-----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, V/AlJIbqazgTfNCVQTcI8l+SjPho8Mrm8guxSphK5I8MW+TIRA7SyLZ65LHMRC3n iA0y/Al1lxX3psBjr5dofQ== 0000785818-97-000003.txt : 19970327 0000785818-97-000003.hdr.sgml : 19970327 ACCESSION NUMBER: 0000785818-97-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961229 FILED AS OF DATE: 19970326 SROS: NONE 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: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-02253 FILM NUMBER: 97563886 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: ASSET-BACKED SECURITIES [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: 033-02253-01 FILM NUMBER: 97563887 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: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-10942 FILM NUMBER: 97563888 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: 1934 Act SEC FILE NUMBER: 033-02253-02 FILM NUMBER: 97563889 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: 1934 Act SEC FILE NUMBER: 033-02253-03 FILM NUMBER: 97563890 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: ASSET-BACKED SECURITIES [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: 97563891 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 29, 1996 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 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.
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 14, 1997, 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 1996, 1995 and 1994 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 1996 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 $ - $ - $ 1,655,373 $ 1,655,373 Trust B - 4,523,745 (1,264,973) 3,258,772 Trust C - - 3,673,354 3,673,354 Trust D 1,935,447 - N/A 1,935,447 Trust E - 10,505,651 (3,501,382) 7,004,269 Trust F - 3,584,406 (775,724) 2,808,682 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 29, 1996, 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 29, 1996. -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 29, 1996 Trust A. Statements of Operations for the Three Years Ended December 29, 1996 Trust B. Statements of Operations for the Three Years Ended December 29, 1996 Trust C. Statements of Operations for the Three Years Ended December 29, 1996 Trust D. Statements of Operations for the Three Years Ended December 29, 1996 Trust E. Statements of Operations for the Three Years Ended December 29, 1996 Trust F. Balance Sheets as of December 29, 1996 and December 31, 1995 Trust A. Balance Sheets as of December 29, 1996 and December 31, 1995 Trust B. Balance Sheets as of December 29, 1996 and December 31, 1995 Trust C. Balance Sheets as of December 29, 1996 and December 31, 1995 Trust D. Balance Sheets as of December 29, 1996 and December 31, 1995 Trust E. Balance Sheets as of December 29, 1996 and December 31, 1995 Trust F. -5- Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust A. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust B. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust C. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust D. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust E. Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust F. Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust A. Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust B. Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust C. Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust D. Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust E. Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust F. Notes to Financial Statements for the Three Years Ended December 29, 1996 -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 22nd day of January 1997. 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/ Denise M. Geran Name: Denise M. Geran Title: Financial Services Officer -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 29, 1996 Trust A 14 Statements of Operations for the Three Years Ended December 29, 1996 Trust B 15 Statements of Operations for the Three Years Ended December 29, 1996 Trust C 16 Statements of Operations for the Three Years Ended December 29, 1996 Trust D 17 Statements of Operations for the Three Years Ended December 29, 1996 Trust E 18 Statements of Operations for the Three Years Ended December 29, 1996 Trust F 19 Balance Sheets as of December 29, 1996 and December 31, 1995 Trust A 20 Balance Sheets as of December 29, 1996 and December 31, 1995 Trust B 21 Balance Sheets as of December 29, 1996 and December 31, 1995 Trust C 22 Balance Sheets as of December 29, 1996 and December 31, 1995 Trust D 23 Balance Sheets as of December 29, 1996 and December 31, 1995 Trust E 24 Balance Sheets as of December 29, 1996 and December 31, 1995 Trust F 25 -9- Page Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust A 26 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust B 27 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust C 28 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust D 29 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust E 30 Statements of Changes in Owner's Beneficial Interest for the Three Years Ended December 29, 1996 Trust F 31 Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust A 32 Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust B 33 Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust C 34 Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust D 35 Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust E 36 Statements of Cash Flows for the Three Years Ended December 29, 1996 Trust F 37 Notes to Financial Statements for the Three Years Ended December 29, 1996 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 29, 1996 and December 31, 1995, 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 29, 1996. 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 29, 1996 and December 31, 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 29, 1996 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 22, 1997 -13-
