<PAGE> 1
UNITED STATES
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) September 27, 1995
-------------------------------
Resource America, Inc.
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-4408 72-0654145
---------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
incorporation) File Number) Identification No.)
1521 Locust Street, Philadelphia, Pennsylvania 19102
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 546-5005
-----------------------------
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
- ---------------------------------------------
On September 27, 1995, the Company acquired Fidelity Leasing Corporation
("FLC"), effective September 1, 1995, an equipment leasing company, for
$1,456,000 in cash (including related expenses) and assumed $312,000 in
liabilities. The acquisition was accounted for as a purchase and, accordingly,
FLC's assets and liabilities have been recorded at their estimated fair values
at the date of acquisition. The purchase price resulted in an excess of costs
over net assets acquired (goodwill) of approximately $558,000, which will be
amortized on a straight line basis over 15 years. FLC manages seven equipment
leasing partnerships.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- --------------------------------------------------------------------------
(a) Financial Statements of business acquired
Report of Independent Certified Public Accountants
Balance Sheets at December 31, 1994, and 1993
Statements of Earnings for the two years ended December 31, 1994
Statements of Cash Flows for the two years ended December 31, 1994
Statements of Shareholder's Equity for the two years ended December 31,
1994
Notes to Financial Statements
Balance Sheet (unaudited) at June 30, 1995
Statement of Earnings (unaudited) for the three months and six months
ended June 30, 1995, and 1994
Statement of Cash Flows (unaudited) for the six months ended June 30, 1995,
and 1994
Notes to Unaudited Financial Statements
(b) Pro Forma Financial Information
Pro Forma Balance Sheet as of June 30, 1995
Pro Forma Statement of Operations for the nine months ended June 30, 1995,
and 1994
Pro Forma Statement of Operations for the year ended September 30, 1994
Notes to Unaudited Pro Forma Financial Statements
(c) Exhibits
Exhibit 99. Resource America, Inc. Press Release dated September 29, 1995
SIGNATURES
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.
RESOURCE AMERICA, INC.
----------------------------------------
(Registrant)
Dated: December 21, 1995 By: /s/ Nancy J. McGurk
----------------------------------------
Nancy J. McGurk
Vice President - Finance and Treasurer
<PAGE> 3
- --------------------------------------------------------------------------------
FIDELITY LEASING CORPORATION
AND SUBSIDIARY
Financial Statements and Report of
Independent Certified Public Accountants
as of December 31, 1994 and 1993
- --------------------------------------------------------------------------------
<PAGE> 4
- --------------------------------------------------------------------------------
Two Commerce Square
Suite 3100
2001 Market Street
Philadelphia, PA 19103-7080
215 561-4200
FAX 215 561-1066
Grant Thornton [logo]
GRANT THORNTON LLP Accountants and
Management Consultants
The U.S. Member Firm of
Grant Thornton International
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Fidelity Leasing Corporation:
We have audited the accompanying consolidated balance sheets of Fidelity Leasing
Corporation (a Delaware corporation) and Subsidiary as of December 31, 1994 and
1993, and the related consolidated statements of earnings, changes in
shareholder's equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
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 consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Fidelity Leasing
Corporation and Subsidiary as of December 31, 1994 and 1993 and the results of
their earnings and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ Grant Thornton LLP
Philadelphia, Pennsylvania
February 23, 1995
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<PAGE> 5
FIDELITY LEASING CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
ASSETS 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $1,577,751 $3,078,015
Investment securities held to maturity 1,656,688 -
Due from Fidelity Leasing Income Funds 14,553 3,488
Computer inventory 247,416 379,963
Investment in Partnerships, at equity 41,379 35,732
Equipment, net of accumulated depreciation of $896,031
and $809,855, respectively 76,014 151,943
Contractual servicing rights under partnership
management agreements, net of accumulated amortization
of $538,165 and $346,165, respectively 473,511 665,511
Other assets 64,283 78,041
