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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, 1998
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
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(Exact name of registrant as specified in its charter)
Delaware 41-6009975
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
IDS Tower 10, Minneapolis, Minnesota 55440
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(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:
Title of each class: None Name of each exchange on 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
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 18-20.
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
nine certificates to the public: "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"), "IDS Market Strategy Certificate," "American Express Investors
Certificate" (including a form of American Express Investors Certificate offered
to select investors who, among other things, invest at least $50 million in the
certificate), and "American Express Special Deposits." The American Express
Special Deposits is only marketed 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 (including the American Express
Stock Market Certificate), the IDS Preferred Investors Certificate, the IDS
Market Strategy 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. As of
December 31, 1998, no certificates have been distributed through AESC. With
respect to IDS Stock Market Certificate, American Express Financial Advisors
Inc. has a Selling Agent Agreement effective March 1999 with Securities America
Inc., an affiliate of IDSC. There is no assurance that IDS certificates will be
distributed by AESC or sold by Securities America Inc.
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, and to IRAs of persons retired as employees or financial
advisors with American Express Financial Corporation. 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 ten 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 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 second through ninth 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 52- week 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., and is available through Securities America Inc. under
a Selling Agent Agreement effective March 1999 with American Express Financial
Advisors Inc., and may be available from time to time through American Express
Service Corporation under its Distribution Agreement with IDSC. This certificate
is marketed as the American Express Stock Market Certificate 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 IDS Market Strategy Certificate is a single payment certificate
that pays interest at a fixed rate or that offers the owner the opportunity to
have all or part of his/her interest tied to 52- week stock market performance
as measured by a broad stock market index, for a series of 52- week terms
starting every month or at intervals the owner selects.
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 (by the date of term renewal in the case of 1- month terms), 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.
To IDSC's knowledge, 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.
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 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 Installment Certificate is
intended to help clients save systematically and may compete with passbook
savings and NOW accounts. The IDS Stock Market Certificate, American Express
Stock Market Certificate and IDS Market Strategy 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 and Market Strategy 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.
Various forward-looking statements have been made in this 10-K Annual
Report, in particular with regard to Year 2000 issues. Forward-looking
statements may also be made by IDSC in other documents. In addition, from to
time to time, IDSC through its management may make oral forward-looking
statements. Forward-looking statements are subject to uncertainties that could
cause actual results to differ materially from such statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. IDSC undertakes no obligation
to update publicly or revised any forward-looking statements.
The following table shows IDSC's certificate payments received and
certificate surrenders for the three years ended December 31, 1998:
1998 1997 1996
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($ in Millions)
Single Payment Certificates
Non-Qualified
Payments through:
American Express Financial Advisors Inc. $ 685.3 $ 860.2 $ 614.2
AEBI, AEB, and Coutts 303.0 483.5 304.9
Surrenders through:
American Express Financial Advisors Inc. 922.9 733.3 1,062.9
AEBI, AEB, and Coutts 370.6 287.5 297.4
Qualified
Payments through:
American Express Financial Advisors Inc. 122.4 135. 99.9
Surrenders through:
American Express Financial Advisors Inc. 164.7 141.0 165.4
Installment Payment Certificates
Through American Express Financial Advisors Inc.
Non-Qualified
Payments 80.4 99.5 108.3
Surrenders 118.5 103.2 98.0
Qualified
Payments 1.0 1.4 1.7
Surrenders 2.5 2.6 2.6
In 1998, approximately 27% of single payment certificate payments were
through AEBI, AEB, and Coutts, and approximately 11% of single payment
certificate payments and 1% of installment certificate payments were of
tax-qualified certificates for use in IRAs, 401(k) plans and other qualified
retirement plans.
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 sale of the American Express Investors
Certificate and the American Express Stock Market Certificate, American Express
Financial Advisors Inc., in turn, has Selling Agent Agreements with AEBI and
Coutts. For the sale of IDS Stock Market Certificate, American Express Financial
Advisors Inc. has a Selling Agent Agreement with Securities America Inc.
effective March 1999. 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
except that such annual review is not required for selling agent agreements.
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 cash and "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 SEC). 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. So long as IDSC wishes to rely on the
SEC order, as a condition to the order IDSC has agreed to maintain an amount of
unappropriated retained earnings and capital equal to at least 5% of net
certificate reserves. For these purposes, net certificate reserves means
certificate reserves less outstanding certificate loans. In determining
compliance with this condition, qualified investments are valued in accordance
with the provisions of Minnesota Statutes where such provisions are applicable.
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.
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 cash dividends declared
during the past two years are as follows:
Dividend Payable Date
For the year ended December 31, 1998:
April 8, 1998 $ 4,500,000
November 17, 1998 25,000,000
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$29,500,000
Dividend Payable Date
For the year ended December 31, 1997: $ 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 1999 and 2000 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, 1998, the capital and unappropriated retained earnings amounted to
6.20% of net certificate reserves.
Item 6. Selected Financial Data
Summary of selected financial information
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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, 1998 1997 1996 1995 1994
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($ thousands)
Statement of Operations Data
Investment income $273,135 $258,232 $251,481 $256,913 $207,975
Investment expenses 76,811 70,137 62,851 62,817 58,690
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Net investment income before provision for
certificate reserves and income tax benefit 196,324 188,095 188,630 194,096 149,285
Net provision for certificate reserves 167,108 165,136 171,968 176,407 107,288
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Net investment income before income
tax benefit 29,216 22,959 16,662 17,689 41,997
Income tax benefit 265 3,682 6,537 9,097 2,663
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Net investment income 29,481 26,641 23,199 26,786 44,660
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Net realized gain (loss) on investments:
Securities of unaffiliated issuers 5,143 980 (444) 452 (7,514)
Other - unaffiliated - - 101 (120) 1,638
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Net realized gain (loss) on investments
before income taxes 5,143 980 (343) 332 (5,876)
Income tax (expense) benefit (1,800) (343) 120 (117) 2,047
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Net realized gain (loss) on investments 3,343 637 (223) 215 (3,829)
Net income - wholly owned subsidiary 1,646 328 1,251 373 241
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Net income $34,470 $27,606 $24,227 $27,374 $41,072
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Cash Dividends Declared $29,500 $- $65,000 $- $40,200
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Balance Sheet Data
Total assets $3,834,244 $4,053,648 $3,563,234 $3,912,131 $3,040,857
Certificate loans 32,343 37,098 43,509 51,147 58,203
Certificate reserves 3,404,883 3,724,978 3,283,191 3,628,574 2,887,405
Stockholder's equity 222,033 239,510 194,550 250,307 141,852
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IDS Certificate Company (IDSC) is 100% owned by American Express Financial
Corporation (Parent).
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 year 1998, 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 1998 reflects also, a decrease in net unrealized
appreciation on investment securities classified as available for sale of $35
million and cash dividends paid to Parent of $30 million.
During the year 1997, total assets and certificate reserves increased due to
certificate sales exceeding certificate maturities and surrenders. The excess of
certificate sales over maturities and surrenders resulted primarily from a
special introductory offer of the seven- and 13-month term IDS Flexible Savings
Certificate. The increase in total assets in 1997 reflects also, an increase of
$27 million in net unrealized appreciation on investment securities classified
as available for sale.
1998 Compared to 1997:
Gross investment income increased 5.8% due primarily to a higher average balance
of invested assets partially offset by slightly lower yields.
Investment expenses increased 9.5% in 1998. The increase resulted primarily from
higher amortization of premiums paid for index options of $6.4 million, higher
interest expense on reverse repurchase and interest rate swap agreements of $5.2
million, and $3.9 million of fees paid under a transfer agent agreement with
American Express Client Service Corporation effective Jan. 1, 1998. Prior to
Jan. 1, 1998, transfer agent services were provided by AEFC under the investment
advisory and services fee agreement. These higher expenses were partially offset
by lower investment advisory and services fees of $8.1 million and lower
distribution fees of $.7 million.
Net provision for certificate reserves increased 1.2% due primarily to the net
of a higher average balance of certificate reserves and lower accrual rates
during 1998.
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.
1997 Compared to 1996:
Gross investment income increased 2.7% due primarily to a higher average balance
of invested assets.
Investment expenses increased 12% in 1997. The increase resulted primarily from
higher amortization of premiums paid for index options of $4.4 million, higher
distribution fees of $1.8 million and $3.2 million of interest expense on
reverse repurchase and interest rate swap agreements entered into in 1997. These
higher expenses were partially offset by $2.3 million lower amortization of
premiums paid for interest rate caps, corridors and floors due primarily to the
expiration of the cap and corridor agreements in 1996 and early 1997.
Net provision for certificate reserves decreased 4.0% due primarily to the net
of lower accrual rates and a higher average balance of certificate reserves
during 1997.
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.
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.
Certificate sales remained strong in 1998 reflecting clients' ongoing desire for
safety of principal. Sales of certificates totaled $1.1 billion in 1998 compared
to $1.5 billion in 1997 and $1.0 billion in 1996. The higher certificate sales
in 1997 over 1996 resulted primarily from a special introductory promotion of
the seven- and 13-month term IDS Flexible Savings Certificate which produced
sales of $238 million. Certificate sales in 1997 benefited also, from higher
sales of the IDS Preferred Investors Certificate of $113 million and sales of
the American Express Special Deposits Certificate of $85 million. The IDS
Preferred Investors Certificate was first offered for sale early in the last
quarter of 1996. The American Express Special Deposits Certificate was first
offered for sale to private banking clients of American Express Bank Ltd. in
Hong Kong late in the third quarter of 1997.
The special promotion of the seven- and 13-month term IDS Flexible Savings
Certificate was offered from Sept. 10, 1997 to Nov. 25, 1997, and applied only
to sales of new certificate accounts during the promotion period. Certificates
sold during the promotion period received a special interest rate, determined on
a weekly basis, of one percentage point above the Bank Rate Monitor Top 25
Market AverageTM of comparable length certificates of deposit.
Certificate maturities and surrenders totaled $1.7 billion during 1998 compared
to $1.3 billion in 1997 and $1.7 billion in 1996. The higher certificate
maturities and surrenders in 1998 resulted primarily from $242 million of
surrenders of the seven- and 13-month IDS Flexible Savings Certificate. The
higher certificate maturities and surrenders in 1996 resulted primarily from
$461 million of surrenders of the 11-month IDS Flexible Savings Certificate.
These surrenders 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
intermediate-term bonds and mortgage-backed securities.
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, 1998, securities classified as held to maturity and carried at
amortized cost were $.6 billion. Securities classified as available for sale and
carried at fair value were $2.7 billion. These securities, which comprise 88% of
IDSC's total invested assets, are well diversified. Of these securities, 97%
have fixed maturities of which 90% 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, 1998, IDSC accepted a tender offer of a
held-to-maturity security with an amortized cost and fair value of $6.2 million.
During the same period in 1998, securities classified as available for sale were
sold with an amortized cost and fair value of $343 million and $346 million,
respectively. The securities were sold in general management of the investment
portfolio.
There were no transfers of available-for-sale or held-to-maturity securities
during the years ended Dec. 31, 1998 and 1997.
Market risk and derivative financial instruments:
The sensitivity analysis of two different tests of market risk discussed below
estimate the effects of hypothetical sudden and sustained changes in the
applicable market conditions on the ensuing year's earnings based on year-end
positions. The market changes, assumed to occur as of year-end, are a 100 basis
point increase in market interest rates and a 10% decline in a major stock
market index. Computation of the prospective effects of hypothetical interest
rate and major stock market index changes are based on numerous assumptions,
including relative levels of market interest rates and the major stock market
index level, as well as the levels of assets and liabilities. The hypothetical
changes and assumptions will be different than what actually occurs in the
future. Furthermore, the computations do not anticipate actions that may be
taken by management if the hypothetical market changes actually occurred over
time. As a result, actual earnings affects in the future will differ from those
quantified below.
IDSC primarily invests in intermediate-term and long-term fixed income
securities to provide its certificate owners with a competitive rate of return
on their certificates while managing risk. These investment securities provide
IDSC with a historically dependable and targeted margin between the interest
rate earned on investments and the interest rate credited to certificate owners'
accounts. IDSC does not invest in securities to generate trading profits for its
own account.
IDSC's Investment Committee, which comprises senior business managers, meets
regularly to review models projecting different interest rate scenarios and
their impact on IDSC's profitability. The committee's objective is to structure
IDSC's portfolio of investment securities based upon the type and behavior of
the certificates in the certificate reserve liabilities, to achieve targeted
levels of profitability and meet certificate contractual obligations.
Rates credited to certificate owners' accounts are generally reset at shorter
intervals than the maturity of underlying investments. Therefore, IDSC's margins
may be negatively impacted by increases in the general level of interest rates.
Part of the committee's strategies include the purchase of derivatives, such as
interest rate caps, corridors, floors and swaps, for hedging purposes. On two
series of certificates, interest is credited to the certificate owners' accounts
based upon the relative change in a major stock market index between the
beginning and end of the certificates' terms. As a means of hedging its
obligations under the provisions of these certificates, the committee purchases
and writes call options on the major stock market index. See note 9 to the
financial statements for additional information regarding derivative financial
instruments.
The negative impact on IDSC's pretax earnings of the 100 basis point increase in
interest rates, which assumes repricings and customer behavior based on the
application of proprietary models to the book of business at Dec. 31, 1998 and
1997, would be approximately $7.5 million and $5.9 million for 1998 and 1997,
respectively. The 10% decrease in a major stock market index level would have a
minimal impact on IDSC's pretax earnings as of Dec. 31, 1998 and 1997, because
the income effect is a decrease in option income and a corresponding decrease in
interest credited to the IDS and American Express Stock Market Certificate
owners' accounts.
Year 2000 Issue:
IDSC is a wholly owned subsidiary of American Express Financial Corporation
(AEFC), which is a wholly owned subsidiary of American Express Company (American
Express). All of the major systems used by IDSC are maintained by AEFC and are
utilized by multiple subsidiaries and affiliates of AEFC. American Express is
coordinating Year 2000 (Y2K) efforts on behalf of all of its businesses and
subsidiaries. Representatives of AEFC are participating in these efforts. The
Y2K issue is the result of computer programs having been written using two
digits rather than four to define a year. Some programs may recognize a date
using "00" as the year 1900 rather than 2000. This misinterpretation could
result in the failure of major systems or miscalculations, which could have a
material impact on American Express and its businesses and subsidiaries through
business interruption or shutdown, financial loss, reputation damage and legal
liability to third parties. American Express and AEFC began addressing the Y2K
issue in 1995 and have established a plan for resolution, which involves the
remediation, decommissioning and replacement of relevant systems, including
mainframe, mid-range and desktop computers, application software, operating
systems, systems software, date back-up archival and retrieval services,
telephone and other communications systems, and hardware peripherals and
facilities dependent on embedded technology. As part of their plan, American
Express has generally followed and utilized the specific policies and guidelines
established by the
Federal Financial Institutions Examination Council, as well as other U.S. and
international regulatory agencies. Additionally, American Express continues to
participate in Y2K related industry consortia sponsored by various partners and
suppliers. Progress is reviewed regularly with IDSC's senior management and
American Express' senior management and Board of Directors.
American Express' and AEFC's Y2K compliance effort related to information
technology (IT) systems is divided into two initiatives. The first, which is the
much larger initiative, is known internally as "Millenniax," and relates to
mainframe and other technological systems maintained by the American Express
Technologies organization. The second, known as "Business T," relates to the
technological assets that are owned, managed or maintained by American Express'
individual business units, including AEFC. Business T also encompasses the
remediation of non-IT systems. These initiatives involve a substantial number of
employees and external consultants. This multiple sourcing approach is intended
to mitigate the risk of becoming dependent on any one vendor or resource. While
the vast majority of American Express' and AEFC's systems that require
modification are being remediated, in some cases they have chosen to migrate to
new applications that are already Y2K compliant.
American Express's and AEFC's plans for remediation with respect to Millenniax
and Business T include the following program phases: (i) employee awareness and
mobilization, (ii) inventory collection and assessment, (iii) impact analysis,
(iv) remediation/decommission, (v) testing and (vi) implementation. As part of
the first three phases, American Express and AEFC have identified their
mission-critical systems for purposes of prioritization. American Express' and
AEFC's goals are to complete testing of critical systems by early 1999, and to
continue compliance efforts, including but not limited to, the testing of
systems on an integrated basis and independent validation of such testing,
through 1999.** American Express and AEFC are currently on schedule to meet
these goals. With respect to systems maintained by American Express and AEFC,
the first three phases referred to above have been substantially completed for
both Millenniax and Business T. In addition, remediation of critical systems is
substantially complete. As of Dec. 31, 1998, for Millenniax for American
Express, the remediation/decommission, testing and implementation phases for
critical and non-critical systems in total are 82%, 75% and 60% complete,
respectively. For Millenniax for AEFC, such phases are 99%, 97% and 97%
complete, respectively. For Business T for American Express, such phases are
85%, 70% and 69% complete, respectively. For Business T for AEFC, such phases
are 74%, 62% and 62% complete, respectively.
American Express' most commonly used methodology for remediation is the sliding
window. Once an application/system has been remediated, American Express applies
specific types of tests, such as stress, regression, unit, future date and
baseline to ensure that the remediation process has achieved Y2K compliance
while maintaining the fundamental data processing integrity of the particular
system. To assist with remediation and testing, American Express is using
various standardized tools obtained from a variety of vendors.
American Express's cumulative costs since inception of the Y2K initiatives were
$383 million through Dec. 31, 1998 and are estimated to be in the range of
$135-$160 million for the remainder through 2000.** AEFC's cumulative costs
since inception of the Y2K initiative were $56 million through Dec. 31, 1998 and
are estimated to be in the range of $13-$19 million for the remainder through
2000.** These include both remediation costs and costs related to replacements
that were or will be required as a result of Y2K. These costs, which are
expensed as incurred, relate to both Millenniax and Business T, and have not
had, nor are they expected to have, a material adverse impact on American
Express', AEFC's or IDSC's results of operations or financial condition.**
Costs related to Millenniax, which represent most of the total Y2K costs of
American
Express, are managed by and included in the American Express corporate level
financial results; costs related to Business T are included in American
Express' individual business segment's financial results, including AEFC's.
American Express and AEFC have not deferred other critical technology projects
or investment spending as a result of Y2K. However, because American Express and
AEFC must continually prioritize the allocation of finite financial and human
resources, certain non-critical spending initiatives have been deferred.
American Express' and AEFC's major businesses are heavily dependent upon
internal computer systems, and all have significant interaction with systems of
third parties, both domestically and internationally. American Express and AEFC
are working with key external parties, including merchants, clients,
counterparties, vendors, exchanges, utilities, suppliers, agents and regulatory
agencies to mitigate the potential risks to American Express and AEFC of Y2K.
The failure of external parties to resolve their own Y2K issues in a timely
manner could result in a material financial risk to American Express or AEFC. As
part of their overall compliance program, American Express and AEFC are actively
communicating with third parties through face-to-face meetings and
correspondence, on an ongoing basis, to ascertain their state of readiness.
Although numerous third parties have indicated to American Express and AEFC in
writing that they are addressing their Y2K issues on a timely basis, the
readiness of third parties overall varies across the spectrum. Because American
Express' and AEFC's Y2K compliance is dependent on key third parties being
compliant on a timely basis, there can be no assurances that American Express'
and AEFC's efforts alone will resolve all Y2K issues.
At this point, American Express and AEFC are in the process of performing an
assessment of reasonably likely Y2K systems failures and related consequences.
American Express is also preparing specific Y2K contingency plans for all key
American Express business units, including AEFC, to mitigate the potential
impact of such failures. This effort is a full-scale initiative that includes
both internal and external experts under the guidance of an American
Express-wide steering committee. The contingency plans, which will be based in
part on an assessment of the magnitude and probability of potential risks, will
primarily focus on proactive steps to prevent Y2K failures from occurring, or if
they should occur, to detect them quickly, minimize their impact and expedite
their repair. The Y2K contingency plans will supplement disaster recovery and
business continuity plans already in place, and are expected to include measures
such as selecting alternative suppliers and channels of distribution, and
developing American Express' and AEFC's own technology infrastructure in lieu
of those provided by third parties. Development of the Y2K contingency plans is
expected to be substantially complete by the end of the first quarter of 1999,
and will continue to be refined throughout 1999 as additional information
related to American Express' and AEFC's exposures is gathered.**
** Statements in this Y2K discussion marked with two asterisks are
forward-looking statements which are subject to risks and uncertainties.
Important factors that could cause results to differ materially from these
forward-looking statements include, among other things, the ability of American
Express or AEFC to successfully identify systems containing two-digit codes, the
nature and amount of programming required to fix the affected systems, the costs
of labor and consultants related to such efforts, the continued availability of
such resources, and the ability of third parties that interface with American
Express and AEFC to successfully address their Y2K issues.
Ratios:
The ratio of stockholder's equity, excluding accumulated other comprehensive
income net of tax, to total assets less certificate loans and net unrealized
holding gains on investment securities at Dec. 31, 1998 and 1997 was 5.6% and
5.2%, respectively. IDSC's current regulatory requirement is a ratio of 5.0%.
Item 7A. Ouantitative and Qualitative Disclosures About Market Risk
See Item 7.
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 24
Report of Independent Auditors 25
Balance Sheets, Dec. 31, 1998 and 1997 26 - 27
Statements of Operations, year ended Dec. 31, 1998, 1997 and 1996 28 - 29
Statements of Comprehensive Income, year ended Dec. 31, 1998,
1997 and 1996 30
Statements of Stockholder's Equity, year ended Dec. 31, 1998,
1997 and 1996 31
Statements of Cash Flows, year ended Dec. 31, 1998, 1997 and 1996 32 - 33
Notes to Financial Statements 34 - 52
Schedules:
I - Investments in Securities of Unaffiliated Issuers, Dec. 31, 1998
II - Investments in and Advances to Affiliates and Income Thereon,
Dec. 31, 1998, 1997, and 1996
III - Mortgage Loans on Real Estate and Interest earned on
Mortgages, year ended Dec. 31, 1998
V - Qualified Assets on Deposit, Dec. 31, 1998
VI - Certificate Reserves, year ended Dec. 31, 1998
VII - Valuation and Qualifying Accounts, year ended Dec. 31, 1998, 1997
and 1996
Schedules I, III and VI for the year ended Dec. 31, 1997, and Schedule
VI for the year ended Dec. 31, 1996, are included in Registrant's Annual Reports
on Form 10-K for the fiscal years ended Dec. 31, 1997 and Dec. 31, 1996,
respectively, Commission file 2-23772, and are incorporated herein by reference.
All other Schedules required by Article 6 of the Regulation S-X are not
required under the related instructions or are inapplicable and therefore have
been omitted.
2. Supplementary Data
None
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None
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. Certificate of Amendment, dated September 12, 1995, filed electronically as Exhibit 3(c) to Post-Effective
Amendment No. 44 to Registration Statement No. 2-55252, is incorporated herein by reference.
(3)d. 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 Registration Statement No. 33-26844 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.
(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. Form of Letter amendment dated April 7, 1997 to the Selling Agent Agreement dated June 1, 1990 between
American Express Financial Advisors Inc. and American Express Bank International, filed electronically
herewith as Exhibit 10(j) to Post-Effective Amendment No. 14 to Registration Statement 33-26044, is
incorporated herein by reference.
(10)l. Form of Selling Agent Agreement, dated March__, 1999 between American Express Financial Advisors Inc. and
Securities America Inc., filed electronically as Exhibit 10(k) to Post-Effective Amendment No. 24 to
Registration Statement 33-22503, is incorporated herein by reference.
(10)m. 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.
(10)n. 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 September 18, 1998, filed electronically as Exhibit 24(a) to Post-Effective
Amendment No. 22 to Registration Statement No. 33-22503, is incorporated herein by reference.
(24)b. Directors' Power of Attorney, dated October 14, 1998, filed electronically as Exhibit 24(b) to Post-Effective
Amendment No. 22 to Registration Statement No. 33-22503, is incorporated herein by reference.
