<PAGE> 1
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
Date of Report (Date of earliest event reported) February 5, 1999
--------------------
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
---------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-13232 84-1259577
- -------------------------------- ------------- -------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1873 SOUTH BELLAIRE STREET, SUITE 1700, DENVER, CO 80222-4348
- ----------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 757-8101
-------------------
NOT APPLICABLE
------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
None.
(b) Pro Forma Financial Information
The pro forma financial information included as Exhibit 99.1 to this
Report is incorporated herein by this reference.
2
<PAGE> 3
(b) Exhibits
The following exhibits are filed with this report:
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
<S> <C>
12.1 Calculation of Ratio of Earnings to Fixed Charges.
12.2 Calculation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
99.1 Pro Forma Financial Information of Apartment Investment and Management
Company.
</TABLE>
<PAGE> 4
SIGNATURE
Pursuant to the requirements 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.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
Date: February 5, 1999 By: /s/ Troy Butts
---------------------------------
Troy Butts
Senior Vice President,
Chief Financial Officer
5
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
<S> <C>
12.1 Calculation of Ratio of Earnings to Fixed Charges.
12.2 Calculation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
99.1 Pro Forma Financial Information of Apartment Investment and Management
Company.
</TABLE>
<PAGE> 1
EXHIBIT 12.1
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
<TABLE>
<CAPTION>
Historical
------------------------------------------------------------------------------------------
Nine Months
Ended January 10,
September 30, Year Ended December 31, 1994 through
-------------------------- --------------------------------------- December 31,
1998 1997 1997 1996 1995 1994
--------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Earnings (1) $ 51,203 $ 20,649 $ 29,535 $ 15,740 $ 14,988 $ 7,702
Fixed charges:
Interest expense 56,756 33,359 51,385 24,802 13,322 1,576
Capitalized interest 2,074 751 1,300 821 113 29
--------- -------- -------- -------- -------- -------
Total fixed charges (A) 58,830 34,110 52,685 25,623 13,435 1,605
--------- -------- -------- -------- -------- -------
Earnings before fixed
charges (2)(B) $ 107,959 $ 54,008 $ 80,920 $ 40,542 $ 28,310 $ 9,278
========= ======== ======== ======== ======== =======
Ratio of earnings to fixed
charges (B divided by A) 1.8:1.0 1.6:1.0 1.5:1.0 1.6:1.0 2.1:1.0 5.8:1.0
========= ======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
-----------------------------
Nine Months
Ended Year Ended
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Earnings (1) $ 59,305 $ 59,017
Fixed charges:
Interest expense 85,010 113,788
Capitalized interest 2,074 1,300
--------- ---------
Total fixed charges (A) 87,084 115,088
--------- ---------
Earnings before fixed
charges (2)(B) $ 144,315 $ 172,805
========= =========
Ratio of earnings to fixed
charges (B divided by A) 1.7:1.0 1.5:1.0
========= =========
</TABLE>
AIMCO PREDECESSORS
<TABLE>
<CAPTION>
Historical
------------------------------
January 1, Year ended
1994 through December 31,
July 28, 1994 1993
------------- ------------
<S> <C> <C>
Historical:
Income (loss) before extraordinary item and income taxes $ (1,463) $ 627
Fixed charges:
Interest expense 4,214 3,510
Capitalized interest - -
-------- -------
Total fixed charges (A) 4,214 3,510
-------- -------
Earnings before fixed charges (1)(B) $ 2,751 $ 4,137
======== =======
Ratio of earnings to fixed charges (B divided by A) (3) 1.2:1.0
======== =======
</TABLE>
- ----------------
(1) Earnings represents pretax income before Minority Interest in Operating
Partnership and minority interest in other partnership. Equity in earnings
of unconsolidated subsidiaries and partnerships is included in earnings
only to the extent of dividends and distributions received.
(2) Earnings before fixed charges excludes capitalized interest.
(3) Earnings for the period January 1, 1994 through July 28, 1994 were
inadequate to cover fixed charges. The deficiency for the period was
$1,463.
<PAGE> 1
EXHIBIT 12.2
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
<TABLE>
<CAPTION>
Historical
-----------------------------------------------------------------
Nine Months
Ended January 10,
September 30, Year Ended December 31, 1994 through
------------------- ----------------------------- December 31,
1998 1997 1997 1996 1995 1994
-------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Earnings (1) $ 51,203 $20,649 $29,535 $15,740 $14,988 $ 7,702
-------- ------- ------- ------- ------- -------
Fixed charges:
Interest expense 56,756 33,359 51,385 24,802 13,322 1,576
Capitalized interest 2,074 751 1,300 821 113 29
Preferred stock dividends 16,320 846 2,315 -- 5,169 3,114
-------- ------- ------- ------- ------- -------
Total fixed charges (A) 75,150 34,956 55,000 25,623 18,604 4,719
-------- ------- ------- ------- ------- -------
Earnings before fixed
charges (2)(B) $107,959 $54,008 $80,920 $40,542 $28,310 $ 9,278
======== ======= ======= ======= ======= =======
Ratio of earnings to fixed
charges (B divided by A) 1.4:1.0 1.5:1.0 1.5:1.0 1.6:1.0 1.5:1.0 2.0:1.0
======== ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
-------------------------------
Nine Months
Ended Year Ended
September 30, December 31,
1998 1997
------------ -------------
<S> <C> <C>
Earnings (1) $ 59,305 $ 59,017
Fixed charges:
Interest expense 85,010 113,788
Capitalized interest 2,074 1,300
Preferred stock dividends 32,414 42,174
-------- --------
Total fixed charges (A) 119,498 157,262
-------- --------
Earnings before fixed
charges (2)(B) $144,315 $172,805
======== ========
Ratio of earnings to fixed
charges (B divided by A) 1.2:1.0 1.1:1.0
======== ========
</TABLE>
AIMCO PREDECESSORS
<TABLE>
<CAPTION>
Historical
-------------------------
January 1, Year ended
1994 through December 31,
July 28, 1994 1993
------------- ------------
<S> <C> <C>
Historical:
Income (loss) before extraordinary item and income taxes $(1,463) $ 627
Fixed charges:
Interest expense 4,214 3,510
Capitalized interest -- --
Preferred stock dividends (3) -- --
------- -------
Total fixed charges (A) 4,214 3,510
------- -------
Earnings before fixed charges (1)(B) $ 2,751 $ 4,137
======= =======
Ratio of earnings to fixed charges (B divided by A) (4) 1.2:1.0
======= =======
</TABLE>
- ----------------
(1) Earnings represents pretax income before Minority Interest in Operating
Partnership and minority interest in other partnership. Equity in earnings
of unconsolidated subsidiaries and partnerships is included in earnings
only to the extent of dividends and distributions received.
(2) Earnings before fixed charges excludes capitalized interest and preferred
stock dividends.
(3) The AIMCO Predecessors did not have any shares of Preferred Stock
outstanding during the period from January 1, 1992 through July 28, 1994.
(4) Earnings for the period January 1, 1994 through July 28, 1994 were
inadequate to cover fixed charges. The deficiency for the period was
$1,463.
<PAGE> 1
EXHIBIT 99.1
PRO FORMA FINANCIAL INFORMATION OF APARTMENT
INVESTMENT AND MANAGEMENT COMPANY
AS OF SEPTEMBER 30, 1998 AND FOR THE YEAR
ENDED DECEMBER 31, 1997 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1998
INTRODUCTION
On October 1, 1998, Apartment Investment and Management Company ("AIMCO")
completed its merger with Insignia Financial Group ("IFG") ("the IFG Merger").
In the IFG Merger, IFG's common stock was converted into 8,423,751 shares of
Class E Cumulative Convertible Preferred Stock of AIMCO ("Class E Preferred
Stock") whose issue date market value approximately equaled $292 million. In
addition to receiving the same dividends as holders of AIMCO Common Stock,
holders of Class E Preferred Stock will be entitled to a special dividend of
approximately $50 million in the aggregate. When that special dividend is paid
in full, the Class E Preferred Stock will automatically convert into AIMCO
Common Stock on a one-for-one basis, subject to antidilution adjustments, if
any. In addition, AIMCO assumed approximately $411 million in indebtedness and
other liabilities of IFG and its subsidiaries and subsidiaries of AIMCO, assumed
approximately $149.5 million of convertible securities and purchased
approximately $5 million of IFG stock prior to the Merger. AIMCO and Insignia
Properties Trust ("IPT") have entered into an agreement and plan of merger dated
as of October 1, 1998, pursuant to which IPT is to be merged into AIMCO or a
subsidiary of AIMCO (the "IPT Merger"). In the IPT Merger, IPT's common stock
will be converted, at AIMCO's option, into 4,826,745 shares of AIMCO Class A
Common Stock whose market value approximately equaled $152 million or $152
million in cash. AIMCO assumed approximately $68 million in indebtedness. In
connection with the IFG Merger and the IPT Merger, AIMCO will incur
approximately $55 million in transaction costs for a combined transactional
value of approximately $1,183 million. In connection with the IFG Merger, AIMCO
assumed property management of approximately 192,000 multifamily units which
consist of general and limited partnership investments in 115,000 units and
third party management of 77,000 units. Insignia Properties Trust ("IPT"), which
prior to the IFG Merger was a subsidiary of IFG, owns a 32% weighted average
general and limited partnership interest in approximately 51,000 units.
Immediately following the IFG Merger, in order to satisfy certain requirements
of the Internal Revenue Code of 1986 (the "Code") applicable to AIMCO's status
as a REIT, AIMCO engaged in a reorganization (the "IFG Reorganization") of the
assets and operations of IFG whereby IFG's operations are being conducted
through corporations (the "Unconsolidated Subsidiaries") in which the AIMCO
Operating Partnership holds non-voting preferred stock that represents a 95%
economic interest, and certain officers and/or directors of AIMCO hold, directly
or indirectly, all of the voting common stock, representing a 5% economic
interest. As a result of the controlling ownership interest in the
Unconsolidated Subsidiaries held by others, AIMCO accounts for its interest in
the Unconsolidated Subsidiaries on the equity method.
In May and September of 1997, AIMCO directly or indirectly through a subsidiary,
acquired (the "NHP Stock Purchase") an aggregate of 6,930,122 shares of common
stock ("NHP Common Stock") of NHP. On December 8, 1997, AIMCO acquired the
remaining shares of NHP Common Stock in a merger transaction accounted for as a
purchase (the "NHP Merger"). As a result of the NHP Merger, AIMCO issued
6,759,148 shares of AIMCO Common Stock, valued at $180.8 million, and paid $86.5
million in cash. The total cost of the purchase of NHP was $349.5 million.
In June 1997, AIMCO purchased a group of companies (the "NHP Real Estate
Companies") affiliated with NHP that hold general and limited partnership
interests in partnerships (the "NHP Partnerships") that own 534 conventional and
affordable multifamily apartment properties (the "NHP Properties") containing
87,659 units, a captive insurance subsidiary and certain related assets (the
"NHP Real Estate Acquisition"). AIMCO paid aggregate consideration of $54.8
million in cash and warrants that entitle the holders to purchase 399,999 shares
of AIMCO Common Stock at an exercise price of $36.00 per share. AIMCO engaged in
a reorganization (the "NHP Real Estate Reorganization") of its interests in the
NHP Real Estate Companies, which resulted in certain of the assets of the NHP
Real Estate Companies being owned by a limited partnership (the "Unconsolidated
Partnership") in which the AIMCO Operating Partnership holds 99% limited partner
interest and certain directors and officers of AIMCO directly or indirectly,
hold a 1% general partner interest.
