SOURCE: Resource America, Inc.

May 08, 2008 17:09 ET

Resource America, Inc. Reports Operating Results for the Second Fiscal Quarter Ended March 31, 2008

PHILADELPHIA, PA--(Marketwire - May 8, 2008) - Resource America, Inc. (NASDAQ: REXI) (the "Company") reported adjusted income from continuing operations, a non-GAAP measure, of $4.5 million, or $0.24 per common share-diluted and $9.4 million, or $0.50 per common share-diluted for the second fiscal quarter and six months ended March 31, 2008, respectively, as compared to $5.9 million, or $0.31 per common share-diluted and $10.5 million, or $0.55 per common share-diluted for the second fiscal quarter and six months ended March 31, 2007, respectively. A reconciliation of the Company's reported income (loss) from continuing operations to adjusted income from continuing operations, a non-GAAP measure, is included as Schedule I to this release.

For the second fiscal quarter ended March 31, 2008, the Company reported revenues of $50.4 million, operating income of $20.3 million, and income from continuing operations and net income of $2.0 million, or $0.11 per common share-diluted, as compared to revenues of $32.4 million, operating income of $15.7 million, income from continuing operations of $5.9 million, or $0.31 per common share-diluted and net income of $5.8 million, or $0.31 per common share-diluted for the second fiscal quarter ended March 31, 2007.

For the six months ended March 31, 2008, the Company reported revenues of $94.4 million, operating income of $35.6 million, a loss from continuing operations and a net loss of $9.0 million, or ($0.51) per common share-diluted, as compared to revenues of $56.7 million, operating income of $25.3 million, income from continuing operations of $10.5 million, or $0.55 per common share-diluted and net income of $10.4 million, or $0.55 per common share-diluted for the six months ended March 31, 2007.

Net loss from continuing operations and net loss for the six months ended March 31, 2008 includes an $11.4 million loss, net of tax, incurred during the quarter ended December 31, 2007 in connection with the Company's decision to terminate its two remaining outstanding financial fund management warehouse credit facilities in the United States and Europe. The Company has now eliminated its exposure to these facilities and has satisfied the guarantees in their entirety. The Company's March 31, 2008 balance sheet reflects the removal of the assets and the associated liabilities of these facilities.

Jonathan Cohen, President and CEO of the Company, commented, "We are pleased with the continued growth of LEAF Financial and Resource Real Estate, which have benefitted from robust fundraising, new joint ventures and fresh institutional partners. We are now raising our third bank private equity fund to capitalize on opportunities in that space and are launching a CMBS focused real estate fund. We continue to manage the complexities of our Resource Financial Fund Management investments -- $14 billion of assets which we manage under long-term contracts. We anticipate further opportunities to sell non-core assets to reduce or eliminate our corporate debt by the end of this fiscal year. Our cost structures globally are being adjusted to reflect the changes in business environment and we expect to see significant cost savings in our fiscal 2009 that begins October 1, 2008. We will also be able to expand our operations as opportunities arise. Overall, we are energized by the opportunities presented to us in this changing marketplace and are taking advantage of them and will continue to."

On April 22, 2008, our subsidiary LEAF Financial Corporation ("LEAF") completed the transfer of a portfolio of leases and loans that were acquired in the NetBank acquisition by the sale to LEAF Equipment Leasing Income Fund III, L.P., ("LEAF Fund III") of LEAF's remaining 51% membership interest in the special purpose entity that owns the portfolio. LEAF had previously transferred a 49% membership interest in this special purpose entity to LEAF Fund III on January 31, 2008. This entity that owns the portfolio, which is wholly-owned by LEAF Fund III as a result of these sales, remains the borrower on the Morgan Stanley bridge financing. Accordingly, a total of $323.0 million of commercial finance assets were transferred by LEAF to LEAF Fund III together with $315.0 million of related debt financing.

