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, 2003
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, 2003 and 2002.
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31,2003 and 2002.
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, 2003.
(2) Employee Stock Ownership Plan
-----------------------------
Report of Independent Registered Public Accounting Firm.
Statements of Net Assets Available for Benefits
as of December 31, 2003 and 2002.
Statements of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2003 and 2002.
Notes to Financial Statements.
(b) Exhibits:
---------
23 Independent Registered Public Accounting Firm Consent -
Deloitte & Touche LLP
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
Financial Statements for the Years Ended December 31,
2003 and 2002, Supplemental Schedule as of December 31,
2003, and Report of Independent Registered Public Accounting Firm
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
TABLE OF CONTENTS
_____________________________________________________________________________
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits -
December 31, 2003 and 2002 2
Statements of Changes in Net Assets Available for Benefits -
Years Ended December 31, 2003 and 2002 3
Notes to Financial Statements 4-10
SUPPLEMENTAL SCHEDULE -
Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets
(Held at End of Year) as of December 31, 2003 11
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
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator 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, 2003 and 2002, 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 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes 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,
2003 and 2002, 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 listed in
the Table of Contents 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 2003 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 24, 2004
2
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
____________________________________________________________________________
2003 2002
------------- -------------
Cash $ -- $ 136,409
Investments, at fair market value:
Master trust 758,182,955 577,393,532
Mutual funds -- 11,814,788
Loans to participants 89,566 243,507
------------- -------------
Total investments 758,272,521 589,451,827
Receivables:
Employee contributions 1,125,223 6,956
Employer contributions 37,131,866 36,899,391
Accrued income -- 130
------------- -------------
Total receivables 38,257,089 36,906,477
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $796,529,610 $626,494,713
============= =============
See notes to financial statements.
3
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2003 AND 2002
____________________________________________________________________________
2003 2002
------------- -------------
CONTRIBUTIONS:
Participants $ 31,442,074 $ 28,780,875
Employer 37,175,015 36,899,391
Participant rollovers 2,629,660 2,247,457
------------- -------------
Total contributions 71,246,749 67,927,723
INVESTMENT INCOME (LOSS):
Income (loss) from Master Trust 142,678,199 (101,525,958)
Net depreciation in fair value of investments (93,224) (592,189)
Interest and dividends 10,701 19,947
------------- -------------
Net investment income (loss) 142,595,676 (102,098,200)
DEDUCTIONS:
Benefits paid to participants (43,998,367) (38,170,185)
Administrative expenses (19,913) (56,553)
------------- -------------
Total deductions (44,018,280) (140,324,938)
------------- -------------
TRANSFERS IN FROM M&I EMPLOYEE
STOCK OWNERSHIP PLAN 210,752 --
TRANSFERS IN DUE TO PLAN MERGERS (NOTE 1) -- 106,742,929
TRANSFERS OUT DUE TO PLAN CHANGES (NOTE 1) -- (278,559,893)
------------- -------------
NET INCREASE (DECREASE) 170,034,897 (244,214,179)
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 626,494,713 870,708,892
------------- -------------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $796,529,610 $626,494,713
============= =============
See notes to financial statements.
4
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
____________________________________________________________________________
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 - Effective January 1, 2002, a portion of the
Plan assets were transferred to the Marshall & Ilsley Retirement ESOP
Plan (the "ESOP Plan"). Participant balances invested in the Employer
Stock Fund attributable to company match and prior acquisition balances
as well as participant balances of the former National City 401(k) Plan
that were invested in Marshall & Ilsley common stock were transferred
to the ESOP Plan. Assets transferred out at January 1, 2002 were
$278,559,893.
On January 1, 2002, participants balances from another Corporation
plan, the M&I Retirement Growth - Money Purchase Pension Plan were
merged into the Plan. Assets merged at January 1, 2002 were
$88,556,769.
During 2002 the Corporation purchased Century Bancshares, Inc.
Effective October 1, 2002, the assets of the Century Bancshares, Inc.
