PRICING SUPPLEMENT DATED DECEMBER 13, 2002 File No. 333-97937
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(To Prospectus Supplement and Rule 424(b)(3)
Prospectus dated September 25, 2002)
Pricing Supplement Number: 2273
Merrill Lynch & Co., Inc.
Merrill Lynch Extendible Monthly Securities
The floating rate notes described in this pricing supplement, which we
refer to as Merrill Lynch Extendible Monthly Securities (the "Notes"), will be
issued as a series of Merrill Lynch & Co., Inc.'s (the "Company") Medium-Term
Notes, Series B, Due Nine Months or More from Date of Issue. The Notes will
mature on the Initial Stated Maturity Date, unless the maturity of all or any
portion of the principal amount of the Notes is extended in accordance with
the procedures described below. In no event will the maturity of the Notes be
extended beyond the Final Stated Maturity Date. The Notes offered hereby have
terms and conditions identical to other Merrill Lynch Extendible Monthly
Securities that were issued by the Company on June 20, 2002 (the "Outstanding
Extendible Monthly Securities"). Interest payable on the Outstanding
Extendible Monthly Securities on the next interest payment date, January 11,
2003, will include interest accrued from and including December 11, 2002; and
the Notes offered hereby will be issued with interest payable from and
including December 11, 2002. The Notes offered hereby and the Outstanding
Extendible Monthly Securities will share the same CUSIP numbers, as described
below.
During the notice period relating to each election date, you may elect to
extend the maturity of all or any portion of the principal amount of your
Notes so that the maturity of your Notes will be extended to the date
occurring 366 calendar days from and including the 11th day of the next
succeeding month following such election date. However, if that 366th calendar
day is not a Business Day, the maturity of your Notes will be extended to the
immediately preceding Business Day. The election dates will be the 11th
calendar day of each month from January 2003 to June 2006 inclusive, whether
or not any such day is a Business Day.
You may elect to extend the maturity of all of your Notes or of any
portion thereof having a principal amount of $1,000 or any multiple of $1,000
in excess thereof. To make your election effective on any election date, you
must deliver a notice of election during the notice period for that election
date. The notice period for each election date will begin on the fifth
scheduled Business Day prior to the election date and end on the election
date; however, if that election date is not a Business Day, the notice period
will be extended to the following Business Day. Your notice of election must
be delivered to the Trustee for the Notes, through the normal clearing system
channels described in more detail below, no later than the close of business
in New York City time on the last Business Day in the notice period relating
to the applicable election date. Upon delivery to the Trustee of a notice of
election to extend the maturity of the Notes or any portion thereof during any
notice period, that election will be revocable during each day of such notice
period until 12:00 noon, New York City time, on the last Business Day in the
notice period relating to the applicable election date, at which time such
notice will become irrevocable.
If, with respect to any election date, you do not make an election to
extend the maturity of all or any portion of the principal amount of your
Notes, the principal amount of the Notes for which you have failed to make
such an election will become due and payable on the Initial Stated Maturity
Date, or any later date to which the maturity of your Notes has previously
been extended. The principal amount of the Notes for which such election is
not exercised will be represented by a note issued on the last Business Day of
the applicable notice period. The note so issued will have the same terms as
the Notes, except that it will not be extendible, will have a separate CUSIP
number and its maturity date will be the date that is 366 calendar days from
and including such election date or, if such 366th calendar day is not a
Business Day, the immediately preceding Business Day. The failure to elect to
extend the maturity of all or any portion of the Notes will be irrevocable and
will be binding upon any subsequent holder of such Notes.
The Notes will bear interest from December 11, 2002 until the principal
amount thereof is paid or made available for payment at a rate determined for
each Interest Reset Period by reference to the Interest Rate Basis, based on
the Index Maturity, plus the Spread applicable for the relevant Interest Reset
Date. We describe how floating rates are determined and calculated in the
section called "Interest-Floating Rate Notes" in the accompanying prospectus
supplement, subject to and as modified by the provisions described below.
The Notes will be issued in registered global form and will remain on
deposit with the Depositary for the Notes. Therefore, you must exercise the
option to extend the maturity of your Notes through the Depositary. To ensure
that the Depositary will receive timely notice of your election to extend the
maturity of all or a portion of your Notes, so that it can deliver notice of
your election to the Trustee prior to the close of business in New York City
time on the last Business Day in the notice period, you must instruct the
direct or indirect participant through which you hold an interest in the Notes
to notify the Depositary of your election to extend the maturity of your Notes
in accordance with the then applicable operating procedures of the Depositary.
The Depositary must receive any notice of election from its participants
no later than 12:00 noon (New York City time) on the last Business Day in the
notice period for any election date. Different firms have different deadlines
for accepting instructions from their customers. You should consult the direct
or indirect participant through which you hold an interest in the Notes to
ascertain the deadline for ensuring that timely notice will be delivered to
the Depositary. If the election date is not a Business Day, notice of your
election to extend the maturity date of your Notes must be delivered to the
Depositary by its participants no later than 12:00 noon (New York City time)
on the first Business Day following the election date.
