that is expressly made junior to such series of Preferred Stock as
to the payment of dividends and distribution of assets upon dissolution,
liquidation or winding up of the Company.
The Series A Preferred Stock will not be convertible into shares of Common
Stock of the Company and will not be subject to any sinking fund or other
obligation of the Company to repurchase the Series A Preferred Stock.
DIVIDENDS
Holders of shares of Series A Preferred Stock will be entitled to receive,
as, if and when declared by the Board of Directors of the Company out of assets
of the Company legally available for payment, cumulative cash dividends at a
rate per annum equal to 9% of the $10,000 liquidation preference per share
(equivalent to $2.25 per Depositary Share). Dividends on the Series A Preferred
Stock will be payable quarterly, as, if and when declared by the Board of
Directors of the Company, on March 30, June 30, September 30 and December 30 of
each year, commencing December 30, 1994 (and, in the case of any accrued but
unpaid dividends, at such additional times and for such interim periods, if
any, determined by the Board of Directors of the Company), at such per annum
rate. The initial dividend for the period from and including November 3, 1994
to but excluding December 30, 1994 will equal $142.50 per share ($.35625 per
Depositary Share). Each such dividend will be payable to holders of record as
they appear on the stock books of the Company on such record dates, not more
than thirty nor less than fifteen days preceding the payment dates thereof, as
shall be fixed by the Board of Directors or a duly authorized committee
thereof. Dividends will accrue from the date of original issue. Dividends will
be cumulative from such date, whether or not in any dividend period or periods
there are assets of the Company legally available for the payment of such
dividends.
If a dividend payment date is not a business day, dividends (if declared) on
the Series A Preferred Stock will be paid on the immediately succeeding
business day, without interest. A dividend period with respect to a dividend
payment date is the period commencing on the immediately preceding dividend
payment date and ending on the day immediately prior to the next succeeding
dividend payment date. Dividends payable on the Series A Preferred Stock for
any period greater or less than a full dividend period shall be computed on the
basis of a 360-day year consisting of twelve 30-day months. Dividends payable
on the Series A Preferred Stock for each full dividend period shall be computed
by dividing the per annum dividend rate by four.
If, for any dividend period, full dividends on a cumulative or noncumulative
basis, as the case may be, on any share or shares of Preferred Stock have not
been paid or declared and set apart for payment or the
S-7
<PAGE>
Company is in default or in arrears with respect to any sinking fund or other
arrangement for the purchase or redemption of any shares of Preferred Stock,
the Company may not declare any dividends on, or make any payment on account of
the purchase, redemption or other retirement of, its Common Stock or any other
stock of the Company ranking as to dividends or distribution of assets junior
to the Preferred Stock, other than as described under "Description of Preferred
Stock--Dividends" in the accompanying Prospectus.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of shares of Series A Preferred Stock
are entitled to receive out of assets of the Company available for distribution
to stockholders, before any distribution of assets is made to holders of Common
Stock or of any other shares of stock of the Company ranking as to such a
distribution junior to the shares of Series A Preferred Stock, a liquidating
distribution in the amount of $10,000 per share (equivalent to $25 per
Depositary Share) plus accrued and unpaid dividends (whether or not declared)
for the then-current dividend period and all dividend periods prior thereto.
After payment of such a liquidating distribution, the holders of shares of
Series A Preferred Stock will not be entitled to any further participation in
any distribution of assets by the Company.
Because the Company is a holding company, its rights and the rights of its
creditors and its shareholders, including the holders of shares of the Series A
Preferred Stock, to participate in the assets of any subsidiary upon the
latter's liquidation or recapitalization may be subject to the prior claims of
the subsidiary's creditors, except to the extent that the Company may itself be
a creditor with recognized claims against the subsidiary.
REDEMPTION
The Series A Preferred Stock is not subject to any mandatory redemption,
sinking fund or other similar provisions. The Series A Preferred Stock is not
redeemable prior to December 30, 2004. On and after that date, the Series A
Preferred Stock will be redeemable at the option of the Company, in whole at
any time or from time to time in part, upon not less than thirty nor more than
sixty days notice, at a redemption price equal to $10,000 per share (equivalent
to $25 per Depositary Share), plus accrued and unpaid dividends (whether or not
declared) to the date fixed for redemption.
If shares of the Series A Preferred Stock are to be redeemed, the notice of
redemption shall be given by first class mail to the holders of record of the
Series A Preferred Stock to be redeemed, mailed not less than 30 days nor more
than 60 days prior to the date fixed for redemption thereof. Each notice of
redemption will include a statement setting forth: (i) the redemption date,
(ii) the number of shares of the Series A Preferred Stock to be redeemed and,
if less than all the shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder, (iii) the redemption price,
(iv) that dividends on such shares to be redeemed will cease to accrue on such
redemption date and (v) the place or places where holders may surrender
certificates evidencing shares of Series A Preferred Stock for payment of the
redemption price.
Holders of Series A Preferred Stock will have no right to require redemption
of the Series A Preferred Stock.
VOTING RIGHTS
The Series A Preferred Stock will have no voting rights except as set forth
under "Description of Preferred Stock--Voting Rights" in the accompanying
Prospectus.
TRANSFER AGENT AND REGISTRAR
Citibank, N.A. will be the transfer agent, registrar, dividend disbursing
agent and redemption agent for the Series A Preferred Stock.
S-8
<PAGE>
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Each Depositary Share will represent a one-four hundredth ownership interest
in a share of Series A Preferred Stock. The shares of Series A Preferred Stock
represented by Depositary Shares will be deposited under a Deposit Agreement
(the "Deposit Agreement") among the Company, Citibank, N.A. (the "Depositary")
and the holders from time to time of the receipts (the "Depositary Receipts")
evidencing the Depositary Shares. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Series A Preferred Stock represented by
such Depositary Share, to all the rights and preferences of the Series A
Preferred Stock represented thereby (including dividend, voting, redemption and
liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Immediately following the issuance of the
Series A Preferred Stock by the Company, the Company will deposit the Series A
Preferred Stock with the Depositary, which will then issue the Depositary
Shares to the Underwriters. Copies of the forms of Deposit Agreement and the
Depositary Receipt may be obtained from the Company upon request, and the
following summary is qualified in its entirety by reference thereto.
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Company, issue temporary Depositary Receipts
substantially identical to (and entitling the holders thereof to all the rights
pertaining to) the definitive Depositary Receipts but not in definitive form.
Definitive Depositary Receipts will be prepared thereafter and will be
exchangeable for temporary Depositary Receipts at the Company's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends and other distributions
received in respect of the Series A Preferred Stock to the record holders of
Depositary Shares in proportion to the number of such Depositary Shares owned
by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Depositary (unless the related Depositary Shares have previously been
called for redemption), the holder of the Depositary Shares evidenced thereby
is entitled to delivery of the number of whole shares of the Series A Preferred
Stock and any money or other property represented by such Depositary Shares.
Holders of Depositary Shares will be entitled to receive whole shares of the
Series A Preferred Stock on the basis of one share of Series A Preferred Stock
for each four hundred Depositary Shares, but holders of such whole shares of
Series A Preferred Stock will not thereafter be entitled to receive Depositary
Shares in exchange therefor. If the Depositary Receipts delivered by the holder
evidence a number of Depositary Shares in excess of the number of Depositary
Shares representing the number of whole shares of Series A Preferred Stock to
be withdrawn, the Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. In no
event will fractional shares of Series A Preferred Stock be delivered upon
surrender of Depositary Receipts to the Depositary.
S-9
<PAGE>
REDEMPTION OF DEPOSITARY SHARES
If the Company redeems the Series A Preferred Stock represented by the
Depositary Shares, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of Series A Preferred Stock held by the Depositary. The redemption price per
Depositary Share will be equal to one-four hundredth of the redemption price
per share payable with respect to the Series A Preferred Stock. Whenever the
Company redeems shares of Series A Preferred Stock held by the Depositary, the
Depositary will redeem as of the same redemption date the number of Depositary
Shares representing shares of Series A Preferred Stock so redeemed. If less
than all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata as may be determined by the
Depositary.
