PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data reflects our historical
results as adjusted on a pro forma basis to give effect to Atlas Pipeline
Partners, L.P. April 2004 offering of common units, the completion of the
Spectrum acquisition and APL's July 2004 offering of common units. The unaudited
pro forma balance sheet is prepared as though these transactions occurred as of
March 31, 2004. The unaudited pro forma statement of operations for the year
ended September 30, 2003 is prepared as though these transactions occurred as of
October 1, 2002. The unaudited pro forma statement of operations for the six
months ended March 31, 2004 is prepared as though these transactions occurred as
of October 1, 2003. The acquisition and offering adjustments are described in
the notes to the unaudited pro forma financial data. The unaudited pro forma
financial data and accompanying notes should be read together with our
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our and Spectrum's historical financial statements and related
notes included elsewhere, or incorporated by reference, in this filing.
We accounted for the acquisition of Spectrum in the unaudited pro forma
financial statements using the purchase method in accordance with the guidance
of Statement of Financial Accounting Standards No. 141, "Business Combinations."
For purposes of developing the unaudited pro forma financial information, we
have allocated the purchase price to Spectrum's gas gathering and transmission
facilities based on fair market value.
The unaudited pro forma financial statements presented are for informational
purposes only and are based upon available information and assumptions that we
believe are reasonable under the circumstances. You should not construe the
unaudited pro forma financial statements as indicative of the combined financial
position or results of operations that we and Spectrum would have achieved had
the transaction been consummated on the dates assumed. Moreover, they do not
purport to represent our and Spectrum's combined financial position or results
of operations for any future date or period.
EXHIBIT 99.2
RESOURCE AMERICA, INC.
PRO FORMA BALANCE SHEET (UNAUDITED)
MARCH 31, 2004
(IN THOUSANDS)
Historical Pro forma
Resource Historical Pre-offering Offering Pro forma
America Spectrum Adjustments Consolidated Adjustments Consolidated
---------- -------- ----------- ------------ ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents..... $ 27,089 $ $ (17,874) (a)(b) $ 9,215 $ 23,916 (i) $ 33,131
Accounts receivable and
prepaid expenses............ 32,074 9,545 41,619 41,619
FIN 46 entities' and other
assets held for sale........ 108,893 108,893 108,893
Other......................... - 672 (10) (b) 662 662
-------- -------- --------- -------- -------- --------
Total current assets........ 168,056 10,217 (17,884) 160,389 23,916 184,305
Investments in real estate loans
and real estate............... 69,603 69,603 69,603
FIN 46 entities' assets.......... 61,595 61,595 61,595
Investment in RAIT Investment
Trust......................... 13,169 13,169 13,169
Property and equipment, net...... 155,523 49,596 94,366 (b) 299,485 299,485
Goodwill......................... 37,471 37,471 37,471
Deferred income taxes............ - 1,645 (1,645) (b) - -
Intangible assets, net........... 7,933 7,933 7,933
Other assets..................... 27,808 1,613 3,152 (b) 32,573 32,573
-------- -------- --------- -------- -------- --------
$541,158 $ 63,071 $ 77,989 $682,218 $ 23,916 $706,134
======== ======== ========= ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt........................ $ 12,202 $ 4,992 $ (4,992) (b) $ 12,202 $ $ 12,202
Secured revolving credit
facilities - leasing........ 13,836 13,836 13,836
Accounts payable and
accrued liabilities......... 32,159 13,186 (2,392) (b) 42,953 42,953
FIN 46 entities' and other
liabilities associated with 69,375 69,375 69,375
assets held for sale........
