SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): March 30, 1999
SOUTHERN PACIFIC FUNDING CORPORATION
(Exact name of registrant as specified in its charter)
California 1-11785 33-0636924
(State or other jurisdiction (Commission File No.) (IRS Employer Identification
of incorporation) No.)
One Centerpointe Drive, Suite 551
Lake Oswego, Oregon 97035
(Address of principal executive offices) (Zip Code)
(503) 684-6316
(Registrant's telephone number, including area code)
Item 5. Other Events.
The Corporation filed a voluntary petition with the United States
Bankruptcy Court for the District of Oregon (the "Bankruptcy Court") under
Chapter 11 of the United States Bankruptcy Code, Case No. 298-37613-elp11, on
October 1, 1998. The Corporation is required to file Monthly Operating Reports
with the Bankruptcy Court pursuant to Bankruptcy Rule 2015. In connection
therewith, attached hereto as Exhibit 99 are the financial statements (omitting
certain schedules) included in the Rule 2015 Report for the Month and Year of
February 1999, filed with the Bankruptcy Court on March 30, 1999.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits:
99 Financial Statements from Rule 2015 Report for the Month
and Year of February 1999
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SIGNATURE
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.
SOUTHERN PACIFIC FUNDING CORPORATION
Dated: March 31, 1999 By: /s/ Timothy Breedlove
Name: Timothy Breedlove
Title: Chief Financial Officer
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<S> <C> <C> <C> <C> <C>
INCOME STATEMENT (Page 1 of 2) Filing
October 1, 1998
November December January February to Date
---------------- ---------------- ---------------- ---------------- ----------------
GROSS SALES
Interest Income $ 2,359,240 $ 133,026 $ 120,039 $ 128,778 $ 5,710,895
Servicing Income 627,509 (219,394) 584,778 766,674 2,471,476
Prepayment Penalty Income 762,923 967,887 1,232,858 659,343 4,481,829
Less: Returns and Allowances - - - - -
---------------- ---------------- ---------------- ---------------- -------------
NET SALES 3,749,672 881,519 1,937,675 1,554,795 12,664,200
COST OF SALES
BEGINNING INVENTORY - - - - -
Add: PURCHASES - - - - -
Less: ENDING INVENTORY - - - - -
---------------- ---------------- ---------------- ---------------- -------------
COST OF GOODS SOLD - - - - -
GROSS PROFIT 3,749,672 881,519 1,937,675 1,554,795 12,664,200
OTHER OPERATING EXPENSES:
OFFICER SALARIES/DRAWS 612,381 299,637 290,739 214,410 1,830,367
DIRECT LABOR/SALARIES 740,169 364,673 196,131 213,631 1,941,801
BENEFITS/PAYROLL TAXES 206,435 11,991 102,529 53,258 623,506
SUPPLIES 13,597 28,404 4,174 10,529 83,524
INSURANCE 28,427 31,527 28,427 28,427 154,238
RENT 287,879 57,755 51,533 75,159 760,894
GENERAL AND ADMINISTRATIVE 1,623,341 1,497,692 1,048,984 781,433 5,514,839
DEPRECIATION/AMORTIZATION 420,588 327,568 160,042 160,042 1,493,317
---------------- ---------------- ---------------- ---------------- -------------
TOTAL OPERATING EXPENSES 3,932,817 2,619,247 1,882,559 1,536,889 12,402,486
---------------- ---------------- ---------------- ---------------- -------------
NET OPERATING INCOME (LOSS) (183,145) (1,737,728) 55,116 17,906 261,714
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ADD: OTHER INCOME (2) 5,533 38,150 1,030,005 87,303 1,212,599
LESS OTHER EXPENSES:
INTEREST EXPENSE (1,777,895) (517,419) (688,451) (383,113) (5,420,753)
OTHER (3) 1,636,646 (3,467,844) (1,095,623) (434,491) (4,439,260)
---------------- ---------------- ---------------- ---------------- -------------
TOTAL OTHER EXPENSES (318,861) (5,684,841) (698,953) (712,395) (8,385,700)
GAIN/(LOSS) SALE OF ASSETS 271,947 (544,418) (3,230,938) (64,328) (3,567,737)
