SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 1997
Commission File Numbers 33-99612, 33-11623, 33-15833, 33-16145
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
----------------------------------------------------
(Exact name of registrant as specified in its registration statements)
Delaware 13-3320910
-------- ----------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
11 Madison Avenue, New York, New York 10010
- ------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 212-325-1811
Securities registered pursuant to section 12(b) of the Act: None.
Securities registered pursuant to section 12(g) of the Act:
Title of Number of shares outstanding
each class as of December 31, 1997
---------- -----------------------
Common Stock 1,000
par value $1.00 per share
As of March 26, 1998 none of the Registrant's Common Stock was held by
non-affiliates.
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 |_|
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
INDEX
Page
Number
PART I
Item 1. Business 3
Item 2. Properties 7
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 8
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 8. Financial Statements 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 16
PART III
Item 10. Directors and Executive Officers of the Registrant 16
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial Owners
and Management 16
Item 13. Certain Relationships and Related Transactions 16
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 16
SIGNATURES 18
INDEX TO EXHIBITS 19
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 20
Page 2
<PAGE>
PART I
Item 1. Business
Credit Suisse First Boston Mortgage Securities Corp. (the "Company"),
is a wholly owned subsidiary of Credit Suisse First Boston Management
Corporation ("FBSC"), which is a wholly owned subsidiary of Credit
Suisse First Boston, Inc., a privately owned holding company. The
Company was incorporated in the State of Delaware on December 31, 1985.
The Company was organized to form trusts to issue and sell
Collateralized Mortgage Obligations ("CMOs") backed by mortgage-backed
certificates (the "Certificates") issued and guaranteed as to the
payment of principal and interest by the Government National Mortgage
Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") and/or
mortgage loans and participations therein; to issue Strips of
Participation Securities ("SPLITS") backed by Certificates; to issue
Conduit Mortgage Pass-Through Certificates ("Conduits") representing
undivided fractional interests in a trust formed by the Company, where
the trust property consists of a pool of mortgage loans; to issue
Commercial/Multifamily Mortgage Pass-Through Certificates
("Multifamily") and to issue Home Equity Loan Pass-Through Certificates
("Home Equity").
Shelf registrations filed for the Company since inception are as
follows (dollars in thousands):
Commission Date of Shelf Type of
File # Filing Amount Issue
------ ------ ------ -----
33-3119 02/12/86 $1,000,000 CMO
33-4884 04/15/86 2,000,000 CMO
33-8856 09/18/86 1,000,000 SPLIT
33-10305 11/19/86 250,000 Conduit
33-10311 11/20/86 2,000,000 CMO
33-11750 02/04/87 2,000,000 CMO
33-11924 02/12/87 2,000,000 CMO
33-12461(A) 03/06/87 1,000,000 Conduit
33-12541 03/10/87 2,000,000 SPLIT
33-37221 10/16/90 500,000 Conduit
33-47579 04/26/92 1,700,000 Conduit
33-59342 05/05/93 500,000 Commercial/Multifamily
33-65950 07/13/93 500,000 Home Equity
33-82354 08/11/94 500,000 Commercial/Multifamily
33-98604 11/08/95 1,000,000 Commercial/Multifamily
33-99612 11/17/95 3,000,000 Conduit
33-99612(B) 11/29/95 1,740,000 Conduit
33-11623 09/09/96 800,000 Conduit
33-15833 11/08/96 800,000 Conduit
33-16145 11/14/96 300,000 Conduit
33-21329 02/07/97 1,000 Conduit
33-21329(C) 02/27/97 1,000,000 Conduit
33-25751 04/24/97 250,000 Commercial/Multifamily
33-25751(D) 05/15/97 1,500,000 Commercial/Multifamily
33-29239 06/13/97 1,000 Conduit
33-29239(E) 07/22/97 1,000,000 Conduit
33-33807 08/15/97 1,000 Conduit
33-33807(F) 09/15/97 700,000 Conduit
Page 3
<PAGE>
Item 1. Business (continued)
(A) Represents amendment No. 1 effectively increasing the shelf amount from
$250,000 to $1,000,000 as filed on Form S-11 #33-10305.
