Annual Report (10-k)

Table of Contents

 

 

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, 2021

OR

☐

   TRANSITION

 

REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from

                

to

                

.

Commission

file number 000-02123

 

 

MILLS MUSIC TRUST

(Exact name of registrant as specified in its charter)

 

 

 

New York		13-6183792
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
c/o HSBC BANK USA, N.A., Corporate Trust, Issuer Services 452 Fifth Avenue, New York, NY		10018
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including

area code: 212-525-1349

Securities registered pursuant to Section 12(g) of the Act:

Trust Units

(Title of class)

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ☐  Yes    ☒  No

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    ☒  No

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    ☐  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405

of Regulation S-T (§ 232.405

of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒  Yes    ☐  No

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 the 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.    ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated

filer, a non-accelerated filer, a

smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated

filer”, “non-accelerated filer”,

“smaller reporting company” and “emerging growth company”

in Rule 12b-2 of the

Exchange Act.

 

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined

in Rule 12-b-2 of the

Act).    ☐  Yes    ☒  No

The aggregate market value of Trust Units

held by non-affiliates as of

the last day of the registrant’s most recently completed second fiscal quarter was $6,665,670.

Total Trust Units outstanding as of December 31, 2021 was 277,712.

 

Auditor Firm ID: 694		Auditor Name: Hoberman & Lesser, CPA’s, LLC		Auditor Location: New York, NY, USA

 

 

 

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Table of Contents

TABLE OF CONTENTS

 

PART I			1
ITEM 1. BUSINESS			1
ITEM 1A. RISK FACTORS			3
ITEM 1B. UNRESOLVED STAFF COMMENTS			3
ITEM 2. PROPERTIES			3
ITEM 3. LEGAL PROCEEDINGS			3
ITEM 4. MINE SAFETY DISCLOSURES			3
PART II			4
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES			4
ITEM 6. SELECTED FINANCIAL DATA			4
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			5
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			7
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE			14
ITEM 9A. CONTROLS AND PROCEDURES			14
ITEM 9B. OTHER INFORMATION			15
PART III			15
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE			15
ITEM 11. EXECUTIVE COMPENSATION			16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE			17
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES			17
PART IV			19
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES			19
ITEM 16. FORM 10-K SUMMARY			19
SIGNATURES			20
EX-31.1
EX-31.2
EX-32.1
EX-32.2

 

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Table of Contents

PART I

ITEM 1. BUSINESS

Organization and Background

Mills Music Trust (the “

Trust

”) was created by a Declaration of Trust, dated December 3, 1964 (the “

Declaration of Trust

”), for the purpose of acquiring from Mills Music, Inc. (“

Old Mills

”), the right to receive payment of a deferred contingent purchase price obligation (the “

Contingent Portion

”) payable to Old Mills. The obligation to pay the Contingent Portion arose as the result of the sale by Old Mills of its music and lyric copyright catalogue (the “

Catalogue

”) to a newly formed company pursuant to an asset purchase agreement dated December 5, 1964 (the “

Asset Purchase Agreement

”). Pursuant to the Asset Purchase Agreement, payment of the Contingent Portion to the Trust continues until the end of the year in which the last copyright in the Catalogue expires and cannot be renewed.

The Contingent Portion amounts are currently payable by EMI Mills Music Inc. (“

EMI

”), the owner of the copyrighted materials contained in the Catalogue. The Trust has been advised that Sony/ATV Music Publishing LLC (“

Sony/ATV

”) is the administrator and manager of EMI and the Catalogue.

HSBC Bank, USA, N.A. is the Corporate Trustee of the Trust (the “

Corporate Trustee

”), and Lee Eastman and Michael E. Reiss are the Individual Trustees of the Trust (the “Individual Trustees” and together with the Corporate Trustee, the “

Trustees

”).

Proceeds from Contingent Portion Payments

The Trust receives quarterly payments of the Contingent Portion from EMI and distributes the amounts it receives to the registered owners of Trust Certificates (the “

Unit Holders

”) representing interests in the Trust (the “

Trust Units

”), after payment of, or withholdings in connection with, expenses and liabilities of the Trust. The Declaration of Trust provides that these are the Trust’s sole responsibilities and that the Trust is prohibited from engaging in any business activities.

Payments of the Contingent Portion to the Trust are based on royalty income which the Catalogue generates. The Trust does not own the Catalogue or any copyrights or other intellectual property rights and is not responsible for collecting royalties in connection with the Catalogue. As the current owner and administrator of the Catalogue, EMI is obligated under the Asset Purchase Agreement to use its best efforts to collect all royalties, domestic and foreign, in connection with the Catalogue and to remit a portion of its royalty income to the Trust as its Contingent Portion payment obligation, in accordance with the terms of the Asset Purchase Agreement.

Calculation of the Contingent Portion

The amount of each payment of the Contingent Portion is based on a formula set forth in the Asset Purchase Agreement. For information regarding the calculation of the Contingent Portion and a related dispute between EMI and the Trust see “Contingent Portion Payments” under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Cash Distributions to Unit Holders

The Declaration of Trust provides for the distribution to the Unit Holders of all funds the Trust receives after payment of, or withholdings in connection with, expenses and liabilities of the Trust.

The Copyright Catalogue

The Catalogue is estimated to be composed of over 12,000 music titles (the “

Copyrighted Songs

”), of which approximately 1,430 produced royalty income in recent years. Based on information which EMI provided to the Trust, most of the royalty income generated by the Catalogue during recent years has been produced by a relatively small number of the Copyrighted Songs with copyrights established in or prior to 1960.

 

1

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Table of Contents

EMI has provided the Trust with a listing (the “

Listing

”) of the top 50 earning songs in the Catalogue during the 2021 calendar year (the “

Top 50 Songs

”). The totals contained in the right most column of the Listing represent gross royalty payments EMI received for each of the Top 50 Songs, before it made deductions in accordance with the Asset Purchase Agreement. The Listing also contains the following additional information for each song title: the writer(s), the original copyright date and copyright renewal date and the date on which each copyright enters the public domain in the United States.

The Listing is set forth below in the form that EMI provided to the Trust. There can be no assurance that the Listing is indicative of the future performance of the Copyrighted Songs or that EMI will be able to retain its rights to the Copyrighted Songs during their full term of copyright protection. As of the date of this report, the Trust has not undertaken an audit to confirm the accuracy of the information contained in the Listing, and there can be no assurance by the Trust that the information EMI provided in the Listing is correct.

