SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form l0-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended June 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee
Required] For the transition period from to
Commission file number 33-26824
Bear Stearns Secured Investors Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3402173
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1601 Elm Street, Dallas, Texas 75201
(2l4) 754-8300
(Address, Including Zip Code, and Telephone Number,
Including Area Code of Registrant's Executive Offices)
Securities registered pursuant to Section 12(b) of
the Act:
Name of each exchange on
Title of each class which registered
None -
Securities registered pursuant to Section 12(g) of
the Act:
None
(Title of class)
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 twelve 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of September 1, 1997.
100 shares of Common Stock, par value $.01 per share
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a) AND
(b) OF FORM 10-K AND THEREFORE IS FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT CONTEMPLATED THEREBY.
<PAGE>
ITEM 1 - BUSINESS
Bear Stearns Secured Investors Inc. (the "Company") was organized by, and is a
direct wholly-owned limited purpose finance subsidiary of The Bear Stearns
Companies Inc. (the "Parent"). The Company was incorporated in the State of
Delaware on November 26, 1986.
The Company was formed solely for the purpose of purchasing or acquiring
mortgage-backed securities, whole residential or commercial mortgage loans or
participations therein, and issuing and selling one or more series of
Collateralized Mortgage Obligations ("CMO's") directly or through one or more
trusts established by it. In connection therewith, the Company is authorized to
acquire, own, hold, and pledge the various instruments collateralizing the
CMO's.
Each series of CMO's is collateralized by "fully modified pass-through"
mortgage-backed certificates ("GNMA Certificates") guaranteed as to the full and
timely payment of principal and interest by the Government National Mortgage
Association, which guaranty is backed by the full faith and credit of the United
States Government; by guaranteed mortgage pass-through certificates ("FNMA
Certificates") issued and guaranteed as to the full and timely payment of
principal and interest by the Federal National Mortgage Association; by mortgage
participation certificates ("FHLMC Certificates") issued and guaranteed as to
timely payment of interest and ultimate payment of principal by the Federal Home
Loan Mortgage Corporation (GNMA, FNMA and FHLMC Certificates are hereinafter
referred to collectively as the "Certificates"); or by whole residential or
commercial mortgage loans or participations therein.
Distributions of principal of and interest on the Certificates pledged as
collateral and, in some cases, the reinvestment income, thereon, are used to pay
the debt service on the CMO's and administrative expenses. In connection with
the issuance and sale of each series, it is the Company's intention to sell its
beneficial interest in the residual cash flow remaining after the payment of
debt service and administrative expenses, with the objective of ultimately
divesting itself of all ownership interest in the underlying collateral.
The Certificates are acquired by the Company from Bear, Stearns & Co. Inc.
("Bear Stearns"), an affiliate of the Company, simultaneously with the issuance
and sale of the CMO's. The Company issues each series of CMO's through Bear
Stearns acting as the principal underwriter in underwritten public offerings.
The net proceeds from the offering of each series of CMO's are used to purchase
the Certificates collateralizing the CMO's.
In connection with the Company's activities in the origination and issuance of
CMO's, the Company derives revenue in its capacity as administrator of various
CMO issues during the outstanding life of the CMO transactions which it
originated, pursuant to subservicing agreements with Bear Stearns.
ITEM 2 - PROPERTIES
The Company owns no physical properties.
<PAGE>
ITEM 3 - LEGAL PROCEEDINGS
The Company has been served with a lawsuit filed in the United
States District Court for the Southern District of New York.
Plaintiff alleges that two Mortgage Pass-Through Certificates it
purchased in 1993 were unsuitable for their account and that the
risks associated with their purchase were not adequately
disclosed. The lawsuit was settled and voluntarily dismissed with
prejudice, pursuant to an Order of the Court, dated May 30, 1995.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to General Instruction J of Form 10-K, the information
required by Item 4 is omitted.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the common
equity of the Company. All of the issued and outstanding shares
of such common equity are owned by the Parent.
On March 16, 1995 the Board of Directors declared an $8,500,000
cash dividend on the Company's Common Stock which was paid to
the Parent on March 27, 1995.
ITEM 6 - SELECTED FINANCIAL DATA
Pursuant to General Instruction J of Form 10-K, the information
required by Item 6 is omitted.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company incurred net loss for the fiscal years ended June 30,
1997 and 1996 in the amounts of $63,588 and $1,504,
respectively. Net loss for both fiscal years 1997 and 1996 is
the result of operating expenses. The Company did not issue any
CMO's during the fiscal year ended June 30, 1997 and 1996 due to
unfavorable market conditions.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item and included in
this Report are listed in the index appearing on page F-1.
