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 March 28, 2003
MERRILL LYNCH PREFERRED CAPITAL TRUST I
(Exact name of Registrant as specified in its certificate of trust)
COMMISSION FILE NO.: 1-7182-01
Delaware 13-7102991
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4 World Financial Center
New York, New York 10080
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
MERRILL LYNCH PREFERRED FUNDING I, L.P.
(Exact name of Registrant as specified in its
certificate of limited partnership)
COMMISSION FILE NO.: 1-7182-02
Delaware 13-3917686
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4 World Financial Center
New York, New York 10080
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
The Registrants meet 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.
Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of May 8, 2003 no voting stock was held by non-affiliates of the Registrants.
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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MERRILL LYNCH PREFERRED CAPITAL TRUST I
CONDENSED BALANCE SHEETS (unaudited)
(dollars in thousands, except per security amounts)
- -----------------------------------------------------------------------------------------------------------------------
MARCH 28, 2003 DECEMBER 27, 2002
-------------- -----------------
ASSETS
Investment in partnership preferred securities $ 283,505 $ 283,505
Income receivable 5,493 5,493
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Total Assets $ 288,998 $ 288,998
========== ==========
LIABILITY AND STOCKHOLDERS' EQUITY
Distributions payable $ 5,493 $ 5,493
---------- ----------
Stockholders' equity:
Preferred securities (7 3/4% Trust Originated Preferred Securities;
11,000,000 authorized, issued, and outstanding; $25 liquidation
amount per security) 275,000 275,000
Common securities (7 3/4% Trust Common Securities;
340,208 authorized, issued, and outstanding;
$25 liquidation amount per security) 8,505 8,505
---------- ----------
Total Stockholders' equity 283,505 283,505
---------- ----------
Total Liability and Stockholders' Equity $ 288,998 $ 288,998
========== ==========
See Note to Condensed Financial Statements
2
MERRILL LYNCH PREFERRED CAPITAL TRUST I
CONDENSED STATEMENTS OF EARNINGS (unaudited)
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
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MARCH 28, 2003 MARCH 29, 2002
-------------- --------------
EARNINGS
Income on partnership preferred securities $ 5,493 $ 5,493
========= =========
See Note to Condensed Financial Statements
3
MERRILL LYNCH PREFERRED CAPITAL TRUST I
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
(dollars in thousands)
- -------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
---------------------------------------
MARCH 28, 2003 MARCH 29, 2002
-------------- --------------
PREFERRED SECURITIES
Balance, beginning and end of period $ 275,000 $ 275,000
---------- ----------
COMMON SECURITIES
Balance, beginning and end of period 8,505 8,505
---------- ----------
UNDISTRIBUTED EARNINGS
Balance, beginning of period - -
Earnings 5,493 5,493
Distributions payable (5,493) (5,493)
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Balance, end of period - -
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Total Stockholders' Equity $ 283,505 $ 283,505
========== ==========
See Note to Condensed Financial Statements
4
MERRILL LYNCH PREFERRED CAPITAL TRUST I
CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
(dollars in thousands)
- -------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
---------------------------------------
MARCH 28, 2003 MARCH 29, 2002
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings $ 5,493 $ 5,493
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Cash provided by operating activities 5,493 5,493
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (5,493) (5,493)
--------- ---------
Cash used for financing activities (5,493) (5,493)
--------- ---------
NET CHANGE IN CASH - -
CASH, BEGINNING OF PERIOD - -
--------- ---------
CASH, END OF PERIOD $ - $ -
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Preferred and common distributions of $5,328 and $165, respectively, were
accrued at March 28, 2003.
See Note to Condensed Financial Statements
5
MERRILL LYNCH PREFERRED CAPITAL TRUST I
NOTE TO CONDENSED FINANCIAL STATEMENTS (unaudited)
MARCH 28, 2003
- -------------------------------------------------------------------------------
BASIS OF PRESENTATION
These unaudited condensed financial statements should be read in conjunction
with the audited financial statements included in the Annual Report on Form 10-K
of Merrill Lynch Preferred Capital Trust I (the "Trust") for the year ended
December 27, 2002. The December 27, 2002 balance sheet information was derived
from the audited financial statements. The interim financial statements for the
three-month periods are unaudited; however, in the opinion of the Regular
Trustee of the Trust, all adjustments, consisting only of normal recurring
accruals necessary for a fair statement of the results of operations, have been
included.
6
MERRILL LYNCH PREFERRED FUNDING I, L.P.
CONDENSED BALANCE SHEETS (unaudited)
(dollars in thousands)
- ----------------------------------------------------------------------------------------------------------------
MARCH 28, 2003 DECEMBER 27, 2002
-------------- -----------------
ASSETS
Cash $ - $ -
Investments:
Affiliate debentures 330,055 330,055
U.S. Treasury bills 3,483 3,499
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Total investments 333,538 333,554
Income receivable 6,395 6,395
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Total Assets $ 339,933 $ 339,949
========== ==========
LIABILITY AND PARTNERS' CAPITAL
Distributions payable $ 6,395 $ 6,395
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Partners' capital:
Limited partnership interest 283,505 283,505
General partnership interest 50,033 50,049
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Total partners' capital 333,538 333,554
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Total Liability and Partners' Capital $ 339,933 $ 339,949
========== ==========
See Note to Condensed Financial Statements
7
MERRILL LYNCH PREFERRED FUNDING I, L.P.