2021

Mills Music Trust Top 50 Songs

 

RANK		SONG_ID		SONG		WRITERS		Orig © Date		Renewal Date		U.S. PD Year		Gross Rev.
1		2166108		LITTLE DRUMMER BOY		KATHERINE K DAVIS (33.34), HENRY ONORATI (33.33), HARRY SIMEONE (33.33)		11/13/1958		5/12/1986		2053			700,760.22
2		2105974		SLEIGH RIDE (VOCAL) [WW + US Pre & Post ERT Options]		LEROY ANDERSON (50), MITCHELL PARISH (50)		10/24/1950		12/5/1977		2045			576,507.17
3		3150020		SLEIGH RIDE PROMENADE		LEROY ANDERSON (50), MITCHELL PARISH (50)		10/24/1950		12/5/1977		N/A			269,971.29
4		3323422		LOVESICK BLUES		CLIFF FRIEND (50), IRVING MILLS (50)		4/3/1949		4/4/1977		2044			166,988.98
5		755387		It Don’t Mean A Thing (If It Ain’t Got That Swing)		Duke Ellington (50), IRVING MILLS (50)		10/28/1932		10/28/1959		2027			73,041.15
6		2135459		STARDUST		HOAGY CARMICHAEL (50), MITCHELL PARISH (50)		1/5/1928		12/29/1955		2023			69,342.13
7		2104381		ST. JAMES INFIRMARY		IRVING MILLS (100)		3/4/1929		2/28/1957		2024			63,870.01
8		755507		Caravan—Vocal Version		Duke Ellington (25), IRVING MILLS (50), JUAN TIZOL (25)		4/19/1937		4/13/1965		2032			59,221.44
9		3797340		STRAIGHTEN UP AND FLY RIGHT		NAT KING COLE (50), IRVING MILLS (50)		5/31/1944		3/17/1972		2039			53,383.08
10		2445029		MINNIE THE MOOCHER		CAB CALLOWAY (33.34), CLARENCE GASKILL (33.33), IRVING MILLS (33.33)		4/7/1931		3/27/1959		2026			48,930.77
11		755555		In A Sentimental Mood (Vocal)		Duke Ellington (50), MANNY KURTZ (25), IRVING MILLS (25)		11/29/1935		12/31/1962		2030			48,465.85
12		2436326		AIN’T MISBEHAVIN’		HARRY BROOKS (25), ANDY RAZAF (50), FATS WALLER (25)		7/8/1929		7/9/1956		2024			47,326.63
13		2306473		STORMY WEATHER (KEEPS RAININ’ ALL THE TIME)		HAROLD ARLEN (50), TED KOEHLER (50)		4/13/1933		12/31/1959		2028			42,168.75
14		2395977		MOONGLOW		EDDIE DE LANGE (33.34), WILL HUDSON (33.34), IRVING MILLS (33.32)		12/31/1933		12/31/1960		2028			40,397.76
15		2109890		SLEIGH RIDE (INSTRUMENTAL) [WW + US Pre & Post ERT Options]		LEROY ANDERSON (100)		12/30/1948		2/23/1976		2043			35,641.61
16		2110059		TYPEWRITER		LEROY ANDERSON (100)		10/6/1953		8/31/1981		2048			32,291.48
17		2049843		I’VE GOT THE WORLD ON A STRING		HAROLD ARLEN (50), TED KOEHLER (50)		3/10/1932		11/10/1959		2027			29,938.83
18		2340125		VIEILLE CANAILLE		JACQUES PLANTE (10), SAM THEARD (90)		12/12/1929		12/12/1957		2024			28,391.41
19		755386		In A Sentimental Mood (Instr.)		DUKE ELLINGTON (100)		11/29/1935		11/29/1962		2030			26,959.98
20		2452611		I CAN’T GIVE YOU ANYTHING BUT LOVE		DOROTHY FIELDS (50), JIMMY MC HUGH (50)		3/6/1928		2/28/1956		2023			26,770.89
21		759836		Caravan— Instrumental Version		Duke Ellington (50), JUAN TIZOL (50)		4/19/1937		4/13/1965		2032			24,369.60
22		2378336		I’M GETTING SENTIMENTAL OVER YOU		GEORGE BASSMAN (50), NED WASHINGTON (50)		10/21/1932		10/21/1959		2045			23,622.91
23		3785846		STARS FELL ON ALABAMA		MITCHELL PARISH (50), FRANK S PERKINS (50)		9/14/1934		9/4/1962		2029			22,947.93
24		795188		Solitude		EDDIE DE LANGE (33.34), Duke Ellington (33.34), IRVING MILLS (33.32)		9/21/1934		9/4/1962		2029			22,500.23
25		3783971		HOLD ME, THRILL ME, KISS ME		HARRY NOBLE (100)		10/21/1952		9/29/1980		2047			21,942.75
26		755513		East St. Louis Toodle-Oo		Duke Ellington (50), Bub Miley (50)		2/10/1927		3/3/1954		2049			21,438.72
27		755540		Mood Indigo		BARNEY BIGARD (33.33), Duke Ellington (33.34), IRVING MILLS (33.33)		2/21/1931		12/31/1958		2029			21,178.67
28		2206172		ROCK-A-BYE YOUR BABY WITH A DIXIE MELODY		SAM LEWIS (33.34), JEAN SCHWARTZ (33.33), JOE YOUNG (33.33)		3/6/1918		4/11/1945		2013			19,881.14
29		2462238		HOLD TIGHT, HOLD TIGHT (WANT SOME SEAFOOD MAMA)		DICK BRANDOW (16.68), LEONARD KENT (16.68), JOSEPH MILLER (16.66), GEORGE ROBINSON (16.66), WILLIE SPOTTSWOOD (16.66), LEON WARE (16.66)		1/24/1939		1/23/1967		2034			19,762.74
30		3757034		SWEET LORRAINE		CLIFF BURWELL (50), MITCHELL PARISH (50)		12/31/1927		11/3/1954		2022			19,373.67
31		2423783		YOU RASCAL YOU		SAM THEARD (100)		12/12/1929		12/12/1957		2024			19,067.45
32		755550		Sophisticated Lady		Duke Ellington (50), IRVING MILLS (25), MITCHELL PARISH (25)		5/31/1933		5/31/1960		2028			18,005.54
33		2011720		SMOKE RINGS		GENE GIFFORD (50), NED WASHINGTON (50)		3/31/1933		4/1/1960		2028			17,274.09
34		755399		Rockin’ In Rhythm		HARRY CARNEY (33.33), Duke Ellington (33.33), IRVING MILLS (33.34)		4/9/1931		4/7/1959		2026			16,852.68
35		2448372		CAROL OF THE DRUM		KATHERINE DAVIS (100)		5/2/1941		10/2/1968		2036			16,258.65

