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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark One)
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
COMMISSION FILE NO.: 1-7182-10
MERRILL LYNCH PREFERRED CAPITAL TRUST V
(Exact name of Registrant as specified in its certificate of trust)
Delaware (State or other jurisdiction of incorporation or organization)
 
13-7140866 (I.R.S. Employer Identification No.)
4 World Financial Center New York, New York (Address of principal executive offices)
 
10080
(Zip Code)
Registrant’s telephone number, including area code: (212) 449-1000
COMMISSION FILE NO.: 1-7182-09
MERRILL LYNCH PREFERRED FUNDING V, L.P.
(Exact name of Registrant as specified in its certificate of limited partnership)
Delaware (State or other jurisdiction of incorporation or organization)
 
13-3983474 (I.R.S. Employer Identification No.)
4 World Financial Center New York, New York (Address of principal executive offices)
 
10080
(Zip Code)
Registrant’s telephone number, including area code: (212) 449-1000
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 þ No o
Indicate by check mark whether the Registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files). Yes þ No o
Indicate by check mark whether the Registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated filer þ
 
Smaller reporting company o
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
The Registrants meet the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and are therefore filing this Quarterly Report on Form 10-Q (the "Report") with a reduced disclosure format.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 






TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Exhibit 12
 Exhibit 31.1
 Exhibit 31.2
 Exhibit 32.1
 Exhibit 32.2
 Exhibit 101
 


2



PART I - FINANCIAL INFORMATION

ITEM 1.
 
FINANCIAL STATEMENTS (Unaudited)


MERRILL LYNCH PREFERRED CAPITAL TRUST V
CONDENSED BALANCE SHEETS (unaudited)
(dollars in thousands, except per security amounts)

 
 
March 31, 2012
 
December 31, 2011
ASSETS
 
 
 
 
Investment in affiliate partnership preferred securities
 
$
876,300

 
$
876,300

Total Assets
 
$
876,300

 
$
876,300

 
 
 
 
 
STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Preferred securities (7.28% Trust Originated Preferred Securities; 34,000,000 authorized, issued, and outstanding; $25 liquidation amount per security)
 
$
850,000

 
$
850,000

Common securities (7.28% Trust Common Securities; 1,052,000 authorized, issued, and outstanding; $25 liquidation amount per security)
 
26,300

 
26,300

Total Stockholders’ Equity
 
$
876,300

 
$
876,300

See Note to Condensed Financial Statements

MERRILL LYNCH PREFERRED CAPITAL TRUST V
CONDENSED STATEMENTS OF EARNINGS (unaudited)
(dollars in thousands)
 
 
FOR THE THREE MONTHS ENDED
 
 
March 31, 2012
 
March 31, 2011
EARNINGS
 
 
 
 
Interest on affiliate partnership preferred securities
 
$
15,949

 
$
15,949

See Note to Condensed Financial Statements

MERRILL LYNCH PREFERRED CAPITAL TRUST V
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)
(dollars in thousands)
 
 
FOR THE THREE MONTHS ENDED
 
 
 
March 31, 2012
 
March 31, 2011
 
 
 
 
 
PREFERRED SECURITIES
 
 
 
 
Balance, beginning and end of period
 
$
850,000

 
$
850,000

 
 
 
 
 
COMMON SECURITIES
 
 
 
 
Balance, beginning and end of period
 
26,300

 
26,300

 
 
 
 
 
UNDISTRIBUTED EARNINGS
 
 
 
 
Balance, beginning of period
 

 

Earnings
 
15,949

 
15,949

Distributions
 
(15,949
)
 
(15,949
)
Balance, end of period
 

 

Total Stockholders’ Equity
 
$
876,300

 
$
876,300

See Note to Condensed Financial Statements

MERRILL LYNCH PREFERRED CAPITAL TRUST V
CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
(dollars in thousands)
 
 
FOR THE THREE MONTHS ENDED
 
 
March 31, 2012
 
March 31, 2011
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Earnings
 
$
15,949

 
$
15,949

Cash provided by operating activities
 
15,949

 
15,949

 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Distributions
 
(15,949
)
 
(15,949
)
Cash used for financing activities
 
(15,949
)
 
(15,949
)
 
 
 
 
 
NET CHANGE IN CASH
 

 

CASH, BEGINNING OF PERIOD
 

 

CASH, END OF PERIOD
 
$

 
$

See Note to Condensed Financial Statements

MERRILL LYNCH PREFERRED CAPITAL TRUST V
NOTE TO CONDENSED FINANCIAL STATEMENTS (unaudited)
March 31, 2012
Merrill Lynch Preferred Capital Trust V (the “Trust”) is a statutory business trust formed under the Delaware Business Trust Act, as amended. Merrill Lynch & Co., Inc. (the “Company”) is the sole owner of the Trust common securities.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For a complete discussion of significant accounting policies, refer to the audited financial statements included in the Trust's Annual Report on Form 10-K for the year ended December 31, 2011.
BASIS OF PRESENTATION

