EX-99.7 2 d83274a2ex99-7.txt PRO FORMA FINANCIAL INFORMATION 1 Exhibit 99.7 INDEX TO PRO FORMA FINANCIAL STATEMENTS Pro Forma Financial Information of AIMCO (Pre-Merger)....... 99.7-2 AIMCO Pro Forma Condensed Consolidated Statement of Operations (Pre-Merger) for the Year Ended December 31, 1999..................................... 99.7-3 AIMCO Pro Forma Condensed Consolidated Statement of Operations (Pre-Merger) for the Nine Months Ended September 30, 2000.................................... 99.7-8 Pro Forma Financial Information of AIMCO (Merger)........... 99.7-13 AIMCO Pro Forma Condensed Consolidated Balance Sheet (Merger) as of September 30, 2000..................... 99.7-14 AIMCO Pro Forma Condensed Consolidated Statement of Operations (Merger) for the Year Ended December 31, 1999.................................................. 99.7-17 AIMCO Pro Forma Condensed Consolidated Statement of Operations (Merger) for the Nine Months Ended September 30, 2000.................................... 99.7-19
99.7-1 2 PRO FORMA FINANCIAL INFORMATION OF AIMCO (PRE-MERGER) The following Pro Forma Consolidated Statement of Operations (Pre-Merger) of AIMCO for the year ended December 31, 1999 has been prepared as if each of the following transactions had occurred as of January 1, 1999: (i) the Oxford Acquisition; (ii) the acquisition of the Regency Windsor Apartment Communities (the "Regency Acquisition"), which includes fourteen separate residential apartment communities located in Indiana, Michigan and North Carolina; (iii) the acquisition of four Dreyfuss Apartment Communities located in Virginia and Maryland ( the "1999 Dreyfuss Acquisition"); and (iv) the acquisition in 2000 of five Dreyfuss Apartment Communities located in Virginia and Maryland (the "2000 Dreyfuss Acquisition," and combined with the 1999 Dreyfuss Acquisition, the "Dreyfuss Acquisitions"). The following Pro Forma Consolidated Statement of Operations (Pre-Merger) of AIMCO for the nine months ended September 30, 2000 has been prepared as if each of the following transactions had occurred as of January 1, 1999: (i) the Oxford Acquisition; and (ii) the 2000 Dreyfuss Acquisition. No Pro Forma Consolidated Balance Sheet (Pre-Merger) of AIMCO as of September 30, 2000 has been presented as the Oxford Acquisition, which occurred on September 20, 2000, and the 2000 Dreyfuss Acquisition, which occurred on September 22, 2000, are already reflected in the historical balance sheet of AIMCO at September 30, 2000. The total purchase price for the Oxford acquisition was $1,183,137, as follows (in thousands): Cash paid to sellers $ 279,000 OP Units issued to sellers 62,177 Transaction costs 18,441 Accrued liabilities resulting from acquisition, including pre- 33,650 acquisition contingencies Accrued liability for restructuring plan related to restructuring 2,133 of Oxford Assumed liabilities of the Oxford entities 720,929 Deferred tax liability resulting from the acquisition 30,000 Minority interest assumed of consolidated real estate partnerships 36,807 ---------- Total $1,183,137 ==========
The purchase price was allocated to the various assets acquired in the Oxford acquisition, as follows (in thousands): Real estate $ 702,107 Investments in unconsolidated real estate partnerships 172,617 Notes receivable from unconsolidated real estate partnerships 91,094 Notes receivable from and advances to unconsolidated subsidiaries 92,248 Cash and cash equivalents 32,512 Investment in asset management contracts 7,487 Investment in participation management contracts 52,026 Other assets 33,046 ---------- $1,183,137 ==========
The following Pro Forma Financial Information (Pre-Merger) is based, in part, on the following historical financial statements, which have been previously filed by AIMCO with the Securities and Exchange Commission: (i) the Consolidated Financial Statements of AIMCO for the year ended December 31, 1999 and the nine months ended September 30, 2000; (ii) the combined historical summary of gross income and direct operating expenses of Regency Windsor Apartment Communities for the year ended December 31, 1998; (iii) the combined historical summary of gross income and direct operating expenses of Dreyfuss Apartment Communities for the year ended December 31, 1998; (iv) the combined financial statements of Oxford Realty Financial Group, Inc. and Subsidiaries, Zimco and Oxford Equities Corporation III (the "Oxford Entities"); (v) the consolidated financial statements of ORFG Operations L.L.C. and Subsidiary ("ORFG Operations"); and (vi) the combined financial statements of Oxparc L.L.C.s (the "Oxparc Entities"). The Pro Forma Financial Information (Pre-Merger) should be read in conjunction with such financial statements and the notes thereto. In the opinion of AIMCO's management, all material adjustments necessary to reflect the effects of these transactions have been made. The unaudited Pro Forma Financial Information (Pre-Merger) has been prepared using the purchase method of accounting whereby the assets and liabilities of the entities acquired in the Oxford Acquisition 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 value. Therefore, the allocations reflected in the following unaudited Pro Forma Financial Information (Pre-Merger) may differ from the amounts ultimately determined. The unaudited Pro Forma Financial Information (Pre-Merger) 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. The unaudited Pro Forma Consolidated Statement of Operations (Pre-Merger) for the nine months ended September 30, 2000 is not necessarily indicative of the results of operations to be expected for the year ending December 31, 2000. 99.7-2 3 APARTMENT INVESTMENT AND MANAGEMENT COMPANY PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER) FOR THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
ADJUSTMENTS ----------------------------------------------------------------------- AIMCO BEFORE AIMCO OXFORD OXFORD OXFORD PRO FORMA HISTORICAL(A) ADJUSTMENTS(B) ACQUISITION(C) REORGANIZATION(D) REORGANIZATION(E) TOTAL ------------- -------------- -------------- ----------------- ----------------- --------- RENTAL PROPERTY OPERATIONS Rental and other property revenues.................. $ 533,917 $ 71,412(F) $119,272 $ 724,601 $(80,823)(J) $ 643,778 Property operating expenses.................. (214,693) (31,748)(F) (67,290) (313,731) 50,342(J) (263,389) Owned property management expense................... (15,429) (2,892)(F) (4,569) (22,890) 3,191(J) (19,699) Depreciation................ (131,753) (11,165)(F) (30,213) (173,131) 15,435(J) (157,696) --------- -------- -------- --------- -------- --------- Income from property operations................ 172,042 25,607 17,200 214,849 (11,855) 202,994 --------- -------- -------- --------- -------- --------- SERVICE COMPANY BUSINESS Management fees and other income.................... 43,455 -- 15,541 58,996 (14,206)(K) 44,790 Management and other expenses.................. (25,470) -- (3,735) (29,205) 2,086(K) (27,119) --------- -------- -------- --------- -------- --------- Income from service company business.................. 17,985 -- 11,806 29,791 (12,120) 17,671 --------- -------- -------- --------- -------- --------- General and administrative expense................... (13,112) -- (1,152) (14,264) 1,152(K) (13,112) Interest expense............ (140,094) (18,477)(G) (84,695) (243,266) 43,267(L) (199,999) Interest income............. 62,721 (1,519)(H) 12,595 73,797 (997)(K) 2,465(M) 75,265 Equity in earnings (losses) of unconsolidated real estate partnerships....... (4,467) -- (8,827) (13,294) 1,299(K) (11,995) Equity in earnings (losses) of unconsolidated subsidiaries.............. (2,818) -- -- (2,818) (24,456)(N) (27,274)(P) Minority interest in other entities.................. (900) -- 4,782 3,882 (3,278)(J) 604 Amortization of intangibles............... (5,860) -- (14,134) (19,994) 14,134(K) (5,860) --------- -------- -------- --------- -------- --------- Income from operations...... 85,497 5,611 (62,425) 28,683 9,611 38,294 Gain (loss) on disposition of properties............. (1,785) -- (600) (2,385) 600 (1,785) Gain (loss) on extinguishment of Debt.... -- -- 1,378 1,378 (1,378) -- --------- -------- -------- --------- -------- --------- Income (loss) before extraordinary item and minority interest in operating partnership..... 83,712 5,611 (61,647) 27,676 8,833 36,509 Extraordinary item.......... -- -- (7,883) (7,883) 7,883 -- --------- -------- -------- --------- -------- --------- Income (loss) before minority interest in operating partnership..... 83,712 5,611 (69,530) 19,793 16,716 36,509 Minority interest in operating partnership..... (2,753) (8,812)(I) 8,001 (3,564) (2,054)(I) (5,618) --------- -------- -------- --------- -------- --------- Net income (loss)........... $ 80,959 $ (3,201) $(61,529) $ 16,229 $ 14,662 $ 30,891 ========= ======== ======== ========= ======== ========= Net income allocable to preferred stockholders.... $ 56,885 $ 56,885 ========= ========= Net income (loss) allocable to common stockholders.... $ 24,074 $ (25,994) ========= ========= Basis earnings (loss) per common share.............. $ 0.39 $ (0.42) ========= ========= Diluted earnings (loss) per common share.............. $ 0.38 $ (0.42) ========= ========= Weighted average common shares outstanding........ 62,242 62,242 ========= ========= Weighted average common shares and common share equivalents outstanding... 63,446 62,242(O) ========= =========
99.7-3 4 --------------- (A) Represents AIMCO's audited historical consolidated results of operations for the year ended December 31, 1999. (B) Represents adjustments to reflect (i) the Regency Acquisition; and (ii) the Dreyfuss Acquisitions as if they had occurred on January 1, 1999. 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. (C) Represents the adjustment to reflect the Oxford Acquisition as if it had occurred on January 1, 1999. These adjustments are detailed, as follows:
COMBINED COMBINED OXFORD ORFG OXPARC OXFORD PRO FORMA OXFORD ENTITIES(i) OPERATIONS(ii) ENTITIES(iii) OTHER(iv) HISTORICAL ADJUSTMENTS(v) ACQUISITION ----------- -------------- ------------- --------- ---------- -------------- ----------- RENTAL PROPERTY OPERATIONS Rental and other property revenues................... $ 76,087 $ -- $ -- $ -- $ 76,087 $ 43,185(vi) $119,272 Property operating expenses.. (39,932) -- -- -- (39,932) (27,358)(vi) (67,290) Owned property management expense.................... (3,537) -- -- -- (3,537) (1,032)(vi) (4,569) Depreciation................. (7,223) -- -- -- (7,223) (22,990)(vi) (30,213) -------- -------- ------- ------- -------- --------- -------- Income from property operations................. 25,395 -- -- -- 25,395 (8,195) 17,200 -------- -------- ------- ------- -------- --------- -------- SERVICE COMPANY BUSINESS Management fees and other income..................... 9,500 12,109 4,707 -- 26,316 (10,775)(vii) 15,541 Management and other expenses................... (13,107) (11,533) (1,236) -- (25,876) 10,775(vii) 11,366(viii) (3,735) -------- -------- ------- ------- -------- --------- -------- Income from service company business................... (3,607) 576 3,471 -- 440 11,366 11,806 -------- -------- ------- ------- -------- --------- -------- General and administrative expense.................... (1,415) -- -- -- (1,415) 263(ix) (1,152) Interest expense............. (40,501) (124) -- -- (40,625) (11,501)(vi) (84,695) (30,380)(x) (2,189)(xi) Interest income.............. 913 12 -- 2,824 3,749 8,846(xii) 12,595 Equity in losses of unconsolidated real estate partnerships........ (295) 768 -- (2,160) (1,687) (7,140)(xiii) (8,827) Equity in earnings (losses) of unconsolidated subsidiaries............... -- -- -- Minority interest............ -- (6) -- -- (6) 4,788(vi) 4,782 Amortization................. -- -- -- -- -- (14,134)(xiv) (14,134) -------- -------- ------- ------- -------- --------- -------- Income from operations....... (19,510) 1,226 3,471 664 (14,149) (48,276) (62,425) Gain (loss) on disposition of properties.............. (600) -- -- -- (600) -- (600) Gain (loss) on extinguishment of debt..... 1,378 -- -- -- 1,378 -- 1,378 -------- -------- ------- ------- -------- --------- -------- Income (loss) before extraordinary item and tax provision.............. (18,732) 1,226 3,471 664 (13,371) (48,276) (61,647) Extraordinary item........... (7,883) -- -- -- (7,883) -- (7,883) -------- -------- ------- ------- -------- --------- -------- Income (loss) before tax provision.................. (26,615) 1,226 3,471 664 (21,254) (48,276) (69,530) Income tax provision......... 120 -- -- -- 120 (120)(xv) -- -------- -------- ------- ------- -------- --------- -------- Net income (loss)............ $(26,495) $ 1,226 $ 3,471 $ 664 $(21,134) $ (48,396) $(69,530) ======== ======== ======= ======= ======== ========= ========
-------------------- (i) Represents the combined historical operating results of the Oxford Entities for the year ended December 31, 1999. (ii) Represents the historical operating results of ORFG Operations for the year ended December 31, 1999. (iii) Represents the historical operating results of the Oxparc Entities for the year ended December 31, 1999. (iv) Represents the historical operating results of other assets acquired in the Oxford Acquisition, primarily related to partnership interests in the real estate partnerships and notes receivable. 99.7-4 5 (v) Represents adjustments related to the Oxford Acquisition as follows: (a) reversal of results of operations for Oxford entities consolidated in the Combined Oxford financial statements; (b) results of operations for Oxford entities consolidated in the financial statements of AIMCO; (c) interest income on additional borrowings for the Oxford Acquisition; (d) elimination of intercompany costs recorded in the Combined Oxford financial statements; (e) interest income and expense on notes receivable and payable adjusted to AIMCO's basis; (f) equity in earnings of unconsolidated real estate partnerships adjusted to AIMCO's basis; and (g) amortization of intangible assets acquired by AIMCO in the Oxford Acquisition. (vi) Represents adjustments to consolidate additional partnerships in AIMCO's consolidated financial statements. Certain of the former Oxford entities' financial statements may not be combined or consolidated on a historical basis under generally accepted accounting principles. As a result of AIMCO's acquisition of ownership interests in real estate partnerships from several different Oxford entities, AIMCO owns a controlling interest in partnerships that were previously accounted for on the equity method by the Oxford entities. Therefore, additional partnerships are consolidated by AIMCO. (vii) Represents adjustment to eliminate the intercompany servicing fee in the Combined Oxford financial statements. (viii) Represents adjustment for a reduction in personnel costs of Oxford pursuant to a restructuring plan, approved by AIMCO senior management, assuming that the Oxford Acquisition had occurred on January 1, 1999, and the restructuring plan was completed on January 1, 1999. 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. As a result of such restructuring plan, the personnel costs of the Oxford entities will not be incurred by AIMCO. (ix) Represents the elimination of general and administrative costs related to assets not purchased from the Oxford entities ($85) and adjustment to depreciation expense for furniture and equipment on a fair value basis ($178). (x) Represents interest expense related to the $279 million borrowed by AIMCO to complete the Oxford Acquisition, at 10.5%, plus amortization of the related deferred financing cost. (xi) Represents adjustment to historical interest expense, based on the fair value of the notes payable recorded by AIMCO. The adjustment represents the difference between the fair market interest rate and the contractual interest rate. (xii) Represents adjustment to interest income on loans receivable from affiliates based on the fair value recorded by AIMCO, net of interest income on the historical basis recorded in the Combined Oxford financial statements. The adjustment represents the difference between the fair market interest rate and the contractual interest rate. (xiii) Represents adjustment to equity in earnings of unconsolidated real estate partnerships related primarily to the increased depreciation as a result of the allocation of the purchase price of the Oxford Acquisition. The increase in depreciation is due to the fair value of the partnership interest being greater than the historical value of the partnership interest. This difference is primarily driven by the fair value of the underlying real estate properties owned by the partnerships being higher than the historical cost basis that is being depreciated by the partnership. The increased depreciation expense for AIMCO's ownership percentage on a fair value basis is included as a reduction of equity in earnings of unconsolidated real estate partnerships. (xiv) Represents incremental amortization of intangible assets, based