UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended Commission File Number
September 27, 1996 0-16312
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ML ASSET BACKED CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 13-3433607
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(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
World Financial Center
North Tower, Room 15-097
250 Vesey Street
New York, New York 10281-1315
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-0336
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Number of Shares Outstanding
Title of Each Class: as of September 27, 1996:
Common Stock, Par Value 100
$10 per Share
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No .
The Registrant had 100 shares of common stock outstanding (all
owned by Merrill Lynch Mortgage Capital Inc.) as of November 8, 1996.
The Registrant meets the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing
this form with the reduced disclosure format.
<PAGE>
ML ASSET BACKED CORPORATION
INDEX
Page No.
PART I FINANCIAL INFORMATION --------
Item 1. Financial Statements
Balance Sheets as of September 27, 1996 and
December 29, 1995. 3
Statements of Operations and Retained Earnings
for the three month periods ended September 27, 1996
and September 29, 1995. 4
Statements of Operations and Retained Earnings
for the nine month periods ended September 27, 1996
and September 29, 1995. 5
Statements of Cash Flows for the nine month
periods ended September 27, 1996
and September 29, 1995. 6
Note to Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults upon Senior Securities 9
Item 4. Submission of Matters to a Vote of
Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ML ASSET BACKED CORPORATION
BALANCE SHEETS
SEPTEMBER 27, 1996 AND DECEMBER 29, 1995
1996 1995
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
ASSETS
- ------
Cash $1,000 $1,000
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STOCKHOLDER'S EQUITY
- --------------------
Common stock, $10.00 par
value; 1,000 shares authorized;
100 shares issued and outstanding $1,000 $1,000
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The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ML ASSET BACKED CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTH PERIODS ENDED
SEPTEMBER 27, 1996 AND SEPTEMBER 29, 1995
1996 1995
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues $ - $ -
Expenses - -
Earnings Before Taxes - -
Provision for Income Taxes - -
Net Earnings - -
Retained earnings, beginning
and end of period $ - $ -
------ ------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ML ASSET BACKED CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 27, 1996 AND SEPTEMBER 29, 1995
1996 1995
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues $ - $ -
Expenses - -
Earnings Before Taxes - -
Provision for Income Taxes - -
Net Earnings - -
Retained earnings, beginning
and end of period $ - $ -
------ ------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ML ASSET BACKED CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 27, 1996 AND SEPTEMBER 29, 1995
1996 1995
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ - $ -
CASH USED IN FINANCING ACTIVITIES - -
CASH USED IN INVESTING ACTIVITIES - -
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Change in cash - -
------ ------
CASH BALANCE, BEGINNING AND
END OF PERIOD $1,000 $1,000
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The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
ML ASSET BACKED CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Description of Business
ML Asset Backed Corporation (the "Company"), incorporated in
the State of Delaware on September 22, 1987, is a wholly-owned,
limited purpose subsidiary of Merrill Lynch Mortgage Capital
Inc., which is an indirect, wholly-owned subsidiary of Merrill
Lynch & Co., Inc. ("ML&Co."). The Company was established for
the sole purpose of engaging in the following activities: (a)
issuing, selling, authorizing and delivering bonds, notes and
other evidences of indebtedness (the "Notes"), (b) acting as
settlor or depositor of trusts formed to issue Notes or to issue
participation certificates (the "Certificates") that are secured
or collateralized by (1) receivables (the "Receivables")
including, without limitation, automobile or marine installment
sale contracts, automobile leases, equipment leases, revolving
credit card accounts, truck receivables, recreational vehicle
loans, manufactured housing loans, student loans and other
receivables, (2) pass-through certificates (the "Pass-Through
Certificates") evidencing a fractional undivided ownership
interest in the assets of one or more trusts or in one or more
pools of Receivables, (3) bonds, notes and other evidences of
indebtedness (the "Bonds") secured or collateralized by one or
more pools of Receivables, or (4) any combination of Receivables,
Bonds and Pass-Through Certificates, (c) acquiring, owning,
holding, selling, assigning, pledging and otherwise dealing with
the Receivables and related insurance policies and agreements,
including agreements with automobile and boat dealers and other
originators or servicers of Receivables, (d) authorizing,
issuing, selling and delivering subordinated indebtedness, and
(e) engaging in any activity and exercising any powers permitted
to corporations under the laws of the State of Delaware that are
incidental to the foregoing and necessary or convenient to
accomplish the foregoing.
