UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended March 31, 2005 |
||
| OR | ||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from ______________ to ______________ |
Commission File Number: 1-13991
MFA MORTGAGE INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 13-3974868 |
| (State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer |
| 350 Park Avenue, 21st Floor, New York, New York | 10022 |
| (Address of principal executive offices) | (Zip Code) |
(212)
207-6400
(Registrant’s telephone number, including area code)
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 þ
No o
Indicate by
check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Securities Exchange Act of 1934). Yes þ
No o
82,385,443 shares of the registrant’s common stock, $0.01 par value, were outstanding as of April 26, 2005.
TABLE OF CONTENTS
TABLE OF CONTENTS
MFA MORTGAGE
INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| (Dollars in Thousands, Except Per Share Amounts) | March 31, 2005 |
December 31, 2004 |
||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Mortgage-backed securities (“MBS”) (Note 4) | $ | 6,936,124 | $ | 6,777,574 | ||||
| Cash and cash equivalents | 77,547 | 68,341 | ||||||
| Accrued interest receivable | 27,407 | 26,428 | ||||||
| Interest rate cap agreements (“Caps”) (Note 5) | 2,159 | 1,245 | ||||||
| Swap agreements (“Swaps”) (Note 5) | 2,703 | 321 | ||||||
| Real estate held for investment (Note 6) | 29,900 | 30,017 | ||||||
| Goodwill | 7,189 | 7,189 | ||||||
| Receivable under Discount Waiver, Direct Stock Purchase and | ||||||||
| Dividend Reinvestment Plan (“DRSPP”) (Note 9) | – | 985 | ||||||
| Prepaid and other assets | 1,932 | 1,584 | ||||||
| $ | 7,084,961 | $ | 6,913,684 | |||||
| Liabilities: | ||||||||
| Repurchase agreements (Note 7) | $ | 6,311,874 | $ | 6,113,032 | ||||
| Accrued interest payable | 44,477 | 28,351 | ||||||
| Mortgages payable on real estate | 22,707 | 22,686 | ||||||
| Dividends payable | – | 18,170 | ||||||
| Accrued expenses and other liabilities | 2,766 | 2,611 | ||||||
| $ | 6,381,824 | $ | 6,184,850 | |||||
| Stockholders' Equity: | ||||||||
| Preferred stock, $.01 par value; series A 8.50% cumulative redeemable; | ||||||||
| 5,000,000 shares authorized; 3,840,000 shares issued and | ||||||||
| outstanding at March 31, 2005 and December 31, 2004 ($96,000 | ||||||||
| aggregate liquidation preference) (Note 9) | 38 | 38 | ||||||
| Common stock, $.01 par value; 370,000,000 shares authorized; | ||||||||
| 82,385,443 and 82,016,741 issued and outstanding at March 31, 2005 | ||||||||
| and December 31, 2004, respectively (Note 9) | 824 | 820 | ||||||
| Additional paid-in capital | 783,526 | 780,406 | ||||||
| Accumulated deficit | (489 | ) | (17,330 | ) | ||||
| Accumulated other comprehensive loss (Note 11) | (80,762 | ) | (35,100 | ) | ||||
| 703,137 | 728,834 | |||||||
| $ | 7,084,961 | $ | 6,913,684 | |||||
The accompanying notes are an integral part of the consolidated financial statements.
