-----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, FqHUTHz1OHSsKJD7BxVqLHJQlfatzCNYwmG7HsJ7c3K9v7i023T8AMroHbUCb4Tc 1X8elFOZvq2Q89aBSo2KXg== 0000950152-95-003026.txt : 19951222 0000950152-95-003026.hdr.sgml : 19951222 ACCESSION NUMBER: 0000950152-95-003026 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950927 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951221 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESOURCE AMERICA INC CENTRAL INDEX KEY: 0000083402 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 720654145 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-04408 FILM NUMBER: 95603451 BUSINESS ADDRESS: STREET 1: 1521 LOCUST STREET CITY: PHILADELPHIA STATE: PA ZIP: 19102 BUSINESS PHONE: 2155465005 MAIL ADDRESS: STREET 1: 2876 SOUTH ARLINGTON ROAD CITY: AKRON STATE: OH ZIP: 44312 FORMER COMPANY: FORMER CONFORMED NAME: RESOURCE EXPLORATION INC DATE OF NAME CHANGE: 19890214 FORMER COMPANY: FORMER CONFORMED NAME: SMTR CORP DATE OF NAME CHANGE: 19700522 8-K 1 RESOURCE AMERICA 8-K 1 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) September 27, 1995 ------------------------------- Resource America, Inc. --------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-4408 72-0654145 --------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer incorporation) File Number) Identification No.) 1521 Locust Street, Philadelphia, Pennsylvania 19102 --------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (215) 546-5005 ----------------------------- 2 Item 2. Acquisition or Disposition of Assets - --------------------------------------------- On September 27, 1995, the Company acquired Fidelity Leasing Corporation ("FLC"), effective September 1, 1995, an equipment leasing company, for $1,456,000 in cash (including related expenses) and assumed $312,000 in liabilities. The acquisition was accounted for as a purchase and, accordingly, FLC's assets and liabilities have been recorded at their estimated fair values at the date of acquisition. The purchase price resulted in an excess of costs over net assets acquired (goodwill) of approximately $558,000, which will be amortized on a straight line basis over 15 years. FLC manages seven equipment leasing partnerships. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits - -------------------------------------------------------------------------- (a) Financial Statements of business acquired Report of Independent Certified Public Accountants Balance Sheets at December 31, 1994, and 1993 Statements of Earnings for the two years ended December 31, 1994 Statements of Cash Flows for the two years ended December 31, 1994 Statements of Shareholder's Equity for the two years ended December 31, 1994 Notes to Financial Statements Balance Sheet (unaudited) at June 30, 1995 Statement of Earnings (unaudited) for the three months and six months ended June 30, 1995, and 1994 Statement of Cash Flows (unaudited) for the six months ended June 30, 1995, and 1994 Notes to Unaudited Financial Statements (b) Pro Forma Financial Information Pro Forma Balance Sheet as of June 30, 1995 Pro Forma Statement of Operations for the nine months ended June 30, 1995, and 1994 Pro Forma Statement of Operations for the year ended September 30, 1994 Notes to Unaudited Pro Forma Financial Statements (c) Exhibits Exhibit 99. Resource America, Inc. Press Release dated September 29, 1995 SIGNATURES 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 thereunto duly authorized. RESOURCE AMERICA, INC. ---------------------------------------- (Registrant) Dated: December 21, 1995 By: /s/ Nancy J. McGurk ---------------------------------------- Nancy J. McGurk Vice President - Finance and Treasurer 3 - -------------------------------------------------------------------------------- FIDELITY LEASING CORPORATION AND SUBSIDIARY Financial Statements and Report of Independent Certified Public Accountants as of December 31, 1994 and 1993 - -------------------------------------------------------------------------------- 4 - -------------------------------------------------------------------------------- Two Commerce Square Suite 3100 2001 Market Street Philadelphia, PA 19103-7080 215 561-4200 FAX 215 561-1066 Grant Thornton [logo] GRANT THORNTON LLP Accountants and Management Consultants The U.S. Member Firm of Grant Thornton International REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors Fidelity Leasing Corporation: We have audited the accompanying consolidated balance sheets of Fidelity Leasing Corporation (a Delaware corporation) and Subsidiary as of December 31, 1994 and 1993, and the related consolidated statements of earnings, changes in shareholder's equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Fidelity Leasing Corporation and Subsidiary as of December 31, 1994 and 1993 and the results of their earnings and their cash flows for the years then ended, in conformity with generally accepted accounting principles. /s/ Grant Thornton LLP Philadelphia, Pennsylvania February 23, 1995 - -------------------------------------------------------------------------------- 5 FIDELITY LEASING CORPORATION AND SUBSIDIARY Consolidated Balance Sheets