---------- ----------
Total assets $4,151,595 $4,392,693
========== ==========
LIABILITIES & SHAREHOLDER'S EQUITY
- ------------------------------------------------------------------------------------------
Accounts payable and accrued expenses $ 203,477 $ 211,461
Due to Fidelity Leasing Income Funds 107,908 1,047,274
Deferred income 9,390 89,678
Commissions payable 21,120 19,864
---------- ----------
Total liabilities 341,895 1,368,277
Shareholder's Equity:
Common stock, $1 par value, authorized 1,000 shares;
issued and outstanding, 100 shares 100 100
Additional paid-in capital 3,362,322 3,362,322
Retained earnings (accumulated deficit) 447,278 (338,006)
---------- ----------
Total shareholder's equity 3,809,700 3,024,416
---------- ----------
Total liabilities and shareholder's equity $4,151,595 $4,392,693
========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
- --------------------------------------------------------------------------------
<PAGE> 6
FIDELITY LEASING CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
<TABLE>
<CAPTION>
Years Ended December 31,
REVENUES 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Fee income $2,344,021 $ 2,569,287
Share of net income from limited partnerships 240,019 327,866
Interest and other income 70,828 36,857
---------- -----------
Total revenues 2,654,868 2,934,010
---------- -----------
EXPENSES
- ---------------------------------------------------------------------------------------
General and administrative expenses 2,450,527 2,870,859
Recovery of expenses from Fidelity Leasing Income Funds (859,119) (1,001,672)
---------- -----------
Total expenses 1,591,408 1,869,187
---------- -----------
Income before depreciation and amortization of intangibles 1,063,460 1,064,823
Depreciation (86,176) (122,445)
Amortization of intangibles (192,000) (192,000)
---------- -----------
Net earnings $ 785,284 $ 750,378
========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
- --------------------------------------------------------------------------------
<PAGE> 7
FIDELITY LEASING CORPORATION AND SUBSIDIARY
Consolidated Statements of Shareholder's Equity
for the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
RETAINED
EARNINGS
COMMON PAID-IN (ACCUMULATED
STOCK CAPITAL DEFICIT) TOTAL
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1993 $100 $3,362,322 $(1,088,384) $2,274,038
Net earnings - - 750,378 750,378
---- ---------- ----------- ----------
Balance, December 31, 1993 100 3,362,322 (338,006) 3,024,416
Net earnings - - 785,284 785,284
---- ---------- ----------- ----------
Balance, December 31, 1994 $100 $3,362,322 $ 447,278 $3,809,700
==== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
- --------------------------------------------------------------------------------
<PAGE> 8
FIDELITY LEASING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 785,284 $ 750,378
----------- -----------
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Share of net income from limited partnerships (240,019) (327,866)
Depreciation and amortization of intangibles 278,176 314,445
(Increase) decrease in amounts due from
Fidelity Leasing Income Funds
(Increase) decrease in computer inventory (11,065) (3,488)
132,547 (241,877)
(Increase) decrease in other, net 3,996 250,430
Increase (decrease) in accounts payable, accrued expenses
and commissions payable (6,728) (707,633)
Increase (decrease) in amounts due to
Fidelity Leasing Income Funds, net (939,366) 1,121,164
Increase (decrease) in deferred income (80,288) 35,007
Distributions from limited partnerships 244,134 327,866
----------- -----------
Net cash provided by operating activities 166,671 1,518,426
----------- -----------
Cash flows from investing activities:
Capital expenditures (10,247) (10,091)
Purchase of investment securities held to maturity (1,656,688) --
----------- -----------
Net cash used in investing activities (1,666,935) (10,091)
----------- -----------
Net increase (decrease) in cash and
cash equivalents (1,500,264) 1,508,335
Cash and cash equivalents, beginning of year 3,078,015 1,569,680
----------- -----------
Cash and cash equivalents, end of year $ 1,577,751 $ 3,078,015
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
- --------------------------------------------------------------------------------
<PAGE> 9
FIDELITY LEASING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
NOTE A - ORGANIZATION
- --------------------------------------------------------------------------------
Fidelity Leasing Corporation (FLC) is a wholly-owned subsidiary of FML
Leasehold, Inc. (FML), a wholly-owned subsidiary of The Fidelity Mutual Life
Insurance Company (In Rehabilitation) (FMLICO). FLC is incorporated in the state
of Delaware.
