<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-Q
Quarterly Report Pursuant to Section
13 or 15(d) of
the Securities Exchange Act
of 1934
For the quarter ended September 30,1998 Commission
file number 0-11281
NORWEST CONVENTIONAL 1, INC.
(Exact name of registrant as
specified in its charter)
Delaware 41-
1462646
(State or other jurisdiction of (I.R.S.
Employer Identification No.)
incorporation or organization)
405 S.W. Fifth Street, Des Moines, Iowa
50328
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code
(515) 221-7300
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN
GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND
IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to
file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes
X No .
On November 12, 1998, 1,000 shares of the
registrant's common stock were outstanding. All
common stock of registrant is held by an affiliate.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
The following statements of the Company are included
herein:
1. Balance Sheets - September 30,1998 and December
31, 1997.
2. Statements of Operations - For the quarters
ended September 30,1998 and 1997.
3. Statements of Operations - For the nine months
ended September 30, 1998 and 1997.
4. Statements of Stockholder's Equity - For the
nine months ended
September 30, 1998, and September 30, 1997, and for
the three months ended December 31, 1997.
The financial information for the interim periods is
unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of the
results of operations have been included. The
results of operations for an interim period are not
necessarily indicative of the results that may be
expected for a full year or any other interim
period.
<PAGE> 3
NORWEST MORTGAGE
CONVENTIONAL 1, INC.
(a wholly-owned subsidiary
of Norwest Mortgage, Inc.)
BALANCE SHEETS
UNAUDITED
September
30,1998 and December 31,1997
September 30, December 31,
Assets 1998
1997
Note receivable from parent $ 4,220
$ 4,220
Money market investment, at cost 47,866
45,879
Investment securities, at cost 169,605
169,605
Due from parent company 6,488
8,475
Total assets
$228,179 $228,179
Stockholder's Equity
Common stock, $1 par value:
1,000 shares authorized, issued
and outstanding $
1,000 $ 1,000
Additional paid-in capital 227,179
227,179
Total stockholder's equity $228,179
$228,179
<PAGE> 4
NORWEST MORTGAGE CONVENTIONAL
1, INC.
(a wholly-owned subsidiary of
Norwest Mortgage, Inc.)
STATEMENTS OF
OPERATIONS
UNAUDITED
For the quarters ended
September 30,1998 and 1997
1998 1997
Income:
Other interest income $ 206
$ --
Total income
206 --
Operating expenses:
Parent company management fee --
- --
Other operating expenses 206
- --
Total operating expenses 206
- --
Net income before income taxes --
- --
Provision for income taxes -
- - --
Net income
$ -- $ --
<PAGE> 5
NORWEST MORTGAGE CONVENTIONAL 1,
INC.
(a wholly-owned subsidiary of
Norwest Mortgage, Inc.)
STATEMENTS OF
OPERATIONS
UNAUDITED
For the nine months ended September
30,1998 and 1997
1998 1997
Income:
Other interest income $
1,987 $ --
Total income
1,987 --
Operating expenses:
Parent company management fee --
- --
Other operating expenses
1,987 --
Total operating expenses
1,987 --
Net income before income taxes --
- --
Provision for income taxes --
- --
Net income $
- -- $ --
<PAGE> 6
NORWEST MORTGAGE CONVENTIONAL 1,
INC.
(a wholly-owned subsidiary of
Norwest Mortgage, Inc.)
STATEMENTS OF STOCKHOLDER'S EQUITY
UNAUDITED
For the nine months ended September 30, 1998 and
September 30, 1997,
and December 31,
1997
Additional
Common Paid in
Retained
Stock
Capital Earnings Total
Balance, December 31, $ 1,000 $227,179 -
- - 228,179
1996
Net income --
- -- -- --
Balance, September 30, $ 1,000 $227,179 --
$228,179
1997
Net income --
- -- -- --
Balance, December 31,
1997 $ 1,000 $227,179
- -- $228,179
Net income --
- -- -- --
Balance, September 30, $ 1,000 $227,179 -
- - $228,179
1998
<PAGE> 7
Item 2. Management's Discussion and Analysis of
Financial Condition and
Results of Operations.
The following narrative by management of the
Company's results of operations is provided in
accordance with General Instruction (H)(2)(a) of
Form 10-Q.
