-----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, LFJP0aryKqBFcsMYVkBViKxrDA1OrwdUbd9e4sy75X76dF3eVg8UKCx/t1INcJAT hC/390T2zkOSwpzFbIbfTA== 0000785818-00-000010.txt : 20000324 0000785818-00-000010.hdr.sgml : 20000324 ACCESSION NUMBER: 0000785818-00-000010 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991226 FILED AS OF DATE: 20000323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTGAGE SECURITIES III TRUSTS A CENTRAL INDEX KEY: 0000785818 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-02253 FILM NUMBER: 576346 BUSINESS ADDRESS: STREET 1: 33650 SIXTH AVENUE S. STREET 2: WRE 2-1 CITY: FEDERAL WAY STATE: WA ZIP: 98003 BUSINESS PHONE: 253-924-25 MAIL ADDRESS: STREET 1: 33650 SIXTH AVENUE S. STREET 2: WRE 2-1 CITY: FEDERAL WAY STATE: WA ZIP: 98003 FORMER COMPANY: FORMER CONFORMED NAME: MORTGAGE SECURITIES III TRUST 1986 A DATE OF NAME CHANGE: 19860409 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTGAGE SECURITIES III TRUSTS B CENTRAL INDEX KEY: 0000799630 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-02253-01 FILM NUMBER: 576347 BUSINESS ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE COMPANY TR-55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8185922562 MAIL ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE CO TR-55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTGAGE SECURITIES III TRUSTS D CENTRAL INDEX KEY: 0000808264 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-10942 FILM NUMBER: 576348 BUSINESS ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE COMPANY TR-55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8185922562 MAIL ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE CO TR-55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTGAGE SECURITIES III TRUSTS C CENTRAL INDEX KEY: 0000814144 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-02253-02 FILM NUMBER: 576349 BUSINESS ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE COMPANY STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8185922562 MAIL ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE COMPANY TR-55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTGAGE SECURITIES III TRUSTS E CENTRAL INDEX KEY: 0000826488 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-02253-03 FILM NUMBER: 576350 BUSINESS ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE CO TR-55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8185922562 MAIL ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE CO TR-55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [x]Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [ ]Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 26, 1999 Commission File Number 33-2253 MORTGAGE SECURITIES III TRUSTS A, B, C, D, E AND F Delaware Trusts (IRS Employer Identification No. 91-1314537) Wilmington, DE 19890 Telephone (302) 651-1730 Securities Registered Pursuant to Section 12(b) of the Act: None Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by a 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 . The Registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore, filing this form with the reduced disclosure format. Mortgage Securities III Trusts A, B, C, D, E and F Table of Contents Page No. PART I Item 1. Business..................................................1 Item 2. Properties................................................1 Item 3. Legal Proceedings.........................................1 Item 4. Submission of Matters to a Vote of Security Holders.......1 PART II Item 5. Market for the Registrant's Beneficial Interest and Related Security Holder Matters...................2 Item 6. Selected Financial Data.................................2 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations...................2 Item 8. Financial Statements and Supplementary Data.............3 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures..................3 PART III Item 10. Directors and Executive Officers of the Registrant......3 Item 11. Executive Compensation..................................3 Item 12. Security Ownership of Certain Beneficial Owners and Management.................................3 Item 13. Certain Relationships and Related Transactions..........3 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...................................4 SIGNATURE ........................................................6 Report of Independent Public Accountants...............................7 Statements of Operations for the Three Years Ended December 26, 1999 Trust A 9 Trust B 10 Trust C 11 Trust D 12 Trust E 13 Trust F 14 Balance Sheets as of December 26, 1999 and December 27, 1998 Trust A 15 Trust B 16 Trust C 17 Trust D 18 Trust E 19 Trust F 20 [CAPTION] Mortgage Securities III Trusts A, B, C, D, E and F Table of Contents Page No. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 26, 1999 Trust A 21 Trust B 22 Trust C 23 Trust D 24 Trust E 25 Trust F 26 Statements of Cash Flows for the Three Years Ended December 26, 1999 Trust A 27 Trust B 28 Trust C 29 Trust D 30 Trust E 31 Trust F 32 Notes to Financial Statements for the Three Years Ended December 26, 1999............................................33 Schedule XIII-Other Security Investments Trust B 39 Trust D 40 Trust E 41 INDEX TO EXHIBITS..............................................42 PART I Item 1. Business Mortgage Securities III Trusts A, B, C, D, E and F (the "Trusts") were established under the laws of Delaware by a trust agreement. Prior to December 27, 1987, the trust agreement was among Mortgage Securities III Corporation, Weyerhaeuser Real Estate Company and Wilmington Trust Company. On December 27, 1987, Weyerhaeuser Real Estate Company dividended its beneficial interests in Mortgage Securities III Trusts A, B, C, D, E and F to Weyerhaeuser Company which in turn contributed its beneficial interests in the Trusts to Weyerhaeuser Financial Services, Inc., a wholly-owned subsidiary of Weyerhaeuser Company. The Trusts were organized to, and are engaged to raise funds through the issuance and sale of Collateralized Mortgage Obligation bonds collateralized by Government National Mortgage Association (GNMA) and Federal National Mortgage Association (FNMA) certificates. The Trusts A, B, C, D, E and F were established on April 8, 1986 and commenced business on June 30, 1986, September 30, 1986, December 30, 1986, February 27, 1987, December 22, 1987 and March 30, 1988, respectively. Each Trust issued a series of Collateralized Mortgage Obligations (the "Bonds"). Trust A, B, C, D and F's Bonds are collateralized by GNMA and FNMA certificates and Trust E's Bonds are collateralized by GNMA certificates.
