UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
(Exact name of Registrant as specified in its certificate of trust)
COMMISSION FILE NO.: 1-7182-08
Delaware 13-7139562
(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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
- -------------------------------- ------------------------------------------
7.12% Trust Originated Preferred New York Stock Exchange
Securities ("TOPrS")
(and the related guarantee)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
(Exact name of Registrant as specified in its certificate of
limited partnership)
COMMISSION FILE NO.: 1-7182-07
Delaware 13-3982446
(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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
- ---------------------------- -----------------------------------------
7.12% Partnership Preferred New York Stock Exchange
Securities (and the
related guarantee)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE Act: None
The Registrants meet the conditions set forth in General Instruction I 1 (a) and
(b) of Form 10-K 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 requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
Indicate by check mark whether the Registrants are accelerated filers
(as defined in Exchange Act Rule 12b-2). Yes [] No [x]
As of the close of business on June 25, 2004, no voting stock of the Registrants
was held by non-affiliates of the Registrants.
As of March 29, 2005, no voting stock of the Registrants was held by
non-affiliates of the Registrants.
DOCUMENTS INCORPORATED BY REFERENCE:
Prospectus, dated June 16, 1998, filed pursuant to Rule 424(b) in connection
with Registration Statement on Form S-3 (No. 333-44173) filed by the Registrants
and Merrill Lynch & Co., Inc., is incorporated by reference in this Form 10-K in
response to Part I. Portion of the Merrill Lynch & Co., Inc. Proxy Statement,
dated March 15, 2005, for its 2005 Annual Meeting of Shareholders to be held
April 22, 2005 is incorporated by reference in this Form 10-K in response to
Part III.
================================================================================
PART I
------
ITEM 1. BUSINESS
--------
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
Merrill Lynch Preferred Capital Trust IV (the "Trust") is a statutory business
trust formed under the Delaware Business Trust Act, as amended, pursuant to a
declaration of trust and the filing of a certificate of trust with the Secretary
of State on December 19, 1997, which was subsequently amended by an amended and
restated declaration of trust dated as of June 16, 1998. Merrill Lynch & Co.,
Inc. (the "Company" or "Merrill Lynch") is the sole owner of the Trust common
securities. The Trust exists for the exclusive purposes of (i) issuing trust
securities, consisting of 7.12% Trust Originated Preferred Securities (the
"TOPrS") and trust common securities (the "Trust Common Securities"),
representing undivided beneficial ownership interests in the assets of the
Trust, (ii) investing the gross proceeds of the trust securities in 7.12%
Partnership Preferred Securities (the "Partnership Preferred Securities") issued
by Merrill Lynch Preferred Funding IV, L.P. (the "Partnership"), and (iii)
engaging in only those other activities necessary or incidental thereto.
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
The Partnership is a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act, as amended, pursuant to an agreement of limited
partnership and the filing of a certificate of limited partnership with the
Secretary of State of the State of Delaware on December 19, 1997, which was
subsequently amended by an amended and restated agreement of limited partnership
dated June 19, 1998. The Company is the sole general partner of the Partnership.
The Partnership is managed by the general partner and exists for the exclusive
purposes of (i) issuing its partnership interests, consisting of the Company's
general partner interest and the Partnership Preferred Securities, (ii)
investing the proceeds thereof in certain eligible securities of the Company and
wholly-owned subsidiaries of the Company (the "Affiliate Investment
Instruments") and certain eligible debt securities, and (iii) engaging in only
those other activities necessary or incidental thereto.
The information set forth under the headings "Merrill Lynch Preferred Capital
Trust IV", "Merrill Lynch Preferred Funding IV, L.P.", "Description of the Trust
Preferred Securities", "Description of the Trust Guarantee", "Description of the
Partnership Preferred Securities", "Description of the Partnership Guarantee",
and "Use of Proceeds" in the Prospectus dated June 16, 1998 of the Trust and the
Partnership is incorporated by reference herein.
Available Information
- ---------------------
The Registrants and Merrill Lynch file annual, quarterly and current
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). You may read and copy any document we file with the SEC
at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC
20549. Please call the SEC at 1-800-SEC-0330 for information on the Public
Reference Room. The SEC maintains an internet site that contains annual,
quarterly and current reports, proxy and information statements and other
information that issuers (including the Registrants and Merrill Lynch & Co.,
Inc.) file electronically with the SEC. The SEC's internet site is www.sec.gov.
Merrill Lynch's internet address is www.ml.com. Merrill Lynch makes available,
free of charge, its proxy statements, annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934. In addition, the website includes information concerning
beneficial ownership of Merrill Lynch's equity securities by its executive
officers and directors. Investors can find this information under "SEC Reports"
through the investor relations section of the website which can be accessed
directly at www.ir.ml.com. These reports are available through the website as
soon as reasonably practicable after such reports are electronically filed with,
or furnished to, the SEC. Additionally, Merrill Lynch's Guidelines for Business
Conduct, Code of Ethics for Financial Professionals and charters for the
committees of its Board of Directors have been filed as exhibits to SEC reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934. These documents, along with Merrill Lynch's Corporate Governance
Guidelines, are also available on the investor relations section of the website.
