-----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, UDo9Q+ljG3yC1FxWG39jIQY3edCL0d9zf+v3T5eYaSqDl2gjic2LTqxv6C5dnGjv 4aevmZE/61o0HFasatpF5w== 0000914317-96-000263.txt : 19960816 0000914317-96-000263.hdr.sgml : 19960816 ACCESSION NUMBER: 0000914317-96-000263 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96613465 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, 1996 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, 1996, 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, 1996 and December 31, 1995 Unaudited Consolidated Statements of Operations for the Three Months Ended June 30, 1996 and 1995 and for the Six Months Ended June 30, 1996 and 1995 Unaudited Consolidated Statement of Shareholders' Equity for the Six Months Ended June 30, 1996 Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995 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, 1996 1995 --------- --------- ASSETS OPERATING REAL ESTATE PROPERTIES: Land .................................................... $ 16,236 $ 20,539 Buildings and improvements .............................. 62,243 78,868 --------- --------- 78,479 99,407 Accumulated depreciation and amortization ............... (4,372) (4,337) --------- --------- Operating real estate properties, net .......... 74,107 95,070 MORTGAGE LOANS ON REAL ESTATE: Earning ................................................. -- 15,052 Non-earning ............................................. 5,640 7,162 --------- --------- 5,640 22,214 Allowance for possible losses ........................... (3,810) (5,295) --------- --------- Mortgage loans on real estate, net ...................... 1,830 16,919 CASH AND CASH EQUIVALENTS ..................................... 28,979 8,818 ACCOUNTS RECEIVABLE (net of allowance for doubtful accounts of $154 and $196) ................. 1,432 1,802 ASSETS HELD FOR SALE .......................................... 29,171 31,707 OTHER ASSETS .................................................. 1,610 1,547 --------- --------- TOTAL ASSETS .................................................. $ 137,129 $ 155,863 ========= ========= RESURGENCE PROPERTIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (Dollars in thousands, except share and per share amounts) June 30, December 31, 1996 1995 --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Senior debt ............................................. $ 38,402 $ 57,898 Mortgage notes payable .................................. 5,569 8,134 Real estate taxes ....................................... 5,608 5,476 Other liabilities ....................................... 1,299 2,354 --------- --------- Total liabilities .............................. 50,878 73,862 COMMITMENTS AND CONTINGENCIES REDEEMABLE PREFERRED STOCK .................................... 300 300 SHAREHOLDERS' EQUITY: Common stock, par value $.01; 50,000,000 shares authorized; 10,000,000 shares issued and outstanding 100 100 Paid-in-capital ......................................... 101,045 101,045 Accumulated deficit ..................................... (15,194) (19,444) --------- --------- Total shareholders' equity .................... 85,951 81,701 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .................... $ 137,129 $ 155,863 ========= =========
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, 1996 1995 1996 1995 -------- -------- -------- -------- REVENUES: Minimum rents ......................................... $ 3,625 $ 4,255 $ 7,614 $ 8,387 Recoveries from tenants ............................... 606 847 1,452 1,842 Mortgage loan interest ................................ 4,109 538 4,554 1,184 Investment income ..................................... 216 166 311 384 Net gain (loss) from asset dispositions ............... (12) 272 963 58 Other ................................................. 82 79 168 171 -------- -------- -------- -------- Total revenues ............................... 8,626 6,157 15,062 12,026 -------- -------- -------- -------- EXPENSES: Property operations ................................... 1,621 2,107 3,525 4,134 Interest expense ...................................... 1,007 1,721 2,119 3,446 Non-income producing assets ........................... 299 315 681 937 Management fees ....................................... 513 513 1,025 1,025 General and administrative ............................ 160 279 346 446 Depreciation and amortization ......................... 776 849 1,553 1,663 Write-downs for impairment of value ................... -- 3,000 1,709 3,000 -------- -------- -------- -------- Total expenses ............................... 4,376 8,784 10,958 14,651 -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY GAIN ................................... 4,250 (2,627) 4,104 (2,625) Income Taxes .......................................... -- -- -- -- -------- -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY GAIN ..................... 4,250 (2,627) 4,104 (2,625) Extraordinary Gain .................................... 46 349 160 589 -------- -------- -------- -------- NET INCOME (LOSS) ........................................... $ 4,296 $ (2,278) $ 4,264 $ (2,036) ======== ======== ======== ======== INCOME (LOSS) PER COMMON SHARE (10,000,000 shares outstanding): INCOME (LOSS) BEFORE EXTRAORDINARY GAIN ..................... $ 0.43 $ (0.26) $ 0.41 $ (0.26) EXTRAORDINARY GAIN .......................................... -- 0.03 0.02 0.06 -------- -------- -------- -------- NET INCOME (LOSS) ........................................... $ 0.43 $ (0.23) $ 0.43 $ (0.20) ======== ======== ======== ========
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, 1996 (Dollars in thousands, except share amounts)
