<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
AMENDMENT NO.1
TO
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
------------------------------------------------------
Commission file number: 1-12592
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 75-2506197
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
(Address of principal executive offices)
(972) 788-0510
(Registrant's telephone number, including area code)
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
----- ------
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of August 4, 1997, there
were 17,574,137 shares of Common Stock, $0.01, par value outstanding.
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<PAGE> 2
EXPLANATORY NOTE
Walden Residential Properties, Inc. (the "Company"), a Maryland Corporation,
hereby amends its Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1997 by revising its financial statements for the fiscal years ended
December 31, 1996 and for the fiscal quarters ended March 31, 1997 and June 30,
1997, by reclassifying the convertible equity securities formerly reported as a
component of stockholders' equity in its consolidated balance sheets to minority
interests and by restating its statements of income to reflect distributions or
income on such convertible equity securities as income allocated to minority
interest which is deducted in arriving at net income. The Company believes
these changes are necessary to conform the Company's financial statements to
generally accepted accounting principles. These changes will have no impact on
the financial condition, business or assets of the Company and do not change the
Company's net income available to common stockholders per share or funds from
operations.
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<PAGE> 3
WALDEN RESIDENTIAL PROPERTIES, INC.
PART 1. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1997
(Unaudited) and December 31, 1996 (As Restated). . . . .. . . . . . . . . 2
Condensed Consolidated Statements of Income for the
Three Months and Six Months Ended June 30, 1997
and 1996 (Unaudited) (As Restated). . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1996 (Unaudited) (As Restated) . . . . 4
Notes to Condensed Consolidated Financial Statements
(Unaudited) (As Restated). . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . 10
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . 17
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . 17
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<PAGE> 4
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (As Restated)
(In thousands)
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
ASSETS (Unaudited)
<S> <C> <C>
Real estate assets, at cost
Land ....................................................... $ 85,671 $ 80,914
Buildings .................................................. 659,287 602,601
--------- ---------
744,958 683,515
Less: Accumulated depreciation ......................... (54,033) (41,707)
--------- ---------
690,925 641,808
Real estate assets held for sale .............................. 6,577 --
Rent and other receivables .................................... 953 1,324
Prepaid and other assets ...................................... 4,706 3,146
Deferred financing costs, net ................................. 5,508 5,827
Cash and cash equivalents ..................................... 5,818 29,720
Restricted cash:
Escrow deposits ............................................ 6,120 5,369
Additional collateral on loans ............................. 2,520 2,520
--------- ---------
Total assets .......................................... $ 723,127 $ 689,714
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable ..................................... $ 257,252 $ 258,908
Credit facility ............................................ 29,350 --
Accrued real estate taxes .................................. 7,025 7,960
Accounts payable ........................................... 5,822 5,653
Accrued expenses and other liabilities ..................... 5,746 5,395
Preferred distribution payable on convertible equity
securities .............................................. 391 377
--------- ---------
Total liabilities ..................................... 305,586 278,293
Commitments and contingencies
Minority Interests ............................................ 15,936 14,886
Stockholders' equity:
Preferred stock ............................................ 58 58
Common stock ............................................... 177 169
Additional paid in capital ................................. 451,517 432,974
Notes receivable from Company officers and
directors ............................................... (5,263) (5,263)
Deferred compensation on Restricted Stock .................. (2,463) --
Distributions in excess of net income ...................... (42,421) (31,403)
--------- ---------
Total stockholders' equity ............................. 486,447 396,536
--------- ---------
Total liabilities and stockholders' equity .......... $ 723,127 $ 689,714
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 5
WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (As Restated)
(In thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Rental income ......................... $ 33,071 $ 24,437 $ 64,587 $ 48,570
Other property income ................. 1,333 919 2,605 1,746
Interest income ....................... 346 508 849 719
Other income .......................... -- 98 -- 202
-------- -------- ------- --------
Total revenues ..................... 34,750 25,962 68,041 51,237
-------- -------- ------- --------
EXPENSES
Property operating and maintenance .... 11,444 8,829 22,013 17,471
Real estate taxes ..................... 3,412 2,296 6,561 4,649
General and administrative ............ 1,972 1,261 3,394 2,406
Interest .............................. 5,244 4,765 10,121 9,687
Amortization .......................... 200 219 411 394
Depreciation .......................... 6,793 4,747 13,121 9,265
-------- -------- ------- --------
Total expenses ..................... 29,065 22,117 55,621 43,872
-------- -------- ------- --------
Operating income ........................ 5,685 3,845 12,420 7,365
Gain on disposition of real property .... -- 1,272 -- 1,272
-------- -------- ------- --------
Income before extraordinary item and
income allocated to minority
interests ............................. 5,685 5,117 12,420 8,637
Extraordinary loss on debt
extinguishment ........................ -- (96) -- (584)
-------- -------- ------- --------
Income before income allocated
to minority interests ................. 5,685 5,021 12,420 8,053
Income allocated to minority interests .. (395) (471) (800) (942)
-------- -------- ------- --------
Net income .............................. 5,290 4,550 11,620 7,111
Preferred distributions ................. (3,311) (342) (6,623) (342)
-------- -------- ------- --------
Net income available to common
stockholders ........................... $ 1,979 $ 4,208 $ 4,997 $ 6,769
======== ======== ======== =======
Income per share:
Before extraordinary item, less
preferred distributions and income $ 0.11 $ 0.31 $ 0.29 $ 0.52
allocated to minority interests
Extraordinary loss on debt
extinguishment ...................... -- (0.01) -- (0.04)
-------- -------- ------- --------
Net income available to common
stockholders ........................ $ 0.11 $ 0.30 $ 0.29 $ 0.48
======== ======== ======== =======
Distributions per share of common stock . $ 0.4825 $ 0.465 $ 0.965 $ 0.93
======== ======== ======== =======
Weighted average number of common
stock and common stock equivalent
shares outstanding ..................... 17,502 14,151 17,329 14,179
======== ======== ======== =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 6
WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (As Restated)
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ...................................................... $ 11,620 $ 7,111
Adjustments to reconcile net income to net cash provided by