 

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Table of Contents

36		2102873		BUGLER’S HOLIDAY		LEROY ANDERSON (100)		7/8/1954		2/3/1982		2049			15,370.59
37		3798731		AMERICAN SALUTE		MORTON GOULD (100)		3/31/1943		2/17/1971		2038			14,773.73
38		2005264		CORRINE CORRINA		BO CHATMAN (33.34), MITCHELL PARISH (33.32), J WILLIAMS (33.34)		12/5/1929		12/3/1957		2024			14,523.37
39		3559694		BUGLE CALL RAG		BILLY MEYERS (33.34), JOHN PETTIS (33.33), ELMER SCHOEBEL (33.33)		6/13/1923		6/15/1950		2018			13,905.73
40		2364046		DONA DONA (HARGAIL VERSION)		ARTHUR KEVESS (12.5), TEDDI SCHWARTZ (12.5), SHELDON SECUNDA (12.5), SHOLOM ‘SAMUEL’ SECUNDA (50), AARON ZEITLIN (12.5)		10/1/1940		5/16/1968		2030			13,764.98
41		755541		Prelude To A Kiss		Duke Ellington (33.34), IRVING GORDON (33.33), IRVING MILLS (33.33)		9/29/1938		9/8/1966		2033			13,591.93
42		3557048		SHANGHAI SHUFFLE		LARRY CONLEY (50), GENE RODEMICH (50)		10/20/1924		1/1/1982		2019			13,517.02
43		2132833		DOES YOUR CHEWING GUM LOSE ITS FLAVOR ON THE BEDPO		MARTY BLOOM (33.33), ERNEST BREUER (33.33), BILLY ROSE (33.34)		2/29/1924		3/1/1951		2019			11,260.99
44		2307281		THIS TRAIN		ROSETTA THARPE (100)		12/23/1938		12/22/1966		2033			10,982.02
45		3485900		IN THE BEGINNING		JEREMY STEIG (100)		3/17/1971		12/31/1998		2066			10,010.48
46		2108433		THAT JUNGLE JAMBOREE		HARRY BROOKS (25), ANDY RAZAF (50), FATS WALLER (25)		9/17/1929		9/17/1956		2024			9,267.91
47		2255641		A CHRISTMAS FESTIVAL		LEROY ANDERSON (100)		11/6/1950		12/9/1977		2045			9,223.21
48		3563580		RED ROSES FOR A BLUE LADY		ROY C BENNETT (50), SID TEPPER (50)		12/30/1948		1/1/1976		2043			8,840.21
49		2290245		SHAKIN’ ALL OVER		FRED HEATH (100)		7/8/1960		1/11/1988		2055			8,695.47
50		755527		I Let A Song Go Out Of My Heart		Duke Ellington (50), IRVING MILLS (16.67), HENRY NEMO (16.67), JOHN REDMOND (16.66)		4/26/1938		4/22/1966		2033			8,153.44

Accounting Policies

EMI typically makes payments to the Trust of the Contingent Portion in March, June, September and December for the prior calendar quarter. The payments received are accounted for on a cash basis, as are expenses of the Trust. The Declaration of Trust provides for the distribution to the Unit Holders of the amounts received by the Trust in Contingent Portion payments after payment of, or withholdings in connection with, expenses and liabilities of the Trust.

The Trust’s financial statements reflect only cash transactions and do not include transactions that would be recorded in financial statements presented on the accrual basis of accounting, as contemplated by generally accepted accounting principles in the United States. The Trust does not prepare a balance sheet or a statement of cash flows.

ITEM 1A. RISK FACTORS

The Trust is a smaller reporting

company as defined by Rule 12b-2 of the Exchange Act and

is not required to provide the information under this item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Trust does not own any property. The administrative office of the Trust is located at the offices of the Corporate Trustee, HSBC Bank, USA, N.A., Corporate Trust Issuer Services, 452 Fifth Avenue, New York, New York 10018. Except for fees paid to the Corporate Trustee in accordance with the Declaration of Trust, no expense is being charged or paid by the Trust for the office space and office equipment of the Corporate Trustee that is being utilized for the Trust. See Note 3, “Related Party Transactions,” under Part II, Item 8, “Financial Statements and Supplementary Data” for information regarding payments by the Trust to the Trustees.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

 

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The Trust

Units are traded on the over-the-counter market and quoted on the

OTC Pink Marketplace under the symbol “MMTRS”.

Price Range of Trust Units

The following table sets forth the high and low bid amounts for the Trust Units (as reported by Yahoo! Finance) during each quarter of the two most recent calendar years. Quotations represent inter-dealers prices, without retail markup, markdown, or commission and may not necessarily represent actual transactions.

 

Calendar Period		High				Low
			$				$
2020
First Quarter			50.00				29.23
Second Quarter			49.00				30.50
Third Quarter			39.00				33.00
Fourth Quarter			39.60				35.00
2021
First Quarter			42.00				37.00
Second Quarter			42.00				39.90
Third Quarter			49.00				40.47
Fourth Quarter			66.00				42.00

Unit Holders

As of December 31, 2021 there were 106 Trust Unit holders of record. The Trust is unable to estimate the total number of persons that beneficially own Trust Units in “street name” through brokers or the other institutions which are the holders of record.

Dividends

The Declaration of Trust provides for the distribution to the Unit Holders of all funds the Trust receives after payment of, or withholdings in connection with, expenses and liabilities of the Trust. See the table under Part II, Item 6, “Selected Financial Data” for information about cash disbursements made to Unit Holders.

Recent Sales of Unregistered Securities

None.

ITEM 6. SELECTED FINANCIAL DATA

The information set forth below for the five years ended December 31, 2021 is not necessarily indicative of results of future operations, and should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes thereto included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report to fully understand factors that may affect the comparability of the information presented below.

