<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
February 22, 2000
--------------------------------------------------------
Date of Report (Date of earliest event reported)
Imperial Credit Commercial Mortgage Investment Corp.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Maryland 0-23089 95-4648345
- ---------------------------------- --------------------- -----------------------
State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
11601 Wilshire Blvd., Suite 2080, Los Angeles, CA 90025
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(Address of principal executive offices) (Zip Code)
(310) 231-1280
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(Registrant's telephone number)
<PAGE>
Item 5. Other Events.
On February 22, 2000, Imperial Credit Commercial Mortgage Investment Corp.
(the "Registrant") issued a press release reporting its earnings for the quarter
and year ended December 31, 1999. The Registrant also reported an amendment,
dated as of February 7, 2000, to the Merger Agreement, dated as of July 22,
1999, by and among Imperial Credit Industries, Inc., ICCMIC Acquisition Corp., a
wholly-owned subsidiary of Imperial Credit Industries, Inc., and the Registrant.
A copy of the press release is attached as Exhibit 99.1 to this Form 8-K
and is incorporated herein by reference. In addition, a copy of the amendment
to the Merger Agreement is attached as Exhibit 10.1 to this Form 8-K and is
incorporated herein by reference.
Item 7. Exhibit
Exhibit 10.1 Amendment, dated as of February 7, 2000, to the Merger
Agreement, dated as of July 22, 1999, by and among Imperial
Credit Industries, Inc., ICCMIC Acquisition Corp., a
wholly-owned subsidiary of Imperial Credit Industries, Inc.,
and the Registrant.
Exhibit 99.1 Press release of the Registrant, dated February 22, 2000
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
By: /s/ MICHAEL MELTZER
----------------------------------------------------------
Michael Meltzer, Chief Financial Officer and Treasurer
Dated: February 22, 2000
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EXHIBIT INDEX
Exhibit
No. Description
--- ----------------------
10.1 Amendment, dated as of February 7, 2000, to the Merger Agreement,
dated as of July 22, 1999, by and among Imperial Credit Industries,
Inc., ICCMIC Acquisition Corp., a wholly-owned subsidiary of
Imperial Credit Industries, Inc., and the Registrant.
99.1 Press release of the Registrant dated February 22, 2000
<PAGE>
Exhibit 10.1
AMENDMENT NO. 2
TO MERGER AGREEMENT
AMENDMENT NO. 2 TO MERGER AGREEMENT (this "Amendment"), dated as of
---------
February 7, 2000, by and among Imperial Credit Commercial Mortgage Investment
Corp., a Maryland corporation (the "Company"), Imperial Credit Industries, Inc.,
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a California corporation ("ICII"), and ICCMIC Acquisition Corp., a Maryland
----
corporation and wholly owned subsidiary of ICII ("Merger Sub").
----------
WHEREAS, the Company, ICII and Merger Sub have previously entered into
that certain Merger Agreement, dated as of July 22, 1999, as amended by
Amendment No. 1 to merger Agreement, dated as of October 29, 1999 (as amended,
the "Merger Agreement"), providing for, among other things, the merger of Merger
----------------
Sub with and into the Company, with the Company continuing as the surviving
corporation; and
WHEREAS, the Company, ICII and Merger Sub desire to amend the Merger
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound
hereby, the Company, ICII and Merger Sub hereby agree as follows:
Section 1. References. Unless otherwise specifically defined herein,
----------
each term used herein which is defined in the Merger Agreement has the meaning
assigned to such term in the Merger Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference in the Merger
Agreement shall from and after the effective date of this Amendment refer to the
Merger Agreement as amended hereby, except in any instance where any such
reference relates to the original date as of which the Merger Agreement was
executed and delivered, in which instance such reference shall relate to the
Merger Agreement, without amendment hereby.
Section 2. Amendments. The Merger Agreement is hereby amended as
follows:
(a) The date reference in clause (ii) of Section 6.1(b) is hereby
changed from "February 29, 2000" to "April 30, 2000".
<PAGE>
(b) The parties agree that, under Section 1.10 of the Merger
Agreement, the Fair Value of the Company Stock Options having an exercise price
of $9.00 per share will be $2.71 per share.
