EX-99.1 2 f8k_exh991sept2006-amac.txt EXHIBIT 99.1 - AMAC 8-K SEPTEMBER 2006 Exhibit 99.1 UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS The following unaudited pro forma condensed consolidated balance sheet as of June 30, 2006, and the unaudited pro forma condensed statements of income for the year ended December 31, 2005, and the six months ended June 30, 2006, 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 to the unaudited pro forma consolidated financial statements as if such dispositions had occurred as of June 30, 2006 for the pro forma balance sheet purposes and as of January 1, 2005, 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 BALANCE SHEET OF AMERICAN MORTGAGE ACCEPTANCE COMPANY AS OF JUNE 30, 2006 (IN THOUSANDS)
ProForma Historic Adjustments (a) ProForma ---------- ----------- ---------- ASSETS Cash and cash equivalents $ 3,692 $ 8,852 $ 12,544 Investments Debt securities at fair value 194,286 (71,407) 122,879 Mortgage loans receivable, net 199,762 13,800 213,562 Notes receivable, net 13,725 13,725 Revenue bonds 6,489 6,489 ARCap 22,278 22,278 Real estate owned - held and used, net 67,500 (18,108) 49,392 Accounts receivable 2,920 2,920 Other assets 6,498 6,498 --------- --------- --------- Total assets $ 517,150 $ (66,863) $ 450,287 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Repurchase facilities payable $ 184,253 $ (68,579) $ 115,674 CDO repurchase facility 127,644 127,644 Line of credit - related party 27,042 27,042 Warehouse facility payable -- -- Mortgages payable on real estate owned 40,220 40,220 Preferred shares of subsidiary (subject to mandatory repurchase) 25,000 25,000 Accounts payable and accrued expenses 2,613 2,613 Due to Advisor and affiliates 1,891 (895) 996 Distributions payable 3,322 3,322 --------- --------- --------- Total liabilities 411,985 (69,474) 342,511 --------- --------- --------- Commitments and contingencies Shareholders' equity: Shares of beneficial interest; $.10 par value; 25,000 shares authorized; 8,719 issued and 8,304 outstanding in 2006 and 2005 871 871 Treasury shares of beneficial interest at par; 415 shares in 2006 and 2005 (42) (42) Additional paid-in capital 126,427 126,427 Share-based compensation -- -- Accumulated deficit (17,027) (2,683) (19,710) Accumulated other comprehensive (loss) income (5,064) 5,294 230 --------- --------- --------- Total shareholders' equity 105,165 2,611 107,776 --------- --------- --------- Total liabilities and shareholders' equity $ 517,150 $ (66,863) $ 450,287 ========= ========= =========
See accompanying notes to unaudited proforma condensed financial statements. UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME OF AMERICAN MORTGAGE ACCEPTANCE COMPANY FOR THE SIX MONTHS ENDED JUNE 30, 2006 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ProForma Historic Adjustments ProForma -------- ------------ -------- Revenues: Interest Income: Debt securities $ 6,215 $ (2,044)(b) $ 4,171 Mortgage loans 5,675 707 (c) 6,382 Notes receivable 449 449 Revenue bonds 284 284 Temporary investments 135 135 Rental income of real estate owned - held and used 4,731 (1,238)(d) 3,493 Other revenues 162 162 -------- -------- -------- Total revenues 17,651 (2,575) 15,076 -------- -------- -------- Expenses: Interest 6,586 (1,844)(e) 4,742 Interest - distributions to preferred shareholders of subsidiary (subject to mandatory repurchase) 1,074 1,074 Mortgage interest for real estate owned - held and used 1,192 1,192 Property operations of real estate owned - held and used 2,650 (865)(d) 1,785 General and administrative 978 978 Fees to Advisor 1,803 90 (f) 1,893 Depreciation 900 (227)(d) 673 Amortization and other 30 30 -------- -------- -------- Total expenses 15,213 (2,846) 12,367 -------- -------- -------- Other income: Equity in earnings of ARCap 3,076 3,076 Loss on repayment of debt securities (153) (153) Change in fair value of derivative instruments 2,023 2,023 -------- -------- -------- Total other income 4,946 4,946 -------- -------- -------- Net income $ 7,384 $ 271 $ 7,655 ======== ======== ======== Net income per share (basic and diluted) $ 0.89 0.92 ======== ======== Weighted average shares outstanding: Basic 8,304 8,304 ======== ======== Diluted 8,305 8,305 ======== ========