operating activities:
Income allocated to minority interests ........................ 800 942
Depreciation and amortization ................................. 13,53 29,659
Gain on disposition of real property .......................... -- (1,272)
Extraordinary loss on debt extinguishment ..................... -- 584
Amortization of deferred compensation on restricted stock ..... 108 --
Net effect of changes in operating accounts:
Escrow deposits ........................................... (751) (8,911)
Other assets .............................................. (1,301) 356
Accrued real estate taxes ................................. (935) (1,139)
Accounts payable .......................................... (222) (522)
Other liabilities ......................................... 397 (99)
-------- -------
Net cash provided by operating activities .............. 23,248 6,709
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of real estate assets, net of noncash items below .... (52,371) (45,948)
Real estate asset additions ................................... (14,926) (2,784)
Proceeds from disposition of real property .................... -- 8,300
-------- -------
Net cash used in investing activities ................... (67,297) (40,432)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuance, net of issuance costs ........... 15,968 45,675
Purchase of the Company's common stock ........................ -- (3,531)
Distributions paid ............................................ (23,424) (14,476)
Proceeds from mortgage notes payable and credit facility ...... 35,350 48,470
Payment of mortgage notes payable and credit facility ......... (6,000) (38,970)
Payment of financing costs .................................... (91) (2,631)
Additional collateral on loans ................................ -- (650)
Principal reductions of debt .................................. (1,656) (3,724)
-------- -------
Net cash provided by financing activities .............. 20,147 30,163
-------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS ....................... (23,902) (3,560)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................. 29,720 6,801
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD ........................ $ 5,818 $ 3,241
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest ....................................... $ 9,781 $ 9,824
======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Real estate asset additions ................................... $ 345 $ 194
======== ========
Notes receivable for officer and director stock purchases ..... $ -- $ 292
======== ========
Deferred compensation on restricted stock ..................... $ 2,571 $ --
======== ========
Preferred distribution payable on minority interest holders ... $ 391 $ 471
======== ========
Items related to purchase of assets:
Securities issued for purchase of real estate assets ....... $ 1,050 $ --
======== ========
Mortgage notes assumed ..................................... $ -- $ 7,618
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 7
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM UNAUDITED FINANCIAL INFORMATION
Walden Residential Properties, Inc. (the "Company") is a selfadministered
and self-managed real estate company operated as a real estate investment trust,
as defined under the Internal Revenue Code of 1986, as amended. As of June 30,
1997, the Company owned 75 multifamily properties, containing 23,188 apartment
units, primarily in the Southwest and Southeast regions of the United States.
The accompanying unaudited financial statements should be read in
conjunction with the Company's Form 8-K dated April 21, 1997 and the
consolidated financial statements and notes thereto included in the Form 10-Q
for the three months ended March 31, 1997, and the Form 10-K for the year ended
December 31, 1996, which were filed with the Securities and Exchange Commission
("SEC"). The accompanying interim unaudited financial information has been
prepared pursuant to the rules and regulations of the SEC. Certain information
and footnote disclosures normally included in the annual financial statements
have been condensed or omitted pursuant to rules and regulations of the SEC.
Management believes that the disclosures contained in this Form 10-Q are
adequate to make the information presented not misleading. In the opinion of
management, all adjustments and eliminations, consisting only of normal
recurring adjustments, necessary to present fairly the consolidated financial
position of the Company and its subsidiaries as of June 30, 1997 and the
consolidated results of their operations and cash flows for the six months ended
June 30, 1997 and 1996, have been included. The consolidated results of
operations for the six months ended June 30, 1997 are not necessarily indicative
of the results for the full year.
In the first quarter of 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 129,
"Disclosure of Information about Capital Structure", which is effective for
year-end 1997. In the second quarter of 1997, the FASB issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," both of which are effective for
year-end 1998. These statements are either not applicable or are not expected to
have a material impact on the Company's financial statements.
Effective July 1, 1996, the Company revised its method of accounting to
capitalize the cost of replacement carpets on a prospective basis. The Company
believes this accounting policy change is preferable because it is consistent
with policies currently being used by the majority of the largest publicly
traded apartment real estate investment trusts and provides a better matching of
expenses with the related benefit of the expenditures.
- 5 -
<PAGE> 8
Following is pro forma information for the three and six months ended
June 30, 1996 as if the revised capitalization policy were in effect as of
January 1, 1996:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1996
<S> <C> <C>
Income before extraordinary item and income allocated to
minority interests as reported ............................. $ 5,117 $ 8,637
Add: Adjustment for change in accounting policy
to capitalize carpet replacement costs ............ 387 666
--------- ---------
Income before extraordinary item and income allocated to
minority interests as adjusted ............................. $ 5,504 $ 9,303
========= =========
Net income as adjusted ...................................... $ 4,937 $ 7,777
========= =========
Net income available to common stockholders as adjusted ..... $ 4,595 $ 7,435
========= =========
Income per share:
Before extraordinary item, less preferred distributions
and income allocated to minority interests as
reported ................................................ $ 0.31 $ 0.52
Adjustment for effect of change in accounting policy ..... 0.02 0.04
--------- ---------
Income before extraordinary item, less preferred
distributions and income allocated to minority interests
as adjusted ............................................. $ 0.33 $ 0.56
========= =========
Net income available to common stockholders as
reported ................................................ $ 0.30 $ 0.48
Adjustment for effect of change in accounting policy ..... 0.02 0.04
--------- ---------
Net income available to common stockholders as
adjusted ................................................ $ 0.32 $ 0.52
========= =========
</TABLE>
2. ACQUISITIONS
On April 21, 1997, the Company purchased six apartment properties,
containing 1,263 units, in Dallas/Fort Worth and Austin, Texas for approximately
$39.8 million. The acquisitions were funded by a $18.5 million borrowing under
the Company's credit facility and $20.2 million of available cash. In addition,
the Company issued $1.1 million of limited partnership interests in an existing
subsidiary partnership which are convertible into 44,379 shares of the Company's
common stock. Such partnership interests are accounted for as minority
interests (see Note 3).
