-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VFEPv4kOosHN16KwJoFsclvuCPAfcOlvqbYY9wv6MX1xPXwR5xGR9wqxRFJQuuxs VlsjDJWyNTNUwYcw9RGJxA== 0000930661-96-000506.txt : 19960524 0000930661-96-000506.hdr.sgml : 19960524 ACCESSION NUMBER: 0000930661-96-000506 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960523 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPSTEAD MORTGAGE CORP CENTRAL INDEX KEY: 0000766701 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 752027937 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-52415 FILM NUMBER: 96571248 BUSINESS ADDRESS: STREET 1: 2711 NORTH HASKELL AVE STREET 2: STE 900 CITY: DALLAS STATE: TX ZIP: 75204 BUSINESS PHONE: 2148742323 MAIL ADDRESS: STREET 1: 2711 NORTH HASKELL AVENUE STREET 2: STE 900 CITY: DALLAS STATE: TX ZIP: 75204 FORMER COMPANY: FORMER CONFORMED NAME: LOMAS MORTGAGE CORP DATE OF NAME CHANGE: 19891105 424B3 1 PROSPECTUS Filed pursuant to Rule 424(b)(3) SEC File No. 33-52415 PROSPECTUS CAPSTEAD MORTGAGE CORPORATION STOCKHOLDER INVESTMENT PROGRAM Capstead Mortgage Corporation (the "Company") hereby offers participation in its amended and restated Stockholder Investment Program (the "Program"). The Program is designed to provide investors with a convenient and economical way to purchase shares of the Company's Common Stock, par value $.01 per share ("Common Stock"), and to reinvest all or a portion of their cash dividends in additional shares of Common Stock, in most cases at a discount to the market price. Participants in the Program and interested investors may: .Automatically reinvest cash dividends on all or a portion of their shares. . Invest by making optional cash payments at any time up to a maximum of $10,000 per month, regardless of whether the participants' dividends are being reinvested. .Make an initial cash investment up to a maximum of $10,000. To fulfill Program requirements, shares of Common Stock may be purchased in the open market or in privately negotiated transactions, or from the Company. Shares purchased in the open market or in privately negotiated transactions will be credited to participant accounts at the average price per share of all shares purchased with respect to the relevant dividend payment date or Investment Date, as applicable. When the Company elects to make shares available for purchase under the Program, the purchase price of the shares of Common Stock so purchased may reflect a discount (ranging from 0% to 5%) from the market price. At present, it is expected that such shares will be purchased from the Company. The closing price of the Common Stock on May 20, 1996, as shown on the New York Stock Exchange consolidated tape, was $25 1/8 per share. This Prospectus relates to 1,500,000 shares of Common Stock offered for purchase under the Program. Stockholders who do not choose to participate in the Program will continue to receive cash dividends, as declared, in the usual manner. To the extent required by applicable law in certain jurisdictions, shares offered under the Program to persons not presently stockholders of the Company are offered through Merrill Lynch, Pierce, Fenner & Smith Incorporated. ---------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------- The date of this Prospectus is May 21, 1996 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files reports, proxy statements, and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements, and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C., and at the Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New York 10048, and 14th Floor, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements, and other information can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which the Common Stock is listed. DOCUMENTS INCORPORATED BY REFERENCE The following documents heretofore filed by the Company with the Commission are incorporated herein by reference: 1. Annual Report on Form 10-K for the year ended December 31, 1995, filed on March 25, 1996. 2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, filed on May 10, 1996. 3. The description of the Common Stock contained in the Company's Registration Statement on Form S-3 (No. 33-62212), as amended, as last filed on July 17, 1995. In addition, all documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus, and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be modified or superseded for purposes of this Prospectus to the extent that a statement contained in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus. The Company will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents incorporated herein by reference, other than exhibits to such documents. Requests for such copies should be directed to Capstead Mortgage Corporation, 2711 North Haskell Avenue, Suite 900, Dallas, Texas 75204, Attention: Treasurer. The Company's telephone number is (214) 874-2323. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 2 SUMMARY OF THE STOCKHOLDER INVESTMENT PROGRAM The following is a summary of certain features of the Program and is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this Prospectus. Number of shares offered under the 1,500,000 shares of Common Stock are Program.............................. offered by the Company under the Program. The Company may issue such shares directly or may cause the purchase of shares of Common Stock in the open market or in privately- negotiated transactions for use in the Program. Current dividend policy of the The Company and its qualified real Company.............................. estate investment trust ("REIT") subsidiaries have elected to be taxed as a REIT and intend to continue to do so. As a result of this election, the Company is not taxed on taxable income distributed to stockholders, provided that certain REIT qualification tests are met. Currently, it is the Company's policy to distribute 100% of taxable income within the time limits prescribed by the Internal Revenue Code, which may extend into the subsequent taxable year. Discount on shares purchased directly from the Company..................... Shares purchased directly from the Com- pany under the Program (whether in con- nection with optional cash purchases or initial cash purchases of up to $10,000 per month or reinvestment of dividends) may be issued at a discount (ranging from 0% to 5%) to the market price. As of the date of this Prospectus the dis- count is 3%, but such discount may be changed or eliminated by the Company at any time without prior notice to par- ticipants. The Company may, without prior notice to participants, change its determination that shares of Common Stock will be purchased by the Pro- gram's administrator directly from the Company or on the open market. No dis- count will be offered on shares pur- chased under the Program in the open market instead of directly from the Company. From time to time, financial intermediaries, including brokers and dealers, and other persons may engage in positioning transactions in order to benefit from the discount from market price of the Common Stock acquired under the Program. Such transactions may cause fluctuations in the trading volume of the Common Stock. Financial intermediaries and such other persons that engage in positioning transactions may be deemed to be underwriters within the meaning of Section 2(11) of the Securities Act of 1933. The Company has no arrangements or understandings, formal or informal, with any person relating to the sale of shares to be received pursuant to the Program. 