<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Thirteen Weeks Ended March 26, 2000 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 33-2253
MORTGAGE SECURITIES III TRUSTS B, D AND E
Delaware Trusts (IRS Employer Identification
No. 91-1314537)
Wilmington, DE 19890
Telephone (302) 651-1730
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by a 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 .
The Registrant meets the conditions set forth in General
Instruction I(1)(a) and (b) of Form 10-Q and is therefore, filing
this form with the reduced disclosure format.
<PAGE>
Mortgage Securities III Trusts B, D and E
Index to Form 10-Q Filing
For the Thirteen Weeks Ended March 26, 2000
Page No.
Part I. Financial Information
Item 1. Financial Statements
Statement of Operations
Trust B 3
Trust D 4
Trust E 5
Balance Sheets
Trust B 6
Trust D 7
Trust E 8
Statement of Cash Flows
Trust B 9
Trust D 10
Trust E 11
Notes to Financial Statements 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 1
Part II. Other Information
Item 1. Legal Proceedings (Not applicable)
Item 2. Changes in Securities (Not applicable)
Item 3. Default upon Senior Securities (Not applicable)
Item 4. Submission of Matters to a Vote
of Security Holders (Not applicable)
Item 5. Other Information (Not applicable)
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
See the Company's financial
statements attached hereto beginning at page 2.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Activity during the first
fiscal quarter of 2000 consisted of the collection of
principal and interest on the GNMA and FNMA certificates
and disbursements of the required payment of principal
and interest to the bondholders.
SIGNATURE
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 on the 5th day of
May 2000.
MORTGAGE SECURITIES III TRUSTS
B, D AND E
Trusts acting through Wilmington
Trust Company, not in its
capacity, but solely as Owner
Trustee
By:__________________________
Mary Kay Pupillo
Financial Services Officer
-1-
<PAGE>
Financial Statements
The financial information included in this report has been prepared
in conformity with accounting practices and methods reflected in
the financial statements included in the Trusts' annual report
(Form 10-K) filed with the Securities and Exchange Commission for
the fiscal year ended December 26, 1999. Though not audited by
independent public accountants, the financial information reflects,
in the opinion of management, all adjustments necessary to present
a fair statement of results for the interim period indicated. The
results of operations for the thirteen weeks ended March 26, 2000
should not be regarded as necessarily indicative of the results
that may be expected for the fiscal year 2000.
-2-
<PAGE>
Mortgage Securities III Trust B
Statements of Operations
For the Periods Ended March 26, 1999 and March 28, 1999
(Unaudited)
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Thirteen Weeks
Ended
-------------------
Mar. 26, Mar. 28,
2000 1999
-------- --------
<S> <C> <C>
Interest income $ 175 $ 242
Interest expense 141 210
-------- --------
Net income $ 34 $ 32
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE>
Mortgage Securities III Trust D
Statements of Operations
For the Periods Ended March 26, 2000 and March 28, 1999
(Unaudited)
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Thirteen Weeks
Ended
-------------------
Mar. 26, Mar. 28,
2000 1999
-------- --------
<S> <C> <C>
Interest income $ 159 $ 198
Interest expense 148 198
-------- --------
Net income $ 11 $ -
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
Mortgage Securities III Trust E
Statements of Operations
For the Periods Ended March 26, 2000 and March 28, 1999
(Unaudited)
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Thirteen Weeks
Ended
-------------------
Mar. 26, Mar. 28,
2000 1999
-------- --------
<S> <C> <C>
Interest income $ 480 $ 644
Interest expense 569 765
-------- --------
Net loss $ (89) $ (121)
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
Mortgage Securities III Trust B
Balance Sheets
March 26, 2000 and December 26, 1999
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Mar. 26, Dec. 26,
2000 1999
-------- --------
<S> <C> <C>
(Unaudited)
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account 358 584
-------- --------
359 585
Interest receivable 56 59
Government National and Federal National
Mortgage Association Certificates 8,006 8,186