On June 26, 1997, the Company purchased a 310-unit apartment property
located in Dallas/Fort Worth, Texas for $7.9 million. The acquisition was funded
by a $7.4 million borrowing under the Company's credit facility and $0.5 million
of available cash.
3. STOCKHOLDERS' EQUITY AND MINORITY INTERESTS (AS RESTATED)
Minority Interests
The Company has certain limited partnership interests that are
exchangeable for an aggregate of 810,128 shares of the Company's common stock at
the option of the interest holders. Prior to the exchange, the holders of the
limited partnership interests will be entitled to receive quarterly
- 6 -
<PAGE> 9
distributions equal to the greater of the Company's actual distributions on
810,128 shares of common stock, or $368,608 in the aggregate ($391,000 was
accrued as of June 30, 1997). These securities have been recorded as minority
interests in the accompanying balance sheet.
In conjunction with the apartment acquisition in April 1997 (see Note 2),
the Company issued $1.1 million of limited partnership interests which are
convertible into 44,379 shares of the Company's common stock. Prior to the
exchange, the holders of the limited partnership interests will be entitled to
receive quarterly distributions on the equivalent of 44,379 shares of common
stock if and when declared and paid (no distributions had been declared on such
securities as of June 30, 1997). These securities have been recorded as
minority interests in the accompanying balance sheet.
Restricted Stock
In February 1997, the Company adopted a Long-Term Incentive Plan to
attract and retain individuals to serve as directors, officers and employees of
the Company. Pursuant to this plan, the Company issued 107,500 restricted shares
of common stock ("Restricted Stock") in February 1997 for $.01 per share to its
non-employee directors, four executive officers and certain other employees. As
of June 30, 1997, 10,000 shares of Restricted Stock were canceled upon the
departure of one of the executive officers. The shares issued to the
non-employee directors vest ratably over a three-year period; while the shares
issued to the executive officers and other employees vest over a ten-year
period, with 40% vesting after the fourth anniversary and 10% vesting annually
thereafter. Deferred compensation related to the Restricted Stock was computed
based upon the market value of the shares at the date of issuance less the
amount paid for the shares. This deferred compensation is being amortized over
the respective vesting periods. The unamortized amount as of June 30, 1997 was
$2,463,000.
4. NET INCOME PER SHARE OF COMMON STOCK
Net income per share of common stock has been computed by dividing net
income available to common stockholders by the weighted average number of
common stock and common stock equivalent shares, if material, outstanding. Net
income available to common stockholders is net income less the preferred
distributions on preferred stock. Common stock equivalents include the common
stock applicable to certain of the convertible equity securities as described
in Note 3 and the weighted average number of assumed equivalent shares
outstanding from stock options, if material and dilutive. Fully diluted net
income per share of common stock is not materially dilutive and is not
presented.
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share", which is effective for periods ending after December 15, 1997,
requires that companies disclose basic earnings per share using only the
weighted average number of common shares outstanding during a period. Currently
common stock equivalents are included in this computation if they are material.
Fully diluted earnings per share will continue to be calculated in a manner
similar to the current calculation. Compliance with SFAS No. 128 will require no
change to the Company's earnings per share for the periods presented.
- 7 -
<PAGE> 10
5. PRO FORMA STATEMENTS OF INCOME (AS RESTATED)
The following unaudited condensed pro forma information for the six
months ended June 30, 1997 and 1996 was prepared from the financial statements
of the Company by adjusting for the effect of all public offerings and property
acquisitions and dispositions in 1997 and 1996, including debt used to finance
acquisitions or repaid from proceeds of dispositions, as if all of these
transactions had occurred on January 1, 1996. The pro forma results do not
include gains on property dispositions or extraordinary losses on early
extinguishment of debt. The current capitalization policy is assumed in place
for all properties acquired during the periods. The following information is not
necessarily indicative of what the performance would have been had the Company
owned these properties for the entire period, nor does it purport to represent
future results of operations of the Company. (In thousands, except per share
information.)
<TABLE>
<CAPTION>
Pro Forma
------------------
Six Months Ended
June 30,
------------------
1997 1996
---- ----
<S> <C> <C>
Revenues ................................................. $ 70,873 $ 69,380
Expenses ................................................. 58,165 58,101
-------- --------
Income before income allocated to minority interests ..... 12,708 11,279
Income allocated to minority interests ................... (804) (951)
-------- --------
Net income ............................................... 11,904 10,328
Preferred distributions .................................. (6,623) (6,661)
-------- --------
Net income available to common stockholders .............. $ 5,281 $ 3,667
======== ========
Net income available to common stockholders per share .... $ 0.30 $ 0.21
======== ========
Weighted average shares of common stock outstanding ...... 17,346 17,097
======== ========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
As of June 30, 1997, the Company had executed contracts to acquire two
apartment properties containing 448 units, of which one property was acquired in
July 1997 (see Note 7). In connection with such contracts, the Company deposited
$300,000 of earnest money. The remaining property acquisition is subject to the
completion of normal due diligence procedures and there is no assurance the
Company will purchase such property.
