Resource America, Inc. Form 10K 093006

10-K 1 raiform10k093006.htm RESOURCE AMERICA, INC. FORM 10K 093006 Resource America, Inc. Form 10K 093006

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2006

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number: 0-4408

RESOURCE AMERICA, INC.

(Exact name of registrant as specified in its charter)

Delaware____________ (State or other jurisdiction of incorporation or organization)	72-0654145 (I.R.S. Employer Identification No.)
One Crescent Drive, Suite 203 Navy Yard Corporate Center Philadelphia, PA______ (Address of principal executive offices)	________19112 (Zip Code)
Registrant’s telephone number, including area code: 215-546-5005
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

Common stock, par value $.01 per share

Title of class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(a) of the Act. Yes o No x

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 o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The aggregate market value of the voting common equity held by non-affiliates of the registrant, based on the closing price of such stock on the last business day of the registrant’s most recently completed second fiscal quarter (March 31, 2006) was approximately $207,494,000.

The number of outstanding shares of the registrant’s common stock on December 1, 2006 was 17,292,049 shares.

DOCUMENTS INCORPORATED BY REFERENCE

[None]

RESOURCE AMERICA, INC. AND SUBSIDIARIES

INDEX TO ANNUAL REPORT

ON FORM 10-K

			Page
PART I
	Item 1:	Business	3 − 10
	Item 1A:	Risk Factors	10 − 15
	Item 1B:	Unresolved Staff Comments	15
	Item 2:	Properties	16
	Item 3:	Legal Proceedings	16
	Item 4:	Submission of Matters to a Vote of Security Holders	16

PART II
	Item 5:	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17 − 18
	Item 6:	Selected Financial Data	19
	Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20 − 46
	Item 7A:	Quantitative and Qualitative Disclosures About Market Risk	47
	Item 8:	Financial Statements and Supplementary Data	48 − 93
	Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	94
	Item 9A:	Controls and Procedures	94 − 95
	Item 9B:	Other Information	96

PART III
	Item 10:	Directors and Executive Officers of the Registrant	97 − 99
	Item 11:	Executive Compensation	100 − 103
	Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	104 − 105
	Item 13:	Certain Relationships and Related Transactions	106 − 107
	Item 14:	Principal Accounting Fees and Services	108

PART IV
	Item 15:	Exhibits, Financial Statement Schedules	109 − 110

SIGNATURES			111

PART I

ITEM 1. BUSINESS

THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS REGARDING EVENTS AND FINANCIAL TRENDS WHICH MAY AFFECT OUR FUTURE OPERATING RESULTS AND FINANCIAL POSITION. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE OUR ACTUAL RESULTS AND FINANCIAL POSITION TO DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH STATEMENTS. IN REAL ESTATE, THESE RISKS INCLUDE RISKS OF THE MARKETABILITY OF REAL ESTATE PROGRAMS, LOAN DEFAULTS, THE ADEQUACY OF OUR PROVISION FOR LOSSES AND THE ILLIQUIDITY OF OUR LOAN PORTFOLIO. IN OUR COMMERCIAL FINANCE AND FINANCIAL FUND MANAGEMENT BUSINESSES, THESE RISKS INCLUDE THE EFFECTS OF FLUCTUATIONS IN INTEREST RATES AND THE MARKETABILITY OF COMMERCIAL FINANCE AND COLLATERALIZED DEBT OBLIGATION PROGRAMS. FOR A MORE COMPLETE DISCUSSION OF THE RISKS AND UNCERTAINTIES TO WHICH WE ARE SUBJECT, SEE ITEM 1A “RISK FACTORS.”

General

We are a specialized asset management company that uses industry specific expertise to generate and administer investment opportunities for our own account and for outside investors in the financial fund management, real estate and commercial finance sectors. As a specialized asset manager, we develop investment funds in each sector in which outside investors invest along with us and for which we provide asset management services. As of September 30, 2006, we managed $12.1 billion of assets.

We limit our fund development and asset management services to asset classes in which we have specific expertise. We believe this strategy enhances the return on investment we can achieve for ourselves and for the investors in our funds. In our financial fund management operations, the asset classes on which we concentrate are asset-backed securities, known as ABS (principally residential and commercial mortgage-backed securities), structured finance securities, bank loans and the trust preferred securities of banks, bank holding companies, insurance companies and other financial companies. We describe these assets more particularly in “— Financial Fund Management,” below. In our real estate operations, we concentrate on investments in multi-family and commercial real estate and real estate mortgage loans including whole loans, first priority interests in commercial mortgage loans, known as A notes, subordinated interests in first mortgage loans, known as B notes, and mezzanine loans. We discuss these assets more particularly in “— Real Estate,” below. In our commercial finance operations, we focus on originating small and middle-ticket equipment leases and commercial notes receivable through strategic marketing alliances and other program relationships with equipment vendors, commercial banks and other financial institutions. The financed equipment includes a wide array of business-essential equipment, including technology, commercial and industrial equipment and medical equipment. We describe these assets more particularly in “−Commercial Finance.”

We have recently undertaken several new initiatives to expand the scope of our asset management operations, including private investment funds that make private equity investments in regional banks, a hedge fund focused on credit products and, through Resource Europe, Inc., the origination and management of international debt assets.

As of September 30, 2006 and 2005, we managed $12.1 billion and $7.1 billion of assets, respectively, for our own account, for the accounts of institutional and individual investors, for the account of Resource Capital Corp., or RCC, and the held in warehouse facilities in the following asset classes (in millions):

	As of September 30, 2006										As of September 30, 2005
	Company		Institutional and Individual Investors		RCC		Assets Held on Warehouse Facilities		Total		Total
Asset-backed securities ⁽¹⁾	$	−	$	2,675	$	1,160	$	568	$	4,403	$	2,821
Trust preferred securities ⁽¹⁾		−		3,538		−		668		4,206		2,879
Bank loans ⁽¹⁾		3		593		615		624		1,835		413
Real properties ⁽²⁾		−		345		−		−		345		202
Mortgage and other real estate-related loans ⁽²⁾		99		−		440		−		539		417
Commercial finance assets ⁽³⁾		109		412		92		−		613		340
Private equity and hedge fund assets ⁽¹⁾		−		58		−		−		58		−
Resource Europe ⁽¹⁾		66		−		−		25		91		2
	$	277	$	7,621	$	2,307	$	1,885	$	12,090	$	7,074

(1) We value these assets at their amortized cost.

