-----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, TNRqeSzqdSIbIwRpB1DfGx7M+A8UmekVFtwTC+K047Vl016N5KOvDrhIc5SRFqMr sJoRXzVhlu6rydblllU4jw== 0000785818-96-000003.txt : 19960613 0000785818-96-000003.hdr.sgml : 19960613 ACCESSION NUMBER: 0000785818-96-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTGAGE SECURITIES III TRUSTS A CENTRAL INDEX KEY: 0000785818 STANDARD INDUSTRIAL CLASSIFICATION: 6189 IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-02253 FILM NUMBER: 96542544 BUSINESS ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE CO TR55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8185922562 MAIL ADDRESS: STREET 1: C/O WEYERHAEUSER MORTGAGE CO TR55 STREET 2: 6320 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 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: IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-02253-01 FILM NUMBER: 96542545 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: 6189 IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-10942 FILM NUMBER: 96542546 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: 6189 IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-02253-02 FILM NUMBER: 96542547 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: IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-02253-03 FILM NUMBER: 96542548 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTGAGE SECURITIES III TRUSTS F CENTRAL INDEX KEY: 0000830431 STANDARD INDUSTRIAL CLASSIFICATION: 6189 IRS NUMBER: 911314537 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-02253-04 FILM NUMBER: 96542549 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 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 Commission File December 31, 1995 Number 33-2253 MORTGAGE SECURITIES III TRUSTS A, B, C, D, E AND F Delaware Trusts (IRS Employer Identification No. 91-1314537) 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 J(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 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. Disagreements on Accounting and Financial Disclosures 3 PART III Item 10. Directors and Executive Officers of the Registrant 4 Item 11. Executive Compensation 4 Item 12. Security Ownership of Certain Beneficial Owners and Management 4 Item 13. Certain Relationships and Related Transactions 4 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 5 SIGNATURE 8 INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES 9 INDEX TO EXHIBITS 55
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. 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 has 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 15, 1996, 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 J(2)(a) of Form 10-K. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Business activity during 1995, 1994 and 1993 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 1995 to the Class 2, 3 and 4 bondholders. Accrued interest was added to the principal of Class 4 Bonds for Collateralized Mortgage Obligation Bonds Trusts B, E and F.
Class 2 Class 3 Class 4 Total Trust A $ - $ - $ 2,259,429 $ 2,259,429 Trust B - 4,068,172 (1,157,252) 2,910,920 Trust C - - 2,485,629 2,485,629 Trust D 1,780,991 - N/A 1,780,991 Trust E - 9,082,461 (3,203,217) 5,879,244 Trust F - 3,316,927 (709,667) 2,607,260 This rate of payment is sufficient to retire the Bonds prior to their stated maturity.
-2- In December 1986, the Financial Accounting Standards Board issued Statement No. 91, which established a new method of accounting for nonrefundable fees and costs associated with purchasing a group of loans and the method of recognizing interest income and expense. This statement is applicable to all transactions entered into for fiscal years beginning after December 15, 1987. Retroactive application with restatement of the financial statements for all years presented was optional. Upon evaluation of this accounting statement and the current method of accounting, the Company elected to adopt Statement No. 91 prospectively for Trusts E and F. Under the new standard all discounts and hedging costs will be recognized over the contractual life of the loan as a yield adjustment. The Company elected not to adopt Statement No. 91 retroactively for Trusts A, B, C and D. Since no transactions have been entered into after the effective date of this statement, the Company will continue to use its current method, which approximates the effective interest method, for Trusts A, B, C and D. 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 31, 1995, are included herein. Item 9. Disagreements 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 31, 1995. -3- 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. -4- 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. Statements of Operations for the Three Years Ended December 31, 1995 Trust A. Statements of Operations for the Three Years Ended December 31, 1995 Trust B. Statements of Operations for the Three Years Ended December 31, 1995 Trust C. Statements of Operations for the Three Years Ended December 31, 1995 Trust D. Statements of Operations for the Three Years Ended December 31, 1995 Trust E. Statements of Operations for the Three Years Ended December 31, 1995 Trust F. Balance Sheets as of December 31, 1995 and December 25, 1994 Trust A. Balance Sheets as of December 31, 1995 and December 25, 1994 Trust B. Balance Sheets as of December 31, 1995 and December 25, 1994 Trust C. Balance Sheets as of December 31, 1995 and December 25, 1994 Trust D. Balance Sheets as of December 31, 1995 and December 25, 1994 Trust E. Balance Sheets as of December 31, 1995 and December 25, 1994 Trust F. -5- Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust A. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust B. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust C. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust D. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust E. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust F. Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust A. Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust B. Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust C. Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust D. Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust E. Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust F. Notes to Financial Statements for the Three Years Ended December 31, 1995 -6- (2) Financial Statement Schedules: Schedule IV-Indebtedness to Related Parties - Not Current Trust E Schedule IV-Indebtedness to Related Parties - Not Current Trust F Schedule XIII - Other Security Investments Trust A Schedule XIII - Other Security Investments Trust B Schedule XIII - Other Security Investments Trust C Schedule XIII - Other Security Investments Trust D Schedule XIII - Other Security Investments Trust E Schedule XIII - Other Security Investments Trust F (3) Exhibits: Certificate of Incorporation of Mortgage Securities III Corporation (incorporated by reference to 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). (b) Exhibits are included in Item (a)(3) above. (c) Financial Statement Schedules required by Regulation S-X are included in Item (a)(2) above. -7- 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 19th day of January 1996. 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:/s/ John M. Beeson, Jr. Name: John M. Beeson, Jr. Title: Vice President -8-
Mortgage Securities III Trusts A, B, C, D, E and F INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The following financial statements are referenced in Item 8: Page Report of Independent Public Accountants 12 Statements of Operations for the Three Years Ended December 31, 1995 Trust A 14 Statements of Operations for the Three Years Ended December 31, 1995 Trust B 15 Statements of Operations for the Three Years Ended December 31, 1995 Trust C 16 Statements of Operations for the Three Years Ended December 31, 1995 Trust D 17 Statements of Operations for the Three Years Ended December 31, 1995 Trust E 18 Statements of Operations for the Three Years Ended December 31, 1995 Trust F 19 Balance Sheets as of December 31, 1995 and December 25, 1994 Trust A 20 Balance Sheets as of December 31, 1995 and December 25, 1994 Trust B 21 Balance Sheets as of December 31, 1995 and December 25, 1994 Trust C 22 Balance Sheets as of December 31, 1995 and December 25, 1994 Trust D 23 Balance Sheets as of December 31, 1995 and December 25, 1994 Trust E 24 Balance Sheets as of December 31, 1995 and December 25, 1994 Trust F 25 -9- Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust A 26 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust B 27 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust C 28 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust D 29 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust E 30 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 31, 1995 Trust F 31 Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust A 32 Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust B 33 Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust C 34 Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust D 35 Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust E 36 Statements of Cash Flows for the Three Years Ended December 31, 1995 Trust F 37 Notes to Financial Statements for the Three Years Ended December 31, 1995 38 -10- Page The following financial statement schedules are included herein: Schedule IV-Indebtedness to Related Parties - Not Current Trust E 47 Schedule IV-Indebtedness to Related Parties - Not Current Trust F 48 Schedule XIII-Other Security Investments Trust A 49 Schedule XIII-Other Security Investments Trust B 50 Schedule XIII-Other Security Investments Trust C 51 Schedule XIII-Other Security Investments Trust D 52 Schedule XIII-Other Security Investments Trust E 53 Schedule XIII-Other Security Investments Trust F 54
-11- 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 31, 1995 and December 25, 1994, 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 31, 1995. 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 31, 1995 and December 25, 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. -12- 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 Los Angeles, California January 19, 1996 -13-
