<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED FEBURARY 28, 1994
Commission File No. 0-18071
________________
INDUSTRIAL FUNDING CORP.
(Exact name of registrant as specified in its charter)
Oregon 93-1013278
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2121 S.W. Broadway
Suite 100
Portland, Oregon 97201
(Address of principal executive offices, including zip code)
(503)228-2111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
________________
<TABLE>
<CAPTION>
Outstanding at
Class April 11, 1994
----- --------------
<S> <C>
Class A, Without Par Value 1,875,000 shares
Class B, Without Par Value 5,625,000 shares
</TABLE>
(The number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date)
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<PAGE>
INDUSTRIAL FUNDING CORP.
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets . . . . . . . . . . . . 3
Consolidated Statements of Income . . . . . . . . . 4
Consolidated Statements of Shareholders' Equity . . 5
Consolidated Statements of Cash Flows . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . 10
Part II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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<PAGE>
INDUSTRIAL FUNDING CORP. UNAUDITED
- --------------------------------------------------------------------------------
Consolidated Balance Sheets
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, NOVEMBER 30,
--------------------------------------------
(DOLLARS IN THOUSANDS) 1994 1993 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Cash and temporary investments $7,110 - $6,586
Restricted cash 805 - 800
Short-term investments 18,321 - 18,260
Notes receivable 15,869 - 15,869
Net assets held for sale - $40,619 -
Nonperforming assets 1,415 7,041 3,025
Other assets 515 - 55
---------------------------------------
TOTAL $44,035 $47,660 $44,595
---------------------------------------
---------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued liabilities $641 $1,831 $619
Deferred income taxes - 2,564 -
---------------------------------------
Total liabilities 641 4,395 619
COMMITMENTS AND CONTINGENCIES - - -
REDEEMABLE PREFERRED STOCK
Series A Cumulative Preferred Stock (without par value,
134,310 shares issued and outstanding - at redemption
and liquidation value of $100 per share) 19,081 17,171 18,604
SHAREHOLDERS' EQUITY:
Preferred stock (10,000,000 shares authorized, 134,310
redeemable preferred shares outstanding) - - -
Common stock:
Class A (20,000,000 no par value shares authorized,
1,875,000 outstanding) 20,381 20,381 20,381
Class B (10,000,000 no par value shares authorized,
5,625,000 outstanding) 27,831 27,831 27,831
Accumulated deficit (23,899) (22,118) (22,840)
---------------------------------------
Total shareholders' equity 24,313 26,094 25,372
---------------------------------------
TOTAL $44,035 $47,660 $44,595
---------------------------------------
---------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
INDUSTRIAL FUNDING CORP. UNAUDITED
- --------------------------------------------------------------------------------
Consolidated Statements of Income
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
---------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
REVENUE:
Net lease revenue - $4,014
Gain on sale of equipment - 931
Other revenue $363 494
---------------------------
Total revenue 363 5,439
---------------------------
EXPENSES:
Net selling, general and administrative 945 2,215
Provision for credit loss - 45
Interest expense - 2,291
---------------------------
Total expenses 945 4,551
---------------------------
INCOME (LOSS) BEFORE INCOME TAXES (582) 888
INCOME TAXES 0 300
---------------------------
NET (LOSS) INCOME ($582) $588
---------------------------
---------------------------
NET (LOSS) INCOME PER COMMON SHARE (Exhibit 11.1) ($0.14) $0.01
---------------------------
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</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
INDUSTRIAL FUNDING CORP. UNAUDITED
- ------------------------------------------------------------------------------
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
----------------------------------------------------
CLASS A CLASS B
PREFERRED COMMON COMMON ACCUMULATED
(DOLLARS IN THOUSANDS) STOCK STOCK STOCK DEFICIT TOTAL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1993 $18,604 $20,381 $27,831 ($22,840) $25,372
Preferred stock dividends accreted 477 - - (477) (477)
Net loss - - - (582) (582)
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BALANCE, FEBRUARY 28, 1994 $19,081 $20,381 $27,831 ($23,899) $24,313
---------------------------------------------------------------------
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BALANCE, NOVEMBER 30, 1992 $16,694 $20,381 $27,831 ($22,229) $25,983
Preferred stock dividends accreted 477 - - (477) (477)
Net income - - - 588 588
