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PAGE 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 30(a) OF THE INVESTMENT
COMPANY ACT OF 1940 AND SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
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 2-23772
IDS Certificate Company
(Exact name of registrant as specified in its charter)
Delaware 41-6009975
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
IDS Tower 10, Minneapolis, Minnesota 55440
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 671-3131
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class: None which registered: None
Securities registered pursuant to Section 12(g) of the Act:
Title of class: None
Indicate by 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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates
of the registrant. None
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Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
150,000 Common shares
CERTAIN DOCUMENTS INCORPORATED BY REFERENCE.
None
The registrant meets the conditions set forth in General
Instructions I(1)(a) and (b) of Form 10-K and is therefore filing
this form with the reduced disclosure format.
The Exhibit Index is located on sequential pages 16-18.
PAGE 3
Item 1. Business
IDS Certificate Company (IDSC) is incorporated under the laws
of Delaware. Its principal executive offices are located in the
IDS Tower, Minneapolis, Minnesota, and its telephone number is
(612) 671-3131. American Express Financial Corporation (formerly
known as IDS Financial Corporation), a Delaware corporation, IDS
Tower 10, Minneapolis, Minnesota 55440-0010, owns 100% of the
outstanding voting securities of IDSC. As of January 1, 1995 IDS
Financial Corporation changed its name to American Express
Financial Corporation. American Express Financial Corporation is a
wholly owned subsidiary of American Express Company (American
Express), a New York Corporation, with headquarters at American
Express Tower, World Financial Center, New York, New York.
IDSC is a face-amount certificate investment company,
registered under the Investment Company Act of 1940 (1940 Act).
IDSC is in the business of issuing face-amount certificates.
Face-amount certificates issued by IDSC entitle the certificate
owner to receive, at maturity, a stated amount of money and
interest or credits declared from time to time by IDSC, in its
discretion.
IDSC is continuously engaged in new product development.
IDSC currently offers eight certificates to the public: "IDS
Future Value Certificate," "IDS Cash Reserve Certificate," "IDS
Flexible Savings Certificate" (formerly "IDS Variable Term
Certificate"),"IDS Installment Certificate," "IDS Preferred
Investors Certificate," "IDS Stock Market Certificate" (marketed in
some channels as "American Express Stock Market Certificate"),
"American Express Investors Certificate," and "American Express
Special Deposits." The American Express Special Deposits is only
offered for sale in England and Hong Kong and is not registered for
sale in the United States. All certificates are currently sold
without a sales charge. The IDS Installment Certificate, the IDS
Flexible Savings Certificate, the IDS Stock Market Certificate, the
IDS Preferred Investors Certificate, the American Express Stock
Market Certificate, the American Express Investors Certificate and
the American Express Special Deposits currently bear surrender
charges for premature surrenders. All of the above described
certificates, except the American Express Special Deposits, are
distributed pursuant to a Distribution Agreement with American
Express Financial Advisors Inc. (formerly known as IDS Financial
Services Inc.), an affiliate of IDSC. With respect to the American
Express Investors Certificate and the American Express Stock Market
Certificate, American Express Financial Advisors Inc., in turn, has
Selling Agent Agreements with American Express Bank International
(AEBI), a subsidiary of American Express, and Coutts & Co. (USA)
International (Coutts), a subsidiary of National Westminster Bank
PLC, for selling the certificates. With respect to the American
Express Special Deposits, IDSC has a Marketing Agreement with
American Express Bank Ltd. (AEB), a subsidiary of American Express,
for marketing the certificate. IDSC has a Distribution Agreement
with American Express Service Corporation (AESC) under which AESC
can distribute the IDS Stock Market Certificate and potentially
other certificates through a direct marketing channel of
distribution known as American Express Financial Direct, but there
is no assurance that IDS certificates will be so distributed.
PAGE 4
AEBI and Coutts are Edge Act corporations organized under the
provisions of Section 25(a) of the Federal Reserve Act. American
Express Financial Advisors Inc. has entered into a consulting
agreement with AEBI under which AEBI provides consulting services
related to any selling agent agreements between American Express
Financial Advisors Inc. and other Edge Act corporations.
IDSC also offers one certificate in connection with certain
employee benefit plans available to eligible American Express
Financial Corporation employees, financial advisors, retirees, and
eligible employees of the IDS Mutual Fund Group. This certificate
is called the Series D-1 Investment Certificate.
Except for the American Express Investors Certificate and the
American Express Special Deposits, all of the certificates are
available as qualified investments for Individual Retirement
Accounts (IRAs), or 401(k) plans and other qualified retirement
plans.
The specified maturities of the certificates range from four
to twenty years. Within that maturity period, most certificates
have terms ranging from three to thirty-six months. Interest rates
change and certificate owners can surrender their certificates
without penalty at term end.
The IDS Future Value Certificate is a single payment
certificate on which IDSC guarantees interest in advance for a 4,
5, 6, 7, 8, 9, or 10-year maturity, at the buyer's option. IDSC
has decided to discontinue sales of IDS Future Value Certificate
after April 30, 1997.
The IDS Cash Reserve Certificate is a single pay certificate
that permits additional investments and on which IDSC guarantees
interest in advance for a three-month term.
The IDS Flexible Savings Certificate is a single payment
certificate that permits a limited amount of additional payments
and on which IDSC guarantees interest in advance for a term of 6,
12, 18, 24, 30, or 36 months, and potentially other terms, at the
buyer's option.
The IDS Installment Certificate is an installment payment
certificate that declares interest in advance for a three-month
period and offers bonuses in the third through sixth years for
regular investments.
The IDS Stock Market Certificate is a single payment
certificate that offers the certificate owner the opportunity to
have all or part of his/her interest tied to stock market
performance, as measured by a broad stock market index, with return
of principal guaranteed by IDSC. The owner can also choose to earn
a fixed rate of interest. This certificate is sold to clients of
American Express Financial Advisors Inc..
PAGE 5
The American Express Stock Market Certificate is a single
payment certificate that offers the certificate owner the
opportunity to have all or part of his/her interest tied to stock
market performance, as measured by a broad stock market index, with
return of principal guaranteed by IDSC. The owner can also choose
to earn a fixed rate of interest. This certificate is sold by AEBI
and Coutts, under Selling Agent Agreements with American Express
Financial Advisors Inc. to AEBI's clients and certain of Coutts'
clients, respectively, who are neither citizens nor residents of
the United States.
The American Express Investors Certificate is a single
payment certificate that generally permits additional payments
within 15 days of term renewal. Interest rates are guaranteed in
advance by IDSC for a term of 1, 2, 3, 6, 12, 24, or 36 months, at
the buyer's option. This certificate is currently sold by AEBI and
Coutts, under Selling Agent Agreements with American Express
Financial Advisors Inc., only to AEBI's clients and certain of
Coutts' clients, respectively, who are neither citizens nor
residents of the United States.
The IDS Preferred Investors Certificate is a single payment
certificate that combines a fixed rate of return with IDSC's
guarantee of principal for investments of $250,000 to $5,000,000.
The American Express Special Deposits is a single payment
certificate that generally permits additional payments within 15
days of term renewal. Interest rates are guaranteed in advance by
IDSC for a term of 1, 2, 3, 6, 12, 24, or 36 months, at the buyer's
option. This certificate is currently marketed by AEB through its
London and Hong Kong offices, under a Marketing Agreement with
IDSC, only to AEB's clients who are neither citizens nor residents
of the United States. This certificate is not registered for sale
in the United States.
IDSC is by far the largest issuer of face-amount certificates
in the United States. However, such certificates compete with many
other investments offered by banks, savings and loan associations,
mutual funds, broker-dealers and others, which may be viewed by
potential clients as offering a comparable or superior combination
of safety and return on investment. In particular, some of IDSC's
products are designed to be competitive with the types of
investment offered by banks and thrifts. Since IDSC's face-amount
certificates are securities, their offer and sale are subject to
regulation under federal and state securities laws. IDSC's
certificates are backed by its qualified assets on deposit and are
not insured by any governmental agency or other entity.
PAGE 6
For all the certificates, except for the American Express
Investors Certificate, IDS Preferred Investors Certificate, and the
American Express Special Deposits, IDSC's current policy is to
re-evaluate the certificate rates weekly to respond to marketplace
changes. For the American Express Investors Certificate, IDS
Preferred Investors Certificate, and the American Express Special
Deposits, IDSC's current policy is to re-evaluate the rates on a
daily basis. For each product, IDSC refers to an independent index
to set the rates for new sales. Except for American Express
Special Deposits, IDSC must set the rates for an initial purchase
of the certificate within a specified range of the rate from such
index. For renewals, IDSC uses such rates as an indication of the
competitors' rates, but is not required to set rates within a
specified range.
For the IDS Flexible Savings Certificate, IDS Future Value
Certificate, IDS Cash Reserve Certificate and the IDS Series D-1
Investment Certificate, the published rates of the BANK RATE
MONITOR Top 25 Market Average tm for various length bank
certificates of deposit are used as the guide in setting rates.
For the IDS Installment Certificate, the average interest rate for
money market deposit accounts, as published by the BANK RATE
MONITOR Top 25 Market Average (the BRM Average), is used as a guide
in setting rates. For the American Express Investors Certificate,
IDS Preferred Investors Certificate, and American Express Special
Deposits, the published average rates for comparable length dollar
deposits available on an interbank basis, referred to as the London
Interbank Offered Rates (LIBOR), are used as a guide in setting
rates.
To compete with popular short-term investment vehicles such
as certificates of deposit, money market certificates and money
market mutual funds that offer comparable yields, liquidity and
safety of principal, IDSC offers the IDS Cash Reserve Certificate
and the IDS Flexible Savings Certificate. The yields and features
on these products are designed to be competitive with such
short-term products. The American Express Investors Certificate,
IDS Preferred Investors Certificate, and American Express Special
Deposits also compete with short-term products but use LIBOR rates.
The IDS Future Value Certificate has certain features similar to
those of zero coupon bonds and is intended to compete with that
type of investment as well as with intermediate to long-term
certificates of deposit. The IDS Installment Certificate is
intended to help clients save systematically and may compete with
passbook savings and NOW accounts. The IDS Stock Market
Certificate and American Express Stock Market Certificate are
designed to offer interest tied to a major stock market index and
principal guaranteed by IDSC. Certain banks offer certificates of
deposit that have features similar to the Stock Market Certificate.
IDSC's gross income is derived principally from interest and
dividends generated by its investments. IDSC's net income is
determined by deducting from such gross income its provision for
certificate reserves, and other expenses, including taxes, the fee
paid to American Express Financial Corporation for advisory and
other services, the distribution fees paid to American Express
Financial Advisors Inc., and marketing fees paid to AEB.
PAGE 7
The following table shows IDSC's certificate payments received and
certificate surrenders for the three years ended December 31, 1996:
1996 1995 1994
($ in Millions)
Single Payment Certificates
Non-Qualified
Payments through:
American Express Financial Advisors Inc. $ 614.2 $1,090.0 $802.4
AEBI, AEB, and Coutts 304.9 429.4 436.0
Surrenders through:
American Express Financial Advisors Inc. 1,062.9 662.0 753.6
AEBI, AEB, and Coutts 297.4 292.0 429.2
Qualified
Payments through:
American Express Financial Advisors Inc. 99.9 236.0 264.9
Surrenders through:
American Express Financial Advisors Inc. 165.4 205.5 238.5
Installment Payment Certificates
Through American Express Financial Advisors Inc.
Non-Qualified
Payments 108.3 109.5 107.6
Surrenders 98.0 112.4 116.6
Qualified
Payments 1.7 1.9 2.9
Surrenders 2.6 4.8 7.8
In 1996, approximately 30% of single payment certificate
payments were through AEBI, AEB, and Coutts, and approximately 10%
of single payment certificate payments and 2% of installment
certificate payments were of tax-qualified certificates for use in
IRAs, 401(k) plans and other qualified retirement plans.
PAGE 8
The certificates offered by American Express Financial
Advisors Inc. are sold pursuant to a distribution agreement which
is terminable on 60 days' notice and is subject to annual approval
by IDSC's Board of Directors, including a majority of the directors
who are not "interested persons" of American Express Financial
Advisors Inc. or IDSC as that term is defined in the 1940 Act. The
agreement provides for the payment of distribution fees to American
Express Financial Advisors Inc. for services provided thereunder.
American Express Financial Advisors Inc. is a wholly owned
subsidiary of American Express Financial Corporation. For the
distribution of the American Express Investors Certificate,
American Express Financial Advisors Inc., in turn, has Selling
Agent Agreements with AEBI and Coutts. For the distribution of the
IDS Stock Market Certificate through American Express Financial
Direct, IDSC has a distribution agreement with American Express
Service Corporation. For marketing American Express Special
Deposits, IDSC has a Marketing Agreement with AEB. These
agreements are terminable upon 60 days' notice and subject to
annual review by directors who are not "interested persons" of
American Express Financial Advisors Inc. or IDSC.
IDSC receives advice, statistical data and recommendations
with respect to the acquisition and disposition of securities for
its portfolio from American Express Financial Corporation, under an
investment management agreement which is subject to annual review
by IDSC's Board of Directors, including a majority of the directors
who are not "interested persons" of American Express Financial
Corporation or IDSC.
IDSC is required to maintain "qualified investments" meeting
the standards of Section 28(b) of the 1940 Act, as modified by an
order of the Securities and Exchange Commission. The amortized
cost of said investments must be at least equal to IDSC's net
liabilities on all outstanding face-amount certificates plus
$250,000. IDSC's qualified assets consist of cash and cash
equivalents, first mortgage loans on real estate, U.S. government
and government agency securities, municipal bonds, corporate bonds,
preferred stocks and other securities meeting specified standards.
IDSC is subject to annual examination and supervision by the State
of Minnesota, Department of Commerce (Banking Division).
Distribution fees on sales of certain certificates are
deferred and amortized over the estimated lives of the related
certificates, which is approximately 10 years. Upon surrender,
unamortized deferred distribution fees and any related surrender
charges are recognized in income. Thus, these certificates must
remain in effect for a period of time to permit IDSC to recover
such costs.
Item 2. Properties
None.
PAGE 9
Item 3. Legal Proceedings
Registrant has no material pending legal proceedings other
than ordinary routine litigation incidental to its business.
Item 4. Submission of Matters to a Vote of Security Holders
Item omitted pursuant to General Instructions I(2)(c) of Form
10-K.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
There is no market for the Registrant's common stock since it
is a wholly owned subsidiary of American Express Financial
Corporation and, indirectly, of American Express. Frequency and
amount of dividends declared during the past two years are as
follows:
Dividend Payable Date Cash
For the year ended December 31, 1996:
February 9, 1996 $10,000,000
June 17, 1996 10,000,000
August 30, 1996 20,000,000
November 8, 1996 25,000,000
$65,000,000
Dividend Payable Date Cash
For the year ended December 31, 1995: $ NONE
Restriction on the Registrant's present or future ability to
pay dividends:
Certain series of installment certificates outstanding
provide that cash dividends may be paid by IDSC only in calendar
years for which additional credits of at least 1/2 of 1% on such
series of certificates have been authorized by IDSC. This
restriction has been removed for 1997 and 1998 by IDSC's
declaration of additional credits in excess of this requirement.
Appropriated retained earnings resulting from the
predeclaration of additional credits to IDSC's certificate owners
are not available for the payment of dividends by IDSC. In
addition, IDSC will discontinue issuance of certificates subject to
the predeclaration of additional credits and will make no further
predeclaration as to outstanding certificates if at any time the
capital and unappropriated retained earnings of IDSC should be less
than 5% of net certificate reserves (certificate reserves less
certificate loans). At December 31, 1996, the capital and
unappropriated retained earnings amounted to 5.19% of net
certificate reserves.
PAGE 10
Item 6. Selected Financial Data
Summary of selected financial information
The following selected financial information has been derived from
the audited financial statements and should be read in conjunction
with those statements and the related notes to financial
statements. Also see Management's Discussion and Analysis of
Financial Condition and Results of Operations for additional
comments.
Year Ended Dec. 31, 1996 1995 1994 1993 1992
($ thousands)
Statement of Operations Data:
Investment income $251,481 $256,913 $207,975 $236,859 $294,799
Investment expenses 62,851 62,817 58,690 65,404 69,630
Net investment income before provision for
certificate reserves and income tax benefit 188,630 194,096 149,285 171,455 225,169
Net provision for certificate reserves 171,968 176,407 107,288 123,516 178,175
Net investment income before income taxes 16,662 17,689 41,997 47,939 46,994
Income tax benefit 6,537 9,097 2,663 3,3651 1,666
Net investment income 23,199 26,786 44,660 51,304 58,660
Realized gain (loss) on investments - net:
Securities of unaffiliated issuers (444) 452 (7,514) (9,870) (9,498)
Other - unaffiliated 101 (120) 1,638 (418) (500)
Total gain (loss) on investments (343) 332 (5,876) (10,288) (9,998)
Income tax benefit (expense) 120 (117) 2,047 4,617 -
Net realized gain (loss) on investments (223) 215 (3,829) (5,671) (9,998)
Net income - wholly owned subsidiary 1,251 373 241 120 3
Net income $24,227 $27,374 $41,072 $45,753 $48,665
Dividends declared:
Cash $65,000 $- $40,200 $64,500 $83,750
In-kind(a) - - - - 64,558
Balance Sheet Data:
Total assets $3,563,234 $3,912,131 $3,040,857 $2,951,405 $3,444,985
Certificate loans 43,509 51,147 58,203 67,429 77,347
Certificate reserves 3,283,191 3,628,574 2,887,405 2,777,451 3,256,472
Stockholder's equity 194,550 250,307 141,852 161,138 179,885
IDS Certificate Company (IDSC) is 100% owned by American Express Financial Corporation (Parent).
(a) Consisted of an investment security at amortized cost.
PAGE 11
Item 7.
Management's discussion and analysis of financial condition and
results of operations
Results of operations:
IDS Certificate Company's (IDSC) earnings are derived primarily
from the after-tax yield on invested assets less investment
expenses and interest credited on certificate reserve liabilities.
Changes in earnings' trends occur largely due to changes in the
rates of return on investments and the rates of interest credited
to certificate owner accounts and also, the mix of fully taxable
and tax-advantaged investments in the IDSC portfolio.
During the years 1994 and 1995, total assets and certificate
reserves increased due to certificate sales exceeding certificate
maturities and surrenders. The excess of certificate sales over
certificate maturities and surrenders resulted primarily from
higher accrual rates declared by IDSC during the last six months of
1994 and the first six months of 1995, reflecting rising interest
rates in the marketplace. The increase in total assets in 1995
reflects also an increase of $81 million in net unrealized
appreciation on investment securities classified as available for
sale. The increase in total assets in 1994 was tempered by $23
million of net unrealized depreciation on investment securities
classified as available for sale, net of deferred taxes of $13
million.
During the year 1996, total assets and certificate reserves
decreased due primarily to certificate maturities and surrenders
exceeding certificate sales. The excess of certificate maturities
and surrenders over certificate sales resulted primarily from lower
accrual rates declared by IDSC during the year. The decrease in
total assets in 1996 reflects also, a decrease in unrealized
appreciation on investment securities classified as available for
sale of $23 million and cash dividends paid to Parent of $65
million. The decrease in total assets in 1996 was tempered by an
increase in payable for securities purchased of $62 million that
settled in early 1997.
1996 Compared to 1995:
Gross investment income decreased 2.1% due primarily to lower
investment yields.
Investment expenses increased slightly in 1996. The increase
resulted primarily from higher amortization of premiums paid for
index options of $2.1 million and higher investment advisory and
services fee of $.5 million due to a slightly higher average asset
base on which the fee is calculated. These increases were offset
by lower distribution fees of $1.2 million due to lower certificate
sales, and lower amortization of premiums paid for interest rate
caps/corridors of $1.4 million. The lower amortization of interest
rate caps/corridors reflects the net of $8.2 million lower
amortization and $6.8 million less interest earned under the
cap/corridor agreements.
PAGE 12
Net provision for certificate reserves decreased 2.5% due primarily
to the net of lower accrual rates and a slightly higher average
balance of certificate reserves during 1996.
The decrease in income tax benefit resulted primarily from a lesser
portion of net investment income before income tax benefit being
attributable to tax-advantaged income.
1995 Compared to 1994:
Gross investment income increased 24% due primarily to a higher
average balance of invested assets and slightly higher investment
yields.
The 7.1% increase in investment expenses resulted primarily from
higher distribution fees due to higher sales of certificates that
provide for no deferral of those fees, and higher investment
advisory and services fee due to a higher asset base on which the
fee is calculated. These increases were partially offset by lower
amortization of the cost of options and interest rate
caps/corridors. The lower amortization of interest rate
caps/corridors reflects the net of $1.7 million of accelerated
amortization and $5.6 million higher interest earned under the
cap/corridor agreements.
Net provision for certificate reserves increased 65% reflecting a
higher average balance of certificate reserves and higher accrual
rates.
The increase in income tax benefit resulted primarily from a
greater portion of net investment income before income tax benefit
being attributable to tax-advantaged income.
Liquidity and cash flow:
IDSC's principal sources of cash are payments from sales of
face-amount certificates and cash flows from investments. In turn,
IDSC's principal uses of cash are payments to certificate owners
for matured and surrendered certificates, purchase of investments
and payments of dividends to its Parent.
Although total certificate sales decreased 41% in 1996 compared to
1995, certificate sales remained strong reflecting clients' ongoing
desire for safety of principal. Sales of certificates totaled
$1.0 billion in 1996 compared to $1.8 billion in 1995 and $1.5
billion during 1994. Certificate sales in 1995 benefited from the
special introductory promotion of IDSC's 11-month term Flexible
Savings certificate which generated sales of $562 million.
The special promotion of the 11-month term Flexible Savings
certificate was offered from May 10, 1995 to July 3, 1995, and
applied only to sales of new certificate accounts during the
promotion period. Certificates sold during the promotion period
received a special interest rate of 7.0% for the 11-month term.
Certificate maturities and surrenders totaled $1.7 billion during
1996 compared to $1.0 billion in 1995 and $1.2 billion in 1994.
The higher certificate maturities and surrenders in 1996 resulted
PAGE 13
primarily from $461 million of surrenders of the 11-month Flexible
Savings certificate. The surrenders of the 11-month Flexible
Savings certificate resulted primarily from lower accrual rates
declared by IDSC at term renewal, reflecting interest rates
available in the marketplace.
IDSC, as an issuer of face-amount certificates, is affected
whenever there is a significant change in interest rates. In view
of the uncertainty in the investment markets and due to the
short-term repricing nature of certificate reserve liabilities,
IDSC continues to invest in securities that provide for more
immediate, periodic interest/principal payments, resulting in
improved liquidity. To accomplish this, IDSC continues to invest
much of its cash flow in mortgage-backed securities and
intermediate-term bonds.
IDSC's investment program is designed to maintain an investment
portfolio that will produce the highest possible after-tax yield
within acceptable risk standards with additional emphasis on
liquidity. The program considers investment securities as
investments acquired to meet anticipated certificate owner
obligations.
Under Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities,
debt securities that IDSC has both the positive intent and ability
to hold to maturity are carried at amortized cost. Debt securities
IDSC does not have the positive intent to hold to maturity, as well
as all marketable equity securities, are classified as available
for sale and carried at fair value. The available-for-sale
classification does not mean that IDSC expects to sell these
securities, but that under SFAS No. 115 positive intent criteria,
these securities are available to meet possible liquidity needs
should there be significant changes in market interest rates
or certificate owner demand. See notes 1 and 3 to the financial
statements for additional information relating to SFAS No. 115.
At Dec. 31, 1996, securities classified as held to maturity and
carried at amortized cost were $.9 billion. Securities classified
as available for sale and carried at fair value were $2.2
billion. These securities, which comprise 88% of IDSC's total
invested assets, are well diversified. Of these securities, 98%
have fixed maturities of which 93% are of investment grade. Other
than U.S. Government Agency mortgage-backed securities, no one
issuer represents more than 1% of total securities. See note 3 to
financial statements for additional information on ratings and
diversification.
During the year ended Dec. 31, 1996, IDSC sold held-to-maturity
securities with an amortized cost and fair value of $2.3 million
and $1.8 million, respectively. The securities were sold due to
significant deterioration in the issuers' creditworthiness. In
addition, a held-to-maturity security with an amortized cost of $20
million was tendered for $23.2 million. By not accepting the
tender offer, Management believes it would have left IDSC
vulnerable to issuer's credit deterioration and it is reasonably
probable, impairment of investment and /or dividends would occur.
During the same period in 1996, securities classified as available
PAGE 14
for sale were sold with an amortized cost and fair value of $319
million and $314 million, respectively. The securities were sold
primarily to cover the cash outflows from surrenders of the
11-month Flexible Savings certificate.
During the year ended Dec. 31, 1995, investment securities,
primarily municipal bonds, with an amortized cost and fair value of
$112 million and $117 million, respectively, were reclassified
from held to maturity to available for sale. The reclassification
was made on Dec. 4, 1995, as a result of IDSC adopting the FASB
Special Report, A Guide to Implementation of Statement 115 on
Accounting for Certain Investments in Debt and Equity Securities.
There were no other transfers of securities during the years 1996
and 1995.
Derivative financial instruments:
IDSC enters into transactions involving interest rate caps, and
purchased and written call options to manage its exposure to rising
interest rates. IDSC does not enter into such transactions for
trading purposes. There is a possibility that the value of these
instruments will change due to fluctuations in a factor from which
the instruments derive their values. IDSC is not subject to this
market risk because these instruments are largely used to hedge
such risks, and therefore, the cash flow and income effects of the
instruments are inverse to the effects of the underlying
transactions. See note 9 to financial statements for additional
information regarding derivative financial instruments.