Each series of the Company's Notes or Certificates will be
secured by, or represent ownership of, a separate and
identifiable pool of Receivables purchased in connection with the
issuance of such Notes or Certificates. Additional security for
each series will be provided by collections and/or distributions
on the Receivables which will be remitted to an account or
accounts to be established with the trustee (the "Trustee") under
the indenture, sale and servicing agreement or other similar
agreement pursuant to which such Notes or Certificates will be
issued, and may also include cash and other investments deposited
with the Trustee at the time of issuance of such Notes or
Certificates, as well as other credit enhancements that may be
used to secure or support the Notes or Certificates. The
Receivables for each series of Notes or Certificates will be
pledged with or sold to the Trustee on behalf of the holders of
the Notes or Certificates of that series, and will not be
available for the Notes or Certificates of any other series. The
Company will use the net proceeds from the sale of the Notes or
Certificates to purchase the Receivables to be pledged as
security for, or sold in connection with, the issuance of such
Notes or Certificates, simultaneously with the issuance of such
Notes or Certificates.
As of September 27, 1996, $694 million of 5.5% Total Rate of
Return Asset Backed Notes, due May 15, 1998, and $925 million of
5.125% Total Rate of Return Asset Backed Notes, due July 15,
1998, were outstanding.
<PAGE>
Following the issuance of these Notes, the Company
transferred all of its rights in the Collateral for the Notes
(including the Receivables) to trusts, subject to the liens of
the indentures and the rights of the Noteholders thereunder.
Upon such transfers, which were made in accordance with the terms
of the indentures, the trusts assumed the obligations of the
Company under the indentures and the Notes and agreed to hold the
Company harmless from any liability related to such obligations.
The Company will not be discharged under the terms of the
indentures from its liabilities with respect to the Notes until
the Notes are retired.
At September 27, 1996, the Company had two registration
statements on Form S-3 with the Securities and Exchange
Commission for the issuance of approximately $191 million
principal amount of securities.
Note 2. Accounting Policies
The Company borrows funds from an affiliate, as required.
Interest expense is allocated to the Company based on the rate of
the asset financed. All other operating expenses are charged
directly to the Parent.
Note 3. Income Taxes
The results of operations of the Company are included in the
consolidated Federal tax return of ML&Co ML&Co. allocates the
income taxes to its subsidiaries in a manner that approximates
the separate company method.
The Company uses the asset and liability method in providing
income taxes on all transactions that have been recognized in the
financial statements. The asset and liability method requires
that deferred taxes be adjusted to reflect the tax rates at which
future taxable amounts will be settled or realized The effect of
tax rate changes on future deferred tax liabilities and deferred
tax assets, as well as other changes in income tax laws, are
recognized in net earnings in the period such changes are
enacted.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Pursuant to general instruction H(1) (a) and (b) of
the Form 10-Q, there were no material changes in the
financial condition or results of operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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The Company is not a party to any pending legal
proceedings, nor is the Company aware of any proceedings
contemplated by governmental authorities.
Item 2. Changes in Securities
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Omitted pursuant to general instruction H(1) (a)
and (b) of the Form 10-Q.
Item 3. Defaults upon Senior Securities
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Omitted pursuant to general instruction H(1) (a)
and (b) of the Form 10-Q.
Item 4. Submission of Matters to a Vote of Security Holders
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Omitted pursuant to general instruction H(1) (a)
and (b) of the Form 10-Q.
Item 5. Other Information
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None
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits required by Item 601 of Regulation S-K:
There are no exhibits required to be filed
with this report.
(b) Reports for the Trust prepared by the Master
Servicer are filed on Form 8-K in the earliest
possible month.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
By: /s/ Daniel G. Pace
Name: Daniel G. Pace
Title: Treasurer
Dated: November 8, 1996
By: /s/ Michael M. McGovern
Name: Michael M. McGovern
Title: Secretary
Dated: November 8, 1996
