Item 1. Business
Mortgage Securities III Trusts A, B, C, D, E and F (the "Trusts") were established under the laws of Delaware by a trust agreement. Prior to December 27, 1987, the trust agreement was among Mortgage Securities III Corporation, Weyerhaeuser Real Estate Company and Wilmington Trust Company. On December 27, 1987, Weyerhaeuser Real Estate Company dividended its beneficial interests in Mortgage Securities III Trusts A, B, C, D, E and F to Weyerhaeuser Company which in turn contributed its beneficial interests in the Trusts to Weyerhaeuser Financial Services, Inc., a wholly- owned subsidiary of Weyerhaeuser Company. The Trusts were organized to, and are engaged to raise funds through the issuance and sale of Collateralized Mortgage Obligation bonds collateralized by Government National Mortgage Association (GNMA) and Federal National Mortgage Association (FNMA) certificates. The Trusts A, B, C, D, E and F were established on April 8, 1986 and commenced business on June 30, 1986, September 30, 1986, December 30, 1986, February 27, 1987, December 22, 1987 and March 30, 1988, respectively.
Each Trust issued a series of Collateralized Mortgage Obligations (the "Bonds"). Trust A, B, C, D and F's Bonds are collateralized by GNMA and FNMA certificates and Trust E's Bonds are collateralized by GNMA certificates.
Trust Date Issued Bonds Issued --------------------------------------------------------------- A June 30, 1986 $100,000,000 B September 30, 1986 $100,000,000 C December 30, 1986 $100,000,000 D February 27, 1987 $ 75,600,000 E December 22, 1987 $131,600,000 F March 30, 1988 $129,250,000 Item 2.
Item 2. Properties The Trusts A, B, C, D, E and F have no physical properties. Item 3.
Item 3. Legal Proceedings The Trusts A, B, C, D, E and F are not a party to any material pending proceedings. Item 4.
Item 4. Submission of Matters to a Vote of Security Holders Omitted pursuant to General Instruction J(2)(c) of Form 10-K.
PART II
Item 5.
Item 5. Market for the Registrant's Beneficial Interest and Related Security Holder Matters
As of March 26, 2001, 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.
Item 6. Selected Financial Data
Omitted pursuant to General Instruction I(2)(a) of Form 10-K.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Business activity during 2000, 1999 and 1998 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 2000 to the bondholders (in thousands).
Class 3 Class 4 Total ------------------------------------
Trust A $ - $ - $ - Trust B - 1,330 1,330 Trust C - - - Trust D 964 - 964 Trust E - 3,712 3,712 Trust F - - -
This rate of payment is sufficient to retire the Bonds prior to their stated maturity.
Item 8.
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, 2000, are included herein. Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
There was no change in accountants, nor any material disagreement with accountants on any matter of accounting principles, practices or financial statement disclosures, during the year ended December 31, 2000.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant Omitted pursuant to General Instruction I(2)(c) of Form 10-K. Item 11.
Item 11. Executive Compensation Omitted pursuant to General Instruction I(2)(c) of Form 10-K. Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management Omitted pursuant to General Instruction I(2)(c) of Form 10-K. Item 13.
Item 13. Certain Relationships and Related Transactions Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(1) The following documents are filed as part of this report:
(a) Report of Independent Public Accountants.
(b) Financial Statements:
Statements of Operations
Trust A for the Three Years Ended December 31, 2000 Trust B for the Three Years Ended December 31, 2000 Trust C for the Three Years Ended December 31, 2000 Trust D for the Three Years Ended December 31, 2000 Trust E for the Three Years Ended December 31, 2000 Trust F for the Three Years Ended December 31, 2000
Balance Sheets
Trust A as of December 31, 2000 and December 26, 1999 Trust B as of December 31, 2000 and December 26, 1999 Trust C as of December 31, 2000 and December 26, 1999 Trust D as of December 31, 2000 and December 26, 1999 Trust E as of December 31, 2000 and December 26, 1999 Trust F as of December 31, 2000 and December 26, 1999
Statements of Changes in Owner's Beneficial Interest
Trust A for the Three Years Ended December 31, 2000 Trust B for the Three Years Ended December 31, 2000 Trust C for the Three Years Ended December 31, 2000 Trust D for the Three Years Ended December 31, 2000 Trust E for the Three Years Ended December 31, 2000 Trust F for the Three Years Ended December 31, 2000
Statements of Cash Flows
Trust A for the Three Years Ended December 31, 2000 Trust B for the Three Years Ended December 31, 2000 Trust C for the Three Years Ended December 31, 2000 Trust D for the Three Years Ended December 31, 2000 Trust E for the Three Years Ended December 31, 2000 Trust F for the Three Years Ended December 31, 2000
Notes to Financial Statements for the Three Years Ended December 31, 2000.
