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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1998
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: 33-68930
CMC SECURITIES CORPORATION II
(Exact name of Registrant as specified in its Charter)
DELAWARE 75-2473215
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2711 NORTH HASKELL AVENUE 75204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 874-2323
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL DOCUMENTS AND
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 [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
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 |_|
AT MARCH 31, 1998 THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NONAFFILIATES WAS: NOT APPLICABLE.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J (1)(a)
AND (b) OF FORM 10-K AND IS, THEREFORE, FILING THIS FORM WITH REDUCED DISCLOSURE
FORMAT.
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT MARCH 25, 1999: 1,000
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
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CMC SECURITIES CORPORATION II
1998 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PART I
<S> <C> <C>
ITEM 1. THE COMPANY..................................................... 1
ITEM 2. PROPERTIES...................................................... 2
ITEM 3. LEGAL PROCEEDINGS............................................... 2
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS............................... 3
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..................... 3
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE........................... 3
PART III
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT................................................ 3
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K........................................... 4
</TABLE>
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PART I
ITEM 1. THE COMPANY.
CMC Securities Corporation II (the "Company") was incorporated in Delaware on
January 4, 1993 as a limited-purpose finance corporation and is wholly-owned by
Capstead Holdings, Inc. ("CHI"), a subsidiary of Capstead Mortgage Corporation
("CMC"). CHI was formed in 1997 in part to hold CMC's interest in the Company
and Capstead Inc. Prior to the formation of CHI, the Company was owned by
Capstead Inc. The Company is managed by CMC (the "Manager").
The Company was formed primarily for the purpose of issuing publicly-offered
multi-class, mortgage pass-through certificates ("MPCs") that evidence ownership
interests in trust funds owning pools of mortgage loans secured by single-family
residences purchased by the trust funds from the Company. On March 30, 1993 the
Securities and Exchange Commission declared effective an amended registration
statement filed by the Company covering the offering of a maximum of $2 billion
aggregate principal amount of MPCs, issuable from time to time in series.
Another registration statement was filed in September 1993 with a September 27,
1993 effective date covering the offering of another $2 billion of MPCs. The
Company issued its first MPC (MPC series 1993-2A) on May 28, 1993. As of
December 31, 1997, the Company had issued 13 MPCs (MPC Series 1993-2A through
1996-C) totaling $2,960,389,000, including $217,199,000 of privately-placed
MPCs.
COMPETITION
In issuing securities, the Company competes with other issuers of these
securities and the securities themselves compete with other investment
opportunities available to prospective purchasers.
EMPLOYEES
At December 31, 1998 the Company had no employees. The Manager provides all
executive and administrative personnel required by the Company.
MANAGEMENT AGREEMENT
Pursuant to a Management Agreement, the Manager advises the Company with respect
to its investments and administers the day-to-day operations of the Company. The
Management Agreement is nonassignable except by consent of the Company and the
Manager. The Management Agreement may be terminated without cause at any time
upon 90 days written notice. In addition, the Company has the right to terminate
the Management Agreement upon the happening of certain specified events,
including a breach by the Manager of any provision contained in the Management
Agreement which remains uncured for 30 days after notice of such breach and the
bankruptcy or insolvency of the Manager.
The Manager is at all times subject to the supervision of the Company's Board of
Directors and has only such functions and authority as the Company delegates to
it. The Manager is responsible for the day-to-day operations of the Company and
performs such services and activities relating to the assets and operations of
the Company as may be appropriate. The Manager receives an annual basic
management fee of $10,000 per year for managing the assets pledged to secure
Bonds issued by the Company.
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The Manager is required to pay employment expenses of its personnel (including
salaries, wages, payroll taxes, insurance, fidelity bonds, temporary help and
cost of employee benefit plans), and other office expenses, travel and other
expenses of directors, officers and employees of the Manager, accounting fees
and expenses incurred in supervising and monitoring the Company's investments.
The Company is required to pay all other expenses of operation (as defined in
the Management Agreement).
IMPACT OF YEAR 2000
Many existing computer software programs use only two digits to identify the
year in date fields and, as such, could fail or create erroneous results by or
at the Year 2000. The Manager utilizes a number of software systems to
administer securitizations and otherwise manage the Company's affairs. In
addition, the Manager utilizes vendors in various capacities and interfaces with
various institutions. The Manager is exposed to the risk that its systems and
the systems of its vendors and institutions it interfaces with are not Year 2000
compliant.