-------- --------
TOTAL ASSETS - TRUST B $8,421 $ 8,830
======== ========
Liabilities and Owner's Beneficial Interest
Interest payable $ 188 $ 199
Collateralized Mortgage Obligation bonds, net 6,317 6,749
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 1,915 1,881
-------- --------
Total Owner's Beneficial Interest 1,916 1,882
-------- --------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST B $8,421 $ 8,830
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
Mortgage Securities III Trust D
Balance Sheets
March 26, 2000 and December 26, 1999
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Mar.26, Dec. 26,
2000 1999
-------- --------
<S> <C> <C>
(Unaudited)
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account 159 104
-------- --------
160 105
Receivable from beneficial owner 148 143
Interest receivable 47 40
Government National and Federal National
Mortgage Association Certificates 6,811 7,126
-------- --------
TOTAL ASSETS - TRUST D $7,166 $ 7,414
======== ========
Liabilities and Owner's Beneficial Interest
Interest payable $ 97 $ 101
Collateralized Mortgage Obligation bonds, 6,786 7,041
net
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 282 271
-------- --------
Total Owner's Beneficial Interest 283 272
-------- --------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST D $7,166 $ 7,414
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
-7-
<PAGE>
Mortgage Securities III Trust E
Balance Sheets
March 26, 2000 and December 26, 1999
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Mar. 26, Dec. 26,
2000 1999
-------- --------
<S> <C> <C>
(Unaudited)
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account 1,226 1,516
-------- --------
1,227 1,517
Interest receivable 148 164
Government National Mortgage Association
Certificates 24,169 24,899
-------- --------
TOTAL ASSETS - TRUST E $25,544 $26,580
======== ========
Liabilities and Owner's Beneficial Interest
Interest payable $ 432 $ 456
Collateralized Mortgage Obligation bonds,
net 18,110 19,033
Owner's Beneficial Interest:
Owner's beneficial interest 36,294 36,294
Accumulated deficit (29,292) (29,203)
-------- -------
Total Owner's Beneficial Interest 7,002 7,091
-------- -------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST -
TRUST E $ 25,544 $ 26,580
========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
-8-
<PAGE>
Mortgage Securities III Trust B
Statements of Cash Flows
For the Periods Ended March 26, 2000 and March 28, 1999
(Unaudited)
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Thirteen Weeks Ended
---------------------
Mar. 26, Mar. 28,
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operations:
Net income $ 34 $ 32
Changes in:
Interest receivable 3 5
Interest payable (11) (20)
-------- --------
Net cash flows from operations 26 17
-------- --------
Cash flows from investing activities:
Collections on mortgage backed 180 641
certificates
Cash flows from financing activities:
Payments on collateralized
mortgage obligation bonds (432) (630)
-------- --------
Net (decrease) increase in cash and (226) 28
equivalents
Cash and equivalents at beginning
of year 585 859
-------- --------
Cash and equivalents at end of period $ 359 $ 887
========= =========
Supplemental disclosure:
Cash paid during the period for
interest $ 152 $ 230
</TABLE>
The accompanying notes are an integral part of these statements.
-9-
<PAGE>
Mortgage Securities III Trust D
Statements of Cash Flows
For the Periods Ended March 26, 2000 and March 28, 1999
(Unaudited)
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Thirteen Weeks Ended
--------------------
Mar. 26, Mar. 28,
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operations:
Net income $ 11 $ -
Changes in:
Interest receivable (7) 8
Receivable from beneficial owner (5) (11)
Interest payable (4) (14)
-------- --------
Net cash flows from operations (5) (17)
-------- --------
Cash flows from investing activities:
Collections on mortgage backed
certificates 315 1,163
Cash flows from financing activities:
Payments on collateralized
mortgage obligation bonds (255) (915)
-------- --------
Net increase in cash and equivalents 55 231
Cash and equivalents at beginning
of year 105 213
-------- --------
Cash and equivalents at end of period $ 160 $ 444
======== =========
Supplemental disclosure:
Cash paid during the period for
Interest $ 152 $ 212
</TABLE>
The accompanying notes are an integral part of these statements.