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BALANCE, FEBRUARY 28, 1993 $17,171 $20,381 $27,831 ($22,118) $26,094
---------------------------------------------------------------------
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</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
INDUSTRIAL FUNDING CORP. UNAUDITED
- --------------------------------------------------------------------------------
Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
---------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTVITIES:
Net income (loss) ($582) $588
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization - 997
Provision for credit loss - 45
Gain on sale of equipment - (931)
Increase in restricted cash (5) -
(Increase) Decrease in other assets (460) 119
Recovery of unrealized loss on short-term investments (83) -
Loss on sale of short-term investments 357 -
Increase (Decrease) in accounts payable and other liabilities 22 (884)
Decrease in deferred income taxes - 507
Other (26) -
---------------------------
Total adjustments (195) (147)
---------------------------
Net cash (used in) provided by operating activities (777) 441
---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal payments received on lease receivables - 15,430
Payments received on sale of equipment - 5,238
Payments received on nonperforming assets 1,636 -
Increase in short-term investments (11,682) -
Payments received on sale of short-term investments 11,347 -
Purchase of equipment to be financed - (2,233)
Initial direct costs - deferred - (129)
Purchase of property and equipment - (52)
---------------------------
Net cash provided by investing activities 1,301 18,254
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt - (29,856)
Decrease in restricted cash - 12,174
---------------------------
Net cash used in financing activities - (17,682)
---------------------------
INCREASE IN CASH AND TEMPORARY INVESTMENTS 524 1,013
CASH AND TEMP. INVESTMENTS AT BEGINNING OF PERIOD 6,586 1,166
---------------------------
CASH AND TEMP. INVESTMENTS AT END OF PERIOD $7,110 $2,179
---------------------------
---------------------------
SUPPLEMENTAL DISCLOSURES:
Interest paid - $2,207
Income taxes refunded - (207)
Non-cash - preferred stock dividends accreted $477 477
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
Industrial Funding Corp. (the "Company"), a majority owned subsidiary of
IFC Holdings Inc. ("IFC Holdings"), was incorporated in October 1989, as a
holding company formed for the purpose of owning Industrial Leasing Corporation
("Industrial Leasing"). During 1992, First City Realty Investment Corp.
("FCRIC"), the Company's previous majority shareholder, transferred all of its
interest in the Company to IFC Holdings. The accompanying consolidated financial
statements include all of the accounts of the Company and its wholly-owned
subsidiary. All significant intercompany transactions and accounts have been
eliminated in consolidation.
Until May 27, 1993, the business of the Company was providing capital
equipment lease financing to small businesses. At that time, the Company
completed a sale of substantially all of the assets of Industrial Leasing (the
"Asset Sale"), to ILC Acquisition Corp., a wholly-owned subsidiary of Parrish
Equipment Partner L.P. ("Parrish"), in a transaction approved by shareholders of
the Company on May 17, 1993.
Subsequent to the sale, Company activities include: collection of the
remaining assets; investment of financial liquid assets; and management of legal
proceedings against the Company. The Company will review other strategic
alternatives that may become available from time to time, including but not
limited to, the adoption of a plan of liquidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). While these statements
reflect all necessary, normal and recurring adjustments in the opinion of
management required to present fairly, in all material respects, the financial
position, results of operations and cash flows of the Company and its subsidiary
at February 28, 1994, and for the three months then ended, they do not include
all information and notes required by generally accepted accounting principles
for complete financial statements. Further information is contained in the
annual financial statements of the Company and notes thereto, for the year ended
November 30, 1993, contained in the Company's Form 10-K, filed with the
Commission pursuant to the Securities Exchange Act of 1934. Operating results
for the three month period ended February 28, 1994, are not necessarily
indicative of the results that may be expected for the full year.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
SHORT-TERM INVESTMENTS. Short-term investment consist of mutual funds
which are recorded at the lower of average cost or market. Aggregate net
unrealized investment losses are included in results of operations.