December 31, ASSETS 1994 1993 - ------------------------------------------------------------------------------------------ Cash and cash equivalents $1,577,751 $3,078,015 Investment securities held to maturity 1,656,688 - Due from Fidelity Leasing Income Funds 14,553 3,488 Computer inventory 247,416 379,963 Investment in Partnerships, at equity 41,379 35,732 Equipment, net of accumulated depreciation of $896,031 and $809,855, respectively 76,014 151,943 Contractual servicing rights under partnership management agreements, net of accumulated amortization of $538,165 and $346,165, respectively 473,511 665,511 Other assets 64,283 78,041 ---------- ---------- Total assets $4,151,595 $4,392,693 ========== ========== LIABILITIES & SHAREHOLDER'S EQUITY - ------------------------------------------------------------------------------------------ Accounts payable and accrued expenses $ 203,477 $ 211,461 Due to Fidelity Leasing Income Funds 107,908 1,047,274 Deferred income 9,390 89,678 Commissions payable 21,120 19,864 ---------- ---------- Total liabilities 341,895 1,368,277 Shareholder's Equity: Common stock, $1 par value, authorized 1,000 shares; issued and outstanding, 100 shares 100 100 Additional paid-in capital 3,362,322 3,362,322 Retained earnings (accumulated deficit) 447,278 (338,006) ---------- ---------- Total shareholder's equity 3,809,700 3,024,416 ---------- ---------- Total liabilities and shareholder's equity $4,151,595 $4,392,693 ========== ==========
The accompanying notes are an integral part of this statement. - -------------------------------------------------------------------------------- 6 FIDELITY LEASING CORPORATION AND SUBSIDIARY Consolidated Statements of Earnings
Years Ended December 31, REVENUES 1994 1993 - --------------------------------------------------------------------------------------- Fee income $2,344,021 $ 2,569,287 Share of net income from limited partnerships 240,019 327,866 Interest and other income 70,828 36,857 ---------- ----------- Total revenues 2,654,868 2,934,010 ---------- ----------- EXPENSES - --------------------------------------------------------------------------------------- General and administrative expenses 2,450,527 2,870,859 Recovery of expenses from Fidelity Leasing Income Funds (859,119) (1,001,672) ---------- ----------- Total expenses 1,591,408 1,869,187 ---------- ----------- Income before depreciation and amortization of intangibles 1,063,460 1,064,823 Depreciation (86,176) (122,445) Amortization of intangibles (192,000) (192,000) ---------- ----------- Net earnings $ 785,284 $ 750,378 ========== ===========
The accompanying notes are an integral part of this statement. - -------------------------------------------------------------------------------- 7 FIDELITY LEASING CORPORATION AND SUBSIDIARY Consolidated Statements of Shareholder's Equity for the years ended December 31, 1994 and 1993
RETAINED EARNINGS COMMON PAID-IN (ACCUMULATED STOCK CAPITAL DEFICIT) TOTAL - ----------------------------------------------------------------------------------- Balance, January 1, 1993 $100 $3,362,322 $(1,088,384) $2,274,038 Net earnings - - 750,378 750,378 ---- ---------- ----------- ---------- Balance, December 31, 1993 100 3,362,322 (338,006) 3,024,416 Net earnings - - 785,284 785,284 ---- ---------- ----------- ---------- Balance, December 31, 1994 $100 $3,362,322 $ 447,278 $3,809,700 ==== ========== =========== ==========
The accompanying notes are an integral part of this statement. - -------------------------------------------------------------------------------- 8 FIDELITY LEASING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 1993 - ---------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 785,284 $ 750,378 ----------- ----------- Adjustments to reconcile net earnings to net cash provided by operating activities: Share of net income from limited partnerships (240,019) (327,866) Depreciation and amortization of intangibles 278,176 314,445 (Increase) decrease in amounts due from Fidelity Leasing Income Funds (Increase) decrease in computer inventory (11,065) (3,488) 132,547 (241,877) (Increase) decrease in other, net 3,996 250,430 Increase (decrease) in accounts payable, accrued expenses and commissions payable (6,728) (707,633) Increase (decrease) in amounts due to Fidelity Leasing Income Funds, net (939,366) 1,121,164 Increase (decrease) in deferred income (80,288) 35,007 Distributions from limited partnerships 244,134 327,866 ----------- ----------- Net cash provided by operating activities 166,671 1,518,426 ----------- ----------- Cash flows from investing activities: Capital expenditures (10,247) (10,091) Purchase of investment securities held to maturity (1,656,688) -- ----------- ----------- Net cash used in investing activities (1,666,935) (10,091) ----------- ----------- Net increase (decrease) in cash and cash equivalents (1,500,264) 1,508,335 Cash and cash equivalents, beginning of year 3,078,015 1,569,680 ----------- ----------- Cash and cash equivalents, end of year $ 1,577,751 $ 3,078,015 =========== ===========
The accompanying notes are an integral part of this statement. - -------------------------------------------------------------------------------- 9 FIDELITY LEASING CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 NOTE A - ORGANIZATION - -------------------------------------------------------------------------------- Fidelity Leasing Corporation (FLC) is a wholly-owned subsidiary of FML Leasehold, Inc. (FML), a wholly-owned subsidiary of The Fidelity Mutual Life Insurance Company (In Rehabilitation) (FMLICO). FLC is incorporated in the state of Delaware. FLC was formed to negotiate, structure and market leasing transactions. FLC acts as the general partner of the Fidelity Leasing income Funds (Funds) which have been formed to acquire and lease to third parties various types of computer equipment. FLC also acts as a broker on certain leasing transactions. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------------------- 1. Consolidation The consolidated financial statements include the accounts of FLC and First Radnor Equities, Incorporated (FRE), a wholly-owned subsidiary of FLC. FRE is an inactive wholesale broker-dealer for investment products and is registered with the Securities and Exchange Commission and the National Association of Securities Dealers, Inc. During 1994 and 1993, FRE sold no units in limited partnerships which were sponsored by affiliates. 2. Investment Securities Held to Maturity FLC adopted Statement of Financial Accounting Standard (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities" on January 1, 1994. This new standard requires investments in securities to be classified in one of three categories: held to maturity, trading and available for sale. Debt securities that FLC has the positive intent and ability to hold to maturity are classified as held to maturity and are reported at amortized cost. As FLC does not engage in security trading, the balance, if any, of its debt securities and equity securities are classified as available for sale. Net unrealized gains and losses for securities available for sale are required to be recognized as a separate component of shareholder's equity and excluded from the determination of net income. FLC's investment securities consist of certificates of deposits and U.S. Government Securities with maturities of one year or less and cost approximates market. FLC adopted this new standard for the year ended December 31, 1994 with no resulting financial statement impact. Prior to the adoption of SFAS No. 115, investment securities were carried at cost which approximates market. 3. Computer Inventory Computer inventory is carried at lower of cost or market value. 4. Equipment Equipment consists primarily of computer equipment and furniture and fixtures and is stated at cost less accumulated depreciation. Depreciation is provided for using the straight-line method over the estimated useful lives of the related assets, which are generally three to seven years. 5. Contractual Services Rights under Partnership Management Agreements Contractual services rights relate to the acquisition by FLC of certain leasing operations in January 1989. A portion of the price paid is attributable to the fair market value of the management contracts FLC had with the Funds that existed at that time. Under the terms of those management agreements, FLC renders a variety of services for which it earns a management fee. These service rights are being amortized over the remaining lives of the individual Funds, ranging from one to four years. - -------------------------------------------------------------------------------- 10 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED - -------------------------------------------------------------------------------- 6. Revenue Recognition Fee income for services rendered is comprised of management fees and brokerage fees earned by FLC. Management fees are earned for management services provided to the Funds by FLC. These fees generally range from 4% to 6% of gross rental payments received by the Funds on equipment under operating leases and 2% and 3% on equipment under full pay-out leases. Such fees are recognized as earned. In addition, FLC may be entitled to a share of the sales proceeds upon the ultimate disposition of equipment by the Funds of up to 3%. 