UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1996
Commission File Nos.: 33-73748
FUND AMERICA INVESTORS CORPORATION II
(Exact name of registrant as specified in its charter)
Delaware 84-1218906
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
6400 S. Fiddler's Green Circle, Suite 1200B,
Englewood, Colorado 80111
(Address of principal executive offices)
Registrant's telephone number including area code: (303) 290-6025
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of November 15, 1996 -- 349,000 shares
<PAGE>
FUND AMERICA INVESTORS CORPORATION II
FORM 10-Q FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote
of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports 8
SIGNATURES 9
Page 2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FUND AMERICA INVESTORS CORPORATION II
BALANCE SHEETS
(Unaudited)
<CAPTION>
September 30, December 31,
1996 1995
------------ -----------
<S> <C> <C>
Assets
Cash $ 238,551 $ 40,450
Deferred offering costs 250,298 398,704
Organizational costs, net 742 1,219
---------- ----------
Total assets $ 489,591 $ 440,373
========== ==========
Liabilities-Accounts payable $ 150 $ 94
---------- ----------
Shareholder's equity
Common stock, par value $.01
per share; 1,000,000 shares
authorized; 349,000 shares
issued and outstanding 3,490 3,490
Retained earnings 485,951 436,789
---------- ----------
Total shareholder's equity 489,441 440,279
---------- ----------
Total liabilities and
shareholder's equity $ 489,591 $ 440,373
========== ==========
<FN>
See notes to financial statements
Page 3
</TABLE>
<PAGE>
<TABLE>
FUND AMERICA INVESTORS CORPORATION II
Statement of Operations
(Unaudited)
<CAPTION>
Three months Nine months
ended ended
June 30, September 30,
----------------- -----------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue
Issuance fee income $ - $ - $193,335 $ -
Interest income 2,137 5,351 4,121 25,720
-------- -------- -------- --------
Total revenue 2,137 5,351 197,456 25,720
-------- -------- -------- --------
Expenses
Deferred offering costs - - 119,900 -
General and administrative 459 27,574 9,917 42,202
Amortization 159 159 477 477
Management fees 6,000 6,000 18,000 18,000
-------- -------- -------- --------
Total expenses 6,618 33,733 148,294 60,679
-------- -------- -------- --------
Net income/(loss) $ (4,481) $(28,382) $ 49,162 $(34,959)
======== ======== ======== ========
<FN>
See notes to financial statements
Page 4
</TABLE>
<PAGE>
<TABLE>
FUND AMERICA INVESTORS CORPORATION II
Statement of Cash Flows
(Unaudited)
<CAPTION>
Nine months ended
September 30,
1996 1995
---------- -----------
<S> <C> <C>
Net cash flow from operating
activities:
Net income/(loss) $ 49,162 $ (34,959)
Adjustments to reconcile net income
to net cash flow from operating
activities:
Amortization deferred offering costs 119,900 -
Amortization of organizational costs 477 476
Changes in operating assets and
liabilities:
Accounts receivable - 285
Accounts payable 56 (42,797)
---------- -----------
Net cash flow provided by/(used in)
operating activities 169,595 ( 76,995)
---------- -----------
Net cash provided by/(used in)
investing activities:
Reimbursements of deferred offering costs 41,866 -
Increase in deferred offering costs (13,360) (4,898)
---------- -----------
Net cash flow provided by/(used in)
investing activities 28,506 (4,898)
---------- -----------
Net cash flow used in financing
activities:
Shareholder distributions - (1,187,200)
---------- ----------
Net increase/(decrease) in cash 198,101 (1,269,093)
Cash at beginning of period 40,450 1,392,900
---------- ----------
Cash at end of period $ 238,551 $ 123,807
========== ==========
<FN>
See notes to financial statements
Page 5
</TABLE>
<PAGE>
FUND AMERICA INVESTORS CORPORATION II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Nine months ended September 30, 1996 and 1995
1. Basis of Presentation
Organization
Fund America Investors Corporation II (the Company") was incorporated
in the State of Delaware on December 14, 1992 as a limited purpose
finance corporation. The Company was established for the purpose of
(A) issuing and administering (i) one or more series of mortgage
pass-through certificates representing the beneficial ownership in trust
funds consisting of mortgage loans and other mortgage-related assets and
created by the Company from time to time, and (ii) one or more series of
bonds collateralized by mortgage loans or mortgage pass-through certificates
directly or through one or more trusts beneficially owned by it and (B)
purchasing, owning and selling mortgage loans and other mortgage-related
assets.
