10-K 1 d95436e10-k.txt FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 2001 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR THE TRANSITION PERIOD FROM ____________ TO ______________ COMMISSION FILE NUMBER: 33-42337 CAPSTEAD SECURITIES CORPORATION IV (Exact name of Registrant as specified in its Charter) DELAWARE 75-2390594 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8401 NORTH CENTRAL EXPRESSWAY, SUITE 800, DALLAS, TX 75225 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (214) 874-2323 Securities registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: None. INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL DOCUMENTS AND REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ] INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 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 [ ] AT MARCH 15, 2002 THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES WAS: NOT APPLICABLE. THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J (1)(a) AND (b) OF FORM 10-K AND IS, THEREFORE, FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT. NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT MARCH 15, 2002: 1,000 DOCUMENTS INCORPORATED BY REFERENCE: NONE. ================================================================================ CAPSTEAD SECURITIES CORPORATION IV 2001 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS

PART I ITEM 1. BUSINESS. ORGANIZATION Capstead Securities Corporation IV (the "Company") was incorporated in Delaware on August 16, 1991 as a special-purpose finance corporation and is a wholly-owned subsidiary of Capstead Mortgage Corporation ("CMC"). CMC is a publicly owned real estate investment trust that, until late 1995, operated a mortgage conduit, purchasing and securitizing single-family residential mortgage loans. The Company is managed by CMC (the "Manager"). The Company believes it has qualified as a REIT subsidiary of CMC under the Internal Revenue Code of 1986 (the "Code"); therefore, for federal income tax purposes it is combined with CMC. Under applicable sections of the Code, REITs are required to distribute annually to stockholders at least 90% of their taxable income. It is the Company's and CMC's policy to distribute 100% of combined taxable income. The Company was formed primarily for the purpose of issuing and selling collateralized mortgage obligations ("CMOs"), collateralized by mortgage-backed, pass-through certificates ("Certificates") which evidence an interest in a pool of mortgage loans secured by single-family residences. The Certificates pledged as collateral for the CMOs are either contributed by CMC or purchased from third parties and are either Ginnie Mae Certificates, Fannie Mae Certificates, Federal Home Loan Mortgage Corporation Certificates or other privately-issued mortgage pass-through ("Non-Agency") Certificates. On August 21, 1991 the Securities and Exchange Commission declared effective a registration statement filed by the Company covering the offering of a maximum of $5 billion aggregate principal amount of CMOs. As of December 31, 2001, the Company has issued 19 series of CMOs with an aggregate original principal balance of $4,572,644,000, leaving remaining securitization capacity under this registration statement of $427,356,000. With the redemption of one CMO during 2001, only one CMO (Series 1998-3) remains outstanding at December 31, 2001. SPECIAL-PURPOSE FINANCE CORPORATION The Company has not engaged, and will not engage in any business or investment activities other than (i) issuing and selling CMOs and receiving, owning, holding and pledging as collateral the related Certificates; (ii) investing cash balances on an interim basis in high quality short-term securities; and (iii) engaging in other activities which are necessary or expedient to accomplish the foregoing and are incidental thereto. COMPETITION In issuing CMOs, the Company competes with other issuers of these securities and the securities themselves compete with other investment opportunities available to prospective purchasers. EMPLOYEES The Manager provides all executive and administrative personnel required by the Company. -1- MANAGEMENT AGREEMENT Pursuant to a Management Agreement, the Manager advises the Company with respect to its investments and administers the day-to-day operations of the Company. The Management Agreement is nonassignable except by consent of the Company and the Manager. The Management Agreement may be terminated without cause at any time upon 90 days written notice. In addition, the Company has the right to terminate the Management Agreement upon the happening of certain specified events, including a breach by the Manager of any provision contained in the Management Agreement which remains uncured for 30 days after notice of such breach and the bankruptcy or insolvency of the Manager. The Manager is at all times subject to the supervision of the Company's Board of Directors and has only such functions and authority as the Company delegates to it. The Manager is responsible for the day-to-day operations of the Company and performs such services and activities relating to the assets and operations of the Company as may be appropriate. The Manager receives an annual basic management fee of $10,000 per year for managing the assets pledged to secure Bonds issued by the Company. The Manager is required to pay employment expenses of its personnel (including salaries, wages, payroll taxes, insurance, fidelity bonds, temporary help and cost of employee benefit plans), and other office expenses, travel and other expenses of directors, officers and employees of the Manager, accounting fees and expenses incurred in supervising and monitoring the Company's investments. The Company is required to pay all other expenses of operation (as defined in the Management Agreement). SERVICING AND ADMINISTRATION The originators of mortgage loans backing Non-Agency Certificates may elect, if they meet the Company's criteria for servicers, either to service the loans they sell or to sell the loans with no agreement with respect to servicing. The Company enters into servicing agreements with each servicer. As compensation for its services under a servicing agreement, the servicers retain a servicing fee, payable monthly, generally 1/4 of 1% of the outstanding principal balance of each mortgage loan serviced as of the last day of each month. CMC does not currently service mortgage loans with respect to CMOs issued by the Company. In addition, CMC is the administrator with respect to the Non-Agency Certificates collateralizing Series 1998-3 and related CMOs. During 2001 and 2000 CMC retained fees for administering these Non-Agency Certificates and related CMOs of $14,000, and $21,000, respectively. ITEM 2. PROPERTIES. The Company conducts operations at CMC's offices in Dallas, Texas. ITEM 3. LEGAL PROCEEDINGS. As of the date hereof, there are no material legal proceedings outside the normal course of business to which the Company was a party or of which any of its property was the subject. -2- PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. All of the Company's common stock is owned by CMC. Accordingly, there is no public trading market for its common stock. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 2001 COMPARED TO 2000 CMO investments (represented by the difference between the carrying amounts of mortgage securities collateral and collateralized mortgage securities on the balance sheet) produced operating income of $37,000 in 2001 compared to an operating loss of $6,000 in 2000. Operating results produced by CMO investments is represented by the difference between interest income on mortgage securities collateral and interest expense on collateralized mortgage securities, mortgage pool insurance expense on mortgage securities collateral and professional fees. The Company elected Real Estate Mortgage Investment Conduit ("REMIC") status for tax purposes on the issuance of CMO Series 1998-III. This issuance was accounted for as a financing, and as a financing, CMO collateral and Bonds are reflected on the balance sheet; however, because the Company did not retain any investment in this CMO, no economic benefit was or will be received and thus no net income or loss was or will be recognized related to this CMO other than amortization of unreimbursed bond issuance costs. Operating results from CMO investments improved due to an increase in net margin from 2000 to 2001. The following table presents the weighted average yields for the periods shown:

Although net interest spreads can fluctuate depending on the timing of the payoff of collateral and bonds with differing amounts of purchase premium and bond discounts, the tendency is for CMO net interest spreads to decline as lower-yielding, shorter-term CMO bonds are paid off prior to longer-term bonds with relatively higher interest rates. During the fourth quarter 2001, the Company redeemed the outstanding bonds of its last non-REMIC CMO (Series 1993-I) pursuant to a clean-up call, and sold the related released collateral of $20,392,000 for a gain of $1,112,000. 2000 COMPARED TO 1999 CMO investments produced an operating loss of $6,000 in 2000 compared to an operating loss of $172,000 in 1999. Operating results improved due primarily to lower prepayment rates in 2000 than in 1999, which caused collateral and bond premiums and discounts to be amortized at a slower rate in 2000 than in -3- 1999, and lower levels of CMO investments during 2000 after the six CMO redemptions that occurred in 1999. Runoff rates were 24% and 35% for the year ended December 31, 2000 and 1999, respectively. Excluding the effects of CMO Series 1998-III, amortization of collateral and bond premiums and discounts resulted in a net expense of $101,000 and $691,000 during 2000 and 1999, respectively. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of funds are the receipt of excess cash flows on CMO Investments (primarily the excess of principal and interest earned on the mortgage securities collateral including reinvestment proceeds over the principal and interest payable on the CMOs), proceeds from additional CMO issuances and occasionally proceeds from the sale of collateral released from the related CMOs. The Company continues to qualify as a real estate investment trust subsidiary. ITEM 7A. QUANTITATIVE AND QUALITITIVE DISCLOSURES ABOUT MARKET RISK The Company did not retain any economic interest in its last remaining CMO outstanding at December 31, 2001; therefore, the Company has no exposure to interest rate risk. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. -4- REPORT OF INDEPENDENT AUDITORS Stockholder and Board of Directors Capstead Securities Corporation IV We have audited the accompanying balance sheets of Capstead Securities Corporation IV (a wholly-owned subsidiary of Capstead Mortgage Corporation) as of December 31, 2001 and 2000, and the related statements of operations, stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 Capstead Securities Corporation IV at December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Dallas, Texas January 25, 2002 -5- CAPSTEAD SECURITIES CORPORATION IV BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA)

