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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2000
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Commission file number 33-11459
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CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 43-1432378
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
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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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date, October 27,
2000:
COMMON STOCK, $1.00 Par Value - 500 Shares
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CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet......................................3
Notes to Balance Sheet.............................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................5
Part II. OTHER INFORMATION..................................6
SIGNATURES..................................................7
2
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
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CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
BALANCE SHEET
(UNAUDITED)
<CAPTION>
September 30, December 31,
2000 1999
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ASSETS
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<S> <C> <C>
CASH $ 500 $ 500
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STOCKHOLDER'S EQUITY
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COMMON STOCK - $1.00 par value, 150,000
shares authorized, 500 shares issued and outstanding $ 500 $ 500
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The accompanying notes are an integral part of these financial statements.
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3
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
NOTES TO BALANCE SHEET
(Unaudited)
BASIS OF PRESENTATION
The financial information included herein is unaudited. However, in the
opinion of management, such information includes all adjustments of a normal
recurring nature which are necessary for its fair presentation.
Cornerstone Mortgage Investment Group II, Inc. ("Cornerstone II") is a
Delaware corporation and a wholly-owned subsidiary of Edward D. Jones & Co.,
L.P. ("EDJ" or the "Partnership"), a Missouri limited partnership.
Cornerstone II was incorporated on December 22, 1986, for the limited
purpose of structuring and selling mortgage-backed securities (the
"Certificates"), which are backed by Government National Mortgage
Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC) and
Federal National Mortgage Association (FNMA) Securities (collectively the
"Deposited Securities").
EDJ absorbed all costs related to the organization of Cornerstone II. In
addition, EDJ paid all offering expenses and assumed all future revenues and
expenses in connection with prior security transactions. Due to the absence
of revenue or expense generating transactions, no income statement is
presented. The balance of stockholder's equity consists solely of common
stock issued on December 30, 1986; therefore, no statement of stockholder's
equity is presented. All funds were obtained from capital transactions;
therefore, no statement of cash flows is presented.
4
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Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
MANAGEMENT'S FINANCIAL DISCUSSION
No series have been issued since May 29, 1991. During the twelve months
ended December 31, 1999 and 1998, EDJ and Cornerstone II exercised the
option to repurchase collateral for 22 and three of the 29 series,
respectively, which had a current collateral principal balance that was less
than 10% of the original collateral principal balance. EDJ and Cornerstone
II exercised the option to repurchase collateral for two series during the
nine months ended September 30, 2000, none of which were excercised during
the three months ended September 30, 2000.
Since Cornerstone II had previously surrendered control of the future
economic benefit in the collateral to EDJ, these transactions have not been
accounted for by Cornerstone II. Accordingly, no income statement is
presented.
The outstanding principal balance and remaining collateral value relating
to the two outstanding series are $4,175,000 and $4,201,346, respectively,
as of September 30, 2000.
5
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Part II. OTHER INFORMATION
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
Item 1: Legal Proceedings:
There are no pending legal proceedings.
Item 2. Changes in Securities:
No change.
Item 3. Default upon Senior Securities:
No default.
Item 4. Submission of Matters to a Vote of Security Holders:
Nothing to report.
Item 5. Other Information:
Nothing to report.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Exhibit
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4.1 Deposit Agreement dated as of February 20, 1987,
between the Company, as Depositor, and The Bank of New
York, as successor Custodian (incorporated by reference
to Exhibit 2 to the Current Report on Form 8-K filed on
March 6, 1987).
4.2 Trust Agreement dated as of February 20, 1987, between
the Company, as Depositor, and The Bank of New York, as
successor Trustee (incorporated by reference to Exhibit
3 to the Current Report on Form 8-K filed on March 6,
1987).
4.3 Trust Agreement dated as of February 20, 1987, between
the Company, as Depositor, and The Bank of New York, as
successor Trustee (incorporated by reference to Exhibit
4 to the Current Report on Form 8-K filed on March 6,
1987).
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ended September 30, 2000.
6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
(Registrant)
/s/ John C. Heisler Chairman of the Board,
----------------------- Chief Financial Officer,
John C. Heisler Chief Accounting Officer October 27, 2000
and Director
/s/ Philip R. Schwab President, Chief Executive
----------------------- Officer and Director October 27, 2000
Philip R. Schwab
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