3 Optional cash investments and initial In addition to reinvestment of cash investments..................... dividends (for which no minimum or maximum amount exists), participants in the Program may invest additional funds in Common Stock through optional investments of not less than $50 and not more than $10,000 per month. Persons not presently stockholders of the Company may become participants by making an initial cash investment of not less than $250 and not more than $10,000 to purchase shares under the Program. For purposes of these limitations, all Program accounts under the common control or management of a participant may be aggregated at the Company's sole discretion. Monthly cash investments of less than the applicable minimum amount and that portion of any investment that exceeds $10,000 will be returned to the participant, without interest. The Company does not anticipate providing waivers of the Program's requirements. Commissions on purchases and sales.... Participants in the Program will pay no commissions or brokerage fees on purchases made regarding dividend reinvestment. Participants will pay a pro rata portion of commissions and brokerage fees on open market purchases of Common Stock in connection with optional cash investments and initial investments. Sales of shares under the Program will be effected through the Program's administrator and will be subject to an administrative charge of $5, applicable brokerage fees and commissions and transfer taxes, if any. Special investment considerations..... Participants in the Program who reinvest dividends will be treated for federal income tax purposes as having received a dividend, without receiving cash to pay any tax payment obligation which arises as a result of such dividend. Participants will have limited control regarding the specific timing of optional cash purchases and sales under the Program. Participants will generally be unable to depend on the availability of a market discount regarding shares acquired under the Program. See "Capstead Mortgage Corporation Stockholder Investment Program--Disadvantages". 4 CAPSTEAD MORTGAGE CORPORATION STOCKHOLDER INVESTMENT PROGRAM The following is a complete statement of the Program. PURPOSE The purpose of the Program is to provide stockholders and other investors with a convenient and economical way to purchase shares of Common Stock and to reinvest all or a portion of their cash dividends in additional shares of Common Stock. ADVANTAGES . Shares purchased directly from the Company under the Program will be issued commission free and may be issued at a discount (ranging from 0% to 5%) to the market price. As of the date of this Prospectus the discount is 3%. If it is determined that shares of Common Stock to be purchased under the Program will be made in the open market instead of directly from the Company, the participants will not pay any brokerage fees or commissions on open market purchases of Common Stock in connection with the reinvestment of dividends. However, participants will pay a pro rata portion of brokerage fees and commissions on open market purchases of Common Stock in connection with optional cash investments and initial investments. No discount will be offered by the Company on shares not issued by the Company. . In addition to reinvestment of dividends, participants may invest additional funds in Common Stock through optional cash investments of not less than $50 and not more than $10,000 per month. Optional investments may be made by check, money order, wire transfer, electronic funds transfer from a predesignated bank account, or, for eligible employees of the Company and its subsidiaries, payroll deduction. Optional investments may be made occasionally or at regular intervals, as the participant desires. Participants may make optional investments even if dividends on their shares of Common Stock are not being reinvested. . Persons not presently stockholders of the Company may become participants by making an initial cash investment of not less than $250 and not more than $10,000 to purchase shares of Common Stock under the Program. . Funds invested in the Program are fully invested through the purchase of fractions of shares, as well as full shares, and proportionate cash dividends on fractions of shares are used to purchase additional shares. . Participants may direct the Program Administrator to transfer, at any time and at no cost to the participant, all or a portion of the participant's Program shares to a Program account for another person. . The Program offers a "share safekeeping" service whereby participants may deposit their Common Stock certificates with the Program Administrator and have their ownership of such Common Stock maintained on the Administrator's records as part of their Program account. . Participants will receive statements containing year-to-date information on all Program transactions in a participant's account within a reasonable time after a transaction occurs. DISADVANTAGES . Participants in the Program who reinvest dividends will be treated for federal income tax purposes as having received a dividend on the dividend payment date; such dividend may give rise to a tax payment obligation without providing the participant with immediate cash to pay such tax when it becomes due. See "Tax Consequences." . Participants will have limited control regarding the specific timing of optional cash purchases and sales under the Program. Because optional purchases under the Program will be made no earlier than ten business days following receipt of an investment instruction, and because sales under the Program will be effected by the Program Administrator only as soon as practicable after its receipt of such instructions, a participant may be unable to achieve the same level of control over purchase and sale timing that he or she might have regarding investments made outside the Program. . The Company may, without prior notice to participants, change its determination that shares of Common Stock will be purchased by the Program Administrator directly from the Company or on the open market. No discount will be offered on shares purchased under the Program in the open market instead of directly from the