 

Year Ended December 31		Receipts From EMI				Cash Distributions to Unit Holders				Cash Distributions Per Unit*
2021		$	1,061,519			$	830,151			$	2.99
2020		$	1,016,712			$	789,444			$	2.84
2019		$	2,058,976			$	1,805,109			$	6.50
2018		$	1,036,335			$	790,184			$	2.85
2017		$	886,165			$	595,328			$	2.14

 

*	Based on 277,712 Trust Units outstanding

 

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Copyright Catalogue

The Catalogue is estimated to be composed of over 12,000 music titles, of which approximately 1,430 produced royalty income in recent years. Based on the Listing, the Trust derives its receipts principally from copyrights established in or prior to 1960 in the United States. The receipts fluctuate based on consumer interest in the nostalgia appeal of older songs and the overall popularity of the songs contained in the Catalogue. The Catalogue also generates royalty income in foreign countries in which copyright is claimed.

A number of factors create uncertainties with respect to the Catalogue’s ability to continue to generate royalty income on a continuing, long-term basis for the Trust. These factors include: (i) the effect that foreign and domestic copyright laws and any changes thereto have or will have on renewal rights (e.g., vesting of renewal term rights), (ii) the length of the term of copyright protection under foreign and domestic copyright laws, (iii) reversionary rights that may affect whether EMI is able to retain its rights to the Copyrighted Songs during certain renewal terms (e.g., statutory termination of transfers or “copyright recapture”) and (iv) ongoing disputes regarding the payment and calculation of the Contingent Portion.

The Trust does not own the Catalogue or any copyrights or other intellectual property rights and is not responsible for collecting royalties in connection with the Catalogue. As the current owner and administrator of the Catalogue, EMI is obligated under the Asset Purchase Agreement to use its best efforts to collect all royalties, domestic and foreign, in connection with the Catalogue and to remit a portion of its royalty income to the Trust in accordance with its Contingent Portion payment obligation.

The Trust’s income is dependent, in part, on EMI’s ability to maintain its rights in the Copyrighted Songs through copyright protection. Although Copyrighted Songs may continue to generate royalty revenue after their copyrights have expired, in general as the copyrights for the Copyrighted Songs expire, less royalty income will be generated, and the size of each payment of the Contingent Portion will be reduced accordingly.

Based on the Listing, most of the Top 50 Songs obtained copyright registration under the U.S. Copyright Act of 1909 (the “

1909 Act

”) between 1918 and 1971. For copyrighted works subject to the 1909 Act, copyright law generally provides for a possible 95 years of copyright protection, subject to certain factors, including the initial registration date of each copyright and compliance with certain statutory provisions including notice and renewal. The Copyright expiration dates for the Top 50 Songs range between 2013 and 2066, as set forth in the Listing.

The Copyrighted Songs are subject to statutory rights of termination of transfers, which may impact whether EMI is able to retain its ownership of the Copyrighted Songs during their respective terms of copyright protection. For copyrights governed by the 1909 Act, this termination right vests at the end of two different renewal terms, which vary for each Copyrighted Song. As the owner of the Catalogue, EMI (and not the Trust) is responsible for administrating the Catalogue and seeking renewals of the Copyrighted Songs. The Asset Purchase Agreement provides that EMI is obligated to use its best efforts to secure renewals.

Contingent Portion Payments

Payments of the Contingent Portion to the Trust are ordinarily made on a quarterly basis, approximately two to three months after a quarter ends. The Trust distributes the amounts it receives in Contingent Portion payments to the Unit Holders after payment of, or withholdings in connection with, expenses and liabilities of the Trust.

The amount of each payment of the Contingent Portion is based on a formula provided in the Asset Purchase Agreement. Prior to the first quarter of 2010, the Contingent Portion was calculated as an amount ranging from 65% to 75% of gross royalty income from the exploitation of the Catalogue for each quarterly period, less royalty expenses. In addition, the Contingent Portion was guaranteed to be at least a minimum of $167,500 per quarter (the “

Minimum Payment Obligation

”).

 

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Beginning with the first quarter of 2010, the Asset Purchase Agreement provides for certain changes with respect to the calculation of the Contingent Portion. One such change is that the Minimum Payment Obligation is no longer in effect. The Trust is also of the view that the Contingent Portion payable to the Trust changed to a fixed 75% of gross royalty income from the exploitation of the Catalogue for each quarterly period, less royalty related expenses (the “

New Calculation Method

”). However, EMI has disputed that the New Calculation Method is the correct interpretation of the Asset Purchase Agreement. As a result of EMI not applying the New Calculation Method, EMI’s payments of the Contingent Portion have been deficient, in the Trust’s view, by the following amounts (the “

Underpayments

”):

 

Quarterly Payment Period		Amount of Deficiency
March 31, 2016		$	79,889
September 30, 2016			37,529
March 31, 2017			85,359
September 30, 2017			41,557
March 31, 2018			98,901
September 30, 2018			75,712
March 31, 2019			71,489
June 30, 2019			41,786
September 30, 2019			68,571
December 31, 2019			42,572
March 31, 2020			40,025
June 30, 2020			15,557
September 30, 2020			40,085
March 31, 2021			42,742
June 30, 2021			43,148
September 30, 2021			38,846
December 31, 2021			38,112
Total		$	901,880

As of the date hereof, the Trust has not received the Underpayments, and EMI has expressly disagreed with the Trust. The Trust can offer no assurance that it will be able to recover any of the Underpayments or that it will resolve favorably the ongoing dispute relating to the New Calculation Method with respect to future payments of the Contingent Portion.

The Trust has engaged Citrin Cooperman & Company LLP, an accounting firm specializing in auditing royalty income, to conduct a special audit of the books and records of EMI administered by Sony/ATV to resolve the ongoing dispute and also determine whether there have been any other material royalty omissions or expense over-deductions for the periods beginning January 1, 2016 and ended December 31, 2020.

Unit Holder Distributions and Trust Expenses

Recent Payments

During the year ended December 31, 2021, the Trust received a total of $1,061,519 from EMI, all of which was attributable to ordinary Contingent Portion Payments which EMI made to the Trust during the 2021 calendar year. During the year ended December 31, 2020, the Trust received a total of $1,016,712 from EMI, all of which was attributable to ordinary Contingent Portion Payments which EMI made to the Trust during the 2020 calendar year.

