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Form 8-K RESOURCE AMERICA, INC. For: Aug 06

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August 7, 2015 6:04 AM EDT




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 6, 2015

Resource America, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
0-4408
 
72-0654145
(State or other jurisdiction
 
(Commission
 
(IRS Employer
of incorporation)
 
File Number)
 
Identification No.)
 
 
 
 
 
One Crescent Drive, Suite 203,
Navy Yard Corporate Center
Philadelphia, PA
 
 
 
19112
(Address of principal executive
offices)
 
 
 
(Zip Code)

Registrant's telephone number, including area code: 215-546-5005

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02     Results of Operations and Financial Condition

On August 6, 2015, Resource America, Inc. (the "Company") issued a press release regarding its operating results for the three and six months ended June 30, 2015. A copy of this press release is furnished with this report as an exhibit. The information in this Current Report, including the exhibit hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.


Item 9.01     Financial Statements and Exhibits
 
(d)
 
The exhibit furnished as part of this report is identified in the Exhibit Index immediately following the signature page of this report. Such Exhibit Index is incorporated herein by this reference.




SIGNATURE(S)

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 hereunto duly authorized.
 
 
 
 
Resource America, Inc.
 
 
 
 
 
Date:
August 6, 2015
 
By:
/s/ Thomas C. Elliott
 
 
 
 
Thomas C. Elliott
 
 
 
 
Senior Vice President and Chief Financial Officer










Exhibit Index
 
Exhibit No.
 
Description
 
 
Ex 99.1
 
Press Release
 








Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT:
THOMAS C. ELLIOTT
 
 
CHIEF FINANCIAL OFFICER
 
 
RESOURCE AMERICA, INC.
 
 
ONE CRESCENT DRIVE, SUITE 203
 
 
PHILADELPHIA, PA 19112
 
RESOURCE AMERICA, INC.
REPORTS OPERATING RESULTS
FOR THE SECOND QUARTER ENDED JUNE 30, 2015
Philadelphia, PA - August 6, 2015 - Resource America, Inc. (NASDAQ: REXI)
Second Quarter 2015 Highlights
•Adjusted net income attributable to common shareholders of $3.4 million (see Schedule I)
•Increased gross assets under management by 15% to $21.8 billion since June 30, 2014
•Net assets under management increased 20% to $10.6 billion
•Book value per common share of $7.28
•Repurchased 302,767 shares at an average price of $8.40
Second Quarter 2015 Results
Resource America, Inc. (NASDAQ: REXI) (the "Company") reported adjusted net income attributable to common shareholders, a non-GAAP measure, of $3.4 million, or $0.15 per common share-diluted, and $5.7 million, or $0.25 per common share-diluted, for the three and six months ended June 30, 2015 as compared to adjusted net income attributable to common shareholders of $4.6 million, or $0.21 per common share-diluted, and $6.9 million, or $0.32 per common share-diluted, for the three and six months ended June 30, 2014, respectively. A reconciliation of the Company's reported GAAP net income (loss) attributable to common shareholders to adjusted net income attributable to common shareholders, a non-GAAP measure, is included as Schedule I to this release.
The Company reported a GAAP net loss attributable to common shareholders of $1.7 million, or $0.07 per common share-diluted, and $1.3 million, or $0.06 per common share-diluted, for the three and six months ended June 30, 2015 as compared to GAAP net income attributable to common shareholders of $2.7 million, or $0.12 per common share-diluted, and $3.7 million, or $0.17 per common share-diluted, for the three and six months ended June 30, 2014.
Included in GAAP net loss attributable to common shareholders for the second fiscal quarter and six months ended June 30, 2015 is a $4.3 million impairment related to the sale of a 9% interest in CVC Credit Partners, L.P. (“CCP”) to the Company's joint venture partner, pursuant to an option provided in connection with the sale of Apidos Capital Management in April 2012.  The Company received $4.9 million from the sale after quarter end and continues to own 24% of the joint venture. 
Assets Under Management
The following table details the Company's gross assets under management by operating segment, which increased by $2.9 billion (15%) from June 30, 2014 to 2015 (in billions):
 
June 30,
 
2015
 
2014
Financial fund management
$
17.3

 
$
15.5

Real estate
3.8

 
2.8

Commercial finance
0.7

 
0.6

 
$
21.8

 
$
18.9

 
 
 
 
Net assets under management (1)
$
10.6

 
$
8.8

 
(1)
Net assets under management represents the proportionate share of assets managed by the Company after reflecting joint venture arrangements.    
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 year ended December 31, 2014.