Company. The Company may also, without prior notice to participants, lower or eliminate the 5 discount on shares to be purchased directly from the Company. As a result, participants will generally be unable to depend on the availability of a market discount regarding shares acquired under the Program. . No interest will be paid by the Company or the Program Administrator on dividends or optional cash investments held pending reinvestment or investment. ADMINISTRATION Society National Bank (the "Administrator") will administer the Program, purchase and hold shares of Common Stock acquired under the Program, keep records, send statements of account activity to participants, and perform other duties related to the Program. Participants may contact the Administrator by writing to: Society National Bank c/o KeyCorp Shareholder Services, Inc. 5050 Renaissance Tower 1201 Elm Street Dallas, Texas 75270-2014 or by telephoning the Administrator toll free at (800) 527-7844 between 9:00 a.m. and 5:00 p.m. Central time. Written communications may also be sent to the Administrator by telefax. Participants should contact the Administrator for current telefax numbers. The Administrator also currently serves as transfer agent and dividend paying agent for the Company and may have other business relationships with the Company from time to time. PARTICIPATION Any person or entity, whether or not a stockholder of the Company, is eligible to participate in the Program, provided that such person or entity fulfills the prerequisites for participation described below under "Enrollment Procedures." The Program is intended for the benefit of investors in the Company and not for persons or entities who accumulate accounts under the Program over which they have control for the purpose of exceeding the $10,000 per month maximum or who engage in transactions that cause or are designed to cause aberrations in the price or trading volume of the Common Stock. Notwithstanding anything in the Program to the contrary, the Company reserves the right to exclude from participation in the Program, at any time, (i) persons or entities who attempt to circumvent the Program's standard $10,000 per month maximum by accumulating accounts over which they have control or (ii) any other persons or entities, as determined in the sole discretion of the Company. PREVIOUS SALES UNDER THE PROGRAM Since inception of the Program in June 1995, the Company has issued 554,872 shares of Common Stock under the Program. A total of 446,742 shares of Common Stock have been issued pursuant to the optional cash investment feature of the Program, approximately half of which shares were issued to investors who violated the intent of the Program by aggregating numerous affiliated accounts. The Program, as amended herein, is designed to eliminate any such aggregation activity. ENROLLMENT PROCEDURES After being furnished a copy of this Prospectus: (a) stockholders of record (shares registered directly with the Company's transfer agent) may become a participant by delivering a completed Enrollment Form to the Administrator. (b) beneficial owners (shares held in a name other than their own) are eligible to participate in the reinvestment of dividends, however, such beneficial owner should consult their broker or nominee to determine how they may participate and, if so, whether any fees will be charged by the broker or nominee in connection with such participation. To facilitate participation by beneficial owners, the Program is eligible for the Depository Trust Dividend Reinvestment Services. Participation in the Program's optional cash feature may only be made by direct enrollment in the Program with the Administrator. 6 (c) interested investors not presently stockholders of the Company may become a participant by delivering a completed Enrollment Form to the Administrator along with an initial investment of not less than $250 and not more than $10,000. Enrollment Forms will be processed as promptly as practicable. Participation in the Program will begin after the properly completed Enrollment Form has been reviewed and accepted by the Administrator. PARTICIPATION OPTION Eligible participants may choose between any one of the following investment options: (a) Full Dividend Reinvestment--The Administrator will apply any cash dividends on all shares of the Common Stock registered in the Program under the participant's name towards the purchase of shares of Common Stock. (b) Partial Dividend Reinvestment--The participant will continue to receive cash dividends on the number of whole shares of Common Stock that are specified on the Enrollment Form. The Administrator will apply any remaining cash dividends on shares of Common Stock registered in the Program under the participant's name towards the purchase of shares of Common Stock. (c) No Dividend Reinvestment--The participant will continue to receive cash dividends on all shares of the Common Stock registered in the Program under the participant's name in the usual manner. In each case, the participant may make optional cash purchases of shares of Common Stock under the Program. REINVESTMENT OF CASH DIVIDENDS Participants may elect to reinvest cash dividends paid on all or a portion of the shares of Common Stock registered in the Program under the participant's name by designating their election on the Enrollment Form. Reinvestment levels may be changed from time to time as a participant desires by submitting a new election to the Administrator. To be effective with respect to a particular Common Stock dividend, any change in the reinvestment election must be received by the Administrator on or before the record date for such dividend. The record date is usually about ten days prior to the payment of the dividend. The Company has historically paid cash dividends on the last business day of each calendar quarter. Once a participant elects reinvestment, cash dividends paid on shares of Common Stock held in the Program under the participant's name will be reinvested in additional shares of Common Stock on the dividend payment date if the shares are purchased from the Company. The Administrator may, in its discretion, initiate purchase transactions for the reinvestment of dividends prior to the actual payment of dividends in order to minimize, to the extent possible, the delay between the payment of dividends and the settlement of purchase transactions (see "Source and Price of Shares" below). If the participant has specified partial or no reinvestment of dividends, the portion of such dividend payment not being reinvested will be sent to the participant by check in the usual manner. OPTIONAL CASH INVESTMENTS AND INITIAL INVESTMENTS Participants may make optional cash investments by personal check or money order, wire investment, payroll deduction (eligible employees of the Company and its subsidiaries only), or automatic deduction from a bank account. Optional cash investments must be at least $50 for any single investment and may not exceed $10,000 per month. (For the purposes of these limitations, all Program accounts under the common control or management of a participant may be aggregated, at the Company's sole discretion.) There is no obligation to make an optional cash investment at any time, and the amount of such investments may vary from time to time. Initial investments, for those who are not already stockholders of the Company, must be at least $250 but less than $10,000, in the form of a personal check or money order, and must be included with the completed Enrollment Form returned to the Administrator. 