---------------- ---------------- ---------------- ---------------- -------------
INCOME (LOSS) BEFORE TAXES (46,914) (6,229,259) (3,929,891) (776,723) (11,953,437)
INCOME TAXES 698,677 1,145,987 1,176,222 142,025 3,118,383
---------------- ---------------- ---------------- ---------------- -------------
NET INCOME (LOSS) $ 651,763 $ (5,083,272) $ (2,753,669) $ (634,698) $ (8,835,054)
================ ================ ================ ================ =============
(2) Schedule of Other Income attached
(3) Schedule of Other Expense attached
</TABLE>
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RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
Filing
October 1, 1998
November December January February to Date
--------------- -------------- ------------- -------------- --------------
NET INCOME (LOSS) $ 651,763 $ (5,083,272) $(2,753,669) $ (634,698) $ (8,835,054)
ADJUSTMENTS TO RECONCILE
NET INCOME TO NET CASH:
DEPRECIATION/AMORTIZATION 420,588 327,568 281,843 311,607 1,766,683
(GAIN)LOSS ON SALE OF ASSETS 855,295 544,418 3,230,938 64,328 4,694,979
(INCREASE)DECREASE IN RECEIVABLES 7,616,002 (1,375,363) 2,254,471 (392,798) 9,459,386
(INCREASE)DECREASE IN INVENTORY (1) 293,830,863 1,005,339 242,557 72,371 295,573,948
INCREASE(DECREASE) IN PAYABLES (9,580,662) (457,059) 721,311 211,909 (7,898,481)
OTHER, NET (2) (30,604) 3,854,169 14,631 719,480 6,047,385
--------------- -------------- ------------- -------------- ---------------
NET CASH PROVIDED BY OPERATIONS 293,763,245 (1,184,200) 3,992,082 352,199 300,808,846
CASH FLOWS FROM INVESTING/FINANCING
(PURCHASE OF)FIXED ASSETS - - - - -
CAPITAL CONTRIBUTIONS - - - - -
LOAN PROCEEDS (SCHEDULE F, NUMBER 6) - 125,122 38,960,936 - 39,086,058
LOAN PRINCIPAL/CAPITAL LEASE (PAYMENTS) 294,217,616) (11,538) (38,690,645) (309,021) (333,326,742)
--------------- -------------- ------------- -------------- ---------------
NET INCREASE (DECREASE) IN CASH (454,371) (1,070,616) 4,262,373 43,178 6,568,162
BEGINNING CASH 5,718,040 5,263,669 4,193,053 8,455,426 1,930,442
--------------- -------------- ------------- -------------- ---------------
ENDING CASH $ 5,263,669 $ 4,193,053 $ 8,455,426 $ 8,498,604 $ 8,498,604
=============== ============= ============= ============== ===============
(1) Mortgage Loans held for Sale
(2) Accrual of Operations of subsidiaries $ (1,636,644) $ 3,467,844 $ 1,095,623 $ 434,491 $ 4,439,262
Residual Loan Interests 213,341 258,976 909,933 286,874 1,949,095
Prepaid expenses and other assets, net 1,392,699 127,349 (1,990,925) (1,885) (340,972)
--------------- -------------- ------------- -------------- ---------------
$ (30,604) $ 3,854,169 $ 14,631 $ 719,480 $ 6,047,385
=============== ============= ============= ============== ===============
</TABLE>
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COMPARATIVE BALANCE SHEET (Page 1 of 2)
<TABLE>
<S> <C> <C> <C> <C> <C>
AS OF AS OF AS OF AS OF
11/30/98 12/31/98 01/31/99 02/28/99
---------------- ----------------- ---------------- -----------------
ASSETS
- ------
Current Assets:
Cash $ 5,263,669 $ 4,193,053 $ 8,455,426 $ 8,498,604
Inventory (Mortgage Loans Held for Sale) 7,864,513 6,859,174 6,616,617 6,544,246
Accounts Receivable 95,136,737 96,512,100 94,257,629 94,650,427
(net of bad debts)
Notes Receivable
Other (attach schedule) 1,621,035 1,535,181 3,149,915 2,993,576
---------------- ----------------- ---------------- -----------------
Total Current Assets 109,885,954 109,099,508 112,479,587 112,686,853
Fixed Assets:
Property and Equipment 9,166,950 7,668,219 1,500,368 1,436,040
Less: Accumulated Depreciation (4,133,906) (3,412,619) (408,799) (408,799)
---------------- ----------------- ---------------- -----------------
Total Fixed Assets 5,033,044 4,255,600 1,091,569 1,027,241