(2) We value our managed real estate assets as the sum of: the amortized cost of our commercial real estate loans; the book value of

real estate and other assets held by our real estate investment partnerships and tenant-in-common, or TIC, property interests; the

amount of our outstanding legacy loan portfolio; and the book value of our interests in real estate.

(3) We value our commercial finance assets as the sum of the book value of the equipment and notes financed by us.

Included in these assets at September 30, 2006 are $8.3 billion of assets held through the 20 collateralized debt obligation, or CDO, Issuers we have sponsored, including $1.4 billion in four CDOs sponsored for RCC, and $1.9 billion held in warehouse facilities for CDOs which had not closed as of September 30, 2006 for which we have been engaged as the collateral manager.

We attract investment funds through the sponsorship of investment vehicles, including CDO issuers, public and private investment partnerships, TIC programs and a real estate investment trust, or REIT. We arrange for the funding of these vehicles through short, medium and longer-term bank financing, CDO issuances and equity investments. We believe that we have developed a unique combination of origination channels to provide such funding, including a network of international investment banks for our CDOs, international and national banks and investment banks both for our short, medium and longer-term debt financing and for equity financing of RCC, and a national network of independent broker-dealers for our investment partnerships and TIC programs.

Our assets under management are primarily managed through the investment vehicles we sponsor. As set forth in the table below, the number of investment vehicles we have sponsored grew significantly in 2006:

	CDOs		Limited Partnerships		TIC Property Interests		Other Investment Funds
As of September 30, 2006 ⁽¹⁾
Financial fund management		19		11		−		−
Real estate		1		5		4		−
Commercial finance		−		2		−		1
Resource Europe		−		−		−		−
		20		18		4		1
As of September 30, 2005 ⁽¹⁾
Financial fund management		11		9		−		−
Real estate		−		4		1		−
Commercial finance		−		2		−		2
		11		15		1		2

(1)

All of our operating segments, except for Resource Europe, manage assets on behalf of RCC.

Financial Fund Management

General. We focus our financial fund management operations on the sponsorship and management of CDO issuers and the management of RCC. We conduct our financial fund management operations through three principal subsidiaries:

Apidos Capital Management, LLC, or Apidos, which invests in, finances, structures and manages investments in bank loans.

Ischus Capital Management, LLC, or Ischus, which invests in, finances, structures and manages investments in asset-backed securities or ABS, including residential mortgage-backed securities, or RMBS, and commercial mortgage-backed securities, or CMBS.

Trapeza Capital Management, LLC, or Trapeza, a joint venture between us and an unrelated third party, which originates, structures, finances and manages investments in trust preferred securities and senior debt securities of banks, bank holding companies, insurance companies and other financial companies.

CDOs. In general, CDOs are issued by special purpose entities, which we refer to as CDO issuers, that hold portfolios of debt obligations. A CDO issuer typically issues two or more series of CDOs of different seniority, as well as equity (sometimes referred to as “preference shares”) to fund the purchase of a portfolio of assets. The series of CDOs are typically rated based on portfolio quality, diversification and, among the series of CDOs being issued, structural subordination. The equity issued by the CDO issuer is the “first loss” piece of the CDO issuer’s capital structure, but is also generally entitled to all residual amounts available for payment after the CDO issuer’s obligations to the holders of the CDOs have been satisfied.

We have focused on the sponsorship of CDO issuers whose CDOs are backed by assets purchased through Ischus, Apidos and Trapeza and the management of their assets. We acquire assets for our CDO issuers principally in transactions with the issuers of those assets, and are responsible for the evaluation of assets proposed for inclusion in the CDO issuer’s portfolio. We analyze the creditworthiness of the issuers of the portfolio assets, the assets themselves and the asset servicers through a credit committee made up of individuals with expertise in the targeted asset class. CDOs must be rated by one or more rating agencies in order for them to be eligible for many of the institutional investors to whom they are marketed; accordingly, we apply rating agency standards when evaluating assets for inclusion in a CDO issuer’s portfolio.

We fund the initial acquisition of a CDO issuer’s portfolio assets through a secured warehouse credit facility prior to the closing of a CDO issuer’s offering. At closing, the warehouse facility is refinanced through the issuance of CDOs.

We derive revenues from our CDO operations through management and administration fees. We also receive distributions on amounts we invest directly in CDO issuers or in limited partnerships we form that purchase equity in our CDO issuers. Management fees vary by CDO issuer but, excluding CDOs managed on behalf of RCC, have ranged from an annual fee of between 0.25% and 0.60% of the par value of the CDO issuer’s portfolio assets. For the Trapeza CDOs we manage, we share these fees with our co-sponsors. For CDOs managed on behalf of RCC, we receive fees directly from RCC pursuant to our management agreement in lieu of asset management fees from the CDO issuers. We describe the management fees we receive from RCC in “− Resource Capital Corp” below. CDO issuer fees are payable monthly, quarterly or semi-annually, as long as we continue to manage portfolio assets on behalf of the CDO issuers. Our interest in distributions from the CDO issuers varies with the amount of our equity interest. In four partnerships in which we have invested that held equity interests in CDO issuers, we have incentive distribution interests.