(B) Represents amendment No. 1 effectively decreasing the shelf amount from
$3,000,000 to $1,740,000 as filed on Form S-11 #33-99612.
(C) Represents amendment No. 1 effectively increasing the shelf amount from
$1,000 to $1,000,000 as filed on Form S-11 #33-21329.
(D) Represents amendment No. 1 effectively increasing the shelf amount from
$250,000 to $1,500,000 as filed on form S-11 #33-25751.
(E) Represents amendment No. 1 effectively increasing the shelf amount from
$1,000 to $1,000,000 as filed on form S-11 #33-29239.
(F) Represents amendment No. 1 effectively increasing the shelf amount from
$1,000 to $700,000 as filed on form S-11 #33-33807.
The Company established the following Trusts which have issued Collateralized
Mortgage Obligations since inception (dollars in thousands):
Pricing Type of Principal
Trust Series Date Collateral Amount
----- ------ ---- ---------- ------
I A 04/07/86 FNMA $ 140,000
I B 04/07/86 FHLMC 249,000
II A 06/04/86 FHLMC 500,000
III A 06/25/86 FNMA 162,000
IV A 10/21/86 FNMA 161,800
IV B 10/21/86 FHLMC 396,265
V A 10/30/86 FHLMC 500,000
VI A 12/02/86 FNMA 185,000
VII A 12/03/86 FHLMC 240,000
VII B 12/04/86 GNMA 300,000
VIII A 12/05/86 FNMA 500,000
IX A 01/07/87 FNMA 350,000
X A 01/15/87 FNMA 300,000
XI A 02/26/87 GNMA 1,000,000
12 A 03/25/87 FHLMC 250,000
13 A 03/31/87 FHLMC 250,000
14 A 04/20/87 FNMA 200,000
15 A 05/12/87 FHLMC/FNMA 250,000
16 A 05/27/87 GNMA 150,000
17 A 06/16/87 FHLMC/FNMA 270,000
18 A 06/30/88 GNMA 500,100
19 A 09/28/88 FHLMC 203,615
20 A 08/29/90 GNMA 154,500
21 A 04/30/91 GNMA 69,514
$7,281,794
Page 4
<PAGE>
Item 1. Business (continued)
The Company has sold, through private placements, the beneficial
interests in Owner Trusts since inception:
Percent of beneficial
interest sold during the year ended:
------------------------------------
Trust 1986 1987
----- ----- ----
I 100.000%
II 98.000
III 98.000
IV 98.000%
V 100.000
VI 98.000
VII 100.000
VIII 98.000
IX 98.635
X 100.000
XI 100.000
Trust 1987 1988 1990 1991
----- ---- ---- ---- ----
12 100.000%
13 99.800
14 99.800
15 99.800
16 100.000
17 100.000
18 100.000%
19 100.000
20 100.000%
21 100.000%
There were no beneficial interests in Owner Trusts sold by the Company
since 1991.
Page 5
<PAGE>
Item 1. Business (continued)
The Company, as Seller, has also issued the following SPLITS since
inception (dollars in thousands):
Pricing Type of Principal
Series Date Collateral Amount
------ ---- ---------- ------
1987-A 02/19/87 FHLMC $ 445,000
1987-B 03/13/87 FNMA 275,000
1987-C 03/27/87 GNMA 126,900
1987-D 04/13/87 GNMA 110,000
1988-E 09/07/88 GNMA 200,000
----------
$1,156,900
==========
The Company established the following Trust Funds, which sold Conduit
Mortgage Pass-Through Certificates since inception (dollars in thousands):
Pricing Principal
Series Date Amount
- ------ ---- ------
1987-1, Class A 07/16/87 $ 72,600
1988-1, Class A 10/13/88 63,794
1988-2, Class A 10/19/88 95,000
1988-3, Class A 11/02/88 61,692
1988-4, Class A 11/09/88 45,893
1989-1, Class A 01/31/89 86,612
1989-2, Class A 02/09/89 81,300
1989-4, Class A 05/03/89 99,877
1989-5, Class A 12/21/89 144,015
1990-1, Class A 09/27/90 134,070
1991-1, Class A 12/24/91 110,201
1992-1, Class A 02/14/92 174,564
1992-2, Class A 07/15/92 131,153
1992-3, Class A 07/23/92 92,623
1992-4, Class A 09/17/92 156,397
1992-5, Class A 09/17/92 115,196
1993-1, Class A 03/01/93 81,879
1993-2, Class A 03/31/93 296,803
1993-3, Class A 04/28/93 50,839
1993-4, Class A 06/11/93 115,000
1993-5, Class A 07/29/93 342,468
