UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-15403
A. Full title of the plan and the address of the plan, if different
from that of the Issuer named below:
M&I Retirement Program
B. Name of the issuer of the securities held pursuant to the plan and
the address of its principal executive office:
MARSHALL & ILSLEY CORPORATION
770 North Water Street
Milwaukee, Wisconsin 53202
Financial Statement and Exhibits
--------------------------------
(a) Financial Statements:
---------------------
M&I Retirement Program
----------------------
(1) M&I Retirement Plan
-------------------
Report of Independent Registered Public Accounting Firm.
Statements of Net Assets Available for Benefits
as of December 31, 2005 and 2004.
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2005 and 2004.
Notes to Financial Statements.
Supplemental Schedule, Form 5500, Schedule H,
Part IV, Line 4(i)
Schedule of Assets (Held at End of Year)
as of December 31, 2005.
(2) Employee Stock Ownership Plan
-----------------------------
Report of Independent Registered Public Accounting Firm.
Statements of Net Assets Available for Benefits
as of December 31, 2005 and 2004.
Statements of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2005 and 2004.
Notes to Financial Statements.
(b) Exhibits:
---------
23 Consent of Independent Registered Public Accounting Firm -
Deloitte & Touche LLP
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
Financial Statements for the Years Ended
December 31, 2005 and 2004, Supplemental
Schedule as of December 31, 2005, and
Report of Independent Registered
Public Accounting Firm
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 2005 and 2004 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2005 and 2004 3
Notes to Financial Statements 4-10
SUPPLEMENTAL SCHEDULE - 11
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets (Held at End of Year)
as of December 31, 2005 12
NOTE: All other schedules required by Section 2520.103-10 of the
Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security
Act of 1974 have been omitted because they are not applicable.
1
[Deloitte & Touche LLP Letterhead]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator and Participants of the
M&I Retirement Program - M&I Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits of the M&I Retirement Program - M&I Retirement Plan (the "Plan")
as of December 31, 2005 and 2004, and the related statements of changes in
net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with 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 Plan is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits 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 Plan'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. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December
31, 2005 and 2004, and the changes in net assets available for benefits for
the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule of
assets (held at end of year) as of December 31, 2005 is presented for the
purpose of additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. This schedule
is the responsibility of the Plan's management. Such schedule has been
subjected to the auditing procedures applied in our audit of the basic 2005
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic financial statements
taken as a whole.
/s/ Deloitte & Touche LLP
Milwaukee, Wisconsin
June 26, 2006
2
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2005 AND 2004
_______________________________________________________________________
2005 2004
-------------- --------------
INVESTMENTS - At fair market value:
Master trust $ 952,368,381 $ 877,480,909
Loans to participants 348,547 538,136
-------------- --------------
Total investments 952,716,928 878,019,045
RECEIVABLES:
Employee contributions 1,677,296 1,365,310
Employer contributions, net of
forfeitures of $1,681,955 and
$2,063,936, respectively 43,628,339 39,282,557
Merged Plans 6,647,976 --
-------------- --------------
Total receivables 51,953,611 40,647,867
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $1,004,670,539 $ 918,666,912
============== ==============
See notes to financial statements.
3
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
_______________________________________________________________________
2005 2004
-------------- --------------
CONTRIBUTIONS:
Participants $ 43,273,805 $ 35,382,404
Employer 43,170,337 39,052,790
Participant rollovers 4,593,612 6,898,543
------------- --------------
Total contributions 91,037,754 81,333,737
INVESTMENT INCOME (LOSS):
Income from Master Trust 45,495,866 79,736,979
Interest 22,107 16,317
------------- --------------
Net investment income 45,517,973 79,753,296
DEDUCTIONS:
Benefits paid to participant (57,185,639) (48,776,364)
Administrative expenses (14,437) (16,515)
------------- --------------
Total deductions (57,200,076) (48,792,879)
TRANSFERS IN DUE TO
PLAN MERGERS (Note 1) 6,647,976 9,843,148
------------- --------------
NET INCREASE IN ASSETS
AVAILABLE FOR BENEFITS 86,003,627 122,137,302
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 918,666,912 796,529,610
------------- --------------
End of year $1,004,670,539 $ 918,666,912
============== ==============
See notes to financial statements.
