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 MARCH 31, 1998
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 May 15, 1998-- 349,000 shares
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FUND AMERICA INVESTORS CORPORATION II
FORM 10-Q FOR THE
THREE MONTHS ENDED MARCH 31, 1998
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>
March 31, December 31,
1998 1997
---------- ------------
<S> <C> <C>
Assets
Cash $ 95,423 $ 110,311
Deferred offering costs 364,797 364,797
Prepaid expenses - 172
---------- ----------
Total assets $ 460,220 $ 475,280
========== ==========
Liabilities - accounts payable $ 7,140 $ 8,801
---------- ----------
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 449,590 462,989
---------- ----------
Total shareholder's equity 453,080 466,479
---------- ----------
Total liabilities and
shareholder's equity $ 460,220 $ 475,280
========== ==========
<FN>
See notes to financial statements
</TABLE>
Page 3
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<TABLE>
FUND AMERICA INVESTORS CORPORATION II
Statements of Operations
(Unaudited)
<CAPTION>
Three months ended
March 31,
--------------------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenue
Interest income $ 1,168 $ 1,595
--------- ---------
Total revenue 1,168 1,595
--------- ---------
Expenses
General and administrative 8,160 7,933
Legal fees 408 159
Management fees 6,000 6,000
--------- ---------
Total expenses 14,568 14,092
--------- ---------
Net loss $ (13,400) $ (12,497)
========= =========
<FN>
See notes to financial statements
</TABLE>
Page 4
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<TABLE>
FUND AMERICA INVESTORS CORPORATION II
Statements of Cash Flows
(Unaudited)
<CAPTION>
Three months ended
March 31,
-------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Net cash flow used in operating
activities:
Net loss $ (13,400) $ (12,497)
Adjustments to reconcile net loss
to net cash flow from operating
activities:
Amortization of organizational costs - 159
Changes in operating assets and
liabilities:
Prepaid expenses 172 163
Accounts payable (1,660) 6,843
--------- ---------
Net cash flow used in operating
activities (14,888) (5,332)
--------- ---------
Net decrease in cash (14,888) (5,332)
Cash at beginning of period 110,311 190,574
--------- ---------
Cash at end of period $ 95,423 $ 185,242
========= =========
<FN>
See notes to financial statements
</TABLE>
Page 5
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FUND AMERICA INVESTORS CORPORATION II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Three months ended March 31, 1998 and 1997
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 corpor-
ation. The Company was established to engage in the issuance and administra-
tion of Collateralized Mortgage Obligations (the "Bonds") and Asset-Backed
Certificates (the "Certificates", and together with the Bonds, the "Securi-
ties"). The Securities are issued in one or more series, from time to time,
by the Company in accordance with the provisions in the prospectus and series-
related prospectus supplement of the Company's latest effective registration
statement.
The Securities of each series can be issued directly by the Company, but
typically the Company forms a separate trust to act as the issuer solely for
the purpose of issuing a series of Securities. A series of Securities that
consist of Bonds will be issued pursuant to an indenture and will represent
indebtedness of the trust or issuer. A series of Securities that consist of
Certificates will represent beneficial ownership in the related trust or
issuer. The sole source of payments to Bondholders or Certificateholders
within each series of Securities is produced from the related trust property.
The trust property is generally comprised of mortgage loans and/or mortgage-
related assets as described in each of the series' related prospectus
supplements.
The Company may not, either directly or indirectly through a beneficially
owned trust, engage in any business or investment activity other than to; (1)
issue and sell Bonds; (2) purchase, own, hold, pledge or sell mortgage loans or
other mortgage-related assets; (3) invest and maintain cash balances on an
interim basis in high quality short-term securities; and (4) engage in other
activities which are necessary or convenient to accomplish the foregoing and
are incidental thereto.
In the first quarter ended March 31, 1998, there was no activity on the
Company's fourth Registration Statement No. 333-33823. The total unissued
Securities remained at $933 million for the first quarter. However, subsequent
to the first quarter, the Company issued one series of Securities (Fund America
Investors Corporation II, Pass-Through Certificates, Series 1998-A), on April
29, 1998 for $60 million. Under generally accepted accounting principles,
this issuance is considered to be a direct sale, therefore, the Company has
no further obligation in connection with this series.
2. Unaudited Financial Statements
In the opinion of management, the accompanying unaudited financial state-
ments contain all adjustments necessary to present fairly the financial
position of the Company at March 31, 1998, and the results of its operations
and cash flows for the periods ended March 31, 1998 and 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Company expects to fund ongoing operations from working capital and
revenues derived from the issuance of Securities. Management's expectations
are that the activity of issuing Securities will increase in volume during 1998
and on. The Company's remaining and unissued-registered securities are antici-
pated to be utilized by an affiliated mortgage company under common control, as
well as other third party issuers.
Results of Operations
The Company reported a net loss for the three months ended March 31, 1998
of $13,400 as compared to a net loss for the three months ended March 31, 1997
of $12,497. An increase in expenses and a decrease of interest earned on cash
balances is the primary difference in the results of operations between the two
reporting periods.
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
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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: May 15, 1998 By: /s/ Helen M. Dickens
------------------ ----------------------------------
Helen M. Dickens
Vice President and Secretary
(Duly authorized and Principal
Financial Officer
Page 8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 95423
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 95423
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 460220
<CURRENT-LIABILITIES> 7140
<BONDS> 0
0
0
<COMMON> 3490
<OTHER-SE> 449590
<TOTAL-LIABILITY-AND-EQUITY> 460220
<SALES> 0
<TOTAL-REVENUES> 1162
<CGS> 0
<TOTAL-COSTS> 14568
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13400)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13400)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13400)
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>
Not presented since all shares of common stock are held by a sole
shareholder.
</FN>
</TABLE>