See accompanying notes to financial statements. -6- CAPSTEAD SECURITIES CORPORATION IV STATEMENTS OF OPERATIONS (IN THOUSANDS)

See accompanying notes to financial statements. -7- CAPSTEAD SECURITIES CORPORATION IV STATEMENTS OF STOCKHOLDER'S EQUITY THREE YEARS ENDED DECEMBER 31, 2001 (IN THOUSANDS)

See accompanying notes to financial statements. -8- CAPSTEAD SECURITIES CORPORATION IV STATEMENTS OF CASH FLOWS (IN THOUSANDS)

See accompanying notes to financial statements. -9- NOTES TO FINANCIAL STATEMENTS CAPSTEAD SECURITIES CORPORATION IV DECEMBER 31, 2001 NOTE A -- BASIS OF PRESENTATION Capstead Securities Corporation IV (the "Company"), was incorporated in Delaware on August 16, 1991 as a special-purpose finance corporation primarily to issue bonds collateralized by whole loans or mortgage-backed securities. The Company is a wholly-owned subsidiary of Capstead Mortgage Corporation ("CMC" or "Parent"), which commenced operations with the issuance of its first collateralized mortgage obligation ("CMO") on December 23, 1991. NOTE B -- ACCOUNTING POLICIES USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The amortization of premiums and discounts on mortgage securities collateral and collateralized mortgage securities is based on expectations of future movements in interest rates and how resulting rates will impact prepayments on underlying mortgage loans. It is possible that prepayments could rise to levels that would adversely affect profitability if such levels are sustained for more than a brief period of time. DEBT SECURITIES Mortgage securities collateral held in the form of mortgage-backed securities are debt securities. Management determines the appropriate classification of debt securities at the time of purchase or securitization and reevaluates such designation as of each balance sheet date. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are stated at fair value with unrealized gains and losses, net of tax, reported as a separate component of stockholder's equity. Amortized cost is adjusted for amortization of premiums and discounts over the estimated life of the security using the interest method. Such amortization is included in related interest income. Mortgage securities collateral is subject to changes in value because of changes in interest rates and rates of prepayment, as well as failure of the mortgagor to perform under the mortgage agreement. The Company has limited its exposure to these risks by issuing collateralized mortgage securities, acquiring mortgage pool and special hazard insurance, and simultaneously selling collateral released from indentures upon redemption of the related bonds. -10- ALLOWANCE FOR POSSIBLE LOSSES The Company provides for possible losses on its investments in amounts which it believes are adequate relative to the risk inherent in such investments. The Company does not provide for losses resulting from covered defaults on investments with mortgage pool insurance and special hazard insurance (see Note F). COLLATERALIZED MORTGAGE SECURITIES Collateralized mortgage securities are carried at their unpaid principal balances, net of unamortized discount or premium. Any discount or premium is recognized as an adjustment to interest expense by the interest method over the life of the related securities. INCOME TAXES The Company believes it has qualified as a real estate investment trust ("REIT") subsidiary of CMC under the Internal Revenue Code of 1986 (the "Code"), and for federal income tax purposes is combined with CMC. Under applicable sections of the Code, a REIT is required to meet certain asset, income and stock ownership requirements as well as distribute at least 90% of its taxable income, the distribution of which may extend into the subsequent taxable year. It is the Company's policy to distribute 100% of taxable income within the time limits prescribed by the Code. Accordingly, no provision has been made for federal income taxes. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less. NOTE C -- MORTGAGE SECURITIES COLLATERAL Mortgage securities collateral consists of conventional single-family mortgage loans that are pledged to secure repayment of the collateralized mortgage securities. All principal and interest payments on the collateral are remitted directly to a collection account maintained by a trustee. The trustee is responsible for reinvesting those funds in short-term investments. All collections on the collateral and the reinvestment income earned thereon is available for payment of principal and interest on the collateralized mortgage securities. The components of mortgage securities collateral are summarized as follows (in thousands):

