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, 1998
Commission File Numbers 33-11623, 33-15833,
33-16145, 33-21329, 33-25751,
33-29239, 33-33807, 33-51771,
33-53115, 33-25751, 33-61167
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
----------------------------------------------------------------------
(Exact name of registrant as specified in its registration statements)
<TABLE>
<S> <C>
Delaware 13-3320910
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
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
</TABLE>
Securities registered pursuant to section 12(b) of the Act: None.
Securities registered pursuant to section 12(g) of the Act:
<TABLE>
<CAPTION>
Title of Number of shares outstanding
each class As of December 31, 1998
---------- -----------------------
<S> <C>
Common Stock 1,000
par value $1.00 per share
</TABLE>
As of March 26, 1999 none of the Registrant's Common Stock was held by
non-affiliates.
Number of shares outstanding of the Registrant's Common Stock as of March 26,
1999 - 1,000
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
<TABLE>
<CAPTION>
Page
Number
<S> <C>
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 7a. Quantitative and Qualitative Disclosures
About Market Risk 9
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 17
PART III
Item 10. Directors and Executive Officers of the Registrant 17
Item 11. Executive Compensation 17
Item 12. Security Ownership of Certain Beneficial Owners
and Management 17
Item 13. Certain Relationships and Related Transactions 17
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 17
SIGNATURES 19
INDEX TO EXHIBITS 20
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 21
</TABLE>
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):
<TABLE>
<CAPTION>
Commission Date of Shelf Type of
File # Filing Amount Issue
--------- ------- ------ -------
<S> <C> <C> <C>
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
</TABLE>
Page 3
<PAGE>
Item 1. Business (continued)
<TABLE>
<CAPTION>
Commission Date of Shelf Type of
File # Filing Amount Issue
--------- ------- ------ -------
<S> <C> <C> <C>
33-51771 05/04/98 3,000,000 Commercial/Multifamily
33-53115 05/20/98 500,000 Conduit
33-25751 (G) 05/29/98 8,000,000 Commercial/Multifamily
33-33807 (H) 08/10/98 500,000 Conduit
33-61167 08/11/98 1,000,000 Conduit
33-33807 (I) 10/09/98 500,000 Conduit
</TABLE>
(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 from $1,000
to $700,000 as filed on form S-11 #33-33807.
(G) Represents amendment No.2 effectively increasing the shelf amount from
$1,077,742 to $8,000,000 as filed on form S-11 #33-25751.
(H) Represents amendment No.1 effectively increasing the shelf amount from
$149,285 to $500,000 as filed on form S-11 #33-33807.
(I) Represents amendment No.2 effectively increasing the shelf amount from
$149,285 to $500,000 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):
<TABLE>
<CAPTION>
Pricing Type of Principal
Trust Series Date Collateral Amount
----- ------ ---- ---------- ------
<S> <C> <C> <C> <C>
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
</TABLE>
Page 4
<PAGE>
Item 1. Business (continued)
<TABLE>
<CAPTION>
Pricing Type of Principal
Trust Series Date Collateral Amount
----- ------ ---- ---------- ------
<S> <C> <C> <C> <C>
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
==========
</TABLE>
The Company has sold, through private placements, the beneficial interests
in Owner Trusts since inception:
Percent of beneficial
interest sold during the year ended:
<TABLE>
<CAPTION>
Trust 1986 1987
----- ----- ----
<S> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Trust 1987 1988 1990 1991
----- ---- ---- ---- ----
<S> <C> <C> <C> <C>
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%
</TABLE>
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):
<TABLE>
<CAPTION>
Pricing Type of Principal
Series Date Collateral Amount
------ ---- ---------- ------
<S> <C> <C> <C>
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
</TABLE>
The Company established the following Trust Funds, which sold Conduit
Mortgage Pass-Through Certificates since inception (dollars in thousands):
<TABLE>
<CAPTION>
Pricing Principal
Series Date Amount
------ ------- ----------
<S> <C> <C>
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
</TABLE>
Page 6
<PAGE>
Item 1. Business (continued)
<TABLE>
<CAPTION>
Pricing Principal
Series Date Amount
------ ------- ----------
<S> <C> <C>
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
1998-1 03/05/98 139,648
1998-CCB1 03/27/98 560,162
1998-WFC2 06/24/98 128,694
----------
$8,429,183
==========
</TABLE>
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):
<TABLE>
<CAPTION>
Series Date Amount
------ ---- ------
<S> <C> <C>
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
1998-C1 06/11/98 2,197,390
1998-C2 11/20/98 1,688,900
----------
$7,741,770
==========
</TABLE>
The Company, as Seller, has also issued the following Home Equity Loan
Pass-Through Certificates since inception (dollars in thousands):
<TABLE>
<CAPTION>
Series Date Amount
------ ---- ------
<S> <C> <C>
1993-H1 09/29 $78,017
=======
</TABLE>
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, 1998.
Part II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
As of March 26, 1999 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 in the
financial statements or notes thereto included herein.