1993-6, Class A 08/27/93 208,700
1993-6R 02/23/94 18,997
1993-2R 08/15/94 21,409
1995-1, Class A 12/15/95 1,278,320
1996-1, Class A 05/28/96 305,580
1996-1R 10/04/96 73,672
1996-2 12/09/96 280,000
1996-3 12/19/96 278,286
Page 6
<PAGE>
Item 1. Business (continued)
Pricing Principal
Series Date Amount
------ ---- -------
1997-1 03/17/97 392,795
1997-1 03/17/97 200,000
1997-1 07/28/97 142,421
1997-1 08/21/97 200,000
1997-2 09/17/97 389,642
1997-WFC1 09/25/97 130,639
1997-CCB1 09/25/97 728,242
1997-2 11/17/97 400,000
---------
$7,600,679
The collateral in the Trust Fund issuances listed above consists of mortgage
pools of fixed and adjustable rate, fully amortizing mortgage loans.
The Company, as Seller, has also issued the following Commercial/Multifamily
Mortgage Pass-Through Certificates since inception (dollars in thousands):
Series Date Amount
------ ---- ------
1993-M1 08/12/93 $ 97,118
1994-M1 03/11/94 157,570
Series 94 05/16/94 15,000
Series 94-E 05/16/94 16,802
1994-CFB1 06/22/94 262,189
1994-MHC1 10/04/94 303,524
1995-AEW1 10/30/95 287,679
1995-FHA1 11/15/95 171,543
1995-MBL1 11/28/95 108,566
1995-WF1 12/21/95 243,850
1997-C1 06/25/97 897,903
1997-C2 12/12/97 1,293,736
----------
$3,855,480
The Company, as Seller, has also issued the following Home Equity
Loan Pass-Through Certificates since inception (dollars in thousands):
Series Date Amount
- ------ ---- ------
1993-H1 09/29/93 $78,017
$78,017
Item 2. Properties
The Company neither owns nor leases any physical property.
Item 3. Legal Proceedings
The Company is not a party to any material actual or pending legal proceedings.
Page 7
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the year ended December 31, 1997.
Part II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
As of March 18, 1998 all outstanding shares of the Company's common
stock are owned indirectly by Credit Suisse First Boston, Inc. and are
not traded in any exchange or in the over-the-counter market.
Item 6. Selected Financial Data
Selected financial data is omitted because the information is included
in the financial statements or notes thereto.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The principal activities of the Company include (i) issuing and selling
collateralized mortgage obligations (the "Bonds"), (ii) issuing and
selling Strips of Participation Certificates ("Splits"), (iii) issuing
and selling Conduit Mortgage Pass-Through Certificates ("Conduits"),
(iv) issuing and selling Commercial/Multifamily Mortgage Pass-Through
Certificates ("Multifamily") and (v) issuing and selling Home Equity
Loan Pass-Through Certificates ("Home Equity").
Results of Operations
The Company recorded no gains on the sale of beneficial interests
during the years ended December 31, 1997, 1996, and 1995.
Net unrealized gains and losses on mortgage pass-through certificates
are reflected in principal transactions. Realized gains and losses on
the sale of mortgage pass-through certificates are also reflected in
principal transactions. For the years ended December 31, 1997 and 1996
principal transactions gains of $1,358,000 and $1,188,000,
respectively, are included in the Company's Statement of Operations.
There were no principal transactions for the year ended December 31,
1995.
During the years ended December 31, 1997, 1996 and 1995 the Company
issued, as depositor, aggregate principal amounts of Bonds, Splits,
Conduits, Multifamily and Home Equity of $4,775,378,000, $937,538,000,
and $2,089,958,000, respectively.