Immediately following the NHP Merger, in order to satisfy certain requirements
of the Code applicable to AIMCO's status as a REIT, AIMCO engaged in a
reorganization (the "NHP Reorganization") of the assets and operations of NHP
that resulted in the Master Property Management Agreement being terminated and
NHP's operations being conducted through Unconsolidated Subsidiaries in which
the AIMCO Operating Partnership holds non-voting preferred stock that represents
a 95% economic interest, and
1
<PAGE> 2
certain officers and/or directors of AIMCO hold, directly or indirectly, all of
the voting common stock, representing a 5% economic interest. As a result of the
controlling ownership interest in the Unconsolidated Subsidiaries held by
others, AIMCO accounts for its interest in the Unconsolidated Subsidiaries on
the equity method.
On May 8, 1998, AIMCO completed a merger with Ambassador Apartments, Inc.
("Ambassador"), pursuant to which Ambassador was merged into AIMCO (the
"Ambassador Merger"). Each outstanding share of stock ("Ambassador Common
Stock") of Ambassador, other than those shares held by AIMCO or Ambassador, were
converted into 0.553 (the "Conversion Ratio") shares of AIMCO Common Stock. Any
outstanding options to purchase Ambassador Common Stock were converted, at the
election of the option holder, into cash or options to purchase AIMCO Common
Stock at such options' then current exercise price divided by the Conversion
Ratio. In accordance with the Agreement and Plan of Merger, dated December 23,
1997 and supplemented by letter dated as of March 11, 1998 (the "Ambassador
Merger Agreement"), the outstanding shares of Class A Senior Cumulative
Convertible Preferred Stock of Ambassador, (the "Ambassador Preferred Stock")
were redeemed and converted into Ambassador Common Stock prior to the Ambassador
Merger. Following the consummation of the Ambassador Merger, a subsidiary of the
AIMCO Operating Partnership was merged with and into the Ambassador Operating
Partnership (the "Ambassador OP Merger"). Each outstanding unit of limited
partnership interest in the Ambassador Operating Partnership was converted into
the right to receive 0.553 OP Units, and as a result, the Ambassador Operating
Partnership became a 99.9% owned subsidiary partnership of the AIMCO Operating
Partnership.
Also during 1997, AIMCO (i) (a) acquired 44 properties for aggregate purchase
consideration of $467.4 million, of which $56 million was paid in the form of
1.9 million OP Units (b) paid $34.2 million in cash and issued OP Units valued
at $7.3 million in connection with the acquisition of partnership interests
through tender offers in certain partnerships ((a) and (b) together are the
"1997 Property Acquisitions") and (c) paid $19.9 million to acquire 886,600
shares of Ambassador Common Stock (together with the 1997 Property Acquisitions,
the "1997 Acquisitions"); (ii) sold (a) approximately 16,367,000 shares of AIMCO
Common Stock for aggregate net proceeds of $513.4 million; (b) 750,000 shares of
AIMCO Class B Cumulative Convertible Preferred Stock for net proceeds of $75
million; and (c) 2,400,000 shares of AIMCO Class C 9% Cumulative Preferred Stock
for net proceeds of $58.1 million (collectively, the "1997 Stock Offerings");
and (iii) sold five real estate properties (the "1997 Dispositions").
Also during 1998, AIMCO (i) (a) sold 4,200,000 shares of its Class D Cumulative
Preferred Stock for net proceeds of $101.5 million (the "Class D Preferred Stock
Offering"); (b) sold 4,050,000 shares of its Class G Cumulative Preferred Stock
for net proceeds of $98.0 million (the "Class G Preferred Stock Offering"); (c)
sold 2,000,000 shares of its Class H Cumulative Preferred Stock for net proceeds
of $48.1 million (the "Class H Preferred Stock Offering"); and (d) sold
1,000,000 shares of its Class J Cumulative Convertible Preferred Stock in a
private placement for $100.0 million (the "Class J Preferred Stock Offering"
and, together with the Class D Preferred Stock Offering, the Class G Preferred
Stock Offering and the Class H Preferred Stock Offering, the "1998 Stock
Offerings"); (ii) purchased 29 properties for aggregate purchase consideration
of $312.7 million, of which $52.2 million was paid in the form of OP Units (the
"1998 Acquisitions"); (iii) sold two real estate properties (the "1998
Dispositions"); (iv) contracted to purchase two properties for aggregate
purchase consideration of $62.1 million, of which $26.4 million will be paid in
the form of OP units (the "Probable Purchase") and (v) sold 1,400,000 Class B
Preferred Partnership Units of a subsidiary and warrants to purchase 875,000
shares of AIMCO Class A Common Stock for $35.0 million (the "Preferred
Partnership Unit Offering").
2
<PAGE> 3
PRO FORMA FINANCIAL INFORMATION OF AIMCO
The following Pro Forma Consolidated Balance Sheet of AIMCO as of September 30,
1998 has been prepared as if each of the following transactions had occurred as
of September 30, 1998: (i) the purchase of nine properties for an aggregate
purchase price of $62.5 million; (ii) the Class J Preferred Stock Offering;
(iii) the Probable Purchases; (iv) the IFG Merger; (v) the IPT Merger; (vi) the
IFG Reorganization; and (vii) the Preferred Partnership Unit Offering.
The following Pro Forma Consolidated Statement of Operations of AIMCO for the
year ended December 31, 1997 has been prepared as if each of the following
transactions had occurred as of January 1, 1997: (i) the 1997 Acquisitions; (ii)
the 1997 Stock Offerings; (iii) the 1997 Dispositions; (iv) the NHP Real Estate
Acquisition; (v) the NHP Real Estate Reorganization; (vi) the NHP Stock
Purchase; (vii) the NHP Merger; (viii) the NHP Reorganization; (ix) the 1998
Stock Offerings; (x) the 1998 Acquisitions; (xi) the Probable Purchases; (xii)
the 1998 Dispositions; (xiii) the Ambassador Merger; (xv) the IFG Merger; (xv)
the merger between IPT and Angeles Mortgage Investment Trust ("AMIT") ("the AMIT
Merger"); (xvi) the IPT Merger; (xvii) the IFG Reorganization; and (xviii) the
Preferred Partnership Unit Offering.
The following Pro Forma Consolidated Statement of Operations of AIMCO for the
nine months ended September 30, 1998 has been prepared as if each of the
following transactions had occurred as of January 1, 1997: (i) the 1998 Stock
Offerings; (ii) the 1998 Acquisitions; (iii) the Probable Purchases; (iv) the
1998 Dispositions; (v) the Ambassador Merger; (vi) the IFG Merger; (vii) the
AMIT Merger; (viii) the IPT Merger; (ix) the IFG Reorganization; and (x) the
Preferred Partnership Unit Offering.
The following Pro Forma Financial Information is based, in part, on the
following historical financial statements, which have been previously filed by
AIMCO: (i) the audited Consolidated Financial Statements of AIMCO for the year
ended December 31, 1997; (ii) the unaudited Consolidated Financial Statements of
AIMCO for the nine months ended September 30, 1998; (iii) the audited
Consolidated Financial Statements of Ambassador for the year ended December 31,
1997; (iv) the unaudited Consolidated Financial Statements of Ambassador for the
four months ended April 30, 1998; (v) the audited Consolidated Financial
Statements of IFG for the year ended December 31, 1997; (vi) the audited
Consolidated Financial Statements of AMIT for the year ended December 31, 1997;
(vii) the unaudited Consolidated Financial Statements of IFG for the nine months
ended September 30, 1998; (viii) the unaudited Consolidated Financial Statements
of AMIT for the eight months ended August 31, 1998; (ix) the unaudited
Consolidated Financial Statements of NHP for the nine months ended September 30,
1997; (x) the unaudited Combined Financial Statements of the NHP Real Estate
Companies for the three months ended March 31, 1997; (xi) the unaudited
Financial Statements of NHP Southwest Partners, L.P. for the three months ended
March 31, 1997; (xii) the unaudited Combined Financial Statements of the NHP New
LP Entities for the three months ended March 31, 1997; (xiii) the unaudited
Combined Financial Statements of the NHP Borrower Entities for the three months
ended March 31, 1997; (xiv) the unaudited Historical Summaries of Gross Income
and Certain Expenses of The Bay Club at Aventura for the three months ended
March 31, 1997; (xv) the unaudited Historical Summary of Gross Income and Direct
Operating Expenses of Morton Towers for the six months ended June 30, 1997;
(xvi) the unaudited Combined Statement of Revenues and Certain Expenses of the
Thirty-Five Acquisition Properties for the six months ended June 30, 1997;
(xvii) the unaudited Statement of Revenues and Certain Expenses of First
3
<PAGE> 4
Alexandria Associates, a Limited Partnership for the nine months ended September
30, 1997; (xviii) the unaudited Statement of Revenues and Certain Expenses of
Country Lakes Associates Two, a Limited Partnership for the nine months ended
September 30, 1997; (xix) the unaudited Statement of Revenues and Certain
Expenses of Point West Limited Partnership, A Limited Partnership for the nine
months ended September 30, 1997; (xx) the unaudited Statement of Revenues and
Certain Expenses for The Oak Park Partnership for the nine months ended
September 30, 1997; (xxi) the audited Combined Historical Summary of Gross
Income and Direct Operating Expenses of the Realty Investment Apartment
Communities I for the year ended December 31, 1997, (xxii) the audited Combined
Historical Summary or Gross Income and Direct Operating Expenses of the Cirque
Apartment Communities for the year ended December 31, 1997; (xxiii) the audited
Combined Historical Summary of Gross Income and Direct Operating Expenses of the
Realty Investment Apartment Communities II for the year ended December 31, 1997;
(xxiv) the audited Historical Summary of Gross Income and Direct Operating
Expenses of the Calhoun Beach Club Apartments for the year ended December 31,
1997; (xxv) the unaudited Combined Historical Summary of Gross Income and Direct
Operating Expenses of the Realty Investment Apartment Communities I for the nine
months ended September 30, 1998; (xxvi) the unaudited Combined Historical
Summary of Gross Income and Direct Operating Expenses of the Cirque Apartment
Communities for the three months ended March 31, 1998; (xxvii) the unaudited
Combined Historical Summary of Gross Income and Direct Operating Expenses of the
Realty Investment Apartment Communities II for the nine months ended September
30, 1998; and (xxviii) the unaudited Historical Summary of Gross Income and
Direct Operating Expenses of Calhoun Beach Club Apartments for the nine months
ended September 30, 1998. The following Pro Forma Financial Information should
be read in conjunction with such financial statements and the notes thereto
incorporated by reference herein.
The unaudited Pro Forma Financial Information has been prepared using the
purchase method of accounting whereby the assets and liabilities of NHP, the NHP
Real Estate Companies, Ambassador, IFG, IPT, the 1997 Acquisitions, the 1998
Acquisitions, and the Probable Purchases are adjusted to estimated fair market
value, based upon preliminary estimates, which are subject to change as
additional information is obtained. The allocations of purchase costs are
subject to final determination based upon estimates and other evaluations of
fair market value. Therefore, the allocations reflected in the following
unaudited Pro Forma Financial Information may differ from the amounts ultimately
determined.
The following unaudited Pro Forma Financial Information is presented for
informational purposes only and is not necessarily indicative of the financial
position or results of operations of AIMCO that would have occurred if such
transactions had been completed on the dates indicated, nor does it purport to
be indicative of future financial positions or results of operations. In the
opinion of AIMCO's management, all material adjustments necessary to reflect the
effects of these transactions have been made.
