SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form l0-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to ______
Commission file number 33-26824
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)
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
--- ---
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND THEREFORE IS FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT CONTEMPLATED THEREBY.
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Financial Condition at September 24, 1999
(Unaudited) and June 30, 1999.
Statements of Income (Unaudited) for the three months ended
September 24, 1999 and September 25, 1998.
Statements of Cash Flows (Unaudited) for the three months
ended September 24, 1999 and September 25, 1998.
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signature
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
STATEMENTS OF FINANCIAL CONDITION
September 24, June 30,
1999 1999
----------- -------
(Unaudited)
Assets
Cash and cash equivalents $ 1,000 $ 1,000
Receivable from affiliates 16,176,822 16,176,822
Other assets 686 686
---------- ----------
Total Assets $16,178,508 $16,178,508
========== ==========
Liabilities
Payable to Parent $ 16,376,446 $ 16,358,688
Other liabilities 165,000 165,000
---------- ----------
Total Liabilities 16,541,446 16,523,688
Stockholder's Equity (Deficit)
Common Stock, $.01 par value;
1,000 shares authorized; 100 shares issued
and outstanding 1 1
Paid-in capital 999 999
Retained earnings (deficit) (363,938) (346,180)
-------- -------
Total Stockholder's Equity (deficit) (362,938) (345,180)
Total Liabilities and Stockholder's
Equity (Deficit) $ 16,178,508 $ 16,178,508
========== ==========
See Notes to Financial Statements.
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
September 24, September 25,
1999 1998
------------ ------------
Expenses
Other expenses $ 31,305 $ 631
------ ---
Total expenses 31,305 631
Loss before benefit
for income taxes (31,305) (631)
Benefit for income taxes (13,547) (275)
------ ---
Net loss $(17,758) $(356)
====== ===
See Notes to Financial Statements.
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 24, September 25,
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(17,758) $ (356)
------ ---
Cash used in operating activities (17,758) (356)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in payable to Parent 17,758 356
------ ---
Cash provided by financing activities 17,758 356
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 1,000 1,000
----- -----
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 1,000 $ 1,000
===== =====
See Notes to Financial Statements.
<PAGE>
BEAR STEARNS SECURED INVESTORS INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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.
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.
Note 2. Collateralized Mortgage Obligations
During the three months ended September 24, 1999 and September 25, 1998, the
Company did not issue any CMO's.
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.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company's principal business activity is the issuing of collateralized
mortgage obligations ("CMO's") that are secured 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 residential or commercial mortgage loans. The Company also
derives revenues in its capacity as administrator during the life of the CMO
transactions where it originates and retaines such servicing obligation.
The Company's level of activity and results of operations reflect the impact of
many factors in the issuance of CMO's, including securities market conditions,
the level of volatility of interest rates, competitive conditions and the size
and timing of transactions. In addition, results of operations for any
particular interim period may not be indicative of results to be expected for a
full year.
The Company incurred a net loss for the three months ended September 24, 1999
and September 25, 1998 of $17,758 and $356, respectively. Net losses are the
result of the Company incurring operating expenses with no earned revenue. The
Company did not issue any CMO's in each of the three months ended September 24,
1999 and September 25, 1998 due to unfavorable market conditions.
Year 2000 Issue
The Year 2000 issue is the result of legacy computer programs having been
written using two digits rather than four digits to define the applicable year
and therefore without consideration of the impact of the upcoming change in the
century. Such programs, unless corrected, may not be able to accurately process
dates ending in the Year 2000 and thereafter.
Over four years ago, the Parent established a task force to review and develop
an action plan to address the Year 2000 issue. The Parent's action plan
addresses both information technology and non-information technology system
compliance issues. Since then, the ongoing assessment and monitoring phase has
continued and includes assessment of the degree of compliance of its significant
vendors, facility operators, custodial banks and fiduciary agents to determine
the extent to which the Parent is vulnerable to those third parties' failure to
remediate their own Year 2000 issues. The Parent has contacted all significant
external vendors in an effort to confirm their readiness for the Year 2000 and
tested compatibility with such systems. The Parent also participates actively in
various industry-wide tests.
Through September 24, 1999, the amounts incurred related to the assessment of,
and efforts in connection with, the Year 2000 and the development and execution
of a remediation plan have approximated $70.5 million of which approximately
$10.6 million in hardware and software has been capitalized. The Parent's total
projected Year 2000 project cost, including the estimated costs and time
associated with the impact of third-party Year 2000 issues, are based on
currently available information. The total remaining Year 2000 project cost is
estimated at approximately $4.5 million, which will be funded through operating
cash flows and primarily expensed as incurred.
The Parent presently believes that the activities it is undertaking in the Year
2000 project should satisfactorily resolve Year 2000 compliance exposures within
its own systems worldwide. The Parent has completed the reprogramming and
replacement phase of the project. Additional testing will continue through the
end of the calendar year as deemed appropriate. There can be no assurance that
<PAGE>
the systems of other companies on which the Parent's systems rely will be timely
converted, or that a failure to convert by another company, or a conversion that
is incompatible with the Parent's systems, would not have a material adverse
effect on the Parent. The Parent has developed an action plan and a formal
contingency plan designed to safeguard the interests of the Parent and its
customers. The Parent believes that these plans significantly reduce the risk of
a Year 2000 issue serious enough to cause a business disruption. With regard to
Year 2000 compliance of other external entities, the Parent is monitoring
developments closely. Should it appear that a major utility, such as a stock
exchange, would not be ready, the Parent will work with other firms in the
industry to plan an appropriate course of action.
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the period
covered by this report.
<PAGE>
SIGNATURE
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 8th day of November, 1999.
Bear Stearns Secured Investors Inc.
(Registrant)
By: /s/Samuel L. Molinaro Jr.
Samuel L. Molinaro Jr.
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
unaudited Statement of Financial Condition at September 24, 1999 and unaudited
Statement of Income for the three months ended September 24, 1999, which are
contained in the body of the accompanying Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Jun-30-2000
<PERIOD-END> Sep-24-1999
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 16,176,822
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,178,508
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> (362,939)
<TOTAL-LIABILITY-AND-EQUITY> 16,178,508
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31,305
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> (13,547)
<INCOME-CONTINUING> (17,758)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,758)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