401(k) Profit Sharing Plan were merged into the Plan. Assets merged at
October 1, 2002 were $1,110,252. The Corporation also purchased
Richfield State Agency during 2002. Effective October 1, 2002, the
assets of Richfield State Agency Profit Sharing Plan were merged into
the Plan. Assets merged at October 1, 2002 were $5,251,685. The
Corporation additionally purchased Southwest Bank of St. Louis.
Effective December 31, 2002, the assets of Southwest Bank of St. Louis
401(k), excluding the employer stock portion which merged into the ESOP
Plan, were merged into the Plan. Assets merged at December 31, 2002
were $10,915,210. All assets merged into the Plan vested at the
respective dates of merger. Prior service of participants is applied
to vesting requirements in the Plan.
Additionally, the Company purchased Paytrust, Inc. during 2001.
Effective December 31, 2002, the assets of the Paytrust, Inc. 401(k)
Retirement Plan were merged into the Plan. Assets merged at December
31, 2002 were $909,013. All assets merged into the Plan vested at
December 31, 2002. Prior service of participants is applied to
vesting requirements in the Plan.
5
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.
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 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, 2003 and 2002.
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 thirteen investment options designated by the Plan's
investment committee in 1% increments. Participants are able to change
their investment elections daily.
6
Due to the merger of the Paytrust, Inc. 401(k) Retirement Plan and
Southwest Bank of St. Louis 401(k) Plan, the Plan held amounts in
various funds that were no longer investment elections for participants
at December 31, 2002. The funds allowed for Paytrust, Inc. 401(k)
Retirement Plan were:
Legg Mason Cash Reserve
Europacific Growth
Investment Co. of America
American New Perspective
Alliance Premier Growth
GS Internet Tollkeeper
Legg Mason Special Investment
Legg Mason High Yield
Legg Mason Investment Grade
Legg Mason Opportunity Trust
Legg Mason Value Trust
OTC Emerging Growth
The funds allowed for the Southwest Bank of St. Louis 401(k) Plan were:
Oppenheimer Strategic
Mutual Funds Janus Government Money Market
American Century Equity Income
Janus Fund
Vanguard Group Index 500 Fund
Janus Worldwide Fund
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 2002 financial
statements have been reclassified to conform to the 2003 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.
INVESTMENTS AND INCOME RECOGNITION - Investments are stated at fair
market value as determined by the Trustee 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, which approximates fair
value. 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.
7
ADMINISTRATIVE EXPENSES - Significantly all administrative expenses for
the Plan were paid by the Plan for the years ended December 31, 2003
and 2002. In 2003 and 2002, 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 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
(loss) of the Master Trust is allocated to participating plans based on
the individual participant balances.
8
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, 2003 and 2002 is as follows:
2003 2002
------------- -------------
M&I Retirement Program Master Trust
-----------------------------------
Investments:
Cash $ 19,184 $ 13,839
Marshall Funds Mutual Funds: *
Intermediate Bond 98,197,687 96,416,531
Equity Income 21,439,613 11,906,251
Mid-Cap Growth 40,016,594 26,623,825
Large Cap Growth & Income 92,452,859 73,382,591
International Stock 18,328,078 11,245,411
Marshall & Ilsley Growth Balanced Fund * 70,369,252 51,834,287
Marshall & Ilsley Aggressive Stock Fund * 74,791,299 50,895,846
Federated Max Cap Index Fund 125,646,671 95,885,035
Managers Special Equity Fund 23,425,835 11,144,111
MFS Massachusetts Growth Fund 10,637,373 6,677,079
Nicholas Fund 34,925,114 25,596,924
M&I Stable Principal Fund * 71,861,889 60,280,459
Marshall & Ilsley Common Stock * ** 401,987,828 286,990,650
Accrued income 599,550 655,528
Pending trades (1,119,105) 61,341
--------------- --------------
Total assets of the
M&I Retirement Program Master $1,083,579,721 $ 809,609,708
=============== ==============
* - Represents party-in-interest.