Highlights for the Second Quarter Ended June 30, 2015 and Recent Developments

REAL ESTATE ASSET MANAGEMENT:
Equity Asset Management
Resource Real Estate Opportunity REIT, Inc. ("Opportunity REIT I"), a public non-traded real estate investment trust ("REIT") managed by the Company which specializes in acquiring and managing distressed real estate assets, had the following highlights:
•
Increased total assets to $1.1 billion at June 30, 2015, an increase of 29%, from $843.0 million at June 30, 2014.
•
Acquired $183.0 million of assets, placed or assumed financing of $94.8 million and disposed of $13.5 million of multifamily assets during the three months ended June 30, 2015.
Resource Real Estate Opportunity REIT II, Inc. ("Opportunity REIT II"), a public non-traded REIT managed by the Company that specializes in acquiring multifamily rental properties and selected loans, is offering up to $1.0 billion in common stock. Opportunity REIT II had the following highlights:
•
Raised a record $96.6 million during the three months ended June 30, 2015 and a total of $266.4 million since inception.
•
Acquired $54.7 million of assets and placed $20.2 million of financing during the three months ended June 30, 2015.
Creation of Real Estate Joint Venture: On June 25, 2015, the Company formed Pearlmark Real Estate, L.L.C, a joint venture between the Company and the principals of Pearlmark Real Estate Partners, L.L.C. (“Pearlmark Partners”), focusing on the management of institutional real estate investments. Based in Chicago, the Pearlmark team has successfully committed $4.5 billion of equity capital from a varied investor base that includes Fortune 500 companies to public and private pension funds to high net worth families.
Debt Asset Management
Resource Capital Corp. ("RSO"), a publicly-traded REIT managed by the Company which focuses on commercial real estate assets, originated $184.5 million in new commercial real estate loans during the three months ended June 30, 2015.
The following additional highlights contributed to our real estate asset management operations:
•
The Company's real estate operating segment increased its gross assets under management at June 30, 2015 to $3.8 billion, an increase of $1.0 billion, or 35%, from June 30, 2014.
•
Real estate revenues increased 57% and 43% to $21.1 million and $38.1 million, for the three and six months ended June 30, 2015, respectively, as compared to $13.4 million and $26.7 million for the three and six months ended June 30, 2014.
•
Resource Real Estate Management, Inc., the Company's property management subsidiary managed 19,321 apartment units as of June 30, 2015 as compared to 19,636 units as of June 30, 2014.
FINANCIAL FUND MANAGEMENT:
Credit Asset Management
CVC Credit Partners, L.P. ("CCP"), the Company's global joint venture created in April 2012, closed Apidos CLO XXI, Ltd. and CVC Cordatus Loan Fund V Limited. CCP has now closed CLOs issuing notes with a total par value of $7.8 billion. At June 30, 2015, the Company had a 33% interest in this joint venture.
On July 2, 2015, CVC Capital Partners SICAV-FIS, S.A., the Company’s joint venture partner, exercised its option to buy down the Company's interest by 9% for $4.9 million.
The following additional highlight contributed to our financial fund asset management operations:
•
The Company's financial fund management operating segment increased its gross assets under management at June 30, 2015 to $17.3 billion, an increase of $1.8 billion, or 12%, from June 30, 2014.





CORPORATE/OTHER:
Share Repurchases
•
The Company repurchased 302,767 of its shares during the second quarter ended June 30, 2015 at an average price of $8.40 per share.
Dividends
•
The Company's Board of Directors authorized a cash dividend of $0.06 per share on the Company’s common stock which was paid on July 31, 2015 to holders of record as of the close of business on July 17, 2015.
•
RSO's Board of Directors declared a cash dividend of $0.16 per common share for its three months ended June 30, 2015.
Other
•
On August 3, 2015, RSO’s Board of Directors approved a one-for-four reverse stock split which is expected to be effective on August 31, 2015.
•
On August 3, 2015, RSO's Board of Directors also authorized RSO to repurchase up to $50 million of its outstanding equity and debt securities.