As of September 30, 2006, our financial fund management operations had sponsored or co-sponsored, structured and managed or co-managed 19 CDO issuers holding approximately $7.9 billion in assets as set forth in the following table:

Sponsor/Manager	Asset Class		Number of CDOs		Assets Under Management
					(in billions)
Ischus ^{(1) (2)}		RMBS/CMBS/ABS		5	$	3.1
Apidos ⁽³⁾		Bank Loans		4		1.3
Trapeza ⁽¹⁾⁽⁴⁾		Trust Preferred Securities		10		3.5
				19	$	7.9

(1)	We also own a 50% interest in the general partners of the limited partnerships that own a portion of the equity interests in each of seven Trapeza CDO issuers and one Ischus CDO issuer.

(2)	RCC holds 100% of the equity interests in one of these CDOs with assets of $396.4 million.

(3)	RCC holds 100% of the equity interests in two of these CDOs with assets of $614.9 million.

(4)	Through Trapeza, we own a 50% interest in an entity that manages eight of the Trapeza CDO issuers and a 33.33% interest in an entity that manages two of the Trapeza CDO issuers.

Real Estate

General. Our real estate operations involve:

the sponsorship and management of real estate investment partnerships and TIC programs;

the management, solely for RCC, of general investments in commercial real estate debt. These investments may include first mortgage debt, whole loans, mortgage participations, subordinate notes, mezzanine debt and related commercial real estate securities; and

to a lesser extent, the management and resolution of a legacy portfolio of real estate loans and property interests that we acquired at various times between 1991 and 1999.

Real Estate Investment Partnerships and TIC Programs. Since 2003, we have sponsored five real estate investment partnerships and four TIC programs in which investors acquire undivided fractional interests in real properties through a tenant-in-common structure. The partnerships and TIC programs have raised a total of $67.8 million and $57.6 million, respectively. These partnerships and TIC programs have acquired interests in 17 multi-family apartment complexes comprising of 5,754 units. The aggregate investment in the properties by these programs, including debt financing, is $204.8 million. The combined acquisition cost of the real estate controlled by all programs is $344.8 million, including interests owned by third parties. We receive acquisition, debt placement, and bridge equity fees from the partnerships and TIC programs in their acquisition stage. These fees, in the aggregate, have ranged from 1.75% to 2% of the acquisition costs of the properties or the debt financing, in the case of debt placement fees. In their operational state, we receive property management fees of 5% of gross revenues and partnership or program management fees of 1% on our partnership and TIC interests. We typically subcontract our property management obligations to third party property managers, who are paid 3% to 4% of gross revenues.

Resource Capital Corp. As of September 30, 2006, we managed approximately $439.7 million of commercial real estate loan assets on behalf of RCC, including $339.8 million of these assets in a CDO we sponsored in which RCC holds the equity interests.

Legacy Portfolio of Loan and Property Interests. In addition to our real estate investment partnerships, TIC programs and commercial loan portfolio, we have a legacy portfolio of real estate loans and property interests. Between fiscal 1991 and 1999, our real estate operations focused on the purchase of commercial real estate loans at discounts to their outstanding loan balances and the appraised value of their underlying properties. As a result of our ownership, management and resolution of some of these loans, we have acquired direct and indirect property interests. Since fiscal 1999, we have focused on managing and resolving our existing portfolio. However, we may sell, purchase or originate portfolio loans or real property investments in the future as part of our management process or as opportunities arise. During fiscal 2006, we reduced the number of loans in this portfolio from twelve to nine through the repayment of seven loans offset by the addition of four loans in conjunction with the resolution of an existing loan, two ventures and one owned asset. We have retained an interest in one of the properties underlying the restructured loans.

In applying Financial Accounting Standards Board Interpretation 46, “Consolidation of Variable Interest Entities,” or FIN 46 and its revisions, FIN 46-R, we consolidate certain variable interest entities, or VIEs, as to which it has been determined that we are the primary beneficiary. The assets, liabilities, revenues and costs and expenses of the VIEs that are included in our consolidated financial statements are not ours. The liabilities of the VIEs will be satisfied from the cash flows of the respective VIE’s consolidated assets, not from our assets, since we have no legal obligation to satisfy those liabilities. The following table sets forth information about the loans we hold in our legacy portfolio in addition to FIN 46-R loans included in our financial statements (in thousands, except number of loans):

	Number of Loans		Outstanding Loans Receivable ⁽¹⁾		Appraised Value of Property Loan ⁽²⁾		Third Party Liens ⁽³⁾		Carried Cost of Investment ⁽⁴⁾		Net Interest in Outstanding Loans Receivable ⁽⁶⁾
September 30, 2006
Portfolio loans		7	$	66,881	$	136,450	$	25,546	$	28,739	$	41,335
Loans held as FIN 46-R entities’ assets		2	$	9,237	$	4,750	$	1,412	$	1,980⁽⁵⁾	$	7,825
September 30, 2005
Portfolio loans		5	$	62,384	$	59,690	$	15,452	$	25,923	$	46,932
Loans held as FIN 46-R entities’ assets		7	$	231,543	$	138,625	$	84,612	$	38,193⁽⁵⁾	$	146,931

(1)	Consists of the original stated or face value of the obligation plus interest and the amount of the senior lien interest.

(2)	We generally obtain appraisals on each of the properties underlying our portfolio loans at least once every three years.

(3)	Represents the amount of the senior lien interests.

(4)

Represents the book cost of our investment, including subsequent advances, after accretion of discount and allocation of gains from the sale of a senior lien interest in, or borrower refinancing of, the loan, but excludes an allowance for possible losses of $770,000 at September 30, 2006 and 2005, respectively.

(5)	For loans held as FIN 46 entities’ assets, the carried cost represents our investment adjusted to reflect the requirements of FIN 46-R of which $29.7 million was classified as held for sale on the balance sheet at September 30, 2005 (none at September 30, 2006).

(6) Consists of the amounts set forth in the column "Outstanding Loans Receivable" less amounts in the column “Third Party Liens.”

Resource Capital Corp.

RCC is a publicly-traded (NYSE:RSO) REIT that we sponsored in fiscal 2005. RCC invests in a diversified portfolio of B notes, CMBS and other real estate-related loans and commercial finance assets. We manage RCC through Resource Capital Manager, Inc., or RCM, an indirect wholly-owned subsidiary. At September 30, 2006, we managed approximately $2.3 billion of assets on behalf of RCC. See “ — General.”