COMMON STOCK PAID - IN ACCUMULATED SHARES AMOUNT CAPITAL DEFICIT TOTAL ------ ------ ------- ------- ----- Balance, December 31, 1995 ............. 10,000,000 $ 100 $ 101,045 $ (19,444) $ 81,701 Preferred stock dividends .............. -- -- -- (14) (14) Net income ............................. -- -- -- 4,264 4,264 ---------- ---------- ---------- ---------- ---------- Balance, June 30, 1996 ................. 10,000,000 $ 100 $ 101,045 $ (15,194) $ 85,951 ========== ========== ========== ========== ==========
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, 1996 1995 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ................................................ $ 4,264 $ (2,036) Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization: Operating real estate properties ........................ 1,392 1,611 Other assets ............................................ 161 52 Net gain from asset dispositions ............................ (963) (58) Extraordinary gain .......................................... (160) (589) Write-downs for impairment of value ......................... 1,709 3,000 Straight line adjustment for stepped rentals ................ 26 (144) Net changes in assets and liabilities ....................... (919) (2,133) -------- -------- Net cash provided by (used for) operating activities .... 5,510 (297) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Net proceeds from sales of assets ........................... 24,511 3,205 Net collections on mortgage loans ........................... 14,050 2,274 Improvements to operating properties ........................ (1,199) (874) Property acquisitions ....................................... (800) (9,532) -------- -------- Net cash provided by (used for) investing activities .... 36,562 (4,927) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Senior debt repayments, net ................................. (11,420) (3,007) Mortgage loan repayments .................................... (2,565) (17) Preferred stock dividends ................................... (14) (14) Purchase of interest in senior debt ......................... (7,912) (8,009) -------- -------- Net cash used for financing activities .................. (21,911) (11,047) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............. 20,161 (16,271) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................. 8,818 26,877 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................... $ 28,979 $ 10,606 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest ...................................... $ 2,167 $ 4,462 ======== ========
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 and sub-partnership (the "Company") is engaged in diversified real estate activities, including the ownership, operation and management of retail, office, industrial/warehouse and multi-family real estate, and investments in mortgage loans on real estate. 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, 1995, which is herein incorporated by reference. Consequently, information with respect to the organization, significant accounting policies and other required disclosures are contained therein. The interim financial information contained herein is unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for the fair presentation of such financial information have been included. The December 31, 1995 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. The results for the interim period are not necessarily indicative of the results to be expected for the year ending December 31, 1996. The Company has approximately $9.4 million of net operating loss carry-forwards ("NOL") available for U.S. income tax purposes expiring in years through 2008. 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. Certain reclassifications have been made to the prior year financial statements to conform with the current period presentation. In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS No. 121"). The Company adopted SFAS No. 121 for the fiscal year beginning January 1, 1996. Under SFAS No. 121 the initial test to determine if impairment exists is to compute the recoverability of the asset based on anticipated cash flows (net realizable value) compared to the net carrying value of the asset. If anticipated cash flows on an undiscounted basis are insufficient to recover the net carrying value of the asset, an impairment loss should be recognized, and the asset written down to its estimated fair value. The fair value of the asset is the amount by which the asset could be bought or sold in a current transaction between willing parties, that is, other than in a forced or liquidation sale. The net realizable value of an asset will generally be greater than its fair value because net realizable value does not discount cash flows to present value and discounting is usually one of the assumptions used in determining fair value. Upon implementation of SFAS No. 121, certain of the Company's assets held for sale have been written down to their estimated fair values, while others remain at depreciated cost. Thus, the net carrying value of the Company's asset portfolio may differ materially from its fair value. However, the write-downs for impairment do not affect the tax basis of the assets and the write-downs are not included in the determination of taxable income or loss. Because the determination of both net realizable value and fair value is based upon projections of future economic events such as property occupancy rates, rental rates, operating cost inflation and market capitalization rates which are inherently subjective, the amounts ultimately realized at disposition may differ materially from the net carrying value as of the balance sheet date. The cash flows used to determine fair value and net realizable value are based on good faith estimates and assumptions developed by management. Inevitably, unanticipated events and circumstances may occur and some assumptions may not materialize; therefore actual results may vary from our estimates and the variances may be material. The Company may provide additional losses in subsequent periods if the real estate market or local economic conditions change and such write-downs could be material. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," which is effective for the Company beginning January 1, 1996. SFAS No. 123 requires expanded disclosures of stock based compensation arrangements with employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share. As of June 30, 1996 there was no effect on net income or earnings per share arising from stock based compensation. B. MORTGAGE LOANS ON REAL ESTATE The Jersey Property Corp. ("JPC") mortgages are a pool of first mortgage loans secured by seven industrial buildings located in New Jersey. During the second quarter of 1996, the Company collected $17,513 as payment in full for the mortgages which resulted in the recognition of $3,864 of interest income which was contingent under the terms of the forebearance agreement between JPC and the borrower. C. ASSETS HELD FOR SALE ABCO Plaza, located in Phoenix, Arizona, is a 120,864 square foot strip shopping center, built in 1988 and is situated on 15.36 acres of land. The net carrying value as of June 30, 1996 was $5,405. During the second quarter of 1996, the Company entered into a contract to sell the property for $6,700. Accordingly, the property was reclassified on the consolidated balance sheet from an operating property to an asset held for sale as of June 30, 1996. Cimarron Plaza, located in Bedford, Texas, is a 101,866 square foot strip shopping center, built in 1983 and renovated in 1992 and is situated on 9.96 acres of land. The net carrying value as of June 30, 1996 was $7,743. During the second quarter of 1996, the Company entered into a contract to sell the property for $8,385. Accordingly, the property was reclassified on the consolidated balance sheet from an operating property to an asset held for sale as of June 30, 1996. Bird of Paradise was a first mortgage loan secured by 13 acres of residential land located in Ventura, California. This mortgage was foreclosed upon during the second quarter of 1996. The undeveloped land which the Company took title to as a result of the foreclosure was reclassified on the consolidated balance sheet to an asset held for sale as of June 30, 1996 at the same carrying value ($525) as the non-earning mortgage loan prior to the foreclosure. Texas Waggoner Corporation is a first mortgage loan secured by a 11,306 square foot community shopping center located in Fort Worth, Texas. The net carrying value as of June 30, 1996 was $513. During the second quarter of 1996, the Company entered into a contract to settle the mortgage at a discount from its contractual balance. Accordingly, the mortgage loan was reclassified on the consolidated balance sheet from an earning mortgage loan to an asset held for sale as of June 30, 1996. Subsequently, the mortgage was paid in full in July 1996 for net proceeds of $675. During the three months ended June 30, 1996, the Company sold Copper Creek Apartments and Shoppes at Cloverplace and various land assets for net proceeds of approximately $3,717, $2,547 and $1,313, respectively. These sales resulted in a net loss of $10, inclusive of closing costs. D. SENIOR DEBT In June 1996, the Company purchased an additional participating interest in the Senior Debt in the principal amount of $4,139 for $4,093 and recognized an extraordinary gain of $46 in connection therewith. In July 1996, the Company prepaid $11,376 of its Senior Debt then outstanding. The net principal balance outstanding after such prepayment was approximately $27,025. E. WRITE-DOWNS FOR IMPAIRMENT OF VALUE AND LOAN LOSSES No write-downs were recorded during the quarter ended June 30, 1996. During the first quarter of 1996 the Company recorded write-downs for impairment of value on certain assets held for sale totaling $1,709. During the quarter ended June 30, 1995, the Company recorded write-downs for impairment of value on operating real estate properties of $573 and certain assets held for sale of $2,427, totaling $3,000 for the quarter ended June 30, 1995. No write-downs were recorded during the first quarter of 1995. No independent appraisal of these assets has been obtained or is contemplated. Since the determination of fair value is based on future economic events which are inherently subjective, the amounts ultimately realized may differ materially from the carrying values as of the balance sheet date. 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, 1996. Results of Operations - General The Company's current objective is to maximize shareholder value through (i) actively managing its real estate and mortgage portfolio to optimize both cash flow and capital appreciation, (ii) selectively disposing of certain assets and (iii) acquiring interests in real property and mortgages offering superior profit potential. The Company believes that the market price of the Common Stock is trading at prices below market value of the Company's assets net of its liabilities. Accordingly, the Company has undertaken an analysis of its operating and financial activities to consider alternative strategies that, consistent with the objective of maximizing long-term shareholder value, will increase the market price of the Common Stock. Strategies that the Company may pursue would include, but would not be limited to, changes in the composition of the Company's asset portfolio, business combinations, the disposition of significant portions of the Company's assets, the sale of the Company or the liquidation of the Company. 