As of March 31, 2008, the Company had, on a consolidated basis, total borrowings outstanding of $884.1 million. After adjusting for the April 22, 2008 transfer of $315.2 million of non-recourse bridge loans at LEAF that financed its acquisition of the NetBank leasing portfolio to LEAF Fund III, the borrowings outstanding will be $568.9 million, including $213.1 million of net liabilities consolidated under FIN 46-R as to which the Company has no recourse; $269.0 million of non-recourse revolving credit facilities at LEAF; $70.0 million of corporate level secured revolving debt; and $16.8 million of other debt, which is principally mortgage debt secured by properties owned by the Company's subsidiaries.

Assets Under Management

Assets under management increased $3.0 billion, or 21%, to $17.7 billion at March 31, 2008 from $14.7 billion at March 31, 2007.

The following table details the Company's assets under management by operating segment:

                                                      At March 31,
                                              -----------------------------
                                                  2008           2007
                                              -------------- --------------
Financial fund management                     $ 14.3 billion $ 12.7 billion
Commercial finance                               1.7 billion    0.7 billion
Real estate                                      1.7 billion    1.3 billion
                                              -------------- --------------
                                              $ 17.7 billion $ 14.7 billion
                                              ============== ==============

A description of how the Company calculates assets under management is set forth in Item 1 of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2007.

Book Value

As of March 31, 2008, the Company's GAAP book value per common share was $8.91 per share. Total stockholders' equity was $156.1 million as of March 31, 2008 as compared to $185.3 million as of September 30, 2007. Total common shares outstanding were 17,525,420 as of March 31, 2008 as compared to 17,417,307 as of September 30, 2007.

Adjusted book value per common share outstanding, a non-GAAP measure, was $9.33. Adjusted book value is computed by adding back to GAAP book value the unrealized loss on swap transactions associated with the NetBank portfolio that were transferred to LEAF III on April 22, 2008 and by adjusting the unrealized loss related to the Company's investment in Resource Capital Corp. (NYSE: RSO) utilizing the closing price of May 7, 2008. A reconciliation of the Company's reported book value to adjusted book value, a non-GAAP measure, is included as Schedule III to this release.

Resource America, Inc. is a specialized asset management company that uses industry specific expertise to generate and administer investment opportunities for its own account and for outside investors in the commercial finance, real estate and financial fund management sectors.

For more information, please visit our website at www.resourceamerica.com or contact investor relations at pkamdar@resourceamerica.com.

Highlights for the Second Fiscal Quarter Ended March 31, 2008 and Recent Developments

--  On April 25, 2008 LEAF announced that it had successfully completed
    the public offering of its third public investment partnership, LEAF Fund
    III, which raised approximately $120.0 million.  LEAF Fund III closed
    within 14 months, 42% ahead of the original two year projected offering
    period, and utilized a syndicate of more than 70 broker dealers that
    participated in the offering. This is LEAF's third fund; the first, Lease
    Equity Appreciation Fund I LP ("LEAF I") raised approximately $17.1 million
    in gross offering proceeds; the second, Lease Equity Appreciation Fund II,
    L.P. ("LEAF II") raised approximately $60.0 million in gross offering
    proceeds.
    
--  LEAF's assets under management at March 31, 2008 were $1.7 billion, an
    increase of $968.1 million (131%) from March 31, 2007.  LEAF increased its
    commercial finance originations to $168.9 million for the three months
    ended March 31, 2008, an increase of $39.0 million (30%) from the three
    months ended March 31, 2007.
    
--  Resource Real Estate Holdings, Inc. ("Resource Real Estate"), the
    Company's real estate asset manager that invests in and manages real estate
    investment vehicles on behalf of itself and for outside investors and
    operates the Company's commercial real estate debt platform, increased its
    assets under management to $1.7 billion at March 31, 2008, an increase of
    $435.8 million (35%) from March 31, 2007.  Since October 1, 2007, Resource
    Real Estate has acquired $72.6 million in real estate assets for its
    investment vehicles.
    
--  Resource Real Estate increased its apartment units under management to
    15,230 at March 31, 2008, an increase of 3,677 units (32%) from March 31,
    2007.  This includes a portfolio of 37 multi-family properties representing
    approximately 9,400 apartment units managed by Resource Residential,
    Resource Real Estate's wholly-owned subsidiary based in Omaha, Nebraska.
    
