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 DECEMBER 31, 2005
0-17202
(Commission file number)
Government Trust 1-D
(Exact name of registrant as specified in its charter)
Illinois | 36-6915817 |
(State of organization) | (IRS Employer Identification No.) |
| |
J.P. Morgan Trust Company, N.A. (formerly Bank One Trust Company, N.A.), Trustee 227 West Monroe Street | |
Suite 2600, Chicago, Illinois | 60606 |
(Address of principal executive offices) | (Zip Code) |
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(312) 267-5071
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) or Section 12(g) of the Act: NONE |
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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 | x | |
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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 | x | |
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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 | x | | No | o |
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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 registrant’s 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 |
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See |
definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one): |
Large accelerated filer | o | | Accelerated filer | o | | Non-accelerated filer | x | |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |
Yes | o | | No | x | |
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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 registrant’s most recently completed second fiscal quarter: NOT APPLICABLE |
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Indicate the number of shares outstanding of each of registrant’s classes of common stock, as of the last practical date: |
NOT APPLICABLE |
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Document Incorporated by Reference: NONE |
Part I
NONE
Item 4. Submissions of Matters to a Vote of Security Holders:
NONE
Part II
Item 5. Market for Registrant’s common Equity and Related Stockholder Matters
Certificate holders as of December 31, 2005, Trust 1-D: 1,495
Item 9. Charges and Disagreements with Accountants on Accounting and Financial Disclosure
NONE
Item 9A. Evaluation of Disclosure Controls and Procedures
| As indicated in the certifications in Exhibit 31 of this report, the Trustee has evaluated the Trust's disclosure controls and procedures as of December 31, 2005. Based on that evaluation, the Trustee concluded that the Trust's disclosure controls and procedures are effective in ensuring that material information required to be in this annual report is made known to it on a timely basis. |
Part III
Item 13. Certain Relationships and Related Transactions
NONE
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
The following documents are filed as part of this annual report
| 1. | The information presented in each semi annual report |
| 2. | The report of the independent registered public accounting firm regarding the annual audit of the financial statements of the Trust required under the Declaration of Trust stating the financial statements are presented in accordance with accounting principles generally accepted in the United States of America. |
31 – Certification by Trustee pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 – Certification by Trustee pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, J.P. Morgan Trust Company, N.A. (formerly Bank One Trust Company, N.A.) has duly caused this report to be signed for the registrant trust by a duly authorized signatory of the Trustee.
| |
| GOVERNMENT TRUST 1-D, |
| J.P. Morgan Trust Company, N.A. (formerly Bank One Trust |
| Company, N.A.), not in its individual capacity but solely as Trustee on behalf of the Trust 1-D. |
| |
| |
| |
| By: | | |
| | Joseph J. Morand, |
| | Vice President |
| |
| |
Date: March 30, 2006
REPORT TO HOLDERS OF GOVERNMENT TRUST
May 15, 2005
To The Holders of
Government Trust Certificates
Zero Coupon Class 1-D
In accordance with Section 4.1 of the Declaration of Trust ("Trust"), J.P. Morgan Trust Company, N.A. (formerly Bank One Trust Company, N.A.), as Trustee and not in its individual capacity ("Trustee"), hereby provides the holders of the above-mentioned certificates this Semi-Annual Report relating to the May 15, 2005 Certificate Payment Date.
Any capitalized terms used herein shall have the meaning assigned to them in the Trust.
1. | The aggregate dollar amount distributed to holders of Class 1-D Certificates: $79,271,104.25. |
2. | The Principal Balance of the Class 1-D Note after the May 3, 2005 Note Payment Date: $824,794,000.00. |
3. | The Deficient amount of the Note Payment: $-0- |
Neither a delinquency in payment under any of the Notes nor an Event of Default has occurred and is continuing.
