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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 JUNE 30, 2003 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, August 11, 2003:
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)
June 30, December 31,
2003 2002
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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"), 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 "Collateral").
All costs related to the organization of Cornerstone II were absorbed
by EDJ. In addition, EDJ paid all offering expenses and assumed all future
revenues and expenses in connection with prior 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
Cornerstone II last offered mortgage-backed securities in 1991. EDJ
and Cornerstone exercised the option to repurchase collateral for Series 5
during the six months ended June 30, 2003. Since Cornerstone II has
surrendered control of the future economic benefit in the collateral, the
underlying certificates and the associated collateral are not recorded on
Cornerstone II's balance sheet. In addition, any transactions relating to
selling of certificates does not impact Cornerstone II's income statement.
There is no outstanding principal balance or remaining collateral
value as of June 30, 2003. EDJ plans to liquidate Cornerstone during the
third quarter of 2003.
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
31 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 302 of the Sarbanes Oxley act of 2002
32 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
6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
(Registrant)
/s/ John C. Heisler Chairman of the Board,
----------------------- Chief Financial Officer,
John C. Heisler Chief Accounting Officer August 11, 2003
and Director
/s/ Philip R. Schwab President, Chief Executive
----------------------- Officer and Director August 11, 2003
Philip R. Schwab
7