--  Resource Real Estate acquired three multi-family residential apartment
    properties for its fund portfolio with an aggregate acquisition cost of
    $37.7 million in the second fiscal quarter ended March 31, 2008.
    
--  The Company's financial fund management operating segment increased
    its assets under management at March 31, 2008 to $14.3 billion, an increase
    of $1.6 billion (13%) from March 31, 2007.
    
--  The Company's Board of Directors authorized the payment of a cash
    dividend to be paid on May 30, 2008 in the amount of $0.07 per share of the
    Company's common stock to all holders of record at the close of business on
    May 16, 2008.
    
--  Resource Capital Corp. (NYSE: RSO), a real estate investment trust for
    which the Company is the external manager, announced a dividend
    distribution of $0.41 per common share for the quarter ended March 31,
    2008, unchanged from the quarter ended December 31, 2007 and an increase of
    $0.02 per common share (5%) from the quarter ended March 31, 2007.
    
--  The Company generated $35.2 million of cash from operating activities
    from continuing operations as adjusted during the six months ended March
    31, 2008.  A reconciliation of net cash provided by (used in) operating
    activities of continuing operations to net cash provided by operating
    activities of continuing operations as adjusted, a non-GAAP measure is
    included as Schedule II to this release.
    

Statements made in this release include forward-looking statements, which involve substantial risks and uncertainties. The Company's actual results, performance or achievements could differ materially from those expressed or implied in this release. For information pertaining to risks relating to these forward-looking statements, reference is made to the section "Risk Factors" contained in Item 1A of the Company's Annual Report on Form 10-K.

The remainder of this release contains the Company's unaudited consolidated balance sheets, consolidated statements of operations, consolidated statements of cash flows, reconciliation of GAAP income (loss) from continuing operations to adjusted income from continuing operations, reconciliation of net cash provided by (used in) operating activities of continuing operations to net cash provided by operating activities of continuing operations as adjusted, reconciliation of GAAP stockholders' equity to adjusted book value, restated consolidated balance sheet as of September 30, 2007, restated consolidated statement of operations for the three months ended March 31, 2007, restated consolidated statement of operations for the six months ended March 31, 2007 and restated consolidated statement of cash flows for the six months ended March 31, 2007.

                          RESOURCE AMERICA, INC.
                        CONSOLIDATED BALANCE SHEETS
                    (in thousands, except share data)
                                (unaudited)

                                                 March 31,   September 30,
                                                   2008          2007
                                               ------------  -------------
                                                               (restated)
ASSETS
  Cash                                         $     11,591  $      14,624
  Restricted cash                                    35,569         19,340
  Receivables                                         3,496         21,255
  Receivables from managed entities                  30,556         20,177
  Loans sold, not settled                                 -        152,706
  Loans held for investment, net                    227,677        285,928
  Investments in commercial finance, net            620,226        243,391
  Investments in real estate, net                    49,890         49,041
  Investment securities available-for-sale, at
   fair value                                        35,874         51,777
  Investments in unconsolidated entities             28,939         39,342
  Property and equipment, net                        15,716         12,286
  Deferred income taxes                              41,944         29,877
  Goodwill                                            7,969          7,941
  Intangible assets, net                              4,598          4,774
  Other assets                                       31,139         18,664
                                               ------------  -------------
    Total assets                               $  1,145,184  $     971,123
                                               ============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
  Accrued expenses and other liabilities       $     78,389  $      60,546
  Payables to managed entities                        1,038          1,163
  Borrowings                                        884,100        706,372
  Deferred income tax liabilities                    11,124         11,124
  Minority interests                                 14,392          6,571
                                               ------------  -------------
    Total liabilities                               989,043        785,776
                                               ------------  -------------

