-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LXMd0xLV20buPfJChXajF/fjvm3jc/A2Fj6czefJo+bRvjnNMb4M9fbvo9joxFMu u/WvdvTQPwBgxYEAB2GjTg== 0001055160-99-000004.txt : 19990816 0001055160-99-000004.hdr.sgml : 19990816 ACCESSION NUMBER: 0001055160-99-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICA FIRST MORTGAGE INVESTMENTS INC CENTRAL INDEX KEY: 0001055160 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 133974868 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13991 FILM NUMBER: 99688017 BUSINESS ADDRESS: STREET 1: 399 PARK AVENUE STREET 2: 36TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129358760 MAIL ADDRESS: STREET 1: 399 PARK AVE STREET 2: 399 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10022 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1999 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 1-13991 AMERICA FIRST MORTGAGE INVESTMENTS, INC. (Exact name of registrant as specified in its charter) Maryland 13-3974868 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 399 Park Avenue, 36th Floor, New York, New York 10022 (Address of principal executive offices) (Zip Code) (212) 935-8760 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Common Stock ($.01 par value) 9,055,142 as of August 11, 1999 -i- Part I. Financial Information Item 1. Financial Statements AMERICA FIRST MORTGAGE INVESTMENTS, INC. CONSOLIDATED BALANCE SHEETS
June 30, 1999 (Unaudited) Dec. 31, 1998 --------------- --------------- Assets Investment in mortgage securities (Note 3) $ 415,219,209 $ 241,895,462 Investment in corporate securities (Note 4) 5,740,933 4,673,127 Investment in preferred stock 1,736,817 1,153,800 Cash and cash equivalents, at cost which approximates market value 6,984,555 6,045,956 Accrued interest receivable 2,433,155 1,540,576 Other investments (Note 5) 1,162,611 1,197,341 Goodwill, net 7,420,737 7,361,338 Other assets 1,843,138 801,302 --------------- --------------- $ 442,541,155 $ 264,668,902 =============== =============== Liabilities Repurchase agreements (Note 6) $ 370,668,890 $ 190,250,084 Accrued interest payable 1,463,174 795,785 Accounts payable 575,850 212,085 Dividends or distributions payable 1,239,300 2,413,803 --------------- --------------- 373,947,214 193,671,757 --------------- --------------- Minority interest in Pension Fund (Note 1) 22,447 64,388 Stockholders' Equity Stockholders' Equity Common stock, $.01 par value; 10,000,000 shares authorized 9,055,142 issued and outstanding 90,551 90,551 Additional paid-in capital 76,203,009 76,203,009 Retained earnings (5,115,628) (4,302,981) Accumulated other comprehensive income (2,606,438) (1,057,822) --------------- --------------- 68,571,494 70,932,757 --------------- --------------- $ 442,541,155 $ 264,668,902 =============== =============== The accompanying notes are an integral part of the consolidated and combined financial statements.
- 1 - AMERICA FIRST MORTGAGE INVESTMENTS, INC. CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (UNAUDITED)
Company Company For the Three For the Three Months Ended Months Ended June 30, 1999 June 30, 1998 ----------------- --------------- Mortgage securities income $ 6,023,386 $ 1,398,141 Corporate securities income 139,816 - Dividend income 120,915 - Interest income on temporary cash investments 62,512 184,622 --------------- --------------- Total interest income 6,346,629 1,582,763 Interest expense on borrowed funds 4,318,692 437,490 --------------- --------------- Net interest income 2,027,937 1,145,273 --------------- --------------- Income from other investments 62,125 213,439 Gain on sale of investments 56,528 414,710 --------------- --------------- 118,653 628,149 --------------- --------------- General and administrative expenses 628,400 540,392 Minority interest 4,230 (7,977) --------------- --------------- 632,630 532,415 --------------- --------------- Net income $ 1,513,960 $ 1,241,007 =============== =============== Net income, basic and fully diluted, per share $ .17 $ .14 =============== =============== Weighted average number of shares outstanding 9,055,142 9,035,084 The accompanying notes are an integral part of the consolidated and combined financial statements.
- 2 - AMERICA FIRST MORTGAGE INVESTMENTS, INC. CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (UNAUDITED)
For the Six Months Ended June 30, 1998 ------------------------------------------------------ Company For the Six Company and Months Ended Company Predecessor June 30, 1999 From April 10 Through Apr. 9 Total --------------- --------------- --------------- --------------- Mortgage securities income $ 10,588,175 $ 1,398,141 $ 613,793 $ 2,011,934 Corporate securities income 270,715 - - - Dividend income 177,818 - - - Interest income on temporary cash investments 136,994 184,622 148,799 333,421 --------------- --------------- --------------- --------------- Total interest income 11,173,702 1,582,763 762,592 2,345,355 Interest expense on borrowed funds 7,461,847 437,490 - 437,490 --------------- --------------- --------------- ---------------- Net interest income 3,711,855 1,145,273 762,592 1,907,865 --------------- --------------- --------------- ---------------- Income from other investments 248,822 213,439 145,167 358,606 Gain on sale of investments 54,994 414,710 - 414,710 --------------- --------------- --------------- ---------------- 303,816 628,149 145,167 773,316 --------------- --------------- --------------- ---------------- General and administrative expenses 1,244,593 540,392 421,293 961,685 Minority interest 4,720 (7,977) - (7,977) --------------- --------------- --------------- ---------------- 1,249,313 532,415 421,293 953,708 --------------- --------------- --------------- ---------------- Net income $ 2,766,358 $ 1,241,007 $ 486,466 $ 1,727,473 =============== =============== =============== ================ Net income allocated to: General Partner $ 3,931 BUC Holders 482,535 -------------- $ 486,466 =============== Net income, basic and fully diluted, per share $ .31 $ .014 $ N/A =============== =============== =============== Net income, basic and fully diluted, per unit $ N/A $ N/A $ .08 =============== =============== =============== Weighted average number of shares outstanding 9,055,142 9,035,084 N/A Weighted average number of units outstanding N/A N/A 5,775,797 The accompanying notes are an integral part of the consolidated and combined financial statements.