7. Income Taxes FLC adopted, effective January 1, 1993, Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for income Taxes." Under the liability method specified by SFAS No. 109, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities. The only difference between assets and liabilities for financial statement and tax return purposes is contractual servicing rights under partnership management contracts. No deferred income taxes have been provided for this difference based on management's evaluation of the likelihood of realization by FML, since FML has had significant tax losses in the past few years. The deferred method, used in years prior to 1993, required FLC to provide for deferred tax expense based on certain items of income and expense which were reported in different years in the financial statements and the tax returns as measured by the tax rate in effect for the year the difference occurred. The change from the deferred method to the liability method of accounting for income taxes had no effect on reported earnings. The cumulative effect of the change in accounting related to years prior to 1993 was $-0-. FLC files a consolidated tax return for federal tax purposes with its parent, FML, and is party to a tax sharing agreement with FML. Under the provisions of the tax sharing agreement, FML is responsible for FLC's tax liability. Due to the amortization of the intangible assets, FLC will have no taxable income for federal purposes. Therefore, no provision for federal taxes has been made on FLC's consolidated balance sheets or consolidated statements of earnings for the years ended December 31, 1994 and 1993. FLC files separate state income tax returns and has provided approximately $37,000 and $16,000 for such taxes in 1994 and 1993, respectively, which is recorded in general and administrative expenses in the accompanying consolidated financial statements. 8. Statements of Cash Flows For purposes of reporting cash flows, FLC considers all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash and cash equivalents. 9. Pension Plan FLC has a defined contribution plan (401K) covering substantially all employees. This plan provides for voluntary company contributions equal to 50% of contributions made by employees up to a maximum of $3,000 per individual employee. There were no contributions made to the plan by the employees or FLC during 1994. FLC contributed $44,500 to the plan during the year ended December 31, 1993. During 1994, the plan's Trustee has filed for termination of the plan with the internal Revenue Service. Upon approval of termination from the Internal Revenue Service, all assets will be distributed to the plan's participants. - -------------------------------------------------------------------------------- 11 NOTE C - INVESTMENT IN PARTNERSHIPS - -------------------------------------------------------------------------------- The investment in partnerships includes FLC's investment in each of the Funds. FLC has contributed $1,000 to each of the Funds and states its investment in the Funds at equity. FLC, as the general partner in each of the Funds, is allocated net income and net losses of the Funds and is entitled to receive cash distributions from the Funds. Net losses of the Funds are generally allocated 99% to the limited partners and 1% to FLC. FLC will generally be allocated net income equal to the amount of cash to be distributed from the Funds to FLC at the close of each month (but not less than 1% of net income), and the balance will be allocated to the limited partners. Cash distributions from the Funds to FLC equal 1% of cash distributed until the limited partners have received an amount equal to the purchase price of their units in the Funds, plus a cumulative compounded priority return, as defined in the partnership agreement of the respective Funds. Thereafter, as provided by the respective partnership agreements, the cash distribution to FLC increases to 15% for two of the Funds and 10% for the other six Funds, with the excess distributed to the limited partners. NOTE D - NOTE PAYABLE - -------------------------------------------------------------------------------- FLC has the availability of a $3,000,000 unsecured line of credit from FMLICO. The rate of interest on any amount outstanding is one percent in excess of the 90 day U.S. Treasury Bill Rate (effective rate of 5.56% at December 31, 1994). In addition, FLC has the availability of a $2,000,000 secured line of credit from Royal Bank of Pennsylvania (Royal Bank). The line is secured by a conditional assignment of the management fees due FLC from the Funds. The rate of interest on any amount outstanding is prime plus two percent (effective rate of 10.50% at December 31, 1994). The primary purpose of these loan facilities is to enable FLC to finance equipment purchases in brokered transactions on a short-term basis. The line from FMLICO remains in effect until either FMLICO or FLC gives written notice of termination to the other. The line from Royal Bank is renewed on an annual basis, with a current expiration date of June 30, 1995. NOTE