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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 1-8896
 CAPSTEAD MORTGAGE CORPORATION
  Maryland
(State or other jurisdiction of
incorporation or organization)
    
    75-2027937
(I.R.S. Employer
Identification No.)
 8401 North Central Expressway, Suite 800, Dallas, TX
(Address of principal executive offices)
    
    75225
(Zip Code)
 (214) 874-2323
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Exchange on Which RegisteredCommon Stock ($0.01 par value)
    
    New York Stock Exchange$1.60 Cumulative Preferred Stock, Series A ($0.10 par value)
    
    New York Stock Exchange$1.26 Cumulative Convertible Preferred Stock, Series B ($0.10 par value)
    
    New York Stock Exchange
 o þ
 o þ
 þ o
 þ
 o þ o
 o þ
 At June 30, 2005 the aggregate market value of the voting common stock held by nonaffiliates
was $154,492,181.
 Number of shares of Common Stock outstanding at March 10, 2006: 19,044,754
 DOCUMENTS INCORPORATED BY REFERENCE:
 (1)
    
    Portions of the Registrants Annual Report to Stockholders for the year ended December 31,
2005 are incorporated by reference into Parts I, II and IV.
 (2)
    
    Portions of the Registrants definitive Proxy Statement, issued in connection with the 2006
Annual Meeting of Stockholders of the Registrant, are incorporated by reference into Part III.




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##### 



CAPSTEAD MORTGAGE CORPORATION
2005 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
 PagePART IITEM 1.
    
    Business
    
    
    1ITEM 1A.
    
    Risk Factors
    
    
    2ITEM 1B.
    
    Unresolved Staff Comments
    
    
    2ITEM 2.
    
    Properties
    
    
    2ITEM 3.
    
    Legal Proceedings
    
    
    2ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    2PART IIITEM 5.
    
    Market for Registrants Common Equity and Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    2ITEM 6.
    
    Selected Financial Data
    
    
    2ITEM 7.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    3ITEM 7A.
    
    Quantitative and Qualitative Disclosures About Market Risks
    
    
    3ITEM 8.
    
    Financial Statements and Supplementary Data
    
    
    3ITEM 9.
    
    Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    
    3ITEM 9A.
    
    Controls and Procedures
    
    
    3ITEM 9B.
    
    Other Information
    
    
    3PART IIIITEM 10.
    
    Directors and Executive Officers of the Registrant
    
    
    3ITEM 11.
    
    Executive Compensation
    
    
    4ITEM 12.
    
    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    4ITEM 13.
    
    Certain Relationships and Related Transactions
    
    
    4ITEM 14.
    
    Principal Accountant Fees and Services
    
    
    4PART IVITEM 15.
    
    Exhibits and Financial Statement Schedules
    
    
    4SIGNATURES
    
    
    
    
    7Computation of Ratio of Income from Continuing OperationsPortions of the Company's Annual Report to StockholdersList of SubsidiariesConsent of Ernst & Young LLPCertification Pursuant to Section 302(a)Certification Pursuant to Section 302(a)Certification Pursuant to Section 906




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PART I
 
 ITEM 1. BUSINESS.
    Other Investment Strategies
  Competition
  Regulation and Related Matters
  Employees
  Website Access to Company Reports and Other Company Information
 www.capstead.com
 1




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Forward-looking Statements
  
 ITEM 1A. RISK FACTORS.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES.
  
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
  
 ITEM 6. SELECTED FINANCIAL DATA.
  2




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS.
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
  
 ITEM 9B. OTHER INFORMATION.
  
 PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
  www.capstead.com
 3




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ITEM 11. EXECUTIVE COMPENSATION.
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 (a)
    
    Documents filed as part of this report:
 1.
    
