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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 333-15835
A. Full title of the plan: Delta Funding Corp. 401(k) Profit Sharing
Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Delta Financial Corporation
1000 Woodbury Road, Suite 200
Woodbury, New York 11797
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REQUIRED INFORMATION
The Statement of Net Assets Available for Benefits of the Plan as of
December 31, 1996 and the related Statement of Changes in Net Assets Available
for Benefits and supplemental schedules for the year ended December 31, 1996,
together with the Independent Auditors' Report and Consent are attached and
filed herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Committee under the Plan, which administers the Plan, has duly
cause this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
DELTA FUNDING CORP.
401(K) PROFIT SHARING PLAN
By: /s/ HUGH MILLER
-------------------
Name: Hugh Miller
Title: Trustee
Dated: June 30, 1997
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INDEX OF FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
PAGES
Independent Auditors' Report 4
Statement of Net Assets Available for Benefits 5
as of December 31, 1996 and 1995
Statements of Changes in Net Assets Available for 6
Benefits for the Year Ended
December 31, 1996
Notes to Financial Statements 7-9
Supplemental Information
Schedule 1-Assets Held for Investment Purposes 10
as of December 31, 1996
Schedule 2-Reportable Transactions 11
for the Year Ended December 31, 1996
Exhibits:
Exhibit 1
Independent Auditors' Consent
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Independent Auditors' Report
To the Trustees of
the Delta Funding Corporation 401(K)
Profit Sharing Plan
We have audited the accompanying statement of net assets available for benefits
of Delta Funding Corporation 401(K) Profit Sharing Plan as of December 31, 1996
and 1995, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1996. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Delta Funding
Corporation 401(K) Profit Sharing Plan as of December 31, 1996 and 1995 and the
changes in its net assets available for benefits for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
For Investment Purposes and Reportable Transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Marks Shron & Company, LLP
May 28, 1997
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<CAPTION>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
1996 1995
-------- --------
<S> <C> <C>
Investments at Fair Value - Note 3
Mutual Funds $ 693,494 $ 459,735
Common stock 197,087 -
Participants' contributions receivable 37,469 24,105
Loans receivable - participants 18,991 7,425
Due from sponsor 1,918 -
-------- --------
Net Assets Available for Benefits $ 948,959 $ 491,265
========= =========
See Independent Auditors' Report and Notes to Financial Statements.
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<TABLE>
<CAPTION>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<S> <C> <C>
Additions to Net Assets Attributed to:
Participants' contributions $397,894
Investment earnings 27,728
Interest on loans to participants 687
Net appreciation of investments
Mutual funds $ 45,927
Common stock 16,424 62,351
-------- --------
488,660
Deductions from Net Assets Attributed to:
Distributions to participants 30,966
--------
INCREASE IN NET ASSETS $457,694
========
See Independent Auditors' Report and Notes to Financial Statements.
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DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1: PLAN DESCRIPTION
The following description of the Delta Funding Corporation 401(K)
Profit-Sharing Plan ("the Plan") provides only general information.
Participants should refer to the Plan Agreement, as amended, for a
more complete description of the Plan's provisions.
GENERAL
The Delta Funding Corporation 401(K) Profit Sharing Plan is a defined
contribution plan covering all full time employees of Delta Funding
Corporation, William J. Horan and L.I. Closing Corp. ("the
Companies") who have one year of service and are age twenty-one or
older. It is subject to the provisions of the Employment Retirement
Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
The Companies contribute to the plan the amounts deferred by the
participants in the Plan. Eligible employees can elect to defer up to
ten percent of their compensation, as defined by the plan,
limited to the maximum for each year ($9,500 in 1996) permitted by
the Internal Revenue Code. In addition, the Companies can contribute
discretionary amounts, of which none were contributed in 1996.
PARTICIPANTS' ACCOUNTS
Contributions are invested in one of six mutual funds or, pursuant to
an October 1996 amendment, the common stock of Delta Financial
Corporation (see Note 6). Contribution selections are designated by
the participants.
VESTING
Participants' contributed funds arising from salary reductions and
the earnings thereon, are fully vested at all times. Vesting in the
Companies contribution portion, if any, of their account balance plus
earnings thereon is based on years of service. A participant is 100%
vested after 5 years of service.
LOANS TO PARTICIPANTS
Once per year, participants may borrow from their 401(k) accounts a
minimum of $1,000 up to a maximum of 50% of their account balance.
Employees are entitled to borrow from their account for a maximum
loan term of five years. The interest rate charged to employees is
prime.
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DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1: PLAN DESCRIPTION (CONTINUED)
PAYMENT OF BENEFITS
On termination of service due to death, disability or retirement , a
participant may elect to receive an amount equal to the value of the
participants' vested interest in their account in either a lump sum
amount or in various annuity options. For termination of service due
to other reasons, a participant may receive the value of the vested
interest in their account as a lump sum distribution.