At September 30, 2006, we owned 1.9 million shares of RCC common stock, or about 10.7% of RCC’s outstanding common stock and held options to acquire 2,166 shares (at an average price per share of $15.00) and warrants to acquire an additional 100,088 shares (at $15.00 per share) of RCC common stock.

In addition to dividends we receive on our RCC common stock, we derive revenues from RCC through its management agreement with RCM. Under this agreement, RCM receives a base management fee, incentive compensation and a reimbursement for out-of-pocket expenses. The base management fee is 1/12^th of 1.50% of RCC’s equity per month. The management agreement defines “equity” as, essentially, shareholder’s equity, subject to adjustment for non-cash equity compensation expense and non-recurring changes to which the parties agree. The incentive compensation is 25% of the amount by which RCC’s quarterly net income exceeds an amount equal to the weighted average issuance price of RCC’s common shares, multiplied by the greater of 2% or 0.50% plus one-fourth of the ten-year treasury rate. RCM receives at least 25% of its incentive compensation in additional shares of RCC common stock and has the option to receive more of its incentive compensation in stock under the management agreement.

Furthermore, we receive an acquisition fee of 1% of the carrying value of the commercial finance assets we sold to RCC.

In fiscal 2006, the management and acquisition fees we received from RCC were $8.2 million, or 10% of our consolidated revenues. These fees have been reported as revenues by each of our operating segments, except for Resource Europe.

Commercial Finance

We focus our commercial finance operations on equipment leases and asset-based loans to small and mid-sized companies. Our equipment lease financing is generally for “business-essential” equipment including technology, commercial, industrial and medical equipment, with a primary financed transaction size of under $2.0 million and an average size of between $50,000 to $100,000. Our asset-backed non-commercial financing is used by borrowers to acquire professional practices, such as dental or veterinary practice and business franchises. We also provide loans to other commercial finance companies secured by pledged financial assets. Our asset-based loans generally range from between $5 million to $15 million.

During fiscal 2006, we originated $423.6 million in commercial finance assets (based on book value). As of September 30, 2006, we managed a commercial finance portfolio totaling $613.0 million, including $92.0 million on behalf of RCC, $402.0 million on behalf of two public limited partnerships we sponsored, $109.0 million for our own account and $10.0 million pursuant to an arrangement with a subsidiary of Merrill Lynch, Pierce, Fenner & Smith Incorporated, or ML, pursuant to which we originate, service and manage equipment leases with tax-exempt entities. Before September 28, 2006, we also had an arrangement with ML to originate, service and manage equipment leases and commercial finance notes with small and mid-size businesses, which was terminated by the sale of that portfolio to one of our public investment partnerships.

We receive acquisition and management fees from RCC, from our investment partnerships and from ML. As of September 30, 2006, acquisition fees ranging from 1% to 2% of the cost of the equipment or the amount financed while annual servicing and management fees ranged from 1% to 1.8% of the book value of the assets and the equity managed, respectively.

New Initiatives

In fiscal 2006, we undertook several new initiatives to expand the scope of our asset management operations, as follows:

Public Equity. We sponsored three investment partnerships for institutional and individual investors focused on private equity investments in domestic regional banks. At September 30, 2006, we managed $20.5 million in assets on behalf of these investment partnerships.

Hedge Fund. We sponsored one partnership for institutional and individual investors that was structured as a hedge fund. The fund focuses on credit products. At September 30, 2006, we managed $37.1 million in ABS and syndicated bank loans on behalf of this fund.

Resource Europe. We formed Resource Europe, Inc. in fiscal 2006 to focus on investments in international, principally European, bank loans. As of September 30, 2006, we managed $66.4 million in bank loan assets held on a warehouse line of credit. We expect to acquire additional bank loan assets on the warehouse line and to obtain term financing for these acquisitions through a CDO issuance in the second quarter of fiscal 2007.

Resource Europe

In April 2006, we commenced our European leveraged loan operations, Resource Europe, based in London, England. Operating results for fiscal 2006 reflected approximately $1.0 million of costs, mostly wages and rent. Resource Europe is in the process of completing its first CDO which it expects to close in the second quarter of fiscal 2007.

Credit Facilities

Through our subsidiaries, we have access to three separate credit facilities, which we describe in this section. We also have arranged three credit facilities for three of our CDO issuers relating to their accumulation of assets, for which we are a guarantor. The aggregate amount of losses guaranteed under these facilities, which we describe in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations and Other Commercial Commitments” was $29.0 million at September 30, 2006.

On July 31, 2006, LEAF entered into a $150.0 million revolving warehouse facility with a group of banks led by National City Bank. Outstanding borrowings bear interest at one of two rates: (i) London Inter-Bank Offered Rates, or LIBOR, plus 150 basis points or (ii) the prime rate. As of September 30, 2006, the balance outstanding was $86.4 million at an interest rate of 6.9%. The underlying equipment being leased or financed collateralized the borrowings under this facility. The Company has guaranteed this facility up to a maximum of $75.0 million.

We have a $14.0 million revolving line of credit with Sovereign Bank based on pledged real estate collateral and 700,000 shares of RCC stock expiring in July 2009. Outstanding borrowings bear interest at one of two rates, elected at our option: (i) LIBOR plus 200 basis points or (ii) the prime rate. Availability under the facility is limited based on the value of assets pledged as security. As of September 30, 2006, there were no outstanding borrowings and $11.4 million was available under this line.

We also have a $25.0 million revolving line of credit with Commerce Bank expiring in August 2009 secured by collateral of 358,290 shares of TBBK stock and 1.2 million shares of RCC stock. Outstanding borrowings bear interest at one of two rates, elected at our option: (i) LIBOR plus 2.25% or (ii) the prime rate plus 1%. Credit availability is based on the value of assets pledged as security. As of September 30, 2006, there were no outstanding borrowings and $22.1 million was available under this line.

