RESOURCE AMERICA, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 5, 2013

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Exhibit 99.1


FOR IMMEDIATE RELEASE


CONTACT:
THOMAS C. ELLIOTT
 
 
CHIEF FINANCIAL OFFICER
 
 
RESOURCE AMERICA, INC.
 
 
ONE CRESCENT DRIVE, SUITE 203
 
 
PHILADELPHIA, PA 19112
 
 
(215) 546-5005; (215) 640-6357 (fax)
 

RESOURCE AMERICA, INC.
REPORTS OPERATING RESULTS
FOR THE FIRST FISCAL QUARTER ENDED DECEMBER 31, 2012

Philadelphia, PA, February 5, 2013 - Resource America, Inc. (NASDAQ: REXI) (the "Company”) reported adjusted income from continuing operations attributable to common shareholders, net of tax, a non-GAAP measure, of $1.4 million, or $0.06 per common share-diluted, for the first fiscal quarter ended December 31, 2012 as compared to an adjusted loss from continuing operations attributable to common shareholders, net of tax, of $2.6 million, or $0.13 per common share-diluted, for the first fiscal quarter ended December 31, 2011. A reconciliation of the Company's reported GAAP (loss) income from continuing operations before taxes to adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, a non-GAAP measure, is included as Schedule I to this release.

The Company reported a GAAP net loss attributable to common shareholders of $1.4 million, or $0.07 per common share-diluted, for the first fiscal quarter ended December 31, 2012 as compared to net income attributable to common shareholders of $185,000, or $0.01 per common share-diluted, for the first fiscal quarter ended December 31, 2011.

Jonathan Cohen, CEO and President, commented, “Resource America's first fiscal quarter that ended December 31, 2012 was a solid one that reflects our progress and makes us excited about our prospects.  Compared to just a year ago, our assets under management have increased by $2.0 billion, from $13.3 billion to $15.3 billion.  In the first fiscal quarter, Resource Capital Corp and Resource Real Estate Opportunity REIT collectively raised over $90.0 million in new capital, which builds those companies and provides us with substantial future management fees.  CVC Credit Partners, our corporate credit joint venture, closed a $450.0 million CLO during the first fiscal quarter and another $400.0 million CLO in January 2013, growing that business which is a top performer in a booming industry.  Our balance sheet remains solid, with substantial liquidity and little debt, and we are generating positive adjusted operating cash earnings.  All of these are positive trends that we expect to build upon.”

Assets Under Management

The following table details the Company's assets under management by operating segment, which increased by $2.0 billion (15%) from December 31, 2011 to December 31, 2012:
 
December 31,
 
December 31,
 
2012
 
2011
Financial fund management
$
13.0

 
billion
 
$
11.1

 
billion
Real estate
1.8

 
billion
 
1.6

 
billion
Commercial finance
0.5

 
billion
 
0.6

 
billion
 
$
15.3

 
billion
 
$
13.3

 
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, 2012.