On May 21, 1997, the Company signed a definitive agreement with Drever
Partners, Inc. ("Drever") to provide for a strategic alliance combining the two
companies, subject to the approval of Drever investors and the Company's
stockholders. Under the agreement, the Drever organization and all 79 Drever
apartment properties, containing 18,118 units located in Texas, Arizona, Georgia
and California, would be acquired by a partnership indirectly wholly-owned by
the Company. The transaction value is approximately $670 million, consisting of
$295 million in common and preferred limited partnership units which are
convertible into common stock, and preferred stock with detachable warrants, $85
million in cash, and $290 million of assumed debt.
- 8 -
<PAGE> 11
7. SUBSEQUENT EVENTS
In July 1997, the Company announced its intention to repurchase shares of
its common stock. During July 1997, the Company repurchased and retired 145,500
shares of its common stock at a cost of $3,470,000.
On July 30, 1997, the Company purchased a 232-unit apartment property
located near Nashville, Tennessee for approximately $9.5 million. The Company
assumed a $6.9 million bond financed mortgage, with the remainder of the
acquisition funded from a borrowing under the Company's credit facility. In
connection with the assumption of the mortgage loan, the Company executed a
letter of credit for $7.1 million as additional collateral for the loan.
On August 7, 1997, the Company declared distributions of $.4825 per share
of common stock, $.5725 per share of convertible preferred stock and $.575 per
share of senior preferred stock, all of which are payable on September 3, 1997
to stockholders of record on August 18, 1997.
8. RESTATEMENT OF FINANCIAL INFORMATION
Subsequent to the issuance of the Company's quarter ended June 30, 1997
financial statements, the Company's management determined that the accounting
for convertible equity securities was inappropriate. The Company revised its
financial statements for the fiscal year ended December 31, 1996, and the
three and six-month periods ended June 30, 1997 and 1996, by reclassifying the
convertible equity securities formerly reported as a component of stockholders'
equity in its consolidated balance sheets to minority interest and by restating
its statements of income to reflect distributions or income on such convertible
equity securities as income allocated to minority interest which is deducted in
arriving at net income. A summary of the significant effects of the restatement
is as follows:
<TABLE>
<CAPTION>
1997 1996
As previously As As previously As
reported restated reported restated
<S> <C> <C> <C> <C>
At June 30 and 31, respectively:
Minority interest $ -- $ 15,936 $ -- $ 14,886
Stockholders' equity 417,541 486,447 411,421 396,536
For the six months ended June 30:
Net income 12,420 11,620 8,053 7,111
</TABLE>
The Company believes these changes are necessary to conform the Company's
financial statements to generally accepted accounting principles. These changes
will have no impact on the financial condition, business or assets of the
Company and do not change the Company's net income available to common
stockholders net income per share.
- 9 -
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following discussion should be read in conjunction with the
"Supplemental Financial and Operating Data" and all of the consolidated
financial statements and notes thereto included elsewhere in this Form 10-Q.
Such financial statements and information have been prepared to reflect the
historical condensed consolidated operations of the Company for the three and
six months ended June 30, 1997 and 1996, and the condensed consolidated balance
sheet data of the Company as of June 30, 1997 and December 31, 1996.
The changes in revenues and expenses related to property operations
during the three and six months ended June 30, 1997 and 1996 are primarily the
result of the increased number of units owned due to acquisitions of additional
multifamily properties by the Company. Where appropriate, comparisons are made
on a dollars-per-weighted-average-unit basis in order to adjust for changes in
the number of units owned during each period.
The Company revised its financial statements for the fiscal year ended
December 31, 1996 and for the fiscal quarters ended March 31, 1997 and June 30,
1997 by reclassifying the convertible equity securities formerly reported as a
component of stockholders' equity in its consolidated balance sheets to
minority interest and by restating its statements of income to reflect
distributions or income on such convertible equity securities as income
allocated to minority interest which is deducted in arriving at net income. The
Company believes these changes are necessary to conform the Company's financial
statements to generally accepted accounting principles. These changes will have
no impact on the financial condition, business or assets of the Company and do
not change the Company's net income available to common stockholders per share
or funds from operations.
The following financial and operating data (see Page 11) is provided as
supplemental information to all financial statements included elsewhere in this
Form 10-Q. Such supplemental information is unaudited except the balance sheet
data as of December 31, 1996.
- 10 -
<PAGE> 13
SUPPLEMENTAL FINANCIAL AND OPERATING DATA (As Restated)(a)
(In thousands, except per share and property data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATING DATA
Revenues
Rental income ....................... $ 33,071 $ 24,437 $ 64,587 $ 48,570
Other property income ............... 1,333 919 2,605 1,746
Interest income ..................... 346 508 849 719
Other income ........................ -- 98 -- 202
-------- -------- -------- -------
Total revenues ................... 34,750 25,962 68,041 51,237
-------- -------- -------- -------
Expenses
Property operating and maintenance .. 11,444 8,829 22,013 17,471
Real estate taxes ................... 3,412 2,296 6,561 4,649
General and administrative .......... 1,972 1,261 3,394 2,406
Interest ............................ 5,244 4,765 10,121 9,687
Amortization ........................ 200 219 411 394
Depreciation ........................ 6,793 4,747 13,121 9,265
-------- -------- -------- -------
Total expenses ................... 29,065 22,117 55,621 43,872
-------- -------- -------- -------
Operating income ........................ 5,685 3,845 12,420 7,365
Gain on disposition of real property .... -- 1,272 -- 1,272
-------- -------- -------- -------
Income before extraordinary item and
income allocated to minority
interest .............................. 5,685 5,117 12,420 8,637
Extraordinary loss on debt extinguishment -- (96) -- (584)
-------- -------- -------- -------
Income before income allocated to
minority interests..................... 5,685 5,021 12,420 8,053
Income allocated to minority interests... (395) (471) (800) (942)
-------- -------- -------- -------
Net income .............................. 5,290 4,550 11,620 7,111
Preferred distributions ................. (3,311) (342) (6,623) (342)
-------- -------- -------- -------
Net income available to common
stockholders .......................... $ 1,979 $ 4,208 $ 4,997 $ 6,769
======== ======== ======== ========
Distribution per share of common stock .. $ .4825 $ .465 $ .965 $ .93
======== ======== ======== ========
Weighted average number of common stock
and common stock equivalent shares
outstanding ........................... 17,502 14,151 17,329 14,179
======== ======== ======== ========
- -------------------------------------------------------------------------------------------------
PROPERTY DATA
Total properties (at end of period) ..... 75 60 75 60
Total units (at end of period) .......... 23,188 18,495 23,188 18,495
Total units (weighted average) .......... 22,617 17,084 22,111 17,145
Weighted average monthly property revenue
per unit .............................. $ 507 $ 495 $ 506 $ 489
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
BALANCE SHEET DATA
Real estate assets, at cost, net ................................. $690,925 $641,808
Mortgage notes payable and Credit facility........................ 286,602 258,908
Minority interests................................................ 15,936 14,886
Stockholders' equity.............................................. 486,447 396,536
</TABLE>
- --------------------
(a) The selected financial data as of June 30, 1997 and December 31, 1996 and
the three- and six-month periods ended June 30, 1997 and 1996 have been
restated. See Note 8 to the Company's unaudited financial statements
included herein.