Resource America, Inc. is a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities for its own account, for its joint ventures, and for outside investors in the real estate, financial fund management and commercial finance sectors.
For more information, please visit our website at www.resourceamerica.com or contact investor relations at [email protected].
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 and its other reports filed with the Securities and Exchange Commission, or SEC. 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 and in other of its public filings with the SEC. The Company undertakes no obligation to update or revise any forward-looking statements to reflect new or changing information or events except as may be required by law.
A registration statement relating to securities offered by Opportunity REIT II was declared effective by the SEC on February 6, 2014.  A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
The remainder of this release contains the Company's unaudited consolidated balance sheets, consolidated statements of operations, consolidating statements of operations and reconciliation of GAAP net income (loss) attributable to common shareholders to adjusted net income attributable to common shareholders.





RESOURCE AMERICA, INC
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
June 30,
2015
 
December 31,
2014
 
(unaudited)
 
 
ASSETS
 
 
 
Cash
$
23,760

 
$
27,542

Restricted cash
886

 
725

Receivables
1,061

 
636

Loans and receivables from managed entities and related parties, net
26,520

 
30,303

Investments in real estate, net
17,040

 
17,097

Investment securities, at fair value
10,870

 
9,540

Investments in unconsolidated loan manager
36,526

 
39,655

Investments in unconsolidated entities
16,884

 
13,089

Assets of consolidated variable interest entity ("VIE")-RSO:
 
 
 
     Cash and cash equivalents (including restricted cash)
190,765

 
202,043

     Investments, at fair value
286,108

 
296,506

     Loans
2,154,007

 
2,038,435

     Investments in real estate and unconsolidated entities
56,330

 
60,007

Other assets
87,014

 
131,481

Total assets of consolidated VIE-RSO
2,774,224

 
2,728,472

 
 
 
 
Property and equipment, net
5,622

 
5,063

Deferred tax assets, net
20,920

 
23,304

Other assets
8,392

 
5,416

Total assets
$
2,942,705

 
$
2,900,842

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Liabilities:
 
 
 
Accrued expenses and other liabilities
$
21,241

 
$
22,279

Payables to managed entities and related parties
4,748

 
3,015

Borrowings
21,029

 
20,412

Liabilities of consolidated VIE-RSO:
 
 
 
     Borrowings
1,827,793

 
1,717,132

     Other liabilities
51,640

 
57,561

Total liabilities of consolidated VIE-RSO
1,879,433

 
1,774,693

Total liabilities
1,926,451

 
1,820,399

 
 
 
 
Commitments and contingencies


 


 
 
 
 
Equity:
 
 
 
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none outstanding
—

 
—

Common stock, $.01 par value, 49,000,000 shares authorized;
34,958,477 and 34,489,568 shares issued (including nonvested restricted stock of 1,143,547 and 833,082), respectively
338

 
335

Additional paid-in capital
309,736

 
308,134

Accumulated deficit
(27,643
)
 
(23,663
)
Treasury stock, at cost; 12,293,346 and 11,764,417 shares, respectively
(124,736
)
 
(120,182
)
Accumulated other comprehensive loss
(915
)
 
(1,030
)
Total stockholders’ equity
156,780

 
163,594

Noncontrolling interests
376

 
306

Noncontrolling interests attributable to consolidated VIE-RSO
859,098

 
916,543

Total equity
1,016,254

 
1,080,443

Total liabilities and equity
$
2,942,705

 
$
2,900,842






RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
REVENUES:
 
 
 
 
 
 
 
Real estate (includes revenues of $2,751, $2,302, $5,503 and $4,985 related to RSO)
$
21,116

 
$
13,448

 
$
38,082

 
$
26,723

Financial fund management (includes revenues of $617, $753, $1,233 and $960 related to RSO)
4,781

 
8,141

 
9,918

 
15,216

Commercial finance (includes no revenues related to RSO)
2

 
(42
)
 
—

 
(141
)
 
