EX-99 2 exh99_1jan2008-amac.txt UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2007, and the unaudited pro forma condensed consolidated statements of income for the year ended December 31, 2006, and the nine months ended September 30, 2007, are based on the historical financial statements of American Mortgage Acceptance Company ("AMAC") after giving effect to the disposition of certain investments and adjustments described in the accompanying notes as if such dispositions had occurred as of September 30, 2007, for the pro forma balance sheet purposes and as of January 1, 2006, for pro forma income statement purposes. The pro forma financial statements are based upon available information, preliminary estimates and certain assumptions that we believe are reasonable in the circumstances, as set for in the notes to the pro forma financial statements. The unaudited pro forma statements are presented for informational purposes only and are not necessarily indicative of the future financial position or results of operations of AMAC or the financial position or the results of operations that would have been realized had the disposition transactions been consummated during the period or as of the dates for which the pro forma statements are presented. The unaudited pro forma financial information should be read in conjunction with, and is qualified by reference to, AMAC's historical consolidated financial statements and notes thereto. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET OF AMERICAN MORTGAGE ACCEPTANCE COMPANY As of September 30, 2007 (In Thousands)
HISTORICAL PRO FORMA AMAC ADJUSTMENTS PRO FORMA ------------ ------------ ------------ ASSETS Cash and cash equivalents $ 11,528 $ (7,000)(b)(c) $ 4,528 Restricted cash 2,507 - 2,507 Investments Mortgage loans receivable, net 710,733 (161,160)(a) 549,573 Available-for-sale investments, at fair value Debt securities 71,528 (71,528)(a) - CMBS 108,621 (22,113)(a) 86,508 CDO securities 8,672 (8,672)(a) - Mortgage revenue bonds 4,860 - 4,860 Accounts receivable 11,165 (1,567)(b) 9,598 Deferred charges and other assets, net 7,456 (318)(c) 7,138 ------------ ------------ ------------ TOTAL ASSETS $ 937,070 $ (272,358) $ 664,712 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: CDO notes payable $ 362,000 $ - $ 362,000 Repurchase facilities 399,780 (238,176)(a) 161,604 Line of credit - related party 39,300 (13,290)(a) 26,010 Preferred shares of subsidiary (subject to mandatory repurchase) 25,000 - 25,000 Accounts payable and accrued expenses 27,024 (8,883)(b)(c) 18,141 Due to Advisor and affiliates 1,607 - 1,607 Dividends payable 2,110 - 2,110 ------------ ------------ ------------ TOTAL LIABILITIES 856,821 (260,349) 596,472 ------------ ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 80,249 (12,009)(a)(c) 68,240 ------------ ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 937,070 $ (272,358) $ 664,712 ============ ============ ============
See accompanying notes to unaudited pro forma condensed consolidated financial statements. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME OF AMERICAN MORTGAGE ACCEPTANCE COMPANY For the Nine Months Ended September 30, 2007 (In Thousands, Except Per Share Amounts)
HISTORICAL PRO FORMA AMAC ADJUSTMENTS PRO FORMA ----------- ----------- ----------- REVENUES: Interest income $ 43,753 $ (11,338)(d) $ 32,415 Other revenues 1,008 - 1,008 ----------- ----------- ----------- Total revenues 44,761 (11,338) 33,423 ----------- ----------- ----------- EXPENSES Interest 30,890 (10,006)(e)(f) 20,884 Interest - distributions to preferred shares of subsidiary 1,677 - 1,677 General and administrative 2,696 - 2,696 Impairment of investments 1,276 (1,140)(d) 136 Fees to Advisor and affiliates 2,929 (23)(g) 2,906 Amortization and other 609 - 609 ----------- ----------- ----------- Total expenses 40,077 (11,169) 28,908 ----------- ----------- OTHER INCOME (EXPENSE): Gain on sale of ARCap 337 - 337 Change in fair value or termination of derivative instruments (39) 39(h) - Loss on repayment or sale of investments (59) - (59) ----------- ----------- ----------- Total other income 239 39 278 ----------- ----------- ----------- Income from continuing operations 4,923 (130) 4,793 Income from discontinued operations, including gain on sale of real estate owned 3,531 - 3,531 ----------- ----------- ----------- Net income 8,454 (130) 8,324 7.25% Cumulative Preferred dividend requirements (219) - $ (219) ----------- ----------- ----------- Net income available to common shareholders $ 8,235 $ (130) $ 8,105 =========== =========== =========== Earnings per share: Basic Income from continuing operations $ 0.56 $ 0.54 Income from discontinued operations 0.42 0.42 ----------- ----------- Net income $ 0.98 $ 0.96 =========== =========== Diluted Income from continuing operations $ 0.56 $ 0.55 Income from discontinued operations 0.40 0.40 ----------- ----------- Net income $ 0.96 $ 0.95 =========== =========== Weighted average shares outstanding: Basic 8,404 8,404 =========== =========== Diluted 8,794 8,794 =========== ===========
See accompanying notes to unaudited pro forma condensed consolidated financial statements. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME OF AMERICAN MORTGAGE ACCEPTANCE COMPANY For the Year Ended December 31, 2006 (In Thousands, Except Per Share Amounts)
