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Exhibit 99.1
INCOME STATEMENT—PRESENTATION CHANGES
Beginning with the First Quarter 2004, Aimco has modified the presentation of its Consolidated Statements of Income in order to add visibility and clarity to its operations. We believe this presentation change is helpful and provides a better understanding of Aimco's business. It is important to note that these changes do not affect the accounting treatment of amounts reported, only their classification within the income statement.
Revenue previously classified as Management fees and other income is now presented primarily in two line items: (1) Property management revenues; and (2) Activity fees and asset management revenues. Expenses previously classified as Management and other expenses are now presented primarily in three line items: (1) Property management expense; (2) Activity and asset management expenses; and (3) General and administrative expenses (G&A).
The new presentation also reclassifies:
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- Certain administrative expenses from Management and other expenses to G&A;
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- Income tax provision/benefit from Management and other expenses to Other expenses (income), net;
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- Insurance claim losses and risk management operations related to unconsolidated real estate partnerships from Management and other expenses to Other expenses (income), net; and
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- Depreciation and amortization related to corporate fixed assets (non-real estate related) from Management and other expenses to Depreciation and amortization.
One of the primary reasons behind these changes is the evolution of Aimco's Investment Management business segment. Over the past few years, the amounts reported for this segment have diminished as Aimco has consolidated an increased portion of its real estate holdings and reduced its third party management activities.
These presentation changes:
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- