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 For the fiscal year ended
June 30, 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 33-93574
Bear Stearns Asset Backed Securities, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3836437
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
245 Park Avenue
New York, New York 10167
(212) 272-2000
(Address, including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal 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 8, 1999.
1 share of Common Stock, par value $1,000.00 per share
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND
(b) OF FORM 10-K AND THEREFORE IS FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT CONTEMPLATED THEREBY.
<PAGE>
PART I
ITEM 1 - BUSINESS
Bear Stearns Asset Backed Securities, Inc. (the "Company") was organized by, and
is a direct wholly owned limited purpose subsidiary of The Bear Stearns
Companies Inc. (the "Parent"). The Company was incorporated in the State of
Delaware on June 2, 1995.
The Company was formed solely for the purpose of issuing directly or through
trusts established by it, in series, debt securities that are secured or
collateralized by one or more pools of Compound Interest Securities, Planned
Amortization Class ("PAC") Securities, Variable Interest Securities, Zero Coupon
Securities, Principal Only Securities, Interest Only Securities, Participants
Securities, Senior Securities or Subordinate Securities.
ITEM 2 - PROPERTIES
The Company owns no physical properties.
ITEM 3 - LEGAL PROCEEDINGS
No legal proceedings are pending.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to General Instruction I of Form 10-K, the information required by Item
4 is omitted.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S SECURITIES 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.
ITEM 6 - SELECTED FINANCIAL DATA
Pursuant to General Instruction I 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's principal business activity is the issuing, directly or through
trust established by it, in series, debt securities that are secured or
collateralized by one or more pools of Compound Interest Securities, PAC
Securities, Variable Interest Securities, Zero Coupon Securities, Principal Only
Securities, Interest Only Securities, Participants Securities, Senior Securities
or Subordinate Securities.
<PAGE>
PART II (CONTINUED)
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
The Company incurred a net loss for the fiscal year ended June 30, 1999 of
$3,517. The Company's net income for the fiscal year ended June 30, 1998 was
$59,522 and net loss for the fiscal year ended June 30, 1997 was $5,330.
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 June 30, 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 $63.1 million of which approximately $8.9
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 $11.9 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
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 (CONTINUED)
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
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.
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 I of Form 10-K, the information required by Item
10 is omitted.
ITEM 11 - EXECUTIVE COMPENSATION
Pursuant to General Instruction I 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 I of Form 10-K, the information required by Item
12 is omitted.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction I 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
The Financial Statements and Financial Statement Schedules required by this Item
and included in this report are listed in the index appearing on page F-1.
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-3 (No.33-93574).
(27) Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended June 30, 1999, the Company filed the following Current
Reports on Form 8-K :
(i) A Current Report on Form 8-K dated March 25, 1999 and filed on April 9,
1999, pertaining to the filing of a monthly report distributed to holders of
Irwin Home Equity Asset Backed Certificates, Series 1999-1, relating to the
March 25, 1999 distribution.
(ii) A Current Report on Form 8-K dated April 9, 1999 and filed on April 9,
1999, pertaining to the filing of Computational Materials in respect of American
Residential Eagle Bond Trust 1999-1 Mortgage-Backed LIBOR Notes, Class A, Series
1999-1.
(iii) A Current Report on Form 8-K dated April 9, 1999 and filed on April 9,
1999, pertaining to the filing of Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939, as amended.
(iv) A Current Report on Form 8-K dated April 13, 1999 and filed on April 13,
1999, pertaining to the filing of a prospectus and prospectus supplement
relating to the Mortgage-Backed LIBOR Notes, Class A, Series 1999-1 of American
Residential Eagle Bond Trust 1999-1.
<PAGE>
PART IV (CONTINUED)
(v) A Current Report on Form 8-K dated April 16, 1999 and filed on April 16,
1999, pertaining to the filing of the Sale and Service Agreement, the Trust
Agreement, the Indenture, the Home Loan Purchase Agreement and the
Administration Agreement in connection with the offering of the United National
Bank Home Loan Owner Trust 1999-1 Home Loan Asset- Backed Notes, Series 1999-1.