(b) Reports on Form 8-K filed during the last quarter of the period
covered by this report:
None
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
BY /s/ Paula R. Meyer*
NAME AND TITLE Paula R. Meyer, President
DATE March 26, 1999
Pursuant to the requirements of the Securities and 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 /s/Paula R. Meyer* **
NAME AND TITLE Paula R. Meyer, President and Director
(Principal Executive Officer)
DATE March 26, 1999
BY /s/Jeffrey S. Horton*
NAME AND TITLE Jeffrey S. Horton, Vice President and Treasurer
(Principal Financial Officer)
DATE March 26, 1999
BY /s/Jay C. Hatlestad*
NAME AND TITLE Jay C. Hatlestad, Vice President and Controller
(Principal Accounting Officer)
DATE March 26, 1999
BY /s/David R. Hubers **
NAME AND TITLE David R. Hubers, Director
DATE March 26, 1999
BY /s/Charles W. Johnson **
NAME AND TITLE Charles W. Johnson, Director
DATE March 26, 1999
BY /s/Richard W. Kling **
NAME AND TITLE Richard W. Kling, Chairman of the Board
of Directors and Director
DATE March 26, 1999
* Signed pursuant to Officers' Power of Attorney dated September 8, 1998, filed
electronically as Exhibit 24(a) to Post-Effective Amendment No. 22 to
Registration Statement No. 33-22503, incorporated herein by reference.
- -------------------------------------------------------------------------------
Bruce A. Kohn
** Signed pursuant to Directors' Power of Attorney dated October 14, 1998,
filed electronically as Exhibit 24(b) to Post-Effective Amendment No. 22 to
Registration Statement No. 33-22503, incorporated herein by reference.
- -------------------------------------------------------------------------------
Bruce A. Kohn
(THIS PAGE INTENTIONALLY LEFT BLANK)
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.
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, 1998 and 1997, and the related statements of operations,
comprehensive income, stockholder's equity, and cash flows for each of the three
years in the period ended December 31, 1998. 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, 1998 and 1997, 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, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, 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.
ERNST & YOUNG LLP
Minneapolis, Minnesota
February 4, 1999
Balance Sheets, Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
Qualified Assets (note 2) 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Investments in unaffiliated issuers (notes 3, 4 and 10):
Held-to-maturity securities $592,815 $758,143
Available-for-sale securities 2,710,545 2,911,524
First mortgage loans on real estate 334,280 212,433
Certificate loans - secured by certificate reserves 32,343 37,098
Investments in and advances to affiliates 418 6,772
- ------------------------------------------------------------------------------------------------------------------------------------
Total investments 3,670,401 3,925,970
- ------------------------------------------------------------------------------------------------------------------------------------
Receivables:
Dividends and interest 46,579 48,817
Investment securities sold 3,085 1,635
- ------------------------------------------------------------------------------------------------------------------------------------
Total receivables 49,664 50,452
- ------------------------------------------------------------------------------------------------------------------------------------
Other (notes 9 and 10) 96,213 56,127
- ------------------------------------------------------------------------------------------------------------------------------------
Total qualified assets 3,816,278 4,032,549
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred federal income taxes (note 8) 1,095 -
Due from affiliate 1,082 -
Deferred distribution fees and other 15,789 21,099
- ------------------------------------------------------------------------------------------------------------------------------------
Total other assets 17,966 21,099
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $3,834,244 $4,053,648
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
Balance Sheets, Dec. 31, (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholder's Equity
Liabilities 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Certificate Reserves (notes 5 and 10):
Installment certificates:
Reserves to mature $309,110 $343,219
Additional credits and accrued interest 15,062 19,554
Advance payments and accrued interest 894 968
Other 55 56
Fully paid certificates:
Reserves to mature 2,909,891 3,186,191
Additional credits and accrued interest 169,514 174,699
Due to unlocated certificate holders 357 291
- ------------------------------------------------------------------------------------------------------------------------------------
Total certificate reserves 3,404,883 3,724,978
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts Payable and Accrued Liabilities:
Due to Parent (note 7A) 771 1,639
Due to Parent for federal income taxes 7,381 495
Due to affiliates (note 7B, 7C, 7D and 7E) 426 331
Reverse repurchase agreements 141,000 22,000
Payable for investment securities purchased 2,211 19,601
Accounts payable, accrued expenses and other (notes 9 and 10) 55,539 29,919
- ------------------------------------------------------------------------------------------------------------------------------------
Total accounts payable and accrued liabilities 207,328 73,985
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred federal income taxes (note 8) - 15,175
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,612,211 3,814,138
- ------------------------------------------------------------------------------------------------------------------------------------
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 143,844 143,844
Retained earnings:
Appropriated for predeclared additional credits/interest 3,710 6,375
Appropriated for additional interest on advance payments 10 50
Unappropriated 63,623 55,948
Accumulated other comprehensive income - net of tax (note 1) 9,346 31,793
- ------------------------------------------------------------------------------------------------------------------------------------
Total stockholder's equity 222,033 239,510
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity $3,834,244 $4,053,648
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
Statements of Operations
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Investment Income
Interest income from investments:
Bonds and notes:
Unaffiliated issuers $209,408 $191,190 $184,653
Mortgage loans on real estate:
Unaffiliated 18,173 18,053 19,583
Affiliated - - 36
Certificate loans 1,896 2,200 2,533
Dividends 40,856 44,543 44,100
Other 2,802 2,246 576
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income 273,135 258,232 251,481
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Expenses
Parent and affiliated company fees (note 7):
Distribution 33,783 34,507 32,732
Investment advisory and services 9,084 17,233 16,989
Transfer agent 3,932 - -
Depositary 250 238 228
Options (note 9) 21,012 14,597 10,156
Interest rate caps, corridors and floors (note 9) - 35 2,351
Reverse repurchase agreements 3,689 1,217 -
Interest rate swap agreements (note 9) 4,676 1,956 -
Other 385 354 395
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment expenses 76,811 70,137 62,851
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income before provision
for certificate reserves and income tax benefit $196,324 $188,095 $188,630
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
Statements of Operations (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Provision for Certificate Reserves (notes 5 and 9)
According to the terms of the certificates:
Provision for certificate reserves $9,623 $9,796 $10,445
Interest on additional credits 1,032 1,244 1,487
Interest on advance payments 44 50 61
Additional credits/interest authorized by IDSC:
On fully paid certificates 146,434 141,515 146,474
On installment certificates 11,001 13,560 14,574
- ------------------------------------------------------------------------------------------------------------------------------------
Total provision for certificate reserves before reserve recoveries 168,134 166,165 173,041
Reserve recoveries from terminations prior to maturity (1,026) (1,029) (1,073)
- ------------------------------------------------------------------------------------------------------------------------------------
Net provision for certificate reserves 167,108 165,136 171,968
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income before income tax benefit 29,216 22,959 16,662
Income tax benefit (note 8) 265 3,682 6,537
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 29,481 26,641 23,199
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments
Securities of unaffiliated issuers 5,143 980 (444)
Other-unaffiliated - - 101
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments before income taxes 5,143 980 (343)
- ------------------------------------------------------------------------------------------------------------------------------------
Income tax (expense) benefit (note 8):
Current (1,800) (304) 772
Deferred - (39) (652)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income tax (expense) benefit (1,800) (343) 120
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 3,343 637 (223)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income - wholly owned subsidiary 1,646 328 1,251
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $34,470 $27,606 $24,227
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
Statements of Comprehensive Income
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Net income $34,470 $27,606 $24,227
- ------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive (loss) income (note 1)
Unrealized (losses) gains on available-for-sale
securities:
Unrealized holding (losses) gains arising during year (32,020) 26,639 (25,853)
Income tax benefit (expense) 11,207 (9,324) 9,048
- ------------------------------------------------------------------------------------------------------------------------------------
Net unrealized holding (losses) gains arising during period (20,813) 17,315 (16,805)
- ------------------------------------------------------------------------------------------------------------------------------------
Reclassification adjustment for (gains) losses included in net income (2,514) 59 2,802
Income tax expense (benefit) 880 (20) (981)
- ------------------------------------------------------------------------------------------------------------------------------------
Net reclassification adjustment for (gains) losses included in net income (1,634) 39 1,821
- ------------------------------------------------------------------------------------------------------------------------------------
Net other comprehensive (loss) income (22,447) 17,354 (14,984)
- ------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income $12,023 $44,960 $9,243
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
Statements of Stockholder's Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ 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 $143,844 $143,844 $168,844
Cash dividends declared - - (25,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $143,844 $143,844 $143,844
- ------------------------------------------------------------------------------------------------------------------------------------
Retained Earnings
Appropriated for predeclared additional credits/interest (note 5B)
Balance at beginning of year $6,375 $11,989 $18,878
Transferred to unappropriated retained earnings (2,665) (5,614) (6,889)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $3,710 $6,375 $11,989
- ------------------------------------------------------------------------------------------------------------------------------------
Appropriated for additional interest on advance payments (note 5C)
Balance at beginning of year $50 $50 $50
Transferred to unappropriated retained earnings (40) - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $10 $50 $50
- ------------------------------------------------------------------------------------------------------------------------------------
Unappropriated (note 6)
Balance at beginning of year $55,948 $22,728 $31,612
Net income 34,470 27,606 24,227
Transferred from appropriated retained earnings 2,705 5,614 6,889
Cash dividends declared (29,500) - (40,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $63,623 $55,948 $22,728
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income -
net of tax (note 1)
Balance at beginning of year $31,793 $14,439 $29,423
Net other comprehensive (loss) income (22,447) 17,354 (14,984)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $9,346 $31,793 $14,439
- ------------------------------------------------------------------------------------------------------------------------------------
Total stockholder's equity $222,033 $239,510 $194,550
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
Statements of Cash Flows
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Cash Flows from Operating Activities
Net income $34,470 $27,606 $24,227
Adjustments to reconcile net income to net
cash provided by operating activities:
Net income of wholly owned subsidiary (1,646) (328) (1,251)
Net provision for certificate reserves 167,108 165,136 171,968
Interest income added to certificate loans (1,180) (1,414) (1,631)
Amortization of premiums/discounts-net 22,620 15,484 14,039
Provision for deferred federal income taxes (3,088) (2,266) (1,124)
Net realized (gain) loss on investments before income taxes (5,143) (980) 343
Decrease (increase) in dividends and interest receivable 2,238 (4,804) 5,619
Decrease in deferred distribution fees 5,310 4,434 2,761
Increase in other assets (1,082) - -
Increase (decrease) in other liabilities 16,814 443 (679)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 236,421 203,311 214,272
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Maturity and redemption of investments:
Held-to-maturity securities 161,649 76,678 163,066
Available-for-sale securities 468,218 408,019 537,565
Other investments 76,894 79,929 52,189
Sale of investments:
Held-to-maturity securities 6,245 33,910 24,984
Available-for-sale securities 344,901 160,207 356,194
Other investments - - 385
Certificate loan payments 4,006 4,814 6,003
Purchase of investments:
Held-to-maturity securities (1,034) (4,565) (49,984)
Available-for-sale securities (663,347) (1,283,620) (617,138)
Other investments (189,905) (62,831) (28,617)
Certificate loan fundings (3,703) (5,021) (5,288)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities $203,924 ($592,480) $439,359
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
Statements of Cash Flows (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Cash Flows from Financing Activities
Payments from certificate owners $1,192,026 $1,580,013 $1,129,023
Proceeds from reverse repurchase agreements 919,500 433,000 -
Dividend from wholly owned subsidiary 8,000 - -
Certificate maturities and cash surrenders (1,729,871) (1,324,175) (1,663,196)
Payments under reverse repurchase agreements (800,500) (411,000) -
Dividends paid (29,500) - (65,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (440,345) 277,838 (599,173)
- ------------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents - (111,331) 54,458
Cash and cash equivalents beginning of year - 111,331 56,873
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents end of year $- $- $111,331
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures Including Non-cash Transactions
Cash received (paid) for income taxes $1,217 ($104) $7,195
Certificate maturities and surrenders through
loan reductions 5,632 8,032 8,554
See notes to financial statements.
Notes to Financial Statements ($ 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 ten to twenty years. Within their specified maturity, most
certificates have interest rate terms of one- to 36-months. In addition, two
types of certificates have 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 non-investment company
subsidiaries of 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.
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.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
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.
Comprehensive Income
Effective Jan. 1, 1998, IDSC adopted Statement of Financial Accounting Standards
(SFAS) No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires the
reporting and display of comprehensive income and its components. Comprehensive
income is defined as the aggregate change in stockholder's equity excluding
changes in ownership interests. For IDSC, comprehensive income consists of net
income and unrealized gains or losses on available-for-sale securities net of
taxes. Prior year amounts have been reclassified to conform to the requirements
of the new Statement.
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.
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 accumulated other
comprehensive income in stockholder's equity.
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.
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.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
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 judgment
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 prior to maturity, unamortized deferred distribution fees
are recognized in expense and any related surrender charges are recognized as a
reduction in provision for certificate reserves.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
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 in the consolidated return. It is the policy of Parent and its
subsidiaries that Parent will reimburse a subsidiary for any tax benefits
recorded.
Accounting developments
In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This SOP, which is effective
Jan. 1, 1999, requires the capitalization of certain costs incurred to develop
or obtain software for internal use. Software utilized by IDSC is owned by
Parent and will be capitalized on Parent's financial statements. As a result,
the new rule will not have a material impact on IDSC's results of operations or
financial condition.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective Jan. 1, 2000. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation.
Earlier application of all of the provisions of this Statement is encouraged,
but it is permitted only as of the beginning of any fiscal quarter that begins
after issuance of the Statement. This Statement cannot be applied retroactively.
The ultimate financial impact of the new rule will be measured based on the
derivatives in place at adoption and cannot be estimated at this time.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
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 $3,353,920 and $3,694,204 at Dec. 31, 1998 and 1997,
respectively. IDSC had qualified assets of $3,799,689 at Dec. 31, 1998 and
$3,964,036 at Dec. 31, 1997, excluding net unrealized appreciation on
available-for-sale securities of $14,378 and $48,912 at Dec. 31, 1998 and 1997,
respectively and payable for securities purchased of $2,211 and $19,601 at Dec.
31, 1998 and 1997, 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, 1998
-----------------------------------------------
Required
Deposits deposits Excess
- -----------------------------------------------------------------------------------------------------
Deposits to meet certificate
liability requirements:
States $364 $327 $37
Central Depositary 3,543,964 3,317,295 226,669
- -----------------------------------------------------------------------------------------------------
Total $3,544,328 $3,317,622 $226,706
- -----------------------------------------------------------------------------------------------------
Dec. 31, 1997
-----------------------------------------------
Required
Deposits deposits Excess
- -----------------------------------------------------------------------------------------------------
Deposits to meet certificate
liability requirements:
States $363 $328 $35
Central Depositary 3,826,505 3,650,121 176,384
- -----------------------------------------------------------------------------------------------------
Total $3,826,868 $3,650,449 $176,419
- -----------------------------------------------------------------------------------------------------
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
The assets on deposit at Dec. 31, 1998 and 1997 consisted of securities having a
deposit value of $3,153,038 and $3,580,866, respectively; mortgage loans of
$334,280 and $212,433, respectively; and other assets of $57,010 and $33,569,
respectively.
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, 1998 and 1997.
Dec. 31, 1998
---------------------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
- ---------------------------------------------------------------------------------------------------------------------
Held to maturity
U.S. Government and
agencies obligations $363 $373 $10 $-
Mortgage-backed securities 22,366 22,986 620 -
Corporate debt securities 168,191 172,941 4,750 -
Stated maturity preferred stock 401,895 428,689 26,802 8
- ---------------------------------------------------------------------------------------------------------------------
Total $592,815 $624,989 $32,182 $8
- ---------------------------------------------------------------------------------------------------------------------
Available for sale
Mortgage-backed securities $831,677 $846,864 $15,787 $600
State and municipal obligations 32,075 33,437 1,362 -
Corporate debt securities 1,674,932 1,667,264 29,197 36,865
Stated maturity preferred stock 63,257 65,822 2,637 72
Perpetual preferred stock 94,226 97,158 2,947 15
- ---------------------------------------------------------------------------------------------------------------------
Total $2,696,167 $2,710,545 $51,930 $37,552
- ---------------------------------------------------------------------------------------------------------------------
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- ------------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997
---------------------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
- ---------------------------------------------------------------------------------------------------------------------
Held to maturity
U.S. Government and
agencies obligations $363 $369 $6 $-
Mortgage-backed securities 29,340 29,969 629 -
Corporate debt securities 242,050 248,455 6,493 88
Stated maturity preferred stock 486,390 505,522 19,332 200
- ---------------------------------------------------------------------------------------------------------------------
Total $758,143 $784,315 $26,460 $288
- ---------------------------------------------------------------------------------------------------------------------
Available for sale
Mortgage-backed securities $1,251,283 $1,274,417 $23,336 $202
State and municipal obligations 41,116 42,526 1,410 -
Corporate debt securities 1,417,668 1,438,640 22,636 1,664
Stated maturity preferred stock 63,214 64,444 1,284 54
Perpetual preferred stock 88,726 91,497 2,771 -
Common stock 605 - - 605
- ---------------------------------------------------------------------------------------------------------------------
Total $2,862,612 $2,911,524 $51,437 $2,525
- ---------------------------------------------------------------------------------------------------------------------
The amortized cost and fair value of securities held to maturity and available
for sale, by contractual maturity, at Dec. 31, 1998, 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 $99,718 $100,336
Due after 1 year through 5 years 274,565 288,415
Due after 5 years through 10 years 179,098 194,280
Due after 10 years 17,068 18,972
- ---------------------------------------------------------------------------------------------------------------------
570,449 602,003
Mortgage-backed securities 22,366 22,986
- ---------------------------------------------------------------------------------------------------------------------
Total $592,815 $624,989
- ---------------------------------------------------------------------------------------------------------------------
Available for sale
Due within 1 year $76,383 $76,569
Due after 1 year through 5 years 825,032 841,426
Due after 5 years through 10 years 506,693 508,301
Due after 10 years 362,156 340,227
- ---------------------------------------------------------------------------------------------------------------------
1,770,264 1,766,523
Mortgage-backed securities 831,677 846,864
Perpetual preferred stock 94,226 97,158
- ---------------------------------------------------------------------------------------------------------------------
Total $2,696,167 $2,710,545
- ---------------------------------------------------------------------------------------------------------------------
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
During the years ended Dec. 31, 1998 and 1997, there were no securities
classified as trading securities.
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,
1998, 1997 and 1996, were as follows:
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
Proceeds $346,353 $161,188 $313,976
Gross realized gains 4,487 1,292 456
Gross realized losses 1,461 1,637 5,836
- ---------------------------------------------------------------------------------------------------------------------
Sales of held-to-maturity securities resulting from acceptance of a tender offer during the year ended
Dec. 31, 1998 and significant credit deterioration during the years ended Dec. 31, 1997 and 1996,
were as follows:
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
Amortized cost $6,182 $32,969 $22,297
Gross realized gains 63 1,621 3,200
Gross realized losses - 680 513
- ---------------------------------------------------------------------------------------------------------------------
During the years ended Dec. 31, 1998 and 1997, no securities were reclassified
from held to maturity to available for sale.
B) Investments in securities with fixed maturities comprised 85% and 89% of
IDSC's total invested assets at Dec. 31, 1998 and 1997, respectively. Securities
are rated by Moody's and Standard & Poors (S&P), or by Parent's internal
analysts, using criteria similar to Moody's and S&P, when a public rating does
not exist. A summary of investments in securities with fixed maturities by
rating of investment is as follows:
Rating 1998 1997
- ---------------------------------------------------------------------
Aaa/AAA 37% 44%
Aa/AA 1 1
Aa/A 1 1
A/A 13 14
A/BBB 5 6
Baa/BBB 33 25
Below investment grade 10 9
- ---------------------------------------------------------------------
100% 100%
- ---------------------------------------------------------------------
Of the securities rated Aaa/AAA, 84% and 83% at Dec. 31, 1998 and 1997,
respectively, are U.S. Government Agency mortgage-backed securities that are not
rated by a public rating
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
agency. Approximately 11% and 9% at Dec. 31, 1998 and 1997, respectively, of
securities with fixed maturities, other than U.S. Government Agency
mortgage-backed securities, are rated by Parent's internal analysts. At Dec. 31,
1998 and 1997 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 incurred by the issuer of the restricted securities.
4. Investments in first mortgage loans on real estate
At Dec. 31, 1998 and 1997, IDSC's recorded investment in impaired mortgage loans
was $296 and $363, respectively, and the reserve for loss on those amounts was
$261 in both years. During 1998, 1997 and 1996, the average recorded investment
in impaired mortgage loans was $331, $743 and $925, respectively.
IDSC recognized $31, $37 and $88 of interest income related to impaired mortgage
loans for the years ended Dec. 31, 1998, 1997 and 1996, respectively.
During the years ended Dec. 31, 1998, 1997 and 1996, there were no changes in
the reserve for loss on mortgage loans of $611.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
At Dec. 31, 1998 and 1997, approximately 9% and 5%, respectively, 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 1998 1997
- ---------------------------------------------------------------------
West North Central 21% 21%
South Atlantic 18 23
East North Central 17 18
Mountain 14 13
West South Central 12 6
Pacific 7 3
New England 6 5
Middle Atlantic 5 11
- ---------------------------------------------------------------------
Total 100% 100%
- ---------------------------------------------------------------------
Property Type 1998 1997
- ---------------------------------------------------------------------
Retail/shopping centers 28% 31%
Office buildings 25 20
Apartments 19 23
Industrial buildings 12 17
Other 16 9
- ---------------------------------------------------------------------
Total 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, 1998 Dec. 31, 1997
---------------------------------------------------------------
Carrying Fair Carrying Fair
amount value amount value
- ---------------------------------------------------------------------------------------------------------------------
First mortgage loans on real estate $334,891 $343,406 $213,044 $216,951
Reserve for losses (611) - (611) -
- ---------------------------------------------------------------------------------------------------------------------
Net first mortgage loans on
real estate $334,280 $343,406 $212,433 $216,951
- ---------------------------------------------------------------------------------------------------------------------
At Dec. 31, 1998 and 1997, commitments for fundings of first mortgage loans, at
market interest rates, aggregated $60,828 and $9,375, respectively. IDSC employs
policies and procedures to ensure the creditworthiness of the borrowers and that
funds will be available on the funding date. IDSC's loan fundings are restricted
to 80% or less of the market value of the real estate at the time of the loan
funding. Management believes there is no fair value for these commitments.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
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, 1998 and 1997
were:
1998
------------------------------------------------
Average Average
gross additional
Reserve accumulation credit
balance rate rate
- ---------------------------------------------------------------------------------------------------------------------
Installment certificates
Reserves to mature:
With guaranteed rates $21,018 3.50% .50%
Without guaranteed rates (A) 288,092 - 2.92
Additional credits and accrued interest 15,061 3.16 -
Advance payments and accrued interest (C) 894 3.18 .82
Other 55 - -
Fully paid certificates
Reserves to mature:
With guaranteed rates 146,437 3.20 1.47
Without guaranteed rates (A) and (D) 2,763,454 - 4.29
Additional credits and accrued interest 169,515 3.18 -
Due to unlocated certificate holders 357 - -
- ---------------------------------------------------------------------------------------------------------------------
Total $3,404,883
- ---------------------------------------------------------------------------------------------------------------------
1997
------------------------------------------------
Average Average
gross additional
Reserve accumulation credit
balance rate rate
- ---------------------------------------------------------------------------------------------------------------------
Installment certificates
Reserves to mature:
With guaranteed rates $24,316 3.50% 1.35%
Without guaranteed rates (A) 318,903 - 2.96
Additional credits and accrued interest 19,554 3.17 -
Advance payments and accrued interest (C) 968 3.17 1.68
Other 56 - -
Fully paid certificates
Reserves to mature:
With guaranteed rates 165,258 3.21 1.83
Without guaranteed rates (A) and (D) 3,020,933 - 5.03
Additional credits and accrued interest 174,699 3.21 -
Due to unlocated certificate holders 291 -
- ---------------------------------------------------------------------------------------------------------------------
Total $3,724,978
- ---------------------------------------------------------------------------------------------------------------------
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
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, 1998, $3,710 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 3.18%. IDSC has increased the rate of accrual
to 4.00% through April 30, 2000. An appropriation of retained earnings amounting
to $10 has been made, which represents the estimated additional accrual that
will result from the increase granted by IDSC.
D) IDS Stock Market Certificate, American Express Stock Market Certificate and
IDS Market Strategy Certificate enable the certificate owner to participate in
any relative rise in a major stock market index without risking loss of
principal. Generally the certificates have a term of 12 months and may continue
for up to 20 successive terms. The reserve balance on these certificates at Dec.
31, 1998 and 1997 was $622,409 and $416,485, respectively.