- 11 -
<PAGE> 14
Comparison of Three Months and Six Months Ended June 30, 1997 to Three Months
and Six Months Ended June 30, 1996
The weighted average number of units owned for the second quarter of 1997
increased by 5,533 units, or 32.4%, from 17,084 units for the second quarter of
1996 to 22,617 units for the second quarter of 1997 as a result of the
acquisition of additional properties. The portfolio had a weighted average
occupancy of 94.8% and 94.1% for the second quarter of 1996 and 1997,
respectively.
The weighted average number of units owned for the six months ended June
30, 1997, increased by 4,966 units, or 29.0% from 17,145 units for the first six
months of 1996 to 22,111 units for the first six months of 1997 as a result of
the acquisition of additional properties. Total units owned at June 30, 1996 and
1997 were 18,495 and 23,188, respectively. The portfolio had a weighted average
occupancy of 94.6% and 93.9% for the first six months of 1996 and 1997,
respectively.
The Company owned 52 properties with 16,373 units throughout both periods
in 1997 and 1996 ("same store"). A summary of the historical operating
performance for "same store" properties is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1997 1996 % Change 1997 1996 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Rental and other property revenue (in thousands) $24,634 $24,248 1.6% $49,168 $48,088 2.2%
Property operating expenses (in thousands) (1) 10,517 10,844 (3.0%) 20,792 21,332 (2.5%)
Property operating income (in thousands) ....... $14,117 $13,404 5.3% $28,376 $26,756 6.1%
======= ======= ======= =======
Weighted average physical occupancy ............ 94.2% 94.8% 94.0% 94.6%
Average monthly revenue per unit ............... $ 502 $ 494 1.6% $ 500 $ 489 2.2%
======= ======= ======= =======
Average annualized property operating and
maintenance expenses per unit ................ $ 1,984 $ 2,108 (5.9%) $ 1,962 $ 2,058 (4.7%)
======= ======= ======= =======
Average annualized real estate taxes per unit .. $ 585 $ 541 8.1% $ 578 $ 548 5.5%
======= ======= ======= =======
Operating expense ratio ........................ 42.7% 44.7% N/A 42.3% 44.4% N/A
======= ======= ======= =======
</TABLE>
(1) Consists of property operating and maintenance and real estate tax expenses.
The operating performance of properties not owned throughout both periods
in 1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Rental and other property revenue (in thousands) $ 9,770 $ 1,108 $18,024 $ 2,228
Property operating expenses (in thousands) (1) 4,339 281 7,782 788
Property operating income (in thousands) ....... $ 5,431 827 $10,242 $ 1,440
Weighted average number of units ............... 6,244 711 5,738 772
Weighted average physical occupancy ............ 93.8% 94.8% 93.6% 94.6%
Average monthly revenue per unit ............... $ 522 $ 519 $ 524 $ 481
Average annualized property operating and
maintenance expenses per unit ................ $ 2,127 $ 1,119 $ 2,075 $ 1,617
Average annualized real estate taxes per unit .. $ 652 $ 456 $ 637 $ 422
Operating expense ratio ........................ 44.4% 25.4% 43.2% 35.4%
======= ======= ======= =======
</TABLE>
(1) Consists of property operating and maintenance and real estate tax
expenses.
- 12 -
<PAGE> 15
Interest income decreased $162,000 for the second quarter of 1997, or
31.9%, from $508,000 for the second quarter of 1996 to $346,000 for the second
quarter of 1997. Cash balances during the second quarter of 1996 were greater
than the second quarter of 1997 due to $30 million of stock proceeds and $8.2
million of property sale proceeds received in April 1996 which were invested in
short-term securities. In addition, the $120 million of stock proceeds received
in December 1996 were used to acquire one property in January 1997 and six
properties in April 1997, resulting in reduced cash balances during the second
quarter of 1997. Interest income increased $130,000 for the first six months of
1997, or 18.1%, from $719,000 for the first six months of 1996 to $849,000 for
the first six months of 1997. The increase was primarily due to increased cash
balances for the first quarter of 1997 attributable to the $120 million of stock
proceeds received in December 1996, not utilized until April 1997.
The 1996 other income of $98,000 for the second quarter and $202,000 for
the first six months was attributable to income from WDN Management Company,
which was merged into the Company and dissolved effective December 31, 1996.