The information on Merrill Lynch's websites is not incorporated by reference
into this Report. Holders of the Registrants' securities may obtain copies of
these reports and documents, free of charge, upon written request to Judith A.
Witterschein, Corporate Secretary, by mail at Merrill Lynch & Co., Inc., 222
Broadway, 17th Floor, New York, NY 10038 or by email at
corporate_secretary@ml.com.
ITEM 2. PROPERTIES
----------
The Registrants do not own or lease any real property.
ITEM 3. LEGAL PROCEEDINGS
-----------------
The Registrants know of no material legal proceedings involving the Trust, the
Partnership or the assets of either of them.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No disclosure is required for this Item pursuant to General Instruction I of
Form 10-K.
PART II
-------
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
---------------------------------------------------------------------
There is no established public market for the Trust Common Securities or the
general partnership interest in the Partnership.
All of the Trust Common Securities and the entire general partnership
interest in the Partnership are owned of record and beneficially by the Company.
The Company, as holder of the Trust Common Securities, is entitled to
receive cumulative cash distributions accumulating from June 19, 1998 and
payable quarterly in arrears on each March 30, June 30, September 30 and
December 30, commencing September 30, 1998, at an annual rate of 7.12% of the
liquidation amount per annum. Distributions not paid on the scheduled payment
date will accumulate and compound quarterly at a rate per annum equal to 7.12%.
The certificate of limited partnership of the Partnership does not require any
regular periodic distributions to be made to the general partner; however, to
the extent that aggregate payments to the Partnership on the Affiliate
Investment Instruments and on certain eligible debt securities exceed
distributions accumulated or payable with respect to the Partnership Preferred
Securities, the Partnership may at times have excess funds which shall be
allocated to and may, in the general partner's sole discretion, be distributed
to the general partner.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
No disclosure is required for this Item pursuant to General Instruction I of
Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
No disclosure is required for this Item pursuant to General Instruction I of
Form 10-K. There are no material changes in the amount of revenue and expense
items between the most recent fiscal year presented and the fiscal year
immediately preceding it.
ITEM 7A. QUANTITATIVE and QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
On June 19, 1998, the Trust invested the gross proceeds from the sale of the
Trust Common Securities and the TOPrS in the Partnership Preferred Securities
(the "Trust Assets"). The Partnership, in turn, invested the proceeds from the
sale of the Partnership Preferred Securities and a capital contribution from the
Company in certain Affiliate Investment Instruments and eligible securities (the
"Partnership Assets"). To the extent the Partnership has funds available from
the Partnership Assets, the general partner of the Partnership may declare
distributions to the Trust, as holder of the Partnership Preferred Securities.
The Trust's ability to pay distributions to the holders of the TOPrS is
dependent on its receipt of distributions on the Trust Assets from the
Partnership. Therefore, upon the receipt by the Partnership of payments from the
Partnership Assets and the distribution thereof to the Trust, the Trust will
pass through such payments to the holders of the TOPrS.
ITEM 8. FINANCIAL STATEMENTS and SUPPLEMENTARY DATA
-------------------------------------------
In response to this ITEM 8, the financial statements and notes thereto and the
Reports of Independent Registered Public Accounting Firm set forth on pages
F-1 through F-17 are incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
ITEM 9A. 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 defined in Rule 13a-15(e) under the Securities Exchange Act of
1934) as of the end of the period covered by this Form 10-K. 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 are effective as of the end of the period covered by this report.
In addition, no change in the Trust's or the Partnership's internal control over
financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange
Act of 1934) occurred during the fourth fiscal quarter of 2004 that has
materially affected, or is reasonably likely to materially affect, the Trust's
or the Partnership's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
-----------------
No information required to be disclosed under this section.
PART III
--------
ITEM 10. DIRECTORS and EXECUTIVE OFFICERS of the REGISTRANT
--------------------------------------------------
No disclosure is required for this Item pursuant to General Instruction I of
Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
No disclosure is required for this Item pursuant to General Instruction I of
Form 10-K.
ITEM 12. SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and MANAGEMENT and
RELATED STOCKHOLDER MATTERS
------------------------------------------------------------------
No disclosure is required for this Item pursuant to General Instruction I of
Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS
----------------------------------------------
No disclosure is required for this Item pursuant to General Instruction I of
Form 10-K.
ITEM 14. PRINCIPAL ACCOUNTANT FEES and SERVICES
--------------------------------------
The following table presents aggregate fees for audits of the Trust's and the
Partnership's financial statements by Deloitte & Touche LLP for the fiscal years
ended December 31, 2004 and December 26, 2003. There were no other services
rendered by Deloitte & Touche LLP to the Trust and the Parnership in fiscal
years ended December 31, 2004 and December 26, 2003.