- 3 - AMERICA FIRST MORTGAGE INVESTMENTS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
Stockholders' Equity --------------------------------------------------------------------------------- Accumulated Other Common Stock Paid-in Retained Comprehensive # of Shares Amount Capital Earnings Income Total ------------ ------------ ------------ ------------ ------------ ------------ Balance at December 31, 1998 9,055,142 $ 90,551 $76,203,009 $(4,302,981) $(1,057,822) $ 70,932,757 Comprehensive income: Net income - - - 2,766,358 - 2,766,358 Net unrealized holding gains (losses) arising during the period - - - - (1,548,616) (1,548,616) ------------ ------------ ------------ ------------ ------------ ------------ Comprehensive income - - - 2,766,358 (1,548,616) 1,217,742 Dividends paid or accrued - - - (3,579,005) - (3,579,005) ------------ ------------ ------------ ------------ ------------ ------------ Balance at June 30, 1999 9,055,142 $ 90,551 $76,203,009 $ (5,115,628) $(2,606,438) $ 68,571,494 ============ ============ ============ ============ ============ ============ The accompanying notes are an integral part of the consolidated and combined financial statements.
- 4 - AMERICA FIRST MORTGAGE INVESTMENTS, INC. CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 1998 ------------------------------------------------------- Company For the Six Months Ended Company Predecessor June 30, 1999 From Apr. 10 Through Apr. 10 Total ---------------- --------------- --------------- --------------- Cash flows from operating activities Net income $ 2,766,358 $ 1,241,007 $ 486,466 $ 1,727,473 Net cash provided by (used in) operating activities: Amortization 792,429 101,987 (1,959) 100,028 Minority interest 4,720 - - - Gain on sale of other investments (54,994) (414,710) - (414,710) (Increase) decrease in accrued interest receivable (892,579) (545,660) 8,302 (537,358) (Increase) decrease in other assets (1,255,642) (110,515) 6,241 (104,274) Increase in accrued interest payable 667,389 341,641 - 341,641 Increase (decrease) in accounts payable 363,765 (1,684,858) 565,608 (1,119,250) --------------- --------------- --------------- --------------- Net cash provided by (used in) operating activities 2,391,446 (1,071,108) 1,064,658 (6,450) --------------- --------------- --------------- --------------- Cash flows from investing activities Principal payments on mortgage securities 49,725,446 2,650,449 867,630 3,518,079 Sale of preferred stock 1,070,972 - - - Decrease in other investments 34,730 - 42,869 42,869 Purchases of mortgage securities (225,430,664) (102,631,993) - (102,631,993) Purchases of corporate securities (1,049,000) - - - Purchases of preferred stock (1,351,830) - - - Proceeds from sale of other investments - 1,290,000 - 1,290,000 Merger transaction costs paid - - (729,509) (729,509) Net cash from Merger - 5,070,552 - 5,070,552 --------------- --------------- --------------- --------------- Net cash provided by (used in) investing activities (177,000,346) (93,620,992) 180,990 (93,440,002) --------------- --------------- --------------- --------------- Cash flows from financing activities Net borrowings from reverse repurchase agreements 180,418,806 99,117,208 - 99,117,208 Dividends and distributions paid (4,871,307) (775,546) (1,535,007) (2,310,553) --------------- --------------- --------------- --------------- Net cash provided by (used in) financing activities 175,547,499 98,341,662 (1,535,007) 96,806,655 --------------- --------------- --------------- --------------- Net increase (decrease) in cash and cash equivalents 938,599 3,649,562 (289,359) 3,360,203 Cash and temporary cash investments at beginning of period 6,045,956 10,136,822 10,426,181 10,426,181 ---------------- --------------- --------------- ---------------- Cash and temporary cash investments at end of period $ 6,984,555 $ 13,786,384 $ 10,136,822 $ 13,786,384 ================ =============== =============== ================ Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 6,794,458 $ 562,050 $ - $ 562,050 ================ =============== =============== ================ Supplemental disclosure on non-cash investing activities: The following assets and liabilities were assumed by the Company in conjunction with the Merger and issuance of common stock (see Note 1): Mortgage securities $ - $ 20,420,336 $ 20,420,336 Accrued interest receivable - 142,545 142,545 Other investments - 175,369 175,369 Accounts payable - 712,888 712,888 Distributions payable - 265,545 265,545 Goodwill of $150,000 and $7,507,902 was recorded by the Company in 1999 and 1998 as a result of the Merger. The accompanying notes are an integral part of the consolidated and combined financial statements.