25,899

 
21,547

 
48,000

 
41,798

Revenues from consolidated VIE-RSO
24,201

 
23,828

 
48,562

 
49,073

Elimination of consolidated VIE-RSO revenues attributed to operating segments
(4,104
)
 
(3,040
)
 
(8,377
)
 
(5,920
)
Total revenues
45,996

 
42,335

 
88,185

 
84,951

COSTS AND EXPENSES:
 
 
 
 
 
 
 
Real estate
12,082

 
9,105

 
23,581

 
17,980

Financial fund management
3,154

 
2,779

 
6,144

 
7,168

Commercial finance
458

 
123

 
1,037

 
226

General and administrative
4,181

 
2,729

 
7,478

 
5,883

Provision for credit losses
276

 
1,575

 
678

 
2,783

Depreciation and amortization
515

 
465

 
972

 
916

 
20,666

 
16,776

 
39,890

 
34,956

Expenses from consolidated VIE-RSO
54,535

 
16,853

 
75,595

 
28,138

Elimination of consolidated VIE-RSO expenses attributed to
operating segments
(3,368
)
 
(3,053
)
 
(6,736
)
 
(5,872
)
Total expenses
71,833

 
30,576

 
108,749

 
57,222

OPERATING INCOME (LOSS)
(25,837
)
 
11,759

 
(20,564
)
 
27,729

 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Gain (loss) on sale of investment securities, net
—

 
370

 
—

 
370

Other-than-temporary impairment on investments
(4,346
)
 
—

 
(4,346
)
 
—

Interest expense
(455
)
 
(497
)
 
(876
)
 
(980
)
Other income (expense), net
231

 
18

 
67

 
183

 
(4,570
)
 
(109
)
 
(5,155
)
 
(427
)
Other income (expense), net, from consolidated VIE-RSO
10,537

 
10,281

 
27,053

 
13,797

Elimination of consolidated VIE-RSO other income, net attributed to operating segments
4

 
11

 
15

 
29

 
5,971

 
10,183

 
21,913

 
13,399

Income (loss) from continuing operations before taxes
(19,866
)
 
21,942

 
1,349

 
41,128

Income tax provision (benefit)
857

 
2,181

 
2,101

 
3,250

Income tax provision (benefit) -RSO
2,918

 
(446
)
 
4,765

 
(430
)
Net income (loss)
(23,641
)
 
20,207

 
(5,517
)
 
38,308

Net (income) loss attributable to noncontrolling interests
(63
)
 
(84
)
 
(55
)
 
(44
)
Net (income) loss attributable to noncontrolling interests of consolidated VIE-RSO
22,052

 
(17,405
)
 
4,257

 
(34,556
)
Net income (loss) attributable to common shareholders
$
(1,652
)
 
$
2,718

 
$
(1,315
)
 
$
3,708

 
 
 
 
 
 
 
 
Basic earnings (loss) per share:
 
 
 
 
 
 
 
Net income (loss)
$
(0.07
)
 
$
0.13

 
$
(0.06
)
 
$
0.18

Weighted average shares outstanding
22,867

 
20,386

 
22,915

 
20,320

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share:
 
 
 
 
 
 
 
Net income (loss)
$
(0.07
)
 
$
0.12

 
(0.06
)
 
$
0.17

Weighted average shares outstanding
22,867

 
22,032

 
22,915

 
22,031





RESOURCE AMERICA, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)
(unaudited)

The following table presents the consolidating statement of operations for the three months ended June 30, 2015:
 
RAI
 
RSO
 
Eliminations
 
Consolidated
REVENUES:
 
 
 
 
 
 
 
Real estate
$
21,116

 
$
—

 
$
—

 
$
21,116

Financial fund management
4,781

 
—

 
—

 
4,781

Commercial finance
2

 
—

 
—

 
2

 
25,899

 
—

 
—

 
25,899

Revenues from consolidated VIE-RSO
—

 
24,201

 
—

 
24,201

Elimination of consolidated VIE-RSO revenues attributed to operating segments
—

 
—

 
(4,104
)
 
(4,104
)
Total revenues
25,899

 
24,201

 
(4,104
)
 
45,996

COSTS AND EXPENSES:
 

 
 

 
 
 
 

