-----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, AtLaC8F1f3pitFEwnoF1vPP+GDyyNzXvHIIKPGbzviYufuB3Ycvupd+2SOBgPsu8 stUFmI/JCjO6mwq/N4HkXw== 0000914317-97-000371.txt : 19970814 0000914317-97-000371.hdr.sgml : 19970814 ACCESSION NUMBER: 0000914317-97-000371 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESURGENCE PROPERTIES INC CENTRAL INDEX KEY: 0000929223 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 133757163 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24740 FILM NUMBER: 97657853 BUSINESS ADDRESS: STREET 1: 411 WEST PUTNAM AVENUE CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2148795800 10-Q 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 Commission file number: 0-24740 RESURGENCE PROPERTIES INC. (Exact name of registrant as specified in its charter) MARYLAND 13-3757163 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) c/o Wexford Management LLC 411 West Putnam Avenue, Greenwich, CT 06830 (Address of principal executive offices) (203) 862-7000 (Registrant's telephone number, including area code) None (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of August 1, 1997, there were 10,000,000 shares of Common Stock, $0.01 par value, outstanding. RESURGENCE PROPERTIES INC. FORM 10-Q TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 Unaudited Consolidated Statements of Operations for the Three Months Ended June 30, 1997 and 1996 and for the Six Months ended June 30, 1997 and 1996 Unaudited Consolidated Statement of Shareholders' Equity for the Six Months Ended June 30, 1997 Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996 Notes to Unaudited Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K SIGNATURES
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share amounts) June 30, December 31, 1997 1996 --------- --------- ASSETS OPERATING REAL ESTATE PROPERTIES: Land ............................................... $ 7,385 $ 7,841 Buildings and improvements ......................... 30,636 32,557 --------- --------- 38,021 40,398 Accumulated depreciation and amortization .......... (3,256) (2,893) --------- --------- Operating real estate properties, net .......... 34,765 37,505 MORTGAGE LOANS ON REAL ESTATE: Nonearning ......................................... -- 3,228 Allowance for possible losses ...................... -- (3,198) --------- --------- Mortgage loans on real estate, net ................. -- 30 CASH AND CASH EQUIVALENTS ............................... 12,551 4,378 ACCOUNTS RECEIVABLE (net of allowance for doubtful accounts of $111 and $244) ............ 724 1,054 ASSETS HELD FOR SALE .................................... 21,215 49,387 OTHER ASSETS ............................................ 503 932 --------- --------- TOTAL ASSETS ............................................ $ 69,758 $ 93,286 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Senior debt ........................................ $ -- $ 2,490 Mortgage notes payable ............................. 5,005 5,294 Real estate taxes .................................. 658 482 Other liabilities .................................. 571 1,320 --------- --------- Total liabilities .............................. 6,234 9,586 COMMITMENTS AND CONTINGENCIES REDEEMABLE PREFERRED STOCK .............................. 300 300
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share amounts) June 30, December 31, 1997 1996 --------- --------- SHAREHOLDERS' EQUITY: Common stock, par value $.01; 50,000,000 shares Authorized; 10,000,000 shares issued and outstanding 100 100 Paid in capital .................................... 76,045 101,045 Accumulated deficit ................................ (12,921) (17,745) --------- --------- Total shareholders' equity .................... 63,224 83,400 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .............. $ 69,758 $ 93,286 ========= ========= See notes to unaudited consolidated financial statements
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share amounts) For the three months For the six months ended June 30, ended June 30, -------------------- ------------------ 1997 1996 1997 1996 ------- ------- ------- ------- REVENUES: Minimum rents ......................... $ 1,846 $ 3,625 $ 4,548 $ 7,614 Recoveries from tenants ............... 240 606 819 1,452 Mortgage loan interest ................ -- 4,109 -- 4,554 Investment income ..................... 157 216 280 311 Net gain (loss) from asset dispositions 251 (12) 3,547 963 Other ................................. 156 82 236 168 ------- ------- ------- ------- Total revenues .................... 2,650 8,626 9,430 15,062 ------- ------- ------- ------- EXPENSES: Property operations ................... 983 1,621 2,378 3,525 Interest expense ...................... 124 1,007 233 2,119 Non-income producing assets ........... 35 299 98 681 Management fees ....................... 369 513 817 1,025 General and administrative ............ 165 160 332 346 Depreciation and amortization ......... 335 776 734 1,553 Write-down for impairment of value .... -- -- -- 1,709 ------- ------- ------- ------- Total expenses .................... 2,011 4,376 4,592 10,958 ------- ------- ------- -------