    The following consolidated financial statements of the Company, included in the
2005 Annual Report to Stockholders, are incorporated herein by reference:
 PageConsolidated Statements of Income Three Years Ended December 31, 2005
    
    
    *Consolidated Balance Sheets  December 31, 2005 and 2004
    
    
    *Consolidated Statements of Stockholders Equity Three Years Ended December 31, 2005
    
    
    *Consolidated Statements of Cash Flows Three Years Ended December 31, 2005
    
    
    *Notes to Consolidated Financial Statements  December 31, 2005
    
    
    *
 
 2.
    
    Financial Statement Schedules  All schedules for which provision is made in the
applicable accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have been
omitted.
 
 *
    
    Incorporated herein by reference from the Companys Annual Report to Stockholders
for the year ended December 31, 2005, filed herewith as Exhibit 13.
 4




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ExhibitNumber1.1
    
    Form of First Amendment to Sales Agreement dated December 16, 2003 by and
between Capstead and Brinson Patrick Securities Corporation, for the issuance of up to
875,000 common shares and 1,000,000 Series B preferred shares.(4)1.2
    
    Form of Sales Agreement dated February 13, 2004 by and between Capstead and
Brinson Patrick Securities Corporation to sell 1,000,000 common shares, and 100,000
Series B preferred shares.(5)1.3
    
    Form of Sales Agreement date June 22, 2004 by and between Capstead and Brinson
Patrick Securities Corporation to sell 1,600,000 common shares, and 100,000 Series B
preferred shares.(7)1.4
    
    Form of Sales Agreement dated November 1, 2004 by and between Capstead and
Brinson Patrick Securities Corporation to sell 1,700,000 common shares, and 100,000
Series B preferred shares.(8)3.1
    
    Charter, including Articles of Incorporation, Articles Supplementary for each
series of preferred shares and all other amendments to such Articles of
Incorporation.(3)3.2
    
    Amended and Restated Bylaws.(14)10.01
    
    Amended Restated Deferred Compensation Plan.(15)10.02
    
    1997 Flexible Long-Term Incentive Plan.(1)10.03
    
    2004 Flexible Long-Term Incentive Plan.(6)10.04
    
    Form of master agreement dated May 10, 2005 between Crescent Real Estate Capital, L.P. and CMC
Real Estate Capital L.P., including a form of limited partnership agreement between Crescent
Redtail Management LLC, Crescent Real Estate Capital L.P. and CMC Real Estate Capital
L.P.(9)10.05
    
    Forms of nonqualified stock option and restricted stock agreements for non-employee
directors.(9)10.06
    
    Forms of nonqualified stock option and restricted stock agreements for employees.(9)10.07
    
    Nonqualified stock option and restricted stock agreements for non-employee directors and named
executives.(9)10.08
    
    Purchase Agreement dated September 23, 2005, by and among the Registrants, the Trust, Merrill
Lynch International and Bear, Stearns & Co., Inc. pertaining to the issuance of Capstead
Mortgage Trust I preferred securities.(10)10.09
    
    Junior Subordinated Indenture dated September 26, 2005, between the Registrant and Wells Fargo
Bank pertaining to the issuance of Capstead Mortgage Trust I preferred
securities.(10)10.10
    
    Amended and Restated Trust Agreement dated September 26, 2005, by and among the Registrant,
Wells Fargo Bank, National Association, Wells Fargo Delaware Trust Company, the Administrators
and the several Holders, as defined therein, pertaining to the issuance of Capstead Mortgage
Trust I preferred securities.(12)10.11
    
    Placement Agreement dated December 6, 2005, by and among the Registrant, the Trust, FTN
Financial Capital Markets and Keefe, Bruyette & Woods, Inc. pertaining to the issuance of
Capstead Mortgage Trust II preferred securities.(11)10.12
    
    Indenture date December 15, 2005, between the Registrant and Wilmington Trust Company regarding
junior subordinated debentures due 2035, including a form of debenture pertaining to the
issuance of Capstead Mortgage Trust II preferred securities.(12)
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ExhibitNumber10.13
    
    Amended and Restated Declaration of Trust dated December 15, 2005, by and
among the Registrant, Wilmington Trust Company and the Administrators defined
therein, including forms of capital security certificates pertaining to the
issuance of Capstead Mortgage Trust II preferred securities.(12)10.14
    