Real estate
12,082

 
—

 
—

 
12,082

Financial fund management
3,154

 
—

 
—

 
3,154

Commercial finance
458

 
—

 
—

 
458

General and administrative
4,181

 
—

 
—

 
4,181

Provision for credit losses
276

 
—

 
—

 
276

Depreciation and amortization
515

 
—

 
—

 
515

 
20,666

 
—

 
—

 
20,666

Expenses of consolidated VIE-RSO
—

 
54,535

 
—

 
54,535

Elimination of consolidated VIE-RSO expenses attributed to operating segments
—

 
—

 
(3,368
)
 
(3,368
)
Total expenses
20,666

 
54,535

 
(3,368
)
 
71,833

OPERATING INCOME (LOSS)
5,233

 
(30,334
)
 
(736
)
 
(25,837
)
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 

 
 

 
 
 
 

Other-than-temporary impairment on investment
(4,346
)
 
—

 
—

 
(4,346
)
Interest expense
(455
)
 
—

 
—

 
(455
)
Other income (expense), net
689

 
—

 
(458
)
 
231

Other income (expense), net, from consolidated VIE-RSO
—

 
10,537

 
—

 
10,537

Elimination of consolidated VIE-RSO other income, net
—

 
—

 
4

 
4

Total other income (expense)
(4,112
)
 
10,537

 
(454
)
 
5,971

Income (loss) from continuing operations before taxes
1,121

 
(19,797
)
 
(1,190
)
 
(19,866
)
Income tax provision (benefit)
857

 
2,918

 
—

 
3,775

Net income (loss)
264

 
(22,715
)
 
(1,190
)
 
(23,641
)
Net (income) loss attributable to noncontrolling interests
(63
)
 
—

 
—

 
(63
)
Net (income) loss attributable to noncontrolling interests-RSO
—

 
(8,296
)
 
30,348

 
22,052

Net income (loss) attributable to common shareholders
$
201

 
$
(31,011
)
 
$
29,158

 
$
(1,652
)




RESOURCE AMERICA, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)
(unaudited)

The following table presents the consolidating statement of operations for the three months ended June 30, 2014:
 
RAI
 
RSO
 
Eliminations
 
Consolidated
REVENUES:
 
 
 
 
 
 
 
Real estate
$
13,448

 
$
—

 
$
—

 
$
13,448

Financial fund management
8,141

 
—

 
—

 
8,141

Commercial finance
(42
)
 
—

 
—

 
(42
)
 
21,547

 
—

 
—

 
21,547

Revenues from consolidated VIE-RSO
—

 
23,828

 
—

 
23,828

Elimination of consolidated VIE-RSO revenues attributed to operating segments
—

 
—

 
(3,040
)
 
(3,040
)
Total revenues
21,547

 
23,828

 
(3,040
)
 
42,335

COSTS AND EXPENSES:
 
 
 
 
 
 
 
Real estate
9,105

 
—

 
—

 
9,105

Financial fund management
2,779

 
—

 
—

 
2,779

Commercial finance
123

 
—

 
—

 
123

General and administrative
2,729

 
—

 
—

 
2,729

Provision for credit losses
1,575

 
—

 
—

 
1,575

Depreciation and amortization
465

 
—

 
—

 
465

 
16,776

 
—

 
—

 
16,776

Expenses of consolidated VIE-RSO
—

 
16,853

 


 
16,853

Elimination of consolidated VIE-RSO expenses attributed to operating segments
—

 
—

 
(3,053
)
 
(3,053
)
Total expenses
16,776

 
16,853

 
(3,053
)
 
30,576

OPERATING INCOME (LOSS)
4,771

 
6,975

 
13

 
11,759

 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Gain (loss) on sale of investment securities, net
370

 
—

 
—

 
370

Interest expense
(497
)
 
—

 
—

 
(497
)
Other income (expense), net
590

 
—

 
(572
)
 
18

Other income (expense), net, from consolidated VIE-RSO
—

 
10,281

 
—

 
10,281

Elimination of consolidated VIE-RSO other income, net
—

 
—

 
11

 
11

Total other income (expense)
463

 
10,281

 
(561
)
 
10,183

Income (loss) from continuing operations before taxes
5,234

 
17,256

 
(548
)
 