-10-
<PAGE>
Mortgage Securities III Trust E
Statements of Cash Flows
For the Periods Ended March 26, 2000 and March 28, 1999
(Unaudited)
<TABLE>
(Dollar amounts in thousands)
<CAPTION>
Thirteen Weeks Ended
--------------------
Mar. 26, Mar. 28,
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operations:
Net loss $ (89) $ (121)
Non-cash charges to income:
Amortization 137 136
Changes in:
Interest receivable 16 21
Interest payable (24) (59)
--------- --------
Net cash flows from operations 40 (23)
-------- --------
Cash flows from investing activities:
Collections on mortgage backed
certificates 730 3,060
Cash flows from financing activities:
Payments on collateralized
mortgage obligation bonds (1,060) (2,639)
-------- --------
Net (decrease) increase in cash and
equivalents (290) 398
Cash and equivalents at beginning
of year 1,517 3,329
-------- --------
Cash and equivalents at end of period $ 1,227 $ 3,727
========= =========
Supplemental disclosure:
Cash paid during the period for
Interest $ 456 $ 824
</TABLE>
The accompanying notes are an integral part of these statements.
-11-
<PAGE>
Mortgage Securities III Trusts B, D and E
Notes to Financial Statements
For the Thirteen Weeks Ended March 26, 2000
(Dollar amounts in thousands)
Note 1. Description of business:
Mortgage Securities III Trusts B, D and E (the "Trusts")
were established under the laws of Delaware by a trust
agreement. Prior to December 27, 1987, the trust
agreement was among Mortgage Securities III Corporation,
Weyerhaeuser Real Estate Company and Wilmington Trust
Company. On December 27, 1987, Weyerhaeuser Real Estate
Company dividended its beneficial interests in the Trusts
to Weyerhaeuser Company which in turn contributed its
beneficial interests in the Trusts to Weyerhaeuser
Financial Services, Inc., a wholly-owned subsidiary of
Weyerhaeuser Company. The Trusts were organized and are
engaged to raise funds through the issuance and sale of
Collateralized Mortgage Obligation bonds (the Bonds)
collateralized by Government National Mortgage Association
(GNMA) and Federal National Mortgage Association (FNMA)
certificates. The Trusts B, D and E were established on
April 8, 1986 and commenced business on September 30,
1986, February 27, 1987 and December 22, 1987,
respectively.
<TABLE>
Each Trust has issued a series of Collateralized Mortgage
Obligations as follows:
<CAPTION>
Trust Date Issued Bonds Issued
----- ----------- ------------
<S> <S> <C>
B September 30, 1986 $100,000
D February 27, 1987 $ 75,600
E December 22, 1987 $131,600
</TABLE>
-12-
<PAGE>
Trust B and D's remaining Bonds are collateralized by GNMA
and FNMA certificates and Trust E's remaining Bonds are
collateralized by GNMA certificates.
Activity during the first quarter of 2000 consisted of the
collection of principal and interest on the GNMA and FNMA
certificates and disbursement of the required payment of
principal and interest to the bondholders.
Note 2. Accounting policies:
The preparation of financial statements in conformity with
generally accepted accounting principles requires
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 the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The bond discounts on Trusts B and D were written off in
1997 as management intends to prepay the bonds at the
earliest allowable prepayment date and the amounts were no
longer material. The bond discount for Trust E is
amortized on a straight line basis, which approximates the
effective interest method, over the remaining life of the
instruments.
Cash and equivalents include cash held in the collection
accounts and invested in short term investments with
maturities at date of purchase of less than three months.
The cost and estimated market values of investments in
debt securities at March 26, 2000, were as follows:
-13-
<PAGE>
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Market
Held to Maturity: Cost Gains Losses Value
------- -------- -------- ----------
<S> <C> <C> <C> <C>
Mortgage-backed
Securities
Trust B 8,006 174 - 8,180
Trust D 6,811 120 - 6,931
Trust E 24,169 - (52) 24,117
</TABLE>
The Trusts are legally precluded from selling the
investments in debt securities, except in the case of a
call of the Bonds as discussed in Note 3.
Note 3.Collateralized Mortgage Obligation Bonds:
<TABLE>
Collateralized Mortgage Obligation Bonds at March 26, 2000
and December 26, 1999 consist of the following:
<CAPTION>
Mar. 26, Dec. 26,
2000 1999
------- -------
<S> <C> <C>
Trust B:
Class 4 - 9.00%, stated maturity
October 1, 2016 $ 6,317 $ 6,749
======= =======
Trust D:
Class 3 - 8.60%, stated maturity
March 1, 2017 $ 6,786 $ 7,041
======= =======
Trust E:
Class 4 - 9.00%, stated maturity
January 1, 2018 19,204 20,264
Unamortized discount (1,094) (1,231)
------- -------
$18,110 $19,033
======= =======
</TABLE>
The stated maturity is the date such class will be fully
paid, assuming that scheduled interest and principal
payments (with no prepayments) on the certificates are
timely received.
