J. BEN WATKINS III

DIRECTOR

      STATE  OF  FLORIDA

      DIVISION OF BOND FINANCE

      OF THE STATE BOARD OF ADMINISTRATION

      HERMITAGE CENTRE, SUITE 200

1801 HERMITAGE BOULEVARD

      TALLAHASSEE, FLORIDA  32308

      POST OFFICE BOX 13300

      TALLAHASSEE, FLORIDA  32317-3300

(Address mail to P.O. Box; deliveries to street address)

TELEPHONE:  (850) 488-4782

TELECOPIER:  (850) 413-1315

JEB BUSH

GOVERNOR

AS CHAIRMAN

CHARLIE CRIST

ATTORNEY GENERAL

TOM GALLAGHER

CHIEF FINANCIAL OFFICER

CHARLES H. BRONSON

COMMISSIONER OF AGRICULTURE

MEMORANDUM

TO:         Governor and Cabinet, as the Governing Board of the Division of Bond Finance

FROM:       J. Ben Watkins III

DATE:       January 28, 2003

SUBJECT:    Award of $233,555,000 State of Florida, State Board of Education

Lottery Revenue Bonds, Series 2002C

Pursuant to authorization by the Governor and Cabinet by a resolution adopted on October 8, 2002, bids were received for the above referenced bonds at the office of the Division of Bond Finance at 11:00 a.m., on Thursday, December 5, 2002.

Five bids were received and a tabulation of such bids is included herein.  The low bid was from Merrill Lynch & Co. at an annual true interest cost rate of 4.3908%.  The annual true interest cost rate using the Thomson Municipal Market Data Insured Revenue Yield Curve for the day of the sale was 4.5039%.  The bids were reviewed by representatives of the Division of Bond Finance and the bonds were awarded to the low bidder as authorized.  The bonds were delivered on January 3, 2003.

The proceeds of the bonds will be used for the purpose of paying part of the cost of capital outlay projects for the various school districts within the State of Florida, pursuant to Sections 235.187 and 235.2195, Florida Statutes.

The bonds are dated November 15, 2002, with interest payable on July 1, 2003 and semiannually on each January 1 and July 1 thereafter.  The bonds consist of serial bonds maturing January 1, 2004 through January 1, 2022.

The bonds are payable from lottery revenues deposited to the Educational Enhancement Trust Fund on a parity with the outstanding Lottery Revenue Bonds, Series 1998A through 2002B.  The bonds are not secured by the full faith and credit of the State of Florida.

(Attachment #2 for Item #7)

Governor and Cabinet

January 28, 2003

Page Two

The bonds have been rated AAA by Standard & Poor's Ratings Services, Aaa by Moody's Investors Service and AAA by Fitch Ratings, based upon the purchase of a municipal bond insurance policy from MBIA Insurance Corporation insuring the payment when due of the principal and interest on the bonds.  Without bond insurance the bonds would have been rated A+, A3 and A by Standard & Poor's Ratings Services, Moody's Investors Service and Fitch Ratings, respectively.

      BID TABULATION

       Annual True Interest

       Bidder                                   Cost Rate

Merrill Lynch & Co.                                4.3908%

Goldman, Sachs & Co.                         4.4072%

Salomon Smith Barney, Inc.                    4.4303%

J.P. Morgan Securities, Inc.                  4.4479%

UBS PaineWebber Inc.                         4.4656%

      INTEREST RATES AND YIELDS FROM THE WINNING BID 

Principal

Maturity Date

Interest Rate

Yield

   

$7,485,000 7,830,000 8,240,000 8,685,000 9,155,000 9,645,000 10,165,000 10,715,000 11,290,000 11,900,000 12,525,000 13,170,000 13,790,000 14,445,000 15,205,000 16,025,000 16,890,000 17,755,000 18,640,000   1/1/04 1/1/05 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20          1/1/21          1/1/22

4.00% 5.00 5.25 5.25 5.25 5.25 5.25 5.25 5.25 5.25 5.00 5.00 4.25 5.00 5.25 5.25 5.25 4.75 5.00

1.30% 1.92 2.34 2.72 3.05 3.31 3.50 3.70 3.80 3.97 4.10 4.20 4.29 4.42 4.48 4.56 4.62 4.75 4.80