Mortgage Securities III Trust A Statements of Operations For the Three Years Ended December 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 ------ ------ ------ Interest income $1,035 $1,203 $1,498 Interest expense 970 1,144 1,504 ------ ------ ------ Net income(loss) $ 65 $ 59 $ (6) ====== ====== ====== 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 ------ ------ ------ Interest income $1,634 $1,927 $2,329 Interest expense 1,573 1,870 2,346 ------ ------ ------ Net income(loss) $ 61 $ 57 $ (17) ====== ====== ====== 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 ------ ------ ------ Interest income $1,441 $1,725 $2,076 Interest expense 1,490 1,761 2,225 ------ ------ ------ Net loss $ (49) $ (36) $ (149) ====== ====== ====== 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 ------ ------ ------ Interest income $1,363 $1,554 $1,780 Interest expense 1,357 1,538 1,813 ------ ------ ------ Net income(loss) $ 6 $ 16 $ (33) ====== ====== ====== 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 ------- ------- ------- Interest income $ 4,305 $ 4,854 $ 5,487 Interest expense 5,195 5,387 6,582 Interest expense to affiliate (Note 5) 2,892 2,753 2,058 ------- ------- ------- Net loss $(3,782) $(3,286) $(3,153) ======= ======= ======= 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 ------- ------- ------ Interest income $ 1,211 $ 1,398 $1,776 Interest expense 1,246 1,400 2,011 Interest expense to affiliate (Note 5) 1,068 1,338 1,000 ------- ------- ------- Net loss $(1,103) $(1,340) $(1,235) ======= ======= ======= The accompanying notes are an integral part of these statements.
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Mortgage Securities III Trust A Balance Sheets December 29, 1996 and December 31, 1995 (Dollar amounts in thousands) 1996 1995 -------- -------- Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 769 844 -------- -------- 770 845 Receivable from beneficial owner - 1,746 Interest receivable 85 98 Government National and Federal National Mortgage Association Certificates, net of unamortized premium of $35 and $41 (Notes 2, 4, 5 and 7) 10,227 11,772 -------- -------- $ 11,082 $ 14,461 ======== ======== Liabilities and Owner's Beneficial Interest Interest payable $ 305 $ 355 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 10,019 11,667 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 757 2,438 -------- -------- Total Owner's Beneficial Interest 758 2,439 -------- -------- $ 11,082 $ 14,461 ======== ======== The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust B Balance Sheets December 29, 1996 and December 31, 1995 (Dollar amounts in thousands) 1996 1995 -------- -------- Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 897 1,003 -------- -------- 898 1,004 Receivable from beneficial owner - 370 Interest receivable 136 161 Government National and Federal National Mortgage Association Certificates, net of unamortized discount of $197 and $233 (Notes 2, 4, 5 and 7) 16,652 19,751 -------- -------- $ 17,686 $ 21,286 ======== ======== Liabilities and Owner's Beneficial Interest Interest payable $ 472 $ 570 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 15,570 18,763 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 1,643 1,952 -------- -------- Total Owner's Beneficial Interest 1,644 1,953 -------- -------- $ 17,686 $ 21,286 ======== ======== The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust C Balance Sheets December 29, 1996 and December 31, 1995 (Dollar amounts in thousands) 1996 1995 -------- -------- Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 900 1,067 -------- -------- 901 1,068 Receivable from (payable to) beneficial owner - 236 Interest receivable 108 138 Government National and Federal National Mortgage Association Certificates, net of unamortized discount of $154 and $194 (Notes 2, 4, 5 and 7) 14,182 17,721 -------- -------- $ 15,191 $ 19,163 ======== ======== Liabilities and Owner's Beneficial Interest Interest payable $ 426 $ 535 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 13,951 17,529 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 813 1,098 -------- -------- Total Owner's Beneficial Interest 814 1,099 -------- -------- $ 15,191 $ 19,163 ======== ======== The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust D Balance Sheets December 29, 1996 and December 31, 1995 (Dollar amounts in thousands) 1996 1995 -------- -------- Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 239 223 -------- -------- 240 224 Receivable from beneficial owner 45 1,653 Interest receivable 107 124 Government National and Federal National Mortgage Association Certificates, net of unamortized premium of $60 and $68 (Notes 2, 4, 5 and 7) 15,095 17,097 -------- -------- $ 15,487 $ 19,098 ======== ======== Liabilities and Owner's Beneficial Interest Interest payable $ 213 $ 241 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 14,801 16,725 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Retained earnings 472 2,131 -------- -------- Total Owner's Beneficial Interest 473 2,132 -------- -------- $ 15,487 $ 19,098 ======== ======== The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust E Balance Sheets December 29, 1996 and December 31, 1995 (Dollar amounts in thousands) 1996 1995 -------- -------- Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 2,120 2,716 --------- --------- 2,121 2,717 Receivable from beneficial owner - 1,662 Interest receivable 336 389 Government National and Federal National Mortgage Association Certificates, net of unamortized discount of $339 and $488 (Notes 2, 4, 5 and 7) 47,636 54,032 Deferred hedging costs (Note 2) 320 460 --------- --------- $ 50,413 $ 59,260 ========= ========= Liabilities and Owner's Beneficial Interest Interest payable $ 986 $ 1,143 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 40,717 46,855 Payable to an affiliate (Note 5) 35,597 32,705 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Accumulated deficit (26,888) (21,444) -------- -------- Total Owner's Beneficial Interest (26,887) (21,443) -------- -------- $ 50,413 $ 59,260 ======== ======== The accompanying notes are an integral part of these balance sheets.