-7-
<PAGE>
NONPERFORMING ASSETS. Nonperforming assets consists primarily of equipment
held for sale on equipment repossessed, leases which are more than 180 days past
due, and lease deficiencies which represent the remaining balance due to the
Company after proceeds from the equipment sale have been applied to the
outstanding lease receivable. The nonperforming assets are valued at their
estimated net realizable value.
CASH FLOW STATEMENT. For purposes of reporting cash flows, cash and
temporary investments includes cash in banks and temporary investments with an
original maturity of three months or less.
ACCOUNTING FOR INCOME TAXES. Under federal income tax laws, the Company is
not part of a controlled group and files its tax return separately. For
financial statement purposes, the federal income tax provision is computed as if
the Company were filing separately.
NOTE 3. CONTINGENCIES
There is litigation pending against the Company, Industrial Leasing, the
Company's previous majority shareholder First City and certain of its former
affiliates and subsidiaries, certain directors, certain former directors and
officers, its independent auditor, and the underwriters of the December 8, 1989,
initial public offering. The class action lawsuits, WADE ET. AL. V. INDUSTRIAL
ET. AL., filed January 1992, and a related case BOWER ET. AL. V. BELZBERG ET.
AL., filed February 1992, allege violations of federal securities law. The WADE
lawsuit also alleged violations under California state law, however, these
claims were dismissed by the Court in January 1994. These lawsuits were filed
in the United States District Court for the Northern District of California, and
allege that plaintiffs were damaged as a result of alleged misstatements and
omissions in documents disseminated in connection with the initial public
offering and in subsequent communications and public filings by the Company,
through February 1991. The Company has retained legal counsel to defend against
these actions. The lawsuits are still in discovery, and therefore management is
unable to determine their probable impact. However, as the plaintiffs allege
damages of approximately $22.5 million, the lawsuits could have a material
effect on results of operations and financial condition of the Company, if
adversely determined.
As a result of the sale of substantially all of Industrial Leasing's assets
on May 27, 1993, plaintiffs moved the court for a preliminary injunction
restraining the Company from withdrawing, transferring, pledging or disposing of
any funds or assets received in connection with the Asset Sale, and further
moved the court to supervise the transfer of any such assets. The court denied
plaintiffs' injunction motions. In so doing, the court stated that plaintiffs
were likely to prevail on their Section 11 claims and that, in the absence of
the requested injunction, there was a possibility plaintiffs would be
irreparably harmed. The preliminary findings of the court, however, will not
control the ultimate determination of liability in connection with the
plaintiffs' Section 11 claim. Subsequently, plaintiffs filed an appeal with
the Ninth Circuit Court of Appeals, which is scheduled for oral argument on
April 13, 1994. It is not known when the Court of Appeals will rule on the
appeal.
-8-
<PAGE>
On October 6, 1993, the trial judge ordered the WADE and BOWER cases to a
settlement magistrate, in an attempt to facilitate a settlement of the
securities litigation. A settlement conference was held on January 6, 1994,
before the magistrate, with the parties and their counsel. Another settlement
conference is scheduled for May 12, 1994 before the magistrate. There can be no
assurance, however, that the securities litigation will be resolved by a
settlement between the parties.
On December 14, 1993, the court certified the WADE lawsuit as a class
action.
On March 4, 1994, the underwriter defendants filed a third-party claim in
WADE for contribution against one current director, certain former directors,
and one former officer of the Company. In their claim, the underwriter
defendants seek to shift any damages assessed against them to these present and
former directors and officers.