E - COMMITMENTS AND CONTINGENCIES - -------------------------------------------------------------------------------- 1. Noncancellable Operating Leases FLC leases office space under agreements which expire at varying dates through 1998. FLC has also entered into an agreement to lease certain computer equipment through 1996. Total expenses under these leases were $418,000 and $341,000 in 1994 and 1993, respectively. FLC recovers a portion of these expenses through sub-lease arrangements entered into for part of its office space and through the reimbursement of its computer lease expenses from the Funds. In 1994 and 1993, FLC recovered $193,000 and $80,000, respectively, in expenses from sub-leasing a portion of its office space and $39,000 and $34,000, respectively, in expenses from the reimbursement of its computer lease expenses from the Funds. Future minimum lease payments, excluding sub-let rental payments and computer lease expense reimbursements from the Funds, as of December 31, 1994 for the above leases are:
Years ending December 31, ------------------------- 1995 $304,000 1996 215,000 1997 26,000 1998 18,000 -------- $563,000 ========
- -------------------------------------------------------------------------------- 12 NOTE E - COMMITMENTS AND CONTINGENCIES - CONTINUED - -------------------------------------------------------------------------------- Future sub-let rental payments and computer lease expense reimbursements due FLC are $198,000 in 1995 and $191,000 in 1996. The net rental expense for the years ended December 31, 1994 and 1993 were approximately $186,000 and $226,000, respectively. 2. Employment Contracts FLC entered into employment contracts with certain key executives. These contracts call for, among other things, base compensation and incentive bonuses. Aggregate approximate future commitments under these contracts as of December 31, 1994 are $98,000 in 1995 and $33,000 in 1996. - -------------------------------------------------------------------------------- 13 FIDELITY LEASING CORPORATION FLC/FINST8 AND SUBSIDIARY 12/18/95 CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, JUNE 30, 1995 1994 ----------------------- Cash & cash equivalents 2,053,396 2,765,275 Short-term investments - net 888,327 Accounts receivable Fidelity Leasing Income Funds 145,226 90,151 Other 1,816 22,722 Computer inventory 641,945 49,698 Investment in Partnerships, at equity 55,000 41,379 Equipment, net of accumulated depreciation of $920,063 and $856,955, respectively 56,012 108,711 Contractual servicing rights under partnership management agreements, net of accumulated amortization of $634,165 and $442,165, respectively 377,511 569,511 Other assets 120,350 52,916 ----------------------- Total assets 4,339,583 3,700,363 ======================= Accounts payable and accrued expenses 28,104 170,641 Deferred income 12,500 28,623 Commissions payable 34,529 16,137 ----------------------- Total liabilities 75,133 215,401 Shareholder's Equity: Common stock 100 100 Additional paid-in capital 3,362,322 3,362,322 Retained Earnings 902,028 122,540 ----------------------- Total shareholder's equity 4,264,450 3,484,962 ----------------------- Total liabilities & shareholder's equity 4,339,583 3,700,363 =======================
14 FIDELITY LEASING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
6 MONTHS ENDED 3 MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1995 1994 1995 1994 ---------------------- ---------------------- Revenues: Fee income 895,693 1,255,742 493,002 641,300 Share of Income from limited partnerships 148,544 94,838 108,509 62,218 Interest and other income 103,995 21,677 69,227 12,069 ---------------------- ---------------------- Total revenues 1,148,232 1,372,257 670,738 715,587 Expenses: General & administrative expenses 962,865 1,210,612 496,047 596,940 Recovery of expenses from Fidelity Leasing Income Funds (389,415) (440,001) (229,284) (221,175) ---------------------- ---------------------- Total expenses 573,450 770,611 266,763 375,765 Income before depreciation and amortization of intangibles ---------------------- ---------------------- 574,782 601,646 403,975 339,822 Depreciation 24,032 47,099 9,772 22,300 Amortization of Intangible 96,000 96,000 48,000 48,000 ---------------------- ---------------------- Net earnings 454,750 458,547 346,203 269,522 ====================== ======================
15 FIDELITY LEASING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