These unaudited condensed financial statements should be read in conjunction with the audited financial statements included in the Annual Report on Form 10-K of the Trust for the year ended December 31, 2011. The interim condensed financial statements for the three month periods are unaudited; however, all adjustments necessary for a fair presentation of the condensed financial statements have been included.
INVESTMENTS

The Trust's investment in Merrill Lynch Preferred Funding V, L.P. (the "Partnership") Preferred Securities represents a limited partnership interest in the Partnership and is recorded at cost. Income on the Partnership Preferred Securities is accrued when earned.

MERRILL LYNCH PREFERRED FUNDING V, L.P.
CONDENSED BALANCE SHEETS (unaudited)
(dollars in thousands)
 
 
March 31, 2012
 
December 31, 2011
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
Affiliate debentures
 
$
1,020,640

 
$
1,020,640

U.S. Government and agencies
 
10,314

 
10,312

Total investments
 
1,030,954

 
1,030,952

Total Assets
 
$
1,030,954

 
$
1,030,952

 
 
 
 
 
PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
Limited partnership interest
 
$
876,300

 
$
876,300

General partnership interest
 
154,654

 
154,652

Total Partners’ Capital
 
$
1,030,954

 
$
1,030,952

See Note to Condensed Financial Statements

MERRILL LYNCH PREFERRED FUNDING V, L.P.
CONDENSED STATEMENTS OF EARNINGS (unaudited)
(dollars in thousands)
 
 
FOR THE THREE MONTHS ENDED
 
 
March 31, 2012
 
March 31, 2011
 
 
 
 
 
EARNINGS
 
 
 
 
Interest income:
 
 
 
 
Affiliate debentures
 
$
18,576

 
$
18,576

U.S. Government and agencies
 
2

 
6

Earnings
 
$
18,578

 
$
18,582

See Note to Condensed Financial Statements

MERRILL LYNCH PREFERRED FUNDING V, L.P.
CONDENSED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (unaudited)
(dollars in thousands)
 
 
FOR THE THREE MONTHS ENDED
 
 
March 31, 2012
 
March 31, 2011
 
 
 
 
 
LIMITED PARTNER’S CAPITAL
 
 
 
 
Balance, beginning of period
 
$
876,300

 
$
876,300

Earnings allocated to limited partner
 
15,949

 
15,949

Distributions
 
(15,949
)
 
(15,949
)
Balance, end of period
 
876,300

 
876,300

 
 
 
 
 
GENERAL PARTNER’S CAPITAL
 
 
 
 
Balance, beginning of period
 
154,652

 
154,656

Earnings allocated to general partner
 
2,629

 
2,633

Distributions
 
(2,627
)
 
(2,627
)
Balance, end of period
 
154,654

 
154,662

TOTAL PARTNERS’ CAPITAL
 
$
1,030,954

 
$
1,030,962

See Note to Condensed Financial Statements

MERRILL LYNCH PREFERRED FUNDING V, L.P.
CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
(dollars in thousands)
 
 
FOR THE THREE MONTHS ENDED
 
 
March 31, 2012
 
March 31, 2011
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Earnings
 
$
18,578

 
$
18,582

Accretion of interest on securities issued by U.S. Government and agencies
 
(2
)
 
(6
)
Cash provided by operating activities
 
18,576

 
18,576

 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Purchases of investment securities
 

 

Maturities of investment securities
 

 

Cash provided by investing activities
 

 

 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Distributions to limited partner
 
(15,949
)
 
(15,949
)
Distributions to general partner
 
(2,627
)
 
(2,627
)
Cash used for financing activities
 
(18,576
)
 
(18,576
)
 
 
 
 
 
NET CHANGE IN CASH
 

 

 
 
 
 
 
CASH, BEGINNING OF PERIOD
 

 

CASH, END OF PERIOD
 
$

 
$

See Note to Condensed Financial Statements


MERRILL LYNCH PREFERRED FUNDING V, L.P.
NOTE TO CONDENSED FINANCIAL STATEMENTS (unaudited)
March 31, 2012
Merrill Lynch Preferred Funding V, L.P. (the “Partnership”) is a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act, as amended. Merrill Lynch & Co. Inc. (the “Company”) is the sole general partner of the Partnership.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For a complete discussion of significant accounting policies, refer to the audited financial statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2011.
BASIS OF PRESENTATION