-11- The weighted average effective interest rate for mortgage securities collateral was 7.13% and 7.63% during 2001 and 2000, respectively. NOTE D -- COLLATERALIZED MORTGAGE SECURITIES Each series of collateralized mortgage securities consists of various classes, some of which may be deferred interest securities. Substantially all classes of bonds are at a fixed rate of interest. Interest is payable quarterly or monthly at specified rates for all classes other than the deferred interest securities. Generally, principal payments on each series are made to each class in the order of their stated maturities so that no payment of principal will be made on any class until all classes having an earlier stated maturity have been paid in full. Generally, payments of principal and interest on the deferred interest securities will commence only upon payment in full of all other classes. Prior to that time, interest accrues on the deferred interest securities and the amount accrued is added to the unpaid principal balance. The components of collateralized mortgage securities are summarized as follows (dollars in thousands):

The maturity of each series of securities is directly affected by the rate of principal prepayments on the related mortgage securities collateral. Each series of securities is also subject to redemption at the Company's option provided that certain requirements specified in the related indenture have been met (referred to as "clean-up calls"). As a result, the actual maturity of any series of securities is likely to occur earlier than its stated maturity. The weighted average effective interest rate for all collateralized mortgage securities was 6.81% and 7.36% during 2001 and 2000, respectively. Interest payments on collateralized mortgage securities of $8,367,000, $11,220,000, and $20,406,000 were made during 2001, 2000, and 1999, respectively. NOTE E -- DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS The estimated fair value of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies; however, considerable judgment is required in interpreting market data to develop these estimates. In addition, fair values fluctuate on a daily basis. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. -12- The carrying amount of cash and cash equivalents approximates fair value. The fair value of mortgage securities collateral was estimated using either quoted market prices, when available, including quotes made by CMC's lenders in connection with designating collateral for repurchase arrangements. The fair value of collateralized mortgage securities is dependent upon the characteristics of the mortgage securities collateral pledged to secure the issuance; therefore, fair value was based on the same method used for determining fair value for the underlying mortgage securities collateral, adjusted for credit enhancements. The following summarizes the fair value of financial instruments (in thousands):

The following summarizes fair value disclosures for mortgage securities collateral held available-for-sale and held-to-maturity (in thousands):

Upon the Company's redemption of remaining bonds outstanding pursuant to clean-up calls, released CMO collateral may be sold. Such sales are deemed maturities under the provisions of SFAS 115. There were no such sales during 2000. The following summarizes disclosures related to the disposition of released CMO collateral (in thousands):

