8-K: Current report filing
Published on April 16, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
__________________________________
Date of Report (Date of earliest event reported): APRIL 16, 1998
BAY APARTMENT COMMUNITIES, INC.
(Exact name of Registrant as specified in charter)
MARYLAND 1-12672 77-0404318
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(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
4340 STEVENS CREEK BOULEVARD, SUITE 275, SAN JOSE, CA 95129
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(Address of principal executive offices) (Zip Code)
(408) 983-1500
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION. This Current
Report on Form 8-K of Bay Apartment Communities, Inc. (the "Company") contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The forward-looking statements contained herein are statements that
involve risks and uncertainties, including, but not limited to, the demand for
apartment homes, the effects of economic conditions, the impact of competition
and competitive pricing, changes in construction costs, the results of financing
efforts, potential acquisitions under agreement, the effects of the Company's
accounting policies and other risks detailed in the Company's filings with the
Securities and Exchange Commission (the "Commission").
As previously reported in a Current Report on Form 8-K filed with the
Commission on March 11, 1998, the Company and Avalon Properties, Inc. ("Avalon")
entered into an Agreement and Plan of Merger (the "Merger Agreement") on March
9, 1998. Pursuant to the Merger Agreement, Avalon will merge (the "Merger") with
and into the Company, with the Company being the surviving corporation. Pursuant
to the Merger Agreement, at the effective time of the Merger each outstanding
share of common stock of Avalon (the "Avalon Common Stock") will be converted
into the right to receive 0.7683 of a share (the "Exchange Ratio") of common
stock of the Company (the "Company Common Stock"). Holders of preferred stock of
Avalon will receive shares of comparable preferred stock of the Company on a
share-for-share basis. In connection with the Merger, the Company also will
assume Avalon's existing indebtedness.
This Current Report on Form 8-K is filed for the purpose of filing
unaudited pro forma condensed financial information giving effect to the Merger.
The unaudited pro forma condensed financial information (1) does not necessarily
indicate what the actual condensed consolidated financial position or results of
operations of the Company and Avalon would have been as of its dates or for the
periods presented if the Merger had actually occurred as of those dates, (2)
does not purport to represent the future condensed consolidated financial
position or results of operations of the Company and Avalon at any future date
or for any future periods, and (3) must be read in conjunction with the audited
consolidated financial statements and the notes thereto and other financial
information contained in (a) the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, as amended by Amendment No. 1 on Form 10-K/A
and (b) Avalon's Annual Report on Form 10-K for the year ended December 31,
1997, as amended and restated by Amendment No. 1 on Form 10-K/A, all of which
are incorporated in this Current Report by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
Not applicable
(b) Pro Forma Financial Statements
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UNAUDITED PRO FORMA FINANCIAL STATEMENTS
AVALON BAY COMMUNITIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Balance Sheet of
Avalon Bay Communities, Inc. ("Avalon Bay") as of December 31, 1997 gives
effect to the proposed Merger as if the Merger had occurred on December 31,
1997, under the purchase method of accounting in accordance with Accounting
Principles Board Opinion No. 16.
The Avalon Properties, Inc. ("Avalon") Pro Forma Balance Sheet as of
December 31, 1997 assumes the acquisition, as of December 31, 1997, of two
Minneapolis metropolitan area communities (Carriage Green and Summer Place).
The Bay Apartment Communities, Inc. ("Bay") Pro Forma Balance Sheet as of
December 31, 1997 assumes the acquisition, as of December 31, 1997, of five
communities (Warner Oaks, Amberway, Arbor Park, Laguna Brisas and Cabrillo
Square).
The unaudited Pro Forma Condensed Consolidated Balance Sheet is presented for
informational purposes only and is not necessarily indicative of what the actual
condensed consolidated financial position of Avalon Bay would have been as of
December 31, 1997, nor does it purport to represent the future condensed
consolidated financial position of Avalon Bay. This information should be read
in conjunction with the audited consolidated financial statements and other
financial information contained in Avalon's Annual Report on Form 10-K, as
amended and restated by Amendment No. 1 on Form 10-K/A, and Bay's Annual Report
on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A, in each case for the
year ended December 31, 1997, respectively, including the notes thereto, both of
which are incorporated by reference herein.