Trust Date Issued Bonds Issued A June 30, 1986 $100,000,000 B September 30, 1986 $100,000,000 C December 30, 1986 $100,000,000 D February 27, 1987 $ 75,600,000 E December 22, 1987 $131,600,000 F March 30, 1988 $129,250,000
Item 2. Properties The Trusts A, B, C, D, E and F have no physical properties. Item 3. Legal Proceedings The Trusts A, B, C, D, E and F are not a party to any material pending proceedings. Item 4. Submission of Matters to a Vote of Security Holders Omitted pursuant to General Instruction J(2)(c) of Form 10-K. -1- PART II Item 5. Market for the Registrant's Beneficial Interest and Related Security Holder Matters As of March 20, 2000, the Trusts' beneficial interest is owned by Mortgage Securities III Corporation and is not traded on any stock exchange or on the over-the-counter market. Item 6. Selected Financial Data Omitted pursuant to General Instruction I(2)(a) of Form 10-K. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Business activity during 1999, 1998 and 1997 consisted of the collection of principal and interest by the trustee on the GNMA and FNMA certificates and the disbursement of the required payment of interest and principal to the bondholders. The following table outlines principal payments made by the Trusts during 1999 to the bondholders (in thousands).
Class 3 Class 4 Total Trust A $ - $ - $ - Trust B - 3,435 3,435 Trust C - - - Trust D 2,776 - 2,776 Trust E - 10,310 10,310 Trust F - - -
This rate of payment is sufficient to retire the Bonds prior to their stated maturity. The Trusts, like all other companies using computers and microprocessors, was faced with the task of addressing the Year 2000 problem. The business activities of the Trusts, which consists of the collection of principal and interest on the GNMA and FNMA certificates securing the bonds issued by the Trusts and disbursing the required payment of principal and interest to the bondholders, are conducted by third party suppliers to the Trusts. Certain accounting, administrative and clerical services are provided to the Trusts by an affiliate. Consequently, the -2- Trusts did not incur and any expenses for Year 2000 remediation. During the transition to the year 2000, the Trusts did not experience problems that affected operations. Item 8. Financial Statements and Supplementary Data The financial statements of the Trusts, together with the related Notes to Financial Statements and Report of Independent Public Accountants, for the three years ended December 26, 1999, are included herein. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures There was no change in accountants, nor any material disagreement with accountants on any matter of accounting principles, practices or financial statement disclosures, during the year ended December 26, 1999. PART III Item 10. Directors and Executive Officers of the Registrant Omitted pursuant to General Instruction I(2)(c) of Form 10-K. Item 11. Executive Compensation Omitted pursuant to General Instruction I(2)(c) of Form 10-K. Item 12. Security Ownership of Certain Beneficial Owners and Management Omitted pursuant to General Instruction I(2)(c) of Form 10-K. Item 13. Certain Relationships and Related Transactions Omitted pursuant to General Instruction I(2)(c) of Form 10-K. -3- PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (1) The following documents are filed as part of this report: (a) Report of Independent Public Accountants. (b) Financial Statements: Statements of Operations Trust A for the Three Years Ended December 26, 1999 Trust B for the Three Years Ended December 26, 1999 Trust C for the Three Years Ended December 26, 1999 Trust D for the Three Years Ended December 26, 1999 Trust E for the Three Years Ended December 26, 1999 Trust F for the Three Years Ended December 26, 1999 Balance Sheets Trust A as of December 26, 1999 and December 27, 1998 Trust B as of December 26, 1999 and December 27, 1998 Trust C as of December 26, 1999 and December 27, 1998 Trust D as of December 26, 1999 and December 27, 1998 Trust E as of December 26, 1999 and December 27, 1998 Trust F as of December 26, 1999 and December 27, 1998 Statements of Changes in Owner's Beneficial Interest Trust A for the Three Years Ended December 26, 1999 Trust B for the Three Years Ended December 26, 1999 Trust C for the Three Years Ended December 26, 1999 Trust D for the Three Years Ended December 26, 1999 Trust E for the Three Years Ended December 26, 1999 Trust F for the Three Years Ended December 26, 1999 Statements of Cash Flows Trust A for the Three Years Ended December 26, 1999 Trust B for the Three Years Ended December 26, 1999 Trust C for the Three Years Ended