FLC was formed to negotiate, structure and market leasing transactions. FLC acts
as the general partner of the Fidelity Leasing income Funds (Funds) which have
been formed to acquire and lease to third parties various types of computer
equipment. FLC also acts as a broker on certain leasing transactions.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
1. Consolidation
The consolidated financial statements include the accounts of FLC and First
Radnor Equities, Incorporated (FRE), a wholly-owned subsidiary of FLC. FRE is
an inactive wholesale broker-dealer for investment products and is registered
with the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. During 1994 and 1993, FRE sold no units in limited
partnerships which were sponsored by affiliates.
2. Investment Securities Held to Maturity
FLC adopted Statement of Financial Accounting Standard (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" on January 1,
1994. This new standard requires investments in securities to be classified in
one of three categories: held to maturity, trading and available for sale. Debt
securities that FLC has the positive intent and ability to hold to maturity are
classified as held to maturity and are reported at amortized cost. As FLC does
not engage in security trading, the balance, if any, of its debt securities and
equity securities are classified as available for sale. Net unrealized gains and
losses for securities available for sale are required to be recognized as a
separate component of shareholder's equity and excluded from the determination
of net income. FLC's investment securities consist of certificates of deposits
and U.S. Government Securities with maturities of one year or less and cost
approximates market. FLC adopted this new standard for the year ended December
31, 1994 with no resulting financial statement impact. Prior to the adoption of
SFAS No. 115, investment securities were carried at cost which approximates
market.
3. Computer Inventory
Computer inventory is carried at lower of cost or market value.
4. Equipment
Equipment consists primarily of computer equipment and furniture and fixtures
and is stated at cost less accumulated depreciation. Depreciation is provided
for using the straight-line method over the estimated useful lives of the
related assets, which are generally three to seven years.
5. Contractual Services Rights under Partnership Management Agreements
Contractual services rights relate to the acquisition by FLC of certain leasing
operations in January 1989. A portion of the price paid is attributable to the
fair market value of the management contracts FLC had with the Funds that
existed at that time. Under the terms of those management agreements, FLC
renders a variety of services for which it earns a management fee. These service
rights are being amortized over the remaining lives of the individual Funds,
ranging from one to four years.
- --------------------------------------------------------------------------------
<PAGE> 10
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
- --------------------------------------------------------------------------------
6. Revenue Recognition
Fee income for services rendered is comprised of management fees and brokerage
fees earned by FLC. Management fees are earned for management services provided
to the Funds by FLC. These fees generally range from 4% to 6% of gross rental
payments received by the Funds on equipment under operating leases and 2% and 3%
on equipment under full pay-out leases. Such fees are recognized as earned.
In addition, FLC may be entitled to a share of the sales proceeds upon the
ultimate disposition of equipment by the Funds of up to 3%.
7. Income Taxes
FLC adopted, effective January 1, 1993, Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for income Taxes." Under the liability
method specified by SFAS No. 109, deferred tax assets and liabilities are
determined based on the differences between the financial statement and tax
basis of assets and liabilities as measured by the enacted tax rates which will
be in effect when these differences reverse. Deferred tax expense is the result
of changes in deferred tax assets and liabilities. The only difference between
assets and liabilities for financial statement and tax return purposes is
contractual servicing rights under partnership management contracts. No deferred
income taxes have been provided for this difference based on management's
evaluation of the likelihood of realization by FML, since FML has had
significant tax losses in the past few years.
The deferred method, used in years prior to 1993, required FLC to provide for
deferred tax expense based on certain items of income and expense which were
reported in different years in the financial statements and the tax returns as
measured by the tax rate in effect for the year the difference occurred. The
change from the deferred method to the liability method of accounting for income
taxes had no effect on reported earnings. The cumulative effect of the change in
accounting related to years prior to 1993 was $-0-.