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Mortgage Securities III Trust F Balance Sheets December 29, 1996 and December 31, 1995 (Dollar amounts in thousands) 1996 1995 -------- -------- Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account (Notes 3 and 4) 648 684 -------- -------- 649 685 Receivable from beneficial owner - 1,937 Interest receivable 90 111 Government National and Federal National Mortgage Association Certificates, net of unamortized discount of $25 and $54 (Notes 2, 4, 5 and 7) 11,949 14,604 Deferred hedging costs (Note 2) 85 178 -------- -------- $ 12,773 $ 17,515 ======== ======== Liabilities and Owner's Beneficial Interest Interest payable $ 304 $ 389 Collateralized Mortgage Obligation bonds, net (Notes 1, 2, 3, 4 and 5) 9,990 12,676 Payable to an affiliate (Note 5) 9,194 15,899 Owner's Beneficial Interest: Owner's beneficial interest 1 1 Accumulated deficit (6,716) (11,450) -------- -------- Total Owner's Beneficial Interest (6,715) (11,449) -------- -------- $ 12,773 $ 17,515 ======== ======== 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 29, 1996 (Dollar amounts in thousands) Owner's Beneficial Retained Interest Earnings Total ---------- -------- ----- 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 Dividends paid - (1,746) (1,746) Net income - 65 65 -- ------ ------ Balance at December 29, 1996 $1 $ 757 $ 758 == ====== ====== 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 29, 1996 (Dollar amounts in thousands) Owner's Beneficial Retained Interest Earnings Total ---------- -------- ----- 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 Dividends paid - (370) (370) Net income - 61 61 -- ------ ------ Balance at December 29, 1996 $1 $1,643 $1,644 == ====== ====== 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 29, 1996 (Dollar amounts in thousands) Owner's Beneficial Retained Interest Earnings Total ---------- -------- ----- 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 Dividends paid - (236) (236) Net loss - (49) (49) -- ------ ------ Balance at December 29, 1996 $1 $ 813 $ 814 == ====== ====== 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 29, 1996 (Dollar amounts in thousands) Owner's Beneficial Retained Interest Earnings Total ---------- -------- ----- 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 Dividends paid - (1,665) (1,665) Net income - 6 6 -- ------ ------ Balance at December 29, 1996 $1 $ 472 $ 473 == ====== ====== 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 29, 1996 (Dollar amounts in thousands) Owner's Beneficial Accumulated Interest Deficit Total ---------- ----------- ----- 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) Dividends paid - (1,662) (1,662) Net loss - (3,782) (3,782) -- -------- -------- Balance at December 29, 1996 $1 $(26,888) $(26,887) == ======== ======== 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 29, 1996 (Dollar amounts in thousands) Owner's Beneficial Accumulated Interest Deficit Total ---------- ----------- ----- 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) Contribution - 5,837 5,837 Net loss - (1,103) (1,103) -- -------- -------- Balance at December 29, 1996 $1 $ (6,716) $ (6,715) == ======== ======== 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 -------- -------- -------- Cash flows from operations: Net income(loss) $ 65 $ 59 $ (6) Adjustments to reconcile net loss to net cash provided by operations: Amortization, net 13 19 58 Accretion of interest - - 470 Changes in: Interest receivable 13 16 59 Receivable from beneficial owner 1,746 - - Interest payable (50) (69) (256) -------- -------- -------- Net cash provided by operations 1,787 25 325 -------- -------- -------- Cash flows from investing: Mortgage-backed certificates-- Collections on principal 1,539 2,059 6,653 -------- -------- -------- Cash flows from financing: Dividends paid (1,746) - - Collateralized Mortgage Obligation bonds -- Payments on principal (1,655) (2,260) (9,391) -------- -------- -------- Cash flows from financing (3,401) (2,260) (9,391) -------- -------- -------- Net increase (decrease) in cash and equivalents (75) (176) (2,413) Cash and equivalents at beginning of year 845 1,021 3,434 -------- -------- -------- Cash and equivalents at end of