The Company will not engage in any business or investment activities other
than the purchase, ownership and sale of mortgage loans and other mortgage
collateral, the issuance and sale of bonds or pass-through certificates
backed by mortgage collateral and activities related thereto as set forth
in the Company's Certificate of Incorporation directly or through one or
more trusts beneficially owned by it.
On January 3, 1994, the Company filed a shelf registration statement on
Form S-11 (File No. 33-73748) (the "Registration Statement") with the
Securities and Exchange Commission ("SEC"). The Registration Statement was
subsequently amended to (i) increase the aggregate amount of securities
offered thereunder to $501,000,000, (ii) convert the Registration Statement
to a registration statement on Form S-3, and (iii) respond to various
comments received by the Company from the SEC. The Registration Statement,
as so amended, was declared effective by the SEC on March 28, 1996.
Pursuant to Rule 429 of the General Rules and Regulations under the
Securities Act of 1933, as amended, the prospectus which is part of the
Registration Statement is a combined prospectus relating also to
$328,086,945 of securities registered under the Company's Registration
Statement No. 33-67202 and remaining unissued as of the declared effective
date of the Registration Statement. Under the Registration Statement,
the Company may issue either collateralized mortgage obligations or
mortgage pass-through certificates.
2. Unaudited Financial Statements
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the financial position
of the Company at September 30, 1996, and the results of its operations and
cash flows for the periods ended September 30, 1996 and 1995.
3. Issuance of Publicly Registered Securities
During the nine months ended September 30, 1996, the Company issued one
series of registered securities.
Description Amount Collateral
- ---------------------------- ------------ ------------------------
Aggregate remaining unissued
as of March 31, 1996 $829,086,945 Collateralized Mortgage
Obligation or pass-through
certificates
Issuance of Series 1996-A
April 22, 1996 296,300,000 A mortgage pass-through
certificate ("The Non-Agency
Certificate"), the Non-Agency
certificate represents the
entire undivided interest in
a pool of conventional
mortgage loans
------------
Aggregate remaining unissued
as of September 30, 1996 $532,786,945
============
Page 6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Liquidity and Capital Resources
The Company will fund its ongoing operating expenses from its cash balances,
revenues derived from the issuance of mortgage securities, and, if
necessary, with borrowing from its sole shareholder. As of September
30, 1996, $1,000,000 was available to be borrowed from the Company's sole
shareholder under a Line of Credit dated April 3, 1995. Any borrowings
will be subordinate and junior to any issued mortgage securities.
Results of Operations
The Company reported a net income for the three and nine months ended
September 30, 1996 of $28,382 and $34,959 respectively, as compared to
a net loss of $28,382 and $34,959 respectively, for the three and nine
months ended September 30, 1995. The increase in net income for the three
and six months ended September 30, 1996 is directly attributable to fees
earned from the 1996-A securitization transaction. The Company did not
issue any securities during the reporting period ended September 30, 1995,
therefore, no issuance fee income was generated for this period.
Page 7
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Form 8-K
None.
Page 8
<PAGE>
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.
FUND AMERICA INVESTORS CORPORATION II
(Registrant)
Date: November 15, 1996
By: /s/ Helen M. Dickens
----------------------------------
Helen M. Dickens
Vice President and Secretary
(Duly authorized and Principal
Financial Officer)
Page 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 238551
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 238551
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 489591
<CURRENT-LIABILITIES> 150
<BONDS> 0
0
0
<COMMON> 3490
<OTHER-SE> 485951
<TOTAL-LIABILITY-AND-EQUITY> 489591
<SALES> 0
<TOTAL-REVENUES> 197456
<CGS> 0
<TOTAL-COSTS> 148294
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 49162
<INCOME-TAX> 0
<INCOME-CONTINUING> 49162
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49162
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>Not presented, as all shares of common stock are held by a sole
shareholder.
</FN>
</TABLE>
