UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  January 28, 2011
 
WASHINGTON MUTUAL, INC.
(Exact name of registrant as specified in its charter)
 
Commission File Number:  1-14667
 
WASHINGTON
91-1653725
(State or other jurisdiction of
(IRS Employer
incorporation)
Identification No.)
 
925 FOURTH AVENUE, SUITE 2500
SEATTLE, WASHINGTON 98104
(Address of principal executive offices, including zip code)
 
(206) 432-8887
(Registrant’s telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 
 

Item 7.01  Regulation FD Disclosure.

On January 28, 2011, Washington Mutual, Inc. (the “ Company ”) and WMI Investment Corp. (together with the Company, the “ Debtors ”) filed their monthly operating report for the period December 1, 2010 to December 31, 2010 (the “ Monthly Operating Report ”) with the United States Bankruptcy Court for the District of Delaware (the “ Court ”) (Case Number 08-12229 (MFW)). The Monthly Operating Report is attached hereto as Exhibit 99.1 and is incorporated herein by reference. This Current Report (including the exhibit hereto) will not be deemed an admission as to the materiality of any information required to be disclosed solely by Regulation FD.
 
The Monthly Operating Report may be available electronically, on the internet website of the Debtors’ claims agent, Kurtzman Carson Consultants, LLC, at http://www.kccllc.net/.
 
Limitation on Incorporation by Reference
 
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
 
Cautionary Statement Regarding Financial and Operating Data
 
The Company cautions investors and potential investors not to place undue reliance upon the information contained in the Monthly Operating Report, which was not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of the Company. The Monthly Operating Report is limited in scope, covers a limited time period, and has been prepared solely for the purpose of complying with the operating guidelines as described in the Chapter 11 Trustee Handbook, United States Department of Justice, May 2004 in accordance with 28 U.S.C. § 586(a)(3). The Monthly Operating Report was not audited or reviewed by independent accountants, was not prepared in accordance with Generally Accepted Accounting Principles in the United States, is in a format prescribed by applicable bankruptcy laws, and is subject to future adjustment and reconciliation. There can be no assurance that, from the perspective of an investor or potential investor in the Company’s securities, the Monthly Operating Report is complete. The Monthly Operating Report also contains information for periods which are shorter or otherwise different from those required in the Company’s reports pursuant to the Exchange Act, and such information might not be indicative of the Company’s financial condition or operating results for the period that would be reflected in the Company’s financial statements or in its reports pursuant to the Exchange Act. Results set forth in the Monthly Operating Report should not be viewed as indicative of future results.
 
Cautionary Statement Regarding Forward-Looking Statements
 
The Current Report on Form 8-K and the exhibit hereto contain certain statements that may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the Company’s current plans, expectations, estimates and management’s beliefs about the Company’s future performance. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” or variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties that are difficult to predict and which may cause the Company’s actual results and performance to differ materially from those expressed or forecasted in any such forward-looking statements. Some of these risks and uncertainties are discussed in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2007 under “Factors that May Affect Future Results.” These risks include, among other factors, changes in business, economic and market conditions, changes in government regulation, and changes in the competitive environment in which the Company operates. Other risks that the Company faces include, but are not limited to, the following: (i) the Company’s ability to obtain Court approval with respect to motions in the
 
 
 
2
 
 
 
Debtors’ chapter 11 proceedings prosecuted by the Debtors from time to time; (ii) risks associated with third parties seeking and obtaining Court approval to convert the Debtors’ chapter 11 cases to cases under chapter 7 of the bankruptcy code; (iii) risks associated with litigation and other claims that involve the Company ; and (iv) the potential adverse impact of the Debtors’ chapter 11 cases on the Debtors’ liquidity or results of operations. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements. However, readers should carefully review the statements set forth in the reports, which the Company files from time to time with the Securities and Exchange Commission, particularly its Current Reports on Form 8-K.
 

Item 9.01  Financial Statements and Exhibits.

(d) Exhibits
 
Exhibit No.
 
  
Description
EX-99.1
 
Monthly Operating Report for the period December 1, 2010 to December 31, 2010, filed with the United States Bankruptcy Court for the District of Delaware.
 
 
 
 
 

 

 
3
 


 

 
Signature(s)
 
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 hereunto duly authorized.

 
  WASHINGTON MUTUAL, INC.  
       
Date:  January 28, 2011
By:
/s/  John Maciel  
    John Maciel  
    Chief Financial Officer  




 
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
4
EXHIBIT 99.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
 
In re Washington Mutual, Inc., et al.
Case No. 08-12229 (MFW)
 
Reporting Period: 12-01-10 to 12-31-10
   
 
MONTHLY OPERATING REPORT
 
REQUIRED DOCUMENTS
Form No.
Document
Attached
Explanation
Attached
Schedule of Cash Receipts and Disbursements
MOR-1
Yes
 
Bank Reconciliation (or copies of Debtors’ bank reconciliations)
MOR-1a
Refer to attached stmt
 
Schedule of Professional Fees Paid
MOR-1b
Yes
 
Copies of bank statements
MOR-1c
Refer to attached stmt
 
Cash disbursements journals
 
n/a
Refer to MOR 1 for summary of all disbursements.
Statement of Operations
MOR-2
Yes
See attached notes
Balance Sheet
MOR-3
Yes
See attached notes
Status of Post petition Taxes
MOR-4
Yes
 
Copies of IRS Form 6123 or payment receipt
 
n/a
Payroll services outsourced including remission of taxes
Copies of tax returns filed during reporting period
 
n/a
See listing of filings
Summary of Unpaid Post petition Debts
MOR-4
n/a
Detail on face of balance sheet.
Listing of aged accounts payable
MOR-4
Yes
 
Accounts Receivable Reconciliation and Aging
MOR-5
n/a
No trade receivables
Debtor Questionnaire
MOR-5
Yes
 

I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the documents attached are true and correct to the best of my knowledge and belief.
 