(vi) A Current Report on Form 8-K dated April 28, 1999 and filed on April 29,
1999, pertaining to the filing of publicly offered American Residential Eagle
Bond Trust 1999-1 Mortgage- Backed LIBOR Notes, Class A, Series 1999-1.
(vii) A Current Report on Form 8-K dated May 4, 1999 and filed on May 12, 1999,
pertaining to the filing of Computational Materials in respect of the proposed
offering of the Irwin Home Equity Loan Trust 1999-2, Home Equity Loan-Backed
Notes, Series 1999-2.
(viii) A Current Report on Form 8-K dated May 26, 1999 and filed on May 26,
1999, pertaining to the filing of a prospectus and prospectus supplement
relating to the Irwin Home Equity Loan Trust 1999-2, Home Equity Loan-Backed
Notes, Series 1999-2.
(ix) A Current Report on Form 8-K dated May 26, 1999 and filed on May 26, 1999,
pertaining to the filing of Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended.
(x) A Current Report on Form 8-K dated June 7, 1999 and filed on June 9, 1999,
pertaining to the filing of Computational Materials related to the proposed
offering of the GMACM Revolving Home Equity Loan Trust 1999-1, Home Equity
Loan-Backed Term Notes, Series 1999-1.
(xi) A Current Report on Form 8-K dated June 16, 1999 and filed on June 17,
1999, pertaining to the filing of a prospectus and prospectus supplement
relating to the GMACM Revolving Home Equity Loan Trust 1999-1, Home Equity
Loan-Backed Term Notes, Series 1999-1.
(xii) A Current Report on Form 8-K dated June 17, 1999 and filed on June 17,
1999, pertaining to the filing of Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939, as amended.
<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 28th day of
September, 1999.
Bear Stearns Asset Backed Securities, Inc.
(Registrant)
By: /s/ Samuel L. Molinaro Jr.
Samuel L. Molinaro Jr.
Chief Financial 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 28th day of September, 1999.
Signatures Title
/s/ Patricia A.Jehle President, Chief Executive
Patricia A.Jehle Officer and Director
/s/ Samuel L. Molinaro Jr. Chief Financial Officer
Samuel L. Molinaro Jr.
________________________ Chairman of the Board and
Jeffrey Mayer Director
/s/ Thomas Marano Director
Thomas Marano
/s/ Juliana C. Johnson Independent Director
Juliana C. Johnson
<PAGE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditors' Report F-2
Statements of Income for the fiscal years ended
June 30, 1999, 1998 and 1997 F-3
Statements of Financial Condition as of June 30, 1999 and 1998 F-4
Statements of Changes in Stockholder's Equity for the fiscal
years ended June 30, 1999, 1998 and 1997 F-5
Statements of Cash Flows for the fiscal years ended
June 30, 1999, 1998 and 1997 F-6
Notes to Financial Statements F-7
Financial Statement Schedules are omitted because they are not applicable or the
information is included in the Financial Statements or Notes thereto.
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder,
Bear Stearns Asset Backed Securities Inc.:
We have audited the accompanying statements of financial condition of Bear
Stearns Asset Backed Securities Inc. (the "Company") (a wholly owned subsidiary
of The Bear Stearns Companies Inc.) as of June 30, 1999 and 1998, 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, 1999. 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 Asset Backed Securities Inc. at
June 30, 1999 and 1998, and the results of their operations and their cash flows
for each of the three years in the period ended June 30, 1999 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
September 22, 1999
F-2
<PAGE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
STATEMENTS OF INCOME
June 30, June 30, June 30,
1999 1998 1997
------- ------- -------
Revenues
Principal transactions $ 3,647 $ 115,311 $ -
----- ------- ----
Total revenues 3,647 115,311 -
Expenses
Other expenses 9,875 9,923 9,505
----- ----- -----
Total expenses 9,875 9,923 9,505
(Loss) income before income tax
(benefit) expense (6,228) 105,388 (9,505)
Income tax (benefit) expense (2,711) 45,866 (4,175)
------ ------ ------
Net (loss) income $ (3,517) $ 59,522 $(5,330)
====== ====== =======
See Notes to Financial Statements.
