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Previous: BRAUVIN INCOME PROPERTIES LP 6, SC 14D1/A, 1998-11-06 |
Next: NEWMONT GOLD CO, 4, 1998-11-06 |
<PAGE> 1
================================================================================
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 QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1998
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: 33-5539
CMC SECURITIES CORPORATION I
(Exact name of Registrant as specified in its Charter)
NEVADA 75-2449544
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2711 NORTH HASKELL AVENUE, DALLAS, TEXAS 75204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 874-2323
The Registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) for Form 10-Q and is therefore filing this Form under the reduced disclosure
format.
Indicate by check mark whether the Registrant (1) has filed all documents and
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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
Common Stock ($1.00 par value) 10,000 as of November 3, 1998
================================================================================
<PAGE> 2
CMC SECURITIES CORPORATION I
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. -- FINANCIAL INFORMATION
<S> <C>
ITEM 1. Financial Statements
Balance Sheet -- September 30, 1998 (Unaudited)
and December 31, 1997............................................................................... 1
Statement of Operations -- Quarter and Nine Months Ended
September 30, 1998 and 1997 (Unaudited)............................................................. 2
Statement of Cash Flows -- Nine Months Ended
September 30, 1998 and 1997 (Unaudited)............................................................. 3
Notes to Financial Statements (Unaudited)............................................................. 4
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............................................. 6
PART II. -- OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K........................................................... 6
SIGNATURES............................................................................................... 7
</TABLE>
<PAGE> 3
PART I. -- FINANCIAL INFORMATION
CMC SECURITIES CORPORATION I
BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Mortgage securities collateral $426,612 $559,254
======== ========
LIABILITIES
Collateralized mortgage securities $426,612 $559,254
Accrued expenses 48 40
-------- --------
426,660 559,294
-------- --------
STOCKHOLDER'S EQUITY
Common stock - $1.00 par value,
10 shares authorized,
issued and outstanding 10 10
Paid-in capital 95 95 84
Accumulated deficit (153) (134)
-------- --------
(48) (40)
-------- --------
$426,612 $559,254
======== ========
</TABLE>
See accompanying notes to financial statements.
-1-
<PAGE> 4
CMC SECURITIES CORPORATION I
STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- -------------------------
1998 1997 1998 1997
------ ------- ------ ------
<S> <C> <C> <C> <C>
Interest income on mortgage
securities collateral $8,249 $11,241 $27,754 $34,691
Interest expense on collateralized
mortgage securities 7,988 10,879 26,870 33,579
------ ------- ------- -------
Net interest income 261 362 884 1,112
------ ------- ------- -------
Other expenses:
Management fees 3 3 8 8
Professional fees and other 1 2 11 11
Pool insurance 261 362 884 1,112
------ ------- ------- -------
Total other expenses 265 367 903 1,131
------ ------- ------- -------
Net loss $ (4) $ (5) $ (19) $ (19)
======= ====== ======= =======
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE> 5
CMC SECURITIES CORPORATION I
STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
-----------------------------------------
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (19) $ (19)
Noncash item - amortization of
discount and premium (60) (28)
Net change in other assets and
accrued expenses 8 8
--------- --------
Net cash used by
operating activities (71) (39)
--------- --------
INVESTING ACTIVITIES:
Mortgage securities collateral:
Principal collections on collateral 131,973 61,314
Decrease in accrued interest receivable 825 377
Decrease in short-term investments 20 3
--------- --------
Net cash provided by
investing activities 132,818 61,694
--------- --------
FINANCING ACTIVITIES:
Collateralized mortgage securities:
Principal payments on securities (131,973) (61,314)
Decrease in accrued interest payable (785) (352)
Capital contributions 11 11
--------- --------
Net cash used by financing
activities (132,747) (61,655)
--------- --------
Net change in cash and cash equivalents - -
Cash and cash equivalents at beginning
of period - 1
--------- --------
Cash and cash equivalents at end of
period $ - $ 1
========= =========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE> 6
CMC SECURITIES CORPORATION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the quarter and nine months ended September 30, 1998 are
not necessarily indicative of the results that may be expected for the calendar
year ending December 31, 1998. For further information refer to the financial
statements and footnotes thereto included in the CMC Securities Corporation I
annual report on Form 10-K for the period ended December 31, 1997.
NOTE B -- DISCLOSURES REGARDING FAIR VALUES OF MORTGAGE SECURITIES COLLATERAL
The estimated fair values of mortgage securities collateral have been determined
by using available market information and appropriate valuation methodologies;
however, considerable judgment is required in interpreting market data to
develop these estimates. In addition, fair values fluctuate on a daily basis.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that could be realized in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
The fair values of mortgage securities collateral were estimated using quoted
market prices, when available, including quotes made by Capstead Mortgage
Corporation's lenders in connection with designating collateral for repurchase
arrangements.