  Commitments and contingencies                           -              -

Stockholders' equity:
  Preferred stock, $1.00 par value, 1,000,000
   shares authorized; none outstanding                    -              -
  Common stock, $.01 par value, 49,000,000
   shares authorized; 27,455,900 and
   26,986,975 shares issued, respectively
   (including nonvested restricted stock
   of 584,808 and 199,708, respectively)                269            268
  Additional paid-in capital                        266,870        264,747
  Retained earnings                                  15,730         27,171
  Treasury stock, at cost; 9,345,672 and
   9,369,960 shares, respectively                  (101,805)      (102,014)
  ESOP loan receivable                                 (211)          (223)
  Accumulated other comprehensive loss              (24,712)        (4,602)
                                               ------------  -------------
    Total stockholders' equity                      156,141        185,347
                                               ------------  -------------
                                               $  1,145,184  $     971,123
                                               ============  =============



                          RESOURCE AMERICA, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except per share data)
                                (unaudited)

                                    Three Months Ended   Six Months Ended
                                        March 31,           March 31,
                                    ------------------  ------------------
                                      2008      2007      2008      2007
                                    --------  --------  --------  --------
                                             (restated)          (restated)
REVENUES
Commercial finance                  $ 32,666  $  8,564  $ 60,631  $ 15,653
Financial fund management             11,023    16,804    20,645    29,430
Real estate                            6,692     7,008    13,164    11,572
                                    --------  --------  --------  --------
                                      50,381    32,376    94,440    56,655
COSTS AND EXPENSES
Commercial finance                    12,233     4,560    21,784     8,191
Financial fund management              6,284     5,401    12,898     9,953
Real estate                            5,326     3,195    10,792     6,208
General and administrative             3,757     2,754     7,215     5,543
Provision for credit losses            1,447         -     4,220        45
Depreciation and amortization            989       719     1,955     1,428
                                    --------  --------  --------  --------
                                      30,036    16,629    58,864    31,368
                                    --------  --------  --------  --------
OPERATING INCOME                      20,345    15,747    35,576    25,287

Interest expense                     (14,595)   (7,694)  (29,272)  (12,285)
Minority interests                    (2,176)     (715)   (3,267)   (1,275)
Other income (expense), net            1,292     1,811   (17,076)    4,339
                                    --------  --------  --------  --------
                                     (15,479)   (6,598)  (49,615)   (9,221)
                                    --------  --------  --------  --------
Income (loss) from continuing
 operations before taxes               4,866     9,149   (14,039)   16,066
Provision (benefit) for income taxes   2,886     3,272    (5,054)    5,585
                                    --------  --------  --------  --------
Income (loss) from continuing
 operations                            1,980     5,877    (8,985)   10,481
Income (loss) from discontinued
 operations, net of tax                    3       (37)       (9)      (56)
                                    --------  --------  --------  --------
NET INCOME (LOSS)                   $  1,983  $  5,840  $ (8,994) $ 10,425
                                    ========  ========  ========  ========

Basic earnings (loss) per common
 share:
Continuing operations               $   0.11  $   0.34  $  (0.51) $   0.60
Discontinued operations                    -         -         -         -
                                    --------  --------  --------  --------
Net income (loss)                   $   0.11  $   0.34  $  (0.51) $   0.60
                                    ========  ========  ========  ========
Weighted average shares outstanding   17,504    17,242    17,466    17,267
                                    ========  ========  ========  ========

Diluted earnings (loss) per common
 share:
Continuing operations               $   0.11  $   0.31  $  (0.51) $   0.55
Discontinued operations                    -         -         -         -
                                    --------  --------  --------  --------
Net income (loss)                   $   0.11  $   0.31  $  (0.51) $   0.55
                                    ========  ========  ========  ========
Weighted average shares outstanding   18,576    19,027    17,466    19,074
                                    ========  ========  ========  ========

Dividends declared per common share $   0.07  $   0.07  $   0.14  $   0.13




                          RESOURCE AMERICA, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands)
                                (unaudited)