(c) Financial Statement Schedules:
Schedule XIII - Other Security Investments Trust B Schedule XIII - Other Security Investments Trust D Schedule XIII - Other Security Investments Trust E
(d) Exhibits:
Certificate of Incorporation of Mortgage Securities III Corporation (incorporated by reference to Exhibit 3(a) to Registration Statement on Form S-11 dated December 18, 1985).
Bylaws of Mortgage Securities III Corporation (incorporated by reference to Exhibit 3(b) to Registration Statement on Form S-11 dated December 18, 1985).
Form of Indenture dated June 1, 1986 between the Trust and Texas Commerce Bank National Association, as Trustee, relating to GNMA and FNMA Collateralized Mortgage Obligations (incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-11 dated December 18, 1985).
Form of Supplemental Indenture dated as of June 1, 1986 (incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-11 dated July 11, 1986).
(2) Exhibits are included in Item (1)(d) above.
(3) Financial Statement Schedules required by Regulation S-X are included in Item (1)(c) above.
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 26th day of March 2001.
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: ____________________________
Mary Kay Pupillo Financial Services Officer
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, 2000 and December 26, 1999, 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, 2000. 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 auditing standards generally accepted in the United States. 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, 2000 and December 26, 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the index to financial statements are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Seattle, Washington February 7, 2001
Mortgage Securities III Trust A Statements of Operations For the Three Years Ended December 31, 2000 - ----------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - -----------------------------------------------------------------
Interest income $ - $ - $ -
Interest expense - - - - ----------------------------------------------------------------- Net income $ - $ - $ - =================================================================
See accompanying notes.
Mortgage Securities III Trust B Statements of Operations For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - -----------------------------------------------------------------
Interest income $ 676 $ 855 $ 1,136
Interest expense 523 727 1,118 - ----------------------------------------------------------------- Net income $ 153 $ 128 $ 18 =================================================================
See accompanying notes.
Mortgage Securities III Trust C Statements of Operations For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - -----------------------------------------------------------------
Interest income $ - $ - $ 742
Interest expense - - 742
Gain on sale - - 272 - ----------------------------------------------------------------- Net income $ - $ - $ 272 =================================================================
See accompanying notes.
Mortgage Securities III Trust D Statements of Operations For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - ------------------------------------------------------------------
Interest income $ 581 $ 695 $ 983
Interest expense 559 698 1,058 - ------------------------------------------------------------------ Net income (loss) $ 22 $ (3) $ (75) ==================================================================
See accompanying notes.
Mortgage Securities III Trust E Statements of Operations For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - ------------------------------------------------------------------
Interest income $ 1,872 $ 2,279 $ 3,106
Interest expense 2,157 2,685 3,597 - ------------------------------------------------------------------ Net loss $ (285) $ (406) $ (491) ==================================================================
See accompanying notes.
Mortgage Securities III Trust F Statements of Operations For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - -----------------------------------------------------------------
Interest income $ - $ - $ -
Interest expense - - - - ----------------------------------------------------------------- Net income $ - $ - $ - =================================================================
See accompanying notes.
Mortgage Securities III Trust A Balance Sheets December 31, 2000 and December 26, 1999 - ----------------------------------------------------------------- (Dollar amounts in thousands) 2000 1999 - -----------------------------------------------------------------
TOTAL ASSETS - TRUST A $ - $ - =================================================================
TOTAL OWNER'S BENEFICIAL INTEREST - TRUST A $ - $ - =================================================================
See accompanying notes.