VOTING THE SERIES A PREFERRED STOCK
Upon receipt of notice of any meeting at which holders of the Series A
Preferred Stock are entitled to vote, the Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Shares relating to Series A Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the record
date for the Series A Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the amount of
Series A Preferred Stock represented by such holder's Depositary Shares. The
Depositary will endeavor, insofar as practicable, to vote the amount of Series
A Preferred Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action which may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of Series A Preferred Stock to the
extent it does not receive specific instructions from the holders of Depositary
Shares representing Series A Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of Depositary Receipts will not
be effective unless such amendment has been approved by the holders of
Depositary Receipts representing at least a majority (or, in the case of
amendments relating to or affecting rights to receive dividends or
distributions, or voting or redemption rights, two-thirds) of the Depositary
Shares then outstanding. The Deposit Agreement may be terminated by the Company
or the Depositary only if (i) all outstanding Depositary Shares have been
redeemed, (ii) there has been a final distribution in respect of the Series A
Preferred Stock in connection with any liquidation, dissolution or winding up
of the Company and such distribution has been distributed to the holders of
Depositary Receipts, or (iii) upon consent of holders of Depositary Receipts
representing not less than two-thirds of the Depositary Shares then
outstanding.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of
the Series A Preferred Stock and any redemption of the Series A Preferred
Stock. Holders of Depositary Receipts will pay all other transfer and other
taxes and governmental charges and such other charges as are expressly provided
in the Deposit Agreement to be for their accounts. The Depositary may refuse to
effect any transfer of a Depositary Receipt or any withdrawal of shares of
Series A Preferred Stock evidenced thereby until all such taxes and charges
with respect to such Depositary Receipt or such shares of Series A Preferred
Stock are paid by the holder thereof.
MISCELLANEOUS
The Depositary will forward all reports and communications from the Company
which are delivered to the Depositary and which the Company is required to
furnish to the holders of the Series A Preferred Stock.
S-10
<PAGE>
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and the Company and the Depositary will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Series A Preferred Stock unless satisfactory indemnity is
furnished. The Company and the Depositary may rely on written advice of counsel
or accountants, or information provided by persons presenting Series A
Preferred Stock for deposit, holders of Depositary Shares or other persons
believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary.
Any such resignation or removal will take effect upon the appointment of a
successor Depositary, which successor Depositary must be appointed within 60
days after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
S-11
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Dean Witter Reynolds Inc., A.G. Edwards &
Sons, Inc., PaineWebber Incorporated, Prudential Securities Incorporated and
Smith Barney Inc. are acting as representatives (the "Representatives"), has
severally agreed to purchase the number of Depositary Shares, each representing
a one-four hundredth ownership interest in a share of Series A Preferred Stock,
set forth opposite its name below. In the Underwriting Agreement, the several
Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all the Depositary Shares offered hereby if any of the
Depositary Shares are purchased. In the event of default by an Underwriter, the
Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER DEPOSITARY SHARES
----------- -----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................... 1,562,500
Dean Witter Reynolds Inc................................... 1,562,500
A.G. Edwards & Sons, Inc. ................................. 1,562,500
PaineWebber Incorporated................................... 1,562,500
Prudential Securities Incorporated......................... 1,562,500
Smith Barney Inc........................................... 1,562,500
Robert W. Baird & Co. Incorporated......................... 250,000
Bear, Stearns & Co. Inc. .................................. 250,000
Alex. Brown & Sons Incorporated............................ 250,000
Dillon, Read & Co. Inc. ................................... 250,000
Donaldson, Lufkin & Jenrette Securities Corporation........ 250,000
Kidder, Peabody & Co. Incorporated......................... 250,000
Oppenheimer & Co., Inc. ................................... 250,000
Piper Jaffray Inc. ........................................ 250,000
Raymond James & Associates, Inc. .......................... 250,000
Wertheim Schroder & Co. Incorporated....................... 250,000
Yamaichi International (America), Inc. .................... 250,000
Advest, Inc. .............................................. 125,000
J.C. Bradford & Co. ....................................... 125,000
JW Charles Securities, Inc. ............................... 125,000
Commerzbank Capital Markets Corporation.................... 125,000
Cowen & Company............................................ 125,000
Craigie Incorporated....................................... 125,000
Dain Bosworth Incorporated................................. 125,000
Doft & Co., Inc. .......................................... 125,000
Fahnestock & Co. Inc. ..................................... 125,000
First Albany Corporation................................... 125,000
First of Michigan Corporation.............................. 125,000
Furman Selz Incorporated................................... 125,000
Gruntal & Co., Incorporated................................ 125,000
Interstate/Johnson Lane Corporation........................ 125,000
Janney Montgomery Scott Inc. .............................. 125,000
Josephthal Lyon & Ross Incorporated........................ 125,000
Legg Mason Wood Walker, Incorporated....................... 125,000
McDonald & Company Securities, Inc. ....................... 125,000
</TABLE>
S-12
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER DEPOSITARY SHARES
----------- -----------------
<S> <C>
Morgan Keegan & Company, Inc. ............................ 125,000
The Ohio Company.......................................... 125,000
Rauscher Pierce Refsnes, Inc. ............................ 125,000
The Robinson-Humphrey Company, Inc. ...................... 125,000
Rodman & Renshaw, Inc. ................................... 125,000
Roney & Co. .............................................. 125,000
Muriel Siebert & Co., Inc. ............................... 125,000
Stifel, Nicolaus & Company, Incorporated.................. 125,000
Sutro & Co. Incorporated.................................. 125,000
Tucker Anthony Incorporated............................... 125,000
US Clearing Corp. ........................................ 125,000
Utendahl Capital Partners, L.P. .......................... 125,000
Wheat, First Securities, Inc. ............................ 125,000
----------
Total................................................ 16,000,000
==========
</TABLE>
The Representatives have advised the Company that they propose initially to
offer the Depositary Shares to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers
at such price less a concession not in excess of $.50 per Depositary Share;
provided, however, that such concession shall not exceed $.30 per Depositary
Share for sales to certain institutions. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of $.30 per Depositary Share to
certain other dealers. After the initial public offering of the Depositary
Shares, the public offering price, concession and discount may be changed.
Application will be made to list the Depositary Shares on the New York Stock
Exchange. The Series A Preferred Stock will not be listed on any securities
exchange and the Company does not expect that there will be any trading market
for the Series A Preferred Stock except as represented by the Depositary
Shares. Trading of the Depositary Shares on the New York Stock Exchange is
expected to commence within a 30-day period after the initial delivery of the
Depositary Shares. The Representatives have advised the Company that they
intend to make a market in the Depositary Shares prior to the commencement of
trading on the New York Stock Exchange. The Representatives will have no
obligation to make a market in the Depositary Shares, however, and may cease
market making activities, if commenced, at any time.
The Company has granted the Underwriters an option exercisable for 30 days
after the date hereof to purchase up to an additional 1,000,000 Depositary
Shares to cover over-allotments, if any, at the initial public offering price,
less the underwriting discount. If the Underwriters exercise this option, each
of the Underwriters will have a firm commitment, subject to certain conditions,
to purchase approximately the same percentage thereof which the number of
Depositary Shares to be purchased by it shown in the foregoing table is of the
16,000,000 Depositary Shares initially offered hereby.
The Company has agreed to indemnify the Underwriters against, or contribute
to payments that the Underwriters may be required to make in respect of,
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
Any Underwriter may engage in transactions with and perform services for the
Company in the ordinary course of business.
The underwriting of the Depositary Shares will conform to the requirements
set forth in the applicable sections of Schedule E to the By-laws of the
National Association of Securities Dealers, Inc.
VALIDITY OF SECURITIES
The validity of the Series A Preferred Stock and the Depositary Shares will
be passed upon for the Company by Brown & Wood, New York, New York and for the
Underwriters by Sullivan & Cromwell, New York, New York.
S-13
<PAGE>
PROSPECTUS
LOGO
MERRILL LYNCH & CO., INC.
PREFERRED STOCK AND DEPOSITARY SHARES
----------------
Merrill Lynch & Co., Inc. (the "Company") intends to offer from time to time,
in one or more series, up to 100,000 shares of its preferred stock, par value
$1.00 per share (the "Preferred Stock"), which may be represented by depositary
shares (the "Depositary Shares"). The Preferred Stock offered hereby may be
denominated in any currency or composite currency, including the European
Currency Unit, as shall be designated by the Company. The Preferred Stock and
Depositary Shares (collectively, the "Securities") may be offered in separate
series in amounts, at prices and on terms determined at the time of sale and
set forth in an accompanying supplement to this Prospectus (a "Prospectus
Supplement").