Dividends:
Cash dividends of $65 million were paid to IDSC's Parent in 1996.
Ratios:
The ratio of stockholder's equity, excluding net unrealized holding
gains on investment securities, to total assets less certificate
loans and net unrealized holding gains on investment securities
at Dec. 31, 1996 was 5.2% compared to 5.8% in 1995. IDSC's current
regulatory requirement is a ratio of 5.0%.
PAGE 15
Item 8. Financial Statements and Supplementary Data
1. Financial Statements and Schedules Required under Regulation S-X
Index to Financial Statements and Schedules Page
Financial Statements:
Responsibility for Preparation of Financial Statements 22
Report of Independent Auditors 23
Balance Sheets, Dec. 31, 1996 and 1995 24-25
Statements of Operations, year ended Dec. 31, 1996,
1995 and 1994 26-27
Statements of Stockholder's Equity, year ended
Dec. 31, 1996, 1995 and 1994 28
Statements of Cash Flows, year ended Dec. 31,
1996, 1995 and 1994 29-30
Notes to Financial Statements 31-47
Schedules:
I - Investments in Securities of Unaffiliated Issuers,
Dec. 31, 1996
II - Investments in and Advances to Affiliates and Income
Thereon, Dec. 31, 1996, 1995 and 1994
III - Mortgage Loans on Real Estate and Interest earned on
Mortgages, year ended Dec. 31, 1996
V - Qualified Assets on Deposit, Dec. 31, 1996
VI - Certificate Reserves, year ended Dec. 31, 1996
VII - Valuation and Qualifying Accounts, year ended
Dec. 31, 1996, 1995 and 1994
Schedules III and Schedule VI for the year ended Dec. 31, 1995
and Schedule VI (formerly Schedule XI) for the year ended Dec. 31,
1994 are included in Registrant's Annual Reports on Form 10-K for
the fiscal years ended Dec. 31, 1995 and Dec. 31, 1994,
respectively, Commission file 2-23772, and are incorporated herein
by reference.
2. Supplementary Data
None
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
None
PAGE 16
PART III
Items omitted pursuant to General Instructions I(2)(c) of
Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a) List the following documents filed as a part of the
report:
1. All financial statements. See Item 8.
2. Financial statement schedules. See Item 8.
3. Exhibits
(3)a. Certificate of Incorporation, dated December 31,
1977, filed electronically as Exhibit 3(a) to
Post-Effective Amendment No. 10 to Registration Statement
No. 2-89507, is incorporated herein by reference.
(3)b. Certificate of Amendment, dated April 2, 1984,
filed electronically as Exhibit 3(b) to Post-Effective
Amendment No. 10 to Registration Statement No. 2-89507,
is incorporated herein by reference.
(3)c. By-Laws, dated December 31, 1977, filed
electronically as Exhibit 3(c) to Post-Effective
Amendment No. 10 to Registration Statement No. 2-89507,
is incorporated herein by reference.
(10)a. The Distribution Agreement dated November 18,
1988, between Registrant and IDS Financial Services Inc.,
filed electronically as Exhibit 1(a) to the Registration
Statement for the American Express International
Investment Certificate (now called the IDS Investors
Certificate), is incorporated herein by reference.
(10)b. The Distribution Agreement dated March 29, 1996,
between Registrant and American Express Service
Corporation, filed electronically as Exhibit 1(b) to
Post-Effective Amendment No. 38 to Registration Statement
No. 2-55252 for the D-1 Investment Certificate, is
incorporated herein by reference.
(10)c. Selling Agent Agreement dated June 1, 1990,
between American Express Bank International and IDS
Financial Services Inc., for the IDS Investors and IDS
Stock Market Certificates, filed electronically as
Exhibit 1(c) to the Post-Effective Amendment No. 5 to
Registration Statement No. 33-26844 for the IDS Investors
Certificate, is incorporated herein by reference.
PAGE 17
(10)d. Marketing Agreement dated October 10, 1991,
between Registrant and American Express Bank Ltd., filed
electronically as Exhibit 1(d) to the Post-Effective
Amendment No. 31 to Registration Statement No. 2-55252
for the Series D-1 Investment Certificate, is
incorporated herein by reference.
(10)e. Letter amendment dated January 9, 1997, to the
Marketing Agreement dated October 10, 1991, between
Registrant and American Express Bank Ltd. filed
electronically as exhibit 10(j) to Post-Effective
Amendment No. 40 to Registration Statement No. 2-55252 is
incorporated herein by reference.
(10)f. Amendment to the Selling Agent Agreement dated
December 12, 1994, between IDS Financial Services Inc.
and American Express Bank International, filed
electronically as Exhibit 16(d) to Post-Effective
Amendment No. 13 to Registration Statement No. 2-95577,
is incorporated herein by reference.
(10)g. Selling Agent Agreement dated December 31, 1994,
between IDS Financial Services Inc. and Coutts & Co.
(USA) International, filed electronically as Exhibit
16(e) to Post-Effective Amendment No. 13 to Registration
Statement No. 2-95577, is incorporated herein by
reference.
(10)h. Consulting Agreement dated December 12, 1994,
between IDS Financial Services Inc. and American Express
Bank International, filed electronically as Exhibit 16(f)
to Post-Effective Amendment No. 13 to Registration
Statement No. 2-95577 incorporated herein by reference.
(10)i. Second amendment to Selling Agent Agreement
between American Express Financial Advisors Inc. and
American Express Bank International dated as of May 2,
1995, filed electronically as Exhibit (1) to Registrant's
June 30, 1995, Quarterly Report on Form 10-Q, is
incorporated herein by reference.
(10)j. The Investment Advisory and Services Agreement
between Registrant and IDS/American Express Inc. dated
January 12, 1984, filed electronically as Exhibit 10(a)
to Registration Statement No. 2-89507 is incorporated
herein by reference.
(10)k. Depository and Custodial Agreement dated
September 30, 1985, between IDS Certificate Company and
IDS Trust Company, filed electronically as Exhibit 10(b)
to Registrant's Post-Effective Amendment No. 3 to
Registration Statement No. 2-89507 is incorporated herein
by reference.
PAGE 18
(10)l. Foreign Deposit Agreement dated November 21,
1990, between IDS Certificate Company and IDS Bank &
Trust, filed electronically as Exhibit 10(h) to
Post-Effective Amendment No. 5 to Registration Statement
No. 33-26844, is incorporated herein by reference.
(24)a. Officers' Power of Attorney dated May 17, 1994,
filed as Exhibit 25(a) to Post-Effective Amendment No. 37
to Registration Statement No. 2-55252, is incorporated
herein by reference.
(24)b. Directors' Power of Attorney dated February 29,
1996, filed as Exhibit 24(b) to Post-Effective Amendment
No. 39 to Registration Statement No. 2-55252, is
incorporated herein by reference.
(b) Reports on Form 8-K filed during the last quarter of the
period covered by this report:
None
PAGE 19
SIGNATURES
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.
REGISTRANT IDS CERTIFICATE COMPANY
/s/ Stuart A. Sedlacek
BY BRUCE A. KOHN
NAME AND TITLE Stuart A. Sedlacek*
President
DATE March 27, 1997
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
BY BRUCE A. KOHN
NAME AND TITLE Stuart A. Sedlacek* **
President and Director
(Principal Executive Officer)
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE Jay C. Hatlestad,* Vice
President and Controller
(Principal Accounting Officer)
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE Morris Goodwin,* Vice President
and Treasurer (Principal
Financial Officer)
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE David R. Hubers,** Director
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE Charles W. Johnson,** Director
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE Richard W. Kling,** Director
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE Edward Landes,** Director
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE John V. Luck,** Director
DATE March 27, 1997
PAGE 20
BY BRUCE A. KOHN
NAME AND TITLE James A. Mitchell,** Director
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE Harrison Randolph,** Director
DATE March 27, 1997
BY BRUCE A. KOHN
NAME AND TITLE Gordon H. Ritz,** Director
DATE March 27, 1997
* Signed pursuant to Officers' Power of Attorney dated May 17,
1994 filed as Exhibit 25(a) to Post-Effective Amendment
No. 37 to Registration Statement No. 2-55252, incorporated herein
by reference.
_______________________
Bruce A. Kohn
** Signed pursuant to Directors' Power of Attorney dated February
29, 1996 filed as Exhibit 24(b) to Post-Effective Amendment No. 39
to Registration Statement No. 2-55252, incorporated herein by
reference.
_______________________
Bruce A. Kohn
PAGE 21
(THIS PAGE INTENTIONALLY LEFT BLANK)
PAGE 22
IDS Certificate Company
Responsibility for Preparation of Financial Statements
The management of IDS Certificate Company (IDSC) is responsible for
the preparation and fair presentation of its financial statements.
The financial statements have been prepared in conformity with
generally accepted accounting principles appropriate in the
circumstances, and include amounts based on the best judgment of
management. IDSC's management is also responsible for the accuracy
and consistency of other financial information included in this
Form 10-K.
In recognition of its responsibility for the integrity and
objectivity of data in the financial statements, IDSC maintains a
system of internal control over financial reporting. The system is
designed to provide reasonable, but not absolute, assurance with
respect to the reliability of IDSC's financial statements. The
concept of reasonable assurance is based on the notion that the
cost of the internal control system should not exceed the benefits
derived.
The internal control system is founded on an ethical climate and
includes an organizational structure with clearly defined lines of
responsibility, policies and procedures, and the careful selection
and training of employees. Internal auditors monitor and assess
the effectiveness of the internal control system and report their
findings to management throughout the year. IDSC's independent
auditors are engaged to express an opinion on the year-end
financial statements and, with the coordinated support of the
internal auditors, review the financial records and related data
and test the internal control system over financial reporting.
PAGE 23
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Security Holders
IDS Certificate Company:
We have audited the accompanying balance sheets of IDS Certificate
Company, a wholly owned subsidiary of American Express Financial
Corporation, as of December 31, 1996 and 1995, and the related
statements of operations, stockholder's equity, and cash flows for
each of the three years in the period ended December 31, 1996. Our
audits also included the financial statement schedules listed in
the index at Item 8. These financial statements and schedules are
the responsibility of the management of IDS Certificate Company.
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 and schedules are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements and schedules. Our procedures included confirmation of
investments owned as of December 31, 1996 and 1995, by
correspondence with custodians and brokers. 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 IDS
Certificate Company at December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally
accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to
the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
As discussed in Note 1 to the financial statements, IDS Certificate
Company changed its method of accounting for certain investments in
debt and equity securities in 1994.
ERNST & YOUNG LLP
Minneapolis, Minnesota
February 7, 1997
PAGE 24
Balance Sheets, Dec. 31,
Assets
Qualified Assets (note 2) 1996 1995
($ thousands)
Investments in unaffiliated issuers (notes 3, 4 and 10):
Cash and cash equivalents $111,331 $56,873
Held-to-maturity securities 863,921 1,002,905
Available-for-sale securities 2,212,968 2,408,491
First mortgage loans on real estate 218,697 233,394
Certificate loans - secured by certificate reserves 43,509 51,147
Investments in and advances to affiliates 6,444 5,655
Total investments 3,456,870 3,758,465
Receivables:
Dividends and interest 44,013 49,632
Investment securities sold 654 42,872
Total receivables 44,667 92,504
Other (notes 9 and 10) 36,164 32,778
Total qualified assets 3,537,701 3,883,747
Other Assets
Deferred distribution fees 25,525 28,286
Other 8 98
Total other assets 25,533 28,384
Total assets $3,563,234 $3,912,131
See notes to financial statements.
PAGE 25
Balance Sheets, Dec. 31,
Liabilities and Stockholder's Equity
Liabilities 1996 1995
($ thousands)
Certificate Reserves (notes 5 and 10):
Installment certificates:
Reserves to mature $344,344 $330,415
Additional credits and accrued interest 21,931 21,555
Advance payments and accrued interest 1,198 1,394
Other 55 55
Fully paid certificates:
Reserves to mature 2,747,690 3,127,301
Additional credits and accrued interest 167,673 147,468
Due to unlocated certificate holders 300 386
Total certificate reserves 3,283,191 3,628,574
Accounts Payable and Accrued Liabilities:
Due to Parent (note 7A) 1,424 1,541
Due to Parent for federal income taxes 1,737 103
Due to affiliates (note 7B, 7C and 7D) 279 2,068
Payable for investment securities purchased 61,979 -
Accounts payable, accrued expenses and other (notes 9 and 10) 11,977 12,249
Total accounts payable and accrued liabilities 77,396 15,961
Deferred federal income taxes (note 8) 8,097 17,289
Total liabilities 3,368,684 3,661,824
Commitments (note 4)
Stockholder's Equity (notes 5B, 5C, and 6):
Common stock, $10 par - authorized and issued 150,000 shares 1,500 1,500
Additional paid-in capital 143,844 168,844
Retained earnings:
Appropriated for predeclared additional credits/interest 11,989 18,878
Appropriated for additional interest on advance payments 50 50
Unappropriated 22,728 31,612
Unrealized holding gains on investment
securities - net (note 3A) 14,439 29,423
Total stockholder's equity 194,550 250,307
Total liabilities and stockholder's equity $3,563,234 $3,912,131
See notes to financial statements.
PAGE 26
Statements of Operations
Year ended Dec. 31, 1996 1995 1994
($thousands)
Investment Income:
Interest income from investments:
Bonds and notes:
Unaffiliated issuers $184,653 $181,902 $125,546
Mortgage loans on real estate:
Unaffiliated 19,583 22,171 24,006
Affiliated 36 56 68
Certificate loans 2,533 2,963 3,342
Dividends 44,100 48,614 54,170
Other 576 1,207 843
Total investment income 251,481 256,913 207,975
Investment Expenses:
Parent and affiliated company fees (note 7):
Distribution 32,732 33,977 27,007
Investment advisory and services 16,989 16,472 13,565
Depositary 228 242 183
Options (note 9) 10,156 8,038 9,854
Interest rate caps/corridors (note 9) 2,351 3,725 7,608
Other 395 363 473
Total investment expenses 62,851 62,817 58,690
Net investment income before provision
for certificate reserves and income
tax benefit $188,630 $194,096 $149,285
See notes to financial statements.
PAGE 27
Statements of Operations (continued)
Year ended Dec. 31, 1996 1995 1994
($thousands)
Provision for Certificate Reserves (notes 5 and 9):
According to the terms of the certificates:
Provision for certificate reserves $10,445 $11,009 $13,317
Interest on additional credits 1,487 2,300 3,174
Interest on advance payments 61 73 61
Additional credits/interest authorized by IDSC:
On fully paid certificates 155,411 157,857 85,101
On installment certificates 5,637 6,288 6,741
Total provision before reserve recoveries 173,041 177,527 108,394
Reserve recoveries from terminations
prior to maturity (1,073) (1,120) (1,106)
Net provision for certificate reserves 171,968 176,407 107,288
Net investment income before income tax benefit 16,662 17,689 41,997
Income tax benefit (note 8) 6,537 9,097 2,663
Net investment income 23,199 26,786 44,660
Realized gain (loss) on investments - net:
Securities of unaffiliated issuers (444) 452 (7,514)
Other-unaffiliated 101 (120) 1,638
Total gain (loss) on investments (343) 332 (5,876)
Income tax benefit (expense) (note 8):
Current 772 160 2,414
Deferred (652) (277) (367)
Total income tax benefit (expense) 120 (117) 2,047
Net realized gain (loss) on investments (223) 215 (3,829)
Net income - wholly owned subsidiary 1,251 373 241
Net income $24,227 $27,374 $41,072
See notes to financial statements.
PAGE 28
Statements of Stockholder's Equity
Year ended Dec. 31, 1996 1995 1994
($thousands)
Common Stock:
Balance at beginning and end of year $1,500 $1,500 $1,500
Additional Paid-in Capital:
Balance at beginning of year $168,844 $140,344 $147,144
Contribution from Parent - 28,500 3,000
Cash dividends declared (25,000) - (9,800)
Balance at end of year $143,844 $168,844 $140,344
Retained Earnings:
Appropriated for predeclared additional credits/interest (note 5B):
Balance at beginning of year $18,878 $18,398 $2,726
Transferred from (to) unappropriated
retained earnings (6,889) 480 15,672
Balance at end of year $11,989 $18,878 $18,398
Appropriated for additional interest on advance payments (note 5C):
Balance at beginning of year $50 $50 $25
Transferred from (to) unappropriated
retained earnings - - 25
Balance at end of year $50 $50 $50
Unappropriated (note 6):
Balance at beginning of year $31,612 $4,718 $9,743
Net income 24,227 27,374 41,072
Transferred (to) from appropriated
retained earnings 6,889 (480) (15,697)
Cash dividends declared (40,000) - (30,400)
Balance at end of year $22,728 $31,612 $4,718
Unrealized holding gains and losses on investment securities -
net (notes 1 and 3A):
Balance at beginning of year $29,423 ($23,158) $-
Adjustment due to initial application of SFAS 115 - - 8,827
Change during year (14,984) 52,581 (31,985)
Balance at end of year $14,439 $29,423 ($23,158)
Total stockholder's equity $194,550 $250,307 $141,852
See notes to financial statements.
PAGE 29
Statements of Cash Flows
Year ended Dec. 31, 1996 1995 1994
($ thousands)
Cash flows from operating activities:
Net income $24,227 $27,374 $41,072
Adjustments to reconcile net income to net
cash provided by operating activities:
Net income of wholly owned subsidiary (1,251) (373) (241)
Provision for certificate reserves 171,968 176,407 107,288
Interest income added to certificate loans (1,631) (1,902) (2,133)
Amortization of premium/discount-net 14,039 19,232 22,114
Net loss (gain) on investments 343 (332) 5,876
Decrease (increase) in dividends and
interest receivable 5,619 (7,371) (1,829)
Decrease (increase) in deferred
distribution fees 2,761 (1,144) (7,527)
Decrease (increase) in other assets - 466 (466)
Decrease (increase) in deferred federal
income taxes (1,124) (2,652) 4,263
Decrease in other liabilities (679) (1,549) (3,210)
Net cash provided by operating activities 214,272 208,156 165,207
Cash flows from investing activities:
Maturity and redemption of investments:
Held-to-maturity securities 163,066 315,766 350,411
Available-for-sale securities 537,565 325,521 173,547
Other investments 52,189 46,004 35,130
Sale of investments:
Held-to-maturity securities 24,984 22,305 3,164
Available-for-sale securities 356,194 48,372 267,808
Other investments 385 21 -
Certificate loan payments 6,003 6,061 7,508
Purchase of investments:
Held-to-maturity securities (49,984) (208,140) (46,080)
Available-for-sale securities (617,138) (1,397,983) (830,826)
Other investments (28,617) (17,234) (9,208)
Certificate loan fundings (5,288) (7,776) (7,603)
Investment in subsidiary - - (450)
Net cash provided by (used in)
investing activities $439,359 ($867,083) ($56,599)
See notes to financial statements.
PAGE 30
Statements of Cash Flows (continued)
Year ended Dec. 31, 1996 1995 1994
($ thousands)
Cash flows from financing activities:
Payments from certificate owners $1,129,023 $1,577,884 $1,185,762
Capital contribution from Parent - 28,500 3,000
Certificate maturities and cash surrenders (1,663,196) (1,030,712) (1,171,101)
Dividends paid (65,000) - (40,200)
Net cash provided by (used in)
financing activities (599,173) 575,672 (22,539)
Net increase (decrease) in cash and
cash equivalents 54,458 (83,255) 86,069
Cash and cash equivalents beginning of year 56,873 140,128 54,059
Cash and cash equivalents end of year $111,331 $56,873 $140,128
Supplemental disclosures including non-cash transactions:
Cash received for income taxes $7,195 $6,854 $2,416
Certificate maturities and surrenders through
loan reductions 8,554 10,673 11,454
See notes to financial statements.
PAGE 31
Notes to Financial Statements ($ in thousands unless indicated
otherwise)
1. Nature of business and summary of significant accounting
policies
Nature of business
IDS Certificate Company (IDSC) is a wholly owned subsidiary of
American Express Financial Corporation (Parent), which is a wholly
owned subsidiary of American Express Company. IDSC is registered
as an investment company under the Investment Company Act of 1940
(the 1940 Act) and is in the business of issuing face-amount
investment certificates. The certificates issued by IDSC are not
insured by any government agency. IDSC's certificates are sold
primarily by American Express Financial Advisors Inc.'s (an
affiliate) field force operating in 50 states, the District of
Columbia and Puerto Rico. IDSC's Parent acts as investment advisor
for IDSC.
IDSC currently offers nine types of certificates with specified
maturities ranging from four to twenty years. Within their
specified maturity, most certificates have interest rate terms of
one to thirty-six months. In addition, one type of certificate has
interest tied, in whole or in part, to any upward movement in a
broad-based stock market index. Except for two types of
certificates, all of the certificates are available as qualified
investments for Individual Retirement Accounts or 401(k) plans and
other qualified retirement plans.
IDSC's gross income is derived primarily from interest and
dividends generated by its investments. IDSC's net income is
determined by deducting from such gross income its provision for
certificate reserves, and other expenses, including taxes, the fee
paid to Parent for investment advisory and other services, and the
distribution fees paid to American Express Financial Advisors Inc.
Described below are certain accounting policies that are important
to an understanding of the accompanying financial statements.
Basis of financial statement presentation
The accompanying financial statements are presented in accordance
with generally accepted accounting principles. IDSC uses the
equity method of accounting for its wholly owned unconsolidated
subsidiary, which is the method prescribed by the Securities and
Exchange Commission (SEC) for issuers of face-amount certificates.
Certain amounts from prior years have been reclassified to
conform to the current year presentation.
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 and the reported amounts of income and expenses during
the year then ended. Actual results could differ from those
estimates.
PAGE 32
Notes to Financial Statements (continued)
Fair values of financial instruments
The fair values of financial instruments disclosed in the notes to
financial statements are estimates based upon current market
conditions and perceived risks, and require varying degrees of
management judgment.
Preferred stock dividend income
IDSC recognizes dividend income from cumulative redeemable
preferred stocks with fixed maturity amounts on an accrual basis
similar to that used for recognizing interest income on debt
securities. Dividend income from perpetual preferred stock is
recognized on an ex-dividend basis.
Securities
Cash equivalents are carried at amortized cost, which approximates
fair value. IDSC has defined cash and cash equivalents as cash in
banks and highly liquid investments with a maturity of three months
or less at acquisition and are not interest rate sensitive.
As of Jan. 1, 1994, IDSC adopted Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in
Debt and Equity Securities. Under the new rules, debt securities
that IDSC has both the positive intent and ability to hold to
maturity are carried at amortized cost. Debt securities IDSC does
not have the positive intent to hold to maturity, as well as all
marketable equity securities, are classified as available for
sale and carried at fair value. Unrealized holding gains and
losses on securities classified as available for sale are carried,
net of deferred income taxes, as a separate component of
stockholder's equity. The opening balance of stockholder's equity
was increased by $8,827 (net of $4,752 in deferred income taxes) to
reflect the net unrealized holding gains on securities classified
as available for sale previously carried at amortized cost or the
lower of cost or market.
The basis for determining cost in computing realized gains and
losses on securities is specific identification. When there is a
decline in value that is other than temporary, the securities are
carried at estimated realizable value with the amount of adjustment
included in income.
First mortgage loans on real estate
Mortgage loans are carried at amortized cost, less reserves for
losses, which is the basis for determining any realized gains or
losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage
interest rates currently offered for mortgages of similar
maturities.
PAGE 33
Notes to Financial Statements (continued)
Impairment is measured as the excess of the loan's recorded
investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate,
or the fair value of collateral. The amount of the impairment is
recorded in a reserve for mortgage loan losses.
The reserve for mortgage loan losses is maintained at a level that
management believes is adequate to absorb estimated losses in the
portfolio. The level of the reserve account is determined based on
several factors, including historical experience, expected future
principal and interest payments, estimated collateral values, and
current and anticipated economic and political conditions.
Management regularly evaluates the adequacy of the reserve for
mortgage loan losses.
IDSC generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on
Management's judgement as to the ultimate collectibility of
principal, interest payments received are either recognized as
income or applied to the recorded investment in the loan.
Certificates
Investment certificates may be purchased either with a lump-sum
payment or by installment payments. Certificate owners are
entitled to receive at maturity a definite sum of money. Payments
from certificate owners are credited to investment certificate
reserves. Investment certificate reserves accumulate at specified
percentage rates as declared by IDSC. Reserves also are maintained
for advance payments made by certificate owners, accrued interest
thereon, and for additional credits in excess of minimum guaranteed
rates and accrued interest thereon. On certificates allowing
for the deduction of a surrender charge, the cash surrender values
may be less than accumulated investment certificate reserves prior
to maturity dates. Cash surrender values on certificates allowing
for no surrender charge are equal to certificate reserves. The
payment distribution, reserve accumulation rates, cash surrender
values, reserve values and other matters are governed by the 1940
Act.
Deferred distribution fee expense
On certain series of certificates, distribution fees are deferred
and amortized over the estimated lives of the related certificates,
which is approximately 10 years. Upon surrender, unamortized
deferred distribution fees and any related surrender charges are
recognized in income.
