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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2002
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Commission file number 33-11459
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CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 43-1432378
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
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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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date, November 8,
2002:
COMMON STOCK, $1.00 Par Value - 500 Shares
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet.......................................................................................3
Notes to Balance Sheet..............................................................................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................................................5
Part II. OTHER INFORMATION...................................................................................6
SIGNATURES.....................................................................................................7
2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
BALANCE SHEET
(Unaudited)
September 30, December 31,
2002 2001
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ASSETS
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CASH $ 500 $ 500
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STOCKHOLDER'S EQUITY
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COMMON STOCK - $1.00 par value, 150,000
shares authorized, 500 shares issued and outstanding $ 500 $ 500
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The accompanying notes are an integral part of these financial statements.
3
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
NOTES TO BALANCE SHEET
(Unaudited)
BASIS OF PRESENTATION
The financial information included herein is unaudited. However, in the
opinion of management, such information includes all adjustments of a normal
recurring nature which are necessary for its fair presentation.
Cornerstone Mortgage Investment Group II, Inc. ("Cornerstone II") is a
Delaware corporation and a wholly-owned subsidiary of Edward D. Jones & Co.,
L.P. ("EDJ" or the "Partnership"), a Missouri limited partnership.
Cornerstone II was incorporated on December 22, 1986, for the limited
purpose of structuring and selling mortgage-backed securities (the
"Certificates"), which are backed by Government National Mortgage
Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC) and
Federal National Mortgage Association (FNMA) Securities (collectively, the
"Deposited Securities").
EDJ absorbed all costs related to the organization of Cornerstone II.
In addition, EDJ paid all offering expenses and assumed all future revenues
and expenses in connection with future securities transactions. Due to the
absence of revenue or expense generating transactions, no income statement
is presented. The balance of stockholder's equity consists solely of common
stock issued on December 30, 1986; therefore, no statement of stockholder's
equity is presented. All funds were obtained from capital transactions;
therefore, no statement of cash flows is presented.
4
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
MANAGEMENT'S FINANCIAL DISCUSSION
No series have been issued since May 29, 1991. EDJ and Cornerstone II
exercised the option to repurchase collateral from a total of 31 series,
(zero and one series during the nine months ended September 30, 2002 and
September 30, 2001, respectively,) which had a current collateral principal
balance that was less than 10% of the original collateral principal balance.
Since Cornerstone II had previously surrendered control of the future
economic benefit in the collateral to EDJ, these transactions have not been
accounted for by Cornerstone II. Accordingly, no income statement is
presented.
The outstanding principal balance and remaining collateral value
relating to the one outstanding series (series 5) are $1,728,000 and
$1,983,410, respectively, as of September 30, 2002.
5
Part II. OTHER INFORMATION
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
Item 1. Legal Proceedings:
There are no pending legal proceedings.
Item 2. Changes in Securities:
No change.
Item 3. Default upon Senior Securities:
No default.
Item 4. Submission of Matters to a Vote of Security Holders:
None.
Item 5. Other Information:
Nothing to report.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit number 99
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to section 906 of the Sarbanes-Oxley act of 2002.
(b) Reports on Form 8-K
Change in certifying accountants, incorporated herein by reference to
the 8-K filed July 16, 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
(Registrant)
/s/ John C. Heisler Chairman of the Board,
----------------------- Chief Financial Officer,
John C. Heisler Chief Accounting Officer November 8, 2002
and Director
/s/ Philip R. Schwab President, Chief Executive
----------------------- Officer and Director November 8, 2002
Philip R. Schwab
7