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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
COMMISSION FILE NUMBER 1-12672
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BAY APARTMENT COMMUNITIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MARYLAND 77-0404318
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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4340 STEVENS CREEK BLVD., #275, SAN JOSE, CALIFORNIA 95129
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
408-983-1500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
8.50% SERIES C CUMULATIVE REDEEMABLE PREFERRED STOCK, $.01 PAR VALUE
8.00% SERIES D CUMULATIVE REDEEMABLE PREFERRED STOCK, $.01 PAR VALUE
SERIES E JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK, $.01 PAR VALUE
(TITLE OF CLASSES)
NEW YORK STOCK EXCHANGE
PACIFIC EXCHANGE
(NAME OF EXCHANGES ON WHICH REGISTERED)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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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 twelve (12) months (or such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past ninety (90) days:
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, as of March 24, 1998 was approximately $966 million based on the
closing price on the New York Stock Exchange for such stock on March 24, 1998.
The number of shares of the Registrant's common stock, par value $.01 per
share, outstanding as of March 24, 1998 was 26,196,490.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
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PAGE NO.
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(a) 1. Financial Statements
Report of Independent Accountants................. 52
Consolidated Balance Sheets at December 31, 1997
and 1996........................................ 53
Consolidated Statements of Operations for the
years ended December 31, 1997, 1996 and 1995.... 54
Consolidated Statements of Shareholders' Equity
for the years ended December 31, 1997, 1996 and
1995............................................ 55
Consolidated Statements of Cash Flows for the
years ended December 31, 1997, 1996 and 1995.... 56
Notes to Consolidated Financial Statements........ 57
2. Financial Statement Schedule
Schedule III: Real Estate Investments and
Accumulated Depreciation at December 31, 1997... 75
Note to Schedule III.............................. 76
3. Exhibits
Index to Exhibits
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EXHIBIT NO. DESCRIPTION
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3(i).1 Articles of Incorporation of the Company. (Incorporated by
reference to Exhibit 3(i).1 to Form 8-B of Bay Apartment
Communities, Inc. dated June 8, 1995.)
3(i).2 Forms of Articles Supplementary relating to the Series A
Preferred Stock of the Company. (Incorporated by reference
to Exhibit 3(i).1 to Form 8-K of Bay Apartment Communities,
Inc. dated September 25, 1995.)
3(i).3 Articles Supplementary relating to the Series B Preferred
Stock of the Company. (Incorporated by reference to Exhibit
3(i).1 to Form 8-K of Bay Apartment Communities, Inc. dated
May 6, 1996.)
3(i).4 Articles Supplementary relating to the 8.50% Series C
Cumulative Redeemable Preferred Stock of the Company.
(Incorporated by reference to Exhibit 3(i) to Form 8-K of
Bay Apartment Communities, Inc. dated July 25, 1997.)
3(i).5 Articles Supplementary relating to the 8.00% Series D
Cumulative Redeemable Preferred Stock of the Company.
(Incorporated by reference to Exhibit 1 to Form 8-A of Bay
Apartment Communities, Inc. dated December 17, 1997.)
3(ii).1 Bylaws of the Company. (Incorporated by reference to Exhibit
10.1 to Form 8-B of Bay Apartment Communities, Inc. dated
June 8, 1995.)
3(ii).2 Text of Amendment to Bylaws of the Company. (Incorporated by
reference to Exhibit 4.2 to Form 8-K of Bay Apartment
Communities, Inc. dated March 8, 1998.)
4.1 Bay Apartment Communities, Inc. -- Dividend Reinvestment and
Stock Purchase Plan dated November 22, 1996. (Incorporated
by reference to Form S-3 of Bay Apartment Communities, Inc.,
File No. 333-16647.)
10.1 Interest Rate Swap Agreement. (Incorporated by reference to
Exhibit 10.1 to Form 10-Q of Bay Apartment Communities, Inc.
dated May 13, 1994.)
10.2 Registration Rights Agreement between the Company and
certain stockholders. (Incorporated by reference to Exhibit
10.2 to Form 10-Q of Bay Apartment Communities, Inc. dated
May 13, 1994.)
10.3 Employment Agreement between the Company and Gilbert M.
Meyer. (Incorporated by reference to Exhibit 10.3 to Form
10-Q of Bay Apartment Communities, Inc. dated May 13, 1994.)
10.4 Employment Agreement between the Company and Morton L.
Newman. (Incorporated by reference to Exhibit 10.4 to Form
10-Q of Bay Apartment Communities, Inc. dated May 13, 1994.)