year $ 770 $ 845 $ 1,021 ======== ======== ======== Supplemental disclosure: Cash paid during the year for interest $ 1,012 $ 1,201 $ 1,255 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 ------- ------- -------- Cash flows from operations: Net income(loss) $ 61 $ 57 $ (17) Adjustments to reconcile net loss to net cash provided by operations: Amortization, net 29 23 62 Accretion of interest 1,266 1,157 1,059 Changes in: Interest receivable 25 21 71 Receivable from beneficial owner 370 - - Interest payable (98) (86) (330) ------- ------- ------- Net cash provided by operations 1,653 1,172 845 ------- ------- ------- Cash flows from investing: Mortgage-backed certificates-- Collections on principal 3,135 2,807 7,644 ------- ------- ------- Cash flows from financing: Dividends paid (370) - - Collateralized Mortgage Obligation bonds -- Payments on principal (4,524) (4,068) (13,132) ------- ------- ------- Cash flows from financing (4,894) (4,068) (13,132) ------- ------- ------- Net increase (decrease) in cash and equivalents (106 ) (89) (4,643) Cash and equivalents at beginning of year 1,004 1,093 5,736 ------- ------- -------- Cash and equivalents at end of year $ 898 $ 1,004 $ 1,093 ======= ======= ======== Supplemental disclosure: Cash paid during the year for interest $ 340 $ 741 $ 1,466 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 -------- -------- -------- Cash flows from operations: Net loss $ (49) $ (36) $ (149) Adjustments to reconcile net loss to net cash provided by operations: Amortization, net 56 41 121 Accretion of interest - - 1,332 Changes in: Interest receivable 30 16 69 Receivable from beneficial owner 236 - - Interest payable (110) (75) (312) ------- ------- ------- Net cash provided by operations 163 (54) 1,061 ------- ------- ------- Cash flows from investing: Mortgage-backed certificates -- Collections on principal 3,579 2,592 7,505 ------- ------- ------- Cash flows from financing: Dividends paid (236) - - Collateralized Mortgage Obligation bonds -- Payments on principal (3,673) (2,485) (12,714) ------- ------- ------- Cash flows from financing (3,909) (2,485) (12,714) ------- ------- ------- Net increase (decrease) in cash and equivalents (167) 53 (4,148) Cash and equivalents at beginning of year 1,068 1,015 5,163 ------- ------- ------- Cash and equivalents at end of year $ 901 $ 1,068 $ 1,015 ======= ======= ======= Supplemental disclosure: Cash paid during the year for interest $ 1,504 $ 1,767 $ 1,004 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 ------- ------- ------- Cash flows from operations: Net income(loss) $ 6 $ 16 $ (33) Adjustments to reconcile net loss to net cash used in operations: Amortization, net 21 20 60 Changes in: Interest receivable 15 12 41 Receivable from beneficial owner 1,608 (81) (79) Interest payable (28) (25) (99) ------- ------- ------- Net cash used in operations 1,622 (58) (110) ------- ------- ------- Cash flows from investing: Mortgage-backed certificates -- Collections on principal 1,994 1,784 5,586 ------- ------- ------- Cash flows from financing: Dividends paid (1,665) - - Collateralized Mortgage Obligation bonds -- Payments on principal (1,935) (1,781) (6,900) ------- ------- ------- Cash flows from financing (3,600) (1,781) (6,900) ------- ------- ------- Net increase (decrease) in cash and equivalents 16 (55) (1,424) Cash and equivalents at beginning of year 224 279 1,703 ------- ------- ------- Cash and equivalents at end of year $ 240 $ 224 $ 279 ======= ======= ======= Supplemental disclosure: Cash paid during the year for interest $ 1,372 $ 1,551 $ 1,874 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 -------- -------- -------- Cash flows from operations: Net loss $ (3,782) $ (3,286) $ (3,153) Adjustments to reconcile net loss to net cash provided by operations: Amortization, net 859 474 891 Accretion of interest 3,501 3,203 2,930 Changes in: Interest receivable 53 38 113 Receivable from beneficial owner 1,662 - - Interest payable (158) (133) (447) Interest payable to an affiliate (Note 5) 2,892 2,753 2,058 ------- ------- ------- Net cash provided by operations 5,027 3,049 2,392 ------- ------- ------- Cash flows from investing: Mortgage-backed certificates -- Collections on principal 6,544 