The Company also reported:
-- Capital Fundraising. The Company has raised a total of $113.6 million
of financing through May 8, 2009:
Retail fundraising.
During the second quarter of fiscal 2009, the Company launched one new
fund through its retail broker-dealer channel with targeted fundraising
of $40.0 million, giving it a total of three retail funds currently in
the offering stage:
-- LEAF Financial Corp. ("LEAF"), the Company's commercial finance
subsidiary, has raised $62.7 million through LEAF Equipment Finance
Fund 4, L.P. ("LEAF 4"), its fourth investment partnership; and
-- Resource Real Estate Holdings, Inc. ("Resource Real Estate") has
raised $24.8 million through its seventh investment partnership and
has launched a real estate opportunity fund which will acquire
discounted real estate assets for which it has raised $6.1 million.
Institutional Fundraising.
-- A joint venture with an institutional partner to acquire distressed
real estate assets has acquired its fourth asset during the fiscal
quarter ended March 31, 2009, for which the institutional partner
has invested $15.3 million; and
-- The Company has launched a credit opportunities fund to invest in
senior bank loans and high yield bonds which has raised
approximately $5.0 million.
-- Debt Reduction. As of March 31, 2009, the Company reduced its
consolidated borrowings outstanding by $725.3 million (82%) to
$158.8 million from $884.1 million at March 31, 2008. Borrowings at
March 31, 2009 include $97.8 million of non-recourse revolving credit
facilities at LEAF and $61.0 million of other debt, which includes
$13.7 million of mortgage debt secured by the underlying properties.
-- Distressed Real Estate Funds. The Company, through its distressed
real estate joint ventures, has closed on approximately $87.0 million
of acquisitions, including committed capital, from September 2007
through April 2009.
-- Reduced Balance Sheet Exposure. The Company has limited its balance
sheet exposure to $233,000, net of tax, with respect to future
valuation adjustments on its investments in trust preferred securities.
The Company has no exposure to valuation adjustments for residential
mortgage-backed securities and has limited its balance sheet exposure
to investments in collateralized debt obligations secured by bank loans
reported as securities available-for-sale to $4.2 million, net of tax.
-- Adjusted Revenues and Adjusted Operating Income. For the second fiscal
quarter and six months ended March 31, 2009, the Company reported
adjusted revenues of $26.0 million and $59.4 million, respectively,
as compared to $51.5 million and $102.3 million for the second fiscal
quarter and six months ended March 31, 2008, respectively. For the
second fiscal quarter and six months ended March 31, 2009, the Company
reported adjusted operating income of $2.7 million and $7.8 million,
respectively, as compared to $21.6 million and $43.7 million for the
second fiscal quarter and six months ended March 31, 2008,
respectively. Adjusted revenues and adjusted operating income, both
non-GAAP measures, include $(1.2) million and $37,000 of pre-tax fair
value adjustments on investments reported under the equity method of
accounting for the second fiscal quarter and six months ended
March 31, 2009, respectively, as compared to $1.1 million and
$7.8 million for the second fiscal quarter and six months ended
March 31, 2008, respectively. A reconciliation of the Company's reported
GAAP revenue and operating income to adjusted revenue and adjusted
operating income is included as Schedule II to this release.
Assets Under Management
Assets under management decreased $1.0 billion, or 6%, to $16.7 billion at
March 31, 2009 from $17.7 billion at March 31, 2008.
The following table details the Company's assets under management by
operating segment:
At March 31,
-----------------------------
2009 2008
-------------- --------------
Financial fund management $ 13.5 billion $ 14.3 billion
Real estate 1.7 billion 1.7 billion
Commercial finance 1.5 billion 1.7 billion
-------------- --------------
$ 16.7 billion $ 17.7 billion
============== ==============
A description of how the Company calculates assets under management is set
forth in Item 1 of the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 2008.
Book Value
As of March 31, 2009, the Company's book value per common share was $7.19
per share. Total stockholders' equity was $128.8 million as of March 31,
2009 as compared to $156.1 million as of March 31, 2008. Total common
shares outstanding were 17,900,293 as of March 31, 2009 as compared to
17,525,420 as of March 31, 2008.