NOTE F -- ALLOWANCE FOR POSSIBLE LOSSES The Company has limited exposure to losses on mortgage loans. Losses due to typical mortgagor default or fraud or misrepresentation during origination of the mortgage loan are substantially reduced by the acquisition of mortgage pool insurance from AAA-rated mortgage pool insurers. The amount of coverage under any such mortgage pool insurance policy is the amount (typically 10% to 12% of the aggregate amount in such pool of mortgage loans), determined by one or more Rating Agencies, necessary to allow the securities such pools are pledged to secure to be rated AAA, when combined with homeowner equity or -13- other insurance coverage. Certain other risks, however, are not covered by mortgage pool insurance. These risks include special hazards which are not covered by standard hazard insurance policies. Special hazards are typically catastrophic events that are unable to be predicted (e.g., earthquakes). The Company has limited its exposure to special hazard losses by acquiring special hazard insurance coverage from an insurer rated AAA. Because of its limited exposure to mortgage loan losses, the Company has determined that an allowance for losses is not warranted at December 31, 2001. Since approximately 73% of the Company's mortgage loans are secured by properties located in California, the Company has a concentration of risk related to the California market. However, the Company has no exposure arising from this concentration because it has retained no economic interest in the remaining CMO outstanding at December 31, 2001. NOTE G -- MANAGEMENT AGREEMENT The Company operates under a $10,000 per year management agreement with CMC (the "Manager"). The agreement provides that the Manager will advise the Company with respect to all facets of its business and administer the day-to-day operations of the Company under the supervision of the Board of Directors. The Manager pays, among other things, salaries and benefits of its personnel, accounting fees and expenses, and other office expenses incurred in supervising and monitoring the Company's investments. NOTE H -- TRANSACTIONS WITH RELATED PARTY The Company signed a $1 million revolving subordinated promissory note with CMC under which interest accrued on amounts payable based on the annual federal short-term rate as published by the Internal Revenue Service. This note matures January 1, 2002. Repayments may be made as funds are available. CMC is the administrator with respect to the Non-Agency Certificates collateralizing Series 1998-3 and related CMOs. During 2001 and 2000 CMC retained fees for administering these Non-Agency Certificates and related CMOs of $14,000 and $21,000, respectively. On a monthly basis, the Company's excess cash is advanced to CMC for which the Company earns interest based on the annual federal short-term rate. At the end of each quarter, these advances are accounted for as distributions to CMC and treated as returns of capital. During the fourth quarter 2001, the Company sold CMO Series 1993-I collateral of $20,392,000 to CMC for a gain of $1,112,000. -14- NOTE I -- NET INTEREST INCOME ANALYSIS (UNAUDITED) The following summarizes interest income and interest expense and the average effective interest rate for mortgage securities collateral and collateralized mortgage securities (dollars in thousands):

The following summarizes the amount of change in interest income and interest expense due to changes in interest rates versus changes in volume (in thousands):

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. -15- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) Documents filed as part of this report: 1. The following financial statements of the Company are included in ITEM 8:

2. Financial statement schedules: None. All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. 3. Exhibits:

(b) Reports on Form 8-K: None. (c) Exhibits - The response to this section of ITEM 14 is submitted as a separate section of this report. ----------------- (1) Previously filed with the Commission as an exhibit to the Company's Registration Statement on Form S-3 (No. 33-42337) filed August 21, 1991. (2) Previously filed with the Commission as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. (3) Previously filed with the Commission as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. (4) Previously filed with the Commission as an exhibit to the Registrant's Current Report on Form 8-K on October 9, 1998. -16- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CAPSTEAD SECURITIES CORPORATION IV REGISTRANT Date: March 22, 2002 By:/s/ ANDREW F. JACOBS -------------------------------- Andrew F. Jacobs Executive Vice President-Finance Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below and on the dates indicated. /s/ ANDREW F. JACOBS Executive Vice President - March 22, 2002 ------------------------------ Finance (Andrew F. Jacobs) /s/ PHILLIP A. REINSCH Senior Vice President - March 22, 2002 ------------------------------ Control (Phillip. A. Reinsch) /s/ MAURICE MCGRATH Director March 22, 2002 ------------------------------ (Maurice McGrath)

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT. No annual report or proxy material has been sent to security holders. -17- INDEX TO EXHIBITS

----------------- (1) Previously filed with the Commission as an exhibit to the Company's Registration Statement on Form S-3 (No. 33-42337) filed August 21, 1991. (2) Previously filed with the Commission as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. (3) Previously filed with the Commission as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. (4) Previously filed with the Commission as an exhibit to the Registrant's Current Report on Form 8-K on October 9, 1998.

CAPSTEAD SECURITIES CORPORATION IV 10-K