21,942

Income tax provision (benefit)
2,181

 
(446
)
 
—

 
1,735

Net income (loss)
3,053

 
17,702

 
(548
)
 
20,207

Income (loss) from continuing operations before taxes
(84
)
 
—

 
—

 
(84
)
Net (income) loss attributable to noncontrolling interests-RSO
—

 
(3,025
)
 
(14,380
)
 
(17,405
)
Net income (loss) attributable to common shareholders
$
2,969

 
$
14,677

 
$
(14,928
)
 
$
2,718







RESOURCE AMERICA, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)
(unaudited)

The following table presents the consolidating statement of operations for the six months ended June 30, 2015:
 
RAI
 
RSO
 
Eliminations
 
Consolidated
REVENUES:
 
 
 
 
 
 
 
Real estate
$
38,082

 
$
—

 
$
—

 
$
38,082

Financial fund management
9,918

 
—

 
—

 
9,918

Commercial finance
—

 
—

 
—

 
—

 
48,000

 
—

 
—

 
48,000

Revenues from consolidated VIE-RSO
—

 
48,562

 
—

 
48,562

Elimination of consolidated VIE-RSO revenues attributed to operating segments
—

 
—

 
(8,377
)
 
(8,377
)
Total revenues
48,000

 
48,562

 
(8,377
)
 
88,185

COSTS AND EXPENSES:
 
 
 
 
 
 
 
Real estate
23,581

 
—

 
—

 
23,581

Financial fund management
6,144

 
—

 
—

 
6,144

Commercial finance
1,037

 
—

 
—

 
1,037

General and administrative
7,478

 
—

 
—

 
7,478

Provision for credit losses
678

 
—

 
—

 
678

Depreciation and amortization
972

 
—

 
—

 
972

 
39,890

 
—

 
—

 
39,890

Expenses of consolidated VIE-RSO
—

 
75,595

 
—

 
75,595

Elimination of consolidated VIE-RSO expenses attributed to operating segments
—

 
—

 
(6,736
)
 
(6,736
)
Total expenses
39,890

 
75,595

 
(6,736
)
 
108,749

OPERATING INCOME (LOSS)
8,110

 
(27,033
)
 
(1,641
)
 
(20,564
)
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Other-than-temporary impairment on investments
(4,346
)
 
—

 
—

 
(4,346
)
Interest expense
(876
)
 
—

 
—

 
(876
)
Other income (expense), net
1,003

 
—

 
(936
)
 
67

Other income (expense), net, from consolidated VIE-RSO
—

 
27,053

 
—

 
27,053

Elimination of consolidated VIE-RSO other income, net
—

 
—

 
15

 
15

Total other income (expense)
(4,219
)
 
27,053

 
(921
)
 
21,913

Income (loss) from continuing operations before taxes
3,891

 
20

 
(2,562
)
 
1,349

Income tax provision (benefit)
2,101

 
4,765

 
—

 
6,866

Net income (loss)
1,790

 
(4,745
)
 
(2,562
)
 
(5,517
)
Net (income) loss attributable to noncontrolling interests
(55
)
 
—

 
—

 
(55
)
Net (income) loss attributable to noncontrolling interests-RSO
—

 
(16,864
)
 
21,121

 
4,257

Net income (loss) attributable to common shareholders
$
1,735

 
$
(21,609
)
 
$
18,559

 
$
(1,315
)




RESOURCE AMERICA, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)
(unaudited)
    
The following table presents the consolidating statement of operations for the six months ended June 30, 2014:
 
RAI
 
RSO
 
Eliminations
 
Consolidated
REVENUES:
 
 
 
 
 
 
 
Real estate
$
26,723

 
$
—

 
$
—

 
$
26,723

Financial fund management
15,216

 
—

 
—

 
15,216

Commercial finance
(141
)
 
—

 
—

 
(141
)
 
41,798

 
—

 
—

 
41,798

Revenues from consolidated VIE-RSO
—

 
49,073

 
—

 
49,073

Elimination of consolidated VIE-RSO revenues attributed to operating segments
—

 
—

 
(5,920
)
 
(5,920
)
Total revenues
41,798

 
49,073

 
(5,920
)
 
