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 September 26, 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 are 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 November 6, 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)
- -------------------------------------------------------------------------------------------------------------------------------
SEPTEMBER 26, 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
---------------------------------------
SEPTEMBER 26, 2003 SEPTEMBER 27, 2002
------------------ ------------------
EARNINGS
Income on partnership preferred securities $ 5,493 $ 5,493
========= =========
FOR THE NINE MONTHS ENDED
---------------------------------------
SEPTEMBER 26, 2003 SEPTEMBER 27, 2002
------------------ ------------------
EARNINGS
Income on partnership preferred securities $ 16,479 $ 16,479
======== =========
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 NINE MONTHS ENDED
---------------------------------------
SEPTEMBER 26, 2003 SEPTEMBER 27, 2002
------------------ ------------------
PREFERRED SECURITIES
Balance, beginning and end of period $ 275,000 $ 275,000
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COMMON SECURITIES
Balance, beginning and end of period 8,505 8,505
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UNDISTRIBUTED EARNINGS
Balance, beginning of period - -
Earnings 16,479 16,479
Distributions (10,986) (10,986)
Distributions payable (5,493) (5,493)
---------- ----------
Balance, end of period - -
---------- ----------
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 NINE MONTHS ENDED
---------------------------------------
SEPTEMBER 26, 2003 SEPTEMBER 27, 2002
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings $ 16,479 $ 16,479
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Cash provided by operating activities 16,479 16,479
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (16,479) (16,479)
--------- ---------
Cash used for financing activities (16,479) (16,479)
--------- ---------
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 September 26, 2003 and September 27, 2002.
See Note to Condensed Financial Statements
5
MERRILL LYNCH PREFERRED CAPITAL TRUST I
NOTE TO CONDENSED FINANCIAL STATEMENTS (unaudited)
September 26, 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- and nine-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)
- -----------------------------------------------------------------------------------------------------------------------
SEPTEMBER 26, 2003 DECEMBER 27, 2002
------------------ -----------------
ASSETS
Cash $ - $ -
Investments:
Affiliate debentures 330,055 330,055
U.S. Government and agencies 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
---------- ----------
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
---------------------------------------
SEPTEMBER 26, 2003 SEPTEMBER 27, 2002
------------------ ------------------
EARNINGS
Interest income:
Affiliate debentures $ 6,395 $ 6,395
U.S. Government and agencies 10 16
---------- ----------
Earnings $ 6,405 $ 6,411
========== ==========
FOR THE NINE MONTHS ENDED
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SEPTEMBER 26, 2003 SEPTEMBER 27, 2002
------------------ ------------------
EARNINGS
Interest income:
Affiliate debentures $ 19,185 $ 19,184
U.S. Government and agencies 33 62
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Earnings $ 19,218 $ 19,246
========== ==========
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 NINE MONTHS ENDED
---------------------------------------
SEPTEMBER 26, 2003 SEPTEMBER 27, 2002
------------------ ------------------
LIMITED PARTNER'S CAPITAL
Balance, beginning of period $ 283,505 $ 283,505
Net income allocated to limited partner 16,479 16,479
Distributions (10,986) (10,986)
Distributions payable (5,493) (5,493)
---------- ----------
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 2,739 2,767
Distributions (1,853) (1,961)
Distributions payable (902) (902)
---------- ----------
Balance, end of period 50,033 50,035
---------- ----------
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 NINE MONTHS ENDED
---------------------------------------
SEPTEMBER 26, 2003 SEPTEMBER 27, 2002
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings $ 19,218 $ 19,246
Accretion of U.S. Government and agencies (33) (62)
--------- ---------
Cash provided by operating activities 19,185 19,184
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities (6,960) (6,959)
Maturities of investment securities 7,009 7,117
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Cash provided by investing activities 49 158
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to limited partner (16,479) (16,479)
Distributions to general partner (2,755) (2,863)
--------- ---------
Cash used for financing activities (19,234) (19,342)
--------- ---------
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 September 26, 2003
and September 27, 2002.
See Note to Condensed Financial Statements
10
MERRILL LYNCH PREFERRED FUNDING I, L.P.
NOTE TO CONDENSED FINANCIAL STATEMENTS (unaudited)
September 26, 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- and nine-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.
INVESTMENTS
The Partnership's investment in affiliate debentures is recorded at cost, and
its investment in U.S. Government and agencies is classified as available
- -for-sale and recorded at accreted cost, which approximates fair value.
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 persons who function as the equivalent of the chief executive officer and
chief financial officer of the Trust and the Partnership have evaluated the
effectiveness of the Trust's and the Partnership's disclosure controls and
procedures as of the end of the period covered by this Form 10-Q. Based on this
evaluation, the persons who function as the equivalent of the chief executive
officer and chief financial officer of the Trust and the Partnership have
concluded that the Trust's and the Partnership's disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) are effective. There have been no significant changes in
the Trust's and the Partnership's internal control over financial reporting that
occurred during the period covered by this Form 10-Q that have materially
affected, or are reasonably likely to materially affect, the Trust's or the
Partnership's internal control over financial reporting.
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.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 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.
MERRILL LYNCH PREFERRED CAPITAL TRUST I*
By: /s/ LINDA L. LOWRY
---------------------------------------------
Name: Linda L. Lowry
Title: Regular Trustee
MERRILL LYNCH PREFERRED FUNDING I, L.P.*
By: MERRILL LYNCH & CO., INC., as General Partner
By: /s/ JOHN J. FOSINA
---------------------------------------------
Name: John J. Fosina
Title: Controller, Merrill Lynch & Co., Inc.
Date: November 6, 2003
- --------------------
* 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 Trustees, the
Property Trustee and the Delaware Trustee) together exercise all powers and
perform all functions with respect to the Trust.
14
INDEX TO EXHIBITS
EXHIBITS
12 Computation of Ratios of Earnings to Combined Fixed Charges and
Preferred Securities Distributions.
31.1 Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15