 
     
 /s/ John Maciel
 
January 28, 2011
Signature of Authorized Individual*
 
Date
     
John Maciel
 
Chief Financial Officer
Printed Name of Authorized Individual
 
Title of Authorized Individual
     

 
*Authorized individual must be an officer, director or shareholder if debtor is a corporation; a partner if debtor is a partnership; a manager or member if debtor is a limited liability company.




 
 
 
In re Washington Mutual, Inc., et al
Case No. 08-12229 (MFW)
 



 
 
DISCLAIMER
 


Washington Mutual, Inc. (“WMI”) and WMI Investment Corp. (together, the “Debtors”) caution investors and potential investors in WMI not to place undue reliance upon the information contained in this Monthly Operating Report, which was not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of WMI.  The Monthly Operating Report is limited in scope, covers a limited time period, and has been prepared solely for the purpose of complying with the monthly operating guidelines as described in the Chapter 11 Trustee Handbook, United States Department of Justice, May 2004 in accordance with 28 U.S.C §586(a)(3).  The Monthly Operating Report was not audited or reviewed by independent accountants; does not purport to present the financial statements of WMI in accordance with generally accepted accounting principles; does not purport to present the market value of WMI’s assets and liabilities or the recoverability of WMI’s assets; is in a format prescribed by applicable bankruptcy laws; and is subject to future adjustment and reconciliation.  There can be no assurance that, from the perspective of an investor or potential investor in WMI’s securities, the Monthly Operating Report is complete.  Results set forth in the Monthly Operating Report should not be viewed as indicative of future results.  This disclaimer applies to all information contained herein.
 
On September 26, 2008 (the “Petition Date”), the Debtors each commenced voluntary cases under chapter 11 of title 11 of the United States Code with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).  Prior to the Petition Date, on September 25, 2008, the Director of the Office of Thrift Supervision, appointed the Federal Deposit Insurance Corporation (the “FDIC”) as receiver for Washington Mutual Bank (“WMB”) and advised that the receiver was immediately taking possession of WMB’s assets.  Immediately after its appointment as receiver, the FDIC sold substantially all the assets of WMB, including the stock of Washington Mutual Bank fsb , to JPMorgan Chase Bank, National Association (“JPMorgan”) pursuant to that certain Purchase and Assumption Agreement, Whole Bank, dated as of September 25, 2008 (the “Sale”).
 
Prior to the Petition Date, WMI and WMB jointly maintained their respective financial records.  As a result of the Sale, many of the Debtors’ books and records were seized by the FDIC and transferred to the custody of JPMorgan.  Accordingly, the Debtors are not in control of certain information relating to their operations and financial affairs, including, but not limited to, certain accounting information.  In addition, as of the date of the Sale, substantially all of WMB’s employees became employees of JPMorgan .  Accordingly, this Monthly Operating Report was prepared, in part, based upon the information and work product and/or representations made available to the Debtors and their professionals by representatives of WMB and JPMorgan.
 
Results represented in this Monthly Operating Report are consistent with WMI’s accounting practices as of the Petition Date.  However, records of prepetition assets and liabilities, including, among other things, liabilities owed by WMI to WMB and its affiliates are likely to be adjusted.  Further, claims have been filed against the Debtors in their chapter 11 cases that are not currently recorded on WMI’s books that, if allowed, would change the reported balances for pre-petition liabilities.  The Debtors reserve all rights to amend the results represented in this Monthly Operating Report.
 

 
 
 


Washington Mutual, Inc., et al.
 
December 2010 Monthly Operating Report -- UNAUDITED
Case No. 08-12229 (MFW)
MOR 1 -- Schedule of Cash Receipts and Disbursements
 
 

 
Washington Mutual, Inc.
 
WMI Investment Corp.
 
Account
Deposit
Deposit
Deposit
Deposit
Money Market
General
 
Deposit
General
   
Bank
WMB/JPM
WMB/JPM
WMB/JPM
WMB/JPM
Bank of America
Bank of America
 
WMB/JPM
Bank of America
   
Bank Account
xxx0667
xxx4234
xxx9626
xxx9663
xxx0658
xxx4228
WMI
xxx4704
xxx4231
WMI Inv Corp
Combined
GL Account
70 /10450
70 / 10441
70 / 10451
70 / 10452
70 / 12510
70 /10305
Total
467 / 10450
467 / 10305
Total
Total
                       
Opening Balance - 11/30/2010
 262,291,951
3,681,475,616
4,668
750,523
 14,970,135
4,696,879
3,964,189,772
 53,683,617
161,290
53,844,907
 4,018,034,679
                       
Receipts
                     
                       
Interest & investment returns
 45,912
644,406
1
132
2,510
242,468
935,427
9,397
105,216
 114,613
 1,050,040
Reimbursements/distributions from subs
       
 32,000,000
 -
 32,000,000
   
 -
32,000,000
Proceeds from BOLI surrender
         
 25,275
 25,275
   
 -
25,275
Other miscellaneous receipts
         
 -
 -
   
 -
 -
Total Receipts
 45,912
644,406
1
132
 32,002,510
267,743
 32,960,702
9,397
105,216
 114,613
33,075,315
                       
                       
Transfers
                     
                       
Sweep to/(from) Money Market account
       
(24,500,000)
 24,500,000
 -
     
 -
Transfer (to)/from Wells Managed Account
         
 -
 -
 
 -
 -
 -
Total Transfers
 -
 -
 -
 -
(24,500,000)
 24,500,000
 -
 -
 -
 -
 -
                       
                       
Disbursements
                     
                       
Salaries and benefits
         
363,114
363,114
 
 -
 -
 363,114
Travel and other expenses
         
 38,588
 38,588
 
 -
 -
38,588
Occupancy and supplies
         
104,358
104,358
 
 -
 -
 104,358
Professional fees
         
 19,249,525
 19,249,525
 
 -
 -
19,249,525
Other outside services
         
2,477,678
2,477,678
 
 -
 -
 2,477,678
Ahmanson Executive Plan Settlement
         
2,532,508
2,532,508
 
 -
 -
 2,532,508
Bank fees
         
 20,564
 20,564
 
 18
 18
20,582
US Trustee quarterly Fees
         
 -
 -
 
 -
 -
 -
Directors fees
         
 60,000
 60,000
 
 -
 -
60,000
Taxes paid
         
7,359
7,359
 
 -
 -
 7,359
Total Disbursements
 -
 -
 -
 -
 
 24,853,693
 24,853,693
 -
 18
 18
24,853,711
                       
Net Cash Flow
 45,912
644,406
1
132
7,502,510
(85,950)
8,107,009
9,397
105,198
 114,595
 8,221,604
                       