Mortgage Securities III Trust B Balance Sheets December 31, 2000 and December 26, 1999 - ----------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 - ----------------------------------------------------------------- Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account 378 584 - ----------------------------------------------------------------- 379 585
Interest receivable 52 59 Government National and Federal National Mortgage Association certificates 7,184 8,186 - ----------------------------------------------------------------- TOTAL ASSETS - TRUST B $7,615 $8,830 =================================================================
Liabilities and owner's beneficial interest
Interest payable $ 161 $ 199
Collateralized Mortgage Obligation bonds 5,419 6,749
Owner's beneficial interest: Owner's beneficial interest 1 1 Retained earnings 2,034 1,881 - ----------------------------------------------------------------- Total owner's beneficial interest 2,035 1,882 - ----------------------------------------------------------------- TOTAL LIABILITIES AND OWNER'S BENEFICIAL INTEREST - TRUST B $7,615 $8,830 =================================================================
See accompanying notes.
Mortgage Securities III Trust C Balance Sheets December 31, 2000 and December 26, 1999 - ----------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 - -----------------------------------------------------------------
TOTAL ASSETS - TRUST C $ - $ - =================================================================
TOTAL OWNER'S BENEFICIAL INTEREST - TRUST C $ - $ - =================================================================
See accompanying notes.
Mortgage Securities III Trust D Balance Sheets December 31, 2000 and December 26, 1999 - ----------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 - -----------------------------------------------------------------
Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account 128 104 - ----------------------------------------------------------------- 129 105
Receivable from beneficial owner 170 143 Interest receivable 43 40 Government National and Federal National Mortgage Association certificates 6,116 7,126 - ----------------------------------------------------------------- TOTAL ASSETS - TRUST D $6,458 $7,414 =================================================================
Liabilities and owner's beneficial interest
Interest payable $ 87 $ 101 Collateralized Mortgage Obligation bonds 6,077 7,041
Owner's beneficial interest: Owner's beneficial interest 1 1 Retained earnings 293 271 - ----------------------------------------------------------------- Total owner's beneficial interest 294 272 - ----------------------------------------------------------------- TOTAL LIABILITIES AND OWNER'S BENEFICIAL INTEREST - TRUST D $6,458 $7,414 =================================================================
See accompanying notes.
Mortgage Securities III Trust E Balance Sheets December 31, 2000 and December 26, 1999 - ----------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 - ------------------------------------------------------------------
Assets Cash and equivalents: Trust account $ 1 $ 1 Collection account 1,217 1,516 - ------------------------------------------------------------------ 1,218 1,517
Receivable from beneficial owner 1 - Interest receivable 142 164 Government National Mortgage Association certificates 21,688 24,899 - ------------------------------------------------------------------ TOTAL ASSETS - TRUST E $ 23,049 $ 26,580 ==================================================================
Liabilities and owner's beneficial interest
Interest payable $ 373 $ 456 Collateralized Mortgage Obligation bonds, 15,870 19,033 net
Owner's beneficial interest: Owner's beneficial interest 36,294 36,294 Accumulated deficit (29,488) (29,203) - ------------------------------------------------------------------ Total owner's beneficial interest 6,806 7,091 - ------------------------------------------------------------------ TOTAL LIABILITIES AND OWNER'S BENEFICIAL INTEREST - TRUST E $ 23,049 $ 26,580 ==================================================================
See accompanying notes.
Mortgage Securities III Trust F Balance Sheets December 31, 2000 and December 26, 1999 - ----------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 - -----------------------------------------------------------------
TOTAL ASSETS - TRUST F $ - $ - =================================================================
TOTAL OWNER'S BENEFICIAL INTEREST - TRUST F $ - $ - =================================================================
See accompanying notes.
Mortgage Securities III Trust A Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
Owner's Beneficial Retained Interest Earnings Total - -------------------------------------------------------------------
Balance at December 28, 1997 $ 1 $ 1,264 $ 1,265 Dividends paid - (1,264) (1,264) Return of owner's beneficial interest (1) - (1) - ------------------------------------------------------------------- Balance at December 27, 1998 - - - - ------------------------------------------------------------------- Balance at December 26, 1999 - - - - ------------------------------------------------------------------- Balance at December 31, 2000 $ - $ - $ - ===================================================================
See accompanying notes.
Mortgage Securities III Trust B Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------ (Dollar amounts in thousands)
Owner's Beneficial Retained Interest Earnings Total - ------------------------------------------------------------------
Balance at December 28, 1997 $ 1 $ 1,735 $ 1,736 Net income - 18 18 - ------------------------------------------------------------------ Balance at December 27, 1998 1 1,753 1,754 Net income - 128 128 - ------------------------------------------------------------------ Balance at December 26, 1999 1 1,881 1,882 Net income - 153 153 - ------------------------------------------------------------------ Balance at December 31, 2000 $ 1 $ 2,034 $ 2,035 ==================================================================
See accompanying notes.