General and administrative expenses increased $711,000 for the second
quarter of 1997, or 56.4%, from $1,261,000 for the second quarter of 1996 to
$1,972,000 for the second quarter of 1997. This represented a per unit increase
of $54, or 18.3%, on an annualized basis. General and administrative expenses
increased $988,000 for the first six months of 1997, or 41.1%, from $2,406,000
for the first six months of 1996 to $3,394,000 for the first six months of 1997.
This represents a per unit increase of $26, or 9.3%, on an annualized basis. The
increases in general and administrative expenses were the result of increases in
costs associated with the increased number of employees, as a result of the
increased number of units over the 1996 level, as well as increased costs
associated with the increased number of stockholders (quarterly mailings to
stockholders, transfer services, etc.), and a one-time severance charge relating
to an executive of the Company.
Interest expense increased $479,000 for the second quarter of 1997, or
10.1%, from $4,765,000 for the second quarter of 1996 to $5,244,000 for the
second quarter of 1997. Interest expense increased $434,000 for the first six
months of 1997, or 4.5%, from $9,687,000 for the first six months of 1996 to
$10,121,000 for the first six months of 1997. The increases were primarily due
to debt incurred in connection with the acquisition of additional properties and
partially due to a slight increase in the weighted average interest rate on debt
between periods.
Depreciation expense increased $2,046,000 for the second quarter of 1997,
or 43.1%, from $4,747,000 for the second quarter of 1996 to $6,793,000 for the
second quarter of 1997. Depreciation increased $3,856,000 for the first six
months of 1997, or 41.6%, from $9,265,000 for the first six months of 1996 to
$13,121,000 for the first six months of 1997. The increases were due to
depreciation on additional properties acquired.
The $584,000 extraordinary loss on debt extinguishment recorded in the
six months ended June 30, 1996, resulted from the write off of unamortized
deferred financing costs due to the refinancing of the Company's credit facility
in February 1996 ($488,000) and the refinancing of $22 million of variable rate
tax-exempt debt in May 1996 ($96,000).
The $1,272,000 gain on disposition of real property recorded in the three
months and six months ended June 30, 1996 represented the gain on the sale of a
384-unit apartment property, located in Wichita, Kansas, in April 1996.
- 13 -
<PAGE> 16
Liquidity and Capital Resources
The Company's principal demands for liquidity are distributions to its
stockholders, property operating and maintenance costs, capital improvements to
its properties, acquisitions of properties, interest on indebtedness and debt
repayments.
During the first six months of 1997, the Company had cash flows from
operating activities of $23.2 million, and proceeds from stock offerings of
$16.0 million, including $12.1 million from its dividend reinvestment plan.
These funds, in addition to $29.4 million of net borrowings on the Company's
credit facility, were used during the period to acquire seven apartment
properties (containing 1,781 units) for $52.4 million, distributions to
stockholders of $23.4 million, capital improvements and rehabilitation costs to
its properties of $14.9 million, and principal repayments of $1.7 million,
resulting in a net decrease in cash of $23.8 million.
The Company has a $150 million unsecured credit facility (the "Credit
Facility"), which expires in February 1999. The Credit Facility has been used to
finance property acquisitions, including capital improvements, and will continue
to be used to meet short-term liquidity requirements. The availability of funds
to the Company under the Credit Facility is subject, however, to certain
borrowing base and other customary covenants.
Net cash provided by operating activities increased $16.5 million for the
first six months of 1997 compared to the same period in 1996, primarily due to
an increase in property operating income due to the increased number of units
owned and a reduction in payments for escrow deposits.
Net cash used in investing activities increased $26.9 million for the
first six months of 1997 compared to the same period in 1996, primarily due to
increased capital expenditures on "same store" properties (particularly for the
construction of covered carports, the installation of access gates with
perimeter fencing, energy efficient exterior lighting and water savers and the
reconstruction of balconies and exterior stairwells). Net cash used in investing
activities also increased due to acquisition rehabilitation costs of $12.1
million and the purchase of additional real estate assets of $6.5 million over
the same period in 1996. Also during the same period in 1996, the Company
received $8.3 million in proceeds from the disposition of an apartment property.
Net cash provided by financing activities decreased by $10.1 million for
the first six months of 1997 compared to the same period in 1996, primarily due
to a decrease in proceeds from stock issuances of $29.7 million and an increase
in distributions of $8.9 million and partially offset by a net borrowings
increase of $19.9 million. In addition, during the first six months of 1996, the
Company purchased $3.5 million of its Common Stock and paid $2.5 million of
principal on a mortgage note to release a guarantee.
The Company intends to meet its short-term liquidity requirements,
including capital expenditures related to maintenance and improvements of its
properties, through cash flow provided by operations and when necessary will
utilize unused portions of its Credit Facility to meet working capital needs.
Historically, the Company considers its cash provided by operating activities to
be adequate to meet both its operating requirements and distribution
obligations. The Company has expended $7.8 million and $7.1 million for capital
expenditures, including non recurring items, and
- 14 -
<PAGE> 17
acquisition rehabilitation costs, respectively during the first six months of
1997. Capital expenditures and rehabilitation on acquisition properties are
anticipated to be approximately $11.9 million and $4.2 million, respectively,
for the remainder of 1997.
Long-term liquidity requirements, such as refinancing mortgage
indebtedness and property acquisitions, including capital improvements on
property acquisitions, is dependent on the Company's ability to obtain long-term
borrowings, both secured and unsecured, and to issue debt or equity securities.
As of June 30, 1997, the Company had outstanding indebtedness in the
aggregate principal amount of $286.6 million, consisting of fixed rate debt of
$206.2 million and variable rate debt of $80.4 million. In June 1997, the
interest rate on the Credit Facility was lowered from LIBOR plus 1.5% to LIBOR
plus 1.375% for an effective rate of 7.0625% at June 30, 1997. The weighted
average interest rate on the Company's outstanding indebtedness at June 30, 1997
was approximately 7.6%.