The specific terms of each issuance of Securities offered pursuant to this
Prospectus will be set forth in the applicable Prospectus Supplement, which in
each case will include the specific designation, the aggregate number of shares
offered, the dividend rate or method of calculation, the dividend period and
dividend payment dates, whether such dividends will be cumulative or
noncumulative, the liquidation preference, the currency, if not the U.S.
dollar, in which dividends and liquidation preference will be denominated,
voting rights, if any, any terms for redemption at the option of the holder or
the Company and the initial public offering or purchase price.
The Prospectus Supplement will also contain information, where applicable,
concerning certain United States federal income tax considerations relating to,
and as to any listing on a securities exchange of, the Securities covered by
such Prospectus Supplement.
----------------
The Securities may be sold by the Company directly to purchasers, through
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S") as agent or through public offerings underwritten by MLPF&S or by
underwriting syndicates managed or co-managed by MLPF&S. The Prospectus
Supplement will also set forth with respect to the sale of Securities in
respect of which this Prospectus is being delivered the name of the agent or
the name or names of any underwriters, any applicable commissions or discounts,
the net proceeds to the Company from such sale and any other terms of the
offering. Any underwriter or agent participating in the offering may be deemed
an "underwriter" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"). See "Plan of Distribution" for possible indemnification
arrangements for the agent, any underwriters and their controlling persons.
This Prospectus and related Prospectus Supplement may be used by MLPF&S in
connection with offers and sales related to market-making transactions in the
Securities. MLPF&S may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
sale.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular Securities in any
jurisdiction shall not constitute an offer in that jurisdiction of any of the
other Securities covered by this Prospectus.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is October 27, 1994.
<PAGE>
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED THE OFFERING OF THE SECURITIES MADE HEREBY NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Midwest Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and New York Regional Office, Seven
World Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Reports, proxy and
information statements and other information concerning the Company may also be
inspected at the offices of the New York Stock Exchange, the American Stock
Exchange, the Chicago Stock Exchange and the Pacific Stock Exchange.
The Company has filed a Registration Statement on Form S-3 (the "Registration
Statement") with the Commission pursuant to the Securities Act, covering the
Securities. This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits thereto, to which reference is
hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1993, Quarterly Reports on Form 10-Q for the quarters ended April 1, 1994 and
July 1, 1994, and Current Reports on Form 8-K dated January 20, 1994, January
24, 1994, January 27, 1994, February 3, 1994, March 9, 1994, March 24, 1994,
March 30, 1994, March 31, 1994, April 18, 1994, May 6, 1994, July 19, 1994,
August 2, 1994 and October 18, 1994 filed pursuant to Section 13 of the
Exchange Act, are hereby incorporated by reference into this Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
(WITHOUT EXHIBITS OTHER THAN EXHIBITS SPECIFICALLY INCORPORATED BY REFERENCE)
OF ANY OR ALL DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO MR. GREGORY T. RUSSO, SECRETARY,
MERRILL LYNCH & CO., INC., 100 CHURCH STREET, 12TH FLOOR, NEW YORK, NEW YORK
10080-6512; TELEPHONE NUMBER (212) 602-8435.
2
<PAGE>
MERRILL LYNCH & CO., INC.
Merrill Lynch & Co., Inc. is a holding company that, through its subsidiaries
and affiliates, provides investment, financing, insurance and related services
worldwide. Its principal subsidiary, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, is one of the largest securities firms in the world. MLPF&S is a
broker in securities, options contracts, and commodity and financial futures
contracts, an underwriter of selected insurance products, a dealer in options
and in corporate and municipal securities and an investment banking firm.
Merrill Lynch Government Securities Inc. is a primary dealer in obligations
issued by the U.S. Government or agencies thereof or guaranteed or insured by
Federal agencies or instrumentalities. Merrill Lynch Asset Management, L.P.
manages mutual funds and provides investment advisory services. Merrill Lynch
Capital Services, Inc. and Merrill Lynch Derivative Products, Inc. are the
Company's primary derivative subsidiaries which enter into interest rate and
currency swaps and other derivative transactions. Other subsidiaries provide
financial services outside the United States similar to those of MLPF&S and are
engaged in such other activities as international banking, lending and
providing other investment and financing services. The Company's insurance
underwriting and marketing operations consist of the underwriting of life
insurance and annuity products through subsidiaries of Merrill Lynch Insurance
Group, Inc., and the sale of life insurance and annuities through Merrill Lynch
Life Agency Inc. and other life insurance agencies associated with MLPF&S.
The principal executive office of the Company is located at World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281; its telephone
number is (212) 449-1000.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Securities
for general corporate purposes. Such uses may include the funding of
investments in, or extensions of credit to, its subsidiaries, the funding of
assets held by the Company or its subsidiaries, including securities
inventories, customer receivables and loans (including business loans, home
equity loans, and loans in connection with investment banking-related merger
and acquisition activities), and the refunding of maturing indebtedness. The
precise amount and timing of investments in, and extensions of credit to, its
subsidiaries will depend upon their funding requirements and the availability
of other funds to the Company and its subsidiaries. Pending such applications,
the net proceeds will be temporarily invested or applied to the reduction of
short-term indebtedness. Management of the Company expects that it will, on a
recurrent basis, engage in additional financings as the need arises to finance
the growth of the Company or to lengthen the average maturity of its
borrowings. To the extent that Securities being purchased for resale by MLPF&S
are not resold, the aggregate proceeds to the Company and its subsidiaries
would be reduced.
3
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following summary of certain consolidated financial information was
derived from, and is qualified in its entirety by reference to, the financial
statements, and other information and data contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993. See "Incorporation of
Certain Documents by Reference". The year-end results include 52 weeks for
1989, 1990, 1991, and 1992 and 53 weeks for 1993.
The Company conducts its business in highly volatile markets. Consequently,
the Company's results can be affected by many factors, including general market
conditions, the liquidity of secondary markets, the level and volatility of
interest rates and currency values, the valuation of securities positions,
competitive conditions, investor sentiment, and the size, number, and timing of
transactions. In periods of unfavorable market activity, profitability can be
adversely affected because certain expenses remain relatively fixed. As a
result, net earnings and revenues can vary significantly from period to period.
<TABLE>
<CAPTION>
YEAR ENDED LAST FRIDAY IN DECEMBER
---------------------------------------------------------------
1989 1990 1991 1992 1993
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT RATIOS)
Revenues................ $11,273,223 $11,147,229 $12,352,812 $ 13,412,668 $ 16,588,177
Net revenues............ $ 5,902,195 $ 5,783,329 $ 7,246,468 $ 8,577,401 $ 10,558,230
Earnings (loss) before
income taxes,
discontinued
operations, and
cumulative effect of
changes in accounting
principles(1).......... $ (158,386) $ 282,328 $ 1,017,418 $ 1,621,389 $ 2,424,808
Discontinued operations
(net of income
taxes)(1).............. $ 3,981 -- -- -- --
Cumulative effect of
changes in accounting
principles (net of
applicable income
taxes)(1).............. -- -- -- $ (58,580) $ (35,420)
Net earnings (loss)(1).. $ (213,385) $ 191,856 $ 696,117 $ 893,825 $ 1,358,939
Ratio of earnings to
combined fixed charges
and preferred stock
dividend
requirements(2)........ -- 1.1 1.2 1.3 1.4
Total assets............ $63,942,263 $68,129,527 $86,259,343 $107,024,173 $152,910,362
Long-term borrowings.... $ 6,897,109 $ 6,341,559 $ 7,964,424 $ 10,871,100 $ 13,468,900
Stockholders' equity(3). $ 3,151,343 $ 3,225,430 $ 3,818,088 $ 4,569,104 $ 5,485,913
</TABLE>
4
<PAGE>
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(1) Net loss for 1989 includes an after-tax reduction of $395,000,000
($470,000,000 before income taxes) resulting from a provision for the costs
of divesting certain nonstrategic product lines and business activities,
consolidating and relocating selected retail and support facilities, and
downsizing certain other operations. Results for 1989 have been restated to
reflect the effects of discontinued operations related to the sale of the
Company's real estate brokerage, relocation, and related services
subsidiary, Fine Homes International, L.P. ("FHI"), in the third quarter of
1989. Discontinued operations include the results of FHI's operations
through September 15, 1989 (the date of final disposition) and the loss on
disposal in 1989. Net earnings for 1992 have been reduced by $58,580,000 to
reflect the effects of the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" and SFAS No. 109, "Accounting for Income
Taxes." Net earnings for 1993 have been reduced by $35,420,000 to reflect
the effect of the adoption of SFAS No. 112, "Employers' Accounting for
Postemployment Benefits."