Highlights for the Second Fiscal Quarter Ended March 31, 2009 and Recent
Developments
-- The Company has reduced its total borrowings to $158.8 million at
March 31, 2009, a decrease of $395.2 million from September 30, 2008. This
reduction largely reflects the sale of all or part of its interest in
Apidos CDO VI and LEAF Commercial Finance Fund ("LCFF"), two investment
vehicles we sponsored and previously consolidated. These sales eliminated
the senior notes of Apidos CDO VI ($213.3 million net outstanding at
September 30, 2008) and LCFF debt ($143.8 million at September 30, 2008).
Additionally, the Company reduced its outstanding borrowings on its
commercial finance revolving warehouse credit facility by $31.2 million and
on one of its corporate revolving lines of credit by $6.4 million.
-- Resource Real Estate Holdings, Inc. ("Resource Real Estate"), the
Company's real estate asset manager that invests in and manages real estate
investment vehicles on behalf of itself and for outside investors and
operates the Company's commercial real estate debt platform, has acquired
$81.7 million in real estate assets for its investment vehicles since April
1, 2008.
-- Resource Real Estate commenced fundraising for Resource Real Estate
Opportunity Fund L.P. ("RREI Opp Fund"), a $40.0 million offering that will
invest in discounted real estate. Through May 8, 2009, Resource Real
Estate has raised $6.1 million through RREI Opp Fund.
-- Resource Real Estate continued fundraising for Resource Real Estate
Investors 7, L.P. ("RREI 7"), a $40.0 million offering that is investing in
multifamily real estate assets. Through May 8, 2009, Resource Real Estate
has raised $24.8 million through RREI 7 and anticipates closing this fund
in August 2009.
-- Resource Real Estate's wholly-owned subsidiary, Resource Residential,
a multifamily and commercial property management company, employed 313
property management personnel as of March 31, 2009. In February 2009,
Resource Residential became one of the first multifamily property
management companies in the U.S. to adopt a lease assurance program which
allows tenants who involuntarily lose their employment to terminate their
leases in 45 days without penalty. Resource Residential also instituted
and expanded use of the LRO™ System which allows it to optimize rental
rates by adjusting them on a daily basis.
-- Resource Real Estate increased the apartment units it manages or whose
management it supervises to 17,070 at March 31, 2009 from 15,230 at March
31, 2008. This includes a portfolio of 50 multifamily properties
representing 12,301 apartment units managed by Resource Residential.
-- Resource Capital Corp. (NYSE : RSO ), a real estate investment trust for
which the Company is the external manager and a shareholder, paid a cash
dividend of $0.30 per common share for its first quarter ended March 31,
2009.
-- The Company generated $11.8 million of cash from operating activities
from continuing operations as adjusted during the six months ended March
31, 2009. A reconciliation of net cash provided by operating activities of
continuing operations to net cash provided by operating activities of
continuing operations as adjusted, a non-GAAP measure, is included as
Schedule III to this release.
Resource America, Inc. is a specialized asset management company that uses
industry specific expertise to evaluate, originate, service and manage
investment opportunities for its own account and for outside investors in
the commercial finance, real estate and financial fund management sectors.
For more information, please visit our website at www.resourceamerica.com
or contact investor relations at pkamdar@resourceamerica.com.
Statements made in this release include forward-looking statements, which
involve substantial risks and uncertainties. The Company's actual results,
performance or achievements could differ materially from those expressed or
implied in this release and its other reports filed with the Securities and
Exchange Commission. For information pertaining to risks relating to these
forward-looking statements, reference is made to the section "Risk Factors"
contained in Item 1A of the Company's Annual Report on Form 10-K. The
Company undertakes no obligation to update or revise any forward-looking
statements to reflect new or changing information or events except as may
be required by law.
This press release shall not constitute an offer to sell or a solicitation
of an offer to buy any of the securities described herein, nor shall there
be any sale of these securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or jurisdiction.
A copy of the prospectus relating to the offering of Fund 4 may be obtained
by contacting Chadwick Securities, Inc. at (866) 323-0241.
The remainder of this release contains the Company's consolidated balance
sheets, consolidated statements of operations, consolidated statements of
cash flows, a reconciliation of GAAP (loss) income from continuing
operations to adjusted income from continuing operations, a reconciliation
of GAAP revenue to adjusted revenue and GAAP operating income to adjusted
operating income and a reconciliation of net cash provided by operating
activities of continuing operations to net cash provided by operating
activities of continuing operations as adjusted.
RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, September 30,
2009 2008
------------- -------------
(unaudited)
ASSETS
Cash $ 24,910 $ 14,910
Restricted cash 3,710 23,689
Receivables 9,341 2,014
Receivables from managed entities and
related parties 45,837 35,674
Loans sold, not settled, at fair value - 662
Loans held for investment, net - 219,664
Investments in commercial finance - held
for investment, net 37,807 182,315
Investments in commercial finance - held
for sale, at fair value 70,381 110,773
Investments in real estate, net 27,396 37,972
Investment securities available-for-sale,
at fair value 13,496 22,746
Investments in unconsolidated entities 17,085 18,523
Property and equipment, net 15,059 16,886
Deferred tax assets 48,635 44,467
Goodwill 7,969 7,969
Intangible assets, net 4,004 4,329
Other assets 10,949 15,764
------------- -------------
Total assets $ 336,579 $ 758,357
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other liabilities $ 47,008 $ 56,309
Payables to managed entities and related
parties 577 586
Borrowings 158,843 554,059
Deferred tax liabilities 983 1,060
Minority interests 409 2,610
------------- -------------
Total liabilities 207,820 614,624
------------- -------------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, $1.00 par value, 1,000,000
shares authorized; none outstanding - -
Common stock, $.01 par value, 49,000,000
shares authorized; 27,661,044 and
27,421,552 shares issued, respectively
(including nonvested restricted stock of
509,610 and 513,386, respectively) 272 269
Additional paid-in capital 271,535 269,689
Accumulated deficit (21,313) (3,980)
Treasury stock, at cost; 9,251,141 and
9,312,232 shares, respectively (100,776) (101,440)
Accumulated other comprehensive loss (20,959) (20,805)
------------- -------------
Total stockholders' equity 128,759 143,733
------------- -------------
$ 336,579 $ 758,357
============= =============
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
REVENUES
Commercial finance $ 13,421 $ 32,665 $ 28,805 $ 60,630
Real estate 5,173 6,692 12,063 13,164
Financial fund management 8,611 11,023 18,530 20,645
--------- --------- --------- ---------
27,205 50,380 59,398 94,439
COSTS AND EXPENSES
Commercial finance 6,774 12,081 14,223 21,462
Real estate 5,370 5,326 11,288 10,792
Financial fund management 5,082 6,284 10,810 12,898
General and administrative 3,670 3,757 7,678 7,215
Provision for credit losses 853 1,447 4,597 4,220
Depreciation and amortization 1,535 985 3,082 1,950
--------- --------- --------- ---------
23,284 29,880 51,678 58,537
--------- --------- --------- ---------
OPERATING INCOME 3,921 20,500 7,720 35,902
OTHER (EXPENSE) INCOME
Interest expense (5,924) (14,595) (14,323) (29,272)
Minority interest income
(expense), net 725 (2,176) 1,539 (3,267)
(Loss) gain on sale of loans
and investment securities,
net (11,588) 312 (11,588) (18,020)
Impairment charges on
investment securities (3,039) (132) (7,962) (1,149)
Other income, net 544 1,112 2,243 2,093
--------- --------- --------- ---------
(19,282) (15,479) (30,091) (49,615)
--------- --------- --------- ---------
(Loss) income from continuing
operations before taxes (15,361) 5,021 (22,371) (13,713)
Income tax (benefit) provision
for income taxes (3,891) 2,931 (7,606) (4,937)
--------- --------- --------- ---------
(Loss) income from continuing
operations (11,470) 2,090 (14,765) (8,776)
Loss from discontinued
operations, net of tax (163) (107) (88) (218)
--------- --------- --------- ---------
NET (LOSS) INCOME $ (11,633) $ 1,983 $ (14,853) $ (8,994)
========= ========= ========= =========
Basic (loss) earnings per
common share:
Continuing operations $ (0.64) $ 0.12 $ (0.83) $ (0.50)
Discontinued operations (0.01) (0.01) (0.01) (0.01)
--------- --------- --------- ---------
Net (loss) income $ (0.65) $ 0.11 $ (0.84) $ (0.51)
========= ========= ========= =========
Weighted average shares
outstanding 17,815 17,504 17,726 17,466
========= ========= ========= =========
Diluted (loss) earnings per
common share:
Continuing operations $ (0.64) $ 0.12 $ (0.83) $ (0.50)
Discontinued operations (0.01) (0.01) (0.01) (0.01)
--------- --------- --------- ---------
Net (loss) income $ (0.65) $ 0.11 $ (0.84) $ (0.51)
========= ========= ========= =========
Weighted average shares
outstanding 17,815 18,576 17,726 17,466
========= ========= ========= =========
Dividends declared per common
share $ 0.07 $ 0.07 $ 0.14 $ 0.14
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
March 31,
--------------------
2009 2008
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (14,853) $ (8,994)