Federal income taxes
IDSC's taxable income or loss is included in the consolidated
federal income tax return of American Express Company. IDSC
provides for income taxes on a separate return basis, except that,
under an agreement between Parent and American Express Company, tax
benefits are recognized for losses to the extent they can be used
PAGE 34
Notes to Financial Statements (continued)
in the consolidated return. It is the policy of Parent and its
subsidiaries that Parent will reimburse a subsidiary for any tax
benefits recorded.
2. Deposit of assets and maintenance of qualified assets
A) Under the provisions of its certificates and the 1940 Act, IDSC
was required to have qualified assets (as that term is defined in
Section 28(b) of the 1940 Act) in the amount of $3,259,260 and
$3,619,188 at Dec. 31, 1996 and 1995, respectively. IDSC had
qualified assets of $3,453,508 at Dec. 31, 1996 and $3,838,482 at
Dec. 31, 1995, excluding net unrealized appreciation on
available-for-sale securities of $22,214 and $45,265 at Dec.
31,1996 and 1995, respectively and payable for securities purchased
of $61,979 and $nil at Dec. 31, 1996 and 1995,
respectively.
Qualified assets are valued in accordance with such provisions of
Minnesota Statutes as are applicable to investments of life
insurance companies. Qualified assets for which no provision for
valuation is made in such statutes are valued in accordance with
rules, regulations or orders prescribed by the SEC. These values
are the same as financial statement carrying values, except for
debt securities classified as available for sale and all marketable
equity securities, which are carried at fair value in the financial
statements but are valued at amortized cost for qualified asset and
deposit maintenance purposes.
B) Pursuant to provisions of the certificates, the 1940 Act, the
central depositary agreement and to requirements of various states,
qualified assets of IDSC were deposited as follows:
Dec. 31, 1996
Required
Deposits deposits Excess
Deposits to meet certificate
liability requirements:
States $362 $330 $32
Central Depositary 3,355,041 3,203,076 151,965
Total $3,355,403 $3,203,406 $151,997
PAGE 35
Notes to Financial Statements (continued)
Dec. 31, 1995
Required
Deposits deposits Excess
Deposits to meet certificate
liability requirements:
States $414 $384 $30
Central Depositary 3,678,295 3,548,334 129,961
Total $3,678,709 $3,548,718 $129,991
The assets on deposit at Dec. 31, 1996 and 1995 consisted of
securities having a deposit value of $3,117,715 and $3,435,074,
respectively; mortgage loans of $218,697 and $229,554,
respectively; and other assets of $18,991 and $14,081,
respectively. Mortgage loans on deposit include an affiliated
mortgage loan at Dec. 31, 1995.
American Express Trust Company is the central depositary for IDSC.
See note 7C.
3. Investments in securities
A) Fair values of investments in securities represent market
prices or estimated fair values when quoted prices are not
available. Estimated fair values are determined by IDSC using
established procedures, involving review of market indexes, price
levels of current offerings and comparable issues, price estimates
and market data from independent brokers and financial files. The
procedures are reviewed annually. IDSC's vice president -
investments reports to the board of directors on an annual basis
regarding such pricing sources and procedures to provide assurance
that fair value is being achieved.
The following is a summary of securities held to maturity and
securities available for sale at Dec. 31, 1996 and Dec. 31, 1995.
Dec. 31, 1996
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
HELD TO MATURITY
U.S. Government and agencies obligations $362 $365 $4 $1
Mortgage-backed securities 38,435 38,834 743 344
Corporate debt securities 266,642 274,235 8,447 854
Stated maturity preferred stock 558,482 576,603 19,513 1,392
$863,921 $890,037 $28,707 $2,591
AVAILABLE FOR SALE
Mortgage-backed securities $1,009,738 $1,021,603 $14,164 $2,299
State and municipal obligations 55,876 57,726 1,850 -
Corporate debt securities 1,000,316 1,008,077 10,808 3,047
Stated maturity preferred stock 52,458 52,139 109 428
Perpetual preferred stock 68,000 68,282 317 35
Common stock 4,366 5,141 775 -
$2,190,754 $2,212,968 $28,023 $5,809
PAGE 36
Notes to Financial Statements (continued)
Dec. 31, 1995
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
HELD TO MATURITY
U.S. Government and agencies obligations $415 $427 $12 $-
Mortgage-backed securities 54,477 55,708 1,234 3
Corporate debt securities 333,861 348,860 15,029 30
Stated maturity preferred stock 614,152 643,436 30,072 788
$1,002,905 $1,048,431 $46,347 $821
AVAILABLE FOR SALE
Mortgage-backed securities $1,321,051 $1,340,956 $21,349 $1,444
State and municipal obligations 101,399 105,680 4,281 -
Corporate debt securities 918,792 939,878 22,638 1,552
Stated maturity preferred stock 21,229 21,365 192 56
Common stock 755 612 - 143
$2,363,226 $2,408,491 $48,460 $3,195
The amortized cost and fair value of securities held to maturity
and available for sale, by contractual maturity, at Dec. 31, 1996,
are shown below. Cash flows will differ from contractual
maturities because issuers may have the right to call or prepay
obligations.
Amortized Fair
cost value
HELD TO MATURITY
Due within 1 year $34,448 $34,948
Due after 1 through 5 years 400,592 414,987
Due after 5 years through 10 years 211,557 217,449
Due after 10 years 178,889 183,819
825,486 851,203
Mortgage-backed securities 38,435 38,834
$863,921 $890,037
AVAILABLE FOR SALE
Due within 1 year $109,402 $109,963
Due after 1 through 5 years 642,863 647,886
Due after 5 years through 10 years 204,675 207,250
Due after 10 years 151,710 152,843
1,108,650 1,117,942
Mortgage-backed securities 1,009,738 1,021,603
Perpetual preferred stock 68,000 68,282
Common stock 4,366 5,141
$2,190,754 $2,212,968
During the years ended Dec. 31, 1996 and 1995, there were no
securities classified as trading securities.
PAGE 37
Notes to Financial Statements (continued)
The proceeds from sales of available-for-sale securities and the
gross realized gains and gross realized losses on those sales
during the years ended Dec. 31, 1996, 1995 and 1994, were as
follows:
1996 1995 1994
Proceeds $313,976 $83,970 $265,008
Gross realized gains 456 36 363
Gross realized losses 5,836 1,854 10,140
Sales of held-to-maturity securities, due to significant credit
deterioration, during the years ended Dec. 31, 1996, 1995 and 1994,
were as follows:
1996 1995 1994
Amortized cost $22,297 $22,782 $3,158
Gross realized gains 3,200 2 5
Gross realized losses 513 479 -
During the year ended Dec. 31, 1996, no securities were
reclassified from held to maturity to available for sale. During
the year ended Dec. 31, 1995, securities with an amortized cost
and fair value of $111,967 and $116,882, respectively, were
reclassified from held to maturity to available for sale. The
reclassification was made on Dec. 4, 1995, as a result of
adopting the FASB Special Report, A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and
Equity Securities.
B) Investments in securities with fixed maturities comprised 85%
and 90% of IDSC's total invested assets at Dec. 31, 1996 and 1995,
respectively. Securities are rated by Moody's and Standard & Poors
(S&P), or by Parent's internal analysts, using criteria similar to
Moody's and S&P, when a public rating does not exist. A summary of
investments in securities with fixed maturities by rating of
investment is as follows:
Rating 1996 1995
Aaa/AAA 41% 44%
Aa/AA 1 2
Aa/A 1 2
A/A 20 23
A/BBB 6 6
Baa/BBB 24 20
Below investment grade 7 3
100% 100%
PAGE 38
Notes to Financial Statements (continued)
Of the securities rated Aaa/AAA, 87% at Dec. 31, 1996 and 92% at
Dec. 31, 1995 are U.S. Government Agency mortgage-backed securities
that are not rated by a public rating agency. Approximately 11% at
Dec. 31, 1996 and 1995 of other securities with fixed maturities
are rated by Parent's internal analysts. At Dec. 31, 1996 and 1995
no one issuer, other than U.S. Government Agency mortgage-backed
securities, is greater than 1% of IDSC's total investment in
securities with fixed maturities.
C) IDSC reserves freedom of action with respect to its acquisition
of restricted securities that offer advantageous and desirable
investment opportunities. In a private negotiation, IDSC may
purchase for its portfolio all or part of an issue of restricted
securities. Since IDSC would intend to purchase such securities
for investment and not for distribution, it would not be acting as
a distributor if such securities are resold by IDSC at a later
date.
The fair values of restricted securities are determined by the
board of directors using the procedures and factors described in
note 3A.
In the event IDSC were to be deemed to be a distributor of the
restricted securities, it is possible that IDSC would be required
to bear the costs of registering those securities under the
Securities Act of 1933, although in most cases such costs would be
borne by the issuer of the restricted securities.
4. Investments in first mortgage loans on real estate
At Dec. 31, 1996 and 1995, IDSC's recorded investment in impaired
mortgage loans was $847 and $1,004, respectively, and the reserve
for loss on those amounts was $611. During 1996 and 1995, the
average recorded investment in impaired mortgage loans was $925 and
$1,052, respectively.
IDSC recognized $88 and $53 of interest income related to impaired
mortgage loans for the years ended Dec. 31, 1996 and 1995,
respectively.
There were no changes in the reserve for loss on mortgage loans of
$611 during the years ended Dec. 31, 1996 and 1995.
At Dec. 31, 1996 and 1995, approximately 6% of IDSC's invested
assets were first mortgage loans on real estate. A summary of
first mortgage loans by region and type of real estate is as
follows:
Region 1996 1995
South Atlantic 22% 22%
East North Central 21 22
West North Central 17 19
Mountain 15 9
Middle Atlantic 14 17
PAGE 39
Notes to Financial Statements (continued)
West South Central 5 5
Pacific 3 3
New England 3 3
100% 100%
Property Type 1996 1995
Retail/shopping centers 36% 32%
Apartments 33 39
Industrial buildings 13 12
Office buildings 9 8
Retirement homes - 1
Other 9 8
100% 100%
The carrying amounts and fair values of first mortgage loans on
real estate are as follows at Dec. 31. The fair values are
estimated using discounted cash flow analysis, using market
interest rates currently being offered for loans with similar
maturities.
Dec. 31, 1996 Dec. 31, 1995
Carrying Fair Carrying Fair
amount value amount value
First mortgage loans on real estate $219,308 $221,253 $234,005 $248,860
Reserve for losses (611) - (611) -
Net first mortgage loans on real estate $218,697 $221,253 $233,394 $248,860
At Dec. 31, 1996 and 1995, commitments for fundings of first
mortgage loans, at market interest rates, aggregated $9,300 and
$nil, respectively. IDSC employs policies and procedures to
ensure the creditworthiness of the borrowers and that funds will be
available on the funding date. IDSC's loan fundings are restricted
to 80% or less of the market value of the real estate at the time
of the loan funding. Management believes there is no fair value
for these commitments.
5. Certificate reserves
Reserves maintained on outstanding certificates have been computed
in accordance with the provisions of the certificates and Section
28 of the 1940 Act. The average rates of accumulation on
certificate reserves at Dec. 31, 1996 and 1995 were:
1996
Average Average
gross additional
Reserve accumulation credit
balance rate rate
Installment certificates:
Reserves to mature:
With guaranteed rates $32,512 3.50% 1.35%
Without guaranteed rates (A) 311,832 - 2.97
Additional credits and accrued interest 21,931 3.14 -
Advance payments and accrued interest (C) 1,198 3.15 1.70
PAGE 40
Notes to Financial Statements (continued)
Other 55 - -
Fully paid certificates:
Reserves to mature:
With guaranteed rates 187,272 3.23 1.79
Without guaranteed rates (A) and (D) 2,560,418 - 5.03
Additional credits and accrued interest 167,673 3.23 -
Due to unlocated certificate holders 300 - -
$3,283,191
1995
Average Average
gross additional
Reserve accumulation credit
balance rate rate
Installment certificates:
Reserves to mature:
With guaranteed rates $40,232 3.50% 1.35%
Without guaranteed rates (A) 290,183 - 3.23
Additional credits and accrued interest 21,555 3.13 -
Advance payments and accrued interest 1,394 3.13 1.72
Other 55 - -
Fully paid certificates:
Reserves to mature:
With guaranteed rates 210,365 3.24 1.85
Without guaranteed rates (A) and (D) 2,916,936 - 5.70
Additional credits and accrued interest 147,468 3.26 -
Due to unlocated certificate holders 386 - -
$3,628,574
A) There is no minimum rate of accrual on these reserves. Interest
is declared periodically, quarterly or annually, in accordance with
the terms of the separate series of certificates.
B) On certain series of single payment certificates, additional
interest is predeclared for periods greater than one year. At Dec.
31, 1996, $11,989 of retained earnings had been appropriated for
the predeclared additional interest, which represents the
difference between certificate reserves on these series, calculated
on a statutory basis, and the reserves maintained per books.
C) Certain series of installment certificates guarantee accrual of
interest on advance payments at an average of 3.15%. IDSC has
increased the rate of accrual to 4.85% through April 30, 1998. An
appropriation of retained earnings amounting to $50 has been made,
which represents the estimated additional accrual that will result
from the increase granted by IDSC.
D) IDS Stock Market Certificate enables the certificate owner to
participate in any relative rise in a major stock market index
without risking loss of principal. Generally the certificate has a
term of 12 months and may continue for up to 14 successive terms.
The reserve balance at Dec. 31, 1996 and 1995 was $309,570 and
$211,093, respectively.
E) The carrying amounts and fair values of certificate reserves
consisted of the following at Dec. 31, 1996 and 1995. Fair values
of certificate reserves with interest rate terms of one year or
less approximated the carrying values less any applicable surrender
charges.
PAGE 41
Notes to Financial Statements (continued)
The fair values for other certificate reserves are determined by a
discounted cash flow analysis using interest rates currently
offered for certificates with similar remaining terms, less
any applicable surrender charges.
1996 1995
Carrying Fair Carrying Fair
amount value amount value
Reserves with terms of one year or less $2,637,144 $2,635,835 $2,900,947 $2,899,542
Other 646,047 630,141 727,627 765,110
Total certificate reserves 3,283,191 3,265,976 3,628,574 3,664,652
Unapplied certificate transactions 1,217 1,217 1,545 1,545
Certificate loans and accrued interest (43,980) (43,980) (51,707) (51,707)
Total $3,240,428 $3,223,213 $3,578,412 $3,614,490
6. Dividend restriction
Certain series of installment certificates outstanding provide that
cash dividends may be paid by IDSC only in calendar years for which
additional credits of at least one-half of 1% on such series of
certificates have been authorized by IDSC. This restriction has
been removed for 1997 and 1998 by IDSC's declaration of additional
credits in excess of this requirement.
7. Fees paid to Parent and affiliated companies ($ not in
thousands)
A) The basis of computing fees paid or payable to Parent for
investment advisory and other general and administrative services
is:
The investment advisory and services agreement with Parent provides
for a graduated scale of fees equal on an annual basis to 0.75% on
the first $250 million of total book value of assets of IDSC, 0.65%
on the next $250 million, 0.55% on the next $250 million, 0.50% on
the next $250 million and 0.45% on the amount in excess of $1
billion. The fee is payable monthly in an amount equal to
one-twelfth of each of the percentages set forth above. Excluded
from assets for purposes of this computation are first mortgage
loans, real estate and any other asset on which IDSC pays an
outside service fee.
B) The basis of computing fees paid or payable to American Express
Financial Advisors Inc. (an affiliate) for distribution services
is:
Fees payable to American Express Financial Advisors Inc. on sales
of IDSC's certificates are based upon terms of agreements giving
American Express Financial Advisors Inc. the exclusive right to
distribute the certificates covered under the agreements. The
agreements provide for payment of fees over a period of time. The
aggregate fees payable under the agreements per $1,000 face amount
of installment certificates and $1,000 purchase price of single
payments, and a summary of the periods over which the fees are
payable, shown by series are:
PAGE 42
Number of
certificate
years over
Aggregate fees payable which
subsequent
First Subsequent years' fees
Total year years are payable
Installment certificates(a) $30.00 $6.00 $24.00 4
Single-payment certificates 60.00 60.00 - -
Future Value certificates 50.00 50.00 - -
(a) At the end of the sixth through the 10th year, an additional
fee is payable of 0.5% of the daily average balance of the
certificate reserve maintained during the sixth through the 10th
year, respectively.
Fees on Cash Reserve and Flexible Savings certificates are paid at
a rate of 0.25% of the purchase price at the time of issuance and
0.25% of the reserves maintained for these certificates at the
beginning of the second and subsequent quarters from issue date.
Fees on the Investors Certificate are paid at an annualized rate of
1% of the reserves maintained for the certificates. Fees are paid
at the end of each term on certificates with a one, two or
three-month term. Fees are paid each quarter from date of issuance
on certificates with a six, 12, 24 or 36-month term.
Fees on the Preferred Investors Certificate are paid at an
annualized rate of 0.66% of the reserves maintained for the
certificates. Fees are paid at the end of each term on
certificates with a one, two or three-month term. Fees are paid
each quarter from date of issuance on certificates with a six, 12,
24 or 36-month term.
Fees on the Stock Market Certificate are paid at a rate of 1.25% of
the purchase price on the first day of the certificate's term and
1.25% of the reserves maintained for these certificates at the
beginning of each subsequent term.
C) The basis of computing depositary fees paid or payable to
American Express Trust Company (an affiliate) is:
Maintenance charge per account 5 cents per $1,000 of assets on deposit
Transaction charge $20 per transaction
Security loan activity:
Depositary Trust Company
receive/deliver $20 per transaction
Physical receive/deliver $25 per transaction
Exchange collateral $15 per transaction
A transaction consists of the receipt or withdrawal of securities
and commercial paper and/or a change in the security position. The
charges are payable quarterly except for maintenance, which is an
annual fee.
PAGE 43
Notes to Financial Statements (continued)
D) The basis for computing fees paid or payable to American
Express Bank Ltd. (an affiliate) for the distribution of the IDS
Special Deposits certificate on an annualized basis is:
1.25% of the reserves maintained for the certificates on an amount
from $100,000 to $249,000, 0.80% on an amount from $250,000 to
$499,000, 0.65% on an amount from $500,000 to $999,000 and 0.50% on
an amount $1,000,000 or more. Fees are paid at the end of each
term on certificates with a one, two or three-month term. Fees are
paid at the end of each quarter from date of issuance on
certificates with a six, 12, 24 or 36-month term.
8. Income taxes
Income tax expense (benefit) as shown in the statement of
operations for the three years ended Dec. 31, consists of:
1996 1995 1994
Federal:
Current ($5,560) ($6,285) ($8,743)
Deferred (1,124) (2,652) 3,933
(6,684) (8,937) (4,810)
State 27 (43) 100
Total tax benefit ($6,657) ($8,980) ($4,710)
Income tax expense (benefit) differs from that computed by using
the U.S. Statutory rate of 35%. The principal causes of the
difference in each year are shown below:
1996 1995 1994
Federal tax expense at U.S. statutory rate $5,711 $6,307 $12,642
Tax-exempt interest (1,517) (3,339) (4,205)
Dividend exclusion (10,865) (12,166) (13,862)
Other, net (13) 261 615
Federal tax benefit ($6,684) ($8,937) ($4,810)
Deferred income taxes result from the net tax effects of temporary
differences. Temporary differences are differences between the tax
bases of assets and liabilities and their reported amounts in the
financial statements that will result in differences between income
for tax purposes and income for financial statement purposes in
future years. Principal components of IDSC's deferred tax assets
and liabilities as of Dec. 31, are as follows.
PAGE 44
Notes to Financial Statements (continued)
Deferred tax assets: 1996 1995
Certificate reserves $13,028 $10,312
Investment reserves 540 843
Investments - 348
Other, net 19 -
Total deferred tax assets $13,587 $11,503
Deferred tax liabilities: 1996 1995
Deferred distribution fees $8,934 $9,900
Investment unrealized gains 7,775 15,843
Purchased/written call options 3,429 1,623
Dividends receivable 745 892
Investments 714 -
Return of capital dividends 87 305
Other, net - 229
Total deferred tax liabilities 21,684 28,792
Net deferred tax liabilities $8,097 $17,289
9. Derivative financial instruments
IDSC enters into transactions involving derivative financial
instruments as an end user(nontrading). IDSC uses these
instruments to manage its exposure to interest rate risk, including
hedging specific transactions. IDSC manages risks associated with
these instruments as described below.
Market risk is the possibility that the value of the derivative
financial instrument will change due to fluctuations in a factor
from which the instrument derives its value, primarily an interest
rate or a major market index. IDSC is not impacted by market risk
related to derivatives held because derivatives are largely used to
manage risk and, therefore, the cash flows and income effects of
the derivatives are inverse to the effects of the underlying hedged
transactions.
Credit exposure is the possibility that the counterparty will not
fulfill the terms of the contract. IDSC monitors credit exposure
related to derivative financial instruments through established
approval procedures, including setting concentration limits by
counterparty, reviewing credit ratings and requiring collateral
where appropriate. At Dec. 31, 1996, IDSC's counterparties to the
interest rate corridors are rated AA or better by nationally
recognized rating agencies. The counterparties to the call options
are seven major broker/dealers.
The notional or contract amount of a derivative financial
instrument is generally used to calculate the cash flows that are
received or paid over the life of the agreement. Notional amounts
do not represent market risk or credit exposure and are not
recorded on the balance sheet.
PAGE 45
Notes to Financial Statements (continued)
Credit exposure related to derivative financial instruments is
measured by the replacement cost of those contracts at the balance
sheet date. The replacement cost represents the fair value
of the instrument, and is determined by market values, dealer
quotes or pricing models.
IDSC's holdings of derivative financial instruments were as follows
at Dec. 31, 1996 and 1995.
1996
Notional Total
or contract Carrying Fair credit
amount value value exposure
Assets:
Interest rate corridors $200,000 $- $188 $188
Purchased call options 242,243 36,164 34,987 34,987
Total $442,243 $36,164 $35,175 $35,175
Liabilities:
Written call options $225,386 $9,552 $17,571 $-
1995
Notional Total
or contract Carrying Fair credit
amount value value exposure
Assets:
Interest rate caps and corridors $970,000 $3,362 $2,128 $2,128
Purchased call options 152,406 27,138 24,161 24,161
Total $1,122,406 $30,500 $26,289 $26,289
Liabilities:
Written call options $141,782 $9,333 $10,394 $-
The fair values of derivative financial instruments are based on
market values, dealer quotes or pricing models. The interest rate
corridors expire in Jan. and Feb. of 1997. The options expire
throughout 1997.
Interest rate caps/corridors and options are used to manage IDSC's
exposure to rising interest rates. These instruments are used
primarily to protect the margin between the interest rate
earned on investments and the interest rate credited to related
investment certificate owners.
The interest rate caps/corridors are reset quarterly and IDSC earns
interest on the notional amount to the extent the London Interbank
Offering Rate exceeds the reference rates specified in the
cap/corridor agreements. These reference rates ranged from 4% to
9%. The cost of interest rate caps/corridors is amortized over the
terms of the agreements on a straight line basis and is included in
other qualified assets. The amortization, net of any interest
earned, is included in investment expenses.
IDSC offers a series of certificates which pay interest based upon
the relative change in a major stock market index between the
beginning and end of the certificates' term. The certificate
owners have the option of participating in the full amount of
increase in the index during the term (subject to a specified
maximum) or a lesser percentage of the increase plus a guaranteed
minimum rate of interest. As a means of hedging its obligations
under the provisions of these certificates, IDSC purchases and
PAGE 46
Notes to Financial Statements (continued)
writes call options on the major market index. The options are
cash settlement options, that is, there is no underlying security
to deliver at the time the contract is closed out.
The option contracts are less than one year in term. The premiums
paid or received on these index options are reported in other
qualified assets or other liabilities, as appropriate, and are
amortized into investment expense over the life of the option. The
intrinsic value of these index options is also reported in other
qualified assets or other liabilities, as appropriate. The
unrealized gains and losses related to the changes in the intrinsic
value of these options are recognized currently in provision for
certificate reserves.
Following is a summary of open option contracts at Dec. 31, 1996
and 1995.
1996
Face Average Index at
amount strike price Dec.31,1996
Purchased call options $242,243 669 741
Written call options 225,386 736 741
1995
Face Average Index at
amount strike price Dec.31,1995
Purchased call options $152,406 539 616
Written call options 141,782 601 616
10. Fair values of financial instruments
IDSC discloses fair value information for most on- and off-balance
sheet financial instruments for which it is practicable to estimate
that value. The fair value of the financial instruments presented
may not be indicative of their future fair values. The estimated
fair value of certain financial instruments such as cash and cash
equivalents, receivables for dividends and interest, investment
securities sold and other trade receivables, accounts payable due
to Parent and affiliates, payable for investment securities
purchased and other accounts payable and accrued expenses are
approximated to be the carrying amounts disclosed in the balance
sheets. Non-financial instruments, such as deferred distribution
fees, are excluded from required disclosure. IDSC's off-balance
sheet intangible assets, such as IDSC's name and future earnings of
the core business are also excluded. IDSC's management believes
the value of these excluded assets is significant. The fair value
of IDSC, therefore, cannot be estimated by aggregating the amounts
presented.