(2) For the purpose of calculating the ratio of earnings to combined fixed
charges and preferred stock dividend requirements, "earnings" consists of
earnings from continuing operations before income taxes and fixed charges.
"Fixed charges" consists of interest costs, that portion of rentals
estimated to be representative of the interest factor, amortization of debt
expenses, and preferred stock dividend requirements of majority-owned
subsidiaries. In 1989, combined fixed charges and preferred stock dividend
requirements exceeded pretax earnings before combined fixed charges and
preferred stock dividend requirements by $187,564,000.
(3) Stockholders' equity for 1993 has been increased by $21,355,000 to reflect
the effect of the adoption of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."
FISCAL YEAR 1993
Net earnings for 1993 were a record $1,358.9 million, an increase of $465.1
million (52%) above the $893.8 million reported for 1992. Results for 1993
include a non-recurring pretax lease charge in the first quarter totaling
$103.0 million ($59.7 million after income taxes) related to the Company's
decision not to occupy certain space at its Headquarters facility. The 1993
results also reflect the early adoption of Statement of Financial Accounting
Standards ("SFAS") No. 112, "Employers' Accounting for Postemployment
Benefits." The cumulative effect of this change in accounting principle reduced
1993 net earnings by $35.4 million. Net revenues (revenues after interest
expense) reached a record $10,558 million, up 23% over the $8,577 million
reported in 1992. Total 1993 revenues advanced 24% to $16,588 million versus
$13,413 million for the prior year.
Commissions revenues increased 19% in 1993 to $2,894 million due primarily to
the continued growth of listed securities transactions, increases in sales of
mutual funds and higher revenues from other commission categories. Commissions
on listed securities benefited from higher trading volume and increases in
average market prices. Mutual fund commissions benefited from increased sales
of front-end funds. Strong 1992 sales led to an increase in 1993 distribution
fees for deferred-charge funds, however, redemption fees declined from 1992 due
to lower levels of redemptions. Interest and dividend revenues in 1993 were
$7,099 million, up 22% from 1992. Interest expense (including dividend expense)
rose 25% in 1993 to $6,030 million. As a result, in 1993 net interest and
dividend profit advanced 10% to $1,069 million, compared to the $971 million
reported in 1992. This increase in net interest and dividend profit resulted
from the expansion of collateralized borrowing and lending activities, the
increased use of interest-free funds due to a larger equity base, and reduced
funding costs due to lower interest rates and improved credit ratings.
Principal transactions revenues rose to record levels in 1993, up 35% to
$2,920 million from the $2,166 million reported in 1992. Fixed-income and
foreign exchange revenues, in the aggregate, increased on higher revenues from
swaps and derivatives, corporate bonds and preferred stocks, and non-U.S.
governments and agencies. These advances were somewhat offset by lower revenues
from foreign exchange. In addition, 1993
5
<PAGE>
mortgage-backed securities principal transactions revenues were essentially
break-even; however, net revenues, including related hedges and net interest,
were positive, although below 1992 levels. Equity trading revenues increased
primarily due to higher volume and prices in over-the-counter and foreign
equity markets. Investment banking revenues increased 23% to a record $1,831
million from the $1,484 million reported in 1992. Underwriting revenues
benefited from the low interest rate environment, as corporations refinanced
higher interest-bearing debt with lower rate issuances, or raised capital
through equity offerings. Investor demand remained strong for equity and high-
yield bond underwritings which offer the potential for increased returns
compared with other investment alternatives. Asset management and portfolio
service fees were also a record, advancing 24% to $1,558 million from the
$1,253 million reported last year. Increased fees earned from asset management
activities, the Merrill Lynch Consults (R) portfolio management service and
other fee-based portfolio services businesses contributed to these favorable
results. Asset management fees increased from 1992 due primarily to asset
growth in stock and bond funds. Merrill Lynch Consults revenue increased due to
the growth in the number of accounts and higher asset levels. Other revenues
rose 1% to $285 million due to higher fees generated from increased home equity
loan activity, partially offset by net investment losses related primarily to
provisions for merchant banking activities.
Non-interest expenses totaled $8,133 million, up 17% from the $6,956 million
in 1992. Excluding the 1993 first quarter non-recurring lease charge totaling
$103.0 million, non-interest expenses were up 15%. Compensation and benefits
expense, which represented approximately 65% of total non-interest expenses,
increased 20% from 1992 due to higher production-related compensation and
increases in incentive compensation linked to the Company's improved
profitability and return on common equity. Nevertheless, compensation and
benefits expense, as a percentage of net revenues, declined to 49.8% from 50.9%
in 1992. Facilities-related costs, including occupancy, communications and
equipment rental, and depreciation and amortization, increased 13% from 1992
(3% excluding the non-recurring lease charge). Advertising and market
development expenses increased 25% reflecting higher sales promotion and
recognition program costs for Financial Consultants that are tied to increased
business activity. In addition, travel costs were up as the increase in
business volume led to additional domestic and international travel, while
favorable markets contributed to the expansion of certain discretionary
national and local advertising campaigns. Professional fees increased 13% due
to technology upgrades which required the use of system and management
consultants, as well as higher employment agency fees. Brokerage, clearing, and
exchange fees were up 1% as a result of increased trading volume, while other
expenses increased 5% principally as a result of additions to loss provisions
related to litigation and claims.
Income tax expense was $1,030 million versus $669 million in the prior year
as the effective rate in 1993 rose to 42.5%, compared with 41.3% a year ago.
The higher effective tax rate in 1993 related to the increase in the Federal
statutory rate from 34% in 1992 to 35% in 1993 due to legislation raising
corporate income tax rates retroactive to January 1, 1993.
The Company's Board of Directors declared a two-for-one common stock split
effected in the form of a 100% stock dividend paid November 24, 1993 to
stockholders of record on October 22, 1993. All share and per share data
presented herein have been restated to reflect the common stock split.
The Company believes that its equity base is adequate relative to the level
and composition of its assets and the mix of its businesses.
In the normal course of business, the Company underwrites, trades, and holds
non-investment grade securities in connection with its market-making,
investment banking and derivative structuring activities. These activities are
subject to risks related to the creditworthiness of the issuers and the
liquidity of the market for such securities, in addition to the usual risks
associated with investing, extending credit, underwriting, and trading in
investment grade instruments. At December 31, 1993, the fair value of long and
short non-investment grade trading inventories amounted to $3,129 million and
$214 million, respectively, and in the aggregate (i.e., the sum of long and
short trading inventories), represented 4.6% of aggregate consolidated trading
inventories.
6
<PAGE>
At December 31, 1993, the carrying value of extensions of credit provided to
corporations entering into leveraged transactions aggregated $435 million
(excluding unutilized revolving lines of credit and other lending commitments
of $49 million), consisting primarily of senior term and subordinated
financings to 42 medium-sized corporations. At December 31, 1993, the Company
had no bridge loans outstanding. Loans to highly leveraged corporations are
carried at unpaid principal balance less a reserve for estimated losses. The
allowance for loan losses is estimated based on a review of each loan, and
considerations of economic, market, and credit conditions. Direct equity
investments made in conjunction with the Company's investment and merchant
banking activities aggregated $276 million at December 31, 1993, representing
investments in 82 enterprises. Equity investments in privately held
corporations for which sale is restricted by government or contractual
requirements are carried at the lower of cost or net realizable value. At
December 31, 1993, the Company held interests in partnerships, totaling $92
million that invest in highly leveraged transactions and non-investment grade
securities. Subsequent to December 31, 1993, the Company increased its
partnership interests by $15 million. The Company has a co-investment
arrangement to enter into direct equity investments. At December 31, 1993, the
additional co-investment commitments were $49 million. The Company also has
committed to invest an additional $19 million in partnerships that invest in
leveraged transactions. Subsequent to year-end, the Company committed to invest
up to $50 million in a partnership over a five-year period.