F-3
<PAGE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
STATEMENTS OF FINANCIAL CONDITION
June 30, June 30,
1999 1998
------- -------
Assets
Receivable from affiliates $ 31,678 $ 31,697
Deferred costs 526,715 771,784
------- -------
Total Assets $558,393 $ 803,481
======= =======
Liabilities
Payable to Parent $523,586 $765,157
------- -------
Total Liabilities 523,586 765,157
Stockholder's Equity
Common stock, $1,000.00 par value;
100 shares authorized; 1 share issued
and outstanding; 1,000 1,000
Retained earnings 33,807 37,324
------ ------
Total Stockholder's Equity 34,807 38,324
Total Liabilities and Stockholder's Equity $558,393 $803,481
======= =======
See Notes to Financial Statements.
F-4
<PAGE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
Retained
Common Stock Earnings
$1,000 Par Value (Deficit)
-------------- --------
Balance, June 30, 1996 $ 1,000 $(16,868)
Net loss - (5,330)
----- -------
Balance, June 30, 1997 1,000 (22,198)
Net income - 59,522
----- ------
Balance, June 30, 1998 1,000 37,324
Net loss - (3,517)
----- ------
Balance, June 30, 1999 $ 1,000 $33,807
===== ======
See Notes to Financial Statements.
F-5
<PAGE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
STATEMENTS OF CASH FLOWS
June 30, June 30, June 30,
1999 1998 1997
------ ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (3,517) $59,522 $ (5,330)
Decreases (increases) in:
Deferred costs 245,069 (422,262) ( 211,821)
Receivable from affiliates 19 8 -
(Decrease) increase in other liabilities - (77,810) 14,056
------- ------- -------
Cash provided by (used in) operating
activities 241,571 (440,542) (203,095)
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in payable to Parent (241,571) 440,542 203,095
Cash (used in) provided by financing -------- ------- -------
activities (241,571) 440,542 203,095
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 0 0 0
------- ------ -------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 0 $ 0 $ 0
======= ====== =======
See Notes to Financial Statements.
F-6
<PAGE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization
Bear Stearns Asset Backed Securities, 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 June 2, 1995.
The Company was formed solely for the purpose of issuing directly or through
trusts established by it, in series, debt securities that are secured or
collateralized by one or more pools of Compound Interest Securities, Planned
Amortization Class ("PAC") Securities, Variable Interest Securities, Zero Coupon
Securities, Principal Only Securities, Interest Only Securities, Participants
Securities, Senior Securities or Subordinate Securities.
Note 2. Summary of Significant Accounting Policies
The Company's policy is to record the securitization and issuance of
collateralized debt and the related sale of all of its remaining beneficial
ownership interest in the residual cash flow attributable to each series of
collateralized debt as a sale of assets. The resultant gain or loss reflects the
net proceeds from the collateralized debt issuance and the sale of the
beneficial ownership interest less the cost of the underlying collateral and is
reflected as principal transaction revenues. Deferred organization costs
associated with the issuance of the collateralized debt are prepaid issue
expenses which are included as a component of the gain or loss upon the sale of
the collateralized debt.
The Company's policy is to sell all of its beneficial ownership interest in each
collateralized debt 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 collateralized debt series are not reflected on the Company's Statement of
Financial Condition.
The financial statements are prepared in conformity with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the amounts in the financial statements and accompanying notes.
Actual results could differ from those estimates.
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.
Note 3. 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 4. Related Party Transactions
Substantially all of the Company's operating expenses, such as office space and
general and administrative expenses, are initially paid for by an affiliate. The
affiliate allocates to the Company all of the operating expenses.
F-7
<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-30-1999
<PERIOD-END> Jun-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 31,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 558,393
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 33,807
<TOTAL-LIABILITY-AND-EQUITY> 558,393
<SALES> 0
<TOTAL-REVENUES> 3,647
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,875
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,228)
<INCOME-TAX> (2,711)
<INCOME-CONTINUING> (3,517)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,517)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