These unaudited condensed financial statements should be read in conjunction with the audited financial statements included in the Annual Report on Form 10-K of the Partnership for the year ended December 31, 2011. The interim condensed financial statements for the three month periods are unaudited; however, all adjustments necessary for a fair presentation of the condensed financial statements have been included.
INVESTMENTS
The Partnership’s investment in affiliate debentures is recorded at cost. Its investment in U.S. Government and agency securities is recorded at accreted cost and matures within one year. At March 31, 2012, the estimated fair value of the investment in affiliate debentures was approximately $1.1 billion, which is classified as Level 2 in the fair value hierarchy per Accounting Standards Codification 820, Fair Value Measurement and Disclosures. This fair value was estimated based on current market interest rates and credit spreads for the Company's debt with similar terms and maturities. At March 31, 2012, the fair value of the investment in U.S. Government and agency securities approximated its carrying value.


3



ITEM 2.
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

No disclosure is required for this Item pursuant to General Instruction H of Form 10-Q. There were no material changes in the amount of revenue and expense items between the most recent calendar year-to-date period presented and the corresponding period in the preceding year.

ITEM 3.
 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No disclosure is required for this Item pursuant to General Instruction H of Form 10-Q.

ITEM 4.
 
CONTROLS AND PROCEDURES
The Trust

The person who functions as the equivalent of the Chief Executive Officer and the Chief Financial Officer of the Trust has evaluated the effectiveness of the Trust's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this Form 10-Q. Based on that evaluation, the person who functions as the equivalent of the Chief Executive Officer and the Chief Financial Officer of the Trust has concluded that the Trust's disclosure controls and procedures are effective as of the end of the period covered by this report, in recording, processing, summarizing and reporting information required to be disclosed by the Trust in reports that it files or submits under the Exchange Act, within the time periods specified in the Securities and Exchange Commission's ("SEC") rules and forms.
 
In addition, no change in the Trust's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the three months ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.
The Partnership

The person who functions as the equivalent of the Chief Executive Officer and the Chief Financial Officer of the Partnership has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Based on that evaluation, the person who functions as the equivalent of the Chief Executive Officer and the Chief Financial Officer of the Partnership has concluded that the Partnership's disclosure controls and procedures are effective as of the end of the period covered by this report, in recording, processing, summarizing and reporting information required to be disclosed by the Partnership in reports that it files or submits under the Exchange Act, within the time periods specified in the SEC's rules and forms.

In addition, no change in the Partnership's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the three months ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting.

4



PART II - OTHER INFORMATION

ITEM 1A.
 
RISK FACTORS

There are no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in the Trust's and the Partnership's Annual Report on Form 10-K for the year ended December 31, 2011.

ITEM 6.
 
EXHIBITS
An exhibit index has been filed as part of this Report and is incorporated herein by reference.


5



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this Report to be signed on their behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
MERRILL LYNCH PREFERRED CAPITAL TRUST V*
 
 
By:  
/s/ ANGELA C. JONES 
 
 
Name:  
Angela C. Jones
 
 
Title:  
Regular Trustee 

 
 
 
 
 
MERRILL LYNCH PREFERRED FUNDING V, L.P.
 
By: MERRILL LYNCH & CO., INC., as General Partner
 
By:  
/s/ PETER D. TAUBE
 
 
Name:  
Peter D. Taube
 
 
Title:  
Chief Accounting Officer and Controller 
 
 
 
Merrill Lynch & Co., Inc.

Date: May 11, 2012

*
 
There is no principal executive officer(s), principal financial officer, controller, principal accounting officer or board of directors of the Registrant. The Trustees of the Trust (which include the Regular Trustees, the Property Trustee and the Delaware Trustee) together exercise all powers and perform all functions with respect to the Trust.

 

6



INDEX TO EXHIBITS
EXHIBITS
 
 
12

 
Statement re: Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Securities Distributions (unaudited).(1)
 

 
 
31.1

 
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)
 

 
 
31.2

 
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)
 

 
 
32.1

 
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(1)
 

 
 
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)
 

 
 
101

 
The following materials from Merrill Lynch Preferred Capital Trust V and Merrill Lynch Preferred Funding V, L.P. Quarterly Reports on Form 10-Q for the three months ended March 31, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Balance Sheets, (ii) the Condensed Statements of Earnings, (iii) the Condensed Statements of Changes in Stockholders' Equity, (iv) the Condensed Statements of Cash Flows, and (v) the Note to Condensed Financial Statements, tagged as blocks of text.(1)(2)
 
 
(1) Filed herewith.
 
 
(2) These interactive data files shall not be deemed filed for purposes of Section 11or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act 1934, as amended, or otherwise subject to liability under those sections.

7