- 5 - AMERICA FIRST MORTGAGE INVESTMENTS, INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) 1. Organization America First Mortgage Investments, Inc. (the Company) was incorporated in Maryland on July 24, 1997, but had no operations prior to April 10, 1998. On April 10, 1998, (the Merger Date) the Company and three partnerships: America First Participating/Preferred Equity Mortgage Fund Limited Partnership (Prep Fund 1), America First Prep Fund 2 Limited Partnership (Prep Fund 2), America First Prep Fund 2 Pension Series Limited Partnership (Pension Fund), consummated a merger transaction whereby their pre-existing net assets and operations or majority interest in the preexisting partnership were contributed to the Company in exchange for 9,035,084 shares of the Company's common stock. For financial accounting purposes, Prep Fund 1, the largest of the three partnerships, was considered the Predecessor entity (the Predecessor) and its historical operating results are presented in the financial statements contained herein. The Merger was accounted for using the purchase method of accounting in accordance with generally accepted accounting principles. Prep Fund 1 was deemed to be the acquirer of the other partnerships under the purchase method. Accordingly, the Merger resulted, for financial accounting purposes, in the effective purchase by Prep Fund 1 of all the Beneficial Unit Certificates (BUCs) of Prep Fund 2 and approximately 99% of the BUCs of Pension Fund. As the surviving entity for financial accounting purposes, the assets and liabilities of Prep Fund 1 were recorded by the Company at their historical cost and the assets and liabilities of Prep Fund 2 and Pension Fund were adjusted to fair value. The excess of the fair value of stock issued over the fair value of net assets acquired has been recorded as goodwill in the accompanying balance sheet. The Company has entered into an advisory agreement with America First Mortgage Advisory Company (the Advisor) which provides advisor services in connection with the conduct of the Company's business activities. 2. Summary of Significant Accounting Policies A) Method of Accounting The accompanying 1999 consolidated financial statements include the accounts of the Company and its subsidiaries, Pension Fund and America First Capital Associates Limited Partnership Six (the general partner of Pension Fund). All significant intercompany transactions and accounts have been eliminated in consolidation. In addition, as more fully discussed in Note 5, the Company has an investment in a corporation and investments in five real estate limited partnerships, none of which are controlled by the Company. These investments are accounted for under the equity method. Neither the corporation nor the real estate limited partnerships are consolidated for income tax purposes. The accompanying 1998 consolidated and combined financial statements include the consolidated accounts of the Company from April 10, 1998, through December 31, 1998, and the combined accounts of the Company, Prep Fund 1 and America First Participating/Preferred Equity Mortgage Fund (the managing general partner of Prep Fund 1) (together referred to as the Predecessor) for periods prior to the Merger. The financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. B) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less. The carrying amount of cash equivalents approximates their fair value. - 6 - C) Mortgage Securities and Corporate Securities Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115), requires the Company to classify its investments in mortgage securities and corporate securities (collectively referred to as investment securities) as either held-to-maturity, available-for-sale or trading. Although the Company generally intends to hold most of its mortgage securities until maturity, it may, from time to time, sell any of its mortgage securities as part of its overall management of its business. In order to be prepared to respond to potential future opportunities in the market, to sell mortgage securities in order to optimize the portfolio's total return and to retain its ability to respond to economic conditions that require the Company to sell assets in order to maintain an appropriate level of liquidity, the Company has classified all its mortgage securities as available-for-sale. Mortgage securities classified as available-for-sale are reported at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Corporate securities are classified as held-to-maturity and are carried at amortized cost. Unrealized losses on mortgage securities that are considered other-than-temporary, as measured by the amount of decline in fair value attributable to factors other than temporary, are recognized in income and the cost basis of the mortgage security is adjusted. Other-than-temporary unrealized losses are based on management's assessment of various factors affecting the expected cash flow from the mortgage securities, including an other-than-temporary deterioration of the credit quality of the underlying mortgages and/or the credit protection available to the related mortgage pool. Gains or losses on the sale of investment securities are based on the specific identification method. Interest income is accrued based on the outstanding principal amount of the investment securities and their contractual terms. Premiums and discounts associated with the purchase of investment securities are amortized into interest income over the lives of the securities using the effective yield method based on, among other things, anticipated estimated prepayments. Such calculations are periodically adjusted for actual prepayment activity. D) Credit Risk The Company limits its exposure to credit losses on its investment portfolio by requiring that at least 70% of its investment portfolio consist of mortgage securities or mortgage loans that are either (i) insured or guaranteed as to principal and interest by an agency of the U.S. government, such as Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA), or Federal Home Loan Mortgage Corporation (FHLMC), (ii) rated in one of the two highest rating categories by either Standard & Poor's or Moody's, or (iii) considered to be of equivalent credit quality as determined by the Advisor and approved by the Company's investment committee. The remainder of the Company's assets may be either: (i) mortgage assets rated at least investment grade or considered to be of equivalent credit quality by the Advisor with approval from the Company's investment committee; (ii) direct investment (mezzanine or equity) in multifamily projects collateralizing mortgage loans owned by the Company; (iii) investments in limited partnerships, real estate investment trusts or closed-end funds owning a portfolio of mortgage assets; or (iv) other fixed income instruments (corporate or government) that provide increased call protection relative to the Company's mortgage securities. Corporate debt that is rated below investment grade will be limited to less than 5% of the Company's total assets. As of June 30, 1999, approximately 84% of the Company's investment portfolio consisted of mortgage securities insured or guaranteed by the U.S. government or an agency thereof. At June 30, 1999, management determined no allowance for credit losses was necessary. E) Other Investments Other investments consist of: (i) non-voting preferred stock of a corporation owning interests in real estate limited partnerships, (ii) investments in limited partnerships owning real estate, (iii) direct investments in multifamily projects collateralizing mortgage loans owned by the Company, and (iv) other real estate investments. - 7 - F) Net income per Share Net income per share is based on the weighted average number of common shares and common equivalent shares (e.g., stock options), if dilutive, outstanding during the period. Basic net income per share is computed by dividing net income available to shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the diluted net income available to common shareholders by the weighted average number of common shares and common equivalent shares outstanding during the period. The common equivalent shares are calculated using the treasury stock method which assumes that all dilutive common stock equivalents are exercised and the funds generated by the exercise are used to buy back outstanding common stock at the average market price during the reported period. As more fully discussed in Note 7, options to purchase 520,000 shares of common stock were issued during the three months ended June 30, 1998. Because the average stock price during the quarter during which such options were issued was less than the exercise price, exercise of such options under the treasury stock method would be anti-dilutive. Accordingly, these potentially dilutive securities were not considered in fully diluted earnings per share and, as a result, basic and fully diluted net income per share are the same for the three and six months ended June 30, 1999. With regard to the Predecessor, no options were issued. As such, basic and diluted net income per Unit of the Predecessor were the same for the three and six months ended June 30, 1998, as no dilutive equivalent units existed. G) Comprehensive Income Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" requires the Company and the Predecessor to display and report comprehensive income, which includes all changes in Stockholders' Equity or Partners' Capital with the exception of additional investments by or dividends to shareholders of the Company or additional investments by or distributions to partners of the Predecessor. Comprehensive income for the Company and the Predecessor includes net income and the change in net unrealized holding gains (losses) on investments. Comprehensive income for the three and six months ended June 30, 1999 and 1998 was as follows:
Company Company For the Three For the Three Months Ended Months Ended June 30, 1999 June 30, 1998 (Unaudited) (Unaudited) --------------- --------------- Net income $ 1,513,960 $ 1,241,007 Change in classification of mortgage securities from held-to-maturity to available-for-sale - (704,828) Change in net unrealized holding gains (losses) (2,351,261) 146,347 --------------- --------------- Comprehensive income $ (837,301) $ 682,526 =============== =============== For the Six Months Ended June 30, 1998 ------------------------------------------------------- Company For the Six Months Ended Company Predecessor June 30, 1999 From April 10 Through April 9 Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) --------------- --------------- --------------- --------------- Net income $ 2,766,358 $ 1,241,007 $ 486,466 $ 1,727,473 Change in classification of mortgage securities from held-to-maturity to available-for-sale - (704,828) - (704,828) Change in net unrealized holding gains (losses) (1,548,616) 146,347 (21,335) 125,012 --------------- --------------- --------------- --------------- Comprehensive income $ 1,217,742 $ 682,526 $ 465,131 $ 1,147,657 =============== =============== =============== ===============
- 8 - H) Reclassifications Certain prior period amounts have been reclassified to conform with the current period classification. 3. Mortgage Securities The following table presents the Company's mortgage securities as of June 30, 1999, and December 31, 1998.
