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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended SEPTEMBER 30, 1997 Commission file number 33-4001
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CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 43-1393535
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
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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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date, October 31, 1997:
COMMON STOCK, $.01 Par Value - 1,000 Shares
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CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
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INDEX
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Page
Number
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet 3
Statement of Operations 4
Statement of Changes in Stockholder's Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. OTHER INFORMATION 9
SIGNATURES 10
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
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CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
BALANCE SHEET
(UNAUDITED)
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September 30, December 31,
1997 1996
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ASSETS
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CASH $ 48,727 $ 43,762
RECEIVABLES 3,660 -
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TOTAL ASSETS $ 52,387 $ 43,762
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LIABILITIES AND STOCKHOLDER'S EQUITY
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Liabilities:
PAYABLE TO EDWARD D. JONES & CO., L.P. $478,505 $ 478,356
ACCRUED EXPENSES 3,500 3,500
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TOTAL LIABILITIES 482,005 481,856
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Stockholder's Equity:
COMMON STOCK - $.01 par value, 1,000 shares
authorized, issued and outstanding 10 10
PAID-IN-CAPITAL 300,490 300,490
RETAINED DEFICIT (730,118) (738,594)
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TOTAL STOCKHOLDER'S EQUITY (429,618) (438,094)
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TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 52,387 $ 43,762
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The accompanying notes are an integral part of these financial statements.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
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CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
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Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
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REVENUES:
Residual interest in certificates $ 0 $213 $11,738 $14,079
--- ---- ------- -------
EXPENSES:
Professional fees 0 0 3,114 3,615
Registration, filing and other fees 1 225 148 570
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TOTAL EXPENSES 1 225 3,262 4,185
INCOME BEFORE INCOME TAXES (1) (12) 8,476 9,894
PROVISION FOR (BENEFIT FROM)
INCOME TAXES - - - -
--- ---- ------- -------
NET INCOME $(1) $(12) $ 8,476 $ 9,894
=== ==== ======= =======
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The accompanying notes are an integral part of these financial statements.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
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CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
(UNAUDITED)
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Nine Months Ended Sept 30, 1997 and 1996
Common Paid-In Retained
Stock Capital Deficit Total
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BALANCE, DECEMBER 31, 1995 $ 10 $300,490 $(748,488) $(447,988)
NET INCOME - - 9,894 9,894
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BALANCE, SEPTEMBER 30, 1996 $ 10 $300,490 $(738,594) $(438,094)
======== ======== ========= =========
BALANCE, DECEMBER 31, 1996 $ 10 $300,490 $(738,594) $(438,094)
NET INCOME - - 8,476 8,476
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BALANCE, SEPTEMBER 30, 1997 $ 10 $300,490 $(730,118) $(429,618)
======== ======== ========= =========
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The accompanying notes are an integral part of these financial statements.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
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CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
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Nine Months Ended September 30,
1997 1996
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CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $ 8,476 $ 9,894
Adjustments to reconcile net income to net
cash provided by operating activities -
Increase in payable to Edward D. Jones
& Co., L.P. 149 3,570
Increase in receivables (3,660) (3,000)
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Net cash provided by operating activities 4,965 10,464
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Net increase in cash 4,965 10,464
CASH, beginning of period 43,762 33,298
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CASH, end of period $48,727 $43,762
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The accompanying notes are an integral part of these financial statements.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The financial information included herein is unaudited. However, in the
opinion of management, such information includes all adjustments, consisting
solely of normal recurring adjustments, which are necessary for a fair
presentation of the results of interim operations. These interim results
should be read in connection with the annual Form 10-K.
The results of operations for the three and six months ended September
30, 1997, are not necessarily indicative of the results to be expected for
the full year.
FUTURE OPERATIONS
Cornerstone Mortgage Investment Group, Inc. (the "Company" or
"Cornerstone") was incorporated in the state of Delaware on January 9, 1986,
as a wholly-owned, limited purpose subsidiary of Edward D. Jones & Co., L.P.
("EDJ"), a Missouri limited partnership. EDJ organized the Company and
currently owns all the issued and outstanding capital stock of the Company.
Cornerstone was organized for the limited purpose of issuing and selling
secured mortgage bonds (the "Bonds"), which are collateralized by Government
National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation
(FHLMC) and Federal National Mortgage Association (FNMA) Certificates.
Due to revisions of the Internal Revenue Code enacted, effective
January 1, 1987, Cornerstone no longer issues bonds. Cornerstone will continue
operations until such time as the Bonds previously issued are retired or
mature.
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Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
MANAGEMENT'S FINANCIAL DISCUSSION
Residual income of $11,738 and $14,079 was earned during the nine months
ended September 30, 1997 and September 30, 1996 respectively. Residual
income of $0 and $213 was earned during the three months ended September 30,
1997 and 1996. No series were issued during these periods.
Expenses for the nine months ended September 30, 1997 and September 30, 1996,
were $3,262 and $4,185, respectively, and were for professional,
registration, filing and other fees.
Expenses for the three months ended September 30, 1997 and September 30, 1996
were $1 and $225, respectively, and were for trustee and filing fees.
The outstanding principal balance and remaining collateral value relating to
series issued by Cornerstone Mortgage Investment Group, Inc. are $5,439,000
and $5,463,007 as of September 30, 1997.
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PART II. OTHER INFORMATION
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
Item 1: Legal Proceedings:
There are no pending legal proceedings.
Item 2. Changes in Securities:
No change.
Item 3. Default upon Senior Securities:
No default.
Item 4. Submission of Matters to a Vote of Security Holders:
Nothing to report.
Item 5. Other Information:
Nothing to report.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
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Exhibit No. Description of Exhibit
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4.1 Indenture dated as of June 15, 1986, between the
Company and Boatmen's Trust Company of St. Louis,
as Trustee, relating to Secured Mortgage Bonds
(incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-1, as amended,
File No. 33-4001).
4.2 First Supplemental Indenture dated August 28, 1986
(incorporated by reference to Exhibit 1 to the
Current Report on Form 8-K filed on September 19,
1986).
4.3 Second Supplemental Indenture dated September 26, 1986
(incorporated by reference to Exhibit 1 to the
Current Report on Form 8-K filed on October 6,
1986).
4.4 Third Supplemental Indenture dated October 31, 1986
(incorporated by reference to Exhibit 1 to the
Current Report on Form 8-K filed on November 12,
1986).
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(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ended September 30, 1997.
9
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SIGNATURES
Pursuant to the requirements 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.
CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.
(Registrant)
/s/ John C. Heisler Chairman of the Board,
-------------------- Chief Financial Officer,
John C. Heisler Chief Accounting Officer
and Director November 10, 1997
/s/ Philip R. Schwab President, Chief Executive
-------------------- Officer and Director November 10, 1997
Philip R. Schwab
10
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<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Cornerstone Mortgage Investment Group, Inc. for
the quarter ended September 30, 1997 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 48,727
<SECURITIES> 0
<RECEIVABLES> 3,660
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 52,387
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 52,387
<CURRENT-LIABILITIES> 482,005
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> (429,628)
<TOTAL-LIABILITY-AND-EQUITY> 52,387
<SALES> 11,738
<TOTAL-REVENUES> 11,738
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,262
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,476
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,476
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,476
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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