E) The carrying amounts and fair values of certificate reserves consisted of the
following at Dec. 31, 1998 and 1997. Fair values of certificate reserves with
interest rate terms of one year or less approximated the carrying values less
any applicable surrender charges.
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.
1998 1997
---------------------------------------------------------------
Carrying Fair Carrying Fair
amount value amount value
- ------------------------------------------------------------------------------------------------------------------------------------
Reserves with terms of one year or less $3,070,001 $3,068,463 $3,186,971 $3,185,396
Other 334,882 350,509 538,007 551,988
- ------------------------------------------------------------------------------------------------------------------------------------
Total certificate reserves 3,404,883 3,418,972 3,724,978 3,737,384
Unapplied certificate transactions 853 853 868 868
Certificate loans and accrued interest (32,703) (32,703) (37,495) (37,495)
- ------------------------------------------------------------------------------------------------------------------------------------
Total $3,373,033 $3,387,122 $3,688,351 $3,700,757
- ------------------------------------------------------------------------------------------------------------------------------------
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
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 1999 and 2000 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, joint facilities, technology support and treasury services is:
The investment advisory and services agreement with Parent provides for a
graduated scale of fees equal on an annual basis to 0.750% on the first $250
million of total book value of assets of IDSC, 0.650% on the next $250 million,
0.550% on the next $250 million, 0.500% on the next $250 million and 0.107% on
the amount in excess of $1 billion. Effective Jan. 1, 1998, the fee on the
amount in excess of $1 billion was changed from 0.450% to 0.107%. 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.
From time to time, IDSC may sponsor or participate in sales promotions involving
one or more of the certificates and their respective terms. These promotions may
offer a special interest rate to attract new clients or retain existing clients.
To cover the cost of these promotions, distribution fees paid to American
Express Financial Advisors may be lowered. For the promotion of the seven- and
13-month term IDS Flexible Savings Certificate which occurred Sept. 10, 1997 to
Nov. 25, 1997, the distribution fee for sales of these certificates was lowered
to 0.067%.
The aggregate fees payable under the agreements per $1,000 face amount of
installment certificates and a summary of the periods over which the fees are
payable are:
Number of
certificate
years over
Aggregate fees payable which
-----------------------------------------------
subsequent
First Subsequent years' fees
Total year years are payable
- ---------------------------------------------------------------------------------------------------------------------
On sales effective April 30, 1997 $25.00 $ 2.50 $22.50 9
On sales prior to April 30, 1997(a) 30.00 6.00 24.00 4
- ---------------------------------------------------------------------------------------------------------------------
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
(a) At the end of the sixth through the 10th year, an additional fee of 0.5% is
payable on the daily average balance of the certificate reserve maintained
during the sixth through the 10th year, respectively.
Effective April 30, 1997, fees on the IDS Cash Reserve and IDS Flexible Savings
Certificates are paid at a rate of 0.20% of the purchase price at the time of
issuance and 0.20% of the reserves maintained for these certificates at the
beginning of the second and subsequent quarters from issue date. For
certificates sold prior to April 30, 1997, fees were 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 IDS Future Value Certificate were paid at the rate of 5% of the
purchase price at time of issuance. Effective May 1, 1997, the IDS Future Value
Certificate is no longer being offered for sale.
Fees on the American Express 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 IDS 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.
Effective April 30, 1997, fees on the IDS and American Express Stock Market
Certificates, and IDS Market Strategy Certificate are paid at the rate of 0.70%
of the purchase price on the first day of the certificate's term and 0.70% of
the reserves maintained for these certificates at the beginning of each
subsequent term. For certificates sold prior to April 30, 1997, fees were 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 $15 per transaction
- -------------------------------------------------------------------------------
A transaction consists of the receipt or withdrawal of securities and commercial
paper and/or a change in the security position. The charges are payable
quarterly except for maintenance, which is an annual fee.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
D) The basis for computing fees paid or payable to American Express Bank Ltd.
(an affiliate) for the distribution of the American Express 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.
E) The basis of computing transfer agent fees paid or payable to American
Express Client Service Corporation (AECSC) (an affiliate) is:
Under a Transfer Agency Agreement effective Jan. 1, 1998, AECSC maintains
certificate owner accounts and records. IDSC pays AECSC a monthly fee of
one-twelfth of $10.353 per certificate owner account for this service. Prior to
Jan. 1, 1998, AEFC provided this service to IDSC under the investment advisory
and services agreement.
8. Income taxes
Income tax (expense) benefit as shown in the statement of operations for the
three years ended Dec. 31, consists of:
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
Federal
Current ($5,668) $1,138 $5,560
Deferred 4,183 2,266 1,124
- ---------------------------------------------------------------------------------------------------------------------
(1,485) 3,404 6,684
State (50) (65) (27)
- ---------------------------------------------------------------------------------------------------------------------
Total income tax (expense) benefit ($1,535) $3,339 $6,657
- ---------------------------------------------------------------------------------------------------------------------
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:
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
Federal tax expense at U.S. statutory rate ($12,026) ($8,378) ($5,711)
Tax-exempt interest 394 724 1,517
Dividend exclusion 10,121 11,044 10,865
Other, net 26 14 13
- ---------------------------------------------------------------------------------------------------------------------
Federal tax (expense) benefit ($1,485) $3,404 $6,684
- ---------------------------------------------------------------------------------------------------------------------
Deferred income taxes result from the net tax effects of temporary differences. Temporary differences
are differences between the tax bases of assets and liabilities and their reported amounts in the financial
statements that will result in differences between income for tax purposes and income for financial statement
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
purposes in future years. Principal components of IDSC's deferred tax assets and
liabilities as of Dec. 31, are as follows.
Deferred tax assets 1998 1997
- ---------------------------------------------------------------------
Certificate reserves $19,423 $13,488
Investment reserves 502 502
Other, net 18 19
- ---------------------------------------------------------------------
Total deferred tax assets $19,943 $14,009
- ---------------------------------------------------------------------
Deferred tax liabilities 1998 1997
- ---------------------------------------------------------------------
Deferred distribution fees $5,523 $7,382
Investment unrealized gains 5,032 17,119
Purchased/written call options 7,417 3,557
Dividends receivable 553 654
Investments 280 429
Return of capital dividends 43 43
- ---------------------------------------------------------------------
Total deferred tax liabilities 18,848 29,184
- ---------------------------------------------------------------------
Net deferred tax assets (liabilities) $1,095 ($15,175)
- ---------------------------------------------------------------------
9. Derivative financial instruments
IDSC enters into transactions involving derivative financial instruments as an
end user (nontrading). IDSC uses these instruments to manage its exposure to
interest rate risk and equity price risk, including hedging specific
transactions. IDSC manages risks associated with these instruments as described
below.
Market risk is the possibility that the value of the derivative financial
instrument will change due to fluctuations in a factor from which the instrument
derives its value, primarily an interest rate or a major market index. IDSC is
not impacted by market risk related to derivatives held because derivatives are
largely used to manage risk and, therefore, the cash flows and income effects of
the derivatives are inverse to the effects of the underlying hedged
transactions.
Credit risk is the possibility that the counterparty will not fulfill the terms
of the contract. IDSC monitors credit risk related to derivative financial
instruments through established approval procedures, including setting
concentration limits by counterparty, reviewing credit ratings and requiring
collateral where appropriate. At Dec. 31, 1998, IDSC's counterparties to the
interest rate floors and swaps are rated AA by nationally recognized rating
agencies. The counterparties to the purchased call options are seven major
broker/dealers.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
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 or credit risk
and are not recorded on the balance sheet.
Credit risk 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,
1998 and 1997.
1998
---------------------------------------------------------------
Notional Total
or contract Carrying Fair credit
amount value value risk
- ---------------------------------------------------------------------------------------------------------------------
Assets
Interest rate floors $500,000 $37 $348 $348
Purchased call options 448 96,176 92,357 92,357
- ---------------------------------------------------------------------------------------------------------------------
Total $500,448 $96,213 $92,705 $92,705
- ---------------------------------------------------------------------------------------------------------------------
Liabilities
Interest rate swaps $500,000 $- $1,488 $-
Written call options 448 38,071 54,181 -
- ---------------------------------------------------------------------------------------------------------------------
Total $500,448 $38,071 $55,669 $-
- ---------------------------------------------------------------------------------------------------------------------
1997
---------------------------------------------------------------
Notional Total
or contract Carrying Fair credit
amount value value risk
- ---------------------------------------------------------------------------------------------------------------------
Assets
Interest rate floors $500,000 $205 $251 $251
Purchased call options 389 55,922 54,609 54,609
- ---------------------------------------------------------------------------------------------------------------------
Total $500,389 $56,127 $54,860 $54,860
- ---------------------------------------------------------------------------------------------------------------------
Liabilities
Interest rate swaps $1,000,000 $- $2,138 $-
Written call options 376 24,739 32,990 -
- ---------------------------------------------------------------------------------------------------------------------
Total $1,000,376 $24,739 $35,128 $-
- ---------------------------------------------------------------------------------------------------------------------
The fair values of derivative financial instruments are based on market values, dealer quotes or
pricing models. The interest rate floors and swaps at Dec. 31, 1998, expire in April of 1999. The
options at Dec. 31, 1998, expire throughout 1999.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
Interest rate caps, corridors, floors and swaps, 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 earned on investments and the
interest rate credited to related investment certificate owners.
The interest rate floors are reset monthly and IDSC earns interest on the
notional amount to the extent the U.S. Treasury securities at "constant
maturity" for a period of one year exceed the reference rates specified in the
floor agreements. These reference rates range from 4.6% to 4.7%. The cost of
interest rate floors 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 or other investment
income, as appropriate.
The interest rate caps and corridors were reset quarterly and IDSC earned
interest on the notional amount to the extent the London Interbank Offering Rate
exceeded the reference rates specified in the cap and corridor agreements. These
reference rates ranged from 4% to 9%. The cost of interest rate caps and
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 or other investment income, as
appropriate.
The interest rate swaps are reset monthly. IDSC pays a fixed rate on the
notional amount ranging from 5.46% to 5.66% and receives a floating rate on the
notional amount tied to the U.S. Treasury securities at "constant maturity" for
a period of one year. There is no cost carried on the balance sheet. Interest
earned and interest expensed under the agreements is shown net in investment
expenses or other investment income, as appropriate.
IDSC offers a series of certificates which pays 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 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.
Each purchased (written) call option contract confers upon the holder the right
(obligation) to receive (pay) an amount equal to one hundred dollars times the
difference between the level of the major stock market index on the date the
call option is exercised and the strike price of the option.
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. Changes in the
intrinsic value of these options are recognized currently in provision for
certificate reserves.
Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------
Following is a summary of open option contracts at Dec. 31, 1998 and 1997.
1998
-----------------------------------------------
Contract Average Index at
amount strike price Dec.31,1998
- -----------------------------------------------------------------------------------------------------
Purchased call options $448 1,088 1,229
Written call options 448 1,206 1,229
- -----------------------------------------------------------------------------------------------------
1997
-----------------------------------------------
Contract Average Index at
amount strike price Dec.31,1997
- -----------------------------------------------------------------------------------------------------
Purchased call options $389 876 970
Written call options 376 969 970
- -----------------------------------------------------------------------------------------------------
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.
A summary of fair values of financial instruments as of Dec. 31, is as follows:
1998 1997
---------------------------------------------------------------
Carrying Fair Carrying Fair
value value value value
- ------------------------------------------------------------------------------------------------------------------------------------
Financial assets
Assets for which carrying values
approximate fair values $50,288 $50,288 $49,940 $49,940
Investment securities (note 3) 3,303,360 3,335,534 3,669,667 3,695,839
First mortgage loans on real estate (note 4) 334,280 343,406 212,433 216,951
Derivative financial instruments (note 9) 96,213 92,705 56,127 54,860
Financial liabilities
Liabilities for which carrying values
approximate fair values 154,964 154,964 48,255 48,255
Certificate reserves (note 5) 3,373,033 3,387,122 3,688,351 3,700,757
Derivative financial instruments (note 9) 38,071 55,669 24,739 35,128
- ------------------------------------------------------------------------------------------------------------------------------------
IDS CERTIFICATE COMPANY
Investments in Securities of Unaffiliated Issuers Schedule I
($ in thousands)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & 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 200 198 204
-------------- --------------- -----------
Total U.S. Government - Direct Obligations 365 363 373
-------------- --------------- -----------
Other Bonds and Notes
United States Government Agencies
FHLMC-GNMA 40 D CMO 6.500% 2011 13,169 13,126 13,185 (f)
GNMA ARM #8377 6.625% 2018 716 714 726 (f)
GNMA ARM #8251 6.625% 2017 63 63 64 (f)
GNMA ARM #8365 6.875% 2018 1,636 1,636 1,661 (f)
GNMA ARM #8274 7.000% 2017 2,096 2,095 2,122 (f)
GNMA ARM #8293 7.000% 2017 488 488 494 (f)
GNMA ARM #8283 7.000% 2017 285 284 288 (f)
GNMA ARM #8353 6.875% 2018 919 914 933 (f)
GNMA ARM #8341 6.875% 2018 119 119 121 (f)
GNMA ARM #8240 6.625% 2017 749 740 760 (f)
GNMA ARM #8440 7.000% 2018 813 813 823 (f)
GNMA ARM #8206 6.875% 2017 1,107 1,107 1,121 (f)
GNMA ARM #8428 7.000% 2018 299 299 303 (f)
GNMA ARM #8157 6.875% 2023 4,537 4,614 4,593 (f)
GNMA ARM #8638 6.875% 2025 7,528 7,589 7,627 (f)
FNMA 30 YR #27880 9.000% 2016 48 49 50 (f)
FNMA 15 YR #34543 9.250% 2001 64 64 68 (f)
FNMA 30 YR #36225 9.000% 2016 129 131 136 (f)
FNMA 30 YR #040877 9.000% 2017 44 45 46 (f)
FNMA 30 YR #51617 10.000% 2017 89 89 96 (f)
FNMA 30 YR #52185 10.000% 2017 58 58 62 (f)
FNMA 15 YR #13705 11.000% 2000 15 16 16 (f)
FNMA 15 YR #18275 11.000% 2000 4 5 5 (f)
FNMA 15 YR #18745 11.000% 2000 3 3 3 (f)
FNMA 15 YR #2469 11.000% 2000 8 8 8 (f)
FNMA 15 YR #13157 11.000% 2000 8 8 8 (f)
FNMA 15 YR #13548 11.000% 2000 22 23 24 (f)
FNMA 15 YR #18986 11.000% 2000 5 5 6 (f)
FNMA 15 YR #64520 11.000% 2001 28 28 30 (f)
FNMA 15 YR #64523 11.000% 2000 23 23 25 (f)
FNMA 15 YR #19070 11.000% 2000 3 3 3 (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
FNMA 15 YR #19261 11.000% 2000 10 10 10 (f)
FNMA 15 YR #22569 11.000% 2000 6 6 7 (f)
FNMA 15 YR #22271 11.000% 2000 22 23 24 (f)
FNMA 15 YR #22674 11.000% 2000 16 16 17 (f)
FNMA 15 YR #22405 11.000% 2000 23 23 25 (f)
FNMA 15 YR #25899 11.000% 2001 6 6 6 (f)
FNMA 15 YR #58405 11.000% 2003 23 23 24 (f)
FNMA 15 YR #70299 10.750% 2001 98 99 104 (f)
FNMA 15 YR #66458 10.000% 2004 2,407 2,417 2,491
FNMA 15 YR 70694 MEG 9.500% 2005 1,144 1,152 1,213
FNMA 15 6.0 #50973 6.000% 2009 30,586 29,967 30,711 (f)
FNMA 10YR #303115 6.500% 2004 10,151 9,662 10,291 (f)
FNMA 15YR #124848 8.000% 2008 8,589 8,567 8,852 (f)
FNMA 15YR #303445 5.500% 2009 16,480 15,859 16,290 (f)
FNMA #73227 MULT-FAM 6.700% 2005 2,429 2,451 2,476 (f)
FNMA 15YR 190534 6.000% 2018 15,777 15,530 15,841
FNMA 15 YR #A250857 7.000% 2012 14,753 14,722 15,067 (f)
FNMA 15YR #250671 7.500% 2011 15,426 15,466 15,865 (f)
FNMA 15 YR #313561 8.000% 2012 15,003 15,288 15,513 (f)
FNMA 15YR #303779 6.000% 2011 29,895 29,374 29,988 (f)
FNMA 7.0 15YR 250670 7.000% 2011 4,934 4,970 5,038 (f)
FNMA 15YR #313522 7.000% 2012 29,007 29,172 29,624 (f)
FNMA 15YR #367005 7.000% 2012 10,717 10,660 10,953 (f)
FNMA 15YR #313042 7.000% 2011 11,095 11,139 11,331 (f)
FNMA 92 203 E CMO 6.250% 2005 3,779 3,756 3,777 (f)
FANNIEMAE GR TRST 6.610% 2018 10,000 9,998 9,965 (f)
FNMA 97-2C CMO 7.000% 2020 29,869 29,882 30,152 (f)
FN 98 50 CLASS PA 6.000% 2012 15,000 15,046 14,989 (f)
FNMA 98-8 A SEQ CMO 6.500% 2024 8,394 8,397 8,428 (f)
FNMA 97-74 G SEQ CMO 6.500% 2024 7,930 7,899 7,963 (f)
FNMA 96-10 C CMO SEQ 6.500% 2023 6,739 6,512 6,830 (f)
FNMA 97-17 CMO 7.000% 2022 45,323 45,072 45,557 (f)
FN 97 11 K SEQ CM0 7.125% 2023 7,803 7,830 7,855 (f)
FNMA ARM #70007 6.697% 2017 1,574 1,574 1,598 (f)
FNMA ARM #70009 6.924% 2018 2,261 2,261 2,296 (f)
FNMA ARM #70117 7.091% 2017 489 489 496 (f)
FNMA ARM #79384 7.790% 2019 738 738 758 (f)
FNMA ARM #70202 7.446% 2019 1,565 1,565 1,598 (f)