June 30, 1999 (Unaudited) December 31, 1998 ----------------- ----------------- GNMA Certificates $ 51,506,206 $ 59,452,502 FNMA Certificates 286,864,488 159,686,597 FHLMC Certificates 16,637,577 22,756,363 Commercial mortgage securities 17,131,000 - Private label CMOs 43,079,938 - ----------------- ----------------- $ 415,219,209 $ 241,895,462 ================= =================
At June 30, 1999, mortgage securities consisted of pools of adjustable-rate mortgage securities with a carrying value of $372,218,608 and fixed-rate mortgage securities with a carrying value of $43,000,601. At December 31, 1998, mortgage securities consisted of pools of adjustable-rate mortgage securities with a carrying value of $194,542,316 and fixed-rate mortgage securities with a carrying value of $47,353,146. The Government National Mortgage Association (GNMA) Certificates are backed by first mortgage loans on multifamily residential properties and pools of single-family properties. The GNMA Certificates are debt securities issued by a private mortgage lender and are guaranteed by GNMA as to the full and timely payment of principal and interest on the underlying loans. The Federal National Mortgage Association (FNMA) Certificates are backed by first mortgage loans on pools of single-family properties. The FNMA Certificates are debt securities issued by FNMA and are guaranteed by FNMA as to the full and timely payment of principal and interest on the underlying loans. The Federal Home Loan Mortgage Corporation (FHLMC) Certificates are backed by first mortgage loans on pools of single-family properties. The FHLMC Certificates are debt securities issued by FHLMC and are guaranteed by FHLMC as to the full and timely payment of principal and interest on the underlying loans. The commercial mortgage securities are rated AA or A by Standard and Poor's. The private label CMOs (collateralized mortgage obligations) are rated AAA by Standard and Poor's. At June 30, 1999, and December 31, 1998, all mortgage securities were classified as available-for-sale and as such are carried at their fair value. The following table presents the amortized cost, gross unrealized gains, gross unrealized losses and fair value of mortgage securities as of June 30, 1999 and December 31, 1998 respectively:
June 30, 1999 (Unaudited) Dec. 31, 1998 ------------------ ------------------ Amortized cost $ 418,199,834 $ 242,142,861 Gross unrealized gains 1,661,108 1,177,638 Gross unrealized losses (4,641,733) (1,425,037) ------------------ ------------------ Fair value $ 415,219,209 $ 241,895,462 ================== ==================
- 9 - As of June 30, 1999, the Company had a commitment to purchase one mortgage security with a current face value totaling approximately $7.4 million. 4. Corporate Securities Corporate securities are classified as held-to-maturity. At June 30, 1999, and December 31, 1998, the total amortized cost, gross unrealized gains and fair value of the corporate securities were $5,740,933, $352,067, and $6,093,000 and $4,673,127, $273,123 and $4,946,250, respectively. 5. Other Investments Other investments consisted of the following as of June 30, 1999 and December 31, 1998:
June 30, 1999 (Unaudited) Dec. 31, 1998 -------------- ------------- Investment in Retirement Centers Corporation $ 332,246 $ 349,076 Investment in and advances to real estate limited partnerships 830,365 848,265 ------------- ------------- Total $ 1,162,611 $ 1,197,341 ============= =============
The Company's investment in Retirement Centers Corporation (RCC) represents a 95% ownership interest in such corporation. The Company owns 100% of the non-voting preferred stock of RCC and a third party owns 100% of the common stock. RCC owns limited partnership interests in five real estate limited partnerships which operate assisted living centers. The Company accounts for its investment in RCC on the equity method. Investments in and advances to real estate limited partnerships consist of investments in or advances made to five limited partnerships which own the properties underlying certain mortgage securities owned by the Company. These investments are not insured or guaranteed but rather are collateralized by the value of the real estate underlying the real estate owned by such limited partnerships. They are accounted for under the equity method of accounting. Certain of the investments have a zero carrying value and, as such, earnings are recorded only to the extent distributions are received. Such investments have not been reduced below zero through recognition of allocated investment losses since the Company has no legal obligation to provide additional cash support to the underlying property partnerships as it is not the general partner, nor has it indicated any commitment to provide this support. 6. Repurchase Agreements As of June 30, 1999, the Company had outstanding balances of $370,668,890 under 31 repurchase agreements with a weighted average borrowing rate of 4.97% and a weighted average remaining maturity of 2.8 months. As of June 30, 1999, all of the Company's borrowings were fixed-rate term repurchase agreements with original maturities that range from one to twelve months. As of December 31, 1998, the Company had outstanding balances of $190,250,084 under 13 repurchase agreements with a weighted average borrowing rate of 5.04%. At June 30, 1999, the repurchase agreements had the following remaining maturities:
Within 30 days $ 95,173,252 30 to 90 days 173,533,638 90 days to one year 101,962,000 ------------- $ 370,668,890 =============
The repurchase agreements are collateralized by the Company's mortgage securities with a principal balance of approximately $380.1 million and bear interest at rates that are LIBOR based. - 10 - 7. Stockholders' Equity 1997 Stock Option Plan - --------------------- The Company has a 1997 Stock Option Plan (the Plan) which authorizes the granting of options to purchase an aggregate of up to 1,000,000 shares of the Company's common stock, but not more than 10% of the total outstanding shares of the Company's common stock. The Plan authorizes the Board of Directors, or a committee of the Board of Directors, to grant Incentive Stock Options (ISOs) as defined under section 422 of the Internal Revenue Code, Non-Qualified Stock Options (NQSOs) and Dividend Equivalent Rights (DERs) to eligible persons, other than non-employee directors. Non-employee directors are eligible to receive grants of NQSOs with DERs pursuant to the provisions of the Plan. The exercise price for any options granted to eligible persons under the Plan shall not be less than the fair market value of the common stock on the day of the grant. The options expire if not exercised ten years after the date granted. During the three months ended June 30, 1998, there were 500,000 ISOs granted to buy common shares at an exercise price of $9.375 per share. In addition, there were 20,000 NQSOs issued at an exercise price of $9.375 per share. Prior to this grant, no other options were outstanding and no additional options