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share amounts) (continued) For the three months For the six months ended June 30, ended June 30, -------------------- ------------------ 1997 1996 1997 1996 ------- ------- ------- ------- INCOME BEFORE INCOME TAXES AND EXTRAORDINARY GAIN .................... 639 4,250 4,838 4,104 Income Taxes .......................... -- -- -- -- ------- ------- ------- ------- INCOME BEFORE EXTRAORDINARY GAIN .................................. 639 4,250 4,838 4,104 Extraordinary Gain .................... -- 46 -- 160 ------- ------- ------- ------- NET INCOME ................................. $ 639 $ 4,296 $ 4,838 $ 4,264 ======= ======= ======= ======= INCOME PER COMMON SHARE (10,000,000 shares outstanding): INCOME BEFORE EXTRAORDINARY GAIN ........... $ 0.06 $ 0.43 $ 0.48 $ 0.41 EXTRAORDINARY GAIN ......................... -- -- -- 0.02 ------- ------- ------- ------- NET INCOME ................................. $ 0.06 $ 0.43 $ 0.48 $ 0.43 ======= ======= ======= ======= See notes to unaudited consolidated financial statements
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY For the Six Months Ended June 30, 1997 (Dollars in thousands, except share amounts) COMMON STOCK PAID IN ACCUMULATED SHARES AMOUNT CAPITAL DEFICIT TOTAL ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1996 10,000,000 $ 100 $ 101,045 $ (17,745) $ 83,400 Common stock dividends ... -- -- (25,000) -- (25,000) Preferred stock dividends -- -- -- (14) (14) Net income ............... -- -- -- 4,838 4,838 ---------- ---------- ---------- ---------- ---------- Balance, June 30, 1997 ... 10,000,000 $ 100 $ 76,045 $ (12,921) $ 63,224 ========== ========== ========== ========== ========== See notes to unaudited consolidated financial statements
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) For the Six Months ended June 30, ---------------------- 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ................................................ $ 4,838 $ 4,264 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization: Operating real estate properties ................. 607 1,392 Other assets ..................................... 127 161 Net gain from asset dispositions .......................... (3,547) (963) Extraordinary gain ........................................ -- (160) Write-down for impairment of value ........................ -- 1,709 Straight-line adjustment for stepped rentals .............. 109 26 Net changes in operating assets and liabilities ........... (448) (919) -------- -------- Net cash provided by operating activities ............ 1,686 5,510 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Net proceeds from sales of assets .................... 34,555 24,511 Net collections on mortgage loans .................... 299 14,050 Improvements to operating properties ................. (574) (1,199) Acquisitions ......................................... -- (800) -------- -------- Net cash provided by investing activities ........ 34,280 36,562 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Common stock dividends ............................... (25,000) -- Senior debt repayments, net .......................... (2,490) (11,420) Mortgage loan repayments ............................. (289) (2,565) Preferred stock dividends ............................ (14) (14) Purchase of interest in senior debt .................. -- (7,912) -------- -------- Net cash used for financing activities ........... (27,793) (21,911) -------- --------
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (continued) For the Six Months ended June 30, ---------------------- 1997 1996 -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS ................. 8,173 20,161 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .......... 4,378 8,818 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ................ $ 12,551 $ 28,979 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest ............................... $ 233 $ 2,167 ======== ======== See notes to unaudited consolidated financial statements
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) A. ORGANIZATION AND ACCOUNTING POLICIES Resurgence Properties Inc. and its subsidiaries (the "Company") are engaged in diversified real estate activities. The Company was incorporated on March 25, 1994 and began its operations on April 7, 1994, when the Company succeeded to most of the assets of Liberte Investors ("Liberte") upon consummation of Liberte's bankruptcy plan ("The Plan of Reorganization"). The Company is managed and administered by Wexford Management LLC ("Wexford"). The accompanying financial statements, notes and discussions should be read in conjunction with the consolidated financial statements, related notes and discussions contained in the Company's annual report on Form 10-K for the year ended December 31, 1996. The interim financial information contained herein is unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring adjustments, other than write-downs for impairment of value) necessary for the fair presentation of such financial information have been included. The December 31, 1996 year-end balance sheet data presented herein was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Long-lived assets are not reclassified to assets held for sale until a valid, binding sales contract is executed. No such reclassifications were made for the three months ended June 30, 1997. The results for the interim period are not necessarily indicative of the results to be expected for the year ending December 31, 1997. The Company has approximately $15.3 million of net operating loss carry-forwards ("NOL") available for U.S. income tax purposes expiring in years through 2011. The Company has provided a valuation allowance to offset the full amount of the net deferred tax assets arising from book and tax differences including those from the NOL's. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" in February, 1997. This pronouncement establishes standards for computing and presenting earnings per share, and is effective for the Company's 1997 year-end financial statements. The Company's management has determined that this standard will have no impact on the Company's computation or presentation of net income per common share. B. ASSETS HELD FOR SALE For the quarter ended June 30, 1997, the Company sold Ramser-Newton Avenue, Executive Airport, Southridge Plaza, Greenway Village and various land assets for net proceeds of approximately $1,400, $2,945, $2,332, $2,295 and $162, respectively. These sales resulted in a net gain of approximately $251, after deducting closing costs. The Company expects that the sales contracts on substantially all of the remaining assets held for sale will close by December 31, 1997. C. PLAN OF LIQUIDATION On April 29, 1997, the Board of Directors approved a plan of complete liquidation and dissolution of the Company (the "Plan") for submission to shareholders for their approval at the annual shareholders meeting which is expected to be held during the third quarter of 1997. The effective date of the Plan will be upon the affirmative vote of a majority of the Company's shareholders. Among the key features of the Plan are: (1) the cessation of all business activities, other than those in furtherance of the Plan; (2) the sale or disposition of all of the Company's assets; (3) the satisfaction of all outstanding liabilities; (4) the payment of liquidating distributions to shareholders in complete redemption of the Common Stock; and (5) the authorization of the filing of Articles of Dissolution. D. MANAGEMENT AGREEMENT The Board of Directors and Wexford have agreed to an extension of the management agreement with Wexford, which was due to expire on May 4, 1997, under a reduced fee arrangement through December 31, 1997 (the "Extended Management Agreement") and to replace all of the Management Options issued to Wexford with a compensation package designed to provide the same economic benefits as the Management Options. The replacement of the Management Options is contingent upon shareholder approval of the Plan. The Extended Management Agreement provides for a fee payable to Wexford of $1,152,125 for the year ending December 31, 1997 subject to adjustment based on actual expenses. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following section includes a discussion and analysis of the results of the Company for the quarter ended June 30, 1997. Plan of Liquidation On April 29, 1997, the Board of Directors approved a plan of complete liquidation and dissolution of the Company (the "Plan") for submission to its shareholders for their approval at the annual shareholders meeting expected to be held during the third quarter of 1997. The effective date of the Plan will be upon the affirmative vote of a majority of the Company's shareholders. Among the key features of the Plan are: (1) the cessation of all business activities, other than those in furtherance of the Plan; (2) the sale or disposition of all of the Company's assets; (3) the satisfaction of all outstanding liabilities; (4) the payment of liquidating distributions to shareholders in complete redemption of the Common Stock; and (5) the authorization of the filing of Articles of Dissolution. Results of Operations - General The Company has disposed of a significant portion of its portfolio acquired under the plan of reorganization of Liberte Investors. The future performance of the Company's portfolio of assets will be subject to prevailing economic conditions and to financial, business and other factors, including the future performance of the real estate market, the availability of financing to prospective asset purchasers, the timing of the liquidation of the Company and to other factors beyond the Company's control. For these reasons, the results of the Company's operations from period to period may not be comparable. Six Months Ended June 30, 1997 Compared To Six Months Ended June 30, 1996 and Three Months Ended June 30, 1997 Compared To Three Months Ended June 30, 1996 For the six months ended June 30, 1997, revenues related to the operations of the Company's operating properties decreased to $5,367,000 from $9,066,000 for the same period in the prior year, primarily as a result of the disposition of ten operating properties (two during the period from July 1996 through December 1996, four during the first quarter of 1997 and four during the second quarter of 1997). For the same period, property operating expenses correspondingly decreased to $2,378,000 from $3,525,000 in the prior year, primarily as a result of the disposition of the ten properties. Depreciation and amortization