PAGE 47
A summary of fair values of financial instruments as of Dec. 31, is
as follows:
1996 1995
Carrying Fair Carrying Fair
value value value value
Financial assets
Assets for which carrying values
approximate fair values $155,396 $155,396 $148,746 $148,746
Investment securities (note 3) 3,076,889 3,103,005 3,411,396 3,456,922
First mortgage loans on real estate (note 4) 218,697 221,253 233,394 248,860
Derivative financial instruments (note 9) 36,164 35,175 30,500 26,289
Financial liabilities
Liabilities for which carrying values
approximate fair values 76,040 76,040 14,247 14,247
Certificate reserves (note 5) 3,240,428 3,223,213 3,578,412 3,614,490
Derivative financial instruments (note 9) 9,552 17,571 9,333 10,394
PAGE 48
IDS CERTIFICATE COMPANY Schedule I
Investments in Securities of Unaffiliated Issuers
December 31, 1996
($ in thousands)
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
BONDS AND NOTES
United States Government -
Direct Obligations
US TREASURY BOND 6.875%, 2000 165 165 169
US TREASURY BOND 5.625%, 2000 200 197 196
Total U.S. Government - Direct Obligations 365 362 365
Other Bonds and Notes
United States Government Agencies
FHGD 15YR 6.5 TBA 6.500%, 2011 31,800 31,328 31,224 (f)
FHLMC 5YR #G50152 7.000%, 1999 6,684 6,631 6,706 (f)
FHLMC 5YR #G50252 7.500%, 2000 27,277 27,411 27,763 (f)
FHLMC 5YR #G50281 GOL 6.500%, 2000 20,307 20,408 20,320 (f)
FHLMC 15YR #G10336 7.500%, 2010 7,627 7,507 7,744 (f)
FHLMC 15YR #10342 7.000%, 2010 23,627 23,016 23,634 (f)
FHLMC 15YR #G10344 G 7.500%, 2010 17,856 17,773 18,129 (f)
FHLMC 15YR #G10350 GLD 6.500%, 2010 23,610 23,556 23,204 (f)
FHLMC 15YR #G10364 7.000%, 2010 20,146 20,040 20,153 (f)
FHLM 15YR #G10369 6.500%, 2010 42,288 41,766 41,830 (f)
FHLMC 15YR GOLD 6.500%, 2010 21,428 21,323 21,060 (f)
FHLMC 15YR #G10439 GOLD 6.500%, 2011 5,093 4,969 5,016 (f)
FHLMC ARM #845154 7.652%, 2022 5,060 5,218 5,225 (f)
FHLMC ARM #845523 7.877%, 2023 7,516 7,735 7,738 (f)
FHLMC ARM #845654 8.030%, 2024 18,368 18,639 19,125 (f)
FHLMC ARM #845730 7.606%, 2024 29,597 30,571 30,652 (f)
FHLMC ARM #845733 7.495%, 2024 28,937 29,454 29,932 (f)
FHLMC ARM #845973 8.083%, 2024 9,655 9,655 10,055 (f)
FHLMC ARM #845999 7.526%, 2027 24,033 24,244 24,826 (f)
FHLMC 30YR #846072 7.683%, 2022 6,389 6,550 6,609 (f)
FHLMC ARM #846107 7.870%, 2025 9,384 9,601 9,728 (f)
FH GD 7YR BLN N97208 7.000%, 2003 14,990 15,181 15,086 (f)
FHLMC 1268 E CMO 7.400%, 2016 3,934 3,938 3,939 (f)
FHLMC ARM #350190 7.375%, 2022 6,395 6,589 6,609 (f)
FHLMC 1379 C CMO 5.600%, 2011 2,089 2,088 2,085 (f)
FHLMC GOLD E00151 7.500%, 2017 8,593 8,831 8,724 (f)
FHLMC 15YR #E00383 7.000%, 2010 21,007 20,974 21,013 (f)
FHLMC 1717B PAC CMO 5.250%, 2008 4,792 4,785 4,782 (f)
FHLMC-GNMA 40 D CMO 6.500%, 2011 20,458 20,058 20,547 (f)
FHLMC 188537 (2) 5.750%, 1998 1 1 1 (f)
FHLMC 4C CMO 8.000%, 2017 3,330 3,338 3,341 (f)
PAGE 49
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
FHLMC CTF SER B-76 8.375%, 2006 40 40 38 (f)
FHLMC CTF SER B-77 8.125%, 2007 195 194 187 (f)
FHLMC 15YR #380025 9.500%, 2003 838 834 884
FHLMC 15YR #200017 11.000%, 2000 484 493 511 (f)
FHLMC 15YR #200018 11.000%, 2000 326 332 344 (f)
FHLMC 15YR #200020 11.000%, 2000 484 493 511 (f)
FHLMC 15YR #200022 10.500%, 2000 101 102 107 (f)
FHLMC 15YR #200035 9.000%, 2001 379 375 394 (f)
FHLMC 15YR #200048 9.000%, 2001 835 823 868
FHLMC 15YR #200064 8.000%, 2002 486 472 496 (f)
FHLMC 15YR #212119 9.500%, 2001 166 168 176 (f)
FHLMC 15YR #218648 9.500%, 2002 58 59 61 (f)
FHLMC 15YR #219392 11.000%, 2001 172 176 182 (f)
FHLMC 15YR #219679 9.500%, 2003 659 654 694 (f)
FHLMC 15YR #219757 11.000%, 2003 2,002 2,082 2,116
FHLMC 15YR #240001 9.500%, 1997 1,221 1,220 1,247
FHLMC 10YR #490009 9.000%, 1997 1,398 1,398 1,418
FHLMC 10YR #490011 10.000%, 1997 317 317 332 (f)
FHLMC 15YR #500155 11.000%, 2001 477 487 504 (f)
FHLMC 15YR #500294 11.000%, 2003 203 209 215 (f)
FHLMC 15YR #500456 11.000%, 2002 222 228 235 (f)
FHLMC 15YR #502175 10.500%, 2004 225 228 238 (f)
FHLMC ARM #605041 7.909%, 2019 293 293 304 (f)
FHLMC ARM #605048 7.576%, 2018 1,292 1,292 1,335 (f)
FHLMC ARM #605050 7.945%, 2018 488 488 506 (f)
FHLMC ARM #605079 WAC 7.772%, 2018 1,504 1,504 1,558 (f)
FHLMC ARM #605175 WAC 7.729%, 2019 3,718 3,718 3,855 (f)
FHLMC ARM #605352 7.589%, 2018 2,915 2,915 3,012 (f)
FHLMC ARM #401587 7.625%, 2018 2,105 2,105 2,179 (f)
FHLMC ARM #630048 8.000%, 2018 23 23 24 (f)
FHLMC ARM #630074 7.500%, 2018 583 583 596 (f)
FHLMC ARM #840031 WAC 7.552%, 2019 473 473 489 (f)
FHLMC ARM #840035 7.795%, 2019 1,474 1,474 1,539 (f)
FHLMC ARM #840036 7.926%, 2019 1,802 1,802 1,871 (f)
FHLMC ARM #840045 7.741%, 2019 3,841 3,841 3,981 (f)
FHLMC ARM #840072 7.262%, 2019 1,951 1,951 1,997 (f)
FHLMC ARM #405014 7.843%, 2019 1,065 1,065 1,106 (f)
FHLMC ARM #405092 7.709%, 2019 1,705 1,705 1,768 (f)
FHLMC ARM #405185 7.470%, 2018 2,377 2,377 2,453 (f)
FHLMC ARM #405243 7.161%, 2019 1,095 1,095 1,128 (f)
FHLMC ARM #405249 7.378%, 2018 3,187 3,187 3,289 (f)
FHLMC ARM #405360 7.756%, 2019 969 969 1,006 (f)
FHLMC ARM #405437 7.969%, 2019 289 289 300 (f)
FHLMC ARM #405455 7.793%, 2019 1,346 1,346 1,397 (f)
FHLMC ARM #405517 8.084%, 2019 491 491 510 (f)
FHLMC ARM #405615 7.706%, 2019 985 985 1,021 (f)
FHLMC ARM #405675 7.687%, 2020 1,972 1,972 2,045 (f)
FHLMC ARM #405692 7.825%, 2020 2,495 2,495 2,593 (f)
PAGE 50
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
FHLMC ARM #405744 7.814%, 2020 1,541 1,541 1,602 (f)
FHLMC ARM #605432 7.755%, 2017 758 758 786 (f)
FHLMC ARM #605433 7.316%, 2017 1,935 1,935 1,995 (f)
FHLMC ARM #605454 7.300%, 2017 5,125 5,125 5,275 (f)
FHLMC ARM #605853 WAC 7.504%, 2019 3,762 3,762 3,883 (f)
FHLMC ARM #605854 7.506%, 2019 3,454 3,454 3,566 (f)
FHLMC ARM #606024 6.963%, 2019 1,561 1,561 1,604 (f)
FHLMC ARM #606025 7.214%, 2019 5,579 5,579 5,745 (f)
FHLMC ARM #606151 7.872%, 2019 4,380 4,380 4,548 (f)
FHLMC ARM #635054 7.994%, 2020 291 291 299 (f)
FHLMC ARM #785363 6.973%, 2025 12,697 12,867 13,098 (f)
FHLMC ARM #785615 6.700%, 2026 15,896 15,805 16,065 (f)
FH 3X1 ARM #785619 6.715%, 2026 8,955 9,004 9,106 (f)
FHLMC ARM 3X1 6.814%, 2026 19,884 19,952 20,245 (f)
FHLMC ARM #785672 6.738%, 2026 10,010 10,057 10,141 (f)
FHLMC ARM #865008 8.431%, 2018 7,459 7,459 7,727 (f)
FHLMC LOANS #885005 9.500%, 2002 1,568 1,558 1,653 (f)
FHLMC LOANS #885008 10.000%, 2003 2,632 2,646 2,778 (f)
FHLMC 15 YR #885009 9.500%, 2003 3,763 3,742 3,968
FHLMC ARM #606301 8.035%, 2020 6,733 6,733 6,997 (f)
FHLMC ARM #606903 6.970%, 2022 2,048 2,066 2,086 (f)
FNMA 92 12 H 6.625%, 2019 6,936 6,936 6,928 (f)
FNMA 1992-5 C 7.000%, 2016 2,432 2,424 2,435 (f)
FNMA 92-21D VANILLA 6.650%, 2018 1,698 1,681 1,698 (f)
FNMA 92 203 E CMO 6.250%, 2005 10,000 9,796 9,978 (f)
FNMA 93-62 B CMO 6.500%, 2017 6,523 6,308 6,485 (f)
FNMA 95 2 T CMO 8.500%, 2021 8,826 8,817 9,001 (f)
FNMA 95-T2 A3 CMO 6.610%, 2018 10,000 9,995 9,819 (f)
FNMA 15 YR #2469 11.000%, 2000 27 27 29 (f)
FNMA 15 YR #13157 11.000%, 2000 17 17 18 (f)
FNMA 15 YR #13548 11.000%, 2000 62 63 66 (f)
FNMA 15 YR #13705 11.000%, 2000 53 54 57 (f)
FNMA 15 YR #18275 11.000%, 2000 9 10 10 (f)
FNMA 15 YR #18745 11.000%, 2000 12 13 13 (f)
FNMA 15 YR #18986 11.000%, 2000 10 10 11 (f)
FNMA 15 YR #19070 11.000%, 2000 9 9 9 (f)
FNMA 15 YR #19261 11.000%, 2000 27 27 29 (f)
FNMA 15 YR #22271 11.000%, 2000 41 42 44 (f)
FNMA 15 YR #22405 11.000%, 2000 62 63 65 (f)
FNMA 15 YR #22569 11.000%, 2000 112 114 119 (f)
FNMA 15 YR #22674 11.000%, 2000 30 30 32 (f)
FNMA 15 YR #25899 11.000%, 2001 20 21 22 (f)
FNMA 30 YR #27880 9.000%, 2016 106 109 112 (f)
FNMA 15 YR #34543 9.250%, 2001 351 351 375 (f)
FNMA 30 YR #36225 9.000%, 2016 309 315 326 (f)
FNMA 30 YR #040877 9.000%, 2017 192 196 202 (f)
FNMA 15 YR #50973 6.000%, 2009 42,908 41,935 41,565 (f)
FNMA 30 YR #51617 10.000%, 2017 191 193 210 (f)
PAGE 51
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
FNMA 30 YR #52185 10.000%, 2017 73 73 80 (f)
FNMA 30 YR #52596 10.000%, 2017 19 19 21 (f)
FNMA 15 YR #58405 11.000%, 2003 31 32 33 (f)
FNMA 15 YR #64520 11.000%, 2001 64 66 68 (f)
FNMA 15 YR #64523 11.000%, 2000 97 98 103 (f)
FNMA 15 YR #66458 10.000%, 2004 4,319 4,355 4,575
FNMA ARM #70007 MEGA 7.328%, 2017 2,444 2,444 2,530 (f)
FNMA ARM #70009 MEGA 7.281%, 2018 3,706 3,706 3,838 (f)
FNMA ARM #70117 7.199%, 2017 826 826 854 (f)
FNMA ARM #70202 7.375%, 2019 2,682 2,682 2,780 (f)
FNMA 15 YR #70299 10.750%, 2001 261 267 277 (f)
FNMA 15 YR #70694 MEG 9.500%, 2005 2,417 2,436 2,558
FNMA #73227 MULT-FAM 6.700%, 2005 2,928 2,963 2,824 (f)
FNMA ARM #79384 8.040%, 2019 1,059 1,059 1,105 (f)
FNMA ARM #88879 8.750%, 2019 2,624 2,624 2,719 (f)
FNMA ARM #89125 7.250%, 2019 7,022 7,176 7,167 (f)
FNMA ARM #92069 FLEX 7.853%, 2018 3,571 3,571 3,722 (f)
FNMA ARM #93787 7.691%, 2019 3,167 3,167 3,297 (f)
FNMA ARM #97822 7.536%, 2020 610 610 633 (f)
FNMA ARM #105989 8.524%, 2020 2,463 2,463 2,563 (f)
FNMA 15YR #124848 8.000%, 2008 15,633 15,587 16,087 (f)
FNMA 15YR #190534 6.000%, 2018 21,885 21,545 21,200
FNMA ARM #190726 7.844%, 2033 15,349 15,660 15,896 (f)
FNMA 7YR 190778 BALN 6.000%, 2001 54,076 53,509 53,331 (f)
FNMA ARM #249907 7.726%, 2024 17,941 18,212 18,722 (f)
FNMA 10YR #303115 6.500%, 2004 17,501 16,494 17,499 (f)
FNMA ARM #303259 7.631%, 2025 8,143 8,368 8,400 (f)
FNMA 15YR #303445 5.500%, 2009 21,754 20,824 20,483 (f)
FNMA 7YR #303448 BLN 6.500%, 2002 24,515 24,545 24,504 (f)
FNMA ARM #368121 5X1 6.757%, 2025 30,000 30,441 31,187 (f)
GNMA ARM 1 YR #8157 6.500%, 2023 7,092 7,219 7,204 (f)
GNMA ARM #8206 6.500%, 2017 1,558 1,558 1,580 (f)
GNMA ARM #8240 7.125%, 2017 1,123 1,109 1,151 (f)
GNMA ARM #8251 7.125%, 2017 90 90 93 (f)
GNMA ARM #8274 7.000%, 2017 3,037 3,034 3,100 (f)
GNMA ARM #8283 7.000%, 2017 400 398 408 (f)
GNMA ARM #8293 7.000%, 2017 698 698 713 (f)
GNMA ARM #8341 7.125%, 2018 157 156 161 (f)
GNMA ARM #8353 7.125%, 2018 1,298 1,290 1,330 (f)
GNMA ARM #8365 7.125%, 2018 2,347 2,347 2,405 (f)
GNMA ARM #8377 7.125%, 2018 1,050 1,048 1,076 (f)
GNMA ARM #8428 7.000%, 2018 442 442 451 (f)
GNMA ARM #8440 7.000%, 2018 1,120 1,120 1,144 (f)
GNMA ARM #8638 7.000%, 2025 26,789 27,011 27,320 (f)
Total United States Government Agencies 1,049,372 1,048,173 1,060,437
PAGE 52
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
Municipal Bonds
California
CAL HSG 95-O TAX MUN 7.740%, 2016 10,645 10,645 10,865 (b)(f)
CAL HSG FIN 1996-M 7.890%, 2016 8,925 8,925 9,103 (b)(f)
Georgia
ATLANTA GA REC AUTH 8.000%, 1997 1,000 1,000 1,014 (b)(f)
Illinois
CHICAGO IL BLDG REV 8.000%, 1997 3,000 3,000 3,000 (b)(f)
CHICAGO IL BLDG COMM 8.000%, 1998 1,800 1,796 1,875 (b)(f)
CHICAGO IL SAN DIST 9.250%, 2000 1,000 1,060 1,137 (b)(f)
*CHIC IL GAS SPY SRC 7.500%, 2015 4,500 4,500 4,916 (b)(f)
Minnesota
WEST MN MUNI POWER 10.250%, 2015 3,120 3,303 3,486 (b)(f)
New Jersey
OCEAN COUNTY NJ UTIL 8.150%, 1997 400 400 400 (b)(f)
New York
NEW YORK CITY NT GO 7.750%, 2000 335 335 342 (b)(f)
NEW YORK PWR AUTH 9.500%, 2001 355 374 385 (b)(f)
North Carolina
NC MUNI POWER 8.400%, 1997 2,000 2,000 2,000 (b)(f)
Pennsylvania
WY VALLEY PA SWR 5.125%, 2007 135 135 135 (b)(f)
Texas
HARRIS CNTY TX TOLL 10.375%, 2014 5,300 5,458 5,667 (b)(f)
AUSTIN TX UTILITY 10.750%, 2015 3,735 4,131 4,477 (b)(f)
DALLAS TX CIVIC CENT 8.100%, 1997 925 925 925 (b)(f)
DALLAS TX CIVIC CENT 8.200%, 1998 1,025 1,025 1,046 (b)(f)
District of Columbia
DIST OF COLUMBIA GO 7.600%, 1997 1,950 1,966 1,983 (b)(f)
DIST OF COLUMBIA GO 7.600%, 1997 4,900 4,898 4,970 (b)(f)
Total Municipal Bonds 55,050 55,876 57,726
Public Utility
BAROID CORP 8.000%, 2003 5,000 4,986 5,219
BELL ATLANTIC FINL 5.300%, 1998 5,000 4,816 4,937 (f)
CAL ENERGY CO INC 9.500%, 2006 4,000 4,034 4,130 (b) (d) (f)
CHEVRON-HOWARD BELL 7.700%, 1997 76 76 76 (b) (d)
COLUMBIA GAS SYS 6.390%, 2000 10,000 10,033 9,938 (f)
PAGE 53
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
DETROIT EDISON 6.280%, 2000 7,000 6,951 6,940 (f)
EL PASO ELEC CO 7.250%, 1999 2,000 2,000 1,994 (f)
GTE CORP 8.850%, 1998 3,000 3,038 3,094 (f)
HANNA M A 9.000%, 1998 5,000 5,057 5,177
INTL SPECIALTY PROD 9.000%, 1999 15,000 15,228 15,222
JERSEY CENTRAL P&L 6.040%, 2000 5,000 5,001 4,910
KANSAS CITY P&L 7.340%, 1999 10,000 10,000 10,209
NORAM ENERGY CORP 7.500%, 2000 5,000 4,980 5,103 (f)
OCCIDENTAL PETROLEUM 6.410%, 2000 5,000 4,959 4,966 (f)
ORYX ENERGY 8.650%, 1999 15,000 15,000 15,356
PDV AMERICA 7.250%, 1998 3,000 2,996 2,989 (f)
PACIFIC GAS TRANS 6.640%, 2000 5,000 5,000 5,001 (f)
PRAXAIR INC 6.750%, 2003 5,000 4,751 5,004 (f)
PUBLIC SERVICE E & G 7.100%, 1997 5,000 5,000 5,016 (f)
SALTON SEA CL A 6.690%, 2000 6,949 6,949 6,960 (b) (d) (f)
SMITH INT`L INC 7.240%, 2001 10,000 10,000 10,000 (b) (d) (f)
TELEPORT COMM 9.875%, 2006 4,000 4,075 4,260 (f)
TEXAS UTILITIES 6.370%, 2000 10,000 10,000 9,918 (f)
TOSCO CORP 7.000%, 2000 5,000 4,994 5,043 (f)
Total Public Utility 150,025 149,924 151,462
Finance
AT&T CAPITAL 6.200%, 2000 5,000 4,993 4,890 (f)
ALCO CAPITAL RES 7.330%, 1998 10,000 10,000 10,145 (f)
AMERICAN GEN FINANCE 7.850%, 1997 2,000 2,001 2,030 (f)
AMERICAN GENERAL FIN 6.470%, 2000 10,000 10,070 9,966 (f)
ARISTAR FINL 7.875%, 1999 3,000 2,997 3,094 (f)
ARISTAR INC 6.300%, 2000 15,000 14,990 14,902 (f)
AUTOFLW 9.160%, 2002 10,000 9,915 9,944 (b) (d) (f)
BANK OF AMERICA 9.750%, 2000 10,000 10,351 11,099
BENEFICIAL CORP 6.450%, 2000 10,000 10,045 9,996 (f)
CIT GROUP HOLDINGS 7.000%, 1997 5,000 4,988 5,048 (f)
CSW INVESTMENTS 6.950%, 2001 10,000 9,988 10,061 (b) (d) (f)
CAPITAL ONE BANK 7.350%, 2000 5,000 4,997 5,079 (f)
COMDISCO INC 7.250%, 1998 10,000 9,989 10,139
COMMERCIAL CREDIT 8.250%, 2001 9,000 8,911 9,618 (f)
CONTI FINANCIAL CORP 8.375%, 2003 5,000 4,986 5,102 (f)
CONTI MTG HEL TRTA-6 6.690%, 2016 10,000 9,999 9,762 (f)
COUNTRYWIDE FUNDING 8.420%, 1999 19,700 19,682 20,554
DART KRAFT FIN 7.750%, 1998 1,000 1,020 1,029 (f)
JOHN DEERE CAP 6.250%, 2000 2,500 2,503 2,475 (f)
DEERE JOHN CAPITAL 6.280%, 2000 5,000 5,015 4,952 (f)
FDIC 96-1C CLASS 1A 6.750%, 2026 10,000 9,995 9,995 (f)
FIDELITY ACCEPTANCE 6.670%, 1997 15,000 15,000 15,048 (b) (d) (f)
FINOVA CAPL CORP 6.840%, 2000 3,000 3,003 3,020 (f)
FIRST NATIONWIDE 9.125%, 2003 4,000 3,865 4,060 (f)
FIRSTAR CORP 7.150%, 2000 12,000 12,000 12,115 (f)
PAGE 54
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
GMAC 96-C1 COMM MBS 6.790%, 2003 4,992 5,016 5,055 (f)
GE CAPITAL CORP 8.125%, 1999 12,000 12,175 12,465 (f)
GREAT WESTERN FINL 6.375%, 2000 3,000 2,992 2,987 (f)
GREENTREE FIN94-1 A1 5.600%, 2019 2,756 2,739 2,764 (f)
GREENTREE FIN94-4 A1 6.550%, 2019 2,905 2,902 2,914 (f)
GREENTREE FIN94-5 A1 6.600%, 1998 3,278 3,277 3,284 (f)
GREENTREE FIN95-5 A1 5.950%, 2025 1,343 1,343 1,346 (f)
HELLER FINANCIAL 8.000%, 1998 15,000 14,984 15,478
HELLER FINANCIAL 6.500%, 2000 8,000 8,002 8,009 (f)
HOUSEHOLD FINANCE 6.375%, 2000 6,775 6,790 6,755 (f)
INTL LEASE FINANCE 7.950%, 1999 12,000 11,991 12,408 (f)
KEYCORP SENIOR 7.430%, 2000 4,000 3,995 4,110 (f)
MBNA 7.540%, 2001 10,000 9,993 10,288
MBNA CORP 6.500%, 2000 5,000 4,998 5,011 (f)
MARGARETTEN FIN'L 6.750%, 2000 15,250 15,385 15,305 (f)
MELLON FINANCIAL 6.300%, 2000 10,000 9,962 9,951 (f)
MERIDIAN BANCORP 6.625%, 2000 5,000 5,045 5,025 (f)
JPMS 96-C2 CL A 6.470%, 2027 4,920 4,951 4,834 (f)
MS CAP 1996-WFI MBS 7.220%, 2028 10,000 10,157 10,150 (f)
MCF 96-MC2 CLS A1 6.758%, 2004 10,000 10,100 10,100 (f)
NCB CAPITAL SER A 8.180%, 1997 8,000 8,000 8,080 (b) (d)
NATIONSBANK TEXAS 6.750%, 2000 12,000 12,038 12,094 (f)
NATIONSBANK CORP 7.500%, 1997 5,000 5,000 5,010 (f)
NORWEST FINANCIAL 7.250%, 2000 4,500 4,494 4,607
ORIX CREDIT ALLIANCE 8.040%, 1997 10,000 10,000 10,140 (b) (d)
ORIX CREDIT ALLIANCE 7.560%, 1997 5,000 5,000 5,063 (b) (d) (f)