State of Readiness. The Manager has made and will continue to make
investments in its software systems and applications to ensure the Manager is
Year 2000 compliant. The Manager is also taking steps to ensure that the vendors
it utilizes and institutions that it interfaces with are also taking the
necessary steps to become Year 2000 compliant. This process is expected to be
essentially complete by the end of the second quarter of 1999.
Costs. The financial costs of the Manager becoming Year 2000 compliant is
the responsibility of the Manager.
Risks and Contingency Planning. Although the Manager expects that all its
systems and applications will be Year 2000 compliant per the above schedule and
well prior to December 31, 1999, there can be no assurance that all of the
vendors it utilizes and institutions that it interfaces with will complete their
compliance efforts. The Manager will continue to monitor their efforts in this
regard and will take all prudent steps necessary to ensure operations are not
disrupted including the use of other vendors or other methodologies and
processes to transact the Company's business. The effect of any disruption to
the Company's operations of any such instances of non-compliance is presently
not determinable.
ITEM 2. PROPERTIES.
The Company's operations are conducted primarily in Dallas, Texas on properties
leased by CMC.
Each series of MPCs issued by the Company represents in the aggregate the entire
beneficial interest in a trust (collectively, for all such series, the "Trusts")
consisting primarily of a segregated pool of single-family first mortgage loans.
For each servicer of mortgage loans owned by the Trusts, the Company will
furnish an Officer's Certificate of the Servicer with regard to such servicer's
compliance with the terms of the Security Agreement.
Listing of Officer's Certificates of the Servicers............. See Exhibit 99.3
ITEM 3. LEGAL PROCEEDINGS.
As of the date hereof, there are no material legal proceedings outside the
normal course of business to which the Company was a party or of which any of
its property was the subject.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
All of the Company's common stock is owned by CHI. Accordingly, there is no
public trading market for its common stock. Presently, there is no established
trading market for the Company's MPCs. Holders of record for the Company's
publicly-offered MPCs are as follows:
<TABLE>
<CAPTION>
MPC SERIES HOLDERS OF RECORD
---------- -----------------
<S> <C>
1993-2A 26
1993-2B 2
1993-2C 4
1993-2D 5
1993-2E 4
1993-2F 2
1993-2G 4
1993-2H 2
1993-2I 2
1995-A 3
1996-A 3
1996-B 2
1996-C 2
----
61
====
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Listing of Officer's Certificates of the Servicers............ See Exhibit 99.3
Listing of Independent Accountants Reports on Servicer's
Servicing Activities....................................... See Exhibit 99.4
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Security Ownership of Certain
Beneficial Owners and Management........................... See Exhibit 99.2
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report:
1. Financial Statements:
Listings of Officer's Certificates of the Servicers and
Independent Accountants Reports on Servicer's Activities.
Actual copies of such Certificates and reports are available
upon request.
2. Financial statement schedules: None.
3. Exhibits:
EXHIBIT
NUMBER
------
3.1 Certificate of Incorporation of CMC Securities
Corporation II(2)
3.2 Bylaws of CMC Securities Corporation II(2)
4.1 Standard Provisions for Pooling and Administration
Agreement(2)
4.2 Pooling and Administration Agreement (Series
Provisions)(2)
10.1 Representative Form(s) of Mortgage Note(s)(4)
10.2 Representative Form of Mortgage(4)
10.3 Specimen of Mortgage Pool Insurance Policy(2)
10.4 Specimen of Special Hazard Insurance Policy(2)
10.5 Specimen of Primary Mortgage Insurance Policy(4)
10.6 Specimen of Standard Hazard Insurance Policy(4)
10.7 Specimen of Bankruptcy Bond(2)
10.8 Form of Servicing Agreement(2)
10.9 Form of Loan Sale Agreement(2)
10.10 Form of Agreement with Clearing Agency(2)
99.1 Forms of Prospectus Supplement(3)
99.2 Security Ownership of Certain Beneficial Owners and
Management*
99.3 Listing of Officer's Certificates of the Servicers*
99.4 Listing of Independent Accountants Reports on
Servicer's Servicing Activities*
----------------
(1) Previously filed with the Commission as an exhibit to the
Company's Registration Statement on Form S-11 (No. 33-6830)
as of September 16, 1993.
(2) Previously filed with the Commission as an exhibit to the
Company's Registration Statement on Form S-11 (No.
33-56778) as of January 7, 1993.
(3) Previously filed with the Commission as an exhibit to
Amendment No. 1 to the Company Registration Statement on
Form S-11 (No. 33-56778) as of March 8, 1993.
(4) Previously filed with the Commission as an exhibit to
Amendment No. 2 to the Company's Registration Statement on
Form S-11 (33-56778) as of March 26, 1993.
* Filed herewith.
