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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
Reported) May 29, 1996
LEHMAN ABS CORPORATION, (as depositor under the Pooling and
Servicing Agreement, dated as of April 30, 1996, which forms
Delta Funding Home Equity Loan Trust 1996-1, which will issue
the Home Equity Loan Trust 1996-1, Home Equity Loan Asset-Backed
Certificates, Series 1996-1).
LEHMAN ABS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 333-01451 13-3447441
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Three World Financial Center
200 Vesey Street
New York, New York 10022
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 526-7000
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Item 5. Other Events.
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Incorporation of Certain Documents by Reference
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The financial statements of MBIA Insurance Corporation ("MBIA") as of
March 31, 1996 and December 31, 1995, that are included in the
prospectus supplement relating to Lehman Home Equity Loan Trust 1996-1 (the
"MBIA Financials") have been audited by Coopers & Lybrand LLP ("Coopers").
The consent of Coopers to the use of their name in such prospectus supplement
is attached hereto as Exhibit 23.
The MBIA Financials are attached hereto as Exhibit 99.1.
2
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Item 7. Financial Statements, Pro Forma Financial
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Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibit:
23. Consent of Coopers.
99.1 MBIA Financials.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LEHMAN ABS CORPORATION
By: /s/ Martin Harding
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Martin Harding
Dated: May 29, 1996
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Exhibit Index
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Exhibit Page
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23. Consent of Coopers.
99.1 MBIA Financials.
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Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the Prospectus Supplement to the
Prospectus dated May 13, 1996 to Registration Statement No. 333-01451 of our
report dated January 22, 1996 on our audits of the consolidated financial
statements of MBIA Insurance Corporation and Subsidiaries. We also consent
to the reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
_______________________________
/s/ Cooper & Lybrand L.L.P.
May 29, 1996
New York, New York
1
MBIA INSURANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND DECEMBER 31, 1995
AND FOR THE PERIODS ENDED MARCH 31, 1996 AND 1995
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MBIA INSURANCE CORPORATION
AND SUBSIDIARIES
I N D E X
PAGE
Consolidated Balance Sheets -
March 31, 1996 (Unaudited) and December 31, 1995 (Audited) ............. 3
Consolidated Statements of Income -
Three months ended March 31, 1996 and 1995 (Unaudited) ................. 4
Consolidated Statement of Changes in Shareholder's Equity -
Three months ended March 31, 1996 (Unaudited) .......................... 5
Consolidated Statements of Cash Flows -
Three months ended March 31, 1996 and 1995 (Unaudited) ................. 6
Notes to Consolidated Financial Statements (Unaudited) ..................... 7
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MBIA INSURANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
March 31, 1996 December 31, 1995
--------------- ------------------
(Unaudited) (Audited)
ASSETS
Investments:
Fixed-maturity securities
held as available-for-sale
at fair value
(amortized cost $3,664,571
and $3,428,986) .................. $3,784,836 $3,652,621
Short-term investments, at
amortized cost
(which approximates fair value) .. 135,428 198,035
Other investments .................. 13,374 14,064
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TOTAL INVESTMENTS .............. 3,933,638 3,864,720
Cash and cash equivalents .............. 2,499 2,135
Accrued investment income .............. 60,462 60,247
Deferred acquisition costs ............. 140,919 140,348
Prepaid reinsurance premiums ........... 206,383 200,887
Goodwill (less accumulated amortization
of $38,590 and $37,366) ............ 104,390 105,614
Property and equipment, at cost
(less accumulated
depreciation of $12,822 and $12,137) 41,771 41,169
Receivable for investments sold ........ 6,501 5,729
Other assets ........................... 51,534 42,145
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TOTAL ASSETS ................... $4,548,097 $4,462,994
========== ==========
Liabilities and Shareholder's Equity
Liabilities:
Deferred premium revenue ........... $1,666,945 $1,616,315
Loss and loss adjustment
expense reserves .................. 46,376 42,505
Deferred income taxes .............. 180,843 212,925
Payable for investments purchased .. 15,715 10,695
Other liabilities .................. 96,600 54,682
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TOTAL LIABILITIES .............. 2,006,479 1,937,122
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Shareholder's Equity:
Common stock, par value $150
per share; authorized,
issued and outstanding -
100,000 shares .................... 15,000 15,000
Additional paid-in capital ......... 1,025,591 1,021,584
Retained earnings .................. 1,423,157 1,341,855
Cumulative translation
adjustment ........................ 330 2,704
Unrealized appreciation
of investments,
net of deferred income tax
provision of $42,114 and $78,372 .. 77,540 144,729
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TOTAL SHAREHOLDER'S EQUITY ..... 2,541,618 2,525,872
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TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY ......... $4,548,097 $4,462,994
========== ==========
The accompanying notes are an integral part of the
consolidated financial statements.