Cash - End of Month
 262,337,863
3,682,120,022
4,669
750,655
 22,472,645
4,610,929
3,972,296,781
 53,693,014
266,488
53,959,502
 4,026,256,283
                       
GL Balance
 262,337,863
3,682,120,022
4,669
750,655
 22,472,645
4,610,929
3,972,296,781
 53,693,014
266,488
53,959,502
 4,026,256,283
                       
Net value - short-term securities
           
 563,680,124
   
 222,204,240
 785,884,363
                       
Total Cash & Cash Equivalents
           
4,535,976,905
   
 276,163,742
 4,812,140,646


 
 
 
In re Washington Mutual, Inc., et al.
Case No. 08-12229 (MFW)
 

 
December 2010 Monthly Operating Report -- UNAUDITED
MOR 1a and MOR 1c -- Cash



Bank Reconciliations
 

The above-captioned debtors (the "Debtors") hereby submit this attestation regarding bank account reconciliations in lieu of providing copies of bank statements and copies of all account reconciliations.
 
I attest that each of the Debtors’ bank accounts is reconciled to monthly bank statements except those certain accounts ending in 0667, 9626, 9663 and 4704 (the “Excluded Accounts”).  The Debtors’ standard practice is to ensure that each bank account is reconciled to monthly bank statements for each calendar month 30 days after month end. 
 
In May 2009, JPMorgan started transitioning bank accounts from the WMB deposit platform to the JPMorgan deposit platform.  Since the transition, JPMorgan has only provided the Debtors with bank account statements for certain months.  The Debtors have not received bank statements for the period covered by this MOR for the Excluded Accounts.  Therefore, the Debtors are unable to reconcile information related to the Excluded Accounts against a related bank statement.  The Debtors have continued to record interest income on the accounts consistent with prior practice and based on an existing agreement with JPMorgan.


   /s/  John Maciel                             
John Maciel
Chief Financial Officer
Washington Mutual, Inc.
 
 
 
 
 
 
 


 
Case No. 08-12229 (MFW)
Washington Mutual, Inc., et al
 
MOR-1B: Schedule of Professional Fees Paid
 
Month Ended December 30, 2010
 


Washington Mutual, Inc.
 
       
Check
 
Amount Paid - Dec'10*
   
Amount Paid CTD
 
Payee
 
Period Covered
 
Number
 
Date
 
Fees
   
Expense
   
Fees
   
Expense
 
                                     
Akin, Gump, Strauss, Hauer & Feld LLP
 
06/01/10 - 10/31/10
 
Wire
 
12/30/10
  $ 1,131,131.35     $ 21,522.59     $ 16,144,269.33     $ 475,266.77  
Alvarez & Marsal
 
10/01/10 - 11/30/10
 
Wires
 
12/02/10, 12/16/10
    3,675,290.50       92,144.63       51,123,107.74       2,285,046.47  
Ashby & Geddes, P.A.
 
06/01/10 - 10/31/10
 
Wires
 
12/16/10, 12/22/10
    126,423.70       1,825.19       680,223.20       63,497.55  
Benesch, Friedlander, Coplan & Aronoff
                -       -       24,742.50       1,677.26  
Blackstone Advisory Partners LLP
                -       -       1,350,000.00       59,356.43  
Cole, Schotz, Meisel, Forman & Leonard, PA
 
08/01/10 - 09/30/10
  3076, 3131  
12/09/10, 12/22/10
    11,571.10       1,558.02       29,061.50       11,987.88  
CONSOR Intellectual Asset Management
 
 
            -       -       255,318.00       3,249.00  
CP Energy Group, LLC
                -       -       91,347.88       159.47  
Davis Wright Tremaine LLP
 
06/01/10 - 09/30/10
  3094, 3133  
12/16/10, 12/22/10
    3,893.30       -       709,666.50       24,567.15  
Elliott Greenleaf
 
06/01/10 - 09/30/10
  3095, 3134  
12/16/10, 12/22/10
    36,266.90       1,405.52       774,698.75       54,314.56  
FTI Consulting, Inc.
 
06/01/10 - 09/30/10
 
Wires
 
12/02/10, 12/22/10
    257,659.95       724.99       5,873,478.30       60,003.77  
Gibson, Dunn & Crutcher LLP
 
07/01/10 - 08/31/10
  3136  
12/22/10
    6,689.80       -       761,800.75       14,086.19  
Grant Thornton
                -       -       457,536.00       39,407.93  
Joele Frank, Wilkinson Brimmer Katcher
 
11/01/10 - 11/30/10
  3099  
12/16/10
    11,110.00       4,354.85       215,471.89       25,101.33  
John W. Wolfe, P.S.
 
06/01/10 - 10/31/10
 
Wire
 
12/22/10
    255,691.30       496.39       3,050,187.60       8,816.13  
Kurtzman Carson Consultants LLC
 
11/01/10 - 11/30/10
 
Wire
 
12/30/10
    392,759.44       400,229.80       2,757,174.83       4,313,814.05  
McKee Nelson LLP / Bingham McCutchen LLP
 
06/01/10 - 09/30/10
  3091, 3132  
12/16/10, 12/22/10
    11,773.90       910.37       2,660,541.68       270,298.92  
McKenna Long & Aldridge
 
07/01/10 - 10/31/10
 
Wires
 
12/09/10, 12/16/10, 12/22/10
    4,012,439.20       147,283.62       5,406,500.60       180,824.63  
Miller & Chevalier Chartered
 
06/01/10 - 08/31/10
  3140  
12/22/10
    31,211.20       -       813,635.36       4,057.34  
Milliman
                -       -       31,429.99       -  
Pepper Hamilton LLP
 