Highlights for the First Fiscal Quarter Ended December 31, 2012 and Recent Developments
REAL ESTATE:
•
Fundraising:
•
Resource Real Estate Opportunity REIT, Inc. (“RRE Opportunity REIT”) raised a record $42.2 million during the first fiscal quarter ended December 31, 2012. Through January 31, 2013, RRE Opportunity REIT has raised approximately $224.8 million in total equity capital.
•
Resource Capital Corp. (“RSO”) raised $49.8 million of common and preferred equity capital during the first fiscal quarter ended December 31, 2012.
•
First Fiscal Quarter RRE Activity:
•
In October 2012, RRE sold a $16.1 million multifamily property on behalf of a joint venture with an existing partner in which RSO is a member. In connection with this sale, the Company received a $114,000 disposition fee.
•
In November 2012, on behalf of one of RRE's sponsored limited partnerships, acquired a multifamily rental property for $4.6 million. In connection with this purchase, the Company received a $47,000 acquisition fee and will receive asset and property management fees in the future.
•
In December 2012, on behalf of RRE Opportunity REIT, acquired four multifamily rental apartment properties for $24.3 million. In connection with this purchase, the Company received $493,000 in acquisition fees and will receive asset and property management fees in the future.
•
In December 2012, in connection with an additional $8.0 million of capital funding for a property acquired in June 2012 on behalf of RRE Opportunity REIT, the Company received an additional acquisition fee totaling $159,000.
•
Property Management: Resource Real Estate Management, Inc., the Company's property management subsidiary, increased the apartment units it manages to 19,267 units at 66 properties as of December 31, 2012 from 15,204 units at 55 properties as of December 31, 2011.
•
Increased Assets Under Management: The Company's real estate operating segment increased its assets under management at December 31, 2012 to $1.8 billion, an increase of $185.0 million, or 11%, from December 31, 2011.
•
Increased Revenues: Real estate revenues increased 52% to $13.2 million for the first fiscal quarter ended December 31, 2012 as compared to $8.7 million for the first fiscal quarter ended December 31, 2011.
FINANCIAL FUND MANAGEMENT:
•
New Collateralized Loan Obligation (“CLO”): In November 2012, CVC Credit Partners, L.P., ("CCP"), the Company's global joint venture with CVC Capital Partners SICAV-FIS, S.A. ("CVC"), closed Apidos CLO X (par value $450.0 million). In January 2013, CCP closed Apidos CLO XI (par value $400.0 million). In connection with these CLOs, CCP expects to receive approximately $5.9 million annually in asset management fees in the future.
•
Increased Assets Under Management: The Company's financial fund management operating segment increased its assets under management at December 31, 2012 to $13.0 billion, an increase of $1.9 billion, or 17%, from December 31, 2011.
COMMERCIAL FINANCE:
•
Lease Origination/Platform Growth.  LEAF Commercial Capital, Inc. (“LEAF”), the Company's equipment leasing joint venture, continued to grow its lease origination and servicing operations during the first fiscal quarter ended December 31, 2012.
•
Lease and loan origination volume increased by 55% compared to the first fiscal quarter ended December 31, 2011; and
•
LEAF's commercial finance assets as of December 31, 2012 increased by 69% from December 31, 2011.
•
Increased Warehouse Capacity:  LEAF expanded and renewed for two years, its Guggenheim Securities arranged revolving warehouse line as of December 31, 2012. This revolving line of credit was expanded to $192.0 million with the other existing facility participants, Well Fargo Capital Finance and Natixis increasing their commitment to LEAF as well. This renewal increases LEAF's overall warehouse capacity to over $340.0 million and these lines of credit provide liquidity to fund lease originations prior to utilizing the term securitization market for permanent financing.






CORPORATE/OTHER:
•
Share Repurchase Plan: In August 2012, the Company's Board of Directors authorized the Company to repurchase up to 5% of the Company's outstanding common shares. Since August 2012, the Company has repurchased over 382,000 shares at an average price of $6.53 under this plan.
•
Senior Note Modification: In December 2012, the Company modified $10.0 million of outstanding senior notes to extend the maturity date to March 31, 2015.
•
Corporate Credit Facility Modifications: In October 2012, the Company extended the maturity of its existing $3.5 million revolving credit facility with Republic Bank from December 2013 to December 2014. In November 2012, the Company extended the maturity of its revolving credit facility with TD Bank from August 2013 to December 2014 and eliminated the 6% interest rate floor.
•
Dividends: The Company's Board of Directors authorized the payment on January 31, 2013 of a $0.03 cash dividend per share on the Company's common stock to holders of record as of the close of business on January 18, 2013. RSO declared a cash dividend of $0.20 per common share for its fourth fiscal quarter ended December 31, 2012.
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 and for outside investors in the real estate, financial fund management and commercial finance sectors as well as our joint ventures.
For more information, please visit our website at www.resourceamerica.com or contact investor relations at pkamdar@resourceamerica.com.
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. 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 Securities and Exchange Commission. 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 RRE Opportunity REIT was declared effective by the SEC on June 16, 2010.  A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 2005 Market Street, 15th 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 and consolidated statements of cash flows and reconciliation of GAAP (loss) income from continuing operations before taxes to adjusted income (loss) from continuing operations attributable to common shareholders, net of tax.