4
<PAGE> 5
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
IN THOUSANDS, EXCEPT SHARE DATA
<TABLE>
<CAPTION>
COMPLETED
TRANSACTIONS IFG AIMCO BEFORE
AND PROBABLE IFG MERGER IFG
HISTORICAL(A) PURCHASES(B) HISTORICAL(C) ADJUSTMENTS(D) REORGANIZATION(E)
------------- --------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Real estate......................... $2,355,122 $ 202,332 $ 44,488 $ 23,880(G) $2,625,822
Property held for sale.............. 42,212 -- -- -- 42,212
Investments in securities........... -- -- -- 443,513(G)
(443,513)(H) --
Investments in and notes receivable
from unconsolidated
subsidiaries...................... 127,082 -- -- -- 127,082
Investments in and notes receivable
from unconsolidated real estate
partnerships...................... 246,847 -- 232,892 444,570 (G) 924,309
Mortgage notes receivable........... -- -- 20,916 -- 20,916
Cash and cash equivalents........... 43,681 6,107 73,064 -- 122,852
Restricted cash..................... 83,187 -- 2,691 -- 85,878
Accounts receivable................. 11,545 -- 54,060 (32,234)(G) 33,371
Deferred financing costs............ 21,835 -- 7,020 (7,020)(G) 21,835
Goodwill............................ 120,503 -- 19,503 111,018 (G) 251,024
Property management contracts....... -- -- 86,419 31,147 (G) 117,566
Other assets........................ 69,935 -- 20,128 (4,533)(G) 85,530
---------- --------- -------- --------- ----------
Total Assets................ $3,121,949 $ 208,439 $561,181 $ 566,828 $4,458,397
========== ========= ======== ========= ==========
Secured notes payable............... $ 774,676 $ 122,568 $ 29,002 $ -- $ 926,246
Secured tax-exempt bond financing... 399,925 -- 399,925
Secured short-term financing........ 50,000 (50,000) 332,691 (300,000)(G) 32,691
Unsecured short-term financing...... 50,800 (50,800) -- 300,000 (G) 300,000
Accounts payable, accrued and other
liabilities....................... 131,799 -- 33,241 50,000 (G)
53,333 (G)
4,935 (G)
2,525 (G) 275,833
Deferred tax liability.............. -- -- 18,802 1,198 (G) 20,000
Security deposits and prepaid
rents............................. 13,171 -- 3,533 (3,533) 13,171
---------- --------- -------- --------- ----------
1,420,371 21,768 417,269 108,458 1,967,866
Minority interest in other
entities.......................... 42,086 37,345 108,485 (108,485)(G) 79,431
Minority interest in Operating
Partnership....................... 137,965 45,176 -- -- 183,141
Company-obligated mandatorily
redeemable convertible securities
of a subsidiary trust............. -- -- 144,282 5,218 149,500
Class A common stock, $.01 par
value............................. 481 -- 320 (320)(G)
133 (H) 614
Class B common stock, $.01 par
value............................. 2 -- -- -- 2
Class B Cumulative Convertible
Preferred Stock, $.01 par value... 75,000 -- -- -- 75,000
Class C Cumulative Preferred Stock
$.01 par value.................... 60,000 -- -- -- 60,000
Class D Cumulative Preferred Stock
$.01 par value.................... 105,000 -- -- -- 105,000
Class G Cumulative Preferred Stock
$.01 par value.................... 101,250 -- -- -- 101,250
Class H Cumulative Preferred Stock
$.01 par value.................... 50,000 -- -- -- 50,000
Class J Cumulative Convertible
Preferred Stock $.01 par value.... -- 100,000 -- -- 100,000
Class A Common Stock Warrants....... -- 4,150 -- -- 4,150
Additional paid in capital.......... 1,236,962 -- (86,959) 86,959 (G)
443,380 (H)
9,269 (G) 1,689,611
Notes receivable on common stock
purchases......................... (43,647) -- -- -- (43,647)
Distributions in excess of
earnings.......................... (63,521) -- (22,216) 22,216 (G) (63,521)
---------- --------- -------- --------- ----------
1,521,527 104,150 (108,855) 561,637 2,078,459
---------- --------- -------- --------- ----------
Total Liabilities and
Equity.................... $3,121,949 $ 208,439 $561,181 $ 566,828 $4,458,397
========== ========= ======== ========= ==========
<CAPTION>
IFG
REORGANIZATION PRO
ADJUSTMENTS(F) FORMA
-------------- ----------
<S> <C> <C>
Real estate......................... $ -- $2,625,822
Property held for sale.............. -- 42,212
Investments in securities...........
-- --
Investments in and notes receivable
from unconsolidated
subsidiaries...................... 59,195(I) 186,277(K)
Investments in and notes receivable
from unconsolidated real estate
partnerships...................... -- 924,309
Mortgage notes receivable........... 20,916
Cash and cash equivalents........... (17,897)(J) 104,955
Restricted cash..................... (1,352)(J) 84,526
Accounts receivable................. (5,471)(J) 27,900
Deferred financing costs............ -- 21,835
Goodwill............................ -- 251,024
Property management contracts....... (79,195)(I) 38,371
Other assets........................ ( 2,860)(J) 82,670
--------- ----------
Total Assets................ $ (47,580) $4,410,817
========= ==========
Secured notes payable............... $ -- $ 926,246
Secured tax-exempt bond financing... -- 399,925
Secured short-term financing........ 32,691
Unsecured short-term financing...... -- 300,000
Accounts payable, accrued and other
liabilities....................... (27,580)(J) 248,253
Deferred tax liability.............. (20,000)(I) --
Security deposits and prepaid
rents............................. -- 13,171
--------- ----------
(47,580) 1,920,286
Minority interest in other
entities.......................... -- 79,431
Minority interest in Operating
Partnership....................... -- 183,141
Company-obligated mandatorily
redeemable convertible securities
of a subsidiary trust............. -- 149,500
Class A common stock, $.01 par
value.............................
-- 614
Class B common stock, $.01 par
value............................. -- 2
Class B Cumulative Convertible
Preferred Stock, $.01 par value... -- 75,000
Class C Cumulative Preferred Stock
$.01 par value.................... -- 60,000
Class D Cumulative Preferred Stock
$.01 par value.................... -- 105,000
Class G Cumulative Preferred Stock
$.01 par value.................... -- 101,250
Class H Cumulative Preferred Stock
$.01 par value.................... -- 50,000
Class J Cumulative Convertible
Preferred Stock $.01 par value.... -- 100,000
Class A Common Stock Warrants....... -- 4,150
Additional paid in capital.......... -- 1,689,611
Notes receivable on common stock
purchases......................... -- (43,647)
Distributions in excess of
earnings.......................... -- (63,521)
--------- ----------
-- 2,078,459
--------- ----------
Total Liabilities and
Equity.................... $ (47,580) $4,410,817
========= ==========
</TABLE>
5
<PAGE> 6
- -------------------------
(A) Represents the unaudited historical consolidated financial position of
AIMCO as of September 30, 1998, as reported in AIMCO's Quarterly Report on
Form 10-Q.
(B) Represents adjustments to reflect the purchase of 10 properties for an
aggregate purchase price of $140.2 million; the Class J Preferred Stock
Offering; the Probable Purchases; and the Preferred Partnership Unit
Offering.
(C) Represents the unaudited historical consolidated financial position of IFG
as of September 30, 1998.
6
<PAGE> 7
(D) Represents the following adjustments occurring as a result of the IFG
Merger: (i) the issuance of 8,423,751 shares of AIMCO Common Stock, based
on consideration to holders of IFG common stock outstanding as of the date
of the IFG Merger; (ii) the issuance of 4,826,745 shares of AIMCO Class A
Common Stock to holders of IPT common stock (other than AIMCO); (iii) the
payment of a special dividend of $50,000; (iv) the assumption of $149,500
of the convertible debentures of IFG; and (v) the allocation of the
combined purchase price of IFG and IPT based on the preliminary estimates
of relative fair market value of the assets and liabilities of IFG and IPT.
(E) Represents the effects of AIMCO's acquisition of IFG immediately after the
IFG Merger. These amounts do not give effect to the IFG Reorganization,
which includes the transfers of certain assets and liabilities of IFG to
the combined Unconsolidated Subsidiaries. The IFG Reorganization occurred
immediately after the IFG Merger so that AIMCO could maintain its
qualification as a REIT. This column is included as an intermediate step to
assist the reader in understanding the entire nature of the IFG Merger and
related transactions.
(F) Represents adjustments related to the IFG Reorganization, whereby,
following the IFG Merger, AIMCO contributed or sold to the combined
Unconsolidated Subsidiaries certain assets and liabilities of IFG,
primarily management contracts and related working capital assets and
liabilities related to IFG's third party property management operations.
The adjustments reflect the transfer of assets valued at AIMCO's new basis
resulting from the allocation of the purchase price of IFG. AIMCO received
non-voting preferred stock as consideration in exchange for the net assets
contributed. The net deferred tax liability is assumed by the
Unconsolidated Subsidiaries as it resulted from the assets and liabilities
transferred to the Unconsolidated Subsidiaries.
(G) In connection with the IFG Merger and the IPT Merger, AIMCO became
obligated to issue a total of 13,250,496 shares of AIMCO Common Stock
The total purchase price of IFG and IPT is $1,128,009, as follows:
<TABLE>
<S> <C>
Issuance of 8,423,751 shares of AIMCO Common Stock in the
IFG Merger, at $34.658 per share.......................... $ 291,949
Issuance of 4,826,745 shares of AIMCO Common Stock in the
IPT Merger, at $31.50 per share........................... 151,564
Assumption of Convertible Debentures........................ 149,500
Assumption of liabilities as indicated in the
Merger Agreement.......................................... 397,459
Transaction costs........................................... 53,333
Generation of deferred tax liability........................ 20,000
Special dividend............................................ 50,000
Purchase of IFG Common Stock prior to merger................ 4,935
Consideration for options................................... 9,269
----------
Total............................................. $1,128,009
==========
</TABLE>
The purchase price was allocated to the various assets of IFG acquired in
the IFG Merger, as follows:
<TABLE>
<S> <C>
Purchase price.............................................. $1,128,009
Historical basis of IFG's assets acquired ................... (561,181)
----------
Step-up to record the fair value of IFG's assets acquired... $ 566,828
==========
</TABLE>
7
<PAGE> 8
This step-up was applied to IFG's assets as follows:
<TABLE>
<S> <C>
Real estate................................................. $ 23,880
Investment in real estate partnerships...................... 444,570
Decrease in accounts receivable............................. (32,234)
Decrease in deferred loan costs............................. (7,020)
Management contracts........................................ 31,147
Increase in goodwill........................................ 111,018
Reduction in value of other assets.......................... (4,533)
--------
Total............................................. $566,828
========
</TABLE>
The fair value of IFG's assets, primarily the real estate and management
contracts, was calculated based on estimated future cash flows of the
underlying assets.
As of September 30, 1998, IFG's stockholder's equity was $(108,855), which
is detailed as follows:
<TABLE>
<S> <C>
Common stock................................................ $ 320
Additional paid-in capital.................................. (86,959)
Distributions in excess of earnings......................... (22,216)
---------
Total............................................. $(108,855)
=========
</TABLE>
Upon completion of the IFG Merger, the entire amount of the stockholder's
equity was eliminated.
In addition, the minority interest in other partnerships of IFG of $108,485
will be eliminated upon the IPT Merger.
At the time of the IFG Merger, AIMCO obtained unsecured short-term
financing of $300 million. The proceeds were used to repay secured
short-term financing of IFG that AIMCO assumed.
(H) Represents the issuance of a total of 13,250,496 shares of AIMCO Common
Stock to IFG and IPT stockholders, in exchange for all the shares of IFG
and IPT common stock.
In accordance with the IFG Merger Agreement, AIMCO became obligated to
issue 8,423,751 shares of Class E Preferred Stock, approximately equal to
$292 million. Each share of Class E Preferred Stock will automatically
convert to one share of AIMCO Common Stock upon the payment of the special
dividend thereon. As such, for the purpose of preparing the pro forma
financial statements, AIMCO's management believes that the Class E
Preferred Stock is substantially the same as AIMCO Common Stock, and that
the fair value of the Class E Preferred Stock approximates the fair value
of the AIMCO Common Stock. Upon the payment of the special dividend on the
Class E Preferred Stock and the conversion of the Class E Preferred Stock
to AIMCO Common Stock, the former IFG stockholders will own approximately
15.0% of the AIMCO Common Stock and the IPT stockholders will own
approximately 7.3% of AIMCO Common Stock. The special dividend on the Class
E Preferred Stock is intended to represent a distribution in an amount at
least equal to the earnings and profits of IFG at the time of the IFG
Merger, to which AIMCO succeeds.