The court has ordered a jury trial of the WADE action to begin in
September, 1994.
The Company has filed a lawsuit against two insurance carriers, demanding
coverage against American Home under a directors and officers liability policy
in the amount of approximately $5 million (Canadian), and against Continental
Insurance under a general liability policy and umbrella policy of approximately
$4 million (Canadian) and $16 million (Canadian), respectively. American Home
and Continental have each filed answers denying liability. Continental has also
filed a counterclaim against the Company, demanding reimbursement of the
attorney fees and costs it advanced to the Company in connection with the
defense of the securities class action lawsuits under a reservation of rights.
As of March 31, 1994, Continental has advanced the Company attorney fees and
costs in the amount of approximately $1.1 million which represents approximately
39 percent of the legal cost recovery requested.
In January 1993, Alex. Brown & Sons and Piper Jaffray, Inc., the
underwriters of the Company's initial public offering, filed an action against
the Company, demanding that the Company pay the underwriters' attorney fees and
costs associated with their defense of the securities litigation, in accordance
with the Underwriting Agreement entered into by the Company. The court granted
the underwriters' motion for summary judgment, on July 9, 1993, and ordered the
Company to pay the underwriters' costs and legal fees as they are incurred. The
Company has filed an appeal with the Ninth Circuit Court of Appeals, which is
scheduled for oral argument on April 13, 1994. The Company has been advised
that as of February 28, 1994 the total amount of expenses incurred by the
underwriters was approximately $439,824. Such amount has not been accrued as
the Company, based in part on discussions with counsel, believe that any
liability related to the matter is unlikely to occur.
Pursuant to an employment agreement entered into July 1, 1993, by the
Company and the Company's President and Chief Executive Officer, John Estok, Mr.
Estok may earn an incentive payment equal to 7 percent of the amount, if any, by
which the Company's net cash recovery in the collection of its nonperforming
assets exceeds the Company's forecast
-9-
<PAGE>
net cash recovery for the period commencing June 1, 1993 and ending May 31,
1994. During the period commencing June 1, 1993 and ending February 28, 1994,
the Company's net cash recovery in the collection of its nonperforming assets
exceeded its forecast net cash recovery by approximately $1.2 million. No
accrual for payment has been made as of February 28, 1994.
The Company is also a defendant in various lawsuits resulting from normal
business activity. In the opinion of management, the disposition of all other
such litigation currently pending will not have a material effect on the
financial position or results of operation of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The Company services a nonperforming lease portfolio through collection and
disposition activities. This portfolio was specifically excluded from the Asset
Sale concluded on May 27, 1993.
The nonperforming portfolio is comprised of leases that either were
seriously delinquent or otherwise impaired prior to the Asset Sale and
consequently were written down in value to an amount estimated to be equal to
their net realizable value. As assets written down to their net realizable
value cannot be written up, the Company applies all cash proceeds to reduce the
aggregate book value of the nonperforming portfolio.
As of May 31, 1993, the fiscal quarter end that immediately followed the
conclusion of the Asset Sale, the aggregate value of the nonperforming
portfolio, as reflected on the financial statements of the Company, was $5.7
million. As of February 28, 1994 this value has been reduced through the
application of cash recoveries to $1.4 million, a reduction of approximately
75%.
The Company will continue its collection efforts as long as the performance
is deemed by management to be cost effective. If the remaining cash recovery is
less than the current book value of nonperforming assets, a loss will occur.
If, however, the collection effort results in the recovery of the entire book
value, any additional recoveries will be recorded as a gain.
The Company invests cash, derived primarily from the proceeds of the Asset
Sale including the initial payment received from the purchaser pursuant to a
purchase note, in a combination of short-term and long-term government bond
mutual funds. These funds are reflected on the Company's balance sheet as
short-term investments, and are recorded at the lower of cost or market value.
Management periodically reviews the performance of these investments, and within
certain limitations as provided in the Company's Investment
-10-
<PAGE>
Policy, makes future investment decisions based upon individual fund performance
and general government bond market conditions.