6 MONTHS ENDED JUNE 30, JUNE 30, 1995 1994 ----------------------- Cash flows from operating activities: Net earnings 454,750 458,547 Adjustment to reconcile net earnings to net cash provided by operating activities: Share of net income from limited partnerships (148,544) (94,838) Depreciation and amortization of intangibles 120,032 143,099 (Increase) decrease in amounts due from Fidelity Leasing Income Funds (130,673) (86,663) (Increase) decrease in accounts receivable (1,816) (22,722) (Increase) decrease in computer inventory (394,529) 330,265 (Increase) decrease in other, net (69,688) 21,478 Increase (decrease) in accounts payable, accrued expenses and commissions payable (161,964) (44,547) Increase (decrease) in amounts due to Fidelity Leasing Income Funds, net (107,908) (1,047,274) Increase (decrease) in deferred income 3,110 (61,055) Distributions from limited partnerships 148,544 94,838 ------------------------ Net cash used in operating activities (288,686) (308,872) ------------------------ Cash flows from investing activities: Capital expenditures (4,030) (3,868) Maturity of investment securities held to maturity 768,361 ------------------------ Net cash provided by (used in) investing activities 764,331 (3,868) ------------------------ Net increase (decrease) in cash and cash equivalents 475,645 (312,740) Cash and cash equivalents, beginning of period 1,577,751 3,078,015 ------------------------ Cash and cash equivalents, end of period 2,053,396 2,765,275 ========================
16 FIDELITY LEASING CORPORATION NOTES TO FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1995 Note 1 - Management's Opinion Regarding Interim Financial Statements In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair statement of the results of operations for the interim period included herein have been made. The accounting policies followed by the Company are set forth in Note B to the Company's consolidated financial statements for the year ended December 31, 1994. Note 2 - Investment in Partnerships The investment in partnerships includes FLC's investment in each of the Funds. FLC has contributed $1,000 to each of the Funds and states its investment in Funds at equity. FLC, as the general partner in each of the Funds, is allocated net income and net losses of the Funds and is entitled to receive cash distributions from the Funds. Net losses of the Funds are generally allocated 99% to the limited partners and 1% to FLC. FLC will generally be allocated net income equal to the amount of cash to be distributed from the Funds to FLC at the close of each month (but not less than 1% of net income), and the balance will be allocated to the limited partners. Cash distributions from the Funds to FLC equal 1% of cash distributed until the limited partners have received an amount equal to the purchase price of their units in the Funds, plus a cumulative compounded priority return, as defined in the partnership agreement of the respective Funds. Thereafter, as provided by the respective partnership agreements, the cash distribution to FLC increases to 15% for two of the Funds and 10% for the other six Funds, with the excess distributed to the limited partner. 17 RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION The unaudited pro forma financial information of Resource America, Inc. (the "Company") presented below reflects the pro forma effects of the acquisition of Fidelity Leasing Corporation, accounted for as a purchase transaction. The unaudited pro forma balance sheet of Resource America, Inc. is presented as if the acquisition had occurred on June 30, 1995. The unaudited pro forma statement of operations of Resource America, Inc. for the period ended September 30, 1994 give effect to the acquisition as if it had occurred on October 1, 1993. The unaudited pro forma statements of operations of Resource America, Inc. for the period ended June 30, 1995 give effect to the acquisition as if it had occurred on October 1, 1994. The pro forma financial information does not purport to be indicative of either the financial position or results of operations that might have occurred had the acquisition of Fidelity Leasing Corporation taken place at the dates or for the periods indicated, or to project the Company's financial position or results of operations for any future date or period. The pro forma financial information has been prepared by the Company and all calculations have been made by the Company based upon assumptions deemed appropriate by the Company. Certain of these assumptions are set forth under the Notes to Unaudited Pro Forma Financial Statements. Such pro forma financial information should be read in conjunction with the Company's historical financial statements and notes thereto contained in the Annual Report on Form 10-KSB for the fiscal year ended September 30, 1994 and the Quarterly Report on Form 10-QSB for the period ended June 30, 1995, and in the historical financial statements of Fidelity Leasing Corporation acquired included in Item 7(a) of Form 8-K. 18 RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION PRO FORMA COMBINED BALANCE SHEET JUNE 30, 1995 (UNAUDITED) The following unaudited pro forma balance sheet combines the balance sheets of Resource America, Inc. and Fidelity Leasing Corporation as of June 30, 1995 as if the acquisition had occurred on that date.