Funds from Operations
Management of the Company generally considers funds from operations
("FFO") an appropriate measure of the performance of an equity real estate
investment trust. FFO is defined as net income before income allocated to
minority interests (determined in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation of real estate assets. The Company believes that in
order to facilitate a clear understanding of its operating results, FFO should
be examined in conjunction with net income as presented herein. FFO does not
represent cash generated from operating, investing and financing activities in
accordance with generally accepted accounting principles and is not necessarily
indicative of cash available to fund cash needs and cash distributions. FFO
should not be considered as an alternative to net income (determined in
accordance with generally accepted accounting principles) as an indication of
the Company's performance or as an alternative to cash flow (determined in
accordance with generally accepted accounting principles) as a measure of
liquidity.
- 15 -
<PAGE> 18
Effective January 1, 1996, the Company adopted the modified definition of
FFO as recommended by the National Association of Real Estate Investment Trusts;
however, the Company's FFO is not necessarily comparable to similar entitled
items reported by other REITs. FFO for the three months and six months ended
June 30, 1997 and 1996 (as restated to conform to the new definition of FFO) are
as follows (unaudited):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Funds from operations:
Operating income ............................ $ 5,685 $ 3,845 $ 12,420 $ 7,365
Depreciation of real estate assets .......... 6,740 4,747 13,009 9,265
Preferred distributions on senior (perpetual)
preferred stock ........................... (2,300) -- (4,600) --
-------- -------- -------- --------
Funds from operations (1) ............... $ 10,125 $ 8,592 $ 20,829 $ 16,630
======== ======== ======== ========
Cash flows provided by (used in):
Operating activities ......................... $ 14,525 $ 1,963 $ 23,248 $ 6,709
Investing activities ......................... (54,357) (39,301) (67,297) (40,432)
Financing activities ......................... 23,157 35,854 20,147 30,163
</TABLE>
(1) Represents funds from operations available for distribution to common and
convertible preferred stockholders and to minority interest holders.
Inflation
The Company leases apartments under lease terms generally ranging from
six to 12 months. Management believes that such short-term lease contracts
lessen the impact of inflation on the cost of property operations, as well as
allow for the adjustment of rental rates to market levels as leases expire.
- 16 -
<PAGE> 19
PART 2. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's Annual Meeting of Stockholders was held on June 5, 1997.
(b) (1) The Stockholders elected two Directors nominated by the Board of
Directors:
<TABLE>
<CAPTION>
Affirmative Negative Abstentions
----------- -------- -----------
<S> <C> <C> <C>
Don R. Daseke 16,137,251 71,062 --
Linda Walker Bynoe 16,132,602 75,711 --
</TABLE>
(2) The Stockholders ratified the appointment of Deloitte & Touche LLP
as independent auditors of the Company for the year ending
December 31, 1997:
<TABLE>
<CAPTION>
Affirmative Negative Abstentions
----------- -------- -----------
<S> <C> <C> <C>
16,109,790 27,062 71,460
</TABLE>
ITEM 5. OTHER INFORMATION
None.
- 17 -
<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits
EXHIBIT NO. DESCRIPTION
<C> <S>
2.1 Contribution Agreement by and among Walden/Drever Operating
Partnership, L.P., Walden Residential Properties, Inc., the
Shareholders of Drever Partners, Inc., AOF, Inc., and AOF II, Inc.
2.2 Exchange Agreement among Walden Residential
Properties, Inc., Walden/Drever Operating
Partnership, L.P., Drever Partners, Inc.,
AOF, Inc. and AOFII, Inc.
10.1 Transfer and Assignment Agreement between
The Arbors of Austin and Walden Residential
Operating Partnership, L.P. (Arbors of Austin
Apartments)
10.2 Transfer and Assignment Agreement between
Arbors of Bedford Limited and Walden Residential
Operating Partnership, L.P. (Arbors of Bedford
Apartments)
10.3 Transfer and Assignment Agreement between
Euless II Limited and Walden Residential
Operating Partnership, L.P. (Arbors of Euless
Apartments)
10.4 Transfer and Assignment Agreement between
The Arbors on Forest Lane Limited and Walden
Residential Operating Partnership, L.P. (Arbors
on Forest Lane Apartments)
10.5 Transfer and Assignment Agreement between
Arbor Park Limited and Walden Residential
Operating Partnership, L.P. (Arbor Park Apartments)
10.6 Transfer and Assignment Agreement between
Arbor Mill Limited and Walden Residential
Operating Partnership, L.P. (Arbors of Carrollton
Apartments)
</TABLE>
- 18 -
<PAGE> 21
<TABLE>
<C> <S>
10.7 Real Estate Sales Contract by and between
Village/Hillcrest Limited Partnership and
Walden Residential Properties, Inc. (Hillcrest
Apartments)
11.1 Computation of Net Income per Share
12.1 Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred
Stock Dividends
27.1 Financial Data Schedule
(b) Reports
None.
</TABLE>
- 19 -
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Walden Residential Properties, Inc. certifies that it has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Don R. Daseke
-----------------------------------
Don R. Daseke
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of Walden Residential
Properties, Inc. and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Don R. Daseke Chairman of the Board of Directors, August 12, 1997
- -----------------------
Don R. Daseke Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Mark S. Dillinger Executive Vice President, Chief August 12, 1997
- -----------------------
Mark S. Dillinger Financial Officer and Director
(Principal Financial and Accounting Officer)
/s/ Marshall B. Edwards President, Chief Acquisitions Officer August 12, 1997
- -----------------------
Marshall B. Edwards and Director
</TABLE>
- 20 -
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S>
2.1 Contribution Agreement by and among Walden/Drever Operating
Partnership, L.P., Walden Residential Properties, Inc., the
Shareholders of Drever Partners, Inc., AOF, Inc., and AOF II, Inc.