December 26, 1999 Trust D for the Three Years Ended December 26, 1999 Trust E for the Three Years Ended December 26, 1999 Trust F for the Three Years Ended December 26, 1999 Notes to Financial Statements for the Three Years Ended December 26, 1999. -4- (c) Financial Statement Schedules: Schedule XIII - Other Security Investments Trust B Schedule XIII - Other Security Investments Trust D Schedule XIII - Other Security Investments Trust E (d) Exhibits: Certificate of Incorporation of Mortgage Securities III Corporation (incorporated by reference to Exhibit 3(a) to Registration Statement on Form S-11 dated December 18, 1985). Bylaws of Mortgage Securities III Corporation (incorporated by reference to Exhibit 3(b) to Registration Statement on Form S-11 dated December 18, 1985). Form of Indenture dated June 1, 1986 between the Trust and Texas Commerce Bank National Association, as Trustee, relating to GNMA and FNMA Collateralized Mortgage Obligations (incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-11 dated December 18, 1985). Form of Supplemental Indenture dated as of June 1, 1986 (incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-11 dated July 11, 1986). (2) Exhibits are included in Item (1)(d) above. (3) Financial Statement Schedules required by Regulation S-X are included in Item (1)(c) above. -5- SIGNATURE 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 20th day of March 2000. MORTGAGE SECURITIES III TRUSTS A, B, C, D, E AND F Trusts acting through Wilmington Trust Company, not in its individual capacity, but solely as Owner Trustee By: ____________________________ Denise M. Geran Senior Financial Services Officer -6- Report of Independent Public Accountants To the Beneficial Owner of Mortgage Securities III Trusts A, B, C, D, E and F We have audited the accompanying balance sheets of Mortgage Securities III Trusts A, B, C, D, E and F (trusts established under the laws of the State of Delaware) as of December 26, 1999 and December 27, 1998, and the related statements of operations, changes in owner's beneficial interest and cash flows for each of the three years in the period ended December 26, 1999. These financial statements and the schedules referred to below are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and schedules 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, the financial statements referred to above present fairly, in all material respects, the financial position of Mortgage Securities III Trusts A, B, C, D, E and F, as of December 26, 1999 and December 27, 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 26, 1999 in conformity with generally accepted accounting principles. -7- Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the index to financial statements are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Seattle, Washington February 9, 2000 -8- Mortgage Securities III Trust A Statements of Operations For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 --------- --------- --------- Interest income $ - $ - $ 676 Interest expense - - 594 Other income - - 425 --------- --------- --------- - - - Net income $ - $ - $ 507 ========= ========= =========
-9- Mortgage Securities III Trust B Statements of Operations For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 -------- --------- --------- Interest income $ 855 $ 1,136 $ 1,573 Interest expense 727 1,118 1,481 --------- --------- --------- Net income $ 128 $ 18 $ 92 ========= ========= =========
-10- Mortgage Securities III Trust C Statements of Operations For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 -------- --------- --------- Interest income $ - $ 742 $ 1,312 Interest expense - 742 1,426 Gain on sale - 272 - --------- --------- --------- Net income (loss) $ - $ 272 $ (114) ========= ========= =========
-11- Mortgage Securities III Trust D Statements of Operations For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 -------- --------- --------- Interest income $ 695 $ 983 $ 1,145 Interest expense 698 1,058 1,198 --------- --------- --------- Net loss $ (3) $ (75) $ (53) ========= ========= =========
-12- Mortgage Securities III Trust E Statements of Operations For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 -------- ---------- -------- Interest income $ 2,279 $ 3,106 $ 3,994 Interest expense 2,685 3,597 4,716 Interest expense to affiliate - - 696 --------- ---------- --------- Net loss $ (406) $ (491) $ (1,418) ========= ========== =========
-13- Mortgage Securities III Trust F Statements of Operations For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 --------- --------- --------- Interest income $ - $ - $ 822 Interest expense - - 917 Interest expense to affiliate - - 180 Other income - - 450 --------- --------- --------- Net income $ - $ - $ 175 ========= ========= =========