FNMA ARM #92069 7.351% 2018 2,017 2,017 2,057 (f)
FNMA ARM #93787 7.157% 2019 1,694 1,694 1,728 (f)
FNMA ARM #97822 7.363% 2020 269 269 274 (f)
FNMA ARM#88879 3X3 7.843% 2019 1,863 1,863 1,963 (f)
FNMA ARM#105989 3X3 7.829% 2020 1,441 1,441 1,520 (f)
FNMA ARM #249907 8.000% 2024 7,238 7,344 7,399 (f)
FNMA ARM#89125 SEMI 7.001% 2019 4,843 4,943 4,967 (f)
FNMA ARM #303259 7.286% 2025 4,811 4,939 4,921 (f)
FNMA ARM#190726 SEMI 7.173% 2033 9,260 9,444 9,479 (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
FHLMC CTF SER B-77 8.125% 2007 91 91 91 (f)
FHLMC 15 YR #200035 9.000% 2001 142 141 147 (f)
FHLMC 15 YR #200064 8.000% 2002 211 207 216 (f)
FHLMC 15 YR #212119 9.500% 2001 62 62 65 (f)
FHLMC 15 YR #218648 9.500% 2002 28 28 30 (f)
FHLMC 15 YR #200048 9.000% 2001 343 340 357
FHLMC 15YR #380025 9.500% 2003 387 386 410
FHLMC 15 YR #219679 9.500% 2003 305 303 323 (f)
FHLMC 15 YR #200022 10.500% 2000 36 36 38 (f)
FHLMC 15 YR #219757 11.000% 2003 656 679 695
FHLMC 15 YR #502175 10.500% 2004 78 79 82 (f)
FHLMC LOANS #885005 9.500% 2002 800 797 847 (f)
FHLMC 15 YR #885009 9.500% 2003 1,870 1,862 1,979
FHLMC LOANS #885008 10.000% 2003 1,375 1,380 1,458 (f)
FHLMC GOLD E00151 7.500% 2017 4,926 5,061 5,069 (f)
FHLMC 5YR BLN #G5015 7.000% 1999 54 55 55 (f)
FHLMC 15YR #G10336 7.500% 2010 4,431 4,366 4,560 (f)
FHLMC 15YR #G10344 G 7.500% 2010 9,991 9,945 10,281 (f)
FHLMC 15YR #10342 7.000% 2010 15,527 15,157 15,877 (f)
FHLMC 5YR BLN #G5025 7.500% 2000 10,133 10,151 10,259 (f)
FHLMC 15YR G10364 7.000% 2010 12,965 12,901 13,257 (f)
FHLM 15 6.5 #G10369 6.500% 2010 29,881 29,544 30,338 (f)
FHLMC 15 #G10350 GLD 6.500% 2010 17,304 17,269 17,575 (f)
FHLMC 15YR #E00383 7.000% 2010 13,355 13,335 13,656 (f)
FHLMC 15YR GOLD 6.500% 2010 14,825 14,758 15,056 (f)
FH GD 15YR #E00426 6.500% 2011 7,021 6,959 7,126 (f)
FH15YR #G10439 GOLD 6.500% 2011 3,629 3,546 3,684 (f)
FHLMC 15YR G10627 6.500% 2011 23,454 23,128 23,806 (f)
FHLMC 15YR G10665 GD 7.000% 2012 60,986 60,850 62,358 (f)
FHLMC T-009 A2 HEL 6.430% 2013 10,000 10,000 10,040 (f)
FHLMC 15YR 11.000% 2003 781 799 829 (f)
FHLMC GOLD E00484 6.500% 2012 6,235 6,099 6,332 (f)
FHLMC GOLD #E00476 6.500% 2012 14,824 14,503 15,038 (f)
FHLMC15YR E00388GOLD 7.000% 2010 8,289 8,178 8,476 (f)
FHLMC ARM #840035 7.364% 2019 765 765 776 (f)
FHLMC ARM #840045 7.644% 2019 2,911 2,911 2,955 (f)
FHLMC ARM #605050 7.555% 2018 290 290 296 (f)
FHLMC ARM #605041 7.594% 2019 226 226 231 (f)
FHLMC ARM #605048 7.201% 2018 1,022 1,022 1,039 (f)
FHLMC ARM #605079 7.470% 2018 927 927 946 (f)
FHLMC ARM #605175 7.567% 2019 2,398 2,398 2,443 (f)
FHLMC ARM #605352 7.239% 2018 1,665 1,665 1,693 (f)
FHLMC ARM #605433 7.336% 2017 1,177 1,177 1,194 (f)
FHLMC ARM #605432 6.996% 2017 407 407 414 (f)
FHLMC ARM #405185 7.415% 2018 1,232 1,232 1,247 (f)
FHLMC ARM #405249 7.463% 2018 1,471 1,471 1,497 (f)
FHLMC ARM #630074 7.250% 2018 404 404 409 (f)
FHLMC ARM #605854 7.497% 2019 1,820 1,820 1,854 (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
FHLMC ARM #630048 6.875% 2018 11 11 12 (f)
FHLMC ARM #405092 7.118% 2019 909 909 922 (f)
FHLMC ARM #840072 7.351% 2019 1,279 1,279 1,297 (f)
FHLMC ARM #605454 7.110% 2017 3,465 3,465 3,510 (f)
FHLMC ARM #405437 7.525% 2019 217 217 221 (f)
FHLMC ARM #405455 7.527% 2019 652 652 661 (f)
FHLMC ARM #405243 7.385% 2019 528 528 537 (f)
FHLMC ARM #606025 6.912% 2019 3,789 3,789 3,812 (f)
FHLMC ARM #606024 6.881% 2019 1,003 1,003 1,009 (f)
FHLMC ARM #405517 7.000% 2019 279 280 285 (f)
FHLMC ARM#605853 7.472% 2019 2,241 2,241 2,286 (f)
FHLMC ARM #405014 7.213% 2019 500 500 508 (f)
FHLMC ARM #401587 7.375% 2018 1,595 1,595 1,619 (f)
FHLMC ARM 840031 7.409% 2019 205 205 208 (f)
FHLMC ARM #840036 7.417% 2019 940 940 957 (f)
FHLMC ARM #405615 7.150% 2019 692 692 702 (f)
FHLMC ARM #405360 7.493% 2019 717 717 729 (f)
FHLMC ARM #606151 7.609% 2019 3,276 3,276 3,341 (f)
FHLMC ARM #635054 7.476% 2020 193 193 197 (f)
FHLMC ARM #405675 7.542% 2020 1,187 1,187 1,207 (f)
FHLMC ARM #405692 7.514% 2020 1,582 1,582 1,610 (f)
FHLMC ARM #606301 7.841% 2020 3,987 3,987 4,093 (f)
FHLMC ARM #405744 7.579% 2020 844 844 859 (f)
FHLMC ARM#865008 3X3 8.448% 2018 4,787 4,787 4,903 (f)
FHLMC ARM #845154 7.537% 2022 2,335 2,405 2,359 (f)
FHLMC ARM #845654 7.766% 2024 7,827 7,939 7,977 (f)
FHLMC ARM #350190 7.625% 2022 3,624 3,729 3,689 (f)
FHLMC ARM #845523 7.473% 2023 3,775 3,881 3,836 (f)
FHLMC ARM #845733 7.502% 2024 12,966 13,191 13,230 (f)
FHLMC ARM #845730 7.516% 2024 15,253 15,737 15,434 (f)
FHLMC ARM #845973 7.482% 2024 4,633 4,633 4,745 (f)
FHLMC ARM #845999 7.355% 2027 13,966 14,085 14,211 (f)
FHLMC ARM #846072 7.477% 2022 3,561 3,648 3,646 (f)
FHLMC ARM#846107LIB 7.946% 2025 4,339 4,436 4,420 (f)
FHLMC ARM#785363 3X1 7.864% 2025 3,137 3,178 3,165 (f)
FHLMC ARM #606903 7.157% 2022 530 535 531 (f)
FHLMC ARM#785615 3X1 6.655% 2026 8,411 8,365 8,650 (f)
FHLMC ARM#785634 3X1 6.743% 2026 8,652 8,680 8,933 (f)
FHLMC ARM#785619 3X1 6.605% 2026 3,433 3,452 3,543 (f)
FHLMC ARM#785672 3X1 6.705% 2026 4,804 4,826 4,854 (f)
-------------- --------------- -----------
Total United States Government Agencies 856,406 854,043 869,850
-------------- --------------- -----------
Municipal Bonds
California
CAL HSG 95-O TAX MUN 7.740% 2016 10,645 10,645 11,159 (b) (f)
CAL HSG FIN 1996-M 7.890% 2016 8,245 8,245 8,583 (b) (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
Illinois
CHICAGO IL SAN DIST 9.250% 2000 1,000 1,021 1,060 (b) (f)
*CHIC IL GAS SPY SRC 7.500% 2015 4,500 4,500 4,768 (b) (f)
Minnesota
WEST MN MUNI POWER 10.250% 2015 3,120 3,120 3,120 (b) (f)
New York
NEW YORK CITY NT GO 7.750% 2000 335 335 339 (b) (f)
NEW YORK PWR AUTH 9.500% 2001 180 186 187 (b) (f)
Pennsylvania
WY VALLEY PA SWR 5.125% 2007 115 115 119 (b) (f)
Texas
AUSTIN TX UTILITY 10.750% 2015 3,735 3,908 4,102 (b) (f)
-------------- --------------- -----------
Total Municipal Bonds 31,875 32,075 33,437
-------------- --------------- -----------
Public Utility
AES CORP SNR SUB NTS 8.375% 2007 5,000 4,979 4,987 (b) (d) (f)
ALLIED WASTE 144A 7.375% 2004 800 799 808 (d) (f)
AVON ENERGY 6.730% 2002 4,750 4,750 4,888 (b) (d) (f)
BAROID CORP 8.000% 2003 5,000 4,990 5,269
BARRETT RESOURCES 7.550% 2007 3,000 3,003 3,186 (f)
CMS ENERGY 7.375% 2000 4,700 4,697 4,789 (f)
CSW INVESTMENTS 144A 6.950% 2001 10,000 9,993 10,302 (b) (d) (f)
CABLE & WIRELESS COM 6.375% 2003 6,000 5,976 6,040 (f)
CAL ENERGY CO INC 9.500% 2006 4,000 4,027 4,440 (f)
CROSS TIMBERS OIL CO 8.750% 2009 3,000 3,000 2,670 (f)
CYTEC INDUSTRIES INC 6.500% 2003 10,500 10,491 10,138 (f)
DETROIT EDISON 6.280% 2000 7,000 6,980 7,099 (f)
EL PASO ELEC CO 7.250% 1999 2,000 2,000 2,002 (f)
ENRON CORP 6.625% 2003 5,000 5,027 5,130 (f)
ENRON CORP 6.450% 2001 10,000 10,000 10,255 (f)
INTL SPECIALTY PROD 9.000% 1999 15,000 15,019 15,039
JERSEY CENTRAL P&L 6.040% 2000 5,000 5,000 5,053
KN ENERGY INC 6.450% 2003 8,000 7,988 8,031 (f)
KANSAS CITY P&L 7.340% 1999 10,000 10,000 10,150
MCN INV`T CORP MTN 6.890% 2002 9,000 9,030 9,322 (f)
NEW PARK RESOURCES 8.625% 2007 2,500 2,528 2,500 (f)
NIAGARA MHWK PWR 7.375% 2003 3,000 3,097 3,139 (f)
NORAM ENERGY CORP 7.500% 2000 5,000 4,990 5,150 (f)
NORCEN ENERGY RES 6.800% 2002 10,000 9,986 10,173 (f)
NOVACOR CHEMICALS 6.500% 2000 10,000 9,986 10,074 (f)
OCCIDENTAL PETROLEUM 6.410% 2000 5,000 4,980 5,060 (f)
ORYX ENERGY 8.650% 1999 15,000 15,000 15,000
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
PUBLIC SERV E&G CAP 6.800% 2002 10,000 10,025 10,277 (d) (f)
PUB SERVICE ELEC GAS 6.740% 2001 12,000 12,000 12,342 (d) (f)
PACIFIC GAS TRANS 6.640% 2000 5,000 5,000 5,100 (f)
PAGING NETWORK 10.000% 2008 2,000 2,000 1,950 (f)
PRAXAIR INC 6.750% 2003 5,000 4,819 5,136 (f)
QWEST COMMUNICATION 7.250% 2008 3,000 3,000 3,075 (b) (d) (f)
SALTON SEA CL A 6.690% 2000 2,081 2,081 2,095 (f)
SMITH INT`L INC 7.240% 2001 10,000 10,000 10,281 (b) (d) (f)
TELEPORT COMM 9.875% 2006 4,000 4,073 4,555 (f)
TEXAS UTILITIES 6.370% 2000 10,000 10,000 10,211 (f)
TOSCO CORP 7.000% 2000 5,000 4,997 5,094 (f)
USX CORP 7.200% 2004 13,000 13,327 13,480 (f)
USA WASTE SERVICES 6.500% 2002 10,000 9,997 10,264 (f)
WILLIAMS CO INC 6.500% 2002 12,000 11,992 12,133 (f)
-------------- --------------- -----------
Total Public Utility 281,331 281,627 286,687
-------------- --------------- -----------
Finance
AG CAP FND SR.NT FLT 6.494% 2004 20,000 19,982 18,550 (d) (f)
AT&T CAPITAL CORP 6.900% 2002 15,000 14,919 14,953 (f)
ADVANTA MTG 98-1 A2 6.250% 2014 5,000 5,000 5,006 (f)
AERCO LDT S-1A CL C1 6.885% 2023 13,496 13,353 12,889 (d) (f)
O`N`E` LOAN TRUST 97 7.906% 2007 25,000 25,000 25,000 (b) (d) (f)
ALLIANCE INV CBO FLT 6.713% 2006 19,000 19,000 18,620 (d) (f)
ARISTAR FINL 7.875% 1999 3,000 3,000 3,007 (f)
ATHENA CBO LIMIT FLT 5.939% 2010 10,000 9,966 9,950 (f)
BANKAMERICA CORP 9.750% 2000 10,000 10,126 10,599
BANPONCE FIN CORP 6.580% 2003 5,000 4,987 5,217 (f)
BISTRO TRST 1997-100 6.350% 2002 7,000 6,986 7,076 (d) (f)
BISTRO TRT 98-1000 6.580% 2001 14,000 14,000 14,206 (d) (f)
CA INF BK SDG E1 A2 6.040% 2002 1,500 1,500 1,511 (f)
CAPITAL ONE BANK 7.350% 2000 5,000 4,998 5,145 (f)
CAPITAL ONE BANK 6.375% 2003 5,500 5,486 5,477 (f)
CARAVELLE INV B FLTG 7.088% 2005 17,500 17,500 17,325 (f)
CARCO AUTO 97-1 6.689% 2004 12,000 12,000 12,051 (f)
CCMSC 1997-2 CLSS A1 6.450% 2004 4,508 4,509 4,604 (f)
COMMERCIAL CREDIT 8.250% 2001 9,000 8,944 9,661 (f)
CONTI FINANCIAL CORP 8.375% 2003 5,000 4,990 3,750 (f)
CONTI MTG HEL TRTA-6 6.690% 2016 10,000 10,000 10,192 (f)
CONTI 98-1 CLASS A5 6.430% 2016 10,000 9,998 10,118 (f)
COUNTRYWIDE FUNDING 8.420% 1999 19,700 19,700 19,796
ECH FUNDING 98-1 A-2 6.385% 2010 19,000 19,000 18,216 (d) (f)
EQCC 97-3 A6 ABS HEL 6.610% 2021 5,000 5,010 5,107 (f)
FDIC 96-1C CLASS 1A 6.750% 2026 5,030 5,028 5,028 (f)
FMAC LLC 98-D CL A-1 6.111% 2019 5,000 5,025 5,033 (d) (f)
FINOVA CAP C MTN 6.190% 2000 3,000 3,016 3,011 (f)
FBMS 93-2 CL B1 CMO 7.500% 2033 6,286 6,434 6,791 (f)
FIRST DOMINION CBO 1 6.981% 2013 19,000 19,000 16,934 (d) (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
FULB 97-C1 A-1 MBS 7.150% 2004 9,399 9,548 9,768 (f)
FULB 97-C2 CLASS A1 6.479% 2004 8,918 8,954 9,066 (f)
FIRST USA DEP NT 6.375% 2000 5,000 4,994 5,129 (f)
FIRSTPLUS 98-A-A NIM 8.500% 2023 6,310 6,281 5,839 (f)
GATX CAPITAL CORP 6.500% 2000 5,000 5,000 5,082 (f)
GATX CAP CORP MTN 6.360% 2002 5,000 4,946 4,974 (f)
GMAC 96-C1 COMM MBS 6.790% 2003 4,331 4,344 4,469 (f)
GMAC 97-C2 A CMBS 6.451% 2004 4,769 4,788 4,908 (f)
GS-96PROTECT LIFE A1 7.020% 2027 6,302 6,407 6,673 (f)
GMAC 7.750% 1999 20,000 19,998 20,013 (f)
GREAT WESTERN FINL 6.375% 2000 3,000 2,996 3,036 (f)
GREENTREE EQP 96-B 7.700% 2018 7,424 7,530 7,544 (f)
GREENPOINT BANK 6.700% 2002 9,250 9,283 9,387 (f)
HELLER FINANCIAL 6.500% 2000 8,000 8,001 8,098 (f)
HELLER FINANCIAL 6.440% 2002 5,000 4,983 5,108 (f)
HOMESIDE LENDING 6.875% 2002 10,000 9,998 10,421 (f)
HOUSEHOLD FIN MTN 7.100% 2002 10,000 9,995 10,426 (f)
INDOSUEZ CAP B-2 CLO 6.727% 2010 16,500 16,500 16,005 (d) (f)
INTL LEASE FINANCE 7.950% 1999 12,000 12,000 12,017 (f)
IROQUOIS TRUST 97-1A 7.000% 2006 10,000 10,004 10,092 (d) (f)
IROQUOIS TRUST 97-2A 6.752% 2007 15,000 14,988 15,143 (d) (f)
KEYCORP SENIOR 7.430% 2000 4,000 3,998 4,118 (f)
LBCMT 98-C1 A-1 CMBS 6.330% 2004 3,778 3,795 3,861 (f)
LBCMT 98-C4 A1A CMBS 5.870% 2035 4,978 5,003 5,012 (f)
LONG ISL SAV BK 7.000% 2002 5,000 4,992 5,186 (f)
MBNA AMER BANK NA 7.540% 2001 10,000 9,996 10,522
MBNA CORP 6.500% 2000 5,000 4,999 5,069 (f)
ML CBO14 98-E&P-1 FL 7.119% 2010 11,000 11,000 9,782 (d) (f)
MARGARETTEN FIN'L 6.750% 2000 15,250 15,310 15,561 (f)
MERCHANDISE MART LLC 6.747% 1999 15,000 15,000 15,000 (b) (d) (f)
ML CLO 98 PILG-3 7.000% 2010 7,500 7,448 6,962 (f)
ML CBO 98 AIG-2 B-1 7.100% 2010 6,500 6,475 6,050 (f)
ML CBO 98 SER 1 B1 6.945% 2009 10,500 10,477 9,618 (f)
MONEYSTORE 97-A 7.210% 2021 4,000 4,000 4,101 (f)
JPMS 96-C2 CL A 6.470% 2027 3,452 3,470 3,518 (f)
JPM 98-C6 A1 CMBS 6.373% 2030 3,685 3,701 3,750 (f)
MS CAP 1996-WFI MBS 7.220% 2028 10,000 10,118 10,587 (f)
MS CAP 1 1997-XL A-1 6.590% 2030 14,507 14,567 15,027 (f)
MS CAPI 97-ALIC A1 A 6.300% 2000 7,241 7,241 7,320 (f)
MS CAP 98-WF1 CMBS 6.250% 2007 2,417 2,427 2,471 (f)
MCF 96-MC2 CLS A1 6.758% 2004 9,202 9,260 9,508 (f)
NORWEST FINANCIAL 7.250% 2000 4,500 4,498 4,612
ORIX CR ALL 144A MTN 6.640% 2002 16,000 16,000 16,124 (d) (f)
PAMCOIII CLO 98-1 B2 6.570% 2010 19,000 19,000 18,620 (d) (f)
PENSKE TRUCK LEASING 7.750% 1999 3,000 3,009 3,027 (f)
BANK POPULAR N.A. 6.625% 2002 12,000 11,991 12,583 (f)
PROVIDENT BANK 6.125% 2000 5,000 4,995 5,072
PROVIDIAN 97-4-A CRD 6.250% 2007 10,500 10,486 10,814 (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
PROVIDIAN BANK 6.700% 2003 13,000 12,992 13,097 (f)
PHMS 1993-39 A8 SUPP 6.500% 2008 10,056 9,711 10,098 (f)
RFMSI 1998-S23 CL A1 6.000% 2028 14,834 14,939 14,788 (f)
SASCO 98-C3 CLASS B 5.792% 2001 4,995 4,961 5,013 (d) (f)
SL CMBS 97-C1 CLS A 6.875% 2004 15,203 15,318 15,691 (d) (f)
SBMS VII 91-1 B1 9.700% 2006 422 422 421 (f)
SANWA BUS CREDIT MTN 7.250% 2001 10,000 9,995 10,416 (b) (d) (f)
SAXON 98-1 AF3 HEL 6.450% 2024 2,000 1,999 2,018 (f)
SAXON 95-1 BA2 ARM 7.668% 2025 1,490 1,511 1,512 (f)
SOMERS CBO FLT 5.975% 2012 11,000 10,928 10,945 (f)
SASCO96-CL1 AIC 5.944% 2028 2,673 2,673 2,670 (f)
TCW GEM II 144A FLT 6.781% 2012 25,000 23,802 7,500 (b) (d) (f)
TRANS OCEAN CRP 144A 6.670% 2007 10,141 10,095 10,442 (d) (f)
UCFC 95 CA2 ASSET BK 6.575% 2011 1,618 1,619 1,620 (f)
UCFC 97-B CL A-4 ABS 6.940% 2023 7,000 6,994 7,160 (f)
UNIFRAX INVESTMENT 10.500% 2003 5,000 5,030 5,200 (f)
VAN KAMPEN CLOII LMT 6.940% 2008 5,000 5,000 4,531 (d) (f)
VANDERBILT 98-A A2 6.140% 2006 3,000 3,000 3,018 (f)
WAYLAND FUND 7.790% 2004 5,000 5,000 5,000 (b) (d) (f)
WELLSFORD RESID PROP 7.250% 2000 5,000 4,989 5,144 (f)
ICI INVESTMENTS EMTN 6.750% 2002 10,000 10,068 10,126 (f)
-------------- --------------- -----------
Total Finance 875,165 874,297 858,306
-------------- --------------- -----------
Industrial
AAF MCQUAY 8.875% 2003 10,000 10,113 9,738 (f)
AGCO CORP 8.500% 2006 5,000 4,969 4,800 (f)
AK STEEL CORP 9.125% 2006 3,000 3,058 3,135 (f)
ADVANCED LIGHTING 8.000% 2008 2,000 2,016 1,910 (b) (d) (f)
AMER AIRLINES LESSEE 6.400% 2008 2,538 2,538 2,538 (b) (d) (f)
AMER AIRLINES LESSEE 6.400% 2008 2,338 2,338 2,338 (b) (d) (f)
AMER AIRLINES LESSEE 6.400% 2008 2,445 2,445 2,445 (b) (d) (f)
AMER AIRLINES LESSEE 6.400% 2008 2,650 2,650 2,650 (b) (d) (f)
AMER AIRLINES LESSEE 6.400% 2008 821 821 821 (b) (d) (f)
AMER AIRLINES LESSEE 6.400% 2008 820 820 820 (b) (d) (f)
AMERICAN STANDARD 10.875% 1999 1,000 1,010 1,024 (f)
AMERISERVE FOOD SER 10.125% 2007 4,000 4,109 3,640 (f)
ANTENNA TV SA 9.000% 2007 5,000 4,911 4,400 (f)
APPLIED MATERIALS 6.650% 2000 5,000 5,000 5,073 (f)
ARGO-TECH CORP 8.625% 2007 2,000 2,000 1,905 (f)
ARMCO STEEL 144A 8.875% 2008 2,000 1,984 2,020 (f)
AVIATION SALES 8.125% 2008 2,000 1,995 1,985 (f)
BECKMAN INSTRUMENTS 7.100% 2003 5,000 5,000 5,179 (f)
A.H. BELO 6.875% 2002 17,885 18,266 18,671 (f)
BLACK & DECKER 7.500% 2003 10,000 10,299 10,652 (f)
BOYD GAMING CORP 9.250% 2003 5,000 4,985 5,162 (f)
BROWN GROUP 8.600% 1999 5,000 5,000 5,012
BURLINGTON NORTHERN 6.375% 2005 5,000 4,998 5,255
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
CSX CORP 7.050% 2002 10,000 9,995 10,390 (f)
REYNOLDS METALS CAN 6.625% 2002 15,600 15,696 16,085 (f)
CAPSTAR HOTEL 8.750% 2007 3,000 2,996 2,936 (f)
CHIQUITA BRANDS INTL 10.250% 2006 3,000 2,985 3,131 (f)
CHRYSLER FINANCE 7.590% 2000 5,000 5,000 5,135 (f)
CINCINNATI MILACRON 7.875% 2000 5,000 5,038 5,110 (f)
CINEMARK USA INC 8.500% 2008 2,000 1,996 1,990 (f)
COLTEC INDUSTRIES 7.500% 2008 2,000 1,997 2,117 (f)
COMCAST CABLE 8.125% 2004 10,000 9,993 11,093 (f)
CONTAINER CORP AMER 9.750% 2003 4,000 3,982 4,045 (f)
CONT'L CABLEVISION 8.300% 2006 4,000 3,990 4,502 (d)
COX COMMUNICATIONS 6.375% 2000 25,000 24,959 25,357 (f)
CROWN CORK & SEAL 6.750% 2003 14,950 15,004 15,036 (f)
DAYTON HUDSON 6.400% 2003 10,000 9,980 10,330 (f)
DAYTON HUDSON CO 6.800% 2001 5,000 5,000 5,173 (f)
DOMAN INDUSTRIES LTD 9.250% 2007 3,000 3,014 2,220 (f)
DOMINO`S 144A 10.375% 2009 2,000 2,015 1,990 (d) (f)
BERGEN BRUNSWIG(DUR) 7.000% 2006 20,000 20,032 20,325 (f)
ERAC USA 144A 6.950% 2004 9,000 9,112 9,217 (d) (f)
ENTERPRIS RENT-A-CAR 8.750% 1999 5,000 4,999 5,147 (d)
EXTENDICARE HLTH SER 9.350% 2007 1,000 1,000 920 (f)
EYE CARE CENTERS 8.958% 2008 2,000 2,000 1,885 (d) (f)
FEDDERS N. AMERICA 9.375% 2007 3,000 3,016 3,023 (f)
FEDERAL-MOGUL 8.800% 2007 4,000 3,989 4,270 (f)
FORD MOTOR CREDIT 6.375% 2000 10,000 10,050 10,173
FORD MOTOR CR MTN 7.060% 2001 5,000 4,990 5,190 (f)
FURON COMPANY 8.125% 2008 2,000 2,000 1,980 (f)
GATC 6.320% 2000 10,000 9,993 10,159 (f)
GE CAPITAL CORP 8.125% 1999 12,000 12,000 12,025 (f)
GENESIS HEALTHCARE 9.250% 2006 5,000 5,000 4,844 (f)
GIANT INDUSTRIES 9.000% 2007 5,000 5,000 4,900 (f)
GRAHAM PACKAGING FLT 9.375% 2008 1,500 1,500 1,470 (f)
HAYES WHEELS INT'L 9.125% 2007 3,000 3,006 3,120 (f)
HAYES WHEELS INT`L 9.125% 2007 1,000 1,000 1,040 (f)
HERITAGE MEDIA 8.750% 2006 4,500 4,567 4,849 (f)
HOWMET INC* 10.000% 2003 3,000 3,156 3,296 (f)
ITT CORP 6.250% 2000 5,000 4,930 4,954 (f)
ISPMEX 144A LIQUID 10.125% 2003 4,605 4,605 4,104 (d) (f)
INTEGON CORP 9.500% 2001 2,000 1,987 2,207
INT`L SHIPHOLDING 7.750% 2007 2,000 1,990 1,868 (f)
INTERPOOL INC 6.625% 2003 12,500 12,486 12,421 (f)
K-III COMM PUT/96 8.500% 2006 5,000 4,983 5,150 (f)
KAUFMAN & BROAD HOME 7.750% 2004 3,000 2,979 2,955 (f)
KROGER CO 8.150% 2006 4,000 4,004 4,471 (f)
LTV CORPORATION 8.200% 2007 5,000 4,972 4,731 (f)
LAMAR ADVERTISING 8.625% 2007 5,000 5,007 5,181 (f)
LGETT&PLATT MTN SERD 7.185% 2002 10,000 9,964 10,476 (d) (f)
LIFE STYLE FURN 10.875% 2006 3,000 3,025 3,300 (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
MJD COMMUNICATIONS 9.159% 2008 3,000 3,000 2,910 (f)
MARK IV 7.500% 2007 3,000 2,986 2,898 (f)
MAXXIM MEDICAL 10.500% 2006 4,000 4,029 4,310 (f)
MEDIAONE GROUP INC 6.850% 2002 15,500 15,495 15,982 (f)
FRED MEYERS INC 7.150% 2003 5,000 4,992 5,216 (f)
MULTICARE CO 9.000% 2007 4,000 4,013 3,800 (f)
MURRIN-MURRIN 144A 8.813% 2005 1,600 1,600 1,408 (d) (f)
MURRIN-MURRIN 144A 8.813% 2005 2,400 2,400 2,112 (d) (f)
NEWS AMER HLDGS 7.500% 2000 10,000 9,986 10,279 (f)
NORFOLK SOUTHERN 6.950% 2002 15,000 15,162 15,655 (f)
NORTEK INC 9.125% 2007 2,500 2,522 2,575 (f)
OFFSHORE LOGISTICS 7.875% 2008 2,000 2,005 1,910 (f)
OUTDOOR SYSTEMS INC 9.375% 2006 5,000 5,000 5,419 (f)
PARACELSUS HEALTH 10.000% 2006 5,000 5,051 4,600 (f)
PARAMOUNT COMMUN 5.875% 2000 5,350 5,290 5,371 (f)
PARK-OHIO INDUSTRIES 9.250% 2007 1,000 1,004 1,022 (f)
PENNEY J.C. & CO 7.250% 2002 10,000 9,997 10,490 (f)
PHARMERICA INC 8.375% 2008 2,000 2,017 1,800 (f)
PILLOWTEX CORP 9.000% 2007 4,000 4,057 4,160 (f)
PRINTPACK INC 9.875% 2004 2,500 2,500 2,562 (f)
QUAKER OATS 6.940% 2003 1,500 1,503 1,578 (f)
QUAKER OATS 6.470% 2000 10,000 10,015 10,159 (f)
REPAP WISCONSIN 9.250% 2002 15,000 15,425 15,656 (f)
RITE AID CORP 6.700% 2001 5,000 4,999 5,151 (f)
ROLLINS TRUCK 6.875% 2001 5,000 4,999 5,124 (f)
RYDER SYSTEM 7.910% 2000 5,000 5,013 5,117 (f)
RYERSON TULL 8.500% 2001 5,000 5,000 5,212 (f)
S C INTERNATIONAL 9.250% 2007 5,000 5,023 5,025 (f)
SCOTSMAN GROUP INC 8.625% 2007 3,500 3,491 3,587 (f)
SEA CONTAINERS LTD 7.875% 2008 2,000 2,000 1,925 (f)
SHOP VAC CORP 10.625% 2003 2,000 2,000 2,183 (f)
SHOWBOAT INC 9.250% 2008 4,000 3,803 4,160
SMITHFIELD FOODS INC 7.625% 2008 2,000 1,993 1,932 (f)
STENA AB 10.500% 2005 3,000 3,000 3,053
SUNAMERICA 9.000% 1999 20,000 20,000 20,016
SUPERVALU INC 7.250% 1999 8,000 7,991 8,072 (f)
SUPERVALU INC 6.500% 2000 5,000 4,998 5,110 (f)
TEEKAY SHIPPING CORP 8.320% 2008 3,000 3,028 2,989 (f)
TELEWEST PLC 9.625% 2006 2,000 2,000 2,075
TENET HEALTHCARE CO 8.625% 2003 7,000 6,984 7,332 (f)
TITAN WHEEL INT`L IN 8.750% 2007 4,100 4,082 4,018 (f)
TRICO MARINE SERVICE 8.500% 2005 3,000 2,986 2,580 (f)
TYSON FOODS 6.410% 2000 10,000 10,004 10,214 (f)
US INDUSTRIES 144A 7.125% 2003 6,000 5,982 5,912 (d) (f)
UNION TANK CAR 6.500% 2008 6,207 6,198 6,363 (f)
UNITED AIR 1991A-1 9.200% 2008 4,281 4,043 5,068
US HOME CORP 7.750% 2005 1,500 1,497 1,432 (f)
UNITED STATIONERS 8.375% 2008 1,000 1,000 1,004 (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
VIACOM INC 6.750% 2003 5,000 4,997 5,161
WALBRO CORP 10.125% 2007 3,000 3,037 2,940 (f)
WHITMAN CORP 6.250% 2000 5,000 4,976 5,074 (f)
AMER AIRLINES LESSE 6.400% 2008 1,248 1,248 1,248 (b) (d) (f)