See accompanying notes to unaudited proforma condensed financial statements. UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME OF AMERICAN MORTGAGE ACCEPTANCE COMPANY FOR THE YEAR ENDED DECEMBER 31, 2005 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ProForma Historic Adjustments ProForma -------- ----------- -------- Revenues: Interest Income: Debt securities $ 12,823 $ (3,820) $ 9,003 Mortgage loans 5,425 1,332 (c) 6,757 Notes receivable 1,563 1,563 Revenue bonds 581 581 Temporary investments 233 233 Rental income of real estate owned - held and used 8,983 (2,139)(d) 6,844 Fees related to prepayment of investments 5,581 5,581 Other revenues 954 954 -------- -------- -------- Total revenues 36,143 (4,627) 31,516 -------- -------- -------- Expenses: Interest 7,057 (1,806)(e) 5,251 Interest - distributions to preferred shareholders of subsidiary (subject to mandatory repurchase) 1,452 1,452 Mortgage interest for real estate owned - held and used 2,407 2,407 Property operations of real estate owned - held and used 3,987 (740)(d) 3,247 General and administrative 1,956 1,956 Fees to Advisor 4,347 (901)(f) 3,446 Depreciation 2,389 (1,014)(d) 1,375 Amortization and other 294 294 -------- -------- -------- Total expenses 23,889 (4,461) 19,428 -------- -------- -------- Other income: Equity in earnings of ARCap 2,837 2,837 Loss on repayment of debt securities 183 (2,536)(g) (2,353) Other non-operating income (expense) (39) (39) -------- -------- -------- Total other income 2,981 (2,536) 445 -------- -------- -------- Net income $ 15,235 $ (2,702) $ 12,533 ======== ======== ======== Net income per share (basic and diluted) $ 1.83 $ 1.51 ======== ======== Weighted average shares outstanding: Basic 8,316 8,316 ======== ======== Diluted 8,317 8,317 ======== ========
See accompanying notes to unaudited proforma condensed financial statements. NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS 1. DESCRIPTION OF TRANSACTIONS AND BASIS OF PRESENTATION On October 24, 2006, AMAC completed the sale of the Autumn Creek from its real estate owned portfolio for $18.1 million, of which $13.8 million was provided via seller financing. On November 2, 2006, AMAC completed the sale of 20 debt securities for total cash proceeds of $3.1 million. While neither of these dispositions individually were significant holdings of AMAC, the combined investments were determined to represent a significant disposition. While the real estate owned investment was unencumbered, the debt securities had been pledged as collateral under repurchase facilities. Sale of the securities therefore necessitated repayment of the associated debt. The sale of the debt securities included five securities that were not owned on January 1, 2005, the assumed date of disposition. Therefore, the proforma adjustments with respect to the condensed statements of income are calculated including those five securities from their actual acquisition dates foward. 2. PRO FORMA ADJUSTMENTS The accompanying unaudited pro forma consolidated financial statements have been prepared as if the dispositions had occurred as of June 30, 2006, for balance sheet purposes and as of January 1, 2005, for income statement purposes and reflect the following pro forma adjustments ($ in thousands):
(a) To record the assumed sale of the assets as follows: Proceeds from sale of debt securities $ 73,279 Proceeds from sale of Autumn Creek 17,952 -------- Total sale proceeds 91,231 Repayment of repurchase facilities (68,579) New mortgage loan issued (13,800) -------- Net cash proceeds $ 8,852 ======== Total sale proceeds as calculated above $ 91,231 Less: basis Fair value of debt securities $ 71,407 Add back unrealized loss 5,294 -------- 76,701 Carrying value of Autumn Creek 18,108 Total basis 94,809 -------- Gross loss (3,578) Less: reduction of incentive management fee liability to Advisor (calculated as 25% of gross loss) 895 -------- Net loss $ (2,683) ========
(b) Elimination of historic interest income, net of premium and discount amortization of debt securities sold. 2. PRO FORMA ADJUSTMENTS (CONTINUED) (c) To record interest income on assumed investment of net sale proceeds assuming the following investments:
Total interest income ----------------------- Type of investment Interest rate 2005 2006 -------------------------------------- ----------------- --------- --------- 10-year treasury Fixed rate loans rate + 2.07%* $ 549 $ 315 Autumn Creek refinanced mortgage loan 5.675% 783 392 --------- --------- Total $ 1,332 $ 707 ========= =========
* Spread is calculated based on 2005 origination activity. (d) Elimination of historic income and expenses from the real estate sold. (e) Elimination of historic interest expenses related to debt securities repurchase facilities. (f) Reduction of incentive management fees payable to AMAC's Advisor (calculated as 25% of proforma adjustments to the statements of income). (g) To record loss relating to sale of investments at the assumed date of disposition as follows:
Proceeds received from sale of debt securities owned on January 1, 2005 $ 41,495 Proceeds from sale of Autumn Creek 17,952 --------- Total sale proceeds 59,447 Carrying amount of assets at January 1, 2005 61,983 --------- Net loss on sale of assets $ (2,536) =========