Mortgage Securities III Trust A Statements of Operations For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Interest income $1,203 $1,498 $2,503 Interest expense 1,144 1,504 2,613 Net income(loss) $ 59 $ (6) $ (110) The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust B Statements of Operations For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Interest income $1,927 $2,329 $3,799 Interest expense 1,870 2,346 3,993 Net income(loss) $ 57 $ (17) $ (194) The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust C Statements of Operations For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Interest income $1,725 $2,076 $3,553 Interest expense 1,761 2,225 3,973 Net loss $ (36) $ (149) $ (420) The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust D Statements of Operations For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Interest income $1,554 $1,780 $2,843 Interest expense 1,538 1,813 2,998 Net income(loss) $ 16 $ (33) $ (155) The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust E Statements of Operations For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Interest income $ 4,854 $ 5,487 $ 7,971 Interest expense 5,387 6,582 10,480 Interest expense to affiliate (Note 5) 2,753 2,058 1,620 Net loss $(3,286) $(3,153) $(4,129) The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust F Statements of Operations For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Interest income $1,398 $ 1,776 $ 4,118 Interest expense 1,400 2,011 6,097 Interest expense to affiliate (Note 5) 1,338 1,000 788 Net loss $(1,340) $(1,235) $(2,767) The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust A Balance Sheets December 31, 1995 and December 25, 1994 (Dollar amounts in thousands) 1995 1994 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 844 1,020 ------- ------- 845 1,021 Receivable from beneficial owner 1,746 1,746 Interest receivable 98 114 Government National and Federal National Mortgage Association Certificates, net of unamortized premium of $41 and $48 (Notes 2, 4, 5 and 7) 11,772 13,838 ------- ------- $ 14,461 $ 16,719 ======= ======= Liabilities and Owner's Beneficial Interest Interest payable $ 355 $ 424 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 11,667 13,915 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 2,438 2,379 ------- ------- Total Owner's Beneficial Interest 2,439 2,380 ------- ------- $ 14,461 $ 16,719 ======= ======= The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust B Balance Sheets December 31, 1995 and December 25, 1994 (Dollar amounts in thousands) 1995 1994 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 1,003 1,092 ------- ------- 1,004 1,093 Receivable from beneficial owner 370 370 Interest receivable 161 182 Government National and Federal National Mortgage Association Certificates, net of unamortized discount of $233 and $267 (Notes 2, 4, 5 and 7) 19,751 22,524 ------- ------- $ 21,286 $ 24,169 ======= ======= Liabilities and Owner's Beneficial Interest Interest payable $ 570 $ 656 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 18,763 21,617 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 1,952 1,895 ------- ------- Total Owner's Beneficial Interest 1,953 1,896 ------- ------- $ 21,286 $ 24,169 ======= ======= The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust C Balance Sheets December 31, 1995 and December 25, 1994 (Dollar amounts in thousands) 1995 1994 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 1,067 1,014 ------- ------- 1,068 1,015 Receivable from (payable to) beneficial owner 236 236 Interest receivable 138 154 Government National and Federal National Mortgage Association Certificates, net of unamortized discount of $194 and $222 (Notes 2, 4, 5 and 7) 17,721 20,285 ------- ------- $ 19,163 $ 21,690 ======= ======= Liabilities and Owner's Beneficial Interest Interest payable $ 535 $ 610 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 17,529 19,945 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 1,098 1,134 ------- ------- Total Owner's Beneficial Interest 1,099 1,135 ------- ------- $ 19,163 $ 21,690 ======= ======= The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust D Balance Sheets December 31, 1995 and December 25, 1994 (Dollar amounts in thousands) 1995 1994 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 223 278 ------- ------- 224 279 Receivable from beneficial owner 1,653 1,573 Interest receivable 124 135 Government National and Federal National Mortgage Association Certificates, net of unamortized premium of $68 and $75 (Notes 2, 4, 5 and 7) 17,097 18,888 ------- ------- $ 19,098 $ 20,875 ======= ======= Liabilities and Owner's Beneficial Interest Interest payable $ 241 $ 266 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 16,725 18,493 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 2,131 2,115 ------- ------- Total Owner's Beneficial Interest 2,132 2,116 ------- ------- $ 19,098 $ 20,875 ======= ======= The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust E Balance Sheets December 31, 1995 and December 25, 1994 (Dollar amounts in thousands) 1995 1994 