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EXHIBIT NO. 99.1
AMRESCO, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE THREE MONTHS ENDED MARCH 31, 2000
The accompanying unaudited pro forma consolidated balance sheet and statement of
operations give effect to the disposition by AMRESCO, INC. ("AMRESCO") of its
Commercial Banking Segment ("CMB") and asset management and real estate
structured finance platforms. The unaudited pro forma consolidated balance sheet
gives effect to the dispositions as if they had occurred on December 31, 1999.
The unaudited pro forma consolidated statements of operations for the year ended
December 31, 1999 and for the three months ended March 31, 2000 give effect to
the transactions as if they had occurred on January 1, 1999. A pro forma
consolidated balance sheet as of March 31, 2000 has not been presented as the
transactions have already been reflected in the March 31, 2000 consolidated
balance sheet previously filed on Form 10-Q.
The unaudited pro forma consolidated financial statements have been prepared
based upon the historical financial statements of AMRESCO. The pro forma
adjustments, which are described in the accompanying notes, reflect AMRESCO's
preliminary assumptions and estimates based upon available information. The
unaudited pro forma consolidated financial statements do not purport to be
indicative of the results which would actually have been obtained if the
transactions had been effected on the date indicated nor are they necessarily
indicative of the results of operations that may be achieved in the future. The
unaudited pro forma consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 and Quarterly Report on Form 10-Q for the three months ended
March 31, 2000.
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AMRESCO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
DISPOSAL
OF OTHER AS
HISTORICAL (a) ADJUSTED
-------------- ------------- --------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents....................................$ 42,352 $ (5,133) $ 37,219
Loans held for sale, net..................................... 295,041 295,041
Loans and asset portfolios, net.............................. 705,353 (20,165)(b) 685,188
Retained interests in securitizations - trading (at fair
value)..................................................... 299,311 299,311
Asset-backed securities - available for sale (at fair
value)..................................................... 107,005 107,005
Accounts receivable, net..................................... 17,685 3,377 21,062
Income taxes receivable...................................... 3,403 943 4,346
Deferred income taxes........................................ 73,983 (18,050)(c) 55,933
Premises and equipment, net.................................. 16,846 (3,697) 13,149
Intangible assets, net....................................... 180,139 (6,041) 174,098
Mortgage servicing rights, net............................... 6,283 6,283
Other assets................................................. 69,272 24,651(d) 93,923
Net assets of discontinued operations........................ 127,753 (127,753)
----------- ----------- -----------
TOTAL ASSETS.................................................$ 1,944,426 $ (151,868) $ 1,792,558
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable..........................................$ 20,098 $ (2,382) $ 17,716
Accrued employee compensation and benefits................ 15,415 (2,424) 12,991
Notes payable............................................. 708,611 (185,999)(e) 522,612
Warehouse loans payable................................... 101,894 101,894
Senior subordinated notes................................. 580,033 580,033
Other liabilities......................................... 58,656 10,878 69,534
----------- ----------- -----------
TOTAL LIABILITIES...................................... 1,484,707 (179,927) 1,304,780
----------- ----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $0.05 par value, authorized 150,000,000
shares; 49,792,788 shares issued....................... 2,490 2,490
Capital in excess of par.................................. 546,762 546,762
Common stock to be issued for earnouts.................... 87,548 (1,448) 86,100
Unamortized stock compensation............................ (4,096) (4,096)
Treasury stock, $0.05 par value, 1,024,339 shares......... (17,363) (17,363)
Accumulated other comprehensive loss...................... (8,848) (8,848)
Retained earnings (deficit)............................... (146,774) 29,507(f) (117,267)
----------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY............................. 459,719 28,059 487,778
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...................$ 1,944,426 $ (151,868) $ 1,792,558
=========== =========== ===========
</TABLE>
(a) Reflects the changes due to the sale of the asset management and real
estate structured finance platforms, and certain corporate items to Lend
Lease.
(b) Reflects the disposal of asset management investments.
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(c) Recording a reduction in deferred tax receivable related to the Lend Lease
sale.
(d) Reflects primarily the recording of $25.0 million note receivable from Lend
Lease.
(e) Shows the paydown of notes payable from disposal.
(f) Reflects gain from Lend Lease sale, net of taxes.