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

 
December 31,
2012
 
September 30,
2012
 
(unaudited)
 
 
ASSETS
 
 
 
Cash
$
11,899

 
$
19,393

Restricted cash
638

 
642

Receivables
468

 
3,554

Receivables from managed entities and related parties, net
38,685

 
41,051

Investments in real estate, net
18,041

 
19,149

Investment securities, at fair value
25,533

 
22,532

Investments in unconsolidated loan manager
37,221

 
36,356

Investments in unconsolidated entities
13,156

 
12,993

Property and equipment, net
2,590

 
2,732

Deferred tax assets, net
35,373

 
34,565

Other assets
6,726

 
3,776

Total assets
$
190,330

 
$
196,743

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 

 
 

Accrued expenses and other liabilities
$
21,556

 
$
23,042

Payables to managed entities and related parties
3,567

 
4,380

Borrowings
22,610

 
23,020

Total liabilities
47,733

 
50,442

 
 
 
 
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; 30,069,822
and 29,866,664 shares issued (including nonvested restricted stock of 604,353
and 403,195), respectively
295

 
294

Additional paid-in capital
286,048

 
285,844

Accumulated deficit
(27,137
)
 
(24,508
)
Treasury stock, at cost; 9,914,090 and 9,756,955 shares, respectively
(103,472
)
 
(102,457
)
Accumulated other comprehensive loss
(13,416
)
 
(13,080
)
Total stockholders’ equity
142,318

 
146,093

Noncontrolling interests
279

 
208

Total equity
142,597

 
146,301

 
$
190,330

 
$
196,743







RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
Three Months Ended
 
December 31,
 
2012
 
2011
REVENUES:
 
 
 
Real estate
$
13,154

 
$
8,666

Financial fund management
2,675

 
6,579

Commercial finance
(124
)
 
3,419

 
15,705

 
18,664

COSTS AND EXPENSES:
 

 
 

Real estate
7,998

 
7,192

Financial fund management
1,017

 
5,804

Commercial finance
(49
)
 
1,963

General and administrative
2,256

 
2,896

Gain on sale of leases and loans
—

 
(37
)
Provision for credit losses
5,152

 
2,250

Depreciation and amortization
492

 
2,061

 
16,866

 
22,129

OPERATING LOSS
(1,161
)
 
(3,465
)
 
 
 
 
OTHER INCOME (EXPENSE):
 

 
 

Gain on deconsolidation and sale of subsidiaries
—

 
8,749

Loss on extinguishment of debt
—

 
(2,190
)
Gain on sale of investment securities, net
—

 
58

Interest expense
(522
)
 
(2,974
)
Other income, net
588

 
559

 
66

 
4,202

(Loss) income from continuing operations before taxes
(1,095
)
 
737

Income tax (benefit) provision
(241
)
 
154

(Loss) income from continuing operations
(854
)
 
583

Loss from discontinued operations, net of tax
(6
)
 
(20
)
Net (loss) income
(860
)
 
563

Add: net income attributable to noncontrolling interests
(587
)
 
(378
)
Net (loss) income attributable to common shareholders
$
(1,447
)
 
$
185

 
 
 
 
Amounts attributable to common shareholders:
 

 
 

(Loss) income from continuing operations
$
(1,441
)
 
$
205

Discontinued operations
(6
)
 
(20
)
Net (loss) income
$
(1,447
)
 
$
185

 
 
 
 
Basic (loss) earnings per share:
 

 
 

Continuing operations
$
(0.07
)
 
$
0.01

Discontinued operations
—

 
—

Net (loss) income
$
(0.07
)
 
$
0.01

Weighted average shares outstanding
20,077

 
19,641

 
 
 
 
Diluted (loss) earnings per share:
 

 
 

Continuing operations
$
(0.07
)
 
$
0.01

Discontinued operations
—

 
—

Net (loss) income
$
(0.07
)
 
$
0.01

Weighted average shares outstanding
20,077

 
20,039







RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Three Months Ended
 
December 31,
 
2012
 
2011
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net (loss) income
$
(860
)
 
$
563

Adjustments to reconcile net (loss) income to net cash used in operating activities:
 

 
 

Depreciation and amortization
550

 
3,087

Provision for credit losses
5,152

 
2,250

Unrealized gain on trading securities
(164
)
 
—

Equity in earnings of unconsolidated entities
(1,201
)
 
(557
)
Distributions from unconsolidated entities
1,011

 
1,163

Gain on sale of leases and loans
—

 
(37
)
Gain on sale of investment securities, net
(307
)
 
(58
)
Gain on sale of assets
(831
)
 