The Outstanding Extendible Monthly Securities were issued in an aggregate
principal amount of $3,000,000,000. This issuance of the Notes will increase
the aggregate principal amount of Notes by $500,000,000. We may create and
issue additional notes with the same terms as the Notes offered hereby.
CAPITALIZED TERMS USED IN THIS PRICING SUPPLEMENT WHICH ARE DEFINED IN THE
PROSPECTUS SUPPLEMENT SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN THE
PROSPECTUS SUPPLEMENT.
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Original Issue Date: December 18, 2002
Initial Stated Maturity Date: January 11, 2004, or if such day is not a Business Day, the immediately
preceding Business Day.
Final Stated Maturity Date: July 11, 2007, or if such day is not a Business Day, the immediately preceding
Business Day.
Aggregate Principal Amount: $500,000,000
Issue Price: 100.00% of the Aggregate Principal Amount (plus accrued interest from December
11, 2002).
Interest Calculation: |X| Regular Floating Rate
|_| Inverse Floating Rate
|_| Floating Rate/Fixed Interest Rate
|_| Fixed Interest Rate
Day Count Convention: |X| Actual/360
|_| 30/360
|_| Actual/Actual
Interest Rate Basis: |X| LIBOR |_| Commercial Paper Rate
|_| CMT Rate |_| Eleventh District Cost of Funds Rate
|_| Prime Rate |_| CD Rate
|_| Federal Funds Rate |_| Other (See Attached)
|_| Treasury Rate
Designated CMT Page: Designated LIBOR Page:
CMT Moneyline Telerate Page: LIBOR Moneyline Telerate Page: 3750
LIBOR Reuters Page:
Spread: The table below indicates the applicable Spread for the Interest Reset Dates
occurring during each of the indicated periods.
For Interest Reset Dates occurring: Spread:
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From the Original Issue Date
to and including June 2003 Plus .05%
From and including July 2003 to
and including June 2004 Plus .125%
From and including July 2004 to
and including June 2005 Plus .15%
From and including July 2005 to
and including June 2006 Plus .20%
From and including July 2006 to
and including June 2007 Plus .25%
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Spread Multiplier: N/A
Index Maturity: One Month
LIBOR Currency: U.S. Dollars
LIBOR Currency: N/A
Minimum Interest Rate: N/A
Interest Payment Period: Monthly. See also "Interest Payment Dates."
Interest Payment Dates: The 11th day of each month, commencing January 11, 2003. From December 11,
2002 until the Initial Interest Reset Date, the Notes shall bear interest at
the Initial Interest Rate set forth below. The final interest payment date for
any Notes maturing prior to the Final Stated Maturity Date will be the relevant
maturity date, and interest for the final interest payment period will accrue
from and including the interest payment date in the month immediately preceding
such relevant maturity date to but excluding the maturity date.
Initial Interest Rate: 1.4725%.
Initial Interest Reset Date: January 11, 2003.
Interest Reset Dates: The 11th day of each month, commencing January 11, 2003.
Interest Reset Periods: The first interest reset period will be the period from and including January
11, 2003 to but excluding the immediately succeeding Interest Reset Date.
Thereafter, the interest reset periods will be the periods from and including
an Interest Reset Date to but excluding the immediately succeeding Interest
Reset Date; provided that the final interest reset period for any Notes
maturing prior to the Final Stated Maturity Date will be the period from and
including the Interest Reset Date in the month immediately preceding the
relevant maturity date of such Notes to the relevant maturity date.
Interest Determination Dates: Two London Banking Days prior to the Interest Reset Dates.
Election Dates and Notice The election date shall be the 11th calendar day of each month from January
Periods: 2003 to June 2006 inclusive, whether or not such day is a Business Day. The
notice period for each election date will begin on the fifth scheduled
Business Day prior to but not including the election date and end on the
election date; however, if that election date is not a Business Day, the
notice period will be extended to the following Business Day.
Form: The Notes are being issued in fully registered book-entry form.
Repayment at the Option
of the Holder: The Notes cannot be repaid prior to the relevant maturity date.
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Redemption at the Option of
the Company: The Notes cannot be redeemed prior to the relevant maturity date.
Original Issue Discount: N/A
Amortization Schedule: N/A
Calculation Agent: Merrill Lynch, Pierce, Fenner & Smith Incorporated
Trustee: JPMorgan Chase Bank
CUSIP No.: 590188 G8 5. New CUSIP numbers will be assigned to Notes maturing prior to the
Final Stated Maturity Date.
Pricing Supplement Dated: December 13, 2002
Plan of Distribution: The Notes are being purchased, severally and not jointly, by Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), ABN AMRO Incorporated and HSBC
Securities (USA) Inc. (collectively, the "Underwriters"), as principal,
pursuant to an agreement, dated December 13, 2002 (the "Agreement"), between
the Company and the Underwriters, in the respective amounts set forth below at
100% of their aggregate principal amount less an underwriting discount equal to
.25% of the principal amount of the Notes. MLPF&S is acting as the Lead
Underwriter.