** - Shares of M&I common stock held at December 31, 2003 and 2002
amounted to 10,454,952 and 10,447,234, respectively.
Allocations of the M&I Retirement Program Master Trust to participating
plans as of December 31, 2003 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 758,182,955 69.97%
M&I Retirement Program -
Employee Stock Ownership Plan 325,396,766 30.03
--------------- -------
Total Assets of the M&I
Retirement Program Master Trust $1,083,579,721 100.00%
=============== =======
9
Allocations of the M&I Retirement Program Master Trust to participating
plans as of December 31, 2002 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 577,393,532 71.32%
M&I Retirement Program -
Employee Stock Ownership Plan 232,216,176 28.68
--------------- -------
Total Assets of the M&I
Retirement Program Master Trust $ 809,609,708 100.00%
=============== =======
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2003 is as follows:
Dividend and interest income $ 17,503,163
Net appreciation in the fair
value of investments, by type:
Mutual Funds 77,108,197
Common collective trusts 30,548,994
Common stock 116,282,706
---------------
Total M&I Retirement Master Trust Income $ 241,443,060
===============
M&I Retirement Program -
M&I Retirement Plan $ 142,678,199 59.09%
M&I Retirement Program -
Employee Stock Ownership Plan 98,764,861 40.91
--------------- -------
Total Income of M&I Retirement
Program Master Trust $ 241,443,060 100.00%
=============== =======
M&I Retirement Program Master Trust loss and its allocation to the
participating plans for the year ended December 31, 2002 was as
follows:
Dividend and interest income $ 16,149,703
Net depreciation in the fair
value of investments, by type:
Mutual Funds (99,283,820)
Common collective trusts (1,549,146)
Common stock (47,470,054)
---------------
Total M&I Retirement Master Trust Loss $ (132,153,317)
===============
M&I Retirement Program -
M&I Retirement Plan $ (101,525,958) 76.82%
M&I Retirement Program -
Employee Stock Ownership Plan (30,627,359) 23.18
--------------- -------
Total Loss of M&I Retirement
Program Master Trust $ (132,153,317) 100.00%
=============== =======
10
4. GUARANTEED INVESTMENT CONTRACTS
-------------------------------
The Master Trust invests in a common collective 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, 2003
and 2002 was 4.33% and 4.94%, respectively. The crediting interest
rate for the investment contracts as of December 31, 2003 and 2002 was
4.33% and 4.94%, respectively. The fair value of the investment
contracts as of December 31, 2003 and 2002 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 Internal Revenue
Service 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 Company 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, 2003 and 2002, investments were made in a master
trust, 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 repayable through payroll deductions over periods ranging up
to 60 months. 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, 2003 and 2002 ranged from 5.75% to
11.00% and 4.75% and 11.00%, respectively.
8. FORFEITURES
-----------
Forfeited nonvested accounts are used to reduce Corporation
contributions. During 2003 and 2002, $1,517,786 and $1,339,862 of
forfeitures, respectively were used to reduce Corporation
contributions. At December 31, 2003 and 2002, $2,497,638 and
$1,517,786 respectively were available to reduce future Corporation
contributions. These forfeitures relate to the nonvested portions of
the employer profit sharing contributions.
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 account.
* * * * * * *
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, 2003
____________________________________________________________________________
Fair
Issuer Description Value
-------------------- ------------------------------------- -------------
*Marshall & Ilsley Marshall & Ilsley Retirement
Trust Company Program Master Trust $758,182,955
*Marshall & Ilsley Loans to Participants (interest rates
ranging from 5.75% to 11.00%) 89,566
-------------
Total assets (held at end of year) $758,272,521
=============
*Represents party-in-interest.
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements for the Years Ended December 31,
2003 and 2002, 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 -
December 31, 2003 and 2002 2
Statements of Changes in Net Assets Available for Benefits -
Years Ended December 31, 2003 and 2002 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
of 1974 have been omitted because they are not applicable.
