-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CBdVyC4sEdCf73GSa1W1ZEPg8usPMeGa5z+ShbCuLuPDLngMdIeB7T1vl3m3AwuF xSITaH7iPeXBis2ws4VVRQ== 0000846607-99-000011.txt : 19991227 0000846607-99-000011.hdr.sgml : 19991227 ACCESSION NUMBER: 0000846607-99-000011 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEAR STEARNS SECURED INVESTORS INC CENTRAL INDEX KEY: 0000806741 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 133402173 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-10524 FILM NUMBER: 99719083 BUSINESS ADDRESS: STREET 1: 300 CRESCENT CT 2ND FLOOR CITY: DALLAS STATE: TX ZIP: 75201-1876 BUSINESS PHONE: 2147548300 MAIL ADDRESS: STREET 1: 1601 ELM ST CITY: DALLAS STATE: TX ZIP: 75201 10-K 1 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 33-26824 Bear Stearns Secured Investors Inc. (Exact name of registrant as specified in its charter) Delaware 13-3402173 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1601 Elm Street, Dallas, Texas 75201 (2l4) 754-8300 (Address, Including Zip Code, and Telephone Number, Including Area Code of Registrant's 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. 100 shares of Common Stock, par value $.01 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. PART I ITEM 1 - BUSINESS Bear Stearns Secured Investors 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 November 26, 1986. The Company was formed solely for the purpose of purchasing or acquiring mortgage-backed securities, whole residential or commercial mortgage loans or participations therein, and issuing and selling one or more series of Collateralized Mortgage Obligations ("CMO's") directly or through one or more trusts established by it. In connection therewith, the Company is authorized to acquire, own, hold, and pledge the various instruments collateralizing the CMO's. Each series of CMO's is collateralized by "fully modified pass-through" mortgage-backed certificates ("GNMA Certificates") guaranteed as to the full and timely payment of principal and interest by the Government National Mortgage Association, which guaranty is backed by the full faith and credit of the United States Government; by guaranteed mortgage pass-through certificates ("FNMA Certificates") issued and guaranteed as to the full and timely payment of principal and interest by the Federal National Mortgage Association; by mortgage participation certificates ("FHLMC Certificates") issued and guaranteed as to timely payment of interest and ultimate payment of principal by the Federal Home Loan Mortgage Corporation (GNMA, FNMA and FHLMC Certificates are hereinafter referred to collectively as the "Certificates"); or by whole residential or commercial mortgage loans or participations therein. Distributions of principal of and interest on the Certificates pledged as collateral and, in some cases, the reinvestment income, thereon, are used to pay the debt service on the CMO's and administrative expenses. In connection with the issuance and sale of each series, it is the Company's intention to sell its beneficial interest in the residual cash flow remaining after the payment of debt service and administrative expenses, with the objective of ultimately divesting itself of all ownership interest in the underlying collateral. The Certificates are acquired by the Company from Bear, Stearns & Co. Inc. ("Bear Stearns"), an affiliate of the Company, simultaneously with the issuance and sale of the CMO's. The Company issues each series of CMO's through Bear Stearns acting as the principal underwriter in underwritten public offerings. The net proceeds from the offering of each series of CMO's are used to purchase the Certificates collateralizing the CMO's. In connection with the Company's activities in the origination and issuance of CMO's, the Company derives revenue in its capacity as administrator of various CMO issues during the outstanding life of the CMO transactions which it originated, pursuant to subservicing agreements with Bear Stearns. ITEM 2 - PROPERTIES The Company owns no physical properties. PART I (CONTINUED) 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 incurred a net loss for the fiscal years ended June 30, 1999, 1998 and 1997 of $70,086, $379,125 and $63,588, respectively. Net losses for each of the three years in the period ended June 30, 1999 are the result of the Company incurring operating expenses with no earned revenue. The Company did not issue any CMO's in each of the three years in the period ended June 30, 1999 due to unfavorable market conditions. 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 PART II (CONTINUED) 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. 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. PART III (CONTINUED) 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-11 (No. 33-17021). 4. Instruments defining the rights of security holders, including indentures: (a) Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 4 to Registration Statement on Form S-11 (No. 33-10524). (b) Series 1987-4 Supplement dated as of December 30, 1987 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(c) to Post-Effective Amendment No. 5 to Registration Statement on Form S-11 (No. 33-10524). (c) Series 1987-5 Supplement dated as of January 27, 1988 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(d) to Post-Effective Amendment No. 6 to Registration Statement on Form S-11 (No. 33-10524). PART IV (CONTINUED) Exhibits (continued) (d) Series 1988-1 Supplement dated as of February 23, 1988 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(e) to Post-Effective Amendment No. 4 to Registration Statement on Form S-11 (No. 33-17021). (e) Series 1988-2 Supplement dated as of March 29, 1988 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(f) to