Section 3. Counterparts; Effectiveness; Governing Law. This
Amendment may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one and the same
agreement. This Amendment shall become effective as of the date first above
written. This Amendment shall be governed and construed in accordance with the
laws of the State of Maryland without regard to the principles of conflicts of
law thereof.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Amendment to
be duly executed on its behalf as of the date first above written.
IMPERIAL CREDIT COMMERCIAL
MORTGAGE INVESTMENT CORP.
By: /s/ Mark S. Karlan
---------------------------
Name: Mark S. Karlan
Title: President and CEO
IMPERIAL CREDIT INDUSTRIES, INC.
By: /s/ H. Wayne Snavely
---------------------------
Name: H. Wayne Snavely
Title: President and CEO
ICCMIC ACQUISITION CORP.
By: /s/ H. Wayne Snavely
---------------------------
Name: H. Wayne Snavely
Title: President and CEO
<PAGE>
Exhibit 99.1
LOGO OF ICCMIC
FOR IMMEDIATE RELEASE
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT
CORP. ANNOUNCES FOURTH QUARTER 1999 RESULTS
LOS ANGELES, CALIFORNIA, February 22, 2000. Imperial Credit Commercial
Mortgage Investment Corp. (Nasdaq: ICMI) today reported net earnings of $3.7
million or $0.13 per share for the quarter ended December 31, 1999 as compared
to net earnings of $3.0 million or $0.11 per share for the same period last
year. Per share amounts presented herein are the same for basic and diluted
share computations. The Company's net earnings for the quarter ended December
31, 1999 were reduced by $1.4 million ($0.05 per share) for non-cash charges to
write down real property held for sale to estimated fair value. The Company's
net earnings for the quarter ended December 31, 1998 were reduced by $4.3
million ($0.15 per share) for non-cash charges to write down certain of the
Company's commercial mortgage-backed securities to estimated fair value and to
increase the Company's allowance for loan losses on mortgage loans.
Net earnings for the year ended December 31, 1999 aggregated $23.2 million
or $0.81 per share as compared to net earnings of $22.2 million or $0.68 per
share for the year ended December 31, 1998. The Company's net earnings for the
year ended December 31, 1999 were reduced by $6.0 million ($0.21 per share) for
non-cash charges to write down real property held for sale to estimated fair
value and to increase the Company's allowance for loan losses on mortgage loans.
The Company's net earnings for the year ended December 31, 1998 were reduced by
$10.9 million ($0.33 per share) to write down certain of the Company's
commercial mortgage-backed securities to estimated fair value and to increase
the Company's allowance for loan losses on mortgage loans.
The Company's operating results, funds from operations and financial
position are summarized as follows (dollars in thousands, except per share
data):
<TABLE>
<CAPTION>
1999 1998
Operating Results: Fourth Quarter Fourth Quarter
- ----------------- -------------- --------------
<S> <C> <C>
Net earnings $3,716 $3,040
Depreciation of real property 823 793
------ ------
Funds from operations ("FFO") $4,539 $3,833
====== ======
Dividends declared $9,405 $9,405
====== ======
Net earnings per share $ 0.13 $ 0.11
====== ======
FFO per share $ 0.16 $ 0.13
===== ======
Dividends declared per share 0.33 $ 0.33
===== ======
</TABLE>
1
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<TABLE>
<CAPTION>
1999 1998
Operating Results: Year Year
- ------------------ ---- -----
<S> <C> <C>
Net earnings $23,211 $22,244
Depreciation of real property 3,195 1,755
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Funds from operations ("FFO") $26,406 $23,999
======= =======
Dividends declared $32,775 $36,948
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Net earnings per share $ 0.81 $ 0.68
======= =======
FFO per share $ 0.92 $ 0.74
======= =======
Dividends declared per share $ 1.15 $ 1.18
======= =======
</TABLE>
<TABLE>
<CAPTION> December 31, December 31,
Summary of Financial Position: 1999 1998
- ------------------------------ ----- ----
<S> <C> <C>
Cash and cash equivalents $101,388 $ 23,398
Repurchase agreements 32,462 -
Mortgage loans, net 369,391 556,648
Real property, net 76,692 107,663
Real property held for sale 24,694 -
Securities available-for-sale 53,549 57,671