on AIMCO's new basis as adjusted by the allocation of the purchase price of the Oxford Acquisition. The intangible assets are comprised of asset management and participation management contracts. The asset management contracts are amortized using the straight-line method over the estimated life of one year, as the contracts have a one-year term. The participation management contracts are amortized using the straight-line method over the estimated life of ten years. The participation contracts have no termination date and provide for AIMCO to participate in cash flows from operations and cash flows upon liquidation of the partnership. A ten year amortization period was used as the useful life as ten years is the average expected hold period for the properties. (xv) Represents reversal of income tax provision recorded in the Combined Oxford financial statements. (D) Represents the effects of AIMCO's acquisition of Oxford immediately after the Oxford Acquisition. These amounts do not give effect to the Oxford Reorganization, which includes the transfers of certain assets and liabilities of Oxford to the combined Unconsolidated Subsidiaries. The Oxford Reorganization must occur immediately after the Oxford Acquisition in order for AIMCO to maintain 99.7-5 6 its qualification as a REIT. This column is included as an intermediate step to assist the reader in understanding the entire nature of the Oxford Acquisition and related transactions. (E) Represents adjustments related to the Oxford Reorganization, whereby, following the Oxford Acquisition, AIMCO contributed or sold to the combined Unconsolidated Subsidiaries certain assets and liabilities of Oxford, primarily asset management and cash flow participation contracts and related working capital assets and liabilities related to Oxford's asset management operations. The adjustments reflect the transfer of assets valued at AIMCO's new basis resulting from the allocation of the purchase price of Oxford. AIMCO received non-voting preferred stock and a $29 million note payable as consideration in exchange for the net assets contributed or sold. (F) Represents adjustment to reflect (i) the Regency Acquisition and (ii) the Dreyfuss Acquisitions as if they had occurred on January 1, 1999. 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. (G) Represents interest expense adjustment related to the assumption of mortgage debt in connection with the Regency Acquisition and the Dreyfuss Acquisitions. (H) Represents adjustments to interest income related to the forfeiture of cash in connection with the Regency Acquisition and the Dreyfuss Acquisitions. (I) Represents adjustments to Minority Interest in Operating Partnership assuming the Regency Acquisition, the Dreyfuss Acquisitions, and the Oxford Acquisition had occurred as of January 1, 1999. On a pro forma basis, as of December 31, 1999, the minority interest percentage is approximately 12.3%. (J) Represents results of operations from certain consolidated Oxford entities that were contributed to the Unconsolidated Subsidiaries. (K) Represents management income and expense associated with certain assets and liabilities contributed to the Unconsolidated Subsidiaries, primarily related to the asset management operations, cashflow participations, notes receivable, and equity in earnings of unconsolidated partnerships of Oxford. (L) Represents the following: (i) interest expense from certain consolidated Oxford entities that were contributed to the Unconsolidated Subsidiaries of $23,784; (ii) interest expense of $5,227 on $48,000 of third party financing contributed by AIMCO to the Unconsolidated Subsidiaries in connection with the Oxford Reorganization; and (iii) interest expense on certain liabilities that were contributed to the Unconsolidated Subsidiaries of $14,256. (M) Represents interest income earned at 8.5% on notes payable of $29 million to AIMCO issued as consideration for certain assets sold by AIMCO to the Unconsolidated Subsidiaries. (N) Represents adjustment to AIMCO's equity in income (loss) of the Unconsolidated Subsidiaries as a result of the Oxford Acquisition and the contribution and sale of certain assets and liabilities to the Unconsolidated Subsidiaries. (O) On a pro forma basis, there is a net loss allocable to common stockholders. As a result, there are no common stock equivalents included for the computation of diluted earnings (loss) per common share as they would be antidilutive. 99.7-6 7 (P) The combined Pro Forma Statement of Operations (Pre-Merger) of the Unconsolidated Subsidiaries for the year ended December 31, 1999 is presented below, which reflects the effects of the Oxford Acquisition and the Oxford Reorganization as if these transactions had occurred as of January 1, 1999. COMBINED UNCONSOLIDATED SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER) FOR THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
COMBINED UNCONSOLIDATED SUBSIDIARIES OXFORD HISTORICAL(i) REORGANIZATION(ii) PRO-FORMA -------------- ------------------ --------- RENTAL PROPERTY OPERATIONS Rental and other property revenues................... $ 4,064 $ 80,823 $ 84,887 Property operating expenses.......................... (1,524) (50,342) (51,866) Owned property management expense.................... -- (3,191) (3,191) Depreciation......................................... (1,161) (15,435) (16,596) -------- -------- -------- Income from property operations...................... 1,379 11,855 13,234 -------- -------- -------- SERVICE COMPANY BUSINESS Management fees and other income..................... 140,666 14,206 154,872 Management and other expenses........................ (77,753) (2,086) (79,839) -------- -------- -------- Income from service company business................. 62,913 12,120 75,033 -------- -------- -------- General and administrative expense................... (24,162) (1,152) (25,314) Interest expense..................................... (8,123) (43,267) (2,465)(iii) (53,855) Interest income...................................... 2,776 997 3,773 Equity in losses of unconsolidated real estate partnerships....................................... (1,665) (1,299) (2,964) Minority interest.................................... -- 3,278 3,278 Depreciation and Amortization........................ (31,915) (14,134) (46,049) -------- -------- -------- Income from operations............................... 1,203 (34,067) (32,864) Gain (loss) on disposition of properties............. 1,051 (600) 451 Gain (loss) on extinguishment of debt................ -- 1,378 1,378 -------- -------- -------- Income (loss) before extraordinary item and tax provision...................................... 2,254 (33,289) (31,035) Extraordinary item................................... -- (7,883) (7,883) -------- -------- -------- Income (loss) before tax provision................... 2,254 (41,172) (38,918) Income tax provision................................. (927) 16,469(iv) 15,542 -------- -------- -------- Net income (loss).................................... $ 1,327 $(24,703) $(23,376) ======== ======== ======== Income (loss) allocable to preferred stock........... $ 1,314 $(24,456) $(23,142) ======== ======== ======== Income (loss) allocable to common stock.............. $ 13 $ (247) $ (234) ======== ======== ========
--------------- (i) Represents the combined historical operating results of the Unconsolidated Subsidiaries for the year ended December 31, 1999. (ii) Represents adjustments related to the Oxford Reorganization, whereby, following the Oxford Acquisition, AIMCO contributed or sold to the combined Unconsolidated Subsidiaries certain assets and liabilities of Oxford, primarily asset management and cash flow participation contracts and related working capital assets and liabilities related to Oxford's asset management operations. The adjustments reflect the transfer of assets valued at AIMCO's new basis resulting from the allocation of the purchase price of Oxford. AIMCO received non-voting preferred stock and a $29 million note payable as consideration in exchange for the net assets contributed or sold. (iii)Represents interest expense at 8.5% on notes payable of $29 million to AIMCO issued as consideration for certain assets sold by AIMCO to the Unconsolidated Subsidiaries. (iv) Represents the estimated Federal and state tax provisions, which are calculated on the operating results of the Unconsolidated Subsidiaries. 99.7-7 8 APARTMENT INVESTMENT AND MANAGEMENT COMPANY PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