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MBIA INSURANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands)
Three Months Ended
March 31
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1996 1995
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Revenues:
Gross premiums written ...................... $ 121,011 $ 71,112
Ceded premiums .............................. (14,715) (7,080)
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Net premiums written .................... 106,296 64,032
Increase in deferred premium revenue ........ (45,532) (12,680)
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Premiums earned (net of ceded
premiums of $9,220 and $7,839) ...... 60,764 51,352
Net investment income ....................... 59,003 53,065
Net realized gains .......................... 2,692 1,724
Other income ................................ 969 908
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Total revenues .......................... 123,428 107,049
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Expenses:
Losses and loss adjustment expenses ......... 3,178 2,033
Policy acquisition costs, net ............... 5,900 5,140
Underwriting and operating expenses ......... 10,549 9,752
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Total expenses .......................... 19,627 16,925
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Income before income taxes ....................... 103,801 90,124
Provision for income taxes ....................... 22,499 19,476
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Net income ....................................... $ 81,302 $ 70,648
========= =========
The accompanying notes are an integral part of the consolidated
financial statements.
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MBIA INSURANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)
For the three months ended March 31, 1996
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Common Stock Additional Cumulative Unrealized
------------------------- Paid-In Retained Translation Appreciation
Shares Amount Capital Earnings Adjustment of Investments
---------- ---------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 ............... 100,000 $ 15,000 $1,021,584 $1,341,855 $ 2,704 $ 144,729
Exercise of stock options .............. -- -- 1,179 -- -- --
Net income ............................. -- -- -- 81,302 -- --
Change in foreign
currency transactions ................ -- -- -- -- (2,374) --
Change in unrealized
appreciation of
investment net of change
in deferred income taxes
of $36,258 ........................... -- -- -- -- -- (67,189)
Tax reduction related to
tax sharing agreement
with MBIA Inc. ....................... -- -- 2,828 -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance, March 31, 1996 ................ 100,000 $ 15,000 $1,025,591 $1,423,157 $ 330 $ 77,540
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
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MBIA INSURANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Three Months Ended
March 31
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1996 1995
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Cash flows from operating activities:
Net income ....................................... $ 81,302 $ 70,648
Adjustments to reconcile net
income to net cash provided
by operating activities:
(Increase) decrease in accrued
investment income ............................ (215) 960
Increase in deferred acquisition costs ......... (571) (1,634)
(Increase) decrease in prepaid
reinsurance premiums .......................... (5,496) 758
Increase in deferred premium revenue ........... 51,028 11,922
Increase in loss and loss adjustment
expense reserves .............................. 3,871 1,885
Depreciation ................................... 719 630
Amortization of goodwill ....................... 1,224 1,232
Amortization of bond discount, net ............. (1,014) (358)
Net realized gains on sale of investments ...... (2,692) (1,724)
Deferred income taxes .......................... 4,176 3,782
Other, net ..................................... 34,288 19,601
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Total adjustments to net income ................ 85,318 37,054
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Net cash provided by operating activities ...... 166,620 107,702
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Cash flows from investing activities:
Purchase of fixed-maturity securities, net
of payable for investments purchased ........... (329,252) (182,603)
Sale of fixed-maturity securities, net of
receivable for investments sold ................ 146,729 92,890
Redemption of fixed-maturity securities,
net of receivable for investments redeemed ..... 32,644 16,717
Purchase of short-term investments, net .......... (15,259) (9,908)
Sale (purchase) of other investments, net ........ 215 (863)
Capital expenditures, net of disposals ........... (1,333) (817)
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Net cash used in investing activities .......... (166,256) (84,584)
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Cash flows from financing activities:
Dividends paid ................................... -- (22,500)
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Net cash used by financing activities .......... -- (22,500)
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Net increase in cash and cash equivalents .......... 364 618
Cash and cash equivalents - beginning of period .... 2,135 1,332
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Cash and cash equivalents - end of period .......... $ 2,499 $ 1,950
========= =========
Supplemental cash flow disclosures:
Income taxes paid ................................ $ 1,161 $ 1
The accompanying notes are an integral part of the consolidated
financial statements.
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MBIA INSURANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
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The accompanying consolidated financial statements are unaudited and
include the accounts of MBIA Insurance Corporation and its Subsidiaries (the
"Company"). The statements do not include all of the information and disclosures
required by generally accepted accounting principles. These statements should be
read in conjunction with the Company's consolidated financial statements and
notes thereto for the year ended December 31, 1995. The accompanying
consolidated financial statements have not been audited by independent
accountants in accordance with generally accepted auditing standards but in the
opinion of management such financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to summarize fairly
the Company's financial position and results of operations. The results of
operations for the three months ended March 31, 1996 may not be indicative of
the results that may be expected for the year ending December 31, 1996. The
December 31, 1995 condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles.
2. Dividends Declared
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No dividends were declared by the Company during the three months ended
March 31, 1996.
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