FLC files a consolidated tax return for federal tax purposes with its parent,
FML, and is party to a tax sharing agreement with FML. Under the provisions of
the tax sharing agreement, FML is responsible for FLC's tax liability. Due to
the amortization of the intangible assets, FLC will have no taxable income for
federal purposes. Therefore, no provision for federal taxes has been made on
FLC's consolidated balance sheets or consolidated statements of earnings for the
years ended December 31, 1994 and 1993.
FLC files separate state income tax returns and has provided approximately
$37,000 and $16,000 for such taxes in 1994 and 1993, respectively, which is
recorded in general and administrative expenses in the accompanying consolidated
financial statements.
8. Statements of Cash Flows
For purposes of reporting cash flows, FLC considers all highly liquid debt
instruments purchased with an initial maturity of three months or less to be
cash and cash equivalents.
9. Pension Plan
FLC has a defined contribution plan (401K) covering substantially all employees.
This plan provides for voluntary company contributions equal to 50% of
contributions made by employees up to a maximum of $3,000 per individual
employee. There were no contributions made to the plan by the employees or FLC
during 1994. FLC contributed $44,500 to the plan during the year ended December
31, 1993.
During 1994, the plan's Trustee has filed for termination of the plan with the
internal Revenue Service. Upon approval of termination from the Internal Revenue
Service, all assets will be distributed to the plan's participants.
- --------------------------------------------------------------------------------
<PAGE> 11
NOTE C - INVESTMENT IN PARTNERSHIPS
- --------------------------------------------------------------------------------
The investment in partnerships includes FLC's investment in each of the Funds.
FLC has contributed $1,000 to each of the Funds and states its investment in the
Funds at equity.
FLC, as the general partner in each of the Funds, is allocated net income and
net losses of the Funds and is entitled to receive cash distributions from the
Funds. Net losses of the Funds are generally allocated 99% to the limited
partners and 1% to FLC. FLC will generally be allocated net income equal to the
amount of cash to be distributed from the Funds to FLC at the close of each
month (but not less than 1% of net income), and the balance will be allocated to
the limited partners.
Cash distributions from the Funds to FLC equal 1% of cash distributed until the
limited partners have received an amount equal to the purchase price of their
units in the Funds, plus a cumulative compounded priority return, as defined
in the partnership agreement of the respective Funds. Thereafter, as provided by
the respective partnership agreements, the cash distribution to FLC increases to
15% for two of the Funds and 10% for the other six Funds, with the excess
distributed to the limited partners.
NOTE D - NOTE PAYABLE
- --------------------------------------------------------------------------------
FLC has the availability of a $3,000,000 unsecured line of credit from FMLICO.
The rate of interest on any amount outstanding is one percent in excess of the
90 day U.S. Treasury Bill Rate (effective rate of 5.56% at December 31, 1994).
In addition, FLC has the availability of a $2,000,000 secured line of credit
from Royal Bank of Pennsylvania (Royal Bank). The line is secured by a
conditional assignment of the management fees due FLC from the Funds. The rate
of interest on any amount outstanding is prime plus two percent (effective rate
of 10.50% at December 31, 1994). The primary purpose of these loan facilities is
to enable FLC to finance equipment purchases in brokered transactions on a
short-term basis. The line from FMLICO remains in effect until either FMLICO or
FLC gives written notice of termination to the other. The line from Royal Bank
is renewed on an annual basis, with a current expiration date of June 30, 1995.
NOTE E - COMMITMENTS AND CONTINGENCIES
- --------------------------------------------------------------------------------
1. Noncancellable Operating Leases
FLC leases office space under agreements which expire at varying dates through
1998. FLC has also entered into an agreement to lease certain computer equipment
through 1996. Total expenses under these leases were $418,000 and $341,000 in
1994 and 1993, respectively. FLC recovers a portion of these expenses through
sub-lease arrangements entered into for part of its office space and through the
reimbursement of its computer lease expenses from the Funds. In 1994 and 1993,
FLC recovered $193,000 and $80,000, respectively, in expenses from sub-leasing a
portion of its office space and $39,000 and $34,000, respectively, in expenses
from the reimbursement of its computer lease expenses from the Funds.
