UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] 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 26, 1997 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
of incorporation or organization Identification No.)
World Financial Center
North Tower
250 Vesey Street - 10th Flr
New York, New York 10281-1310
(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 26, 1997
-------------------------- ----------------------------
Common Stock, Par Value 100
$10 per Share
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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: [x] Yes [ ] No.
The Registrant had 100 shares of common stock outstanding
(all owned by Merrill Lynch Mortgage Capital Inc.) as of
November 6, 1997.
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.
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ML ASSET BACKED CORPORATION
TABLE OF CONTENTS
Page No.
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PART I FINANCIAL INFORMATION
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Item 1 Financial Statements
Balance Sheets as of September 26, 1997
and December 27, 1996 4
Statements of Operations and Retained
Earnings for the three month periods
ended September 26, 1997 and September 27, 1996 5
Statements of Operations and Retained
Earnings for the nine month periods
ended September 26, 1997 and September 27, 1996 6
Statements of Cash Flows for the nine
month periods ended September 26, 1997 and
September 27, 1996 7
Notes to Financial Statements 8-9
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION
- -------------------------
Item 1 Legal Proceedings 10
Item 2 Changes in Securities 10
Item 3 Defaults upon Senior Securities 10
Item 4 Submission of Matters to a Vote of
Security Holders 10
Item 5 Other Information 10
Item 6 Exhibits and Reports on Form 8-K 10
Signatures 11
Page 3
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<TABLE>
<CAPTION>
ML ASSET BACKED CORPORATION
BALANCE SHEETS
AS OF SEPTEMBER 26, 1997 AND DECEMBER 27, 1996
1997 1996
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<S> <C> <C>
ASSET
Cash $1,000 $1,000
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STOCKHOLDER'S EQUITY
Common Stock, $10 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 4
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<TABLE>
<CAPTION>
ML ASSET BACKED CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTH PERIODS ENDED
SEPTEMBER 26, 1997 AND SEPTEMBER 27, 1996
1997 1996
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<S> <C> <C>
Revenues - Interest Income $ - $ -
Expenses - Interest Expense - -
Earnings Before Taxes - -
Provision For Income Taxes - -
Net Earnings - -
Retained earnings, beginning of period - -
Retained earnings, end of period $ - $ -
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 5
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<TABLE>
<CAPTION>
ML ASSET BACKED CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 26, 1997 AND SEPTEMBER 27, 1996
1997 1996
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<S> <C> <C>
Revenues - Interest Income $ - $ -
Expenses - Interest Expense - -
Earnings Before Taxes - -
Provision For Income Taxes - -
Net Earnings - -
Retained earnings, beginning of period - -
Retained earnings, end of period $ - $ -
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 6
<PAGE>
<TABLE>
<CAPTION>
ML ASSET BACKED CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 26, 1997 AND SEPTEMBER 27, 1996
1997 1996
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net earnings $ - $ -
CASH FLOWS FROM FINANCING ACTIVITIES - -
CASH FLOWS FROM INVESTING ACTIVITIES - -
------ ------
CHANGE IN CASH - -
CASH, BEGINNING OF PERIOD 1,000 1,000
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CASH, END OF PERIOD $1,000 $1,000
------ ------
SUPPLEMENTAL INFORMATION:
Cash payments for interest and taxes $ - $ -
------ ------
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 7
<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 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
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
Page 8
<PAGE>
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 simultaneously purchase the Receivables to be pledged
as security for, or sold in connection with, the issuance of such
Notes or Certificates.
During 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 Asset Backed Notes, due July 15, 1998, were retired. As of
September 26, 1997, there were no notes outstanding.
At September 26, 1997, the Company had two registration statements
on Form S-3 with the Securities and Exchange Commission for the issuance
of approximately $191 million of securities.
Note 2. Accounting Policies
The Company may borrow funds from an affiliate as needed.
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 income 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 effects 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 9
<PAGE>
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
-----------------
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
---------------------
Omitted pursuant to general instruction H(1) (a) and
(b) of the Form 10-Q.
Item 3. Defaults upon Senior Securities
-------------------------------
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
---------------------------------------------------
Omitted pursuant to general instruction H(1) (a) and
(b) of the Form 10-Q.
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit 27 - Financial Data Schedule for nine month
period ended September 26, 1997.
(b) All outstanding debt securities issued have been
retired. Reports for the Trust, prepared by the
Master Servicer, are filed on Form 8-K when required.
Page 10
<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\ Thomas Layton
--------------
Name: Thomas Layton
Title: Treasurer
Dated: November 6, 1997
By:\s\ Michael M. McGovern
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Name: Michael M. McGovern
Title: Secretary
Dated: November 6, 1997
Page 11
<PAGE>
EXHIBITS INDEX PAGE NO.
EX-27 FINANCIAL DATA SCHEDULE 13
PAGE 12
</PAGE>
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<FISCAL-YEAR-END> DEC-26-1997
<PERIOD-START> DEC-28-1996
<PERIOD-END> SEP-26-1997
<CASH> 1000
<SECURITIES> 0
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0
0
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