7 Optional cash investments and initial investments must be received by the Administrator NO EARLIER THAN the 28th day of the calendar month immediately preceding the Investment Date (as defined below under "Investment Date") and NO LATER THAN 12:00 p.m. (Noon) Eastern time on the first day of the relevant Pricing Period (as defined below under "Source and Price of Shares") in order to be invested on the Investment Date. Otherwise, the optional cash investment or initial investment amount will be returned automatically by the Administrator to the participant as soon as is practicable. Furthermore, upon a participant's written request received by the Administrator no later than two business days prior to the Pricing Period, a timely optional cash investment or initial investment not already invested under the Program will be cancelled or returned to the participant, as appropriate. However, in such latter event, no refund of a check or money order will be made until the funds have been actually received by the Administrator. Accordingly, such refunds may be delayed by up to three weeks. The Administrator will apply the optional cash investment or initial investment received from a participant to the purchase of shares of the Common Stock for the account of the participant on the related Investment Date (see "Source and Price of Shares" below). NO INTEREST WILL BE PAID ON AMOUNTS HELD BY THE ADMINISTRATOR PENDING INVESTMENT. Accordingly, investors should transmit optional cash investments and initial investments so as to reach the Administrator shortly (but not later than 12:00 p.m. (Noon) Eastern time) on the first day of the relevant Pricing Period. All optional cash investments and initial investments are subject to collection by the Administrator for full face value in U.S. funds. INVESTMENT DATE The Program's "Investment Date" for optional cash investments and initial investments is the 22nd day of each month, or as soon thereafter as reasonably practicable, provided such date is not a Common Stock dividend record date. For months in which the 22nd is a Common Stock dividend record date, the Investment Date will be the first business day following, or as soon thereafter as reasonably practicable. If any Investment Date is not a day on which financial markets in New York City are open for business, the Investment Date will be the next day on which they are so open. SOURCE AND PRICE OF SHARES Source To fulfill Program requirements, the Administrator may purchase or sell shares in the open market or in privately negotiated transactions subject to such terms and conditions, including price and delivery, as the Administrator may accept. The Administrator may also purchase shares from or sell shares to the Company, to the extent the Company makes shares available or is willing to purchase or sell shares. The Administrator may commingle each participant's funds with those of other participants for the purpose of executing purchases. The Administrator will purchase shares as soon as practicable beginning on the relevant dividend payment date or Investment Date and in no event later than 30 days after the relevant dividend payment date or Investment Date and will sell shares on the open market as soon as practicable, except where and to the extent necessary under any applicable federal securities laws or other government or stock exchange regulations. For the reinvestment of cash dividends for shares purchased in the open market, the Administrator may, in its discretion, purchase shares prior to the actual payment of dividends (see "Reinvestment of Cash Dividends" above). Dividend and voting rights on shares purchased in the open market will commence upon settlement, which is normally three business days after purchase. However, shares purchased in the open market within a period of three business days prior to and including a dividend record date are considered purchased "ex-dividend" and therefore are not entitled to payment of that dividend or voting rights. 8 Price Shares purchased pursuant to the reinvestment of dividends will be credited to the participant's account at the weighted average price per share of all shares purchased with respect to the relevant dividend payment date. Shares purchased for the Program directly from the Company will be acquired on the relevant dividend payment date at the average of the high and low sales price of the Common Stock as reported in the New York Stock Exchange composite transaction listing on the dividend payment date, less a discount from the market price (ranging from 0% to 5%), as determined at the sole discretion of the Company. Shares purchased pursuant to optional cash investments and initial cash investments will be credited to the participant's account at the WEIGHTED AVERAGE PRICE PER SHARE OF ALL SHARES PURCHASED with respect to the relevant Investment Date. Shares purchased for the Program directly from the Company will be acquired on the relevant Investment Date at a price to participants, computed to three decimal places, obtained by averaging the daily high and low sales price of the Common Stock as reported in the New York Stock Exchange composite transaction listing for the ten Trading Days (as defined below) immediately preceding the relevant Investment Date and subtracting from such average a discount, determined at the sole discretion of the Company, ranging from 0% to 5%. A "Trading Day" means a day on which trades of the Common Stock are reported on the New York Stock Exchange; the period encompassing the ten Trading Days immediately preceding the relevant Investment Date is the relevant "Pricing Period." See "Plan of Distribution; Expenses" below. As of the date of this Prospectus, the discount for purchases directly from the Company is 3%, but may be changed or eliminated by the Company without prior notice to participants at any time. In all instances the discount on shares issued directly by the Company shall not exceed 5% of the closing price for the Common Stock as reported in the New York Stock Exchange composite transaction listing on the relevant dividend payment date or Investment Date, as applicable. Shares