OPERATING EXPENSES
Any operating expenses of the Plan are absorbed by the Plan Sponsor.
NOTE 2: SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual
method of accounting.
INVESTMENT VALUATION
The Plan's investments are stated at fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures
NOTE 3: INVESTMENTS AT FAIR VALUE
The Plan's investments are held by Putnam Investments except for its
Delta Financial Corporation stock which is held by Prudential
Securities. The following table presents the fair values, as
determined by quoted market price, of the investments:
<TABLE>
<CAPTION>
Putnam Investments - Fair Value Net Investment Net Fair Value Number Of
Mutual Funds 1/1/96 Contributions Earnings Appreciation 12/31/96 Shares
------------------------ ---------- ------------- ---------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Diversified Income $ 21,086 $ 7,877 $ 1,793 $ 547 $ 31,303 2,522
Growth & Income 109,593 41,927 13,944 15,323 180,787 10,134
Global Govt Income 5,002 (210) 386 (35) 5,143 360
Government Global Fund 89,540 25,528 8,757 8,445 132,270 12,548
Money Market Fund 4,567 28 261 - 4,856 4,856
New Opportunities Fund 229,947 84,954 2,587 21,647 339,135 8,584
Delta Financial Corporation - 180,658 - 16,424 197,087 10,949
-------- --------- --------- --------- -----------
$459,735 $340,762 $ 27,728 $ 62,351 $ 890,581
======== ======== ========= ========= ==========
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DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 4: PLAN TERMINATION
Although it has not expressed any intent to do so, the Companies have
the right under the Plan to discontinue their contributions at any
time and to terminate the Plan subject to the provisions of ERISA.
NOTE 5: TAX STATUS
The Plan obtained its latest determination letter on October 4, 1995,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code. The Plan has been amended since receiving the
determination letter. However, the Plan administrator and the Plan's
tax counsel believe that the plan is currently designed and being
operated in compliance with the applicable requirements of the
Internal Revenue Code. Therefore, they believe that the Plan was
qualified and the related trust was tax-exempt as of the financial
statement date.
NOTE 6: RELATED PARTY TRANSACTIONS
In November 1996, the Plan, pursuant to an initial public offering,
purchased 10,949 shares of stock in Delta Financial Corporation, the
plan sponsor, at the initial offering price of $16.50 a share or
$180,658.
NOTE 7: SUBSEQUENT EVENTS
In January 1997, the Delta Funding Corporation Profit Sharing Plan
was merged into the Delta Funding Corporation 401(k) Profit
Sharing Plan.
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<CAPTION>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
E.I.N. # 11-2609517
PLAN # 002
1996
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUE, INCLUDING MATURITY DATE, RATE
BORROWER, LESSOR, OR OF INTEREST, COLLATERAL, PAR OR
SIMILAR PARTY MATURITY VALUE COST CURRENT VALUE
(A) (B) (C) (D) (E)
- ---- ---------------------- --------------------------------- ----------- ---------
<S> <C> <C> <C> <C>
Putnam Investments Diversified Income $ 29,886 $ 31,303
Putnam Investments Growth & Income $141,174 $180,787
Putnam Investments Global Govt Income $ 4,986 $ 5,143
Putnam Investments Global Growth Fund $114,088 $132,270
Putnam Investments Money Market Fund $ 4,856 $ 4,856
Putnam Investments New Opportunities Fund $254,903 $339,135
Delta Financial Corp. Common stock $180,658 $197,087
Participant loans 8.25% - 8.75% $ 0 $ 18,991
See Independent Auditors' Report and Notes to Financial Statements.
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<TABLE>
<CAPTION>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
E.I.N. # 11-2609517
PLAN # 333
1996
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- ------------- ---------------- ----------- ---------- --------- -------------- ----------- -------------- ----------
Description of Current
asset (include Expense Value of
Identity of interest rate and Incurred Asset on
Party maturity in case Purchase Selling Lease With Cost of Transaction Net Gain
Involved of a loan) Price Price Rental Transaction Asset Date Or (loss)
- ------------- ---------------- ----------- ---------- --------- -------------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- Common stock
of Delta
Financial Corp. $180,659 $180,659 $180,659 $ -0-
See Independent Auditors' Report and Notes to Financial Statements.
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EXHIBIT 1
Independent Auditors' Consent
The Board of Directors and Stockholders
Delta Financial Corporation
We consent to incorporation by reference in the Registration Statement (Form S-8
No. 333-15835) pertaining to the Delta Funding Corp. 401(k) Profit Sharing Plan,
relating to the Statements of Net Assets Available for Benefits of the Delta
Funding Corp. 401(k) Profit Sharing Plan as of December 31, 1996 and 1995 and
the related Statement of Changes in Net Assets Available for Benefits for the
year ended December 31, 1996 and all schedules included in this annual report on
Form 11-K.
/s/ Marks Shron & Company LLP
Great Neck, New York
June 26, 1997