Future minimum lease payments, excluding sub-let rental payments and computer
lease expense reimbursements from the Funds, as of December 31, 1994 for the
above leases are:
<TABLE>
<CAPTION>
Years ending December 31,
-------------------------
<S> <C>
1995 $304,000
1996 215,000
1997 26,000
1998 18,000
--------
$563,000
========
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 12
NOTE E - COMMITMENTS AND CONTINGENCIES - CONTINUED
- --------------------------------------------------------------------------------
Future sub-let rental payments and computer lease expense reimbursements due FLC
are $198,000 in 1995 and $191,000 in 1996. The net rental expense for the years
ended December 31, 1994 and 1993 were approximately $186,000 and $226,000,
respectively.
2. Employment Contracts
FLC entered into employment contracts with certain key executives. These
contracts call for, among other things, base compensation and incentive bonuses.
Aggregate approximate future commitments under these contracts as of December
31, 1994 are $98,000 in 1995 and $33,000 in 1996.
- --------------------------------------------------------------------------------
<PAGE> 13
FIDELITY LEASING CORPORATION FLC/FINST8
AND SUBSIDIARY 12/18/95
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1995 1994
-----------------------
<S> <C> <C>
Cash & cash equivalents 2,053,396 2,765,275
Short-term investments - net 888,327
Accounts receivable
Fidelity Leasing Income Funds 145,226 90,151
Other 1,816 22,722
Computer inventory 641,945 49,698
Investment in Partnerships, at equity 55,000 41,379
Equipment, net of accumulated depreciation
of $920,063 and $856,955, respectively 56,012 108,711
Contractual servicing rights under
partnership management agreements,
net of accumulated amortization of $634,165
and $442,165, respectively 377,511 569,511
Other assets 120,350 52,916
-----------------------
Total assets 4,339,583 3,700,363
=======================
Accounts payable and accrued expenses 28,104 170,641
Deferred income 12,500 28,623
Commissions payable 34,529 16,137
-----------------------
Total liabilities 75,133 215,401
Shareholder's Equity:
Common stock 100 100
Additional paid-in capital 3,362,322 3,362,322
Retained Earnings 902,028 122,540
-----------------------
Total shareholder's equity 4,264,450 3,484,962
-----------------------
Total liabilities & shareholder's equity 4,339,583 3,700,363
=======================
</TABLE>
<PAGE> 14
FIDELITY LEASING CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
6 MONTHS ENDED 3 MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
---------------------- ----------------------
<S> <C> <C> <C> <C>
Revenues:
Fee income 895,693 1,255,742 493,002 641,300
Share of Income from limited partnerships 148,544 94,838 108,509 62,218
Interest and other income 103,995 21,677 69,227 12,069
---------------------- ----------------------
Total revenues 1,148,232 1,372,257 670,738 715,587
Expenses:
General & administrative expenses 962,865 1,210,612 496,047 596,940
Recovery of expenses from Fidelity
Leasing Income Funds (389,415) (440,001) (229,284) (221,175)
---------------------- ----------------------
Total expenses 573,450 770,611 266,763 375,765
Income before depreciation and amortization
of intangibles ---------------------- ----------------------
574,782 601,646 403,975 339,822
Depreciation 24,032 47,099 9,772 22,300
Amortization of Intangible 96,000 96,000 48,000 48,000
---------------------- ----------------------
Net earnings 454,750 458,547 346,203 269,522
====================== ======================
</TABLE>
<PAGE> 15
FIDELITY LEASING CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
6 MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994
-----------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings 454,750 458,547
Adjustment to reconcile net earnings to net cash
provided by operating activities:
Share of net income from limited partnerships (148,544) (94,838)
Depreciation and amortization of intangibles 120,032 143,099
(Increase) decrease in amounts due from
Fidelity Leasing Income Funds (130,673) (86,663)
(Increase) decrease in accounts receivable (1,816) (22,722)
(Increase) decrease in computer inventory (394,529) 330,265
(Increase) decrease in other, net (69,688) 21,478
Increase (decrease) in accounts payable, accrued
expenses and commissions payable (161,964) (44,547)