for the six months ended June 30, 1997 and 1996 amounted to $734,000 and $1,553,000, respectively. The decrease in depreciation and amortization is a result of the disposition of the ten operating properties as mentioned above. For the three months ended June 30, 1997, revenues related to the operations of the Company's operating properties decreased to $2,086,000 from $4,231,000 for the same period in the prior year, primarily as a result of the disposition of the ten operating properties as noted above. For the same period, property operating expenses correspondingly decreased to $983,000 from $1,621,000 in the prior year, primarily as a result of the disposition of the ten properties. Depreciation and amortization for the three months ended June 30, 1997 and 1996 amounted to $335,000 and $776,000, respectively. The decrease in depreciation and amortization is a result of the disposition of the ten operating properties as mentioned above. Mortgage loan interest decreased to zero for the six and three months ended June 30, 1997 from $4,554,000 and $4,109,000 for the same periods in the prior year, primarily as a result of the sale and/or repayment of all of the mortgage loans. The results for the six and three months ended June 30, 1996 include approximately $3,864,000 of additional interest income from the payoff of a pool of mortgage loans. Investment income decreased to $280,000 and $157,000 for the six and three months ended June 30, 1997 from $311,000 and $216,000 for the same periods in the prior year, primarily due to a higher amount of cash available for investment for the six and three months ended June 30, 1996. Interest expense decreased to $233,000 and $124,000 for the six and three months ended June 30, 1997 from $2,119,000 and $1,007,000 for the same periods in the prior year, primarily due to the repayment of the entire outstanding balance of the Senior Debt in January 1997. Expenses related to non-income producing assets decreased to $98,000 and $35,000 for the six and three months ended June 30, 1997 from $681,000 and $299,000 for the same periods in the prior year, primarily as a result of asset sales. General and administrative expenses, which primarily consist of insurance, consulting, legal and accounting fees, remained relatively constant for the six and three months ended June 30, 1997 as compared to the same periods in the prior year. In connection with the Company's purchases of interests in the Senior Debt during the three months ended June 30, 1996, the Company recorded an extraordinary gain of $46,000. Capital Expenditures Capital expenditures for the six months ended June 30, 1997 were $574,000, of which approximately $300,000 related to tenant improvements. The balance of the expenditures were for normal property improvements. The source of funds for such capital expenditures was from cash generated from rents and proceeds from the sale of assets. Liquidity and Capital Resources For the six months ended June 30, 1997, cash and cash equivalents increased by $8,173,000. $1,686,000 was provided by operating activities, $34,280,000 was provided by investing activities and $27,793,000 was used for financing activities. Cash provided by investing activities consisted primarily of net proceeds from asset sales of $34,555,000 and net collections on mortgage loans of $299,000, partially offset by improvements to the operating properties of $574,000. Cash used for financing activities consisted primarily of dividend payments of $25,014,000, net Senior Debt repayments of $2,490,000 and mortgage repayments of $289,000. On April 14, 1997 the Company paid a special dividend of $2.50 per Common Share ($25,000,000) to shareholders of record as of March 28, 1997. The source of funds for such dividend was from cash generated from rents and proceeds from the sale of assets. During the six months ended June 30, 1997, the Company sold eight operating properties and various land assets for net proceeds of approximately $34,555,000. These sales resulted in a net gain of approximately $3,279,000, after deducting closing costs. As of August 1, 1997, the Company has four assets under contract for sale to various purchasers, which are expected to result in net proceeds of approximately $23 million in the aggregate. All of the assets under contract are subject to customary closing conditions and substantially all are expected to close within the next three months. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits: None (b) Reports on Form 8-K: the Company filed a report on Form 8-K dated April 30, 1997. 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. Resurgence Properties Inc. Date: August 13, 1997 By: /s/ Joseph M. Jacobs --------------------- Joseph M. Jacobs Chief Executive Officer and President (Duly Authorized Officer) Date: August 13, 1997 By: /s/ Jay L. Maymudes -------------------- Jay L. Maymudes Chief Financial Officer, Vice President and Secretary (Principal Financial and Accounting Officer and Duly Authorized Officer) EX-27 2
5 6-MOS DEC-31-1997 JUN-30-1997 12,551,000 0 724,000 (111,000) 0 0 0 0 69,758,000 0 0 0 300,000 100,000 63,124,000 69,758,000 0 9,430,000 0 2,378,000 1,981,000 0 233,000 4,838,000 0 4,838,000 0 0 0 4,838,000 0 0
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