The Company's insurance subsidiaries hold non-investment grade securities. At
December 31, 1993, non-investment grade insurance investments were $458
million, representing 5.8% of the total insurance investments. At December 31,
1993, non-investment grade securities of insurance subsidiaries were classified
as trading or available-for-sale in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." At December 31, 1993,
these investment securities were carried at fair value.
At December 31, 1993, the largest non-investment grade concentration
consisted of various issues of a Latin American sovereign totaling $341
million, of which $146 million represented on-balance sheet hedges. No one
industry sector accounted for more than 15% of total non-investment grade
positions. At December 31, 1993, the Company held an aggregate carrying value
of $393 million in debt and equity securities of issuers who were in various
stages of bankruptcy proceedings. Approximately 59% of this amount resulted
from the Company's market-making activities.
7
<PAGE>
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms of the
Preferred Stock to which any Prospectus Supplement may relate. Certain terms
of any series of the Preferred Stock offered by any Prospectus Supplement will
be described in the Prospectus Supplement relating thereto. If so indicated in
the Prospectus Supplement, the terms of any series may differ from the terms
set forth below. The description of certain provisions of the Preferred Stock
does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the provisions of the Company's Restated Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), including
the Certificate of Designations (the "Certificate of Designations") relating
to each particular series of the Preferred Stock, which will be filed with the
Commission at or prior to the time of sale of such Preferred Stock.
GENERAL
Under the Certificate of Incorporation, the Company has authority to issue
25,000,000 shares of undesignated preferred stock, par value $1.00 per share.
The Board of Directors of the Company has the authority, without approval of
the stockholders, to issue such shares of preferred stock in one or more
series and to fix the number of shares and the rights, preferences,
privileges, qualifications, restrictions and limitations of each series. By
resolutions adopted on April 19, 1994, the Board of Directors of the Company
expressly delegated to the Executive Committee of the Board of Directors the
authority to authorize the issuance from time to time of up to 100,000 shares
of previously undesignated preferred stock (having an aggregate liquidation
preference not exceeding $600,000,000) in one or more series and upon such
terms as the Executive Committee may deem appropriate.
In addition, as described under "Description of Depositary Shares" below,
the Company, at its option, may elect to offer depositary shares (the
"Depositary Shares") evidenced by depositary receipts, each representing a
fraction (to be specified in the Prospectus Supplement relating to the
particular series of Preferred Stock) of a share of the particular series of
Preferred Stock issued and deposited with a depositary, in lieu of offering
full shares of such series of Preferred Stock.
The shares of any series of Preferred Stock will be, when issued and sold,
fully paid and nonassessable and holders thereof shall have no preemptive
rights in connection therewith. Each series of Preferred Stock will rank on a
parity with all other outstanding series of preferred stock issued by the
Company as to payment of dividends (except with respect to cumulation thereof)
and as to the distribution of assets upon liquidation, dissolution, or winding
up of the Company. As of July 1, 1994, there were outstanding 1,938 shares of
Remarketed Preferred SM ("RP (R)") Stock, Series C. Each series of Preferred
Stock will rank prior to the common stock, par value $1.33 1/3 per share (the
"Common Stock"), of the Company and any other stock of the Company that is
expressly made junior to such series of Preferred Stock.
Citibank, N.A., will be the transfer agent, dividend disbursing agent and
registrar for the shares of the Preferred Stock.
DIVIDENDS AND DISTRIBUTIONS
Holders of shares of the Preferred Stock will be entitled to receive, as, if
and when declared by the Board of Directors of the Company (or a duly
authorized committee thereof) out of funds legally available for the payment
of dividends, cash dividends at the rate set forth in, or calculated in
accordance with the formula set forth in, the Prospectus Supplement. Dividends
on the Preferred Stock may be cumulative ("Cumulative Preferred Stock") or
noncumulative ("Noncumulative Preferred Stock") as provided in the Prospectus
Supplement. Unless otherwise provided in the Prospectus Supplement, dividends
on the Cumulative Preferred Stock will be cumulative from the date of original
issue of such series and will be payable quarterly in arrears on the dates
specified in the Prospectus Supplement. If any date so specified as a dividend
payment date is not a business day, dividends (if declared) on the Preferred
Stock (unless otherwise provided in the Prospectus Supplement) will be paid on
the immediately succeeding business day, without interest. The Prospectus
8
<PAGE>
Supplement will set forth the applicable dividend period with respect to a
dividend payment date. If the Board of Directors of the Company (or a duly
authorized committee thereof) fails to declare a dividend on any series of
Noncumulative Preferred Stock for any dividend period, the Company shall have
no obligation to pay a dividend for such period, whether or not dividends on
such series of Noncumulative Preferred Stock are declared for any future
dividend period. Dividends on the Preferred Stock will be payable to holders of
record as they appear on the stock books of the Company on such record dates,
not more than thirty nor less than fifteen days preceding the payment dates
thereof, as shall be fixed by the Board of Directors (or a duly authorized
committee thereof). No full dividends will be declared or paid or set apart for
payment on the preferred stock of any series ranking, as to dividends, on a
parity with or junior to any other series of Preferred Stock for any period
unless full dividends have been or are contemporaneously declared and paid or
declared and a sum sufficient for the payment thereof set apart for such
payment on such series of Preferred Stock for (i) all dividend periods
terminating on or prior to the date of payment of such full cumulative
dividends (in the case of a series of Cumulative Preferred Stock) or (ii) the
immediately preceding dividend period (in the case of a series of Noncumulative
Preferred Stock). When dividends are not paid in full upon such series of
Preferred Stock (whether Cumulative Preferred Stock or Noncumulative Preferred
Stock), and any other preferred stock ranking on a parity as to dividends with
such series of Preferred Stock, all dividends declared upon shares of such
series of Preferred Stock and any other preferred stock ranking on a parity as
to dividends will be declared pro rata so that the amount of dividends declared
per share on such series of Preferred Stock and such other preferred stock will
in all cases bear to each other the same ratio that accrued dividends per share
(which, in the case of Noncumulative Preferred Stock, shall not include any
cumulation in respect of unpaid dividends for prior dividend periods) on the
shares of such series of Preferred Stock and such other preferred stock bear to
each other. Except as provided in the preceding sentence, unless full dividends
on all outstanding shares of any such series of Preferred Stock have been
declared and paid for all past dividend periods, in the case of a series of
Cumulative Preferred Stock, or for the immediately preceding dividend period,
in the case of Noncumulative Preferred Stock, no dividends (other than
dividends or distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, the Common Stock of the Company or another
stock of the Company ranking junior to the Preferred Stock as to dividends and
upon liquidation) will be declared or paid or set aside for payment or other
distribution declared or made upon the Common Stock of the Company or upon any
other stock of the Company ranking junior to or on parity with the Preferred
Stock as to dividends or upon liquidation, nor will any Common Stock of the
Company nor any other stock of the Company ranking junior to or on parity with
such Preferred Stock as to dividends or upon liquidation be redeemed, purchased
or otherwise acquired, other than in connection with the distribution or
trading thereof, for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such
stock) by the Company (except by conversion into or exchange for stock of the
Company ranking junior to the Preferred Stock as to dividends and upon
liquidation). Unless otherwise specified in the Prospectus Supplement, the
amount of dividends payable for any period shorter than a full dividend period
shall be computed on the basis of twelve 30-day months, a 360-day year and the
actual number of days elapsed in any period of less than one month.
LIQUIDATION PREFERENCE
Upon any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, the holders of the Preferred Stock will have
preference and priority over the Common Stock of the Company and any other
class of stock of the Company ranking junior to the Preferred Stock upon
liquidation, dissolution or winding up, for payments out of or distributions of
the assets of the Company or proceeds thereof, whether from capital or surplus,
of the amount per share set forth in the Prospectus Supplement plus all
dividends (whether or not earned or declared), accrued and unpaid thereon to
the date of final distribution to such holders (but in the case of
Noncumulative Preferred Stock, without cumulation of unpaid dividends for prior
dividend periods), and after such payment the holders of Preferred Stock will
be entitled to no other payments. If, in the case of any such liquidation,
dissolution or winding up of the Company, the assets of the Company or proceeds
thereof should be insufficient to make the full liquidation payment in the
amount per share set forth in the Prospectus Supplement, plus all accrued and
unpaid dividends on the
9
<PAGE>
Preferred Stock (but in the case of Noncumulative Preferred Stock without
cumulation of unpaid dividends for prior dividend periods), and liquidating
payments on any other preferred stock ranking as to liquidation, dissolution or
winding up on a parity with the Preferred Stock, then such assets and proceeds
will be distributed among the holders of the Preferred Stock and any such other
preferred stock ratably in accordance with the respective amounts which would
be payable on such shares of Preferred Stock and any such other preferred stock
if all amounts thereon were paid in full. A consolidation or merger of the
Company with one or more corporations will not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Company.