4
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
---------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
-----------------------
The M&I Retirement Program - M&I Retirement Plan (the "Plan") is a
defined contribution plan which is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Marshall & Ilsley Corporation (the "Corporation") is the
Administrator of the Plan and the Marshall & Ilsley Trust Company, a
subsidiary of the Corporation, is the Trustee and recordkeeper of the
Plan. The Trustee holds all investments of the Plan.
The following descriptions of the Plan are provided for general
information purposes only. More complete information regarding the
Plan's provisions may be found in the plan document.
Plan Transfer and Merger - On November 18, 2005, the Corporation
completed the acquisition of LINK2GOV Corp. All participants in the
LINK2GOV Corp. 401(k) Profit Sharing Plan and Trust ("Link2Gov Plan")
became 100% vested as of that date.
Effective December 31, 2005, the assets of the Link2Gov Plan were
merged into the Plan. Assets merged at December 31, 2005 were
$253,253.
On October 6, 2005, the Corporation completed the acquisition of
Brasfield Holdings, LLC. All participants in The Brasfield 401(k)
Plan ("Brasfield Plan") became 100% vested as of that date.
Effective December 31, 2005, the assets of the Brasfield Plan were
merged into the Plan. Assets merged at December 31, 2005 were
$806,950.
On August 11, 2005, the Corporation completed the acquisition of GHR
Systems, Inc. All participants in the GHR Systems, Inc. 401(k)
Profit Sharing Plan & Trust ("GHR Plan") became 100% vested as of
that date.
Effective December 31, 2005, the assets of the GHR Plan were merged
into the Plan. Assets merged at December 31, 2005 were $4,713,738.
On July 22, 2005, the Corporation completed the acquisition of Med-i-
Bank, Inc. All participants in the Med-i-Bank , Inc. 401(k) Plan
("Med-i-Bank Plan") became 100% vested as of that date.
Effective December 31, 2005, the assets of the Med-i-Bank Plan were
merged into the Plan. Assets merged at December 31, 2005 were
$874,035.
During 2004 the Corporation purchased Advanced Financial Solutions,
Inc. Effective December 1, 2004, the assets of the Advanced
Financial Solutions, Inc. 401(k) Plan were merged into the Plan.
Assets merged at December 1, 2004 were $9,843,148.
Eligibility - All employees of the Corporation and subsidiaries who
have completed one year of continuous service, as defined by the
Plan, and have elected to become participants are eligible to receive
employer profit sharing contributions. Employees may elect to make
deferrals upon the date of hire.
5
Contributions - Upon election to participate, the participant
designates under a salary reduction agreement the amount of the
annual contribution (0% to 50% of compensation, as defined), subject
to Internal Revenue Service ("IRS") limitations. Employees may
change the amount of the annual contribution as often as they wish.
Participants who will reach at least age 50 by the end of the plan
year have the ability to make pre-tax 401(k) catch-up contributions,
subject to IRS limitations.
Employer profit sharing contribution percentages are discretionary
and are determined by the Board of Directors on an annual basis. The
Corporation made a profit sharing contribution of 8% of eligible
compensation during the years ended December 31, 2005 and 2004.
Vesting - All employee contributions and related income are
fully vested at all times. Employer profit sharing
contributions vest at the earliest of the following dates:
a. The date the participant completed at least 5 years of
Vesting Service, as defined by the Plan.
b. The date of the participant's death while employed by
the employer or of an affiliated employer.
c. The date of participant's attainment of age 65 or
earlier disability.
d. The date of termination of the Plan (or partial
termination as to participants affected thereby) or
the date of complete discontinuance of contributions
by the employer at a time when the participant is
employed by the employer or by an affiliated employer.