Increase (decrease) in amounts due to
Fidelity Leasing Income Funds, net (107,908) (1,047,274)
Increase (decrease) in deferred income 3,110 (61,055)
Distributions from limited partnerships 148,544 94,838
------------------------
Net cash used in operating activities (288,686) (308,872)
------------------------
Cash flows from investing activities:
Capital expenditures (4,030) (3,868)
Maturity of investment securities held to maturity 768,361
------------------------
Net cash provided by (used in) investing activities 764,331 (3,868)
------------------------
Net increase (decrease) in cash and cash equivalents 475,645 (312,740)
Cash and cash equivalents, beginning of period 1,577,751 3,078,015
------------------------
Cash and cash equivalents, end of period 2,053,396 2,765,275
========================
</TABLE>
<PAGE> 16
FIDELITY LEASING CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1995
Note 1 - Management's Opinion Regarding Interim Financial Statements
In the opinion of management, all adjustments (consisting of normal
recurring accruals) necessary for a fair statement of the results of operations
for the interim period included herein have been made.
The accounting policies followed by the Company are set forth in Note B
to the Company's consolidated financial statements for the year ended December
31, 1994.
Note 2 - Investment in Partnerships
The investment in partnerships includes FLC's investment in each of the
Funds. FLC has contributed $1,000 to each of the Funds and states its
investment in Funds at equity.
FLC, as the general partner in each of the Funds, is allocated net
income and net losses of the Funds and is entitled to receive cash
distributions from the Funds. Net losses of the Funds are generally allocated
99% to the limited partners and 1% to FLC. FLC will generally be allocated net
income equal to the amount of cash to be distributed from the Funds to FLC at
the close of each month (but not less than 1% of net income), and the balance
will be allocated to the limited partners.
Cash distributions from the Funds to FLC equal 1% of cash distributed
until the limited partners have received an amount equal to the purchase price
of their units in the Funds, plus a cumulative compounded priority return, as
defined in the partnership agreement of the respective Funds. Thereafter, as
provided by the respective partnership agreements, the cash distribution to FLC
increases to 15% for two of the Funds and 10% for the other six Funds, with the
excess distributed to the limited partner.
<PAGE> 17
RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
The unaudited pro forma financial information of Resource America, Inc. (the
"Company") presented below reflects the pro forma effects of the acquisition of
Fidelity Leasing Corporation, accounted for as a purchase transaction.
The unaudited pro forma balance sheet of Resource America, Inc. is presented as
if the acquisition had occurred on June 30, 1995. The unaudited pro forma
statement of operations of Resource America, Inc. for the period ended
September 30, 1994 give effect to the acquisition as if it had occurred on
October 1, 1993. The unaudited pro forma statements of operations of Resource
America, Inc. for the period ended June 30, 1995 give effect to the acquisition
as if it had occurred on October 1, 1994.
The pro forma financial information does not purport to be indicative of either
the financial position or results of operations that might have occurred had
the acquisition of Fidelity Leasing Corporation taken place at the dates or for
the periods indicated, or to project the Company's financial position or
results of operations for any future date or period.
The pro forma financial information has been prepared by the Company and all
calculations have been made by the Company based upon assumptions deemed
appropriate by the Company. Certain of these assumptions are set forth under
the Notes to Unaudited Pro Forma Financial Statements. Such pro forma
financial information should be read in conjunction with the Company's
historical financial statements and notes thereto contained in the Annual
Report on Form 10-KSB for the fiscal year ended September 30, 1994 and the
Quarterly Report on Form 10-QSB for the period ended June 30, 1995, and in the
historical financial statements of Fidelity Leasing Corporation acquired
included in Item 7(a) of Form 8-K.