(b) Reports on Form 8-K:
Current Reports on Form 8-K dated October 1, November
5 and December 22, 1998, regarding monthly
distributions of principal and interest made with
respect to the outstanding REMIC Pass-Through
Certificates on August 25, September 25 and October
25, 1998, respectively, (Item 5).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CMC SECURITIES CORPORATION II
REGISTRANT
Date: March 25, 1999 By:/s/ ANDREW F. JACOBS
-----------------------------------
Andrew F. Jacobs
Executive Vice President-Finance,
Treasurer and Secretary
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 below and on the dates indicated.
/s/ RONN K. LYTLE Chairman, Chief March 29, 1999
- ------------------------------ Executive Officer
(Ronn K. Lytle) and Director
/s/ ANDREW F. JACOBS Executive Vice President - March 25, 1999
- ------------------------------ Finance, Treasurer
(Andrew F. Jacobs) and Secretary
/s/ MAURICE MCGRATH Director March 26, 1999
- ------------------------------
(Maurice McGrath)
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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material has been sent to security holders.
<PAGE> 9
INDEX TO EXHIBITS
EXHIBIT
NUMBER
------
3.1 Certificate of Incorporation of CMC Securities
Corporation II(2)
3.2 Bylaws of CMC Securities Corporation II(2)
4.1 Standard Provisions for Pooling and Administration
Agreement(2)
4.2 Pooling and Administration Agreement (Series
Provisions)(2)
10.1 Representative Form(s) of Mortgage Note(s)(4)
10.2 Representative Form of Mortgage(4)
10.3 Specimen of Mortgage Pool Insurance Policy(2)
10.4 Specimen of Special Hazard Insurance Policy(2)
10.5 Specimen of Primary Mortgage Insurance Policy(4)
10.6 Specimen of Standard Hazard Insurance Policy(4)
10.7 Specimen of Bankruptcy Bond(2)
10.8 Form of Servicing Agreement(2)
10.9 Form of Loan Sale Agreement(2)
10.10 Form of Agreement with Clearing Agency(2)
99.1 Forms of Prospectus Supplement(3)
99.2 Security Ownership of Certain Beneficial Owners and
Management*
99.3 Listing of Officer's Certificates of the Servicers*
99.4 Listing of Independent Accountants Reports on
Servicer's Servicing Activities*
----------------
(1) Previously filed with the Commission as an exhibit to the
Company's Registration Statement on Form S-11 (No. 33-6830)
as of September 16, 1993.
(2) Previously filed with the Commission as an exhibit to the
Company's Registration Statement on Form S-11 (No.
33-56778) as of January 7, 1993.
(3) Previously filed with the Commission as an exhibit to
Amendment No. 1 to the Company Registration Statement on
Form S-11 (No. 33-56778) as of March 8, 1993.
(4) Previously filed with the Commission as an exhibit to
Amendment No. 2 to the Company's Registration Statement on
Form S-11 (33-56778) as of March 26, 1993.
* Filed herewith.
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EXHIBIT 99.2
CMC SECURITIES CORPORATION II
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(EXCLUDES PRIVATELY-OFFERED MPCS TOTALING $217,198,748 AT ISSUANCE)
<TABLE>
<CAPTION>
AMOUNT OF BENEFICIAL
MPC SERIES NAME AND ADDRESS OWNERSHIP PERCENTAGE
REFERENCE OF BENEFICIAL OWNER (PRINCIPAL AT 2/25/99) OF SERIES
- ---------------- ----------------------------------------- -----------------------------------------------------------
<C> <C> <C> <C>
1993-2A Cede & Co. $30,369,723 90.8789%
P.O. Box 20
Bowling Green Station
New York, NY 10274
1993-2B Cede & Co. $24,781,089 100.0000%
(see above)
1993-2C Teachers Insurance & Annuity $78,487,528 89.2509%
Association of America
Securities Division, Mail Stop 41
730 Third Avenue 3rd Floor
New York, NY 10017
CMI Investors 3LP $8,882,480 10.1006%
2 Lincoln Center
5420 LBJ Freeway, Suite 515
Dallas, Texas 75240
1993-2D Cede & Co. $51,872,561 94.7497%
(see above)
1993-2E Cede & Co. 132,268,975 99.0456%
(see above)
1993-2F Cede & Co. $35,596,400 100.0000%
(see above)
1993-2G Cede & Co. $12,299,898 9.4658%
(see above)
Teachers Insurance & Annuity 116,840,702 89.9184%