CONDENSED STATEMENTS OF EARNINGS (unaudited)
(dollars in thousands)
- -----------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
---------------------------------------
MARCH 28, 2003 MARCH 29, 2002
------------------ ------------------
EARNINGS
Interest income:
Affiliate debentures $ 6,395 $ 6,395
U.S. Treasury bills 13 30
---------- ----------
Earnings $ 6,408 $ 6,425
========== ==========
See Note to Condensed Financial Statements
8
MERRILL LYNCH PREFERRED FUNDING I, L.P.
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (unaudited)
(dollars in thousands)
- ------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
---------------------------------------
MARCH 28, 2003 MARCH 29, 2002
--------------- --------------
LIMITED PARTNER'S CAPITAL
Balance, beginning of period $ 283,505 $ 283,505
Net income allocated to limited partner 5,493 5,493
Distributions payable (5,493) (5,493)
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Balance, end of period 283,505 283,505
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GENERAL PARTNER'S CAPITAL
Balance, beginning of period 50,049 50,131
Net income allocated to general partner 915 932
Distributions (29) (126)
Distributions payable (902) (902)
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Balance, end of period 50,033 50,035
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TOTAL PARTNERS' CAPITAL $ 333,538 $ 333,540
========== ==========
See Note to Condensed Financial Statements
9
MERRILL LYNCH PREFERRED FUNDING I, L.P.
CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
(dollars in thousands)
- -------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
---------------------------------------
MARCH 28, 2003 MARCH 29, 2002
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings $ 6,408 $ 6,425
Accretion of U.S. Treasury bills (13) (30)
--------- ---------
Cash provided by operating activities 6,395 6,395
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities (3,480) (3,479)
Maturities of investment securities 3,509 3,605
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Cash provided by investing activities 29 126
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to limited partner (5,493) (5,493)
Distributions to general partner (931) (1,028)
--------- ---------
Cash used for financing activities (6,424) (6,521)
--------- ---------
NET CHANGE IN CASH - -
CASH, BEGINNING OF PERIOD - 1
--------- ---------
CASH, END OF PERIOD $ - $ 1
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Distributions of $6,395 were accrued at March 28, 2003.
See Note to Condensed Financial Statements
10
MERRILL LYNCH PREFERRED FUNDING I, L.P.
NOTE TO CONDENSED FINANCIAL STATEMENTS (unaudited)
MARCH 28, 2003
- --------------------------------------------------------------------------------
BASIS OF PRESENTATION
These unaudited condensed financial statements should be read in conjunction
with the audited financial statements included in the Annual Report on Form 10-K
of Merrill Lynch Preferred Funding I, L.P. (the "Partnership") for the year
ended December 27, 2002. The December 27, 2002 balance sheet information was
derived from the audited financial statements. The interim financial statements
for the three-month periods are unaudited; however, in the opinion of the
General Partner of the Partnership, all adjustments, consisting only of normal
recurring accruals necessary for a fair statement of the results of operations,
have been included.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
No disclosure is required for this Item pursuant to General Instruction H of
Form 10-Q. There are no material changes in the amount of revenue and expense
items between the most recent fiscal year-to-date period presented and the
corresponding year-to-date period in the preceding fiscal year.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
No disclosure is required for this Item pursuant to General Instruction H of
Form 10-Q.
ITEM 4. CONTROLS AND PROCEDURES
The person who functions as the equivalent of the chief executive officer and
chief financial officer of the Trust and the Partnership has evaluated the
effectiveness of the Trust's and the Partnership's disclosure controls and
procedures as of a date within ninety days prior to the filing date of this
Form 10-Q. Based on this evaluation, the person who functions as the
equivalent of the chief executive officer and chief financial officer of the
Trust and the Partnership has concluded that the Trust's and the Partnership's
disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under
the Securities Exchange Act of 1934) are effective and that there have been no
significant changes in internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
12 Computation of Ratios of Earnings to Combined Fixed Charges and
Preferred Securities Distributions
99 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned, thereunto duly authorized on the 8th day of May, 2003.
MERRILL LYNCH PREFERRED CAPITAL TRUST I*
By: /s/ JOHN C. STOMBER
---------------------------------------------
Name: John C. Stomber
Title: Regular Trustee
MERRILL LYNCH PREFERRED FUNDING I, L.P.*
By: MERRILL LYNCH & CO., INC., as General Partner
By: /s/ JOHN C. STOMBER
---------------------------------------------
Name: John C. Stomber
Title: Treasurer
- ------------
* There is no principal executive officer(s), principal financial officer,
controller, principal accounting officer or board of directors of the
Registrants. The Trustees of the Trust (which include the Regular Trustee, the
Property Trustee and the Delaware Trustee) together exercise all powers and
perform all functions with respect to the Trust.
14
Certification
-------------
I, John C. Stomber, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Merrill Lynch Preferred
Capital Trust I and Merrill Lynch Preferred Funding I, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers* and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
MERRILL LYNCH PREFERRED CAPITAL TRUST I
By: /s/ JOHN C. STOMBER
---------------------------------------------
Name: John C. Stomber *
Title: Regular Trustee
MERRILL LYNCH PREFERRED FUNDING I, L.P.
By: MERRILL LYNCH & CO., INC., as General Partner
By: /s/ JOHN C. STOMBER
---------------------------------------------
Name: John C. Stomber *
Title: Treasurer
Dated: May 8, 2003
_______________
* John C. Stomber functions as the equivalent of the Chief Executive Officer and
Chief Financial Officer of each of the Trust and the Partnership for purposes of
Section 302 of the Sarbanes-Oxley Act of 2002.
15
INDEX TO EXHIBITS
EXHIBITS
12 Computation of Ratios of Earnings to Combined Fixed Charges and
Preferred Securities Distributions
99 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
16