Mortgage Securities III Trust C Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------ (Dollar amounts in thousands)
Owner's Beneficial Retained Interest Earnings Total - ------------------------------------------------------------------
Balance at December 28, 1997 $ 1 $ 699 $ 700 Net income - 272 272 - ------------------------------------------------------------------ Balance at December 27, 1998 1 971 972 Dividends paid - (971) (971) Return of owner's beneficial (1) - (1) interest - ------------------------------------------------------------------ Balance at December 26, 1999 - - - - ------------------------------------------------------------------ Balance at December 31, 2000 $ - $ - $ - ==================================================================
See accompanying notes.
Mortgage Securities III Trust D Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
Owner's Beneficial Retained Interest Earnings Total - -------------------------------------------------------------------
Balance at December 28, 1997 $ 1 $ 349 $ 350 Net loss - (75) (75) - ------------------------------------------------------------------- Balance at December 27, 1998 1 274 275 Net loss - (3) (3) - ------------------------------------------------------------------- Balance at December 26, 1999 1 271 272 Net income - 22 22 - ------------------------------------------------------------------- Balance at December 31, 2000 $ 1 $ 293 $ 294 ===================================================================
See accompanying notes.
Mortgage Securities III Trust E Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
Owner's Beneficial Accumulated Interest Deficit Total - --------------------------------------------------------------------
Balance at December 28, 1997 $ 36,294 $ (28,306) $ 7,988 Net loss - (491) (491) - -------------------------------------------------------------------- Balance at December 27, 1998 36,294 (28,797) 7,497 Net loss - (406) (406) - -------------------------------------------------------------------- Balance at December 26, 1999 36,294 (29,203) 7,091 Net loss - (285) (285) - -------------------------------------------------------------------- Balance at December 31, 2000 $ 36,294 $ (29,488) $ 6,806 ====================================================================
See accompanying notes.
Mortgage Securities III Trust F Statements of Changes in Owner's Beneficial Interest For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------- (Dollar amounts in thousands)
Owner's Beneficial Accumulated Interest Deficit Total - --------------------------------------------------------------------
Balance at December 28, 1997 $ 9,375 $ (6,541) $ 2,834 Return of owner's beneficial (9,375) 6,541 (2,834) interest - -------------------------------------------------------------------- Balance at December 27, 1998 - - - - -------------------------------------------------------------------- Balance at December 26, 1999 - - - - -------------------------------------------------------------------- Balance at December 31, 2000 $ - $ - $ - ====================================================================
See accompanying notes.
Mortgage Securities III Trust A Statements of Cash Flows For the Three Years Ended December 31, 2000 - -------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - ---------------------------------------------------------------------
Cash flows from operations: Net income $ - $ - $ - Changes in: Receivable from beneficial owner - - 1,263 - --------------------------------------------------------------------- Cash flows from operations - - 1,263 - --------------------------------------------------------------------- Cash flows from financing activities: Return of owner's beneficial interest - - (1) Dividends paid - - (1,264) - --------------------------------------------------------------------- Cash flows from financing activities - - (1,265) - --------------------------------------------------------------------- Net decrease in cash and equivalents - - (2) Cash and equivalents at beginning of year - - 2 - --------------------------------------------------------------------- Cash and equivalents at end of year $ - $ - $ - ===================================================================== Supplemental disclosure: Cash paid during the year for interest $ - $ - $ -
See accompanying notes.
Mortgage Securities III Trust B Statements of Cash Flows For the Three Years Ended December 31, 2000 - ---------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - ----------------------------------------------------------------------
Cash flows from operations: Net income $ 153 $ 128 $ 18 Changes in: Interest receivable 7 23 23 Interest payable (38) (102) (1) - ---------------------------------------------------------------------- Cash flows from operations 122 49 40 - ---------------------------------------------------------------------- Cash flows from investing activities: Collections on mortgage backed certificates 1,002 3,112 3,373 - ---------------------------------------------------------------------- Cash flows from financing activities: Payments on collateralized mortgage obligation bonds (1,330) (3,435) (3,254) - ---------------------------------------------------------------------- Net increase (decrease) in cash and equivalents (206) (274) 159 Cash and equivalents at beginning of year 585 859 700 - ---------------------------------------------------------------------- Cash and equivalents at end of year $ 379 $ 585 $ 859 ====================================================================== Supplemental disclosure: Cash paid during the year for interest $ 561 $ 829 $ 1,119
See accompanying notes.