-14- Mortgage Securities III Trust A Balance Sheets December 26, 1999 and December 27, 1998 (Dollar amounts in thousands)
1999 1998 TOTAL ASSETS - TRUST A $ - $ - ======== ======== TOTAL OWNER'S BENEFICIAL INTEREST - TRUST A $ - $ - ======== ========
-15- Mortgage Securities III Trust B Balance Sheets December 26, 1999 and December 27, 1998 (Dollar amounts in thousands)
1999 1998 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account 584 858 585 859 Interest receivable 59 82 Government National and Federal National Mortgage Association Certificates 8,186 11,298 -------- -------- TOTAL ASSETS - TRUST B $ 8,830 $12,239 ======== ======== Liabilities and Owner's Beneficial Interest Interest payable $ 199 $ 301 Collateralized Mortgage Obligation bonds, net 6,749 10,184 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 1,881 1,753 Total Owner's Beneficial Interest 1,882 1,754 TOTAL LIABILITIES AND OWNER'S BENEFICIAL INTEREST - TRUST B $ 8,830 $12,239 ======== ========
-16- Mortgage Securities III Trust C Balance Sheets December 26, 1999 and December 27, 1998 (Dollar amounts in thousands)
1999 1998 Assets Receivable from beneficial owner $ - $ 972 TOTAL ASSETS - TRUST C $ - $ 972 ======== ======== Owner's Beneficial Interest Owner's Beneficial Interest: Owner's beneficial interest $ - $ 1 Retained earnings - 971 Total Owner's Beneficial Interest - 972 TOTAL OWNER'S BENEFICIAL INTEREST - TRUST C $ - $ 972 ======== ========
-17- Mortgage Securities III Trust D Balance Sheets December 26, 1999 and December 27, 1998 (Dollar amounts in thousands)
1999 1998 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account 104 212 105 213 Receivable from beneficial owner 143 95 Interest receivable 40 70 Government National and Federal National Mortgage Association Certificates 7,126 9,855 TOTAL ASSETS - TRUST D $ 7,414 $10,233 ======== ======== Liabilities and Owner's Beneficial Interest Interest payable $ 101 $ 141 Collateralized Mortgage Obligation bonds, net 7,041 9,817 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 271 274 Total Owner's Beneficial Interest 272 275 TOTAL LIABILITIES AND OWNER'S BENEFICIAL INTEREST - TRUST D $7,414 $10,233 ======== ========
-18- Mortgage Securities III Trust E Balance Sheets December 26, 1999 and December 27, 1998 (Dollar amounts in thousands)
1999 1998 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account 1,516 3,328 1,517 3,329 Interest receivable 164 222 Government National Mortgage Association Certificates 24,899 33,430 TOTAL ASSETS - TRUST E $26,580 $36,981 Liabilities and Owner's Beneficial Interest Interest payable $ 456 $ 687 Collateralized Mortgage Obligation bonds, net 19,033 28,797 Owner's Beneficial Interest: Owner's beneficial interest 36,294 36,294 Accumulated deficit (29,203) (28,797) Total Owner's Beneficial Interest 7,091 7,497 TOTAL LIABILITIES AND OWNER'S BENEFICIAL INTEREST - $26,580 $36,981 TRUST E ========= ========
-19- Mortgage Securities III Trust F Balance Sheets December 26, 1999 and December 27, 1998 (Dollar amounts in thousands)
1999 1998 TOTAL ASSETS - TRUST F $ - $ - TOTAL OWNER'S BENEFICIAL INTEREST - TRUST F $ - $ -
-20- Mortgage Securities III Trust A Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
Owner's Retained Beneficial Earnings Total Interest Balance at December 29, 1996 $ 1 $ 757 $ 758 Net income - 507 507 Balance at December 28, 1997 1 1,264 1,265 Dividends paid - (1,264) (1,264) Return of owner's beneficial (1) - (1) interest Balance at December 27, 1998 - - - Balance at December 26, 1999 $ - $ - $ -
-21- Mortgage Securities III Trust B Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
Owner's Retained Beneficial Earnings Total Interest Balance at December 29, 1996 $ 1 $ 1,643 $1,644 Net income - 92 92 Balance at December 28, 1997 1 1,735 1,736 Net income - 18 18 Balance at December 27, 1998 1 1,753 1,754 Net income - 128 128 Balance at December 26, 1999 $ 1 $ 1,881 $1,882
-22- Mortgage Securities III Trust C Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
Owner's Retained Beneficial Earnings Total Interest Balance at December 29, 1996 $ 1 $ 813 $ 814 Net loss - (114) (114) Balance at December 28, 1997 1 699 700 Net income - 272 272 Balance at December 27, 1998 1 971 972 Dividends paid - (971) (971) Return of owner's beneficial (1) - (1) interest Balance at December 26, 1999 $ - $ - $ -
-23- Mortgage Securities III Trust D Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