Asset Sourcing

We originate assets, other than commercial finance investments, commercial real estate whole loans and trust preferred securities, through a variety of financial industry sources including investment banks, brokerage firms, commercial banks and loan originators, including Banc Investment Group, LLC, Barclays Capital Inc, Bear, Stearns International Limited, Citibank N.A., Credit Suisse Securities (USA) LLC, FIG Partners, LLC, Friedman, Billings, Ramsey & Co., Inc., Howe Barnes Investments, Inc., Keefe, Bruyette & Woods, Inc., Lehman Brothers Inc., Morgan Keegan & Co., Inc., Morgan Stanley & Co. Incorporated, RBS Greenwich Capital, Stifel, Nicolaus & Company, Incorporated, and UBS Securities LLC. We base our origination capability on relationships our asset management professionals have developed with these sources over their professional careers, as well as upon our current presence in the market place as sponsor, originator, holder or acquirer of assets for investment entities and for our own account.

LEAF Financial is responsible for sourcing our commercial finance investments. LEAF Financial’s strategy for originating commercial finance assets involves marketing to direct sales organizations which offer LEAF Financial’s financing as part of their marketing package. By developing and maintaining programs with these organizations, LEAF Financial is able to use their sales force, and its outside distributors, dealers and resellers, to market its commercial finance products and services to the highly dispersed population of small- to middle-sized businesses, which is LEAF Financial’s targeted demographic.

In May 2006, we hired a team of two commercial real estate lending professionals to originate commercial real estate whole loans directly from borrowers. This team, which previously headed a commercial lending office for a large investment bank, uses the contacts they have developed in the commercial finance industry to obtain borrower referrals.

Our ability to source trust preferred investment opportunities comes from the relationships we have developed with the regional broker-dealer community that services smaller financial services companies. We also expect to source investments directly through our own relationships in the commercial banking sector.

Employees

As of September 30, 2006, we employed 224 full-time workers, an increase of 70, or 45%, from 154 employees at September 30, 2005. The following table summarizes our employees by operating segment:

	Total		Financial Fund Management		Real Estate		Commercial Finance		Resource Europe		Corporate/ Other
September 30, 2006
Investment professionals		76		24		22		24		5		1
Other		148		18		9		93		−		28
Total		224		42		31		117		5		29

September 30, 2005
Investment professionals		51		19		15		16		−		1
Other		103		11		7		65		−		20
Total		154		30		22		81		−		21

ITEM 1A. RISK FACTORS

You should carefully consider the risks that follow together with all of the other information contained in this report in evaluating our company. If any of these risks develop into actual events, our business, financial condition and results of operations could be materially adversely affected and the trading price of our common stock could decline.

Risks Related to Our Business Generally

Our business depends upon our ability to sponsor and raise investor capital for our investment funds.

Our business as a specialized asset manager depends upon our ability to sponsor, and raise capital, through investment funds and to generate management fees by managing those funds and the assets they hold. If we are unable to raise capital through these funds, our ability to increase our managed assets, and thus our revenues from management fees, will be materially impaired. Our ability to raise capital through these funds will depend upon numerous factors, including

the performance of our existing funds;

market acceptance of the types of funds we sponsor;

the availability of qualified personnel to manage our funds;

the availability of suitable investments in the types of loans, real estate, commercial finance assets and other assets that we seek to acquire for our funds; and

interest rate changes and their effect on both the assets we seek to acquire for our funds, and the amount, cost and availability of acquisition financing.

Our revenues depend to a significant extent upon the performance of the assets we manage.

Our asset management revenues depend, to a significant extent, upon the value of the assets we manage and the returns achieved by those assets. If either or both the value of those assets or the revenues from them decline, our management revenues will decline, which could impair our profitability. Asset values and revenues from managed assets may be affected by factors beyond our control, including interest rate changes and other economic or market conditions. Moreover, our ability to compete and grow depends, in part, on the relative attractiveness of the type of investment funds we sponsor and our management performance and strategies under prevailing market conditions. Changes in our absolute performance, or performance relative to competing investments, market indices or other criteria could impair our ability to maintain or increase our revenues.

Increases in interest rates may increase our operating costs.

As of September 30, 2006, we had two corporate credit facilities, one commercial finance credit facilities and, with respect to two CDO issuers we are sponsoring, warehouse credit facilities. We expect that in the course of our operations we will obtain other credit facilities. All of our current credit facilities are at variable interest rates, and we expect that future facilities will also be at variable rates. As a result, increases in interest rates on our credit facilities, to the extent they are not matched by increased interest rates or other income from the assets whose acquisition is financed by these facilities, will increase our interest costs, which would reduce our net income.

Our revenues depend to a significant extent upon the performance of the assets we manage.

The investments made by many of our funds are interest-rate sensitive. As a result, changes in interest rates could reduce the value of the assets held and the returns to investors, thereby impairing our ability to raise capital and reducing both our returns on amounts we have invested in the funds as well as management and other fees that may depend on fund net impaired.

If we cannot generate sufficient cash to fund our participations in our investment funds, our ability to maintain and increase our revenues may be impaired.

We typically participate in our investment funds along with our investors, and believe that our participation enhances our ability to raise capital from investors. We typically fund our participations through cash derived from operations or from financing. If our cash from operations is insufficient to fund our participation in future investment funds we sponsor, and we cannot arrange for financing, our continuing ability to raise funds from investors and, thus, our ability to maintain and increase the revenues we receive from fund management, will be impaired.

Termination of management arrangements with one or more of our investment funds could harm our business.

We provide our management services to our investment funds through management agreements, as well as through our position as the sole or managing general partner of partnership funds or as the operating manager of other fund entities, or combinations thereof. Our arrangements are long-term, and frequently have no specified termination dates. However, our management arrangements with, or our position as general partner or operating manager of, an investment fund typically may be terminated by action taken by the investors. Upon any such termination, our management fees, after payment of any termination payments required, would cease, reducing our expected revenues.

