<PAGE>
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 JUNE 30,
1997,
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Nos.: 33-67202
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 August 14, 1997 -- 349,000 shares
</PAGE>
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FUND AMERICA INVESTORS CORPORATION II
FORM 10-Q FOR THE
SIX MONTHS ENDED JUNE 30, 1997
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
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<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FUND AMERICA INVESTORS CORPORATION II
BALANCE SHEETS
(Unaudited)
<CAPTION>
June 30, December 31,
1997 1996
________ ___________
<S> <C> <C>
Assets
Cash $175,299 $190,574
Deferred offering costs 251,124 251,124
Organizational costs, net 265 583
Prepaid expenses - 163
________ ________
Total assets $426,688 $442,444
======== ========
Liabilities - accounts payable $ 2,010 $ -
________ ________
Shareholder's equity
Common stock, par value
$.01 per share; 10,000 shares
authorized; 349,000 shares
issued and outstanding 3,490 3,490
Retained earnings 421,188 438,954
_______ _______
Total shareholder's equity 424,678 442,444
_______ _______
Total liabilities and
shareholder's equity $426,688 $442,444
======== ========
Page 3
</TABLE>
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<TABLE>
FUND AMERICA INVESTORS CORPORATION II
Statements of Operations
(Unaudited)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
____________________ ___________________
1997 1996 1997 1996
________ ________ _______ ________
<S> <C> <C> <C> <C>
Revenue
Issuance fee income $ - $193,335 $ - $193,335
Interest income 1,544 1,676 3,139 1,984
_______ ________ ________ ________
Total revenue 1,544 195,011 3,139 195,319
_______ ________ ________ ________
Expenses
Deferred offering costs - 119,900 - 119,900
General and administrative 654 2,493 8,587 9,459
Amortization of
organization costs 159 159 318 318
Management fees 6,000 6,000 12,000 12,000
_______ ________ ________ ________
Total expenses 6,813 128,552 20,905 141,677
_______ ________ ________ ________
Net income/(loss) $(5,269) $ 66,459 $(17,766) $ 53,642
======= ======== ======== ========
Page 4
</TABLE>
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<TABLE>
FUND AMERICA INVESTORS CORPORATION II
Statements of Cash Flows
(Unaudited)
<CAPTION>
Six months ended
June 30,
_____________________
1997 1996
________ ________
<S> <C> <C>
Net cash flow used in
operating activities:
Net loss $(17,766) $ 53,642
Adjustments to reconcile
net loss to net cash flow
from operating activities:
Amortization deferred offering costs 163 119,900
Amortization of organizational costs 318 318
Changes in operating assets
and liabilities:
Accounts payable 2,010 ( 94)
_______ _______
Net cash flow provided by/(used in)
investing activities (15,275) 173,766
_______ _______
Net cash provided by/(used in)
investing activities:
Reimbursements of deferred
offering costs - 41,866
Increase in deferred offering costs - ( 5,826)
_______ _______
Net cash flow provided by/(used in)
investing activities - 36,040
_______ _______
Net increase/(decrease) in cash (15,275) 209,806
Cash at beginning of period 190,574 40,450
_______ _______
Cash at end of period $175,299 $250,256
======== ========
Page 5
</TABLE>
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FUND AMERICA INVESTORS CORPORATION II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Six months ended June 30, 1997 and 1996
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 to engage in
the issuance and administration of Collateralized Mortgage Obligations
which are secured by collateral and Mortgage Pass-through Certificates
representing beneficial interests in the collateral (both are
collectively referred to as the "Securities"). The collateral for the
Securities may include mortgage loans or mortgage loan pass-through
certificates which are backed by mortgage loans. To issue the
Securities, the Company may acquire, hold, sell or pledge the collateral,
and typically such activities are transacted through trusts beneficially
owned and created by the Company.
The Company may not, either directly or indirectly, through a
beneficially owned trust, engage in any business or investment activity
other than (i) issuing and selling the Securities; (ii) purchasing,
owning, holding, pledging or selling the Collateral or other
mortgage-related assets; (iii) investing and maintaining cash
balances on an interim basis in high quality short-term securities; and
(iv) engaging in other activities which are necessary or convenient to
accomplish the foregoing and are incidental thereto.
The Company currently has approximately $533 million registered and
unissued Securities under its third registration statement which became
effective March 28, 1996. The Company will continue to seek
opportunities to utilize these remaining Securities.
Currently, the Company is in the process of filing a fourth
registration statement on Form S-3 with the Secrurities and Exchange
Commission. The filing would register additional Securities available
for issuance.
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, 1997, and the results of
its operations and cash flows for the periods ended June 30, 1997 and
1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Company expects to fund its ongoing operations from its cash
balances, revenue derived from the issuance of Securities, and, if
necessary, with borrowings from its sole shareholder. As of June 30,
1997, $1,000,000 was available to be borrowed from the Company's
shareholder under a Line of Credit dated April 3, 1995. Any borrowings
will be subordinate and junior to any issued Securities.
Results of Operations
The Company reported a net loss for the six months ended June 30,
1997 of $17,766 as compared to a net income for the six months ended June
30, 1996 of $53,642. The primary difference in the results of operations
between the two reporting periods is attributable to the issuance of one
series of Securities completed in 1996.
Page 6
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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 7
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<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 14, 1997 By: /s/ Helen M. Dickens
Helen M. Dickens
Vice President, Secretary/Treasurer
(Duly authorized and Principal
Financial Officer
Page 8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 175299
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 175299
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 426688
<CURRENT-LIABILITIES> 2010
<BONDS> 0
0
0
<COMMON> 3490
<OTHER-SE> 424678
<TOTAL-LIABILITY-AND-EQUITY> 426688
<SALES> 0
<TOTAL-REVENUES> 3139
<CGS> 0
<TOTAL-COSTS> 20905
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (17766)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17766)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17766)
<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>