Association of America
(see above)
1993-2H Cede & Co. $44,718,313 100.0000%
(see above)
1993-2I Cede & Co. $66,087,233 100.0000%
(see above)
1995-A Cede & Co. $40,294,183 100.0000%
(see above)
1996-A Cede & Co. $33,598,164 100.0000%
(see above)
1996-B Cede & Co. $67,232,816 100.0000%
(see above)
1996-C Cede & Co. $59,007,200 99.9998%
(see above)
</TABLE>
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EXHIBIT 99.3
CMC SECURITIES CORPORATION II
LISTING OF
OFFICER'S CERTIFICATES OF THE SERVICERS
<TABLE>
<CAPTION>
DATE OF
SERVICER CERTIFICATE
- ---------------------------------------------------------------- --------------------
<S> <C>
American City Mortgage Corporation N/A
Atlantic Mortgage and Investment Corporation August 3, 1998
BB&T Financial Corporation (BB&T Mortgage) March 31, 1998
Capstead Mortgage Corporation March 11, 1998
Charter Mortgage & Investments, Inc. (First Commercial) N/A
Chase Manhattan Mortgage Corporation March 26, 1998
Citfed Mortgage Corporation of America July 10, 1998
Colonial Savings, F.A. December 31, 1998
Companion Servicing Company, L.L.C. August 26, 1998
Crestar Mortgage Corporation March 23, 1998
CU Mortgage Corporation September 22, 1998
First Federal Savings Bank of America N/A
First Nationwide Mortgage Corporation March 7, 1997
First Union Mortgage Corporation August 13, 1998
GE Capital Mortgage Services, Inc. March 27, 1998
GMAC Mortgage Corporation March 31, 1998
LaSalle Home Mortgage Corporation January 21, 1998
M&T Mortgage Corporation N/A
Matrix Financial Services Corporation July 8, 1997
Mellon Mortgage Company N/A
Mercantile Bank N.A. March 11, 1998
Mitchell Mortgage Corporation April 17, 1997
ML Bancorp, Inc. April 22, 1997
NationsBanc Mortgage Corporation January 29, 1997
Navy Federal Credit Union March 25, 1998
Old Kent Mortgage Services, Inc. March 31, 1997
Southwest Bancorp, Inc. (Stillwater National Bank & Trust) March 27, 1998
Standard Mortgage Corporation N/A
Town & Country Mortgage Co. N/A
Universal American Mortgage Company March 9, 1998
Western Financial Savings Bank, F.S.B. March 30, 1998
York Financial Corp. September 23, 1998
</TABLE>
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EXHIBIT 99.4
CMC SECURITIES CORPORATION II
LISTING OF
INDEPENDENT ACCOUNTANTS REPORTS
ON SERVICER'S SERVICING ACTIVITIES
<TABLE>
<CAPTION>
DATE OF
SERVICER CERTIFICATE
- ---------------------------------------------------------------- --------------------
<S> <C>
American City Mortgage Corporation N/A
Atlantic Mortgage and Investment Corporation February 20, 1998
BB&T Financial Corporation (BB&T Mortgage) January 14, 1998
Capstead Mortgage Corporation January 21, 1998
Charter Mortgage & Investments, Inc. (First Commercial) January 17, 1997
Chase Manhattan Mortgage Corporation March 26, 1998
Citfed Mortgage Corporation of America May 22, 1998
Colonial Savings, F.A. November 25, 1998
Companion Servicing Company, L.L.C. February 13, 1998
Crestar Mortgage Corporation January 14, 1998
CU Mortgage Corporation August 11, 1998
First Federal Savings Bank of America N/A
First Nationwide Mortgage Corporation February 23, 1997
First Union Mortgage Corporation March 13, 1998
GE Capital Mortgage Services, Inc. February 17, 1998
GMAC Mortgage Corporation March 25, 1998
LaSalle Home Mortgage Corporation January 21, 1998
M&T Mortgage Corporation March 20, 1998
Matrix Financial Services Corporation March 6, 1998
Mellon Mortgage Company March 23, 1998
Mercantile Bank N.A. February 20, 1998
Mitchell Mortgage Corporation June 24, 1998
ML Bancorp, Inc. August 22, 1997
NationsBanc Mortgage Corporation March 12, 1998
Navy Federal Credit Union February 1, 1997
Old Kent Mortgage Services, Inc. January 14, 1998
Southwest Bancorp, Inc. (Stillwater National Bank & Trust) January 30, 1998
Standard Mortgage Corporation May 8, 1998
Town & Country Mortgage Co. February 20, 1998
Universal American Mortgage Company January 20, 1998
Western Financial Savings Bank, F.S.B. February 9, 1998
York Financial Corp. July 15, 1998
</TABLE>