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator 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, 2003 and 2002, 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 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes 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,
2003 and 2002, 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 24, 2004
2
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
____________________________________________________________________________
2003 2002
------------- -------------
Investments, at fair market value:
Master trust $325,396,766 $232,216,176
Common stock -- 4,374,174
Money market mutual fund -- 312,956
------------- -------------
Total investments 325,396,766 236,903,306
Receivables -
Employer contribution 11,112,565 10,827,778
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $336,509,331 $247,731,084
============= =============
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, 2003 AND 2002
____________________________________________________________________________
2003 2002
------------- -------------
CONTRIBUTIONS -
Employer $ 11,156,606 $ 10,827,778
INVESTMENT INCOME (LOSS):
Investment income (loss) from Master Trust 98,764,861 (30,627,359)
Other net investment loss (253,595) --
------------- -------------
Net investment income (loss) 98,511,266 (30,627,359)
DEDUCTIONS:
Benefits paid to participants (20,670,440) (15,693,260)
Administrative expenses (8,433) (23,098)
------------- -------------
Total deductions (20,678,873) (15,716,358)
TRANSFERS IN (NOTE 1) -- 283,247,023
TRANSFERS TO M&I RETIREMENT PLAN (210,752) --
------------- -------------
NET INCREASE 88,778,247 247,731,084
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 247,731,084 --
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $336,509,331 $247,731,084
============= =============
See notes to financial statements.
4
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
____________________________________________________________________________
1. DESCRIPTION OF THE PLAN
-----------------------
The Marshall & Ilsley Corporation (the "Corporation") formed on January
1, 2002, 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.
PLAN TRANSFER AND MERGER - Effective January 1, 2002, the portion of
the Employer Stock Fund attributable to company match and prior
acquisition balances from the M&I Retirement Program - M&I Retirement
Plan were transferred into the Plan. Assets transferred at January 1,
2002 were $274,527,790. Effective January 1, 2002, participants
balances from the M&I Retirement Program - M&I Retirement Plan relating
to merged balances from the National City Bancorporation 401(k) Plan
that were invested in Corporation stock were also transferred into the
Plan. Assets transferred at January 1, 2002 were $4,032,103.
During 2002, the Corporation purchased Southwest Bank of St. Louis.
Effective December 31, 2002, the employer stock portion of the
Southwest Bank of St. Louis 401(k) Plan were also merged into the
Plan. Assets merged at December 31, 2002 were $4,687,130.
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, 2003 and 2002, 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.
5
INVESTMENT OPTIONS - The employer matching contributions are invested
in Marshall & Ilsley Common Stock within the M&I Retirement Program
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.
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 accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America. Certain amounts in the 2002 financial
statements have been reclassified to conform to the 2003 presentation.
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 as determined by the Trustee by reference to published
market data except for 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, 2003
and 2002. 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 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 M&I Retirement Program
Master Trust ("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, 2003 and 2002 is as follows:
2003 2002
------------- -------------
M&I Retirement Program Master Trust
-----------------------------------
Investments:
Cash $ 19,184 $ 13,839
Marshall Funds Mutual Funds: *
Intermediate Bond 98,197,687 96,416,531
Equity Income 21,439,613 11,906,251
Mid-Cap Growth 40,016,594 26,623,825
Large Cap Growth & Income 92,452,859 73,382,591
International Stock 18,328,078 11,245,411
Marshall & Ilsley Growth Balanced Fund * 70,369,252 51,834,287
Marshall & Ilsley Aggressive Stock Fund * 74,791,299 50,895,846
Federated Max Cap Index Fund 125,646,671 95,885,035
Managers Special Equity Fund 23,425,835 11,144,111
MFS Massachusetts Growth Fund 10,637,373 6,677,079
Nicholas Fund 34,925,114 25,596,924
M&I Stable Principal Fund * 71,861,889 60,280,459
Marshall & Ilsley Common Stock * ** 401,987,828 286,990,650
Accrued income 599,550 655,528
Pending trades (1,119,105) 61,341
--------------- --------------
Total assets of the
M&I Retirement Program Master $1,083,579,721 $ 809,609,708
=============== ==============
* - Represents party-in-interest
** - Shares of M&I common stock held at December 31, 2003 and 2002
amounted to 10,454,952 and 10,4447,234, respectively.