purchased on the open market will not be eligible for the discount to market price. INVESTMENTS MAY BE MADE IN THE FOLLOWING WAYS: Check Investment Optional cash investments and initial investments may be made by personal check or money order payable in U.S. dollars to "Society National Bank." Optional cash investments mailed to the Administrator must include the Voluntary Purchase Form attached to each statement of account sent to participants. Additional Voluntary Purchase Forms are available upon request from the Administrator. Wire Investment Optional cash investments may be made by wire transfer to the Administrator. Participants who wish to make a wire transfer should contact the Administrator for instructions. Participants making wire investments may be charged fees by the commercial bank initiating the transfer. Payroll Deduction Eligible employees of the Company and its subsidiaries ("eligible employees"), may make optional cash investments under the Program by having specified amounts (not less than $50 per month nor more than $10,000 per month) deducted from each paycheck. Capstead will make payroll deductions from each payroll check during the month. Capstead will hold all funds so deducted until the 5th of each month, and will then promptly forward such funds to the Administrator. The Administrator will invest funds in Common Stock beginning on the first Investment Date following receipt thereof by the Administrator. 9 Because funds to be invested by payroll deduction may only be transmitted to the Administrator once a month, participants using this investment option should recognize that, depending on the applicable pay date, funds deducted from a particular paycheck may not be forwarded to the Administrator for several weeks. NO INTEREST WILL BE PAID ON AMOUNTS HELD PENDING INVESTMENT. Eligible employees who wish to enroll in the Program but who are not stockholders of the Company may satisfy the requirement for an initial investment by initiating payroll deduction at the time of enrollment. Deduction from Retirement Distributions Retired employees of the Company and its subsidiaries who receive retirement distributions from the Company may make optional cash purchases under the Program through deductions from their retirement distribution checks. The features of such deduction procedure are identical in all material respects to those covering payroll deduction regarding eligible employees. See "Payroll Deduction" above. Automatic Investment from a Bank Account Participants may make automatic monthly investments of a specified amount (not less than $50 per month nor more than $10,000 per month) by electronic funds transfer from a pre-designated U.S. bank account. To initiate automatic monthly deductions, the participant must provide written authorization to the Administrator together with a voided blank check for the account from which funds are to be drawn. The written request for automatic monthly deduction will be processed and will become effective as promptly as practicable. Once automatic monthly deduction is initiated, funds will be drawn from the participant's designated bank account on the first day of the relevant Pricing Period, and will be invested in Common Stock beginning on the Investment Date. Participants may change or terminate automatic monthly deduction by providing new written instructions to the Administrator. To be effective with respect to a particular month, however, the new instructions must be received by the Administrator prior to the last business day of the preceding calendar month. SALE OF SHARES Participants may request the Administrator to sell any number of whole shares held in their Program accounts by giving written instruction to the Administrator. The Administrator will make the sale on the open market (at the market price at the time of sale) as soon as practicable following receipt of the request; participants will generally be unable to terminate the sale after submitting the request. The Company will have no influence over sales of shares on behalf of participants in the Program. The participant will receive the proceeds, less an administrative charge of $5 and applicable brokerage fees and commissions, if any, and any transfer taxes. Proceeds of shares sold through the Program will be paid to the participant normally by check upon settlement of trade. If instructions for the sale of shares are received on or after an ex- dividend date but before the related dividend payment date, the sale will be processed as described above and a separate check for the dividends will be mailed following the payment date. A request to sell all shares held in a participant's account will be treated as a withdrawal from the Program (see "Withdrawal" below). SHARE SAFEKEEPING At the time of enrollment in the Program, or at any later time, participants may use the Program's share safekeeping service to deposit any Common Stock certificates in their possession with the Administrator. Shares deposited will be transferred into the name of the Administrator or its nominee and credited to the participant's account under the Program. 10 By using the Program's share safekeeping service, participants no longer bear the risk associated with loss, theft or destruction of stock certificates. Also, because shares deposited with the Administrator are treated in the same manner as shares purchased through the Program, they may be transferred or sold through the Program in a convenient and efficient manner. See "Sale of Shares" above and "Withdrawal" and "Gift/Transfer of Shares Within the Program" below. Participants who wish to deposit their Common Stock certificates with the Administrator must complete and return to the Administrator, by registered, insured mail, the Common Stock certificates to be deposited, along with a properly completed Enrollment Form, if applicable. The certificate should not be endorsed. GIFT/TRANSFER OF SHARES WITHIN THE PROGRAM If a participant wishes to transfer the ownership of all or part of the shares held in the participant's Program account to a Program account for another person, whether by gift, private sale or otherwise, the participant may effect such transfer by written request, along with an executed stock assignment (stock power), to the Administrator. Requests for transfer are subject to the same requirements as for the transfer of Common Stock certificates, including requirements of a signature guarantee on the stock assignment. Shares so transferred will continue to be held by the Administrator under the Program. An account will be opened in the name of the transferee, if he or she is not already a participant, and such transferee will automatically be enrolled in the Program. If the transferee is not already a registered stockholder or a Program participant, the donor may make a reinvestment election for the