UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________
Commission File Nos.: 033-73748
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FUND AMERICA INVESTORS CORPORATION II
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(Exact name of registrant as specified in its charter)
Delaware 84-1218906
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
6400 S. Fiddler's Green Circle, Suite 1200B, Englewood, Colorado 80111
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(Address of principal executive offices)
Registrant's telephone number including area code: (303) 290-6025
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of August 14, 2001- 349,000 shares
FUND AMERICA INVESTORS CORPORATION II
FORM 10-Q FOR THE
SIX MONTHS ENDED JUNE 30, 2002
INDEX
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PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements 3
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults upon Senior Securities 8
Item 4. Submission of Matters to a Vote
of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports 8
SIGNATURES 9
2
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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FUND AMERICA INVESTORS CORPORATION II
Balance Sheets
(Unaudited)
June 30, December 31,
2002 2001
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Assets
Cash and cash equivalents $ 40,431 $ 5,071
Deferred offering costs, net 256,361 256,361
Prepaid expenses 2,150 204
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Total assets $ 298,942 $ 261,636
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Liabilities - accounts payable $ - $ -
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Commitments and Contingencies - -
Shareholder's equity
Common stock, par value $.01 per share;
1,000,000 shares authorized; 349,000
shares issued and outstanding 3,490 3,490
Additional paid-in capital 504,010 488,010
Shareholder distributions (1,874,798) (1,874,798)
Retained earnings 1,666,240 1,644,934
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Total shareholder's equity 298,942 261,636
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Total liabilities and
shareholder's equity $ 298,942 $ 261,636
============== =============
See notes to financial statements
3
FUND AMERICA INVESTORS CORPORATION II
Statements of Operations
(Unaudited)
Three months ended Six months ended
June 30, June 30,
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2002 2001 2002 2001
-------- -------- -------- --------
Revenue
Other bond income $44,166 $ - $44,166 $30,000
Interest - 1 - 8
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Total revenue 44,166 1 44,166 30,008
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Expenses
General and
administrative 786 923 10,860 10,480
Management fees 6,000 6,000 12,000 12,000
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Total expenses 6,786 6,923 22,860 22,480
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Net income $37,380 $(6,922) $21,306 $ 7,528
========= ========= ========= ========
See notes to financial statements
4
FUND AMERICA INVESTORS CORPORATION II
Statements of Cash Flows
(Unaudited)
Six months ended
June 30,
--------------------------
2002 2001
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Operating activities:
Net income $ 21,306 $ 7,528
Adjustments to reconcile net income to
net cash from operating activities:
Changes in operating assets
and liabilities:
Accounts payable - 14,583
Prepaid expenses (1,946) 195
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Net cash provided by operating activities: 19,360 22,306
Financing activities:
Capital contributions 16,000 2,500
Shareholder distributions - (25,000)
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Net cash provided by/(used in)
financing activities: 16,000 (22,500)
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Net increase/(decrease) in cash
and cash equivalents 35,360 (194)
Cash and cash equivalents
at beginning of year 5,071 797
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Cash and cash equivalents at end of year $ 40,431 $ 603
========== ==========
See notes to financial statements
5
FUND AMERICA INVESTORS CORPORATION II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Three months ended June 30, 2002 and 2001
1. Basis of Presentation
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Organization
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Fund America Investors Corporation II (the "Company") was incorporated
in the State of Delaware on December 14, 1992 as a limited purpose finance
corporation. The Company was established to engage in the issuance and
administration of Collateralized Mortgage Obligations (the "Bonds") and
Asset-Backed Certificates(the "Certificates", and together with the Bonds,
the "Securities"). The Securities are issued in one or more series, from time
to time, by the Company in accordance with the provisions in the prospectus
and series-related prospectus supplement of the Company's latest effective
registration statement.
The Securities of each series can be issued directly by the Company, but
typically the Company forms a separate trust to act as the issuer solely for
the purpose of issuing a series of Securities. A series of Securities that
consist of Bonds will be issued pursuant to an indenture and will represent
indebtedness of the trust or issuer. A series of Securities that consist of
Certificates will represent beneficial ownership in the related trust or
issuer. The sole source of payments to Bondholders or Certificateholders
within each series of Securities is produced from the related trust property.
The trust property is generally comprised of mortgage loans and/or mortgage-
related assets as described in each of the series' related prospectus
supplements.