We may have difficulty managing our growth which may divert resources and limit our ability to expand our operations successfully.

The amount of assets we manage has grown substantially from $7.1 billion at September 30, 2005 to $12.1 billion at September 30, 2006. We expect to continue to experience significant growth in our assets under management. Our future success will depend on the ability of our officers and key employees to continue to implement and improve our operational, financial and management controls, reporting systems and procedures, and manage a growing number of assets and investment funds. We may not implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls. Consequently, our continued growth may place a strain on our administrative and operations infrastructure. Any such strain could increase our costs or reduce or eliminate our profitability.

Our business will be harmed if we are unable to locate and retain key personnel.

Our ability to locate and retain quality personnel has contributed significantly to our growth and success and is important to attracting investors. The market for qualified executives, asset managers and other key personnel is extremely competitive. We cannot assure you that we will continue to be successful in our efforts to recruit and retain the required personnel. The loss of any of our professional personnel could reduce our revenues and earnings.

We are subject to substantial competition in all aspects of our business.

Our ability to sponsor investment funds is highly dependent on both our access to various distribution systems of national, regional and local securities firms, and our ability to locate and acquire appropriate assets for our investment funds. We are subject to substantial competition in each area. In the distribution area, our investment funds compete with those sponsored by other asset managers which are being distributed through the same networks as well as investments sponsored by the securities firms themselves. While we have been successful in maintaining access to these distribution channels, we cannot assure you that we will continue to do so. The inability to have continued access to our distribution channels could reduce the number of funds we sponsor and assets we manage, thereby impeding and possibly impairing our revenues and revenue growth.

In acquiring appropriate assets for our investment funds, we compete with numerous public and private investment vehicles, commercial banks, investment banks and other financial institutions, as well as industry participants in each of our separate asset management areas. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. Competition for desirable investments may result in higher costs and lower investment returns, and may delay our sponsorship of investment funds.

There are few economic barriers to entry in the asset management business.

Our investment funds compete against an ever-increasing number of investment and asset management products and services sponsored by investment banks, banks, insurance companies, financial services companies and others. There are few economic barriers to entry into the investment or asset management industries and, as a result, we expect that competition for access to distribution channels and appropriate assets to acquire will increase.

Risks Relating to Particular Aspects of Our Financial Fund Management, Real Estate and Commercial Finance Operations

We depend upon CDO issuances as the principal source of term financing for assets we acquire for our account and for the account of investment entities we sponsor. If we are unable to access the CDO market, or are able to do so only on unattractive terms, our ability to acquire assets and sponsor investment vehicles may be limited.

We use CDO financing to provide term funding for a significant portion of the assets we acquire, both for our own account and for the account of investment vehicles we sponsor. Pending financing through a CDO, we accumulate assets through warehouse and other short-term credit facilities. As a result, during the accumulation period, we are subject to the risk that the assets we acquire may not meet standards established by underwriters, rating agencies and CDO purchasers for CDO financing. In addition, conditions in the capital markets may limit or eliminate our ability to use CDOs as term financing for the kinds of assets we seek to acquire, or make the issuance of CDOs economically unattractive. If we are unable to issue CDOs to finance assets we accumulate, we may have to seek other, potentially more economically unfavorable forms of term financing, or liquidate assets which may be at a price lower than the acquisition price. Any such occurrence could limit or eliminate our ability to acquire assets or sponsor investment vehicles to hold these assets and, accordingly, impair our ability to generate asset management fees, which are a significant portion of our gross revenues.

We arrange for warehouse and other short term financing for assets we accumulate for CDOs for our own account and for the account of investment vehicles we sponsor. We typically guarantee some portion of amounts drawn on these facilities which exposes us to loss.

We typically accumulate assets for our own account and for the account of investment vehicles we sponsor by using warehouse and other short term financing pending obtaining term financing through CDOs or other longer-term credit facilities. If we cannot arrange CDO or other term financing, short term lenders may liquidate the assets accumulated through their credit facilities which, depending upon market conditions, could be at a price which is less than what we paid. Because we typically are required to guarantee the short term lender against loss, either generally or subject to negotiated caps, we will have to bear any loss realized up to the guaranty cap amount, if any. Our loss exposure at September 30, 2006 was $29.0 million.

Our income from our interests in CDOs may be volatile.

We account for our investments in the Trapeza CDO programs, described in “Business-Financial Fund Management,” under the equity method of accounting. Accordingly, we recognize our percentage share of any income or loss of these entities. Because the Trapeza entities are investment companies for accounting purposes, such income or loss includes a “mark-to-market” adjustment to reflect the net changes in value, including unrealized appreciation or depreciation, in investments and swap agreements. Such value will be impacted by changes in the underlying quality of the Trapeza entities’ investments and by changes in interest rates. To the extent that the Trapeza entities’ investments are securities with a fixed rate of interest, increases in interest rates will likely cause the value of the investments to fall and decreases in interest rates will likely cause the value of the investments to rise. The Trapeza entities’ various interest rate hedge and swap agreements will also change in value with changes in interest rates. In addition, as the equity interests that we hold in CDO issuers either directly or through limited partnership investments are terminated, we obtain a return of capital only after all payments are made on the CDOs. If there are defaults on the collateral securities held by these issuers, our distributions and return of capital upon liquidation may be reduced or eliminated. Accordingly, our income or loss from our CDO investments and from future similar CDO investments may be volatile.

Real estate loans in our portfolio are subject to higher risk of default than first mortgage loans.

The primary or sole source of recovery for our real estate loans and property interests is typically the underlying real property. Accordingly, the value of our loans and property interests depends upon the value of that real property. Many of the properties underlying our portfolio loans, while income producing, do not generate sufficient revenues to pay the full amount of debt service required under the original loan terms or have other problems. There may be a higher risk of default with these loans as compared to conventional loans. Loan defaults will reduce our current return on investment and may require us to become involved in expensive and time-consuming bankruptcy, reorganization or foreclosure proceedings.