Adjustments to reconcile net loss to net cash
provided by operating activities, net of
acquisitions:
Impairment charges on investment securities
available-for-sale 7,962 1,149
Depreciation and amortization 4,156 2,509
Provision for credit losses 4,597 4,220
Minority interest (income) expense (1,539) 3,267
Equity in (earnings) losses of unconsolidated
entities (199) 1,373
Distributions from unconsolidated entities 3,053 8,658
Loss on sale of loans and investment securities,
net 11,588 18,020
Gain on sale of investments in commercial finance
assets (319) -
Gain on sale of investment securities
available-for-sale (40) -
Gain on sale of assets (688) (2,033)
Deferred income tax (benefit) provision (14,520) 735
Non-cash compensation on long-term incentive plans 2,774 2,388
Non-cash compensation issued 1 62
Non-cash compensation received (98) 356
Decrease in commercial finance investments 4,390 59,603
Changes in operating assets and liabilities (4,494) (36,438)
--------- ---------
Net cash provided by operating activities of
continuing operations 1,771 54,875
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (184) (5,549)
Payments received on real estate loans and real
estate 10,036 8,104
Investments in real estate (2,232) (4,074)
Purchase of commercial finance assets held for
investment (41,942) (71,586)
Payments received on commercial finance assets held
for investment 33,643 43,859
Purchase of loans and investment securities (19,036) (239,551)
Proceeds from sale of loans and investment securities 13,275 5,215
Principal payments received on loans 3,975 6,126
Net cash paid for acquisitions - (8,022)
Increase in other (1,394) (3,795)
--------- ---------
Net cash used in investing activities of continuing
operations (3,859) (269,273)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 263,714 616,335
Principal payments on borrowings (258,054) (385,314)
Minority interest contributions 1 315
Distributions paid to minority interest holders (73) (1,243)
Dividends paid (2,480) (2,447)
Decrease (increase) in restricted cash 9,326 (16,229)
Proceeds from issuance of stock 3 182
Purchase of treasury stock - (237)
Repurchase of subsidiary stock (264) -
--------- ---------
Net cash provided by financing activities of
continuing operations 12,173 211,362
--------- ---------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities (8) 3
Financing activities (77) -
--------- ---------
Net cash (used in) provided by discontinued
operations (85) 3
--------- ---------
Increase (decrease) in cash 10,000 (3,033)
Cash at beginning of period 14,910 14,624
--------- ---------
Cash at end of period $ 24,910 $ 11,591
========= =========
This press release contains supplemental financial information determined
by methods other than in accordance with Accounting Principles Generally
Accepted in the United States of America ("GAAP"). The Company's
management uses these non-GAAP measures in its analysis of the exclusion of
certain adjustments recorded in the three and six months ended March 31,
2009. Management believes the presentation of these financial measures
excluding the impact of these items provides useful supplemental
information that is essential to a proper understanding of the financial
results of the Company. These disclosures should not be viewed as a
substitute for results determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP performance measures that may be
presented by other companies.
SCHEDULE I
RECONCILIATION OF GAAP (LOSS) INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED INCOME FROM CONTINUING OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
(Loss) income from continuing
operations - GAAP $ (11,470) $ 2,090 $ (14,765) $ (8,776)
Adjustments, net of tax:
Partnership level adjustments
(1) (116) 651 723 4,920
Impairment charge on CDO
investments 1,460 84 4,191 735
Loan reserves - - 675 -
Loss (gain) on sale of loans
and investment securities,
net 8,652 (342) 8,120 11,390
Severance costs 1,099 - 1,219 -
Resource residential start-up
costs - - - 349
RCC incentive stock 464 950 410 950
Other 715 - 402 -
Tax rate normalization - 1,134 - -
--------- --------- --------- ---------
Adjusted income from continuing
operations (2) $ 804 $ 4,567 $ 975 $ 9,568
========= ========= ========= =========
Weighted average diluted shares
outstanding (3) 18,874 18,576 18,466 18,608
========= ========= ========= =========
Adjusted income from continuing
operations per share-diluted $ 0.04 $ 0.25 $ 0.05 $ 0.51
========= ========= ========= =========
(1) Primarily includes mark to market adjustments on investments in
partnerships that the Company manages.