84,951

COSTS AND EXPENSES:
 
 
 
 
 
 
 
Real estate
17,980

 
—

 
—

 
17,980

Financial fund management
7,168

 
—

 
—

 
7,168

Commercial finance
226

 
—

 
—

 
226

General and administrative
5,883

 
—

 
—

 
5,883

Provision for credit losses
2,783

 
—

 
—

 
2,783

Depreciation and amortization
916

 
—

 
—

 
916

 
34,956

 
—

 
—

 
34,956

Expenses of consolidated VIE-RSO
—

 
28,138

 
—

 
28,138

Elimination of consolidated VIE-RSO expenses attributed to operating segments
—

 
—

 
(5,872
)
 
(5,872
)
Total expenses
34,956

 
28,138

 
(5,872
)
 
57,222

OPERATING INCOME (LOSS)
6,842

 
20,935

 
(48
)
 
27,729

 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Gain (loss) on sale of investment securities, net
370

 
—

 
—

 
370

Interest expense
(980
)
 
—

 
—

 
(980
)
Other income (expense), net
1,327

 
—

 
(1,144
)
 
183

Other income (expense), net, from consolidated VIE-RSO
—

 
13,797

 
—

 
13,797

Elimination of consolidated VIE-RSO other income, net
—

 
—

 
29

 
29

Total other income (expense)
717

 
13,797

 
(1,115
)
 
13,399

Income (loss) from continuing operations before taxes
7,559

 
34,732

 
(1,163
)
 
41,128

Income tax provision (benefit)
3,250

 
(430
)
 
—

 
2,820

Net income (loss)
4,309

 
35,162

 
(1,163
)
 
38,308

Net (income) loss attributable to noncontrolling interests
(44
)
 
—

 
—

 
(44
)
Net (income) loss attributable to noncontrolling interests-RSO
—

 
(5,369
)
 
(29,187
)
 
(34,556
)
Net income (loss) attributable to common shareholders
$
4,265

 
$
29,793

 
$
(30,350
)
 
$
3,708






Schedule I


RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS TO
ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS (1) 
(in thousands, except per share data)
(unaudited)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Net income (loss) attributable to common shareholders - GAAP
$
(1,652
)
 
$
2,718

 
$
(1,315
)
 
$
3,708

 
 
 
 
 
 
 
 
Adjustments, net of tax:
 
 
 
 
 
 
 
Reduction of income, net of eliminations, attributable to consolidation of RSO
1,853

 
251

 
3,050

 
541

Impairment of investment in unconsolidated loan manager
2,485

 
—

 
2,589

 
—

Loss attributable to commercial finance
305

 
1,180

 
836

 
2,070

Deferred tax provision
377

 
466

 
528

 
627

Adjusted net income attributable to common shareholders
$
3,368

 
$
4,615

 
$
5,688

 
$
6,946

 
 
 
 
 
 
 
 
Adjusted weighted average diluted shares outstanding (2)
23,135

 
22,032

 
23,186

 
22,031

 
 
 
 
 
 
 
 
Adjusted net income attributable to common shareholders per
common per share-diluted
$
0.15

 
$
0.21

 
$
0.25

 
$
0.32

 
(1)
Adjusted net income attributable to common shareholders presents the Company's operations prior to the consolidation of RSO and without the effect of the impairment of investment in unconsolidated loan manager, its commercial finance operations and deferred tax provision. The Company believes that this provides useful information to investors since it allows investors to evaluate the Company's progress in both its real estate and financial fund management segments for the three and six months ended June 30, 2015 and 2014 separately from these items. Adjusted net income attributable to common shareholders should not be considered as an alternative to net income (loss) attributable to common shareholders (computed in accordance with GAAP). Instead, adjusted net income attributable to common shareholders should be reviewed in connection with net income (loss) attributable to common shareholders in the Company's consolidated financial statements to help analyze how the Company's business is performing.
(2)
Dilutive shares used in the calculation of adjusted income from continuing operations attributable to common shareholders per common share-diluted includes an additional 268,000 and 271,000 shares for the three and six months ended June 30, 2015, which were antidilutive for the periods and, as such, were not used in the calculation of GAAP loss from continuing operations attributable to common shareholders per common share-diluted.




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