transferee at the time of the gift. The transferee may change the reinvestment election after the gift has been made as described under "Reinvestment of Cash Dividends" above. The transferee will receive a statement showing the number of shares transferred to and held in the transferee's Program account. REPORTS TO PARTICIPANTS Each participant will receive a statement after each transaction showing the amount invested, purchase price, the number of shares purchased, deposited, sold, transferred, or withdrawn, the total number of shares accumulated and other information. The statement will consolidate all Program and certificated shares standing in the participant's name. The statement will reflect all account activity for the year. Each participant should retain these statements so as to be able to establish the cost basis of shares purchased under the Program for income tax and other purposes. Duplicate statements will be available from the Administrator at the participant's expense. In addition, each participant will receive copies of the same communications sent to all other holders of shares of Common Stock, including the Company's annual report to stockholders, a notice of the annual meeting and accompanying proxy statement, and Internal Revenue Service information return, if so required, for reporting dividend income received. All notices, statements and reports from the Administrator to a participant will be addressed to the participant at his or her latest address of record with the Administrator. Therefore, participants must promptly notify the Administrator of any change of address. To be effective with respect to mailings of dividend checks and quarterly statements and reports for a particular quarter, address changes must be received by the Administrator prior to the record date for that quarter's dividend. CERTIFICATES FOR SHARES Shares purchased and held under the Program will be held in safekeeping by the Administrator in its name or the name of its nominee. The number of shares (including fractional interests) held for each participant will be shown on each statement of account. Participants may obtain a new certificate for all or some of the whole 11 shares of Common Stock held in their Program accounts upon written request to the Administrator. Any remaining whole or fractional Program shares will continue to be held by the Administrator. Withdrawal of shares in the form of a certificate in no way affects dividend reinvestment (see "Reinvestment of Cash Dividends" above). Except as described above under "Gift/Transfer of Shares Within the Program," shares of stock held by the Administrator for a participant's Program account may not be pledged or assigned. A participant who wishes to pledge or assign any such shares must request that a certificate for such shares be issued in the participant's name. PLAN OF DISTRIBUTION; EXPENSES The Company may offer certain of the shares of Common Stock offered hereunder to persons not presently stockholders of the Company through Merrill Lynch, Pierce, Fenner & Smith Incorporated in states requiring the use of licensed broker-dealers in connection with such offering. Shares purchased for a participant with respect to a particular Investment Date will be credited to the participant's account at the weighted average price per share of all shares purchased with respect to that Investment Date. Shares purchased in the open market or in privately negotiated transactions are subject to such terms and conditions, including price and delivery, as the Administrator may accept. Shares purchased on the open market will not be eligible for the discount to market price. The Company will pay the costs of administering the Program, including charges by the Administrator for bank services on each dividend reinvestment. There will be no brokerage commissions on purchases of shares of Common Stock by the Administrator directly from the Company. In addition, the Company will pay all brokerage commissions related to purchases of shares of Common Stock on the open market pursuant to the reinvestment of dividends. For shares purchased on the open market pursuant to optional cash investments or on behalf of persons not presently stockholders of the Company, participants will pay a pro rata portion of brokerage commissions for such purchase. Such brokerage commissions are currently expected to range from $0.10 per share to $0.25 per share. The Administrator may charge a participant for additional services not provided under the Program or where specified charges are indicated. Certain expenses will be incurred by the participant if the participant requests that shares of Common Stock be sold. Brokers or nominees who participate on behalf of beneficial owners for whom they are holding shares may charge such beneficial owners fees in connection with such participation, for which neither the Administrator nor the Company will be responsible. WITHDRAWAL A participant may withdraw from the Program at any time by giving written instructions to the Administrator. Upon withdrawal from the Program, a certificate for the whole shares held in the Program for the participant will be issued. Alternatively, a participant may specify in the withdrawal notice that all (but not less than all) whole Program shares be sold. The Administrator will make the sale on the open market as soon as practicable after receipt of the withdrawal notice (see "Source and Price of Shares" above), and the participant will receive a check for the proceeds, less an administrative charge of $5 and applicable brokerage fees and commissions and any transfer taxes. Whether whole Program shares are withdrawn or sold, participants terminating participation in the Program will receive a check for the cash value of any fractional share held in their Program accounts. Fractions of shares will be valued at the same effective price as whole shares sold. If notice of withdrawal is received on or after an ex-dividend date but before the related dividend payment date, the withdrawal will be processed as described above and a separate check for the dividends will be mailed following the payment date. After participation in the Program has been terminated, no further investments may be made without re-enrolling in the Program. 