<PAGE>
PART II (continued)
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
Pursuant to General Instruction J of Form 10-K, the
information required by Item 10 is omitted.
ITEM 11 - EXECUTIVE COMPENSATION
Pursuant to General Instruction J of Form 10-K, the
information required by Item 11 is omitted.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Pursuant to General Instruction J of Form 10-K, the
information required by Item 12 is omitted.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction J of Form 10-K, the
information required by Item 13 is omitted.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of Financial Statements, Financial Statement Schedules
and Exhibits.
Financial Statements
The financial statements required to be filed hereunder are
listed on Page F-1 hereof.
Financial Statement Schedules
The Financial Statement Schedules required to be filed hereunder
are listed on Page F-1 hereof.
Exhibits
3. Articles of Incorporation and by-laws, incorporated by reference to Exhibits
3.1 and 3.2,respectively, to Registration Statement on Form S-11 (No. 33-17021).
<PAGE>
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(continued)
4. Instruments defining the rights of security holders, including indentures:
(a) Indenture dated as of November 30, 1987 between Bear Stearns
Secured Investors Inc. and State Street Bank and Trust Company,
incorporated by reference to Exhibit 4.3(a) to Post-Effective
Amendment No. 4 to Registration Statement on Form S-11 (No. 33-10524).
3. Exhibits (continued)
(b) Series 1987-4 Supplement dated as of December 30, 1987 to the
Indenture dated as of November 30, 1987 between Bear Stearns Secured
Investors Inc. and State Street Bank and Trust Company, incorporated
by reference to Exhibit 4.3(c) to Post-Effective Amendment No. 5 to
Registration Statement on Form S-11 (No. 33-10524).
(c) Series 1987-5 Supplement dated as of January 27, 1988 to the
Indenture dated as of November 30, 1987 between Bear Stearns Secured
Investors Inc. and State Street Bank and Trust Company, incorporated
by reference to Exhibit 4.3(d) to Post-Effective Amendment No. 6 to
Registration Statement on Form S-11 (No. 33-10524).
(d) Series 1988-1 Supplement dated as of February 23, 1988 to the
Indenture dated as of November 30, 1987 between Bear Stearns Secured
Investors Inc. and State Street Bank and Trust Company, incorporated
by reference to Exhibit 4.3(e) to Post-Effective Amendment No. 4 to
Registration Statement on Form S-11 (No. 33-17021).
(e) Series 1988-2 Supplement dated as of March 29, 1988 to the
Indenture dated as of November 30, 1987 between Bear Stearns Secured
Investors Inc. and State Street Bank and Trust Company, incorporated
by reference to Exhibit 4.3(f) to Post-Effective Amendment No. 5 to
Registration Statement on Form S-11 (No. 33-17021).
(f) Series 1988-2 Supplement dated as of March 29, 1988, as
amended and restated as of April 5, 1988, to the Indenture dated as of
November 30, 1987 between Bear Stearns Secured Investors Inc. and
State Street Bank and Trust Company, incorporated by reference to
Exhibit 4.3(g) to Post-Effective Amendment No. 6 to Registration
Statement on Form S-11 (No. 33-17021).
(g) Series 1988-3 Supplement dated as of April 27, 1988 to the
Indenture dated as of November 30, 1987 between Bear Stearns Secured
Investors Inc. and State Street Bank and Trust Company, incorporated
by reference to Exhibit 4.3(h) to Post-Effective Amendment No. 7 to
Registration Statement on Form S-11 (No. 33-17021).
<PAGE>
3. Exhibits (continued)
(h) Series 1988-4 Supplement dated as of October 27, 1988 to
the Indenture dated as of November 30, 1987 between Bear
Stearns Secured Investors Inc. and State Street Bank and
Trust Company, incorporated by reference to Exhibit
4.3(i) to Post-Effective Amendment No.
8 to Registration Statement on Form S-11 (No. 33-17021).
(i) Series 1988-6 Supplement dated as of November 22, 1988 to
the Indenture dated as of November 30, 1987 between Bear
Stearns Secured Investors Inc. and State Street Bank and
Trust Company, incorporated by reference to Exhibit 4.3(1)
to Post-Effective Amendment No.
11 to Registration Statement on Form S-11 (No. 33-17021).
(j) Series 1988-7 Supplement dated as of November 29, 1988 to
the Indenture dated as of November 30, 1987 between Bear
Stearns Secured Investors Inc. and State Street Bank and
Trust Company, incorporated by reference to Exhibit
4.3(m) to Post-Effective Amendment No.