The following table summarizes the fair values of mortgage securities collateral
(in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
<S> <C> <C>
Carrying amount $426,612 $559,254
Unrealized gains 9,984 10,985
Unrealized losses - (707)
-------- --------
Fair value $436,596 $569,532
======== ========
</TABLE>
All mortgage securities collateral is held-to-maturity. The maturity of mortgage
securities collateral is directly affected by the rate of principal prepayments
by mortgagors. In addition, upon the redemption of remaining bonds outstanding
pursuant to clean-up calls, released collateral may be sold. Such sales are
deemed maturities under the provisions of Statement of Financial Accounting
Standards No. 115. No such redemptions occurred during the nine months ended
September 30, 1998 or during 1997.
-4-
<PAGE> 7
NOTE C -- NET INTEREST INCOME ANALYSIS
The following tables summarize interest income and interest expense and the
average effective interest rates for the periods indicated (dollars in
thousands):
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30
-------------------------------------------------------------
1998 1997
-------------------- -----------------------
AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE
------ ------- ------ --------
<S> <C> <C> <C> <C>
Interest income on mortgage
securities collateral $8,249 7.43% $11,241 7.57%
Interest expense on
collateralized mortgage
securities 7,988 7.20 10,879 7.33
------ -------
Net interest $ 261 $ 362
====== =======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------------------------------------
1998 1997
--------------------- ----------------------
AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE
------- -------- ------ -------
<S> <C> <C> <C> <C>
Interest income on mortgage
securities collateral $27,754 7.50% $34,691 7.53%
Interest expense on
collateralized mortgage
securities 26,870 7.27 33,579 7.29
------- -------
Net interest $ 884 $ 1,112
======= =======
</TABLE>
The following tables summarize changes in interest income and interest expense
due to changes in interest rates, versus changes in volume for the quarter and
nine months ended September 30, 1998, compared to the same periods in 1997 (in
thousands):
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30, 1998
------------------------------------------------
RATE* VOLUME* TOTAL
----- ------- -----
<S> <C> <C> <C>
Interest income on mortgage
securities collateral $(199) $(2,793) $(2,992)
Interest expense on
collateralized mortgage
securities (183) (2,708) (2,891)
----- ------- -------
$ (16) $ (85) $ (101)
===== ======= =======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------
RATE* VOLUME* TOTAL
----- ------- -----
<S> <C> <C> <C>
Interest income on mortgage
securities collateral $(119) $(6,818) $(6,937)
Interest expense on
collateralized mortgage
securities (106) (6,603) (6,709)
----- ------- -------
$ (13) $ (215) $ (228)
===== ======= =======
</TABLE>
* THE CHANGES IN INTEREST INCOME AND EXPENSE DUE TO BOTH VOLUME AND RATE HAVE
BEEN ALLOCATED TO VOLUME AND RATE CHANGES IN PROPORTION TO THE RELATIONSHIP
OF THE ABSOLUTE DOLLAR AMOUNTS OF THE CHANGE IN EACH.
-5-
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CMC Securities Corporation I (the "Company"), was incorporated in Nevada on May
7, 1986 as a special-purpose finance corporation and is a wholly-owned
subsidiary of Capstead Mortgage Corporation ("CMC").
As of November 30, 1993, the Company had issued 10 series of collateralized
mortgage obligations ("CMOs") with an aggregate original principal balance of
$1,727,627,000 under the registration statement. These issuances have been
accounted for as financings. The Company has essentially issued the maximum
amount of securities under the $1.732 billion amended registration statement
and, therefore, the Company has not issued any CMOs since November 30, 1993.
Since the Company did not retain any investment in the CMOs issued, no economic
benefit was or will be received, thus no net income or loss was or will be
recognized.
The Company's net losses are due to operational costs incurred (management and
professional fees).
LIQUIDITY AND CAPITAL RESOURCES
All ongoing CMO expenses of the Company are paid out of the excess cash flows on
the CMOs issued before the residual holders receive their residual interest. The
Company believes that the excess cash flows will be sufficient to pay ongoing
CMO expenses. Cash flow requirements due to ongoing operational costs are funded
by CMC.
PART II. -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits:
Exhibit 27 Financial Data Schedule (electronic filing only).
(b) Reports on Form 8-K: None.
-6-
<PAGE> 9
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.
CMC SECURITIES CORPORATION I
Date: November 3, 1998 By: /s/ RONN K. LYTLE
----------------------------
Ronn K. Lytle
Chairman and Chief Executive Officer
Date: November 3, 1998 By: /s/ ANDREW F. JACOBS
----------------------------
Andrew F. Jacobs
Executive Vice President - Finance,
Treasurer and Secretary
-7-
<PAGE> 10
EXHIBIT INDEX
Exhibit Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted form CMC
Securities Corporation I's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 426,612
<CURRENT-LIABILITIES> 48
<BONDS> 426,612
0
0
<COMMON> 10
<OTHER-SE> (58)
<TOTAL-LIABILITY-AND-EQUITY> 426,612
<SALES> 0
<TOTAL-REVENUES> 27,754
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 903
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,870
<INCOME-PRETAX> (19)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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