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EXHIBIT NO. DESCRIPTION
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10.5 Registration Rights Agreement, dated as of September 15,
1995, by and between the Company and Purchaser.
(Incorporated by reference to Exhibit 4.1 to Form 8-K of Bay
Apartment Communities, Inc. dated September 25, 1995.)
10.6 Indemnification Agreements between the Company and the
Directors and Officers of the Company. (Incorporated by
reference to Exhibit 10.6 to Form 10-Q of Bay Apartment
Communities, Inc. dated May 13, 1994.)
10.7 Umbrella Agreement, among the Company, certain subsidiaries
of the Company, Citibank, N.A., as collateral agent, and
Financial Guaranty Insurance Company. (Incorporated by
reference to Exhibit 10.7 to Form 10-Q of Bay Apartment
Communities, Inc. dated May 13, 1994.)
10.8 Cash Collateral Account, Security, Pledge and Assignment
Agreement among the Company, certain subsidiaries of the
Company, Citibank, N.A., as collateral agent, and Financial
Guaranty Insurance Company. (Incorporated by reference to
Exhibit 10.8 to Form 10-Q of Bay Apartment Communities, Inc.
dated May 13, 1994.)
10.9 Reimbursement Agreements among certain subsidiaries of the
Company, Citibank, N.A., as collateral agent, and Financial
Guaranty Insurance Company. (Incorporated by reference to
Exhibit 10.9 to Form 10-Q of Bay Apartment Communities, Inc.
dated May 13, 1994.)
10.10 Guaranty Agreements by Bay Asset Group, Inc., a subsidiary
of the Company, in favor of Citibank, N.A., as collateral
agent for Financial Guaranty Insurance Company.
(Incorporated by reference to Exhibit 10.10 to Form 10-Q of
Bay Apartment Communities, Inc. dated May 13, 1994.)
10.11 Limited Guaranty Agreements by certain subsidiaries of the
Company in favor of Citibank, N.A., as collateral agent, and
Financial Guaranty Insurance Company. (Incorporated by
reference to Exhibit 10.11 to Form 10-Q of Bay Apartment
Communities, Inc. dated May 13, 1994.)
10.12 Pledge Agreement between Bay Asset Group, Inc., a subsidiary
of the Company and Citibank, N.A., as collateral agent for
Financial Guaranty Insurance Company. (Incorporated by
reference to Exhibit 10.12 to Form 10-Q of Bay Apartment
Communities, Inc. dated May 13, 1994.)
10.13 Office lease dated January 4, 1995. (Incorporated by
reference to Exhibit 10.21 to Form 10-Q of Bay Apartment
Communities, Inc. dated May 10, 1995.)
10.14 Agreement and Plan of Merger. (Incorporated by reference to
Exhibit 10.22 to Form 10-Q of Bay Apartment Communities,
Inc. dated August 11, 1995.)
10.15 Master Reimbursement Agreement. (Incorporated by reference
to Exhibit 10.23 to Form 10-Q of Bay Apartment Communities,
Inc. dated August 11, 1995.)
10.16 ISDA Master Agreement (Interest rate swap agreement).
(Incorporated by reference to Exhibit 10.24 to Form 10-Q of
Bay Apartment Communities, Inc. dated August 11, 1995.)
10.17 Cash Collateral Pledge, Security and Custody Agreement.
(Incorporated by reference to Exhibit 10.25 to Form 10-Q of
Bay Apartment Communities, Inc. dated August 11, 1995.)
10.18 Series A Preferred Stock Purchase Agreement, dated as of
September 15, 1995, by and between the Registrant and the
Purchaser. (Incorporated by reference to Exhibit 10.1 to
Form 8-K of Bay Apartment Communities, Inc. dated September
25, 1995.)
10.19 Employment Agreement between the Company and Max L. Gardner.
(Incorporated by reference to Exhibit 10.28 to Form 10-K of
Bay Apartment Communities, Inc. dated March 18, 1996.)
10.20 Series B Preferred Stock Purchase Agreement, dated as of May
6, 1996, by and between the Company and PaineWebber
Incorporated. (Incorporated by reference to Exhibit 10.1 to
Form 8-K of Bay Apartment Communities, Inc. dated May 6,
1996.)
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48
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EXHIBIT NO. DESCRIPTION
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10.21 Form of Agreement of Limited Partnership of Bay
Countrybrook, L.P., by and among Bay GP, Inc., the Company
and certain other defined Persons. (Incorporated by
reference to Exhibit 10.5 to Form 8-K/A of Bay Apartment
Communities, Inc. dated May 23, 1996.)