Benefit Payments - Upon termination, death, retirement, in the event
of disability, as defined, or financial hardship, a participant or
beneficiary is entitled to withdraw his or her vested interest in a
lump sum payment. Participants who are 59 or older may take pretax
withdrawals for any reason. In addition, after-tax contributions
made before 1987 and former Valley Bancorporation employee balances
from the former Valley plan are available for distribution.
Participant Accounts - Individual accounts are maintained for each of
the Plan's participants. Each participant's account is credited with
the participant's contribution and allocations of the Plan's income
(loss) and any related administrative expenses based on participant
earnings or account balances as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
Investment Options - Participants may direct their pretax and
Corporation profit sharing contributions and any related earnings
thereon into eighteen investment options designated by the Plan's
investment committee in 1% increments. Participants are able to
change their investment elections daily.
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Basis of Accounting - The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States of America. Certain amounts in the 2004
financial statements have been reclassified to conform to the 2005
presentation.
Accounting Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires the Plan's management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from these estimates.
Contributions - Contributions from employees are recorded in
the period the employer makes corresponding payroll deductions.
Contributions from the employer are accrued based upon amounts
required to be contributed as determined by the Plan.
6
Investments and Income Recognition - Investments are stated at fair
market value. The Trustee of the Master Trust determines the fair
value of the Trust's investments by reference to published market
data except for the Marshall & Ilsley Stable Principal Fund, which is
valued at contract value (see Note 4), which approximates fair value.
Each security is valued at the last sales price reported by the
principal security exchange on which the issue is traded. Securities
which are traded over-the-counter are valued at the mean between the
latest bid and asked prices. Mutual funds are valued at the last
market quotation by reference to published market data. Participant
loans are valued at unpaid principal amounts. Purchases and sales of
securities are recorded on a trade-date basis. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-
dividend date.
Administrative Expenses - Significantly all administrative expenses
for the Plan were paid by the Plan for the years ended December 31,
2005 and 2004. In 2005 and 2004, trustee fees were paid by the
Corporation.
Payment of Benefits - Benefit payments to participants are recorded
upon distribution.
Risks and Uncertainties - The Plan invests in a Master Trust which
invest in various securities. Investment securities are exposed to
various risks including, but not limited to, interest rate, market
and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near
term and such changes could be material to the financial statements.
3. INVESTMENTS
-----------
The Plan's investments are commingled with the assets of the M&I
Retirement Program - Employee Stock Ownership Plan in the M&I
Retirement Program Master Trust ("Master Trust"). Investment income
of the Master Trust is allocated to participating plans based on the
individual participant balances.
7
The assets of the Plan are commingled and are not segregated in the
accounts of the trusts. The market value of the assets held in the
Master Trust as of December 31, 2005 and 2004 is as follows:
2005 2004
-------------- --------------
M&I Retirement Program Master Trust
Investments:
Cash $ 37,004 $ --
Marshall Funds Mutual Funds:*
Intermediate Bond 93,781,483 93,390,687
Equity Income -- 25,733,834
Mid-Cap Growth 48,373,398 45,180,332
Mid-Cap Value 19,522,137 9,210,171
Large Cap Growth & Income 97,130,966 96,457,763
Large Cap Value 25,885,990 --
International Stock 36,348,286 25,204,109
M&I Master Trust -
Growth Balanced Fund * 97,369,207 84,258,194
M&I Master Trust -
Moderate Balanced Fund * 3,418,422 1,483,550
