SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
Commission File Number: 001-13709
ANWORTH MORTGAGE ASSET
CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| MARYLAND |
52-2059785 | |
| (State or other jurisdiction of Incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 1299 Ocean Avenue, #250, Santa Monica, California |
90401 | |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (310) 255-4493
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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨
As of May 14, 2003, the Registrant had 31,727,119 shares of Common Stock outstanding.
ANWORTH MORTGAGE ASSET CORPORATION
FORM 10-Q
INDEX
| Page | ||||||
| Part I. |
1 | |||||
| Item 1. |
1 | |||||
| 1 | ||||||
| Statement of Operations for the three months ended March 31, 2003 and 2002 |
2 | |||||
| Statement of Stockholders’ Equity for the three months ended March 31, 2003 |
3 | |||||
| Statements of Cash Flows for the three months ended March 31, 2003 and 2002 |
4 | |||||
| 5 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 | ||||
| Item 3. |
28 | |||||
| Item 4. |
31 | |||||
| Part II. |
32 | |||||
| Item 1. |
32 | |||||
| Item 2. |
32 | |||||
| Item 3. |
32 | |||||
| Item 4. |
32 | |||||
| Item 5. |
32 | |||||
| Item 6. |
33 | |||||
| 35 | ||||||
i
ANWORTH MORTGAGE ASSET CORPORATION
BALANCE SHEETS
(in thousands)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (unaudited) |
(audited) |
|||||||
| ASSETS |
||||||||
| Mortgage-backed securities at fair market value |
$ |
2,815,005 |
|
$ |
2,430,103 |
| ||
| Cash and cash equivalents |
|
229 |
|
|
906 |
| ||
| Interest receivable |
|
12,472 |
|
|
11,673 |
| ||
| Prepaid expenses and other |
|
1,492 |
|
|
1,202 |
| ||
| $ |
2,829,198 |
|
$ |
2,443,884 |
| |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Liabilities |
||||||||
| Reverse repurchase agreements |
$ |
2,485,414 |
|
$ |
2,153,870 |
| ||
| Payable for purchase of mortgage-backed securities |
|
40,945 |
|
|
— |
| ||
| Accrued interest payable |
|
8,008 |
|
|
9,944 |
| ||
| Dividends payable |
|
— |
|
|
12,673 |
| ||
| Accrued expenses and other |
|
1,996 |
|
|
1,875 |
| ||
| $ |
2,536,363 |
|
$ |
2,178,362 |
| |||
| Stockholders’ Equity |
||||||||
| Preferred stock, par value $.01 per share; authorized 20,000 shares; no shares issued and outstanding |
|
— |
|
|
— |
| ||
| Common stock, par value $.01 per share; authorized 100,000 shares; 26,609 and 25,396 issued and 26,559 and 25,346 outstanding, respectively |
|
265 |
|
|
253 |
| ||
| Additional paid in capital |
|
271,233 |
|
|
256,610 |
| ||
| Accumulated other comprehensive income consisting of unrealized gains on available-for-sale securities |
|
15,696 |
|
|
14,860 |
| ||
| Retained earnings (deficit) |
|
6,604 |
|
|
(5,218 |
) | ||
| Unearned restricted stock |
|
(734 |
) |
|
(754 |
) | ||
| Treasury stock at cost (50 shares) |
|
(229 |
) |
|
(229 |
) | ||
|
|
292,835 |
|
|
265,522 |
| |||
| $ |
2,829,198 |
|
$ |
2,443,884 |
| |||
See accompanying notes to financial statements.
1
ANWORTH MORTGAGE ASSET CORPORATION
STATEMENT OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited)
| Three months ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Interest income net of amortization of premium and discount |
$ |
23,327 |
|
$ |
7,925 |
| ||
| Interest expense |
|
(10,210 |
) |
|
(3,007 |
) | ||
| Net interest income |
|
13,117 |
|
|
4,918 |
| ||
| Gain on sale of securities |
|
652 |
|
|
223 |
| ||
| Expenses: |
||||||||
| External base management fee |
|
— |
|
|
(208 |
) | ||
| External incentive fee |
|
— |
|
|
(728 |
) | ||
| Compensation and benefits |
|
(386 |
) |
|
— |
| ||
| Incentive compensation |
|
(1,218 |
) |
|
— |
| ||
| Other expenses |
|
(343 |
) |
|
(90 |
) | ||
| Total expenses |
|
(1,947 |
) |
|
(1,026 |
) | ||
| Net income |
$ |
11,822 |
|
$ |
4,115 |
| ||
| Basic earnings per share |
$ |
0.46 |
|
$ |
0.45 |
| ||
| Average number of shares outstanding |
|
25,796 |
|
|
9,107 |
| ||
| Diluted earnings per share |
$ |
0.46 |
|
$ |
0.45 |
| ||
| Average number of diluted shares outstanding |
|
25,926 |
|
|
9,214 |
| ||
| Dividends declared per share |
|
— |
|
|
— |
| ||
See accompanying notes to financial statements.
2
ANWORTH MORTGAGE ASSET CORPORATION
STATEMENT OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
| Common Stock Shares |
Common Stock Par Value |
Additional Paid-in Capital |
Accum. Other Compre- hensive Income |
Retained Earnings (Deficit) |
Unearned Restricted Stock |
Treasury Stock at Cost |
Compre- hensive Income |
Total | ||||||||||||||||||||
| Balance, December 31, 2002 |
25,346 |
$ |
253 |
$ |
256,610 |
$ |
14,860 |
$ |
(5,218 |
) |
$ |
(754 |
) |
$ |
(229 |
) |
$ |
265,522 | ||||||||||
| Issuance of common stock |
1,213 |
|
12 |
|
14,623 |
|
14,635 | |||||||||||||||||||||
| Available-for-sale securities, fair value adjustment |
|
836 |
836 |
|
836 | |||||||||||||||||||||||
| Net income |
|
11,822 |
|
11,822 |
|
11,822 | ||||||||||||||||||||||
| Comprehensive income |
12,658 |
|||||||||||||||||||||||||||
| Amortization of restricted stock |
|
20 |
|
|
20 | |||||||||||||||||||||||
| Balance, March 31, 2003 |
26,559 |
$ |
265 |
$ |
271,233 |
$ |
15,696 |
$ |
6,604 |
|
$ |
(734 |
) |
$ |
(229 |
) |
$ |
292,835 | ||||||||||
See accompanying notes to financial statements.
3
ANWORTH MORTGAGE ASSET CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| For the three months ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Operating Activities: |
||||||||
| Net income |
$ |
11,822 |
|
$ |
4,115 |
|||