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 2,716 2,711 ------- ------- 2,717 2,712 Receivable from beneficial owner 1,662 1,662 Interest receivable 389 427 Government National Mortgage Association Certificates, net of unamortized discount of $488 and $613 (Notes 2, 4, 5 and 7) 54,032 59,945 Deferred hedging costs (Note 2) 460 578 ------- ------- $ 59,260 $ 65,324 ======= ======= Liabilities and Owner's Beneficial Interest Interest payable $ 1,143 $ 1,275 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 46,855 52,253 Payable to Weyerhaeuser Mortgage Company 32,705 29,953 (Note 5) Owner's Beneficial Interest: Owner's beneficial interest 1 1 Accumulated deficit (21,444) (18,158) ------- ------- Total Owner's Beneficial Interest (21,443) (18,157) ------- ------- $ 59,260 $ 65,324 ======= ======= The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust F Balance Sheets December 31, 1995 and December 25, 1994 (Dollar amounts in thousands) 1995 1994 Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 684 1,236 ------- ------- 685 1,237 Receivable from beneficial owner 1,937 1,937 Interest receivable 111 128 Government National and Federal National Mortgage Certificates, net of unamortized discount of $54 and $68 (Notes 2, 4, 5 and 7) 14,604 16,561 Deferred hedging costs (Note 2) 178 222 ------- ------- $ 17,515 $ 20,085 ======= ======= Liabilities and Owner's Beneficial Interest Interest payable $ 389 $ 464 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 12,676 15,169 Payable to Weyerhaeuser Mortgage Company (Note 5) 15,899 14,561 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Accumulated deficit (11,450) (10,110) ------- ------- Total Owner's Beneficial Interest (11,449) (10,109) ------- ------- $ 17,515 $ 20,085 ======= ======= The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust A Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) Owner's Beneficial Retained Interest Earnings Total Balance at December 27, 1992 $1 $2,495 $2,496 Net loss - (110) (110) Balance at December 26, 1993 1 2,385 2,386 Net loss - (6) (6) Balance at December 25, 1994 1 2,379 2,380 Net income - 59 59 Balance at December 31, 1995 $1 $2,438 $2,439 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust B Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) Owner's Beneficial Retained Interest Earnings Total Balance at December 27, 1992 $1 $2,106 $2,107 Net loss - (194) (194) Balance at December 26, 1993 1 1,912 1,913 Net loss - (17) (17) Balance at December 25, 1994 1 1,895 1,896 Net income - 57 57 Balance at December 31, 1995 $1 $1,952 $1,953 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust C Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) Owner's Beneficial Retained Interest Earnings Total Balance at December 27, 1992 $1 $1,703 $1,704 Net loss - (420) (420) Balance at December 26, 1993 1 1,283 1,284 Net loss - (149) (149) Balance at December 25, 1994 1 1,134 1,135 Net loss - (36) (36) Balance at December 31, 1995 $1 $1,098 $1,099 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust D Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) Owner's Beneficial Retained Interest Earnings Total Balance at December 27, 1992 $1 $2,303 $2,304 Net loss - (155) (155) Balance at December 26, 1993 1 2,148 2,149 Net loss - (33) (33) Balance at December 25, 1994 1 2,115 2,116 Net income - 16 16 Balance at December 31, 1995 $1 $2,131 $2,132 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust E Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) Owner's Beneficial Accumulated Interest Deficit Total Balance at December 27, 1992 $1 $(10,876) $(10,875) Net loss - (4,129) (4,129) Balance at December 26, 1993 1 (15,005) (15,004) Net loss - (3,153) (3,153) Balance at December 25, 1994 1 (18,158) (18,157) Net loss - (3,286) (3,286) Balance at December 31, 1995 $1 $(21,444) $(21,443) The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust F Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) Owner's Beneficial Accumulated Interest Deficit Total Balance at December 27, 1992 $1 $ (6,108) $ (6,107) Net loss - (2,767) (2,767) Balance at December 26, 1993 1 (8,875) (8,874) Net loss - (1,235) (1,235) Balance at December 25, 1994 1 (10,110) (10,109) Net loss - (1,340) (1,340) Balance at December 31, 1995 $1 $(11,450) $(11,449) The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust A Statements of Cash Flows For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Cash flows from operations: Net income(loss) $ 59 $ (6) $ (110) Adjustments to reconcile net loss to net cash provided by operations: Amortization, net 19 58 135 Accretion of interest - 470 1,775 Changes in: Interest receivable 16 59 122 Interest payable (69) (256) (513) Net cash provided by operations 25 325 1,409 Cash flows from investing: Mortgage-backed certificates-- Collections on principal 2,059 6,653 14,447 Cash flows from financing: Collateralized Mortgage Obligation bonds -- Payments on principal (2,260) (9,391) (19,288) Net increase (decrease) in cash and equivalents (176) (2,413) (3,432) Cash and equivalents at beginning of year 1,021 3,434 6,866 Cash and equivalents at end of year $ 845 $ 1,021 $ 3,434 Supplemental