At December 31,
---------------------------------
2007 2006
-------------- --------------
Financial fund management $ 14.6 billion $ 11.8 billion
Commercial finance 1.7 billion 0.7 billion
Real estate 1.6 billion 1.1 billion
-------------- --------------
$ 17.9 billion $ 13.6 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, 2007.
As of December 31, 2007, the Company had, on a consolidated basis, total
borrowings outstanding of $1.05 billion. This amount includes $143.1
million relating to the warehouse facilities that have been terminated;
$213.0 million of net liabilities consolidated under FIN 46 as to which the
Company has no recourse; $257.6 million of non-recourse revolving credit
facilities at LEAF; $355.2 million of non-recourse bridge loans at LEAF
that financed its acquisition of the NetBank leasing portfolio (these
bridge loans will be transferred to a partnership sponsored by LEAF with
48% of the risk having been transferred in February 2008 and the balance
anticipated to be transferred in April 2008); $64.6 million of corporate
level secured revolving debt; and $17.0 million of other debt, which is
principally mortgage debt secured by properties owned by the Company's
subsidiaries.
Resource America, Inc. is a specialized asset management company that uses
industry specific expertise to generate and administer 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. Highlights for the First Fiscal Quarter Ended December 31, 2007 and Recent Developments
-- On November 30, 2007, LEAF Financial Corporation ("LEAF") acquired the
business of Dolphin Capital Corp., an equipment finance subsidiary of
Lehman Brothers Bank. The total purchase price of $170.5 million included
a portfolio of small ticket leases acquired directly by an investment
partnership sponsored and managed by LEAF. In addition, LEAF has retained
the Dolphin lease origination team in Moberly, Missouri.
-- On November 7, 2007, LEAF acquired from the Federal Deposit Insurance
Corporation ("FDIC") a $412.5 million portfolio, at a discount, comprised
of over 10,000 leases and small business loans originated by NetBank
Business Finance, the equipment leasing division of NetBank which was being
operated in receivership by the FDIC. LEAF has sold an interest of
approximately 48% in this portfolio to its investment partnership and
intends to sell the remaining assets by April 2008. Additionally, LEAF
retained the NetBank management and origination teams in Columbia, South
Carolina.
-- LEAF increased its assets under management to $1.7 billion at December
31, 2007, an increase of $1.0 billion (149%) from December 31, 2006. LEAF
increased its commercial finance originations to $730.1 million for the
three months ended December 31, 2007, an increase of $601.0 million (466%)
from the three months ended December 31, 2006.
-- 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, increased its
assets under management to $1.6 billion at December 31, 2007, an increase
of $485.0 million (42%) from December 31, 2006. Since October 1, 2007,
Resource Real Estate has acquired $57.6 million in real estate assets for
its investment vehicles.
-- In October 2007, Resource Real Estate commenced operations of its new
wholly owned subsidiary, Resource Residential, a multi-family and
commercial property management company based in Omaha, Nebraska. Resource
Residential has completed the internalization of its property management
operations by terminating its third party management contracts with seven
management firms and currently employs 193 property management personnel,
including 17 property management professionals formerly employed by America
First Apartment Investors. As of January 2008, Resource Residential is the
property manager of its entire portfolio of 34 multi-family properties
representing approximately 8,300 apartment units.
-- Resource Real Estate increased its apartment units managed to 14,919
at December 31, 2007, an increase of 4,075 units (38%) from December 31,
2006.
-- The Company's financial fund management operating segment increased
its assets under management at December 31, 2007 to $14.6 billion, an
increase of $2.8 billion (24%) from December 31, 2006.
-- The Company's Board of Directors authorized the payment of a cash
dividend to be paid on February 29, 2008 in the amount of $0.07 per share
of the Company's common stock to all holders of record at the close of
business on February 15, 2008.
-- Resource Capital Corp. (NYSE : RSO ), a real estate investment trust for
which the Company is the external manager, declared a quarterly dividend of
$0.41 per share in December 2007.
-- The Company generated $14.4 million of cash from operating activities
from continuing operations, as adjusted, during the quarter ended December
31, 2007.