06/01/10 - 10/31/10
 
Wires
 
12/02/10, 12/16/10, 12/22/10
    137,379.40       15,520.66       2,399,445.43       140,170.81  
Perkins Coie LLP
 
06/01/10 - 09/30/10
 
Wires
 
12/16/10, 12/22/10
    259,565.30       14,128.04       2,603,990.34       126,718.21  
Peter J. Solomon Company
 
06/01/10 - 10/31/10
 
Wires
 
12/16/10, 12/22/10
    280,000.00       249.30       1,471,250.00       10,038.73  
PricewaterhouseCoopers LLP
                -       -       2,066,910.00       184,532.35  
Quinn Emanuel Urquhart Oliver & Hedges
 
06/01/10 - 09/30/10
 
Wires
 
12/09/10, 12/16/10, 12/22/10
    1,649,330.51       36,638.39       12,926,230.66       389,816.52  
Richards, Layton & Finger P.A.
 
06/01/10 - 10/31/10
 
Wires
 
12/16/10, 12/22/10, 12/30/10
    253,082.40       26,196.61       1,264,876.00       159,365.19  
Shearman & Sterling LLP
 
06/01/10 - 09/30/10
  3107, 3143  
12/16/10, 12/22/10
    28,196.00       13.38       1,171,668.46       19,036.04  
Silverstein & Pomerantz, LLP
                -       -       21,932.50       77.53  
Simpson Thacher & Bartlett LLP
 
07/01/10 - 09/30/10
  3108, 3144  
12/16/10, 12/22/10
    15,668.90       330.77       515,144.75       13,024.34  
Susman Godfrey LLP
 
06/01/10 - 10/31/10
 
Wires
 
12/09/10, 12/22/10
    239,282.70       38,268.08       993,044.60       66,216.12  
Towers Watson Pennsylvania Inc.
                -       -       425,569.38       -  
Venable LLP
                -       -       825,235.16       34,992.10  
Weil, Gotshal & Manges LLP
 
05/01/10 - 08/31/10
 
Wires
 
12/16/10, 12/22/10
    5,493,313.00       125,993.76       33,950,864.11       869,260.67  
                                             
Total
              $ 18,319,729.85     $ 929,794.96     $ 153,846,353.79     $ 9,908,781.44  
                                             
 
                                           
 
WMI Investment Corp.
       
Check
 
Amount Paid - Dec'10*
   
Amount Paid CTD
 
Payee
 
Period Covered
 
Number
 
Date
 
Fees
   
Expense
   
Fees
   
Expense
 
                                             
CP Energy Group, LLC
                -       -       22,000.00       42.77  
Goldman, Sachs & Co.
                -       -       300,000.00       -  
                                             
Total
              $ -     $ -     $ 322,000.00     $ 42.77  
 

* Interim fee applications and multiple invoices were paid during this period.
 
 
 

 
 
 

Washington Mutual, Inc., et al.
Case No. 08-12229 (MFW)
December 2010 Monthly Operating Report -- UNAUDITED
 
MOR 2 Statement of Operations for the period 12/1/10 to 12/31/10
 


 
   
Washington Mutual, Inc.
   
WMI Investment Corp.
 
   
December 2010
   
Cumulative to Date
   
December 2010
   
Cumulative to Date
 
Revenues:
                       
Interest income:
                       
Cash equivalents
    809,455       20,528,690       42,368       1,094,779  
Securities
    224,870       6,842,940       -       2,976,201  
Notes receivable - intercompany
    36,783       1,685,297       -       1  
Other
    -       1,031,979       -       -  
Total interest income
    1,071,107       30,088,906       42,368       4,070,981  
Earnings (losses) from subsidiaries and other
                         
equity investments
    (10,376,946 )     (185,042,621 )     (41,563 )     (5,828,656 )
Gains (losses) from securities / investments
    145,431       (10,006,660 )     -       (112,258,277 )
Other income
    (111,638 )     4,830,913       -       (0 )
Total revenues
    (9,272,046 )     (160,129,462 )     805       (114,015,952 )
                                 
Operating expenses:
                               
Compensation and benefits
    637,146       12,006,579       -       -  
Occupancy and equipment
    83,117       2,389,497       -       -  
Professional fees
    274,471       15,038,504       -       148  
Loss / (Income) from BOLI/COLI policies
    (133,889 )     (10,095,716 )     -       -  
Management fees / Transition services
    20,000       2,304,560       -       -  
Insurance
    184,757       17,632,477       -       -  
Other
    158,474       4,015,656       14,618       611,022  
Total operating expenses
    1,224,075       43,291,559       14,618       611,170  
                                 
Net profit (loss) before other income
                         
   and expenses
    (10,496,121 )     (203,421,020 )     (13,814 )     (114,627,122 )
                                 
Other income and expenses:
                               
Interest expense:
                               
Notes payable - intercompany
    -       -       -       -  
Borrowings
    -       -       -       -  
Total interest expense
    -       -       -       -  
Other expense / (income)
    -       (55,028,000 )     -       -  
                                 
Net profit (loss) before reorganization
                         
   items
    (10,496,121 )     (148,393,020 )     (13,814 )     (114,627,122 )
                                 
Reorganization items:
                               
Professional fees
    8,093,707       175,374,064       -       322,043  
Claims Adjustments
    36,167,637       157,908,607       -       -  
US Trustee quarterly fees
    -       203,000       -       12,025  
Gains (losses) from sale of assets
    -       -       -       -  
Other reorganization expenses
    1,105,284       17,773,403       -       -  
Total reorganization items
    45,366,627       351,259,074       -       334,068  
Net profit (loss) before income taxes
    (55,862,748 )     (499,652,095 )     (13,814 )     (114,961,190 )
                                 
Income taxes
    -       4,050       -       -  
                                 
Net profit (loss)
    (55,862,748 )     (499,656,145 )     (13,814 )     (114,961,190 )
                                 
Income tax rate
    0.0 %     0.0 %     0.0 %     0.0 %
 

 
 
 
 

 
 

Washington Mutual, Inc., et al.
Case No. 08-12229 (MFW)
December 2010 Monthly Operating Report -- UNAUDITED
 
MOR 3 Balance Sheet as of 12/31/2010 and 9/26/2008
 


 
   
Washington Mutual, Inc.
   