Principal Amount
----------------
Underwriter of the Notes
----------- ------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $495,000,000
ABN AMRO Incorporated $2,500,000
HSBC Securities (USA) Inc. $2,500,000
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Total $500,000,000
Pursuant to the Agreement, the obligations of the Underwriters are subject to
certain conditions, and the Underwriters are committed to pay for all the
Notes if any are taken.
The Underwriters have advised the Company that they propose initially to
offer all or part of the Notes directly to the public at the Issue Price
listed above. After the initial public offering, the Issue Price may be
changed.
The Company has agreed to indemnify the Underwriters against and to
contribute toward certain liabilities, including liability under the
Securities Act of 1933, as amended.
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United States Federal Taxation:
The following discussion is based on the opinion of Sidley Austin Brown &
Wood LLP, tax counsel to the Company ("Tax Counsel").
An election to extend the maturity of all or any portion of the principal
amount of the Notes in accordance with the procedures described above should
not be a taxable event for U.S. federal income tax purposes. Tax Counsel has
reached this conclusion based, in part, upon the Treasury regulations
governing original issue discount on debt instruments (the "OID Regulations").
Pursuant to Treasury regulations governing modifications to the terms of
debt instruments (the "Modification Regulations"), the exercise of an option
by a holder of a debt instrument to defer any scheduled payment of principal
is a taxable event if, based on all the facts and circumstances, such deferral
is considered material under the Modification Regulations. The Modification
Regulations do not specifically address the unique features of the Notes
(including their economic equivalence to a five-year debt instrument
containing put options). However, under the OID Regulations, for purposes of
determining the yield and maturity of a debt instrument that provides the
holder with an unconditional option or options, exercisable on one or more
dates during the term of the debt instrument, that, if exercised, require
payments to be made on the debt instrument under an alternative payment
schedule or schedules (e.g., an option to extend the maturity of the debt
instrument), a holder is deemed to exercise or not exercise an option or
combination of options in a manner that maximizes the yield on the debt
instrument. Since the Spread will periodically increase during the term of the
Notes from an initial amount equal to .05% to an amount equal to .25% for
Interest Reset Dates occurring from and including July 11, 2006 to and
including June 11, 2007, under these rules, as of the Original Issue Date,
original holders of the Notes should be deemed to elect to extend the maturity
of all of the principal amount of the Notes to the Final Stated Maturity Date
in accordance with the procedures described above. Accordingly, under these
rules, the Final Stated Maturity Date should be treated as the maturity date
of the Notes. Although it is unclear how the OID Regulations should apply in
conjunction with the Modification Regulations to the Notes, Tax Counsel is of
the opinion that, based upon the OID Regulations, an election to extend the
maturity of all or any portion of the principal amount of the Notes in
accordance with the procedures described above should not be a taxable event
for U.S. federal income tax purposes. In addition, the Notes should not
constitute contingent payment debt instruments that would be subject to
certain Treasury regulations governing contingent payment obligations (the
"Contingent Payment Regulations").
Under the treatment described above, the Notes will be treated as having
been issued with de minimis original issue discount. Therefore, the Notes will
not constitute Discount Notes.
Prospective investors should note that no assurance can be given that the
IRS will accept, or that the courts will uphold, the characterization and the
tax treatment of the Notes described above. If the IRS were successful in
asserting that an election to extend the maturity of all or any portion of the
principal amount of the Notes is a taxable event for U.S. federal income tax
purposes, then you would be required to recognize any gain inherent in the
Notes at such time upon the exercise of such election. However, because the
Notes bear a variable interest rate that is reset monthly, the Company expects
that the amount of any gain recognized with respect to the Notes should not be
significant (but the amount of any such gain will depend upon all of the facts
and circumstances present at the time of the recognition event). Also, if the
IRS were successful in asserting that the Notes were subject to the Contingent
Payment Regulations, the timing and character of income thereon would be
affected. Among other things, you may be required to accrue original issue
discount income, subject to adjustments, at a "comparable yield" on the issue
price. Furthermore, any gain recognized with respect to the Notes would
generally be treated as ordinary income. However, because the Notes bear a
variable interest rate that is reset monthly, the Company expects that (i) the
accrual of income at the comparable yield should not significantly alter the
timing of income inclusion and (ii) the amount of any gain recognized with
respect to the Notes should not be significant (but the amount of any such
gain will depend upon all of the facts and circumstances present at the time
of the recognition event). The foregoing is a summary of certain of the
material U.S. federal income tax considerations applicable to an investment in
the
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Notes and is not to be construed as tax advice for investors. Prospective
investors should consult their tax advisor regarding the U.S. federal income
tax consequences of an investment in, and extending the maturity of, the
Notes.
Prospective investors should also consult the summary describing the
principal U.S. federal income tax consequences of the ownership and
disposition of the Notes contained in the section called "United States
Federal Income Taxation" in the accompanying prospectus supplement.
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