disclosure: Cash paid during the year for interest $ 1,201 $ 1,255 $ 1,267 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust B Statements of Cash Flows For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Cash flows from operations: Net income(loss) $ 57 $ (17) $ (194) Adjustments to reconcile net loss to net cash provided by operations: Amortization, net 23 62 189 Accretion of interest 1,157 1,059 968 Changes in: Interest receivable 21 71 151 Interest payable (86) (330) (629) Net cash provided by operations 1,172 845 485 Cash flows from investing: Mortgage-backed certificates-- Collections on principal 2,807 7,644 18,513 Cash flows from financing: Collateralized Mortgage Obligation bonds -- Payments on principal (4,068) (13,132) (22,804) Net increase (decrease) in cash and equivalents (89) (4,643) (3,806) Cash and equivalents at beginning of year 1,093 5,736 9,542 Cash and equivalents at end of year $ 1,004 $ 1,093 $ 5,736 Supplemental disclosure: Cash paid during the year for interest $ 741 $ 1,466 $ 3,249 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust C Statements of Cash Flows For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Cash flows from operations: Net loss $ (36) $ (149) $ (420) Adjustments to reconcile net loss to net cash provided by operations: Amortization, net 41 121 347 Accretion of interest - 1,332 1,631 Changes in: Interest receivable 16 69 144 Interest payable (75) (312) (607) Net cash provided by operations (54) 1,061 1,095 Cash flows from investing: Mortgage-backed certificates -- Collections on principal 2,592 7,505 19,070 Cash flows from financing: Collateralized Mortgage Obligation bonds -- Payments on principal (2,485) (12,714) (22,363) Net increase (decrease) in cash and equivalents 53 (4,148) (2,198) Cash and equivalents at beginning of year 1,015 5,163 7,361 Cash and equivalents at end of year $ 1,068 $ 1,015 $ 5,163 Supplemental disclosure: Cash paid during the year for interest $ 1,767 $ 1,004 $ 2,397 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust D Statements of Cash Flows For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Cash flows from operations: Net income(loss) $ 16 $ (33) $ (155) Adjustments to reconcile net loss to net cash used in operations: Amortization, net 20 60 177 Changes in: Interest receivable 12 41 122 Receivable from beneficial owner (81) (79) (125) Interest payable (25) (99) (235) Net cash used in operations (58) (110) (216) Cash flows from investing: Mortgage-backed certificates -- Collections on principal 1,784 5,586 16,418 Cash flows from financing: Collateralized Mortgage Obligation bonds -- Payments on principal (1,781) (6,900) (16,479) Net increase (decrease) in cash and equivalents (55) (1,424) (277) Cash and equivalents at beginning of year 279 1,703 1,980 Cash and equivalents at end of year $ 224 $ 279 $ 1,703 Supplemental disclosure: Cash paid during the year for interest $ 1,551 $ 1,874 $ 3,122 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust E Statements of Cash Flows For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Cash flows from operations: Net loss $ (3,286) $ (3,153) $ (4,129) Adjustments to reconcile net loss to net cash provided by operations: Amortization, net 475 891 2,090 Accretion of interest 3,203 2,930 2,681 Changes in: Interest receivable 38 113 180 Receivable from beneficial owner - - (188) Interest payable (133) (447) (518) Interest payable to an affiliate (Note 5) 2,752 2,058 1,620 Net cash provided by operations 3,049 2,392 1,736 Cash flows from investing: Mortgage-backed certificates -- Collections on principal 6,038 13,047 25,029 Cash flows from financing: Collateralized Mortgage Obligation bonds -- Payments on principal (9,082) (22,819) (25,705) Net (decrease) increase in cash and equivalents 5 (7,380) 1,060 Cash and equivalents at beginning of year 2,712 10,092 9,032 Cash and equivalents at end of year $ 2,717 $ 2,712 $ 10,092 Supplemental disclosure: Cash paid during the year for interest $ 1,716 $ 3,055 $ 5,543 The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust F Statements of Cash Flows For the Three Years Ended December 31, 1995 (Dollar amounts in thousands) 1995 1994 1993 Cash flows from operations: Net loss $ (1,340) $ (1,235) $ (2,767) Adjustments to reconcile net loss to net cash provided by/(used in) operations: Amortization, net 144 323 1,921 Accretion of interest 710 649 594 Changes in: Interest receivable 17 97 248 Interest payable (75) (455) (1,023) Interest payable to an affiliate (Note 5) 1,338 1,000 788 Net cash provided by/(used in) operations 794 379 (239) Cash flows from investing: Mortgage-backed certificates-- Collections on principal 1,971 9,769 31,720 Cash flows from financing: Collateralized Mortgage Obligation bonds -- Payments on principal (3,317) (17,602) (35,526) Net increase (decrease) in cash and equivalents (552) (7,454) (4,045) Cash and equivalents at beginning of year 1,237 8,691 12,736 Cash and equivalents at end of year $ 685 $ 1,237 $ 8,691 Supplemental disclosure: Cash paid during the year for interest $ 606 $ 1,455 $ 4,274 The accompanying notes are an integral part of these statements.