PENSKE TRUCK LEASING 6.670%, 2000 13,000 13,006 13,053 (f)
PENSKE TRUCK LEASING 7.750%, 1999 3,000 3,053 3,102 (f)
PROVIDENT BANK 6.125%, 2000 5,000 4,990 4,922
PHMS 1993-39 A8 SUPP 6.500%, 2008 10,056 9,580 9,776 (f)
SBMS VII 91-1 B1 9.700%, 2006 1,098 1,098 1,098 (f)
SALOMON INC INDEX AM 7.070%, 2000 25,000 25,000 25,187 (f)
SANWA BUS CREDIT MTN 7.250%, 2001 10,000 9,991 10,189 (b) (d) (f)
SAXON 95-1 A2 ARM 7.745%, 2025 2,893 2,934 2,962 (f)
SEARS ROEBUK ACC 6.500%, 2000 5,000 5,018 5,012 (f)
SASCO96-CL1 AIC 5.944%, 2028 9,800 9,800 9,696 (f)
SASCO 96-CL-A2B 6.759%, 2028 5,000 5,080 4,991 (f)
TRANSAMERICA FINANCE 9.260%, 1998 5,000 4,997 5,166
UCFC 95 BA-2 ASSET B 6.600%, 2009 10,000 10,023 10,041 (f)
UCFC 95 CA2 ASSET BK 6.575%, 2011 10,000 10,019 10,031 (f)
WELLSFORD RESID PROP 7.250%, 2000 5,000 4,976 5,083 (f)
XEROX CREDIT 6.840%, 2000 5,000 5,013 4,985 (f)
Total Finance 516,766 517,210 522,650
Industrial
AAF MCQUAY 8.875%, 2003 10,000 10,155 10,050 (f)
ADT OPERATIONS INC 8.250%, 2000 5,000 5,052 5,225 (f)
PAGE 55
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
AGCO CORP 8.500%, 2006 5,000 4,963 5,150 (b) (d) (f)
AMERICAN STANDARD 10.875%, 1999 1,000 1,062 1,077 (f)
APPLIED MATERIALS 6.650%, 2000 5,000 5,000 5,007 (f)
BELL & HOWELL OPER 9.250%, 2000 4,425 4,522 4,508 (f)
BOYD GAMING CORP 9.250%, 2003 5,000 4,980 4,925 (f)
BROWN GROUP 8.600%, 1999 5,000 5,000 5,018
BURLINGTON NORTHERN 6.375%, 2005 5,000 4,998 4,775
CSX 9.230%, 1998 13,500 13,500 13,932
CATERPILLAR FINANCE 6.960%, 1998 5,000 4,964 5,063 (f)
CHAMPION INTL 9.800%, 1998 10,000 9,997 10,382
CHIQUITA BRANDS INTL 10.250%, 2006 3,000 2,983 3,203 (f)
CHRYSLER FINANCE 7.700%, 1998 10,000 9,940 10,266 (f)
CHRYSLER FINANCE 7.590%, 2000 5,000 5,001 5,147 (f)
CINCINNATI MILACRON 7.875%, 2000 5,000 5,087 5,061 (b) (d) (f)
COLUMBIA/HCA HLTHCRE 6.410%, 2000 10,000 10,022 9,981 (f)
CONTAINER CORP AMER 9.750%, 2003 4,000 3,976 4,230 (f)
CONT'L CABLEVISION 8.300%, 2006 4,000 3,988 4,281 (b) (d)
COX COMMUNICATION 6.375%, 2000 25,000 24,908 24,843 (f)
DARLING DELAWARE 11.000%, 2000 3,308 3,308 3,308 (f)
DAYTON HUDSON 6.400%, 2003 10,000 9,972 9,763 (f)
DAYTON HUDSON CO 6.800%, 2001 5,000 5,000 5,023 (f)
DELTA AIRLINES 9.875%, 1998 8,100 8,100 8,358
BERGEN BRUNSWIG(DUR) 7.000%, 2006 20,000 20,057 19,766 (f)
ENTERPRIS RENT-A-CAR 8.750%, 1999 5,000 4,998 5,273 (b) (d)
ENTERPRIS RENT-A-CAR 7.875%, 1998 5,000 4,999 5,094 (b) (d) (f)
ENTERP RENT-A-CARMTN 6.350%, 2001 10,000 9,998 9,877 (b) (d) (f)
EXIDE CORP 10.750%, 2002 5,000 5,385 5,263 (f)
FIRST USA DEP NT 6.375%, 2000 5,000 4,988 4,946 (f)
FORD MOTOR CREDIT 6.375%, 2000 10,000 10,101 9,938
FORD MOTOR CR MTN 7.060%, 2001 5,000 4,983 5,079 (f)
FOUNDATION HLTH CORP 7.750%, 2003 4,500 4,487 4,669 (f)
GS-96PROTECT LIFE A1 7.020%, 2027 4,792 4,864 4,901 (f)
GATC 6.320%, 2000 10,000 9,984 9,852 (f)
GMAC 7.650%, 1997 10,000 10,000 10,018 (f)
GMAC 7.750%, 1999 20,000 19,913 20,581 (f)
GENESIS HLTHCR 144A 9.250%, 2006 5,000 5,000 5,125 (b) (d) (f)
HERITAGE MEDIA 8.750%, 2006 4,500 4,567 4,354 (f)
HOWMET INC 10.000%, 2003 3,000 3,167 3,270 (f)
ITT CORP 6.250%, 2000 5,000 4,864 4,926 (f)
ILLINOIS CENTRAL 6.270%, 1998 5,000 5,002 5,008 (f)
INTEGON CORP 9.500%, 2001 2,000 1,980 2,149
KIII COMM PUT/96 8.500%, 2006 5,000 4,980 4,950 (b) (d) (f)
KAUFMAN & BROAD HOME 10.375%, 1999 1,000 997 1,030
KROGER CO 8.150%, 2006 4,000 4,005 4,105 (f)
LA QUINTA MOTOR 9.250%, 2003 2,000 2,096 2,070 (f)
LIFE STYLE FURN 10.875%, 2006 3,000 3,031 3,255 (f)
LONE STAR INDUSTRIES 10.000%, 2003 657 638 663 (b) (f)
MGM GRAND HOTEL FIN 11.750%, 1999 2,000 2,062 2,080 (f)
PAGE 56
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
MARK IV IND INC 8.750%, 2003 2,000 1,835 2,070
MATTEL INC 6.875%, 1997 15,000 14,986 15,082 (f)
MAXXIM MEDICAL 10.500%, 2006 4,000 4,036 4,190 (f)
NEWS AMER HLDGS 7.500%, 2000 10,000 9,965 10,211 (f)
NOVACOR CHEMICALS 6.500%, 2000 10,000 9,971 9,915 (b) (d) (f)
OUTDOOR SYSTEMS INC 9.375%, 2006 5,000 5,000 5,162 (f)
PACCAR FIN SER 3 7.940%, 1997 8,250 8,248 8,273 (f)
PAGING NETWORK 10.000%, 2008 2,000 2,000 2,027 (b) (d) (f)
PARACELSUS HEALTH 10.000%, 2006 5,000 5,061 4,725 (f)
PARAMOUNT COMMUN 5.875%, 2000 5,350 5,222 5,107 (f)
PRINT PACK SR NT 9.875%, 2004 2,500 2,500 2,594 (f)
QUAKER OATS 6.940%, 2003 1,500 1,504 1,521 (f)
QUAKER OATS 6.470%, 2000 10,000 10,037 9,981 (f)
RITE AID CORP 6.700%, 2001 5,000 4,999 4,999 (f)
ROLLINS TRUCK 6.875%, 2001 5,000 4,999 5,039 (f)
RYDER SYSTEM 5.530%, 1997 7,500 7,500 7,497 (f)
RYDER SYSTEM 7.910%, 2000 5,000 5,033 5,185 (f)
RYDER SYSTEMS INC 7.330%, 2000 5,000 5,086 5,122 (f)
RYERSON TULL 8.500%, 2001 5,000 5,000 5,131 (f)
SCHULLER INT'L GROUP 10.875%, 2004 5,000 5,383 5,587 (f)
SEALY CORP 9.500%, 2003 4,275 4,309 4,307
SEARS 7.620%, 1997 5,000 4,990 5,070 (f)
SEARS 7.420%, 1998 10,000 10,004 10,162 (f)
SERVICE CORP INTL 6.375%, 2000 10,500 10,493 10,394 (f)
SERVICE MERCHANDISE 8.375%, 2001 1,000 876 952
SHOP VAC CORP 10.625%, 2003 2,000 2,000 2,110 (b) (d) (f)
SHOWBOAT INC 9.250%, 2008 4,000 3,781 3,945
SUNAMERICA 9.000%, 1999 20,000 20,000 21,034
SUPERVALU INC 6.500%, 2000 5,000 4,996 4,967 (f)
SUPERVALU INC 7.250%, 1999 8,000 7,959 8,163 (f)
TENET HEALTHCARE CO 8.625%, 2003 7,000 6,979 7,411 (f)
TYSON FOODS 6.410%, 2000 10,000 10,008 9,959 (f)
UNIFRAX INVESTMENT 10.500%, 2003 3,000 3,000 3,109 (f)
UNITED AIR 1991A-1 9.200%, 2008 4,610 4,288 4,929
U.S. WEST CAP FUNDIN 6.200%, 2000 5,000 4,993 4,900 (f)
UNIVERSAL OUTDOOR 9.750%, 2006 5,000 4,969 5,175 (f)
VIACOM INC 6.750%, 2003 5,000 4,996 4,694
WMX TECHNOLOGIES 6.250%, 2000 3,500 3,504 3,471 (f)
WHITMAN CORP 6.250%, 2000 5,000 4,944 4,962 (f)
WHITMAN CORP 8.110%, 1997 12,500 12,500 12,516 (f)
FIBERGLASS CAD INC 9.800%, 1998 5,000 5,070 5,238 (b) (d)
ISPMEX 10.125%, 2003 5,000 5,000 5,200 (f)
REPAP NEW BRUNSWICK 9.875%, 2000 7,000 7,130 7,263 (f)
STENA AB 10.500%, 2005 3,000 3,000 3,233
TARKETT 9.00 9.000%, 2002 3,650 3,728 3,737 (b) (d) (f)
PAGE 57
Bal. held
at 12-31-96
Principal
Amount of Cost Value at
Bonds (Notes 12-31-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
TEEKAY SHIPPING CORP 8.320%, 2008 3,000 3,033 3,008 (f)
TELEWEST PLC 9.625%, 2006 2,000 2,000 2,055
Total Industrial 599,917 600,539 608,200
Total Other Bonds and Notes 2,371,130 2,371,722 2,400,475
Total Bonds and Notes 2,371,495 2,372,084 2,400,840
Bal. Held
at 12-31-96 Cost Value at
Number of (Notes 12-31-96
Shares a and c) (Note a)
Preferred Stock
Public Utility
ALLTEL 7.75 $100 PAR 7.750%, 2005 24,140 2,434 2,438 (b) (d)
AMERICAN WTRWRKS $25 8.500%, 2000 800,000 20,000 21,089 (b) (d)
AMERITECH NZ A $100 7.040%, 2001 40,000 4,199 4,225 (b) (d) (f)
APPALACHIAN PWR $100 6.850%, 2004 30,000 3,004 3,171
APPALACHIAN PWR $100 5.900%, 2008 10,000 996 998 (f)
APPALACHIAN PWR $100 5.920%, 2008 11,000 1,089 1,076
ARIZONA PUB SER V 7.875%, 2007 7,500 783 795 (f)
ARIZONA PUB SVC $100 10.000%, 2001 120,400 12,703 12,950
ATLANTIC CITY EL $100 7.800%, 2006 90,000 8,988 9,795
ATLANTIC CITY EL $100 8.200%, 2000 49,500 4,945 5,258
BALTIMORE G&E $100 8.625%, 2000 57,984 5,798 6,194
BALTIMORE G&E $100 8.250%, 1999 13,388 1,339 1,357
BELL ATLANTIC NZ 7.080%, 2001 25,000 2,654 2,637 (b) (d) (f)
BELL ATLANTIC NZ $100 5.800%, 2004 100,000 10,000 9,875 (b) (d)
BOSTON EDISON $100 8.000%, 2001 90,000 9,000 9,447
CBI INDUSTRIES $100 7.480%, 2000 70,000 7,090 7,000
CENTRAL ILL LT $100 5.850%, 2008 65,000 6,511 6,565
COMMWLTH ED $100 8.200%, 2002 63,068 6,163 6,496 (b) (d)
COMMONWEALTH EDISON 8.850%, 2003 68,250 6,945 7,030 (b) (d)
CONN LT & PWR $50 5.300%, 2003 75,300 3,709 3,012
CON EDISON $100 SR J 6.125%, 2002 150,000 15,042 15,281
CON EDISON SER I 7.200%, 2007 32,550 3,282 3,422
DUKE POWER $100 SR V 6.400%, 2002 30,000 3,000 3,120
DUKE POWER $100 SR U 6.300%, 2001 30,000 3,000 3,120
DUKE POWER $100 SR T 6.200%, 2000 30,000 3,000 3,120
DUKE POWER 1992D $25 6.200%, 2001 200,000 5,005 5,000
DUKE POWER 1992C $25 6.100%, 2000 250,000 6,270 6,375
DUKE POWER 1992B $25 5.950%, 1999 15,000 380 382 (f)
DUKE POWER CO SER R 7.500%, 2017 13,000 1,366 1,383 (f)
EASTERN EDISON $100 6.625%, 2008 210,000 20,924 21,263
ENTERGY ARKANSAS $25 9.920%, 2002 129,188 3,361 3,423
ENTERGY LA INC PFD 8.000%, 2001 70,000 7,000 7,481
ENTERGY LA $100 7.000%, 1999 80,000 8,004 8,160
PAGE 58
Bal. Held
at 12-31-96 Cost Value at
Number of (Notes 12-31-96
Name of Issuer and Titles of Issue Shares a and c) (Note a)
ENTERGY MISS $100 9.760%, 1997 13,403 1,340 1,367
GREEN MTN PWR CL-D/3 8.625%, 2000 56,000 5,600 5,761 (b) (d)
HAWAII ELEC $100 8.500%, 2005 50,000 5,141 5,238 (b) (d)
MAUI ELEC $100 8.500%, 2005 50,000 5,115 5,238 (b) (d)
HOUSTON LT PWR $100 9.375%, 1999 31,000 3,102 3,147 (b) (d)
INDIANA MICH POWER 6.300%, 2009 52,250 5,222 5,258
IND MICH POWER $100 6.250%, 2009 20,000 2,007 2,007 (f)
INDIANA MICHIGAN PWR 5.900%, 2009 32,500 3,110 3,062
JERSEY CENTRAL P&L 8.650%, 2005 110,400 11,297 12,208
JERSEY CENTRAL P & L 8.480%, 2000 51,000 5,111 5,388
LONG ISL LGT SER AA 7.940%, 2000 273,600 6,898 6,943
LOUISVILLE G&E PFD 5.875%, 2008 12,000 1,197 1,164 (f)
MAINE YANKEE $100 7.480%, 2001 34,918 3,396 3,343
MIDAMERICAN ENERGY 7.800%, 2006 73,300 7,586 7,843
MN P & L $100 7.125%, 2002 50,000 4,974 5,026 (b) (d)
MN P & L 6.700%, 2002 100,000 10,000 10,150 (b) (d)
NJ NATL GAS $100 7.720%, 2001 200,000 20,000 21,500 (b) (d)
NO IND PUB SERV $100 8.850%, 2003 36,750 3,695 3,743 (b) (d)
NO IND PUB SERV $100 6.500%, 2002 101,250 10,578 10,530 (f)
NORTHWEST NAT GA 100 6.950%, 2002 170,000 17,125 18,105
OHIO POWER CO $100 5.900%, 2009 36,000 3,527 3,587
OHI PWR CO $100 6.020%, 2008 10,000 990 1,001
OHIO PWR CO $100 6.350%, 2008 5,000 508 511
ORANGE ROCKLAND$100 8.125%, 1997 6,562 658 663 (b) (d)
OTTER TAIL PWR $100 6.300%, 2007 180,000 18,000 18,360
PECO ENERGY 6.120%, 2003 150,300 14,956 15,218
PACIFIC GAS & ELEC 6.300%, 2009 112,200 2,748 2,714 (f)
PACIFIC GAS & ELEC 6.570%, 2007 567,500 14,152 14,755
PACIFICORP $100 PAR 7.700%, 2001 150,000 15,000 16,313
PENN P&L PFD $100 6.150%, 2003 28,000 2,673 2,825
PENN P&L $100 PAR 6.125%, 2008 60,000 5,955 6,029
PENN PWR & LT $100 6.330%, 2008 155,750 15,439 15,832
POTOMAC ELEC PWR $50 6.800%, 2007 160,800 7,942 8,468
POTOMAC ELECTRIC 7.780%, 2006 160,000 8,007 9,140
PUB SERV COLO $100 7.500%, 2009 173,368 16,735 17,640 (b) (d)
PUGET SOUND P&L $100 8.000%, 2004 3,305 330 339
ROCHESTER G & E $100 6.600%, 2009 52,500 5,180 5,335
ROCHESTER G & E $100 7.650%, 1999 20,000 2,000 2,146
ROCHESTER G & E $100 7.550%, 1998 67,000 6,704 7,117
ROCHESTER G & E $100 7.450%, 1997 52,500 5,250 5,322
SAN DIEGO G & E $25 1.762%, 2008 59,500 1,594 1,577 (f)
SO CA EDISON $100 6.050%, 2008 45,000 4,503 4,357 (f)
SO CA EDISON $100 6.450%, 2002 202,250 20,402 20,781
SO INDIANA G & E $100 6.500%, 2002 75,000 7,500 7,320 (b) (d)
TEXAS UTILITY $100 9.640%, 1998 44,427 4,456 4,527 (b) (d)
TEXAS UTILITIES 6.375%, 2008 54,000 5,435 5,414
TEXAS UTIL $100 PAR 6.980%, 2008 50,000 5,000 5,288
VIRGINIA ELEC & PWR 5.580%, 2000 12,500 1,264 1,262 (f)
VIRGINIA ELEC & PWR 6.350%, 2000 195,200 19,546 20,374
WASHINGTON WATER 8.625%, 2000 48,696 4,876 5,080
PAGE 59
Bal. Held
at 12-31-96 Cost Value at
Number of (Notes 12-31-96
Name of Issuer and Titles of Issue Shares a and c) (Note a)
WASHINGTON WTR POWER 6.950%, 2007 57,500 5,766 6,124
WESTERN RESOURCES 7.580%, 2007 76,000 7,916 7,980
Total Public Utility 7,639,497 565,490 583,358
Finance
ABN AMRO NA (FRAP) 5.940% 15,000 15,000 15,000 (f)
COMERICA (FRAP) 6.840% 50,000 2,597 2,596 (f)
FLEET FIN (FRAP) 6.590% 100,000 5,079 5,132 (f)
HOUSEHLD FIN$100 92A 7.250%, 1997 90,500 9,124 9,299
MORGAN STANLEY GROUP
GROUP (FRAP) 5.910% 100,000 5,000 5,050 (f)
PNC BK (FRAP) SERF 6.050% 440,000 22,160 22,125 (f)
WELLS FRGO (FRAP) SERH 6.590% 357,000 18,164 18,379 (f)
Total Finance 1,152,500 77,124 77,581
Industrial
BOWATER $50 VAR RATE VAR %, 1998 167,869 8,189 8,058 (f)
NORTHBROOK HLDG 1000 6.600%, 2001 10,000 10,000 10,050 (b) (d) (f)
WHIRLPOOL FIN $100 B 6.550%, 2008 180,000 18,137 17,977 (b) (d)
Total Industrial 357,869 36,326 36,085
Total Preferred Stock 9,149,866 678,940 697,024
Other
Industrial
MRS FIELDS 20,176,717 605 605 (f)
Public Utility
EL PASO NATURAL GAS 89,806 3,761 4,536 (f)
Total Other 20,266,523 4,366 5,141
Total Investments in Securities
of Unaffiliated Issuers 3,055,390 3,103,005
Total Reserve for Possible Losses
on Corporate Issues 715
$3,054,675 $3,103,005
PAGE 60
NOTES:
(a) See notes 1 and 3 to financial statements regarding determination of cost and
fair values.
(b) Securities valued by IDS Certificate Company at fair value in the absence of
market quotations.
(c) The aggregate cost of investments in securities of unaffiliated issuers for
federal income tax purposes was $3,053,100.
(d) Securities acquired in private negotiation which may require registration under
federal securities laws if they were to be publicly sold. Also see note 3B to
financial statements.
(e) Non-income producing securities.
(f) Securities classified as available for sale and carried at fair value in the
balance sheet. Also see notes 1 and 3A to financial statements.
PAGE 61
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1996, 1995 and 1994
($ in thousands)
Balance December 31, 1996
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a)&(c) (b) (d)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock...................... 100 $2,998 $6,444 $0
Other Controlled Company:
Real Estate Development Company:
Mankato Ventures, First Mortgage Loan.. $0 0 0 36
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).......... 0 0 0 0
Total affiliates...................................$2,998 $6,444 $36
PAGE 62
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1996, 1995 and 1994
($ in thousands)
Balance December 31, 1995
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a)&(c) (b) (d)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock...................... 100 $2,998 $5,193 $0
Other Controlled Company:
Real Estate Development Company:
Mankato Ventures, First Mortgage Loan.. $462 462 462 56
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).......... 0 0 0 0
Total affiliates...................................$3,460 $5,655 $56
PAGE 63
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1996, 1995 and 1994
($ in thousands)
Balance December 31, 1994
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a)&(c) (b) (d)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock...................... 100 $2,998 $4,819 $0
Other Controlled Company:
Real Estate Development Company:
Mankato Ventures, First Mortgage Loan.. $580 580 580 68
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).......... 0 0 0 0
Total affiliates...................................$3,578 $5,399 $68
PAGE 64
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1996, 1995 and 1994
($ in thousands)
NOTES:
(a) The aggregate cost for federal income tax purposes at December 31, 1996, 1995 and 1994 was $5,159,
$5,526 and $4,677 respectively, subject to possible adjustment in certain circumstances under
consolidated income tax return regulations.
(b) Investments in stocks of wholly owned subsidiaries are carried at cost adjusted for equity in undistributed
net income since organization or acquisition of the subsidiaries.
(c) Changes in investment in affiliate during the three years ended December 31, 1996 are summarized
below:
Cost at Additions (Deductions) Cost at
Name of Issuer and Dec. 31, Dec. 31,
Title of Issue 1993 1994 1995 1996 1996
---------------------------- ----------- ------- ------- ------ -----------
Mankato Ventures,
First Mortgage
Loan 684 (104) (118) (462) 0
(d) There were no dividends or interest earned which were not credited to income.