M&I Master Trust -
Aggressive Balanced Fund * 6,520,745 3,057,247
M&I Master Trust -
Aggressive Stock Fund * 94,931,423 87,922,089
M&I Master Trust -
Diversified Stock Fund * 10,546,969 5,480,544
Vanguard Institutional Index Fund 139,675,430 139,613,300
Managers Special Equity Fund 33,812,010 32,576,527
MFS Massachusetts Growth Fund 12,960,151 11,295,041
Nicholas Fund 44,860,061 40,267,514
M&I Stable Principal Fund * 91,372,531 83,676,660
Goldman Sachs Small-Cap Value Fund 17,428,614 9,794,802
M&I Master Trust -
Common Stock Fund * 438,727,812 456,311,819
Accrued income 659,518 570,684
Pending trades (1,666,372) (1,355,084)
-------------- --------------
Total assets of the M&I Retirement
Program Master Trust $1,311,695,785 $1,250,129,783
============== ==============
* - Represents party-in-interest
8
Allocations of the M&I Retirement Program Master Trust to
participating plans as of December 31, 2005 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 952,368,381 72.61%
M&I Retirement Program -
Employee Stock Ownership Plan 359,327,404 27.39
-------------- --------
Total Assets of the M&I Retirement
Program Master Trust $1,311,695,785 100.00%
============== ========
Allocations of the M&I Retirement Program Master Trust to
participating plans as of December 31, 2004 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 877,480,909 70.19%
M&I Retirement Program -
Employee Stock Ownership Plan 372,648,874 29.81
-------------- --------
Total Assets of the M&I Retirement
Program Master Trust $1,250,129,783 100.00%
============== ========
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2005 is as
follows:
Dividend and interest income $ 19,785,365
Net appreciation in the fair
value of investments, by type:
Mutual Funds 21,470,760
Master trusts 4,099,711
--------------
Total M&I Retirement Master
Trust Income $ 45,355,836
==============
M&I Retirement Program -
M&I Retirement Plan $ 45,495,866 100.31%
M&I Retirement Program -
Employee Stock Ownership Plan (140,030) (0.31)
-------------- --------
Total Income of M&I Retirement
Program Master Trust $ 45,355,836 100.00%
============== ========
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2004 is as
follows:
Dividend and interest income $ 20,430,029
Net appreciation in the fair
value of investments, by type:
Mutual Funds 35,840,178
Master trusts 79,403,110
--------------
Total M&I Retirement Master
Trust Income $ 135,673,317
==============
M&I Retirement Program -
M&I Retirement Plan $ 79,736,979 58.77%
M&I Retirement Program -
Employee Stock Ownership Plan 55,936,338 41.23
-------------- --------
Total Income of M&I Retirement
Program Master Trust $ 135,673,317 100.00%
============== ========
9
4. GUARANTEED INVESTMENT CONTRACTS
-------------------------------
The Master Trust invests in the M&I Stable Principal Fund that
invests in guaranteed investment contracts. Fully benefit-responsive
investment contracts are valued at contract value, which represents
the principal balance of the investment contracts, plus accrued
interest at the stated contract rate, less payments received and
contract charges by the insurance company. Under the terms of the
investment contracts, the crediting interest rate is determined semi-
annually based on the insurance company's applicable rate schedule.
The aggregate average yield of the investment contracts for the years
ended December 31, 2005 and 2004 was 4.43% and 4.00%, respectively.
The crediting interest rate for the investment contracts as of
December 31, 2005 and 2004 was 4.59% and 4.31%, respectively. The
fair value of the investment contracts as of December 31, 2005 and
2004 approximates the contract value. There are no limitations on
guarantees of the contracts.
5. INCOME TAX STATUS
-----------------
The Plan has obtained a determination letter from the IRS dated
November 26, 2002, approving the Plan as qualified for tax-exempt
status. The Plan has been amended since receiving the determination
letter. However, the Corporation and the Plan Administrator believe
that the Plan is currently designed and operated in compliance with
the applicable requirements of the Internal Revenue Code and the Plan
and related trust continue to be tax-exempt. Therefore, no provision
for income taxes has been included in the Plan's financial
statements.