ADJUSTMENTS ----------------------------------------------------------------------- AIMCO BEFORE AIMCO OXFORD OXFORD OXFORD PRO FORMA HISTORICAL(A) ADJUSTMENTS(B) ACQUISITION(C) REORGANIZATION(D) REORGANIZATION(E) TOTAL ------------- -------------- -------------- ----------------- ----------------- --------- RENTAL PROPERTY OPERATIONS Rental and other property revenues................. $ 753,463 $ 6,903(F) $ 92,935 $ 853,301 $(61,163)(I) $ 792,138 Property operating expenses................. (302,435) (2,634)(F) (49,528) (354,597) 35,887(I) (318,710) Owned property management expense.................. (9,713) (287)(F) (3,651) (13,651) 2,479(I) (11,172) Depreciation............... (223,128) (1,121)(F) (20,964) (245,213) 11,164(I) (234,049) --------- -------- -------- --------- -------- --------- Income from property operations............... 218,187 2,861 18,792 239,840 (11,633) 228,207 --------- -------- -------- --------- -------- --------- SERVICE COMPANY BUSINESS Management fees and other income................... 36,865 -- 9,629 46,494 (9,432)(J) 37,062 Management and other expenses................. (23,603) -- (2,762) (26,365) 1,169(J) (25,196) --------- -------- -------- --------- -------- --------- Income from service company business................. 13,262 -- 6,867 20,129 (8,263) 11,866 --------- -------- -------- --------- -------- --------- General and administrative expense.................. (9,609) -- (1,101) (10,710) 1,121(J) (9,589) Interest expense........... (190,459) (2,055)(G) (62,545) (255,059) 32,378(K) (222,681) Interest income............ 47,352 -- 16,426 63,778 (7,984)(J) 1,849(L) 57,643 Equity in earnings (losses) of unconsolidated real estate partnerships...... (4,489) -- (3,222) (7,711) 625(J) (7,086) Equity in earnings (losses) of unconsolidated subsidiaries............. 2,538 -- -- 2,538 (7,015)(M) (4,477)(N) Minority interest in other entities................. (10,977) -- 2,635 (8,342) (1,801)(I) (10,143) Amortization of intangibles.............. (4,968) -- (4,580) (9,548) 4,985(J) (4,563) --------- -------- -------- --------- -------- --------- Income from operations..... 60,837 806 (26,728) 34,915 4,262 39,177 Gain (loss) on disposition of properties............ 14,234 35 14,269 (35) 14,234 Gain (loss) on extinguishment of debt... -- -- (568) (568) 568 -- --------- -------- -------- --------- -------- --------- Income (loss) before minority interest in operating partnership.... 75,071 806 (27,261) 48,616 4,795 53,411 Minority interest in operating partnership.... (7,131) (781)(H) 2,388 (5,524) (502)(H) (6,026) --------- -------- -------- --------- -------- --------- Net income (loss).......... $ 67,940 $ 25 $(24,873) $ 43,092 $ 4,293 $ 47,385 ========= ======== ======== ========= ======== ========= Net income allocable to preferred stockholders... $ 44,843 $ 44,843 ========= ========= Net income (loss) allocable to common stockholders... $ 23,097 2,542 ========= ========= Basis earnings (loss) per common share............. $ 0.35 0.04 ========= ========= Diluted earnings (loss) per common share............. $ 0.34 $ 0.04 ========= ========= Weighted average common shares outstanding....... 66,641 66,641 ========= ========= Weighted average common shares and common share equivalents outstanding.............. 68,478 68,478 ========= =========
--------------- (A) Represents AIMCO's unaudited historical condensed consolidated results of operations for the nine months ended September 30, 2000. 99.7-8 9 (B) Represents adjustment to reflect the 2000 Dreyfuss Acquisition as if it had occurred on January 1, 1999. 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. (C) Represents the adjustment to reflect the Oxford Acquisition as if it had occurred on January 1, 1999. These adjustments are detailed as follows:
COMBINED OXFORD ORFG OXPARC OXFORD PRO FORMA ENTITIES(i) OPERATIONS(ii) ENTITIES(iii) OTHER(iv) HISTORICAL ADJUSTMENTS(v) ----------- -------------- ------------- --------- ---------- -------------- RENTAL PROPERTY OPERATIONS Rental and other property revenues..................... $ 52,667 $ -- $ -- $ -- $ 52,667 $ 40,268(vi) Property operating expenses.... (25,777) -- -- -- (25,777) (23,751)(vi) Owned property management expense...................... (2,423) -- -- -- (2,423) (1,228)(vi) Depreciation................... (4,901) -- -- -- (4,901) (16,063)(vi) -------- ------- ------ ------- -------- -------- Income from property operations................... 19,566 -- -- -- 19,566 (774) -------- ------- ------ ------- -------- -------- SERVICE COMPANY BUSINESS Management fees and other income....................... 5,900 9,044 2,484 -- 17,428 1,747(vii) (9,546)(viii) Management and other expenses..................... (9,581) (7,324) (684) -- (17,589) 5,281(ix) 9,546(viii) -------- ------- ------ ------- -------- -------- Income from service company business..................... (3,681) 1,720 1,800 -- (161) 7,028 -------- ------- ------ ------- -------- -------- General and administrative expense...................... (1,136) -- -- -- (1,136) 35(x) Interest expense............... (25,905) (75) -- -- (25,980) (13,774)(vi) (21,890)(xi) (901)(xii) Interest income................ 603 13 -- 2,316 2,932 13,494(xiii) Equity in losses of unconsolidated real estate partnerships................. 181 647 -- (1,699) (871) (2,351)(xiv) Equity in earnings (losses) of unconsolidated subsidiaries................. -- -- Minority interest.............. -- (6) -- -- (6) 2,641(vi) Amortization................... -- -- -- -- -- (4,580)(xv) -------- ------- ------ ------- -------- -------- Income from operations......... (10,372) 2,299 1,800 617 (5,656) (21,072) Gain (loss) on disposition of properties................... 35 -- -- -- 35 -- Gain (loss) on extinguishment of debt...................... (568) -- -- -- (568) -- -------- ------- ------ ------- -------- -------- Income (loss) before tax provision.................... (10,905) 2,299 1,800 617 (6,189) (21,072) Income tax provision........... (1,576) -- -- -- (1,576) 1,576(xvi) -------- ------- ------ ------- -------- -------- Net income (loss).............. $(12,481) $ 2,299 $1,800 $ 617 $ (7,765) $(19,496) ======== ======= ====== ======= ======== ======== OXFORD ACQUISITION ----------- RENTAL PROPERTY OPERATIONS Rental and other property revenues..................... $ 92,935 Property operating expenses.... (49,528) Owned property management expense...................... (3,651) Depreciation................... (20,964) -------- Income from property operations................... 18,792 -------- SERVICE COMPANY BUSINESS Management fees and other income....................... 9,629 Management and other expenses..................... (2,762) -------- Income from service company business..................... 6,867 -------- General and administrative expense...................... (1,101) Interest expense............... (62,545) Interest income................ 16,426 Equity in losses of unconsolidated real estate partnerships................. (3,222) Equity in earnings (losses) of unconsolidated subsidiaries................. -- Minority interest.............. 2,635 Amortization................... (4,580) -------- Income from operations......... (26,728) Gain (loss) on disposition of properties................... 35 Gain (loss) on extinguishment of debt...................... (568) -------- Income (loss) before tax provision.................... (27,261) Income tax provision........... -- -------- Net income (loss).............. $(27,261) ========