Resource Fidelity Pro Forma Assets America, Inc. Leasing Corp. Adjustments Combined - ------ ------------- ------------- ----------- ---------- Cash $2,960,623 $2,053,396 (a)$(3,350,772) $1,663,247 Short-term investments - 888,327 (a)(888,327) - Computer inventory - 641,945 (a)(641,945) - Other current assets 1,280,849 147,042 1,427,891 Other property and equipment, oil and gas properties and equipment (successful efforts) 28,951,450 - - 28,951,450 Other 2,603,921 920,063 (a)(920,063) 2,603,921 Less accumulated depreciation and depletion (18,748,041) (864,051) (a)864,051 (18,748,041) Investments in Real Estate Loans 17,577,784 - - 17,577,784 Restricted cash 1,885,170 - - 1,885,170 Other assets 1,803,007 552,861 (a)672,606 3,028,474 ----------- ---------- ----------- ----------- Total assets $38,314,763 $4,339,583 $(4,264,450) $38,389,896 =========== ========== =========== =========== Liabilities and Stockholders' Equity - ------------------------------------ Liabilities - ----------- Current liabilities $906,381 $75,133 - $981,514 Long-term debt, excluding current portion 10,561,075 - - 10,561,075 Deferred taxes 890,000 - - 890,000 Stockholders' Equity - -------------------- Capital Stock 8,179 100 (a)(100) 8,179 Additional paid-in capital 19,214,210 3,362,322 (a)(3,362,322) 19,214,210 Retained earnings 9,782,232 902,028 (a)(902,028) 9,782,232 Treasury stock (2,533,040) - - (2,533,040) Loan receivable from ESOP (514,274) - - (514,274) ----------- ---------- ----------- ----------- Total liabilities and stockholders' equity $38,314,763 $4,339,583 $(4,264,450) $38,389,896 =========== ========== =========== ===========
See accompanying Notes to Unaudited Pro Forma Financial Statements 19 RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION PRO FORMA STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 1995 (UNAUDITED) The following unaudited pro forma statement of operations combines the results of Resource America, Inc. with the results of Fidelity Leasing Corporation for the nine months ended June 30, 1995 as if the acquisition had occurred on October 1, 1994.
Resource Fidelity Pro Forma America, Inc. Leasing Corp. Adjustments Combined ------------- ------------- ------------- ------------ Gross Revenue $8,360,488 $1,840,269 (b)$(203,000) $9,997,757 General and administrative expense (1,628,828) (996,797) - (2,625,625) Other expense (4,558,228) (186,794) (c)85,000 (4,660,022) ---------- ---------- ---------- ----------- Income from operations 2,173,432 656,678 (118,000) 2,712,110 Gain(loss) on sale of property 1,291 4,458 - 5,749 ---------- ---------- ---------- ----------- Income before taxes 2,174,723 661,136 (118,000) 2,717,859 (Provision) benefit for federal income taxes (372,000) - (d)(222,000) (594,000) ---------- ---------- ---------- ----------- Net Income $1,802,723 $661,136 $(340,000) $2,123,859 ========== ========== =========== ========== Net income per common share $2.39 $2.82 ========== ========== Weighted average common shares outstanding 753,100 753,100 ========== ==========
See accompanying Notes to Unaudited Pro Forma Financial Statements 20 RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION JUNE 30, 1995 NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS The following note describe the pro forma adjustments made to reflect the acquisition of Fidelity Leasing Corporation: (a) To record the purchase price of Fidelity Leasing Corporation: ------------------------------------------------------------- DR 21 RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION PRO FORMA STATEMENT OF OPERATIONS FOR YEAR ENDED SEPTEMBER 30, 1994 (UNAUDITED) The following unaudited pro forma statement of operations combines the results of Resource America, Inc. with the results of Fidelity Leasing Corporation for the year ended September 30, 1994 as if the acquisition had occurred on October 1, 1993.