12 to Registration Statement on Form S-11 (No. 33-17021).
(k) Series 1988-8 Supplement dated as of November 21, 1988 to
the Indenture dated as of November 30, 1987 between Bear
Stearns Secured Investors Inc. and State Street Bank and
Trust Company, incorporated by reference to Exhibit
4.3(k) to Post-Effective Amendment No.
10 to Registration Statement on Form S-11 (No. 33-17021).
(l) Series 1989-3 Supplement dated as of February 16, 1989,
to the Indenture dated as of November 30, 1987, between
Bear Stearns Secured Investors Inc. and State Street Bank
and Trust Company, incorporated by reference to Exhibit
4.3(b) to Post-Effective Amendment No.
2 to Registration Statement on Form S-11 (No. 33-25464).
(m) Series 1991-1 Series Supplement dated as of July 29,
1991, between Bear Stearns Secured Investors Inc. and Texas
Commerce Bank National Association, to the Indenture dated as of
November 30, 1987, between Bear Stearns Secured Investors Inc.
and State Street Bank and Trust Company, incorporated by
reference to Exhibit 4.3(k) to Post-Effective Amendment No. 3 to
Registration Statement on Form S-11 (No. 33-26824).
(n) Series 1991-2 Series Supplement dated as of December 30,
1991, between Bear Stearns Secured Investors Inc. and Texas
Commerce Bank National Association, to the Indenture dated as of
November 30, 1987, between Bear Stearns Secured Investors Inc.
and State Street Bank and Trust Company, incorporated by
reference to Exhibit 4.3(k) to Post-Effective Amendment No. 4 to
Registration Statement on Form S-11 (No 33-26824)
<PAGE>
3. Exhibits (continued)
(o) Series 1992-1 Series Supplement dated as of January 30, 1992,
between Bear Stearns Secured Investors Inc. and Texas Commerce Bank
National Association, to the Indenture dated as of November 30, 1987,
between Bear Stearns Secured Investors Inc. and State Street Bank and
Trust Company, incorporated by reference to Exhibit 4.3(k) to
Post-Effective Amendment No. 5 to Registration Statement on Form S-11
(No 33-26824)
(p) Series 1992-2 Supplement dated as of July 30, 1992, to the
Indenture dated as of November 30, 1987, between Bear Stearns Secured
Investors Inc. and State Street Bank and Trust Company, incorporated
by reference to Exhibit 4.3 (a) to Post-Effective Amendment No. 6 to
Registration Statement on Form S-11 (No. 33 -26824).
(q) Series 1993-1 Supplement dated as of June 18, 1993, to the
Indenture dated as of November 30, 1987, between Bear Stearns Secured
Investors Inc. and State Street Bank and Trust Company, incorporated
by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 7 to
Registration Statement on Form S-11 (No. 33-26824).
(r) Series 1993-2 Supplement dated as of June 30, 1993, to
the Indenture dated as of November 30, 1987, between Bear
Stearns Secured Investors Trust 1993-2 and State Street
Bank and Trust Company, incorporated by reference to
Exhibit 4.3 (a) to Post-Effective Amendment No. 2 to
Registration Statement on Form S-11 (No. 33-48313).
(s) Series 1993-3 Supplement dated as of July 30, 1993, to
the Indenture dated as of November 30, 1987, between Bear
Stearns Secured Investors Trust 1993-3 and State Street
Bank and Trust Company, incorporated by reference to
Exhibit 4.3(a) to Post-Effective Amendment No.
3 to Registration Statement on Form S-11 (No. 33-48313).
(t) Series 1993-4 Supplement dated as of August 31, 1993, to
the Indenture dated as of November 30, 1987, between Bear
Stearns Secured Investors Trust 1993-4 and State Street
Bank and Trust Company, incorporated by reference to
Exhibit 4.3(a) to Post-Effective Amendment No. 4 to
Registration Statement on Form S-11 (No. 33-48313).
(u) Series 1993-5 Supplement dated as of September 3, 1993,
to the Indenture dated as of November 30, 1987, between
Bear Stearns Secured Investors Trust 1993-5 and State
Street Bank and Trust Company, incorporated by reference
to Exhibit 4.3(a) to Post-Effective Amendment No. 5 to
Registration Statement on Form S-11 (No. 33-48313).
(v) Series 1993-6 Supplement dated as of November 1, 1993, to
the Indenture dated as of November 30, 1987, between Bear
Stearns Secured Investors Trust 1993-6 and State Street
Bank and Trust Company, incorporated by reference to
Exhibit 4.3(a) to Post-Effective Amendment No. 6 to
Registration Statement on Form S-11 (No. 33-48313).
