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, 1997
[ ] 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
<PAGE>
REQUIRED INFORMATION
The Statement of Net Assets Available for Benefits of the Plan as of
December 31, 1997 and the related Statement of Changes in Net Assets Available
for Benefits and supplemental schedules for the year ended December 31, 1997,
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 26, 1998
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<PAGE>
INDEX OF FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
Pages
Independent Auditors' Report 4
Statements of Net Assets Available for Benefits 5
as of December 31, 1997 and 1996
Statement of Changes in Net Assets Available for 6
Benefits for the Year Ended
December 31, 1997
Notes to Financial Statements 7-10
Supplemental Information
Schedule 1-Assets Held for Investment Purposes 11
as of December 31, 1997
Schedule 2-Reportable Transactions 12-14
for the Year Ended December 31, 1997
Exhibits:
Exhibit 1
Independent Auditors' Consent
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<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of
the Delta Funding Corporation 401(K)
Profit Sharing Plan
We have audited the accompanying statements of net assets available for benefits
of Delta Funding Corporation 401(K) Profit Sharing Plan as of December 31, 1997
and 1996, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1997. 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, 1997 and 1996 and the
changes in it's net assets available for benefits for the year ended December
31, 1997, in conformity with generally accepted accounting principles.
Our audits were 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
Great Neck, New York
May 6, 1998
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<PAGE>
<TABLE>
<CAPTION>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
1997 1996
----------- -----------
<S> <C> <C>
Investments at Fair Value - Note 4
Mutual funds $ 3,219,679 $ 693,494
Common stock 292,003 197,087
Receivables:
Employer's contributions 77,449 -
Participants' contributions 63,756 37,469
Due from sponsor 1,918 1,918
Loans receivable - participants - Note 1 113,134 18,991
Cash 16,456 -
----------- ----------
Net Assets Available for Benefits $ 3,784,395 $ 948,959
=========== ==========
See Independent Auditors' Report and Notes to Financial Statements.
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</TABLE>
<PAGE>
<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, 1997
<S> <C> <C>
Additions to Net Assets Attributed to:
Transfers from Profit Sharing Plan - Note 3 $ 1,742,234
Participants' contributions 736,731
Employer's contributions 294,725
Investment earnings 248,913
Interest on loans to participants 5,091
Net appreciation (depreciation) of
investments
Mutual funds $ 184,735
Common stock (122,146) 62,589
----------- -----------
3,090,283
Deductions from Net Assets Attributed to:
Distributions to participants 254,847
-----------
Increase in Net Assets $ 2,835,436
===========
See Independent Auditors' Report and Notes to Financial Statements.
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</TABLE>
<PAGE>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
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).
On January 1, 1997, the Delta Funding Corporation Profit Sharing Plan
was merged into this 401(k) Plan (see Note 3).
L.I. Closing Corporation has filed a final income tax return as of
December 31, 1997 and is no longer a part of the plan.
CONTRIBUTIONS
The Companies contribute to the plan the amounts deferred by the
participants in the Plan. Eligible employees can elect to defer up to
15% of their compensation, as defined by the plan, limited to the
maximum for each year ($9,500 in 1997) permitted by the Internal
Revenue Code. In addition, the Companies can contribute discretionary
amounts, of which $248,913 was contributed in 1997 and none were
contributed in 1996.
PARTICIPANTS' ACCOUNTS
Contributions are invested in a choice of nine mutual funds or,
pursuant to an October 1996 amendment, the common stock of Delta
Financial Corporation (see Note 7). 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, including Profit Sharing Plan
amounts, plus earnings thereon are 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 vested account
balance. Participants are entitled to borrow from their account for a
maximum loan term of five years. The loans are secured by the balance
in the participant's account and the interest rate charged to
participants is prime.
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<PAGE>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 1: PLAN DESCRIPTION (continued)
PAYMENT OF BENEFITS
On termination of service due to death, disability or retirement,
participants 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
Operating expenses of the Plan are absorbed by the Plan Sponsor.
NOTE 2: SUMMARY OF SIGNIFICANT 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: PLAN MERGER
On January 1, 1997, The Delta Funding Corporation Profit Sharing Plan
was merged into The Delta Funding Corporation 401(K) Profit Sharing
Plan. Prior to the merger, The Delta Funding Corporation Profit
Sharing Plan covered eligible employees of Delta Funding Corporation.
The transferred assets have been recognized in the accounts of the
plan as of January 1, 1997, at their balances as previously carried
in the accounts of the Delta Funding Corporation Profit Sharing Plan.