(I) Represents the increase in AIMCO's investment in Unconsolidated
Subsidiaries to reflect the contribution or sale of property management
contracts, including the related deferred tax liability, in exchange for
preferred stock and a note payable from the Unconsolidated Subsidiaries.
These assets and liabilities are valued at AIMCO's new basis resulting from
the allocation of the purchase price of IFG.
(J) Represents certain assets and liabilities of IFG, primarily related to the
management operations of IFG, contributed or sold by AIMCO to the
Unconsolidated Subsidiaries,
8
<PAGE> 9
(K) Represents notes receivable from the Unconsolidated Subsidiaries of
$95,000, advances to the Unconsolidated Subsidiaries of $45,792, and
equity in the Unconsolidated Subsidiaries of $48,485. The combined pro
forma balance sheet of the Unconsolidated Subsidiaries as of September 30,
1998 is presented below, which reflects the effects of the IFG Merger, the
IPT Merger, and the IFG Reorganization as if such transactions had occurred
as of September 30, 1998.
9
<PAGE> 10
UNCONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
IFG
HISTORICAL REORGANIZATION(i) PRO FORMA
---------- ----------------- ----------
<S> <C> <C> <C>
ASSETS
Real estate............................... $ 22,376 $ -- $ 22,376
Cash and cash equivalents................. 16,919 17,897(ii) 34,816
Restricted cash........................... 5,507 1,352(ii) 6,859
Management contracts...................... 47,846 79,195(iii) 127,041
Accounts receivable....................... 13,109 5,471(ii) 18,580
Deferred financing costs.................. 3,117 -- 3,117
Goodwill.................................. 43,544 -- 43,544
Other assets.............................. 51,498 2,860(ii) 54,358
-------- -------- --------
$203,916 $106,775 $310,691
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured notes payable..................... $114,302 $ 45,000(iii) $159,302
Accounts payable, accrued and other
liabilities............................. 56,773 27,580(ii) 84,353
Security deposits and deferred income..... 334 --(ii) 334
Deferred tax liability.................... -- 20,000(iii) 20,000
-------- -------- --------
171,409 92,580 263,989
Common stock.............................. 2,061 747(iv) 2,808
Preferred stock........................... 34,290 14,195(iii) 48,485
Retained earnings......................... (3,844) -- (3,844)
Notes receivable on common stock
purchases............................... -- (747)(iv) (747)
-------- -------- --------
32,507 14,195 46,702
-------- -------- --------
$203,916 $106,775 $310,691
======== ======== ========
</TABLE>
- -------------------------
(i) Represents adjustments related to the IFG Reorganization, whereby,
following the IFG Merger, AIMCO contributed or sold to the combined
Unconsolidated Subsidiaries certain assets and liabilities of IFG,
primarily related to the management operations owned by IFG. The
adjustments reflect the transfer of assets valued at AIMCO's new basis
resulting from the allocation of the purchase price of IFG. AIMCO received
non-voting preferred stock as consideration in exchange for the net assets
contributed. The net deferred tax liability is assumed by the
Unconsolidated Subsidiaries as it resulted from the assets and liabilities
transferred to the Unconsolidated Subsidiaries.
(ii) Represents certain assets and liabilities of IFG, primarily related to the
management operations of IFG, contributed or sold by AIMCO to the
Unconsolidated Subsidiaries, valued at AIMCO's new basis resulting from the
allocation of the purchase price of IFG.
(iii)Represents the transfer or sale of management contracts, the establishment
of an intercompany note,and the establishment of the related estimated net
deferred Federal and state tax liabilities at a combined rate of 40% for
the estimated difference between the book and tax basis of the net assets
of the Unconsolidated Subsidiaries. The primary component of the deferred
tax liability is the difference between the new basis of the property
management contracts, as a result of the allocation of the purchase price
of IFG, and the historical tax basis.
(iv) Represents the issuance of common stock to the common stockholders of the
Unconsolidated Subsidiaries in exchange for notes receivable, in order for
the common stockholders to maintain their respective ownership interest in
the Unconsolidated Subsidiaries.
10
<PAGE> 11
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPLETED AMBASSADOR
TRANSACTIONS AND NHP AMBASSADOR PURCHASE PRICE
HISTORICAL(A) PROBABLE PURCHASES(B) TRANSACTIONS(C) HISTORICAL(D) ADJUSTMENTS(E)
------------- ---------------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Rental and other property
revenues........................... $193,006 $120,337 (I)
11,012 (J) $ 6,660 $ 93,329 $ --
Property operating expenses......... (76,168) (59,466)(I)
(4,860)(J) (2,941) (36,088) --
Owned property management expense... (6,620) (4,327)(I)
(602)(J) (282) -- --
Depreciation........................ (37,741) (26,645)(I)
(2,172)(J) (1,414) (18,979) (5,997)(O)
-------- -------- ------- -------- -------
Income from property operations..... 72,477 33,277 2,023 38,262 (5,997)
-------- -------- ------- -------- -------
Management fees and other income.... 13,937 -- 7,813 -- --
Management and other expenses....... (9,910) -- (5,394) -- --
Corporate overhead allocation....... (588) -- -- -- --
Amortization........................ (1,401) -- (5,800) -- --
-------- -------- ------- -------- -------
Income from service company
business........................... 2,038 -- (3,381) -- --
Minority interest in service company
business........................... (10) -- -- -- --
-------- -------- ------- -------- -------
AIMCO's share of income from service
company business................... 2,028 -- (3,381) -- --
-------- -------- ------- -------- -------
General and administrative
expenses........................... (5,396) -- (1,025) (7,392) 7,392(P)
Interest expense.................... (51,385) (3,451)(K) (5,462) (26,987) (221)(Q)
(2,497)(L)
Interest income..................... 8,676 -- 1,900 -- --
Minority interest in other
entities........................... 1,008 458 (M) 16 (851) 705(R)
Equity in losses of unconsolidated
partnerships....................... (1,798) (122)(N) (8,542) 405 --
Equity in earnings of unconsolidated
subsidiaries....................... 4,636 -- 5,790 -- --
-------- -------- ------- -------- -------
Income (loss) from operations....... 30,246 27,665 (8,681) 3,437 1,879
Income tax provision................ -- -- -- -- --
Gain on dispositions of property.... 2,720 (2,720) -- -- --
-------- -------- ------- -------- -------
Income (loss) before extraordinary
item and minority interest in AIMCO
Operating Partnership.............. 32,966 24,945 (8,681) 3,437 1,879
Extraordinary item -- early
extinguishment of debt............. (269) 269 -- -- --
-------- -------- ------- -------- -------
Income before minority interest in
AIMCO Operating Partnership........ 32,697 25,214 (8,681) 3,437 1,879
Minority interest in AIMCO Operating
Partnership........................ (4,064) 1,148 (BB) 1,794(BB) (386)(BB) (221)(BB)
-------- -------- ------- -------- -------
Net income.......................... 28,633 26,362 (6,887) 3,051 1,658
Income attributable to preferred
stockholders....................... 2,315 39,859 -- -- --
-------- -------- ------- -------- -------
Income attributable to common
stockholders....................... $ 26,318 $(13,497) $(6,887) $ 3,051 $ 1,658
======== ======== ======= ======== =======
Basic earnings per share............ $ 1.09
========
Diluted earnings per share.......... $ 1.08
========
Weighted average shares
outstanding........................ 24,055
========
Weighted average shares and
equivalents outstanding............ 24,436
========
<CAPTION>
IFG IFG
IFG AS MERGER REORGANIZATION
ADJUSTED(F) ADJUSTMENTS(G) ADJUSTMENTS(H) PRO FORMA
----------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
Rental and other property
revenues........................... $ 6,912 $ -- $ -- $ 431,256
Property operating expenses......... (3,307) -- -- (182,830)
Owned property management expense... -- -- -- (11,831)
Depreciation........................ (966) (2,350)(S) -- (96,264)
-------- -------- -------- ---------
Income from property operations..... 2,639 (2,350) -- 140,331
-------- -------- -------- ---------
Management fees and other income.... 94,330 -- (74,404)(X) 41,676
Management and other expenses....... (57,615) -- 49,236(X) (23,683)
Corporate overhead allocation....... -- -- -- (588)
Amortization........................ (16,768) (32,699)(T) 30,188(Y) (26,480)
-------- -------- -------- ---------
Income from service company
business........................... 19,947 (32,699) 5,020 (9,075)
Minority interest in service company
business........................... -- -- -- (10)
-------- -------- -------- ---------
AIMCO's share of income from service
company business................... 19,947 (32,699) 5,020 (9,085)
-------- -------- -------- ---------
General and administrative
expenses........................... (21,199) -- 6,249(X) (21,371)
Interest expense.................... (9,035) (14,750) -- (113,782)
Interest income..................... 10,967 -- 191(Z) 21,734(CC)
Minority interest in other
entities........................... (12,871) 1,552 (U) -- (9,983)
Equity in losses of unconsolidated
partnerships....................... 12,515 (29,995)(V) -- (27,537)
Equity in earnings of unconsolidated
subsidiaries....................... -- -- (4,578)(AA) 5,848(EE)
-------- -------- -------- ---------
Income (loss) from operations....... 2,963 (78,242) 6,882 (13,851)
Income tax provision................ 1,701 (1,701)(W) -- --
Gain on dispositions of property.... 80 (80) -- --
-------- -------- -------- ---------
Income (loss) before extraordinary
item and minority interest in AIMCO
Operating Partnership.............. 4,744 (80,023) 6,882 (13,851)
Extraordinary item -- early
extinguishment of debt............. -- -- -- --
-------- -------- -------- ---------
Income before minority interest in
AIMCO Operating Partnership........ 4,744 (80,023) 6,882 (13,851)
Minority interest in AIMCO Operating
Partnership........................ -- 8,023(BB) -- 6,294(BB)
-------- -------- -------- ---------
Net income.......................... 4,744 (72,000) 6,882 (7,557)
Income attributable to preferred
stockholders....................... -- -- -- 42,174(DD)
-------- -------- -------- ---------
Income attributable to common
stockholders....................... $ 4,744 $(72,000) $ 6,882 $ (49,731)(CC)
======== ======== ======== =========
Basic earnings per share............ $ (0.83)(CC)
=========
Diluted earnings per share.......... $ (0.83)(CC)
=========
Weighted average shares
outstanding........................ 59,936
=========
Weighted average shares and
equivalents outstanding............ 60,780
=========
</TABLE>
11
<PAGE> 12
- -------------------------
(A) Represents AIMCO's audited consolidated results of operations for the
year ended December 31, 1997.