PAGE 65
IDS CERTIFICATE COMPANY SCHEDULE III
Mortgage Loans on Real Estate and Interest Earned on Mortgages
Year Ended December 31, 1996
($ in thousands)
Part 1 - Mortgage loans on real estate at end of period
Amount of principal
unpaid at end of period
Carrying Subject Amount
amount of to of
Number Prior mortgages delinquent mortgages
of liens (c),(g),(h) interest being
Description (a) loans (b) and (i) Total (d) forclosed
First mortgages:
Insured by Federal Housing Administration - liens on:
Residential - under $100 0 0 0 0 0
Apartment and business - under $100 0 0 0 0 0
Total 0 0 0 0 0
Partially guaranteed under Servicemen's
Readjustment Act of 1944, as amended - liens on:
Residential - under $100 0 0 0 0 0
Apartment and business - under $100 0 0 0 0 0
Total 0 0 0 0 0
Other - liens on:
Residential 0 0 0 0 0
Apartment and business:
Under $100 1 54 415 0 0
$100 to $150 1 101 101 0 0
$150 to $200 1 182 432 0 0
$200 to $250 2 447 447 0 0
$250 to $300 1 271 271 0 0
$300 to $350 1 339 339 0 0
$350 to $400 2 759 759 0 0
$400 to $450 1 408 408 0 0
$450 to $500 0 0 0 0 0
Over $500:
Loan No. Mortgagor Property Location
20-00001 NSP, LTD Bloomington, MN 1 631 631 0 0
20-00002 CCH-Space Center Austin, TX 1 2,000 2,000 0 0
21-47004 Retired Teachers Housing Authority Yukon, OK 1 544 544 0 0
21-47084 Ryan Construction Co. Eden Prairie, MN 1 1,750 1,750 0 0
PAGE 66
Part 1 - Mortgage loans on real estate at end of period
Amount of principal
unpaid at end of period
Carrying Subject Amount
Description(a) amount of to of
Number Prior mortgages delinquent mortgages
Over $500: of liens (c),(g),(h) interest being
Loan No. Mortgagor Property Location loans (b) and (i) Total (d) forclosed
21-47106 1225 No. County Road 18 LTD Plymouth, MN 1 1,700 1,700 0 0
21-47110 Lloyd Engelsma Brooklyn Park, MN 1 2,404 2,404 0 0
21-47116 McCaughey Dev. Association Madison, WI 1 1,183 1,183 0 0
21-47128 Century Income Properties Fund Brookfield,WI 1 1,916 1,916 0 0
21-47139 Treasurer's Island Inc. Eagan, MN 1 1,517 1,517 0 0
21-47140 Harbour Run LTD MentorOnTheLake,OH 1 4,118 4,118 0 0
21-47141 John E. Smith Lafayette, IN 1 3,829 3,829 0 0
21-47142 34th Street Properties Partnership Gainsville, FL 1 10,102 10,102 0 0
21-47144 Turnquist, Inc. Brooklyn Park, MN 1 4,252 4,252 0 0
21-47147 Columbus Real Estate Co. Hilliard, OH 1 7,683 7,683 0 0
21-47148 Turner Development Corporation Orlando, FL 1 4,523 4,523 0 0
21-47150 Bircain Apartment Company LP Gladstone, MO 1 2,446 2,446 0 0
21-47152 Richard D. Fownes Trustee Boston, MA 1 3,290 3,290 0 0
21-47154 Kenneth Grandberg Trustee Randolph, MA 1 3,127 3,127 0 0
21-47157 John A. Belanich Tampa, FL 1 3,604 3,604 0 0
21-47158 Grande Associates South River, NJ 1 4,162 4,162 0 0
21-47159 Grande Associates Marlton, NJ 1 3,736 3,736 0 0
21-47160 James Esshaki DBA Taylor MI 1 6,084 6,084 0 0
21-47162 York Creek #3 LTD DBA Taylor MI 1 3,959 3,959 0 0
21-47164 K & M Hamilton Development Co. Halmilton, OH 1 5,754 5,754 0 0
21-47165 Bowling Freen Partnership Sussex, WI 1 2,635 2,635 0 0
21-47166 Colonial Estates Associates Warrington, PA 1 6,164 6,164 0 0
21-47167 Wilder Corp of Delaware Ruskin, FL 1 5,624 5,624 0 0
PAGE 67
Part 1 - Mortgage loans on real estate at end of period
Amount of principal
unpaid at end of period
Carrying Subject Amount
Description(a) amount of to of
Number Prior mortgages delinquent mortgages
Over $500: of liens (c),(g),(h) interest being
Loan No. Mortgagor Property Location loans (b) and (i) Total (d) forclosed
21-47168 Wilder Corp of Delaware Riverview, FL 1 3,104 3,104 0 0
21-47169 Franklin & Bonnie Kottshade Rochester, MN 1 4,313 4,313 0 0
21-47170 Franklin & Bonnie Kottshade Rochester, MN 1 1,142 1,142 0 0
21-47172 Dial Reit Inc. Fremont, NE 1 2,926 2,926 0 0
21-47173 Cinram Associates Fairfield, NJ 1 3,851 3,851 0 0
21-47177 Griffin Real Estate Fund II LP Urbandale, IA 1 2,820 2,820 0 0
21-47178 Griffin Real Estate Fund II LP Urbandale, IA 1 2,443 2,443 0 0
21-47179 Morrestown Office Center Morrestown, NJ 1 2,701 2,701 0 0
21-47181 Westlake #1 Limited Partnership Charlotte, NC 1 2,312 2,312 0 0
21-47183 Cowne Point Ltd Partnership Holland, MI 1 3,880 3,880 0 0
21-47184 Mcnab Commerce Center Association Pompano Beach, FL 1 2,176 2,176 0 0
21-47186 Mack Edison Company Edison, NJ 1 6,709 6,709 0 0
21-47187 Industrial Development Association Mebane, NC 1 2,575 2,575 0 0
21-47190 Dial Reit Inc. Davenport, IA 1 4,099 4,099 0 0
21-47191 SSC Associates Ltd Ptnshp St. Claire Shores, MI 1 6,177 6,177 0 0
21-47192 Tree Trail Village Association Norcross, GA 1 6,614 6,614 0 0
21-47193 ECPG (Peoria) Association Glendale, AZ 1 6,447 6,447 0 0
21-47194 Briar Development Company Tacoma, WA 1 4,197 4,197 0 0
21-47195 Tipotex Inc. Pharr, TX 1 1,859 1,859 0 0
21-47196 Wilder Corporation Pharr, TX 1 4,053 4,053 0 0
21-47197 Wilder Corporation Alamo, TX 1 953 953 0 0
21-47198 Investors Real Estate Trust Grand Forks, ND 1 4,145 4,145 0 0
21-47199 Warren and Kelso Company Cheltenham Twsp, PA 1 2,854 2,854 0 0
21-47201 Oakland Park Festival Ctr Oakland Park, FL 1 4,306 4,306 0 0
21-47202 Lakewood West Ltd Partnership Lakewood, CO 1 4,184 4,184 0 0
21-47203 Desert Shadow Tucson, AZ 1 8,858 8,858 0 0
21-47204 Fort Walton Mary Esther, FL 1 3,050 3,050 0 0
21-47205 Kavanaugh Tucson, AZ 1 3,796 3,796 0 0
21-47206 Hicker Albequerque, NM 1 5,735 5,735 0 0
21-47207 Newport VII Albequerque, NM 1 2,546 2,546 0 0
21-47208 Newport VI Albequerque, NM 1 999 999 0 0
0-3027654 DFB Associates Costa Mesa, CA 1 1,043 1,043 0 0
0-3031967 Special Partnership St. Anthony, MN 1 532 532 0 0
70 218,697 219,308 0 0
Total Other 70 218,697 219,308 0 0
Total First Mortgage Loans on Real Estate 70 218,697 219,308 0 0
PAGE 68
Part 2 -
Interest earned on mortgages
Average
gross rate
Interest of interest
due and on mortgages
accrued held at end
at end of of period
Description (a) period (e) (f)
First mortgages:
Insured by Federal Housing Administration - liens on:
Residential - under $100 0.000%
Apartment and business - under $100 0.000%
Total 0.000%
Partially guaranteed under Servicemen's
Readjustment Act of 1944, as amended - liens on:
Residential - under $100 0.000%
Apartment and business - under $100 0.000%
Total 0.000%
Other - liens on:
Residential 0.000%
Apartment and business:
Under $100 9.500%
$100 to $150 9.375%
$150 to $200 9.250%
$200 to $250 8.750%
$250 to $300 9.900%
$300 to $350 9.750%
$350 to $400 8.564%
$400 to $450 12.000%
$450 to $500 0.000%
Over $500:
Loan No. Mortgagor Property Location
20-00001 NSP, LTD Bloomington, MN 8.750%
21-46978 Kraus Anderson Burnsville, MN 8.000%
21-47004 Retired Teachers Housing Authority Yukon, OK 8.875%
21-47084 Ryan Construction Co. Eden Prairie, MN 8.500%
PAGE 69
Part 2 -
Interest earned on mortgages
Average
gross rate
Interest of interest
due and on mortgages
accrued held at end
at end of of period
Description (a) period (e) (f)
Over $500:
Loan No. Mortgagor Property Location
21-47106 1225 No. County Road 18 LTD Plymouth, MN 8.000%
21-47110 Lloyd Engelsma Brooklyn Park, MN 8.750%
21-47116 McCaughey Dev. Association Madison, WI 8.500%
21-47128 Century Income Properties Fund Brookfield,WI 8.250%
21-47139 Treasurer's Island Inc. Eagan, MN 8.625%
21-47140 Harbour Run LTD MentorOnTheLake,OH 9.000%
21-47141 John E. Smith Lafayette, IN 10.000%
21-47142 34th Street Properties Partnership Gainsville, FL 8.125%
21-47144 Turnquist, Inc. Brooklyn Park, MN 8.875%
21-47147 Columbus Real Estate Co. Hilliard, OH 8.375%
21-47148 Turner Development Corporation Orlando, FL 7.375%
21-47150 Bircain Apartment Company LP Gladstone, MO 7.250%
21-47152 Richard D. Fownes Trustee Boston, MA 8.000%
21-47154 Kenneth Grandberg Trustee Randolph, MA 8.250%
21-47157 John A. Belanich Tampa, FL 8.750%
21-47158 Grande Associates South River, NJ 7.500%
21-47159 Grande Associates Marlton, NJ 7.500%
21-47160 James Esshaki DBA Taylor MI 8.500%
21-47162 York Creek #3 LTD DBA Taylor MI 9.750%
21-47164 K & M Hamilton Development Co. Halmilton, OH 9.625%
21-47165 Bowling Freen Partnership Sussex, WI 8.625%
21-47166 Colonial Estates Associates Warrington, PA 8.750%
21-47167 Wilder Corp of Delaware Ruskin, FL 9.625%
PAGE 70
Part 2 -
Interest earned on mortgages
Average
gross rate
Interest of interest
due and on mortgages
accrued held at end
at end of of period
Description (a) period (e) (f)
Over $500:
Loan No. Mortgagor Property Location
21-47168 Wilder Corp of Delaware Riverview, FL 9.625%
21-47169 Franklin & Bonnie Kottshade Rochester, MN 9.000%
21-47170 Franklin & Bonnie Kottshade Rochester, MN 9.750%
21-47172 Dial Reit Inc. Fremont, NE 9.250%
21-47173 Cinram Associates Fairfield, NJ 9.125%
21-47177 Griffin Real Estate Fund II LP Urbandale, IA 8.375%
21-47178 Griffin Real Estate Fund II LP Urbandale, IA 8.375%
21-47179 Morrestown Office Center Morrestown, NJ 8.625%
21-47181 Westlake #1 Limited Partnership Charlotte, NC 8.250%
21-47183 Cowne Point Ltd Partnership Holland, MI 9.250%
21-47184 Mcnab Commerce Center Association Pompano Beach, FL 9.000%
21-47186 Mack Edison Company Edison, NJ 8.000%
21-47187 Industrial Development Association Mebane, NC 8.125%
21-47190 Dial Reit Inc. Davenport, IA 8.000%
21-47191 SSC Associates Ltd Ptnshp St. Claire Shores, MI 7.125%
21-47192 Tree Trail Village Association Norcross, GA 8.250%
21-47193 ECPG (Peoria) Association Glendale, AZ 7.000%
21-47194 Briar Development Company Tacoma, WA 8.750%
21-47195 Tipotex Inc. Pharr, TX 9.125%
21-47196 Wilder Corporation Pharr, TX 9.125%
21-47197 Wilder Corporation Alamo, TX 9.125%
21-47198 Investors Real Estate Trust Grand Forks, ND 7.500%
21-47199 Warren and Kelso Company Cheltenham Twsp, PA 8.125%
21-47201 Oakland Park Festival Ctr Oakland Park, FL 7.750%
21-47202 Lakewood West Ltd Partnership Lakewood, CO 7.750%
21-47203 Desert Shadow Tucson, AZ 8.750%
21-47204 Fort Walton Mary Esther, FL 8.125%
21-47205 Kavanaugh Tucson, AZ 8.000%
21-47206 Hicker Albequerque, NM 8.250%
21-47207 Newport VII Albequerque, NM 8.125%
21-47208 Newport VI Albequerque, NM 8.125%
0-3027654 DFB Associates Costa Mesa, CA 9.500%
0-3031967 Special Partnership St. Anthony, MN 9.250%
8.450%
Total Other 8.450%
Total First Mortgage Loans on Real Estate 8.450%
PAGE 71
Part 3 - Location of mortgaged properties
($ in thousands)
Amount of principal
unpaid at end of period
Carrying Subject
State in amount of to Amount of
which mortgaged Number Prior mortgages delinquent mortgages
property of liens (c), (g), interest being
is located loans (b) (h) and (i) Total (d) foreclosed
Arizona 3 19,101 19,101
California 3 1,653 1,653
Colorado 1 4,184 4,184
Florida 8 36,490 36,490
Georgia 1 6,614 6,614
Indiana 1 3,829 3,829
Iowa 3 9,362 9,362
Massachusetts 2 6,417 6,417
Michigan 4 20,100 20,100
Minnesota 11 18,668 18,918
Missouri 1 2,446 2,446
Nebraska 1 2,926 2,926
New Jersey 6 21,544 21,544
New Mexico 3 9,280 9,280
North Carolina 2 4,887 4,887
North Dakota 1 4,145 4,145
Ohio 3 17,555 17,555
Oklahoma 3 1,154 1,154
Pennsylvania 2 9,018 9,018
South Dakota 1 373 373
Texas 6 9,019 9,380
Washington 1 4,197 4,197
Wisconsin 3 5,735 5,735
Total 70 218,697 219,308 0 0
PAGE 72
NOTES:
(a) The classification "residential" includes single dwellings only. Residential multiple dwellings are included
in "apartment and business".
(b) Real estate taxes and easements, which in the opinion of the Company are not undue burden on the properties,
have been excluded from the determination of "prior liens".
(c) In this schedule III, carrying amount of mortgage loans represents unpaid principal balances plus unamortized
premiums less unamortized discounts and allowance for loss.
(d) Interest in arrears for less than three months has been disregarded in computing the total amount of principal
subject to delinquent interest. The amounts of mortgage loans being forclosed are also included in amounts
subject to delinquent interest.
(e) Information as to interest due and accrued at the end of the period is shown by type of mortgage loan.
Information as to interest due and accrued for the various classes within the types of mortgage loans is not
readily available and the obtaining thereof would involve unreasonable effort and expense.
The Company does not accrue interest on loans which are over three months delinquent.
(f) Information as to interest income by type and class of loan has been omitted because it is not readily available
and the obtaining thereof would involve unreasonable effort and expense. In lieu thereof, the average gross
interest rates (exclusive of amortization of discounts and premiums) on mortgage loans held at
December 31, 1996 are shown by type and class of loan.
The average gross interest rates on mortgage loans held at December 31, 1996, 1995 and 1994 are
summarized as follows:
1996 1995 1994
First mortgages:
Insured by Federal Housing Administratio 0.000% 0.000% 7.186%
Partially guaranteed under Servicemen's
Readjustment Act of 1944, as amended 0.00 0.00 8.000
Other 8.45 8.90 8.884
Combined average 8.450% 8.901% 8.884%
(g) Following is a reconciliation of the carrying amount of mortgage loans for the years ended
December 31, 1996, 1995 and 1994.
1996 1995 1994
Balance at beginning of period $233,394 $253,968 $281,865
Additions during period:
New loans acquired:
Nonaffiliated companies 18,301 9,000 0
Allowance for loss transferred to real esta 0 0 350
Amortization of discount/ premium 0 0 51
Total additions 18,301 9,000 401
251,695 262,968 282,266
Deductions during period:
Collections of principal 32,998 29,533 28,298
Cost of mortgages sold 0 41 0
Total deductions 32,998 29,574 28,298
Balance at end of period $218,697 $233,394 $253,968
(h) The aggregate cost of mortgage loans for federal income tax purposes at December 31, 1996 was $219,308.
(i) At December 31, 1996, an allowance for loss of $611 is recorded which represents the amount of impairment on
mortgage loans.
(j) New loans acquired during 1996 include $2,000 of proceeds received from sale of real estate in lieu of cash.
/TABLE
PAGE 73
SCHEDULE V
IDS CERTIFICATE COMPANY
Qualified Assets on Deposit
December 31, 1996
($ thousands)
Investment Securities
Bonds and Mortgage
Notes Stocks Loans Other
Name of Depositary (a) (b) (c) (d) Total
Deposits with states or their depositaries to
meet requirements of statutes and
agreements:
Illinois - Secretary of
State of Illinois $50 $0 $0 $0 $50
New Jersey - Commissioner
of Banking and Insurance
of New Jersey 49 0 0 0 49
Pennsylvania - Treasurer
of the State of
Pennsylvania 148 0 0 0 148
Texas - Treasurer of the
State of Texas 115 0 0 0 115
Total deposits with states or their
depositaries to meet requirements of
statues and agreements 362 0 0 0 362
Central depositary - American
Express Trust Company 2,434,047 683,306 218,697 18,991 3,355,041
Total $2,434,409 $683,306 $218,697 $18,991 $3,355,403
Notes:
(a) Represents amortized cost of bonds and notes.
(b) Represents average cost of individual issues of stocks.
(c) Represents unpaid principal balance of mortgage loans less unamortized
discounts and reserve for losses.
(d) Represents amortized cost of purchased call options.
PAGE 74
Schedule VI
IDS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 1996 Balance at beginning of period
($ in thousands)
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 1 $ 5 1
" 20, " " " 2.52 Inst/2.50 Ext. 33 407 366
" 15A, " " " 2.66 Inst/3.04 Ext. 56 831 770
" 22A, " " " 3.09 2,051 36,322 29,265
" I-76, " " " 3.35 1,001 23,309 9,830
" Reserve Plus Flexible Payment (note a) 466 4,400 2,336
" IC-Q-Installment (note a) 302 3,215 1,198
" IC-Q-Ins (note a) 21,505 275,345 112,274
" IC-Q-Ins Emp (note a) 117 1,765 551
" IC-1 (note a) 57,510 1,053,083 163,021
" IC-1-Emp (note a) 433 7,229 1,104
" RP-Q-Installment (note a) 318 4,379 2,695
" RP-Q-Flexible Payment (note a) 105 1,704 408
" RP-Q-Ins (note a) 595 11,401 3,709
" RP-Q-Ins Emp (note a) 5 176 23
" RP-1 (note a) 498 14,852 2,631
" RP-1-Emp (note a) 5 1,254 14
Total 85,001 1,439,677 330,196
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 Not Not 0
" 20, " " " 2 Readily Applicable 18
" 15A, " " " 3 Available 24
" 22A, " " " 3 951
" I-76, " " " 3.5 401
Total 1,394
PAGE 75
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 0 0 0
" 20, " " " 2.52 Inst/2.50 Ext. 8 2 19
" 15A, " " " 2.66 Inst/3.04 Ext. 14 10 5
" 22A, " " " 3.09 820 480 2,733
" I-76, " " " 3.35 313 375 44
" Reserve Plus Flexible Payment (note a) 0 346 63
" IC-Q-Installment (note a) 0 122 24
" IC-Q-Ins (note a) 0 14,907 2,720
" IC-Q-Ins Emp (note a) 0 85 16
" IC-1 (note a) 0 94,233 5,739
" IC-1-Emp (note a) 0 755 51
" RP-Q-Installment (note a) 0 40 75
" RP-Q-Flexible Payment (note a) 0 2 6
" RP-Q-Ins (note a) 0 276 93
" RP-Q-Ins Emp (note a) 0 2 1
" RP-1 (note a) 0 1,339 90
" RP-1-Emp (note a) 0 6 1
Total 1,155 112,980 11,680
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 0 0 0
" 20, " " " 2 1 4 0
" 15A, " " " 3 1 3 0
" 22A, " " " 3 40 247 85
" I-76, " " " 3.5 19 76 4
Total 61 330 89
PAGE 76
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 0 0 1
" 20, " " " 2.52 Inst/2.50 Ext. 48 0 123
" 15A, " " " 2.66 Inst/3.04 Ext. 120 6 359
" 22A, " " " 3.09 2,193 1,566 6,352
" I-76, " " " 3.35 0 1,485 289
" Reserve Plus Flexible Payment (note a) 31 975 4
" IC-Q-Installment (note a) 448 263 2
" IC-Q-Ins (note a) 1,763 48,835 14
" IC-Q-Ins Emp (note a) 0 314 0
" IC-1 (note a) 0 43,339 0
" IC-1-Emp (note a) 0 364 0
" RP-Q-Installment (note a) 95 606 0
" RP-Q-Flexible Payment (note a) 254 36 8
" RP-Q-Ins (note a) 71 1,274 0
" RP-Q-Ins Emp (note a) 0 0 0
" RP-1 (note a) 0 694 0
" RP-1-Emp (note a) 0 7 0
Total 5,023 99,764 7,152
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 0 0 0
" 20, " " " 2 5 1 5
" 15A, " " " 3 1 4 8
" 22A, " " " 3 21 43 461
" I-76, " " " 3.5 0 100 27
Total 27 148 501
PAGE 77
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 0 0 0
" 20, " " " 2.52 Inst/2.50 Ext. 21 256 224
" 15A, " " " 2.66 Inst/3.04 Ext. 14 341 314
" 22A, " " " 3.09 1,545 29,381 23,187
" I-76, " " " 3.35 822 19,231 8,788
" Reserve Plus Flexible Payment (note a) 372 3,475 1,735
" IC-Q-Installment (note a) 142 1,436 631
" IC-Q-Ins (note a) 14,496 180,394 79,289
" IC-Q-Ins Emp (note a) 73 914 338
" IC-1 (note a) 61,488 1,103,589 219,654
" IC-1-Emp (note a) 425 7,490 1,546
" RP-Q-Installment (note a) 250 3,368 2,109
" RP-Q-Flexible Payment (note a) 22 300 118
" RP-Q-Ins (note a) 403 8,093 2,733
" RP-Q-Ins Emp (note a) 5 176 26
" RP-1 (note a) 494 15,371 3,366
" RP-1-Emp (note a) 5 1,292 14
Total 80,577 1,375,107 344,072
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 Not Not 0
" 20, " " " 2 Readily Applicable 12
" 15A, " " " 3 Available 15
" 22A, " " " 3 798
" I-76, " " " 3.5 373
Total 1,198
PAGE 78
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 0
" 20, " " " 2.5 Not Not 78
" 15A, " " " 3 Readily Applicable 129
" 22A, " " " 3 Available 5,940
" I-76, " " " 3.5 2,247
" Reserve Plus Flexible Payment (note a) 0
" IC-Q-Installment (note a) 0
" IC-Q-Ins (note a) 0
" IC-Q-Ins Emp (note a) 0
" IC-1 (note a) 214
" IC-1-Emp (note a) 2
" RP-Q-Installment (note a) 0
" RP-Q-Flexible Payment (note a) 0
" RP-Q-Ins (note a) 0
" RP-Q-Ins Emp (note a) 0
" RP-1 (note a) 3
" RP-1-Emp (note a) 0
Total 8,613
Reserve for accrued extra contribution 3rd year 12,322
Reserve for accrued extra contribution 6th year 563
Accrued interest on reserves in default I-76 3.5 2
Reserve for additional credits to be allowed Not Not
Installment Certificates-Special Additional Readily Applicable
Credits I-76 Available 0
Accrued for additional credits to be allowed at
next anniversary 276
Reserve for death and disability refund options 0
Reserve for reconversion of paid-up certificates 53
Total installment certificates 353,419
PAGE 79
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
Additional credits and accrued interest
thereon:
" 15, includes extended maturities 2.5 0 0
" 20, " " " 2.5 1 Not 9
" 15A, " " " 3 2 Applicable 10
" 22A, " " " 3 153 912
" I-76, " " " 3.5 72 110
" Reserve Plus Flexible Payment (note a) 63 0
" IC-Q-Installment (note a) 24 0
" IC-Q-Ins (note a) 2,723 0
" IC-Q-Ins Emp (note a) 16 0
" IC-1 (note a) 5,793 0
" IC-1-Emp (note a) 51 0
" RP-Q-Installment (note a) 75 0
" RP-Q-Flexible Payment (note a) 6 0
" RP-Q-Ins (note a) 93 0
" RP-Q-Ins Emp (note a) 1 0
" RP-1 (note a) 91 0
" RP-1-Emp (note a) 1 0
Total 9,165 1,041
Reserve for accrued extra contribution 3rd year 4,987 (2,897) 0
Reserve for accrued extra contribution 6th year 197 (478) 0
Accrued interest on reserves in default I-76 3.5 6 0 0
Reserve for additional credits to be allowed
Installment Certificates-Special Additional
Credits I-76 0 0 0
Accrued for additional credits to be allowed at
next anniversary 453 0 0
Reserve for death and disability refund options 0 0 0
Reserve for reconversion of paid-up certificates 0 0 0
Total installment certificates 16,024 109,935 12,810
PAGE 80
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 0 0 0
" 20, " " " 2.5 12 0 29
" 15A, " " " 3 22 1 70
" 22A, " " " 3 462 315 1,306
" I-76, " " " 3.5 0 344 64
" Reserve Plus Flexible Payment (note a) 0 0 63
" IC-Q-Installment (note a) 0 0 24
" IC-Q-Ins (note a) 0 0 2,723
" IC-Q-Ins Emp (note a) 0 0 16
" IC-1 (note a) 0 0 5,741
" IC-1-Emp (note a) 0 0 51
" RP-Q-Installment (note a) 0 0 75
" RP-Q-Flexible Payment (note a) 0 0 6
" RP-Q-Ins (note a) 0 0 93
" RP-Q-Ins Emp (note a) 0 0 1
" RP-1 (note a) 0 0 90
" RP-1-Emp (note a) 0 0 1
Total 496 660 10,353
Reserve for accrued extra contribution 3rd year 0 0 0
Reserve for accrued extra contribution 6th year 0 0 0
Accrued interest on reserves in default I-76 3.5 0 0 6
Reserve for additional credits to be allowed
Installment Certificates-Special Additional
Credits I-76 0 0 0
Accrued for additional credits to be allowed at
next anniversary 0 0 530
Reserve for death and disability refund options 0 0 0
Reserve for reconversion of paid-up certificates 0 0 0
Total installment certificates 5,546 100,572 18,542
PAGE 81
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 0
" 20, " " " 2.5 Not Not 47
" 15A, " " " 3 Readily Applicable 48
" 22A, " " " 3 Available 4,922
" I-76, " " " 3.5 2,021
" Reserve Plus Flexible Payment (note a) 0
" IC-Q-Installment (note a) 0
" IC-Q-Ins (note a) 0
" IC-Q-Ins Emp (note a) 0
" IC-1 (note a) 266
" IC-1-Emp (note a) 2
" RP-Q-Installment (note a) 0
" RP-Q-Flexible Payment (note a) 0
" RP-Q-Ins (note a) 0
" RP-Q-Ins Emp (note a) 4
" RP-1 (note a) 0
Total 7,310
Reserve for accrued extra contribution 3rd year 14,412
Reserve for accrued extra contribution 6th year 282
Accrued interest on reserves in default I-76 3.5 2
Reserve for additional credits to be allowed