                                                       Six Months Ended
                                                           March 31,
                                                    ----------------------
                                                       2008        2007
                                                    ----------  ----------
                                                                (restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                   $   (8,994) $   10,425
Adjustments to reconcile net (loss) income to net
 cash provided by
  (used in) operating activities, net of
   acquisitions:
  Impairment charge on collateralized debt
   obligation investments                                1,149           -
  Depreciation and amortization                          2,509       1,721
  Provision for credit losses                            4,220          45
  Minority interests                                     3,267       1,275
  Equity in losses (earnings) of unconsolidated
   entities                                              1,373      (8,939)
  Distributions from unconsolidated entities             8,658       7,852
  Loss on sales of loans                                18,530           -
  Gain on sales of assets                               (2,033)     (5,307)
  Deferred income tax benefit                              735      (3,603)
  Non-cash compensation on long-term incentive plans     2,388       1,316
  Non-cash compensation issued                              62       1,174
  Non-cash compensation received                           356      (1,396)
Decrease (increase) in commercial finance investments   31,876     (92,246)
Changes in operating assets and liabilities            (36,948)     (5,211)
                                                    ----------  ----------
Net cash provided by (used in) operating activities
 of continuing operations                               27,148     (92,894)
                                                    ----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                                    (5,549)     (1,494)
Payments received on real estate loans and real estate   8,104       8,401
Investments in real estate                              (4,074)    (10,163)
Purchase of investments                               (239,551)     (9,881)
Proceeds from sale of investments                        5,215       4,694
Principal payments received on loans                     6,126           -
Net cash paid for acquisitions                          (8,022)          -
Increase in other assets                                (3,795)     (1,775)
                                                    ----------  ----------
Net cash used in investing activities of continuing
 operations                                           (241,546)    (10,218)
                                                    ----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings                                 616,335     356,944
Principal payments on borrowings                      (385,314)   (262,651)
Minority interest contributions                            315           -
Minority interest distributions                         (1,243)       (968)
Dividends paid                                          (2,447)     (2,287)
Increase in restricted cash                            (16,229)     (8,969)
Proceeds from issuance of stock                            182         927
Purchase of treasury stock                                (237)          -
Tax benefit from the exercise of stock options               -       1,887
                                                    ----------  ----------
Net cash provided by financing activities of
 continuing operations                                 211,362      84,883
                                                    ----------  ----------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities                                         3         (49)
Financing activities                                         -      (1,145)
                                                    ----------  ----------
Net cash provided by (used in) discontinued
 operations                                                  3      (1,194)
                                                    ----------  ----------
Decrease in cash                                        (3,033)    (19,423)
Cash at beginning of period                             14,624      37,622
                                                    ----------  ----------
Cash at end of period                               $   11,591  $   18,199
                                                    ==========  ==========

This press release contains supplemental financial information determined by methods other than in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP"). The Company's management uses this non-GAAP measure in its analysis of the exclusion of certain adjustments recorded in the Company's six months ended March 31, 2008. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results of the Company. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

SCHEDULE I

      RECONCILIATION OF GAAP INCOME (LOSS) FROM CONTINUING OPERATIONS
              TO ADJUSTED INCOME FROM CONTINUING OPERATIONS
                  (in thousands, except per share data)
                                (unaudited)

                                    Three Months Ended   Six Months Ended
                                        March 31,           March 31,
                                    ------------------- -------------------
                                      2008      2007      2008      2007
                                    --------  --------- --------  ---------
                                             (restated)          (restated)
Income (loss) from continuing
 operations - GAAP                  $  1,980  $   5,877 $ (8,985) $  10,481
Adjustments, net of tax:
  Resource residential start-up costs      -          -      349          -
  Impairment charge on CDO investments    84          -      735          -
  (Recovery) loss on sales of loans     (342)         -   11,390          -
  Partnership mark-to-market impact      651          -    4,920          -
  RCC incentive stock                    950          -      950          -
  Tax rate normalization               1,134          -        -          -
                                    --------  --------- --------  ---------
Adjusted income from continuing
 operations (1)                     $  4,457  $   5,877 $  9,359  $  10,481
                                    ========  ========= ========  =========

Weighted average diluted shares
 outstanding (2)                      18,576     19,027   18,608     19,074
                                    ========  ========= ========  =========

Adjusted income from continuing
 operations per share-diluted       $   0.24  $    0.31 $   0.50  $    0.55
                                    ========  ========= ========  =========

(1) During the six months ended March 31, 2008, in connection with
    substantial volatility and reduction in liquidity in the global credit
    markets, the Company recorded several significant adjustments.  For
    comparability purposes, the Company is presenting adjusted income from
    continuing operations because it facilitates the evaluation of the
    Company without the effect of these adjustments.  Adjusted income from
    continuing operations should not be considered as an alternative to
    income (loss) from continuing operations (computed in accordance
    with GAAP).  Instead, adjusted income from continuing operations
    should be reviewed in connection with income (loss) from continuing
    operations in the Company's consolidated financial statements, to help
    analyze how the Company's business is performing.

(2) Includes 1,142,000 diluted shares not used in the calculation of loss
    from continuing operations per share-diluted for the six months ended
    March 31, 2008.




SCHEDULE II

 RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF
    CONTINUING OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES OF
                    CONTINUING OPERATIONS AS ADJUSTED

Net cash provided by operating activities of continuing operations as
adjusted was $35.2 million for the six months ended March 31, 2008, an
increase of $24.3 million as compared to net cash provided by operating
activities of $10.8 million in the six months ended March 31, 2007.  The
following reconciles net cash provided by (used in) operating activities of
continuing operations to net cash provided by operating activities of
continuing operations as adjusted (in thousands):

                                                      Six Months Ended
                                                          March 31,
                                                  ------------------------
                                                      2008         2007
                                                  -----------  -----------
                                                               (restated)
Net cash provided by (used in) operating
 activities of continuing operations              $    27,148  $   (92,894)

Adjustments:
  (Decrease) increase in commercial finance
   investments                                        (31,876)      92,246
  Changes in operating assets and liabilities          36,948        5,211
  Proceeds from sales of investments                    2,933        6,268
                                                  -----------  -----------
    Net cash provided by operating activities of
     continuing operations as adjusted            $    35,153  $    10,831
                                                  ===========  ===========



SCHEDULE III

    RECONCILIATION OF GAAP STOCKHOLDERS' EQUITY TO ADJUSTED BOOK VALUE
                  (in thousands, except per share data)
                                (unaudited)



                                                                  As of
                                                             March 31, 2008
                                                              -------------
Stockholders' equity - GAAP                                   $     156,141
Add:
  Unrealized losses - NetBank interest rate swap contracts            5,480
  Appreciation in investment in Resource Capital Corp                 1,958
                                                              -------------
Adjusted book value                                           $     163,579
                                                              =============

Shares outstanding                                            $      17,525
                                                              =============

Adjusted book value per share                                 $        9.33
                                                              =============




SCHEDULE IV

                    RESTATED CONSOLIDATED BALANCE SHEET
                   (in thousands, except per share data)
                                (unaudited)

The following sets forth the effect of the restatement on the applicable
line items in the Company's consolidated balance sheet as of September 30,
2007 (unaudited):


                                                     Restatement
                                             2007    Adjustments    2007
                                           ---------  ---------  ---------
                                          (as filed)             (restated)

ASSETS
  Cash                                     $  14,624  $       -  $  14,624
  Restricted cash                             19,340                19,340
  Receivables                                 21,255                21,255
  Receivables from managed entities           20,177                20,177
  Loans sold, not settled                    152,706               152,706
  Loans held for investment, net             285,928               285,928
  Investments in commercial finance, net     243,391               243,391
  Investments in real estate, net             49,041                49,041
  Investment securities available-for-sale    51,777                51,777
  Investments in unconsolidated entities      36,777      2,565     39,342
  Property and equipment, net                 12,286                12,286
  Deferred income taxes                       30,995     (1,118)    29,877
  Goodwill                                     7,941                 7,941
  Intangible assets, net                       4,774                 4,774
  Other assets                                18,664                18,664
                                           ---------  ---------  ---------
    Total assets                           $ 969,676  $   1,447  $ 971,123
                                           =========  =========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Accounts payable, accrued expenses and
   other liabilities                       $  60,546  $       -  $  60,546
  Payables to managed entities                 1,163                 1,163
  Borrowings                                 706,372               706,372
  Deferred income tax liabilities             11,124                11,124
  Minority interests                           6,571                 6,571
                                           ---------  ---------  ---------
    Total liabilities                        785,776          -    785,776
                                           ---------  ---------  ---------

