UNITED STATES
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
|
|
|
For the fiscal year ended:
|
|
Commission file number: |
December 31, 2013
|
|
001-31409 |
MERRILL LYNCH DEPOSITOR, INC.
(ON BEHALF OF PREFERREDPLUS TRUST SERIES VER-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, 4th FL STRUCTURED CREDIT TRADING
NEW YORK, NEW YORK
(Address of principal
executive offices) |
|
10036
(Zip Code) |
Registrants telephone number, including area code: (646) 855-6745
Securities registered pursuant to Section 12(b) of the Act:
PreferredPLUS Trust Certificates Series VER-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
PART I
ITEM 1. BUSINESS
For information with respect to the underlying securities held
by PreferredPLUS Trust Series VER-1, please refer to Verizon
Communications Inc.s (Commission file number 001-08606)
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, N.E., 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, N.E., 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 the underlying securities
support provider has filed electronically with the SEC.
Although we have no reason to believe the information
concerning the support agreement and the underlying securities
or the underlying securities support provider and the
underlying securities issuer contained in the underlying
securities support providers 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 support
provider and underlying securities issuer (including, without
limitation, no investigation as to their respective financial
condition or creditworthiness) or of the underlying securities
and support agreement has been made. You should obtain and
evaluate the same information concerning the underlying
securities issuer and the underlying securities support
provider 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 support provider. There can be no
assurance that events affecting the underlying securities and
support agreement or the underlying securities issuer and
underlying securities support provider 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 support provider may file in its 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 PRIOR TO
THE STATED MATURITY DATE, 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, |
|
|
|
|
you acquire your trust certificates, |
|
|
|
|
the underlying securities issuer exercises its option to
redeem the underlying securities, and |
|
|
|
|
whether the call warrant holders exercise their optional
rights to purchase outstanding trust certificates. |
The underlying securities issuer has the right to redeem the
underlying securities at its option. Because the underlying
securities issuer has the right to redeem the underlying
securities 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. 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 or 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.
3
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.
As a holding company, the underlying securities support
providers assets consist primarily of equity in its
subsidiaries. As a result, the ability of the underlying
securities support provider to make payments on the underlying
securities depends upon its receipt of dividends, loan payments
and other funds from its subsidiaries. In no event will the
holders of the underlying securities have recourse to or
against the stock or assets of the underlying securities
support provider or
any operating telephone company which may from time to time be
owned directly or indirectly by the underlying securities
support provider. In addition, if any of the underlying
securities support providers subsidiaries becomes insolvent,
the direct creditors of that subsidiary will have a prior claim
on its assets, and the rights of the underlying securities
support provider and the rights of the underlying securities
support providers creditors, including the trusts rights as a
holder of the underlying securities, will be subject to that
prior claim, unless the underlying securities support provider
is also a direct creditor of that subsidiary. In addition,
various statutes and regulations restrict some of the
underlying securities support providers subsidiaries from
paying dividends or making loans or advances to the underlying
securities support provider. These restrictions could prevent
those subsidiaries from paying the cash to the underlying
securities support provider that the underlying securities
support provider may need in order to pay the trust.
YOU MAY NOT RECOVER THE WHOLE OF THE STATED AMOUNT OF YOUR
TRUST CERTIFICATES IF THE TRUST DISPOSES OF THE UNDERLYING
SECURITIES ON A DEFAULT BY THE UNDERLYING SECURITIES ISSUER OR
THE UNDERLYING SECURITIES SUPPORT PROVIDER OR IN THE EVENT THE
UNDERLYING SECURITIES SUPPORT PROVIDER CEASES FILING EXCHANGE
ACT REPORTS
If the underlying securities issuer or the underlying
securities support provider defaults on its obligations under
the underlying securities or the underlying securities support
provider 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:
4
|
|
|
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 or present value (if applicable) of the trust
certificates; and |
|
|
|
|
either event, any distribution of funds or underlying
securities by the trust to the 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 or present
value (if applicable) of your trust certificates. |
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 that
adversely affects the underlying securities issuer or the
underlying securities support provider. 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 its underlying securities, or |
|
|
|
|
the underlying securities support provider 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
SUPPORT PROVIDER
The trust certificates represent interests in obligations of
the underlying securities issuer and the underlying securities
support provider. 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 support providers unsecured subordinated debt
obligations. None of the underlying indenture, the support
agreement or the underlying securities places a limitation on
the amount of indebtedness that may be incurred by the
underlying securities issuer or the underlying securities
support provider.
5
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 issuer or the
underlying securities support provider. According to the
underlying securities prospectus, the underlying securities are
unsecured and will rank pari passu with all other unsecured and
unsubordinated debt of the underlying securities issuer.
However, the underlying indenture provides that the underlying
securities issuer will not mortgage, pledge or otherwise
subject to any lien (with certain exceptions), the whole or any
part of any property or assets now owned by or acquired by it,
unless the underlying securities issuer shall cause the
underlying securities to be secured equally and ratably with
(or, at the underlying securities issuers option, prior to)
any indebtedness secured thereby.
THE TRUSTS RIGHT TO DIRECT ACTION AGAINST THE UNDERLYING
SECURITIES SUPPORT PROVIDER IS LIMITED
Pursuant to the support agreement, the underlying securities
support provider has guaranteed to provide the underlying
securities issuer with sufficient funds to maintain a positive
net worth and to meet any obligation to pay when due interest,
principal and premium, if any, underlying securities.
In the event of any default in the payment of any such
obligation by the underlying securities issuer, any holder of
the underlying securities may proceed directly against the
underlying securities support provider. However, the support
agreement provides that no holder of any of the underlying
securities shall have recourse to or against the stock or
assets of the underlying securities support provider or any of
its subsidiaries that are operating telephone companies.
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.
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.
6
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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
VER-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.
7
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.
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.
8
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 24, 2014, 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, 2013. |
|
|
99.1. |
|
Trustees Annual Compliance Certificate
dated February 20, 2014. |
|
|
99.2. |
|
Report of PricewaterhouseCoopers LLP, Independent Registered Public
Accounting Firm, dated March 21, 2014, Registrants Assertion
on Compliance with PPLUS Minimum Servicing Standards dated March 21,
2014 and PPLUS Minimum Servicing Standards. |
|
|
99.3. |
|
Report of KPMG LLP, Independent
Registered Public Accounting Firm, dated
January 28, 2014, The Bank of New
York Mellons Assertion on Compliance with
PPLUS Minimum Servicing Standards dated
January 28, 2014 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.
9
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 27, 2014 |
By: |
/s/
John Marciano |
|
|
|
Name: |
John Marciano |
|
|
|
Title: |
Vice President |
|