Liabilities associated with
drilling contracts.......... 15,465 15,465 15,465
-------- -------- --------- -------- -------- --------
Total current liabilities... 143,037 18,178 (7,384) 153,831 153,831
Long-term debt................... 70,725 42,433 62,833 (b) 175,991 (45,266) (i) 130,725
Deferred revenue and other
liabilities................... 3,855 3,855 3,855
FIN 46 entities' liabilities..... 30,304 30,304 30,304
Deferred income taxes............ 14,860 14,860 14,860
Minority interest in Atlas
Pipeline Partners, L.P........ 43,163 25,000 (a) 68,163 69,182 (i) 137,345
Commitments and contingencies.... - - -
Stockholders' equity:
Preferred stock............... - 13,856 (13,856) (b) -
Common stock.................. 255 27 (27) (b) 255 255
Additional paid-in capital.... 227,413 3,149 (3,149) (b) 227,413 227,413
Less treasury stock, at cost.. (78,648) (10,010) 10,010 (b) (78,648) (78,648)
Less ESOP loan receivable..... (1,121) (1,121) (1,121)
Deferred compensation......... - (43) 43 (b) -
Accumulated other
comprehensive income (loss). 4,594 (310) 310 (b) 4,594 4,594
Retained earnings (deficit)... 82,721 (4,209) 4,209 (b) 82,721 82,721
-------- -------- --------- -------- -------- --------
Total stockholders' equity.. 235,214 2,460 (2,460) 235,214 235,214
-------- -------- --------- -------- -------- --------
$541,158 $ 63,071 $ 77,989 $682,218 $ 23,916 $706,134
======== ======== ========= ======== ======== ========
See notes to pro forma financial statements
RESOURCE AMERICA, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED SEPTEMBER 30, 2003
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical Pro forma
Resource Historical Pre-offering Offering Pro forma
America Spectrum Adjustments Consolidated Adjustments Consolidated
---------- -------- ----------- ------------ ----------- ------------
REVENUES:
Energy....................... $105,262 $ 97,929 $ $203,191 $ $ 203,191
Real estate.................. 14,335 14,335 14,335
Leasing...................... 4,071 4,071 4,071
Equity in earnings of
financial services investees 1,444 1,444 1,444
Interest, dividends, gains and
other....................... 7,417 7,417 7,417
-------- -------- --------- -------- -------- ---------
132,529 97,929 - 230,458 - 230,458
COSTS AND EXPENSES:
Energy....................... 67,215 89,411 156,626 156,626
Real estate.................. 5,464 5,464 5,464
Leasing...................... 5,883 5,883 5,883
General and administrative... 6,925 6,925 6,925
Depreciation, depletion and
amortization................ 12,148 16,050 (7,071) (d) 21,127 21,127
Interest..................... 13,092 2,725 3,503 (c)(e) 19,320 (2,205)(j)(k)(l) 17,115
Provision for possible losses 1,848 1,848 1,848
Provision for legal settlement 1,185 1,185 1,185
Minority interest in Atlas
Pipeline Partners, L.P...... 4,439 (4,959) (f) (520) 3,046 (m) 2,526
-------- -------- --------- -------- -------- ---------
118,199 108,186 (8,527) 217,858 841 218,699
-------- -------- --------- -------- -------- ---------
Income from continuing
operations before income
taxes and cumulative effect
of change in accounting
principle.................. 14,330 (10,257) 8,527 12,600 (841) 11,759
Provision for income taxes..... 4,586 (4,303) 3,749 (g) 4,032 (269)(n) 3,763
-------- -------- --------- -------- -------- ---------
Income from continuing
operations before
cumulative effect of change
in accounting principle.... 9,744 (5,954) 4,778 8,568 (572) 7,996
Preferred stock dividends...... - (1,054) 1,054 (h) - -
Discontinued operations........ 1,222 1,222 1,222
Cumulative effect of change in
accounting principle, net of
income taxes................ (13,881) (13,881) (13,881)
-------- -------- --------- -------- -------- ---------
Net income (loss).............. $ (2,915) $ (7,008) $ 5,832 $ (4,091) $ (572) $ (4,663)
======== ======== ========= ======== ======== =========
NET INCOME (LOSS) PER
COMMON SHARE - BASIC:
From continuing operations.. $ .57 $ .50 $ .47
Preferred stock dividends... - - -
Discontinued operations..... .07 .07 .07
Cumulative effect of change
in accounting principle.... (.81) (.81) (.81)
-------- -------- ---------
Net loss per common
share - basic.............. $ (.17) $ (.24) $ (.27)
======== ======== =========
Weighted average common
shares outstanding.......... 17,172 17,172 17,172
======== ======== =========
NET INCOME (LOSS) PER
COMMON SHARE - DILUTED:
From continuing operations.. $ .55 $ .49 $ .46
Preferred dividends......... - - -
Discontinued operations..... .07 .07 .07
Cumulative effect of change
in accounting principle.... (.79) (.79) (.79)
-------- -------- ---------
Net loss per
common share - diluted...... $ (.17) $ (.23) $ (.26)
======== ======== =========
Weighted average common
shares...................... 17,568 17,568 17,568
======== ======== =========
See notes to pro forma financial statements
RESOURCE AMERICA, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MARCH 31, 2004
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical Pro forma
Resource Historical Pre-offering Offering Pro forma
America Spectrum Adjustments Consolidated Adjustments Consolidated
---------- -------- ----------- ------------ ----------- ------------
REVENUES:
Energy....................... $ 77,673 $ 51,013 $ $128,686 $ $ 128,686