 

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Recent Distributions

During the year ended December 31, 2021, the Trust made cash distributions to Unit Holders in the aggregate amount of $830,151 ($2.99 per Trust Unit), as compared to cash distributions to Unit Holders in the aggregate amount of $789,444 ($2.84 per Trust Unit) during the year ended December 31, 2020. For computation details regarding the distributions made during the year ended December 31, 2021, please refer to

the Current Report on Form 8-K, which the Trust filed with

the Securities and Exchange Commission on December 21, 2021.

Cash and Administrative Expenses

As of December 31, 2021 the Trust had $39,262 unpaid administrative expenses for services rendered to the Trust. As of March 7, 2022, the Trust had received invoices for an aggregate of $56,036 in unpaid administrative expenses for services rendered to the Trust.

Inflation

The Trust does not believe that inflation has materially affected its activities.

Liquidity and Capital Resources

The Declaration of Trust provides for the distribution to the Unit Holders of all funds the Trust receives after payment of, or withholdings in connection with, expenses and liabilities of the Trust. See the table headed “Statements of Cash Receipts and Disbursements” under Part II, Item 8, “Financial Statements and Supplementary Data” for information regarding cash disbursements made to Unit Holders for the years ended December 31, 2021 and 2020.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or

are reasonably likely to have a current or future effect on the Trust’s financial condition, changes in financial condition, revenues or expenses, results of operations or liquidity that is material to investors.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm and financial statements begin on page 8 of this report.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Trustees and Unit Holders of Mills Music Trust

Opinion on the Financial Statements

We have audited the accompanying statements of cash receipts and disbursements of Mills Music Trust (the “Trust”) for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the cash receipts and disbursements of the Trust for each of the years in the two-year period ended December 31, 2021, in conformity with the basis of cash receipts and disbursements, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America, as described in Note 1 to the financial statements.

Basis for Opinion

This financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statement that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statement and (2) involved our especially challenging, subjective, or complex judgements. We determined that there were no critical audit matters.

Other Matter

Attention is directed to Note 1 to the financial statements for information concerning a dispute with respect to certain amounts believed to be owed to Mills Music Trust.

 

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We have served as the Trust’s auditor since 2020.

New York, New York

March 31, 2022

 

MGI Worldwide is a network of independent audit, tax, accounting and consulting firms. MGI Worldwide does not provide any services and its member firms are not an international partnership. Each member firm is a separate entity and neither MGI Worldwide nor any member firm accepts responsibility for the activities, work, opinions or services of any other member firm. For more information visit www.mgiworld.com/legal

 

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MILLS MUSIC TRUST

STATEMENTS OF CASH RECEIPTS AND DISBURSEMENTS

YEARS ENDED DECEMBER 31, 2021 AND 2020

 

		2021				2020
Receipts from EMI		$	1,061,519			$	1,016,712
Undistributed Cash at Beginning of Year			46				46
Disbursements – Administrative Expenses			(231,368	)			(227,268	)
Balance Available for Distribution			830,197				789,490
Cash Distributions to Unit Holders			830,151				789,444
Undistributed Cash at End of Year		$	46			$	46
Cash Distributions Per Unit (based on 277,712 Trust Units Outstanding)		$	2.99			$	2.84

See accompanying Notes to Statements of Cash Receipts and Disbursements.

The Trust does not prepare a balance sheet or a statement of cash flows.

 

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MILLS MUSIC TRUST

NOTES TO STATEMENTS OF CASH RECEIPTS AND DISBURSEMENTS

YEARS ENDED DECEMBER 31, 2021 AND 2020

NOTE 1. ACCOUNTING POLICIES AND GENERAL INFORMATION

Organization and Background

Mills Music Trust (the “

Trust

”) was created by a Declaration of Trust, dated December 3, 1964 (the “

Declaration of Trust

”), for the purpose of acquiring from Mills Music, Inc. (“

Old Mills

”), the right to receive payment of a deferred contingent purchase price obligation (the “

Contingent Portion

”) payable to Old Mills. The obligation to pay the Contingent Portion arose as the result of the sale by Old Mills of its music and lyric copyright catalogue (the “

Catalogue

”) to a newly formed company pursuant to an asset purchase agreement dated December 5, 1964 (the “

Asset Purchase Agreement

”). Pursuant to the Asset Purchase Agreement, payment of the Contingent Portion to the Trust continues until the end of the year in which the last copyright in the Catalogue expires and cannot be renewed.

The Contingent Portion amounts are currently payable by EMI Mills Music Inc. (“

EMI

”), the owner of the copyrighted materials contained in the Catalogue. The Trust has been advised that Sony/ATV Music Publishing LLC (“

Sony/ATV

”) is the administrator and manager of EMI and the Catalogue.

HSBC Bank, USA, N.A. is the Corporate Trustee of the Trust (the “

Corporate Trustee

”), and Lee Eastman and Michael E. Reiss are the Individual Trustees of the Trust (the “

Individual Trustees

” and together with the Corporate Trustee, the “

Trustees

”).

Proceeds from Contingent Portion Payments

The Trust receives quarterly payments of the Contingent Portion from EMI and distributes the amounts it receives to the registered owners of Trust Certificates (the “

Unit Holders

”) representing interests in the Trust (the “

Trust Units

”), after payment of, or withholdings in connection with, expenses and liabilities of the Trust. The Declaration of Trust provides that these are the Trust’s sole responsibilities and that the Trust is prohibited from engaging in any business activities.

Payments of the Contingent Portion to the Trust are based on royalty income which the Catalogue generates. The Trust does not own the Catalogue or any copyrights or other intellectual property rights and is not responsible for collecting royalties in connection with the Catalogue. As the current owner and administrator of the Catalogue, EMI is obligated under the Asset Purchase Agreement to use its best efforts to collect all royalties, domestic and foreign, in connection with the Catalogue and to remit a portion of its royalty income to the Trust as its Contingent Portion payment obligation, in accordance with the terms of the Asset Purchase Agreement.

Cash Distributions to Unit Holders

The Declaration of Trust provides for the distribution to the Unit Holders of all funds the Trust receives after payment of, or withholdings in connection with, expenses and liabilities of the Trust.

Contingent Portion Payments

Payments of the Contingent Portion to the Trust are ordinarily made on a quarterly basis, approximately two to three months after a quarter ends. The Trust distributes the amounts it receives in Contingent Portion payments to the Unit Holders after payment of, or withholdings in connection with, expenses and liabilities of the Trust.