WMI Investment Corp.
 
   
12/31/2010
   
9/26/08
   
12/31/2010
   
9/26/08
 
Assets:
                       
Unrestricted cash and cash equivalents
    4,535,976,905       4,018,083,009       276,163,742       52,974,376  
Restricted cash and cash equivalents
    89,987,740       145,668,884       -       -  
Investment securities
    73,420,468       59,688,627       -       266,444,881  
Accrued interest receivable
    888,933       413,253       5,002       4,084,658  
Income tax receivable
    475,913,725       742,680,150       22,187,560       22,187,560  
Prepaid expenses
    2,504,844       11,311,510       -       -  
Cash surrender value of BOLI/COLI
    35,335,041       84,039,738       -       -  
Funded Pension
    39,173,922       638,870,071       -       -  
Other investments
    -       23,668,909       57,173,954       65,952,708  
Investment in subsidiaries
    1,460,009,908       1,895,218,467       -       -  
Notes receivable - intercompany
    -       58,001,133       565,844,197       565,844,197  
Fixed Assets
    154,519       -       -       -  
Other assets
    96,664,125       23,489,277       -       -  
Total assets
    6,810,030,131       7,701,133,028       921,374,456       977,488,380  
                                 
Liabilities not subject to compromise (Postpetition):
                         
Accounts payable
    5,141,177       -       -       -  
Accrued wages and benefits
    1,648,137       -       -       -  
Other accrued liabilities
    20,579,429       -       14,825       -  
Minority interest
    1,115,684       3,104,022       -       -  
Total post-petition liabilities
    28,484,426       3,104,022       14,825       -  
                                 
Liabilities subject to compromise (Pre-petition):
                         
Senior debt
    4,132,421,622       4,126,545,947       -       -  
Subordinated debt
    1,666,464,970       1,662,295,485       -       -  
Junior subordinated debt
    765,674,200       752,445,436       -       -  
CCB Trust Preferred
    69,554,647       -       -       -  
Intercompany payables
    684,095,259       684,095,258       -       -  
Accounts payable
    4,480,720       3,941,450       -       -  
Taxes payable
    550,769,514       550,080,833       -       -  
Payroll and benefit accruals
    411,797,975       407,215,221       -       -  
Other accrued liabilities
    76,155,816       92,259,015       -       -  
Other pre-petition liabilities
    159       223       -       -  
Total pre-petition liabilities
    8,361,414,880       8,278,878,868       -       -  
                                 
Total liabilities
    8,389,899,306       8,281,982,890       14,825       -  
                                 
Shareholders' equity:
                               
Preferred stock
    3,392,341,954       3,392,341,953       -       -  
Common stock
    13,023,756,177       12,988,753,556       1,000,000,000       1,000,000,000  
Other comprehensive income
    (754,119,196 )     (222,770,180 )     22,187,560       (36,644,880 )
Retained earnings - pre-petition
    (16,742,191,966 )     (16,739,175,191 )     14,133,260       14,133,260  
Retained earnings - post-petition
    (499,656,145 )     -       (114,961,190 )     -  
Total shareholders' equity
    (1,579,869,175 )     (580,849,862 )     921,359,631       977,488,380  
                                 
Total liabilities and shareholder's equity
    6,810,030,131       7,701,133,028       921,374,456       977,488,380  
 
 
 

 
 
 
In re Washington Mutual, Inc., et al.
Case No. 08-12229 (MFW)
 


 
NOTES TO MOR-2 and MOR-3
 

Note 1:  Plan of Reorganization and Settlement Agreement
 
On March 26, 2010, the Debtors filed a proposed plan of reorganization pursuant to chapter 11 of the Bankruptcy Code and related disclosure statement, which were subsequently amended.
 
Most recently, on October 6, 2010, the Debtors filed their Sixth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the Bankruptcy Code [D.I. 5548] (as it has been and may be amended, the “Plan”) and related Disclosure Statement [D.I. 5549] (the “Disclosure Statement”) with the Bankruptcy Court.  The Plan is premised upon implementation of an Amended and Restated  Settlement Agreement (as further amended, modified or supplemented, the “Settlement Agreement”), which represents a compromise of certain disputes among the Debtors, JPMorgan, the FDIC (as receiver for WMB and in its corporate capacity), the Creditors’ Committee and certain other parties-in-interest.  By order, dated October 21, 2010, the Court approved the adequacy of the information contained in the Disclosure Statement, authorized the commencement of the solicitation of acceptances and rejections to the Plan.  The confirmation hearing related to the Plan was held between December 1 st and 7 th , 2010.  After hearing testimony and argument regarding confirmation of the Plan, on January 7, 2011, the Court issued an opinion, pursuant to which, among other things, the Court found the settlement and compromise represented by the Settlement Agreement to be fair and reasonable; however, the Court nonetheless denied confirmation of the Plan unless certain modifications are made thereto.  WMI plans to submit a revised Plan consistent with the Court’s opinion, with a confirmation hearing scheduled for March 28, 2011.
 
The Settlement Agreement is an integral part of the Plan and is subject to confirmation of the Plan.  On the basis of the foregoing, the balance sheet and operating statement in this monthly operating report do not reflect any of the financial arrangements or settlements set forth in the Settlement Agreement.
 
The foregoing notwithstanding, aspects of the Plan and Settlement Agreement are referred to in the Notes to MOR 2 and MOR 3 herein; however, users of this monthly operating report should refer to the Plan, Disclosure Statement, Settlement Agreement and related documents directly for complete information.
 