Other assets 6,741 11,794
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Total Assets $664,917 $757,174
======== ========
Dividends and other payables and accruals $ 12,374 $ 17,233
Debt 256,878 331,132
Total Stockholders' Equity 395,665 408,809
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Total Liabilities and Stockholders' Equity $664,917 $757,174
======== ========
</TABLE>
Allowance for Loan Losses
The loan loss provisions for the years ended December 31, 1999 and 1998
amounted to $4.6 million and $6.3 million, respectively. The loan loss
provision for the fourth quarter of 1998 aggregated $3.0 million while no such
provision was made for the fourth quarter of 1999. The loan loss provisions
generally were due to an increase in the principal amount of mortgage loans
maintained on non-accrual status. As of December 31, 1999, the Company's
mortgage loan portfolio included 930 loans with a principal balance of $370.8
million (before an allowance for loan losses of $9.7 million), of which 19 loans
with a principal balance of $16.5 million were over 90 days past due, maintained
on non-accrual status and considered impaired loans. As of December 31, 1998,
the Company's mortgage loan portfolio included 1,343 loans with a principal
balance of $552.9 million (before an allowance for loan losses of $8.0 million),
of which 38 loans with a principal balance of $5.7 million were over 90 days
past due, maintained on non-accrual status and considered impaired loans. The
ratio of the allowance for loan losses to non-accrual loans was 0.59 to 1 at
December 31, 1999 as compared to 1.40 to 1 at December 31, 1998. The allowance
for loan losses represented 2.61% and 1.45% of the total principal balance of
the Company's mortgage loans at December 31, 1999 and 1998, respectively.
2
<PAGE>
Securities Write-downs
The Company had no write-downs of securities available-for-sale during the
fourth quarter and year ended December 31, 1999 as compared to $1.3 million and
$4.6 million, respectively, during the corresponding periods in 1998. The
write-downs to estimated fair value in 1998 were applicable to interest-only
commercial mortgage-backed securities that the Company acquired at the time of
its initial public offering. As of December 31, 1999 and 1998, the Company held
$5.7 million and $7.6 million, respectively, in interest-only commercial
mortgage-backed securities (after mark-to-market adjustments). Adverse market
conditions and increased prepayment speeds were the causes of the write-downs.
Net Interest Income
The table presented below sets forth the components of the Company's net
interest income (in thousands of dollars) and yields (expressed as a percentage
per annum) for the relevant periods. The yield computations are based on
average investment balances for interest income and average debt outstanding for
interest expense.
<TABLE>
<CAPTION>
1999 1998
Fourth Quarter Fourth Quarter
-------------- --------------
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
Interest Income:
Mortgage loans $6,443 6.54% $12,776 8.84%
Securities 1,627 11.60 1,522 10.56
Interest bearing accounts* 1,621 5.06 170 4.38
------ -------
Total Interest Income 9,691 6.71 14,468 8.88
Less interest expense** 3,725 6.94 4,793 6.68
------ -------
Net Interest Income $5,966 $ 9,675
====== =======
</TABLE>
<TABLE>
<CAPTION>
1999 1998
Year Year
---- ----
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
Interest Income:
Mortgage loans $37,289 8.06% $40,312 8.71%
Securities 6,299 11.15 6,153 10.68
Interest bearing accounts* 4,039 4.90 2,454 5.39
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Total 47,627 7.92 48,919 8.64
Mortgage loans - non-recurring income 4,730 818
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Total Interest Income 52,357 49,737
Less interest expense** 15,623 6.29 9,255 6.83
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Net Interest Income $36,734 $40,482
======= =======
</TABLE>
* Includes repurchase agreements.
** Excludes interest expense attributable to real property.
3
<PAGE>
The decrease in interest income and yield on mortgage loans is due
primarily to the $1.8 million loss recognized during the fourth quarter of 1999
on the sale of certain mortgage loans secured by an apartment/hotel project as
well as the decrease in size of the Company's mortgage loan portfolio.