Mortgage Securities III Trust C Statements of Cash Flows For the Three Years Ended December 31, 2000 - ---------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - ----------------------------------------------------------------------
Cash flows from operations: Net income $ - $ - $ 272 Non cash charges: Gain on sale - - (272) Changes in: Interest receivable - - 87 Receivable from beneficial owner - 972 (972) Interest payable - - (274) - ---------------------------------------------------------------------- Cash flows from operations - - (1,159) - ---------------------------------------------------------------------- Cash flows from investing activities: Collections on mortgage backed certificates - - 12,510 - ---------------------------------------------------------------------- Cash flows from financing activities: Return of owner's beneficial interest - (1) - Dividends paid - (971) - Payments on collateralized mortgage obligation bonds - - (12,241) - ---------------------------------------------------------------------- Cash flows from financing activities - (972) (12,241) - ---------------------------------------------------------------------- Net decrease in cash and equivalents - - (890) Cash and equivalents at beginning of year - - 890 - ----------------------------------------------------------------------
Cash and equivalents at end of year $ - $ - $ - ====================================================================== Supplemental disclosure: Cash paid during the year for interest $ - $ - $ 1,016
See accompanying notes.
Mortgage Securities III Trust D Statements of Cash Flows For the Three Years Ended December 31, 2000 - --------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - ----------------------------------------------------------------------
Cash flows from operations: Net income (loss) $ 22 $ (3) $ (75) Changes in: Interest receivable (3) 30 18 Receivable from beneficial owner (27) (48) (67) Interest payable (14) (40) 51 - ---------------------------------------------------------------------- Cash flows from operations (22) (61) (73) - ---------------------------------------------------------------------- Cash flows from investing activities: Collections on mortgage backed certificates 1,010 2,729 2,842 - ---------------------------------------------------------------------- Cash flows from financing activities: Payments on collateralized mortgage obligation bonds (964) (2,776) (2,677) - ---------------------------------------------------------------------- Net increase (decrease) in cash and equivalents 24 (108) 92 Cash and equivalents at beginning of year 105 213 121 - ----------------------------------------------------------------------
Cash and equivalents at end of year $ 129 $ 105 $ 213 ====================================================================== Supplemental disclosure: Cash paid during the year for interest $ 573 $ 738 $ 1,007
See accompanying notes.
Mortgage Securities III Trust E Statements of Cash Flows For the Three Years Ended December 31, 2000 - ---------------------------------------------------------------------- (Dollar amounts in thousands)
2000 1999 1998 - ----------------------------------------------------------------------
Cash flows from operations: Net loss $ (285) $ (406) $ (491) Non-cash charges: Amortization 549 546 544 Changes in: Interest receivable 22 58 59 Receivable from beneficial owner (1) - - Interest payable (83) (231) (171) - ---------------------------------------------------------------------- Cash flows from operations 202 (33) (59) - ---------------------------------------------------------------------- Cash flows from investing activities: Collections on mortgage backed certificates 3,211 8,531 8,641 - ---------------------------------------------------------------------- Cash flows from financing activities: Payments on collateralized mortgage obligation bonds (3,712) (10,310) (7,566) - ---------------------------------------------------------------------- Net increase (decrease) in cash and equivalents (299) (1,812) 1,016 Cash and equivalents at beginning of year 1,517 3,329 2,313 - ---------------------------------------------------------------------- Cash and equivalents at end of year $ 1,218 $ 1,517 $ 3,329 ====================================================================== Supplemental disclosure: Cash paid during the year for interest $ 1,691 $ 2,370 $ 3,224
See accompanying notes.
Mortgage Securities III Trust F Statements of Cash Flows For the Three Years Ended December 31, 2000 - ------------------------------------------------------------------ (Dollar amounts in thousands)
2000 1999 1998 - ------------------------------------------------------------------
Cash flows from operations: Net income $ - $ - $ - Changes in: Receivable from beneficial owner - - 2,832 - ------------------------------------------------------------------ Cash flows from operations - - 2,832 - ------------------------------------------------------------------ Cash flows from financing activities: Return of owner's beneficial - - (2,834) interest - ------------------------------------------------------------------ Net decrease in cash and equivalents - - (2) Cash and equivalents at beginning of year - - 2 - ------------------------------------------------------------------ Cash and equivalents at end of $ - $ - $ - year ================================================================== Supplemental disclosure: Cash paid during the year for interest $ - $ - $ -
See accompanying notes.