AMER AIRLINES LESSE 6.400% 2008 1,248 1,248 1,248 (b) (d) (f)
AMER AIRLINES LESSE 6.400% 2008 1,248 1,248 1,248 (b) (d) (f)
AMER AIRLINES LESSE 6.400% 2008 853 853 853 (b) (d) (f)
AMER AIRLINES LESSE 6.400% 2008 855 855 855 (b) (d) (f)
AMER AIRLINES LESSE 6.400% 2008 924 924 924 (b) (d) (f)
AMER AIRLINES LESSE 6.400% 2008 923 923 923 (b) (d) (f)
AMER AIRLINES LESSE 6.400% 2008 925 925 925 (b) (d) (f)
WORLD COLOR PRESS 8.375% 2008 3,000 3,000 3,015 (b) (d) (f)
WYMAM GORDON CO 8.000% 2007 1,000 994 1,013 (f)
ASTRON CBO LTD FLT 6.392% 2010 17,500 17,500 15,794 (d) (f)
-------------- --------------- -----------
Total Industrial 685,814 687,198 695,211
-------------- --------------- -----------
Total Other Bonds and Notes 2,730,591 2,729,241 2,743,492
-------------- --------------- -----------
TOTAL BONDS AND NOTES 2,730,956 2,729,604 2,743,865
-------------- --------------- -----------
PREFERRED STOCK
Public Utility
ALLTEL 7.75 $100 PAR 7.750% 2005 18 1,845 1,851 (d)
AMERICAN WTRWRKS $25 8.500% 2000 800 20,000 21,032 (b) (d)
AMERITECH NZ A $100 7.040% 2001 40 4,112 4,170 (d) (f)
APPALACHIAN PWR $100 6.850% 2004 30 3,003 3,315
APPALACHIAN PWR $100 5.900% 2008 10 997 1,151 (f)
APPALACHIAN PWR $100 5.920% 2008 11 1,090 1,268
ATLANTIC CITY EL 100 7.800% 2006 90 8,990 10,024
BELL ATLANTIC NZ144A 7.080% 2001 25 2,612 2,689 (d) (f)
BELL ATL NZ$100 144A 5.800% 2004 100 10,000 11,025 (d)
BOSTON EDISON $100 8.000% 2001 90 9,000 9,872
CENTRAL ILL LT $100 5.850% 2008 65 6,508 7,280
COMMONWEALTH EDISON 8.850% 2003 49 4,919 4,924 (b) (d)
COMMWLTH ED $100 PVT 8.200% 2002 42 4,133 4,246 (d)
CON EDISON $100 SR J 6.125% 2002 150 15,029 15,947
DUKE ENERGY $100 V 6.400% 2002 30 3,000 3,262
DUKE ENRGY $100 SR U 6.300% 2001 30 3,000 3,201
DUKE ENRGY $100 SR T 6.200% 2000 30 3,000 3,139
DUKE ENRGY 1992D $25 6.200% 2001 200 5,003 5,212
DUKE ENRGY 1992C $25 6.100% 2000 250 6,256 6,375
DUKE ENRGY 1992B $25 5.950% 1999 15 375 383 (f)
EASTERN EDISON $100 6.625% 2008 210 20,925 22,273
ENTERGY ARKANSAS $25 9.920% 2002 26 661 682
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
ENTERGY LA INC PFD 8.000% 2001 70 7,000 7,254
ENTERGY LA $100 7.000% 1999 80 8,000 8,135
GREEN MTN PWR CL-D/3 8.625% 2000 28 2,800 2,827 (b) (d)
HAWAII ELEC $100 8.500% 2005 50 5,107 5,178 (b) (d)
MAUI ELEC $100 8.500% 2005 50 5,087 5,178 (b) (d)
INDIANA MICH POWER 6.300% 2009 52 5,222 5,770
IND MICH POWER $100 6.250% 2009 20 2,005 2,198 (f)
INDIANA MICHIGAN PWR 5.900% 2009 33 3,126 3,516
JERSEY CENTRAL P&L 8.650% 2005 110 11,250 11,827
KEYSPAN ENERGY PFD 7.950% 2000 274 6,866 7,319
LOUISVILLE G&E PFD 5.875% 2008 12 1,197 1,286 (f)
MAINE YANKEE $100 7.480% 2001 23 2,286 2,315
MIDAMERICAN ENERGY 7.800% 2006 73 7,559 8,338
MN P & L 144A $100 7.125% 2002 50 4,983 5,126 (b) (d)
MN P&L 144A 6.70 6.700% 2002 100 10,000 10,387 (b) (d)
NO IND PUB SERV $100 8.850% 2003 26 2,630 2,644 (b) (d)
NO IND PUB SERV $100 6.500% 2002 115 11,857 12,214 (f)
NORTHWEST NAT GA 100 6.950% 2002 170 17,088 18,902
OHIO POWER CO $100 5.900% 2009 36 3,536 3,960
OHI PWR CO $100 6.020% 2008 10 991 1,109
OHIO PWR CO $100 6.350% 2008 5 506 565
OTTER TAIL PWR $100 6.300% 2007 180 18,000 19,766
PECO ENERGY 6.120% 2003 160 16,003 16,501
PACIFIC GAS & ELEC 6.300% 2009 120 2,963 3,275 (f)
PACIFIC GAS & ELEC 6.570% 2007 718 18,036 19,372
PACIFICORP $100 PAR 7.700% 2001 150 15,000 16,341
POTOMAC ELEC PWR $50 6.800% 2007 161 7,955 8,824
PRAXAIR INC 7.480% 2000 70 7,037 7,319
PUBLIC SER ELEC & GA 5.970% 2008 6 612 540 (f)
ROCHESTER G&E $100 6.600% 2009 53 5,184 5,726
ROCHESTER G & E $100 7.650% 1999 20 2,000 2,041
SAN DIEGO G&E $25 1.762% 2008 59 1,580 1,796 (f)
SO CA EDISON $100 6.050% 2008 45 4,501 4,829 (f)
SO CA EDISON $100 6.450% 2002 202 20,344 21,679
SO INDIANA G&E 100 6.500% 2002 75 7,500 7,805 (b) (d)
TEXAS UTILITIES 6.375% 2008 54 5,426 5,737
TEXAS UTIL $100 PAR 6.980% 2008 50 5,000 5,460
UBS PRIVATE SER H 5.040% 2002 15 15,000 15,300 (b) (d) (f)
VIRGINIA ELEC & PWR 5.580% 2000 18 1,758 1,790 (f)
VIRGINIA ELEC & PWR 6.350% 2000 201 20,144 21,013
WASHINGTON WTR POWER 6.950% 2007 57 5,764 6,724
-------------- --------------- -----------
Total Public Utility 6,112 433,361 461,207
-------------- --------------- -----------
Finance
ABN AMRO NA FRAP 5.94% 15 15,000 15,525 (d) (f)
CHASE MANHAT FRAP 4.96% 110 5,500 5,569 (f)
COMERICA FRAP 6.84% 150 7,796 7,837 (f)
Bal Held at
12/31/98
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/98
Issuer Name and Issue Title # of Shares a & c) (Note a)
EURO AMER BANK FRAP 5.84% 10 10,000 10,462 (f)
FLEET FIN 6.59% FRAP 6.59% 130 6,662 6,939 (f)
MORGAN STANLEY GROUP 5.91% 100 5,000 5,138 (f)
PNC BK FRAP SERF 6.05% 440 22,160 22,495 (f)
WELLS FRGO FRAP SERH 6.59% 432 22,108 23,193 (f)
-------------- --------------- -----------
Total Finance 1,387 94,226 97,158
-------------- --------------- -----------
Industrial
NORTHBROOK HLDG 1000 6.600% 2001 10 10,000 10,362 (b) (d) (f)
WHIRLPOOL FIN $100 B 6.550% 2008 180 18,103 19,102 (d)
WHIRLPL FINL PFD144A 6.090% 2002 37 3,688 3,839 (b) (d) (f)
-------------- --------------- -----------
Total Industrial 227 31,791 33,303
-------------- --------------- -----------
TOTAL PREFERRED STOCK 7,726 559,378 591,669
-------------- --------------- -----------
TOTAL Investments in Securities of Unaffiliated Issuers 3,288,982 3,335,534
TOTAL Reserve for Possible Losses on Corporate Issues 0 0
--------------- -----------
3,288,982 3,335,534
=============== ===========
NOTES:
a) See Notes 1 and 3 to the financial statements regarding determination of cost and fair values.
b) In the absence of market quotations, securities are valued by IDS Certificate Company at fair value.
c) Aggregate cost of investment in securities of unaffiliated issuers for federal income tax
purposes was $3,288,060.
d) Securities acquired in private negotiation which may require registration under federal securities
law if they were to be publicly sold. Also see Note 3B to financial statements.
e) Non-income producing securities.
f) Securities classified as available for sale and carried at fair value on the balance sheet. Also
see Notes 1 and 3A to financial statements.
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1998, 1997 and 1996
($ in thousands)
Balance December 31, 1998
-------------------------------------------------
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 $418 $0
====================
Other Controlled Company:
Real Estate Development Company:
Mankato Ventures, First Mortgage Loan.................... $0 0 0 0
====================
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940)............................... $0 0 0 0
==================== ----------- ------------- ----------------
Total affiliates........................................................... $2,998 $418 $0
=========== ============= ================
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1998, 1997 and 1996
($ in thousands)
Balance December 31, 1997
-------------------------------------------------
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 $6,772 $0
====================
Other Controlled Company:
Real Estate Development Company:
Mankato Ventures, First Mortgage Loan.................... $0 0 0 0
====================
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940)............................... $0 0 0 0
==================== ----------- ------------- -------------
Total affiliates........................................................... $2,998 $6,772 $0
=========== ============= =============
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1998, 1997 and 1996
($ 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 $36
=========== ============= =============
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1998, 1997 and 1996
($ in thousands)
NOTES:
(a) The aggregate cost for federal income tax purposes at December 31, 1998, 1997 and 1996 was $438,
$6,776 and $5,159 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, 1998 are summarized
below:
Cost at Additions (Deductions) Cost at
Name of Issuer and Dec. 31, Dec. 31,
Title of Issue 1995 1996 1997 1998 1998
-------------------- ----------- ------- ------- ------- -----------
Mankato Ventures,
First Mortgage
Loan $462 (462) 0 0 $0
(d) There were no dividends or interest earned which were not credited to income.
IDS CERTIFICATE COMPANY SCHEDULE III
Mortgage Loans on Real Estate and Interest
Earned on Mortgages
Year Ended December 31, 1998
($ in thousands)
Part 1 - Mortgage loans on real estate at end of period
----- --------------------------------------------
Amount of principal
unpaid at end of period
----------------------
Subject Amount
Carrying to of
Number Prior amount of delinquent mortgages
of liens mortgages (c), interest being
Description (a) loans (b) (g),(h) 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 Serviceman'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 83 83 0 0
$100 to $150 1 139 139 0 0
$150 to $200 2 383 383 0 0
$200 to $250 1 240 240 0 0
$250 to $300 1 35 296 0 0
$300 to $350 1 341 341 0 0
$350 to $400 0 0 0 0 0
$400 to $450 0 0 0 0 0
$450 to $500 0 0 0 0 0
Over $500:
Loan No. Mortgagor Property Location
20-00001 NSP, LTD Bloomington, MN 1 529 529 0 0
20-00002 CCH-Space Center Houston, TX 1 1,916 1,916 0 0
21-47106 1225 No. County Road 18 LTD Plymouth, MN 1 1,573 1,573 0 0
21-47110 Lloyd Engelsma Brooklyn Park, MN 1 1,998 1,998 0 0
Part 1 - Mortgage loans on real estate at end of period
----- --------------------------------------------
Amount of principal
unpaid at end of period
----------------------
Subject Amount
Carrying to of
Number Prior amount of delinquent mortgages
of liens mortgages (c), interest being
Description (a) loans (b) (g),(h) and (i) Total (d) forclosed
- -------------------------------------------------- ----- ------ ----------- ------------- -------- --------
21-47128 Century Income Properties Fund Brookfield, WI 1 1,659 1,659 0 0
21-47139 Treasure's Island Inc. Eagan, MN 1 1,446 1,446 0 0
21-47140 Harbour Run LTD Mentor-On-The-Lake, OH 1 4,056 4,056 0 0
21-47141 John E. Smith Lafayette, IN 1 3,092 3,092 0 0
21-47142 34th Street Properties Partnership Gainsville, FL 1 9,842 9,842 0 0
21-47147 Columbus Real Estate Co. Hilliard, OH 1 7,426 7,426 0 0
21-47150 Bircain Apartment Company LP Gladstone, MO 1 2,368 2,368 0 0
21-47152 Richard D. Fownes Trustee Boston, MA 1 3,198 3,198 0 0
21-47154 Kenneth Grandberg Trustee Randolp, MA 1 3,044 3,044 0 0
21-47157 John A. Belanich Tampa, FL 1 3,514 3,514 0 0
21-47160 James Esshaki DBA Taylor, MI 1 5,831 5,831 0 0
21-47164 K & M Hamilton Development Co. Halmilton, OH 1 5,605 5,605 0 0
21-47165 Bowling Freen Partnership Sussex, WI 1 2,570 2,570 0 0
21-47167 Wilder Corp of Delaware Ruskin, FL 1 5,239 5,239 0 0
21-47168 Wilder Corp of Delaware Riverview, FL 1 2,892 2,892 0 0
21-47172 Dial Reit Inc. Fremont, NE 1 2,858 2,858 0 0
21-47173 Cinram Associates Fairfield, NJ 1 3,935 3,935 0 0
21-47181 Westlake #1 Limited Partnership Charlotte, NC 1 2,152 2,152 0 0
21-47184 Mcnab Commerce Center Association Pompano Beach, FL 1 2,094 2,094 0 0
21-47186 Mack Edison Company Edison, NJ 1 6,264 6,264 0 0
21-47187 Industrial Development Association Mebane, NC 1 2,962 2,962 0 0
21-47190 Dial Reit Inc. Davenport, IA 1 3,928 3,928 0 0
21-47191 SSC Associates Ltd Ptnshp St. Clair Shores, MI 1 5,915 5,915 0 0
21-47195 Tipotex Inc. Pharr, TX 1 1,750 1,750 0 0
21-47196 Wilder Corporation Pharr, TX 1 3,794 3,794 0 0
21-47197 Wilder Corporation Alamo, TX 1 897 897 0 0
21-47198 Investors Real Estate Trust Grand Forks, ND 1 3,898 3,898 0 0
21-47199 Warren and Kelso Company Cheltenham Twsp, PA 1 2,749 2,749 0 0
21-47204 Fort Walton Mary Esther, FL 1 2,968 2,968 0 0
21-47205 Kavanagh Tucson, AZ 1 3,692 3,692 0 0
21-47206 Hicker Albuquerque, NM 1 5,490 5,490 0 0
21-47207 Newport VII Albuquerque, NM 1 2,455 2,455 0 0
21-47208 Newport VI Albuquerque, NM 1 963 963 0 0
21-47209 Fountain Lake Brandeton, FL 1 4,688 4,688 0 0
21-47210 Orion West Haven, CT 1 4,337 4,337 0 0
21-47211 Plaza 7000 Greenwood Village, CO 1 2,437 2,437 0 0
21-47212 Howard Lake-Maple Plain Howard Lake, MN 1 1,353 1,353 0 0
21-47213 Crec-Plymouth Plymouth, MN 1 967 967 0 0
21-47214 West Health Inc. Plymouth, MN 1 10,636 10,636 0 0
21-47215 Invespro Urbandale, IA 1 3,436 3,436 0 0
21-47216 Invespro Urbandale, IA 1 2,705 2,705 0 0
21-47217 Airport Tempe, AZ 1 7,032 7,032 0 0
21-47218 D&R Northpoin Sterling, VA 1 1,943 1,943 0 0
21-47219 NewPort IX Albuquerque, NM 1 2,648 2,648 0 0
Part 1 - Mortgage loans on real estate at end of period
----- --------------------------------------------
Amount of principal
unpaid at end of period
----------------------
Subject Amount
Carrying to of
Number Prior amount of delinquent mortgages
of liens mortgages (c), interest being
Description (a) loans (b) (g),(h) and (i) Total (d) forclosed
- -------------------------------------------------- ----- ------ ---------------- ---------- -------- --------
21-47221 300 First LLC Minneapolis, MN 1 2,873 2,873 0 0
21-47222 Transwestern Houston, TX 1 2,078 2,078 0 0
21-47223 Westwood Plaza Houston, TX 1 3,801 3,801 0 0
21-47224 Custer Office Plano, TX 1 1,962 1,962 0 0
21-47225 Valley Mining Eagan, MN 1 2,905 2,905 0 0
21-47226 Jake's LP Austin, TX 1 2,772 2,772 0 0
21-47227 PW Holdings Falls Township, PA 1 4,654 4,654 0 0
21-47228 Lafayette Square Bridgeport, CT 1 4,464 4,464 0 0
21-47230 Wilcrest Gree Houston, TX 1 2,179 2,179 0 0
21-47231 Midtown Mall Hastings, MN 1 2,090 2,090 0 0
21-47232 DHIR Group LLC Milwaukee, WI 1 4,969 4,969 0 0
21-47233 Capital Plaza Jefferson City, MO 1 2,187 2,187 0 0
21-47234 Southwest Medical Littleton, CO 1 3,284 3,284 0 0
21-47235 2507 & 2473 Assc Southport, CT 1 2,547 2,547 0 0
21-47237 Abmar Valley Roanoke, VA 1 1,876 1,876 0 0
21-47238 Cicero Place Cicero, IN 1 3,458 3,458 0 0
21-47240 Crystal Plaza Baltimore, MD 1 3,995 3,995 0 0
21-47241 Pal, Inc Sioux Falls, SD 1 1,288 1,288 0 0
21-47242 Northpoint AT San Antonio, TX 1 1,730 1,730 0 0
21-47243 Pam-Joy Realty Chesapeake. VA 1 3,060 3,060 0 0
21-47245 Tide Mill Southport, CT 1 2,497 2,497 0 0
21-47246 JLC, IX PF LTD Dallas, TX 1 1,036 1,036 0 0
21-47247 Airport Land Tempe, AZ 1 4,961 4,961 0 0
21-47248 HMJ Moorehead, MN 1 6,088 6,088 0 0
21-47249 MIDEB Ventura, CA 1 5,389 5,389 0 0
21-47250 Thomas Ribis Alexandria, VA 1 2,789 2,789 0 0
21-47251 Arcadia Villa Phoenix, AZ 1 2,850 2,850 0 0
21-47252 Broken Arrow Broken Arrow, OK 1 3,400 3,400 0 0
21-47253 Palo Verde Plaxa Phoenix, AZ 1 1,700 1,700 0 0
21-47254 Village S. Tulsa, OK 1 3,550 3,550 0 0
21-47255 Gaughan Forest Lake/Stillwater, 1 6,239 6,239 0 0
21-47256 Fremont Apts Rapid City, SD 1 1,242 1,242 0 0
21-47257 Corpus Assets Corpus Christi, TX 1 7,241 7,241 0 0
21-47259 Alza Plaza Santa Clarita, CA 1 1,960 1,960 0 0
21-47260 Eisenhower 3 Ann Arbor, MI 1 3,094 3,094 0 0
21-47261 KKMP Properties Bloomington, MN 1 1,195 1,195 0 0
21-47262 312 Third Street Fargo, ND 1 5,885 5,885 0 0
21-47263 G.O.L.D Columbus, OH 1 2,229 2,229 0 0
21-47264 Esnet Properties Orem, UT 1 1,997 1,997 0 0
21-47265 Eaglecreek A Lakewood, CO 1 2,300 2,300 0 0
21-47266 Independence Clarkston, MI 1 4,475 4,475 0 0
21-47267 Blairhill LLC Charlotte, NC 1 1,497 1,497 0 0
21-47268 Lemans Limited Seebring, FL 1 5,700 5,700 0 0
21-47269 Hampton Inn Spokane, WA 1 4,800 4,800 0 0
21-47270 Brookhollow-2 Houston, TX 1 2,850 2,850 0 0
21-47271 Wilsonville Wilsonville, OR 1 2,000 2,000 0 0
21-47273 Sears Bldg Rapid City, SD 1 1,000 1,000 0 0
21-47274 Edison Towson, MD 1 1,200 1,200 0 0
21-47275 Colorado & SA Colorado Springs, CO 1 1,065 1,065 0 0
21-47277 Alvernon Place Tucson, AZ 1 2,290 2,290 0 0
21-47278 Financial PAC Kennewick, WA 1 6,800 6,800 0 0
21-47279 Daniel G Chetek, WI 1 2,100 2,100 0 0
21-47282 Cary Bldg LP Springfield, VA 1 2,250 2,250 0 0
0-3027654 DFB Associates Costa Mesa, CA 1 824 824 0 0
----- ----------- ------------- -------- --------
109 334,630 334,891 0 0
----- ----------- ------------- -------- --------
Total Other 109 334,630 334,891 0 0
----- ----------- ------------- -------- --------
Unallocated Reserve for Losses 350
-----------
Total First Mortgage Loans on Real Estate 109 $334,280 $334,891 $0 $0
===== =========== ============= ======== ========
Part 2 - Interest earned
on mortgages
-------------------------
Average
Interest gross rate
due and of interest
accrued on mortgages
at end of held at end
period of period
Description (a) (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 Serviceman'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 9.375%
$100 to $150 9.750%
$150 to $200 10.566%
$200 to $250 8.875%
$250 to $300 9.500%
$300 to $350 8.500%
$350 to $400 0.000%
$400 to $450 0.000%
$450 to $500 0.000%
Over $500:
Loan No. Mortgagor Property Location
20-00001 NSP, LTD Bloomington, MN 8.750%
20-00002 CCH-Space Center Houston, TX 8.000%
21-47106 1225 No. County Road 18 LTD Plymouth, MN 8.000%
21-47110 Lloyd Engelsma Brooklyn Park, MN 8.750%
Part 2 - Interest earned
on mortgages
-------------------------
Average
Interest gross rate
due and of interest
accrued on mortgages
at end of held at end
period of period
Description (a) (e) (f)
- -------------------------------------------------- ----------- -------------
21-47128 Century Income Properties Fund Brookfield, WI 8.250%
21-47139 Treasure's Island Inc. Eagan, MN 7.480%
21-47140 Harbour Run LTD Mentor-On-The-Lake, OH 6.910%
21-47141 John E. Smith Lafayette, IN 10.000%
21-47142 34th Street Properties Partnership Gainsville, FL 7.050%
21-47147 Columbus Real Estate Co. Hilliard, OH 7.500%
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 Randolp, MA 8.250%
21-47157 John A. Belanich Tampa, FL 7.650%
21-47160 James Esshaki DBA Taylor, MI 8.500%
21-47164 K & M Hamilton Development Co. Halmilton, OH 8.125%
21-47165 Bowling Freen Partnership Sussex, WI 7.200%
21-47167 Wilder Corp of Delaware Ruskin, FL 7.500%
21-47168 Wilder Corp of Delaware Riverview, FL 7.500%
21-47172 Dial Reit Inc. Fremont, NE 7.090%
21-47173 Cinram Associates Fairfield, NJ 7.260%
21-47181 Westlake #1 Limited Partnership Charlotte, NC 7.212%
21-47184 Mcnab Commerce Center Association Pompano Beach, FL 8.250%
21-47186 Mack Edison Company Edison, NJ 6.850%
21-47187 Industrial Development Association Mebane, NC 7.220%
21-47190 Dial Reit Inc. Davenport, IA 7.875%
21-47191 SSC Associates Ltd Ptnshp St. Clair Shores, MI 7.125%
21-47195 Tipotex Inc. Pharr, TX 7.400%
21-47196 Wilder Corporation Pharr, TX 7.400%
21-47197 Wilder Corporation Alamo, TX 7.400%
21-47198 Investors Real Estate Trust Grand Forks, ND 8.188%
21-47199 Warren and Kelso Company Cheltenham Twsp, PA 8.125%
21-47204 Fort Walton Mary Esther, FL 8.125%
21-47205 Kavanagh Tucson, AZ 8.000%
21-47206 Hicker Albuquerque, NM 8.250%
21-47207 Newport VII Albuquerque, NM 8.125%
21-47208 Newport VI Albuquerque, NM 8.125%
21-47209 Fountain Lake Brandeton, FL 8.375%
21-47210 Orion West Haven, CT 7.875%
21-47211 Plaza 7000 Greenwood Village, CO 7.625%
21-47212 Howard Lake-Maple Plain Howard Lake, MN 7.750%
21-47213 Crec-Plymouth Plymouth, MN 7.750%
21-47214 West Health Inc. Plymouth, MN 7.450%
21-47215 Invespro Urbandale, IA 8.375%
21-47216 Invespro Urbandale, IA 8.375%
21-47217 Airport Tempe, AZ 8.375%
21-47218 D&R Northpoin Sterling, VA 8.500%
21-47219 NewPort IX Albuquerque, NM 7.850%
Part 2 - Interest earned
on mortgages
-------------------------
Average
Interest gross rate
due and of interest
accrued on mortgages
at end of held at end
period of period
Description (a) (e) (f)
- -------------------------------------------------- ----------- -------------
21-47221 300 First LLC Minneapolis, MN 7.440%
21-47222 Transwestern Houston, TX 7.370%
21-47223 Westwood Plaza Houston, TX 7.500%
21-47224 Custer Office Plano, TX 7.320%
21-47225 Valley Mining Eagan, MN 7.210%
21-47226 Jake's LP Austin, TX 6.950%
21-47227 PW Holdings Falls Township, PA 6.650%
21-47228 Lafayette Square Bridgeport, CT 7.140%
21-47230 Wilcrest Gree Houston, TX 7.080%
21-47231 Midtown Mall Hastings, MN 7.140%
21-47232 DHIR Group LLC Milwaukee, WI 7.400%
21-47233 Capital Plaza Jefferson City, MO 7.150%
21-47234 Southwest Medical Littleton, CO 7.180%
21-47235 2507 & 2473 Assc Southport, CT 7.020%
21-47237 Abmar Valley Roanoke, VA 7.100%
21-47238 Cicero Place Cicero, IN 7.000%
21-47240 Crystal Plaza Baltimore, MD 7.020%
21-47241 Pal, Inc Sioux Falls, SD 7.050%
21-47242 Northpoint AT San Antonio, TX 6.970%
21-47243 Pam-Joy Realty Chesapeake. VA 6.960%
