UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 1996
Commission file Nos.: 33-73748
FUND AMERICA INVESTORS CORPORATION II
(Exact name of registrant as specified in its
charter)
Delaware
(State or other jurisdiction of organization)
84-1218906
(I.R.S. Employer incorporation or 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 August 13, 1996 -- 349,000 shares
<PAGE>
FUND AMERICA INVESTORS CORPORATION II
FORM 10-Q FOR THE
SIX MONTHS ENDED JUNE 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 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 2. Changes in Securities 7
Item 3. Defaults Upon Senior
Securities 7
Item 4. Submission of Matters
to a Vote of Security
Holders 7
Item 5. Other Information 7
Item 6. Exhibits and Reports 7
SIGNATURES 8
Page 2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FUND AMERICA INVESTORS CORPORATION II
BALANCE SHEETS
(Unaudited)
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Assets
Cash $250,256 $ 40,450
Deferred offering
costs 242,764 398,704
Organizational
costs, net 901 1,219
-------- --------
Total assets $493,921 $440,373
======== ========
Liabilities
Accounts payable $ - $ 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 490,431 436,789
-------- --------
Total shareholder's
equity 493,921 440,279
-------- --------
Total liabilities
and shareholder's
equity $493,921 $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 Six months
ended ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue:
Issuance fee
income $193,335 $ - $193,335 $ -
Interest income 1,676 7,738 1,984 20,369
-------- -------- -------- --------
Total revenue 195,011 7,738 195,319 20,369
Expenses:
Deferred offering
costs 119,900 - 119,900 -
General and
administrative 2,493 4,073 9,459 14,628
Amortization
of organization
costs 159 159 318 318
Management fees 6,000 6,000 12,000 12,000
------- ------- -------- --------
Total expenses 128,552 10,232 141,677 26,946
-------- ------- -------- --------
Net income/(loss) $66,459 $(2,494) $ 53,642 $ (6,577)
======== ======== ======== ========
<FN>
See notes to financial statements
Page 4
</TABLE>
<PAGE>
<TABLE>
FUND AMERICA INVESTORS CORPORATION II
Statement of Cash Flows
(Unaudited)
<CAPTION>
Six months ended
June 30,
1996 1995
<S> <C> <C>
Net cash flow from
operating activities:
Net income/(loss) $ 53,642 $ (6,577)
Adjustments to reconcile
net income to net cash
flow from operating
activities:
Amortization deferred
offering costs 119,900 -
Amortization of
organizational costs 318 318
Changes in
operating assets and
liabilities:
Accounts receivable - 55
Accounts payable ( 94) (3,850)
-------- --------
Net cash flow provided by/
(used in) operating
activities 173,766 ( 10,054)
-------- --------
Net cash provided by/
(used in) investing
activities:
Reimbursements of deferred
offering costs 41,866 -
Increase in deferred
offering costs (5,826) (4,898)
-------- --------
Net cash flow provided by/
(used in) investing
activities 36,040 (4,898)
-------- --------
Net cash flow used in
financing activities:
Shareholder distributions - (700,000)
-------- --------
Net increase/(decrease)
in cash 209,806 (714,952)
Cash at beginning
of period 40,450 1,392,900
--------- ---------
Cash at end of period $ 250,256 $ 677,948
========= =========
<FN>
See notes to financial statements
Page 5
</TABLE>
<PAGE>
FUND AMERICA INVESTORS CORPORATION II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Six months ended June 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. 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 June 30,
1996, and the results of its operations and
cash flows for the periods ended June 30, 1996
and 1995.
3. Issuance of Publicly Registered Securities
During the three months ended June 30, 1996,
the Company issued one series of registered
securities.
Description Amount Collateral
Aggregate remaining
unissued securuties
as of March 31, 1996 $829,086,945 Collateralized Mortgage
Obligation or pass-through
certificates
Issuance of Series 1996-A
April22, 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 securities
as of June 30, 1996 $532,786,945
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 June 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 six months ended June 30, 1996 of
$66,459 and $53,642 respectively, as compared
to a net loss of $2,494 and $6,577
respectively, for the three and six months
ended June 30, 1995. The increase in net
income for the three and six months ended June
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
June 30, 1995, therefore, no income was
generated for this period.
Page 6
<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
1) Form 8-K dated May 10, 1996
reporting the acquisition and
disposition of mortgage loans in
connection with the 1996-A
securitization transaction.
2) Form 8-K/A dated May 14, 1996 amending
the Form 8-K filed on May 10, 1996.
Page 7
<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: August 13, 1996
By: /s/ Helen M. Dickens
Helen M. Dickens
Vice President and Secretary
(Duly authorized and
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 250256
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 250256
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 439921
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3490
<OTHER-SE> 490431
<TOTAL-LIABILITY-AND-EQUITY> 493921
<SALES> 0
<TOTAL-REVENUES> 195319
<CGS> 0
<TOTAL-COSTS> 141677
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 53642
<INCOME-TAX> 0
<INCOME-CONTINUING> 53642
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53642
<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>