The Company may not, either directly or indirectly through a beneficially
owned trust, engage in any business or investment activity other than to; (1)
issue and sell Bonds; (2) purchase, own, hold, pledge or sell mortgage loans
or other mortgage-related assets; (3) invest and maintain cash balances on an
interim basis in high quality short-term securities; and (4) engage in other
activities which are necessary or convenient to accomplish the foregoing and
are incidental thereto.
On January 1, 2002, the Company had a total of $561 million registered and
unissued Securities on its Registration Statement No. 333-33823. No Securities
were issued during the six months ended June 30, 2002. From inception to date,
the Company has issued nineteen series of Securities, which aggregate $2.4
billion in original issued principal. The Company does not have any further
obligations in connection with the issuance of these Securities. Under
accounting principles generally accepted in the United States of America,
these issuances are considered to be a direct sale of the collateral.
The Company's fifth Registration Statement on Form S-3 was filed on
September 30, 1998 with the Securities and Exchange Commission. The purpose
of this filing was to register an additional amount of Securities and to merge
the Company's effective Registration Statement No. 333-33823, thereby increasing
the total amount of Securities that can be issued by the Company. As of June
30, 2002, this Registration Statement was not effective and was subject to
completion or amendment. The Company intends to file one or more further
amendments to complete this Registration Statement and to bring it effective.
6
2. Unaudited Financial Statements
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In the opinion of management, the accompanying unaudited financial
Statements contain all adjustments necessary to present fairly the financial
position of the Company at June 30, 2002 and December 31, 2001, and the results
of its operations and cash flows for the periods ended June 30, 2002 and 2001.
These financial statements should be read in conjunction with the audited
financial statements and the accompanying notes included in the Company's
latest annual report on Form 10-K for the year ended December 31, 2001.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Liquidity and Capital Resources
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The Company expects to fund ongoing operations from its cash balances,
revenues derived from the issuance of Securities, and if necessary, from
loans or capital contributions from its sole shareholder. The current cash
position will not adequately fund overhead costs over the next twelve months
without additional revenues generated during this period. Capital funding
has and will continue to be provided by the sole shareholder to cover operating
costs on a monthly basis until the Company generates sufficient revenue. The
funding source for any additional capital costs relating to the registration
of securities will be determined when the funding is required and will depend
on the cash position at that time.
Results of Operations
- ----------------------
The Company operates on relatively fixed general and administrative costs
which have not substantially changed from comparable periods in prior years.
Typically, periodical fluctuations in net income are directly related to
Activity from the issuance of Securities. Under normal circumstances, periods
reporting net income are the direct result of issuance fees earned by the
Company, and periods reporting a net loss, no issuance fees were earned. For
the three-months ended June 30, 2002, the Company reported net income of $37,380
and a net loss of $6,922 for the three months ended June 30, 2001. The
difference in the two reporting periods was a result of call option fees
received in the amount of $44,166 when the call rights to Fund America Investors
Corporation II, Series 1993-J were sold during the three months ended June 30,
2002. The remaining income and expense items for June 30, 2002 are comparable
to the three-months ended June 30, 2002.
The six-month period ended June 30, 2002 reported net income of $21,306 as
compared to the six-months ended June 30, 2001, which reported a net income of
$7,528. The income reported on June 30, 2001 was the result of call option
income received in the amount of $30,000 when the call rights to Fund America
Investors Corporation II 1993-E were sold, as compared to the same six months
in 2002 where call option income was $44,166.
7
Forward Looking Statements
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The statements contained in this Item 2 that are not historical facts,
including, but not limited to, statements that can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, and involve a number of risks
and uncertainties. The actual results of the future events described in such
forward-looking statements could differ materially from those stated in such
forward-looking statements.
8
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
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None.
Item 2. Changes in Securities
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None.
Item 3. Defaults Upon Senior Securities
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None.
Item 4. Submission of Matters to a Vote of Security Holders
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None.
Item 5. Other Information
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None.
Item 6. Exhibits and Reports on Form 8-K
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A. Exhibits
None
B. Form 8-K
None
9
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FUND AMERICA INVESTORS CORPORATION II
(Registrant)
Date: August 14, 2002 By: /s/ Helen M. Dickens
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Helen M. Dickens
Vice President and Secretary
(Duly authorized and
Principal Financial Officer
10