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 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. Inflation is not expected to have a material impact on the Company's results of operations or financial position. Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995 and Three Months Ended June 30, 1996 Compared To Three Months Ended June 30, 1995 For the six months ended June 30, 1996, revenues related to the operations of the Company's operating properties decreased to $9,066,000 from $10,229,000 for the same period in the prior year, primarily as a result of the disposition of six operating properties (one in September 1995, one in January 1996, one in February 1996, one in March 1996, one in April 1996 and one in June 1996) partially offset by the acquisition of an operating property in February 1995. For the same period, property operating expenses decreased to $3,525,000 from $4,134,000 in the prior year, primarily as a result of the six dispositions and partially offset by the acquisition of one property as mentioned above. Exclusive of revenues and expenses related to the six properties sold and one acquired, operating revenue and expenses for the six months ended June 30, 1996 were $7,108,000 and $4,615,000, respectively, compared to $7,225,000 and $4,669,000, respectively, for the same period in the prior year. Depreciation and amortization for the six months ended June 30, 1996 and 1995, amounted to $1,553,000 and $1,663,000, respectively. The decrease in depreciation and amortization is a result of the disposition of the six operating properties as mentioned above and write-downs of operating properties in the latter part of 1995. For the three months ended June 30, 1996, revenues related to the operations of the Company's operating properties decreased to $4,231,000 from $5,102,000 for the same period in the prior year, primarily as a result of the disposition of six operating properties as discussed above. For the same period, property operating expenses decreased to $1,621,000 from $2,107,000 in the prior year, primarily as a result of the disposition of six operating properties as discussed above. Exclusive of revenues and expenses related to the six properties sold, operating revenue and expenses for the three months ended June 30, 1996 were $3,530,000 and $1,267,000, respectively, compared to $3,501,000 and $1,243,000, respectively, for the same period in the prior year. Depreciation and amortization for the three months ended June 30, 1996 and 1995, amounted to $776,000 and $849,000, respectively. The decrease in depreciation and amortization is a result of the disposition of the six operating properties as mentioned above and write-downs of operating properties in the latter part of 1995. Mortgage loan interest, primarily generated from earning loans increased to $4,554,000 for the six months ended June 30, 1996 from $1,184,000 for the same period in the prior year. For the three months ended June 30, 1996, mortgage loan interest increased to $4,109,000 from $538,000 for the same period in the prior year. The increase for the six months ended and three months ended June 30, 1996 are primarily due to the payoff of the JPC mortgages during the second quarter of 1996 which resulted in the recognition of contingent interest income of $3,864,000. This increase was slightly offset by the reduction in mortgage loan interest as a result of mortgage loan payoffs during the latter part of 1995 and the sale of a mortgage loan in January 1996. Investment income decreased to $311,000 for the six months ended June 30, 1996 from $384,000 for the same period in the prior year, due to a larger amount of cash available for investment during the first six months of 1995 as compared to the same period in 1996. Investment income increased to $216,000 for the three months ended June 30, 1996 from $166,000 for the same period in the prior year, due to a larger amount of cash available for investment during the three months ended June 30, 1996 as compared to the same period in 1995. Interest expense decreased to $2,119,000 for the six months ended June 30, 1996 from $3,446,000 for the same period in the prior year and to $1,007,000 for the three months ended June 30, 1996 from $1,721,000 for the same period in the prior year, primarily due to the reduction in the outstanding balance of the Senior Debt resulting from the recent purchases and quarterly amortization payments and the payoff of the Barrington Hills mortgage in January 1996. Expenses related to non-income producing assets decreased to $681,000 for the six months ended June 30, 1996 from $937,000 for the same period in the prior year and to $299,000 for the three months ended June 30, 1996 from $315,000 for the same period in the prior year, primarily as a result of asset sales. Expenses related to non-income producing assets consisted primarily of real estate taxes. Such expenses will decrease in the future to the extent that such assets are sold. However, to the extent the Company forecloses on the remaining mortgage loans, expenses related to assets held for sale may increase. General and administrative expenses, which primarily consists of insurance, consulting, legal and accounting fees, decreased to $346,000 for the six months ended