The amount of each payment of the Contingent Portion is based on a formula provided in the Asset Purchase Agreement. Prior to the first quarter of 2010, the Contingent Portion was calculated as an amount ranging from 65% to 75% of gross royalty income from the exploitation of the Catalogue for each quarterly period, less royalty expenses. In addition, the Contingent Portion was guaranteed to be at least a minimum of $167,500 per quarter (the “

Minimum Payment Obligation

”).

 

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Beginning with the first quarter of 2010, the Asset Purchase Agreement provides for certain changes with respect to the calculation of the Contingent Portion. One such change is that the Minimum Payment Obligation is no longer in effect. The Trust is also of the view that the Contingent Portion payable to the Trust changed to a fixed 75% of gross royalty income from the exploitation of the Catalogue for each quarterly period, less royalty related expenses (the “

New Calculation Method

”). However, EMI has disputed that the New Calculation Method is the correct interpretation of the Asset Purchase Agreement. As a result of EMI not applying the New Calculation Method, EMI’s payments of the Contingent Portion have been deficient, in the Trust’s view, by the following amounts (the “

Underpayments

”):

 

Quarterly Payment Period		Amount of Deficiency
March 31, 2016		$	79,889
September 30, 2016			37,529
March 31, 2017			85,359
September 30, 2017			41,557
March 31, 2018			98,901
September 30, 2018			75,712
March 31, 2019			71,489
June 30, 2019			41,786
September 30, 2019			68,571
December 31, 2019			42,572
March 31, 2020			40,025
June 30, 2020			15,557
September 30, 2020			40,085
March 31, 2021			42,742
June 30, 2021			43,148
September 30, 2021			38,846
December 31, 2021			38,112
Total		$	901,880

As of the date hereof, the Trust has not received the Underpayments, and EMI has expressly disagreed with the Trust. The Trust can offer no assurance that it will be able to recover any of the Underpayments or that it will resolve favorably the ongoing dispute relating to the New Calculation Method with respect to future payments of the Contingent Portion.

The Trust has engaged Citrin Cooperman & Company LLP, an accounting firm specializing in auditing royalty income, to conduct a special audit of the books and records of EMI administered by Sony/ATV to resolve the ongoing dispute and also determine whether there have been any other material royalty omissions or expense over-deductions for the periods beginning January 1, 2016 and ended December 31, 2020.

Unit Holder Distributions and Trust Expenses

Recent Payments

During the year ended December 31, 2021, the Trust received a total of $1,061,519 from EMI, all of which was attributable to ordinary Contingent Portion Payments which EMI made to the Trust during the 2021 calendar year. During the year ended December 31, 2020, the Trust received a total of $1,016,712 from EMI, all of which was attributable to ordinary Contingent Portion Payments which EMI made to the Trust during the 2020 calendar year.

Recent Distributions

During the year ended December 31, 2021, the Trust made cash distributions to Unit Holders in the aggregate amount of $830,151 ($2.99 per Trust Unit), as compared to cash

distributions

to Unit Holders in the aggregate amount of $789,444 ($2.84 per Trust Unit) during the year ended December 31, 2020. For computation details regarding the distributions made during the year ended December 31, 2021, please refer to the Current Report on Form

8-K,

which the Trust filed with the Securities and Exchange Commission on December 21, 2021.

 

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Cash and Administrative Expenses

As of December 31, 2021 the Trust had $39,262 unpaid administrative expenses for services rendered to the Trust. As of March 7, 2022, the Trust had received invoices for an aggregate of $56,036 in unpaid administrative expenses for services rendered to the Trust.

Accounting Policies

Payments from EMI to the Trust of the Contingent Portion are typically made in March, June, September and December for the prior calendar quarter. The payments received are accounted for on a cash basis, as are expenses. The Declaration of Trust provides for the distribution of all funds received by the Trust to the Unit Holders after expenses are paid.

The Trust’s financial statements reflect only cash transactions and do not include transactions that would be recorded in financial statements presented on the accrual basis of accounting, as contemplated by generally accepted accounting principles in the United States. The Trust does not prepare a balance sheet or a statement of cash flows.

NOTE 2. FEDERAL INCOME TAXES

No provision for income taxes has been made since the liability thereof is that of the Unit Holders and not the Trust.

NOTE 3. RELATED PARTY TRANSACTIONS

The Trustees are paid in accordance with the Declaration of Trust, which provides that each Trustee shall receive annual compensation of $2,500, provided that such aggregate compensation to the Trustees as a group may not exceed 3% of the Contingent Portion amounts received by the Trust in any year. The Declaration of Trust also provides for the reimbursement of expenses reasonably incurred in the performance of a Trustee’s duties to the Trust, including clerical and administrative services. Accordingly, the Trustees are entitled to receive annual compensation and reimbursement for services performed for the Trust, including the Corporate Trustee’s services as the Registrar and Transfer Agent of the certificates representing the Trust Units. No expense is being charged or paid by the Trust for the office space and office equipment of the Corporate Trustee that is being utilized for the Trust

.

The Declaration of Trust also provides that if a Trustee performs unusual or extraordinary services, reasonable compensation for such services shall be paid, subject to the terms and conditions of the Declaration of Trust.

Pursuant to the Declaration of Trust, disbursements were made as follows to the Trustees for the years ended December 31, 2021 and December 31, 2020:

 

Trustee Fees Paid by the Trust		2021				2020
Individual Trustee fees  (1)		$	5,000			$	5,000
Corporate Trustee fees			2,500				2,500
Corporate Trustee Transfer Agent Registrar fees (2)			15,000				15,000
Totals		$	22,500			$	22,500

 

(1)	The Individual Trustees were elected on August 29, 2013.

(2)	These services are performed by the Corporate Trustee.

NOTE 4. THE COPYRIGHT CATALOGUE

The Catalogue is estimated to be composed of over 12,000 music titles, of which approximately 1,430 produced royalty income in recent years. Based on the Listing, the Trust derives its receipts principally from copyrights established in or prior to 1960 in the Unites States. The receipts fluctuate based on consumer interest in the nostalgia appeal of older songs and the overall popularity of the songs contained in the Catalogue. The Catalogue also generates royalty income in foreign countries in which copyright is claimed.

 

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A number of factors create uncertainties with respect to the Catalogue’s ability to continue to generate royalty income on a continuing, long-term basis for the Trust. These factors include: (i) the effect that foreign and domestic copyright laws and any changes thereto have or will have on renewal rights (e.g., vesting of renewal term rights), (ii) the length of the term of copyright protection under foreign and domestic copyright laws, (iii) reversionary rights that may affect whether EMI is able to retain its rights to the Copyrighted Songs during certain renewal terms (e.g., statutory termination of transfers or “copyright recapture”) and (iv) ongoing disputes regarding the payment and calculation of the Contingent Portion.