2004 2003
------- -------
Audit Fee(1) $12,200 $10,900
The Audit Committee of the Board of Directors of the Company is responsible for
the approval of audit fees for its subsidiaries, which includes the Trust and
the Partnership. The Company is the sole owner of the Trust's common securities
and the sole general partner of the Partnership. Consistent with SEC rules
regarding auditor independence, the Audit Committee of the Company has
established a policy governing the provision of audit and non-audit services to
the Company and its subsidiaries (Pre-Approval Policy). The description of the
Pre-Approval Policy found on page 33 of the Company's 2005 Proxy Statement filed
on March 15, 2005 is incorporated herein by reference. You may obtain a copy of
the 2005 Proxy Statement on the Company's Investor Relations website at
www.ir.ml.com or by written request to Judith A. Witterschein, Corporate
Secretary, Merrill Lynch & Co., Inc., 222 Broadway, 17th Floor, New York, New
York 10038-2510.
- --------------
(1) Audit Fees consisted of fees for the audit of the Trust's and the
Partnership's financial statements filed with the SEC on Forms 10-K and 10-Q, as
well as work generally only the independent registered public accounting firm
can be reasonably expected to provide, such as comfort letters, statutory
audits, consents and review of documents filed with the SEC.
PART IV
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
---------------------------------------
Documents filed as part of this Report:
1. Financial Statements
The contents of the financial statements are listed on page F-1
hereof, and the financial statements and accompanying Reports of
Independent Registered Public Accounting Firm appear on pages F-2
through F-17.
2. Financial Statement Schedules
None.
3. Exhibits
Certain of the following exhibits were previously filed as
exhibits to other reports or registration statements filed by the
Registrants and are incorporated herein by reference to such
reports or registration statements as indicated parenthetically
below by the appropriate report reference date or registration
statement number.
4.1 Certificate of Trust dated December 19, 1997, of the Trust
(incorporated by reference to Exhibit 4.1 to the Trust's Quarterly
Report on Form 10-Q for the period ended June 26, 1998 (File No.
1-7182-08)).
4.2 Form of Amended and Restated Declaration of Trust of the Trust
(incorporated by reference to Exhibit 4.2 to Registration
Statement of Form S-3 (File No. 333-42859) (the "Registration
Statement")).
4.3 Certificate of Limited Partnership, dated as of December 19, 1997,
of the Partnership (incorporated by reference to Exhibit 4.3 to
the Partnership's Quarterly Report on Form 10-Q for the period
ended June 26, 1998 (File No. 1-7182-07)).
4.4 Form of Amended and Restated Agreement of Limited Partnership of
the Partnership (incorporated by reference to Exhibit 4.4 to the
Registration Statement).
4.5 Form of Trust Preferred Securities Guarantee Agreement between the
Company and JPMorgan Chase Bank, N.A.(1), as guarantee trustee
(incorporated by reference to Exhibit 4.5 to the Registration
Statement).
4.6 Form of Partnership Preferred Securities Guarantee Agreement
between the Company and JPMorgan Chase Bank, N.A., as guarantee
trustee (incorporated by reference to Exhibit 4.6 to the
Registration Statement).
4.7 Form of Subordinated Debenture Indenture between the Company and
JPMorgan Chase Bank, N.A., as trustee (incorporated by reference
to Exhibit 4.7 to the Registration Statement on Form S-3
(No. 333-16603)).
4.8 Form of Affiliate Debenture Guarantee Agreement between the
Company and JPMorgan Chase Bank, N.A., as guarantee trustee
(incorporated by reference to Exhibit 4.8 to the Registration
Statement).
4.9 Form of Trust Preferred Security (included in Exhibit 4.2 above).
4.10 Form of Partnership Preferred Security (included in Exhibit 4.4
above).
4.11 Form of Subordinated Debenture (incorporated by reference to
Exhibit 4.11 to the Registration Statement).
12* Statement re: Computation of Ratios of Earnings to Combined
Fixed Charges and Preferred Securities Distributions.
23* Consent of Deloitte & Touche LLP.
31.1*Rule 13a-14(a) Certification.
31.2*Rule 13a-14(a) Certification.
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.
- ---------------
(1) As used in Item 15 and the Exhibit Index of this Report, "JPMorgan Chase
Bank, N.A." shall mean the entity formerly known as JPMoran Chase and The
Chase Manhattan Bank.