—

Gain on sale and deconsolidation of subsidiaries
—

 
(8,749
)
Loss on extinguishment of debt
—

 
2,190

Deferred income tax (benefit) provision
(241
)
 
154

Equity-based compensation issued
205

 
498

Equity-based compensation received
(206
)
 
—

Trading securities purchases and sales, net
(1,828
)
 
—

Loss from discontinued operations
6

 
20

Changes in operating assets and liabilities
(4,666
)
 
(1,432
)
Net cash used in operating activities
(3,380
)
 
(908
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Capital expenditures
(80
)
 
(106
)
Payments received on real estate loans and real estate
712

 
1,550

Investments in real estate and unconsolidated real estate entities
(1,012
)
 
(127
)
Purchase of commercial finance assets
—

 
(18,483
)
Principal payments received on leases and loans
3

 
9,031

Cash divested on deconsolidation of LEAF
—

 
(2,284
)
Purchase of investments
(1,323
)
 
(600
)
Proceeds from sale of loans and investments
—

 
207

Net cash used in investing activities
(1,700
)
 
(10,812
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

Increase in borrowings
—

 
128,845

Principal payments on borrowings
(229
)
 
(123,823
)
Dividends paid
(593
)
 
(569
)
Repurchase of common stock
(1,078
)
 
(939
)
Preferred stock dividends paid by LEAF to RSO
—

 
(188
)
Decrease (increase) in restricted cash
3

 
(633
)
Other
(150
)
 
(2,250
)
Net cash (used in) provided by financing activities
(2,047
)
 
443

CASH FLOWS FROM DISCONTINUED OPERATIONS:
 

 
 

Operating activities
(367
)
 
(375
)
Net cash used in discontinued operations
(367
)
 
(375
)
 
 
 
 
Decrease in cash
(7,494
)
 
(11,652
)
Cash, beginning of year
19,393

 
24,455

Cash, end of period
$
11,899

 
$
12,803






Schedule I

RECONCILIATION OF GAAP (LOSS) INCOME FROM CONTINUING
OPERATIONS BEFORE TAXES TO ADJUSTED INCOME (LOSS) FROM
CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS, NET OF TAX (1) 
(in thousands, except per share data)
(unaudited)
 
 
Three Months Ended
 
 
December 31,
 
 
2012
 
2011
(Loss) income from continuing operations before taxes - GAAP
 
$
(1,095
)
 
$
737

Income attributable to noncontrolling interests - pre-tax
 
(865
)
 
(249
)
(Loss) income from continuing operations attributable to
common shareholders - pre-tax
 
(1,960
)
 
488

 
 
 
 
 
Commercial finance adjustments, pre-tax:
 
 
 
 
   Loss (income) from operations
 
4,582

 
(4,849
)
    Noncontrolling interests
 
—

 
223

    Commercial finance operations
 
4,582

 
(4,626
)
 
 
 
 
 
Adjusted income (loss) from continuing operations attributable to
common shareholders - pre-tax
 
2,622

 
(4,138
)
Income tax provision (benefit) (2)
 
1,245

 
(1,527
)
Adjusted income (loss) from continuing operations attributable to
common shareholders, net of tax
 
$
1,377

 
$
(2,611
)
 
 
 
 
 
Adjusted weighted average diluted shares outstanding (3)
 
21,199

 
19,641

 
 
 
 
 
Adjusted income (loss) from continuing operations attributable
to common shareholders, net of tax, per common per share-diluted
 
$
0.06

 
$
(0.13
)
 
1.
Adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, presents the Company's operations without the effect of its commercial finance operations. 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 months ended December 31, 2012 and 2011 separately from its commercial finance operations. Adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, should not be considered as an alternative to (loss) income from continuing operations before taxes (computed in accordance with GAAP). Instead, adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, should be reviewed in connection with (loss) income from continuing operations before taxes in the Company's consolidated financial statements, to help analyze how the Company's business is performing.
2.
Income tax provision (benefit) is calculated using the Company's tax rate for the period, excluding one-time tax adjustments.
3.
Dilutive shares used in the calculation of adjusted income from continuing operations attributable to common shareholders per common share-diluted includes an additional 1.1 million shares for the three months ended December 31, 2012, which were antidilutive for the period 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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