The Company manages the defense of a pending litigation as described in
Part II, Item 1, and plans to continue to incur legal costs associated with this
defense in the range of $1.5 million to $2.0 million per year. The securities
class action lawsuit is scheduled for trial in September 1994. The Company
plans to redeem its preferred stock, as soon as the current litigation pending
against the Company is resolved, assuming funds are then available.
RESULTS OF OPERATION
THREE MONTHS ENDED FEBRUARY 28, 1994 COMPARED TO FEBRUARY 28, 1993
As a result of the sale of substantially all of its assets on May 27, 1993,
management believes that performance and results of operation are not comparable
with prior periods.
Revenue for the three months ended February 28, 1994 consisted primarily of
interest and net investment income, as compared to net lease revenue, gain of
sale of equipment, and other income a year earlier. Revenue for the fiscal
period ending February 28, 1994 was $363,000 compared to $5.4 million for the
same period a year ago.
Total expenses were $945,000 for the three months ended February 28, 1994,
compared to $4.6 million the previous year. Costs incurred in the defense of
the securities litigation were $407,000 during the first fiscal quarter, or 43%
of the total expenses incurred.
The Company reports a net loss of $582,000 for the first quarter ended
February 28, 1994, as compared to net income of $588,000 for the same period a
year ago. The net loss per common share for the period was $0.14 per share as
compared to a net income per common share of $0.01 a year earlier.
LIQUIDITY AND CAPITAL RESOURCES
The Company has no available short-term or long-term debt facilities. The
Company believes that its present cash and short-term investments will allow it
to manage the collection of the remaining assets and defend the legal
proceedings against the Company.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There is litigation pending against the Company, Industrial Leasing, the
Company's previous majority shareholder First City and certain of its former
affiliates and subsidiaries, certain directors, certain former directors and
officers, its independent auditor, and the underwriters of the December 8, 1989,
initial public offering. The class action lawsuits,
-11-
<PAGE>
WADE ET. AL. V. INDUSTRIAL ET. AL., filed January 1992, and a related case BOWER
ET. AL. V. BELZBERG ET. AL., filed February 1992, allege violations of federal
securities law. The WADE lawsuit also alleged violations under California state
law, however, these claims were dismissed by the Court in January 1994. These
lawsuits were filed in the United States District Court for the Northern
District of California, and allege that plaintiffs were damaged as a result of
alleged misstatements and omissions in documents disseminated in connection with
the initial public offering and in subsequent communications and public filings
by the Company, through February 1991. The Company has retained legal counsel
to defend against these actions. The lawsuits are still in discovery, and
therefore management is unable to determine their probable impact. However, as
the plaintiffs allege damages of approximately $22.5 million, the lawsuits could
have a material effect on results of operations and financial condition of the
Company, if adversely determined.
As a result of the sale of substantially all of Industrial Leasing's assets
on May 27, 1993, plaintiffs moved the court for a preliminary injunction
restraining the Company from withdrawing, transferring, pledging or disposing of
any funds or assets received in connection with the Asset Sale, and further
moved the court to supervise the transfer of any such assets. The court denied
plaintiffs' injunction motions. In so doing, the court stated that plaintiffs
were likely to prevail on their Section 11 claims and that, in the absence of
the requested injunction, there was a possibility plaintiffs would be
irreparably harmed. The preliminary findings of the court, however, will not
control the ultimate determination of liability in connection with the
plaintiffs' Section 11 claim. Subsequently, plaintiffs filed an appeal with
the Ninth Circuit Court of Appeals, which is scheduled for oral argument on
April 13, 1994. It is not known when the Court of Appeals will rule on the
appeal.