(2) During the six months ended March 31, 2009 and 2008, in connection with
substantial volatility and reduction in liquidity in the global credit
markets, the Company recorded several significant adjustments that it
believes do not directly impact its continuing operations. For
comparability purposes, the Company is presenting adjusted income from
continuing operations because it facilitates the evaluation of the
Company's underlying operating performance without the effect of
adjustments that do not directly relate to that performance. Adjusted
income from continuing operations should not be considered as an
alternative to (loss) income from continuing operations (computed in
accordance with GAAP). Instead, adjusted income from continuing
operations should be reviewed in connection with (loss) income from
continuing operations in the Company's consolidated financial
statements, to help analyze how the Company's business is performing.
(3) Dilutive shares used in the calculation of adjusted income from
continuing operations per share-diluted includes an additional
1,059,000 shares for the three months ended March 31, 2009, and 740,000
and 1,142,000 shares for the six months ended March 31, 2009 and 2008,
respectively, which were not used in the calculation of loss from
continuing operations per share-diluted.
SCHEDULE II
RECONCILIATION OF GAAP REVENUE TO ADJUSTED REVENUE AND RECONCILIATION OF
GAAP OPERATING INCOME TO ADJUSTED OPERATING INCOME
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
------------------ -------------------
2009 2008 2009 2008
-------- --------- --------- ---------
Revenues
Commercial finance $ 13,421 $ 32,665 $ 28,805 $ 60,630
Real estate 5,173 6,692 12,063 13,164
Financial fund management 8,611 11,023 18,530 20,645
-------- --------- --------- ---------
Total revenues - GAAP 27,205 50,380 59,398 94,439
Adjustments:
Fair value adjustments (1) (1,181) 1,146 37 7,827
-------- --------- --------- ---------
Adjusted revenues (2) $ 26,024 $ 51,526 $ 59,435 $ 102,266
======== ========= ========= =========
Operating income - GAAP $ 3,921 $ 20,500 $ 7,720 $ 35,902
Adjustments:
Fair value adjustments (1) (1,181) 1,146 37 7,827
-------- --------- --------- ---------
Adjusted operating income (2) $ 2,740 $ 21,646 $ 7,757 $ 43,729
======== ========= ========= =========
(1) Reflects pre-tax fair value adjustments on investments reported under
the equity method of accounting.
(2) Management of the Company views adjusted revenues and adjusted
operating income, both non-GAAP measures, as useful and appropriate
supplements to revenues and operating income since they exclude fair
value adjustments related to current credit market conditions and are
not indicative of the Company's current operating performance.
SCHEDULE III
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING
OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING
OPERATIONS AS ADJUSTED
(in thousands)
(unaudited)
Net cash provided by operating activities of continuing operations as
adjusted was $11.8 million for the six months ended March 31, 2009, a
decrease of $23.4 million as compared to net cash provided by operating
activities of $35.2 million in the six months ended March 31, 2008. The
following reconciles net cash provided by operating activities of
continuing operations to net cash provided by operating activities of
continuing operations as adjusted:
Six Months Ended
March 31,
------------------
2009 2008
-------- --------
Net cash provided by operating activities of continuing
operations $ 1,771 $ 54,875
Adjustments:
Increase in commercial finance investments (4,390) (59,603)
Changes in operating assets and liabilities 4,494 36,948
Proceeds from sales of certain loans and investment
securities 9,900 2,933
-------- --------
Net cash provided by operating activities of
continuing operations as adjusted $ 11,775 $ 35,153
======== ========
(1) Management of the Company believes net cash provided by operating
activities of continuing operations as adjusted is a useful and
appropriate supplement to GAAP net cash provided by operating
activities of continuing operations since it reflects how management
views its liquidity and working capital requirements.
Contact Information: CONTACT: Steven Kessler Chief Financial Officer Resource America, Inc. One Crescent Drive, Suite 203 Philadelphia, PA 19112 215/546-5005 215/546-4785 (fax)