Mortgage Securities III Trusts A, B, C, D, E and F Notes to Financial Statements For the Three Years Ended December 31, 2000
(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 (the "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 Bonds as follows: Trust Date Issued Bonds Issued --------------------------------------------------------- A June 30, 1986 $100,000 B September 30, 1986 $100,000 C December 30, 1986 $100,000 D February 27, 1987 $ 75,600 E December 22, 1987 $131,600 F March 30, 1988 $129,250
Trust B and D's remaining Bonds are collateralized by GNMA and FNMA certificates and Trust E's remaining Bonds are collateralized by GNMA certificates. Trust A, C and F had no remaining Bonds or related collateralization at December 31, 2000.
Activity during 2000, 1999 and 1998, primarily consisted of the collection of principal and interest on the GNMA and FNMA certificates and payment of principal and interest to the bondholders. In 1998, the Bonds in Trust C were called and in 1997, the Bonds in Trusts A and F were called. All GNMA and FNMA certificates of these Trusts were sold and all Bond principal and interest were paid to the bondholders when the Bonds were called.
Note 2. Accounting policies:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
The bond discounts on Trusts B and D were written off in 1997 as management intends to prepay the bonds at the earliest allowable prepayment date and the amounts were no longer material. The bond discount for Trust E is amortized on a straight line basis, which approximates the effective interest method over the remaining life of the instruments.
Cash and equivalents include cash held in the collection accounts and invested in short-term investments with maturities at date of purchase of less than three months.
The cost and estimated market values of investments in debt securities at December 31, 2000 were as follows:
Gross Gross Estimated Held to Unrealized Unrealized Market Maturity: Cost Gains Losses Value ---------------------------------------------------------
Mortgage-backed Securities Trust B $ 7,184 $ 22 $ - $ 7,206 Trust D 6,116 16 - 6,132 Trust E 21,688 13 - 21,701
The Trusts are legally precluded from selling the investments in debt securities, except in the case of a call of the Bonds as discussed in Note 3.
Note 3. Collateralized mortgage obligation bonds:
Collateralized mortgage obligation bonds at December 31, 2000 and December 26, 1999 consist of the following:
2000 1999 -------------------- Trust B: Class 4 - 9.00%, stated maturity October 1, 2016 $ 5,419 $ 6,749 ====================
Trust D: Class 3 - 8.60%, stated maturity March 1, 2017 $ 6,077 $ 7,041 ====================
Trust E: Class 4 - 9.00%, stated maturity January 1, 2018 $ 16,552 $ 20,264 Unamortized discount (682) (1,231) -------------------- $ 15,870 $ 19,033 ====================
The stated maturity is the date such class will be fully paid, assuming that scheduled interest and principal payments (with no prepayments) on the certificates are timely received.
All collections on the certificates pledged as security for the Bonds will be remitted directly to a collection account (the "Collection Account") established with the Trustee and together with the reinvestment earnings thereon, will be available for application to the payment of principal and interest on the Bonds on the following payment date.
Each Trust's Bonds are subject to a special redemption, in whole or in part, if, as a result of substantial payments of principal on the underlying mortgage loans and/or low reinvestment yields, the Trusts determine that the amount of cash anticipated to be on deposit in the Collection Accounts on the next payment date might be insufficient to make required payments on the Bonds. Any such redemption would not exceed the principal amount of Bonds that would otherwise be required to be paid on the next payment date. As a result, a special redemption of Bonds will not result in a payment to bondholders more than two months earlier than the payment date on which such payment would otherwise have been received. The Bonds are not otherwise subject to call at the option of the Trusts except that (a) Trust B and E's Class 4 Bonds may be redeemed in whole, but not in part, at the Trusts' option on any payment date on or after October 1, 2001 and January 1, 2003, respectively, (or on any earlier payment date if the current principal amount of Trust B and E's Class 4 Bonds are less than $6,100 and $13,160, respectively) and (b) Trust D's Class 3 Bonds may be redeemed in whole, but not in part, at the Trust's option on any payment date on or after March 1, 2002, or on any earlier payment date if the aggregate outstanding principal amount of the Class 3 Bonds is less than 10 percent of its aggregate initial principal amount of $14,600.