were granted through June 30, 1999. At June 30, 1999 and December 31, 1998, respectively, 10,000 and 5,000 NQSOs were vested and exercisable. At June 30, 1999 and December 31, 1998, respectively, 250,000 and 125,000 ISOs were vested and exercisable. As of June 30, 1999, no options had been exercised. In addition to options, 500,000 and 20,000 DERs were granted on the ISOs and NQSOs, respectively, during the three months ended June 30, 1998, based on the provisions of the Plan. DERs vest on the same basis as the options and payments are made on vested DERs only. Vested DERs are paid only to the extent of ordinary income and not on returns of capital. Dividends paid on ISOs are charged to stockholders' equity when declared and dividends paid on NQSOs are charged to earnings when declared. For the three and six months ended June 30, 1999, respectively, the Company recorded a $31,250 and $47,500 charge to stockholders' equity (included in dividends paid or accrued) associated with the DERs on ISOs and a $1,250 and $1,900 charge to earnings associated with DERs on NQSOs. The options and related DERs issued were accounted for under the provisions of SFAS 123, "Accounting for Stock Based Compensation". Because the ISOs were not issued to officers who are direct employees of the Company, ISOs granted were accounted for under the option value method and a periodic charge will be recognized based on the vesting schedule. The charge of options which vested at date of grant were included as capitalized transaction costs in connection with the Merger. Management estimated the value of the ISOs at the date of grant to be approximately $1.88 per share using a Black-Scholes valuation model, as adjusted for the discounted value of dividends not to be received under the unvested DERs. In the absence of comparable historical market information for the Company, management utilized assumptions consistent with activity of a comparable peer group of companies including an estimated option life of five years, a 25% volatility rate and a risk-free rate of 5.5% and a dividend yield of 0% (because of the DERs). During the three and six months ended June 30, 1999, respectively, as part of operations, the Company reflected an earnings charge of approximately $58,899 and $117,798, representing the value of ISOs/DERs granted over their vesting period. NQSOs granted were accounted for using the intrinsic method and, accordingly, no earnings charge was reflected since the exercise price was equal to the fair market value of the common stock at the date of the grant. Dividends/Distributions - ----------------------- The Company declared the following distributions through June 30, 1999: Declaration Date Record Date Payment Date Amount per share - ---------------- -------------- -------------- ------------------ March 24, 1999 April 5, 1999 May 17, 1999 $.265 June 14, 1999 June 30, 1999 August 17, 1999 .125 For tax purposes, the distribution of $.265 per share declared on December 15, 1998, but payable on February 19, 1999, will be treated as a 1999 distribution for shareholders and partially taxable in 1999. Cash distributions paid by the Company during the year consist in part of a dividend paid from earnings and in part of a return of capital. - 11 - 8. Related Party Transactions The Advisor manages the operations and investments of the Company and performs administrative services for the Company. In turn, the Advisor receives a management fee payable monthly in arrears in an amount equal to 1.10% per annum of the first $300 million of Stockholders' Equity of the Company, plus .80% per annum of the portion of Stockholders' Equity of the Company above $300 million. The Company also pays the Advisor, as incentive compensation for each fiscal quarter, an amount equal to 20% of the dollar amount by which the annualized Return on Equity for such fiscal quarter exceeds the amount necessary to provide an annualized Return on Equity equal to the Ten-Year U.S. Treasury Rate plus 1%. For the three and six months ended June 30, 1999, the Advisor earned a base management fee of $192,964 and $382,786, respectively, and incentive compensation of approximately $89,689 and $134,607, respectively. Subsequent to the Merger Date and through June 30, 1998, the Advisor earned a base management fee of $181,376 and incentive compensation of approximately $8,400. America First Properties Management Company L.L.C., (the Manager), provides property management services for certain of the multifamily properties in which the Company has an interest. The Manager also provided property management services to certain properties previously associated with the Predecessor which were acquired in the Merger. The Manager receives a management fee equal to a stated percentage of the gross revenues generated by the properties under management, ranging from 4.5% to 5% of gross revenues. Such fees paid by the Company for the three and six months ended June 30, 1999, amounted to $82,082 and $167,445, respectively. Such fees paid by the Company subsequent to the Merger Date and through June 30, 1998, amounted to $70,583 and such fees paid by the Predecessor in 1998 for periods prior to the Merger Date amounted to $71,125. Prior to the Merger Date, the general partner of the Predecessor (AFCA 3) was entitled to an administrative fee of .35% per annum of the outstanding amount of investments of the Predecessor to be paid by the Predecessor to the extent such amount is not paid by property owners. Prior to the Merger Date, AFCA 3 earned administrative fees of $53,617 in 1998 of which $38,659 was paid by the Predecessor and the remainder was paid by owners of real estate properties financed by the Predecessor. Prior to the Merger Date, substantially all of Predecessor's general and administrative expenses and certain costs capitalized by the Predecessor were paid by AFCA 3 or an affiliate and reimbursed by the Predecessor. Prior to the Merger Date, the amount of such expenses reimbursed to AFCA 3 or an affiliate was $165,439. The capitalized costs consist of transaction costs incurred in conjunction with the merger described in Note 1. - 12 - 9. Pro Forma Financial Statements (Unaudited) The following summary pro forma information includes the effects of the Merger as if the Merger had been completed on January 1, 1998. Pro Forma Statement of Operations
For the Six Months Ended June 30, 1998 --------------- Mortgage securities income $ 2,513,828 Interest income on temporary cash investments 432,155 --------------- Total interest income 2,945,983 Interest expense on borrowed funds 437,490 -------------- Net interest income 2,508,493 -------------- Income from other investments 415,101 Gain on sale of investments 414,710 -------------- 829,811 -------------- General and administrative expenses (1) 1,322,326 Minority interest (7,977) --------------- 1,314,349 -------------- Net income $ 2,023,955 =============== Net income, basic and fully diluted, per share $ .22 =============== Weighted average number of shares outstanding 9,055,142