6,038 13,047 ------- ------- ------- Cash flows from financing: Dividends paid (1,662) - - Collateralized Mortgage Obligation bonds -- Payments on principal (10,505) (9,082) (22,819) ------- ------- ------- Cash flows from financing (12,167) (9,082) (22,819) ------- ------- ------- Net (decrease) increase in cash and equivalents (596) 5 (7,380) Cash and equivalents at beginning of year 2,717 2,712 10,092 ------- ------- ------- Cash and equivalents at end of year $ 2,121 $ 2,717 $ 2,712 ======= ======= ======= Supplemental disclosure: Cash paid during the year for interest $ 845 $ 1,716 $ 3,055 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 29, 1996 (Dollar amounts in thousands) 1996 1995 1994 -------- -------- -------- Cash flows from operations: Net loss $ (1,103) $ (1,340) $ (1,235) Adjustments to reconcile net loss to net cash provided by/(used in) operations: Amortization, net 187 144 323 Accretion of interest 776 710 649 Changes in: Interest receivable 21 17 97 Interest payable (85) (75) (455) Receivable from beneficial owner 1,937 - - Interest payable to an affiliate (Note 5) 1,068 1,338 1,000 ------- ------- ------- Net cash provided by operations 2,801 794 379 ------- ------- ------- Cash flows from investing: Mortgage-backed certificates-- Collections on principal 2,684 1,971 9,769 ------- ------- ------- Cash flows from financing: Contribution 5,837 - - Payment on Weyerhaeuser Mortgage Company note (7,773) - - Collateralized Mortgage Obligation bonds -- Payments on principal (3,585) (3,317) (17,602) ------- ------- ------- Cash flows from financing (5,521) (3,317) (17,602) ------- ------- ------- Net increase (decrease) in cash and equivalents (36) (552) (7,454) Cash and equivalents at beginning of year 685 1,237 8,691 ------- ------- ------- Cash and equivalents at end of year $ 649 $ 685 $ 1,237 ======= ======= ======= Supplemental disclosure: Cash paid during the year for interest $ 339 $ 606 $ 1,455 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 29, 1996 (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 1996, 1995 and 1994, 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 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. 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 approximating 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 29, 1996 and December 31, 1995 consist of the following:
1996 1995 -------- -------- Collateralized Mortgage Obligation Bonds, Trust A: Class 4 - 9.20%, stated maturity July 1, 2016 $ 10,068 $ 11,723 Unamortized discount (49) (56) -------- -------- $ 10,019 $ 11,667 ======== ======== Collateralized Mortgage Obligation Bonds, Trust B: Class 3 - 9.00%, stated maturity April 1, 2010 $ 1,014 $ 5,538 Class 4 - 9.00%, stated maturity October 1, 2016 14,855 13,590 Unamortized discount (299) (365) -------- -------- $ 15,570 $ 18,763 ======== ======== Collateralized Mortgage Obligation Bonds, Trust C: Class 4 - 9.00%, stated maturity January 1, 2017 $ 14,320 $ 17,994 Unamortized discount (369) (465) -------- -------- $ 13,951 $ 17,529 ======== ======== -41- 1996 1995 -------- -------- Collateralized Mortgage Obligation Bonds, Trust D: Class 2 - 8.55%, stated maturity December 1, 2014 $ 302 $ 2,237 Class 3 - 8.60%, stated maturity March 1, 2017 14,600 14,600 (101) (112) -------- -------- $ 14,801 $ 16,725 ======== ======== Collateralized Mortgage Obligation Bonds, Trust E: Class 3 - 9.00%, stated maturity January 1, 2006 $ 2,681 $ 13,186 Class 4 - 9.00%, stated maturity January 1, 2018 41,117 37,616 Unamortized discount (3,081) (3,947) -------- -------- $ 40,717 $ 46,855 ======== ======== Collateralized Mortgage Obligation Bonds, Trust F: Class 3 - 9.00%, stated maturity January 1, 2014 $ 1,152 $ 4,736 Class 4 - 9.00%, stated maturity April 1, 2018 9,109 8,334 Unamortized discount (271) (394) -------- -------- $ 9,990 $ 12,676 ======== ========
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 ------- ------- ------- ------- ------- ------- 1997 $ 2,307 $ 3,404 $ 2,778 $ 2,684 $ 8,208 $ 2,748 1998 1,863 2,816 2,298 2,211 7,001 2,248 1999 1,508 2,338 1,902 1,819 5,987 1,852 2000 1,225 1,948 1,576 1,496 5,137 1,540 2001 992 1,626 1,306 1,225 4,427 1,295