* Filed herewith
INDEX TO FINANCIAL STATEMENTS
-----------------------------
ITEM 15(1)
FINANCIAL STATEMENTS PAGE
- -------------------- ----
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
Balance Sheets, December 31, 2004 and December 26, 2003 F-2
Statements of Earnings, Year Ended December 31, 2004,
December 26, 2003 and December 27, 2002 F-3
Statements of Changes in Stockholders' Equity, Year Ended
December 31, 2004, December 26, 2003 and December 27, 2002 F-4
Statements of Cash Flows, Year Ended December 31, 2004,
December 26, 2003 and December 27, 2002 F-5
Notes to Financial Statements F-6
Report of Independent Registered Public Accounting Firm F-8
Supplemental Financial Information (Unaudited) F-9
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
Balance Sheets, December 31, 2004 and December 26, 2003 F-10
Statements of Earnings, Year Ended December 31, 2004,
December 26, 2003 and December 27, 2002 F-11
Statements of Changes in Partners' Capital, Year Ended
December 31, 2004, December 26, 2003 and December 27, 2002 F-12
Statements of Cash Flows, Year Ended December 31, 2004,
December 26, 2003 and December 27, 2002 F-13
Notes to Financial Statements F-14
Report of Independent Registered Public Accounting Firm F-16
Supplemental Financial Information (Unaudited) F-17
F-1
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
BALANCE SHEETS
(dollars in thousands, except per security amounts)
- -------------------------------------------------------------------------------------------------------
December 31, 2004 December 26, 2003
----------------- -----------------
ASSETS
Investment in affiliate partnership preferred securities $ 412,372 $ 412,372
Interest receivable from affiliate - 7,341
---------- ----------
Total Assets $ 412,372 $ 419,713
========== ==========
LIABILITY AND STOCKHOLDERS' EQUITY
Distributions payable $ - $ 7,341
---------- ----------
Stockholders' equity:
Preferred securities (7.12% Trust
Originated Preferred Securities;
16,000,000 authorized, issued, and
outstanding; $25 liquidation
amount per security) 400,000 400,000
Common securities (7.12% Trust Common
Securities; 494,880 authorized,
issued, and outstanding;
$25 liquidation amount per security) 12,372 12,372
---------- ----------
Total Stockholders' equity 412,372 412,372
---------- ----------
Total Liability and Stockholders' Equity $ 412,372 $ 419,713
========== ==========
See Notes to Financial Statements
F-2
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
STATEMENTS OF EARNINGS
(dollars in thousands)
- -------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
---------------------------------------------------------------
December 31, 2004 December 26, 2003 December 27, 2002
----------------- ----------------- -----------------
EARNINGS
Interest on affiliate partnership preferred securities $ 29,361 $ 29,361 $ 29,361
========= ========= =========
See Notes to Financial Statements
F-3
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
---------------------------------------------------------------
December 31, 2004 December 26, 2003 December 27, 2002
----------------- ----------------- -----------------
PREFERRED SECURITIES
Balance, beginning and end of period $ 400,000 $ 400,000 $ 400,000
--------- --------- ---------
COMMON SECURITIES
Balance, beginning and end of period 12,372 12,372 12,372
--------- ------- -------
UNDISTRIBUTED EARNINGS
Balance, beginning of period - - -
Earnings 29,361 29,361 29,361
Distributions (29,361) (22,020) (22,021)
Distributions payable - (7,341) (7,340)
--------- --------- ---------
Balance, end of period - - -
--------- --------- ---------
Total Stockholders' Equity $ 412,372 $ 412,372 $ 412,372
========= ========= =========
See Notes to Financial Statements
F-4
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
STATEMENTS OF CASH FLOWS
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
---------------------------------------------------------------
December 31, 2004 December 26, 2003 December 27, 2002
----------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings $ 29,361 $ 29,361 $ 29,361
Decrease in interest receivable from affiliate 7,341 - -
-------- -------- --------
Cash provided by operating activities 36,702 29,361 29,361
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (36,702) (29,361) (29,361)
-------- -------- --------
Cash used for financing activities (36,702) (29,361) (29,361)
-------- -------- --------
NET CHANGE IN CASH - - -
CASH, BEGINNING OF PERIOD - - -
-------- -------- --------
CASH, END OF PERIOD $ - $ - $ -
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
No distributions were accrued at December 31, 2004 and preferred and common
distributions of $7,120 and $221, respectively, were accrued at December 26,
2003 and distributed in the following fiscal year.
See Notes to Financial Statements
F-5
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
- --------------------------------------------------------------------------------
1. ORGANIZATION AND PURPOSE
Merrill Lynch Preferred Capital Trust IV (the "Trust") is a statutory business
trust formed under the Delaware Business Trust Act, as amended, pursuant to a
declaration of trust and the filing of a certificate of trust with the Secretary
of State on December 19, 1997, which was subsequently amended by an amended and
restated declaration of trust dated as of June 16, 1998. Merrill Lynch & Co.,
Inc. (the "Company") is the sole owner of the Trust common securities. The Trust
exists for the exclusive purposes of (i) issuing trust securities, consisting of
7.12% Trust Originated Preferred Securities (the "Trust Preferred Securities")
and trust common securities (the "Trust Common Securities"), representing
undivided beneficial ownership interests in the assets of the Trust, (ii)
investing the gross proceeds of the trust securities in 7.12% Partnership
Preferred Securities (the "Partnership Preferred Securities") issued by Merrill
Lynch Preferred Funding IV, L.P. (the "Partnership"), and (iii) engaging in only
those other activities necessary or incidental thereto.