1
MFA MORTGAGE
INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
| For the Three Months Ended March 31, |
||||||||
| 2005 | 2004 | |||||||
| (Dollars In Thousands, Except Per Share Amounts) | (Unaudited) | |||||||
| Interest Income: | ||||||||
| MBS income | $ | 60,942 | $ | 40,066 | ||||
| Interest income on temporary cash investments | 297 | 167 | ||||||
| Total Interest Income | 61,239 | 40,233 | ||||||
| Interest Expense | 39,766 | 16,141 | ||||||
| Net Interest Income | 21,473 | 24,092 | ||||||
| Other Income: | ||||||||
| Revenue from operations of real estate | 1,033 | 1,002 | ||||||
| Miscellaneous other income | 12 | 162 | ||||||
| Total Other Income | 1,045 | 1,164 | ||||||
| Operating and Other Expense: | ||||||||
| Compensation and benefits | 1,555 | 1,467 | ||||||
| Real estate operating expense | 699 | 709 | ||||||
| Mortgage interest on real estate | 424 | 426 | ||||||
| Other general and administrative | 959 | 749 | ||||||
| Total Operating and Other Expense | 3,637 | 3,351 | ||||||
| Net Income | $ | 18,881 | $ | 21,905 | ||||
| Less: Preferred Stock Dividends | 2,040 | – | ||||||
| Net Income Available to Common Stockholders | $ | 16,841 | $ | 21,905 | ||||
| Earnings Per Share of Common Stock: | ||||||||
| Earnings per share – basic | $ | 0.20 | $ | 0.32 | ||||
| Weighted average shares outstanding – basic | 82,243 | 68,910 | ||||||
| Earnings per share – diluted | $ | 0.20 | $ | 0.32 | ||||
| Weighted average shares outstanding – diluted | 82,285 | 69,001 | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
2
MFA MORTGAGE
INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| For the Three Months Ended March 31, 2005 |
|||||
| (Unaudited) | |||||
| (Dollars in Thousands, Except Per Share Amounts) | |||||
| 8.50% Series A Cumulative Redeemable Preferred Stock – Liquidation | |||||
| Preference $25.00 per share: | |||||
| Balance at December 31, 2004 | $ | 38 | |||
| Balance at March 31, 2005 | 38 | ||||
| Common Stock, Par Value $0.01 (“Common Stock”): | |||||
| Balance at December 31, 2004, 82,016,741 shares | 820 | ||||
| Issuance of 368,702 shares | 4 | ||||
| Balance at March 31, 2005, 82,385,443 shares | 824 | ||||
| Additional Paid-in Capital, in excess of Par: | |||||
| Balance at December 31, 2004 | 780,406 | ||||
| Issuance of Common Stock, net of expenses | 2,994 | ||||
| Compensation expense for Common Stock options | 126 | ||||
| Balance at March 31, 2005 | 783,526 | ||||
| Accumulated Deficit: | |||||
| Balance at December 31, 2004 | (17,330 | ) | |||
| Net income | 18,881 | ||||
| Dividends declared on preferred stock | (2,040 | ) | |||
| Balance at March 31, 2005 | (489 | ) | |||
| Accumulated Other Comprehensive Loss: | |||||
| Balance at December 31, 2004 | (35,100 | ) | |||
| Unrealized losses on MBS, net | (49,388 | ) | |||
| Unrealized gains on interest rate Caps, net | 1,344 | ||||
| Unrealized gains on Swaps, net | 2,382 | ||||
| Balance at March 31, 2005 | (80,762 | ) | |||
| Total Stockholders' Equity | $ | 703,137 | |||
The accompanying notes are an integral part of the consolidated financial statements.
3
MFA MORTGAGE
INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended March 31, |
||||||||
| (Dollars In Thousands) | 2005 | 2004 | ||||||
| (Unaudited) | ||||||||
| Cash Flows From Operating Activities: | ||||||||
| Net income | $ | 18,881 | $ | 21,905 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Amortization of purchase premiums on MBS, net of accretion of discounts | 11,606 | 8,420 | ||||||
| Amortization of premium cost for Caps | 430 | 405 | ||||||
| Increase in interest receivable | (979 | ) | (3,773 | ) | ||||
| Decrease (increase) in receivable under DRSPP | 985 | (10,326 | ) | |||||
| Increase in other assets and other | (352 | ) | (356 | ) | ||||
| Decrease in accrued expenses and other liabilities | 155 | (2,182 | ) | |||||
| Increase in accrued interest payable | 16,126 | 3,918 | ||||||
| Stock option expense | 126 | 171 | ||||||
| Net cash provided by operating activities | 46,978 | 18,182 | ||||||
| Cash Flows From Investing Activities: | ||||||||
| Principal payments on MBS | 533,138 | 362,585 | ||||||
| Purchases of MBS | (752,682 | ) | (1,669,010 | ) | ||||
| Amortization of mortgage principal for real estate | (47 | ) | (41 | ) | ||||
| Cash recognized upon consolidation of subsidiary | – | 258 | ||||||
| Depreciation and amortization on real estate | 189 | 191 | ||||||
| Net cash used by investing activities | (219,402 | ) | (1,306,017 | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Purchase of interest rate Caps | – | (2,395 | ) | |||||
| Net increase in borrowings under repurchase agreements | 198,842 | 1,131,284 | ||||||
| Net proceeds from issuances of Common Stock | 2,998 | 103,770 | ||||||
| Dividends paid on Common Stock | (18,170 | ) | (15,923 | ) | ||||
| Dividends paid on preferred stock | (2,040 | ) | – | |||||
| Net cash provided by financing activities | 181,630 | 1,216,736 | ||||||
| Net increase (decrease) in cash and cash equivalents | 9,206 | (71,099 | ) | |||||
| Cash and cash equivalents at beginning of period | 68,341 | 139,707 | ||||||
| Cash and cash equivalents at end of period | ||||||||