10-Q 1 cornerii.txt FORM 10-Q FOR CORNERSTONE MORTGAGE INVESTMENT II UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 2001 Commission file number 33-11459 -------------- -------- CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC. ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 43-1432378 ------------------------------------------------------------------------------ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 201 Progress Parkway Maryland Heights, Missouri 63043 ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (314) 515-2000 ---------------- 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date, May 9, 2001: 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)

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 prior security 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. During the twelve months ended December 31, 1999 and December 31, 2000, EDJ and Cornerstone II exercised the option to repurchase collateral for 22 and two of the 29 series, respectively, which had a current collateral principal balance that was less than 10% of the original collateral principal balance. EDJ and Cornerstone II exercised the option to repurchase collateral for two series during the three months ended March 31, 2001. 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 are $3,002,000 and $3,037,149, respectively, as of March 31, 2001. 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: Nothing to report. Item 5. Other Information: Nothing to report. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description of Exhibit ----------- ---------------------- 4.1 Deposit Agreement dated as of February 20, 1987, between the Company, as Depositor, and The Bank of New York, as successor Custodian (incorporated by reference to Exhibit 2 to the Current Report on Form 8-K filed on March 6, 1987). 4.2 Trust Agreement dated as of February 20, 1987, between the Company, as Depositor, and The Bank of New York, as successor Trustee (incorporated by reference to Exhibit 3 to the Current Report on Form 8-K filed on March 6, 1987). 4.3 Trust Agreement dated as of February 20, 1987, between the Company, as Depositor, and The Bank of New York, as successor Trustee (incorporated by reference to Exhibit 4 to the Current Report on Form 8-K filed on March 6, 1987). (b) Reports on Form 8-K No reports were filed on Form 8-K for the quarter ended March 31, 2001. 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 May 9, 2001 and Director /s/ Philip R. Schwab President, Chief Executive ---------------------------- Officer and Director May 9, 2001 Philip R. Schwab

CORNERSTONE MORTGAGE INVESTMENT GROUP II INC 10-Q