    Stock Purchase Agreement dated December 30, 2005 by and between Brookdale
Living Communities, Inc. and the Company regarding the sale of the stock of
CMCP  Properties, Inc.(13)12
    
    Computation of ratio of income from continuing operations to combined fixed
charges and preferred stock dividends.*13
    
    Portions of the Companys Annual Report to Stockholders for the year ended
December 31, 2005.*21
    
    List of subsidiaries of the Company.*23
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.*31.1
    
    Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.*32
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 
 (1)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the period ended March 31, 1997.(2)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (No. 333-63358) dated June 19, 2001.(3)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the year ended December 31, 2001.(4)
    
    Incorporated by reference to the Companys Post-Effective Amendment No. 1 to the Registration Statement on Form S-3
(No. 333-68424) dated December 17, 2003.(5)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (No. 333-112900) dated February 17, 2004.(6)
    
    Incorporated by reference to the Companys Registration Statement on Form S-8 (No. 333-116738) dated June 22, 2004.(7)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (No. 333-116741) dated June 22, 2004.(8)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (No. 333-119193) dated November 2, 2004.(9)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the period ended June 20, 2005.(10)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated September 30, 2005.(11)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated December 12, 2005.(12)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated December 20, 2005.(13)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated January 4, 2006.(14)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated January 31, 2006.(15)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated February 23, 2006.*
    
    Filed herewith. 6




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SIGNATURES
  CAPSTEAD MORTGAGE CORPORATIONRegistrantDate: March 10, 2006
    
    By:
    
    /s/ ANDREW F. JACOBSAndrew F. JacobsPresident and Chief Executive OfficerDate: March 10, 2006
    
    By:
    
    /s/ PHILLIP A. REINSCHPhillip A. ReinschSenior Vice President and Chief
Financial Officer(Principal Financial and Accounting Officer)
  /s/ PAUL M. LOW
    
    Chairman and Director
    
    March 8, 2006(Paul M. Low)/s/ ANDREW F. JACOBS
    
    President, Chief Executive Officer
    
    March 10, 2006(Andrew F. Jacobs)
    
    and
Director/s/ JACK BIEGLER
    
    Director
    
    March 3, 2006(Jack Biegler)/s/ GARY KEISER
    
    Director
    
    March 6, 2006(Gary Keiser)/s/ CHRISTOPHER W. MAHOWALD
    
    Director
    
    March 8, 2006(Christopher W. Mahowald)/s/ MICHAEL G. ONEIL
    
    Director
    
    March 3, 2006(Michael G. ONeil)/s/ HOWARD RUBIN
    
    Director
    
    March 8, 2006(Howard Rubin)/s/ MARK S. WHITING
    
    Director
    
    March 8, 2006(Mark S. Whiting)
 7




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INDEX TO EXHIBITS
 EXHIBITNUMBER
    
    DESCRIPTION1.1
    
    Form of First Amendment to Sales Agreement dated December 16, 2003 by and between
Capstead and Brinson Patrick Securities Corporation, for the issuance of up to 875,000
common shares and 1,000,000 Series B preferred shares.(4)1.2
    
    Form of Sales Agreement dated February 13, 2004 by and between Capstead and
Brinson Patrick Securities Corporation to sell 1,000,000 common shares, and 100,000
Series B preferred shares.(5)1.3
    
    Form of Sales Agreement dated June 22, 2004 by and between Capstead and Brinson
Patrick Securities Corporation to sell 1,600,000 common shares, and 100,000 Series B
preferred shares.(7)1.4
    
    Form of Sales Agreement dated November 1, 2004 by and between Capstead and
Brinson Patrick Securities Corporation to sell 1,700,000 common shares, and 100,000
Series B preferred shares.(8)3.1
    
    Charter, including Articles of Incorporation, Articles Supplementary for each
series of preferred shares and all other amendments to such Articles of
Incorporation.(3)3.2
    