-37- Mortgage Securities III Trusts A, B, C, D, E and F Notes to Financial Statements For the Three Years Ended December 31, 1995 (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 has 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. -38-
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 1995, 1994 and 1993, consisted of the collection of principal and interest on the GNMA and FNMA certificates and disbursement of the required payment of principal and interest to the bondholders. Note 2. Accounting policies: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect 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. Trust A, B, C and D's GNMA and FNMA certificates are carried at par value adjusted for any unamortized premiums or discounts. These premiums and discounts are amortized using a method approximating the effective interest method over the estimated life of the underlying mortgage loans. The Bonds are carried at par value less unamortized discounts. These discounts are amortized using a method approx- imately the effective interest method over the estimated life of the Bonds. Due to prepayments on the underlying mortgage loans, revisions are made each quarter to the remaining period to maturity of the certificates and the Bonds. The amortization described above reflects these revisions. Trust E's GNMA certificates and Trust F's GNMA and FNMA certificates are carried at par value less unamortized discounts. These discounts are amortized using an interest method which computes a constant effective yield and includes estimates of future prepayments on the certificates in the calculation of the constant effective yield. Hedging costs related to holding GNMA and FNMA certificates have been deferred and are also being amortized using the interest method and includes estimates of future prepayments on the certificates in the calculation of the constant effective yield. The Bonds are carried at par value less unamortized -39- discounts. These discounts are amortized using the interest method and include estimates of future prepayments on the Bonds in the calculation of the constant effective yield. Semi-annually differences between anticipated future prepayments and actual prepayments are calculated. The effective yield is then recalculated to reflect actual prepayments to date and anticipated future prepayments. The unamortized discounts and accumulated hedging amortization are adjusted (with a corresponding charge or credit to interest income/expense) to reflect the amount that would have existed had the new effective yield been applied since the purchase of certificates and/or issuance of Bonds. In December 1986, the Financial Accounting Standards Board issued Statement No. 91, which established a new method of accounting for nonrefundable fees and costs associated with purchasing a group of loans and the method of recognizing interest income and expense. This statement must be applied prospectively to all transactions entered into for fiscal years beginning after December 15, 1987. Retroactive application with restatement of the financial statements for all years presented was optional. Upon evaluation of this accounting statement and the current method of accounting, the Company elected to adopt Statement No. 91 prospectively for Trusts E and F. Under the new standard, all discounts and hedging costs are recognized over the contractual life of the loan as a yield adjustment. The Company elected not to adopt Statement No. 91 retroactively for Trusts A, B, C and D. Since no transactions have been entered into after the effective date of this statement, the Company will continue to use its current method, which approximates the effective interest method, for Trusts A, B, C and D. -40- Cash and equivalents include cash held in the collection accounts and invested in short term investments with original maturities of less than three months. Note 3. Collateralized Mortgage Obligation Bonds: Bonds at December 31, 1995 and December 25, 1994 consist of the following:
1995 1994 Collateralized Mortgage Obligation Bonds, Trust A: Class 4 - 9.20%, stated maturity July 1, 2016 $ 11,723 $ 13,983 Unamortized discount (56) (68) ------- ------- $ 11,667 $ 13,915 ======= ======= Collateralized Mortgage Obligation Bonds, Trust B: Class 3 - 9.00%, stated maturity April 1, 2010 $ 5,538 $ 9,606 Class 4 - 9.00%, stated maturity October 1, 2016 13,590 12,432 Unamortized discount (365) (421) ------- ------- $ 18,763 $ 21,617 ======= ======= Collateralized Mortgage Obligation Bonds, Trust C: Class 4 - 9.00%, stated maturity January 1, 2017 $ 17,994 $ 20,479 Unamortized discount (465) (534) ------- ------- $ 17,529 $ 19,945 ======= ======= -41- 1995 1994 Collateralized Mortgage Obligation Bonds, Trust D: Class 2 - 8.55%, stated maturity December 1, 2014 $ 2,237 $ 4,018 Class 3 - 8.60%, stated maturity March 1, 2017 14,600 14,600 (112) (125) ------- ------- $ 16,725 $ 18,493 ======= ======= Collateralized Mortgage Obligation Bonds, Trust E: Class 3 - 9.00%, stated maturity January 1, 2006 $ 13,186 $ 22,269 Class 4 - 9.00%, stated maturity January 1, 2018 37,616 34,412 Unamortized discount (3,947) (4,428) ------- ------- $ 46,855 $ 52,253 ======= ======= Collateralized Mortgage Obligation Bonds, Trust F: Class 3 - 9.00%, stated maturity January 1, 2014 $ 4,736 $ 8,053 Class 4 - 9.00%, stated maturity April 1, 2018 8,334 7,624 Unamortized discount (394) (508) ------- ------- $ 12,676 $ 15,169 ======= =======
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. -42- 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 the Class 1, Class 2 and Class 3 Bonds may, in the case of each such class, be redeemed in whole, but not in part, at the Trusts' option on any payment date if the aggregate outstanding principal amount of the Bonds of the class to be redeemed is less than 10 percent of its aggregate initial principal amount. Trust A, B, C, E and F's Class 4 Bonds may be redeemed in whole, but not in part, at the Trusts' option on any payment date on or after July 1, 2001, October 1, 2001, January 1, 2002, January 1, 2003 and April 1, 2003, respectively, if only the Class 4 Bonds are then outstanding (or on any earlier payment date if only the Class 4 Bonds are then outstanding and the current principal amount of Trust A, B, C, E and F's Class 4 Bonds are less than $10,560, $6,100, $10,500, $13,160 and $12,925, respectively). Trust D's Class 1 and Class 2 Bonds may be redeemed in whole, but not in part, at the Trust's option on any payment date on or after March 1, 1997 and the 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. -43- 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 such 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 which estimates liquidations based on current market interest rates are as follows:
Trust A Trust B Trust C Trust D Trust E Trust F 1996 $ 2,220 $ 3,062 $ 2,758 $ 2,325 $ 7,580 $ 2,899 1997 1,861 2,677 2,381 2,030 6,700 2,435 1998 1,564 2,345 2,056 1,770 5,934 2,055 1999 1,318 2,059 1,775 1,544 5,267 1,745 2000 1,116 1,813 1,534 1,345 4,689 1,494
Note 4. Assets pledged: Trust A, B, C, D and F's Bonds are collateralized by the Trusts' GNMA and FNMA certificates and the Collection Accounts (see Note 3). Trust E Bonds are collateralized by Trust E's GNMA certificates. 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 31, 1995, 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 A $ 7,794 $ 3,937 Trust B 17,004 2,980 Trust C 12,596 5,319 Trust D 14,215 2,814 Trust E 54,520 N/A Trust F 3,261 11,397
-44- 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 proeeds received from the bond issuances and notes due to Weyerhaeuser Mortgage Company. The notes bear interest at Bank of America's prime rate and interest shall be compounded annually. The principal balances and all accrued interest shall be due on each note on January 1, 2018 ("Maturity"). The principal and accrued interest on the notes will be paid by the Trusts with the proceeds of a capital contribution from Weyerhaeuser Financial Services, Inc., to the extent that residual payments from the GNMA and FNMA certificates are insufficient to retire the debt and related interest. The receivable from beneficial owner, Mortgage Securities III Corporation, represents cash received from GNMA and FNMA certificates in excess of bond principal and interest payments required on Class 1 bonds which has been advanced to the beneficial owner. This amount is non- interest bearing and has no fixed repayment terms. Certain ongoing administrative and accounting functions are provided by the beneficial owner at no cost to each Trust. -45- 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. Note 7. Investment securities: All investment securities held by the Trusts are classified as "held to maturity". The amortized cost and estimated market values of investments in debt securities are as follows:
Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Held to Maturity: Mortgage-backed Securities Trust A $ 11,772 $ 717 $ - $ 12,489 Trust B 19,751 1,245 - 20,996 Trust C 17,721 1,089 - 18,810 Trust D 17,097 755 - 17,852 Trust E 54,032 2,631 - 56,663 Trust F 14,604 808 - 15,412 Per the terms of the prospectus, 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.
