Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
The Securities Exchange Act of 1934
For the fiscal year ended: | Commission file number: | |
December 31, 2010 | 001-16835 |
MERRILL LYNCH DEPOSITOR, INC.
(ON BEHALF OF PREFERREDPLUS TRUST SERIES ALL-1)
(Exact name of registrant as specified in its charter)
DELAWARE (State or other jurisdiction of incorporation) |
13-3891329 (I. R. S. Employer Identification No.) |
ONE BRYANT PARK |
10036 (Zip Code) |
Registrants telephone number, including area code: (212) 449-1000
Securities registered pursuant to Section 12(b) of the Act:
PreferredPLUS Trust Certificates Series ALL-1, listed on The New York Stock
Exchange.
Securities registered pursuant to Section 12(g) of the Act:
Not Applicable.
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
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 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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in
Rule 12b-2 of the Exchange Act.
Large
accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting filer o
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes o No þ
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrants most recently completed second fiscal
quarter.
Not Applicable.
Indicate the number of shares outstanding for each of the registrants classes
of common stock, as of the latest practicable date.
Not Applicable.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART I
ITEM 1. BUSINESS
For information with respect to the underlying
securities held by PreferredPLUS Trust Series ALL-1,
please refer to The Hanover Insurance Group, Inc.s
(Commission file number 001-13754) periodic reports,
including annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K,
and other information on file with the Securities and
Exchange Commission (the SEC). You can read and
copy these reports and other information at the
public reference facilities maintained by the SEC at
Room 1580, 100 F Street, NE, Washington, D.C. 20549.
You may obtain copies of this material for a fee by
writing to the SECs Public Reference Section of the
SEC at 100 F Street, NE, Washington, D.C. 20549. You
may obtain information about the operation of the
Public Reference Room by calling the SEC at
1-800-SEC-0330. You can also access some of this
information electronically by means of the SECs
website on the Internet at http://www.sec.gov, which
contains reports, proxy and information statements
and other information that the underlying securities
issuer and underlying securities guarantor have filed
electronically with the SEC.
Although we have no reason to believe the information
concerning the underlying guarantee, the junior
subordinated debentures and the underlying securities
or the underlying securities guarantor and the
underlying securities issuer contained in the
underlying securities guarantors Exchange Act
reports is not reliable, neither the depositor nor
the trustee participated in the preparation of such
documents or made any due diligence inquiry with
respect to the information provided therein. No
investigation with respect to the underlying
securities guarantor and underlying securities issuer
(including, without limitation, no investigation as
to their respective financial condition or
creditworthiness) or of the underlying securities,
the junior subordinated debentures or the underlying
guarantee has been made. You should obtain and
evaluate the same information concerning the
underlying securities issuer and the underlying
securities guarantor as you would obtain and evaluate
if your investment were directly in the underlying
securities or in other securities issued by the
underlying securities issuer or the underlying
securities guarantor. There can be no assurance that
events affecting the underlying securities, junior
subordinated debentures and the underlying guarantee
or the underlying securities issuer and underlying
securities guarantor have not occurred or have not
yet been publicly disclosed which would affect the
accuracy or completeness of the publicly available
documents described above.
2
ITEM 1A. RISK FACTORS
Your investment in the trust certificates will
involve certain risks. You should carefully consider
the following discussion of risks, and the other
information included or incorporated by reference in
the applicable prospectus supplement and the
accompanying prospectus. You should also carefully
consider any risk factors and other information that
the underlying securities issuer and underlying
securities guarantor may file in their Exchange Act
reports as referenced in Item 1 above.