Credit Suisse First Boston Corporation, (the "Corporation") a wholly
owned subsidiary of the Parent Company, provides certain administrative
functions on behalf of the Company. Beginning in 1997, the Corporation
charged the Company a management fee for providing these services. The
fee represents an allocation of the Corporation's costs based on an
evaluation of the level of business activity of the Company and the
services provided by the Corporation. At December 31, 1997, there was
$1,597,000 in management fees charged to the Company. Prior to 1997,
the fees associated with the Corporation's services were not reflected
in the Company's financial statements. In addition, during 1997 the
Company incurred other miscellaneous expenses totaling $21,000, which
are reflected in the Company's Statement of Operations.
Liquidity and Capital Resources
The Company utilizes FBSC to borrow funds and facilitate the settlement
of all transactions through intercompany accounts as required with
FBSC. FBSC does not charge the Company interest on such borrowings.
Page 8
<PAGE>
Item 8. Financial Statements
INDEX TO FINANCIAL STATEMENTS PAGE
----
Independent Auditors' Report 10
Balance Sheets as of December 31, 1997 and 1996 11
Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995 12
Statements of Changes in Stockholder's Equity for the
Years Ended December 31, 1997, 1996 and 1995 12
Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 13
Notes to Financial Statements 14
Financial Statement Schedules are omitted because they are not required,
inapplicable, or the information is included in the financial statements or
notes thereto.
Page 9
<PAGE>
Independent Auditors' Report
The Board of Directors
Credit Suisse First Boston Mortgage Securities Corp.:
We have audited the accompanying balance sheets of Credit Suisse First Boston
Mortgage Securities Corp. as of December 31, 1997 and 1996, and the related
statements of operations, changes in stockholder's equity, and cash flows for
each of the years in the three year period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Credit Suisse First Boston
Mortgage Securities Corp. as of December 31, 1997 and 1996, and the results of
its operations and its cash flows for each of the years in the three year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
March 26, 1998
Page 10
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1997 1996
------- -------------
(in thousands, except par value and share data)
<S> <C> <C>
Assets:
Cash $ 11 $ 11
Investment in trusts 624 605
Mortgage Pass-Through Certificates 4,776 7,952
Resale agreements -- 23,109
Receivables from affiliates -- 76
Accrued interest 456 542
-------- ---------
Total Assets $ 5,867 $ 32,295
-------- ---------
Liabilities and Stockholder's Equity:
Securities sold not yet purchased:
U.S. Government treasury notes $ -- $ 22,859
Payables to affiliates 4,739 7,855
Accrued interest -- 712
-------- ---------
Total Liabilities 4,739 31,426
-------- ---------
Stockholder's Equity:
Common Stock, (par value $1.00 per share,
1,000 shares authorized and outstanding) 1 1
Retained earnings 1,127 868
-------- ---------
Total Stockholder's Equity 1,128 869
-------- ---------
Total Liabilities and Stockholder's Equity $ 5,867 $ 32,295
======== =========
</TABLE>
See Accompanying Notes to Financial Statements.
Page 11
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Revenues:
Principal transactions $1,358 $1,188 $ --
Interest income 1,026 535 --
------- ------ --------
Total revenues 2,384 1,723 --
Expenses:
Interest expense 367 388 --
General and administrative expenses 1,618 -- --
------- ------ --------
Total expenses 1,985 388 --
Income from operations before income
taxes 399 1,335 --
Income taxes 140 467 --
------- ------ --------
Net income $ 259 $ 868 $ --
======= ====== ========
</TABLE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
------------ ----------- ------------
(in thousands)
<S> <C> <C> <C>
Common stock - balance at beginning of year $ 1 $ 1 $ 1
------- ----- -----
Common stock - balance at end of year $ 1 $ 1 $ 1
======= ===== =====
Retained earnings-balance at beginning of year $ 868 $ -- $ --
Net income 259 868 --
------- ----- -----
Retained earnings-balance at end of year $1,127 $ 868 $ --
------- ----- -----
Total $1,128 $ 869 $ 1
======= ===== =====
</TABLE>
See Accompanying Notes to Financial Statements.