Real Property
The table presented below sets forth the Company's real property operating
results (in thousands of dollars) and yields (expressed as a percentage per
annum) for the relevant periods. The yields are based on the average amount of
real property assets for rental income after operating expenses and average debt
outstanding for interest expense.
<TABLE>
<CAPTION>
1999 1998
Fourth Quarter Fourth Quarter
--------------- --------------
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
Real Property Income:
Rental income $3,489 $3,418
Less operating expenses 766 858
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Rental income after operating expenses 2,723 10.03% 2,560 9.37%
Less real property interest expense 807 6.91 897 6.87
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Real property FFO 1,916 1,663
Less depreciation 823 793
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Real property income $1,093 $ 870
====== ======
</TABLE>
<TABLE>
<CAPTION>
1999 1998
Year Year
---- ----
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
Real Property Income:
Rental income $13,938 $7,684
Less operating expenses 3,150 1,872
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Rental income after operating expenses 10,818 9.97% 5,812 9.61%
Less real property interest expense 3,247 6.91 1,910 6.92
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Real property FFO 7,571 3,902
Less depreciation 3,195 1,755
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Real property income $ 4,376 $2,147
======= ======
</TABLE>
Real Property Held for Sale
The Company's real property investment in 17 properties leased to the Ugly
Duckling Corporation was reclassified at December 31, 1999 to real property held
for sale and is carried net of a valuation allowance of $1.4 million which was
provided for in the fourth quarter. The investment was sold on January 3, 2000
for $22.3 million cash and a $2.4 million second mortgage note bearing interest
at 15% per annum. The Company has an option to unwind this transaction if the
proposed merger with Imperial Credit Industries, Inc. (Nasdaq: ICII) does not
occur by April 3, 2000.
4
<PAGE>
Set forth below are the Company's consolidated balance sheets as of
December 31, 1999 and December 31, 1998 and consolidated statements of earnings
for the three and twelve months ended December 31, 1999 and 1998. Amounts are
expressed in thousands, except for share data.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cash and interest bearing deposits $101,388 $ 23,398
Repurchase agreements 32,462 -
Mortgage loans collateralizing debt obligations, net of
allowance for loan losses of $4,614 258,976 -
Mortgage loans, net of allowance for loan losses of $5,053
and $8,027, respectively 110,415 556,648
Real property, net of accumulated depreciation 76,692 107,663
Real property held for sale, at estimated fair value 24.694 -
Securities available-for-sale, at estimated fair value 53,549 57,671
Accrued interest receivable 3,092 6,410
Other assets 3,649 5,384
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Total Assets $664,917 $757,174
======== ========
Liabilities
Dividends payable $ 9,405 $ 9,405
Borrowings under collateralized mortgage obligations 210,716 -
Borrowings under secured warehouse facility - 279,000
Borrowings under secured bank loan - 3,557
Mortgage loans secured by real property 46,162 48,575
Accrued expenses, payables and other liabilities 2,969 7,828
-------- --------
Total Liabilities 269,252 348,365
-------- --------
Stockholders' Equity
Common stock, $.0001 par value. Authorized 500,000,000
shares, 28,500,000 shares issued and outstanding 3 3
Additional paid-in capital 425,615 425,615
Accumulated other comprehensive income (loss) (3,359) 221
Distributions in excess of earnings (26,594) (17,030)
-------- -------
Total Stockholders' Equity 395,665 408,809
-------- -------
Total Liabilities and Stockholders' Equity $664,917 $757,174
======== ========
</TABLE>
5
<PAGE>
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
Consolidated Statements of Earnings
<TABLE>
<CAPTION>
Three months ended Twelve months ended
December 31, December 31,
1999 1998 1999 1998
---- ---- ----- -----
<S> <C> <C> <C> <C>
Income
Mortgage loans $ 6,443 $12,776 $42,019 $ 41,130
Securities available-for-sale 1,627 1,522 6,299 6,153
Repurchase agreements and interest bearing deposits 1,621 170 4,039 2,454
----------- ----------- ----------- -----------
Total Interest Income 9,691 14,468 52,357 49,737
Real property rental income 3,489 3,418 13,968 7,684