Post-Effective Amendment No. 5 to Registration Statement on Form S-11 (No. 33-17021). (f) Series 1988-2 Supplement dated as of March 29, 1988, as amended and restated as of April 5, 1988, to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(g) to Post-Effective Amendment No. 6 to Registration Statement on Form S-11 (No. 33-17021). (g) Series 1988-3 Supplement dated as of April 27, 1988 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(h) to Post- Effective Amendment No. 7 to Registration Statement on Form S-11 (No. 33- 17021). (h) Series 1988-4 Supplement dated as of October 27, 1988 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(i) to Post-Effective Amendment No. 8 to Registration Statement on Form S-11 (No. 33-17021). (i) Series 1988-6 Supplement dated as of November 22, 1988 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(1) to Post-Effective Amendment No. 11 to Registration Statement on Form S-11 (No. 33-17021). (j) Series 1988-7 Supplement dated as of November 29, 1988 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(m) to Post-Effective Amendment No. 12 to Registration Statement on Form S-11 (No. 33-17021). PART IV (CONTINUED) Exhibits (continued) (k) Series 1988-8 Supplement dated as of November 21, 1988 to the Indenture dated as of November 30, 1987 between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(k) to Post-Effective Amendment No. 10 to Registration Statement on Form S-11 (No. 33-17021). (l) Series 1989-3 Supplement dated as of February 16, 1989, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(b) to Post-Effective Amendment No. 2 to Registration Statement on Form S-11 (No. 33-25464). (m) Series 1991-1 Series Supplement dated as of July 29, 1991, between Bear Stearns Secured Investors Inc. and Texas Commerce Bank National Association, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(k) to Post-Effective Amendment No. 3 to Registration Statement on Form S-11 (No. 33-26824). (n) Series 1991-2 Series Supplement dated as of December 30, 1991, between Bear Stearns Secured Investors Inc. and Texas Commerce Bank National Association, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(k) to Post-Effective Amendment No. 4 to Registration Statement on Form S-11 (No 33-26824) (o) Series 1992-1 Series Supplement dated as of January 30, 1992, between Bear Stearns Secured Investors Inc. and Texas Commerce Bank National Association, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(k) to Post-Effective Amendment No. 5 to Registration Statement on Form S-11 (No 33-26824) (p) Series 1992-2 Supplement dated as of July 30, 1992, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3 (a) to Post-Effective Amendment No. 6 to Registration Statement on Form S-11 (No. 33 - -26824). (q) Series 1993-1 Supplement dated as of June 18, 1993, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Inc. and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 7 to Registration Statement on Form S-11 (No. 33-26824). PART IV (CONTINUED) Exhibits (continued) (r) Series 1993-2 Supplement dated as of June 30, 1993, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Trust 1993-2 and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3 (a) to Post-Effective Amendment No. 2 to Registration Statement on Form S-11 (No. 33-48313). (s) Series 1993-3 Supplement dated as of July 30, 1993, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Trust 1993-3 and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 3 to Registration Statement on Form S-11 (No. 33-48313). (t) Series 1993-4 Supplement dated as of August 31, 1993, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Trust 1993-4 and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 4 to Registration Statement on Form S-11 (No. 33-48313). (u) Series 1993-5 Supplement dated as of September 3, 1993, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Trust 1993-5 and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 5 to Registration Statement on Form S-11 (No. 33-48313). (v) Series 1993-6 Supplement dated as of November 1, 1993, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Trust 1993-6 and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 6 to Registration Statement on Form S-11 (No. 33-48313). (w) Series 1993-6 Supplement dated as of November 1, 1993, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Trust 1993-6 and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 7 to Registration Statement on Form S-11 (No. 33-48313). (x) Series 1993-8 Supplement dated as of December 1, 1993, to the Indenture dated as of November 30, 1987, between Bear Stearns Secured Investors Trust 1993-8 and State Street Bank and Trust Company, incorporated by reference to Exhibit 4.3(a) to Post-Effective Amendment No. 8 to Registration Statement on Form S-11 (No. 33-48313). (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter ended June 30, 1999. 