Any such redemptions at the option of the Trusts shall be at a price equal to 100 percent of the unpaid principal amount of such Bonds plus accrued interest.
The maturities of the Bonds are based on the prepayment speed (liquidations) on the GNMA and FNMA certificates collateralizing the Bonds and the reinvestment of scheduled distributions at the assumed reinvestment rates. Maturities for the succeeding five years with estimated liquidations based on current market interest rates are as follows:
Trust B Trust D Trust E ----------------------------
2001 $ 1,424 $ 1,069 $ 4,141 2002 1,233 887 3,580 2003 1,079 745 3,117 2004 955 624 2,742 2005 728 522 2,439
Note 4. Assets pledged:
Trust B and D's Bonds are collateralized by the Trusts' GNMA and FNMA certificates and the Collection Accounts. Trust E's Bonds are collateralized by Trust E's GNMA certificates and the Collection Account. 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, 2000, certificates are guaranteed by the Government National Mortgage Association and the Federal National Mortgage Association as follows:
Government National Federal National Mortgage Association Mortgage Association -------------------------------------------- Trust B $ 6,481 $ 703 Trust D 5,269 847 Trust E 21,688 N/A
Note 5. Related parties:
Trusts A, B, C and D purchased from an affiliate, Weyerhaeuser Mortgage Company, GNMA and FNMA certificates which were used to collateralize the Bonds. The purchases were at par value, plus Trust A and D's purchase premiums and less Trust B and C's purchase discounts. The purchases were financed with market-rate short-term debt from this affiliate until proceeds from the bond issuance were obtained.
Trust E purchased from an affiliate, Weyerhaeuser Mortgage Company, GNMA certificates which were used to collateralize the Bonds. Trust F purchased from an affiliate, Weyerhaeuser Mortgage Company, GNMA and FNMA certificates which were used to collateralize the Bonds. The purchases were at par value, less the purchase discounts. The purchases were financed with the proceeds received from the Bond issuances and notes due to Weyerhaeuser Mortgage Company. The notes accrued interest at Bank of America's prime rate and compounded interest annually. Both the principal and interest related to the Weyerhaeuser Mortgage Company payables were paid off by Weyerhaeuser Financial Services, Inc. (the "Beneficial Owner") in March 1997, in anticipation of the sale of Weyerhaeuser Mortgage Company to an unrelated third party by Weyerhaeuser Financial Services, Inc. and Weyerhaeuser Company. In August 1997, Weyerhaeuser Financial Services, Inc. contributed capital to Trusts E and F, increasing the Beneficial Owner's interest.
The Beneficial Owner advanced funds to Trust C during the third quarter of 1998. The funds were repaid during the fourth quarter of 1998. No interest was charged as the advances were treated as a current payable.
Certain ongoing administrative and accounting functions are provided by the Beneficial Owner at no cost to each Trust.
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.
Mortgage Securities III Trust B Schedule XIII - Other Security Investments December 31, 2000
(Dollar amounts in thousands)
Number of Certificates Market Type of Security Held Cost Value - ------------------------------------------------------------------
Government National Mortgage Association Certificates 30 $ 6,481 $ 6,501
Federal National Mortgage Association Certificates 20 703 705 ----------------------------------------- 50 $ 7,184 $ 7,206 =========================================
1. Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost.
2. Market value is an estimate based on the most current information available.
Mortgage Securities III Trust D Schedule XIII - Other Security Investments December 31, 2000
(Dollar amounts in thousands)
Number of Certificates Market Type of Security Held Cost Value - ------------------------------------------------------------------
Government National Mortage Association Certificates 23 $ 5,269 $ 5,283
Federal National Mortgage Association Certificates 10 847 849 ----------------------------------------- 33 $ 6,116 $ 6,132 =========================================
1. Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost.
2. Market value is an estimate based on the most current information available.
Mortgage Securities III Trust E Schedule XIII - Other Security Investments December 31, 2000
(Dollar amounts in thousands)
Number of Certificates Market Type of Security Held Cost Value - ------------------------------------------------------------------
Government National Mortgage Association Certificates 67 $ 21,688 $ 21,701 =========================================
1. Cost represents the uncollected principal balance of the mortgage loans underlying the certificates. Investments are grouped and are carried at cost.
2. Market value is an estimate based on the most current information available.
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.