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, 2000,
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.: 33-73748
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 August 14, 2000 - 349,000 shares
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FUND AMERICA INVESTORS CORPORATION II
FORM 10-Q FOR THE
SIX MONTHS ENDED JUNE 30, 2000
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 9
Item 2. Changes in Securities 9
Item 3. Defaults upon Senior Securities 9
Item 4. Submission of Matters to a Vote
of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports 9
SIGNATURES 10
Page 2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FUND AMERICA INVESTORS CORPORATION II
BALANCE SHEETS
(Unaudited)
<CAPTION>
June 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
Assets
Cash $ 11,747 $ 15,513
Deferred offering costs 253,574 254,826
Prepaid expenses 2,000 187
------------ ------------
Total assets $ 267,321 $ 270,526
============ ============
Liabilities - accounts payable $ - $ -
------------ ------------
Shareholder's equity
Common stock, par value $.01 per
share;10,000 shares authorized;
349,000 shares issued and
outstanding 3,490 3,490
Additional paid-in capital 445,510 445,510
Shareholder distributions (1,849,798) (1,779,798)
Retained earnings 1,668,119 1,601,324
----------- -----------
Total shareholder's equity 267,321 270,526
----------- -----------
Total liabilities and
shareholder's equity $ 267,321 $ 270,526
=========== ===========
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See notes to financial statements
Page 3
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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,
---------------------- --------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue
Issuance fee income $ - $ - $ 76,253 $ -
Call option income 18,000 - 18,000 -
Interest income 207 2,158 667 4,317
---------- ---------- ---------- ----------
Total revenue 18,207 2,158 94,920 4,317
---------- ---------- ---------- ----------
Expenses
Deferred offering costs 5,000 - 6,358 -
General and administrative 915 1,505 9,768 9,712
Management fees 6,000 6,000 12,000 12,000
---------- ---------- ---------- ----------
Total expenses 11,915 7,505 28,126 21,712
---------- ---------- ---------- ----------
Net income/(loss) $ 6,292 $ (5,347) $ 66,794 $ (17,395)
========== ========== ========== ==========
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See notes to financial statements
Page 4
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<TABLE>
FUND AMERICA INVESTORS CORPORATION II
Statements of Cash Flows
(Unaudited)
<CAPTION>
Six months ended
June 30,
--------------------------
2000 1999
---------- ----------
<S> <C> <C>
Net cash flow used in operating activities:
Net income/(loss) $ 66,794 $ (17,395)
Adjustments to reconcile net loss to
net cash flow from operating activities:
Amortization deferred offering costs 1,253 -
Changes in operating assets and liabilities:
Accounts payable - (215)
Prepaid expenses (1,813) 179
---------- ----------
Net cash flow provided by/(used in)
operating activities 66,234 (17,431)
Net cash flow from financing activities:
Shareholder distributions (70,000) -
---------- ----------
Net decrease in cash (3,766) (17,431)
Cash at beginning of period 15,513 226,446
---------- ----------
Cash at end of period $ 11,747 $ 209,015
========== ==========
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See notes to financial statements
Page 5
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FUND AMERICA INVESTORS CORPORATION II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Six months ended June 30, 2000 and 1999
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 (the "Bonds") and
Asset-Backed Certificates (the "Certificates", and together with the Bonds,
the "Securities"). 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 Securities; (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.
On April 1, 2000, the Company had a total of $561 million registered and
unissued Securities on its Registration Statement No. 333-33823. The
Company issued one series of Securities for 3.2 million during the first quarter
ended March 31, 2000. This series, Fund America Investors Corporation II,
Issuer Trust 2000-1, was issued pursuant to a seperate prospectus
supplement filed on January 21, 2000. No subsequent Securities have been
issued from the Company's shelf. The balance of unissued Securities on
Registration Statement No. 333-33823 remaining was $561 million as of June
30, 2000.
To date, the Company has issued nineteen series of Securities which aggregate
$2.7 billion in original issued principal. The Company does not have any
further obligations in connection with the issuance of these Securities. Under
generally accepted accounting principles, such issuances are considered to be a
direct sale of the collateral.
On September 30, 1998, the Company filed its fifth Registration Statement on
Form S-3 with the Securities and Exchange Commission. The purpose of this
Registration Statement is to register an additional amount of Securities and to
merge the Company's Effective Registration Statement No. 333-33823, thereby
increasing the total amount of Securities that can be issued by the Company.
As of June 30, 2000, this Registration Statement was not effective and was
subject to completion or amendment. The Company intends to file one or more
further amendments to complete this Registration Statement and to bring
it effective.
2. Unaudited Financial Statements
-----------------------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim reporting
periods and in accordance with the instructions to Form 10-Q. In complying to
the guidelines, the accompanying financial statements do not include all of the
information and footnotes that are required for a complete annual reporting
period.
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, 2000, and the results of its operations and
cash flows for the periods ended June 30, 2000 and 1999.
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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 its cash balances,
revenues derived from the issuance of Securities, and if necessary, from loans
or capital contributions from its sole shareholder. Management believes that
the current cash position will adequately fund overhead for the remainder of
2000. Any capital costs required that are related to the registration
of additional securities will be funded by the Company's sole shareholder.
Results of Operations
---------------------
The Company operates on relatively fixed general and administrative costs
which have not substantially changed from comparable periods in prior years.
Typically, periodical fluctuations in net income are directly related to acti-
vity from the issuance of Securities. Under normal circumstances, periods
reporting net income are the direct result of issuance fees earned by the
Company, and periods reporting a net loss, no issuance fees were earned. For
the three-months ended June 30, 2000, the Company reported net income of $6,292,
however, income for the three months was a result call option fees received in\
the amount of $18,000 when the bonds in Fund America Investors Corporation II,
Series 1993-H were called by the servicer. Call option income is not a usual
event and the Company does not anticipate the receipt of call option income in
future periods. The remaining income and expense items for June 30, 2000 are
comparable to the three-months ended June 30, 1999, except for deferred
offering costs of $5,000, paid on the issuance of Fund America Investors
Corporation II, Series 2000-1.
The six-month period ended June 30, 2000 reported net income of $66,794 as
compared to the six-months ended June 30, 1999 which reported a net loss of
$17,395. The income reported on June 30, 2000 was the result of net issuance
fees earned of $70,000 and call option income of $18,000, whereas, the net loss
reported on June 30, 1999 was the result of normal expenses incurred without
any issuance fees earned. Other items remained comparable for both periods
with the exception of a decrease in interest earned for June 30, 2000.
Page 7
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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 8
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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: August 14, 2000 By: /s/ Helen M. Dickens
----------------------- ----------------------------------
Helen M. Dickens
Vice President, Secretary/Treasurer
(Duly authorized and
Principal Financial Officer
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