Installment Certificates-Special Additional Not Not
Credits I-76 Readily Applicable 0
Accrued for additional credits to be allowed at Available
next anniversary 199
Reserve for death and disability refund options 0
Reserve for reconversion of paid-up certificates 53
Total installment certificates 367,528
PAGE 82
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Fully paid certificates:
Single-payment certificates:
SP 74 3.5 1 8 8
SP 75 3.5 44 367 366
SP 76 3.5 366 3,072 2,987
SP 77 3.5 442 3,088 2,909
SP 78 3.5 541 3,985 3,633
SP 79 3.5 613 4,800 4,234
SP 80 3.5 604 4,813 4,094
SP 81A 3.5 480 3,175 2,605
SP 82A 3.5 447 4,361 3,460
SP 82B 3.5 785 7,016 5,504
SP 83A 3.5 141 1,216 940
SP 83B 3.5 317 2,858 2,175
IC-2-84 3.5 1,263 12,298 9,050
IC-2-85 3.5 697 7,443 6,880
IC-2-86 3.5 366 4,571 3,775
IC-2-87 3.5 456 5,957 4,653
IC-2-88 3.5 870 12,875 9,087
Reserve Plus Single Payment (note a) 1,432 6,764 10,205
Cash Reserve Single Payment (note b) 58 271 228
IC-Flexible Savings (formerly Variable Term) (note d) 125,194 1,025,145 1,090,095
IC-Flexible Savings Emp (formerly Variable Term) (note d) 1,540 13,147 15,070
IC-Preferred Investors (note d) 0 0 0
IC-Investors (note d) 546 565,213 590,747
IC-Special Deposits (note d) 62 56,830 58,457
IC-1-84 (note c) 92 564 578
Cash Reserve Variable Payment (note b) 764 3,704 4,731
Cash Reserve Variable Payment-3mo. (note e) 47,447 213,252 224,047
IC-Future Value (note f) 20,452 229,864 229,864
IC-Future Value Emp (note f) 407 4,300 4,300
IC-Stock Market (note g) 43,358 154,060 166,263
IC-AEBI Stock Market (note g) 24 5,872 6,362
Total 249,809 2,360,889 2,467,307
PAGE 83
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
Fully paid certificates:
Single-payment certificates:
SP 74 3.5 0 0 0
SP 75 3.5 1 0 0
SP 76 3.5 77 0 0
SP 77 3.5 95 0 0
SP 78 3.5 117 0 0
SP 79 3.5 135 0 0
SP 80 3.5 131 0 0
SP 81A 3.5 77 0 0
SP 82A 3.5 112 0 0
SP 82B 3.5 172 0 0
SP 83A 3.5 29 0 0
SP 83B 3.5 69 0 0
IC-2-84 3.5 287 0 0
IC-2-85 3.5 0 0 329
IC-2-86 3.5 0 0 173
IC-2-87 3.5 0 0 215
IC-2-88 3.5 0 0 422
Reserve Plus Single Payment (note a) 0 0 392
Cash Reserve Single Payment (note b) 0 0 9
IC-Flexible Savings (formerly Variable Term) (note d) 0 173,006 41,884
IC-Flexible Savings Emp (formerly Variable Term) (note d) 0 4,620 814
IC-Preferred Investors (note d) 0 25,111 73
IC-Investors (note d) 0 262,568 30,158
IC-Special Deposits (note d) 0 41,065 2,441
IC-1-84 (note c) 0 0 28
Cash Reserve Variable Payment (note b) 0 452 175
Cash Reserve Variable Payment-3mo. (note e) 0 275,959 9,862
IC-Future Value (note f) 0 6,598 0
IC-Future Value Emp (note f) 0 71 0
IC-Stock Market (note g) 0 128,386 16,955
IC-AEBI Stock Market (note g) 0 1,310 593
Total 1,302 919,146 104,523
PAGE 84
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
Fully paid certificates:
Single-payment certificates:
SP 74 3.5 0 0 0
SP 75 3.5 (77) (13) 400
SP 76 3.5 1,512 272 413
SP 77 3.5 0 376 0
SP 78 3.5 0 525 25
SP 79 3.5 0 691 7
SP 80 3.5 0 628 0
SP 81A 3.5 0 669 0
SP 82A 3.5 0 610 0
SP 82B 3.5 0 1,034 12
SP 83A 3.5 0 222 0
SP 83B 3.5 0 319 0
IC-2-84 3.5 0 1,785 19
IC-2-85 3.5 0 1,579 0
IC-2-86 3.5 0 1,083 23
IC-2-87 3.5 0 1,119 8
IC-2-88 3.5 0 1,584 23
Reserve Plus Single Payment (note a) 0 1,717 0
Cash Reserve Single Payment (note b) 0 41 0
IC-Flexible Savings (formerly Variable Term) (note d) 0 682,884 0
IC-Flexible Savings Emp (formerly Variable Term) (note d) 0 3,703 0
IC-Preferred Investors (note d) 0 1,592 0
IC-Investors (note d) 0 263,613 0
IC-Special Deposits (note d) 0 26,265 0
IC-1-84 (note c) 0 104 0
Cash Reserve Variable Payment (note b) 0 1,366 0
Cash Reserve Variable Payment-3mo. (note e) 0 267,607 0
IC-Future Value (note f) 6,777 15,233 0
IC-Future Value Emp (note f) 152 154 0
IC-Stock Market (note g) 0 51,476 0
IC-AEBI Stock Market (note g) 0 4,495 0
Total 8,364 1,332,733 930
PAGE 85
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Fully paid certificates:
Single-payment certificates:
SP 74 3 1 8 8
SP 75 3.5 2 57 57
SP 76 3.5 111 871 867
SP 77 3.5 385 2,696 2,628
SP 78 3.5 455 3,391 3,200
SP 79 3.5 522 4,020 3,671
SP 80 3.5 502 4,086 3,597
SP 81A 3.5 402 2,372 2,013
SP 82A 3.5 362 3,606 2,962
SP 82B 3.5 643 5,702 4,630
SP 83A 3.5 110 933 747
SP 83B 3.5 265 2,445 1,925
IC-2-84 3.5 1,029 9,884 7,533
IC-2-85 3.5 560 5,788 5,630
IC-2-86 3.5 290 3,229 2,842
IC-2-87 3.5 371 4,569 3,741
IC-2-88 3.5 728 10,661 7,902
Reserve Plus Single Payment 3.5 1,207 5,678 8,880
Cash Reserve Single Payment (note a) 48 231 196
IC-Flexible Savings (formerly Variable Term) (note b) 93,070 561,761 622,101
IC-Flexible Savings Emp (formerly Variable Term) (note d) 1,514 14,554 16,801
IC-Preferred Investors (note d) 25 23,523 23,592
IC-Investors (note d) 529 585,856 619,860
IC-Special Deposits (note d) 75 72,990 75,698
IC-1-84 (note d) 72 464 502
Cash Reserve Variable Payment (note c) 655 3,098 3,992
Cash Reserve Variable Payment-3mo. (note b) 50,579 231,063 242,261
IC-Future Value (note e) 19,246 214,452 214,452
IC-Future Value Emp (note f) 377 4,065 4,065
IC-Stock Market (note g) 66,983 238,765 260,128
IC-AEBI Stock Market (note g) 22 3,543 3,770
Total 241,140 2,024,361 2,150,251
PAGE 86
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Additional credits and accrued interest thereon:
SP 74 3.5 Not Not 10
SP 75 3.5 Applicable Applicable 442
SP 76 3.5 3,494
SP 77 3.5 3,101
SP 78 3.5 3,483
SP 79 3.5 3,735
SP 80 3.5 3,337
SP 81A 3.5 1,737
SP 82A 3.5 2,237
SP 82B 3.5 3,345
SP 83A 3.5 439
SP 83B 3.5 953
IC-2-84 3.5 4,079
IC-2-85 3.5 129
IC-2-86 3.5 62
IC-2-87 3.5 80
IC-2-88 3.5 160
Reserve Plus Single Payment (note a) 0
Cash Reserve Single Payment (note b) 0
IC-Flexible Savings (formerly Variable Term) (note d) 2,559
IC-Flexible Savings Emp (formerly Variable Term) (note d) 37
IC-Preferred Investors (note d) 0
IC-Investors (note d) 1,342
IC-Special Deposits (note d) 104
IC-1-84 (note c) 14
Cash Reserve Variable Payment (note b) 0
Cash Reserve Variable Payment-3mo. (note e) 389
IC-Future Value (note f) 37,728
IC-Future Value Emp (note f) 676
IC-Stock Market (note g) 1,118
IC-AEBI Stock Market (note g) 110
Total 74,900
PAGE 87
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
Additional credits and accrued interest thereon:
SP 74 3.5 0 0 0
SP 75 3.5 1 0 0
SP 76 3.5 90 0 59
SP 77 3.5 102 0 63
SP 78 3.5 113 0 80
SP 79 3.5 121 0 92
SP 80 3.5 109 0 83
SP 81A 3.5 52 0 59
SP 82A 3.5 72 0 74
SP 82B 3.5 107 0 132
SP 83A 3.5 14 0 21
SP 83B 3.5 32 0 42
IC-2-84 3.5 131 0 183
IC-2-85 3.5 217 0 0
IC-2-86 3.5 117 0 0
IC-2-87 3.5 147 0 0
IC-2-88 3.5 297 0 0
Reserve Plus Single Payment (note a) 394 0 0
Cash Reserve Single Payment (note b) 9 0 0
IC-Flexible Savings (formerly Variable Term) (note d) 45,214 0 0
IC-Flexible Savings Emp (formerly Variable Term) (note d) 963 0 0
IC-Peferred Investors (note d) 133 0 0
IC-Investors (note d) 32,822 0 0
IC-Special Deposits (note d) 2,790 0 0
IC-1-84 (note c) 28 0 0
Cash Reserve Variable Payment (note b) 185 0 0
Cash Reserve Variable Payment-3mo. (note e) 10,061 0 0
IC-Future Value (note f) 18,940 0 0
IC-Future Value Emp (note f) 389 0 0
IC-Stock Market (note g) 2,318 0 (1)
IC-AEBI Stock Market (note g) 141 0 0
Total 116,109 0 887
PAGE 88
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
Additional credits and accrued interest thereon:
SP 74 3.5 0 0 0
SP 75 3.5 (112) (15) 497
SP 76 3.5 1,828 307 499
SP 77 3.5 0 384 0
SP 78 3.5 0 505 25
SP 79 3.5 0 605 7
SP 80 3.5 0 545 0
SP 81A 3.5 0 483 0
SP 82A 3.5 0 417 0
SP 82B 3.5 0 670 8
SP 83A 3.5 0 104 0
SP 83B 3.5 0 138 0
IC-2-84 3.5 0 844 9
IC-2-85 3.5 0 15 227
IC-2-86 3.5 0 12 121
IC-2-87 3.5 0 10 151
IC-2-88 3.5 0 18 300
Reserve Plus Single Payment (note a) 0 0 394
Cash Reserve Single Payment (note b) 0 0 9
IC-Flexible Savings (formerly Variable Term) (note d) 0 4,591 41,904
IC-Flexible Savings Emp (formerly Variable Term) (note d) 0 146 814
IC-Preferred Investors (note d) 0 9 72
IC-Investors (note d) 0 2,663 30,158
IC-Special Deposits (note d) 0 323 2,441
IC-1-84 (note c) 0 2 29
Cash Reserve Variable Payment (note b) 0 9 176
Cash Reserve Variable Payment-3mo. (note e) 0 177 9,869
IC-Future Value (note f) 4,072 3,151 0
IC-Future Value Emp (note f) 72 41 0
IC-Stock Market (note g) 0 79 2,081
IC-AEBI Stock Market (note g) 0 7 189
Total 5,860 16,240 89,980
PAGE 89
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Additional credits and accrued interest thereon:
SP 74 3.5 Not Not 10
SP 75 3.5 Applicable Applicable 73
SP 76 3.5 1,009
SP 77 3.5 2,882
SP 78 3.5 3,146
SP 79 3.5 3,336
SP 80 3.5 2,984
SP 81A 3.5 1,365
SP 82A 3.5 1,966
SP 82B 3.5 2,906
SP 83A 3.5 370
SP 83B 3.5 889
IC-2-84 3.5 3,540
IC-2-85 3.5 104
IC-2-86 3.5 46
IC-2-87 3.5 66
IC-2-88 3.5 139
Reserve Plus Single Payment (note a) 0
Cash Reserve Single Payment (note b) 0
IC-Flexible Savings (formerly Variable Term) (note d) 1,278
IC-Flexible Savings Emp (formerly Variable Term) (note d) 40
IC-Preferred Investors (note d) 52
IC-Investors (note d) 1,343
IC-Special Deposits (note d) 130
IC-1-84 (note c) 11
Cash Reserve Variable Payment (note b) 0
Cash Reserve Variable Payment-3mo. (note e) 404
IC-Future Value (note f) 49,445
IC-Future Value Emp (note f) 952
IC-Stock Market (note g) 1,275
IC-AEBI Stock Market (note g) 55
Total 79,816
PAGE 90
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Accrued for additional credits to be allowed
at next anniversaries:
SP 74 Not Not 0
SP 75 Applicable Applicable 0
SP 76 22
SP 77 26
SP 78 34
SP 79 43
SP 80 35
SP 81A 37
SP 82A 25
SP 82B 86
SP 83A 13
SP 83B 22
IC-2-84 97
IC-2-85 59
IC-2-86 26
IC-2-87 36
IC-2-88 67
IC-Stock Market 10,781
IC-AEBI Stock Market 285
Total 11,694
PAGE 91
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
Accrued for additional credits to be allowed
at next anniversaries:
SP 74 0 0 0
SP 75 0 0 0
SP 76 60 0 0
SP 77 72 0 0
SP 78 84 0 0
SP 79 92 0 0
SP 80 88 0 0
SP 81A 43 0 0
SP 82A 69 0 0
SP 82B 98 0 0
SP 83A 15 0 0
SP 83B 36 0 0
IC-2-84 149 0 0
IC-2-85 78 0 0
IC-2-86 41 0 0
IC-2-87 51 0 0
IC-2-88 101 0 0
IC-Stock Market 21,048 0 0
IC-AEBI Stock Market 210 0 0
Total 22,335 0 0
PAGE 92
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
Accrued for additional credits to be allowed
at next anniversaries:
SP 74 0 0 0
SP 75 0 0 0
SP 76 0 0 59
SP 77 0 0 63
SP 78 0 0 80
SP 79 0 0 92
SP 80 0 0 83
SP 81A 0 0 59
SP 82A 0 0 74
SP 82B 0 0 132
SP 83A 0 0 21
SP 83B 0 0 42
IC-2-84 0 0 183
IC-2-85 0 0 102
IC-2-86 0 0 51
IC-2-87 0 0 64
IC-2-88 0 0 123
IC-Stock Market 0 174 14,887
IC-AEBI Stock Market 0 0 404
Total 0 174 16,519
PAGE 93
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Accrued for additional credits to be allowed
at next anniversaries:
SP 74 Not Not 0
SP 75 Applicable Applicable 0
SP 76 23
SP 77 35
SP 78 38
SP 79 43
SP 80 40
SP 81A 21
SP 82A 20
SP 82B 52
SP 83A 7
SP 83B 16
IC-2-84 63
IC-2-85 35
IC-2-86 16
IC-2-87 23
IC-2-88 45
IC-Stock Market 16,768
IC-AEBI Stock Market 91
Total 17,336
PAGE 94
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
R Series Single-Payment certificates:
R-76 3.5 17 184 144
R-77 3.5 76 806 610
R-78 3.5 115 1,203 844
R-79 3.5 146 1,649 1,130
R-80 3.5 211 2,652 1,716
R-81 3.5 74 914 514
R-82A 3.5 337 2,747 1,381
RP-Q (note a) 902 1,666 3,559
R-II 3.5 263 2,837 1,087
RP-84 3.5 831 10,844 3,952
RP-85 3.5 250 1,481 1,360
RP-86 3.5 89 781 672
RP-87 3.5 177 1,138 877
RP-88 3.5 248 1,974 1,389
Cash Reserve RP (note b) 17 67 115
IC-Flexible Savings RP (note d) 18,802 168,363 186,084
RP-Preferred Investors (note d) 0 0 0
Cash Reserve RP-3 mo. (note e) 3,645 27,814 29,083
IC-Flexible Savings RP Emp (note d) 446 4,639 5,367
RP-Future Value (note f) 13,017 200,914 200,914
RP-Future Value Emp (note f) 303 5,346 5,345
RP-Stock Market (note g) 6,802 34,695 38,468
D-1 (note a) 270 39,251 43,660
Total 47,038 511,965 528,271
PAGE 95
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
R Series Single-Payment certificates:
R-76 3.5 0 0 6
R-77 3.5 0 0 26
R-78 3.5 0 0 34
R-79 3.5 0 0 49
R-80 3.5 0 0 74
R-81 3.5 0 0 26
R-82A 3.5 0 0 72
RP-Q (note a) 0 0 136
R-II 3.5 0 0 56
RP-84 3.5 0 0 190
RP-85 3.5 0 0 68
RP-86 3.5 0 0 31
RP-87 3.5 0 0 41
RP-88 3.5 0 0 65
Cash Reserve RP (note b) 0 0 4
IC-Flexible Savings RP (formally Variable Term RP) (note d) 0 25,902 8,138
RP-Preferred Investors (note d) 0 853 0
Cash Reserve RP-3 mo. (note e) 0 43,847 1,241
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 0 776 316
RP-Future Value (note f) 0 5,596 0
RP-Future Value Emp (note f) 0 80 0
RP-Stock Market (note g) 0 15,473 3,951
D-1 (note a) 0 7,412 2,179
Total 0 99,939 16,703
PAGE 96
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
R Series Single-Payment certificates:
R-76 3.5 0 35 0
R-77 3.5 0 157 0
R-78 3.5 0 157 5
R-79 3.5 0 243 0
R-80 3.5 0 399 9
R-81 3.5 0 88 9
R-82A 3.5 0 293 0
RP-Q (note a) 0 720 8
R-II 3.5 0 279 0
RP-84 3.5 0 1,065 0
RP-85 3.5 0 420 0
RP-86 3.5 0 184 0
RP-87 3.5 0 219 0
RP-88 3.5 0 652 0
Cash Reserve RP (note b) 0 27 0
IC-Flexible Savings RP (formally Variable Term RP) (note d) 0 79,824 0
RP-Preferred Investors (note d) 0 0 0
Cash Reserve RP-3 mo. (note e) 0 43,690 0
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 0 1,073 0
RP-Future Value (note f) 8,934 8,954 0
RP-Future Value Emp (note f) 265 40 0
RP-Stock Market (note g) 0 12,220 0
D-1 (note a) 32 11,165 0
Total 9,231 161,904 31
PAGE 97
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Series Single-Payment certificates:
R-76 3.5 14 142 115
R-77 3.5 55 603 479
R-78 3.5 94 981 716
R-79 3.5 118 1,309 936
R-80 3.5 159 2,046 1,382
R-81 3.5 64 751 443
R-82A 3.5 279 2,196 1,160
RP-Q (note a) 744 1,334 2,967
R-II 3.5 216 2,150 864
RP-84 3.5 639 8,043 3,077
RP-85 3.5 188 847 1,008
RP-86 3.5 68 573 519
RP-87 3.5 135 861 699
RP-88 3.5 171 1,091 802
Cash Reserve RP (note b) 12 51 92
IC-Flexible Savings RP (formally Variable Term RP) (note d) 15,504 122,693 140,300
RP-Preferred Investors (note d) 1 853 853
Cash Reserve RP-3 mo. (note e) 3,362 29,175 30,481
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 422 4,512 5,386
RP-Future Value (note f) 12,266 188,622 188,622
RP-Future Value Emp (note f) 287 5,120 5,120
RP-Stock Market (note g) 7,883 40,098 45,672
D-1 (note a) 230 37,064 42,054
Total 42,911 451,115 473,747
PAGE 98
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 Not Not 5
R-77 3.5 Applicable Applicable 10
R-78 3.5 20
R-79 3.5 25
R-80 3.5 40
R-81 3.5 13
R-82A 3.5 62
RP-Q (note a) 0
R-II 3.5 39
RP-84 3.5 118
RP-85 3.5 47
RP-86 3.5 17
RP-87 3.5 27
RP-88 3.5 43
Cash Reserve RP (note b) 0
IC-Flexible Savings RP (formally Variable Term RP) (note d) 416
RP-Preferred Investors (note d) 0
Cash Reserve RP-3 mo. (note e) 52
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 12
RP-Future Value (note f) 43,462
RP-Future Value Emp (note f) 1,248
RP-Stock Market (note g) 331
D-1 (note a) 1
Total 45,988
Accrued for additional credits to be allowed
at next anniversaries
RP-Stock Market 2,475
Total single payment 3,130,635
Paid-up certificates:
Series 15 and 20 3.25 47 550 519
" 15A and 22A 3.5 1,504 13,310 12,018
" I-76 3.5 737 3,635 2,227
Total 2,288 17,495 14,764
PAGE 99
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 6 0 0
R-77 3.5 27 0 0
R-78 3.5 37 0 0
R-79 3.5 52 0 0
R-80 3.5 75 0 0
R-81 3.5 24 0 0
R-82A 3.5 62 0 0
RP-Q (note a) 136 0 0
R-II 3.5 46 0 0
RP-84 3.5 169 0 0
RP-85 3.5 56 0 0
RP-86 3.5 28 0 0
RP-87 3.5 37 0 0
RP-88 3.5 51 0 0
Cash Reserve RP (note b) 4 0 0
IC-Flexible Savings RP (formally Variable Term RP) (note d) 8,723 0 0
RP-Preferred Investors (note d) 0 0 0
Cash Reserve RP-3 mo. (note e) 1,252 0 0
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 341 0 0
RP-Future Value (note f) 17,844 0 0
RP-Future Value Emp (note f) 554 0 0
RP-Stock Market (note g) 495 0 0
D-1 (note a) 2,476 0 0
Total 32,495 0 0
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 3,872 0 0
Total single payment 176,113 1,019,085 122,113
Paid-up certificates:
Series 15 and 20 3.25 10 0 24
" 15A and 22A 3.5 378 0 1,662
" I-76 3.5 77 0 351
Total 465 0 2,037
PAGE 100
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 0 0 6
R-77 3.5 0 2 26
R-78 3.5 0 1 34
R-79 3.5 0 5 49
R-80 3.5 0 4 74
R-81 3.5 0 1 26
R-82A 3.5 0 5 72
RP-Q (note a) 0 0 136
R-II 3.5 0 2 56
RP-84 3.5 0 13 190
RP-85 3.5 0 4 68
RP-86 3.5 0 2 31
RP-87 3.5 0 4 41
RP-88 3.5 0 6 65
Cash Reserve RP (note b) 0 0 4
IC-Flexible Savings RP (formally Variable Term RP) (note d) 0 697 8,139
RP-Preferred Investors (note d) 0 0 0
Cash Reserve RP-3 mo. (note e) 0 14 1,242
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 0 26 316
RP-Future Value (note f) 6,414 2,171 0
RP-Future Value Emp (note f) 241 6 0
RP-Stock Market (note g) 0 15 552
D-1 (note a) 0 298 2,179
Total 6,655 3,276 13,306
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 0 10 3,399
Total single payment 30,110 1,514,337 124,165
Paid-up certificates:
Series 15 and 20 3.25 228 21 86
" 15A and 22A 3.5 1,501 1,010 1,629
" I-76 3.5 0 435 23
Total 1,729 1,466 1,738
PAGE 101
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 Not Not 5
R-77 3.5 Applicable Applicable 9
R-78 3.5 22
R-79 3.5 23
R-80 3.5 37
R-81 3.5 10
R-82A 3.5 47
RP-Q (note a) 0
R-II 3.5 27
RP-84 3.5 84
RP-85 3.5 31
RP-86 3.5 12
RP-87 3.5 19
RP-88 3.5 23
Cash Reserve RP (note b) 0
IC-Flexible Savings RP (formally Variable Term RP) (note d) 303
RP-Preferred Investors (note d) 0
Cash Reserve RP-3 mo. (note e) 48
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 11
RP-Future Value (note f) 52,721
RP-Future Value Emp (note f) 1,555
RP-Stock Market (note g) 259
D-1 (note a) 0
Total 55,246
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 2,938
Total single payment 2,779,334
Paid-up certificates:
Series 15 and 20 3.25 24 236 218
" 15A and 22A 3.5 1,074 10,915 9,918
" I-76 3.5 687 3,468 2,197
Total 1,785 14,619 12,333
PAGE 102
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 Not Not 21
" 15A and 22A 3 Applicable Applicable 518
" Series I-76 3.5 155
Total 694
Accrued for additional credits to be allowed
at next anniversaries 77
Total paid-up 2,288 17,495 15,535
Optional settlement certificates:
Series 1, IST&G 3 14 9
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 9,910 111,881
Series R-76 thru R-82A 3 75 301
Series R-II & RP-2-84 thru 88 3.5 69 1,010
Reserve Plus Single-Payment (note a) 231 2,243
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 21 111
Series R-Installment (note a) 104 514
Series R-Single-Payment (note a) 49 132
Additional credits and accrued interest thereon 2.5-3 Not Not 11,368
Additional credits and accrued int. thereon-IST&G 2.5-3 Applicable Applicable 0
Accrued for additional credits to be allowed
at next anniversaries 1,019
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 11
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0
Total optional settlement 10,473 128,599
Not
Due to unlocated certificate holders Applicable 386
Total certificate reserves 3,628,574
PAGE 103
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 0 0 3
" 15A and 22A 3 14 0 96
" Series I-76 3.5 5 0 23
Total 19 0 122
Accrued for additional credits to be allowed
at next anniversaries 100 0 0
Total paid-up 584 0 2,159
Optional settlement certificates:
Series 1, IST&G 3 0 0 0
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 3,275 0 7,890
Series R-76 thru R-82A 3 8 0 29
Series R-II & RP-2-84 thru 88 3.5 32 0 12
Reserve Plus Single-Payment (note a) 77 0 0
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 4 0 21
Series R-Installment (note a) 14 0 8
Series R-Single-Payment (note a) 5 0 8
Additional credits and accrued interest thereon 2.5-3 296 0 2,045
Additional credits and accrued int. thereon-IST&G 2.5-3 0 0 0
Accrued for additional credits to be allowed
at next anniversaries 1,966 0 0
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 18 0 0
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0 0 0
Total optional settlement 5,695 0 10,013
Not
Due to unlocated certificate holders Applicable 158
Total certificate reserves 198,416 1,129,020 147,253
Provision for certificate reserves and additional
credits per Statement of Operations 173,041
Provision for reconversion applied against reserve
recoveries from terminations prior to maturity in
Statement of Operations 0
Income (loss) from purchased and written call options
included in provision for certificate reserves
in Statement of Operations 25,375
198,416
PAGE 104
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 11 1 3
" 15A and 22A 3 122 27 58
" Series I-76 3.5 0 21 0
Total 133 49 61
Accrued for additional credits to be allowed
at next anniversaries 0 0 122
Total paid-up 1,862 1,515 1,921
Optional settlement certificates:
Series 1, IST&G 3 1 1 0
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 7,455 8,122 0
Series R-76 thru R-82A 3 68 38 0
Series R-II & RP-2-84 thru 88 3.5 136 108 0
Reserve Plus Single-Payment (note a) 93 597 0
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 7 20 0
Series R-Installment (note a) 92 51 0
Series R-Single-Payment (note a) 31 15 0
Additional credits and accrued interest thereon 2.5-3 963 910 446
Additional credits and accrued int. thereon-IST&G 2.5-3 0 0 0
Accrued for additional credits to be allowed
at next anniversaries 30 (3) 2,055
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 4 0 18
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0 0 0
Total optional settlement 8,880 9,859 2,519
Not
Due to unlocated certificate holders Applicable 244
Total certificate reserves 46,398 1,626,283 147,391
PAGE 105
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 Not Not 9
" 15A and 22A 3 Applicable Applicable 421
" Series I-76 3.5 162
Total 592
Accrued for additional credits to be allowed
at next anniversaries 55
Total paid-up 1,785 14,619 12,980
Optional settlement certificates:
Series 1, IST&G 3 13 7
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 9,173 107,469
Series R-76 thru R-82A 3 59 232
Series R-II & RP-2-84 thru 88 3.5 49 810
Reserve Plus Single-Payment (note a) 175 1,630
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 21 109
Series R-Installment (note a) 85 393
Series R-Single-Payment (note a) 38 99
Additional credits and accrued interest thereon 2.5-3 Not Not 11,390
Additional credits and accrued int. thereon-IST&G 2.5-3 Applicable Applicable 0
Accrued for additional credits to be allowed
at next anniversaries 903
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 7
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0
Total optional settlement 9,613 123,049
Not
Due to unlocated certificate holders Applicable 300
Total certificate reserves 3,283,191
PAGE 106
Notes:
(a) On these series of certificates, there is no minimum rate of accrual of interest.