Real estate loans in our portfolio require large lump sum payments at maturity, increasing the risk of default.

Our loans, including those treated in our consolidated financial statements as FIN 46 assets and liabilities, typically provide payment structures other than equal periodic payments that retire a loan over its specified term, including structures that defer payment of some portion of accruing interest, or defer repayment of principal, until loan maturity. Where a borrower must pay a loan balance in a large lump sum payment, its ability to satisfy this obligation may depend upon its ability to obtain suitable refinancing or otherwise to raise a substantial cash amount, which we do not control. In addition, lenders can lose their lien priority in many jurisdictions, including those in which our existing loans are located, to persons who supply labor or materials to a property. For these and other reasons, the total amount which we may recover from one of our loans may be less than the total amount of the carrying value of the loan or our cost of acquisition.

The value of our portfolio of real estate loans and property interests depends upon the value of the underlying real properties which may decline due to factors beyond our control.

Declines in real property values generally and/or in those specific markets where the properties underlying our portfolio of loans and property interests are located could affect the value of those properties and, with respect to our portfolio loans, default rates. Properties underlying our loans and our property interests may be affected by general and local economic conditions, neighborhood values, competitive overbuilding, casualty losses and other factors beyond our control. The value of real properties may also be affected by factors such as the cost of compliance with, and liability under environmental laws, changes in interest rates and the availability of financing. Income from a property will be reduced if a significant number of tenants are unable to pay rent or if available space cannot be rented on favorable terms. Operating and other expenses of real properties, particularly significant expenses such as real estate taxes, insurance and maintenance costs, generally do not decrease when revenues decrease and, even if revenues increase, operating and other expenses may increase faster than revenues.

Our portfolio of real estate loans principally consists of junior mortgage loans, which are subject to higher default risks than senior financing.

Many of our portfolio loans, including those treated in our consolidated financial statements as FIN 46 assets and liabilities, are junior lien obligations. Subordinate lien financing poses a greater credit risk, including a substantially greater risk of nonpayment of interest or principal, than senior lien financing. If we or any senior lender forecloses on a loan, we will be entitled to share only in the net foreclosure proceeds after payment to all senior lenders. It is therefore possible that we will not recover the full amount of a foreclosed loan or the amount of our unrecovered investment in the loan.

Our real estate loan loss reserve may not be sufficient to cover future losses.

At September 30, 2006, our allowance for possible losses was $770,000, which represents 1.5% of the book value of our investments in real estate loans and property interests. We cannot assure you that this allowance will prove to be sufficient to cover future losses, or that future provisions for losses will not be materially greater than those we have recorded to date. Losses that exceed our allowance for losses, or cause an increase in our provision for losses, could materially reduce our earnings.

Our real estate loans are illiquid, and we may not be able to divest them in response to changing economic, financial and investment conditions.

The loans in our portfolio, including those treated in our consolidated financial statements as FIN 46 assets and liabilities, typically do not conform to standard loan underwriting criteria. Many of our loans are subordinate loans. As a result, our loans are relatively illiquid investments. We may be unable to vary our portfolio in response to changing economic, financial and investment conditions.

Hazardous or toxic substances on properties underlying our loans may subject us to environmental liabilities.

The existence of hazardous or toxic substances on a property will reduce its value and our ability to sell the property in the event of a default in the loan it underlies. Contamination of a real property by hazardous substances or toxic wastes not only may give rise to a lien on that property to assure payment of the cost of remediation, but also can result in liability to us as an owner, lender or, if we assume management, as an operator, for that cost regardless of whether we know of, or are responsible for, the contamination. In addition, if we arrange for disposal of hazardous or toxic substances at another site, we may be liable for the costs of cleaning up and removing those substances from the site, even if we neither own nor operate the disposal site. Environmental laws may require us to incur substantial expenses to remediate contaminated properties and may materially limit use of these properties. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability.

We may be required to repurchase up to $3.5 million of real estate loan participations we have sold.

Before fiscal 2000, we entered into a series of standby commitments with some participants in our loans which obligate us to repurchase their participations or substitute a performing loan if the borrower defaults. At September 30, 2006, the participations as to which we had standby commitments had an aggregate outstanding balance of $1.3 million.

Our equipment leases and commercial notes may have greater risks of default than senior secured loans.

While we expect that we will transfer our commercial financing assets, principally direct financing leases, operating leases and equipment notes, to third party programs or, to a lesser extent, RCC, we typically retain some assets for our own account. Many of the entities seeking equipment financing from us are small- to middle-size businesses. As a result, we may be subject to higher risks of a default than if we provided equipment financing to larger businesses. While we will seek to repossess and re-lease or sell the equipment subject to a defaulted lease or other commercial finance instrument, we may not be able to do so on advantageous terms. If a borrower files for protection under the bankruptcy laws, we may experience difficulties and delays in recovering the equipment. Moreover, the equipment may be returned in poor condition and we may be unable to enforce important lease or loan provisions against an insolvent borrower, including the contract provisions that require the borrower to return the equipment in good condition. In some cases, the deteriorating financial condition of a borrower may make trying to recover what it owes impractical. The costs of recovering equipment upon a default, enforcing obligations under the lease or loan, and transporting, storing, repairing and finding a new borrower or purchaser for the equipment may be high. Higher than expected lease defaults will result in a loss of anticipated revenues.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES

Philadelphia, Pennsylvania:

We maintain our executive and corporate offices at One Crescent Drive in the Philadelphia Naval Yard under a lease for 8,771 square feet that expires in May 2019. We lease 20,207 square feet for additional executive office space and for certain of our real estate operations at 1845 Walnut Street. This lease, which expires in May 2008, contains extension options through 2033 and is in an office building in which we own a 30% equity interest. Our commercial finance operations are located in another office building at 1818 Market Street under a lease for 29,554 square feet that expires in March 2008.

New York City, New York:

We maintain additional executive offices in a 12,930 square foot location in New York City at 712 5^th Avenue under a lease agreement that expires in March 2010. Certain of our financial fund management and real estate operations are also located in these offices.