6. RELATED PARTY TRANSACTIONS
--------------------------
As of December 31, 2005 and 2004, investments were made in a master
trust, which includes common/collective trusts and mutual funds
managed by a subsidiary of the Corporation, as well as common stock
of the Corporation. These transactions were not considered prohibited
transactions by statutory exemptions under ERISA regulations.
7. LOANS TO PARTICIPANTS
---------------------
The Plan does not offer new loans to active participants. All
existing loans are as a result of plan mergers due to acquisitions.
The loans are repayable through payroll deductions and were written
with original terms of one to twenty-five years. The interest rate
was based on prevailing market conditions and is fixed over the life
of the note. Interest rates on participant loans at December 31, 2005
and 2004 ranged from 4.00% and 10.50% and 4.00% to 11.00%,
respectively.
8. FORFEITURES
-----------
Forfeited nonvested accounts are used to reduce Corporation
contributions. During 2005 and 2004, $2,063,936 and $2,497,638 of
forfeitures, respectively were used to reduce Corporation
contributions. At December 31, 2005 and 2004, $1,681,955 and
$2,063,936, respectively were available to reduce future Corporation
contributions. These forfeitures relate to the nonvested portions of
the employer profit sharing contributions.
10
9. PLAN TERMINATION
----------------
Although it has not expressed any intention to do so, the Corporation
has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions set forth in
ERISA. In the event that the Plan is terminated, participants would
become 100 percent vested in their accounts.
10. SUBSEQUENT EVENT
----------------
Effective February 16, 2006 the components of the M&I Retirement
Program - M&I Retirement Plan and the M&I Retirement Program -
Employee Stock Ownership Plan were merged into a single plan. The
balance of the M&I Retirement Program - Employee Stock Ownership Plan
was transferred and invested in the Marshall & Ilsley Corporation
common stock unitized fund investment option within the M&I
Retirement Program - M&I Retirement Plan.
* * * * * *
11
SUPPLEMENTAL SCHEDULE FURNISHED
PURSUANT TO
DEPARTMENT OF LABOR'S RULES AND REGULATIONS
12
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2005
___________________________________________________________________________
Issuer Description Fair Value
------------------- ------------------------------ ----------------
Marshall & Ilsley Marshall & Ilsley Retirement
Trust Company * Program Master Trust $ 952,368,381
Various
Participants* Loans to Participants
(interest rates ranging
from 4.00% to 10.50%) 348,547
--------------
Total assets (held at end of year) $ 952,716,928
==============
*Represents party-in-interest.
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements for the Years Ended
December 31, 2005 and 2004, and
Report of Independent Registered
Public Accounting Firm
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
---------------------------------------------------------------------------
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 2005 and 2004 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2005 and 2004 3
Notes to Financial Statements 4-9
All schedules required by Section 2520.103-10 of the Department
of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act 1974 have
been omitted because they are not applicable.
1
[Deloitte & Touche LLP Letterhead]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator and Participants of the
M&I Retirement Program - Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for
benefits of the M&I Retirement Program - Employee Stock Ownership Plan (the
"Plan") as of December 31, 2005 and 2004, and the related statements of
changes in net assets available for benefits for the years then ended.
These financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with 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 Plan is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits include 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 Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit 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. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December
31, 2005 and 2004, and the changes in net assets available for benefits for
the years then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
Milwaukee, Wisconsin
June 26, 2006
2
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
_______________________________________________________________________
2005 2004
-------------- --------------
INVESTMENTS - At fair
market value - Master trust $ 359,327,404 $ 372,648,874
RECEIVABLES - Employer contribution 14,079,509 11,957,582
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 373,406,913 $ 384,606,456
============== ==============
See notes to financial statements.