I, Vanessa F. Williams, a Responsible Officer of the Trustee, to the best of my knowledge and belief, certify that this Semi-annual Report is complete and accurate.
| | |
| Trust Officer |
| For J.P. Morgan Trust Company, N.A. |
| (formerly Bank One Trust Company, N.A.), |
| as Trustee and not in its individual capacity. |
| |
REPORT TO HOLDERS OF GOVERNMENT TRUST
November 15, 2005
To The Holders of
Government Trust Certificates
Zero Coupon Class 1-D
In accordance with Section 4.1 of the Declaration of Trust ("Trust"), J.P. Morgan Trust Company, N.A. (formerly Bank One Trust Company, N.A.), as Trustee and not in its individual capacity ("Trustee"), hereby provides the holders of the above-mentioned certificates this Semi-Annual Report relating to the November 15, 2005 Certificate Payment Date.
Any capitalized terms used herein shall have the meaning assigned to them in the Trust.
1. | The aggregate dollar amount distributed to holders of Class 1-D Certificates: $74,108,157.88. |
2. | The Principal Balance of the Class 1-D Note after the May 3, 2005 Note Payment Date: $790,843,000.00. |
3. | The Deficient amount of the Note Payment: $-0- |
Neither a delinquency in payment under any of the Notes nor an Event of Default has occurred and is continuing.
I, Vanessa F. Williams, a Responsible Officer of the Trustee, to the best of my knowledge and belief, certify that this Semi-annual Report is complete and accurate.
| | |
| Trust Officer |
| For J.P. Morgan Trust Company, N.A. |
| (formerly Bank One Trust Company, N.A.), |
| as Trustee and not in its individual capacity. |
| |
GOVERNMENT TRUST 1-D
Financial Statements as of and for the
Year Ended December 31, 2005 and
Report of Independent Registered Public
Accounting Firm
Deloitte. | Deloitte & Touche LLP Two World Financial Center New York, NY 10281-1414 USA Tel: +1 212 436 2000 Fax: +1 212 436 5000 www.deloitte.com |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Government Trust 1-D
We have audited the accompanying balance sheet of Government Trust 1-D (the "Trust") as of December 31, 2005, and the related statements of income, cash flows and changes in Trust balance for the year then ended. 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 audit.
We conducted our audit 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 audit 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 control 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. Our procedures included confirmation of the securities held by the Depository as of December 31, 2005 for the account of the Government of Israel, for the purpose described in Note 4 of the notes to financial statements, by correspondence with the Depository. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Government Trust 1-D at December 31, 2005, the results of its operations, cash flows and changes in Trust balance for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
March 15, 2006
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, NY
GOVERNMENT TRUST 1-D | | |
| | |
BALANCE SHEET | | |
AS OF DECEMBER 31, 2005 | | |
| | |
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| | |
ASSETS | | |
| | |
| | |
LOAN NOTE RECEIVABLE—At amortized cost, | | |
inclusive of unamortized premium of $3,796,178 | $ | 794,639,178 |
| | |
ACCRUED INTEREST RECEIVABLE | | 12,416,456 |
| | |
TOTAL | $ | 807,055,634 |
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LIABILITIES AND TRUST BALANCE | | |
| | |
| | |
ACCRUED EXPENSES PAYABLE | $ | 9,556 |
| | |
TRUST BALANCE—Comprised of owners’ | | |
equity in Government Trust Certificates | | 807,046,078 |
| | |
TOTAL | $ | 807,055,634 |
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| | |
| | |
See notes to financial statements. | | |
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GOVERNMENT TRUST 1-D | | |
| | |
STATEMENT OF INCOME | | |
FOR THE YEAR ENDED DECEMBER 31, 2005 | | |
| | |
| | |
| | |
INTEREST INCOME ON THE LOAN NOTE | $ | 80,066,594 |
| | |
TRUSTEE FEES AND OTHER EXPENSES | | (62,397) |
| | |
NET INCOME | $ | 80,004,197 |
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| | |
| | |
See notes to financial statements. | | |
GOVERNMENT TRUST 1-D | | |
| | |
STATEMENT OF CASH FLOWS | | |
FOR THE YEAR ENDED DECEMBER 31, 2005 | | |
| | |
| | |
| | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | |
| Principal and interest received on the Loan Note | $ | 153,442,520 |
| Trustee fees and other expenses paid | | (63,258) |
| | |
| Net cash provided by operating activities | | 153,379,262 |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | |
| Distributions to certificate owners | | (153,379,262) |
| | |