Owner's Retained Beneficial Earnings Total Interest Balance at December 29, 1996 $ 1 $ 472 $ 473 Dividends paid - (70) (70) Net loss - (53) (53) Balance at December 28, 1997 1 349 350 Net loss - (75) (75) Balance at December 27, 1998 1 274 275 Net loss - (3) (3) Balance at December 26, 1999 $ 1 $ 271 $ 272
-24- Mortgage Securities III Trust E Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
Owner's Accumulated Beneficial Deficit Total Interest Balance at December 29, 1996 $ 1 $(26,888) $(26,887) Contribution 36,293 - 36,293 Net loss - (1,418) (1,418) Balance at December 28, 1997 36,294 (28,306) 7,988 Net loss - (491) (491) Balance at December 27, 1998 36,294 (28,797) 7,497 Net loss - (406) (406) Balance at December 26, 1999 $ 36,294 $(29,203) $ 7,091
-25- Mortgage Securities III Trust F Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
Owner's Accumulated Beneficial Deficit Total Interest Balance at December 29, 1996 $ 1 $ (6,716) $(6,715) Contribution 9,374 - 9,374 Net income - 175 175 Balance at December 28, 1997 9,375 (6,541) 2,834 Return of owner's beneficial (9,375) 6,541 (2,834) interest Balance at December 27, 1998 - - - Balance at December 26, 1999 $ - $ - $ -
-26- Mortgage Securities III Trust A Statements of Cash Flows For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 Cash flows from operations: Net income $ - $ - $ 507 Non-cash charges to income: Amortization - - 3 Write-offs - - 81 Changes in: Interest receivable - - 85 Receivable from beneficial owner - 1,263 (1,263) Interest payable - - (305) Cash flows from operations - 1,263 (892) Cash flows from investing activities: Collections on mortgage backed certificates - - 10,192 Cash flows from financing activities: Return of owner's beneficial - (1) - interest Dividends paid - (1,264) - Payments on collateralized mortgage obligation bonds. - - (10,068) Cash flows from financing activities - (1,265) (10,068) Net decrease in cash and equivalents - (2) (768) Cash and equivalents at beginning of year - 2 770 Cash and equivalents at end of year $ - $ - $ 2 Supplemental disclosure: Cash paid during the year for interest $ - $ - $ 850
-27- Mortgage Securities III Trust B Statements of Cash Flows For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 Cash flows from operations: Net income $ 128 $ 18 $ 92 Non-cash charges to income: Amortization - - 3 Write-offs - - 99 Accretion of interest - - 334 Changes in: Interest receivable 23 23 31 Interest payable (102) (1) (170) Cash flows from operations 49 40 389 Cash flows from investing activities: Collections on mortgage backed certificates 3,112 3,373 2,178 Cash flows from financing activities: Payments on collateralized mortgage obligation bonds (3,435) (3,254) (2,765) Net increase (decrease) in cash and equivalents (274) 159 (198) Cash and equivalents at beginning of year 859 700 898 Cash and equivalents at end of year $ 585 $ 859 $ 700 Supplemental disclosure: Cash paid during the year for interest $ 829 $ 1,119 $ 1,353
-28- Mortgage Securities III Trust C Statements of Cash Flows For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 Cash flows from operations: Net income (loss) $ - $ 272 $ (114) Non cash charges: Amortization - - 13 Write-offs - - 202 Gain on sale - (272) - Changes in: Interest receivable - 87 21 Receivable from beneficial owner 972 (972) - Interest payable - (274) (152) Cash flows from operations - (1,159) (30) Cash flows from investing activities Collections on mortgage backed certificates - 12,510 2,098 Cash flows from financing activities: Return of owner's beneficial (1) - - interest Dividends paid (971) - - Payments on collateralized mortgage obligation bonds - (12,241) (2,079) Cash flows from financing activities (972) (12,241) (2,079) Net decrease in cash and equivalents - (890) (11) Cash and equivalents at beginning of year - 890 901 Cash and equivalents at end of year $ - $ - $ 890 Supplemental disclosure: Cash paid during the year for interest $ - $ 1,016 $ 1,207
-29- Mortgage Securities III Trust D Statements of Cash Flows For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 Cash flows from operations: Net loss $ (3) $ (75) $ (53) Non-cash charges: Amortization - - 7 Write-offs - - 154 Changes in: Interest receivable 30 18 19 Receivable from beneficial owner (48) (67) 17 Interest payable (40) 51 (123) Cash flows from operations (61) (73) 21 Cash flows from investing activities: Collections on mortgage backed certificates 2,729 2,842 2,338 Cash flows from financing activities: Dividends paid - - (70) Payments on collateralized mortgage obligation bonds (2,776) (2,677) (2,408) Cash flows from financing activities (2,776) (2,677) (2,478) Net (decrease) increase in cash and equivalents (108) 92 (119) Cash and equivalents at beginning of year 213 121 240 Cash and equivalents at end of year $ 105 $ 213 $ 121 Supplemental disclosure: Cash paid during the year for interest $ 738 $ 1,007 $ 1,220