<PAGE> 18
RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1995
(UNAUDITED)
The following unaudited pro forma balance sheet combines the balance sheets of
Resource America, Inc. and Fidelity Leasing Corporation as of June 30, 1995 as
if the acquisition had occurred on that date.
<TABLE>
<CAPTION>
Resource Fidelity Pro Forma
Assets America, Inc. Leasing Corp. Adjustments Combined
- ------ ------------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Cash $2,960,623 $2,053,396 (a)$(3,350,772) $1,663,247
Short-term investments - 888,327 (a)(888,327) -
Computer inventory - 641,945 (a)(641,945) -
Other current assets 1,280,849 147,042 1,427,891
Other property and equipment,
oil and gas properties and
equipment (successful
efforts) 28,951,450 - - 28,951,450
Other 2,603,921 920,063 (a)(920,063) 2,603,921
Less accumulated
depreciation and depletion (18,748,041) (864,051) (a)864,051 (18,748,041)
Investments in Real Estate
Loans 17,577,784 - - 17,577,784
Restricted cash 1,885,170 - - 1,885,170
Other assets 1,803,007 552,861 (a)672,606 3,028,474
----------- ---------- ----------- -----------
Total assets $38,314,763 $4,339,583 $(4,264,450) $38,389,896
=========== ========== =========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities
- -----------
Current liabilities $906,381 $75,133 - $981,514
Long-term debt,
excluding current portion 10,561,075 - - 10,561,075
Deferred taxes 890,000 - - 890,000
Stockholders' Equity
- --------------------
Capital Stock 8,179 100 (a)(100) 8,179
Additional paid-in capital 19,214,210 3,362,322 (a)(3,362,322) 19,214,210
Retained earnings 9,782,232 902,028 (a)(902,028) 9,782,232
Treasury stock (2,533,040) - - (2,533,040)
Loan receivable from ESOP (514,274) - - (514,274)
----------- ---------- ----------- -----------
Total liabilities and
stockholders' equity $38,314,763 $4,339,583 $(4,264,450) $38,389,896
=========== ========== =========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Financial Statements
<PAGE> 19
RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
The following unaudited pro forma statement of operations combines the results
of Resource America, Inc. with the results of Fidelity Leasing Corporation for
the nine months ended June 30, 1995 as if the acquisition had occurred on
October 1, 1994.
<TABLE>
<CAPTION>
Resource Fidelity Pro Forma
America, Inc. Leasing Corp. Adjustments Combined
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Gross Revenue $8,360,488 $1,840,269 (b)$(203,000) $9,997,757
General and
administrative expense (1,628,828) (996,797) - (2,625,625)
Other expense (4,558,228) (186,794) (c)85,000 (4,660,022)
---------- ---------- ---------- -----------
Income from operations 2,173,432 656,678 (118,000) 2,712,110
Gain(loss) on sale of property 1,291 4,458 - 5,749
---------- ---------- ---------- -----------
Income before taxes 2,174,723 661,136 (118,000) 2,717,859
(Provision) benefit for
federal income taxes (372,000) - (d)(222,000) (594,000)
---------- ---------- ---------- -----------
Net Income $1,802,723 $661,136 $(340,000) $2,123,859
========== ========== =========== ==========
Net income per common
share $2.39 $2.82
========== ==========
Weighted average common
shares outstanding 753,100 753,100
========== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Financial Statements
<PAGE> 20
RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
JUNE 30, 1995
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following note describe the pro forma adjustments made to reflect the
acquisition of Fidelity Leasing Corporation:
(a) To record the purchase price of Fidelity Leasing Corporation:
-------------------------------------------------------------
DR<CR)
Cash $(3,350,772)
Short-term investments (888,327)
Computer Inventory (641,945)
Other property & equipment (920,063)
Accumulative depreciation 864,051
Other assets 672,606
Capital stock 100
Additional paid-in stock 3,362,322
Retained earnings 902,028
The pro forma allocation of the purchase price to the net assets of Fidelity
Leasing Corporation has been based on estimated asset values determined from
information prepared internally by management for purposes of pro forma
financial information.