NET INCREASE IN CASH | | - |
| | |
CASH BALANCE—Beginning of year | | - |
| | |
CASH BALANCE—End of year | $ | - |
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| | |
| | |
Reconciliation of net income to net cash provided by operating activities: | | |
| Net income | $ | 80,004,197 |
| Amortization of premium on Loan Note receivable | | 1,008,298 |
| Decrease in Loan Note receivable | | 71,249,000 |
| Decrease in accrued interest receivable | | 1,118,628 |
| Decrease in accrued expenses | | (861) |
| Net cash provided by operating activities | $ | 153,379,262 |
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| | |
See notes to financial statements. | | |
| | |
| | | | |
GOVERNMENT TRUST 1-D | |
| |
STATEMENT OF CHANGES IN TRUST BALANCE | |
FOR THE YEAR ENDED DECEMBER 31, 2005 | |
Trust Balance January 1, 2005 | | Net Income | | Distributions to Certificate Owners | | Trust Balance, December 31, 2005 |
| | | | | | |
$ 880,421,143 | | $ 80,004,197 | | $ (153,379,262) | | $ 807,046,078 |
| | | | | | | | |
See notes to financial statements.
GOVERNMENT TRUST 1-D
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2005
1. | ORGANIZATION AND OPERATIONS |
Government Trust 1-D (the “Trust”) is a limited purpose trust established under the laws of the state of Illinois pursuant to a Declaration of Trust (the “Declaration”) between the Trust and J.P. Morgan Trust Company, N.A. (formerly, Bank One Trust Company, N.A., formerly, First National Bank of Chicago), as Trustee (the “Trustee”). The Trust was created for the sole purpose of the issuance and sale of a single class of Zero Coupon Certificates (the “Certificates”). The assets of the Trust consist of a Promissory Note (a “Loan Note”) from the Government of Israel (“Israel”). The Loan Note is backed by a full faith and credit guaranty (the “Guaranty”) issued by the United States of America, acting through the Defense Security Assistance Agency of the Department of Defense (the “DSA”), of the due and punctual payment of 90% of all payments of principal and interest due on the Loan Note (the “Guaranteed Portion”) and a security interest in certain collateral, consisting of non-callable securities issued or guaranteed by the United States Government, sufficient to pay the remaining 10% of all payments of principal and interest due on the Loan Note (the “Unguaranteed Secured Portion”). The Loan Note and Certificates will not be subject to prepayment or acceleration.
The Loan Note in the original principal amount of $1,300,000,000 evidences a loan made by the Trust to Israel subject to the terms and conditions of a Loan Agreement (the “Loan Agreement”) dated as of September 29, 1988 between the Trust and Israel. The Loan Note is carried at amortized cost on the accompanying Balance Sheet because of the Trust’s intent and ability to hold the Loan Note to maturity. The proceeds from the Loan Note were used to prepay certain loans made to Israel from the Federal Financing Bank. Semiannual payments of interest at an annual rate of 9.7450% are due on the Loan Note on each May 3 and November 3 (each a “Note Payment Date”). On the May 3, 2005 and November 3, 2005 Note Payment Dates, Israel made its scheduled payments of principal on the Loan Note in the amounts of $37,298,000 and $33,951,000, respectively. Scheduled principal payments are due on each Note Payment Date as follows:
Payment | | Principal | | Payment | | Principal |
Date | | Payment | | Date | | Payment |
| | | | | | |
May 3, 2006 | | $33,951,000 | | May 3, 2010 | | $41,800,000 |
November 3, 2006 | | 39,761,000 | | November 3, 2010 | | 47,368,000 |
May 3, 2007 | | 40,051,000 | | May 3, 2011 | | 47,368,000 |
November 3, 2007 | | 67,844,000 | | November 3, 2011 | | 29,248,000 |
May 3, 2008 | | 89,940,000 | | May 3, 2012 | | 22,773,000 |
November 3, 2008 | | 93,710,000 | | November 3, 2012 | | 16,877,000 |
May 3, 2009 | | 92,701,000 | | May 3, 2013 | | 16,877,000 |
November 3, 2009 | | 93,710,000 | | November 3, 2013 | | 16,864,000 |
The Government of the United States, acting through the DSA, has agreed to guarantee the repayment of the Guaranteed Portion due to the Trust under the Loan Note. Israel has agreed to pledge certain collateral as security for the repayment of the Unguaranteed Secured Portion, as more fully described in Note 4. The estimated fair value of the Loan Note approximates the fair value of the Certificates. The estimated fair value of the Certificates at December 31, 2005 was approximately $926,565,000. The estimate of the fair value of the Certificates is based upon the present values of the cash flows using risk-adjusted spreads to the U.S. Treasury curve.