-30- Mortgage Securities III Trust E Statements of Cash Flows For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 Cash flows from operations: Net loss $ (406) $ (491) $(1,418) Non-cash charges: Amortization 546 544 758 Write-offs - - (17) Accretion of interest - - 925 Changes in: Interest receivable 58 59 55 Interest payable (231) (171) (128) Interest payable to Weyerhaeuser Mortgage Company - - (18,656) Cash flows from operations (33) (59) (18,481) Cash flows from investing activities: Collections on mortgage backed certificates 8,531 8,641 5,904 Cash flows from financing activities: Contribution - - 36,293 Payments on collateralized mortgage obligation bonds (10,310) (7,566) (6,583) Payments to Weyerhaeuser Mortgage - - (16,941) Company Cash flows from financing (10,310) (7,566) 12,769 activities: Net increase (decrease) in cash and equivalents 1,812 1,016 192 Cash and equivalents at beginning of year 3,329 2,313 2,121 Cash and equivalents at end of year $ 1,517 $ 3,329 $ 2,313 Supplemental disclosure: Cash paid during the year for interest $ 2,370 $ 3,224 $23,118
-31- Mortgage Securities III Trust F Statements of Cash Flows For the Three Years Ended December 26, 1999 (Dollar amounts in thousands)
1999 1998 1997 Cash flows from operations: Net income (loss) $ - $ - $ 175 Non-cash charges to income: Amortization - - 71 Write-offs - - 260 Accretion of interest - - 415 Changes in: Interest receivable - - 90 Interest payable - - (304) Receivable from beneficial - 2,832 (2,832) owner Interest payable to Weyeraheuser Mortgage Company - - (8,570) Cash flows from operations - 2,832 (10,695) Cash flows from investing activities: Sale of/collections on mortgage backed certificates - - 11,974 Cash flows from financing activities: Contribution - - 9,374 Return of owner's beneficial - (2,834) - interest Payments on Weyerhaeuser Mortgage - - (624) Company note Payments on collateralized mortgage obligation bonds - - (10,676) Cash flows from financing - (2,834) (1,926) activities Net decrease in cash and - (2) (647) equivalents Cash and equivalents at beginning of year - 2 649 Cash and equivalents at end of $ - $ - $ 2 year Supplemental disclosure: Cash paid during the year for interest $ - $ - $9,616
-32- Mortgage Securities III Trusts A, B, C, D, E and F Notes to Financial Statements For the Three Years Ended December 26, 1999 (Dollar amounts in thousands) Note 1. Description of business: Mortgage Securities III Trusts A, B, C, D, E and F (the "Trusts") were established under the laws of Delaware by a trust agreement. Prior to December 27, 1987, the trust agreement was among Mortgage Securities III Corporation, Weyerhaeuser Real Estate Company and Wilmington Trust Company. On December 27, 1987, Weyerhaeuser Real Estate Company dividended its beneficial interests in Mortgage Securities III Trusts A, B, C, D, E and F to Weyerhaeuser Company which in turn contributed its beneficial interests in the Trusts to Weyerhaeuser Financial Services, Inc., a wholly-owned subsidiary of Weyerhaeuser Company. The Trusts were organized to, and are engaged to raise funds through the issuance and sale of Collateralized Mortgage Obligation bonds collateralized by Government National Mortgage Association (GNMA) and Federal National Mortgage Association (FNMA) certificates. The Trusts A, B, C, D, E and F were established on April 8, 1986 and commenced business on June 30, 1986, September 30, 1986, December 30, 1986, February 27, 1987, December 22, 1987 and March 30, 1988, respectively. Each Trust issued a series of Collateralized Mortgage Obligations (the "Bonds"). Trust B and D's Bonds are collateralized by GNMA and FNMA certificates and Trust E's Bonds are collateralized by GNMA certificates. Trust A, C and F had no remaining Bonds or related collateralization at December 26, 1999. -33- Bonds originally issued were as follows:
Trust Date Issued Bonds Issued A June 30, 1986 $100,000 B September 30, 1986 $100,000 C December 30, 1986 $100,000 D February 27, 1987 $ 75,600 E December 22, 1987 $131,600 F March 30, 1988 $129,250