 
Note 2:  Washington Mutual Preferred Funding
 
 
On September 25, 2008, the Office of Thrift Supervision concluded that an “Exchange Event” had occurred with respect to the following securities (the “Securities”):
 
●   
Washington Mutual Preferred Funding Trust I Fixed-to-Floating Rate Perpetual Non-cumulative Trust Securities (to be exchanged into depositary shares representing Series I Perpetual Non-Cumulative Fixed-to-Floating Rate Preferred Stock of WMI);
 
●   
Washington Mutual Preferred (Cayman) I Ltd. 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1 (to be exchanged into depositary shares representing Series J Perpetual Non-Cumulative Fixed Rate Preferred Stock of Washington Mutual, Inc. (“WMI”));
 
●   
Washington Mutual Preferred (Cayman) I Ltd. 7.25% Perpetual Non-cumulative Preferred Securities, Series A-2 (to be exchanged into depositary shares representing Series J Perpetual Non-Cumulative Fixed Rate Preferred Stock of WMI);
 
●   
Washington Mutual Preferred Funding Trust II Fixed-to-Floating Rate Perpetual Non-cumulative Trust Securities (to be exchanged into depositary shares representing Series L Perpetual Non-Cumulative Fixed Rate Preferred Stock of WMI);
 
 
 
 
 
 
 
 
●   
Washington Mutual Preferred Funding Trust III Fixed-to-Floating Rate Perpetual Non-cumulative Trust Securities (to be exchanged into depositary shares representing Series M Perpetual Non-Cumulative Fixed Rate Preferred Stock of WMI); and
 
●   
Washington Mutual Preferred Funding Trust IV Fixed-to-Floating Rate Perpetual Non-cumulative Trust Securities (to be exchanged into depositary shares representing Series N Perpetual Non-Cumulative Fixed-to-Floating Rate Preferred Stock of WMI).
 
In accordance with the terms of the documents governing the Securities, the Conditional Exchange (as defined in the disclosure materials related to the Securities) of the Securities occurred on Friday, September 26, 2008 at 8:00 A.M. (New York time).  The documentation governing the Securities contemplates that at the time of the Conditional Exchange, each outstanding Security was intended to be exchanged automatically for a like amount of newly issued Fixed Rate Depositary Shares or newly issued Fixed-to-Floating Rate Depositary Shares, as applicable, each representing a 1/1000th interest in one share of the applicable series of preferred stock of WMI.  If and until such depositary receipts are delivered or in the event such depositary receipts are not delivered, any certificates previously representing Securities are deemed for all purposes, effective as of 8:00 AM (New York time) on September 26, 2008, to represent Fixed Rate Depositary Shares or Fixed-to-Floating Rate Depositary Shares, as applicable.
 
There are numerous legal, accounting and tax issues related to the Securities and the transactions related to the Conditional Exchange.  On July 6, 2010, certain institutional investors filed an adversary proceeding captioned Black Horse Capital LP et al. v. JPMorgan Chase Bank, N.A. et al., Adv. No. 10-51387 (MFW) (the "Black Horse Litigation") against WMI and JPMorgan asserting that the Conditional Exchange did not occur due to the failure of certain alleged conditions precedent.  On January 7, 2011, the Court entered an opinion and order granting summary judgment in favor of WMI and JPMC in the Black Horse Litigation, holding that the Conditional Exchange occurred automatically on September 26, 2008.  On January 13, 2011, certain plaintiffs appealed the judgment to the United States District Court for the District of Delaware.  Because of these unresolved issues at December 31, 2010, WMI has not yet reflected the Conditional Exchange and/or its attendant transactions on its financial statements, including any possible interests (direct or indirect, contingent or otherwise) in the Securities and the assets, as the case may be, of Washington Mutual Preferred Funding LLC.
 
Assuming that the Conditional Exchange had been completed in accordance with the terms of the relevant documentation, on a pro forma basis, WMI’s financial statements would reflect (a) a credit to shareholders’ equity of approximately $3.9 billion upon issuance of the new classes of preferred stock; (b) an investment in subsidiary (i.e. WMB) of approximately $3.9 billion upon contribution of the Preferred Securities by WMI to WMB; and (c) an immediate and corresponding write-down of such investment in subsidiary.
 
Pursuant to the terms of the Settlement Agreement, upon consummation of the Plan, WMI and relevant third parties will complete the ministerial actions attendant to the Conditional Exchange.
 
Note 3:  Restricted Cash and Cash Equivalents
 
WMI’s restricted cash and cash equivalents of $90 million includes $34 million of accumulated dividends related to amounts held in escrow pertaining to that certain action styled as American Savings Bank, F.A et al. v United States , Case No 92-872C pending in the United States Court of Federal Claims, $53 million in a deposit account pledged as collateral to secure prepetition intercompany transactions between WMI and WMB and $3 million held as part of a Rabbi Trust.
 
Pursuant to the terms of the Settlement Agreement, upon consummation of the Plan, WMI will take possession of the $53 million deposit account pledged as collateral for prepetition intercompany transactions with WMB, free and clear of any interest or liens asserted by JPMorgan.
 
 
 
 
 
 
 
 
 
Note 4:  Investment in Subsidiaries
 
WMI’s investment in subsidiaries represents the book value of WMI’s subsidiaries, including WMI Investment.  This balance does not represent the market value of these entities.
 
WMI subsidiaries hold unsecured notes receivable from WMB or JPMorgan, as the case may be, totaling approximately $181 million.
 
Pursuant to the terms of the Settlement Agreement, upon consummation of the Plan, JPMorgan will repay with interest the unsecured notes receivable to WMI subsidiaries.
 
Note 5:  Funded Pension
 
 
The funded pension balance reflects the (1) the market value of assets as of December 2, 2008 less (2) the November 2008 actuarial estimated settlement value of September 25, 2008 liabilities.  The value does not reflect any recent changes in market values, interest rate assumptions and the participants since November 2008 which could materially affect the results.
 
Pursuant to the terms of the Settlement Agreement, upon consummation of the Plan, WMI will transfer sponsorship of the pension plan to JPMorgan, including certain related assets, and JPMorgan will assume the pension plan liabilities.
 