(B) Represents adjustments to reflect the following as if they had occurred
on January 1, 1997: (i) the 1997 Acquisitions; (ii) the 1997 Stock
Offerings; (iii) the 1997 Dispositions; (iv) the 1998 Stock Offerings;
(v) the 1998 Acquisitions; (vi) the Probable Purchases; (vii) the
1998 Dispositions; and (viii) the Preferred Partnership Unit Offering.
(C) Represents adjustments to reflect the purchase of the NHP Real Estate
Companies, the NHP Merger, and the NHP Reorganization, as if the
transactions had taken place on January 1, 1997. These adjustments are
detailed, as follows:
<TABLE>
<CAPTION>
NHP
REAL ESTATE NHP NHP NHP NHP
PURCHASE(i) HISTORICAL(ii) ADJUSTMENTS(iii) REORGANIZATION(iv) TRANSACTIONS
----------- -------------- ---------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Rental and other
property revenues..... $ 6,660(v) $ 16,842 $ -- $(16,842)(xvii) $ 6,660
Property operating
expenses.............. (2,941)(v) (8,411) -- 8,411 (xvii) (2,941)
Owned property
management expense.... (282)(v) (862) -- 862 (xvii) (282)
Depreciation........... (1,414)(vi) (2,527) (693)(xi) 3,220 (xvii) (1,414)
------- -------- ------- -------- -------
Income from property
operations............ 2,023 5,042 (693) (4,349) 2,023
------- -------- ------- -------- -------
Management fees and
other income.......... 1,405(vii) 72,176 -- (65,768)(xviii) 7,813
Management and other
expenses.............. (2,263)(viii) (35,267) -- 32,136 (xviii) (5,394)
Amortization........... -- (9,111) (4,432)(xii) 7,743 (xix) (5,800)
------- -------- ------- -------- -------
Income from service
company business...... (858) 27,798 (4,432) (25,889) (3,381)
------- -------- ------- -------- -------
General and
administrative
expenses.............. -- (16,266) 8,668 (xiii) 6,573 (xviii) (1,025)
Interest expense....... (5,082)(ix) (10,685) -- 10,305(xx) (5,462)
Interest income........ 540(v) 1,963 -- (603)(xxi) 1,900
Minority interest in
other partnerships.... 16(v) -- -- -- 16
Equity in losses of
unconsolidated
partnerships.......... (3,905)(x) -- (4,631)(xiv) (6) (8,542)
Equity in earnings of
unconsolidated
subsidiaries.......... -- -- (4,636)(xv) 10,426 (xxii) 5,790
------- -------- ------- -------- -------
Income (loss) from
operations............ (7,266) 7,852 (5,724) (3,543) (8,681)
Income tax provision... -- (3,502) 3,502 (xvi) -- --
------- -------- ------- -------- -------
Income (loss) before
minority interest in
Operating
Partnership........... (7,266) 4,350 (2,222) (3,543) (8,681)
Minority interest in
Operating
Partnership........... 1,426 -- -- 368 1,794
------- -------- ------- -------- -------
Net income (loss)...... (5,840) 4,350 (2,222) (3,175) (6,887)
======= ======== ======= ======== =======
</TABLE>
12
<PAGE> 13
- -------------------------
(i) Represents the adjustment to record activity from January 1, 1997
to the date of acquisition, as if the acquisition of the NHP Real
Estate Companies had occurred on January 1, 1997. The historical
financial statements of the NHP Real Estate Companies consolidate
certain real estate partnerships in which they have an interest
that will be presented on the equity method by AIMCO as a result
of the NHP Real Estate Reorganization. In addition, represents
adjustments to record additional depreciation and amortization
related to the increased basis in the assets of the NHP Real
Estate Companies as a result of the allocation of the purchase
price of the NHP Real Estate Companies and additional interest
expense incurred in connection with borrowings incurred by AIMCO
to consummate the NHP Real Estate Acquisition.
(ii) Represents the unaudited consolidated results of operations of
NHP for the period from January 1, 1997 through December 8, 1997
(date of the NHP Merger).
(iii) Represents the following adjustments occurring as a result of the
NHP Merger: (i) the reduction in personnel costs, primarily
severance costs, pursuant to a restructuring plan; (ii) the
incremental depreciation of the purchase price adjustment related
to real estate; (iii) the incremental amortization of the
purchase price adjustment related to the management contracts,
furniture, fixtures and equipment, and goodwill; (iv) the
reversal of equity in earnings of NHP during the pre-merger
period when AIMCO held a 47.62% interest in NHP; and (v) the
amortization of the increased basis in investments in real estate
partnerships based on the purchase price adjustment related to
real estate and an estimated average life of 20 years.
(iv) Represents adjustments related to the NHP Reorganization, whereby
AIMCO contributed or sold to the Unconsolidated Subsidiaries and
the Unconsolidated Partnership: (i) certain assets and liabilities
of NHP, primarily related to the management operations and other
businesses owned by NHP and (ii) 12 real estate properties
containing 2,905 apartment units. The adjustments represent (i)
the related revenues and expenses primarily related to the
management operations and other businesses owned by NHP and (ii)
the historical results of operations of such real estate
partnerships contributed, with additional depreciation and
amortization recorded related to AIMCO's new basis resulting from
the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies.
(v) Represents adjustments to reflect the acquisition of the NHP Real
Estate Companies and the corresponding historical results of
operations as if they had occurred on January 1, 1997.
(vi) Represents incremental depreciation related to the consolidated
real estate assets purchased from the NHP Real Estate Companies.
Buildings and improvements are depreciated on the straight-line
method over a period of 30 years, and furniture and fixtures are
depreciated on the straight-line method over a period of 5 years.
13
<PAGE> 14
(vii) Represents the adjustment to record the revenues from ancillary
businesses purchased from the NHP Real Estate Companies as if the
acquisition had occurred on January 1, 1997.
(viii) Represents $4,878 related to the adjustment to record the
expenses from ancillary businesses purchased from the NHP Real
Estate Companies as if the acquisition had occurred on January 1,
1997, less $2,615 related to a reduction in personnel costs
pursuant to a restructuring plan, approved by AIMCO senior
management, assuming that the acquisition of the NHP Real Estate
Companies had occurred on January 1, 1997 and that the
restructuring plan was completed on January 1, 1997. The
restructuring plan specifically identifies all significant
actions to be taken to complete the restructuring plan, including
the reduction of personnel, job functions, location and the date
of completion.
(ix) Represents adjustments in the amount of $3,391 to reflect the
acquisition of the NHP Real Estate Companies and the corresponding
historical results of operations as if they had occurred on
January 1, 1997, as well as the increase in interest expense in
the amount of $1,691 related to borrowings on AIMCO's credit
facilities of $55,807 to finance the NHP Real Estate Acquisition.
(x) Represents adjustments in the amount of $2,432 to reflect the
acquisition of the NHP Real Estate Companies and the corresponding
historical results of operations as if they had occurred on
January 1, 1997, as well as amortization of $1,473 related to the
increased basis in investment in real estate partnerships, as a
result of the allocation of the purchase price of the NHP Real
Estate Companies, based on an estimated average life of 20 years.
(xi) Represents incremental depreciation related to the real estate
assets purchased from NHP. Buildings and improvements are
depreciated on the straight-line method over a period of 20 years,
and furniture and fixtures are depreciated on the straight-line
method over a period of 5 years.
(xii) Represents incremental depreciation and amortization of the
tangible and intangible assets related to the property management
and other business operated by the Unconsolidated Subsidiaries,
based on AIMCO's new basis as adjusted by the allocation of the
combined purchase price of NHP including amortization of
management contracts of $3,782, depreciation of furniture,
fixtures and equipment of $2,018 and amortization of goodwill of
$7,743, less NHP's historical depreciation and amortization of
$9,111. Management contracts are amortized using the straight-line
method over the weighted average life of the contracts estimated
to be approximately 15 years. Furniture, fixtures and equipment
are depreciated using the straight-line method over the estimated
life of 3 years. Goodwill is amortized using the straight-line
method over 20 years.
(xiii) Represents a reduction in personnel costs, primarily severance
costs, pursuant to a restructuring plan, approved by AIMCO senior
management, specifically identifying all significant actions to
be taken to complete the restructuring plan, assuming that the
NHP Merger had occurred on
14
<PAGE> 15
January 1, 1997 and that the restructuring plan was completed on
January 1, 1997.
(xiv) Represents adjustment for amortization of the increased basis in
investments in real estate partnerships, as a result of the
allocation of the combined purchase price of NHP and the NHP Real
Estate Companies, based on an estimated average life of 20 years.
(xv) Represents the reversal of equity in earnings in NHP during the
pre-merger period when AIMCO held a 47.62% interest in NHP, as a
result of AIMCO's acquisition of 100% of the NHP Common Stock.
(xvi) Represents the reversal of NHP's income tax provision due to the
restructuring of the management business to the Unconsolidated
Subsidiaries.
(xvii) Represents the contribution of NHP's 12 real estate properties
containing 2,905 apartment units to the Unconsolidated
Partnership pursuant to the NHP Reorganization.
(xviii) Represents the historical income and expenses associated with
certain assets and liabilities of NHP that were contributed or
sold to the Unconsolidated Subsidiaries, primarily related to the
management operations and other businesses owned by NHP.
(xix) Represents the amortization and depreciation of certain management
contracts and other assets of NHP, based on AIMCO's new basis
resulting from the allocation of the purchase price of NHP, that
will be contributed or sold to the Unconsolidated Subsidiaries,
primarily related to the management operations and other
businesses owned by NHP.
(xx) Represents interest expense of $6,020 related to the contribution
of NHP's 12 real estate properties containing 2,905 apartment
units to the Unconsolidated Partnership and interest expense of
$4,285 related to the certain assets and liabilities that will be
contributed or sold to the Unconsolidated Subsidiaries pursuant to
the NHP Reorganization.
(xxi) Represents the interest income of $5,000 earned on notes payable
of $50,000 to AIMCO issued as consideration for certain assets and
liabilities sold to the Unconsolidated Subsidiaries by AIMCO, net
of the elimination of AIMCO's share of the related interest
expense of $4,750 reflected in the equity in earnings of the
Unconsolidated Subsidiaries operating results, offset by $853 in
interest income primarily related to the management operations and
other businesses owned by NHP contributed or sold to the
Unconsolidated Subsidiaries pursuant to the NHP Reorganization.
(xxii) Represents AIMCO's equity in earnings of the Unconsolidated
Subsidiaries.
(D) Represents the audited historical statement of operations of Ambassador
for the year ended December 31, 1997. Certain reclassifications have been
made to Ambassador's historical statement of operations to conform to
AIMCO's Statement of Operations presentation. The Ambassador historical
statement of operations excludes extraordinary loss of $1,384 and a loss
on sale of an interest rate cap of $509.
15
<PAGE> 16
(E) Represents the following adjustments occurring as a result of the
Ambassador Merger: (i) the incremental depreciation of the purchase price
adjustment related to real estate; (ii) the reduction in personnel costs,
primarily severance costs, pursuant to a restructuring plan; (iii) the
reduction of interest expense resulting from the net reduction of debt;
and (iv) the elimination of the minority interest associated with
Jupiter-I, L.P.
(F) Represents adjustments to reflect the IFG Merger, the AMIT Merger, the
IPT Merger, and the spin-off of Holdings as if these transactions had
occurred on January 1, 1997. These adjustments are detailed, as follows:
<TABLE>
<CAPTION>
IFG AMIT HOLDINGS IFG
HISTORICAL(i) MERGER(ii) SPIN-OFF(iii) AS ADJUSTED
------------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
Rental and other property
revenues.................... $ 6,646 $ 266 $ -- $ 6,912
Property operating expenses... (3,251) (56) -- (3,307)
Depreciation.................. (966) -- -- (966)
--------- ------- --------- --------
Income from property
operations.................. 2,429 210 -- 2,639
--------- ------- --------- --------
Management fees and other
income...................... 389,626 -- (295,296) 94,330
Management and other
expenses.................... (315,653) -- 258,038 (57,615)
Amortization.................. (31,709) (303) 15,244 (16,768)
--------- ------- --------- --------
Income from service company
business.................... 42,264 (303) (22,014) 19,947
--------- ------- --------- --------
General and administrative
expenses.................... (20,435) (1,351) 587 (21,199)
Interest expense.............. (9,353) -- 318 (9,035)
Interest income............... 4,571 6,853 (457) 10,967
Minority interest in other
partnerships................ (12,448) (382) (41) (12,871)
Equity in income (losses) of
unconsolidated
partnership................. 10,027 2,639 (151) 12,515
--------- ------- --------- --------
Income (loss) from
operations.................. 17,055 7,666 (21,758) 2,963
Income tax provision.......... (6,822) (180) 8,703 1,701
Gain on sale of property...... -- 80 -- 80
--------- ------- --------- --------
Net income (loss)............. 10,233 7,566 (13,055) 4,744
========= ======= ========= ========
</TABLE>
- -------------------------
(i) Represents the audited consolidated results of operations of IFG for
the year ended December 31, 1997, as reported in IFG's Annual Report
on Form 10-K. Certain reclassifications have been made to IFG's
historical statement of operations to conform to AIMCO's statement
of operations presentation.