Page 12
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
-------- -------- -----
(in thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income $ 259 $ 868 $ --
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
(Increase) decrease in investments in and distribution by trusts (19) 18 66
Decrease (increase) in Mortgage Pass-Through Certificates 3,176 (7,952) --
Decrease (increase) in resale agreements 23,109 (23,109) --
Decrease (increase) in receivables from affiliates 76 (76) --
Decrease (increase) in accrued interest receivable 86 (542) --
(Decrease) increase in accrued interest payable (712) 712 --
-------- -------- -----
Net Cash Provided by (Used for)
Operating Activities 25,975 (30,081) 66
-------- -------- -----
Cash Flows From Financing Activities:
(Decrease) increase in securities sold not yet purchased (22,859) 22,859 --
Decrease in deferred debt issuance costs -- 945 185
(Decrease) increase in payables to affiliates (3,116) 6,277 (251)
-------- -------- -----
Net Cash (Used for) Provided by Financing
Activities (25,975) 30,081 (66)
-------- -------- -----
Net increase in cash -- -- --
Cash at beginning of year 11 11 11
-------- -------- -----
Cash at end of year $ 11 $ 11 $ 11
======== ======== =====
</TABLE>
See Accompanying Notes to Financial Statements
Page 13
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
NOTES TO FINANCIAL STATEMENTS
1. Description of business
Credit Suisse First Boston Mortgage Securities Corp. (the "Company"), is a
wholly owned subsidiary of Credit Suisse First Boston Management Corporation
("FBSC"), which is a wholly owned subsidiary of Credit Suisse First Boston,
Inc., (the "Parent Company") a privately owned holding company. The Company
was granted authority to do business in the state of Delaware on April 18,
1986 ("date of inception").
The Company was organized to form ("Trusts"); to issue and sell
Collateralized Mortgage Obligations ("CMOs"); to issue Strips of
Participation Securities ("SPLITS"); to issue Conduit Mortgage Pass-Through
Certificates ("Conduits"); to issue Commercial/Multifamily Mortgage
Pass-Through Certificates ("Multifamily"); and to issue Home Equity
Pass-Through Certificates ("Home Equity").
CMOs are backed by mortgage-backed certificates (the "Certificates") issued
and guaranteed as to the payment of principal and interest by the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC")
and/or mortgage loans and participations therein. SPLITS are backed by
Certificates. Conduits, Multifamily, and Home Equity represent undivided
fractional interests in their respective trust, formed by the Company, where
the trust property consists of a pool of mortgage loans, a pool of
commercial/multifamily mortgage loans and a pool of home equity loans,
respectively.
Since inception, the Company has had the following activity:
- Established 21 Trusts which have issued CMO's with an aggregate
principal balance of $7,281,794,000 as of their respective date of
issuance. Additionally, the Company sold, through private placements, 21
Trusts consisting of beneficial interests in Owner Trusts. There were no
Trusts issued during the years ended December 31, 1997, 1996, and 1995,
respectively.
- As seller, has issued 5 series of SPLITS with an aggregate principal
balance of $1,156,900,000 as of their respective date of issuance. No
SPLITS have been issued since 1988.
- Established 37 Trust Funds which sold Conduits with an aggregate
principal balance of $7,600,679,000 as of their respective date of
issuance, including $2,583,739,000, $937,538,000 and $1,278,320,000 issued
during the years ended December 31, 1997, 1996, and 1995, respectively.
- As seller, has issued 12 series of Multifamily certificates with an
aggregate principal balance of $3,855,480,000 as of their respective date
of issuance, including $2,191,639,000 and $811,638,000 issued during the
years ended December 31, 1997 and 1995, respectively. There were no
Multifamily certificates issued during 1996.
- As seller, has issued 1 series of Home Equity certificates with an
aggregate principal balance of $78,017,000 as of December 31, 1993. There
were no Home Equity certificates issued since 1993.
Page 14
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
NOTES TO FINANCIAL STATEMENTS
2. Summary of significant accounting policies
Deferred debt issuance costs, which consist primarily of shelf
registration costs, are allocated to the specific Trust to which the
expense relates on the date of issuance and are included in the cost of
investment upon sale.
The Company's investments in the Trusts are carried at cost less cash
distributions received to date. Cash in excess of the Company's cost is
recognized as income when received.