The Company has paid compensation to the underwriters of the offering of the
Trust Preferred Securities. The Company also has agreed to (i) pay all fees and
expenses related to the organization and operations of the Trust (including
taxes, audit fees, duties, assessments, or government charges of whatever nature
(other than withholding taxes) imposed by the United States of America or any
other domestic taxing authority upon the Trust) and the offering of the Trust
Preferred Securities and (ii) be responsible for all debts and other obligations
of the Trust (other than with respect to the Trust Preferred Securities and the
Trust Common Securities). The Company has agreed to indemnify the trustees and
certain other persons.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS of PRESENTATION
The financial statements are presented in accordance with accounting principles
generally accepted in the United States of America, which require management to
make estimates that affect reported amounts and disclosure of contingencies in
the financial statements. As such, actual results could differ from those
estimates.
INVESTMENTS
The investment in Affiliate Partnership Preferred Securities represents a
limited partnership interest in the Partnership and is recorded at cost. As of
year end, the fair value of the investment approximates its carrying value.
Income on the Partnership Preferred Securities is accrued when earned.
INCOME TAXES
The Trust does not incur any income tax liabilities. Such liabilities are
incurred directly by the security holders.
F-6
MERRILL LYNCH PREFERRED CAPITAL TRUST IV
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
- --------------------------------------------------------------------------------
3. INVESTMENT IN AFFILIATE PARTNERSHIP PREFERRED SECURITIES
The Trust holds 16,494,880 7.12% Partnership Preferred Securities, $25
liquidation preference per security. The interest payment dates and redemption
provisions of the Partnership Preferred Securities, which are redeemable on or
after June 30, 2008 at the option of the Partnership, correspond to the
distribution payment dates and redemption provisions of the Trust Preferred
Securities. Upon any redemption of the Partnership Preferred Securities, the
Trust Preferred Securities will be redeemed. The Company has guaranteed, on a
subordinated basis, the payment of distributions by the Partnership on the
Partnership Preferred Securities if, as, and when declared out of funds legally
available and payments upon liquidation of the Partnership or the redemption of
the Partnership Preferred Securities to the extent of funds legally available.
4. STOCKHOLDERS' EQUITY
TRUST PREFERRED SECURITIES
The Trust issued 16,000,000 7.12% Trust Preferred Securities, $25 liquidation
amount per security in a public offering on June 19, 1998. The Trust Preferred
Securities are redeemable on or after June 30, 2008 at the option of the Trust,
in whole or in part, at a redemption price equal to $25 per security.
Distributions on the Trust Preferred Securities are cumulative from the date of
original issue and are payable quarterly if, as, and when the Trust has funds
available for payment. Holders of the Trust Preferred Securities have limited
voting rights and are not entitled to vote to appoint, remove, or replace, or to
increase or decrease the number of, trustees, which voting rights are vested
exclusively in the holder of the Trust Common Securities. Under certain
circumstances, the Trust Preferred Securities have preferential rights to
payment relative to the Trust Common Securities.
The Company has guaranteed, on a subordinated basis, the payment in full of all
distributions and other payments on the Trust Preferred Securities to the extent
that the Trust has funds legally available. This guarantee and the partnership
distribution guarantee are subordinated to all other liabilities of the Company
and rank equally with the most senior preferred stock of the Company.
TRUST COMMON SECURITIES
The Trust issued 494,880 7.12% Trust Common Securities, $25 liquidation amount
per security, to the Company on June 19, 1998. The Trust Common Securities are
redeemable on or after June 30, 2008 at the option of the Trust, in whole or in
part, at a redemption price equal to $25 per security.
F-7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of Merrill Lynch Preferred Capital Trust IV
We have audited the accompanying balance sheets of Merrill Lynch Preferred
Capital Trust IV (the "Trust") as of December 31, 2004 and December 26,
2003, and the related statements of earnings, changes in stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 2004. These financial statements are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Trust is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal contol over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Trust at December 31, 2004 and December
26, 2003, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2004, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
New York, New York
March 29, 2005
F-8
SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
- ----------------------------------------------
Quarterly Information
- ---------------------
The unaudited quarterly results of operations of Merrill Lynch Preferred Capital
Trust IV for 2004 and 2003 are prepared in conformity with U.S. generally
accepted accounting principles, which include industry practices, and reflect
all adjustments that are, in the opinion of management, necessary for a fair
presentation of the results of operations for the periods presented. Results of
any interim period are not necessarily indicative of results for a full year.