10.22 Agreement to Contribute, dated as of March 27, 1996, by and
between the Countrybrook of Berryessa Associates and the
Company. (Incorporated by reference to Exhibit 10.6 to Form
8-K/A of Bay Apartment Communities, Inc. dated May 23,
1996.)
10.23 Employment Agreement, dated June 19, 1996, between the
Company and Jeffrey B. Van Horn. (Incorporated by reference
to Exhibit 10.1 to Form 8-K of Bay Apartment Communities,
Inc. dated January 21, 1997.)
10.24 Promissory Note, dated July 26, 1996, between the Company
and Jeffrey B. Van Horn. (Incorporated by reference to
Exhibit 10.2 to Form 8-K of Bay Apartment Communities, Inc.
dated January 21, 1997.)
10.25 First Amendment to Agreement to Contribute between
Countrybrook of Berryessa Associates and the Company, dated
June 27, 1996. (Incorporated by reference to Exhibit 10.34
to Form 10-K of Bay Apartment Communities, Inc. dated March
18, 1996.)
10.26 Agreement dated as of May 16, 1997, between the Company J.E.
Butler & Associates, Inc. and AP Companies, Ltd. relating to
the formation of Bay Rincon, L.P. (Incorporated by reference
to Exhibit 10.1 to Form 10-Q of Bay Apartment Communities,
Inc. dated August 14, 1997.)
10.27 Severance Agreement and Mutual General Release, dated July
31, 1997, between the Company and Geoffrey L. Baker.
(Incorporated by reference to Exhibit 10.1 to Form 10-Q of
Bay Apartment Communities, Inc. dated November 13, 1997.)
10.28 Agreement of Limited Partnership of Bay Pacific Northwest,
L.P. dated as of September 12, 1997, between the Company and
certain other defined Persons. (Incorporated by reference to
Exhibit 10.1 to Form 8-K of Bay Apartment Communities, Inc.
dated October 28, 1997.)
10.29 Registration Rights Agreement, dated as of September 23,
1997, between the Company and certain defined Holders of
units of limited partnership interests in Bay Pacific
Northwest, L.P. (Incorporated by reference to Exhibit 10.2
to Form 8-K of Bay Apartment Communities, Inc. dated October
28, 1997.)
10.30 Second Amended and Restated Revolving Loan Agreement dated
November 21, 1997, between the Company, Union Bank of
Switzerland, as Co-Agent and Bank, Union Bank of California,
N.A., as Co-Agent and Bank, Union Bank of Switzerland, as
Administrative Agent, and the other Banks signatory thereto.
(Incorporated by reference to Exhibit 10.1 to Form 8-K of
Bay Apartment Communities, Inc. dated December 16, 1997.)
10.31 Bay Apartment Communities, Inc. -- 1994 Stock Incentive
Plan, as amended and restated. Incorporated by reference to
Exhibit 99.1 to Form S-8 of Bay Apartment Communities, Inc.
dated March 5, 1998, File No. 333-47405.)
10.32 Bay Apartment Communities, Inc. -- 1996 Non-Qualified
Employee Stock Purchase Plan dated November 26, 1996.
(Incorporated by reference to Exhibit 99.1 to Form S-3 of
Bay Apartment Communities, Inc., File No. 333-16837.)
10.33 Bay Apartment Communities, Inc. -- 1996 Non-Qualified
Employee Stock Purchase Plan -- Plan Information Statement
dated November 26, 1996. (Incorporated by reference to
Exhibit 99.2 to Form S-3 of Bay Apartment Communities, Inc.,
File No. 333-16837.)
12.1 Statements re: Computation of Ratios.
*21.1 Subsidiaries of the Company.
23.1 Consent of Coopers & Lybrand L.L.P.
*27.1 Financial Data Schedule.
* Previously filed as exhibits to Form 10-K of Bay Apartment Communities, Inc.
dated March 24, 1998.
(b) Reports on Form 8-K
Form 8-K of the Company, dated October 28, 1997, relating to the
acquisition of the Landing West apartment home community and the Rosewalk Phase
II land site and, through Bay Pacific Northwest, L.P., the Gallery Place
apartment home community. This Form 8-K contained Financial Statements under
Rule 3-14 of Registration S-X and pro forma financial statements.
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Form 8-K of the Company, dated December 11, 1997, relating to the
acquisition of the Creekside apartment home community. This Form 8-K contained
Financial Statements under Rule 3-14 of Regulation S-X and pro forma financial
statements.