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AMRESCO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DISPOSAL
OF OTHER AS
HISTORICAL (a) ADJUSTED
------------ ------------- ------------
<S> <C> <C> <C>
REVENUES:
Interest and other investment income ............. $ 247,420 $ (3,173)(b) $ 244,247
Gain on sale of loans and investments, net ....... 144,838 144,838
Mortgage banking and servicing fees .............. 14,617 (75)(b) 14,542
Asset management and resolution fees ............. 19,799 (11,078)(b) 8,721
Other revenues ................................... 3,195 (603)(b) 2,592
------------ ------------ ------------
Total revenues ................................. 429,869 (14,929)(b) 414,940
------------ ------------ ------------
EXPENSES:
Personnel ........................................ 176,207 (31,242)(c) 144,965
Interest ......................................... 157,708 (1,354)(d) 156,354
Loss on retained interests in securitizations .... 146,398 146,398
Impairment of assets ............................. 113,497 113,497
Other general and administrative ................. 90,747 (10,472)(e) 80,275
Provisions for loan and asset portfolio losses ... (1,087) (1,087)
Depreciation and amortization .................... 37,450 (1,897)(f) 35,553
------------ ------------ ------------
Total expenses ................................. 720,920 (44,965) 675,955
------------ ------------ ------------
Income (loss) from continuing operations before
income taxes ..................................... (291,051) 30,036 (261,015)
Income tax expense (benefit) ......................... (62,774) 6,308 (56,466)
------------ ------------ ------------
Income (loss) from continuing operations ............. $ (228,277) $ 23,728 $ (204,549)
============ ============ ============
Income (loss) from continuing operations per
common share:
Basic and Diluted $ (4.77) $ (4.27)
============ ============
Weighted average shares outstanding
Basic and Diluted 47,879,000 47,879,000
============ ============
</TABLE>
(a) Disposal of other reflects the changes due to the sale of the asset
management and real estate structured finance platforms, and certain
corporate items.
(b) Represents actual revenues recorded by the Company during the period
related to the disposed asset management and real estate structured
platforms.
(c) The adjustment for personnel expense consists of salaries and benefits
related to the disposal of $14.6 million in corporate, $13.7 million in
asset management and $2.9 million in real estate structured finance.
(d) Represents proportionate amount of total interest expense associated with
financing the related asset management investments sold to Lend Lease.
(e) General and administrative expenses include adjustments for $12.2 million
for asset management related expenses, $1.6 million for real estate
structured finance related
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expenses, $1.7 million in reduced occupancy and leases expenses, $1.0 in
reduced professional fees, $1.9 million in reduced equipment costs offset
partially by $7.9 million in additional professional fees to be paid to
Lend Lease for asset management services based upon a contractual rate.
(f) The reduction in depreciation and amortization relates to $0.7 million of
the asset management platform, $0.6 million of reduced leasehold
improvements amortization, $0.3 million related to reduced equipment
depreciation and $0.3 million of reduced furniture and fixtures
depreciation and computer software amortization.
Note: The Company anticipates obtaining prior to the end of the third quarter
of 2000 an additional $15.0 million cash for consents or approvals (see
Item 2. for further information). The pro forma statement of operations
for the year ended December 31, 1999 does not reflect such amounts.
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AMRESCO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DISPOSAL
OF OTHER AS
HISTORICAL (a) ADJUSTED
------------ ------------- ------------
<S> <C> <C> <C>
REVENUES:
Interest and other investment income .............. $ 34,155 $ (1,523)(b) $ 32,632
Gain on sale of loans and investments, net ........ 1,422 1,422
Mortgage banking and servicing fees ............... 2,004 2,004
Asset management and resolution fees .............. 3,884 (2,166)(b) 1,718
Other revenues .................................... 1,566 (2,143) (577)
------------ ------------ ------------
Total revenues .................................. 43,031 (5,832)(b) 37,199
------------ ------------ ------------
EXPENSES:
Personnel ......................................... 18,096 (7,016)(c) 11,080
Interest .......................................... 31,910 (553)(d) 31,357
Loss on disposal of assets ........................ 38,431 (33,070) 5,361
Other general and administrative .................. 12,519 (3,957)(e) 8,562
Provisions for loan and asset portfolio losses .... 2,255 2,255
Depreciation and amortization ..................... 4,753 (427)(f) 4,326
------------ ------------ ------------
Total expenses .................................. 107,964 (45,023) 62,941
------------ ------------ ------------
Income (loss) from continuing operations before
income taxes ...................................... (64,933) 39,191 (25,742)
Income tax expense (benefit) .......................... (19,588) 13,717 (5,871)
------------ ------------ ------------
Income (loss) from continuing operations .............. $ (45,345) $ 25,474 $ (19,871)
============ ============ ============
Income (loss) from continuing operations
per common share:
Basic and Diluted $ (0.94) $ (0.41)
============ ============
Weighted average shares outstanding
Basic and Diluted 48,259,000 48,259,000
============ ============
</TABLE>
(a) Disposal of other reflects the changes due to the sale of the asset
management and real estate structured finance platforms, and certain
corporate items.
(b) Represents actual revenues recorded by the Company during the period
related to the disposed asset management and real estate structured
platforms.
(c) The adjustment for personnel expense consists of salaries and benefits
related to the disposal of $3.7 million in asset management, $3.1 million
in corporate and $0.2 million in real estate structured finance.
(d) Represents proportionate amount of total interest expense related to the
asset management investments sold to Lend Lease.
(e) General and administrative expenses include adjustments for reduction of
$3.9 million for asset management related expenses, $0.3 million for real
estate structured finance related
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expenses, $0.6 million in equipment costs, $0.6 million in occupancy and
lease expenses, $0.2 in professional fees, offset partially by $1.6
million in additional professional fees to be paid to Lend Lease for asset
management services based upon a contractual rate.
(f) The reduction in depreciation and amortization relates to reduced
depreciation and amortization in the asset management platform and in
corporate overhead.
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