Other:

We maintain various other office leases in the following cities: Los Angeles and San Francisco, California; Portland, Oregon; Northfield, Illinois; Denver, Colorado; and Bloomfield, Michigan. We also lease office space in London, England for our European operations.

ITEM 3. LEGAL PROCEEDINGS

In October 2006, Atlas America (our former energy subsidiary) tentatively settled a class action lawsuit filed in February 2000 in New York pertaining to the payment of royalty revenues to landowners. We are a named defendant in the lawsuit. Under the terms of the proposed settlement, Atlas America has agreed to pay $300,000. We believe that this matter will not have a material adverse effect on our financial condition or operations.

We are a party to various routine legal proceedings arising out of the ordinary course of our business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders during the quarter ended September 30, 2006.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF

EQUITY SECURITIES

Our common stock is quoted on the Nasdaq National Market under the symbol "REXI." The following table sets forth the high and low sale prices as reported by Nasdaq and as adjusted for the spin-off of Atlas America as of June 30, 2005, on a quarterly basis for our last two fiscal years:

	As Reported				As Adjusted
	High		Low		High		Low
Fiscal 2006
Fourth Quarter	$	22.31	$	17.75	$	22.31	$	17.75
Third Quarter	$	21.00	$	17.06	$	21.00	$	17.06
Second Quarter	$	20.12	$	15.98	$	20.12	$	15.98
First Quarter	$	17.92	$	14.60	$	17.92	$	14.60

Fiscal 2005
Fourth Quarter	$	19.75	$	15.86	$	19.75	$	15.86
Third Quarter	$	38.67	$	31.74	$	16.63	$	13.65
Second Quarter	$	40.17	$	29.57	$	17.28	$	12.72
First Quarter	$	32.92	$	22.94	$	14.16	$	9.87

As of December 1, 2006, there were 17,292,049 shares of common stock outstanding held by 388 holders of record.

We have paid regular quarterly cash dividends since the fourth quarter of fiscal 1995. Commencing with the third quarter of fiscal 2004, we increased our quarterly dividend by 52% from $0.033 to $0.05 per common share and for fiscal 2006, further increased our quarterly dividend by 20% to $0.06 per common share.

Additionally, in fiscal 2005, we distributed our 10.7 million shares of Atlas America to our stockholders in the form of a tax-free distribution valued at $91.4 million.

Securities Authorized for Issuance under Equity Compensation Plans

	(a)	(b)	(c)
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a)
Equity compensation plans approved by security holders	3,865,296	$7.54	821,698

The following table provides information about purchases by us during the quarter ended September 30, 2006 of equity securities that are registered by us pursuant to Section 12 of the Securities Exchange Act of 1934:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs ⁽²⁾⁽³⁾		Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Programs ⁽¹⁾
July 1 to July 31, 2006		−	$	−		−	$	31,362,326
August 1 to August 31, 2006		34,956	$	18.94		34,956	$	30,700,099
September 1 to September 30, 2006		26,123	$	19.99		26,123	$	30,177,850
Total		61,079				61,079

(1)	On September 21, 2004, the Board of Directors approved a share repurchase program under which we may buy up to $50.0 million of our outstanding common stock from time to time in open market purchases or through privately negotiated transactions.

(2)	As of September 30, 2006, we had repurchased an aggregate of 1,103,639 shares at a total cost of $19.8 million pursuant to the repurchase program, at an average cost of $17.96 per share.

(3)

On August 30, 2006, we entered into a Stock Repurchase Agreement with Morgan Stanley & Co. Inc. to begin purchasing stock on September 1, 2006 at a price up to $20.00 (excluding commission) to an aggregate cost of $6.0 million, which expired on November 23, 2006. As of September 30, 2006, we purchased an aggregate of 26,123 shares at a total cost of approximately $522,000 pursuant to this repurchase agreement, at an average cost of $19.99 per share.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read together with our consolidated financial statements, the notes to the consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this report. We derived the selected consolidated financial data for each of the years ended September 30, 2006, 2005 and 2004, and as of September 30, 2006 and 2005 from our consolidated financial statements appearing elsewhere in this report, which have been audited by Grant Thornton LLP, an independent registered public accounting firm. We derived the selected financial data for the years ended September 30, 2004, 2003 and 2002 and as of September 30, 2004, 2003 and 2002 from our consolidated financial statements for those periods which were audited by Grant Thornton LLP but are not included in this report. As a result of the completion of our spin-off of Atlas America in June 2005, financial data relating to our former energy operations has been reclassified as discontinued operations for all periods presented.

	As of and for the Years Ended September 30,
	2006		2005		2004		2003			2002
	(in thousands, except per share data)
Statement of operations data:
Revenues
Financial fund management	$	30,834	$	15,944	$	7,585	$	1,444		$	185
Real estate		23,676		17,791		10,519		13,331			16,582
Commercial finance		23,840		13,381		7,135		4,071			1,246
Resource Europe		474		−		−		−			−
Total revenues	$	78,824	$	47,116	$	25,239	$	18,846		$	18,013
Income (loss) from continuing operations before cumulative effect of changes in accounting principles	$	17,282	$	5,388	$	1,610	$	(3,556	)	$	(1,101	)
Income (loss) from discontinued operations, net of tax		1,231		11,070		16,799		14,522			(2,208	)
Cumulative effect of changes in accounting principles, net of tax		1,357		−		−		(13,881	)		−
Net income (loss)	$	19,870	$	16,458	$	18,409	$	(2,915	)	$	(3,309	)

Basic earnings (loss) per common share:
Continuing operations	$	0.98	$	0.30	$	0.09	$	(0.21	)	$	(0.06	)
Discontinued operations		0.07		0.63		0.97		0.85			(0.13	)
Cumulative effect of changes in accounting principles		0.08		−		−		(0.81	)		−
Net income (loss)	$	1.13	$	0.93	$	1.06	$