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AVALON BAY COMMUNITIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
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AVALON BAY COMMUNITIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
1.BASIS OF PRESENTATION
The Avalon Pro Forma Consolidated Balance Sheet as of December 31, 1997
represents Avalon's historical Condensed Consolidated Balance Sheet adjusted
to give effect to the purchase of two apartment communities purchased by
Avalon in January 1998 as if these communities had been acquired as of
December 31, 1997.
The Bay Pro Forma Consolidated Balance Sheet as of December 31, 1997
represents Bay's historical Condensed Consolidated Balance Sheet adjusted to
give effect to the purchase of five apartment communities purchased by Bay in
January, February and March 1998 as if these communities had been acquired as
of December 31, 1997.
2.PRO FORMA ADJUSTMENTS
i. Real estate, net: The adjustment reflects the increase in book value
of Avalon's real estate assets based upon the Bay purchase of (1) the
common stock of Avalon (assuming Bay common stock is valued at $38.6333 per
share) based upon the exchange of each outstanding share of common stock of
Avalon for .7683 shares of Bay common stock, and (2) the conversion of
Avalon preferred stock for substantially equivalent preferred stock of Bay
as follows:
ii. Deferred financing costs, net: The adjustment reflects the
elimination of Avalon deferred financing costs which have no future value
to Avalon Bay.
iii. Notes payable and Unsecured Facilities: The adjustment reflects
additional borrowings for the payment of the estimated fees and other
expenses relating to the Merger, including, but not limited to, investment
banking fees, legal and accounting fees, printing, filing and other related
costs.
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iv. Stockholders' Equity: The adjustments to stockholders' equity reflect
the issuance of 32,249,577 shares of Bay Common Stock, par value $.01 per
share, the exchange of Avalon Preferred Stock for substantially equivalent
preferred stock of Bay, and the conversion of Bay Series A Preferred Stock
and Bay Series B Preferred Stock for Bay common stock, as follows:
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AVALON BAY COMMUNITIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Statement of Income
of Avalon Bay for the year ended December 31, 1997 gives effect to the
proposed Merger as if the Merger had occurred as of January 1, 1997 under the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16.
The Avalon Pro Forma Income Statement for the year ended December 31, 1997
assumes that all 1997 and 1998 acquisitions occurred as of January 1, 1997.
The Bay Pro Forma Income Statement for the year ended December 31, 1997
assumes that all 1997 and 1998 acquisitions occurred as of January 1, 1997.
The unaudited Pro Forma Condensed Consolidated Statement of Income is
presented for informational purposes only and is not necessarily indicative of
what the actual consolidated operating results of Avalon Bay would have been for
the year ended December 31, 1997, nor does it purport to represent the future
condensed consolidated financial results of Avalon Bay. This information should
be read in conjunction with the audited consolidated financial statements and
other financial information contained in Avalon's Annual Report on Form 10-K, as
amended and restated by Amendment No. 1 on Form 10-K/A, and Bay's Annual Report
on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A, in each case for the
year ended December 31, 1997, respectively, including the notes thereto, both of
which are incorporated by reference herein.
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AVALON BAY COMMUNITIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE INFORMATION)
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AVALON BAY COMMUNITIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
1.PRO FORMA ADJUSTMENTS
i. Interest expense: The adjustment is attributable to the interest
incurred on funds obtained from the Unsecured Facilities used to pay
estimated merger costs.
ii. Depreciation and amortization: The adjustment results from (1) the net
increase in real estate owned as a result of recording the Avalon real
estate assets at fair value versus historical cost and (2) conforming the
depreciation methodology of Bay to the policies of Avalon Bay. Depreciation
is computed on the straight-line method based on an estimated life of 40
years and an allocation of the stepped-up basis to land and building of 20%
and 80%, respectively.
iii. Weighted Average number of Common shares outstanding: The Pro Forma
weighted average number of common shares outstanding for the year ended
December 31, 1997 are computed as follows:
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(c) Exhibits
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
BAY APARTMENT COMMUNITIES, INC.
/s/ JEFFREY B. VAN HORN
Dated: April 16, 1998 By: ----------------------------
Name: Jeffrey B. Van Horn
Title: Vice President, Chief
Financial Officer and
Secretary
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