(1) Excludes transaction costs incurred by Prep Fund 2 and Pension Fund. The pro forma financial information is not necessarily indicative of what the consolidated results of operations of the Company would have been as of and for the period indicated, nor does it purport to represent the results of operations for future periods. - 13 - Item 2. AMERICA FIRST MORTGAGE INVESTMENTS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The Company was incorporated in Maryland on July 24, 1997, but did not begin operations until April 10, 1998. On April 10, 1998, the Company and three partnerships: America First Participating/Preferred Equity Mortgage Fund Limited Partnership (Prep Fund 1), America First Prep Fund 2 Limited Partnership (Prep Fund 2), America First Prep Fund 2 Pension Series Limited Partnership (Pension Fund), consummated a merger transaction whereby their pre-existing net assets and operations or majority interest in the pre-existing partnership were contributed to the Company in exchange for 9,035,084 shares of the Company's common stock. For financial accounting purposes, Prep Fund 1, the largest of the three Partnerships, was considered the Predecessor entity (the Predecessor) and its historical operating results are presented in the financial statements contained herein. The Merger was accounted for using the purchase method of accounting in accordance with generally accepted accounting principles. Prep Fund 1 was deemed to be the acquirer of the other Partnerships under the purchase method. Accordingly, the Merger resulted, for financial accounting purposes, in the effective purchase by Prep Fund 1 of all the Beneficial Unit Certificates (BUCs) of Prep Fund 2 and approximately 99% (98% on the date of the Merger and 1% since the Merger) of the BUCs of Pension Fund. As the surviving entity for financial accounting purposes, the assets and liabilities of Prep Fund 1 were recorded by the Company at their historical cost and the assets and liabilities of Prep Fund 2 and Pension Fund were adjusted to fair value. The excess of the fair value of stock issued over the fair value of net assets acquired has been recorded as goodwill in the accompanying balance sheet of the Company. Concurrently with the Merger, the Company entered into an Advisory Agreement with America First Mortgage Advisory Corporation (the "Advisor") and adopted an investment policy which significantly differed from that pursued by the predecessor partnerships. This strategy includes leveraged investing in adjustable rate mortgage securities and mortgage loans. The Company began implementing this investment strategy in the second quarter of 1998. During the period from the consummation of the Merger through June 30, 1999, the Company purchased mortgage securities with a face value at the time of purchase of $455.3 million (mortgage securities with a face value of approximately $222.7 million were purchased during the six months ended June 30, 1999). The Company has elected to become subject to tax as a real estate investment trust (REIT) under the Code beginning with its 1998 taxable year and, as such, anticipates distributing annually at least 95% of its taxable income, subject to certain adjustments. Generally, cash for such distributions is expected to be largely generated from the Company's operations, although the Company may borrow funds to make distributions. Further, as part of the Merger transaction, the Company committed to make distributions in the first year following the Merger of at least $1.06 per common share, to be paid in four equal quarterly installments, which is expected to significantly exceed taxable income. Accordingly, a portion of distributions received by shareholders in 1998 and 1999 consisted in part of a dividend paid from earnings and in part of a cash merger payment representing non-taxable return of capital. There is no commitment by the Company to distribute amounts in excess of taxable income beyond the first year of operations. For tax purposes, the dividend declared on December 15, 1998, and paid on February 19, 1999, was treated as a 1999 event for shareholders. The Company's operations for any period may be affected by a number of factors including the investment assets held, general economic conditions affecting underlying borrowers and, most significantly, factors which affect the interest rate market. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors beyond the control of the Company. - 14 - Income from other investments decreased $109,784 during the six months ended June 30, 1999, compared to the six months ended June 30, 1998. Approximately $56,000 of such decrease is due to a decrease in the amount of income realized on the Company's investments in real estate limited partnerships and approximately $54,000 of such decrease is due to interest income recorded in 1998 on a participating loan which was paid off in May of 1998. The Company recorded a gain of $55,994 on the sale of investments during the six months ended June 30, 1999 compared to a gain of $414,710 for the comparable period of 1998. The gain recorded for the six months ended June 30, 1998 was due primarily to the payoff of the Company's only participating loan in the amount of $385,000. General and administrative expenses for the Company for the six months ended June 30, 1999 increased $282,908 as compared to that of the Predecessor and the Company for the six months ended June 30, 1998. This increase is primarily a result of the increased scope of operations resulting from the Merger and an increase of approximately $126,000 in incentive compensation payable to the Advisor for the six months ended June 30, 1999 compared to the same period in 1998. Year 2000 The Company does not own or operate its own computer system and owns no business or other equipment. However, the operation of the Company's business relies on the computer system and other equipment maintained by America First Companies L.L.C., the principal shareholder of the Company's Advisor ("America First"). In addition, the Company has business relationships with a number of third parties whose ability to perform their obligations to the Company depend on such systems and equipment. Some or all of these systems and equipment may be affected by the inability of certain computer programs and embedded circuitry to correctly recognize dates occurring after December 31, 1999. America First has adopted a plan to deal with this so-called "Year 2000 problem" with respect to its information technology ("IT") systems, non-IT systems and third party business relationships. State of Readiness The IT system maintained by America First consists primarily of personal computers, most of which are connected by a local area network. All accounting and other record keeping functions relating to the Company that are conducted in house by America First are performed on this PC-LAN system. America First does not own or operate any "mainframe" computer systems. The PC-LAN system runs software programs that America