Real estate.................. 9,790 9,790 9,790
Leasing...................... 3,708 3,708 3,708
Equity in earnings of
financial services investees 2,880 2,880 2,880
Interest, dividends, gains and
other....................... 4,878 4,878 4,878
-------- -------- --------- -------- -------- ---------
98,929 51,013 - 149,942 149,942
COSTS AND EXPENSES:
Energy....................... 52,361 46,974 99,335 99,335
Real estate.................. 8,034 8,034 8,034
Leasing...................... 4,426 4,426 4,426
Financial services........... 413 413 413
General and administrative... 3,566 3,566 3,566
Depreciation, depletion and
amortization................ 7,210 2,578 1,819 (d) 11,607 11,607
Interest..................... 3,906 1,562 1,365 (c)(e) 6,833 (718)(j)(k)(l) 6,115
Provision for possible losses 400 400 400
Minority interest in Atlas
Pipeline Partners, L.P...... 2,595 (3,439) (f) (844) 1,003 (m) 159
-------- -------- --------- -------- -------- ---------
82,911 51,114 (255) 133,770 285 134,055
-------- -------- --------- -------- -------- ---------
Income from continuing
operations before income
taxes and cumulative effect
of change in accounting
principle................... 16,018 (101) 255 16,172 (285) 15,887
Provision for income taxes..... 5,446 (341) 393 (g) 5,498 (97)(n) 5,401
-------- -------- --------- -------- -------- ---------
Income from continuing
operations before
cumulative effect of change
in accounting principle..... 10,572 240 (138) 10,674 (188) 10,486
Preferred stock dividends...... - (523) 523 (h) - -
Discontinued operations........ (1,067) (1,067) (1,067)
-------- -------- --------- -------- -------- ---------
Net income (loss).............. $ 9,505 $ (283) $ 385 $ 9,607 $ (188) $ 9,419
======== ======== ========= ======== ======== =========
NET INCOME (LOSS) PER COMMON
SHARE - BASIC:
From continuing operations.. $ .61 $ .61 $ .60
Preferred stock dividends... - - -
Discontinued operations..... (.06) (.06) (.06)
-------- -------- ---------
Net income per $ .55 $ .55 $ .54
======== ======== =========
common share - basic........
Weighted average common 17,364 17,364 17,364
======== ======== =========
shares outstanding..........
NET INCOME (LOSS) PER COMMON
SHARE - DILUTED:
From continuing operations.. $ .59 $ .59 $ .58
Preferred dividends......... - - -
Discontinued operations..... (.06) (.06) (.06)
-------- -------- ---------
Net income per common $ .53 $ .53 $ .52
======== ======== =========
share - diluted.............
Weighted average common
shares...................... 18,052 18,052 18,052
======== ======== =========
See notes to pro forma financial statements
RESOURCE AMERICA, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
a. Reflects the net proceeds from the sale of 750,000 common units by APL in April 2004.
b. Reflects the purchase of 100% of the common stock of Spectrum for $148.1 million, including estimated
transaction costs. The acquisition was financed by the $25 million of net proceeds from APL's April
2004 common unit offering, a $100 million term loan and $5.3 million revolving loan under APL's new
credit facility and $17.9 million of cash from us and Atlas America, Inc., our 80% owned subsidiary.
Adjustments include the payment of $3.3 million of estimated financing costs which appear in the pro
forma balance sheet as other assets.
c. Reflects the adjustment to interest expense resulting from $105.3 million of borrowing under APL's new
credit facility bearing interest at the London Interbank Offered Rate, or LIBOR, plus 375 basis points,
assumed to be 5.51% for the six months ended March 31, 2003, 5.00% for the six months ended September
30, 2003, and 4.90% for the six months ended March 31, 2004.
d. Reflects the adjustment to depreciation expense based upon the cost of the acquired gas gathering and
transmission facilities using depreciable lives ranging from 3 to 26.5 years and using the straight-line
method.
e. Reflects the amortization of deferred financing costs related to APL's new credit facility to finance
the acquisition.
f. Reflects the adjustment to minority interest to eliminate income attributed to the public unitholders
of APL.
g. Reflects the elimination of federal and state income taxes following the conversion of Spectrum,
formerly a C-corporation, to a limited liability company concurrent with its acquisition by APL and the
adjustment to our taxes.
h. Reflects the elimination of preferred stock dividends by Spectrum paid prior to APL's acquisition.
i. Reflects net proceeds of $69.2 million after offering costs of $3.8 million from APL's July 2004 common
unit offering, used to repay $45.3 million of borrowings under APL's credit facility.
j. Reflects the adjustment to interest expense resulting from the issuance of common units and the
repayment of debt incurred to finance the Spectrum acquisition.
k. Reflects a write-off of deferred financing costs in connection with a permanent $40 million repayment of
the $100 million term loan.
l. Reflects the adjustment to amortization as a result of the write-off of deferred financing costs due to
the partial repayment of the $100 million term loan.
m. Reflects the adjustment to minority interest as a result of the offering of common units of APL.
n. Reflects the adjustment to our taxes.