  Commitments and contingencies                    -          -          -

Stockholders' equity:
  Preferred stock, $1.00 par value,
   1,000,000 shares authorized; none
   outstanding                                     -          -          -
  Common stock, $.01 par value, 49,000,000
   shares authorized; 26,986,975 shares
   issued (including unvested restricted
   stock of 199,708)                             268                   268
  Additional paid-in capital                 264,747               264,747
  Retained earnings                           25,724      1,447     27,171
  Treasury stock, at cost; 9,369,960
   shares                                   (102,014)             (102,014)
  ESOP loan receivable                          (223)                 (223)
  Accumulated other comprehensive loss        (4,602)               (4,602)
                                           ---------  ---------  ---------
    Total stockholders' equity               183,900      1,447    185,347
                                           ---------  ---------  ---------
                                           $ 969,676  $   1,447  $ 971,123
                                           =========  =========  =========




SCHEDULE V

              RESTATED CONSOLIDATED STATEMENT OF OPERATIONS
                  (in thousands, except per share data)
                                (unaudited)

 The following sets forth the effect of the restatement on the applicable
 line items in the Company's consolidated statement of operations for the
                    three months ended March 31, 2007:

                                                     Restatement
                                             2007    Adjustments    2007
                                           ---------  ---------- ---------
                                          (as filed)             (restated)
REVENUES
Commercial finance                         $   8,564  $        - $   8,564
Financial fund management                     16,030         774    16,804
Real estate                                    7,008                 7,008
                                           ---------  ---------- ---------
                                              31,602         774    32,376
COSTS AND EXPENSES
Commercial finance                             4,560                 4,560
Financial fund management                      5,401                 5,401
Real estate                                    3,195                 3,195
General and administrative                     2,754                 2,754
Depreciation and amortization                    719                   719
                                           ---------  ---------- ---------
                                              16,629           -    16,629
                                           ---------  ---------- ---------
OPERATING INCOME                              14,973         774    15,747

Interest expense                              (7,694)               (7,694)
Minority interests                              (715)                 (715)
Other income, net                              1,811                 1,811
                                           ---------  ---------- ---------
                                              (6,598)          -    (6,598)
                                           ---------  ---------- ---------
Income from continuing operations before
 taxes                                         8,375         774     9,149
Provision for income taxes                     2,955         317     3,272
                                           ---------  ---------- ---------
Income from continuing operations              5,420         457     5,877
Loss from discontinued operations, net of
 tax                                             (37)          -       (37)
                                           ---------  ---------- ---------
NET INCOME                                 $   5,383  $      457 $   5,840
                                           =========  ========== =========
Basic earnings per common share:
Continuing operations                      $    0.31  $     0.03 $    0.34
Discontinued operations                            -           -         -
                                           ---------  ---------- ---------
Net income                                 $    0.31  $     0.03 $    0.34
                                           =========  ========== =========
Weighted average shares outstanding           17,242      17,242    17,242
                                           =========  ========== =========
Diluted earnings per common share:
Continuing operations                      $    0.29  $     0.02 $    0.31
Discontinued operations                            -           -         -
                                           ---------  ---------- ---------
Net income                                 $    0.29  $     0.02 $    0.31
                                           =========  ========== =========
Weighted average shares outstanding           19,027      19,027    19,027
                                           =========  ========== =========

Dividends declared per common share        $    0.07             $    0.07





SCHEDULE VI

              RESTATED CONSOLIDATED STATEMENT OF OPERATIONS
                  (in thousands, except per share data)
                                (unaudited)

The following sets forth the effect of the restatement on the applicable
line items in the Company's consolidated statement of operations for the
six months ended March 31, 2007:

                                                     Restatement
                                             2007    Adjustments    2007
                                           ---------  ---------- ---------
                                          (as filed)             (restated)
REVENUES
Commercial finance                         $  15,653  $        - $  15,653
Financial fund management                     28,417       1,013    29,430
Real estate                                   11,572                11,572
                                           ---------  ---------- ---------
                                              55,642       1,013    56,655
COSTS AND EXPENSES
Commercial finance                             8,191                 8,191
Financial fund management                      9,953                 9,953
Real estate                                    6,208                 6,208
General and administrative                     5,543                 5,543
Provision for credit losses                       45                    45
Depreciation and amortization                  1,428                 1,428
                                           ---------  ---------- ---------
                                              31,368           -    31,368
                                           ---------  ---------- ---------
OPERATING INCOME                              24,274       1,013    25,287

Interest expense                             (12,285)              (12,285)
Minority interests                            (1,275)               (1,275)
Other income, net                              4,339                 4,339
                                           ---------  ---------- ---------
                                              (9,221)          -    (9,221)
                                           ---------  ---------- ---------
Income from continuing operations before
 taxes                                        15,053       1,013    16,066
Provision for income taxes                     5,165         420     5,585
                                           ---------  ---------- ---------
Income from continuing operations              9,888         593    10,481
Loss from discontinued operations, net of
 tax                                             (56)          -       (56)
                                           ---------  ---------- ---------
NET INCOME                                 $   9,832  $      593 $  10,425
                                           =========  ========== =========
Basic  earnings per common share:
Continuing operations                      $    0.57  $     0.03 $    0.60
Discontinued operations                            -           -         -
                                           ---------  ---------- ---------
Net income                                 $    0.57  $     0.03 $    0.60
                                           =========  ========== =========
Weighted average shares outstanding           17,267      17,267    17,267
                                           =========  ========== =========
Diluted earnings per common share:
Continuing operations                      $    0.52  $     0.03 $    0.55
Discontinued operations                            -           -         -
                                           ---------  ---------- ---------
Net income                                 $    0.52  $     0.03 $    0.55
                                           =========  ========== =========
Weighted average shares outstanding           19,074      19,074    19,074
                                           =========  ========== =========

Dividends declared per common share        $    0.13             $    0.13




SCHEDULE VII

              RESTATED CONSOLIDATED STATEMENT OF CASH FLOWS
                  (in thousands, except per share data)
                                (unaudited)

The following sets forth the effect of the restatement on the applicable
line items in the Company's consolidated statement of cash flows for the
six months ended March 31, 2007:

                                                     Restatement
                                             2007    Adjustments    2007
                                           ---------  ---------- ---------
                                          (as filed)             (restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                 $   9,832  $     593  $  10,425
Adjustments to reconcile net income to net
 cash used in operating activities, net of
 acquisitions:
  Depreciation and amortization                1,721                 1,721
  Provision for credit losses                      -         45         45
  Equity in earnings of unconsolidated
   entities                                   (7,926)    (1,013)    (8,939)
  Minority interests                           1,275                 1,275
  Distributions from unconsolidated
   entities                                    7,852                 7,852
  Gains on sales of assets                    (5,307)               (5,307)
  Deferred income tax benefit                 (4,023)       420     (3,603)
  Non-cash compensation on long-term
   incentive plans                             1,316                 1,316
  Non-cash compensation issued                 1,174                 1,174
  Non-cash compensation received              (1,396)               (1,396)
Decrease in commercial finance investments   (92,246)              (92,246)
Changes in operating assets and
 liabilities                                  (5,166)       (45)    (5,211)
                                           ---------  ---------- ---------
Net cash used in operating activities of
 continuing operations                       (92,894) $       -    (92,894)
                                           ---------  ========== ---------

Contact Information

  • CONTACT:
    STEVEN KESSLER
    CHIEF FINANCIAL OFFICER
    RESOURCE AMERICA, INC.
    ONE CRESCENT DRIVE, SUITE 203
    PHILADELPHIA, PA 19112
    215/546-5005
    215/546-4785 (fax)