The Trust does not own the Catalogue or any copyrights or other intellectual property rights and is not responsible for collecting royalties in connection with the Catalogue. As the current owner and administrator of the Catalogue, EMI is obligated under the Asset Purchase Agreement to use its best efforts to collect all royalties, domestic and foreign, in connection with the Catalogue and to remit a portion of its royalty income to the Trust in accordance with its Contingent Portion payment obligation.

The Trust’s income is dependent, in part, on EMI’s ability to maintain its rights in the Copyrighted Songs through copyright protection. Although Copyrighted Songs may continue to generate royalty revenue after their copyrights have expired, in general as the copyrights for the Copyrighted Songs expire, less royalty income will be generated, and the size of each payment of the Contingent Portion will be reduced accordingly.

Based on the Listing, most of the Top 50 Songs obtained copyright registration under the U.S. Copyright Act of 1909 (the “

19

09

Act

”) between 1918 and 19

71

. For copyrighted works subject to the 19

0

9

Act, copyright law generally provides for a possible 95 years of copyright protection, subject to certain factors, including the initial registration date of each copyright and compliance with certain statutory provisions including notice and renewal. The Copyright expiration dates for the Top 50 Songs range between 2013 and 2066, as set forth in the Listing.

The Copyrighted Songs are subject to statutory rights of termination of transfers, which may impact whether EMI is able to retain its ownership of the Copyrighted Songs during their respective terms of copyright protection. For copyrights governed by the 1909 Act, this termination right vests at the end of two different renewal terms, which vary for each Copyrighted Song. As the owner of the Catalogue, EMI (and not the Trust) is responsible for administrating the Catalogue and seeking renewals of the Copyrighted Songs. The Asset Purchase Agreement provides that EMI is obligated to use its best efforts to secure renewals.

NOTE 5. OTHER MATTERS

None.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in this report under the Securities Exchange Act of 1934 (the “

Exchange Act

”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Trust’s management, which is comprised of the Trust Officer of the Corporate Trustee and the Chief Financial Individual providing accounting services to the Trust, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Trust’s management has evaluated the effectiveness of the design and operation of the Trust’s disclosure controls and procedures as of December 31, 2021. Based upon that evaluation and subject to the foregoing, the Trust’s management concluded that the design and operation of the Trust’s disclosure controls and procedures provided reasonable assurance that the disclosure controls and procedures are effective to accomplish their objectives.

 

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Management’s Annual Report on Internal Control over Financial Reporting

Management of the Trust is responsible for establishing and maintaining adequate internal control over financial reporting for the Trust as defined in Rule

13a-15(f)

under the Exchange Act. The Trust’s internal control over financial reporting is designed to provide reasonable assurance to management regarding the preparation and fair presentation of published financial statements and the reliability of financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Trust’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework. Based on management’s assessment, the Trust believes that, as of December 31, 2021, the Trust’s internal control over financial reporting is effective based on those criteria.

This annual report does not include an attestation report of the Trust’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Trust’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Trust to provide only management’s report in this annual report on Form

10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in the Trust’s internal control over financial

reporting (as defined in Rule 13a-15(f) under the Exchange Act)

during the quarter ended December 31, 2021 that materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Trust does not have, nor does the Declaration of Trust provide for, officers, a board of directors or any employees. HSBC Bank, USA, N.A. is the Corporate Trustee of the Trust, and Lee Eastman and Michael E. Reiss are the Individual Trustees of the Trust. Pursuant to the Declaration of Trust, Trustees of the Trust serve until their removal, resignation, incapacity, or in the case of Individual Trustees, their death.

HSBC Bank, USA, N.A.

—The Corporate Trustee (or its predecessor, Marine Midland Bank) has been the Corporate Trustee of the Trust since February 1965 and is a national banking association organized under the laws of the United States.

Lee Eastman

—Mr. Eastman has been a partner at the law firm Eastman & Eastman since 1997. He is also responsible for the day to day operations of MPL Communications, Inc. and MPL Music Publishing, Inc. and is a principal of various music publishing interests. Mr. Eastman currently serves as executive vice-president on the board of Literacy Partners, Inc. Mr. Eastman graduated from Stanford University in 1992 and from Stanford Law School in 1997. He has served on the Board of Visitors and has lectured on intellectual property at Stanford Law School.

 

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Michael E. Reiss

—Mr. Reiss has served on a number of civic, philanthropic and community boards, including the Hinsdale Central High School Foundation, the Chicago Chapter of the Cystic Fibrosis Foundation, the Discovery Science Center of Southern California and the Coach Care Medical Foundation. From 2006 until present, Mr. Reiss has been a Member of Buttonwood Tree Management, LLC and a general partner of Buttonwood Tree Value Partners, LLC, a California investment partnership with investments that include Trust Units of Mills Music Trust. From 2010 until present, Mr. Reiss has served as Trustee for the Peggy J. Wilson Declaration of Trust and the Peggy J. Wilson Irrevocable Life Insurance Trust. Mr. Reiss is responsible for fiduciary management of these trusts, including general operations, investment management and accounting oversight. From 1992 until present, Mr. Reiss has served as President of M.E. Reiss, Ltd. and Chief Administrator and Investment Advisor for the James M. Wilson and Peggy J. Wilson trusts. From 2002 until present, Mr. Reiss has been an investment member of the following companies: McHenry Ventures, LLC, McHenry IL, Lemont Ventures, LLC, Lemont, IL; Buffalo Grove Ventures, LLC, Buffalo, IL; and Green Trails Ventures, LLC, Lisle, IL. Mr. Reiss’s activities in connection with these roles include acquisition and management of commercial real estate investments in the greater Chicago area. Mr. Reiss attended Eastern Illinois University from 1982 until 1986, where he received a Bachelor of Arts degree. Prior to that, Mr. Reiss attended the University of San Diego from 1975 until 1977 and also attended the College of DuPage from 1973 until 1975, where he received an Associate’s Degree.