21-47245 Tide Mill Southport, CT 6.980%
21-47246 JLC, IX PF LTD Dallas, TX 7.010%
21-47247 Airport Land Tempe, AZ 6.890%
21-47248 HMJ Moorehead, MN 6.960%
21-47249 MIDEB Ventura, CA 6.750%
21-47250 Thomas Ribis Alexandria, VA 6.900%
21-47251 Arcadia Villa Phoenix, AZ 6.800%
21-47252 Broken Arrow Broken Arrow, OK 6.800%
21-47253 Palo Verde Plaxa Phoenix, AZ 6.800%
21-47254 Village S. Tulsa, OK 6.800%
21-47255 Gaughan Forest Lake/Stillwater, MN 6.830%
21-47256 Fremont Apts Rapid City, SD 6.750%
21-47257 Corpus Assets Corpus Christi, TX 6.900%
21-47259 Alza Plaza Santa Clarita, CA 6.950%
21-47260 Eisenhower 3 Ann Arbor, MI 6.980%
21-47261 KKMP Properties Bloomington, MN 7.060%
21-47262 312 Third Street Fargo, ND 6.900%
21-47263 G.O.L.D Columbus, OH 6.950%
21-47264 Esnet Properties Orem, UT 6.810%
21-47265 Eaglecreek A Lakewood, CO 6.770%
21-47266 Independence Clarkston, MI 6.890%
21-47267 Blairhill LLC Charlotte, NC 6.910%
21-47268 Lemans Limited Seebring, FL 6.850%
21-47269 Hampton Inn Spokane, WA 7.150%
21-47270 Brookhollow-2 Houston, TX 6.800%
21-47271 Wilsonville Wilsonville, OR 6.850%
21-47273 Sears Bldg Rapid City, SD 6.850%
21-47274 Edison Towson, MD 6.850%
21-47275 Colorado & SA Colorado Springs, CO 6.550%
21-47277 Alvernon Place Tucson, AZ 7.000%
21-47278 Financial PAC Kennewick, WA 6.750%
21-47279 Daniel G Chetek, WI 7.250%
21-47282 Cary Bldg LP Springfield, VA 6.850%
0-3027654 DFB Associates Costa Mesa, CA 9.500%
-------------
7.394%
-------------
Total Other 7.394%
-------------
Unallocated Reserve for Losses
Total First Mortgage Loans on Real Estate 7.394%
=============
Part 3 - Location of mortgaged properties
($ in thousands)
Amount of principal
unpaid at end of period
--------------------
Carrying Subject
amount of to Amount of
State in Number Prior mortgages delinquent mortgages
which mortgaged of liens (c),(g), interest being
property is located loans (b) (h)and(i) Total (d) foreclosed
- ------------------- ------ ---- -------- --------- -------- -----------
Arizona 6 22,524 22,524 0 0
California 4 8,316 8,316 0 0
Colorado 4 9,086 9,086 0 0
Connecticut 4 13,845 13,845 0 0
Florida 8 36,936 36,936 0 0
Indiana 2 6,550 6,550 0 0
Iowa 3 10,068 10,068 0 0
Massachusetts 2 6,241 6,241 0 0
Maryland 2 5,195 5,195 0 0
Michigan 4 19,316 19,316 0 0
Minnesota 14 40,092 40,092 0 0
Missouri 2 4,555 4,555 0 0
Nebraska 1 2,858 2,858 0 0
New Jersey 2 10,199 10,199 0 0
New Mexico 4 11,556 11,556 0 0
North Carolina 3 6,611 6,611 0 0
North Dakota 2 9,783 9,783 0 0
Ohio 4 19,317 19,317 0 0
Oklahoma 4 7,373 7,373 0 0
Oregon 1 2,000 2,000 0 0
Pennsylvania 2 7,403 7,403 0 0
South Dakota 4 3,871 3,871 0 0
Texas 15 34,122 34,383 0 0
Utah 1 1,997 1,997 0 0
Virginia 5 11,918 11,918 0 0
Washington 2 11,600 11,600 0 0
Wisconsin 4 11,298 11,298 0 0
------ -------- --------- -------- --------
109 334,630 334,891 0 0
------ -------- --------- -------- --------
Unallocated Reserve
for Losses 350
--------
Total 109 $334,280 $334,891 $0 $0
====== ======== ========= ======== ========
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
reserve 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 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, 1998 are shown by type and class of loan.
The average gross interest rates on mortgage loans held at December 31, 1998,
1997 and 1996 are summarized as follows:
1998 1997 1996
----------- ----------- --------
First mortgages:
Insured by Federal Housing Administration 0.000% 0.000% 0.000%
Partially guaranteed under Servicemen's
Readjustment Act of 1944, as amended 0.000 0.000 0.000
Other 7.394 8.212 8.450
----------- ----------- --------
Combined average 7.394% 8.212% 8.450%
=========== =========== ========
(g) Following is a reconciliation of the carrying amount of mortgage loans for
the years ended December 31, 1998, 1997 and 1996.
1998 1997 1996
----------- ----------- -----------
Balance at beginning of period $212,433 $218,697 $233,394
Additions during period:
New loans acquired:
Nonaffiliated companies (j) 163,398 45,200 18,301
Amortization of discount/ premium 0 0 0
----------- ----------- -----------
Total additions 163,398 45,200 18,301
----------- ----------- -----------
375,831 263,897 251,695
----------- ----------- -----------
Deductions during period:
Collections of principal 41,551 51,464 32,998
----------- ----------- -----------
Balance at end of period $334,280 $212,433 $218,697
=========== =========== ===========
(h) The aggregate cost of mortgage loans for federal income tax purposes at
December 31, 1998 was $334,891.
(i) At December 31, 1998, a reserve for loss of $611 is recorded which
represents $261 on impaired mortgage loans and $350 of unallocated reserves.
(j) New loans acquired during 1996 include $2,000 of proceeds received from sale
of real estate in lieu of cash.
IDS CERTIFICATE COMPANY SCHEDULE V
Qualified Assets on Deposit
December 31, 1998
($ 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 50 0 0 0 50
Pennsylvania - Treasurer
of the State of
Pennsylvania 149 0 0 0 149
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 364 0 0 0 364
Central depositary - American
Express Trust Company 2,593,297 559,377 334,280 57,010 3,543,964
------------- ------------- ----------- -------------- -------------
Total $2,593,661 $559,377 $334,280 $57,010 $3,544,328
============= ============= =========== ============== =============
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 and interest rate floors of $56,973 and $37, respectively.
IDS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 1998
($ in thousands)
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
--------------------------- ------------ ------------ ------------
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. 11 134 124
" 15A, " " " 2.66 Inst/3.04 Ext. 5 48 38
" 22A, " " " 3.09 1,020 21,961 16,045
" I-76, " " " 3.35 695 16,407 8,110
" Reserve Plus Flexible Payment (note a) 286 2,605 1,366
" IC-Q-Installment (note a) 104 1,132 492
" IC-Q-Ins (note a) 8,748 106,483 47,907
" IC-Q-Ins Emp (note a) 39 511 207
" IC-I (note a) 55,233 983,323 258,004
" IC-I-Emp (note a) 360 6,142 1,713
" Inst (note a) 3,134 66,052 1,807
" Inst-Emp (note a) 17 255 6
" RP-Q-Installment (note a) 199 2,729 1,726
" RP-Q-Flexible Payment (note a) 18 236 94
" RP-Q-Ins (note a) 244 5,083 1,765
" RP-Q-Ins Emp (note a) 3 84 14
" RP-I (note a) 412 12,663 3,431
" RP-I-Emp (note a) 3 1,182 9
" Inst-R (note a) 18 4,788 42
" Inst-R-Emp (note a) 0 0 0
------------ ------------ ------------
Total 70,549 1,231,818 342,900
------------ ------------ ------------
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 7
" 15A, " " " 3 Available 10
" 22A, " " " 3 608
" I-76, " " " 3.5 343
------------
Total 968
------------
Additions
------------------------------------------
Charged
Charged Reserve to other
to profit payments by accounts
and loss certificate (per
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. 3 1 9
" 15A, " " " 2.66 Inst/3.04 Ext. 1 0 1
" 22A, " " " 3.09 444 209 648
" I-76, " " " 3.35 255 261 26
" Reserve Plus Flexible Payment (note a) 0 204 37
" IC-Q-Installment (note a) 0 69 13
" IC-Q-Ins (note a) 0 4,405 933
" IC-Q-Ins Emp (note a) 0 24 6
" IC-I (note a) 0 73,942 7,631
" IC-I-Emp (note a) 0 469 61
" Inst (note a) 0 6,209 118
" Inst-Emp (note a) 0 31 1
" RP-Q-Installment (note a) 0 26 49
" RP-Q-Flexible Payment (note a) 0 1 3
" RP-Q-Ins (note a) 0 65 33
" RP-Q-Ins Emp (note a) 0 1 1
" RP-I (note a) 0 825 102
" RP-I-Emp (note a) 0 0 0
" Inst-R (note a) 0 40 0
" Inst-R-Emp (note a) 0 1 0
------------ ------------ ------------
Total 703 86,783 9,672
------------ ------------ ------------
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 0 0 0
" 20, " " " 2 0 2 0
" 15A, " " " 3 1 (7) 0
" 22A, " " " 3 27 146 17
" I-76, " " " 3.5 16 36 1
------------ ------------ ------------
Total 44 177 18
------------ ------------ ------------
Deductions
------------------------------------------
Credited
Cash to other
surrenders accounts
prior to (per
Maturities maturity 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. 5 30 47
" 15A, " " " 2.66 Inst/3.04 Ext. 9 5 0
" 22A, " " " 3.09 439 732 2,192
" I-76, " " " 3.35 0 1,408 290
" Reserve Plus Flexible Payment (note a) 101 379 0
" IC-Q-Installment (note a) 5 161 0
" IC-Q-Ins (note a) 7,224 22,205 48
" IC-Q-Ins Emp (note a) 16 88 0
" IC-I (note a) 0 91,236 0
" IC-I-Emp (note a) 0 713 0
" Inst (note a) 0 945 0
" Inst-Emp (note a) 0 7 0
" RP-Q-Installment (note a) 25 345 9
" RP-Q-Flexible Payment (note a) 0 8 0
" RP-Q-Ins (note a) 409 618 12
" RP-Q-Ins Emp (note a) 0 1 0
" RP-I (note a) 0 1,512 0
" RP-I-Emp (note a) 0 9 0
" Inst-R (note a) 0 30 0
" Inst-R-Emp (note a) 0 0 0
------------ ------------ ------------
Total 8,233 120,432 2,598
------------ ------------ ------------
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 0 0 0
" 20, " " " 2 0 3 2
" 15A, " " " 3 0 0 1
" 22A, " " " 3 10 21 213
" I-76, " " " 3.5 0 44 19
------------ ------------ ------------
Total 10 68 235
------------ ------------ ------------
Balance at close of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
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. 5 59 55
" 15A, " " " 2.66 Inst/3.04 Ext. 3 28 26
" 22A, " " " 3.09 841 18,616 13,983
" I-76, " " " 3.35 568 13,074 6,954
" Reserve Plus Flexible Payment (note a) 236 2,167 1,127
" IC-Q-Installment (note a) 88 1,000 408
" IC-Q-Ins (note a) 4,498 53,344 23,768
" IC-Q-Ins Emp (note a) 24 245 133
" IC-I (note a) 44,058 765,696 248,341
" IC-I-Emp (note a) 266 3,763 1,530
" Inst (note a) 6,090 66,052 7,189
" Inst-Emp (note a) 27 255 31
" RP-Q-Installment (note a) 157 2,185 1,422
" RP-Q-Flexible Payment (note a) 16 205 90
" RP-Q-Ins (note a) 118 2,659 824
" RP-Q-Ins Emp (note a) 2 24 15
" RP-I (note a) 299 9,199 2,846
" RP-I-Emp (note a) 0 0 0
" Inst-R (note a) 43 4,788 52
" Inst-R-Emp (note a) 3 28 1
------------ ------------ ------------
Total 57,342 943,387 308,795
------------ ------------ ------------
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 4
" 15A, " " " 3 Available 3
" 22A, " " " 3 554
" I-76, " " " 3.5 333
------------
Total 894
------------
Balance at beginning of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 Not Not 0
" 20, " " " 2.5 Readily Applicable 27
" 15A, " " " 3 Available 5
" 22A, " " " 3 3,600
" I-76, " " " 3.5 1,873
" 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-I (note a) 312
" IC-I-Emp (note a) 3
" Inst (note a) 2
" Inst-Emp (note a) 0
" 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-I (note a) 4
" RP-I-Emp (note a) 0
------------
Total 5,826
------------
Reserve for accrued extra contribution 3rd year 13,889
Reserve for accrued extra contribution 6th year 10
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 148
Reserve for death and disability refund options 0
Reserve for reconversion of paid-up certificates 54
------------
Total installment certificates 363,797
------------
Additions
------------------------------------------
Charged
Charged Reserve to other
to profit payments by accounts
and loss certificate (per
or income holders part 2)
------------ ------------ ------------
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 0 Not 0
" 20, " " " 2.5 1 Applicable 3
" 15A, " " " 3 0 0
" 22A, " " " 3 96 296
" I-76, " " " 3.5 59 80
" Reserve Plus Flexible Payment (note a) 37 0
" IC-Q-Installment (note a) 13 0
" IC-Q-Ins (note a) 934 0
" IC-Q-Ins Emp (note a) 5 0
" IC-I (note a) 7,624 0
" IC-I-Emp (note a) 61 0
" Inst (note a) 125 0
" Inst-Emp (note a) 1 0
" RP-Q-Installment (note a) 49 0
" RP-Q-Flexible Payment (note a) 3 0
" RP-Q-Ins (note a) 33 0
" RP-Q-Ins Emp (note a) 1 0
" RP-I (note a) 102 0
" RP-I-Emp (note a) 0 0
------------ ------------
Total 9,144 379
------------ ------------
Reserve for accrued extra contribution 3rd year 1,743 (5,574) 0
Reserve for accrued extra contribution 6th year 9 (19) 0
Accrued interest on reserves in default I-76 3.5 7 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 262 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 11,912 81,367 10,069
------------ ------------ ------------
Deductions
------------------------------------------
Credited
Cash to other
surrenders accounts
prior to (per
Maturities maturity part 2)
------------ ------------ ------------
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 0 0 0
" 20, " " " 2.5 2 7 10
" 15A, " " " 3 2 0 0
" 22A, " " " 3 93 166 483
" I-76, " " " 3.5 0 329 73
" Reserve Plus Flexible Payment (note a) 0 0 37
" IC-Q-Installment (note a) 0 0 13
" IC-Q-Ins (note a) 0 0 934
" IC-Q-Ins Emp (note a) 0 0 5
" IC-I (note a) 0 0 7,635
" IC-I-Emp (note a) 0 0 62
" Inst (note a) 0 0 119
" Inst-Emp (note a) 0 0 1
" RP-Q-Installment (note a) 0 0 49
" RP-Q-Flexible Payment (note a) 0 0 3
" RP-Q-Ins (note a) 0 0 33
" RP-Q-Ins Emp (note a) 0 0 1
" RP-I (note a) 0 0 102
" RP-I-Emp (note a) 0 0 0
------------ ------------ ------------
Total 97 502 9,560
------------ ------------ ------------
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 1 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 0 281
Reserve for death and disability refund options 0 0 0
Reserve for reconversion of paid-up certificates 0 1 0
------------ ------------ ------------
Total installment certificates 8,340 121,004 12,680
------------ ------------ ------------
Balance at close of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 Not Not 0
" 20, " " " 2.5 Readily Applicable 12
" 15A, " " " 3 Available 3
" 22A, " " " 3 3,250
" I-76, " " " 3.5 1,610
" 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-I (note a) 301
" IC-I-Emp (note a) 2
" Inst (note a) 8
" Inst-Emp (note a) 0
" 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-I (note a) 4
" RP-I-Emp (note a) 0
------------
Total 5,190
------------
Reserve for accrued extra contribution 3rd year 10,058
Reserve for accrued extra contribution 6th year 0
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 129
Reserve for death and disability refund options 0
Reserve for reconversion of paid-up certificates 53
------------
Total installment certificates 325,121
------------
Balance at beginning of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Fully paid certificates:
Single-Payment certificates:
SP 74 3.5 1 8 8
SP 75 3.5 0 0 0
SP 76 3.5 0 0 0
SP 77 3.5 64 485 483
SP 78 3.5 391 2,838 2,771
SP 79 3.5 448 3,340 3,157
SP 80 3.5 424 3,430 3,125
SP 81A 3.5 344 2,056 1,806
SP 82A 3.5 300 2,793 2,375
SP 82B 3.5 542 4,890 4,111
SP 83A 3.5 93 678 562
SP 83B 3.5 222 2,101 1,712
IC-2-84 3.5 840 8,234 6,490
IC-2-85 3.5 440 4,580 4,682
IC-2-86 3.5 243 2,699 2,480
IC-2-87 3.5 292 3,853 3,300
IC-2-88 3.5 598 8,681 6,735
Reserve Plus Single Payment (note a) 979 4,640 7,570
Cash Reserve Single Payment (note b) 39 218 178
IC-Flexible Savings (formally Variable Term) (note d) 99,887 683,370 746,512
IC-Flexible Savings Emp (formally Variable Term) (note d) 1,409 13,702 16,219
IC-Preferred Investors (note d) 63 70,037 71,008
IC-Investors (note d) 568 691,996 741,439
IC-Special Deposits (note d) 138 189,063 195,319
IC-1-84 (note c) 57 405 426
Cash Reserve Variable Payment (note b) 535 2,687 3,473
Cash Reserve Variable Payment-3mo. (note e) 48,811 213,126 224,176
IC-Future Value (note f) 17,346 191,851 191,851
IC-Future Value Emp (note f) 328 3,658 3,658
IC-Stock Market (note g) 92,416 312,493 346,548
IC-Market Strategy (note g) 0 0 0
IC-AEBI Stock Market (note g) 16 2,401 2,716
------------ ------------ ------------
Total 267,834 2,430,313 2,594,890
------------ ------------ ------------
Additions
------------------------------------------
Charged
Charged Reserve to other
to profit payments by accounts
and loss certificate (per
or income holders part 2)
------------ ------------ ------------
Fully paid certificates:
Single-Payment certificates:
SP 74 3.5 0 0 0
SP 75 3.5 0 0 0
SP 76 3.5 0 0 0
SP 77 3.5 2 0 0
SP 78 3.5 62 0 0
SP 79 3.5 102 0 0
SP 80 3.5 102 0 0
SP 81A 3.5 59 0 0
SP 82A 3.5 78 0 0
SP 82B 3.5 128 0 0
SP 83A 3.5 19 0 0
SP 83B 3.5 56 0 0
IC-2-84 3.5 204 0 0
IC-2-85 3.5 0 0 214
IC-2-86 3.5 0 0 114
IC-2-87 3.5 0 0 148
IC-2-88 3.5 0 0 303
Reserve Plus Single Payment (note a) 0 1 281
Cash Reserve Single Payment (note b) 0 1 7
IC-Flexible Savings (formally Variable Term) (note d) 0 86,531 32,199
IC-Flexible Savings Emp (formally Variable Term) (note d) 0 2,482 819
IC-Preferred Investors (note d) 0 163,550 4,445
IC-Investors (note d) 0 206,028 38,873
IC-Special Deposits (note d) 0 91,975 9,606
IC-1-84 (note c) 0 0 15
Cash Reserve Variable Payment (note b) 0 388 123
Cash Reserve Variable Payment-3mo. (note e) 0 192,333 8,132
IC-Future Value (note f) 0 0 1
IC-Future Value Emp (note f) 0 0 0
IC-Stock Market (note g) 0 167,931 30,686
IC-Market Strategy (note g) 0 72,061 654
IC-AEBI Stock Market (note g) 0 4,977 227
------------ ------------ ------------
Total 812 988,258 126,847
------------ ------------ ------------
Deductions
------------------------------------------
Credited
Cash to other
surrenders accounts
prior to (per
Maturities maturity part 2)
------------ ------------ ------------
Fully paid certificates:
Single-Payment certificates:
SP 74 3.5 0 0 8
SP 75 3.5 0 0 0
SP 76 3.5 0 0 0
SP 77 3.5 381 21 83
SP 78 3.5 1,772 319 349
SP 79 3.5 0 427 56
SP 80 3.5 0 401 0
SP 81A 3.5 0 257 0
SP 82A 3.5 0 283 0
SP 82B 3.5 0 724 0
SP 83A 3.5 0 71 0
SP 83B 3.5 0 222 0
IC-2-84 3.5 0 1,151 8
IC-2-85 3.5 0 830 0
IC-2-86 3.5 0 513 8
IC-2-87 3.5 0 597 0
IC-2-88 3.5 0 1,099 0
Reserve Plus Single Payment (note a) 0 1,109 60
Cash Reserve Single Payment (note b) 0 11 0
IC-Flexible Savings (formally Variable Term) (note d) 0 362,709 0
IC-Flexible Savings Emp (formally Variable Term) (note d) 0 2,984 0
IC-Preferred Investors (note d) 0 161,632 0
IC-Investors (note d) 0 236,219 0
IC-Special Deposits (note d) 0 129,253 0
IC-1-84 (note c) 0 112 0
Cash Reserve Variable Payment (note b) 0 911 0
Cash Reserve Variable Payment-3mo. (note e) 0 238,745 0
IC-Future Value (note f) 54,334 17,197 0
IC-Future Value Emp (note f) 1,021 208 0
IC-Stock Market (note g) 0 104,850 0
IC-Market Strategy (note g) 0 2,343 0
IC-AEBI Stock Market (note g) 0 1,180 0
------------ ------------ ------------
Total 57,508 1,266,378 572
------------ ------------ ------------
Balance at close of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Fully paid certificates:
Single-Payment certificates:
SP 74 3.5 0 0 0
SP 75 3.5 0 0 0
SP 76 3.5 0 0 0
SP 77 3.5 0 0 0
SP 78 3.5 61 723 393
SP 79 3.5 388 2,838 2,776
SP 80 3.5 356 2,999 2,826
SP 81A 3.5 297 1,770 1,608
SP 82A 3.5 259 2,466 2,170
SP 82B 3.5 452 4,041 3,515
SP 83A 3.5 83 595 510
SP 83B 3.5 189 1,833 1,546
IC-2-84 3.5 686 6,783 5,535
IC-2-85 3.5 360 3,877 4,066
IC-2-86 3.5 188 2,152 2,073
IC-2-87 3.5 239 3,190 2,851
IC-2-88 3.5 486 7,301 5,939
Reserve Plus Single Payment (note a) 820 308,978 6,683
Cash Reserve Single Payment (note b) 32 176 175
IC-Flexible Savings (formally Variable Term) (note d) 76,191 438,276 502,533
IC-Flexible Savings Emp (formally Variable Term) (note d) 1,247 13,712 16,536
IC-Preferred Investors (note d) 67 76,339 77,371
IC-Investors (note d) 549 687,325 750,121
IC-Special Deposits (note d) 115 157,232 167,647
IC-1-84 (note c) 51 354 329
Cash Reserve Variable Payment (note b) 443 2,330 3,073
Cash Reserve Variable Payment-3mo. (note e) 44,122 175,219 185,896
IC-Future Value (note f) 11,209 120,321 120,321
IC-Future Value Emp (note f) 219 2,429 2,429
IC-Stock Market (note g) 110,202 391,171 440,315
IC-Market Strategy (note g) 5,134 69,753 70,372
IC-AEBI Stock Market (note g) 33 6,428 6,740
------------ ------------ ------------
Total 254,478 2,490,611 2,386,349
------------ ------------ ------------
Balance at beginning of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Additional credits and accrued interest thereon:
SP 74 3.5 Not Not 10
SP 75 3.5 Applicable Applicable 0
SP 76 3.5 0
SP 77 3.5 529
SP 78 3.5 2,787
SP 79 3.5 2,959
SP 80 3.5 2,665
SP 81A 3.5 1,257
SP 82A 3.5 1,602
SP 82B 3.5 2,675
SP 83A 3.5 289
SP 83B 3.5 823
IC-2-84 3.5 3,171
IC-2-85 3.5 84
IC-2-86 3.5 41
IC-2-87 3.5 58
IC-2-88 3.5 120
Reserve Plus Single Payment (note a) 0
Cash Reserve Single Payment (note b) 0
IC-Flexible Savings (formally Variable Term) (note d) 1,575
IC-Flexible Savings Emp (formally Variable Term) (note d) 144
IC-Preferred Investors (note d) 39
IC-Investors (note d) 1,733
IC-Special Deposits (note d) 414
IC-1-84 (note c) 9
Cash Reserve Variable Payment (note b) 0
Cash Reserve Variable Payment-3mo. (note e) 370
