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[CAPSTEAD
LETTERHEAD]

August 26, 2005

Submitted Via EDGAR and Facsimile

Yolanda Crittendon

Staff Accountant, Division of Corporate Finance

U.S. Securities and Exchange Commission

450 Fifth Street, N.W.

Mail Stop 4561

Washington, D.C. 20549

         Re:

    Capstead Mortgage Corporation (the “Company”)

Form 10-K for the year ended December 31, 2004

File No. 001-08896

Dear Ms. Crittendon:

     Our responses to the staff’s comments in the August 2, 2005 comment letter are set forth
below. To facilitate your review, the comments of the staff have been set forth below in italics
and are followed by our response.

Form 10-K (incorporated by reference)

Exhibit 13

Report of Independent Registered Public Accounting Firm on Audit of Management’s Assessment of
Internal Control Over Financial Reporting, page 4

    1.

    We noted that the auditor’s report on management’s assessment of internal control over
financial reporting was not signed. Tell us how you considered Item 302 of Regulation S-T.
Confirm that a manually signed audit opinion has been received from the independent registered
public accounting firm.

    Item 302 of Regulation S-T requires signatures to, or within, any electronic submission to
be included in typed form. Although typed signatures were, in all cases, provided elsewhere
in our Form 10-K as required (including in Exhibit 23 where our independent registered
public accounting firm consented to the incorporation by reference of their report on the
2004 financial statements into our registration statements on file with the Commission), we
inadvertently did not include typed signatures of our independent registered public
accounting firm in Exhibit 13, which includes portions of our annual report to stockholders.
This annual report, with facsimiles of manual signatures, was previously mailed to our
stockholders. We also have on file the related manual signatures as required by Item 302 of
Regulation S-T. In future filings we will ensure that typed signatures are included
throughout the entire Form 10-K including all exhibits.

Yolanda Crittendon

August 26, 2005

Page 2

Report of Independent Registered Public Accounting Firm on Audit of Consolidated Financial
Statements, page 5

    2.

    We noted that your report of the independent registered pubic accounting firm was not signed.
Tell us how you considered Item 302 of Regulation S-T. Confirm that a manually signed audit
opinion has been received from the independent registered public accounting firm.

    Please see response to comment number one above.

    Note 13

    — Employee and Director Benefit Plans, page 26

    3.

    We note that you cancelled all existing options and replaced them with new option grants at a
reduced exercise price. Please advise us how you considered EITF 00-23 in determining this
transaction was not a repricing triggering variable plan accounting.

    We carefully followed EITF 00-23 Issue 49 and FASB Interpretation No. 44 Question 11(c) in
canceling and reissuing options in connection with Capstead’s equity restructuring in
January 2003 in order to not trigger variable plan accounting. This restructuring involved
the payment of a $7.19 special dividend in addition to a $1.16 regular common dividend for
the fourth quarter of 2002 for a total dividend payment of $8.35 in January 2003. The
special dividend totaled $100.4 million (approximately 47% of common equity prior to the
dividend) and as such represented a recapitalization of the Company in accordance with FASB
Interpretation No. 44 Question 11(c). All outstanding options were cancelled and an
increased number of new options were issued at a reduced option price determined in
accordance with paragraph 53(b) of Interpretation 44. The number of new options issued was
determined in accordance with paragraph 53(a) of Interpretation 44 such that the total
intrinsic value of each new award was equal to the total intrinsic value of the related
canceled award. Accordingly, variable accounting for the new options was not triggered.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, page
31

Results of Operations, page 38

    4.

    Reference is made to your disclosure of operating income and operating income per common
share as a non-GAAP measure. Tell us what consideration was given to the disclosure
requirements of Item 10(e) of Regulation S-K specifically as it relates to:

    a.

    Avoiding titles that are the same or confusingly similar to GAAP financial
measures;

    b.

    Clarifying why you believe this measure is used to evaluate performance rather
than your liquidity based on the manner in which this measure is used (i.e. used by the
Board to determine the funds available for dividends). Note, per share measures of
liquidity are prohibited; and

Yolanda Crittendon

August 26, 2005

Page 3

    c.

    Demonstrating the usefulness of excluding recurring items. Reference is made
to Questions 8 and 9 in the Commission’s Frequently Asked Questions Regarding the Use
of Non-GAAP Financial Measures.

    In addition, tell us what consideration was given to including a reference to where the
investor can find the quantitative reconciliation for this non-GAAP measure and disclosing
this information in a section clearly labeled as “Other Data”.