(ii) Represents the historical statement of operations of AMIT, as well
as pro forma adjustments related to the AMIT Merger. The AMIT
Merger closed prior to the IFG Merger.
16
<PAGE> 17
(iii) Represents the distribution of two shares of Holdings common stock
for each three shares of IFG common stock to holders of IFG common
stock.
(G) Represents the following adjustments occurring as a result of the IFG
Merger and the IPT Merger: (i) the incremental depreciation of the
purchase price adjustment related to consolidated real estate and
investments in real estate partnerships; (ii) the amortization of
goodwill and property management contracts resulting from the IFG
Merger; (iii) the increase in interest expense resulting from the
net increase in debt; and (iv) the elimination of the income tax
provision.
(H) Represents adjustments related to the IFG Reorganization, whereby,
following the IFG Merger, AIMCO contributed or sold to the Unconsolidated
Subsidiaries certain assets and liabilities of IFG, primarily management
contracts and related working capital assets and liabilities related to
IFG's third party management operations. The adjustments reflect the
related revenues and expenses primarily related to the management
operations owned by IFG, with additional amortization recorded related to
AIMCO's new basis resulting from the allocation of the purchase price of
IFG.
(I) Represents adjustments to reflect the 1997 Property Acquisitions and the
1998 Acquisitions, less the 1997 Dispositions and the 1998 Dispositions
as if they had occurred on January 1, 1997. These pro forma operating
results are based on historical results of the properties, except for
depreciation, which is based on AIMCO's investment in the properties.
These adjustments are as follows:
<TABLE>
<CAPTION>
1997 PROPERTY 1997 1998 1998
ACQUISITIONS DISPOSITIONS ACQUISITIONS DISPOSITIONS TOTAL
------------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
Rental and other property
revenues............... $ 88,589 $(4,081) $ 39,132 $(3,303) $120,337
Property operating
expense................ (44,109) 1,944 (18,655) 1,354 (59,466)
Owned property management
expense................ (3,233) 133 (1,349) 122 (4,327)
Depreciation............. (16,839) 452 (10,946) 688 (26,645)
</TABLE>
(J) Represents adjustments to reflect the Probable Purchases as if they had
occurred on January 1, 1997. These pro forma operating results are based
on historical results of the properties, except for depreciation, which
is based on AIMCO's investment in the properties.
17
<PAGE> 18
(K) Represents adjustments to interest expense for the following:
<TABLE>
<S> <C>
Borrowings on AIMCO's credit facilities and other loans and
mortgages assumed in connection with the 1997 Property
Acquisitions.............................................. $(29,490)
Repayments on AIMCO's credit facilities and other
indebtedness with proceeds from the 1997 Dispositions and
the 1997 Stock Offerings.................................. 19,568
Repayments on AIMCO's credit facilities with proceeds from a
dividend received from one of the Unconsolidated
Subsidiaries.............................................. 1,889
Borrowings on AIMCO's credit facilities and other loans and
mortgages assumed in connection with the 1998
Acquisitions.............................................. (15,994)
Repayments on AIMCO's credit facilities and other
indebtedness with proceeds from the 1998 Dispositions and
the 1998 Stock Offerings.................................. 20,113
Repayments on AIMCO's credit facilities and other
indebtedness with proceeds from the Preferred Partnership
Unit offering............................................. 463
--------
$ (3,451)
========
</TABLE>
(L) Represents adjustments to interest expense related to the assumption of
mortgage debt in connection with the Probable Purchases.
(M) Represents (i) loss of $181 related to limited partners in consolidated
partnerships acquired in connection with the 1997 Property Acquisitions
and the 1998 Property Acquisitions and (ii) income of $502 allocable to
the Partnership Preferred Units.
(N) Represents the reduction in AIMCO's earnings in unconsolidated
partnerships as a result of the consolidation of additional partnerships
resulting from additional ownership acquired through tender offers.
(O) Represents incremental depreciation related to the real estate assets
purchased in connection with the Ambassador Merger. Buildings and
improvements are depreciated on the straight-line method over a period of
30 years, and furniture and fixtures are depreciated on the straight-line
method over a period of 5 years.
(P) Decrease results from identified historical costs of certain items which
will be eliminated or reduced as a result of the Ambassador Merger, as
follows:
<TABLE>
<S> <C>
Duplication of public company expenses...................... $ 724
Reduction in salaries and benefits.......................... 4,197
Merger related costs........................................ 524
Other....................................................... 1,947
------
$7,392
======
</TABLE>
The reduction in salaries and benefits is pursuant to a restructuring
plan, approved by AIMCO senior management, assuming that the Ambassador
Merger had occurred on January 1, 1997 and that the restructuring plan
was completed on January 1, 1997. The restructuring plan specifically
identifies all significant actions to be taken to complete the
restructuring plan, including the reduction of personnel, job functions,
location and date of completion.
(Q) Represents the decrease in interest expense of $3,612 related to the
repayment of the Ambassador revolving lines of credit upon consummation
of the Ambassador Merger, offset by an increase in interest expense of
$3,833 related to borrowings under AIMCO's credit facilities.
18
<PAGE> 19
(R) Represents elimination of minority interest in Jupiter-I, L.P. resulting
from the redemption of limited partnership interests not owned by
Ambassador in connection with the Ambassador Merger.
(S) Represents incremental depreciation related to the consolidated real
estate assets purchased in connection with the IFG Merger and IPT Merger,
based on AIMCO's new basis resulting from the allocation of the purchase
price of IFG and IPT. Buildings and improvements are depreciated on the
straight-line method over a period of 20 years, and furniture and
fixtures are depreciated on the straight-line method over a period of 5
years.
(T) Represents incremental depreciation and amortization of the tangible and
intangible assets related to the property management business of IFG,
based on AIMCO's new basis resulting from the allocation of the purchase
price of IFG, including amortization of property management contracts of
$38,885, amortization of goodwill of $6,526, and depreciation of
furniture, fixtures, and equipment of $3,753, less IFG's historical
depreciation and amortization of $16,465. Property management contracts
are amortized using the straight-line method over a period of three
years. Furniture, fixtures, and equipment are depreciated using the
straight-line method over a period of three years. Goodwill is amortized
using the straight-line method over 20 years.
(U) Represents elimination of minority interest of IPT resulting from the IPT
merger.
(V) Represents amortization related to the increased basis in investment in
real estate partnerships, as a result of the allocation of the purchase
price of IFG and IPT, based on an estimated average life of 20 years, and
based on AIMCO's new basis resulting from the allocation of the purchase
price of IFG and IPT.
(W) Represents the reversal of IFG's income tax provision.
(X) Represents the historical income and expenses associated with certain
assets and liabilities of IFG that were contributed or sold to the
Unconsolidated Subsidiaries, primarily related to the management
operations of IFG.
(Y) Represents the depreciation and amortization of certain management
contracts and furniture, fixtures, and equipment that were contributed
or sold to the Unconsolidated Subsidiaries, primarily related to the
management operations of IFG, based on AIMCO's new basis resulting from
the allocation of the purchase price of IFG.
(Z) Represents interest income of $3,825 earned on notes payable of $45,000
to AIMCO issued as consideration for certain assets and liabilities sold
to the Unconsolidated Subsidiaries by AIMCO, net of the elimination of
AIMCO's share of the related interest expense of $3,634 reflected on the
equity in earnings of the Unconsolidated Subsidiaries.
(AA) Represents AIMCO's equity in earnings of the Unconsolidated Subsidiaries.
(BB) Represents adjustments to Minority Interest in AIMCO Operating
Partnership assuming the Completed Transactions, the NHP Transactions,
the Ambassador Merger, the IFG Merger and the IPT Merger had occurred as
of January 1, 1997. On a pro forma
19
<PAGE> 20
basis, without giving effect to the NHP Transactions, the Ambassador
Merger, the IFG Merger and the IPT Merger as of December 31, 1997, the
minority interest percentage is approximately 18.5%. On a pro forma
basis, without giving effect to the Ambassador Merger, the IFG Merger,
and the IPT Merger as of December 31, 1997, the minority interest
percentage is approximately 15.9%. On a pro forma basis, without giving
effect to the IFG Merger and the IPT Merger, as of December 31, 1997, the
minority interest percentage is approximately 14.0%. On a pro forma
basis, giving effect to the Completed Transactions, the NHP Transactions,
the Ambassador Merger, the IFG Merger and the IPT Merger, as of December
31, 1997, the minority interest percentage is approximately 11.3%.
(CC) The following table presents the net impact to pro forma net loss
applicable to holders of shares of AIMCO Common Stock and net loss per
share of AIMCO Common Stock assuming the interest rate per annum
increases by 0.25%:
<TABLE>
<S> <C>
Increase in interest expense................................ $ 938
========
Income before minority interest in AIMCO Operating
Partnership............................................... $(14,789)
Minority interest in AIMCO Operating Partnership............ 6,400
--------
Net income.................................................. $ (8,389)
========
Net loss attributable to common stockholders................ $(50,563)
========
Basic loss per share........................................ $ (0.84)
========
Diluted loss per share...................................... $ (0.84)
========
</TABLE>
(DD) Represents the net income attributable to holders of the AIMCO Class B
Preferred Stock, the AIMCO Class C Preferred Stock, the AIMCO Class D
Preferred Stock, the AIMCO Class G Preferred Stock, the AIMCO Class H
Preferred Stock and the AIMCO Class J Preferred Stock as if these stock
offerings had occurred as of January 1, 1997.
(EE) Represents AIMCO's equity in earnings in the Unconsolidated Subsidiaries
of $(2,536), plus the elimination of intercompany interest expense of
$8,384. The combined Pro Forma Statement of Operations of the
Unconsolidated Subsidiaries for the year ended December 31, 1997 is
presented below, which represents the effects of the Ambassador Merger,
the NHP Merger, the NHP Reorganization, the IFG Merger, and the IFG
Reorganization as if these transactions had occurred as of January 1,
1997.
20
<PAGE> 21
UNCONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
REORGANIZATION IFG
HISTORICAL(i) ADJUSTMENTS(ii) REORGANIZATION(iii) PRO FORMA
------------- --------------- ------------------- ----------
<S> <C> <C> <C> <C>
Rental and other property
revenues............... $ 6,194 $ 6,371(iv) $ -- $ 12,565
Property operating
expenses............... (3,355) (3,531)(iv) -- (6,886)
Owned property management
expense................ (147) (478)(iv) -- (625)
Depreciation expense..... (1,038) (767)(iv) -- (1,805)
-------- -------- -------- --------
Income from property
operations............. 1,654 1,595 -- 3,249
-------- -------- -------- --------
Management fees and other
income................. 23,776 41,992(v) 74,404(x) 140,172
Management and other
expenses............... (11,733) (20,403)(v) (49,236)(x) (81,372)
Amortization............. (3,726) (4,017)(v) (30,188)(xi) (37,931)
-------- -------- -------- --------
Income from service
company................ 8,317 17,572 (5,020) 20,869
General and
administrative
expense................ -- (6,573)(v) (6,249)(x) (12,822)
Interest expense......... (6,058) (5,849)(vi) (3,825)(xii) (15,732)
Interest income.......... 1,001 (148)(v) -- 853
Minority interest in
other partnerships..... (2,819) 2,198 (viii) -- (621)
Equity in losses of
unconsolidated
partnerships........... (1,028) 1,028(iv) -- --
Equity in earnings of
Unconsolidated
Subsidiaries........... 2,943 (2,943)(vii) -- --
-------- -------- -------- --------
Income (loss) from
operations............. 4,010 6,880 (15,094) (4,204)
Income tax provision..... (1,902) (3,013)(ix) 6,450 (xiii) 1,535
-------- -------- -------- --------
Net income (loss)........ $ 2,108 $ 3,867 $ (8,644) $ (2,669)
======== ======== ======== ========
Income attributable to
preferred
stockholders........... $ 2,198 $ 3,478 $ (8,212) $ (2,536)
======== ======== ======== ========
Income (loss)
attributable to common
stockholders........... $ (90) $ 389 $ (432) $ (133)
======== ======== ======== ========
</TABLE>
21
<PAGE> 22
- -------------------------
(i) Represents the historical results of operations of the Unconsolidated
Subsidiaries for the year ended December 31, 1997.