REDEMPTION
If specified in the Prospectus Supplement relating to a series of Preferred
Stock, the Company may, at its option, at any time or from time to time on not
less than 30 nor more than 60 days notice, redeem such series of Preferred
Stock in whole or in part at the redemption prices and on the dates set forth
in the applicable Prospectus Supplement.
If less than all outstanding shares of a series of Preferred Stock are to be
redeemed, the selection of the shares to be redeemed shall be determined by lot
or pro rata as may be determined by the Board of Directors of the Company (or a
duly authorized committee thereof) to be equitable. From and after the
redemption date (unless default shall be made by the Company in providing for
the payment of the redemption price), dividends shall cease to accrue on the
shares of such series of Preferred Stock called for redemption and all rights
of the holders thereof (except the right to receive the redemption price) shall
cease.
VOTING RIGHTS
Unless otherwise described in the applicable Prospectus Supplement, holders
of the Preferred Stock will have no voting rights except as set forth below or
as otherwise from time to time required by law.
Whenever dividends payable on the Preferred Stock shall be in arrears for
such number of dividend periods, whether or not consecutive, which shall in the
aggregate contain a number of months equivalent to six calendar quarters, the
holders of outstanding shares of the Preferred Stock (voting as a class with
holders of shares of all other series of preferred stock ranking on a parity
with the Preferred Stock either as to dividends or the distribution of assets
upon liquidation, dissolution or winding up and upon which like voting rights
have been conferred and are exercisable) will be entitled to vote for the
election of two additional directors on the terms set forth below. Such voting
rights will continue, in the case of any series of Cumulative Preferred Stock,
until all past dividends accumulated on shares of Cumulative Preferred Stock
shall have been paid in full and, in the case of Noncumulative Preferred Stock,
until all dividends on shares of Noncumulative Preferred Stock shall have been
paid in full for at least one year. Upon payment in full of such dividends,
such voting rights shall terminate except as expressly provided by law, subject
to re-vesting in the event of each and every subsequent default in the payment
of dividends as aforesaid. Holders of all series of preferred stock which are
granted such voting rights (which rank on a parity with the Preferred Stock)
will vote as a class, and, unless otherwise specified in the applicable
Prospectus Supplement, each holder of shares of the Preferred Stock will have
one vote for each share of stock held and each other series will have such
number of votes, if any, for each share of stock held as may be granted to
them. In the event that the holders of shares of the Preferred Stock are
entitled to vote as described in this paragraph, the Board of Directors of the
Company will be increased by two directors, and the holders of the Preferred
Stock will have the exclusive right as members of such class, as outlined
above, to elect two directors at the next annual meeting of stockholders.
Upon termination of the right of the holders of the Preferred Stock to vote
for directors as discussed in the preceding paragraph, the term of office of
all directors then in office elected by such holders will terminate
immediately. Whenever the term of office of the directors elected by such
holders ends and the related special voting rights expire, the number of
directors will automatically be decreased to such number as would otherwise
prevail.
10
<PAGE>
So long as any shares of Preferred Stock remain outstanding, the Company
shall not, without the affirmative vote or consent of the holders of at least
two-thirds of the shares of the Preferred Stock outstanding at the time (voting
as a class with all other series of preferred stock ranking on a parity with
the Preferred Stock either as to dividends or the distribution of assets upon
liquidation, dissolution or winding up and upon which like voting rights have
been conferred and are exercisable), given in person or by proxy, either in
writing or at a meeting, (i) authorize, create or issue, or increase the
authorized or issued amount, of any class or series of stock ranking prior to
the Preferred Stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up; or (ii) amend, alter or
repeal, whether by merger, consolidation or otherwise, the provisions of the
Certificate of Incorporation or the Certificate of Designations of the
Preferred Stock designating such Preferred Stock and the preferences and
privileges, relative, participating, optional or other special rights and
qualifications, limitations and restrictions thereof, so as to materially and
adversely affect any right, preference, privilege or voting power of the
Preferred Stock or of the holders thereof; provided, however, that any increase
in the amount of authorized preferred stock or the creation and issuance, or an
increase in the authorized or issued amount, of other series of preferred
stock, or any increase in the amount of authorized shares of Preferred Stock,
in each case ranking on a parity with or junior to the Preferred Stock with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up will not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if all outstanding shares of
Preferred Stock have been redeemed or sufficient funds have been deposited in
trust to effect such a redemption which is scheduled to be consummated within
three months after the time that such rights would otherwise be exercisable.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may, at its option, elect to offer Depositary Shares, each
representing a fraction (to be set forth in the Prospectus Supplement relating
to a particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below. In the event such option is exercised,
receipts ("Depositary Receipts") for Depositary Shares will be issued to the
public.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") among the
Company, a bank or trust company selected by the Company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000 (the "Depositary") and the holders from time to time of the
Depositary Receipts. Subject to the terms of the Deposit Agreement, each owner
of a Depositary Share will be entitled, in proportion to the applicable
fraction of a share of Preferred Stock represented by such Depositary Share, to
all the rights and preferences of the Preferred Stock represented thereby
(including dividend, voting, redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Depositary Receipts will be distributed to
those persons purchasing the fractional shares of the related series of
Preferred Stock in accordance with the terms of the offering described in the
related Prospectus Supplement. Copies of the forms of Deposit Agreement and
Depositary Receipt are filed as exhibits to the Registration Statement of which
this Prospectus is a part, and the following summary is qualified in its
entirety by reference to such exhibits.
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Company, issue temporary Depositary Receipts
substantially identical to (and entitling the holders thereof to all the rights
pertaining to) the definitive Depositary Receipts but not in definitive form.
Definitive Depositary Receipts will be prepared thereafter without unreasonable
delay, and temporary Depositary Receipts will be exchangeable for definitive
Depositary Receipts without charge to the holder thereof.
11
<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other distributions
received in respect of the related series of Preferred Stock to the record
holders of Depositary Shares relating to such series of Preferred Stock in
proportion to the number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Depositary (unless the related Depositary Shares have previously been
called for redemption), the holder of the Depositary Shares evidenced thereby
is entitled to delivery of the number of whole shares of the related series of
Preferred Stock and any money or other property represented by such Depositary
Shares. Holders of Depositary Shares will be entitled to receive whole shares
of the related series of Preferred Stock on the basis set forth in the related
Prospectus Supplement for such series of Preferred Stock, but holders of such
whole shares of Preferred Stock will not thereafter be entitled to receive
Depositary Shares in exchange therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of whole shares of the related series
of Preferred Stock to be withdrawn, the Depositary will deliver to such holder
at the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares. In no event will fractional shares of Preferred Stock be
delivered upon surrender of Depositary Receipts to the Depositary.
REDEMPTION OF DEPOSITARY SHARES
If the Company redeems a series of Preferred Stock represented by Depositary
Shares, the Depositary Shares will be redeemed from the proceeds received by
the Depositary resulting from the redemption, in whole or in part, of such
series of Preferred Stock held by the Depositary. The redemption price per
Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of the Preferred Stock.
Whenever the Company redeems shares of Preferred Stock held by the Depositary,
the Depositary will redeem as of the same redemption date the number of
Depositary Shares representing shares of the related series of Preferred Stock
so redeemed. If less than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or pro rata as may be
determined by the Depositary.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the amount of the series of Preferred Stock
represented by such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the amount of the Preferred Stock represented
by such Depositary Shares in accordance with such instructions, and the Company
will agree to take all action which may be deemed necessary by the Depositary
in order to enable the Depositary to do so. The Depositary will abstain from
voting shares of the Preferred Stock to the extent it does not receive specific
instructions from the holders of Depositary Shares representing such Preferred
Stock.