Note 6:  Taxes
 
 
The tax asset and liability balances are recorded consistent with WMI’s historical accounting practices as of the Petition Date and adjusted for refunds collected.  Generally, tax related claims and payables are recorded on WMI’s books and records on a consolidated basis with the other members of the consolidated tax group and have not been adjusted for any potential claims against these assets.  The current recorded balances do not reflect all expected refunds or payments as these amounts are currently being reviewed.   The current estimate for the total expected refunds, net of potential payments, is in the range of approximately $2.7 - $3.0 billion (including interest but excluding tax refunds attributable to the Act, as described below).  Various parties claim ownership rights to these refunds and to tax refunds in the amount of $250 million received by WMI during the period from the Petition Date to the date of the Settlement Agreement.  As set forth in the Settlement Agreement, upon consummation of the Plan, WMI and JPMorgan will split the above-referenced net tax refunds 20%/80%, respectively (once received).
 
On November 6, 2009, the Worker, Homeownership, and Business Assistance Act of 2009 (the “Act”) was enacted into law.  The Act provides, in pertinent part, that corporate taxpayers, subject to certain limitations, may elect to extend the permitted Net Operating Loss (“NOL”) carryback period from two years to five years (with such taxpayers only receiving half this benefit in the fifth year).  Pursuant thereto, WMI elected to carry back its 2008 NOL five years.  WMI currently estimates an additional expected tax refund attributable to the Act of approximately $2.8 billion, including interest, as to which there are competing claims of ownership .   As set forth in the Settlement Agreement, upon consummation of the Plan, WMI and the FDIC will split the tax refunds attributable to the Act (and actually received ) 69.643%/30.357 %, respectively.    Pursuant to the terms of the Plan and the Settlement Agreement,  a certain portion of WMI’s share of such refunds will be distributed to certain holders of WMB Senior Notes in an amount equal to $335 million.
 
 As of December 31, 2010, refunds totaling approximately $5.2 billion of the estimated $5.5 - $5.8 billion in total refunds have been paid into a segregated escrow account that was established with Wells Fargo Bank, National Association, as escrow agent (the “Escrow Agent”).  The refunds, together with any interest and income relating thereto, shall remain in the escrow account until (a)(i) the effective date of the Settlement Agreement, and (ii) the receipt by the Escrow Agent of a joint written notice from an authorized officer of each of WMI, JPMorgan and the FDIC Receiver, (b) the mutual agreement of WMI, JPMorgan and the FDIC, which agreement is approved by an order of the Bankruptcy Court, or (c) entry of a final order by a court of competent jurisdiction that determines the ownership of the refunds between WMI, JPMorgan and the FDIC.
 
 
 
 
 
 
 
 
 
No 2010 provision or benefit from income taxes has been recorded as the NOL carry forward amounts from prior years are expected to be sufficient to offset income during the reported period.  Income tax expense contains minimum taxes paid in certain states.
 
 
 
Note 7:  Liabilities Subject to Compromise (Pre-Petition) – Payroll and Benefit Accruals
 
WMI’s pre-petition payroll and benefit accruals include balances reflecting WMI’s historic accounting policies related to pension accounting.  Prior to the Petition Date, WMI recorded a $274 million liability in respect of such accruals and WMB recorded a $274 million asset, which amounts were netted out and eliminated on a consolidated basis.  Neither balance was reported as an intercompany balance.  WMI is analyzing these accounting entries and treatment within the context of its bankruptcy proceedings.
 
As set forth in the Settlement Agreement, upon consummation of the Plan, any potential liability related to this pension accounting will be waived.
 
 
Note 8:  Allowed Claim – Principal Financial Group
 
WMI and Principal Financial Group (“PFG”) are parties to that certain Stock Purchase Agreement (“SPA”) dated July 25, 2006 pursuant to which a wholly-owned subsidiary of WMI sold all of the issued and outstanding shares of capital stock of WM Advisors, Inc. to a subsidiary of PFG.  WMI and PFG are parties to that certain Global Distribution Agreement dated December 31, 2006, pursuant to which PFG has asserted that it has the right, for five years from the date of the closing of the SPA, to require WMI and certain of its subsidiaries to distribute PFG products.  PFG filed an amended proof of claim against WMI on April 23, 2010, in the amount of $39,002,621.52.  On December 16, 2010, the claim was allowed.  Of the allowed amount, $4 million will be classified as an allowed general unsecured claim and the remainder, $35,002,621.52 (the “Allowed Subordinated Claim Amount”), will have the same priority, and shall be treated similarly, as common equity interests, and the Debtors will not be required to create a reserve for distribution purposes under the Plan on account of such Allowed Subordinated Amount.
 
 
 
 
 

 
 
 

 
Washington Mutual, Inc. / WMI Investment Corp.
December 2010 Monthly Operating Report -- UNAUDITED
MOR 4 Status of Postpetition Taxes


   
Washington Mutual, Inc.
WMI Investment Corp
   
Beginning Tax Liability
Amt approved for pmt
Taxes collected
Taxes remitted
Closing Balance Post Petition
Beginning Tax Liability
Amt approved for pmt
Taxes collected
Taxes remitted
Closing Balance Post Petition
                       