(ii) Represents adjustments related to the NHP Reorganization, which includes
the sale or contribution of 14 properties containing 2,725 apartment
units from the unconsolidated partnerships to the Unconsolidated
Subsidiaries, as well as the sale or contribution of 12 properties
containing 2,905 apartment units from the Unconsolidated Subsidiaries to
the Unconsolidated Partnership.
(iii) Represents adjustments related to the IFG Reorganization, whereby,
following the IFG Merger, AIMCO contributed or sold to the Unconsolidated
Subsidiaries certain assets and liabilities of IFG, primarily related to
the management operations owned by IFG. The adjustments reflect the
related revenues and expenses primarily related to the management
operations owned by IFG, with additional amortization recorded related to
AIMCO's new basis resulting from the allocation of the purchase price of
IFG.
(iv) Represents adjustments for the historical results of operations of the 14
real estate properties contributed or sold to the Unconsolidated
Subsidiaries, offset by the historical results of operations of the 12
real estate properties contributed or sold to the Unconsolidated
Partnership, with additional depreciation recorded related to AIMCO's new
basis resulting from the allocation of purchase price of NHP and the NHP
Real Estate Companies.
(v) Represents adjustments to reflect income and expenses associated with
certain assets and liabilities of NHP contributed or sold to the
Unconsolidated Subsidiaries.
(vi) Represents adjustments of $6,058 to reverse the historical interest
expense of the Unconsolidated Subsidiaries, which resulted from its
original purchase of NHP Common Stock, offset by $2,622 related to the
contribution or sale of the 14 real estate properties, $4,285 related to
assets and liabilities transferred from AIMCO to the Unconsolidated
Subsidiaries and $5,000 related to a note payable to AIMCO.
(vii) Represents the reversal of the historical equity in earnings of NHP for
the period in which NHP was not consolidated by the Unconsolidated
Subsidiaries.
(viii) Represents the minority interest in the operations of the 14 real estate
properties.
(ix) Represents the estimated Federal and state tax provisions, which are
calculated on the pro forma operating results of the Unconsolidated
Subsidiaries, excluding amortization of goodwill which is not deductible
for tax purposes.
(x) Represents the historical income and expenses associated with certain
assets and liabilities of IFG that were contributed or sold to the
Unconsolidated Subsidiaries, primarily related to the management
operations of IFG.
(xi) Represents the depreciation and amortization of certain management
contracts and furniture, fixtures, and equipment that were contributed
or sold to the Unconsolidated Subsidiaries, primarily related to the
management operations of IFG, based on AIMCO's new basis resulting from
the allocation of the purchase price of IFG.
(xii) Represents adjustment for interest expense related to a note payable to
AIMCO.
(xiii) Represents the estimated Federal and state tax provisions, which are
calculated on the pro forma operating results of the Unconsolidated
Subsidiaries, excluding amortization of goodwill, which is not deductible
for tax purposes.
22
<PAGE> 23
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPLETED
TRANSACTIONS AMBASSADOR IFG
AND PROBABLE AMBASSADOR PURCHASE PRICE IFG AS MERGER
HISTORICAL(A) PURCHASES(B) HISTORICAL(C) ADJUSTMENTS(D) ADJUSTED(E) ADJUSTMENTS(F)
------------- --------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Rental and other property
revenues................ $265,700 $ 19,603(H) $35,480 $ -- $ 8,126 $ --
8,398 (I)
Property operating
expenses................ (101,600) (9,009)(H) (14,912) -- (2,585) --
(3,745)(I)
Owned property management
expense................. (7,746) (728)(H) -- -- -- --
(459)(I)
Depreciation.............. (59,792) (4,886)(H) (7,270) (1,420)(M) (904) (1,583)(Q)
(1,625)(I)
-------- ------- -------- ------- -------- --------
Income from property
operations.............. 96,562 6,549 13,298 (1,420) 4,637 (1,583)
-------- ------- -------- ------- -------- --------
Management fees and other
income.................. 13,968 -- -- -- 71,155 --
Management and other
expenses................ (8,101) -- -- -- (41,477) --
Corporate overhead
allocation.............. (196) -- -- -- -- --
Amortization.............. (3) -- -- -- (13,986) (23,895)(R)
-------- ------- -------- ------- -------- --------
Income from service
company business........ 5,668 -- -- -- 15,692 (23,895)
-------- ------- -------- ------- -------- --------
General and administrative
expenses................ (7,444) -- (5,278) 5,278(N) (61,386) 45,823(S)
Interest expense.......... (56,756) 1,975 (J)
(2,469)(K) (10,079) 145(O) (24,871) 7,045
Interest income........... 18,244 (1) -- -- 22,501 --
Minority interest in other
entities................ (1,052) 160(L) (252) 252(P) (14,159) 6,622 (T)
Equity in losses of
unconsolidated
partnerships............ (5,078) -- (71) -- 13,492 (18,577)(U)
Equity in earnings of
unconsolidated
subsidiaries............ 8,413 -- -- -- -- --
Amortization of
goodwill................ (5,071) -- -- -- -- --
-------- ------- -------- ------- -------- --------
Income (loss) from
operations.............. 53,486 6,215 (2,382) 4,255 (44,094) 15,435
Income tax provision...... -- -- -- -- 1,180 (1,180)(V)
Gain on dispositions of
property................ 2,783 (2,783) -- -- 6,576 (6,576)
-------- ------- -------- ------- -------- --------
Income before minority
interest in AIMCO
Operating Partnership... 56,269 3,432 (2,382) 4,255 (36,338) 7,679
Minority interest in AIMCO
Operating Partnership... (4,425) 276 (AA) -- 243(AA) -- 2,925 (AA)
-------- ------- -------- ------- -------- --------
Net income (loss)......... 51,844 3,708 (2,382) 4,498 (36,338) 10,604
Income attributable to
preferred
stockholders............ 16,320 16,094 -- -- -- --
-------- ------- -------- ------- -------- --------
Income (loss) attributable
to common
stockholders............ $ 35,524 $(12,386) $ (2,382) $ 4,498 $(36,338) $ 10,604
======== ======= ======== ======= ======== ========
Basic earnings (loss) per
share................... $ 0.80
========
Diluted earnings (loss) per
share................... $ 0.79
========
Weighted average shares
outstanding............. 44,562
========
Weighted average shares
and equivalents
outstanding............. 44,765
========
<CAPTION>
IFG
REORGANIZATION
ADJUSTMENTS(G) PRO FORMA
-------------- ---------
<S> <C> <C>
Rental and other property
revenues................ $ -- $ 337,307
Property operating
expenses................ -- (131,851)
Owned property management
expense................. -- (8,933)
Depreciation.............. -- (78,480)
-------- ---------
Income from property
operations.............. -- 118,043
-------- ---------
Management fees and other
income.................. (56,211)(W) 28,912
Management and other
expenses................ 35,192(W) (14,386)
Corporate overhead
allocation.............. -- (196)
Amortization.............. 22,641(X) (15,243)
-------- ---------
Income from service
company business........ 1,622 (913)
-------- ---------
General and administrative
expenses................ 14,375(W) (8,632)
Interest expense.......... -- (85,010)(BB)
Interest income........... 143(Y) 40,887
Minority interest in other
entities................ -- (8,429)
Equity in losses of
unconsolidated
partnerships............ -- (10,234)
Equity in earnings of
unconsolidated
subsidiaries............ (7,562)(Z) 851(DD)
Amortization of
goodwill................ -- (5,071)
-------- ---------
Income (loss) from
operations.............. 8,578 41,493
Income tax provision...... -- --
Gain on dispositions of
property................ -- --
-------- ---------
Income before minority
interest in AIMCO
Operating Partnership... 8,578 41,493
Minority interest in AIMCO
Operating Partnership... -- (981)(AA)
-------- ---------
Net income (loss)......... 8,578 40,512(BB)
Income attributable to
preferred
stockholders............ -- 32,414(CC)
-------- ---------
Income (loss) attributable
to common
stockholders............ $ 8,578 $ 8,098(BB)
======== =========
Basic earnings (loss) per
share................... $ 0.13(BB)
=========
Diluted earnings (loss) per
share................... $ 0.13(BB)
=========
Weighted average shares
outstanding............. 61,150
=========
Weighted average shares
and equivalents
outstanding............. 61,814
=========
</TABLE>
23
<PAGE> 24
- -------------------------
(A) Represents AIMCO's unaudited consolidated results of operations for the
nine months ended September 30, 1998.
(B) Represents adjustments to reflect the following as if they had occurred
on January 1, 1998: (i) the 1998 Stock Offerings; (ii) the 1998
Acquisitions; (iii) the Probable Purchases; (iv) the 1998 Dispositions;
and (v) the Preferred Partnership Unit Offering.
(C) Represents the unaudited historical statement of operations of Ambassador
for the four months ended April 30, 1998. Certain reclassifications have
been made to Ambassador's historical Statement of Operations to conform
to AIMCO's Statement of Operations presentation.
(D) Represents the following adjustments occurring as a result of the
Ambassador Merger: (i) the incremental depreciation of the purchase price
adjustment related to real estate; (ii) the reduction in personnel costs,
primarily severance costs, pursuant to a restructuring plan; (iii) the
reduction of interest expense resulting from the net reduction of debt;
and (iv) the elimination of the minority interest associated with
Jupiter-I, L.P.
(E) Represents adjustments to reflect the IFG Merger, the AMIT Merger, the
IPT Merger and the spin-off of the common stock of Holdings as if these
transactions had occurred on January 1, 1998. These adjustments are
detailed, as follows:
<TABLE>
<CAPTION>
IFG AMIT HOLDINGS IFG
HISTORICAL(i) MERGER(ii) SPIN-OFF(iii) AS ADJUSTED
------------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
Rental and other property
revenues....................... $ 7,566 $ 560 $ -- $ 8,126
Property operating expenses...... (2,585) -- -- (2,585)
Depreciation..................... (904) -- -- (904)
--------- ------ --------- --------
Income from property
operations..................... 4,077 560 -- 4,637
--------- ------ --------- --------
Management fees and other
income......................... 311,475 -- (240,320) 71,155
Management and other expenses.... (252,295) -- 210,818 (41,477)
Amortization..................... (26,781) (48) 12,843 (13,986)
--------- ------ --------- --------
Income from service company
business....................... 32,399 (48) (16,659) 15,692
--------- ------ --------- --------
General and administrative
expenses....................... (66,272) (675) 5,561 (61,386)
Interest expense................. (24,164) -- (707) (24,871)
Interest income.................. 18,817 4,193 (509) 22,501
Minority interest in other
partnerships................... (14,159) -- -- (14,159)
Equity in losses of
unconsolidated partnerships.... 12,169 1,323 13,492
--------- ------ --------- --------
Income (loss) from operations.... (37,133) 4,030 (10,991) (44,094)
Income tax provision............. (4,772) -- 5,952 1,180
Gain on disposition of property.. 5,888 688 -- 6,576
--------- ------ --------- --------
Item income (loss)............... $ (36,017) $4,718 $ (5,039) $(36,338)
========= ====== ========= ========
</TABLE>
- ---------------
(i) Represents the unaudited consolidated results of operations of IFG
for the nine months ended September 30, 1998.