Other Assets (attach schedule) 324,015,488 320,152,631 317,174,516 316,299,768
---------------- ----------------- ---------------- -----------------
TOTAL ASSETS $ 438,934,486 $ 433,507,739 $ 430,745,672 $ 430,013,862
================ ================= ================ =================
LIABILITIES
- -----------
Postpetition Liabilities:
Accounts Payable $ 104,337 $ 41,155 $ 99,496 $ 82,481
Notes Payable 125,122 38,957,990 38,649,723
Rents and Leases Payable
Taxes Payable
Accrued Interest 78,563 121,742
Other 729,034 1,239,891 3,095,204 3,419,228
---------------- ----------------- ---------------- -----------------
Total Postpetition Liabilities 833,371 1,406,168 42,231,253 42,273,174
Prepetition Liabilities (Noncurrent):
Unsecured Debt 171,362,497 171,637,000 171,606,879 171,609,871
Notes Payable-Secured 151,616,803 151,576,120 111,948,980 111,948,980
Priority Claims:
Taxes 76,332 76,332 76,332 76,332
Wages 1,409,372 1,405,267 1,405,267 1,405,267
Deposits
Other 17,882,417 16,736,430 15,560,208 15,418,183
---------------- ----------------- ---------------- -----------------
Total Prepetition Liabilities 342,347,421 341,431,149 300,597,666 300,458,633
---------------- ----------------- ---------------- -----------------
TOTAL LIABILITIES 343,180,792 342,837,317 342,828,919 342,731,807
OWNER EQUITY (DEFICIT) 95,753,694 90,670,422 87,916,753 87,282,055
---------------- ----------------- ---------------- -----------------
TOTAL LIABILITIES AND OWNER EQUITY $ 438,934,486 $ 433,507,739 $ 430,745,672 $ 430,013,862
================ ================= ================ =================
</TABLE>
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SCHEDULE F
STATEMENT OF PERSONNEL, INSURANCE AND OPERATIONS
1. PERSONNEL REPORT (required if more than ten employees)
Full Time Part Time
Total number of employees at beginning of period 83 -
Number hired during period 3 -
Number terminated or resigned during period 2 -
----------- ----------
Total number of employees on payroll at period end 84 -
Total Payroll for the period: $ 396,084
Includes payment of severance and retention compensation for terminated
employees
2. INSURANCE - Copies of certificates of insurance must accompany first report.
For subsequent months, explain any changes in insurance coverage:
Copies of insurance certificates have already been submitted.
3. Subsequent to the filing of the petition have any payments been made on
prepetition unsecured debt, except as authorized by the court?
X No.
-----------------------------
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<S> <C> <C>
Yes. Identify amount, who was paid and date paid:
----------------------------- -------------------------------
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4. Provide a narrative report of significant events which may have an effect on
the financial condition of the debtor or any events out of the ordinary
course of business, which have occurred since the period covered by this
report. Attach separate sheet(s) if necessary.
On March 19, 1999, the Bankruptcy Court approved the sale of certain
mortgage loans held by the Debtor, pursuant to a Mortgage Loan Purchase and
Sale Agreement dated as of March 1, 1999 (the "Sale Agreement"), between
Bayview Financial Trading Group, LP and the Debtor. The Sale Agreement
provided for two closings. The first closing occurred on March 22, 1999, and
the Debtor received approximately $5.7 million in proceeds. Pursuant to the
Financing Agreement between Bear Stearns International Ltd. and the Debtor,
dated January 8, 1999, $2 million of the proceeds were paid to the Debtor
and the remainder of the proceeds were remitted to Bear Stearns to pay the
Debtor's debt to Bear Stearns. The second closing is scheduled for March 29,
1999.