3. | THE ZERO COUPON CERTIFICATES |
On September 29, 1988, the Trust issued 51 separate series of Certificates, Class 1-D. Thirty-five of such series of Certificates matured prior to December 31, 2005. Each of the remaining series of Certificates will mature on one of the semiannual certificate payment dates from May 15, 2006 to November 15, 2013 (each, a “Maturity Date”). Scheduled distributions are due on the Maturity Dates as follows:
Maturity | | Distribution | | Maturity | | Distribution |
Date | | Amount | | Date | | Amount |
| | | | | | |
May 15, 2006 | | $ 72,455,169 | | May 15, 2010 | | $53,444,833 |
November 15, 2006 | | 76,612,179 | | November 15, 2010 | | 56,977,695 |
May 15, 2007 | | 74,966,316 | | May 15, 2011 | | 54,671,466 |
November 15, 2007 | | 100,809,333 | | November 15, 2011 | | 34,245,236 |
May 15, 2008 | | 119,602,178 | | May 15, 2012 | | 26,346,224 |
November 15, 2008 | | 118,993,224 | | November 15, 2012 | | 19,341,464 |
May 15, 2009 | | 113,421,718 | | May 15, 2013 | | 18,519,765 |
November 15, 2009 | | 109,917,338 | | November 15, 2013 | | 17,685,066 |
Each of the Certificates evidences an undivided fractional interest in the Trust, and represents the right to receive a portion of the semiannual payments due on the Loan Note held by the Trust.
In accordance with the Collateral Depository Agreement (the “Depository Agreement”) between Israel, the Trustee, and JPMorgan Chase Bank, NA, as depository (the “Depository”), and in order to provide security for the payment of the Unguaranteed Secured Portion, Israel has pledged certain collateral, consisting of non-callable securities issued or guaranteed by the United States Government (together with the proceeds thereof, the “Collateral”). The Collateral is of such amounts and has such payment dates as to enable the Trustee to receive on or immediately prior to each semiannual Maturity Date an amount sufficient to pay the Unguaranteed Secured Portion if timely payment on the Loan Note has not been received by the related Note Payment Date. All of the Collateral was deposited with the Depository on the date that the loans evidenced by the Loan Note were made by the Trust to Israel.
Pursuant to the Declaration, the Trustee established a separate trust account for the Trust. All payments received with respect to the Loan Notes, the Guaranty and any relevant Collateral are deposited in the trust account for the benefit of the holders of the Certificates after deducting fees of
the Trustee and any additional expenses of the Trust. Any excess funds remaining in the trust account after the payment of principal on the Certificates will revert back to Israel to the extent such funds were provided by Israel but not needed for the above purpose.
The Trust is classified as a Grantor Trust and will not be subject to Federal income taxes. Each Certificateholder will be treated for Federal income tax purposes as the owner of a pro rata undivided fractional interest in the assets held by the Trust. The difference between the financial reporting and income tax bases of the Trust’s assets and liabilities is not significant.
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