Norwest Mortgage Conventional 1, Inc. (the
Company), a wholly-owned subsidiary of Norwest
Mortgage, Inc. (the parent company) which is a
wholly-owned subsidiary of Norwest Nova, Inc., was
incorporated on October 20, 1983, under the laws of
the State of Delaware. The Company was organized
to issue and sell one series of obligations,
consisting of four classes, collateralized by fully
modified, pass-through, mortgage-backed
certificates guaranteed as to principal and
interest by the Government National Mortgage
Association, and does not intend to engage in any
other business activities except activities
incidental and necessary to the foregoing.
The Company had no net income for the quarter and
nine months ended September 30,1998 and 1997. The
management contract is structured so that all
available income of the Company shall be paid to the
parent company as compensation for management
services, reimbursement for certain expenses, and as
additional purchase price of the pass-through
certificates purchased from the parent company. As
a result of the terms of the management contract, it
is anticipated that the Company will have no net
income for a number of subsequent years.
Year 2000 Readiness Disclosure
The Company is aware of the issues associated
with the programming code in existing computer
systems as the millennium (year 2000) approaches.
The "year 2000 problem" is pervasive and complex;
virtually every computer operation will be affected
in some way by the rollover of the two-digit year
value to 00. The issue is whether computer systems
will properly recognize date-sensitive information
when the year changes to 2000. Systems that do not
properly recognize such information could generate
erroneous data, fail or cause another system to
fail. "Systems" include all hardware, networks,
system and application software, commercial "off-the-
shelf" software, data and voice communication
devices, and embedded technology such as date-
impacted processors in automated systems such as
elevators, telephone systems, security systems,
vault systems, heating and cooling systems and
others.
<PAGE> 8
The Company's year 2000 readiness projects are
divided into four phases:
Phase I: comprehensive assessment and inventory of
Systems intended to determine year 2000
vulnerability and risk;
Phase II: date detection on Systems intended to
determine which Systems must be remediated and which
Systems are compliant and require testing only;
determination of required resources and costs; and
the development of schedules and high-level testing
plans for the repair, replacement and/or retirement
of Systems that are not determined to be year 2000
compliant;
Phase III: repair, replacement and/or retirement of
Systems that are not determined to be year 2000
compliant; conduct testing of individual Systems;
and plan the integration testing for those Systems
that have interfaces with other Systems both
internal and external to the company, such as those
of customers and suppliers; and
Phase IV: integration testing of applicable Systems
to validate that interfaces with other Systems are
year 2000 compliant; and the development of
contingency plans, such as plans to recover
operations and alternatives to mitigate the effects
of counterparties whose own failure to properly
address year 2000 issues may adversely impact their
ability to perform certain functions.
The Company in respect to the year 2000
project: (i) has substantially completed Phases I
and II; (ii) anticipates Phase III will be
substantially complete by December 31, 1998; and
(iii) anticipates Phase IV will be substantially
complete by June 30, 1999.
The cost to address the Company's year 2000
projects are included as part of the management
contract with its parent company.
In the event year 2000 problems arise out of a
failure of the efforts described above any resulting
disruptions could adversely affect the business
operations.
<PAGE> 9
PART II -- OTHER
INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
Omitted pursuant to General Instruction
(H)(2)(b) of Form
10-Q.
Item 3. Defaults Upon Senior Securities.
Omitted pursuant to General Instruction
(H)(2)(b) of Form
10-Q.
Item 4. Submission of Matters to a Vote of Security
Holders.
Omitted pursuant to General Instruction
(H)(2)(b) of Form 10-Q.
Item 5. Other Information.
Omitted pursuant to General Instruction
(H)(2)(b) of Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K.
(a) None.
(b) None.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant had duly caused
this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Norwest Mortgage Conventional 1, Inc.
Dated: November 13, 1998
Robert K. Chapman
Chief Financial Officer
(Principal Accounting and
Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 47,866
<SECURITIES> 169,605
<RECEIVABLES> 10,708
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 228,179
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 227,179
<TOTAL-LIABILITY-AND-EQUITY> 228,179
<SALES> 0
<TOTAL-REVENUES> 1,987
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,987
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