Resource Fidelity Pro Forma America, Inc. Leasing Corp. Adjustments Combined ------------- ------------- ------------- ------------ Gross Revenue $7,986,661 $2,654,868 (a)$(300,000) $10,341,529 General and administrative expense (1,708,008) (1,591,408) - (3,299,416) Other expense (5,062,410) (278,176) (b) 143,000 (5,197,586) Income from operations 1,216,243 785,284 (157,000) 1,844,527 Gain(loss) on sale of property (7,610) - - (7,610) ---------- ---------- --------- ----------- Income before taxes 1,208,633 785,284 (157,000) 1,836,917 (Provision) benefit for federal income taxes 100,000 - (c) (273,000) (173,000) ---------- ---------- --------- ----------- Net Income $1,308,633 $785,284 $(430,000) $1,663,917 ========== ========== ========== ========== Net income per common share - primary $1.83 $2.33 ========== ========== Weighted average common shares outstanding 715,400 715,400 ========== ========== Net income per common share - fully diluted $ 1.69 $2.15 ========== ========== Weighted average common shares outstanding 774,700 774,700 ========== ==========
See accompanying Notes to Unaudited Pro Forma Financial Statements 22 RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION SEPTEMBER 30, 1994 NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS The following note describe the pro forma adjustments made to reflect the acquisition of Fidelity Leasing Corporation: The pro forma allocation of the purchase price to the net assets of Fidelity Leasing Corporation has been based on estimated asset values determined from information prepared internally by management for purposes of pro forma financial information. (a) To reduce interest income for the reduction of cash spent to acquire assets and cash paid to its parent prior to the transaction Revenue 300,000 (b) To adjust depreciation and amortization based on new value of assets Other expense (143,000) (c) To record pro forma tax effects Provision for federal income taxes 273,000 EX-99 2 RESOURCE AMERICA EX-99 1 Exhibit 99 FOR IMMEDIATE RELEASE SEPTEMBER 29, 1995 CONTACT: MICHAEL L. STAINES SENIOR VICE PRESIDENT RESOURCE AMERICA, INC. 1521 LOCUST STREET PHILADELPHIA, PA 19102 (215) 546-5005 Page 1 of 1 ________________________________________________________________________________ RESOURCE AMERICA, INC. ACQUIRES MANAGEMENT OF $70 MILLION in EQUIPMENT ON LEASE Resource America, Inc., (NASDAQ: REXI) (the "Company") announces its acquisition of the managment of approximately $70 million in peripheral computer equipment leased to investment grade customers. Resource America is a specialty-finance company principally engaged in the acquisition at substantial discount of income-producing mortgages. It is also engaged in the management and operation of energy investments. This acquisition increases the assets owned or under management of the Company to approximately $150 million. Further, the Company announces that a special meeting of the stockholders (the "Meeting"), will be held on Monday, October 16, 1995 at 9:00 am in the Company's offices in Philadelphia, Pennsylvania. The purpose of the Meeting will be to consider and vote on proposals by the Board of Directors to (i) effect a division of the Company's common stock into Class A and Class B common stock, and (ii) amend the 1989 Key Employee Stock Option Plan. As previously announced, only those holders of the Company's common stock at the close of business on August 18, 1995 will be entitled to vote. -----END PRIVACY-ENHANCED MESSAGE-----