-- On January 7, 2008, the Company filed for an initial public offering
of units of RAI Acquisition Corp., a newly incorporated special purpose
acquisition corporation formed for the purpose of acquiring one or more
businesses, which seeks to raise $250.0 million for RAI Acquisition Corp.,
in an offering to be underwritten by J.P. Morgan Securities, Inc. The net
proceeds of the offering will be held in trust pending the completion of an
acquisition. The timing of the offering is subject to market conditions,
regulatory approvals and certain other conditions. A registration
statement relating to these securities has been filed with the Securities
and Exchange Commission but has not yet become effective. These securities
may not be sold, nor may offers to buy be accepted prior to the time the
registration statement becomes effective. Interested parties may obtain
copies of the preliminary prospectus relating to the offering by contacting
J.P. Morgan Securities Inc., 4 Chase Metrotech Center, CS Level, Brooklyn,
NY 11245, Attention: Prospectus Department; telephone: (718) 242-8002, or
email at addressing.services@jpmorgan.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. 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 remainder of this release contains the Company's unaudited consolidated
balance sheets, consolidated statements of operations, consolidated
statements of cash flows, reconciliation of GAAP (loss) income from
continuing operations to adjusted income from continuing operations and a
reconciliation of net cash provided by (used in) 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)
December 31, September 30,
2007 2007
------------ ------------
(unaudited)
ASSETS
Cash $ 19,790 $ 14,624
Restricted cash 76,613 19,340
Receivables 19,812 21,255
Receivables from managed entities 20,478 20,177
Loans sold, not settled 11,857 152,706
Loans held for investment, net 197,721 285,928
Loans held-for-sale, at fair value 112,634 -
Investments in commercial finance, net 646,394 243,391
Investments in real estate, net 49,265 49,041
Investment securities available-for-sale, at
fair value 45,145 51,777
Investments in unconsolidated entities 34,924 36,777
Property and equipment, net 15,242 12,286
Deferred income taxes 36,482 30,995
Goodwill 7,969 7,941
Intangible assets, net 4,699 4,774
Other assets 24,438 18,664
------------ ------------
Total assets $ 1,323,463 $ 969,676
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other liabilities $ 81,723 $ 60,546
Payables to managed entities 2,561 1,163
Borrowings 1,050,476 706,372
Deferred income tax liabilities 11,124 11,124
Minority interests 6,146 6,571
------------ ------------
Total liabilities 1,152,030 785,776
------------ ------------
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; 27,117,108 and
26,986,975 shares issued, respectively
(including nonvested restricted stock of
306,716 and 199,708, respectively) 268 268
Additional paid-in capital 265,730 264,747
Retained earnings 18,114 25,724
Treasury stock, at cost; 9,379,326 and
9,369,960 shares, respectively (102,171) (102,014)
ESOP loan receivable (217) (223)
Accumulated other comprehensive loss (10,291) (4,602)
------------ ------------
Total stockholders' equity 171,433 183,900
------------ ------------
$ 1,323,463 $ 969,676
============ ============
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
December 31,
------------------------
2007 2006
----------- -----------
REVENUES
Commercial finance $ 27,965 $ 7,089
Financial fund management 16,292 12,387
Real estate 6,472 4,564
----------- -----------
50,729 24,040
COSTS AND EXPENSES
Commercial finance 9,551 3,631
Financial fund management 6,614 4,552
Real estate 5,466 3,013
General and administrative 3,458 2,789
Provision for credit losses 2,773 45
Depreciation and amortization 966 709
----------- -----------
28,828 14,739
----------- -----------
OPERATING INCOME 21,901 9,301
Interest expense (14,677) (4,591)
Minority interests (1,091) (560)
Other (expense) income, net (18,368) 2,528
----------- -----------
(34,136) (2,623)
----------- -----------
(Loss) income from continuing operations before
taxes (12,235) 6,678
(Benefit) provision for income taxes (5,873) 2,210
----------- -----------
(Loss) income from continuing operations (6,362) 4,468
Loss from discontinued operations, net of tax (12) (19)
----------- -----------
NET (LOSS) INCOME $ (6,374) $ 4,449
=========== ===========
Basic (loss) earnings per common share:
Continuing operations $ (0.37) $ 0.26
Discontinued operations - -
----------- -----------
Net (loss) income $ (0.37) $ 0.26
=========== ===========
Weighted average shares outstanding 17,428 17,292
=========== ===========
Diluted (loss) earnings per common share:
Continuing operations $ (0.37) $ 0.23
Discontinued operations - -
----------- -----------
Net (loss) income $ (0.37) $ 0.23
=========== ===========
Weighted average shares outstanding 17,428 19,122
=========== ===========
Dividends declared per common share $ 0.07 $ 0.06
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
December 31,
------------------------
2007 2006
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (6,374) $ 4,449
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities,
net of acquisitions:
Impairment charge on collateralized debt
obligation investments 1,017 -
Depreciation and amortization 1,290 810
Provision for credit losses 2,773 45
Equity in earnings of unconsolidated entities (3,609) (3,981)
Minority interests 1,091 560
Distributions from unconsolidated entities 4,764 3,941
Losses on sales of loans held-for-sale 18,332 -
Gains on sales of investment securities
available-for-sale - (1,347)
Gains on sales of assets (301) (74)
Deferred income tax benefit (5,487) (671)
Non-cash compensation on long-term incentive
plans 905 401
Non-cash compensation issued 110 797
Non-cash compensation received (97) (673)
Decrease (increase) in commercial finance
investments 7,455 (63,594)
Changes in operating assets and liabilities (979) (7,706)
----------- -----------
Net cash provided by (used in) operating
activities of continuing operations 20,890 (67,043)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,375) (219)
Payments received on real estate loans and real
estate 3,695 3,256
Investments in real estate (738) (10,188)
Purchase of investments (200,311) (5,795)
Proceeds from sale of investments 1,957 3,381
Net cash paid for acquisitions (8,022) -
(Increase) decrease in other assets (3,842) 1,769
----------- -----------
Net cash used in investing activities of
continuing operations (210,636) (7,796)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 416,900 161,507
Principal payments on borrowings (162,452) (97,751)
Dividends paid (1,236) (1,043)
Distributions paid to minority interest holders (937) -
Increase in restricted cash (57,273) (5,639)
Proceeds from issuance of stock 158 25
Purchase of treasury stock (237) -
----------- -----------
Net cash provided by financing activities of
continuing operations 194,923 57,099
----------- -----------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities (6) (14)
Financing activities (5) -
----------- -----------
Net cash used in discontinued operations (11) (14)
----------- -----------
Increase (decrease) in cash 5,166 (17,754)
Cash at beginning of period 14,624 37,622
----------- -----------
Cash at end of period $ 19,790 $ 19,868
=========== ===========
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
December 31,
------------------------
2007 2006
----------- ------------
(Loss) income from continuing operations - GAAP $ (6,362) $ 4,468
Adjustments, net of tax:
Resource residential start-up costs 303 -
Impairment charge on CDO investments 564 -
Loss on sales of loans 10,168 -
----------- ------------
Adjusted income from continuing operations (1) $ 4,673 $ 4,468
=========== ============
Weighted average diluted shares outstanding (2) 18,641 19,122
=========== ============
Adjusted income from continuing operations per
share-diluted $ 0.25 $ 0.23
=========== ============
(1) During the first quarter of fiscal 2008, in connection with substantial
volatility and reduction in liquidity in the global credit markets, the
Company recorded several significant adjustments. For comparability
purposes, the Company is presenting adjusted income from continuing
operations because it facilitates the evaluation of the Company without
the effect of these adjustments. 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.
(2) Includes 1,213,000 diluted shares not used in the calculation of loss
from continuing operations per share-diluted for the three months ended
December 31, 2007.
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 this non-GAAP measure in its analysis of the exclusion of
certain adjustments recorded in the Company's first quarter of fiscal 2008.
Management believes the presentation of this financial measure excluding
the impact of these items provides useful supplemental information that is
essential to a proper understanding of the financial results of the
Company. This disclosure should not be viewed as a substitute for results
determined in accordance with GAAP, nor is it necessarily comparable to
non-GAAP performance measures that may be presented by other companies.
Schedule II
Reconciliation of Net Cash Provided By (Used In) Operating Activities of
Continuing Operations to Net Cash Provided By Operating Activities of
Continuing Operations As Adjusted
Net cash provided by operating activities of continuing operations as
adjusted was $14.4 million for the first fiscal quarter ended December 31,
2007, an increase of $8.1 million as compared to net cash provided by
operating activities of $6.3 million in the first fiscal quarter ended
December 31, 2006. The following reconciles net cash provided by (used in)
continuing operations to net cash provided by operating activities of
continuing operations as adjusted (in thousands):
Three Months Ended
December 31,
------------------------
2007 2006
----------- -----------
Net cash provided by (used in) operating
activities of continuing operations $ 20,890 $ (67,043)
Adjustments:
(Decrease) increase in commercial finance
investments (7,455) 63,594
Changes in operating assets and liabilities 979 7,706
Proceeds from sale of an investment security - 2,009
----------- -----------
Net cash provided by operating activities
of continuing operations as adjusted $ 14,414 $ 6,266
=========== ===========
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)