--------------- (i) Represents the unaudited combined historical operating results of the Oxford Entities for the eight months ended August 31, 2000. (ii) Represents the unaudited historical operating results of ORFG Operations for the eight months ended August 31, 2000. 99.7-9 10 (iii) Represents the unaudited historical operating results of the Oxparc Entities for the eight months ended August 31, 2000. (iv) Represents the unaudited historical operating results for the eight months ended August 31, 2000 of other assets acquired in the Oxford Acquisition, primarily related to partnership interests in the real estate partnerships and notes receivable. (v) Represents adjustments related to the Oxford Acquisition as follows: (a) reversal of results of operations for Oxford entities consolidated in the Combined Oxford financial statements; (b) results of operations for Oxford entities consolidated in the financial statements of AIMCO; (c) interest income on additional borrowings for the Oxford Acquisition; (d) elimination of intercompany costs recorded in the Combined Oxford financial statements; (e) interest income and expense on notes receivable and payable adjusted to AIMCO's basis; (f) equity in earnings of unconsolidated real estate partnerships adjusted to AIMCO's basis; and (g) amortization of intangible assets acquired by AIMCO in the Oxford Acquisition. (vi) Represents adjustments to consolidate additional partnerships in AIMCO's consolidated financial statements. Certain of the former Oxford entities' financial statements may not be combined or consolidated on a historical basis under generally accepted accounting principles. As a result of AIMCO's acquisition of ownership interests in real estate partnerships from several different Oxford entities, AIMCO owns a controlling interest in partnerships that were previously accounted for on the equity method by the Oxford entities. Therefore, additional partnerships are consolidated by AIMCO. (vii) Represents adjustment from eight months of management fees and other income recorded in the Combined Oxford financial statements to nine months recorded in the pro forma financial statements of AIMCO, net of amount recorded by AIMCO subsequent to the Oxford Acquisition. (viii) Represents adjustment to eliminate the intercompany servicing fee in the Combined Oxford financial statements. (ix) Represents adjustment for a reduction in personnel costs of Oxford pursuant to a restructuring plan, approved by AIMCO senior management, assuming that the Oxford Acquisition had occurred on January 1, 1999, and the restructuring plan was completed on January 1, 1999. 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. As a result of such restructuring plan, the personnel costs of the Oxford entities will not be incurred by AIMCO. (x) Represents (i) $122 for adjustment from eight months of expense to nine months, net of the amount recorded by AIMCO subsequent to the Oxford Acquisition; net of (ii) the elimination of general and administrative expenses related to assets not purchased from the Oxford entities ($64) and adjustment to depreciation expense for furniture and equipment on a fair value basis ($93). (xi) Represents interest expense related to the $279 million borrowed by AIMCO to complete the Oxford Acquisition, at 10.5%, plus amortization of the related deferred financing cost. (xii) Represents adjustment to historical interest expense, based on the fair value of the notes payable recorded by AIMCO. The adjustment represents the difference between the fair market interest rate and the contractual interest rate. (xiii) Represents adjustment to interest income on loans receivable from affiliates based on the fair value recorded by AIMCO, net of interest income on the historical basis recorded in the Combined Oxford financial statements. The adjustment represents the difference between the fair market interest rate and the contractual interest rate. (xiv) Represents adjustment to equity in earnings of unconsolidated real estate partnerships related primarily to the increased depreciation as a result of the allocation of the purchase price of the Oxford Acquisition. The increase in depreciation is due to the fair value of the partnership interest being greater than the historical value of the partnership interest. This difference is primarily driven by the fair value of the underlying real estate properties owned by the partnerships being higher than the historical cost basis that is being depreciated by the partnership. The increased depreciation expense for AIMCO's ownership percentage on a fair value basis is included as a reduction of equity in earnings of unconsolidated real estate partnerships. (xv) Represents incremental amortization of intangible assets, based on AIMCO's new basis as adjusted by the allocation of the purchase price of the Oxford Acquisition. The intangible assets are comprised of asset management and participation management contracts. The asset management contracts are amortized using the straight-line method over the estimated life of one year, as the contracts have a one-year term. The participation management contracts are amortized using the straight-line method over the estimated life of ten years. The participation contracts have no termination date and provide for AIMCO to participate in cash flows from operations and cash flows upon liquidation of the partnership. A ten year amortization period was used as the useful life as ten years is the average expected hold period for the properties. 99.7-10 11 (xvi) Represents reversal of income tax provision recorded in the Combined Oxford financial statements. (D) Represents the effects of AIMCO's acquisition of Oxford immediately after the Oxford Acquisition. These amounts do not give effect to the Oxford Reorganization, which includes the transfers of certain assets and liabilities of Oxford to the combined Unconsolidated Subsidiaries. The Oxford Reorganization must occur immediately after the Oxford Acquisition in order for AIMCO to 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 Oxford Acquisition and related transactions. (E) Represents adjustments related to the Oxford Reorganization, whereby, following the Oxford Acquisition, AIMCO contributed or sold to the combined Unconsolidated Subsidiaries certain assets and liabilities of Oxford, primarily asset management and cash flow participation contracts and related working capital assets and liabilities related to Oxford's asset management operations. The adjustments reflect the transfer of assets valued at AIMCO's new basis resulting from the allocation of the purchase price of Oxford. AIMCO received non-voting preferred stock and a $29 million note payable as consideration in exchange for the net assets contributed or sold. (F) Represent adjustments to reflect the 2000 Dreyfuss Acquisition as if it had occurred on January 1, 1999. 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. (G) Represents interest expense adjustment related to the assumption of mortgage debt in connection with the 2000 Dreyfuss Acquisition. (H) Represents adjustments to Minority Interest in Operating Partnership assuming the Oxford Acquisition and the 2000 Dreyfuss Acquisition had occurred as of January 1, 1999. On a pro forma basis, as of September 30, 2000, the minority interest percentage is approximately 10.5%. (I) Represents results of operations from certain consolidated Oxford entities that were contributed to the Unconsolidated Subsidiaries. (J) Represents management income and expense associated with certain assets and liabilities contributed to the Unconsolidated Subsidiaries, primarily related to the asset management operations, cash flow participations, notes receivable, and equity in earnings of unconsolidated partnerships of Oxford. (K) Represents the following: (i) interest expense from certain consolidated Oxford entities that were contributed to the Unconsolidated Subsidiaries of $17,837; (ii) interest expense of $3,920 on $48,000 of third party financing contributed by AIMCO to the Unconsolidated Subsidiaries in connection with the Oxford Reorganization; and (iii) interest expense on certain liabilities that were contributed to the Unconsolidated Subsidiaries of $10,621. (L) Represents interest income earned at 8.5% on notes payable of $29 million to AIMCO issued as consideration for certain assets sold by AIMCO to the Unconsolidated Subsidiaries. (M) Represents adjustment to AIMCO's equity in income (loss) of the Unconsolidated Subsidiaries as a result of the Oxford Acquisition and the contribution and sale of certain assets and liabilities to the Unconsolidated Subsidiaries. 99.7-11 12 (N) The combined Pro Forma Statement of Operations (Pre-Merger) of the Unconsolidated Subsidiaries for the nine months ended September 30, 2000 is presented below, which reflects the effects of the Oxford Acquisition and the Oxford Reorganization as if these transactions had occurred as of January 1, 1999. COMBINED UNCONSOLIDATED SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (IN THOUSANDS)
