-----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, HSIu1drCaovwcc/zsHZyykfqsnipYzRSo2x8mOLrYf+f/HGqyDIoNUkq369G1vUy sRjMPvMwAbuVSYIbaSYsTw== 0001068800-00-000104.txt : 20000329 0001068800-00-000104.hdr.sgml : 20000329 ACCESSION NUMBER: 0001068800-00-000104 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORNERSTONE MORTGAGE INVESTMENT GROUP II INC CENTRAL INDEX KEY: 0000809767 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 431432378 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-11459 FILM NUMBER: 581105 BUSINESS ADDRESS: STREET 1: 12555 MANCHESTER CITY: ST LOUIS STATE: MO ZIP: 63131 BUSINESS PHONE: 3148512000 10-K 1 CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 1999 Commission file number 33-11459 ----------------- -------- CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC. - --------------------------------------------------------------------------- (Exact name of registrant as specified in its Articles of Incorporation) DELAWARE 43-1432378 - --------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 201 Progress Parkway Maryland Heights, Missouri 63043 - --------------------------------------------------------------------------- (Address and principal executive office) (Zip Code) Registrant's telephone number, including area code (314) 515-2000 ---------------- 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 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 the number of shares outstanding of each of the registrant's classes of common stock, as of filing date: COMMON STOCK, $1.00 Par Value - 500 Shares 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 the reduced disclosure format. CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC. TABLE OF CONTENTS PART I Page ---- Item 1. Business 3 Item 2. Properties 3 Item 3. Legal Proceedings 3 Item 4. Submission of Matters to a Vote of Security Holders 3 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters 4 Item 6. Selected Financial Data 4 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 4 Item 8. Financial Statements and Supplementary Data 5 Item 9. Change in and Disagreements with Accountants on Accounting and Financial Disclosure 10 PART III Item 10. Directors and Executive Officers of the Registrant 11 Item 11. Executive Compensation 11 Item 12. Security Ownership of Certain Beneficial Owners and Management 11 Item 13. Certain Relationships and Related Transactions 11 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 12 SIGNATURES 13 INDEX TO EXHIBITS 14 2 PART I Item 1. BUSINESS Cornerstone Mortgage Investment Group II, Inc. (the "Company") was incorporated in the state of Delaware on December 22, 1986, as a wholly owned, limited purpose subsidiary of Edward D. Jones & Co., L.P. ("EDJ" or the "Partnership"), a Missouri limited partnership. The Company was organized for the purpose of investing in collateral to be purchased with the proceeds of Mortgage-Backed Securities collateralized by such collateral. EDJ organized the Company and currently owns all the issued and outstanding capital stock of the Company. The Company does not intend to engage in any business or investment activities other than issuing and selling Mortgage-Backed Securities and acquiring, owning, holding and assigning collateral and investing cash balances on an interim basis in high quality, short-term securities, some or all of which may be purchased from or through EDJ. Article 3 of the Company's Certificate of Incorporation limits the Company's business and investment activities to the above purposes and to any activities incidental and necessary or convenient for such purposes. Article 7 of the Company's Certificate of Incorporation prohibits the Company, without the consent of the trustee under any indenture pursuant to which Mortgage-Backed Securities are issued, from (1) dissolving or liquidating, in whole or in part; (2) merging or consolidating with another corporation other than a corporation wholly owned, directly or indirectly, by EDJ or (3) amending Articles 3 or 7 of the Company's Certificate of Incorporation. Item 2. PROPERTIES The Company has no physical properties appropriate for description herein. Item 3. LEGAL PROCEEDINGS The Company is not a party to any material pending legal proceedings. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Omitted pursuant to General Instruction J(2)(c) of Form 10-K. 3 PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of filing date, all outstanding shares of the Company's common stock are owned by EDJ and are not traded on any stock exchange or in the over-the-counter market. Item 6. SELECTED FINANCIAL DATA Omitted pursuant to General Instruction J(2)(c) of Form 10-K. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cornerstone II has not issued Mortgage-Backed Securities since 1991. Cornerstone II's operations are directed toward maintenance of outstanding issues. During 1999, Cornerstone II exercised the option to repurchase collateral for series which had a current collateral principal balance that was less than 10% of the original collateral principal balance. Series 6 and Series 17 were repurchased on January 30, 1999, for net gains of $145,203 and $152,094, respectively. Series 24 and Series 32 were repurchased on February 25, 1999, for net gains of $104,180 and $48,311, respectively. Series 16, Series 20 and Series 31 were repurchased on March 30, 1999, for net gains of $105,112, $315,832 and $185,913, respectively. Series 28 and Series 29 were repurchased on April 23, 1999, for net gains of $111,700 and $95,264, respectively. Series 11, Series 19, Series 21 and Series 22 were repurchased on April 30, 1999, for net gains of $136,517, $210,748, $183,120 and $158,091, respectively. Series 30 was repurchased on July 15, 1999, for a net gain of $304,714. Series 9 and Series 18 were repurchased on August 30, 1999, for a net loss of $84,714 and a net gain of $70,804, respectively. Series 4, Series 8 and Series 12 were repurchased on September 1, 1999, for net gains of $7,688, $6,646 and $41,021, respectively. Series 27 was repurchased on October 15, 1999, for a net gain of $103,788. Series 10 and Series 13 were repurchased on October 29, 1999, for net gains of $120,431 and $75,141, respectively. Year 2000 Issues - ---------------- As of February 22, 2000, the Partnership has not encountered any significant business disruptions as a result of internal or external Year 2000 issues. However, while no such occurrence has developed, Year 2000 issues may arise that may not become immediately apparent. Therefore, the Partnership will continue to monitor and work to remediate any issues that may arise. Although the Partnership expects not to be materially impacted, such future events cannot be known with certainty. 4 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements and Supplementary Financial Data Page No. -------- Report of Independent Public Accountants 8 Balance Sheets as of December 31, 1999 and 1998. 9 Notes to Balance Sheets 10 All schedules are omitted because they are not required, inapplicable or the information is included in the balance sheets or notes thereto. 5 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED) REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To Cornerstone Mortgage Investment Group II, Inc.: We have audited the accompanying balance sheets of Cornerstone Mortgage Investment Group II, Inc. (a Delaware corporation and wholly owned subsidiary of Edward D. Jones & Co., L.P.) as of December 31, 1999 and 1998. 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 balance sheets are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheets. 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, the balance sheets referred to above present fairly, in all material respects, the financial position of Cornerstone Mortgage Investment Group II, Inc. as of December 31, 1999 and 1998, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP St. Louis, Missouri, February 22, 2000 6 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED) CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC. BALANCE SHEETS -------------- AS OF DECEMBER 31, 1999 AND 1998 --------------------------------
1999 1998 ------- ------- ASSETS ------ CASH $ 500 $ 500 ======= ======= STOCKHOLDER'S EQUITY -------------------- COMMON STOCK - $1.00 par value, 150,000 shares authorized, 500 issued and outstanding $ 500 $ 500 ======= ======= The accompanying notes are an integral part of this balance sheet.