12 MISCELLANEOUS Stock Split, Stock Dividend or Rights Offering Any dividends in Common Stock or split shares distributed by the Company on shares held in the Program will be added to the participant's account. Stock dividends or split shares distributed on certificated shares will be mailed directly to the participant in the same manner as to stockholders who are not participating in the Program. In the event of a rights offering, the participant will receive rights based upon the total number of whole shares owned, that is, the total number of Program and certificated shares standing in the participant's name. Voting of Shares Held in the Program Whole and fractional shares held in a Program account may be voted in person or by the proxy sent to the participant. Limitation of Liability Neither the Company nor the Administrator (nor any of their respective agents, representatives, employees, officers, directors, or subcontractors) will be liable in administering the Program for any act done in good faith nor for any good faith omission to act, including, without limitation, any claim of liability arising with respect to the prices or times at which shares are purchased or sold for participants, or any change in the market value of shares, or from failure to terminate a participant's account upon such a participant's death. The foregoing does not represent a waiver of any rights a participant may have under applicable securities laws. Change or Termination of the Program The Company, in its sole discretion, may suspend, modify or terminate the Program at any time in whole, in part, or in respect of participants in one or more jurisdictions. Notice of such suspension, modification or termination will be sent to all affected participants. No such event will affect any shares then credited to a participant's account. Upon any whole or partial termination of the Program by the Company, certificates for whole shares held in an affected participant's account under the Program will be issued to the participant and a cash payment will be made for any fraction of a share. Termination of a Participant If a participant does not own in excess of one whole Program or certificated share in the participant's name, the participant's participation in the Program may be terminated. The Company may also terminate any participant's participation in the Program for any reason (including, without limitation, the attempted circumvention by a participant of the $10,000 monthly maximum for cash purchases through the accumulation of Program accounts over which they have control) after written notice in advance mailed to such participant at the address appearing on the Administrator's records. Participants whose participation in the Program has been terminated will receive certificates for whole shares held in their accounts and a check for the cash value of any fractional share held in their Program accounts. THE COMPANY The Company was incorporated on April 15, 1985 in the state of Maryland and commenced operations in September 1985. The Company generates earnings from the interest income on its consolidated mortgage loan portfolio which includes its investments in whole mortgage loans, AAA-rated private mortgage pass- through securities and mortgage-backed securities issued by various government-sponsored entities; from its investment in mortgage loans pledged to secure collateralized mortgage obligations ("CMOs") or pooled in connection with the issuance of publicly-offered pass-through securities; and from the servicing fees on 13 mortgage loans in its servicing portfolio. The mortgage pass-through securities and CMOs are issued by certain affiliated entities of the Company. Mortgage loan servicing includes collection activities, accounting for principal and interest payments, escrow administration and other responsibilities relating to the administration of the mortgage loans. In exchange for providing this service, the Company will receive periodically a servicing fee representing an annualized percentage of the outstanding principal balance of each such mortgage loan. The Company may enter into short- or long-term investment strategies as opportunities arise. The Company, and its qualified real estate investment trust ("REIT") subsidiaries, have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), and intend to continue to do so. As a result of this election, the Company and such subsidiaries are not taxed at the corporate level on taxable income distributed to stockholders, provided that certain REIT qualification tests are met. Certain other affiliated entities which are consolidated with the Company for financial reporting purposes, are not consolidated for federal income tax purposes because such entities were not established as REITs or qualified REIT subsidiaries. All taxable income of these affiliated entities are subject to federal and state income taxes, where applicable. TAX CONSEQUENCES The Company believes the following is an accurate summary of the material federal tax consequences of participation in the Program as of the date of this Prospectus. This summary may not reflect every possible situation that could result from participation in the Program, and, therefore, participants in the Program are advised to consult their own tax advisors with respect to the tax consequences (including federal, state, local and other tax laws and U.S. tax withholding laws) applicable to their particular situations. The discussion is based on various rulings of the Internal Revenue Service regarding several types of dividend reinvestment plans. No ruling, however, has been issued or requested regarding the Program. REINVESTED DIVIDENDS For shares purchased from the Company with reinvested dividends, participants in the Program will be treated for federal income tax purposes as having received, on the dividend payment date, a distribution in an amount equal to the fair market value on that date of the shares so acquired. Such shares will have an initial tax basis equal to the same amount. For shares purchased by the Administrator on the open market by reinvestment of dividends, participants in the Program will be treated for federal income tax purposes as having received on the dividend payment date, a distribution in an amount equal to the cash dividend such participant would otherwise have been entitled to receive plus the participant's pro rata portion of any brokerage cost paid by the Company. Such shares will have an initial tax basis equal to the same amount. The amount treated as a distribution will constitute a dividend for federal income tax purposes to the same extent that a cash distribution would be so treated. The holding period for a share of Common Stock (including a fractional share) generally will begin on the day after the Investment Date that the share was acquired. The holding period of a whole share resulting from the acquisition of two or more fractional shares on different Investment Dates normally will be split between the holding periods of the fractional components comprising the whole share. OPTIONAL CASH PAYMENTS Participants will be treated as having received a distribution upon the purchase of shares with an optional cash deposit in an amount equal to the excess, if any, of the fair market value of the shares on the date on which they were acquired (plus a pro rata portion of any brokerage cost incurred in open market purchases of the shares) over