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 29, 1996, 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 $ 6,819 $3,373 Trust B 14,403 2,446 Trust C 10,055 4,281 Trust D 12,843 2,192 Trust E 47,975 N/A Trust F 2,462 9,512
-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 proceeds 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 $ 10,227 $ 651 $ - $ 10,878 Trust B 16,652 940 - 17,592 Trust C 14,182 780 - 14,962 Trust D 15,095 536 - 15,631 Trust E 47,636 1,416 - 49,052 Trust F 11,949 597 - 12,546 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 29, 1996 (Dollar amounts in thousands) Name of December 31, Indebtedness to December 29, Related Party 1995 Additions Deductions 1996 -------------- ------------ --------- ---------- ------------ Weyerhaeuser Mortgage Company $32,705 $2,892 $ - $35,597 ======= ====== ======= ======= 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 29, 1996 (Dollar amounts in thousands) Name of December 31, Indebtedness to December 29, Related Party 1995 Additions Deductions 1996 ------------- ------------ --------- ---------- ------------ Weyerhaeuser Mortgage Company $15,899 $1,068 $(7,773) $9,194 ======= ====== ======== ====== 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. -48-
Mortgage Securities III Trust A Schedule XIII - Other Security Investments December 29, 1996 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 ---------------------- ------------ ---- ----- Government National Mortgage Association Certificates 27 $ 6,819 $ 7,241 Federal National Mortgage Association Certificates 14 3,373 3,637 -- ------- ------- 41 10,192 10,878 Plus: Unamortized premium - 35 - -- ------- ------- 41 $10,227 $10,878 == ======= ======= 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.
-49-
Mortgage Securities III Trust B Schedule XIII - Other Security Investments December 29, 1996 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 ---------------------- ------------ ---- ----- Government National Mortgage Association Certificates 33 $14,403 $14,997 Federal National Mortgage Association Certificates 26 2,446 2,595 -- ------- ------- 59 16,849 17,592 Less: Unamortized discount - (197) - -- ------- ------- 59 $16,652 $17,592 == ======= ======= 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.
-50-
Mortgage Securities III Trust C Schedule XIII - Other Security Investments December 29, 1996 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 ---------------------- ------------ ---- ----- Government National Mortgage Association Certificates 25 $ 10,055 $10,441 Federal National Mortgage Association Certificates 26 4,281 4,521 -- ------- ------- 51 14,336 14,962 Less: Unamortized discount - (154) - -- ------- ------- 51 $ 14,182 $14,962 == ======= ======= 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 29, 1996 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 ---------------------- ------------ ---- ----- Government National Mortgage Association Certificates 23 $12,843 $13,316 Federal National Mortgage Association Certificates 15 2,192 2,315 -- ------- ------- 38 15,035 15,631 Plus: Unamortized premium - 60 - -- ------- ------- 38 $15,095 $15,631 == ======= ======= 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.
Mortgage Securities III Trust E Schedule XIII - Other Security Investments December 29, 1996 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 ---------------------- ------------ ---- ----- Government National Mortgage Association Certificates 76 $47,975 $49,052 Less: Unamortized discount - (339) - -- ------- ------- 76 $47,636 $49,052 == ======= ======= 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 29, 1996 (Dollar amounts in thousands) Number of Certificates Market Type of Security Held Cost1 Value2 ---------------------- ------------ ---- ----- Government National Mortgage Association Certificates 7 $ 2,462 $ 2,612 Federal National Mortgage Association Certificates 44 9,512 9,934 -- ------- ------- 51 11,974 12,546 Less: Unamortized discount - (25) - -- ------- ------- 51 $ 11,949 $ 12,546 == ======= ======= 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 1000 YEAR DEC-29-1996 DEC-29-1996 5573 0 907 0 0 0 0 0 122632 0 105047 0 0 0 (29913) 122632 0 10989 0 0 0 0 15791 (4802) 0 0 0 0 0 (4802) 0 0
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