COMBINED UNCONSOLIDATED SUBSIDIARIES OXFORD HISTORICAL(i) REORGANIZATION(ii) PRO-FORMA -------------- ------------------ --------- RENTAL PROPERTY OPERATIONS Rental and other property revenues................... $ -- $ 61,163 $ 61,163 Property operating expenses.......................... -- (35,887) (35,887) Owned property management expense.................... -- (2,479) (2,479) Depreciation......................................... -- (11,164) (11,164) -------- -------- -------- Income from property operations...................... -- 11,633 11,633 -------- -------- -------- SERVICE COMPANY BUSINESS Management fees and other income..................... 102,392 9,432 111,824 Management and other expenses........................ (46,198) (1,169) (47,367) -------- -------- -------- Income from service company business................. 56,194 8,263 64,457 -------- -------- -------- General and administrative expense................... (15,057) (1,121) (16,178) Interest expense..................................... (7,311) (32,378) (1,849)(iii) (41,538) Interest income...................................... 4,529 7,984 12,513 Equity in losses of unconsolidated real estate partnerships....................................... (13,654) (625) (14,279) Minority interest.................................... -- 1,801 1,801 Depreciation and Amortization........................ (18,967) (4,985) (23,952) -------- -------- -------- Income from operations............................... 5,734 (11,277) (5,543) Gain (loss) on disposition of properties............. 5,760 35 5,795 Gain (loss) on extinguishment of debt................ -- (568) (568) -------- -------- -------- Income (loss) before tax provision................... 11,494 (11,810) (316) Income tax provision................................. (2,562) 4,724(iv) 2,162 -------- -------- -------- Net income (loss).................................... $ 8,932 $ (7,086) $ 1,846 ======== ======== ======== Income (loss) allocable to preferred stock........... $ 8,843 $ (7,015) $ 1,828 ======== ======== ======== Income (loss) allocable to common stock.............. $ 89 $ (71) $ 18 ======== ======== ========
--------------- (i) Represents the unaudited combined historical operating results of the Unconsolidated Subsidiaries for the nine months ended September 30, 2000. (ii) Represents adjustments related to the Oxford Reorganization, whereby, following the Oxford Acquisition, AIMCO contributed or sold to the combined Unconsolidated Subsidiaries certain assets and liabilities of Oxford, primarily asset management and cash flow participation contracts and related working capital assets and liabilities related to Oxford's asset management operations. The adjustments reflect the transfer of assets valued at AIMCO's new basis resulting from the allocation of the purchase price of Oxford. AIMCO received non-voting preferred stock and a $29 million note payable as consideration in exchange for the net assets contributed or sold. (iii) Represents interest expense at 8.5% on notes payable of $29 million to AIMCO issued as consideration for certain assets sold by AIMCO to the Unconsolidated Subsidiaries. (iv) Represents the estimated Federal and state tax provisions, which are calculated on the operating results of the Unconsolidated Subsidiaries. 99.7-12 13 PRO FORMA FINANCIAL INFORMATION OF AIMCO (MERGER) The following Pro Forma Condensed Consolidated Balance Sheet (Merger) of AIMCO as of September 30, 2000 has been prepared as if the OTEF Merger had occurred as of September 30, 2000. The following Pro Forma Condensed Consolidated Statements of Operations (Merger) of AIMCO for the year ended December 31, 1999 and the nine months ended September 30, 2000 have been prepared as if each of the following transactions had occurred as of January 1, 1999: (i) OTEF's redemption of the status quo BACs and payment of the special distribution; (ii) the exercise by AIMCO of 652,125 options to acquire BACs; (iii) the OTEF Merger; and (iv) each of the transactions reflected in the Pro Forma Consolidated Statements of Operations (Pre-Merger) of AIMCO for the year ended December 31, 1999 and the nine months ended September 30, 2000. The following Pro Forma Financial Information (Merger) is based, in part, on the Pro Forma Financial Information (Pre-Merger) included elsewhere in this Current Report on Form 8-K/A. The Pro Forma Financial Information (Pre-Merger) gives effect to all material transactions of AIMCO prior to the OTEF Merger and as of the date of this Current Report on Form 8-K/A, including the Oxford Acquisition, the Regency Acquisition, and the Dreyfuss Acquisitions. See "Pro Forma Financial Information (Pre-Merger)." The Pro Forma Financial Information (Merger) is also based, in part, on the following historical financial statements, which are incorporated by reference in this Current Report on Form 8-K/A: (i) the Consolidated Financial Statements of AIMCO for the year ended December 31, 1999 and the nine months ended September 30, 2000; and (ii) the Consolidated Financial Statements of OTEF for the year ended December 31, 1999 and the nine months ended September 30, 2000. The Pro Forma Financial Information (Merger) should be read in conjunction with such financial statements and the notes thereto. The unaudited Pro Forma Financial Information (Merger) has been prepared using the purchase method of accounting whereby the assets and liabilities of OTEF 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 (Merger) may differ from the amounts ultimately determined. The unaudited Pro Forma Financial Information (Merger) 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. The unaudited Pro Forma Consolidated Statement of Operations (Merger) for the nine months ended September 30, 2000 is not necessarily indicative of the results of operations to be expected for the year ending December 31, 2000. 99.7-13 14 APARTMENT INVESTMENT AND MANAGEMENT COMPANY PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER) AS OF SEPTEMBER 30, 2000 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
ADJUSTMENTS ---------------------------------------------------- OPTION EXERCISE, OTEF MERGER AIMCO OTEF REDEMPTION MERGER PRO FORMA HISTORICAL(A) HISTORICAL(B) AND DISTRIBUTION(C) ADJUSTMENTS(D) TOTAL ------------- ------------- ------------------- -------------- ---------- ASSETS Real estate, net of accumulated depreciation.............................. $5,471,364 $ -- $ -- $ -- $5,471,364 Investments in unconsolidated real estate partnerships.............................. 798,158 -- -- -- 798,158 Investments in unconsolidated subsidiaries.............................. 91,358 -- -- -- 91,358 Notes receivable from unconsolidated real estate partnerships....................... 145,587 -- -- -- 145,587 Notes receivable from and advances to unconsolidated subsidiaries............... 213,991 -- -- -- 213,991 Investments in bonds and notes receivable.............................. -- 288,362 -- (5,084) -- (190,362)(G) 92,916 Cash and cash equivalents................. 106,544 41,358 (40,082)(C) -- 15,573(E) (15,573)(F) 107,820 Restricted cash........................... 113,545 -- -- -- 113,545 Other assets.............................. 216,237 4,452 15,573(F) (1,427) (4,800) (2,172) (15,573) 212,290 ---------- -------- -------- --------- ---------- $7,156,784 $334,172 $(24,509) $(219,418) $7,247,029 ========== ======== ======== ========= ========== LIABILITIES AND SHAREHOLDERS' EQUITY/PARTNERS' CAPITAL Liabilities: Secured notes payable..................... $2,836,097 $ -- $ -- $ -- $2,836,097 Secured tax-exempt bond financing......... 583,106 -- -- (190,362)(G) 392,744 Unsecured short-term financing............ 406,000 52,229 10,000(C) 2,585 470,814 ---------- -------- -------- --------- ---------- Total indebtedness.................. 3,825,203 52,229 10,000 (187,777) 3,699,655 Accounts payable, accrued and other liabilities............................... 243,286 4,488 -- 5,000 252,774 Resident security deposits and prepaid rents..................................... 32,899 -- -- -- 32,899 ---------- -------- -------- --------- ---------- Total liabilities................... 4,101,388 56,717 10,000 (182,777) 3,985,328 ---------- -------- -------- --------- ---------- Commitments and contingencies............... -- -- -- -- -- Mandatorily redeemable convertible preferred securities................................ 35,330 -- -- -- 35,330 Minority interest in other entities......... 194,006 -- -- -- 194,006 Minority interest in Operating Partnership............................... 297,631 -- -- -- 297,631 Stockholders' equity/Partners' capital: Preferred Stock........................... 837,717 -- -- 100,000 937,717 Class A Common Stock ($.01 par value)..... 712 -- -- 22 734 General Partners' interests............... -- (1,670) -- 1,670 -- Limited Partners' interests............... -- 194,002 (50,082)(C) (159,493) 15,573(E) -- Additional paid-in capital................ 2,065,618 -- -- 106,283 2,171,901 Notes receivable on common stock purchases................................. (44,795) -- -- -- (44,795) Distributions in excess of earnings......... (330,823) -- -- -- (330,823) Accumulated other comprehensive income...... -- 85,411 -- (85,411) -- Treasury shares............................. -- (288) -- 288 -- ---------- -------- -------- --------- ---------- Total stockholders' equity/partners' capital........................... 2,528,429 277,455 (34,509) (36,641) 2,734,734 ---------- -------- -------- --------- ---------- Total liabilities and stockholders' equity/ partners' capital......... $7,156,784 $334,172 $(24,509) $(219,418) $7,247,029 ========== ======== ======== ========= ==========