    Amended and Restated Bylaws.(14)10.01
    
    Amended and Restated Deferred Compensation Plan.(15)10.02
    
    1997 Flexible Long-Term Incentive Plan.(1)10.03
    
    2004 Flexible Long-Term Incentive Plan.(6)10.04
    
    Form of master agreement dated May 10, 2005 between Crescent Real Estate Capital, L.P. and CMC
Real Estate Capital L.P., including a form of limited partnership agreement between Crescent
Redtail Management LLC, Crescent Real Estate Capital L.P. and CMC Real Estate Capital
L.P.(9)10.05
    
    Forms of nonqualified stock option and restricted stock agreements for non-employee
directors.(9)10.06
    
    Forms of nonqualified stock option and restricted stock agreements for employees.(9)10.07
    
    Nonqualified stock option and restricted stock agreements for non-employee directors and named
executives.(9)10.08
    
    Purchase Agreement dated September 23, 2005, by and among the Registrants, the Trust, Merrill
Lynch International and Bear, Stearns & Co., Inc. pertaining to the issuance of Capstead
Mortgage Trust I preferred securities.(10)10.09
    
    Junior Subordinated Indenture dated September 26, 2005, between the Registrant and Wells Fargo
Bank pertaining to the issuance of Capstead Mortgage Trust I preferred
securities.(10)10.10
    
    Amended and Restated Trust Agreement dated September 26, 2005, by and among the Registrant,
Wells Fargo Bank, National Association, Wells Fargo Delaware Trust Company, the Administrators
and the several Holders, as defined therein, pertaining to the issuance of Capstead Mortgage
Trust I preferred securities.(12)10.11
    
    Placement Agreement dated December 6, 2005, by and among the Registrant, the Trust, FTN
Financial Capital Markets and Keefe, Bruyette & Woods, Inc. pertaining to the issuance of
Capstead Mortgage Trust II preferred securities.(11)10.12
    
    Indenture date December 15, 2005, between the Registrant and Wilmington Trust Company regarding
junior subordinated debentures due 2035, including a form of debenture pertaining to the
issuance of Capstead Mortgage Trust II preferred securities.(12)




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10.13
    
    Amended and Restated Declaration of Trust dated December 15, 2005, by and
among the Registrant, Wilmington Trust Company and the Administrators defined
therein, including forms of capital security certificates pertaining to the
issuance of Capstead Mortgage Trust II preferred securities.(12)10.14
    
    Stock Purchase Agreement dated December 30, 2005 by and between Brookdale
Living Communities, Inc. and the Company regarding the sale of the stock of
CMCP  Properties, Inc.(13)12
    
    Computation of ratio of income from continuing operations to combined fixed
charges and preferred stock dividends.*13
    
    Portions of the Companys Annual Report to Stockholders for the year ended
December 31, 2005.*21
    
    List of subsidiaries of the Company.*23
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.*31.1
    
    Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.*32
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* 
 (1)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the period ended March 31, 1997.(2)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (No. 333-63358) dated June 19, 2001.(3)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the year ended December 31, 2001.(4)
    
    Incorporated by reference to the Companys Post-Effective Amendment No. 1 to the Registration Statement on Form S-3
(No. 333-68424) dated December 17, 2003.(5)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (No. 333-112900) dated February 17, 2004.(6)
    
    Incorporated by reference to the Companys Registration Statement on Form S-8 (No. 333-116738) dated June 22, 2004.(7)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (No. 333-116741) dated June 22, 2004.(8)
    
    Incorporated by reference to the Companys Registration Statement on Form S-3 (No. 333-119193) dated November 2, 2004.(9)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the period ended June 20, 2005.(10)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated September 30, 2005.(11)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated December 12, 2005.(12)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated December 20, 2005.(13)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated January 4, 2006.(14)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated January 31, 2006.(15)
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated February 23, 2006.*
    
    Filed herewith.