The Company utilizes FBSC to borrow funds and facilitate the settlement of
all transactions through intercompany accounts of which no interest is
charged by FBSC to the Company.
The Company is included in the consolidated federal and combined state and
local income tax returns of Credit Suisse First Boston, Inc. The amount of
income tax expense is computed on a separate company basis and allocated
by Credit Suisse First Boston, Inc. to the Company.
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.
3. Mortgage Pass-Through Certificates
In the normal course of business, the Company establishes trusts which
sell mortgage pass-through certificates. All certificates are generally
purchased from the trust by the underwriter and sold to third parties. As
of December 31, 1997 and 1996, the Company held $4,776,000 and $7,952,000,
respectively, of certificates which they purchased directly from the
trust. As of December 31, 1995, all mortgage pass-through certificates
were sold to third parties and none were held by the Company. The
certificates are carried at market value and are expected to be sold in
the near future. To acquire the mortgage pass-through certificates, the
Company established an intercompany loan included in payables to
affiliates on the balance sheets.
4. Related party transactions
In the normal course of business, the Company enters into securities
transactions with affiliated companies. In addition, the Company enters
into resale agreements with affiliated companies at prevailing interest
rates. These affiliates have collateralized their borrowings with U.S.
Government treasury notes whose market values approximate the amount of
the borrowing. There were no such transactions at December 31, 1997. At
December 31, 1996, there were $23,109,000 of such resale agreements
outstanding.
Credit Suisse First Boston Corporation, (the "Corporation") a wholly owned
subsidiary of the Parent Company, provides certain administrative
functions on behalf of the Company. Beginning in 1997, the Corporation
charged the Company a management fee for providing these services. The fee
represents an allocation of the Corporation's costs based on an evaluation
of the level of business activity of the Company and the services provided
by the Corporation. At December 31, 1997, there was $1,597,000 in
management fees charged to the Company. Prior to 1997, the fees associated
with the Corporation's services were not reflected in the Company's
financial statements. In addition, during 1997 the Company incurred other
miscellaneous expenses totaling $21,000, which are reflected in the
Company's Statement of Operations.
Page 15
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
NOTES TO FINANCIAL STATEMENTS
5. Reorganization
On July 1, 1996, the Parent Company's principal shareholder, CS Holding,
announced a plan to reorganize its corporate structure, including the
operations of the Parent Company. This reorganization was fully implemented
as of January 1, 1997. Pursuant to this reorganization, CS Holding changed
its name to Credit Suisse Group and is comprised of four distinct business
units. As part of this reorganization the Parent Company changed its name
from CS First Boston, Inc. to Credit Suisse First Boston, Inc. and the
Company changed its name from CS First Boston Mortgage Securities Corp. to
Credit Suisse First Boston Mortgage Securities Corp.. FBSC changed its name
from CS First Boston Securities Corporation to Credit Suisse First Boston
Management Corporation.
Page 16
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE TITLE DATE ELECTED
---- --- ----- ------------
<S> <C> <C> <C>
Lawrence A. Shelley 39 President and Director 02/26/97
Diane Manno 39 Treasurer 09/13/96
Rhonda G. Matty 39 Assistant Secretary 08/24/94
Thomas A. DeGennaro 43 Director of Taxes 07/16/90
Thomas M. Zingalli 39 Controller and Principal
Accounting Officer 08/05/94
</TABLE>
Item 11. Executive Compensation
No compensation was paid by the Company to persons who were directors,
officers or employees of the Company for their services as directors or
officers of the Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Not applicable.
Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements:
The Financial Statements and Notes to Financial Statements
appear on pages 11 through 16. The Report of Independent
Auditors, KPMG Peat Marwick LLP, pertaining to the 1997, 1996
and 1995 financial statements appears on page 10.
(2) Financial Statement Schedules
Financial Statement Schedules are omitted because they are not
required, inapplicable, or the information is included in the
financial statements or notes thereto.
(3) Exhibits:
Articles of Incorporation of the Company as of December 31, 1985
(incorporated by reference to Exhibit 3.1 of the Company's Form
S-11 Registration Statement No. 33-8856 dated September 18,
1986).