99.7-14 15 --------------- (A) Represents the unaudited historical consolidated financial position of AIMCO as of September 30, 2000. (B) Represents the unaudited historical consolidated financial position of OTEF as of September 30, 2000. (C) Represents the following transactions of OTEF immediately prior to the OTEF Merger: (i) the exercise by AIMCO of 652,125 options to acquire BACs; (ii) the redemption at $860.25 of each outstanding status quo BAC, for a total of $82; and (iii) the payment of the special distribution of $50,000. (D) Represents the following adjustments occurring as a result of the OTEF Merger: (i) the issuance of $100,000 of Class P Preferred Stock, with a dividend rate of 9%, as merger consideration to holders of OTEF BAC interests outstanding as of September 30, 2000 and to the OTEF associate general partner; (ii) the issuance of 2,405 shares of AIMCO Class A Common Stock, valued at approximately $106,305 (based on $48.509 per share, which is the average of the high and low reported sales prices of AIMCO Class A common stock for the 20 trading-day period beginning on December 4, 2000, the third full trading day following the first public announcement of the OTEF Merger) as merger consideration to holders of OTEF BAC interests outstanding as of September 30, 2000 and to the OTEF associate general partner; (iii) the payment of $2,585 to the Oxford principals and the OTEF non-employee directors as additional consideration for the options to acquire BACs; (iv) the reclassification of the OTEF options acquired by AIMCO in the Oxford Acquisition for $4,800, which is considered additional consideration in connection with the OTEF Merger; (v) the reclassification of the fair value assigned to the OTEF general partner interest acquired by AIMCO in the Oxford Acquisition of $2,172; (vi) the elimination of AIMCO's investment in OTEF of $15,573, resulting from AIMCO's exercise of options to acquire BACs; and (vii) the allocation of the purchase price of OTEF based on the preliminary estimates of relative fair value of the asset and liabilities of OTEF. The total purchase price of OTEF is $287,579, as follows: Issuance of Class P Preferred Stock......................... $ 100,000 Issuance of 2,405 shares of AIMCO Class A Common Stock...... 106,305 Reclassification of OTEF options purchased in the Oxford Acquisition............................................... 4,800 Reclassification of OTEF general partner interest acquired by AIMCO in the Oxford Acquisition........................ 2,172 Additional consideration paid to the Oxford principals and the OTEF non-employee directors for the options to acquire BACs...................................................... 2,585 Assumption of OTEF liabilities, including additional borrowings by OTEF to pay a portion of the special distribution.............................................. 66,717 Transaction costs........................................... 5,000 --------- Total............................................. $ 287,579 ========= The purchase price was allocated to the various assets of OTEF to be acquired in the OTEF Merger, as follows: Purchase Price.............................................. $ 287,579 Historical basis of OTEF assets, net of payment of cash by OTEF for the redemption of the status quo BACs and payment of the special distribution............................... (294,090) --------- Reduction to record OTEF's assets at AIMCO's costs as a result of the OTEF Merger................................. $ (6,511) ========= The reduction was applied to OTEF's assets based on their relative fair values, as follows: Reduction in investments in bonds and notes receivable...... $ (5,084) Reduction in other assets................................... (1,427) --------- Reduction to record OTEF's assets at AIMCO's costs as a result of the OTEF Merger................................. $ (6,511) =========
99.7-15 16 The reduction in the assets of OTEF results from the excess of the historical net assets acquired over the consideration given in the OTEF Merger. The write-down required by purchase accounting in the pro forma balance sheet has been applied to all non-current assets of OTEF. As of September 30, 2000, OTEF's partners' capital (after the redemption of the status quo BACs, AIMCO's exercise of options to acquire BACs and the payment of the special distribution) was $242,946, which is detailed as follows: General Partners' capital................................... $ (1,670) Limited Partners' capital (after the redemption of the status quo BACs and the payment of the special distribution)............................................. 159,493 Accumulated other comprehensive income...................... 85,411 Treasury shares............................................. (288) --------- Total partners' capital..................................... $ 242,946 ========= Upon completion of the OTEF Merger, the entire amount of OTEF partners' capital is eliminated.
(E) Represents the receipt of cash by OTEF from the exercise of 652,125 BACs by AIMCO at an exercise price of $23.88 per BAC. (F) Represents the exercise of 652,125 BACs by AIMCO at an exercise price of $23.88 per BAC. AIMCO's investment in OTEF is recorded in Other assets. (G) Represents the elimination of the investment in bonds with the secured tax-exempt bond financing on OTEF properties that are consolidated by AIMCO. 99.7-16 17 APARTMENT INVESTMENT AND MANAGEMENT COMPANY PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER) FOR THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
ADJUSTMENTS ---------------------------------------------------- PRE-MERGER OTEF OTEF MERGER PRO FORMA OTEF REDEMPTION MERGER PRO FORMA TOTAL(A) HISTORICAL(B) AND DISTRIBUTION(C) ADJUSTMENTS(D) TOTAL ---------- ------------- ------------------- -------------- --------- RENTAL PROPERTY OPERATIONS Rental and other property revenues......................... $ 643,778 $ -- $ -- $ -- $ 643,778 Property operating expenses........ (263,389) -- -- -- (263,389) Owned property management expense.......................... (19,699) -- -- -- (19,699) Depreciation....................... (157,696) -- -- -- (157,696) --------- ------- ----- -------- --------- Income from property operations.... 202,994 -- -- -- 202,994 --------- ------- ----- -------- --------- SERVICE COMPANY BUSINESS Management fees and other income... 44,790 -- -- -- 44,790 Management and other expenses...... (27,119) -- -- -- (27,119) --------- ------- ----- -------- --------- Income from service company business......................... 17,671 -- -- -- 17,671 --------- ------- ----- -------- --------- General and administrative expense.......................... (13,112) (2,512) (15,624) Interest expense................... (199,999) (2,121) (783) 13,200(E) (202)(F) (189,905) Interest income.................... 75,265 24,607 -- 508(G) -- (13,200)(E) 87,180 Equity in losses of unconsolidated real estate partnerships................... (11,995) -- -- -- (11,995) Equity in losses of unconsolidated subsidiaries..................... (27,274) -- -- -- (27,274) Minority interest in other entities......................... 604 -- -- -- 604 Amortization of intangibles........ (5,860) -- -- -- (5,860) --------- ------- ----- -------- --------- Income from operations............. 38,294 19,974 (783) 306 57,791 Gain (loss) on the disposition of properties.................... (1,785) -- -- -- (1,785) --------- ------- ----- -------- --------- Income before minority interest in operating partnership............ 36,509 19,974 (783) 306 56,006 Minority interest in operating partnership...................... (5,618) -- -- (2,433)(H) (8,051) --------- ------- ----- -------- --------- Net income......................... $ 30,891 $19,974 $(783) $ (2,127) $ 47,955 ========= ======= ===== ======== ========= Net income allocable to preferred stockholders..................... $ 56,885 $ 9,000(I) $ 65,885 ========= ======== ========= Net income (loss) allocable to common stockholders.............. $ (25,994) $ (17,930) ========= ========= Basis earnings (loss) per common share............................ $ (0.42) $ (0.28) ========= ========= Diluted earnings (loss) per common share............................ $ (0.42) $ (0.28) ========= ========= Weighted average common shares outstanding...................... 62,242 2,191(J) 64,433 ========= ======== ========= Weighted average common shares and common share equivalents outstanding...................... 62,242 2,191(J) 64,433(K) ========= ======== =========