-14-
<PAGE>
All collections on the certificates pledged as security for
the Bonds will be remitted directly to a collection account
(the "Collection Account") established with the Trustee and
together with the reinvestment earnings thereon, will be
available for application to the payment of principal and
interest on the bonds on the following payment date.
Each Trust's Bonds are subject to a special redemption, in
whole or in part, if, as a result of substantial payments
of principal on the underlying mortgage loans and/or low
reinvestment yields, the Trusts determine that the amount
of cash anticipated to be on deposit in the Collection
Accounts on the next payment date might be insufficient to
make required payments on the Bonds. Any such redemption
would not exceed the principal amount of Bonds that would
otherwise be required to be paid on the next payment date.
As a result, a special redemption of Bonds will not result
in a payment to bondholders more than two months earlier
than the payment date on which such payment would otherwise
have been received. The Bonds are not otherwise subject to
call at the option of the Trusts except that (a) Trust B
and E's Class 4 Bonds may be redeemed in whole, but not in
part, at the Trusts' option on any payment date on or after
October 1, 2001, and January 1, 2003, respectively, (or on
any earlier payment date if the current principal amount of
Trust B and E's Class 4 Bonds are less than $6,100 and
$13,160, respectively) and (b) Trust D's Class 3 Bonds may
be redeemed in whole, but not in part, at the Trust's
option on any payment date on or after March 1, 2002, (or
on any earlier payment date if the aggregate outstanding
principal amount of the Class 3 Bonds is less than 10
percent of its aggregate initial principal amount of
$14,600).
Any such redemptions at the option of the Trusts shall be
at a price equal to 100 percent of the unpaid principal
amount of such Bonds plus accrued interest.
-15-
<PAGE>
Note 4. Assets pledged:
Trust B and D's Bonds are collateralized by the Trusts' GNMA
and FNMA certificates and the Collection Accounts. Trust
E's Bonds are collateralized by Trust E's GNMA certificates
and the Collection Account. Collections on the certificates
are used to meet the quarterly Bond interest payments and to
reduce the outstanding principal balance on the Bonds.
Note 5. Related parties:
Trusts B and D purchased from an affiliate, Weyerhaeuser
Mortgage Company, GNMA and FNMA certificates which were used
to collateralize the Bonds. The purchases were at par
value, plus Trust D's purchase premium and less Trust B's
purchase discount. The purchases were financed with market-
rate short-term debt from this affiliate until proceeds from
the bond issuance were obtained.
Trust E purchased from an affiliate, Weyerhaeuser Mortgage
Company, GNMA certificates which were used to collateralize
the Bonds. The purchase was at par value, less the purchase
discount. The purchase was financed with the proceeds
received from the Bond issuances and a note due to
Weyerhaeuser Mortgage Company. The note accrued interest at
Bank of America's prime rate and compounded interest
annually. Both the principal and interest related to the
Weyerhaeuser Mortgage Company payable was paid off by
Weyerhaeuser Financial Services, Inc. (Beneficial Owner) in
March 1997, in anticipation of the sale of Weyerhaeuser
Mortgage Company to an unrelated third party by Weyerhaeuser
Financial Services, Inc. and Weyerhaeuser Company. In
August 1997, Weyerhaeuser Financial Services, Inc.
contributed capital to Trust E, increasing beneficial
owner's interest.
Certain ongoing administrative and accounting functions are
provided by the Beneficial Owner at no cost to each Trust.
-16-
<PAGE>
Note 6. Results of operations:
All results of operations will be transferred to the
Beneficial Owner of the Trusts. Mortgage Securities III
Corporation will be responsible for all tax liabilities
incurred relating to the Trusts' operations.
-17-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> CT
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-26-2000
<TOTAL-ASSETS> 41,131
0
0
<COMMON> 0
<OTHER-SE> 9,201
<TOTAL-LIABILITY-AND-EQUITY> 41,131
<TOTAL-REVENUES> 814
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (44)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