IC-Future Value (note f) 55,702
IC-Future Value Emp (note f) 1,132
IC-Stock Market (note g) 1,486
IC-Market Strategy (note g) 0
IC-AEBI Stock Market (note g) 43
------------
Total 81,717
------------
Additions
------------------------------------------
Charged
Charged Reserve to other
to profit payments by accounts
and loss certificate (per
or income holders part 2)
------------ ------------ ------------
Additional credits and accrued interest thereon:
SP 74 3.5 0 0 0
SP 75 3.5 0 0 0
SP 76 3.5 0 0 0
SP 77 3.5 2 0 14
SP 78 3.5 62 0 74
SP 79 3.5 97 0 85
SP 80 3.5 88 0 80
SP 81A 3.5 42 0 39
SP 82A 3.5 53 0 53
SP 82B 3.5 86 0 87
SP 83A 3.5 10 0 11
SP 83B 3.5 27 0 32
IC-2-84 3.5 101 0 128
IC-2-85 3.5 154 0 0
IC-2-86 3.5 80 0 0
IC-2-87 3.5 107 0 0
IC-2-88 3.5 221 0 0
Reserve Plus Single Payment (note a) 283 0 0
Cash Reserve Single Payment (note b) 7 0 0
IC-Flexible Savings (formally Variable Term) (note d) 35,433 0 0
IC-Flexible Savings Emp (formally Variable Term) (note d) 4,642 0 0
IC-Preferred Investors (note d) 949 0 0
IC-Investors (note d) 42,092 0 0
IC-Special Deposits (note d) 10,270 0 0
IC-1-84 (note c) 17 0 2
Cash Reserve Variable Payment (note b) 131 0 0
Cash Reserve Variable Payment-3mo. (note e) 8,181 0 0
IC-Future Value (note f) 15,595 0 0
IC-Future Value Emp (note f) 351 0 0
IC-Stock Market (note g) 2,529 (1) 0
IC-Market Strategy (note g) 746 0 0
IC-AEBI Stock Market (note g) 82 0 0
------------ ------------ ------------
Total 122,438 (1) 605
------------ ------------ ------------
Deductions
------------------------------------------
Credited
Cash to other
surrenders accounts
prior to (per
Maturities maturity part 2)
------------ ------------ ------------
Additional credits and accrued interest thereon:
SP 74 3.5 0 0 10
SP 75 3.5 0 0 0
SP 76 3.5 0 0 0
SP 77 3.5 429 25 91
SP 78 3.5 1,846 315 358
SP 79 3.5 0 423 57
SP 80 3.5 0 333 0
SP 81A 3.5 0 176 0
SP 82A 3.5 0 203 0
SP 82B 3.5 0 501 0
SP 83A 3.5 0 35 0
SP 83B 3.5 0 116 0
IC-2-84 3.5 0 572 4
IC-2-85 3.5 0 13 153
IC-2-86 3.5 0 6 82
IC-2-87 3.5 0 7 107
IC-2-88 3.5 0 12 223
Reserve Plus Single Payment (note a) 0 0 283
Cash Reserve Single Payment (note b) 0 0 7
IC-Flexible Savings (formally Variable Term) (note d) 0 3,802 32,214
IC-Flexible Savings Emp (formally Variable Term) (note d) 0 171 4,451
IC-Preferred Investors (note d) 0 132 819
IC-Investors (note d) 0 3,272 38,873
IC-Special Deposits (note d) 0 726 9,606
IC-1-84 (note c) 0 4 17
Cash Reserve Variable Payment (note b) 0 7 124
Cash Reserve Variable Payment-3mo. (note e) 0 122 8,139
IC-Future Value (note f) 21,505 5,539 1
IC-Future Value Emp (note f) 420 73 0
IC-Stock Market (note g) 0 130 2,416
IC-Market Strategy (note g) 0 0 655
IC-AEBI Stock Market (note g) 0 2 79
------------ ------------ ------------
Total 24,200 16,717 98,769
------------ ------------ ------------
Balance at close of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Additional credits and accrued interest thereon:
SP 74 3.5 Not Not 0
SP 75 3.5 Applicable Applicable 0
SP 76 3.5 0
SP 77 3.5 0
SP 78 3.5 404
SP 79 3.5 2,661
SP 80 3.5 2,500
SP 81A 3.5 1,162
SP 82A 3.5 1,505
SP 82B 3.5 2,347
SP 83A 3.5 275
SP 83B 3.5 766
IC-2-84 3.5 2,824
IC-2-85 3.5 72
IC-2-86 3.5 33
IC-2-87 3.5 51
IC-2-88 3.5 106
Reserve Plus Single Payment (note a) 0
Cash Reserve Single Payment (note b) 0
IC-Flexible Savings (formally Variable Term) (note d) 992
IC-Flexible Savings Emp (formally Variable Term) (note d) 164
IC-Preferred Investors (note d) 37
IC-Investors (note d) 1,680
IC-Special Deposits (note d) 352
IC-1-84 (note c) 7
Cash Reserve Variable Payment (note b) 0
Cash Reserve Variable Payment-3mo. (note e) 290
IC-Future Value (note f) 44,252
IC-Future Value Emp (note f) 990
IC-Stock Market (note g) 1,468
IC-Market Strategy (note g) 91
IC-AEBI Stock Market (note g) 44
------------
Total 65,073
------------
Balance at beginning of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
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 0
SP 77 12
SP 78 37
SP 79 43
SP 80 39
SP 81A 23
SP 82A 18
SP 82B 54
SP 83A 7
SP 83B 16
IC-2-84 65
IC-2-85 33
IC-2-86 16
IC-2-87 23
IC-2-88 43
IC-Stock Market 18,318
IC-Market Strategy 0
IC-AEBI Stock Market 64
------------
Total 18,811
------------
Additions
------------------------------------------
Charged
Charged Reserve to other
to profit payments by accounts
and loss certificate (per
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 0 0 0
SP 77 2 0 0
SP 78 46 0 0
SP 79 76 0 0
SP 80 72 0 0
SP 81A 34 0 0
SP 82A 49 0 0
SP 82B 79 0 0
SP 83A 10 0 0
SP 83B 30 0 0
IC-2-84 113 0 0
IC-2-85 54 0 0
IC-2-86 29 0 0
IC-2-87 36 0 0
IC-2-88 72 0 0
IC-Stock Market 44,383 0 0
IC-Market Strategy 2,179 0 0
IC-AEBI Stock Market 328 0 0
------------ ------------ ------------
Total 47,592 0 0
------------ ------------ ------------
Deductions
------------------------------------------
Credited
Cash to other
surrenders accounts
prior to (per
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 0
SP 77 0 0 14
SP 78 0 0 74
SP 79 0 0 85
SP 80 0 0 80
SP 81A 0 0 39
SP 82A 0 0 53
SP 82B 0 1 87
SP 83A 0 0 11
SP 83B 0 0 32
IC-2-84 0 0 128
IC-2-85 0 0 61
IC-2-86 0 0 33
IC-2-87 0 0 41
IC-2-88 0 0 80
IC-Stock Market 0 663 28,280
IC-Market Strategy 0 0 0
IC-AEBI Stock Market 0 0 148
------------ ------------ ------------
Total 0 664 29,246
------------ ------------ ------------
Balance at close of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
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 0
SP 77 0
SP 78 9
SP 79 34
SP 80 31
SP 81A 18
SP 82A 14
SP 82B 45
SP 83A 6
SP 83B 14
IC-2-84 50
IC-2-85 26
IC-2-86 12
IC-2-87 18
IC-2-88 35
IC-Stock Market 33,758
IC-Market Strategy 2,179
IC-AEBI Stock Market 244
------------
Total 36,493
------------
Balance at beginning of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
R Series Single-Payment certificates:
R-76 3.5 9 92 78
R-77 3.5 42 506 425
R-78 3.5 74 721 551
R-79 3.5 100 1,068 797
R-80 3.5 119 1,211 849
R-81 3.5 50 572 351
R-82A 3.5 228 1,778 980
RP-Q (note a) 590 1,042 2,404
R-II 3.5 169 1,696 713
RP-2-84 3.5 515 6,321 2,526
RP-2-85 3.5 152 650 658
RP-2-86 3.5 49 344 324
RP-2-87 3.5 110 624 527
RP-2-88 3.5 140 789 609
Cash Reserve RP (note b) 8 18 34
IC-Flexible Savings RP (note d) 14,722 134,813 151,753
RP-Preferred Investors (note d) 4 3,046 3,132
Cash Reserve RP-3 mo. (note e) 3,127 28,298 29,587
IC-Flexible Savings RP Emp (note d) 393 4,455 5,390
RP-Future Value (note f) 10,988 168,857 168,857
RP-Future Value Emp (note f) 258 5,035 5,035
RP-Stock Market (note g) 10,285 59,553 67,221
RP-Market Strategy (note g) 0 0 0
D-1 (note a) 211 28,044 34,272
------------ ------------ ------------
Total 42,343 449,533 477,073
------------ ------------ ------------
Additions
------------------------------------------
Charged
Charged Reserve to other
to profit payments by accounts
and loss certificate (per
or income holders part 2)
------------ ------------ ------------
R Series Single-Payment certificates:
R-76 3.5 0 0 4
R-77 3.5 0 0 21
R-78 3.5 0 0 24
R-79 3.5 0 0 38
R-80 3.5 0 0 39
R-81 3.5 0 0 17
R-82A 3.5 0 0 48
RP-Q (note a) 0 0 87
R-II 3.5 0 0 34
RP-2-84 3.5 0 0 120
RP-2-85 3.5 0 0 32
RP-2-86 3.5 0 0 13
RP-2-87 3.5 0 0 25
RP-2-88 3.5 0 0 30
Cash Reserve RP (note b) 0 0 1
IC-Flexible Savings RP (note d) 0 23,393 6,706
RP-Preferred Investors (note d) 0 2,153 143
Cash Reserve RP-3 mo. (note e) 0 41,298 1,062
IC-Flexible Savings RP Emp (note d) 0 769 290
RP-Future Value (note f) 0 (17) 0
RP-Future Value Emp (note f) 0 17 0
RP-Stock Market (note g) 1 38,041 5,983
RP-Market Strategy (note g) 0 15,941 141
D-1 (note a) 0 806 1,582
------------ ------------ ------------
Total 1 122,401 16,440
------------ ------------ ------------
Deductions
------------------------------------------
Credited
Cash to other
surrenders accounts
prior to (per
Maturities maturity part 2)
------------ ------------ ------------
R Series Single-Payment certificates:
R-76 3.5 0 18 0
R-77 3.5 0 149 0
R-78 3.5 0 156 0
R-79 3.5 0 63 0
R-80 3.5 0 206 10
R-81 3.5 0 58 0
R-82A 3.5 0 167 0
RP-Q (note a) 0 541 0
R-II 3.5 0 149 0
RP-2-84 3.5 0 662 0
RP-2-85 3.5 0 153 0
RP-2-86 3.5 0 183 0
RP-2-87 3.5 0 126 0
RP-2-88 3.5 0 131 0
Cash Reserve RP (note b) 0 0 0
IC-Flexible Savings RP (note d) 0 60,068 0
RP-Preferred Investors (note d) 0 3,095 0
Cash Reserve RP-3 mo. (note e) 0 48,880 0
IC-Flexible Savings RP Emp (note d) 0 1,143 0
RP-Future Value (note f) 37,243 12,780 0
RP-Future Value Emp (note f) 1,276 100 0
RP-Stock Market (note g) 0 21,884 0
RP-Market Strategy (note g) 0 463 0
D-1 (note a) 0 7,504 0
------------ ------------ ------------
Total 38,519 158,679 10
------------ ------------ ------------
Balance at close of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
R Series Single-Payment certificates:
R-76 3.5 8 72 64
R-77 3.5 30 338 297
R-78 3.5 56 523 419
R-79 3.5 87 984 772
R-80 3.5 87 916 672
R-81 3.5 44 481 310
R-82A 3.5 192 1,491 861
RP-Q (note a) 477 814 1,950
R-II 3.5 136 1,350 598
RP-2-84 3.5 410 4,741 1,984
RP-2-85 3.5 122 509 537
RP-2-86 3.5 33 159 154
RP-2-87 3.5 86 482 426
RP-2-88 3.5 105 627 508
Cash Reserve RP (note b) 8 18 35
IC-Flexible Savings RP (note d) 12,026 105,502 121,784
RP-Preferred Investors (note d) 5 2,255 2,333
Cash Reserve RP-3 mo. (note e) 2,492 21,903 23,067
IC-Flexible Savings RP Emp (note d) 334 4,342 5,306
RP-Future Value (note f) 7,645 118,817 118,817
RP-Future Value Emp (note f) 193 3,676 3,676
RP-Stock Market (note g) 11,994 79,218 89,362
RP-Market Strategy (note g) 601 15,487 15,619
D-1 (note a) 199 23,613 29,156
------------ ------------ ------------
Total 37,370 388,318 418,707
------------ ------------ ------------
Balance at beginning of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 Not Not 3
R-77 3.5 Applicable Applicable 7
R-78 3.5 16
R-79 3.5 20
R-80 3.5 25
R-81 3.5 9
R-82A 3.5 42
RP-Q (note a) 0
R-II 3.5 23
RP-2-84 3.5 73
RP-2-85 3.5 20
RP-2-86 3.5 9
RP-2-87 3.5 15
RP-2-88 3.5 17
Cash Reserve RP (note b) 0
IC-Flexible Savings RP (note d) 329
RP-Preferred Investors (note d) 5
Cash Reserve RP-3 mo. (note e) 47
IC-Flexible Savings RP Emp (note d) 11
IC-Future Value (note f) 55,838
IC-Future Value Emp (note f) 1,769
RP-Stock Market (note g) 309
RP-Market Strategy (note g) 0
D-1 (note a) 0
------------
Total 58,587
------------
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 3,597
RP-Market Strategy 0
------------
Total single payment 3,234,675
------------
Paid-up certificates:
Series 15 and 20 3.25 14 123 108
" 15A and 22A 3.5 662 8,525 7,638
" I-76 3.5 648 3,194 2,094
------------ ------------ ------------
Total 1,324 11,842 9,840
------------ ------------ ------------
Additions
------------------------------------------
Charged
Charged Reserve to other
to profit payments by accounts
and loss certificate (per
or income holders part 2)
------------ ------------ ------------
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 4 0 0
R-77 3.5 20 0 0
R-78 3.5 23 0 0
R-79 3.5 38 0 0
R-80 3.5 37 0 0
R-81 3.5 17 0 0
R-82A 3.5 46 0 0
RP-Q (note a) 87 0 0
R-II 3.5 32 0 0
RP-2-84 3.5 109 0 0
RP-2-85 3.5 29 0 0
RP-2-86 3.5 12 0 0
RP-2-87 3.5 24 0 0
RP-2-88 3.5 27 0 0
Cash Reserve RP (note b) 1 0 0
IC-Flexible Savings RP (note d) 7,390 0 0
RP-Preferred Investors (note d) 141 0 0
Cash Reserve RP-3 mo. (note e) 1,061 0 0
IC-Flexible Savings RP Emp (note d) 322 0 0
IC-Future Value (note f) 14,621 0 0
IC-Future Value Emp (note f) 516 0 0
RP-Stock Market (note g) 488 0 0
RP-Market Strategy (note g) 159 0 0
D-1 (note a) 1,701 0 0
------------ ------------ ------------
Total 26,905 0 0
------------ ------------ ------------
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 8,936 0 0
RP-Market Strategy 446 0 0
------------ ------------ ------------
Total single payment 207,130 1,110,658 143,892
------------ ------------ ------------
Paid-up certificates:
Series 15 and 20 3.25 3 0 0
" 15A and 22A 3.5 217 0 1,176
" I-76 3.5 72 0 369
------------ ------------ ------------
Total 292 0 1,545
------------ ------------ ------------
Deductions
------------------------------------------
Credited
Cash to other
surrenders accounts
prior to (per
Maturities maturity part 2)
------------ ------------ ------------
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 0 1 4
R-77 3.5 0 1 21
R-78 3.5 0 3 24
R-79 3.5 0 1 38
R-80 3.5 0 2 39
R-81 3.5 0 1 18
R-82A 3.5 0 4 48
RP-Q (note a) 0 0 87
R-II 3.5 0 2 34
RP-2-84 3.5 0 7 120
RP-2-85 3.5 0 1 32
RP-2-86 3.5 0 4 13
RP-2-87 3.5 0 1 25
RP-2-88 3.5 0 2 29
Cash Reserve RP (note b) 0 0 1
IC-Flexible Savings RP (note d) 0 764 6,706
RP-Preferred Investors (note d) 0 1 143
Cash Reserve RP-3 mo. (note e) 0 12 1,062
IC-Flexible Savings RP Emp (note d) 0 34 289
IC-Future Value (note f) 19,220 4,795 0
IC-Future Value Emp (note f) 534 36 0
RP-Stock Market (note g) 0 41 482
RP-Market Strategy (note g) 0 0 140
D-1 (note a) 0 119 1,582
------------ ------------ ------------
Total 19,754 5,832 10,937
------------ ------------ ------------
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 0 99 5,502
RP-Market Strategy 0 0 0
------------ ------------ ------------
Total single payment 139,981 1,448,369 145,036
------------ ------------ ------------
Paid-up certificates:
Series 15 and 20 3.25 6 2 5
" 15A and 22A 3.5 1,531 680 1,356
" I-76 3.5 0 387 9
------------ ------------ ------------
Total 1,537 1,069 1,370
------------ ------------ ------------
Balance at close of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 Not Not 2
R-77 3.5 Applicable Applicable 5
R-78 3.5 12
R-79 3.5 19
R-80 3.5 21
R-81 3.5 7
R-82A 3.5 36
RP-Q (note a) 0
R-II 3.5 19
RP-2-84 3.5 55
RP-2-85 3.5 16
RP-2-86 3.5 4
RP-2-87 3.5 13
RP-2-88 3.5 13
Cash Reserve RP (note b) 0
IC-Flexible Savings RP (note d) 249
RP-Preferred Investors (note d) 2
Cash Reserve RP-3 mo. (note e) 34
IC-Flexible Savings RP Emp (note d) 10
IC-Future Value (note f) 46,444
IC-Future Value Emp (note f) 1,715
RP-Stock Market (note g) 274
RP-Market Strategy (note g) 19
D-1 (note a) 0
------------
Total 48,969
------------
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 6,932
RP-Market Strategy 446
------------
Total single payment 2,962,969
------------
Paid-up certificates:
Series 15 and 20 3.25 10 110 98
" 15A and 22A 3.5 358 6,307 5,464
" I-76 3.5 613 3,131 2,139
------------ ------------ ------------
Total 981 9,548 7,701
------------ ------------ ------------
Balance at beginning of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 Not Not 3
" 15A and 22A 3 Applicable Applicable 273
" I-76 3.5 165
------------
Total 441
------------
Accrued for additional credits to be allowed
at next anniversaries 42
------------ ------------ ------------
Total paid-up 1,324 11,842 10,323
------------ ------------ ------------
Optional settlement certificates:
Series 1, IST&G 3 13 6
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 8,329 101,339
Series R-76 thru R-82A 3 46 173
Series R-II & RP-2-84 thru 88 3.5 29 464
Reserve Plus Single-Payment (note a) 146 1,429
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 18 105
Series R-Installment (note a) 59 301
Series R-Single-Payment (note a) 27 72
Add'l credits and accrued int. thereon 2.5-3 Not Not 11,139
Add'l credits and accrued int. thereon-IST&G 2.5-3 Applicable Applicable 0
Accrued for additional credits to be allowed
at next anniversaries 860
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 4
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0
------------ ------------
Total optional settlement 8,667 115,892
------------ ------------
Not
Due to unlocated certificate holders Applicable 291
------------
Total certificate reserves 3,724,978
============
Additions
------------------------------------------
Charged
Charged Reserve to other
to profit payments by accounts
and loss certificate (per
or income holders part 2)
------------ ------------ ------------
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 0 0 1
" 15A and 22A 3 6 0 46
" I-76 3.5 6 0 19
------------ ------------ ------------
Total 12 0 66
------------ ------------ ------------
Accrued for additional credits to be allowed
at next anniversaries 58 0 0
------------ ------------ ------------
Total paid-up 362 0 1,611
------------ ------------ ------------
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 2,938 0 3,807
Series R-76 thru R-82A 3 5 0 13
Series R-II & RP-2-84 thru 88 3.5 15 0 5
Reserve Plus Single-Payment (note a) 52 0 60
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 2 0 49
Series R-Installment (note a) 9 0 21
Series R-Single-Payment (note a) 2 0 0
Add'l credits and accrued int. thereon 2.5-3 296 0 1,715
Add'l credits and accrued int. thereon-IST&G 2.5-3 0 0 0
Accrued for additional credits to be allowed
at next anniversaries 1,678 0 0
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 8 1 0
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0 0 0
------------ ------------ ------------
Total optional settlement 5,005 1 5,670
------------ ------------ ------------
Not
Due to unlocated certificate holders Applicable 164
------------ ------------ ------------
Total certificate reserves 224,409 1,192,026 161,406
============ ============ ============
Provision for certificate reserves and additional
credits, per Statement of Operations 168,134
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 56,275
------------
224,409
============
Deductions
------------------------------------------
Credited
Cash to other
surrenders accounts
prior to (per
Maturities maturity part 2)
------------ ------------ ------------
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 1 0 0
" 15A and 22A 3 102 19 53
" I-76 3.5 0 18 0
------------ ------------ ------------
Total 103 37 53
------------ ------------ ------------
Accrued for additional credits to be allowed
at next anniversaries 0 0 66
------------ ------------ ------------
Total paid-up 1,640 1,106 1,489
------------ ------------ ------------
Optional settlement certificates:
Series 1, IST&G 3 1 0 0
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 6,067 7,438 0
Series R-76 thru R-82A 3 42 18 0
Series R-II & RP-2-84 thru 88 3.5 76 20 0
Reserve Plus Single-Payment (note a) 58 264 0
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 20 39 0
Series R-Installment (note a) 47 28 0
Series R-Single-Payment (note a) 18 18 0
Add'l credits and accrued int. thereon 2.5-3 993 939 360
Add'l credits and accrued int. thereon-IST&G 2.5-3 0 0 0
Accrued for additional credits to be allowed
at next anniversaries 16 0 1,721
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 1 1 8
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0 0 0
------------ ------------ ------------
Total optional settlement 7,339 8,765 2,089
------------ ------------ ------------
Not
Due to unlocated certificate holders Applicable 10 88
------------ ------------ ------------
Total certificate reserves 157,300 1,579,254 161,382
============ ============ ============
Balance at close of period
------------------------------------------
Number
of
accounts Amount
with of Amount
security maturity of
holders value reserves
------------ ------------ ------------
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 Not Not 3
" 15A and 22A 3 Applicable Applicable 151
" I-76 3.5 172
------------
Total 326
------------
Accrued for additional credits to be allowed
at next anniversaries 34
------------ ------------ ------------
Total paid-up 981 9,548 8,061
------------ ------------ ------------
Optional settlement certificates:
Series 1, IST&G 3 12 5
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 7,454 94,579
Series R-76 thru R-82A 3 32 131
Series R-II & RP-2-84 thru 88 3.5 19 388
Reserve Plus Single-Payment (note a) 124 1,219
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 22 97
Series R-Installment (note a) 47 256
Series R-Single-Payment (note a) 31 38
Add'l credits and accrued int. thereon 2.5-3 Not Not 10,858
Add'l credits and accrued int. thereon-IST&G 2.5-3 Applicable Applicable 0
Accrued for additional credits to be allowed
at next anniversaries 801
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 3
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0
------------ ------------
Total optional settlement 7,741 108,375
------------ ------------
Not
Due to unlocated certificate holders Applicable 357
------------
Total certificate reserves 3,404,883
============
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 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.