HISTORICAL PRO FORMA AMAC ADJUSTMENTS PRO FORMA ----------- ----------- ----------- REVENUES: Interest income $ 38,342 $ (5,339)(d) $ 33,003 Other revenues 286 - 286 ----------- ----------- ----------- Total revenues 38,628 (5,339) 33,289 ----------- ----------- ----------- EXPENSES Interest 19,149 (4,841)(e)(f) 14,308 Interest - distributions to preferred shares of subsidiary 2,241 - 2,241 Mortgage interest for real estate owned - held and used 2,376 - 2,376 Property operations of real estate owned - held and used 3,527 - 3,527 General and administrative 2,500 - 2,500 Impairment of investments 17,496 - 17,496 Fees to Advisor 3,483 (16)(g) 3,467 Depreciation 1,345 - 1,345 Amortization and other 160 - 160 ----------- ----------- ----------- Total expenses 52,277 (4,857) 47,420 ----------- ----------- ----------- OTHER INCOME (EXPENSE): Gain on sale of ARCap 19,223 - 19,223 Change in fair value or termination of derivative instruments (5,522) 498(h) (5,024) Equity in earnings of ARCap 3,000 - 3,000 Loss on sale or repayment of investments (934) - (934) ----------- ----------- ----------- Total other income 15,767 498 16,265 ----------- ----------- ----------- Income from continuing operations 2,118 16 2,134 Income from discontinued operations 569 - 569 ----------- ----------- ----------- Net income $ 2,687 $ 16 $ 2,703 =========== =========== =========== Per share amounts (basic and diluted): Income from continuing operations $ 0.25 $ 0.26 Income from discontinued operations 0.07 $ 0.07 ----------- ----------- Net income $ 0.32 $ 0.33 =========== =========== Weighted average shares outstanding: Basic 8,323 8,323 =========== =========== Diluted 8,330 8,330 =========== ===========
See accompanying notes to unaudited pro forma condensed consolidated financial statements. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF TRANSACTIONS AND BASIS OF PRESENTATION In November and December of 2007, AMAC completed the sale of its portfolio of debt securities and two CMBS securities for sales proceeds of $86.8 million. During December 2007, AMAC completed additional sales of first mortgage loans and CDO securities for net sales proceeds of $164.6 million. All of the assets sold had been pledged as collateral under repurchase facilities. Sale of the securities therefore necessitated repayment of the associated debt, which totaled $227.9 million. The first mortgage loans, CDO securities and CMBS securities were not owned on January 1, 2006, the assumed date of disposition. Therefore, the pro forma adjustments with respect to the condensed statements of income are calculated on these assets from their actual acquisition dates forward. The pro forma adjustments do not include a loss on sale of $2.3 million on debt securities assumed to have been sold January 1, 2006 and the receipt of $0.8 million related to the termination of related interest rate derivatives at January 1, 2006. 2. PRO FORMA ADJUSTMENTS The accompanying unaudited pro forma consolidated financial statements have been prepared as if the dispositions had occurred as of September 30, 2007, for balance sheet purposes and as of January 1, 2006, for income statement purposes and reflect the following pro forma adjustments ($ in thousands): (a) To record the assumed sale of the assets as follows:
DEBT SECURITIES --------------- Proceeds from the sale of debt securities $ 71,212 Repayment of repurchase facilities (66,817) ----------- Net cash proceeds $ 4,395 =========== Total sales proceeds $ 71,212 Less: basis Fair value of debt securities $ 71,528 Add back unrealized losses 2,466 ---------- Total basis 73,994 ----------- Net loss $ (2,782) =========== CMBS SECURITIES --------------- Proceeds from the sale of CMBS securities $ 15,562 Repayment of repurchase facilities (23,065) ----------- Net cash expenditure $ (7,503) =========== Total sales proceeds $ 15,562 Less: basis Fair value of CMBS securities $ 22,113 Add back unrealized losses 3,798 ---------- Total basis 25,911 ----------- Net loss $ (10,349) =========== CDO SECURITIES -------------- Proceeds from the sale of CDO securities $ 7,939 Repayment of repurchase facilities (3,586) ----------- Net cash proceeds $ 4,353 =========== Total sales proceeds $ 7,939 Less: basis Fair value of CDO securities $ 8,672 Add back unrealized losses 1,391 ---------- Total basis 10,063 ----------- Net loss $ (2,124) =========== FIRST MORTGAGES --------------- Proceeds from the sale of first mortgages $ 157,406 Less: selling expenses (654) ----------- Net sales proceeds 156,752 Repayment of repurchase facilities (144,708) ----------- Net cash proceeds $ 12,044 =========== Net sales proceeds $ 156,752 Less: basis Fair value of first mortgages $ 161,160 Add back impairment losses 1,140 ---------- Total basis 162,300 ----------- Net loss $ (5,548) ===========
(b) To reflect assumed collection of $1.5 million of interest receivables and payment of $6.5 million of interest liabilities upon assumed sale of the assets. (c) To record a net cash payment of $2.0 million resulting from termination of interest rate swaps on assets sold or interest rate swaps on cash flows of debt repaid, of which, $2.3 million were in a liability position and $0.3 million were in an asset position. (d) Elimination of historic interest income on assets sold, net of premium and discount amortization, and impairment charges. (e) Elimination of historic interest expense on the debt assumed repaid or interest on debt incurred on assets not owned at January 1, 2006. A weighted average interest rate of 8.13% and 8.37% in 2006 and 2007, respectively, was assumed in calculating interest expense amounts. (f) Reduction of interest expense assuming net sale proceeds from debt securities were used to repay the related party line of credit and cash was never borrowed from this line for the origination of first mortgages throughout 2006. (g) To record reduction in asset management fees related to 2006 activity. (h) To reverse changes in fair value of free-standing derivatives on first mortgages sold.