IF THE UNDERLYING SECURITIES ARE REDEEMED PRIOR TO
THEIR MATURITY DATE OR IF ANY CALL WARRANTS ARE
EXERCISED, YOU MAY NOT BE ABLE TO REINVEST YOUR
REDEMPTION OR CALL PROCEEDS AT A YIELD COMPARABLE TO
THE YIELD YOU WOULD HAVE RECEIVED ON YOUR TRUST
CERTIFICATES
The yield you will realize on your trust certificates
depends upon several factors, including:
| the purchase price of the trust certificates, | ||
| when you acquire your trust certificates, | ||
| whether the underlying securities guarantor exercises its option to redeem the junior subordinated debentures upon the occurrence of a Special Event, and | ||
| whether the call warrant holders exercise their optional rights to purchase outstanding trust certificates. |
Upon the occurrence and continuation of a Special
Event (as defined in the prospectus supplement
relating to the trust certificates), the underlying
securities guarantor will have the right, if certain
conditions are met, to redeem the junior subordinate
debentures. If the junior subordinated debenture
issuer redeems the junior subordinated debentures,
the underlying securities held by the trust will also
be redeemed. Because the junior subordinated
debenture issuer may have the right to redeem the
junior subordinated debentures early, we cannot
assure you that the trust will be able to hold the
underlying securities until their maturity date.
Although the call warrant holders are not obligated
to exercise the call warrants, the yield you will
realize on your trust certificates depends on whether
the call warrant holders exercise their call warrants
to purchase the trust certificates.
3
Prevailing interest rates at the time of an early
redemption or a call exercise may be lower than the
yield on your trust certificates. Therefore, you may
be unable to realize a comparable yield upon
reinvesting the funds you receive from an early
redemption or exercise of any call warrants. In
addition, if the prevailing market value of the trust
certificates exceeds the redemption price call
exercise price paid to you upon a redemption of the
underlying securities or the exercise of a call, you
will not be able to realize such excess.
YOU MAY NOT BE PAID IF THE ASSETS OF THE TRUST ARE
INSUFFICIENT
Currently, the trust has no significant assets other
than the underlying securities. If the underlying
securities are insufficient to make payments or
distributions on the trust certificates, no other
assets will be available for payment of the
deficiency.
YOU MAY NOT RECOVER THE WHOLE OF THE STATED AMOUNT OF
YOUR TRUST CERTIFICATES IF THE TRUST DISPOSES THE
UNDERLYING SECURITIES ON A DEFAULT BY THE UNDERLYING
SECURITIES ISSUER OR IN THE EVENT THE UNDERLYING
SECURITIES GUARANTOR CEASES FILING EXCHANGE ACT
REPORTS
If the underlying securities issuer or the underlying
securities guarantor defaults on its obligations
under the underlying securities or the underlying
securities guarantor ceases to file Exchange Act
reports, then the trust will either distribute the
underlying securities to the trust certificateholders
or dispose of them and distribute the proceeds to the
trust certificateholders. Your recovery in either of
those events may be limited by two factors:
| if a default occurs, the market value of the underlying securities may be adversely affected and the proceeds of their disposition may be lower than the aggregate stated amount of the trust certificates, and | ||
| in either event, any distribution of funds or underlying securities by the trust to the Class A and Class B trust certificateholders will be done in accordance with the allocation ratio as described in the applicable prospectus supplement relating to the trust certificates. The funds or aggregate principal amount of underlying securities you receive on that distribution may be less than the stated amount of your trust certificates. |
4
THE TRUSTEE WILL NOT MANAGE THE UNDERLYING SECURITIES
Except as described below, the trust will not dispose
of any underlying securities, even if an event occurs
that adversely affects the value of the underlying
securities or the junior subordinated debentures or
that adversely affects the underlying securities
issuer or the underlying securities guarantor. As
provided in the applicable trust agreement, the trust
will dispose of the underlying securities only if:
| there is a payment default on any underlying securities, | ||
| there is another type of default that accelerates the maturity of the underlying securities, or | ||
| the underlying securities guarantor ceases to file Exchange Act reports. |
Under the first circumstance listed above, the
trustee must sell the underlying securities on behalf
of the trust, even if adverse market conditions
exist. The trustee has no discretion to do otherwise.