First believes are compatible with dates after December 31, 1999. America First has engaged a third party computer consulting firm to review and test its PC-LAN system to ensure that it will function correctly after that date and expects that this process, along with any necessary remediation, will be completed by early in the final quarter of 1999. America First believes any Year 2000 problems relating to its IT systems will be resolved without significant operational difficulties. However, there can be no assurance that testing will discover all potential Year 2000 problems or that it will not reveal unanticipated material problems with the America First IT systems that will need to be resolved. Non-IT systems include embedded circuitry such as microcontrollers found in telephone equipment, security and alarm systems, copiers, fax machines, mail room equipment, heating and air conditioning systems and other infrastructure systems that are used by America First in connection with the operation of the Company's business. America First is reviewing its non-IT systems along with the providers that service and maintain these systems, with initial emphasis being placed on those, such as telephone systems, which have been identified as necessary to America First's ability to conduct the operation of the Company's business activities. America First expects that any necessary modification or replacement of such "mission critical" systems will be accomplished by early in the final quarter of 1999. The Company has no control over the remediation efforts of third parties with which it has material business relationships and the failure of certain of these third parties to successfully remediate their Year 2000 issues could have a material adverse effect on the Company. Accordingly, America First has undertaken the process of contacting each such third party to determine the state of their readiness for Year 2000. Such parties include, but are not limited to, the obligors on the Company's mortgage securities, the Company's - 15 - transfer and paying agent and the financial institutions with which the Company maintains accounts. America First has received initial assurances from certain of these third parties that their ability to perform their obligations to the Company are not expected to be materially adversely affected by the Year 2000 problem. America First will continue to request updated information from these material third parties in order to assess their Year 2000 readiness. If a material third party vendor is unable to provide assurance to America First that it is, or will be, ready for Year 2000, America First intends to seek an alternative vendor to the extent practical. Costs All of the IT systems and non-IT systems used to conduct the Company's business operations are owned or leased by America First. The Company will bear its proportionate share of the costs associated with surveying the Year 2000 readiness of third parties and with the identification, remediation and testing of America First's IT and non-IT systems. However, the Company's share of the costs associated with these activities is expected to be insignificant. Accordingly, the costs associated with addressing the Company's Year 2000 issues are not expected to have a material effect on the Company's results of operations, financial position or cash flow. Year 2000 Risks The Company's Advisor believes that the most reasonably likely worst-case scenario will be that one or more of the third parties with which it has a material business relationship will not have successfully dealt with its Year 2000 issues and, as a result, is unable to provide services or otherwise perform its obligations to the Company. For example, if an obligor on the Company's mortgage securities encounters a serious and unexpected Year 2000 issue, it may be unable to make a timely payment of principal and interest to the Company. This, in turn, could cause a delay in dividend payments to shareholders. In addition, if the Company's transfer and paying agent experiences Year 2000-related difficulties, it may cause delays in making dividend payments to shareholders or in the processing of trading of shares. It is also possible that one or more of the IT and non-IT systems of America First will not function correctly, and that such problems may make it difficult to conduct necessary accounting and other record keeping functions for the Company. However, based on currently available information, the Company's Advisor does not believe that there will be any protracted systemic failures of the IT or non-IT systems utilized by America First in connection with the operation of the Company's business. Contingency Plans Because of the progress which America First has made toward achieving Year 2000 readiness, the Company has not made any specific contingency plans with respect to the IT and non-IT systems of America First. In the event of a Year 2000 problem with its IT system, America First may be required to manually perform certain accounting and other record-keeping functions. America First plans to terminate the Company's relationships with material third party service providers that are not able to represent to America First that they will be able to successfully resolve their material Year 2000 issues in a timely manner. However, the Company will not be able to readily terminate its relationships with all third parties, such as the obligors on its mortgage securities, who may experience Year 2000 problems. The Company has no specific contingency plans for dealing with Year 2000 problems experienced with these third parties. All forecasts, estimates or other statements in this report relating to the Year 2000 readiness of the Company and its affiliates are based on information and assumptions about future events. Such "forward-looking statements" are subject to various known and unknown risks and uncertainties that may cause actual events to differ from such statements. Important factors upon which the Company's Year 2000 forward-looking statements are based include, but are not limited to, (a) the belief of America First that the software used in IT systems is already able to correctly read and interpret dates after December 31, 1999 and will require little or any remediation; (b) the ability to identify, repair or replace mission critical non-IT equipment in a timely manner, (c) third parties' remediation of their internal systems to be Year 2000 ready and their willingness to test their systems interfaces with those of America First, (d) no third party system failures causing material disruption of telecommunications, data transmission, - 16 - payment networks, government services, utilities or other infrastructure, (e) no unexpected failures by third parties with which the Company has a material business relationship and (f) no material undiscovered flaws in America First's Year 2000 testing process. Other Matters The Company at all times intends to conduct its business so as to not become regulated as an investment