7 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED) CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC. NOTES TO BALANCE SHEETS ----------------------- DECEMBER 31, 1999 AND 1998 -------------------------- 1. GENERAL ------- Cornerstone Mortgage Investment Group II, Inc. ("Cornerstone II") is a Delaware corporation and a wholly owned subsidiary of Edward D. Jones & Co., L.P. ("EDJ"), a Missouri limited partnership. Cornerstone II was incorporated on December 22, 1986, for the limited purpose of structuring and selling mortgage-backed securities (the "Certificates"), which are backed by Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage Association (FNMA) Securities (collectively the "Collateral"). All costs related to the organization of Cornerstone II have been absorbed by EDJ. In addition, EDJ has paid all offering expenses and assumed all future revenues and expenses in connection with prior security transactions. Due to the absence of revenue or expense generating transactions, no income statement is presented. The balance of stockholder's equity consists solely of common stock issued on December 30, 1986; therefore, no statement of stockholder's equity is presented. All funds were obtained from capital transactions; therefore, no statement of cash flows is presented. 2. SECURITY TRANSACTIONS --------------------- Cornerstone II last offered mortgage-backed securities in 1991. Series 4, Series 6, Series 8, Series 9, Series 10, Series 11, Series 12, Series 13, Series 16, Series 17, Series 18, Series 19, 8 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED) Series 20, Series 21, Series 22, Series 24, Series 27, Series 28, Series 29, Series 30, Series 31 and Series 32 were repurchased during 1999. Since Cornerstone II has surrendered control of the future economic benefit in the collateral, these transactions have been accounted for as sales, and both the Certificates and the Collateral have been eliminated from Cornerstone II's balance sheet. The outstanding principal balance and remaining collateral value relating to series issued by Cornerstone II are $7,208,000 and $7,268,046 as of December 31, 1999. 9 Item 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There was no change of accountants or disagreement with accountants on any matter of accounting principles or financial disclosure. 10 PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Omitted pursuant to General Instruction J(2)(c) of Form 10-K. Item 11. EXECUTIVE COMPENSATION Omitted pursuant to General Instruction J(2)(c) of Form 10-K. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Omitted pursuant to General Instruction J(2)(c) of Form 10-K. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Omitted pursuant to General Instruction J(2)(c) of Form 10-K. 11 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K a. The following documents are filed as part of this report: 1. Financial Statements: -------------------- Report of Independent Public Accountants Balance Sheets as of December 31, 1999 and 1998 Notes to Balance Sheets 2. Financial Statement Schedules: ----------------------------- All schedules are omitted because they are not required, inapplicable, or the information is included in the balance sheets or notes thereto. 3. Exhibits: -------- Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3(a) to Registration Statement on Form S-11, as amended, File No. 33-11459). Bylaws of the Company as amended (incorporated by reference to Exhibit 3(b) to Registration Statement on Form S-11, as amended, File No. 33-11459). Deposit Agreement dated as of February 20, 1987, between the Company, as Depositor, and The Bank of New York, as Custodian (incorporated by reference to Exhibit 2 to the Current Report on Form 8-K filed on March 6, 1987). Trust Agreement dated as of February 20, 1987, between the Company, as Depositor, and The Bank of New York, as Successor Trustee (incorporated by reference to Exhibit 3 to the Current Report on Form 8-K filed on March 6, 1987). Trust Agreement dated as of February 20, 1987, between the Company, as Depositor, Bank of New York as Successor Trustee (incorporated by reference to Exhibit 4 to the Current Report on Form 8-K filed on March 6, 1987). 12 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 this 22th day of February, 2000. CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC. ---------------------------------------------- (Registrant) 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 and on the dates indicated. /s/ John C. Heisler Chairman of the Board, - ---------------------- Chief Financial Officer, John C. Heisler Chief Accounting Officer and Director February 22, 2000 ----------------- /s/ Philip R. Schwab President, Chief - ---------------------- Executive Officer Philip R. Schwab and Director February 22, 2000 ----------------- /s/ John Beuerlein Secretary and Director February 22, 2000 - ---------------------- ----------------- John Beuerlein 13 INDEX TO EXHIBITS Exhibit Number Description of Exhibit Page - ------ ---------------------- ---- 3.1 Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3(a) to Registration Statement on Form S-11, as amended, File No. 33-11459) 3.2 Bylaws of the Company as amended (incorporated by reference to Exhibit 3(b) to Registration Statement on Form S-11, as amended, File No. 33-11459) 4.1 Deposit Agreement dated as of February 20, 1987, between the Company, as Depositor, and Bank of New York, (incorporated by reference to Exhibit 2 to the Current Report on Form, 8-K filed on March 6, 1987) 4.2 Trust Agreement dated as of February 20, 1987, between the Company, as Depositor, and Bank of New York as Trustee (incorporated by reference to Exhibit 3 to the Current Report on Form 8-K filed on March 6, 1987) 4.3 Trust Agreement dated as of February 20, 1987, between the Company, as Depositor, and Bank of New York, as Successor Trustee (incorporated by reference to Exhibit 4 to the Current Report on Form 8-K filed on March 6, 1987 [FN] - ----------- Incorporated by reference 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the financial statements of Cornerstone Mortgage Investment Group II, Inc. for the year ended December 31, 1999 and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 500 0 0 0 0 500 0 0 500 0 0 500 0 0 0 500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-----END PRIVACY-ENHANCED MESSAGE-----