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<PAGE>
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of Depositary Receipts will not
be effective unless such amendment has been approved by the holders of
Depositary Receipts representing at least a majority (or, in the case of
amendments relating to or affecting rights to receive dividends or
distributions or voting or redemption rights, two-thirds, unless otherwise
provided in the related Prospectus Supplement) of the Depositary Shares then
outstanding. The Deposit Agreement may be terminated by the Company or the
Depositary only if (i) all outstanding Depositary Shares have been redeemed,
(ii) there has been a final distribution in respect of the related series of
Preferred Stock in connection with any liquidation, dissolution or winding up
of the Company and such distribution has been distributed to the holders of
Depositary Receipts or (iii) upon the consent of holders of Depositary Receipts
representing not less than two-thirds of the Depositary Shares outstanding.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of
the related series of Preferred Stock and any redemption of such Preferred
Stock. Holders of Depositary Receipts will pay all other transfer and other
taxes and governmental charges and such other charges as are expressly provided
in the Deposit Agreement to be for their accounts.
The Depositary may refuse to effect any transfer of a Depositary Receipt or
any withdrawal of shares of a series of Preferred Stock evidenced thereby until
all such taxes and charges with respect to such Depositary Receipt or such
shares of Preferred Stock are paid by the holders thereof.
MISCELLANEOUS
The Depositary will forward all reports and communications from the Company
which are delivered to the Depositary and which the Company is required to
furnish to the holders of the Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and neither the Company nor the Depositary
will be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or series of Preferred Stock unless satisfactory indemnity is
furnished. The Company and the Depositary may rely on written advice of counsel
or accountants, or information provided by persons presenting Preferred Stock
for deposit, holders of Depositary Shares or other persons believed to be
competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary.
Any such resignation or removal of the Depositary will take effect upon the
appointment of a successor Depositary, which successor Depositary must be
appointed within 60 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000.
13
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of the principal United States Federal income tax
consequences of the purchase, ownership and disposition of shares of the
Preferred Stock and the Depositary Shares is based upon laws, regulations,
rulings and decisions now in effect, all of which are subject to change
(possibly with retroactive effect) or possible differing interpretations. It
deals only with shares of the Preferred Stock and Depositary Shares held as
capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, persons holding
shares of the Preferred Stock and Depositary Shares as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. Persons considering the
purchase of shares of the Preferred Stock and Depositary Shares should consult
their own tax advisors concerning the application of United States Federal
income tax laws to their particular situations as well as any consequences of
the purchase, ownership and disposition of shares of the Preferred Stock and
Depositary Shares arising under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of shares of
the Preferred Stock and Depositary Shares that is for United States Federal
income tax purposes (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof, or (iii) an
estate or trust the income of which is subject to United States Federal income
taxation regardless of its source. As used herein, the term "non-U.S. Holder"
means a holder of shares of the Preferred Stock and Depositary Shares that is
not a U.S. Holder.
U.S. HOLDERS
Depositary Shares
U.S. Holders of the Depositary Shares will be treated for United States
Federal income tax purposes as owners of the shares of the Preferred Stock
represented by the Depositary Shares. Accordingly, the United States Federal
income tax treatment of U.S. Holders of the Depositary Shares will be the same
as the United States Federal income tax treatment of U.S. Holders of shares of
the Preferred Stock as described below. In addition, upon the withdrawal of
shares of the Preferred Stock in exchange for Depositary Shares, (i) no gain or
loss will be realized by an exchanging U.S. Holder, (ii) the tax basis of each
share of the Preferred Stock to an exchanging U.S. Holder will be the same as
the aggregate tax basis of the Depositary Shares exchanged therefor, and (iii)
the holding period for shares of the Preferred Stock in the hands of an
exchanging U.S. Holder will include the period during which such U.S. Holder
held the Depositary Shares exchanged therefor. Hereinafter, references in this
summary to holders of the Preferred Stock will mean both holders of shares of
the Preferred Stock and holders of Depositary Shares representing shares of the
Preferred Stock.
Dividends and Dividends Received Deduction
Distributions with respect to shares of the Preferred Stock will be treated
as dividends for United States Federal income tax purposes, to the extent paid
out of current or accumulated earnings and profits of the Company, as
determined for United States Federal income tax purposes. In addition, a U.S.
Holder of shares of the Preferred Stock that is a corporation otherwise
entitled to the 70% dividends received deduction provided for under Section
243(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), should
be entitled to that deduction with respect to those distributions received on
the Preferred Stock that are treated as dividends for United States Federal
income tax purposes.
In determining the entitlement to the dividends received deduction, corporate
U.S. Holders should consider, as may be more fully set forth in the applicable
Prospectus Supplement, (i) the holding period and other requirements of Section
246(c) of the Code and the Treasury regulations promulgated thereunder (under
which the dividends received deduction is disallowed in its entirety if a
minimum holding period requirement is not satisfied); (ii) the "debt-financed
portfolio stock" rules of Section 246A of the Code (under which the dividends
received deduction could be reduced or eliminated to the extent that a holder
incurs
14
<PAGE>
indebtedness directly attributable to its investment in shares of the Preferred
Stock); and (iii) Code Section 1059 (under which a corporate U.S. Holder may be
required to reduce its tax basis in shares of the Preferred Stock by the
"nontaxed portion" of any "extraordinary dividend" it receives from the Company
with respect to such shares if it has not held the underlying shares for more
than two years before the dividend announcement date).
To the extent, if any, that distributions made by the Company with respect to
shares of the Preferred Stock exceed the current and accumulated earnings and
profits of the Company, as determined for United States Federal income tax
purposes, such distributions will not constitute dividends for United States
Federal income tax purposes. Rather, such distributions will be treated as a
return of capital, which will first reduce the U.S. Holder's tax basis in
shares of the Preferred Stock and then, to the extent such distributions exceed
the U.S. Holder's tax basis in shares of the Preferred Stock, result in short-
term or long-term capital gain (depending upon the U.S. Holder's holding period
for the shares of the Preferred Stock).
Redemption Premium
Under Section 305 of the Code and the Treasury regulations promulgated
thereunder, if the redemption price of any series of the Preferred Stock that
is redeemable exceeds its issue price, the entire amount of such excess may, in
certain circumstances, constitute an unreasonable redemption premium which will
be treated as a constructive dividend taken into account by a U.S. Holder each
year, generally in the same manner as original issue discount would be taken
into account if the Preferred Stock were treated as a debt instrument for
United States Federal income tax purposes. Any such constructive dividend would
be subject to the same rules applicable to the stated dividends on shares of
the Preferred Stock, as described in the discussion of "Dividends and Dividends
Received Deduction" above. Any such constructive dividend would also be taken
into account for purposes of applying the extraordinary dividends rules of Code
Section 1059 and the amount or period over which such constructive dividends
are taken into account could, in certain circumstances, cause some or all of
the stated dividends on shares of the Preferred Stock to be treated as
extraordinary dividends. The applicable Prospectus Supplement for any series of
the Preferred Stock that is redeemable at a price in excess of its issue price
will contain a more detailed discussion as to whether a U.S. Holder of such
Preferred Stock should include in income any redemption premium under Code
Section 305.
NON-U.S. HOLDERS
Dividends
Dividends that are paid to a non-U.S. Holder that are not effectively
connected with a trade or business carried on by such non-U.S. Holder in the
United States are generally subject to a 30% United States withholding tax.
Such rate of withholding may be reduced to the extent provided by a tax treaty
to which the United States is a party if the recipient of the dividends is
entitled to the benefits of the applicable treaty.
Dividends that are effectively connected with a trade or business carried on
in the United States by a non-U.S. Holder or, if an income tax treaty applies,
are attributable to a U.S. permanent establishment, generally will be subject
to tax at the same rates of tax applicable to U.S. Holders. The determination
of whether a person is engaged in a United States trade or business and whether
the dividends or gains realized in connection with shares of the Preferred
Stock are effectively connected with that trade or business will depend upon
the specific facts and circumstances of each non-U.S. Holder. In the case of a
non-U.S. Holder that is a corporation, such effectively connected income may be
subject to the branch profits tax, which is generally imposed on foreign
corporations upon the repatriation from the United States of effectively
connected earnings and profits unless an applicable tax treaty eliminates or
reduces the rate of such tax.
Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding tax discussed above and, under the current interpretation of the
United States
15
<PAGE>
Treasury regulations, for purposes of determining the applicability of a tax
treaty rate. Under proposed United States Treasury regulations, not currently
in effect, however, a non-U.S. Holder of Preferred Stock who wishes to claim
the benefit of an applicable tax treaty rate would be required to satisfy
certain certification requirements.
A non-U.S. Holder of Preferred Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to an applicable treaty may obtain a refund of
any excess amounts currently withheld by filing an appropriate claim for refund
with the United States Internal Revenue Service ("IRS").
Disposition of Shares of the Preferred Stock
Subject to the discussion below under "Backup Withholding," a non-U.S. Holder
generally will not be subject to United States tax on gains realized from the
sale or exchange of shares of the Preferred Stock unless (i) such gain is
effectively connected with the conduct of a trade or business carried on in the
United States, or (ii) the non-U.S. Holder is a non-resident alien individual
present in the United States for a period or periods aggregating 183 days or
more during the taxable year of such disposition and either the non-U.S. Holder
has a "tax home" (as determined for United States Federal income tax purposes)
in the United States or the gain is attributable to an office or other fixed
place of business maintained by the non-U.S. Holder in the United States (in
which case, a 30 percent United States tax is imposed on the amount by which
such person's gains derived from United States sources, from the sale or
exchange at any time during such taxable year of capital assets, exceed such
person's losses allocable to United States sources, from the sale or exchange
at any time during such taxable year of capital assets).
Federal Estate Taxes
Preferred Stock held by an individual non-U.S. Holder at the time of such
individual's death will be includible in such non-U.S. Holder's gross estate
for United States Federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
BACKUP WITHHOLDING AND U.S. INFORMATION REPORTING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments of dividends on shares of the Preferred Stock to registered
owners who are not "exempt recipients" and who fail to provide certain
identifying information (such as the registered owner's taxpayer identification
number) in the required manner. Generally, individuals are not exempt
recipients, whereas corporations and certain other entities generally are
exempt recipients. Such payments made to a U.S. Holder must be reported to the
IRS unless the U.S. Holder is an exempt recipient or establishes an exemption.
Backup withholding and information reporting requirements, other than reporting
dividend payments for purposes of the withholding tax discussed above,
generally will not apply to dividends paid to non-U.S. Holders that are subject
to the 30% withholding tax discussed above (even where such withholding tax is
reduced by an applicable tax treaty).
In addition, the payment of the proceeds from a disposition of shares of the
Preferred Stock to or through the United States office of a broker will be
subject to information reporting and backup withholding unless (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies as to its non-United States
status or otherwise establishes an exemption from backup withholding. The
payment of the proceeds from the disposition of shares of the Preferred Stock
to or through a non-United States office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States
Federal income tax purposes or a foreign person 50 percent or more of whose
gross income was effectively connected with the conduct of a trade or business
within the United States for a specified three-year period, information
reporting will apply to such payments unless such broker has documentary
evidence in its files of the owner's non-United States status and has no actual
knowledge to the contrary, or the owner otherwise establishes an exemption.
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<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through MLPF&S as agent, (ii) through
public offerings underwritten by MLPF&S or by underwriting syndicates managed
or co-managed by MLPF&S or (iii) directly to one or more purchasers. The
applicable Prospectus Supplement will set forth the terms of the offering of
the Securities to which such Prospectus Supplement relates, including the name
of the agent or the name or names of any underwriters with whom the Company has
entered into arrangements with respect to the sale of such Securities, the
public offering or purchase price of such Securities, the net proceeds to the
Company from such sale, any underwriting discounts and other items constituting
underwriting compensation, any discounts and commissions allowed or paid to
dealers, if any, any commissions allowed or paid to the agent, the initial
public offering price and the securities exchanges, if any, on which such
Securities will be listed.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters to solicit offers by certain institutions to purchase Securities
from the Company pursuant to Delayed Delivery Contracts providing for payment
and delivery on the date specified in the Prospectus Supplement. Each such
contract will be for a number of Securities not less than, and, unless the
Company otherwise agrees, the aggregate number of Securities sold pursuant to
such contracts shall not be more than, the respective numbers specified in the
Prospectus Supplement. Institutions with whom such contracts, when authorized,
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions, and other
institutions, but shall in all cases be subject to the approval of the Company.
Delayed Delivery Contracts will not be subject to any conditions except that
the purchase by an institution of the Securities covered thereby shall not at
the time of delivery be prohibited under the laws of any jurisdiction in the
United States to which such institution is subject.
Any underwriter or agent participating in the distribution of the Securities
may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the Securities so offered and sold and any discounts or commissions
received by them from the Company and any profit realized by them on the sale
or resale of the Securities may be deemed to be underwriting discounts and
commissions under the Securities Act.
The underwriters, the agent and their controlling persons may be entitled,
under agreements entered into with the Company, to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act.
The Prospectus and related Prospectus Supplement may be used by MLPF&S in
connection with offers and sales related to market-making transactions in the
Securities. MLPF&S may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
sale.
The distribution of Securities will comply with the requirements of Schedule
E of the By-laws of the National Association of Securities Dealers, Inc. (the
"NASD") regarding underwriting securities of an affiliate. No NASD member
participating in offers and sales of the Securities will execute a transaction
in the Securities in a discretionary account without the prior written specific
approval of the member's customer.
See "Underwriting" in the accompanying Prospectus Supplement for further
information regarding the distribution of the Securities offered hereby.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for the Company by Brown &
Wood, New York, New York, and for the underwriters by Sullivan & Cromwell, New
York, New York.
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<PAGE>
EXPERTS
The consolidated financial statements and related financial statement
schedules of the Company and its subsidiaries included or incorporated by
reference in the Company's 1993 Annual Report on Form 10-K, and incorporated by
reference in this Prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports incorporated by reference
herein. The information under the caption "Summary Financial Information" for
each of the five years in the period ended December 31, 1993 included in this
Prospectus and the Selected Financial Data under the captions "Operating
Results", "Financial Position" and "Common Share Data" for each of the five
years in the period ended December 31, 1993 included in the 1993 Annual Report
to Stockholders of the Company, and incorporated by reference herein, has been
derived from consolidated financial statements audited by Deloitte & Touche
LLP, as set forth in their reports incorporated by reference herein. Such
consolidated financial statements and related financial statement schedules,
such Summary Financial Information and Selected Financial Data appearing or
incorporated by reference in this Prospectus and the Registration Statement of
which this Prospectus is a part, have been included or incorporated herein by
reference in reliance upon such reports of Deloitte & Touche LLP given upon
their authority as experts in accounting and auditing.
With respect to unaudited interim financial information for the periods
included in any of the Quarterly Reports on Form 10-Q which may be incorporated
herein by reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their report included in any such Quarterly Report on
Form 10-Q and incorporated by reference herein, they did not audit and they do
not express an opinion on such interim financial information. Accordingly, the
degree of reliance on their reports on such information should be restricted in
light of the limited nature of the review procedures applied. Deloitte & Touche
LLP are not subject to the liability provisions of Section 11 of the Securities
Act for any such report on unaudited interim financial information because any
such report is not a "report" or a "part" of the Registration Statement
prepared or certified by an accountant within the meaning of Sections 7 and 11
of the Securities Act.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, THE SERIES A
PREFERRED STOCK OR THE DEPOSITARY SHARES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
<CAPTION>
PAGE
----
<S> <C>
Recent Developments........................................................ S-3
Description of Series A Preferred Stock.................................... S-7
Description of Depositary Shares........................................... S-9
Underwriting............................................................... S-12
Validity of Securities..................................................... S-13
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Merrill Lynch & Co., Inc................................................... 3
Use of Proceeds............................................................ 3
Summary Financial Information.............................................. 4
Description of Preferred Stock............................................. 8
Description of Depositary Shares........................................... 11
Certain United States Federal Income Tax Considerations.................... 14
Plan of Distribution....................................................... 17
Validity of Securities..................................................... 17
Experts.................................................................... 18
</TABLE>
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LOGO
16,000,000 DEPOSITARY SHARES
MERRILL LYNCH & CO., INC.
EACH REPRESENTING A
ONE-FOUR HUNDREDTH INTEREST IN A SHARE
OF 9% CUMULATIVE
PREFERRED STOCK, SERIES A
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
A. G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
OCTOBER 27, 1994
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