the amount of the optional cash deposit. Such shares will have an initial tax basis equal to the amount of the deposit plus the excess, if any, of the fair market value of the shares purchased over the amount of the deposit. The amount treated as a distribution will constitute a dividend for federal income tax purposes to the same extent that a cash distribution would be so treated. The holding period for a share of Common Stock (including a fractional share) generally will begin on the day after the Investment Date that the share was 14 acquired. The holding period of a whole share resulting from the acquisition of two or more fractional shares on different Investment Dates normally will be split between the holding periods of the fractional components comprising the whole share. RECEIPT OF SHARE CERTIFICATES AND CASH A participant will not realize any taxable income other than that described above upon the mere receipt of certificates for whole shares credited to the participant's account, either upon the participant's request for certain of those shares or upon termination in the Program. A participant will realize gain or loss upon the sale or exchange of shares acquired under the Program. A participant will also realize gain or loss upon receipt, following termination of participation in the Program, of a cash payment for any fractional share interests credited to the participant's account. The amount of any such gain or loss will be the difference between the amount that the participant received for the shares or fractional share interest (net of any applicable fees or expenses) and the tax basis thereof. MISCELLANEOUS The above rules may not be applicable to certain participants in the Program, such as tax-exempt entities (e.g., pension funds and IRAs) and foreign stockholders. These particular participants should consult their own tax advisors concerning the tax consequences applicable to their situations. In the case of participants in the Program whose dividends are subject to U.S. backup withholding, the Administrator will reinvest dividends less the amount of tax required to be withheld. In the case of foreign stockholders whose dividends are subject to U.S. federal tax withholding, the Administrator will reinvest dividends less the amount of tax required to be withheld. The filing of any documentation required to obtain a reduction in U.S. withholding tax will be the responsibility of the stockholder. USE OF PROCEEDS At present, it is expected that purchases of Common Stock under the Program will be made directly from the Company. The Company, however, may determine without prior notice to participants that shares will be purchased by the Administrator on the open market for use in the Program. The Company intends to use any net proceeds from the sales of shares purchased from the Company for general corporate purposes. LEGAL MATTERS The validity of the Common Stock offered hereby has been passed on for the Company by Andrews & Kurth L.L.P., Dallas, Texas. Andrews & Kurth L.L.P. will rely as to all matters of Maryland law on Piper & Marbury L.L.P., Baltimore, Maryland. Attorneys at Andrews & Kurth L.L.P. beneficially own approximately 15,000 shares of Common Stock and approximately 32,600 shares of the Company's $1.26 Cumulative Convertible Preferred Stock, Series B. EXPERTS The consolidated financial statements of Capstead Mortgage Corporation incorporated by reference in Capstead Mortgage Corporation's Annual Report (Form 10-K) for the year ended December 31, 1995, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon incorporated by reference therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 15 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE- SENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR- CUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF- FAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTI- TUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SE- CURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. ---------------- TABLE OF CONTENTS
PAGE ---- Available Information...................................................... 2 Documents Incorporated by Reference........................................ 2 Summary of the Stockholder Investment Program.............................. 3 Capstead Mortgage Corporation Stockholder Investment Program............... 5 Purpose.................................................................. 5 Advantages............................................................... 5 Disadvantages............................................................ 5 Administration........................................................... 6 Participation............................................................ 6 Previous Sales Under the Program......................................... 6 Enrollment Procedures.................................................... 6 Participation Option..................................................... 7 Reinvestment of Cash Dividends........................................... 7 Optional Cash Investments and Initial Investments........................ 7 Investment Date.......................................................... 8 Source and Price of Shares............................................... 8 Sale of Shares........................................................... 10 Share Safekeeping........................................................ 10 Gift/Transfer of Shares Within the Program............................... 11 Reports to Participants.................................................. 11 Certificates for Shares.................................................. 11 Plan of Distribution; Expenses........................................... 12 Withdrawal............................................................... 12 Miscellaneous............................................................ 13 The Company................................................................ 13 Tax Consequences........................................................... 14 Reinvested Dividends..................................................... 14 Optional Cash Payments................................................... 14 Receipt of Share Certificates and Cash................................... 15 Miscellaneous............................................................ 15 Use of Proceeds............................................................ 15 Legal Matters.............................................................. 15 Experts.................................................................... 15
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1,500,000 SHARES LOGO CAPSTEAD MORTGAGE CORPORATION COMMON STOCK ---------------- PROSPECTUS ---------------- STOCKHOLDER INVESTMENT PROGRAM ---------------- MAY 21, 1996 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----