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Mortgage Securities III Trust E Schedule IV - Indebtedness to Related Parties - Not Current December 31, 1995 (Dollar amounts in thousands) Name of December 25, Indebtedness to December 31, Related Party 1994 Additions Deductions 1995 Weyerhaeuser Mortgage Company $29,953 $2,752 $ - $32,705 On December 22, 1987, the Trust purchased from an affiliate, Weyerhaeuser Mortgage Company, GNMA certificates which were used to collateralize the Bonds. The purchase was financed with the proceeds received from the bond issuance and an interest bearing note due to Weyerhaeuser Mortgage Company.
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Mortgage Securities III Trust F Schedule IV - Indebtedness to Related Parties - Not Current December 31, 1995 (Dollar amounts in thousands) Name of December 25, Indebtedness to December 31, Related Party 1994 Additions Deductions 1995 Weyerhaeuser Mortgage Company $14,561 $1,338 $ - $15,899 On March 30, 1988, the Trust purchased from an affiliate, Weyerhaeuser Mortgage Company, GNMA and FNMA certificates which were used to collateralize the Bonds. The purchase was financed with the proceeds received from the bond issuance and an interest bearing note due to Weyerhaeuser Mortgage Company.
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Mortgage Securities III Trust A Schedule XIII - Other Security Investments December 31, 1995 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 Government National Mortgage Association Certificates 28 $ 7,794 $ 8,302 Federal National Mortgage Association Certificates 14 3,937 4,187 -- ------ ------ 42 11,731 12,489 Plus: Unamortized premium - 41 - -- ------- ------- 42 $11,772 $12,489 == ======= ======= 1 Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost plus unamortized premium on the balance sheet. 2 Market value is an estimate based on the most current information available.
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Mortgage Securities III Trust B Schedule XIII - Other Security Investments December 31, 1995 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 Government National Mortgage Association Certificates 33 $17,004 $17,851 Federal National Mortgage Association Certificates 26 2,980 3,145 -- ------- ------- 59 19,984 20,996 Less: Unamortized discount - (233) - -- ------- ------- 59 $19,751 $20,996 == ======= ======= 1 Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost less unamortized discount on the balance sheet. 2 Market value is an estimate based on the most current information available.
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Mortgage Securities III Trust C Schedule XIII - Other Security Investments December 31, 1995 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 Government National Mortgage Association Certificates 26 $ 12,596 $13,208 Federal National Mortgage Association Certificates 29 5,319 5,602 -- ------- ------- 55 17,915 18,810 Less: Unamortized discount - (194) - -- -------- ------- 55 $ 17,721 $18,810 == ======== ======= 1 Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost less unamortized discount on the balance sheet. 2 Market value is an estimate based on the most current information available.
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Mortgage Securities III Trust D Schedule XIII - Other Security Investments December 31, 1995 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 Government National Mortgage Association Certificates 23 $14,215 $14,888 Federal National Mortgage Association Certificates 16 2,814 2,964 -- ------- ------- 39 17,029 17,852 Plus: Unamortized premium - 68 - -- ------- ------- 39 $17,097 $17,852 == ======= ======= 1 Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost plus unamortized premium on the balance sheet. 2 Market value is an estimate based on the most current information available.
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Mortgage Securities III Trust E Schedule XIII - Other Security Investments December 31, 1995 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 Government National Mortgage Association Certificates 76 $54,520 $56,663 Less: Unamortized discount - (488) - -- ------- ------- 76 $54,032 $56,663 == ======= ======= 1 Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost less unamortized discount on the balance sheet. 2 Market value is an estimate based on the most current information available.
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Mortgage Securities III Trust F Schedule XIII - Other Security Investments December 31, 1995 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 Government National Mortgage Association Certificates 8 $ 3,261 $ 3,462 Federal National Mortgage Association Certificates 46 11,397 11,950 -- ------ ------- 54 14,658 15,412 Less: Unamortized discount - (54) - -- -------- -------- 54 $ 14,604 $ 15,412 == ======== ======== 1 Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost less unamortized discount on the balance sheet. 2 Market value is an estimate based on the most current information available.
-54- 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. -55- EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 YEAR DEC-31-1995 DEC-31-1995 6543 0 9625 0 0 0 0 0 150783 0 124215 0 0 0 (25269) 150783 0 12661 0 0 0 0 17191 (4530) 0 0 0 0 0 (4530) 0 0
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