3
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2004 AND 2003
_______________________________________________________________________
2005 2004
-------------- --------------
CONTRIBUTIONS - Employer $ 14,081,660 $ 11,945,705
INVESTMENT INCOME:
Investment income (loss)
from Master Trust (140,030) 55,936,338
-------------- --------------
Net investment income (loss) (140,030) 55,936,338
DEDUCTIONS:
Benefits paid to participants (25,135,238) (19,777,825)
Administrative expenses (5,935) (7,093)
-------------- --------------
Total deductions (25,141,173) (19,784,918)
-------------- --------------
NET INCREASE (DECREASE) (11,199,543) 48,097,125
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 384,606,456 336,509,331
-------------- --------------
End of year $ 373,406,913 $ 384,606,456
============= =============
See notes to financial statements.
4
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2005 AND 2004
--------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
-----------------------
The Marshall & Ilsley Corporation (the "Corporation") sponsors the
M&I Retirement Program - Employee Stock Ownership Plan (the "Plan"),
a defined contribution plan which is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Corporation is the Administrator of the Plan and the
Marshall & Ilsley Trust Company, a subsidiary of the Corporation, is
the trustee and recordkeeper of the Plan. All investments of the
Plan are held by the Trustee.
The following description of the Plan is provided for general
information purposes only. More complete information regarding the
Plan's provisions may be found in the Plan document.
Eligibility - All employees of the Corporation and subsidiaries who
have completed one year of continuous service and have elected to
participate in the employee deferrals offered in another corporation
plan, the M&I Retirement Program - M&I Retirement Plan, are eligible
to participate in the Plan.
Contributions - The Corporation contributes an employer match that is
a percentage of the participants' contribution to the M&I Retirement
Program - M&I Retirement Plan. Such percentage is based on a scale
which increases with the annual rate of return on equity of the
Corporation. The maximum contribution is 50% of the participant's
contribution up to 6% of a participant's total eligible compensation,
and if the annual rate of return on equity is less than 11%, the
employer contribution is not required. For the years ended December
31, 2005 and 2004, the Corporation matched 50% up to 6% of eligible
compensation. Participants must have completed 1,000 hours of
service during the plan year and be employed on December 31 to
receive that year's employer matching contribution.
Vesting - A participant is 100% vested at all times.
Participant Accounts - Individual accounts are maintained for each of
the Plan's participants. Each participant's account is credited with
the Company's matching contribution and allocations of the Plan's
income (loss) and any related administrative expenses based on
participant's earnings or account balances as defined. The benefit
to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
Investment Options - The employer matching contributions are invested
in Marshall & Ilsley Common Stock within the M&I Retirement Program
Master Trust (the "Master Trust") and is non-participant directed.
Balances transferred from merged plans that were originally in the
form of Marshall & Ilsley Common Stock and participants over the age
of 55 are able to direct their investments within the master trust.
5
Benefit Payments - Upon termination, death, retirement, disability,
as defined, or financial hardship, a participant or beneficiary is
entitled to withdraw his or her vested interest in a lump sum
payment. Participants who are 59 or older may take pretax
withdrawals for any reason. In addition, after-tax contributions
made before 1987 and former Valley Bancorporation employee balances
from the former Valley Bancorporation plan are available for
distribution.
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Basis of Accounting - The financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America.
Accounting Estimates - The preparation of financial statements in
conformity with accounting principals generally accepted in the
United States of America requires the Plan's management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from these estimates.
Investments and Income Recognition - Investments are stated at fair
market value. The Trustee of the Master Trust determines the fair
value of the Trust's investments by reference to published market
data except for the Marshall & Ilsley Stable Principal Fund, which is
valued at contract value (see Note 4), which approximates fair value.
Each security is valued at the last sales price reported by the
principal security exchange on which the issue is traded. Securities
which are traded over-the-counter are valued at the mean between the
latest bid and asked prices. Mutual funds are valued at the last
market quotation by reference to published market data. Purchases and
sales of investments are accounted for on a trade-date basis.
Interest income is recorded as earned on the accrual basis. Dividend
income is recorded on the ex-dividend date.