(b) To reduce interest income for the reduction of cash spent to acquire
assets and cash Fidelity paid to its parent prior to the transaction
Revenue 203,000
(c) To adjust depreciation and amortization based on new value of assets
Other expense (85,000)
(d) To record pro forma tax effects
Provision for federal
income taxes 222,000
<PAGE> 21
RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
FOR YEAR ENDED SEPTEMBER 30, 1994
(UNAUDITED)
The following unaudited pro forma statement of operations combines the results
of Resource America, Inc. with the results of Fidelity Leasing Corporation for
the year ended September 30, 1994 as if the acquisition had occurred on October
1, 1993.
<TABLE>
<CAPTION>
Resource Fidelity Pro Forma
America, Inc. Leasing Corp. Adjustments Combined
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Gross Revenue $7,986,661 $2,654,868 (a)$(300,000) $10,341,529
General and
administrative expense (1,708,008) (1,591,408) - (3,299,416)
Other expense (5,062,410) (278,176) (b) 143,000 (5,197,586)
Income from operations 1,216,243 785,284 (157,000) 1,844,527
Gain(loss) on sale of property (7,610) - - (7,610)
---------- ---------- --------- -----------
Income before taxes 1,208,633 785,284 (157,000) 1,836,917
(Provision) benefit for
federal income taxes 100,000 - (c) (273,000) (173,000)
---------- ---------- --------- -----------
Net Income $1,308,633 $785,284 $(430,000) $1,663,917
========== ========== ========== ==========
Net income per common
share - primary $1.83 $2.33
========== ==========
Weighted average common
shares outstanding 715,400 715,400
========== ==========
Net income per
common share - fully
diluted $ 1.69 $2.15
========== ==========
Weighted average
common shares
outstanding 774,700 774,700
========== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Financial Statements
<PAGE> 22
RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
SEPTEMBER 30, 1994
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following note describe the pro forma adjustments made to reflect the
acquisition of Fidelity Leasing Corporation:
The pro forma allocation of the purchase price to the net assets of Fidelity
Leasing Corporation has been based on estimated asset values determined from
information prepared internally by management for purposes of pro forma
financial information.
(a) To reduce interest income for the reduction of cash spent to acquire
assets and cash paid to its parent prior to the transaction
Revenue 300,000
(b) To adjust depreciation and amortization based on new value of assets
Other expense (143,000)
(c) To record pro forma tax effects
Provision for federal
income taxes 273,000
<PAGE> 1
Exhibit 99
FOR IMMEDIATE RELEASE
SEPTEMBER 29, 1995
CONTACT: MICHAEL L. STAINES
SENIOR VICE PRESIDENT
RESOURCE AMERICA, INC.
1521 LOCUST STREET
PHILADELPHIA, PA 19102
(215) 546-5005
Page 1 of 1
________________________________________________________________________________
RESOURCE AMERICA, INC.
ACQUIRES MANAGEMENT OF $70 MILLION in EQUIPMENT ON LEASE
Resource America, Inc., (NASDAQ: REXI) (the "Company") announces its
acquisition of the managment of approximately $70 million in peripheral
computer equipment leased to investment grade customers.
Resource America is a specialty-finance company principally engaged in the
acquisition at substantial discount of income-producing mortgages. It is also
engaged in the management and operation of energy investments. This
acquisition increases the assets owned or under management of the Company to
approximately $150 million.
Further, the Company announces that a special meeting of the stockholders (the
"Meeting"), will be held on Monday, October 16, 1995 at 9:00 am in the
Company's offices in Philadelphia, Pennsylvania. The purpose of the Meeting
will be to consider and vote on proposals by the Board of Directors to (i)
effect a division of the Company's common stock into Class A and Class B common
stock, and (ii) amend the 1989 Key Employee Stock Option Plan. As previously
announced, only those holders of the Company's common stock at the close of
business on August 18, 1995 will be entitled to vote.