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STATEMENT OF PERSONNEL, INSURANCE, AND OPERATIONS - Continued
5. If assets, other than inventory sold in the ordinary course of business,
were disposed of during the current month, provide the following information
for each asset (attach separate sheet(s), if necessary):
<TABLE>
<S> <C> <C>
ENTITY TO WHOM AUTHORIZATION
TRANSFERRED (e.g. notice
(relationship dated _____ or
DESCRIPTION VALUE ON to debtor court order
OF ASSET BOOK BASIS if any) dated _____) Terms
-------------------------------------------------------------------------------------------------------------------------------
Fixed Assets Oct. 21, 1998 all sales of
personal property approved
Lake Oswego $64,328 Maynards
</TABLE>
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STATEMENT OF PERSONNEL, INSURANCE, AND OPERATIONS - Continued
6. For each loan obtained during the current month provide the following
information (attach separate sheet(s), if necessary):
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<S> <C> <C> C>
-----------------------------------------------------------------------------------------------------
AMOUNT OF LOAN TERMS OF LOAN
LENDER'S NAME (describe right (interest rate, PROCEDURE FOR
(Relationship to receive future maturity OBTAINING
to debtor, if any) advances, if any) collateral, etc.) AUTHORIZATION
-----------------------------------------------------------------------------------------------------
7. Statement of Disbursements and Fee paid to the U.S. Trustee pursuant to
Federal Rule of Bankruptcy Procedure 2015(a)(5):
--------------------------------------------------------------------------------------------------------
QUARTER ENDING TOTAL DISBURSEMENTS FEE PAID
-------------- ------------------- --------
March 31, 1998
------------------- --------------
June 30, 1998
------------------- --------------
September 30, 1998
------------------- --------------
December 31, 1998 $ 6,857,519 (1) $ 10,000
------------------- --------------
March 31, 1999 $ 2,596,854 (1)
------------------- --------------
( 1 ) Excludes servicing disbursements
</TABLE>
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INCOME STATEMENT
SUPPORTING SCHEDULE (2) OTHER INCOME
<TABLE>
<S> <C> <C> <C> <C> <C>
Filing
October 1, 1998
November December January February to Date
-------------- ------------ ------------ -------------- -----------------
Insurance Commissions Revenue (Servicing) $ 7,548 $ 6,811 $ 20,763 $ 62,373 $ 113,766
Discount on Early Payoff of Secured Financing 1,000,000 1,000,000
Miscellaneous Refunds Received (2,015) 31,339 9,242 24,930 73,903
-------------- ------------ ------------ -------------- -----------------
TOTAL OTHER INCOME $ 5,533 $ 38,150 $ 1,030,005 $ 87,303 $ 1,187,669
============== ============ ============ ============== =================
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INCOME STATEMENT
SUPPORTING SCHEDULE (3) OTHER EXPENSE
<TABLE>
<S> <C> <C> <C> <C> <C>
Filing
October 1, 1998
November December January February to Date
---------------- -------------- --------------- ------------- ----------------
Equity in Operations (Losses) of Subsidiaries
Oceanmark Financial Services $ - $ (1,548,458) $ (246,476) $ 44,856 $ (1,927,044)
Home America Financial Services (78,612) (314,202) (32,740) (124,513) (661,234)
Hallmark America - - - - (7,265)
National Capital Funding, Inc. (22,144) - - - (114,156)
Southern Pacific Mortgage Limited 1,737,400 (1,605,184) (816,407) (354,834) (1,729,563)
---------------- --------------- --------------- ------------- ----------------
TOTAL OTHER EXPENSE $ 1,636,644 $ (3,467,844) $ (1,095,623) $ (434,491) $ (4,439,262)
================ =============== =============== ============= ================
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COMPARATIVE BALANCE SHEET
SUPPORTING SCHEDULES - OTHER ASSETS
<TABLE>
<S> <C> <C> <C> <C>
AS OF AS OF AS OF AS OF
11/30/98 12/31/98 01/31/99 02/28/99
-------------- -------------- -------------- --------------
OTHER CURRENT ASSETS
Prepaid Expenses $ 1,464,976 $ 1,384,119 $ 2,997,327 $ 2,845,762
Prepaid Lease Deposit 146,052 149,052 149,052 149,052
Prepaid Maintenace Contracts 1,238 1,059 880 701
Miscellaneous Servicing Accounts 8,769 951 2,656 (1,939)
-------------- -------------- -------------- --------------
TOTAL OTHER CURRENT ASSETS $ 1,621,035 $ 1,535,181 $ 3,149,915 $ 2,993,576
============== ============== ============== ==============
OTHER ASSETS
Residual Loan Interests 302,490,391 302,231,415 301,321,482 301,034,608
Mortgage Servicing Rights 7,343,613 7,183,570 7,023,528 6,863,486
Investment in Subsidiaries 13,370,766 9,902,922 8,807,299 8,372,808
Real Estate Owned 810,718 834,724 22,207 28,866
-------------- -------------- -------------- --------------
TOTAL OTHER ASSETS $324,015,488 $320,152,631 $317,174,516 $316,299,768
============== ============== ============== ==============
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