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 Secured Investors 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/ Thomas Marano President, Chief Operating Thomas Marano Officer and Director /s/ Samuel L. Molinaro Jr. Chief Financial Officer Samuel L. Molinaro Jr. _____________________ Vice President and Director Jeffrey Mayer /s/ Craig M. Overlander Vice President and Director Craig M. Overlander BEAR STEARNS SECURED INVESTORS 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 and 1998 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 INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholder, Bear Stearns Secured Investors Inc.: We have audited the accompanying statements of financial condition of Bear Stearns Secured Investors 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 Secured Investors 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 BEAR STEARNS SECURED INVESTORS INC. STATEMENTS OF INCOME Fiscal Years Ended June 30, June 30, June 30, 1999 1998 1997 ------- ------- ------- Expenses Other expenses 124,092 671,268 113,388 ------- ------- ------- Total expenses 124,092 671,268 113,388 Loss before benefit for income taxes (124,092) (671,268) (113,388) Benefit for income taxes (54,006) (292,143) (49,800) -------- --------- -------- Net loss $ (70,086) $(379,125) $ (63,588) ======== ========= ======== See Notes to Financial Statements. F-3 BEAR STEARNS SECURED INVESTORS INC. STATEMENTS OF FINANCIAL CONDITION June 30, June 30, 1999 1998 ------- ------- Assets Cash and cash equivalents $ 1,000 $ 1,000 Receivable from affiliates 16,176,822 16,176,822 Other assets 686 686 ---------- ---------- Total Assets $ 16,178,508 $ 16,178,508 ========== ========== Liabilities Payable to Parent $ 16,358,688 $ 16,288,602 Other liabilities 165,000 165,000 ---------- ---------- Total Liabilities 16,523,688 16,453,602 Stockholder's Equity (Deficit) Common Stock, $.01 par value; 1,000 shares authorized; 100 shares issued and outstanding 1 1 Paid-in capital 999 999 Retained earnings (deficit) (346,180) (276,094) --------- --------- Total Stockholder's Equity (deficit) (345,180) (275,094) Total Liabilities and Stockholder's Equity (deficit) $ 16,178,508 $ 16,178,508 ========== ========== See Notes to Financial Statements. F-4 BEAR STEARNS SECURED INVESTORS INC. STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY Common Stock Paid-in Retained $.01 Par Value Capital Earnings (Deficit) ------------- ------- ----------------- Balance, June 30, 1996 $ 1 $ 999 $ 166,619 Net loss - - (63,588) --- --- -------- Balance, June 30, 1997 1 999 103,031 Net loss - - (379,125) --- --- --------- Balance, June 30, 1998 1 999 (276,094) Net loss - - (70,086) --- --- --------- Balance, June 30, 1999 $ 1 $ 999 $ (346,180) === === ========= See Notes to Financial Statements. F-5 BEAR STEARNS SECURED INVESTORS INC. STATEMENTS OF CASH FLOWS Fiscal Years Ended June 30, June 30, June 30, 1999 1998 1997 -------- -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (70,086) $ (379,125) $(63,588) Decrease (increase) in: Deferred organization costs - 611,514 100,000 Other assets - (686) - Increase (decrease) in other liabilities - 689 (18) Cash (used in) provided by operating -------- ------- ------ activities (70,086) 232,392 36,394 CASH FLOWS FROM FINANCING ACTIVITIES Increase (decreases) in payable to Parent 70,086 (232,392) (36,394) Cash provided by (used in) financing ------ --------- -------- activities 70,086 (232,392) (36,394) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,000 1,000 1,000 CASH AND CASH EQUIVALENTS, ----- ----- ----- END OF YEAR $ 1,000 $ 1,000 $1,000 ===== ===== ===== See Notes to Financial Statements. F-6 BEAR STEARNS SECURED INVESTORS INC. NOTES TO FINANCIAL STATEMENTS Note 1. Organization Bear Stearns Secured Investors Inc. (the "Company"), a direct wholly owned limited purpose finance subsidiary of The Bear Stearns Companies Inc. (the "Parent"), was organized on November 26, 1986 as a Delaware corporation. The Company's sole purpose is to issue and sell one or more series of collateralized mortgage obligations ("CMO's") directly or through one or more trusts established by it. In connection therewith, the Company provides management and administrative services after the issuance of each CMO issued. The Company's activities are limited to issuing CMO's that will be collateralized by mortgage-backed certificates, whole residential or commercial mortgage loans or participations therein, and, in connection therewith, acquiring, owning, holding and pledging mortgage-backed certificates, whole loans or commercial mortgage loans. Note 2. Summary of Significant Accounting Policies The financial statements are prepared in conformity with generally accepted accounting principles which require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The Company's policy is to record the securitization and issuance of CMO's and the related sale of all of its remaining beneficial ownership interest in the residual cash flow attributable to each series of CMO's as a sale of assets. The resultant gain or loss reflects the net proceeds from the CMO issuance and the sale of the beneficial ownership interest less the cost of the underlying collateral and is reflected as principal transaction revenues. The Company's policy is to sell all of its beneficial ownership interest in each CMO 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 CMO series are not reflected on the Company's Statement of Financial Condition. Management fee income received for the management and administration of the various CMO issues is recognized into income when earned. 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. F-7 BEAR STEARNS SECURED INVESTORS INC. NOTES TO FINANCIAL STATEMENTS Note 3. Collateralized Mortgage Obligations During the fiscal years ended June 30, 1999, 1998 and 1997 the Company did not issue any CMO's. Note 4. 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 5. Related Party Transactions The Company clears all of its securities transactions relating to the purchase of the underlying collateral and issuance of CMO's through an affiliate. An affiliate also acts as the principal underwriter for the Company's CMO issuances. 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-8 EX-27 2 FINANCIAL DATA SCHEDULE
5 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. 1 Year Jun-30-1999 Jun-30-1999 1,000 0 16,176,822 0 0 0 0 0 16,178,508 0 0 0 0 1 (345,181) 16,178,508 0 0 0 0 124,092 0 0 (124,092) (54,006) (70,086) 0 0 0 (70,086) 0 0
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