If adverse market conditions do exist at the time of
the trustees sale of the underlying securities, you
may incur greater losses than if the trust continued
to hold the underlying securities.
THE TRUST CERTIFICATES ARE SUBJECT TO THE
CREDITWORTHINESS OF THE UNDERLYING SECURITIES
ISSUER AND THE UNDERLYING SECURITIES GUARANTOR
The trust certificates represent interests in
obligations of the underlying securities issuer and
the underlying securities guarantor. In particular,
the trust certificates will be subject to all the
risks associated with directly investing in both the
underlying securities issuers and the underlying
securities guarantors unsecured subordinated debt
obligations. None of the Declaration, guarantee,
junior subordinated debentures, underlying indenture
or the underlying securities place a limitation on
the amount of indebtedness that may be incurred by
the underlying securities issuer or the underlying
securities guarantor.
THE TRUSTS RIGHT TO DIRECT ACTION AGAINST THE
UNDERLYING SECURITIES GUARANTOR TO ENFORCE THE RIGHTS
OF THE JUNIOR SUBORDINATED DEBENTURES HOLDERS IS
LIMITED
If a debenture event of default occurs and is
continuing, then the holders of the underlying
securities would rely on, and in certain
circumstances could cause, the trustee of the
underlying securities issuer to enforce its rights as
a holder of the junior subordinated debentures and
the guarantee on behalf of the underlying securities
issuer against the underlying securities guarantor.
In addition, any registered holder of underlying
securities may institute a legal proceeding directly
against the underlying securities guarantor to
enforce its rights against the underlying securities
guarantor without first instituting any legal
proceeding against the underlying securities trustee
or any other person or entity.
5
THE UNDERLYING SECURITIES GUARANTOR HAS THE ABILITY
TO DEFER INTEREST PAYMENTS ON THE JUNIOR
SUBORDINATED DEBENTURES
The underlying securities guarantor can, on one or
more occasions, defer interest payments on the junior
subordinated debentures for up to 10 consecutive
semiannual interest periods, but not beyond the
maturity date of the junior subordinated debentures.
If the underlying securities guarantor defers
interest payments on the junior subordinated
debentures, the underlying securities issuer will
defer distributions on the underlying securities. If
the underlying securities issuer defers distributions
on the underlying securities, the trust will defer
distributions on the trust certificates during any
deferral period. No additional amounts will accrue on
the trust certificates or be owed to trust
certificateholders as a result of any delay, but any
additional amounts owed and paid by the underlying
securities issuer as a result of the delay will be
paid to the trust certificateholders.
Because the underlying securities guarantor has the
right to defer interest payments, the market price of
the underlying securities (which represent an
undivided beneficial interest in the junior
subordinated debentures) may be more volatile than
other similar securities where the issuer does not
have the right to defer interest payments.
IF THE UNDERLYING SECURITIES GUARANTOR EXERCISES ITS
OPTION TO DEFER INTEREST PAYMENTS ON THE JUNIOR
SUBORDINATED DEBENTURES, THE TRUST CERTIFICATEHOLDERS
MAY FACE ADVERSE TAX CONSEQUENCES
Should the underlying securities guarantor exercise
its right to defer any payment of interest on the
junior subordinated debentures, each trust
certificateholder will be required to accrue interest
income (as original issue discount) in respect of the
deferred stated interest allocable to its share of
the underlying securities for United States federal
income tax purposes. As a result, a trust
certificateholder, as a beneficial owner of a portion
of the underlying securities, would have to include
this amount in gross income for United States federal
income tax purposes prior to the receipt of any cash
distributions. In addition, the trust
certificateholder would not receive cash from the
underlying securities issuer related to this income
if the trust certificateholder disposes of the trust
certificates prior to the record date on which
distributions of these amounts are made. To the
extent the selling price is less than the trust
certificateholders adjusted tax basis (which will
include, in the form of original issue discount all
accrued but unpaid interest), the trust
certificateholder will recognize a capital loss.
Subject to limited exceptions, capital losses cannot
be applied to offset ordinary income for United
States federal income tax purposes.
