10-Q 1 d99030e10vq.txt FORM 10-Q FOR QUARTER ENDED JUNE 30, 2002 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ----- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2002 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ----- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ______________ COMMISSION FILE NUMBER: 33-47912 CMC SECURITIES CORPORATION IV (Exact name of Registrant as specified in its Charter) DELAWARE 75-2431915 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8401 NORTH CENTRAL EXPRESSWAY, SUITE 800, DALLAS, TX 75225 (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (214) 874-2323 The Registrant meets the conditions set forth in General Instruction H(1)(a) and (b) for Form 10-Q and is therefore filing this Form under the reduced disclosure format. Indicate by check mark whether the Registrant (1) has filed all documents and 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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Common Stock ($1.00 par value) 1,000 as of August 12, 2002 ================================================================================ CMC SECURITIES CORPORATION IV FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2002 INDEX

ITEM 1. FINANCIAL STATEMENTS CMC SECURITIES CORPORATION IV PART I. -- FINANCIAL INFORMATION BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA)

See accompanying notes to financial statements. -1- CMC SECURITIES CORPORATION IV STATEMENTS OF OPERATIONS (IN THOUSANDS) (UNAUDITED)

See accompanying notes to financial statements. -2- CMC SECURITIES CORPORATION IV STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)

See accompanying notes to financial statements. -3- CMC SECURITIES CORPORATION IV NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (UNAUDITED) NOTE A -- BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter and six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. For further information refer to the financial statements and footnotes thereto included in the CMC Securities Corporation IV annual report on Form 10-K for the year ended December 31, 2001. NOTE B -- DISCLOSURES REGARDING FAIR VALUES OF MORTGAGE SECURITIES COLLATERAL The estimated fair values of mortgage securities collateral have been determined by using available market information and appropriate valuation methodologies; however, considerable judgment is required in interpreting market data to develop these estimates. In addition, fair values fluctuate on a daily basis. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair values of mortgage securities collateral were estimated using quoted market prices, when available, including quotes made by Capstead Mortgage Corporation's lenders in connection with designating collateral for repurchase arrangements. Fair values are estimated using quoted market prices, when available, including quotes made by Capstead Mortgage Corporation's lenders in connection with designating collateral for repurchase arrangements. The following summarizes fair value disclosures for mortgage securities collateral (in thousands):

All mortgage securities collateral is held-to-maturity. The maturity of mortgage securities collateral is directly affected by the rate of principal prepayments by mortgagors. In addition, upon the redemption of remaining bonds outstanding pursuant to clean-up calls, released collateral may be sold. Such sales are deemed maturities under the provisions of Statement of Financial Accounting Standards No. 115. No such redemptions have occurred during the six months ended June 30, 2002. -4- NOTE C -- NET INTEREST INCOME ANALYSIS The following summarizes interest income and interest expense and the average effective interest rates (dollars in thousands):

Changes in interest income and interest expense due to changes in interest rates versus changes in volume were as follows (in thousands):

* The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. -5- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION AND RESULTS OF OPERATIONS CMC Securities Corporation IV (the "Company") was incorporated in Delaware on May 6, 1992 as a limited purpose finance corporation, and is a wholly-owned subsidiary of Capstead Mortgage Corporation ("CMC"). As of October 31, 1997, the Company had issued 5 series of collateralized mortgage obligations ("CMOs") with an aggregate original principal balance of $2,003,125,000; $176,304,000 of which was issued through private placements, with the remainder being issued under the registration statement. These issuances have been accounted for as financings. The Company has essentially issued the maximum amount of securities under the $2 billion amended registration statement; therefore, the Company has not issued any CMOs since October 31, 1997. Since the Company did not retain any investment in the CMOs issued, no economic benefit was or will be received, and therefore no net income or loss was or will be recognized, other than amortization of unreimbursed shelf issuance costs. The Company's net losses are due to operational costs incurred (management and administrative fees) and unreimbursed shelf registration costs. LIQUIDITY AND CAPITAL RESOURCES All ongoing cash CMO expenses are paid out of the excess cash flows on the CMOs issued before the residual holders receive their residual interest. The Company believes that the excess cash flows will be sufficient to pay ongoing cash CMO expenses. Cash flow requirements due to ongoing operational costs are funded by CMC. PART II. -- OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: (a) Exhibits: The following Exhibit is presented herewith: Exhibit 99.1 - Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K: None -6- SIGNATURES Pursuant to the requirements 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. CMC SECURITIES CORPORATION IV Date: August 12, 2002 By: /s/ ANDREW F. JACOBS ----------------------------------------- Andrew F. Jacobs Chairman, Chief Executive Officer and President Date: August 12, 2002 By: /s/ PHILLIP A. REINSCH ----------------------------------------- Phillip A. Reinsch Senior Vice President - Control -7- INDEX TO EXHIBITS

CMC SECURITIES CORP IV 10-Q