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------
For the Quarter Ended
------------------------------------------------------------------------------------
Dec. 31, Sept. 24, June 25, Mar.26, Dec. 26, Sept. 26, June 27, Mar.28,
2004 2004 2004 2004 2003 2003 2003 2003
------------------------------------------------------------------------------------
Total Revenues $7,340 $7,341 $7,340 $7,340 $7,341 $7,340 $7,340 $7,340
Net Earnings $7,340 $7,341 $7,340 $7,340 $7,341 $7,340 $7,340 $7,340
F-9
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
BALANCE SHEETS
(dollars in thousands)
- ------------------------------------------------------------------------------------------------
December 31, 2004 December 26, 2003
----------------- -----------------
ASSETS
Investments:
Affiliate debentures $ 480,292 $ 480,292
U.S. Government and agencies 4,862 4,856
---------- ----------
Total investments 485,154 485,148
Interest receivables from affiliates - 8,550
---------- ----------
Total Assets $ 485,154 $ 493,698
========== ==========
LIABILITY AND PARTNERS' CAPITAL
Distributions payable $ - $ 8,550
---------- ----------
Partners' capital:
Limited partnership interest 412,372 412,372
General partnership interest 72,782 72,776
---------- ----------
Total partners' capital 485,154 485,148
---------- ----------
Total Liability and Partners' Capital $ 485,154 $ 493,698
========== ==========
See Notes to Financial Statements
F-10
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
STATEMENTS OF EARNINGS
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
---------------------------------------------------------------
December 31, 2004 December 26, 2003 December 27, 2002
----------------- ----------------- -----------------
EARNINGS
Interest income:
Affiliate debentures $ 34,197 $ 34,197 $ 34,197
U.S. Government and agencies 68 60 106
--------- --------- ---------
Earnings $ 34,265 $ 34,257 $ 34,303
========= ========= =========
See Notes to Financial Statements
F-11
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
---------------------------------------------------------------
December 31, 2004 December 26, 2003 December 27, 2002
----------------- ----------------- -----------------
LIMITED PARTNER'S CAPITAL
Balance, beginning of period $ 412,372 $ 412,372 $ 412,372
Net income allocated to limited partner 29,361 29,361 29,361
Distributions (29,361) (22,020) (22,021)
Distributions payable - (7,341) (7,340)
--------- --------- ---------
Balance, end of period 412,372 412,372 412,372
--------- --------- ---------
GENERAL PARTNER'S CAPITAL
Balance, beginning of period 72,776 72,799 72,912
Net income allocated to general partner 4,904 4,896 4,942
Distributions (4,898) (3,710) (3,846)
Distributions payable - (1,209) (1,209)
--------- --------- ---------
Balance, end of period 72,782 72,776 72,799
--------- --------- ---------
TOTAL PARTNERS' CAPITAL $ 485,154 $ 485,148 $ 485,171
========= ========= =========
See Notes to Financial Statements
F-12
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
STATEMENTS OF CASH FLOWS
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
---------------------------------------------------------------
December 31, 2004 December 26, 2003 December 27, 2002
----------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings $ 34,265 $ 34,257 $ 34,303
Accretion of U.S. Government and agencies (68) (60) (106)
Decrease in interest receivable from affiliates 8,550 - -
-------- -------- --------
Cash provided by operating activities 42,747 34,197 34,197
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities (9,703) (14,555) (9,702)
Maturities of investment securities 9,765 14,637 9,922
-------- -------- --------
Cash provided by investing activities 62 82 220
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to limited partner (36,702) (29,361) (29,361)
Distributions to general partner (6,107) (4,919) (5,055)
-------- -------- --------
Cash used for financing activities (42,809) (34,280) (34,416)
-------- -------- --------
NET CHANGE IN CASH - (1) 1
CASH, BEGINNING OF PERIOD - 1 -
-------- -------- --------
CASH, END OF PERIOD $ - $ - $ 1
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
No distributions were accrued at December 31, 2004 and distributions of
$8,550 were accrued at December 26, 2003 and distributed in the following fiscal
year.
See Notes to Financial Statements
F-13
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
- --------------------------------------------------------------------------------
1. ORGANIZATION AND PURPOSE
Merrill Lynch Preferred Funding IV, L.P. (the "Partnership") is a limited
partnership formed under the Delaware Revised Uniform Limited Partnership Act,
as amended, pursuant to an agreement of limited partnership and the filing of a
certificate of limited partnership with the Secretary of State of the State of
Delaware on December 19, 1997, which was subsequently amended by an amended and
restated agreement of limited partnership dated June 19, 1998. Merrill Lynch &
Co., Inc. (the "Company") is the sole general partner of the Partnership. The
Partnership is managed by the general partner and exists for the exclusive
purposes of (i) issuing its partnership interests, consisting of the Company's
general partner interest and the Partnership Preferred Securities, (ii)
investing the proceeds thereof in certain eligible securities of the Company and
wholly-owned subsidiaries of the Company (the "Affiliate Investment
Instruments") and certain eligible debt securities, and (iii) engaging in only
those other activities necessary or incidental thereto.
