SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 26, 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
(Address of principal executive offices) (Zip Code)
(212) 272-2000
(Registrant's number, including area code)
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 IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT CONTEMPLATED THEREBY.
<PAGE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Financial Condition at March 26, 1999
(Unaudited) and June 30, 1998
Statement of Operations (Unaudited) for the three months
ended March 26, 1999 and for the nine months ended
March 26, 1999
Statement of Cash Flows (Unaudited) for the nine months ended
March 26, 1999
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>
<TABLE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
STATEMENT OF FINANCIAL CONDITION
<CAPTION>
March 26, June 30,
1999 1998
(Unaudited)
<S> <C> <C>
Assets
Receivable from Bear Stearns
Securities Corp. $ 31,678 $ 31,697
Deferred costs 712,446 771,784
-------------- --------------
Total Assets $ 744,124 $ 803,481
============== ==============
Liabilities and Stockholders Equity
Payable to Parent $ 710,026 $ 765,157
-------------- -------------
Total Liabilities 710,026 765,157
-------------- -------------
Stockholders Equity
Common Stock, $1.00 par value;
1,000 shares authorized:
1,000 shares outstanding 1,000 1,000
Retained earnings 33,098 37,324
-------------- -------------
Total Stockholders Equity 34,098 38,324
-------------- -------------
Total Liabilities and
Stockholders Equity $ 744,124 $ 803,481
============== =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
March 26, March 26,
1999 1999
<S> <C> <C>
Expenses
Other expenses $ 2,981 $ 7,484
---------- ------------
Total expenses 2,981 7,484
--------- ------------
Loss before benefit from income taxes (2,981) (7,484)
Benefit from income taxes 1,297 3,258
---------- -----------
Net loss $ (1,684) $ (4,226)
========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended Nine Months Ended
March 26, March 27,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ (4,226) $ (4,266)
Increase in:
Receivable from affiliates 19 (406,955)
Deferred Costs 59,338 -
Other Liabilities - 37,500
--------------- ---------------
Cash provided by (used in) operating activities 55,131 (373,721)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in payable to Parent (55,131) 373,721
--------------- ---------------
Cash (used in) provided by financing activities (55,131) 373,721
--------------- ---------------
Cash and cash equivalents, beginning of period 0 0
--------------- ---------------
Cash and cash equivalents, end of period $ 0 $ 0
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Organization
Bear Stearns Asset Backed Securities, Inc. (the "Company"), a direct
wholly-owned limited purpose subsidiary of The Bear Stearns Companies, Inc.
("Bear Stearns"), was organized 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 Securities, Variable Interest Securities, Zero Coupon
Securities, Principal Only Securities, Interest Only Securities, Participants
Securities, Senior Securities or Subordinate Securities.
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.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company's principal business activity is the 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 Securities, Variable Interest Securities, Principal Only
Securities, Interest Only Securities, Participants Securities, Senior Securities
or Subordinate Securities.
The Company's net loss for the three months ended March 26, 1999 was $1,684.
The Company's net loss for the nine months ended March 26, 1998 was $4,226.
Year 2000 Issue
The Year 2000 issue is the result of legacy computer programs being 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 may not be able to accurately process dates ending in the
year 2000 and thereafter. The Company determined that it needed to modify or
replace portions of its software and hardware so that its computer systems would
properly utilize dates beyond December 31, 1999.
Over four years ago, the Company established a task force to review and
develop an action plan to address the Year 2000 issue. The Companys 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 Company is vulnerable to those third parties failure to
remediate their own Year 2000 issues. The Company has contacted all significant
external vendors in an effort to confirm their readiness for the Year 2000 and
is in the process of testing compatibility with such converted systems. The
Company also participates actively in industry-wide tests.
The Company has and will continue to test the software and hardware for
Year 2000 modifications. To date, 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 $45.8 million. The Companys
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 $14.2 million, which will be funded through operating
cash flows and primarily expensed as incurred.
The Company presently believes that the activities that it is undertaking
in the Year 2000 project should satisfactorily resolve Year 2000 compliance
exposures within its own systems worldwide. The Company has substantially
completed the reprogramming and replacement phase of the project. Testing is in
progress and is expected to be completed in fiscal year 1999 with additional
testing, as deemed appropriate, through the end of the calendar year. However,
if such modifications and conversions are not operationally effective on a
timely basis, the Year 2000 issue could have a material impact on the operations
of the Company. Additionally, there can be no assurance that the systems of
other companies on which the Companys systems rely will be timely converted, or
that a failure to convert by another company, or a conversion that is
incompatible with the Companys systems, would not have a material adverse
effect on the Company. The Company has developed an action plan and a formal
contingency plan designed to safeguard the interests of the Company and its
customers. The Company believes that these plans significantly reduces 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 Company is monitoring
developments closely. Should it appear that a major utility, such as a stock
exchange, would not be ready, the Company will work with other firms in the
industry to plan an appropriate course of action.
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
No legal proceedings are pending.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K:
During the quarter, the Company filed the following current reports on Form 8-K.
(i) A Current Report on Form 8-K dated December 30, 1998 and filed on
January 15, 1999, pertaining to the filing of Pooling and Servicing
Agreement of Home Equity Loan Asset-Backed Certificates, Series 1998-0F54.
(ii) A Current Report on Form 8-K dated January 26, 1999 and filed on
January 28, 1999, pertaining to the filing of computational materials in
connection with the proposed offering of the Irwin Home Equity Corporation Home
Equity Asset Backed Certificates, Series 1999-1.
(iii) A Current Report on Form 8-K dated February 18, 1999 and filed on
February 22, 1999, pertaining to filing a prospectus and a prospectus supplement
relating to its Irwin Equity Asset Backed Certificates, Series 1999-1.
(iv) A Current Report on Form 8-K dated March 10, 1999 and filed on March 10,
1999, pertaining to the filing of Computational Materials in connection with the
proposed offering of the United National Bank Home Loan Asset-Backed Notes,
Series 1999-1.
(v) A Current Report on form 8-K dated February 25, 1999 and filed on
March 12, 1999, pertaining to the filing of Pooling and Servicing Agreement
of the American Residential Home Equity Loan Trust Asset-Backed Certificates,
Series 1998-1.
<PAGE>
SIGNATURE
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.
Bear Stearns Asset Backed Securities, Inc.
(Registrant)
Date: May 12, 1999 By: /s/ William J. Montgoris
William J. Montgoris
Executive Vice President and Treasurer
(Principal Financial Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from unaudited
Statements of Financial Condition at March 26, 1999 and unaudited Statements
of Operations for the nine months ended March 26, 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>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-26-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 31,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 744,124
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 33,098
<TOTAL-LIABILITY-AND-EQUITY> 744,124
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,484
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,484)
<INCOME-TAX> 3,258
<INCOME-CONTINUING> (4,226)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,226)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