Administrative Expenses - Significantly all administrative expenses
of the Plan were paid by the Plan for the years ended December 31,
2005 and 2004. Trustee fees were paid by the Corporation.
Payment of Benefits - Benefits paid to participants are recorded when
paid.
Risks and Uncertainties - The Plan invests in a Master Trust, which
invest in various securities. Investment securities are exposed to
various risks including, but not limited to, interest rate, market
and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near
term and such changes could be material to the financial statements.
6
3. INVESTMENTS
-----------
The Plan's investments are commingled with the assets of the M&I
Retirement Program - M&I Retirement Plan in the Master Trust.
Investment income (loss) of the Master Trust is allocated to
participating plans based on the individual participant balances.
The assets of the Plan are commingled and are not segregated in the
accounts of the trusts. The market value of the assets held in the
Master Trust as of December 31, 2005 and 2004, is as follows:
2005 2004
-------------- --------------
M&I Retirement Program Master Trust
Investments:
Cash $ 37,004 $ --
Marshall Funds Mutual Funds:*
Intermediate Bond 93,781,483 93,390,687
Equity Income -- 25,733,834
Mid-Cap Growth 48,373,398 45,180,332
Mid-Cap Value 19,522,137 9,210,171
Large Cap Growth & Income 97,130,966 96,457,763
Large Cap Value 25,885,990 --
International Stock 36,348,286 25,204,109
M&I Master Trust -
Growth Balanced Fund * 97,369,207 84,258,194
M&I Master Trust -
Moderate Balanced Fund * 3,418,422 1,483,550
M&I Master Trust -
Aggressive Balanced Fund * 6,520,745 3,057,247
M&I Master Trust -
Aggressive Stock Fund * 94,931,423 87,922,089
M&I Master Trust -
Diversified Stock Fund * 10,546,969 5,480,544
Vanguard Institutional Index Fund 139,675,430 139,613,300
Managers Special Equity Fund 33,812,010 32,576,527
MFS Massachusetts Growth Fund 12,960,151 11,295,041
Nicholas Fund 44,860,061 40,267,514
M&I Stable Principal Fund * 91,372,531 83,676,660
Goldman Sachs Small-Cap Value Fund 17,428,614 9,794,802
M&I Master Trust -
Common Stock Fund * 438,727,812 456,311,819
Accrued income 659,518 570,684
Pending trades (1,666,372) (1,355,084)
-------------- --------------
Total assets of the M&I Retirement
Program Master Trust $1,311,695,785 $1,250,129,783
============== ==============
* - Represents party-in-interest
Allocations of the M&I Retirement Program Master Trust to
participating plans as of December 31, 2005 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 952,368,381 72.61%
M&I Retirement Program -
Employee Stock Ownership Plan 359,327,404 27.39
-------------- --------
Total Assets of the M&I Retirement
Program Master Trust $1,311,695,785 100.00%
============== ========
7
Allocations of the M&I Retirement Program Master Trust to
participating plans as of December 31, 2004 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 877,480,909 70.19%
M&I Retirement Program -
Employee Stock Ownership Plan 372,648,874 29.81
-------------- --------
Total Assets of the M&I Retirement
Program Master Trust $1,250,129,783 100.00%
============== ========
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2005 is as
follows:
Dividend and interest income $ 19,785,365
Net appreciation in the fair
value of investments, by type:
Mutual Funds 21,470,760
Master trusts 4,099,711
--------------
Total M&I Retirement Master
Trust Income $ 45,355,836
==============
M&I Retirement Program -
M&I Retirement Plan $ 45,495,866 100.31%
M&I Retirement Program -
Employee Stock Ownership Plan (140,030) (0.31)
-------------- --------
Total Income of M&I Retirement
Program Master Trust $ 45,355,836 100.00%
============== ========
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2004 is as
follows:
Dividend and interest income $ 20,430,029
Net appreciation in the fair
value of investments, by type:
Mutual Funds 35,840,178
Master trusts 79,403,110
--------------
Total M&I Retirement Master
Trust Income $ 135,673,317
==============
M&I Retirement Program -
M&I Retirement Plan $ 79,736,979 58.77%
M&I Retirement Program -
Employee Stock Ownership Plan 55,936,338 41.23
-------------- --------
Total Income of M&I Retirement
Program Master Trust $ 135,673,317 100.00%
============== ========
4. GUARANTEED INVESTMENT CONTRACTS
-------------------------------
The Master Trust invests in the M&I Stable Principal Fund that
invests in guaranteed investment contracts. Fully benefit-responsive
investment contracts are valued at contract value, which represents
the principal balance of the investment contracts, plus accrued
interest at the stated contract rate, less payments received and
contract charges by the insurance company. Under the terms of the
investment contracts, the crediting interest rate is determined semi-
annually based on the insurance company's applicable rate schedule.