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, 1998, 1997, and 1996.
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, 1998, 1997
and 1996, principal transactions gains of $863,000, $1,358,000 and
$1,188,000, respectively, are included in the Company's Statements of
Operations.
During the years ended December 31, 1998, 1997 and 1996 the Company
issued, as depositor, aggregate principal amounts of Conduits and
Multifamily of $4,714,794,000, $4,775,378,000, and $937,538,000,
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. $852,000 and
$1,597,000 were charged to the Company as management fees for the
years ended December 31, 1998 and 1997, respectively. Prior to 1997,
the fees associated with the Corporation's services were not reflected
in the Company's financial statements. In addition, during 1998 and
1997 the Company incurred other miscellaneous expenses totaling $4,000
and $21,000, respectively, which are reflected in the Company's
Statements 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 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify the year. Date-sensitive systems
may recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in some systems, which use
certain dates in 1999 to represent something other than a date. The
effects of Year 2000 Issues may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems
failure, which could affect a company's ability to conduct normal
business operations. The potential impact of the Year 2000 Issue on
the company is being addressed by Credit Suisse First Boston, Inc.,
which has a contingency plan in place. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the Company,
including those related to the efforts of customers or other third
parties, will be fully resolved.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of changes in value of a financial
instrument caused by fluctuations in interest rates and prices. The
Company monitors market risks in accordance with established policies
and may enter into various derivatives and U.S. Government securities
transactions, as it deems necessary.
Item 8. Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS PAGE
<S> <C>
Independent Auditors' Report 10
Balance Sheets as of December 31, 1998 and 1997 11
Statements of Operations for the Years Ended
December 31, 1998, 1997 and 1996 12
Statements of Changes in Stockholder's Equity for the
Years Ended December 31, 1998, 1997 and 1996 12
Statements of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996 13
Notes to Financial Statements 14
</TABLE>
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>
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 ("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 the date of inception, the Company has had the following activity:
- Established 21 Trusts which have issued CMOs 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, 1998, 1997, and 1996,
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 $8,429,183,000 as of their respective date of
issuance, including $828,504,000, $2,583,739,000 and $937,538,000 issued
during the years ended December 31, 1998, 1997, and 1996, respectively.
- As seller, has issued 12 series of Multifamily certificates with an
aggregate principal balance of $7,741,770,000 as of their respective date
of issuance, including $3,866,290,000 and $2,191,639,000 issued during the
years ended December 31, 1998 and 1997, 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.
Certain expenses are paid on behalf of the Company by Credit Suisse First
Boston, Inc.
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 Trusts by the underwriter and sold to third parties. As
of December 31, 1998 and 1997, the Company held $695,000 and $4,776,000,
respectively, of certificates which they purchased directly from the
Trusts. The certificates are carried at market value and are expected to be
sold in the near future. The effective interest rate yield of 7.4%, as of
December 31, 1998, will be used to accrue income in the following period.
The effective interest rate yield of 7.3%, as of December 31, 1997, was
used to accrue income in the following period. Net unrealized gains/losses
on the certificates are reflected in principal transactions in the
accompanying Statements of Operations. Realized gains/losses on the sale of
the certificates are also reflected in principal transactions in the
accompanying Statements of Operations. 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
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. $852,000 and $1,597,000 were charged to the Company as
management feees for the years ended December 31, 1998 and 1997,
respectively. Prior to 1997, the fees associated with the Corporation's
services were not reflected in the Company's financial statements.
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 40 President and Director 02/26/97
Zev Kindler 35 Treasurer 11/10/98
Rhonda G. Matty 40 Assistant Secretary 08/24/94
Thomas A. DeGennaro 44 Director of Taxes 07/16/90
Thomas M. Zingalli 40 Controller and Principal 08/05/94
Accounting Officer
</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
LLP, pertaining to the 1998, 1997 and 1996 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>
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable October 15, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable October 22, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable October 30, 1998
Items 5 & 7. Other Events and
Monthly Statements and Exhibits Not Applicable October 30, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable November 4, 1998
Items 5 & 7. Other Events and
Monthly Statements and Exhibits Not Applicable November 6, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable November 10, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable November 12, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable November 12, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable November 17, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable November 24, 1998
Items 5 & 7. Other Events and
Monthly Statements and Exhibits Not Applicable December 3, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 3, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 10, 1998
Items 5 & 7. Other Events and
Financial Statements and Exhibits Not Applicable December 31, 1998
</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, 1999.
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.
By: /s/ 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, 1999.
<TABLE>
<S> <C>
By: /s/ ZEV KINDLER By: /s/ RHONDA G. MATTY
-------------------------------- ----------------------------
Zev Kindler Rhonda G. Matty
Treasurer Assistant Secretary
By: /s/ THOMAS A. DEGENNARO By: /s/ THOMAS M. ZINGALLI
-------------------------------- ----------------------------
Thomas A. DeGennaro Thomas M. Zingalli
Director of Taxes Controller and Principal
Accounting Officer
</TABLE>
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, 1999.