Form 8-K of the Company, dated December 16, 1997, relating to (i) the
amendment and restatement of the Company's unsecured line of credit from Union
Bank of Switzerland, pursuant to which the maximum revolving credit amount was
increased to $350 million, and (ii) the acquisition of the Governor's Square
apartment home community. This Form 8-K contained Financial Statements under
Rule 3-14 of Regulation S-X and pro forma financial statements.
Form 8-K of the Company, dated December 22, 1997, relating to the
underwritten public offering of 3,267,700 shares of the Company's 8.00% Series D
Cumulative Redeemable Preferred Stock, par value $.01 per share, at a price per
share of $25.00.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BAY APARTMENT COMMUNITIES, INC.
Date: April 15, 1998 /s/ JEFFREY B. VAN HORN
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Jeffrey B. Van Horn
Chief Financial Officer
(Authorized Officer of the Registrant
and Principal Financial Officer)
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Exhibit 12.1
BAY APARTMENT COMMUNITIES, INC.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
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Year Year Year Year
Ended Ended Ended March 17- January 1- Ended
December 31, December 31, December 31, December 31, March 16, December 31,
1997 1996 1995 1994 1994 1993
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Net Operating Income $38,941 $19,626 $11,460 $ 7,486 $ (716) $ (447)
(Less) Nonrecurring
Item:
Gain on sale $ 0 $ 0 $(2,412) $ 0 $ 0 $ 0
Plus Extraordinary Item:
Unamortized loan fee
write-off $ 0 $ 511 $ 0 $ 0 $ 0 $ 0
Plus Fixed Charges:
Interest expense $14,113 $14,276 $11,472 $ 4,782 $2,358 $10,932
Interest capitalized 6,985 2,567 3,641 2,096 0 0
Debt cost amortization 505 667 1,278 241 80 218
Preferred dividend 7,480 4,264 917 0 0 0
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Total fixed charges(1) $29,083 $21,774 $17,308 $ 7,119 $2,438 $11,150
Less:
Interest capitalized $ 6,985 $ 2,567 $ 3,641 $ 2,096 $ 0 $ 0
Preferred dividend 7,480 4,264 917 0 0 0
Adjusted earnings(2) $53,559 $35,080 $21,798 $12,509 $1,722 $10,703
------ ------ ------ ------ ----- ------
Ratio (2 divided by 1) 1.84 1.61 1.26 1.76 0.71 0.96
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BAY APARTMENT COMMUNITIES, INC.
RATIOS OF EARNINGS TO FIXED CHARGES
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Year Year Year Year
Ended Ended Ended March 17- January 1- Ended
December 31, December 31, December 31, December 31, March 16, December 31,
1997 1996 1995 1994 1994 1993
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Net Operating Income $38,941 $19,626 $11,460 $ 7,486 $ (716) $ (447)
(Less) Nonrecurring
Item:
Gain on sale $ 0 $ 0 $(2,412) $ 0 $ 0 $ 0
Plus Extraordinary Item:
Unamortized loan fee
write-off $ 0 $ 511 $ 0 $ 0 $ 0 $ 0
Plus Fixed Charges:
Interest expense $14,113 $14,276 $11,472 $ 4,782 $2,358 $10,932
Interest capitalized 6,985 2,567 3,641 2,096 0 0
Debt cost amortization 505 667 1,278 241 80 218
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Total fixed charges(1) $21,603 $17,510 $16,391 $ 7,119 $2,438 $11,150
Less:
Interest capitalized $ 6,985 $ 2,567 $ 3,641 $ 2,096 $ 0 $ 0
Adjusted earnings(2) $53,559 $35,080 $21,798 $12,509 $1,722 $10,703
------ ------ ------ ------ ----- ------
Ratio (2 divided by 1) 2.48 2.00 1.33 1.76 0.71 0.96
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Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Bay Apartment Communities, Inc. on Form S-8 (File No. 333-47405), Form S-8 (File
No. 333-16837), Form S-3 (File No. 333-16647), Form S-3 (File No. 333-15407),
Form S-3 (File No. 333-39037) and Form S-3 (File No. 333-41511) of our report
dated January 30, 1998, except for Note 14, as to which the date is March 24,
1998, on our audits of the consolidated financial statements and financial
statement schedule of the Bay Apartment Communities, Inc. as of December 31,
1997 and 1996, and for the years ended December 31, 1997, 1996 and 1995, which
report is included in the Company's 1997 Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND L.L.P.
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Coopers & Lybrand L.L.P.
San Francisco, California
April 15, 1998