The aggregate average yield of the investment contracts for the years
ended December 31, 2005 and 2004, was 4.43% and 4.00%, respectively.
The crediting interest rate for the investment contracts as of
December 31, 2005 and 2004 was 4.59% and 4.31%, respectively. The
fair value of the investment contracts as of December 31, 2005 and
2004, approximates the contract value. There are no limitations on
guarantees of the contracts.
8
5. NON-PARTICIPANT DIRECTED ACCOUNTS
---------------------------------
Information about the net assets as of December 31, 2005 and 2004,
and the significant components of the changes in net assets for the
years ended December 31, 2005 and 2004, relating to non-participant
directed balances is as follows:
2005 2004
-------------- --------------
Investment in Master Trust $ 138,392,996 $ 133,624,444
Employer contribution receivable 10,600,298 9,584,531
-------------- --------------
Total assets $ 148,993,294 $ 143,208,975
Changes in assets attributable to:
Contributions $ 10,600,298 $ 9,584,531
Investment income from Master Trust 185,684 19,237,611
Benefit payments (4,921,646) (4,436,129)
Expenses (2,065) (2,412)
Transfers to participant
directed accounts (77,952) (503,335)
-------------- --------------
Net increase 5,784,319 23,880,266
Balance - beginning of year 143,208,975 119,328,709
-------------- --------------
Balance - end of year $ 148,993,294 $ 143,208,975
============== ==============
6. INCOME TAX STATUS
-----------------
The Plan has obtained a determination letter from the Internal
Revenue Service ("IRS") dated November 26, 2002, approving the Plan
as qualified for tax-exempt status. The Plan has been amended since
receiving the determination letter. However, the Corporation and the
Plan Administrator believe that the Plan is currently designed and
operated in compliance with the applicable requirements of the
Internal Revenue Code and the Plan and related trust continue to be
tax-exempt. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
7. RELATED PARTY TRANSACTIONS
--------------------------
As of December 31, 2005 and 2004, investments were made in a master
trust, which includes common/collective trusts and mutual funds
managed by a subsidiary of the Corporation, as well as common stock
of the Corporation. These transactions were not considered prohibited
transactions by statutory exemptions under ERISA regulations.
9
8. PLAN TERMINATION
----------------
The Corporation has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to the
provisions set forth in ERISA.
Effective February 16, 2006 the components of the M&I Retirement
Program - M&I Retirement Plan and the M&I Retirement Program -
Employee Stock Ownership Plan was merged into a single plan. The
balance of the M&I Retirement Program - Employee Stock Ownership Plan
was transferred and invested in the Marshall & Ilsley Corporation
common stock unitized fund investment option within the M&I
Retirement Program - M&I Retirement Plan.
* * * * * * *
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed by the undersigned thereunto
duly authorized.
M&I Retirement Program
/s/ Paul J. Renard
____________________________
Paul J. Renard
Senior Vice President,
Director of Human Resources
of the Marshall & Ilsley
Corporation and a Member
of the Committee of the
M&I Retirement Program
Date: June 26, 2006