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. (
-- 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)