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Rule 424(b)(3)
File No. 33-61559
PROSPECTUS SUPPLEMENT
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(TO PROSPECTUS AND PROSPECTUS SUPPLEMENT, EACH DATED SEPTEMBER 1, 1995)
MERRILL LYNCH & CO., INC.
MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
FLIP-IN NOTES DUE OCTOBER 10, 2000
Original Issue Date: October 10, 1995 Maturity Date: October 10, 2000
Principal Amount: $40 million
This Prospectus Supplement relates to $40,000,000 aggregate principal
amount of Notes which the Company has agreed to sell to Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Underwriter"), and which the Underwriter has
agreed to purchase from the Company, at a price of 99.55% of the principal
amount thereof. The Underwriter has advised the Company that it proposes to
offer the Notes to the public at varying prices relating to prevailing market
prices at the time of resale.
DESCRIPTION OF THE NOTES
GENERAL
The Medium-Term Notes, Series B of Merrill Lynch & Co., Inc. (the
"Company") offered hereby are "Flip-in Notes due October 10, 2000" and are
referred to in this Prospectus Supplement as the "Notes". On any April 10 or
October 10 on or after October 10, 1996 (each, an "Optional Conversion Date"),
the Company may exercise an option to convert the Notes from Fixed Rate Notes to
Regular Floating Rate Notes (the "Flip-in Option"), on notice given to the
Holders of the Notes as provided in the Indenture not more than 20 nor less than
10 Business Days prior to such Optional Conversion Date.
PRIOR TO EXERCISE OF THE FLIP-IN OPTION
Prior to exercise by the Company of the Flip-in Option, the Notes will be
Fixed Rate Notes. Certain provisions of the Fixed Rate Notes are more fully
described in the accompanying Prospectus and Prospectus Supplement. The Notes
will bear interest at the rate of 7.00% per annum until the earlier of (i) the
principal amount thereof is paid or made available for payment and (ii) the
Flip-in Option is exercised. Interest payments on the Notes will equal the
amount of interest accrued from and including the immediately preceding Interest
Payment Date in respect of which interest has been paid (or from and including
the Original Issue Date, if no interest has been paid with respect to the
Notes), to, but excluding, the related Interest Payment Date, Maturity or
Optional Conversion Date, as the case may be. Interest on the Notes will be
computed on the basis of a 360-day year of twelve 30-day months. Interest on
the Notes will be payable semiannually on April 10 and October 10 of each year,
commencing April 10, 1996, and at Maturity if the Flip-in Option is not
exercised. Otherwise, the terms of the Notes will be as described in the
accompanying Prospectus and Prospectus Supplement.
SUBSEQUENT TO EXERCISE OF THE FLIP-IN OPTION
On and after the date on which the Flip-in Option is exercised, if any, the
Notes will be Regular Floating Rate Notes. Certain provisions of the Regular
Floating Rate Notes are more fully described in the accompanying Prospectus and
Prospectus Supplement. The Interest Rate Basis will be LIBOR; the Index
Currency will be U.S. Dollars; the Index Maturity will be 3 Months; the
Designated LIBOR Page will be Telerate Page 3750; the Spread
The date of this Prospectus Supplement is October 4, 1995.
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will be +0.25%. The Interest Reset Dates will be January 10, April 10, July 10
and October 10 of each year, commencing on the date on which the Flip-in Option
is exercised. The Interest Payment Dates will be January 10, April 10, July 10
and October 10 of each year, commencing on the January 10 or July 10 following
the date on which the Flip-in Option is exercised. Interest payments on the
Notes will equal the amount of interest accrued from and including the
immediately preceding Interest Payment Date in respect of which interest has
been paid (or from the date on which the Flip-in Option is exercised, for the
initial payment as a Regular Floating Rate Note), to but excluding the related
Interest Payment Date or Maturity. Interest on the Notes will be computed on
the basis of the actual number of days during the period for which payment is
being made, divided by 360. Interest on the Notes will be computed and payable
as a Regular Floating Rate Note as described in the accompanying Prospectus and
Prospectus Supplement.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion supplements the discussion contained in the
accompanying Prospectus Supplement under the heading "Certain United States
Federal Income Tax Considerations--U.S. Holders--Original Issue Discount".
The OID Regulations do not specifically address the proper United States
Federal income tax treatment of a debt instrument which provides the issuer with
an option to convert the interest rate from a fixed rate to a floating rate,
such as the Flip-in Option applicable to the Notes. It is also unclear whether
the tax treatment of the Notes is properly governed by the OID Regulations or
whether alternatively the Notes constitute contingent payment debt obligations.
Accordingly, the proper United States Federal income tax treatment of the Notes
is uncertain.
Due to the lack of authority directly addressing the proper United States
Federal income tax treatment of the Notes, since the OID Regulations contain an
analogous set of rules which apply to debt instruments which provide for
alternative payment schedules upon the occurrence of certain contingencies or
the exercise of certain options, although not expressly applicable to the Notes,
the Company intends to apply similar rules for purposes of calculating the
amount and accrual of original issue discount on the Notes. Based upon such an
approach, the Company intends to assume that the Company will not exercise the
Flip-in Option and that the Notes will accrue interest at the 7% per annum fixed
rate until the Maturity Date and intends to treat such fixed interest on the
Notes entirely as qualified stated interest. Under this approach, if the
Company in fact exercises the Flip-in Option, the Notes will be deemed to be
reissued for an issue price equal to the Principal Amount and the floating
interest rate of the LIBOR Rate plus 0.25% will constitute qualified stated
interest. Accordingly, under this approach, the Notes will not be treated as
having been issued with any original issue discount. Where required, the
Company intends to file information returns with the IRS in accordance with the
foregoing treatment, in the absence of any change or clarification in the law,
by regulation or otherwise, requiring another treatment of the Notes for United
States Federal income tax purposes. There can be no assurance, however, that
the IRS will agree with the foregoing treatment, and it is possible that the IRS
could assert another treatment which could result in the Notes being treated as
having original issue discount.
Prospective investors in the Notes are urged to consult their own tax
advisors regarding the proper United States Federal income tax treatment of the
Notes.
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