company under the Investment Company Act of 1940. If the Company were to become regulated as an investment company, then, among other things, the Company's ability to use leverage would be substantially reduced. The Investment Company Act exempts entities that are "primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate" (i.e. "Qualifying Interests"). Under the current interpretation of the staff of the SEC, in order to qualify for this exemption, the Company must maintain at least 55% of its assets directly in Qualifying Interests. In addition, unless certain mortgage securities represent an undivided interest in the entire pool backing such mortgage securities (i.e. "whole pool" mortgage securities), such mortgage securities may be treated as securities separate from the underlying mortgage loan, thus, may not be considered Qualifying Interests for purposes of the 55% exemption requirement. Accordingly, the Company monitors its compliance with this requirement in order to maintain its exempt status. As of June 30, 1999, the Company determined that it is in and has maintained compliance with this requirement. Forward Looking Statements When used in this Form 10-Q, in future SEC filings or in press releases or other written or oral communications, the words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project" or similar expressions are intended to identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions that such forward looking statements speak only as of the date made and that various factors including regional and national economic conditions, changes in levels of market interest rates, credit and other risks of lending and investment activities, and competitive and regulatory factors could affect the Company's financial performance and could cause actual results for future periods to differ materially from those anticipated or projected. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk. There have been no material changes in the Company's market risk since December 31, 1998. Item 4. Submission of Matters to a Vote of Security Holders. The Company held its Annual Meeting of Stockholders on May 5, 1999 for the purpose of electing two directors and ratifying the appointment of its auditors. The following sets forth the results of the election of officers: NAME OF NOMINEE FOR WITHHELD Michael B. Yanney 7,226,637 (80%) 157,978 (2%) Gregor Medinger 7,226,774 (80%) 147,841 (2%) There was no solicitation in opposition to the nominees proposed to be elected by the Stockholders in the Proxy Statement. The ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors for the Company for the fiscal year ending December 31, 1999 was approved by the Stockholders with 7,258,567 votes FOR (80%), 64,583 votes AGAINST (1%), and 61,465 votes ABSTAINED OR BROKER NON-VOTES (1%). Further information regarding these matters is contained in the Company's Proxy Statement dated April 5, 1999. - 17 - PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 2.1 Agreement and Plan of Merger by and among the Registrant, America First Participating/Preferred Equity Mortgage Fund Limited Partnership, America First Prep Fund 2 Limited Partnership, America First Prep Fund 2 Pension Series Limited Partnership and certain other parties, dated as of July 29, 1997 (incorporated herein by reference to Exhibit 2.1 of the Registration Statement on Form S-4 dated February 12, 1998, filed by the Registrant pursuant to the Securities Act of 1933 (Commission File No. 333-46179)). 3.1 Amended and Restated Articles of Incorporation of the Registrant (incorporated herein by reference from Form 8-K dated April 10, 1998, filed by the Registrant pursuant to the Securities Exchange Act of 1934 (Commission File No. 1-13991)). 3.2 Amended and Restated Bylaws of the Registrant (incorporated herein by reference from Form 8-K dated April 10, 1998, filed by the Registrant pursuant to the Securities Exchange Act of 1934 (Commission File No. 1-13991)). 3.3 Agreement of Limited Partnership, dated May 25, 1988, of America First Prep Fund 2 Pension Series Limited Partnership (incorporated herein by reference to Form 10-K, dated December 31, 1988, filed with the Securities and Exchange Commission (File No. 33-13407)). 4.1 Specimen of Common Stock Certificate of the Company. (incorporated herein by reference to Exhibit 4.1 of the Registration Statement on Form S-4 dated February 12, 1998, filed by the Registrant pursuant to the Securities Act of 1933 (Commission File No. 333-46179)). 10.1 Advisory Agreement, dated April 9, 1998, by and between the Company and the Advisor (incorporated herein by reference from Form 8-K dated April 10, 1998 filed by the Company pursuant to the Securities Exchange Act of 1934 (Commission File No. 1-13991)). 10.2 Employment Agreement of Stewart Zimmerman (incorporated herein by reference to Exhibit 10.2 of the Registration Statement on Form S-4 dated February 12, 1998, filed by the Registrant pursuant to the Securities Act of 1933 (Commission File No. 333-46179)). 10.3 Employment Agreement of William S. Gorin (incorporated herein by reference to Exhibit 10.3 of the Registration Statement on Form S-4 dated February 12, 1998, filed by the Registrant pursuant to the Securities Act of 1933 (Commission File No. 333-46179)). 10.4 Employment Agreement of Ronald A. Freydberg (incorporated herein by reference to Exhibit 10.4 of the Registration Statement on Form S-4 dated February 12, 1998, filed by the Registrant pursuant to the Securities Act of 1933 (Commission File No. 333-46179)). 10.5 1997 Stock Option Plan of the Company (incorporated herein by reference from Form 8-K dated April 10, 1998, filed by the Company pursuant to the Securities Exchange Act of 1934 (Commission File No. 1-13991)). 10.6 Form of Dividend Reinvestment Plan (incorporated herein by reference to Appendix C of the Registration Statement on Form S-4 dated February 12, 1998, filed by the Registrant pursuant to the Securities Act of 1933 (Commission File No. 333-46179)). - 18 - 21. Subsidiaries of the Registrant 27. Financial Data Schedule (b) Reports on Form 8-K The Registrant filed the following reports on Form 8-K during the quarter for which this report is filed. Item Reported Financial Statements Filed Date of Report 5. Other Matters No April 26, 1999 - 19 - SIGNATURES 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. Dated: August 13, 1999 AMERICA FIRST MORTGAGE INVESTMENTS, INC. By /s/ Stewart Zimmerman Stewart Zimmerman President and Chief Executive Officer By /s/ Gary Thompson Gary Thompson Authorized Officer and Chief Financial Officer - 20 - EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT America First Prep Fund 2 Pension Series Limited Partnership America First Capital Associates Limited Partnership Six - 21 - EX-27 2
5 6-MOS DEC-31-1999 JUN-30-1999 6,984,555 422,696,959 2,433,155 0 0 9,417,710 0 0 442,541,155 373,947,214 0 90,551 0 0 68,503,390 442,541,155 0 4,015,671 0 0 1,249,313 0 0 2,766,358 0 0 0 0 0 2,766,358 .31 .31
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