<PAGE>
3. Exhibits (continued)
(w) Series 1993-6 Supplement dated as of November 1, 1993, to
the Indenture dated as of November 30, 1987, between Bear
Stearns Secured Investors Trust 1993-6 and State Street
Bank and Trust Company, incorporated by reference to
Exhibit 4.3(a) to Post-Effective Amendment No. 7 to
Registration Statement on Form S-11 (No. 33-48313).
(x) Series 1993-8 Supplement dated as of December 1, 1993, to
the Indenture dated as of November 30, 1987, between Bear
Stearns Secured Investors Trust 1993-8 and State Street
Bank and Trust Company, incorporated by reference to
Exhibit 4.3(a) to Post-Effective Amendment No. 8 to
Registration Statement on Form S-11 (No. 33-48313).
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the fiscal year
ended June 30, 1997.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on
the 22nd day of September, 1997.
Bear Stearns Secured Investors Inc.
(Registrant)
By: /s/ William J. Montgoris
Secretary and Treasury and Principal
Financial and Accounting Officer
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 the 22nd day of
September, 1997.
Signatures Title
/s/ Warren J. Spector President and Chief Operating
Warren J. Spector Officer; Director
/s/ William J. Montgoris Secretary and Treasurer
William J. Montgoris
(Principal Financial and Accounting
Officer)
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on
the 22nd day of September, 1997.
Bear Stearns Secured Investors Inc.
(Registrant)
By:
William J. Montgoris
Secretary and Treasury and Principal
Financial and Accounting Officer
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 the 22nd day of
September, 1997.
Signatures
Title
President and Chief Operating
Warren J. Spector Officer; Director
Secretary and Treasurer
William J. Montgoris (Principal Financial and Accounting
Officer)
<PAGE>
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report F-1
Statements of Financial Condition as of June 30, 1997 and 1996 F-3
Statements of Operation for the fiscal years ended
June 30, 1997, 1996 and 1995 F-4
Statements of Changes in Stockholder's Equity for the fiscal
years ended June 30, 1997 and 1996 F-5
Statements of Cash Flows for the fiscal years ended
June 30, 1997, 1996 and 1995 F-6
Notes to Financial Statements F-7
Financial Statement Schedules are omitted because they are inapplicable
or the information is included in the financial statements or notes
thereto.
Page F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder,
Bear Stearns Secured Investors Inc.:
We have audited the accompanying statements of financial condition of Bear
Stearns Secured Investors Inc. (a wholly-owned subsidiary of The Bear Stearns
Companies Inc.) as of June 30, 1997 and 1996, and the related statements of
income, cash flows, and changes in stockholder's equity for each of the three
years in the period ended June 30, 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, such financial statements present fairly, in all material
respects, the financial position of Bear Stearns Secured Investors Inc. at June
30, 1997 and 1996, and the results of their operations and their cash flows for
each of the three years in the period ended June 30, 1997 in conformity with
generally accepted accounting principles.
September 2, 1997
<TABLE>
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
STATEMENTS OF FINANCIAL CONDITION
June 30, June 30,
1997 1996
ASSETS
<S>
Assets <C> <C>
Cash and cash equivalents $ 1,000 $ 1,000
Receivable from affiliates 16,176,822 16,176,822
Deferred organization costs 611,514 711,514
Total Assets $16,789,336 $16,889,336
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Payable to Parent $16,520,993 $16,557,387
Other liabilities 164,312 164,330
Total Liabilities 16,685,305 16,721,717
Stockholder's Equity
Common stock, $.01 par value;
1,000 shares authorized;
100 shares outstanding 1 1
Paid-in capital 999 999
Retained earnings 103,031 166,619
Total Stockholder's Equity 104,031 167,619
Total Liabilities and Stockholder's Equity $16,789,336 $16,889,336
========== ==========
See notes to financial statements.
</TABLE>
<TABLE>
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
STATEMENTS OF OPERATIONS
Fiscal Year Ended
June 30, June 30, June 30,
1997 1996 1995
<S>
Revenues <C> <C> <C>
Principal transactions $ $ $ 56,588
Management fees 6,057
Total revenues 62,645
Expenses
Other expenses 113,388 2,734 7,533
Total expenses 113,388 2,734 7,533
(Loss) income before (benefit) provision
for income taxes (113,388) 2,734) 55,112
(Benefit) provision for income taxes (49,800) (1,230) 24,196
Net (loss) income $ (63,588) $ (1,504) $ 30,916
======== ======= ======
See notes to financial statements.