The changes in net assets of the combined plans are included in the
accompanying statement of changes in net assets available for
benefits from January 1, 1997. A summary of the transferred net
assets follows:
Investments, at fair value $1,463,463
Receivables 278,771
----------
$1,742,234
==========
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<PAGE>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 4: INVESTMENTS AT FAIR VALUE
The Plan's investments are held by Putnam Investments except for its
Delta Financial Corporation stock and a money market fund which are
held by Prudential Securities Incorporated. In addition, during the
year, investments were also held in a Fleet Bank, N.A. money market
account. The following table presents the fair values, as determined
by quoted market price, of the investments:
<TABLE>
<CAPTION>
Fair Value Net Investment Net Fair Value Number of
Investments 1/1/97 Contributions Earnings Appreciation 12/31/97 Shares
----------- ---------- ------------- ---------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fund of Boston CI-A $ - $ 146,785 $ 14,633 $ 6,320 $ 167,738 9,329
Diversified Income CI-A - 78,148 2,429 315 80,892 6,430
Diversified Income CI-B 31,302 (33,167) 1,421 444 - -
Global Gov't Income CI-A - 39,230 1,979 (2,427) 38,782 2,903
Global Gov't Income CI-B 5,143 (5,159) 172 (156) - -
Global Growth Fund CI-A - 352,799 64,411 (61,065) 356,145 35,758
Global Growth Fund CI-B 132,270 (155,635) - 23,365 - -
Growth & Income CI-A - 696,195 96,593 (24,306) 768,482 39,329
Growth & Income CI-B 180,787 (219,249) 2,374 36,088 - -
Money Market Fund CI-A 4,857 149,417 6,666 - 160,940 160,940
New Opportunities CI-A - 937,937 22,187 68,611 1,028,735 21,145
New Opportunities CI-B 339,135 (404,732) - 65,597 - -
OTC & Energ. Growth CI-A - 232,110 - 32,388 264,498 16,418
Voyager Fund C1-A - 290,602 20,863 39,561 351,026 18,427
Delta Financial Corp. 197,087 214,628 2,434 (122,146) 292,003 21,832
Money Market Fund - 2,427 14 - 2,441 2,441
Money Market Fund - (12,737) 12,737 - - -
--------- ----------- ----------- ----------- ----------
$890,581 $ 2,309,599 $ 248,913 $ 62,589 $3,511,682
========= =========== =========== =========== ==========
</TABLE>
NOTE 5: 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 6: 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.
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<PAGE>
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 7: 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. During 1997, 12,017 shares were purchased at a total price
of $238,233 and 1126 shares were sold at a total price of $21,013.
NOTE 8: SUBSEQUENT EVENTS
In March 1998, the employees of William J. Horan became employees of
Delta Funding Corporation and the William J. Horan Company no longer
participates in the plan.
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<PAGE>
<TABLE>
<CAPTION>
Schedule 1
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
E.I.N. # 11-2609517
Plan # 002
1997
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 Fund of Boston CI-A $161,418 $167,738
Putnam Investments Diversified Income CI-A 80,577 80,892
Putnam Investments Global Gov't Income CI-A 41,209 38,782
Putnam Investments Global Growth Fund CI-A 417,210 356,145
Putnam Investments Growth & Income CI-A 792,788 768,482
Putnam Investments Money Market Fund CI-A 160,940 160,940
Putnam Investments New Opportunities CI-A 960,124 1,028,735
Putnam Investments OTC & Energ. Growth CI-A 232,110 264,498
Putnam Investments Voyager Fund CI-A 311,465 351,026
Delta Financial Corp. Common Stock 395,286 292,003
Prudential Securities Money Market Fund 2,441 2,441
Participant Loans 8.25% - 8.75% 0 113,134
See Independent Auditors' Report and Notes to Financial Statements.
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 2
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
E.I.N. # 11-2609517
Plan # 333
1997
(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. 21,745 21,745 21,745
Common stock
of Delta
Financial Corp. 11,060 11,060 11,060
Common stock
of Delta
Financial Corp. 10,935 10,935 10,935
Common stock
of Delta
Financial Corp. 10,873 10,873 10,873
Common stock
of Delta
Financial Corp. 20,745 20,745 20,745
Common stock
of Delta
Financial Corp. 17,633 17,633 17,633
Common stock
of Delta
Financial Corp. 10,498 10,498 10,498
Common stock
of Delta
Financial Corp. 10,498 10,498 10,498
Common stock
of Delta
Financial Corp. 20,245 20,245 20,245
Common stock
of Delta
Financial Corp. 19,076 19,076 19,076
Common stock
of Delta
Financial Corp. 7,051 7,051 7,051
Common stock
of Delta
Financial Corp. 6,810 6,810 6,810
See Independent Auditors' Report and Notes to Financial Statements.
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 2
Continued
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
E.I.N. # 11-2609517
Plan # 333
1997
(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. 7,081 7,081 7,081
Common stock
of Delta
Financial Corp. 8,028 8,028 8,028
Common stock
of Delta
Financial Corp. 6,867 6,867 6,867
Common stock
of Delta
Financial Corp. 5,225 5,225 5,225
Common stock
of Delta
Financial Corp. 5,698 5,698 5,698
Common stock
of Delta
Financial Corp. 7,091 7,091 7,091
Common stock
of Delta
Financial Corp. 6,808 6,808 6,808
Common stock
of Delta
Financial Corp. 5,149 5,149 5,149
Common stock
of Delta
Financial Corp. 7,608 7,608 7,608
Common stock
of Delta
Financial Corp. 6,503 6,503 6,503
Common stock
of Delta
Financial Corp. 5,007 5,007 5,007
Common stock
of Delta
Financial Corp. 17,309 14,504 17,309 2,806
See Independent Auditors' Report and Notes to Financial Statements.
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 2
Concluded
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
E.I.N. # 11-2609517
Plan # 333
1997
(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. 560 462 560 98
Common stock
of Delta
Financial Corp. 1,334 1,403 1,334 (69)
Common stock
of Delta
Financial Corp. 1,810 2,211 1,810 (401)
See Independent Auditors' Report and Notes to Financial Statements.
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</TABLE>
<PAGE>
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, 1997 and 1996 and
the related Statement of Changes in Net Assets Available for Benefits for the
year ended December 31, 1997 and all schedules included in this annual report on
Form 11-K.
/s/ Marks Shron & Company LLP
Great Neck, New York
June 26, 1998