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1998
($ 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 0 1 8 9
Series 15A, including extended
maturities 0 1 0 1
Series 22A, including extended
maturities 165 159 324 648
Series I-76 7 19 0 26
Series Reserve Plus Flexible Payment 0 0 37 37
Series IC-Q-Installment 0 0 13 13
Series IC-Q-Ins 0 0 933 933
Series IC-Q-Ins Emp 0 0 6 6
Series IC-I 0 0 7,631 7,631
Series IC-I-Emp 0 0 61 61
Series Inst 0 0 118 118
Series Inst-Emp 0 0 1 1
Series RP-Q-Installment 0 0 49 49
Series RP-Q-Flexible Payment 0 0 3 3
Series RP-Q-Ins 0 0 33 33
Series RP-Q-Ins Emp 0 0 1 1
Series RP-I 0 0 102 102
Series RP-I Emp 0 0 0 0
-------------- ---------------- ------------------------- ----------
Total 172 180 9,320 9,672
============== ================ ========================= ==================
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1998
($ 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
----------------- ------------------- ------------------ ----------------
0 0 0 0
0 39 8 47
0 0 0 0
974 894 324 2,192
290 0 0 290
0 0 0 0
0 0 0 0
0 48 0 48
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 9 0 9
0 0 0 0
0 12 0 12
0 0 0 0
0 0 0 0
0 0 0 0
- ----------------- ------------------- ------------------ ----------------
1,264 1,002 332 2,598
================= =================== ================== ================
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1998
($ 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 5 0 12 17
Series I-76 0 1 0 1
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-I 0 0 0 0
Series IC-I 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-I 0 0 0 0
Series RP-I Emp 0 0 0 0
----------------- ----------------- ------------------------ ----------
Total 5 1 12 18
================= ================= ======================== ==========
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1998
($ 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
reserves to credited reserves certificates-
mature, to optional to mature- credited to
loading settlement extended paid-up
and insurance reserves maturities reserves Total
-------------------- --------------------- ------------------ -------------------- ---------
0 0 0 0 0
1 1 0 0 2
1 0 0 0 1
159 41 12 1 213
19 0 0 0 19
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
-------------------- --------------------- ------------------ -------------------- ---------
180 42 12 1 235
==================== ===================== ================== ==================== =========
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 $ 281
Reconversions of paid-up certificates-charged to paid-up reserves 32
Transfers from maturities to extended maturities 66
----------
$ 379
==========
Other deductions represent:
Transfers to reserves on a quarterly basis for Reserve Plus Flexible-
Payment, IC-Q-Installment and R-Flexible-Payment $ 8,993
Conversions to optional settlement certificates-credited to optional
settlement reserves 225
Conversions to paid-up certificates-credited to paid-up reserves 276
Transfers to extended maturities at maturity 66
----------
$ 9,560
==========
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 $ 281
==========
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) $ 1,545
Transfers from accrual for additional credits to be allowed at next
anniversaries 66
----------
$ 1,611
==========
Other deductions represent:
Transfers credited to installment reserves on reconversions to installment
certificates $ 209
Transfers for accrual for additional credits and accrued interest thereon 66
Transfers to settlement options 1,214
----------
$ 1,489
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 charges),
single-payment and Series D certificate reserves upon election of
optional settlement privileges $ 2,743
Transfers from paid-up certificate reserves 1,214
Transfers from accruals for additional credits to be allowed at next
anniversaries 1,713
----------
$ 5,670
==========
Other deductions represent:
Transfers to reserve for additional credits and accrued interest thereon $ 1,721
Transfers to optional settlement reserves 368
----------
$ 2,089
==========
Single-Payment certificates:
Other additions represent:
Transfers from accruals for additional credits to be allowed at next
anniversaries $ 605
Transfers from accruals on a quarterly basis on:
Reserve Plus Single-Payment 281
Cash Reserve Single-Payment 7
Flexible Savings 32,199
Flexible Savings-Emp 819
Preferred Investors 4,445
Investors 38,873
Special Deposits 9,606
Cash Reserve 123
Cash Reserve-3mo 8,132
Future Value 1
Stock Market 30,686
Market Strategy 654
AEBI Stock Market 227
R82-B 87
Cash Reserve-RP 1
Cash Reserve-RP-3mo 1,062
Flexible Saving-RP 6,706
Flexible Savings-RP-Emp 290
Preferred Investors-RP 143
Stock Market-RP 5,983
Market Strategy-RP 141
Transfers from accruals at anniversaries maintained in a separate
reserve account. 2,821
----------
$ 143,892
==========
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 $ 1,882
R Single-Payment 10
Transfers to reserves for additional credits and accrued interest thereon 2,821
Transfers to a separate reserve account from the accrual account 605
Transfers to reserves on a quarterly basis:
Reserve Plus Single-Payment 281
Cash Reserve Single-Payment 7
Flexible Savings 32,199
Flexible Savings-Emp 819
Preferred Investors 4,451
Investors 38,873
Special Deposits 9,606
Cash Reserve 124
Cash Reserve-3mo 8,133
Stock Market 30,686
AEBI Stock Market 227
R82-B 87
Cash Reserve-RP 1
Cash Reserve-RP-3mo 1,062
Flexible Saving-RP 6,706
Flexible Savings-RP-Emp 289
Preferred Investors-RP 143
Stock Market-RP 5,984
Transfers to Federal tax withholding 40
----------
$ 145,036
==========
Due to unlocated certificate holders:
Other additions represent:
Amounts equivalent to payments due certificate holders who could
not be located $ 164
==========
Other deductions represent:
Payments to certificate holders credited to cash $ 88
==========
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1998
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
------------ ----------------------------------------------------------------------------
1997 1998 1997 1998 1997 1998
--------- ------ ------- ------- ------ -------
20, including extended maturities 169-180 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
205-216 0 0 0 0 0 0 0 0
217-228 0 0 0 0 0 0 0 0
229-240 (a) 1 0 8 0 7 0 0 8
241-252 0 1 0 13 0 8 0 0
253-264 0 0 0 0 0 0 0 0
265-276 0 0 0 0 0 0 0 0
277-288 0 0 0 0 0 0 0 0
289-300 0 0 0 0 0 0 0 0
301-312 1 0 14 0 11 0 0 11
313-324 0 0 0 0 0 0 0 0
325-336 1 0 14 0 12 0 0 0
337-348 4 2 46 25 42 26 0 0
349-360 (a) 4 2 52 21 52 20 30 28
--------- ----- ------ ----- ------ ------ ------- ------
Total 11 5 134 59 24 54 30 47
--------- ----- ------ ------ ----- ------- ------- ------
15A, including extended maturities 97-108 0 0 0 0 0 0 0 0
109-120 0 0 17 0 10 0 0 0
121-132 1 0 0 0 0 10 0 0
133-144 0 1 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 (a) 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
205-216 1 0 7 0 6 0 0 0
217-228 1 1 10 11 9 6 0 0
229-240 1 1 5 17 5 10 0 0
241-252 1 0 9 0 8 0 5 0
--------- ----- ----- ------ ----- ------ ------- ------
Total 5 3 48 28 38 26 5 0
--------- ------ ---- ----- ----- ------- ------ ------
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1998
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
------------ ---------------------------------------------------------------------------
1997 1998 1997 1998 1997 1998
-------- --------- ------- --------- --------- --------
22A, including extended maturities 61-72 1 0 19 0 3 0 0 0
73-84 0 1 0 19 0 4 0 0
85-96 1 0 13 0 3 0 0 6
97-108 1 1 19 13 6 4 0 0
109-120 1 0 15 0 5 0 0 0
121-132 3 1 75 15 29 6 0 0
133-144 1 3 19 75 8 31 0 0
145-156 4 1 94 19 45 8 0 0
157-168 0 4 0 94 0 50 0 0
169-180 1 0 19 0 11 0 0 0
181-192 2 1 131 19 84 11 0 0
193-204 8 3 270 103 182 71 0 97
205-216 10 5 266 148 195 109 0 27
217-228 13 11 266 304 212 240 0 0
229-240 19 13 345 263 295 223 28 49
241-252 17 14 542 253 498 232 14 20
253-264 (a) 91 16 1,954 594 1,680 581 148 836
265-276 114 21 3,347 685 1,999 415 96 176
277-288 118 104 2,916 3,008 1,852 1,907 71 95
289-300 118 101 2,869 2,533 1,946 1,706 95 41
301-312 107 115 2,296 2,807 1,640 2,015 23 153
313-324 103 96 1,916 2,049 1,444 1,546 35 51
325-336 82 95 1,569 1,773 1,248 1,412 21 21
337-348 80 76 1,130 1,494 950 1,253 44 27
349-360 68 69 1,062 1,000 940 884 40 84
361-372 30 62 468 932 436 868 66 30
373-384 27 28 341 416 334 408 32 253
-------- -------- -------- ---------- -------- --------- ---- -------
Total 1,020 841 21,961 18,616 16,045 13,984 713 1,966
-------- ----- -------- -------- --------- ---------- ---- ------
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1998
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
------------------------------------------------------------------------------------- ---------
1997 1998 1997 1998 1997 1998
----------- ------- ----------- -------- -------
I-76 61-72 1 1 62 62 6 7 0 0
73-84 0 0 0 0 0 0 0 0
85-96 0 0 0 0 0 0 0 0
97-108 0 0 0 0 0 0 0 0
109-120 0 1 0 12 0 3 0 0
121-132 1 0 46 0 11 0 11 0
133-144 2 1 68 37 17 10 0 0
145-156 3 1 52 31 15 9 0 0
157-168 2 3 55 52 18 17 10 0
169-180 3 1 86 25 30 9 0 20
181-192 31 2 793 43 313 16 0 19
193-204 89 23 2,359 624 991 267 81 32
205-216 107 72 2,706 1,790 1,225 812 319 46
217-228 110 88 2,519 2,233 1,227 1,092 83 46
229-240 148 97 3,069 2,153 1,610 1,129 258 0
241-252 127 117 2,962 2,328 1,676 1,308 406 73
253-264 71 101 1,630 2,334 971 1,414 213 18
265-276 0 60 0 1,350 0 861 27 0
---- ----- --------- ------ ------ ----- ------- -----------
Total 695 568 16,407 13,074 8,110 6,954 1,408 254
--------- -------- --------- -------- -------- ------- -------
Reserve Plus Flexible Payment 145-156 0 0 0 0 0 0 0 0
157-168 50 0 510 0 209 0 0 0
169-180 138 41 1,169 429 694 187 57 0
181-192 98 110 926 932 463 544 183 0
193-204 0 85 0 806 0 396 137 0
----------- -------- --------- ------ ------- ---- -------
Total 286 236 2,605 2,167 1,366 1,127 377 0
----------- ------ ----------- -------- ------- -------- -------
IC-Q-Installment 121-132 0 0 0 0 0 0 0 0
133-144 15 0 150 0 93 0 0 0
145-156 49 12 588 120 185 67 30 0
157-168 40 42 394 534 214 177 52 0
169-180 0 34 0 346 0 164 79 0
----------- --------- -------- ------- ------- -------- -------
Total 104 88 1,132 1,000 492 408 161 0
----------- --------- -------- -------- ------ --------- -------
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings7
($ in thousands)
Year ended December 31, 1998
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
--------------------------------------------------------------------------------------------------------------
1997 1998 1997 1998 1997 1998
-------- -------- -------- --------- -------- ------------
IC-Q-Ins 37-48 0 0 0 0 0 0 0 0
49-60 1 0 12 0 6 0 0 0
61-72 1,450 1 18,833 12 8,872 7 0 0
73-84 2,495 751 31,597 9,366 13,737 4,132 5,748 0
85-96 1,620 1,487 19,313 17,909 8,652 7,794 7,536 0
97-108 1,499 1,104 16,776 12,973 7,701 5,870 3,799 0
109-120 1,618 1,003 19,301 11,317 8,717 5,189 2,894 0
121-132 48 98 472 1,240 149 588 1,980 48
133-144 17 40 179 408 73 130 42 0
145-156 0 14 0 119 0 58 17 0
-------- ---------------------------------------- --------------------------- -----------
Total 8,748 4,498 106,483 53,344 47,907 23,768 22,016 48
-------- ---------------------------------------- --------------------------- -----------
IC-Q-Ins Emp 49-60 0 0 0 0 0 0 0 0
61-72 9 0 96 0 61 0 0 0
73-84 10 4 126 30 64 19 47 0
85-96 7 7 63 78 45 48 23 0
97-108 5 6 45 57 11 44 6 0
109-120 8 5 181 45 26 14 2 0
121-132 0 2 0 35 0 7 7 0
-------- ---------------------------------------- --------------------------- -----------
Total 39 24 511 245 207 132 85 0
-------- ---------------------------------------- --------------------------- -----------
IC-I 1-12 4,757 5 89,119 99 7,336 9 0 0
13-24 10,813 3,898 193,840 71,494 28,085 11,472 1,583 0
25-36 13,109 9,013 233,170 159,367 54,541 35,951 4,663 0
37-48 11,764 10,741 213,507 185,076 64,318 57,299 10,541 0
49-60 9,583 9,633 165,479 172,242 63,685 63,221 11,135 0
61-72 5,207 7,823 88,208 131,773 40,039 59,111 11,199 0
73-84 0 2,945 0 45,645 0 21,278 20,646 0
-------- ---------------------------------------- --------------------------- -----------
Total 55,233 44,058 983,323 765,696 258,004 248,341 59,767 0
-------- ---------------------------------------- --------------------------- -----------
IC-I-Emp 1-12 39 0 456 0 50 0 0 0
13-24 69 26 1,869 295 221 60 17 0
25-36 94 55 1,422 997 324 248 33 0
37-48 71 64 953 709 394 278 114 0
49-60 53 58 892 802 419 397 57 0
61-72 34 44 550 675 305 359 72 0
73-84 0 19 0 285 0 188 167 0
-------- ---------------------------------------- --------------------------- -----------
Total 360 266 6,142 3,763 1,713 1,530 460 0
-------- ---------------------------------------- --------------------------- -----------
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1998
Deductions from Reserves
-------------------------
Number of Cash
Months Accounts with Amount of Amount of Surrenders
Certificate Series Paid Certificate Holders Maturity Value Reserves Prior to
December 31, December 31, December 31, Maturity Other
-----------------------------------------------------------------------------------------------------------
1997 1998 1997 1998 1997 1998
----------- --------- ---------- -------- --------- -------------
Inst 1-12 3,134 3,774 66,052 66,052 1,807 3,012 174 0
13-24 0 2,316 0 0 0 4,177 458 0
----------- --------- ---------- --------- -------- ----------------- --------- ---------
3,134 6,090 66,052 66,052 1,807 7,189 632 0
----------- --------- ---------- --------- ------- ---------------- --------- ---------
Inst-Emp 1-12 17 20 255 255 6 21 3 0
13-24 0 7 0 0 0 10 3 0
----------- --------- --------- --------- ------- ----------------- -------- ---------
17 27 255 255 6 31 6 0
----------- --------- --------- --------- ------- ----------------- -------- ---------
R Flexible Payment 133-144 0 0 0 0 0 0 0 0
145-156 43 0 662 0 377 0 0 0
157-168 21 39 337 593 155 365 14 0
169-180 70 15 960 253 571 105 39 0
181-192 65 51 770 735 623 435 120 9
193-204 0 52 0 604 0 517 88 0
----------- ---------- -------- --------- ------- ---- ----------- ------- ---------
Total 199 157 2,729 2,185 1,726 1,422 261 9
----------- ---------- -------- --------- -------- ----------------- -------- ---------
RP-Q-Installment 121-132 0 0 0 0 0 0 0 0
133-144 10 0 133 0 53 0 0 0
145-156 8 9 103 126 41 52 3 0
157-168 0 7 0 79 0 38 4 0
----------- ----------- ------- --------- ------- ----------------- -------- ---------
Total 18 16 236 205 94 90 7 0
----------- ------------ ------ --------- ------- ----------------- -------- ---------
RP-Q-Ins 49-60 0 0 0 0 0 0 0 0
61-72 19 0 255 0 148 0 0 0
73-84 42 13 905 131 327 95 62 0
85-96 52 29 1,808 613 283 184 145 0
97-108 49 39 997 1,068 411 250 51 0
109-120 78 35 1,084 829 580 290 111 0
121-132 3 0 24 0 13 0 115 12
133-144 1 2 10 18 3 5 0 0
----------- ---------- -------- --------- -------- ----------------- -------- ---------
Total 244 118 5,083 2,659 1,765 824 484 12
----------- ---------- -------- --------- --------- ---------------- --------- --------
RP-Q-Ins Emp 49-60 0 0 0 0 0 0 0 0
61-72 2 0 78 0 0 0 0 0
73-84 1 1 6 18 10 0 0 0
85-96 0 1 0 6 4 10 1 0
97-108 0 0 0 0 0 5 0 0
----------- ---------- --------- --------- -------- ------------------ -------- ---------
Total 3 2 84 24 14 15 1 0
------------ -------- ----------- ------- ------------ ------------- ----------- --------
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1998
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
------------ -----------------------------------------------------------------------------------------------
1997 1998 1997 1998 1997 1998
--------- -------------------- --------------------- ---------
RP-I 1-12 39 0 1,738 0 120 0 0 0
13-24 54 32 1,763 1,652 289 218 11 0
25-36 90 46 2,452 1,479 605 387 16 0
37-48 83 63 2,710 1,806 782 546 206 0
49-60 84 58 2,574 1,574 1,076 441 452 0
61-72 62 60 1,426 1,709 559 923 287 0
73-84 0 40 0 979 0 331 281 0
--------- -------------------- --------------------- -------------------- --------
Total 412 299 12,663 9,199 3,431 2,846 1,253 0
--------- -------------------- --------------------- -------------------- --------
RP-I-Emp 1-12 0 0 0 0 0 0 0 0
13-24 1 0 600 0 1 0 0 0
25-36 1 0 6 0 2 0 1 0
37-48 0 0 0 0 0 0 0 0
49-60 1 0 576 0 6 0 6 0
--------- -------------------- --------------------- -------------------- --------
Total 3 0 1,182 0 9 0 7 0
--------- -------------------- --------------------- -------------------- --------
Inst-R 1-12 18 34 4,788 4,021 42 42 27 0
13-24 0 9 0 767 0 11 1 0
--------- -------------------- --------------------- -------------------- --------
Total 18 43 4,788 4,788 42 53 28 0
--------- -------------------- --------------------- -------------------- --------
Inst-R-E 1-12 0 3 0 28 0 1 0 0
--------- -------------------- --------------------- -------------------- --------
Total All Series 70,549 57,342 1,231,818 943,387 342,900 308,795 87,701 2,336
========= ==================== ===================== ==================== ========
(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.
Part 4 - Amounts Periodically Credited to Certificate Holders' Accounts
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 $1,000 face-amount certificate basis for the term of
the certificate), is filed in Part 4 of Schedule IX as part of Post-
effective Amendment No. 9 to Registration Statement No. 2-17681, Post
effective Amendment No. 1 to Registration Statement No. 2-23772 and
Post-effective Amendment No. 1 to Registration Statement No. 2-258081
and is incorporated herein by reference.
IDS CERTIFICATE COMPANY SCHEDULE VII
Valuation and Qualifying Accounts
Years ended December 31, 1998, 1997 and 1996
($ thousands)
Year ended December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------
-----------------------
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 $605 $0 $0 $605 (a) $0
Conventional first
mortgage loans 611 0 0 0 611
Year ended December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------
-----------------------
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 $715 $0 $0 $110 (a) $605
Conventional first
mortgage loans 611 0 0 0 611
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 (b) 0
a) Applicable to reversal on securities sold.
b) Applicable to reversal on other assets sold.