----------- ----------- ----------- -----------
Total Income 13,180 17,886 66,325 57,421
----------- ----------- ----------- -----------
Operating Expenses
Management fees 420 1,936 5,905 6,319
Interest expense 4,532 5,690 18,870 11,165
Provision for loan losses - 3,000 4,633 6,300
Write-down of securities available-for-sale - 1,321 - 4,554
Depreciation of real property 823 793 3,195 1,755
Real property operating expenses 766 858 3,150 1,872
Write-down of real property held for sale 1,411 - 1,411 -
Due diligence expenses and professional fees 292 793 3,812 1,659
Stock options issued to Manager and its employees - 97 - 97
Other 1,220 358 2,138 1,456
----------- ----------- ----------- -----------
Total Expenses 9,464 14,846 43,114 35,177
----------- ----------- ----------- -----------
Net Earnings 3,716 3,040 23,211 22,244
Dividends 9,405 9,405 32,775 36,948
----------- ----------- ----------- -----------
Dividends in excess of earnings $(5,689) $(6,365) $(9,564) $(14,704)
=========== =========== =========== ===========
Earnings per share
Basic $0.13 $0.11 $0.81 $0.68
Diluted $0.13 $0.11 $0.81 $0.68
Weighted average common shares outstanding
Basic 28,500,000 28,580,710 28,500,000 32,570,974
Diluted 28,662,138 28,581,348 28,607,809 32,588,634
</TABLE>
Imperial Credit Commercial Mortgage Investment Corp. is a publicly traded
real estate investment trust that invests primarily in multifamily and
commercial mortgage loans, real property and commercial mortgage-backed
securities. The Company has entered into a merger agreement with ICII pursuant
to which, subject to certain conditions including stockholder approval, ICII
effectively will acquire all of the outstanding shares of the Company (other
than 2,570,000 shares already owned by ICII) for a cash purchase price of
approximately $11.575 per share. The merger agreement was amended effective as
of February 7, 2000 to extend to April 30, 2000 the date after which any party
to the merger agreement may terminate the proposed merger transaction.
Mark S. Karlan, President and Chief Executive Officer of the Company,
stated "Imperial Credit Commercial Mortgage Investment Corp. outperformed the
entire mortgage
6
<PAGE>
REIT industry in terms of stock price performance in 1999, and has been the best
performing mortgage REIT since the date of the Company's initial public offering
in October 1997. Because of our solid balance sheet, low leverage and
substantial liquidity, the Company was able to attract an all-cash merger offer
of $11.575 per share from Imperial Credit Industries for all of the Company's
common stock not already owned by them. The Imperial Credit Industries offer was
subjected to a 60-day market check process last year during which no superior
proposal for the Company or its assets was received. The stockholder meeting to
approve the merger will be held on Monday, March 20, 2000 and, if approved at
that time, the merger is expected to close by the end of the first quarter."
Certain statements contained herein are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Act
of 1934, as amended. These forward-looking statements may be identified by
reference to a future period(s) or by the use of forward-looking terminology
such as "may," "will," "intend," "should," "expect," "anticipate," "estimate" or
"continue" or the negatives thereof or other comparable terminology. The
Company's actual results could differ materially from those anticipated in such
forward-looking statements due to a variety of factors, including, but not
limited to, changes in national, regional or local economic environments,
competitive products and pricing, government fiscal and monetary policies,
changes in prevailing interest rates, the course of negotiations, the
fulfillment of contractual conditions, factors inherent to the valuation and
pricing of interests in commercial mortgage-backed securities, other factors
generally understood to affect the real estate acquisition, mortgage and leasing
markets and security investments, the other risks detailed in the Company's
Registration Statement on Form S-11, as amended, filed with the Securities and
Exchange Commission (the "SEC"), periodic reports on Forms 10-Q, 8-K and 10-K
and any amendments with respect thereto filed with the SEC, the Company's
definitive proxy statement filed with the SEC with respect to the Company's
proposed merger with a subsidiary of Imperial Credit Industries, Inc., and other
filings made by the Company with the SEC.
For further information, please contact Michael Meltzer, Chief Financial
Officer, at (310) 231-5906.
7
