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, 1998
[ ] 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, 1998 and the related Statement of Changes in Net Assets Available for
Benefits and supplemental schedules for the year ended December 31, 1998,
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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DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
Table of Contents
Page
---------
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits -
December 31, 1998 and 1997 2
Statement of Changes in Net Assets Available for Benefits -
For the Year Ended December 31, 1998 3
Notes to Financial Statements 4-7
SUPPLEMENTAL INFORMATION
Schedule
- ---------
1 Schedule of Assets Held for Investment Purposes 8
2 Schedule of Reportable Transactions 9
EXHIBITS
Exhibit I
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 statements of net assets available for benefits
of Delta Funding Corporation 401(K) Profit Sharing Plan as of December 31, 1998
and 1997, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1998. 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, 1998 and 1997 and the
changes in it's net assets available for benefits for the year ended December
31, 1998, 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.
June 4, 1999
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DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
Statements of Net Assets Available for Benefits
December 31,
1998 1997
----------- -----------
<S> <C> <C>
Investments at Fair Value - Note 4
Mutual funds $ 5,097,551 $ 3,219,679
Common stock 203,288 292,003
Receivables:
Employer's contributions 109,709 77,449
Participants' contributions 108,647 63,756
Other 3,196 1,918
Loans receivable - participants - Note 1 161,734 113,134
Cash - 16,456
----------- -----------
Total Assets 5,684,125 3,784,395
----------- -----------
Benefit claims payable 793 -
----------- ----------
Net assets available for benefits $ 5,683,332 $ 3,784,395
=========== ===========
See Independent Auditors' Report and Notes to Financial Statements.
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DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
<S> <C> <C>
Additions to Net Assets Attributed to:
Participants' contributions $ 1,121,509
Employer's contributions 444,020
Rollover contributions 22,843
Investment earnings 250,144
Interest on loans to participants 12,744
Net appreciation (depreciation) of investments
Mutual funds $ 481,808
Common stock (202,871) 278,937
------------- -----------
2,130,197
Deductions from Net Assets Attributed to:
Distributions to participants 231,260
-----------
Increase in Net Assets $ 1,898,937
===========
See Independent Auditors' Report and Notes to Financial Statements.
</TABLE>
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Page 4
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 1998
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, and William J. Horan ("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).
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.
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 ($10,000 in 1998) permitted by the Internal
Revenue Code. In addition, the Companies can contribute discretionary
amounts, of which $444,020 was contributed in 1998 and $248,913 was
contributed in 1997.
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 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, including the former Profit Sharing
Plan that was merged into this plan in 1997, and 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 5
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 1998
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.
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Page 6
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 1998
NOTE 3: 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. The following table presents the
activity and the fair values, as determined by quoted market price,
of the investments:
<TABLE>
<CAPTION>
Fair Value Net Investment Net Fair Value Number of
Investments 01/01/98 Contributions Earnings Appreciation 12/31/98 Shares
---------- ------------- ---------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
George Putnam Fund of Boston CI-A $ 167,738 $ 36,217 $ 19,404 $ 496 $ 223,855 12,409
Putnam Diversified Income CI-A 80,892 19,827 6,462 (8,243) 98,938 8,603
Putnam Global Gov't Income CI-A 38,782 13,404 3,071 (1,287) 53,970 4,174
Putnam Global Growth Fund CI-A 356,145 127,689 17,510 104,106 605,450 48,630
Putnam Growth & Income CI-A 768,482 271,843 101,274 33,836 1,175,435 57,366
Putnam Money Market Fund CI-A 160,940 99,753 10,869 0 271,562 271,562
Putnam New Opportunities CI-A 1,028,735 389,580 54,505 258,557 1,731,377 29,632
Putnam OTC & Emerg Growth CI-A 264,498 45,882 10,893 24,723 345,996 20,058
Putnam Voyager Fund CI-A 351,026 129,919 39,586 69,620 590,151 26,923
Delta Financial Corp. 292,003 127,722 (13,566) (202,871) 203,288 34,235
Money Market Fund 2,441 (1,760) 136 - 817 817
-------- -------- -------- --------- ----------
$3,511,682 $1,260,076 $ 250,144 $ 278,937 $ 5,300,839
========= ========== ======= ========= =========
</TABLE>
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.
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Page 7
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 1998
NOTE 6: RELATED PARTY TRANSACTIONS
During 1998, the Plan purchased 14,472 shares of stock in Delta
Financial Corporation, the Plan sponsor, at market prices totaling
$146,535. In addition, 2,067 shares were sold, at market prices
totaling $20,572 at a loss of $13,566.
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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
1998
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 $ 223,359 $ 223,855
Putnam Investments Diversified Income CI-A $ 107,181 $ 98,938
Putnam Investments Global Gov't Income CI-A $ 55,257 $ 53,970
Putnam Investments Global Growth Fund CI-A $ 501,344 $ 605,450
Putnam Investments Growth & Income CI-A $ 1,141,599 $ 1,175,435
Putnam Investments Money Market Fund CI-A $ 271,562 $ 271,562
Putnam Investments New Opportunities CI-A $ 1,472,820 $ 1,731,377
Putnam Investments OTC & Energ. Growth CI-A $ 321,273 $ 345,996
Putnam Investments Voyager Fund CI-A $ 520,531 $ 590,151
Delta Financial Corp. Common Stock $ 406,976 $ 203,288
Prudential Securities Money Market Fund $ 817 $ 817
Participant Loans 8.25% - 8.75% $ 0 $ 161,734
See Independent Auditors' Report and Notes to Financial Statements.
</TABLE>
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Schedule 2
DELTA FUNDING CORPORATION 401(K)
PROFIT SHARING PLAN
Line 27d - Schedule of Reportable Transactions
E.I.N. # 11-2609517
Plan # 333
1998
(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 $146,535 $146,535 $146,535
of Delta (24 purchases)
Financial Corp.
Common stock $20,572 $ 34,138 $(13,566)
of Delta (12 sales)
Financial Corp.
See Independent Auditors' Report and Notes to Financial Statements.
</TABLE>
<PAGE>
EXHIBIT 1
INDEPENDENT AUDITORS' CONSENT
To 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, 1998 and 1997 and
the related Statement of Changes in Net Assets Available for Benefits for the
year ended December 31, 1998 and all schedules in this annual report on Form
11-K.
Great Neck, New York
June 4, 1999