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, 1999.
<TABLE>
<S> <C>
By: -------------------------------- By: ----------------------------
Zev Kindler Rhonda G. Matty
Treasurer Assistant Secretary
By: -------------------------------- By: ----------------------------
Thomas A. DeGennaro Thomas M. Zingalli
Director of Taxes Controller and Principal
Accounting Officer
</TABLE>
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>
Consent of Independent Certified Public Accountants
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, 33-33807, 33-51771,
33-53115, 33-25751 and 33-61167 on Form S-3 of Credit Suisse First Boston
Mortgage Securities Corp. of our report dated March 26, 1999 relating to the
balance sheets of Credit Suisse First Boston Mortgage Securities Corp. as of
December 31, 1998 and 1997, 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, 1998, which report appears in the December 31, 1998
annual report on Form 10-K of Credit Suisse First Boston Mortgage Securities
Corp.
/s/ KPMG LLP
New York, New York
March 26, 1999
Page 21
<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, 1998 and 1997, 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, 1998. 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, 1998 and 1997, and the results of
its operations and its cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
New York, New York
March 26, 1999
Page 10
<PAGE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1998 1997
---- ----
(in thousands, except par value and share data)
<S> <C> <C>
Assets:
Cash $ 11 $ 11
Investment in trusts - 624
Mortgage Pass-Through Certificates 695 4,776
Receivables from affiliates 619 -
Accrued interest 16 456
-------- --------
Total Assets $ 1,341 $ 5,867
======== ========
Liabilities and Stockholder's Equity:
Payables to affiliates $ - $ 4,739
Other Payables 47 -
-------- --------
Total Liabilities 47 4,739
-------- --------
Stockholder's Equity:
Common Stock, (par value $1.00 per share,
1,000 shares authorized and outstanding) 1 1
Retained earnings 1,293 1,127
-------- --------
Total Stockholder's Equity 1,294 1,128
-------- --------
Total Liabilities and Stockholder's Equity $ 1,341 $ 5,867
======== ========
</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,
1998 1997 1996
------ ------ ------
(in thousands)
<S> <C> <C> <C>
Revenues:
Principal transactions $ 863 $1,358 $1,188
Interest income 644 1,026 535
------ ------ ------
Total revenues 1,507 2,384 1,723
Expenses:
Interest expense 396 367 388
General and administrative expenses 856 1,618 --
------ ------ ------
Total expenses 1,252 1,985 388
Income from operations before income taxes 255 399 1,335
Income taxes 89 140 467
------ ------ ------
Net income $ 166 $ 259 $ 868
====== ====== ======
</TABLE>
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996
------ ------ ------
(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 $1,127 $ 868 $ --
Net income 166 259 868
------ ------ ------
Retained earnings - balance at end of year $1,293 $1,127 $ 868
------ ------ ------
Total $1,294 $1,128 $ 869
====== ====== ======
</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,
1998 1997 1996
------ ------ ------
(in thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
- -------------------------------------
Net Income $ 166 $ 259 $ 868
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Decrease (increase) in investments in and
distribution by trusts 624 (19) 18
Decrease (increase) in Mortgage
Pass-Through Certificates 4,081 3,176 (7,952)
Decrease (increase) in resale agreements -- 23,109 (23,109)
(Increase) decrease in receivables
from affiliates (619) 76 (76)
Decrease (increase) in accrued
interest receivable 440 86 (542)
(Decrease) increase in accrued
interest payable -- (712) 712
(Increase) in other payables 47 -- --
------- ------- -------
Net Cash provided by (used for)
Operating Activities 4,739 25,975 (30,081)
------- ------- -------
Cash Flows From Financing Activities:
- -------------------------------------
(Decrease) increase in securities sold not
yet purchased -- (22,859) 22,859
Decrease in deferred debt issuance costs -- -- 945
(Decrease) increase in payables to affiliates (4,739) (3,116) 6,277
------- ------- -------
Net Cash (used for) provided by
Financing Activities (4,739) (25,975) 30,081
------- ------- -------
Net increase in cash -- -- --
Cash at beginning of year 11 11 11
------- ------- -------
Cash at end of year $ 11 $ 11 $ 11
======= ======= =======
Supplemental Disclosure of Cash Flow Information:
- -------------------------------------------------
Interest -- 1,079 --
Income Taxes 89 140 467
</TABLE>
See Accompanying Notes to Financial Statements.
Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 619
<ALLOWANCES> 0
<INVENTORY> 695
<CURRENT-ASSETS> 1,341
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,341
<CURRENT-LIABILITIES> 47
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 1,293
<TOTAL-LIABILITY-AND-EQUITY> 1,341
<SALES> 0
<TOTAL-REVENUES> 1,507
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 856
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 396
<INCOME-PRETAX> 255
<INCOME-TAX> 89
<INCOME-CONTINUING> 166
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 166
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