Interest is declared for a quarter or quarters by IDSC and credited to the reserves
maintained at the end of each calendar quarter.
(b) On these series of certificates, there is no minimum rate of accrual of interest.
Interest is declared for a quarter or quarters by IDSC and credited to the reserves
maintained or paid in cash at the end of each calendar month.
(c) On these series of certificates, there is no minimum rate of accrual of interest.
Interest is declared by IDSC for the first four certificate quarters, then
annually thereafter, and credited to the reserves maintained at the end of each
certificate year.
(d) On this series of certificates, there is no minimum rate of accrual of interest.
Interest is declared for the term selected and credited to the reserves maintained
or paid in cash at the end of each certificate month.
(e) On this series of certificates, there is no minimum rate of accrual of interest.
Interest is declared by IDSC for a three-month term and credited to the reserves
maintained or paid in cash at the end of each certificate month.
(f) On this series of certificates, there is no minimum rate of accrual of interest.
Interest is declared by IDSC for a four, five, six, seven, eight, nine or ten
year maturity and credited to the reserves maintained at maturity.
(g) On this series of certificates, the certificate holder may elect to receive
minimum interest only or minimum interest plus participation interest. Minimum
interest is declared by IDSC for a twelve-month term and is credited to the
reserves maintained at the end of each certificate term. Participation interest is
determined at the end of each certificate term by multiplying the market
participation rate in effect at the beginning of the certificate term for
each certificate times any total percentage appreciation in a broad stock
market indicator subject to specified maximums. Participation interest is
credited to the reserves maintained at the end of each certificate term.
PAGE 107
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1996
($ in thousands)
Additions to reserves charged to other accounts
Transfers of
maturities to
Reconversions extended
of paid-up maturities-
certificate charged to
charged Charged reserves to
to paid-up to mature, addi-
reserves and advance tional credits/
reserve for payments interest and
reconversions reserve advance payments Total
Reserves to mature installment
certificates:
Series 15, including extended
maturities 0 0 0 0
Series 20, including extended
maturities 5 3 11 19
Series 15A, including extended
maturities 0 5 0 5
Series 22A, including extended
maturities 244 261 2,228 2,733
Series I-76 17 27 0 44
Series Reserve Plus Flexible
Payment 0 0 63 63
Series IC-Q-Installment 0 0 24 24
Series IC-Q-Ins 0 0 2,720 2,720
Series IC-Q-Ins Emp 0 0 16 16
Series IC-1 0 0 5,739 5,739
Series IC-1 Emp 0 0 51 51
Series RP-Q-Installment 0 0 75 75
Series RP-Q-Flexible Payment 0 0 6 6
Series RP-Q-Ins 0 0 93 93
Series RP-Q-Ins Emp 0 0 1 1
Series RP-1 0 0 90 90
Series RP-1 Emp 0 0 1 1
Total 266 296 11,118 11,680
PAGE 108
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1996
($ in thousands)
Deductions from reserves credited to other accounts
Conversions
to optional Maturities
settlement transferred
Conversions certificates- to extended
to paid-up credited maturities-
certificates- to optional credited to
credited settlement reserves to
to paid-up reserves and mature-
surrender surrender extended
income income maturities Total
Reserves to mature installment
certificates:
Series 15, including extended
maturities 1 0 0 1
Series 20, including extended
maturities 19 93 11 123
Series 15A, including extended
maturities 58 301 0 359
Series 22A, including extended
maturities 1,340 2,784 2,228 6,352
Series I-76 283 6 0 289
Series Reserve Plus Flexible
Payment 0 4 0 4
Series IC-Q-Installment 0 2 0 2
Series IC-Q-Ins 0 14 0 14
Series IC-Q-Ins Emp 0 0 0 0
Series IC-1 0 0 0 0
Series IC-1 Emp 0 0 0 0
Series RP-Q-Installment 0 0 0 0
Series RP-Q-Flexible Payment 0 8 0 8
Series RP-Q-Ins 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0
Series RP-1 0 0 0 0
Series RP-1 Emp 0 0 0 0
Total 1,701 3,212 2,239 7,152
PAGE 109
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1996
($ in thousands)
Additions to reserves charged to other accounts
Additions Additions to
to advance reserves to
Reconversions payments- mature-extended
of paid-up charged to maturities
Payments made in advance certificates- default charged to
of current certificate charged to interest reserves to
year requirements and paid-up on late mature from
accrued interest thereon: reserves payments maturity Total
Series 15, including extended
maturities 0 0 0 0
Series 20, including extended
maturities 0 0 0 0
Series 15A, including extended
maturities 0 0 0 0
Series 22A, including extended
maturities 3 0 82 85
Series I-76 3 1 0 4
Series Reserve Plus Flexible
Payment 0 0 0 0
Series IC-Q-Installment 0 0 0 0
Series IC-Q-Ins 0 0 0 0
Series IC-Q-Ins Emp 0 0 0 0
Series IC-1 0 0 0 0
Series IC-1 Emp 0 0 0 0
Series RP-Q-Installment 0 0 0 0
Series RP-Q-Flexible Payment 0 0 0 0
Series RP-Q-Ins 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0
Series RP-1 0 0 0 0
Series RP-1 Emp 0 0 0 0
Total 6 1 82 89
PAGE 110
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1996
($ in thousands)
Deductions from reserves credited to other accounts
Maturities
Conversions transferred
Applied to to optional to extended
certificates- settlement maturities- Conversions
credited to certificates- credited to to paid-up
Payments made in advance reserves to credited reserves certificates-
of current certificate mature, to optional to mature- credited to
year requirements and loading settlement extended paid-up
accrued interest thereon: and insurance reserves maturities reserves Total
Series 15, including extended
maturities 0 0 0 0 0
Series 20, including extended
maturities 3 2 0 0 5
Series 15A, including extended
maturities 5 3 0 0 8
Series 22A, including extended
maturities 262 115 82 2 461
Series I-76 27 0 0 0 27
Series Reserve Plus Flexible
Payment 0 0 0 0 0
Series IC-Q-Installment 0 0 0 0 0
Series IC-Q-Ins 0 0 0 0 0
Series IC-Q-Ins Emp 0 0 0 0 0
Series IC-1 0 0 0 0 0
Series IC-1 Emp 0 0 0 0 0
Series RP-Q-Installment 0 0 0 0 0
Series RP-Q-Flexible Payment 0 0 0 0 0
Series RP-Q-Ins 0 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0 0
Series RP-1 0 0 0 0 0
Series RP-1 Emp 0 0 0 0 0
Total 297 120 82 2 501
PAGE 111
Certificate Reserves
($ in thousands)
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Additional credits on installment certificates and
accrued interest thereon:
Other additions represent:
Transfers from accruals for additional credits to be allowed at next anniversaries $ 530
Reconversions of paid-up certificates-charged to paid-up reserves 45
Transfers from maturities to extended maturities 466
$ 1,041
Other deductions represent:
Transfers to reserves on a quarterly basis for Reserve Plus Flexible-
Payment, IC-Q-Installment and R-Flexible-Payment $ 8,883
Conversions to optional settlement certificates-credited to optional
settlement reserves 673
Conversions to paid-up certificates-credited to paid-up reserves 331
Transfers to extended maturities at maturity 466
$10,353
Accrual for additional credits to be allowed on installment
certificates at next anniversaries:
Other deductions represent:
Transfers to reserves for additional credits on installment certificates $ 530
Reserve for death and disability refund options:
Other deductions represent:
Payments, in excess of installment reserves, made to certificate holders
who exercised the death and disability refund options. $ 0
Reserve for reconversions of paid-up certificates:
The amount shown as charged to profit and loss has been deducted from
reserve recoveries in the accompanying Statement of Operations $ 0
Other deductions represent:
Amounts credited to installment certificate reserves to mature, on
reconversions of paid-up certificates. $ 0
Paid-up certificates:
Other additions represent:
Conversions from installment certificates (charged to installment reserves
less surrender charges) $ 2,037
Transfers from accrual for additional credits to be allowed at next
anniversaries 122
$ 2,159
Other deductions represent:
Transfers credited to installment reserves on reconversions to installment
certificates $ 316
Transfers for accrual for additional credits and accrued interest thereon 122
Transfers to settlement options 1,483
$ 1,921
PAGE 112
Certificate Reserves
($ in thousands)
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Default interest on installment certificates:
Other additions represent:
Reconversions of paid-up certificates charged to paid-up reserves $ 0
Other deductions represent:
Conversions to paid-up certificates - credited to paid-up reserves $ 5
Transfers to advance payments as late payments are credited to
certificates 1
$ 6
Optional settlement certificates:
Other additions represent:
Transfers from installment certificate reserves (less surrender chargees),
single-payment and Series D certificate reserves upon election of
optional settlement privileges $ 6,484
Transfers from paid-up certificate reserves 1,484
Transfers from accruals for additional credits to be allowed at next
anniversaries 2,045
$10,013
Other deductions represent:
Transfers to reserve for additional credits and accrued interest thereon $ 2,055
Transfers to optional settlement reserves 464
$ 2,519
Single-Payment certificates:
Other additions represent:
Transfers from accruals for additional credits to be allowed at next
anniversaries $ 887
Transfers from accruals on a quarterly basis on:
Reserve Plus Single-Payment 392
Cash Reserve Single-Payment 9
Flexible Savings 41,884
Flexible Savings-Emp 814
Preferred Investors 73
Investors 30,158
Special Deposits 2,441
Cash Reserve 175
Cash Reserve-3mo 9,862
Stock Market 16,955
AEBI Stock Market 593
R82-B 136
Cash Reserve-RP 4
Cash Reserve-RP-3mo 8,138
Flexible Savings-RP 0
Flexible Savings-RP-3mo 1,241
Preferred Investors-RP 316
Stock Market-RP 3,951
Transfers from accruals at anniversaries maintained in a separate
reserve account. 4,084
$122,113
PAGE 113
Certificate Reserves
($ in thousands)
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Single-Payment certificates continued:
Other deductions represent:
Transfers to optional settlement reserves:
Single-Payment $ 1,975
R Single-Payment 31
Transfers to reserves for additional credits and accrued interest thereon 4,084
Transfers to a separate reserve account from the accrual account 887
Transfers to reserves on a quarterly basis:
Reserve Plus Single-Payment 391
Cash Reserve Single-Payment 9
Flexible Savings 41,884
Flexible Savings-Emp 814
Preferred Investors 72
Investors 30,158
Special Deposits 2,441
Cash Reserve 175
Cash Reserve-3mo 9,862
Stock Market 16,955
AEBI Stock Market 593
R82-B 136
Cash Reserve-RP 4
Cash Reserve-RP-3mo 1,242
Flexible Saving-RP 8,139
Flexible Savings-RP-Emp 316
Preferred Investors-RP 0
Stock Market-RP 3,951
Transfers to Federal tax withholding 46
$124,125
Due to unlocated certificate holders:
Other additions represent:
Amounts equivalent to payments due certificate holders who could
not be located $ 158
Other deductions represent:
Payments to certificate holders credited to cash $ 244
PAGE 114
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1996
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1995 1996 1995 1996 1995 1996
15, including extended
maturities 73-84 1 0 5 0 1 0 0 1
Total 1 0 5 0 1 0 0 1
20, including extended
maturities 157-168 1 0 6 0 4 0 0 0
169-180 0 1 0 6 0 4 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
205-216 2 1 27 20 23 17 0 0
217-228 0 1 0 8 0 7 0 0
229-240 (a) 0 0 0 0 0 0 0 0
241-252 0 0 0 0 0 0 0 0
253-264 0 0 0 0 0 0 0 0
265-276 1 0 9 0 6 0 0 0
277-288 0 1 0 9 0 6 0 0
289-300 1 0 18 0 10 0 0 0
301-312 3 1 47 14 36 11 0 0
313-324 5 3 52 47 47 39 0 9
325-336 3 4 47 46 41 40 0 0
337-348 7 4 78 53 72 48 0 5
349-360 (a) 10 5 123 53 127 52 0 109
Total 33 21 407 256 366 224 0 123
15A, including
extended maturities 85-96 1 0 16 0 7 0 0 0
97-108 0 1 0 17 0 8 0 0
109-120 0 0 0 0 0 0 0 0
121-132 0 0 0 0 0 0 0 0
133-144 1 0 8 0 6 0 0 0
145-156 0 0 0 0 0 0 6 0
157-168 1 0 66 0 59 0 0 0
169-180 (a) 2 2 88 132 84 127 0 0
181-192 1 0 7 0 5 0 0 0
193-204 1 1 11 7 8 5 0 0
205-216 2 1 12 10 9 8 0 5
217-228 2 1 79 5 66 5 0 0
229-240 5 2 65 79 60 71 0 0
241-252 40 6 479 91 466 90 0 354
Total 56 14 831 341 770 314 6 359
PAGE 115
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1996
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1995 1996 1995 1996 1995 1996
22A, including
extended maturities 49-60 2 0 22 0 3 0 0 1
61-72 2 2 56 30 10 5 7 0
73-84 1 1 13 13 3 3 15 0
85-96 2 0 71 0 18 0 0 0
97-108 2 2 56 34 16 10 0 0
109-120 2 2 38 56 12 19 0 6
121-132 5 2 113 37 43 14 0 7
133-144 1 3 19 75 8 33 9 0
145-156 4 1 62 19 29 9 68 12
157-168 5 1 244 19 126 9 0 38
169-180 10 2 377 37 216 21 23 78
181-192 15 9 379 392 237 242 0 27
193-204 15 13 328 315 223 214 0 51
205-216 18 12 337 234 249 173 25 14
217-228 26 21 621 364 494 288 10 21
229-240 109 18 1,956 585 1,680 500 346 116
241-252 565 108 9,154 1,804 8,287 1,659 641 434
253-264 (a) 485 506 7,439 8,299 7,207 8,022 8 4,850
265-276 134 136 3,353 3,650 2,017 2,175 40 121
277-288 130 126 2,890 3,067 1,838 1,964 49 208
289-300 132 118 2,481 2,588 1,672 1,744 97 56
301-312 114 121 2,131 2,306 1,520 1,644 66 90
313-324 103 99 1,539 1,819 1,162 1,370 57 81
325-336 81 91 1,341 1,361 1,069 1,084 35 36
337-348 43 76 672 1,205 566 1,013 55 0
349-360 38 39 539 611 476 541 15 90
361-372 7 31 91 403 84 374 0 15
373-384 0 5 0 58 0 57 0 0
Total 2,051 1,545 36,322 29,381 29,265 23,187 1,566 6,352
PAGE 116
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1996
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1995 1996 1995 1996 1995 1996
I-76 49-60 1 0 62 0 6 0 0 0
61-72 0 1 0 62 0 6 0 0
73-84 0 0 0 0 0 0 0 0
85-96 1 0 31 0 5 0 0 0
97-108 2 2 58 43 11 8 0 2
109-120 1 1 31 46 6 10 0 0
121-132 2 2 52 68 12 16 0 0
133-144 4 2 80 40 21 10 3 0
145-156 8 3 188 68 55 20 9 4
157-168 49 7 1,301 172 430 55 4 0
169-180 133 41 3,451 1,033 1,222 374 203 36
181-192 153 106 3,832 2,783 1,474 1,076 242 64
193-204 169 127 3,973 3,143 1,658 1,315 243 95
205-216 202 128 4,050 2,943 1,832 1,329 266 45
217-228 180 173 4,087 3,531 2,003 1,722 237 30
229-240 96 151 2,113 3,534 1,095 1,864 257 13
241-252 0 78 0 1,765 0 983 21 0
Total 1,001 822 23,309 19,231 9,830 8,788 1,485 289
Reserve Plus Flexible
Payment 133-144 68 0 702 0 280 0 0 0
145-156 220 60 1,993 642 1,164 239 96 0
157-168 178 169 1,705 1,499 892 869 484 0
169-180 0 143 0 1,334 0 627 395 4
Total 466 372 4,400 3,475 2,336 1,735 975 4
IC-Q-Installment 109-120 151 0 1,648 0 580 0 0 0
121-132 87 21 939 193 283 109 58 2
133-144 64 72 628 759 335 259 113 0
145-156 0 49 0 484 0 263 92 0
Total 302 142 3,215 1,436 1,198 631 263 2
PAGE 117
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1996
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1995 1996 1995 1996 1995 1996
IC-Q-Ins 25-36 1 0 6 0 3 0 0 0
37-48 2,919 1 41,871 6 13,764 4 0 0
49-60 5,820 1,951 79,538 26,694 28,903 10,537 5,796 0
61-72 4,303 4,295 54,527 55,985 24,690 24,774 9,676 0
73-84 3,360 2,648 38,943 32,068 17,845 14,471 14,214 4
85-96 3,391 2,227 41,425 25,326 18,292 11,427 8,597 0
85-108 1,292 2,417 14,662 29,384 6,741 13,138 7,469 0
109-120 419 937 4,373 10,734 2,036 4,857 2,502 0
121-132 0 20 0 197 0 81 581 10
Total 21,505 14,496 275,345 180,394 112,274 79,289 48,835 14
IC-Q-Ins Emp 25-36 1 0 6 0 2 0 0 0
37-48 21 0 655 0 115 0 2 0
49-60 36 12 396 174 156 59 84 0
61-72 22 25 198 258 109 118 70 0
73-84 9 12 75 96 35 59 68 0
85-96 16 5 251 45 56 11 30 0
97-108 12 13 184 227 78 46 21 0
109-120 0 6 0 114 0 45 39 0
Total 117 73 1,765 914 551 338 314 0
IC-1 1-12 19,035 13,607 357,345 253,057 21,298 14,547 650 0
13-24 16,818 15,443 315,789 276,635 44,618 41,395 3,862 0
25-36 14,059 14,526 249,976 267,364 57,967 60,291 6,188 0
37-48 7,598 11,601 129,973 200,810 39,138 62,621 26,337 0
49-60 0 6,311 0 105,723 0 40,800 6,302 0
Total 57,510 61,488 1,053,083 1,103,589 163,021 219,654 43,339 0
IC-1 Emp 1-12 158 94 2,648 2,640 160 141 36 0
13-24 120 113 1,688 1,676 271 271 40 0
25-36 90 100 1,473 1,368 363 380 39 0
37-48 65 71 1,420 1,130 310 397 169 0
49-60 0 47 0 676 0 357 80 0
Total 433 425 7,229 7,490 1,104 1,546 364 0
PAGE 118
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1996
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1995 1996 1995 1996 1995 1996
R Flexible Payment 121-132 52 0 791 0 389 0 0 0
133-144 36 45 550 688 314 373 20 0
145-156 103 29 1,429 446 728 211 70 0
157-168 127 81 1,609 1,099 1,264 616 103 0
169-180 0 95 0 1,135 0 909 413 0
Total 318 250 4,379 3,368 2,695 2,109 606 0
RP-Q-Installment 109-120 95 0 1,575 0 367 0 0 0
121-132 10 14 129 197 41 78 36 8
133-144 0 8 0 103 0 40 0 0
Total 105 22 1,704 300 408 118 36 8
RP-Q-Ins 37-48 50 0 1,421 0 427 0 0 0
49-60 108 29 2,423 590 753 231 197 0
61-72 116 79 2,781 1,979 676 666 166 0
73-84 108 78 1,907 2,229 681 441 462 0
85-96 137 72 2,043 1,457 863 544 149 0
97-108 55 107 626 1,389 237 673 209 0
109-120 21 37 200 439 72 176 80 0
121-132 0 1 0 10 0 2 11 0
Total 595 403 11,401 8,093 3,709 2,733 1,274 0
RP-Q-Ins Emp 37-48 3 0 150 0 10 0 0 0
49-60 1 3 6 150 3 10 0 0
61-72 0 1 0 6 0 4 0 0
73-84 1 0 20 0 10 12 0 0
85-96 0 1 0 20 0 0 0 0
Total 5 5 176 176 23 26 0 0
RP-1 1-12 150 76 3,825 3,196 300 179 1 0
13-24 136 119 4,734 2,991 618 525 103 0
25-36 115 117 3,531 4,079 1,067 848 70 0
37-48 97 99 2,762 2,693 646 1,139 397 0
49-60 0 83 0 2,412 0 675 123 0
Total 498 494 14,852 15,371 2,631 3,366 694 0
PAGE 119
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1996
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1995 1996 1995 1996 1995 1996
RP-1-Emp 1-12 3 1 618 600 8 5 0 0
13-24 0 2 0 56 0 2 7 0
25-36 2 0 636 0 6 0 0 0
37-48 0 2 0 636 0 7 0 0
Total 5 5 1,254 1,292 14 14 7 0
Total All Series 85,001 80,577 1,439,677 1,375,107 330,196 344,072 99,764 7,152
(a) Includes accounts on which all payments necessary to mature have been made, but additional time must elapse before the
certificate maturity year is completed. Also includes accounts for which maturity election has been made, but no further
payments have been received.
PAGE 120
Part 4 - Amounts Periodically Credited to Certificate Holders' A
to Accumulate the Maturity Amount of Installment Certificates.
Information as to (1) amounts periodically credited to each class of
security holders' accounts from installment payments and (2) such other
amounts periodically credited to accumulate the maturity amount of the
certificate (on a $1,000 face-amount certificate basis for the term of
the certificate), is filed in Part 4 of Schedule IX as part of Post-
effective Amendment No. 9 to Registration Statement No. 2-17681, Post
effective Amendment No. 1 to Registration Statement No. 2-23772 and
Post-effective Amendment No. 1 to Registration Statement No. 2-2258081
and is incorporated herein by reference.
PAGE 121
IDS CERTIFICATE COMPANY SCHEDULE VII
Valuation and Qualifying Accounts
Years ended December 31, 1996, 1995 and 1994
($ thousands)
Year ended December 31, 1996
Additions
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
Allowance for losses:
Securities $110 $605 $0 $0 $715
Conventional first
mortgage loans 611 0 0 0 611
Other assets 2,468 0 0 2,468 (a) 0
Year ended December 31, 1995
Additions
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
Allowance for losses:
Securities $1,000 $0 $0 $890 (b) $110
Conventional first
mortgage loans 611 0 0 0 611
Other assets 2,368 100 0 0 2,468
Year ended December 31, 1994
Additions
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
Allowance for losses:
Securities $2,049 $0 $0 $1,049 (b) $1,000
Conventional first
mortgage loans 961 0 0 350 (c) 611
Other assets 2,018 0 350 (c) 0 2,368
a) Applicable to reversal on other asset sold.
b) Applicable to reversal on securities sold.
c) Transferred from mortgage loans on real estate to other assets.