Code of Ethics

On December 23, 2014, the Trust adopted a code of ethics

(as defined in Item 406 of Regulation S-K under the Securities Act of

1933) applicable to the Individual Trustees and the trust officers of the Corporate Trustee. A copy of the Code of Ethics will be provided to any person without charge upon written request to the Trust at its administrative office, c/o HSBC BANK USA, N.A., Corporate Trust, Issuer Services, 452 Fifth Avenue, New York, NY. In addition, the Trust relies on the Corporate Trustee to abide by HSBC Bank, USA, N.A.’s Statement of Business Principles and Code of Ethics, which is available on the Corporate Trustee’s website at http://www.us.hsbc.com.

Audit Committee

The Trust is not a corporate entity and thus does not have an Audit Committee. The Trust has established a policy with regard to audit, audit-related and certain

non-audit

engagements of its independent auditors. Under this policy, the Trust annually approves certain limited, specified recurring services which may be provided by the Trust’s accountant or independent auditors. All other engagements for services to be performed by the Trust’s independent auditors must be separately

pre-approved

by the Trust. Joel Faden acts as Chief Financial Individual providing accounting services for the Trust.

ITEM 11. EXECUTIVE COMPENSATION

The Trust does not have, nor does the Declaration of Trust provide for, officers, a board of directors or any executives.

The Trustees are paid in accordance with the Declaration of Trust, which provides that each Trustee shall receive annual compensation of $2,500, provided that such aggregate compensation to the Trustees as a group may not exceed 3% of the Contingent Portion amounts received by the Trust in any year. The Declaration of Trust also provides for the reimbursement of expenses reasonably incurred in the performance of a Trustee’s duties to the Trust, including clerical and administrative services. Accordingly, the Trustees are entitled to receive annual compensation and reimbursement for services performed for the Trust, including the Corporate Trustee’s services as the Registrar and Transfer Agent of the certificates representing the Trust Units. The Declaration of Trust also provides that if a Trustee performs unusual or extraordinary services, reasonable compensation for such services shall be paid, subject to the terms and conditions of the Declaration of Trust. See Note 3, “Related Party Transactions” under Part II, Item 8, “Financial Statements and Supplementary Data” for information regarding payments by the Trust to the Trustees made in accordance with the Declaration of Trust.

The Declaration of Trust does not provide for any bonuses, stock awards, option awards,

non-equity

incentive plan compensation or nonqualified deferred compensation earnings. The Trust does not have severance agreements nor does it provide post-retirement benefits to any of the Trustees.

 

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

To the best knowledge of the Corporate Trustee as of December 31, 2021, the only persons who beneficially owned more than 5% of the Trust Units are as follows:

 

Name and Address of Beneficial Owner		Number of Trust Units Owned				Percent of Trust Units Outstanding  (1)
MPL Communications, Ltd. (2) 41 West 54th Street New York, New York 10019			79,609				28.67	%
Michael Reiss (3) 104 West Chestnut Suite 356 Hinsdale, IL 60521			18,385				6.62	%
First Eagle Investment Management, LLC (4) 1345 Avenue of the Americas NY, NY 10018			31,592				11.38	%

 

(1)	Based on 277,712 Trust Units outstanding.

(2)	Lee Eastman, an Individual Trustee of the Trust, is responsible for the day to day operations of MPL Communications, Ltd.

(3)	Michael Reiss is an Individual Trustee of the Trust.

(4)	As reported on Schedule 13G/A filed with the SEC on January 30, 2015.

The Trust does not have, nor does the Declaration of Trust provide for, officers, a board of directors or any employees. There were no Trust Units owned or pledged by the Corporate Trustee as of December 31, 2021. The Trust does not have any compensation plans under which the Trust Units are authorized for issuance.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The Trust does not have, nor does the Declaration of Trust provide for a board of directors. Pursuant to the Declaration of Trust, trustees of the Trust serve until their removal, resignation, incapacity, or in the case of individual trustees, their death. The Trustees are paid only in accordance with the Declaration of Trust. See Note 3, “Related Party Transactions” under Part II, Item 8, “Financial Statements and Supplementary Data” for information regarding payments by the Trust to the Trustees in accordance with the Declaration of Trust.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

Fees paid to Hoberman & Lesser, CPA’s, LLC for professional services rendered for the audit of the Trust’s annual statement of cash receipts and disbursements and the review of its interim quarterly financial statements included in its

quarterly reports on Forms 10-Q aggregated $28,000

in 2021. Fees paid to Cornick, Garber & Sandler, LLP for professional services rendered for the audit of the Trust’s annual statement of cash receipts and disbursements and the review of its interim quarterly financial statements included in its

quarterly reports on Forms 10-Q aggregated $28,500 in 2020.

Audit-Related Fees

$19,000

Tax Fees

None.

 

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All Other Fees—For Quarterly Reviews of Form 10Q

$9,000

Audit Committee

The Trust is not a corporate entity and thus does not have an Audit Committee. The Trust has established a policy with regard to audit, audit-related and certain

non-audit

engagements of its independent auditors. Under this policy, the Trust annually approves certain limited, specified recurring services which may be provided by the Trust’s accountant or independent auditors. All other engagements for services to be performed by the Trust’s independent auditors must be separately

pre-approved

by the Trust. Joel Faden acts as Chief Financial Individual providing accounting services for the Trust.

 

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

		Page
1. FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm			8-9
Statements of cash receipts and disbursements – years ended December 31, 2021 and 2020			10
Notes to statements of cash receipts and disbursements – years ended December 31, 2021 and 2020			11
2. FINANCIAL STATEMENT SCHEDULES
3. EXHIBITS

 

Exhibit No.		Description
4(a)		Declaration of Trust dated as of December 3, 1964(1)
4(b)		Asset Purchase Agreement dated December 5, 1964(2)
31.1		Certification by the Chief Financial Individual providing accounting services pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification by the Trust Officer of the Corporate Trustee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification by the Chief Financial Individual providing accounting services pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification by the Trust Officer for the Corporate Trustee Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL (eXtensible Business Reporting Language) Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

(1)	Incorporated by reference to Exhibit 4.1 to the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

(2)	Incorporated by reference to Exhibit 4.2 to the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

*	Furnished, not filed

ITEM 16. FORM 10-K SUMMARY

Registrants may voluntarily include a summary

of information required by Form 10-K under this Item 16. The

Trust has elected not to include such summary information.

 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

March 31, 2022						Mills Music Trust
						(Registrant)
				By:		/s/ Garfield Barrett
						Garfield Barrett
						Trust Officer of the Corporate Trustee
						HSBC Bank USA, N.A.

 

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