Page 17
<PAGE>
(b) Reports on Form 8-K
<TABLE>
<CAPTION>
Items Reported Financial Statements Filed Date of Filing
-------------- -------------------------- --------------
<S> <C> <C> <C>
Item 2. Acquisition or Disposition of Assets Not Applicable January 23, 1997
Item 2. Acquisition or Disposition of Assets Not Applicable February 20, 1997
Item 5. Other Events Not Applicable March 17, 1997
Item 7. Financial Statements and Exhibits Not Applicable March 26, 1997
Item 7. Financial Statements and Exhibits Not Applicable March 27, 1997
Item 5. Other Events Not Applicable May 7, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable June 10, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable June 12, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable June 16, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable June 27, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable July 16, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable July 25, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable August 21, 1997
Items 7. Financial Statements and Exhibits Not Applicable September 11, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable September 17, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable September 24, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable September 29, 1997
Item 7. Financial Statements and Exhibits Not Applicable October 9, 1997
Item 7. Financial Statements and Exhibits Not Applicable October 21, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 1, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 3, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 4, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 8, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 9, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 10, 1997
Item 5. Other Events Not Applicable December 10, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 11, 1997
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 19, 1997
Item 7. Financial Statements and Exhibits Not Applicable December 29, 1997
</TABLE>
(c) Exhibits filed as part of this report are included in Item 14(a) (3)
above.
Page 18
<PAGE>
SIGNATURES
Pursuant to the requirements of the 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 this 26th day of
March, 1998.
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.
By: LAWRENCE A. SHELLEY
-------------------
Lawrence A. Shelley
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 26, 1998.
By: DIANE MANNO By: RHONDA G. MATTY
------------------- --------------------------
Diane Manno Rhonda G. Matty
Treasurer Assistant Secretary
By: THOMAS A. DEGENNARO By: THOMAS M. ZINGALLI
------------------- --------------------------
Thomas A. DeGennaro Thomas M. Zingalli
Director of Taxes Controller and Principal
Accounting Officer
Page 19
<PAGE>
SIGNATURES
Pursuant to the requirements of the 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 this 26th day of
March, 1998.
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.
By:
-------------------------
Lawrence A. Shelley
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on March 26, 1998.
By: By:
- ---------------------- -------------------------
Diane Manno Rhonda G. Matty
Treasurer Assistant Secretary
By: By:
- ---------------------- -------------------------
Thomas A. DeGennaro Thomas M. Zingalli
Director of Taxes Controller and Principal
Accounting Officer
Page 19
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C> <C>
3.1 Articles of Incorporation of the Company as of December 31, 1985. *
3.2 By-Laws of the Company as of December 31, 1985. *
</TABLE>
* Incorporated by reference to the same Exhibits in Registration Statement No.
33-8856 on Form S-11 filed with the Securities and Exchange Commission on
September 18, 1986.
Page 20
<PAGE>
The Board of Directors
Credit Suisse First Boston Mortgage Securities Corp.:
We consent to incorporation by reference in the registration statement Nos.
33-11623, 33-15833, 33-16145, 33-21329, 33-25751, 33-29239, and 33-33807 on Form
S-3 of Credit Suisse First Boston Mortgage Securities Corp. of our report dated
March 26, 1998 relating to the balance sheets of Credit Suisse First Boston
Mortgage Securities Corp. as of December 31, 1997 and 1996, and the related
statements of operations, changes in stockholder's equity, and cash flows for
each of the years in the three year period ended December 31, 1997, which report
appears in the December 31, 1997 annual report on Form 10-K of Credit Suisse
First Boston Mortgage Securities Corp.
KPMG Peat Marwick LLP
New York, New York
March 26, 1998
Page 21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1997
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 4,776
<CURRENT-ASSETS> 5,867
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,867
<CURRENT-LIABILITIES> 4,739
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 1,127
<TOTAL-LIABILITY-AND-EQUITY> 5,867
<SALES> 0
<TOTAL-REVENUES> 2,384
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,618
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 367
<INCOME-PRETAX> 399
<INCOME-TAX> 140
<INCOME-CONTINUING> 259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 259
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