Activity during 1999, 1998 and 1997, primarily consisted of the collection of principal and interest on the GNMA and FNMA certificates and disbursement of the required payments of principal and interest to the bondholders. In 1998, the Bonds in Trust C were called and in 1997, the Bonds in Trusts A and F were called. All GNMA and FNMA certificates of these Trusts were sold and all Bond principal and interest were paid to the bondholders when the Bonds were called. Note 2. Accounting policies: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The bond discounts on Trusts B and D were written off in 1997 as management intends to prepay the bonds at the earliest allowable prepayment date and the amounts were no longer material. The bond discount for Trust E is amortized on a straight line basis, which approximates the effective interest method, over the remaining life of the instruments. Cash and equivalents include cash held in the collection accounts and invested in short term investments with maturities at date of purchase of less than three months. The cost and estimated market values of investments in debt securities are as follows:
Gross Gross Estimated Unrealized Unrealized Market Held to Maturity: Cost Gains Value Losses Mortgage-backed Securities Trust B 8,186 111 - 8,297 Trust D 7,126 38 - 7,164 Trust E 24,899 - (290) 24,609
The Trusts are legally precluded from selling the investments in debt securities, except in the case of a call of the Collateralized Mortgage Obligation bonds as discussed in Note 3. Note 3.Collateralized Mortgage Obligation Bonds: Collateralized Mortgage Obligation Bonds at December 26, 1999 and December 27, 1998 consist of the following:
1999 1998 Trust B: Class 4 - 9.00%, stated maturity October 1, 2016 $ 6,749 $ 10,184 Trust D: Class 3 - 8.60%, stated maturity March 1, 2017 $ 7,041 $ 9,817 Trust E: Class 4 - 9.00%, stated maturity January 1, 2018 $ 20,264 $ 30,574 Unamortized discount (1,231) (1,777) $ 19,033 $ 28,797
-34- The stated maturity is the date such class will be fully paid, assuming that scheduled interest and principal payments (with no prepayments) on the certificates are timely received. All collections on the certificates pledged as security for the Bonds will be remitted directly to a collection account (the "Collection Account") established with the Trustee and together with the reinvestment earnings thereon, will be available for application to the payment of principal and interest on the bonds on the following payment date. Each Trust's Bonds are subject to a special redemption, in whole or in part, if, as a result of substantial payments of principal on the underlying mortgage loans and/or low reinvestment yields, the Trusts determine that the amount of cash anticipated to be on deposit in the Collection Accounts on the next payment date might be insufficient to make required payments on the Bonds. Any such redemption would not exceed the principal amount of Bonds that would otherwise be required to be paid on the next payment date. As a result, a special redemption of Bonds will not result in a payment to bondholders more than two months earlier than the payment date on which such payment would otherwise have been received. The Bonds are not otherwise subject to call at the option of the Trusts except that (a) Trust B and E's Class 4 Bonds may be redeemed in whole, but not in part, at the Trusts' option on any payment date on or after October 1, 2001 and January 1, 2003, respectively, (or on any earlier payment date if the current principal amount of Trust B and E's Class 4 Bonds are less than $6,100 and $13,160, respectively) and (b) Trust D's Class 3 Bonds may be redeemed in whole, but not in part, at the Trust's option on any payment date on or after March 1, 2002, or on any earlier payment date if the aggregate outstanding principal amount of the Class 3 Bonds is less than 10 percent of the aggregate initial principal amount of $75,600. Any such redemptions at the option of the Trusts shall be at a price equal to 100 percent of the unpaid principal amount of such Bonds plus accrued interest. The maturities of the Collateralized Mortgage Obligation Bonds are based on the prepayment speed (liquidations) on the GNMA and FNMA certificates collateralizing the Bonds and the reinvestment of scheduled distributions at the assumed reinvestment rates. Maturities for the succeeding five years with estimated liquidations based on current market interest rates are as follows:
Trust Trust Trust B D E 2000 1,322 1,024 3,833 2001 1,179 896 3,429 2002 1,051 759 3,075 2003 954 661 2,770 2004 870 578 2,522
Note 4. Assets pledged: Trust B and D's Bonds are collateralized by the Trusts' GNMA and FNMA certificates and the Collection Accounts. Trust E's Bonds are collateralized by Trust E's GNMA certificates and the Collection Account (see Note 3). Collections on the certificates are used to meet the quarterly Bond interest payments and to reduce the outstanding principal balance on the Bonds. As of December 26, 1999, certificates are guaranteed by the Government National Mortgage Association and the Federal National Mortgage Association as follows:
Government National Federal National Mortgage Association Mortgage Association Trust B 7,274 912 Trust D 6,225 901 Trust E 24,899 N/A
-35- Note 5. Related parties: Trusts A, B, C and D purchased from an affiliate, Weyerhaeuser Mortgage Company, GNMA and FNMA certificates which were used to collateralize the Bonds. The purchases were at par value, plus Trust A and D's purchase premiums and less Trust B and C's purchase discounts. The purchases were financed with market-rate short-term debt from this affiliate until proceeds from the bond issuance were obtained. Trust E purchased from an affiliate, Weyerhaeuser Mortgage Company, GNMA certificates which were used to collateralize the Bonds. Trust F purchased from an affiliate, Weyerhaeuser Mortgage Company, GNMA and FNMA certificates which were used to collateralize the Bonds. The purchases were at par value, less the purchase discounts. The purchases were financed with the proceeds received from the Bond issuances and notes due to Weyerhaeuser Mortgage Company. The notes accrued interest at Bank of America's prime rate and compounded interest annually. Both the principal and interest related to the Weyerhaeuser Mortgage Company payables were paid off by Weyerhaeuser Financial Services, Inc. (Beneficial Owner) in March 1997, in anticipation of the sale of Weyerhaeuser Mortgage Company to an unrelated third party by Weyerhaeuser Financial Services, Inc. and Weyerhaeuser Company. In August 1997, Weyerhaeuser Financial Services, Inc. contributed capital to Trusts E and F, increasing beneficial owner's interest. The Beneficial Owner advanced funds to Trust C during the third quarter of 1998. The funds were repaid during the fourth quarter of 1998. No interest was charged as the advances were treated as a current payable. Certain ongoing administrative and accounting functions are provided by the Beneficial Owner at no cost to each Trust. -36- Note 6. Results of operations: All results of operations will be transferred to the Beneficial Owner of the Trusts. Mortgage Securities III Corporation will be responsible for all tax liabilities incurred relating to the Trusts' operations. -37- Mortgage Securities III Trust B Schedule XIII - Other Security Investments December 26, 1999 (Dollar amounts in thousands)
Number of Certificates Market Type of Security Held Cost Value Government National Mortgage Association Certificates 31 $ 7,274 $ 7,376 Federal National Mortgage Association Certificates 21 912 921 52 $ 8,186 $ 8,297 1. Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost. 2. Market value is an estimate based on the most current information available.
-38- Mortgage Securities III Trust D Schedule XIII - Other Security Investments December 26, 1999 (Dollar amounts in thousands)
Number of Certificates Market Type of Security Held Cost Value Government National Mortgage Association Certificates 23 $ 6,225 $ 6,243 Federal National Mortgage Association Certificates 10 901 921 33 $ 7,126 $ 7,164 1. Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost. 2. Market value is an estimate based on the most current information available.
-39- Mortgage Securities III Trust E Schedule XIII - Other Security Investments December 26, 1999 (Dollar amounts in thousands)
Number of Certificates Market Type of Security Held Cost Value Government National Mortgage Association Certificates 67 $24,899 $24,609 1. Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost. 2. Market value is an estimate based on the most current information available.
-40- INDEX TO EXHIBITS Exhibit Number Description of Exhibits Page 3(a) Certificate of Incorporation of the Mortgage Securities III Corporation (incorporated by reference to Exhibit 3(a) to Registration Statement on Form S-11 dated December 18, 1985). * 3(b) Bylaws of Mortgage Securities III Corporation (incorporated by reference to Exhibit 3(b) to Registration Statement on Form S-11 dated December 18, 1985). * 4(a) Form of Indenture dated June 1, 1986 between the Trust and Texas Commerce Bank National Association, as trustee, relating to GNMA and FNMA Collateralized Mortgage Obligations (incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-11 dated December 18, 1985). * 4(a) Form of Supplemental Indenture dated as of June 1, 1986 (incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-11 dated July 11, 1986). * *Incorporated by reference. -41- EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
CT 1,000 12-MOS DEC-26-1999 DEC-26-1999 42,835 0 0 0 9,256 42,835 3,840 0 0 0 0 0 (270) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----