    On page 38 of Exhibit 13 in the section of Management’s Discussion and Analysis of Financial
Position and Results of Operations (“MD&A”) entitled “Results of Operations,” Capstead
disclosed “Operating income” and “Operating income per common share” in a table of
comparative net operating results in the belief this non-GAAP financial measure provides
investors with a useful supplemental measure of the Company’s operating performance. A
footnote to these disclosures describes the Company’s use of this non-GAAP financial measure
and how it is calculated. On page 51 in the section entitled “Comparison of Operating
Income and Diluted Income per Common Share” a tabular reconciliation between this non-GAAP
financial measure and its GAAP counterpart is provided.

    a.

    We believe that our use of the terms “operating income” and “operating income
per common share” are sufficiently differentiated from the comparable GAAP terms of
“net income” and “diluted net income per common share” such that their use conforms
with Regulation S-K and that these terms are ideally accurate and descriptive of their
intended usage as a “supplemental measure of the Company’s operating performance,” as
we describe in the related note to the table on page 38 of Exhibit 13 of our filing.
Note also that this measure is only included in this section of our MD&A and not on the
face of our income statement.

    b.

    We believe operating income per common share, as we define and calculate it, is
an extremely useful measure of operating performance as opposed to a measure of
liquidity. Furthermore, as used in our earnings press releases as well as our periodic
filings with the Commission, we have found it very useful in communicating to our
investors our performance for a given period. The context of these communications is
always focused on results of operations and not liquidity. In order to convey how our
investments are performing, we add back depreciation expense on our relatively small
portfolio of real estate held for lease. This is similar to the way traditional
property real estate investment trusts add back depreciation charges on their large
holdings of real estate to arrive at the typically used metric, funds from operations or “FFO.” Like traditional property
REITs, we believe that depreciation charges, particularly on real property, are not
necessarily indicative of the operating performance of these properties and need to
be excluded to better gauge such operating performance. Similarly, gains, if any,
are excluded, as is the impact of dilution of our Series B preferred shares, if
present. This is all done with the intent to convey how the Company is performing
from reporting period to reporting period.

Yolanda Crittendon

August 26, 2005

Page 4

    c.

    We described in some detail immediately above why we exclude depreciation
charges from operating income in order to improve the usefulness of this non-GAAP
financial measure. Gains from asset sales and CMO redemptions are also excluded
because, as we state in the accompanying note to this measure, “[g]ains are excluded
because they are considered non-operating in nature and the amount and timing of any
such gains are dependent upon investment strategies and market conditions.” Note also
that by the end of 2003 we had redeemed nearly all outstanding CMO issues that gave
rise to gains in years 2002 and 2003 and no such gains were recorded in 2004.

    The remaining adjustment made to arrive at operating income per common share
involves excluding the dilutive effects of the Series B preferred shares, if
present. Again as stated in the accompanying note, this approach helps make this
measure more useful “because it is not economically advantageous to convert these
shares at market prices of both the common shares and Series B preferred shares;
therefore, few, if any, Series B preferred share conversions are expected.”

As noted above in the first paragraph to this response, we did include a quantitative
reconciliation for this non-GAAP financial measure in our filing. Unfortunately, we
inadvertently omitted the following cross-reference to this reconciliation in the
accompanying note to the measure as we had in past filings: “(see “Comparison of Operating
Income and Diluted Income per Common Share”).” We will ensure that such reference is made
in all future filings with the Commission.

     In connection with the above responses, the undersigned, on behalf of the Company,
acknowledges that:

    •

    the Company is responsible for the adequacy and accuracy of the disclosure in the
filings;

    •

    staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filings; and

    •

    the Company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United States.

Yolanda Crittendon

August 26, 2005

Page 5

     We respectfully submit the foregoing for your consideration in response to your comment letter
dated August 2, 2005. If you have any further questions concerning this filing, please contact me
at (214) 874-2350.

    Sincerely,

    /s/ PHILLIP A. REINSCH

    Phillip A. Reinsch
Chief Financial Officer

    cc:

    Cicely Lucky — U.S. Securities and Exchange Commission (via facsimile)

Andrew F. Jacobs — Capstead Mortgage Corporation (via facsimile)

David Barbour — Andrews Kurth LLP (via facsimile)

Muriel C. McFarling — Andrews Kurth LLP (via facsimile)

Howard Altshuler — Ernst Young (via facsimile)