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 December 31, 1998
OR
[ f ] 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 Statement
Statement of Financial Condition at December 31, 1998
(Unaudited) and June 30, 1998
Statement of Operations (Unaudited) for the three months
ended December 31, 1998 and for the six months ended
December 31, 1998
Statement of Cash Flows (Unaudited) for the six months ended
December 31, 1998
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>
December 31, June 30,
1998 1998
(Unaudited)
<S> <C> <C>
Assets
Receivable from Bear Stearns
Securities Corp. $ 31,679 $ 31,697
Deferred costs 798,777 771,784
-------------- --------------
Total Assets $ 830,456 $ 803,481
======== ========
Liabilities and Stockholders Equity
Payable to Parent $ 794,673 $ 765,156
-------------- -------------
Total Liabilities 794,673 765,156
-------------- -------------
Stockholders Equity
Common Stock, $1.00 par value;
1,000 shares authorized:
1,000 shares outstanding 1,000 1,000
Retained earnings 34,783 37,324
-------------- -------------
Total Stockholders Equity 35,783 38,324
-------------- -------------
Total Liabilities and
Stockholders Equity $ 830,456 $ 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 Six Months Ended
December 31, December 31,
1998 1998
<S> <C> <C>
Expenses
Other expenses $ 2,093 $ 4,502
---------- ------------
Total expenses 2,093 4,502
--------- ------------
Loss before benefit from income taxes (2,093) (4,502)
Benefit from income taxes 912 1,960
---------- -----------
Net loss $ (1,181) $ (2,542)
======= =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
BEAR STEARNS ASSET BACKED SECURITIES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended Six Months Ended
December 31, December 31,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,542) $ (2,536)
Increase in:
Receivable from affiliates 18 ---
Deferred Costs (26,993) ---
Other Liabilities --- 287,740
--------------- ---------------
Cash (Used in) provided by operating activities (29,517) 285,204
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in payable to Parent 29,517 (285,204)
--------------- ---------------
Cash provided by (used in) financing activities 29,517 (285,204)
--------------- ---------------
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 Companys 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 Companys net loss for the three months ended December 31, 1998 was $1,181.
The Companys net loss for the six months ended December 31, 1998 was $2,542.
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. All hardware and software used by the Company is
through The Bear Stearns Companies, Inc. and affiliates (BSC)and therefore this
discussion represents the year 2000 issue for BSC taken as a whole. BSC has
determined that they need to modify or replace portions of their software and
hardware so that its computer system will properly utilize dates beyond December
31, 1999.
Over three years ago, BSC established a task force to review and develop an
action plan to address the Year 2000 issue. BSCs 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 BSC is vulnerable to those third parties failure to remediate their
own year 2000 issues. BSC has contacted all significant external vendors in an
effort to confirm their readiness for the Year 2000 and plans to test
compatibility with such converted systems. BSC1 also participates in
industry-wide tests.
BSC has and will continue to utilize both internal and external resources
to reprogram, or replace, and test the software and hardware for Year 2000
modifications. To date, the amounts incurred and expensed related to the
assessment of, and efforts in connection with, the Year 2000 and the development
of a remediation plan have approximated $31.3 million. BSCs 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. BSCs total remaining Year 2000 project cost is estimated at
approximately $28.7 million which will be funded through operating cash flows
and expensed as incurred.
BSC 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. BSC has substantially completed the
reprogramming and replacement phase of the project. Testing has commenced and
will proceed through calendar 1999. 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 BSC.
Additionally, there can be no assurance that the systems of other companies
on which BSCs systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with BSCs
systems, would not have a material adverse effect on BSC. While BSC does not
have a specific, formal contingency plan, the BSCs action plan is designed to
safeguard the interests of the BSC and its customers. BSC believes that this
action plan 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, BSC is monitoring developments closely. Should it appear that
a major utility, such as a stock exchange, would not be ready, BSC 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:
No reports on Form 8-K have been filed during the period covered by this
report.
<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: February 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 Decmber 31, 1998 and unaudited Statements
of Operations for the six-months ended December 31, 1998, 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> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 31,679
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 830,456
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 34,783
<TOTAL-LIABILITY-AND-EQUITY> 830,456
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,093
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,093)
<INCOME-TAX> (912)
<INCOME-CONTINUING> (1,181)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,181)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