99.7-17 18 --------------- (A) Represents AIMCO's pro forma consolidated results of operations for the year ended December 31, 1999, which gives effect to (i) the Regency Acquisition; (ii) the Dreyfuss Acquisitions; and (iii) the Oxford Acquisition. See "Pro Forma Financial Information (Pre-Merger)." (B) Represents the audited historical consolidated results of operations of OTEF for the year ended December 31, 1999. (C) Represents additional interest expense due to the additional borrowings by OTEF of $10,000 to pay a portion of the special distribution. (D) Represents the following adjustments occurring as a result of the OTEF Merger: (i) the amortization of the discount on the bonds and notes receivable; (ii) the allocation of income to the Class P Preferred Stock issued in connection with the OTEF Merger, at a dividend rate of 9%; and (iii) the issuance of AIMCO Class A Common Stock in connection with the OTEF Merger. (E) Represents the elimination of the interest income on the investment in bonds with the interest expense on the secured tax-exempt bond financing on OTEF properties that are consolidated by AIMCO. (F) Represents adjustment for interest expense on additional borrowings for the additional consideration to the Oxford principals and the OTEF non-employee directors. (G) Represents adjustment to amortize the discount on the bonds and notes receivable purchased from OTEF, using the effective interest method over the estimated lives of the bonds and notes receivable. The discount on the bonds is the result of AIMCO purchasing the bonds and notes receivable at a discount of $5,084. The discount is amortized to interest income based upon estimated future cash flows and the estimated timing of their receipt. (H) Represents adjustment to minority interest in the Operating Partnership assuming the OTEF Merger had occurred as of January 1, 1999. On a pro forma basis, as of December 31, 1999, the minority interest percentage is 11.9%. (I) Represents the allocation of income to the Class P Preferred Stock issued in connection with the OTEF Merger, at a dividend rate of 9%. (J) Represents the number of shares of AIMCO Class A Common Stock to be issued in connection with the OTEF Merger. (K) On pro forma basis, there is a net loss allocable to common stockholders. As a result, there are no common stock equivalents included for the computation of diluted earnings (loss) per common share as they would be antidilutive. 99.7-18 19 APARTMENT INVESTMENT AND MANAGEMENT COMPANY PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
ADJUSTMENTS PRE-MERGER ----------------------------------- OTEF MERGER PRO FORMA OTEF OTEF REDEMPTION MERGER PRO FORMA TOTAL(A) HISTORICAL(B) AND DISTRIBUTION(C) ADJUSTMENTS(D) TOTAL ---------- ------------- ------------------- -------------- --------- RENTAL PROPERTY OPERATIONS Rental and other property revenues....................... $ 792,138 $ -- $ -- $ -- $ 792,138 Property operating expenses...... (318,710) -- -- -- (318,710) Owned property management expense........................ (11,172) -- -- -- (11,172) Depreciation..................... (234,049) -- -- -- (234,049) --------- ------- ----- --------- --------- Income from property operations..................... 228,207 -- -- -- 228,207 --------- ------- ----- --------- --------- SERVICE COMPANY BUSINESS Management fees and other income......................... 37,062 -- -- -- 37,062 Management and other expenses.... (25,196) -- -- -- (25,196) --------- ------- ----- --------- --------- Income from service company business....................... 11,866 -- -- -- 11,866 --------- ------- ----- --------- --------- General and administrative expense........................ (9,589) (1,939) -- -- (11,528) Interest expense................. (222,681) (1,943) (688) 9,900(E) (178)(F) (215,590) Interest income.................. 57,643 18,539 -- 381(G) -- (9,900)(E) 66,663 Equity in losses of unconsolidated real estate partnerships................... (7,086) -- -- -- (7,086) Equity in losses of unconsolidated subsidiaries.... (4,477) -- -- -- (4,477) Minority interest in other entities....................... (10,143) -- -- -- (10,143) Amortization of intangibles...... (4,563) -- -- -- (4,563) --------- ------- ----- --------- --------- Income from operations........... 39,177 14,657 (688) 203 53,349 Gain on disposition of securities..................... -- 23,499 -- -- 23,499 Gain (loss) on disposition of properties.................. 14,234 -- -- -- 14,234 --------- ------- ----- --------- --------- Income (loss) before minority interest in operating partnership.................... 53,411 38,156 (688) 203 91,082 Minority interest in operating partnership.................... (6,026) -- -- (3,818)(H) (9,844) --------- ------- ----- --------- --------- Net income (loss)................ $ 47,385 $38,156 $(688) $ (3,615) $ 81,238 ========= ======= ===== ========= ========= Net income allocable to preferred stockholders................... $ 44,843 $ 6,750(I) $ 51,593 ========= ========= ========= Net income (loss) allocable to common stockholders............ $ 2,542 $ 29,645 ========= ========= Basis earnings (loss) per common share.......................... $ 0.04 $ 0.43 ========= ========= Diluted earnings (loss) per common share................... $ 0.04 $ 0.42 ========= ========= Weighted average common shares outstanding.................... 66,641 2,191(J) 68,832 ========= ========= ========= Weighted average common shares and common share equivalents outstanding.................... 68,478 2,191(J) 70,669 ========= ========= =========
99.7-19 20 --------------- (A) Represents AIMCO's pro forma consolidated results of operations for the nine months ended September 30, 2000, which gives effect to (i) the 2000 Dreyfuss Acquisition; and (ii) the Oxford Acquisition. See "Pro Forma Financial Information (Pre-Merger)." (B) Represents the unaudited historical consolidated results of operations of OTEF for the nine months ended September 30, 2000. (C) Represents additional interest expense due to the additional borrowings by OTEF of $10,000 to pay a portion of the special distribution. (D) Represents the following adjustments occurring as a result of the OTEF Merger: (i) the amortization of the discount on the bonds and notes receivable; (ii) the elimination of OTEF's historical gain on disposition of securities; (iii) the allocation of income to the Class P Preferred Stock issued in connection with the OTEF Merger, at a dividend rate of 9%; and (iv) the issuance of AIMCO Class A Common Stock in connection with the OTEF Merger. (E) Represents the elimination of the interest income on the investment in bonds with the interest expense on the secured tax-exempt bond financing on OTEF properties that are consolidated by AIMCO. (F) Represents adjustment for interest expense on additional borrowings for the additional consideration to the Oxford principals and the OTEF non-employee directors. (G) Represents adjustment to amortize the discount on the bonds and notes receivable purchased from OTEF, using the effective interest method over the estimated lives of the bonds and notes receivable. The discount on the bonds is the result of AIMCO purchasing the bonds and notes receivable at a discount of $5,084 to OTEF's carrying value. The discount is amortized to interest income based upon estimated future cash flows and the estimated timing of their receipt. (H) Represents adjustment to minority interest in the Operating Partnership assuming the OTEF Merger had occurred as of January 1, 1999. On a pro forma basis, as of September 30, 2000, the minority interest percentage is 10.2%. (I) Represents the allocation of income to the Class P Preferred Stock issued in connection with the OTEF Merger, at a dividend rate of 9%. (J) Represents the number of shares of AIMCO Class A Common Stock to be issued in connection with the OTEF Merger. 99.7-20