Federal
NOTES
                   
                       
Withholding
 
26,409.00
 -
 697,905.62
 (700,410.62)
23,904.00
       
 -
FICA -- Employee
 
3,383.58
 -
 161,302.11
 (161,954.58)
2,731.11
       
 -
FICA -- Employer
 
3,383.58
 162,844.42
 -
 (161,954.58)
4,273.42
       
 -
Unemployment
 
336.00
1,039.62
 -
 -
1,375.62
       
 -
Income
*
 -
 -
 -
 -
 -
       
 -
Other
 
 -
 -
 -
 -
 -
       
 -
Total Federal
 
33,512.16
 163,884.04
 859,207.73
 (1,024,319.78)
32,284.15
 -
 -
 -
 -
 -
                       
State and Local
                     
                       
CA Withholding
 
 -
 -
 248,694.07
 (248,694.07)
 -
         
CA Disability
 
 -
 -
18,476.64
 (18,476.64)
 -
         
CA Unemployment
 
 -
4,284.00
 -
(4,284.00)
 -
         
CA Employment Training Tax
 
 -
126.00
 -
 (126.00)
 -
         
WA Withholding
n/a
 -
 -
 -
 -
 -
         
WA Disability
 
759.44
215.98
154.50
 -
1,129.92
         
WA Unemployment
 
 -
 -
 -
 -
 -
         
Sales/Use
**
 -
 -
 -
 -
 -
         
Real Property
n/a
 -
 -
 -
 -
 -
         
Personal Property
n/a
 -
 -
 -
 -
 -
         
Other
 
1,297.22
814.73
 -
 (892.37)
1,219.58
         
   
 -
     
 -
         
Total State and Local
 
2,056.66
5,440.71
 267,325.21
 (272,473.08)
2,349.50
 -
 -
 -
 -
 -
                       
                       
Total Taxes
 
35,568.82
 169,324.75
1,126,532.94
 (1,296,792.86)
34,633.65
 -
 -
 -
 -
 -
                       
 
NOTES
 
   
*
WMI has booked no federal income tax on its post-petition income tax provision, nor has it made any federal payments.
**
WMI does not have any Washington or City of Seattle sales/use tax liability for the month of December.
   
   
   
I attest that all tax returns have been filed in accordance with federal / state / county / city requirements for the above period.
   
   
  /s/  John Maciel  
John Maciel
Chief Financial Officer
Washington Mutual, Inc., et al
 


 
 
 

 
Washington Mutual, Inc. and WMI Investment Corp.
Tax Return Filings
For the Period 12/1/2010 through 12/31/2010

 

Property Tax Filings:
     
         
No property tax returns were filed during the period 12/1/2010 through 12/31/2010.
   
         
         
Sales/Use Tax Filings:
     
         
No sales/use tax returns were filed during the period 12/1/2010 through 12/31/2010.
   
         
         
Payroll Tax Filings:
     
         
Entity
Jurisdiction
Filing Description
Due Date
Date Filed
WMI
IRS (Federal)
Withholding summary of deposits and filings (semi-monthly)
12/03/2010
12/03/2010
WMI
IRS (Federal)
Withholding summary of deposits and filings (semi-monthly)
12/22/2010
12/22/2010
WMI
California
Withholding summary of deposits and filings
12/22/2010
12/22/2010
WMI
California
Disability insurance filings
12/22/2010
12/22/2010
WMI
California
Unemployment summary of deposits and filings
1/31/2011
12/22/2010
WMI
California
Employment training tax reporting
1/31/2011
12/22/2010
         
         
Corporate Income Tax/Franchise Tax/Gross Receipts Tax Filings:
   
         
Entity
Jurisdiction
Filing Description
Due Date
Date Filed
WMI
Washington
Business and occupation tax return
12/27/2010
12/23/2010
 
 
 

 
 
 
 

 
Case No. 08-12229 (MFW)
Washington Mutual, Inc., et al
 
MOR-4: Post Petition Accounts Payable Aging by Vendor
 
As of October 30, 2010
 
 

Washington Mutual, Inc.
 
                                     
 
Vendor
 
Current *
      31 - 60       61- 90    
91 and Over
   
Total
 
                                     
 
Akin Gump Strauss Hauer & Feld LLP
  $ 147,473.10     $ -     $ -     $ -     $ 147,473.10  
 
Ashby & Geddes, P.A.
    136,882.24       -       -       -       136,882.24  
 
Bingham McCutchen LLP / McKee Nelson LLP
    45,690.77       -       -       -       45,690.77  
 
Blackstone Advisory Partners LLP
    155,199.56       -       -       -       155,199.56  
 
Broadridge
    40,276.67       -       -       -       40,276.67  
 
Elliott Greenleaf
    112,582.90       -       -       -       112,582.90  
 
FTI Consulting, Inc.
    439,660.71       -       -       -       439,660.71  
 
Gibson, Dunn & Crutcher LLP
    36,750.18       -       -       -       36,750.18  
 
John W. Wolfe, P.S.
    172,405.90       -       -       -       172,405.90  
 
McKenna Long & Aldridge
    456,421.40       -       -       -       456,421.40  
 
Miller & Chevalier
    127,654.76       -       -       -       127,654.76  
 
Pepper Hamilton LLP
    99,321.94       -       -       -       99,321.94  
 
Peter J. Solomon Company
    35,000.00       -       -       -       35,000.00  
 
Richards, Layton & Finger P.A.
    27,566.20       -       -       -       27,566.20  
 
Shearman & Sterling LLP
    182,306.73       -       -       -       182,306.73  
 
Susman Godfrey LLP
    192,045.38       -       -       -       192,045.38  
 
TIAA CREF
    1,871.03       -       -       -       1,871.03  
 
Towers Watson Pennsylvania Inc.
    97,000.00       -       -       -       97,000.00  
 
Weil, Gotshal & Manges LLP
    2,635,067.54       -       -       -       2,635,067.54  
                                           
 
Total
  $ 5,141,177.01     $ -     $ -     $ -     $ 5,141,177.01  
 

NOTES
*Any holdback for professionals pursuant to their respective retention orders are included in “Current.”
 

 
 
 

 
DEBTOR QUESTIONNAIRE
 
  Must be completed each month
Yes
No
1. 
Have any assets been sold or transferred outside the normal course of business this reporting period?  If yes, provide an explanation below.
 
X
2. 
Have any funds been disbursed from any account other than a debtor in possession account this reporting period?  If yes, provide an explanation below.
 
X
3. 
Have all post petition tax returns been timely filed?  If no, provide an explanation below.
X
 
4. 
Are workers compensation, general liability and other necessary insurance coverage in effect?  If no, provide an explanation below.
X
 
5. 
Has any bank account been opened during the reporting period?  If yes, provide documentation identifying the opened account(s).  If an investment account has been opened provide the required documentation pursuant to the Delaware Local Rule 4001-3.
X
 


5.  New account opened during the reporting period:
 
Company
Bank
Account Number
 
WMI
Wells Fargo Bank, N.A.
xxxx5448
 
 
On December 28, 2010, WMI established the above account for use by the Reorganized Debtor.  The account has no balance and it will not be funded until the effective date of the Reorganization.