6
THE PAYMENTS OWED TO THE TRUST CERTIFICATEHOLDERS
ARE UNSECURED OBLIGATIONS
In a liquidation, holders of the underlying
securities, including the trust, will be paid only
after holders of secured obligations of the
underlying securities guarantor. According to the
underlying securities prospectus, the junior
subordinated debentures are general unsecured
obligations of the underlying securities guarantor,
and will be subordinate and junior in right of
payment to all Senior Indebtedness to the extent
provided in the underlying indenture.
THE UNDERLYING SECURITIES GUARANTORS OBLIGATIONS
UNDER THE JUNIOR SUBORDINATED DEBENTURES AND THE
GUARANTEE IS SUBORDINATED
The obligations of the underlying securities
guarantor under the junior subordinated debentures,
the indenture and the guarantee will be:
| unsecured and rank subordinate and junior in right of payment to all existing and future senior indebtedness of the underlying securities guarantor. This means that the underlying securities guarantor can not make any payments of principal (including redemption payments) or interest on the junior subordinated debentures if it defaults on a payment on its Senior Indebtedness or the maturity of any of its Senior Indebtedness has been accelerated because of a default; | ||
| senior to common and preferred equity of the underlying securities guarantor; and | ||
| structurally subordinated to all existing and future liabilities and obligations of the underlying securities guarantors subsidiaries. |
The terms of the underlying securities, the junior
subordinated debentures and the guarantee place no
limitation on the amount of Senior Indebtedness that
the underlying securities guarantor may incur or on
the amount of liabilities and obligations of the
underlying securities guarantors subsidiaries.
THE TRUSTS RIGHT TO DIRECT ACTION AGAINST THE
UNDERLYING SECURITIES GUARANTOR FOR
PAYMENT IS LIMITED
The guarantee of the underlying securities guarantor
is subject to the provisions of the Trust Indenture
Act of 1939, as amended (the Trust Indenture Act).
The trustee of the junior subordinated debentures, in
addition to acting as indenture trustee under the
Indenture, will act as guarantee trustee under the
guarantee for the purposes of compliance with the
provisions of the Trust Indenture Act (the Guarantee
Trustee). The Guarantee Trustee will hold the
guarantee for the benefit of the underlying
securities holders.
7
Pursuant to the guarantee, the underlying securities
guarantor has guaranteed to the underlying securities
holders the payment of:
| any accumulated and unpaid distributions required to be paid on the underlying securities, to the extent the underlying securities issuer has funds available for payment; | ||
| the applicable redemption price of the underlying securities called for redemption, to the extent the underlying securities issuer has funds available for redemption; and | ||
| upon a voluntary or involuntary termination or liquidation of the underlying securities issuer (unless the junior subordinated debentures are distributed to holders of the underlying securities), the lesser of: |
| the aggregate of the liquidation amount and all accrued and unpaid distributions on the underlying securities to the date of the payment, to the extent the underlying securities issuer has funds available for payment, and | ||
| the amount of the underlying securities issuers assets remaining available for distribution to underlying securities holders upon the underlying securities issuers liquidation. |
The underlying securities guarantors obligation to
make payments under the Guarantee may be satisfied by
direct payment of the required amounts by the
underlying securities guarantor to the holders of the
underlying securities or by causing the underlying
securities issuer to pay such amounts to such
holders.
THE RATINGS OF THE TRUST CERTIFICATES MAY CHANGE
At the time of issuance, Moodys and/or S&P assigned
ratings to the trust certificates equivalent to the
ratings of the underlying securities as of the date
of the applicable prospectus supplement.
8
Any rating issued with respect to the trust
certificates is not a recommendation to purchase,
sell or hold a security. Ratings do not comment on
the market price of the trust certificates or their
suitability for a particular investor. We cannot
assure you that these ratings will remain for any
given period of time or that a ratings agency would
not revise or withdraw entirely the ratings if, in
its judgment, circumstances (including, without
limitation, the rating of the underlying securities)
merit. A revision or withdrawal of a rating may
adversely affect the market price of the trust
certificates.