The Company, in its capacity as sole general partner of the Partnership, has
agreed to (i) pay all fees and expenses related to the organization and
operations of the Partnership (including taxes, audit fees, duties, assessments,
or government charges (other than withholding taxes) imposed by the United
States or any other domestic taxing authority upon the Partnership) and (ii) be
responsible for all debts and other obligations of the Partnership (other than
with respect to the Partnership Preferred Securities). The Company has also
agreed to indemnify certain officers and agents of the Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements are presented in accordance with accounting principles
generally accepted in the United States of America, which require management to
make estimates that affect reported amounts and disclosure of contingencies in
the financial statements. As such, actual results could differ from those
estimates.
INVESTMENTS
The Partnership's investment in affiliate debentures is recorded at cost, and
its investment in U.S. Government and agencies, which are recorded at accreted
cost and which mature within one year, are classified as available-for-sale,
which both approximate fair value.
INCOME TAXES
The Partnership does not incur any income tax liabilities. Such liabilities are
incurred directly by the partners.
F-14
MERRILL LYNCH PREFERRED FUNDING IV, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
- --------------------------------------------------------------------------------
3. INVESTMENT IN AFFILIATE DEBENTURES
The Partnership holds debentures of the Company and a wholly owned subsidiary of
the Company. The debentures have a term of approximately 20 years and bear
interest at 7.12% per annum. The interest payment dates and redemption
provisions of the debentures, which are redeemable at the option of the Company
and its subsidiary on or after June 30, 2008, correspond to the distribution
payment dates and redemption provisions of the Partnership Preferred Securities.
Interest and redemption payments on the subsidiary debenture are guaranteed by
the Company on a subordinated basis.
4. PARTNERS' CAPITAL
The Partnership issued 16,494,880 7.12% Partnership Preferred Securities, $25
liquidation preference per security, to the Trust on June 19, 1998.
Distributions on the Partnership Preferred Securities are cumulative from the
date of original issue and are payable quarterly if, as, and when declared by
the general partner. The Partnership Preferred Securities are redeemable on or
after June 30, 2008 at the option of the Partnership, at a redemption price
equal to $25 per security. Except as provided in the Limited Partnership
Agreement and Partnership Preferred Securities Guarantee Agreement, and as
otherwise provided by law, the holders of the Partnership Preferred Securities
have no voting rights.
The Company has guaranteed the payment of distributions by the Partnership on
the Partnership Preferred Securities if, as, and when declared out of funds
legally available and payments upon liquidation of the Partnership or the
redemption of the Partnership Preferred Securities to the extent of funds
legally available. This guarantee is subordinated to all other liabilities of
the Company and ranks equally with the most senior preferred stock of the
Company.
Contemporaneously with the issuance of the Partnership Preferred Securities,
the Company, as general partner, contributed capital to the Partnership in the
amount of approximately $73.0 million. The Partnership may at times have
excess funds which are allocated to the Company and may, in the Company's sole
discretion, be distributed to the Company to the extent that aggregate payments
by the Company to the Partnership exceed distributions accumulated or payable
with respect to the Partnership Preferred Securities.
F-15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the General Partner and Limited Partner of Merrill Lynch Preferred Funding
IV, L.P.
We have audited the accompanying balance sheets of Merrill Lynch Preferred
Funding IV, L.P. (the "Partnership") as of December 31, 2004 and December 26,
2003, and the related statements of earnings, changes in partners' capital and
cash flows for each of the three years in the period ended December 31, 2004.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Partnership is not required to
have, nor were we engaged to perform, an audit of its internal control over
finacial reporting. Our audits included consideration of internal control
over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Partnership's internal contol over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 2004 and
December 26, 2003, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2004, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
New York, New York
March 29, 2005
F-16
SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
- ----------------------------------------------
Quarterly Information
- ---------------------
The unaudited quarterly results of operations of Merrill Lynch Preferred
Funding IV, L.P. for 2004 and 2003 are prepared in conformity with U.S.
generally accepted accounting principles, which include industry practices,
and reflect all adjustments that are, in the opinion of management,
necessary for a fair presentation of the results of operations for the
periods presented. Results of any interim period are not necessarily
indicative of results for a full year.
(dollars in thousands)
- -------------------------------------------------------------------------------------------------------------
For the Quarter Ended
-------------------------------------------------------------------------------------
Dec. 31, Sept. 24, June 25, Mar.26, Dec. 26, Sept. 26, June 27, Mar.28,
2004 2004 2004 2004 2003 2003 2003 2003
-------------------------------------------------------------------------------------
Total Revenues $8,572 $8,566 $8,568 $8,559 $8,563 $8,564 $8,563 $8,567
Net Earnings $8,572 $8,566 $8,568 $8,559 $8,563 $8,564 $8,563 $8,567
F-17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 29th day of March,
2005.