On October 6, 1993, the trial judge ordered the WADE and BOWER cases to a
settlement magistrate, in an attempt to facilitate a settlement of the
securities litigation. A settlement conference was held on January 6, 1994,
before the magistrate, with the parties and their counsel. Another settlement
conference is scheduled for May 12, 1994 before the magistrate. There can be no
assurance, however, that the securities litigation will be resolved by a
settlement between the parties.
On December 14, 1993, the court certified the WADE lawsuit as a class
action.
On March 4, 1994, the underwriter defendants filed a third-party claim in
Wade for contribution against one current director, certain former directors,
and one former officer of the Company. In their claim, the underwriter
defendants seek to shift any damages assessed against them to these present and
former directors and officers.
The court has ordered a jury trial of the WADE action to begin in
September, 1994.
The Company has filed a lawsuit against two insurance carriers, demanding
coverage against American Home under a directors and officers liability policy
in the amount of approximately $5 million (Canadian), and against Continental
Insurance under a general liability policy and umbrella policy of approximately
$4 million (Canadian) and $16 million
-12-
<PAGE>
(Canadian), respectively. American Home and Continental have each filed answers
denying liability. Continental has also filed a counterclaim against the
Company, demanding reimbursement of the attorney fees and costs it advanced to
the Company in connection with the defense of the securities class action
lawsuits under a reservation of rights. As of March 31, 1994, Continental has
advanced the Company attorney fees and costs in the amount of $1.1 million which
represents approximately 39 percent of the legal cost recovery requested.
In January 1993, Alex. Brown & Sons and Piper Jaffray, Inc., the
underwriters of the Company's initial public offering, filed an action against
the Company, demanding that the Company pay the underwriters' attorney fees and
costs associated with their defense of the securities litigation, in accordance
with the Underwriting Agreement entered into by the Company. The court granted
the underwriters' motion for summary judgment, on July 9, 1993, and ordered the
Company to pay the underwriters' costs and legal fees as they are incurred. The
Company has filed an appeal with the Ninth Circuit Court of Appeals, which is
scheduled for oral argument on April 13, 1994. The Company has been advised
that as of February 28, 1994 the total amount of expenses incurred by the
underwriters was approximately $439,824. Such amount has not been accrued as
the Company, based in part on discussions with counsel, believe that any
liability related to the matter is unlikely to occur.
Pursuant to an employment agreement entered into July 1, 1993, by the
Company and the Company's President and Chief Executive Officer, John Estok, Mr.
Estok may earn an incentive payment equal to 7 percent of the amount, if any, by
which the Company's net cash recovery in the collection of its nonperforming
assets exceeds the Company's forecast net cash recovery for the period
commencing June 1, 1993 and ending May 31, 1994. During the period commencing
June 1, 1993 and ending February 28, 1994, the Company's net cash recovery in
the collection of its nonperforming assets exceeded its forecast net cash
recovery by approximately $1.2 million. No accrual for payment has been made as
of February 28, 1994.
The Company is also a defendant in various lawsuits resulting from normal
business activity. In the opinion of management, the disposition of all other
such litigation currently pending will not have a material effect on the
financial position or results of operation of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
11.1 Exhibit 11.1 is a statement of computation of per share earnings that
includes the preferred stock dividend.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INDUSTRIAL FUNDING CORP.
(Registrant)
Date: April 11, 1994 By:/s/ JOHN J. ESTOK
------------------- -------------------------------------
John J. Estok
President and Chief Executive Officer
Date: April 11, 1994 By:/s/ JOHN W. PITT
------------------- -------------------------------------
John W. Pitt
Vice-President and Secretary
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<PAGE>
INDUSTRIAL FUNDING CORP.
- -------------------------------------------------------------------------------
Exhibit 11.1
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
---------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Net income (loss) ($582) $588
Cumulative preferred stock dividend (477) (477)
---------------------------
Earnings (loss) on common stock ($1,059) $111
Average number of common shares outstanding 7,500 7,500
---------------------------
Earnings (loss) per common share ($0.14) $0.01
---------------------------
---------------------------
</TABLE>
-15-