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<PAGE> 25
Certain reclassifications have been made to IFG's historical
statement of operations to conform to AIMCO's statement of
operations presentation.
(ii) Represents the historical statement of operations of AMIT, as well
as pro forma adjustments related to the AMIT Merger. The AMIT
Merger closed prior to the IFG Merger.
(iii) Represents the distribution of two shares of Holdings common stock
for each three shares of IFG common stock to holders of IFG common
stock.
(F) Represents the following adjustments occurring as a result of the IFG
Merger: (i) the incremental depreciation of the purchase price adjustment
related to consolidated real estate and investments in real estate
partnerships; (ii) the amortization of goodwill and property management
contracts resulting from the IFG Merger; (iii) the increase in interest
expense resulting from the net increase in debt; and (iv) the elimination
of the income tax provision.
(G) Represents adjustments related to the IFG Reorganization, whereby,
following the IFG Merger, AIMCO contributed or sold to the combined
Unconsolidated Subsidiaries certain assets and liabilities of IFG,
primarily management contracts and related working capital assets and
liabilities related to IFG's third party management operations. The
adjustments reflect the related revenues and expenses primarily related
to the management operations owned by IFG, with additional amortization
recorded related to AIMCO's new basis resulting from the allocation of
the purchase price of IFG.
(H) Represents adjustments to reflect the 1998 Acquisitions, less the 1998
Dispositions as if they had occurred on January 1, 1998. These pro forma
operating results are based on historical results of the properties,
except for depreciation, which is based on AIMCO's investment in the
properties.
These adjustments are as follows:
<TABLE>
<CAPTION>
1998 1998
ACQUISITIONS DISPOSITIONS TOTAL
------------ ------------ -------
<S> <C> <C> <C>
Rental and other property revenues...... $20,554 $(951) $19,603
Property operating expense.............. (9,385) 376 (9,009)
Owned property management expense....... (765) 37 (728)
Depreciation............................ (4,979) 93 (4,886)
</TABLE>
(I) Represents adjustments to reflect the Probable Purchases as if
they had occurred on January 1, 1998. These pro forma operating
results are based on historical results of the properties, except for
depreciation, which is based on AIMCO's investment in the properties.
(J) Represents adjustments to interest expense for the following:
<TABLE>
<S> <C>
Borrowings on AIMCO's credit facilities and other loans and
mortgages assumed in connection with the 1998
Acquisitions.............................................. $(8,698)
Repayments on AIMCO's credit facilities and other
indebtedness with proceeds from the 1998 Dispositions and
the 1998 Stock Offerings.................................. 10,326
Repayments on AIMCO's credit facilities and other
indebtedness with proceeds from the Preferred
Partnership Unit Offering................................. 347
-------
$ 1,975
=======
</TABLE>
(K) Represents adjustments to interest expense related to the assumption
of mortgage debt in connection with the probable purchases.
(L) Represents (i) loss of $537 related to limited partners in consolidated
partnerships acquired in connection with the 1998 Acquisitions and (ii)
income of $377 allocable to the Partnership Preferred Units.
(M) Represents incremental depreciation related to the real estate assets
purchased in connection with the Ambassador Merger. Buildings and
improvements are
25
<PAGE> 26
depreciated on the straight-line method over a period of 30 years, and
furniture and fixtures are depreciated on the straight-line method over
a period of 5 years.
(N) Decrease results from identified historical costs of certain items which
will be eliminated or reduced as a result of the Ambassador Merger, as
follows:
<TABLE>
<S> <C>
Duplication of public company expenses...................... $ 355
Reduction in salaries and benefits.......................... 2,482
Merger related costs........................................ 1,212
Other....................................................... 1,229
------
$5,278
======
</TABLE>
The reduction in salaries and benefits is pursuant to a restructuring
plan, approved by AIMCO senior management, assuming that the Ambassador
Merger had occurred on January 1, 1998 and that the restructuring plan
was completed on January 1, 1998. The restructuring plan specifically
identifies all significant actions to be taken to complete the
restructuring plan, including the reduction of personnel, job functions,
location and date of completion.
(O) Represents the decrease in interest expense of $1,480 related to the
repayment of the Ambassador revolving lines of credit upon consummation
of the Ambassador Merger, offset by an increase in interest expense of
$1,335 related to borrowings under the AIMCO line of credit.
(P) Represents elimination of minority interest in Jupiter-I, L.P. resulting
from the redemption of limited partnership interests not owned by
Ambassador in connection with the Ambassador Merger.
(Q) Represents incremental depreciation related to the consolidated real
estate assets purchased in connection with the IFG Merger and IPT Merger,
based on AIMCO's new basis resulting from the allocation of the purchase
price of IFG and IPT. Buildings and improvements are depreciated on the
straight-line method over a period of 20 years, and furniture and
fixtures are depreciated on the straight-line method over a period of 5
years.
(R) Represents incremental depreciation and amortization of the tangible and
intangible assets related to the property management business of IFG,
based on AIMCO's new basis resulting from the allocation of the purchase
price of IFG, including amortization of property management contracts of
$30,096, amortization of goodwill of $4,895, and depreciation of
furniture, fixtures, and equipment of $2,842, less IFG's historical
depreciation and amortization of $13,938. Property management contracts
are amortized using the straight-line method over a period of three
years. Furniture, fixtures, and equipment are depreciated using the
straight-line method over a period of three years. Goodwill is amortized
using the straight-line method over 20 years.
(S) Represents the elimination of merger related expenses recorded by IFG
during the nine months ended September 30, 1998. In connection with the
IFG Merger, certain IFG executives will receive one-time lump-sum
payments in connection with the termination of their employment and
option agreements. The total of these lump sum payments is estimated to
be approximately $50,000.
26
<PAGE> 27
(T) Represents elimination of minority interest in IPT resulting from the
IPT merger.
(U) Represents amortization related to the increased basis in investment in
real estate partnerships, as a result of the allocation of the purchase
price of IFG and IPT, based on an estimated average life of 20 years, and
based on AIMCO's new basis resulting from the allocation of the purchase
price of IFG and IPT.
(V) Represents the reversal of IFG's income tax provision.
(W) Represents the historical income and expenses associated with certain
assets and liabilities of IFG that were contributed or sold to the
Unconsolidated Subsidiaries, primarily related to the management
operations of IFG.
(X) Represents the depreciation and amortization of certain management
contracts and furniture, fixtures, and equipment that were contributed or
sold to the Unconsolidated Subsidiaries, primarily related to the
management operations of IFG, based on AIMCO's new basis resulting from
the allocation of the purchase price of IFG.
(Y) Represents interest income of $2,861 earned on notes payable of $45,000
to AIMCO issued as consideration for certain assets and liabilities sold
to the Unconsolidated Subsidiaries of AIMCO, net of the elimination of
AIMCO's share of the related interest expense of $2,718 reflected in the
equity in earnings of the Unconsolidated Subsidiaries.
(Z) Represents AIMCO's equity in earnings of the Unconsolidated Subsidiaries.
(AA) Represents adjustments to Minority Interest in the AIMCO Operating
Partnership assuming the Completed Transactions, the Ambassador Merger,
the IFG Merger and the IPT Merger had occurred as of January 1, 1997. On
a pro forma basis, without giving effect to the Ambassador Merger, the
IFG Merger and the IPT Merger, as of September 30, 1998, the minority
interest percentage is approximately 15.2%. On a pro forma basis, without
giving effect to the IFG Merger and the IPT Merger, as of June 30, 1998,
the minority interest percentage is approximately 13.4%. On a pro forma
basis, giving effect to the Completed Transactions, the Ambassador
Merger, the IFG Merger and the IPT Merger, as of June 30, 1998, the
minority interest percentage is approximately 10.9%.
(BB) The following table presents the net impact to pro forma net income
applicable to holders of shares of AIMCO Common Stock and net income per
share of AIMCO Common Stock assuming the interest rate per annum
increases by 0.25%:
<TABLE>
<S> <C>
Increase in interest........................................ $ 702
========
Income before minority interest in AIMCO Operating
Partnership............................................... $ 40,791
Minority interest in AIMCO Operating Partnership............ (905)
--------
Net income.................................................. $ 39,886
========
Net income attributable to common stockholders.............. $ 7,472
========
Basic loss per share........................................ $ 0.12
========
Diluted loss per share...................................... $ 0.12
========
</TABLE>
(CC) Represents the net income attributable to holders of the AIMCO Class B
Preferred Stock, the AIMCO Class C Preferred Stock, the AIMCO Class D
Preferred Stock
27
<PAGE> 28
the AIMCO Class G Preferred Stock, the AIMCO Class H Preferred Stock and
the AIMCO Class J Preferred Stock as if these stock offerings had
occurred as of January 1, 1997.
(DD) Represents AIMCO's equity in earnings in the Unconsolidated Subsidiaries
of $(1,867) plus the elimination of intercompany interest of $2,718. The
combined Pro Forma Statement of Operations of the Unconsolidated
Subsidiaries for the nine months ended September 30, 1998 is presented
below, which represents the effects of the Ambassador Merger, the IFG
Merger and the IFG Reorganization as if these transactions had occurred
as of January 1, 1997.
28
<PAGE> 29
UNCONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
IFG
HISTORICAL(i) REORGANIZATION(ii) PRO FORMA
------------- ------------------ ----------
<S> <C> <C> <C>
Rental and other property revenues.... $ 9,910 $ -- $ 9,910
Property operating expense............ (5,139) -- (5,139)
Owned property management expense..... (345) -- (345)
Depreciation expense.................. (1,026) -- (1,026)
-------- -------- --------
Income from property operations....... 3,400 -- 3,400
-------- -------- --------
Management fees and other income...... 57,665 56,211 (iii) 113,876
Management and other expenses......... (36,221) (35,192)(iii) (71,413)
Amortization.......................... (2,111) (22,641)(iv) (24,752)
-------- -------- --------
Income from service company........... 19,333 (1,622) 17,711
General and administrative expense.... -- (14,375)(iii) (14,375)
Interest expense...................... (6,931) (2,861)(v) (9,792)
Interest income....................... 617 -- 617
Minority interest in other
partnerships........................ (526) -- (526)
-------- -------- --------
Income (loss) from operations......... 15,893 (18,858) (2,965)
Income tax provision.................. (7,037) 8,037 (vi) 1,000
-------- -------- --------
Net income (loss)..................... $ 8,856 $(10,821) $ (1,965)
======== ======== ========
Income (loss) attributable to
preferred stockholders.............. $ 8,413 $(10,280) $ (1,867)
======== ======== ========
Income (loss) attributable to common
stockholders........................ $ 443 $ (541) $ (98)
======== ======== ========
</TABLE>
- -------------------------
(i) Represents the Unconsolidated Subsidiaries historical consolidated
results of operations.
(ii) Represents adjustments related to the IFG Reorganization, whereby,
following the IFG Merger, AIMCO contributed or sold to the combined
Unconsolidated Subsidiaries certain assets and liabilities of IFG,
primarily related to the management operations owned by IFG. The
adjustments reflect the related revenues and expenses primarily related
to the management operations owned by IFG, with additional amortization
recorded related to AIMCO's new basis resulting from the allocation of
the purchase price of IFG.
(iii) Represents the historical income and expenses associated with certain
assets and liabilities of IFG that were contributed or sold to the
Unconsolidated Subsidiaries, primarily related to the management
operations of IFG.
29
<PAGE> 30
(iv) Represents the depreciation and amortization of certain management
contracts and furniture, fixtures, and equipment contributed or sold to
the Unconsolidated Subsidiaries, primarily related to the management
operations of IFG, based on AIMCO's new basis resulting from the
allocation of the purchase price of IFG.
(v) Represents adjustment for interest expense related to a note payable to
AIMCO.
(vi) Represents the estimated Federal and state tax provisions, which are
calculated on the pro forma operating results of the Unconsolidated
Subsidiaries, excluding amortization of goodwill, which is not deductible
for tax purposes.
30