MERRILL LYNCH PREFERRED CAPITAL TRUST IV*
By: /s/ HAIG NARGESIAN
---------------------------------------------
Name: Haig Nargesian
Title: Regular Trustee
- ------------
* 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.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant, by Merrill Lynch & Co., Inc. as General Partner,
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized on the 29th day of March, 2005.
Merrill Lynch Preferred Funding IV, L.P.
By: Merrill Lynch & Co., Inc. as General Partner
SIGNATURE TITLE
--------- -----
/s/ JUDITH A. WITTERSCHEIN Secretary
- -----------------------------------------
(Judith A. Witterschein)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following directors and officers of Merrill Lynch
& Co., Inc., General Partner of the Registrant, in the capacities indicated
on the 29th day of March, 2005.
SIGNATURE TITLE
--------- -----
/s/ E. STANLEY O'NEAL Director, Chairman of the Board and
- ----------------------------------------- Chief Executive Officer
(E. Stanley O'Neal) (Principal Executive Officer)
/s/ AHMASS L. FAKAHANY Executive Vice President and Chief
- ----------------------------------------- Financial Officer
(Ahmass L. Fakahany) (Principal Financial Officer)
/s/ LAURENCE A. TOSI Vice President and Finance Director
- ----------------------------------------- (Principal Accounting Officer)
(Laurence A. Tosi)
/s/ W. H. CLARK Director
- -----------------------------------------
(W. H. Clark)
/s/ JILL K. CONWAY Director
- -----------------------------------------
(Jill K. Conway)
/s/ ALBERTO CRIBIORE Director
----------------------------------------
(Alberto Cribiore)
/s/ JOHN D. FINNEGAN Director
- -----------------------------------------
(John D. Finnegan)
/s/ HEINZ-JOACHIM NEUBURGER Director
- -----------------------------------------
(Heinz-Joachim Neuburger)
/s/ DAVID K. NEWBIGGING Director
- -----------------------------------------
(David K. Newbigging)
/s/ AULANA L. PETERS Director
- -----------------------------------------
(Aulana L. Peters)
/s/ JOSEPH W. PRUEHER Director
- -----------------------------------------
(Joseph W. Prueher)
/s/ ANN N. REESE Director
- -----------------------------------------
(Ann N. Reese)
/s/ CHARLES O. ROSSOTTI Director
- -----------------------------------------
(Charles O. Rossotti)
EXHIBIT INDEX
4.1 Certificate of Trust dated December 19, 1997, of the Trust (incorporated by
reference to Exhibit 4.1 to the Trust's Quarterly Report on Form 10-Q for
the period ended June 26, 1998 (File No. 1-7182-08)).
4.2 Form of Amended and Restated Declaration of Trust of the Trust
(incorporated by reference to Exhibit 4.2 to Registration
Statement of Form S-3 (File No. 333-42859) (the "Registration Statement")).
4.3 Certificate of Limited Partnership, dated as of December 19, 1997, of the
Partnership (incorporated by reference to Exhibit 4.3 to the Partnership's
Quarterly Report on Form 10-Q for the period ended June 26, 1998 (File No.
1-7182-07)).
4.4 Form of Amended and Restated Agreement of Limited Partnership of the
Partnership (incorporated by reference to Exhibit 4.4 to the Registration
Statement).
4.5 Form of Trust Preferred Securities Guarantee Agreement between the
Company and JPMorgan Chase Bank, N.A., as guarantee trustee
(incorporated by reference to Exhibit 4.5 to the Registration
Statement).
4.6 Form of Partnership Preferred Securities Guarantee Agreement
between the Company and JPMorgan Chase Bank, N.A., as guarantee trustee
(incorporated by reference to Exhibit 4.6 to the Registration
Statement).
4.7 Form of Subordinated Debenture Indenture between the Company and
JPMorgan Chase Bank, N.A., as trustee (incorporated by reference to
Exhibit 4.7 to the Registration Statement on Form S-3 (No. 333-16603)).
4.8 Form of Affiliate Debenture Guarantee Agreement between the
Company and JPMorgan Chase Bank, N.A., as guarantee trustee
(incorporated by reference to Exhibit 4.8 to the Registration
Statement).
4.9 Form of Trust Preferred Security (included in Exhibit 4.2 above).
4.10 Form of Partnership Preferred Security (included in Exhibit 4.4 above).
4.11 Form of Subordinated Debenture (incorporated by reference to Exhibit 4.11
to the Registration Statement).
12* Statement re: Computation of Ratios of Earnings to Combined Fixed Charges
and Preferred Securities Distributions.
23* Consent of Deloitte & Touche LLP.
31.1*Rule 13a-14(a) Certification.
31.2*Rule 13a-14(a) Certification.
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.
- ------------------
* Filed herewith