</TABLE>
<TABLE>
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
Common Stock Paid-in Retained
$.01 Par Value Capital Earnings
<S> <C> <C> <C>
Balance, June 30, 1994 $ 1 $ 999 $ 8,637,207
Net income 30,916
Dividend declared (8,500,000)
Balance, June 30, 1995 $ 1 $ 999 168,123
Net loss (1,504)
Balance, June 30, 1996 $ 1 $ 999 166,619
Net loss (63,588)
Balance, June 30, 1997 $ 1 $ 999 $ 103,031
= === =======
See notes to financial statements.
</TABLE>
<TABLE>
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
STATEMENTS OF CASH FLOWS
Fiscal Years Ended
June 30, June 30, June 30,
1997 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)/income $ (63,588) $ (1,504) $ 30,916
Decrease (increase) in:
Receivable from Parent
Receivable from affiliates (168,500)
Deferred organization costs 100,000
(Decreases) increases in:
Income taxes payable (318,520)
Payable to Parent (36,394) 1,490 8,851,303
Other liabilities (18) 14 104,801
Cash provided by operating activities 8,500,000
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid
(8,500,000)
Cash used in financing activities
(8,500,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 1,000 1,000 1,000
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 1,000 $ 1,000 $ 1,000
===== ===== =====
See notes to financial statements.
</TABLE>
Page F-6
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization
Bear Stearns Secured Investors Inc. (the "Company") a direct
wholly-owned limited purpose finance subsidiary of The Bear
Stearns Companies Inc. (the "Parent") was organized on November
26, 1986 as a Delaware corporation. The Company's sole purpose is
to issue and sell one or more series of collateralized mortgage
obligations ("CMO's") directly or through one or more trusts
established by it. In connection therewith, the Company provides
management and administrative services after the issuance of each
CMO issued.
The Company's activities are limited to issuing CMO's that will
be collateralized by mortgage-backed certificates, whole
residential or commercial mortgage loans or participations
therein, and, in connection therewith, acquiring, owning, holding
and pledging mortgage-backed certificates, whole loans or
commercial mortgage loans.
Note 2. Summary of Significant Accounting Policies
The financial statements are prepared in conformity with
generally accepted accounting principles which require
management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those
estimates.
The Company's policy is to record the securitization and issuance
of CMO's and the related sale of all of its remaining beneficial
ownership interest in the residual cash flow attributable to each
series of CMO's as a sale of assets. The resultant gain or loss
reflects the net proceeds from the CMO issuance and the sale of
the beneficial ownership interest less the cost of the underlying
collateral and is reflected as principal transaction revenues.
The Company's policy is to sell all of its beneficial ownership
interest in each CMO series issued directly or through one or
more trusts established by it. Accordingly, as the Company no
longer retains an economic interest in the underlying collateral,
the assets and liabilities related to each CMO series are not
reflected on the Company's Statement of Financial Condition.
Management fee income received for the management and
administration of the various CMO issues is recognized into
income when earned.
The Company is included in the consolidated federal income tax
return of the Parent. Income tax expense is computed on a
separate company basis.
For purposes of reporting cash flows, the Company has defined
cash equivalents as liquid investments not held for sale in the
ordinary course of business.
Page F-7
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
NOTES TO FINANCIAL STATEMENTS
Note 3. Collateralized Mortgage Obligations
During the fiscal year ended June 30, 1997 and 1996 the Company
did not issue any CMO's.
Note 4. Income Taxes
The difference between the Company's effective tax rate and the
statutory federal income tax rate is the effect of state and
local income taxes.
Note 5. Related Party Transactions
The Company clears all of its securities transactions relating to
the purchase of the underlying collateral and issuance of CMO's
through an affiliate. An affiliate also acts as the principal
underwriter for the Company's CMO issuances.
In connection with the Company's CMO issuances and pursuant to
subservicing agreements with an affiliate, the Company earns
management fee income in its capacity as administrator of certain
CMO issues during the outstanding life of the CMO transactions
which it originated.
The Company clears all of its securities transactions relating to
the purchase of the underlying collateral and issuance of CMO's
through an affiliate. An affiliate also acts as the principal
underwriter for the Company's CMO issuances. Substantially all of
the Company's operating expenses, such as office space and
general and administrative expenses, are borne by an affiliate.
Page F-8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements contained in the body of the accompanying Form 10-K and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Jun-30-1997
<PERIOD-END> Jun-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 16,176,822
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,789,336
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 104,031
<TOTAL-LIABILITY-AND-EQUITY> 16,789,336
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 113,388
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (113,388)
<INCOME-TAX> (49,800)
<INCOME-CONTINUING> (63,588)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63,588)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