THE JUNIOR SUBORDINATED DEBENTURES CAN BE
DISTRIBUTED IN LIQUIDATION OF THE UNDERLYING
SECURITIES ISSUER
At any time, the underlying securities guarantor will
have the right to terminate the underlying securities
issuer and cause the junior subordinated debentures
to be distributed to the underlying securities
holders. Such right is subject to the underlying
securities guarantor having received an opinion of
counsel to the effect that such distribution will not
be taxable event to holders of the underlying
securities. In addition, upon certain other events,
the underlying securities issuer may be liquidated
and the junior subordinated debentures and the
guarantee may be distributed to those holders.
Under current United States federal income tax law
and interpretations thereof and assuming, as
expected, that the underlying securities issuer is
treated as a grantor trust for United States federal
income tax purposes, the underlying securities
issuers distribution of the junior subordinated
debentures and the guarantee pursuant to a
liquidation of the underlying securities issuer will
not be a taxable event to the underlying securities
issuer or to beneficial owners of any underlying
securities, including the trust certificateholders.
If, however, the liquidation of the underlying
securities issuer were to occur because the
underlying securities issuer is subject to United
States federal income tax with respect to income
accrued or received on the junior subordinated
debentures as a result of the occurrence of a tax
event or otherwise, the distribution of junior
subordinated debentures and the guarantee to holders
of the underlying securities could be a taxable event
to the underlying securities issuer and the trust
certificateholders, and a trust certificateholder may
be required to recognize gain or loss on the
distribution.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2. PROPERTIES
None.
9
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. (REMOVED AND RESERVED)
PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
The Trust Certificates issued by PreferredPLUS Trust
Series ALL-1 are represented by one or more physical
certificates registered in the name of Cede & Co.,
the nominee of the Depository Trust Company. The
Trust Certificates are listed on the New York Stock
Exchange.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Not Applicable.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Not Applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The Registrant has procedures so as to provide
reasonable assurance that its future Exchange Act
filings will be filed within the applicable time
periods.
10
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Not Applicable.
ITEM 11. EXECUTIVE COMPENSATION
Not Applicable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
(a) | Securities Authorized For Issuance Under Equity Compensation Plans: None. | ||
(b) | Security Ownership Of Certain Beneficial Owners: None. | ||
(c) | Security Ownership Of Management: Not Applicable. | ||
(d) | Changes In Control: None. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
None.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Not Applicable.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements: Not Applicable.
(a)(2) Financial Statement Schedules: Not Applicable.
(a)(3) List of Exhibits
The following exhibits are filed as part of, and
incorporated by reference into, this Annual Report on
Form 10-K:
31.1. | Certification of the Vice President of Registrant dated March 28, 2011, pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the Registrants Annual Report on Form 10-K for the year ended December 31, 2010. | ||
99.1. | Trustees Annual Compliance Certificate dated March 4, 2011. | ||
99.2. | Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, dated March 21, 2011, Registrants Assertion on Compliance with PPLUS Minimum Servicing Standards dated March 21, 2011 and PPLUS Minimum Servicing Standards. | ||
99.3. | Report of KPMG LLP, Independent Registered Public Accounting Firm, dated March 2, 2011, The Bank of New York Mellons Assertion on Compliance with PPLUS Minimum Servicing Standards dated March 2, 2011 and PPLUS Minimum Servicing Standards. |
(b) Exhibits
The Registrant hereby files as part of this
Annual Report on Form 10-K the exhibits
listed in Item 15(a)(3) set forth above.
(c) Financial Statement Schedules
Not Applicable.
11
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, hereunto duly authorized.
MERRILL LYNCH DEPOSITOR, INC. |
||||
Date: March 28, 2011 | By: | /s/ John Marciano | ||
Name: | John Marciano | |||
Title: | Vice President |