2.2 Exchange Agreement among Walden Residential
Properties, Inc., Walden/Drever Operating
Partnership, L.P., Drever Partners, Inc.,
AOF, Inc. and AOFII, Inc.
10.1 Transfer and Assignment Agreement between
The Arbors of Austin and Walden Residential
Operating Partnership, L.P. (Arbors of Austin
Apartments)
10.2 Transfer and Assignment Agreement between
Arbors of Bedford Limited and Walden Residential
Operating Partnership, L.P. (Arbors of Bedford
Apartments)
10.3 Transfer and Assignment Agreement between
Euless II Limited and Walden Residential
Operating Partnership, L.P. (Arbors of Euless
Apartments)
10.4 Transfer and Assignment Agreement between
The Arbors on Forest Lane Limited and Walden
Residential Operating Partnership, L.P. (Arbors
on Forest Lane Apartments)
10.5 Transfer and Assignment Agreement between
Arbor Park Limited and Walden Residential
Operating Partnership, L.P. (Arbor Park Apartments)
10.6 Transfer and Assignment Agreement between
Arbor Mill Limited and Walden Residential
Operating Partnership, L.P. (Arbors of Carrollton
Apartments)
</TABLE>
- E-1 -
<PAGE> 24
<TABLE>
<C> <S>
10.7 Real Estate Sales Contract by and between
Village/Hillcrest Limited Partnership and
Walden Residential Properties, Inc. (Hillcrest
Apartments)
11.1 Computation of Net Income per Share
12.1 Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred
Stock Dividends
</TABLE>
- E-2 -
<PAGE> 1
EXHIBIT 11.1
WALDEN RESIDENTIAL PROPERTIES, INC.
COMPUTATION OF NET INCOME PER SHARE (As Restated)(1)
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Income before extraordinary item and income
allocated to minority interests.................... $ 5,685 $ 5,117 $ 12,420 $ 8,637
Extraordinary loss on debt extinguishment ......... -- (96) -- (584)
-------- -------- -------- ---------
Income before minority interests .................. 5,685 5,021 12,420 8,053
Income allocated to minority interests ............ (395) (471) (800) (942)
-------- -------- -------- ---------
Net income ........................................ 5,290 4,550 11,620 7,111
Preferred distributions ........................... (3,311) (342) (6,623) (342)
-------- -------- -------- ---------
Net income available to common stockholders ....... $ 1,979 $ 4,208 $ 4,997 $ 6,769
======== ======== ======== =========
Income per share -- Primary:
Before extraordinary item, less preferred
distributions and income allocated to
minority interests ........................ $ .11 $ .31 $ .29 $ .52
Extraordinary loss on debt extinguishment .... -- (.01) -- (.04)
-------- -------- -------- ---------
Net income available to common
stockholders ............................... $ .11 $ .30 $ .29 $ .48
======== ======== ======== =========
Income per share -- Additional Primary(2):
Before extraordinary item, less preferred
distributions and income allocated to
minority interests ......................... $ .11 $ .31 $ .29 $ .52
Extraordinary loss on debt extinguishment .... -- (.01) -- (.04)
-------- -------- -------- ---------
Net income available to common
stockholders ............................... $ .11 $ .30 $ .29 $ .48
======== ======== ======== =========
Income per share -- Fully diluted(2):
Before extraordinary item, less preferred
distributions and income allocated to
minority interests ......................... $ .11 $ .31 $ .29 $ .52
Extraordinary loss on debt extinguishment .... -- (.01) -- (.04)
-------- -------- -------- ---------
Net income available to common
stockholders ............................... $ .11 $ .30 $ .29 $ .48
======== ======== ======== =========
Weighted average number of shares outstanding:
Primary ...................................... 17,502 14,151 17,329 14,179
Dilutive effect of outstanding options ....... 121 52 164 60
-------- -------- -------- ---------
Additional Primary(2) ........................ 17,623 14,203 17,493 14,239
Fully dilutive effect of outstanding options.. 80 -- 39 --
-------- -------- -------- ---------
Fully diluted(2) ............................. 17,703 14,203 17,537 14,239
======== ======== ======== =========
</TABLE>
(1) Fully diluted net income per share does not include the minority interest
securities and convertible preferred stock because they are anti-dilutive.
(2) This calculation is submitted in accordance with Securities Exchange Act of
1934 Release No. 9083, although not required by APB Opinion No. 15, because
it results in dilution of less than three percent.
<PAGE> 1
EXHIBIT 12.1
WALDEN RESIDENTIAL PROPERTIES, INC.
COMPUTATION OF NET RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED DISTRIBUTIONS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Income before extraordinary item and income allocated to
minority interests .......................................... $ 5,685 $ 5,117 $12,420 $ 8,637
Add:
Interest on indebtedness ................................. 5,244 4,765 10,121 9,687
Amortization ............................................. 200 219 411 394
------- ------- ------- -------
Earnings ............................................ $11,129 $10,101 $22,952 $18,718
======= ======= ======= =======
Fixed charges and preferred distributions:
Interest on indebtedness ................................. $ 5,244 $ 4,765 $10,121 $ 9,687
Amortization ............................................. 200 219 411 394
------- ------- ------- -------
Fixed Charges ....................................... 5,444 4,984 10,532 10,081
Add:
Preferred distributions(1) .......................... 3,702 813 7,419 1,284
------- ------- ------- -------
Combined fixed charges and
preferred distributions ........................ $ 9,146 $ 5,797 $17,951 $11,365
======= ======= ======= =======
Ratio of earnings to fixed charges ............................ 2.04x 2.03x 2.18x 1.86x
Ratio of earnings to fixed charges and
preferred distributions ..................................... 1.22x 1.74x 1.28x 1.65x
</TABLE>
(1) Includes dividends on preferred stock and minority interest securities.