7
Allocations of the M&I Retirement Program Master Trust to participating
plans as of December 31, 2003 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 758,182,955 69.97%
M&I Retirement Program -
Employee Stock Ownership Plan 325,396,766 30.03
--------------- -------
Total Assets of the M&I
Retirement Program Master Trust $1,083,579,721 100.00%
=============== =======
Allocations of the M&I Retirement Program Master Trust to participating
plans as of December 31, 2002 was as follows:
M&I Retirement Program -
M&I Retirement Plan $ 577,393,532 71.32%
M&I Retirement Program -
Employee Stock Ownership Plan 232,216,176 28.68
--------------- -------
Total Assets of the M&I
Retirement Program Master Trust $ 809,609,708 100.00%
=============== =======
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2003 is as follows:
Dividend and interest income $ 17,503,163
Net appreciation in the fair
value of investments, by type:
Mutual Funds 77,108,197
Common collective trusts 30,548,994
Common stock 116,282,706
---------------
Total M&I Retirement Master Trust Income $ 241,443,060
===============
M&I Retirement Program -
M&I Retirement Plan $ 142,678,199 59.09%
M&I Retirement Program -
Employee Stock Ownership Plan 98,764,861 40.91
--------------- -------
Total Income of M&I Retirement
Program Master Trust $ 241,443,060 100.00%
=============== =======
8
M&I Retirement Program Master Trust loss and its allocation to the
participating plans for the year ended December 31, 2002 was as
follows:
Dividend and interest income $ 16,149,703
Net depreciation in the fair
value of investments, by type:
Mutual Funds (99,283,820)
Common collective trusts (1,549,146)
Common stock (47,470,054)
---------------
Total M&I Retirement Master Trust Loss $ (132,153,317)
===============
M&I Retirement Program -
M&I Retirement Plan $ (101,525,958) 76.82%
M&I Retirement Program -
Employee Stock Ownership Plan (30,627,359) 23.18
--------------- -------
Total Loss of M&I Retirement
Program Master Trust $ (132,153,317) 100.00%
=============== =======
4. GUARANTEED INVESTMENT CONTRACTS
-------------------------------
The Master Trust invests in a common collective trust 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, 2003
and 2002 was 4.33% and 4.94%, respectively. The crediting interest
rate for the investment contracts as of December 31, 2003 and 2002 was
4.33% and 4.94%, respectively. The fair value of the investment
contracts as of December 31, 2003 and 2002 approximates the contract
value. There are no limitations on guarantees of the contracts.
9
5. NON-PARTICIPANT DIRECTED ACCOUNTS
---------------------------------
Information about the net assets as of December 31, 2003 and 2002 and
the significant components of the changes in net assets for the years
ended December 31, 2003 and 2002 relating to non-participant directed
balances is as follows:
2003 2002
-------------- --------------
Investment in Master Trust $ 110,109,187 $ 70,447,036
Employer contribution receivable 9,219,522 9,793,043
-------------- --------------
Total assets $ 119,328,709 $ 80,240,079
============== ==============
Changes in assets attributable to:
Contributions $ 9,219,522 $ 9,793,043
Investment income (loss) from Master Trust 33,348,978 (9,641,769)
Benefit payments (3,423,975) (3,331,713)
Expenses (2,840) (7,443)
Transfers to participant directed accounts (53,055) (3,604,983)
Transfer in from another Plan (Note 1) -- 87,032,944
-------------- --------------
Net increase 39,088,630 80,240,079
Balance, Beginning of year 80,240,079 --
-------------- --------------
Balance, End of year $ 119,328,709 $ 80,240,079
============== ==============
6. INCOME TAX STATUS
-----------------
The Plan has obtained a determination letter from the Internal Revenue
Service 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 Company 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, 2003 and 2002, 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.
8. 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.
* * * * * * *
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 28, 2004