June 30, 1996 from $446,000 for the same period in the prior year and decreased to $160,000 for the three months ended June 30, 1996 from $279,000 for the same period in the prior year primarily due to a decrease in legal and consulting fees. In March 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of ("SFAS No. 121"). The Company adopted SFAS No. 121 for the fiscal year beginning January 1, 1996. See Note A to the consolidated financial statements. In accordance with SFAS No. 121, the Company monitors the value of its assets on a continuous basis to ascertain if impairment exists, based on current information available to the Company. During the first quarter of 1996 the Company recorded write-downs for impairment of value on certain assets held for sale totaling $1,709,000. During the quarter ended June 30, 1995, the Company recorded write-downs for impairment of value on operating real estate properties of $573,000 and certain assets held for sale of $2,427,000, totaling $3,000,000 for the quarter ended June 30, 1995. No write-downs were recorded during the first quarter of 1995. In connection with the Company's purchases of interests in the Senior Debt, as discussed below, for the six months ended June 30, 1996 and 1995, the Company recorded extraordinary gains of $160,000 and $589,000, respectively, and for the three months ended June 30, 1996 and 1995, the Company recorded extraordinary gains of $46,000 and $349,000, respectively. Capital Expenditures Capital expenditures for the six months ended June 30, 1996 were $1,199,000 of which approximately $902,000 related to tenant improvements and the balance was for normal property improvements. The source of funds for such capital expenditures were from cash generated from rents, interest received on mortgage loans, proceeds from the sale of assets and principal repayments on its mortgage loans. Liquidity and Capital Resources For the six months ended June 30, 1996, cash and cash equivalents increased by $20,161,000. $5,510,000 was provided by operating activities, $36,562,000 was provided by investing activities and $21,911,000 was used for financing activities. Cash provided by investing activities consisted primarily of net proceeds from asset sales of $24,511,000 and net collections on mortgage loans of $14,050,000 partially offset by improvements to the operating properties of $1,199,000 and the purchase of a building for $800,000. Cash used for financing activities consisted primarily of net Senior Debt repayments of $11,420,000, mortgage repayments of $2,565,000 and purchases of interest's in the Senior Debt of $7,912,000. During the six months ended June 30, 1996, the Company sold Barrington Hills, Copper Creek Apartments, Olympia Corners, Pike Plaza, Shoppes at Cloverplace and the Fort Smith Quarry mortgage loan and various land assets for net proceeds of approximately $24,511,000. These sales resulted in a net gain of $965,000, after deducting closing costs. During the second quarter of 1996, the JPC mortgage loan was paid in full for net proceeds of $17,513,000 which included $3,864,000 of interest income which was contingent under the terms of the forebearance agreement between JPC and the borrower. In connection with Liberte's Plan of Reorganization, the Company assumed Liberte's then outstanding debt under Liberte's credit agreements which was restructured pursuant to the Credit Agreement, the Company's sole credit facility. The Credit Agreement has no provision for the extension of additional credit and the Company, at present, believes that available cash, existing cash flow from operations and the proceeds from sales of properties and mortgage repayments are sufficient to satisfy the Company's foreseeable cash requirements (principally scheduled debt maturities and amortization, capital expenditures and other assumed liabilities inclusive of real estate taxes) and, when combined with the Company's ability to leverage new investments, should be sufficient to finance such new investments. As of June 30, 1996, the Senior Debt under the Credit Agreement was approximately $38,402,000. This is net of $18,055,000 which the Company has acquired through June 30, 1996. In July 1996, the Company prepaid $11,376,000 of it's Senior Debt then outstanding. The net principal balance outstanding after such prepayment was approximately $27,025,000. The source of funds for such prepayment were from cash generated from rents, interest received on mortgage loans, proceeds from the sale of assets and principal repayments on its mortagage loans. In August 1996, the Company executed documents settling in full, a suit the Company instituted against a former tenant at Harbor Bay for default of their lease obligations. Based on the terms of the settlement the Company expects to receive in September 1996, net proceeds of approximately $920,000. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: (a) Not applicable. (b) None. The Company was not required to file any reports on Form 8-K during the quarter ended June 30, 1996. 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 14, 1996 By: /s/ Joseph M. Jacobs --------------------- Joseph M. Jacobs Chief Executive Officer and President (Duly Authorized Officer) Date: August 14, 1996 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 THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF THE JUNE 30, 1996 FORM 10Q OF RESURGENCE PROPERTIES INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JUN-30-1996 28,979 0 1,586 154 0 0 0 0 137,129 0 43,971 0 300 100 85,851 137,129 0 15,062 0 3,525 5,314 0 2,119 4,104 0 4,104 0 160 0 4,264 0 0
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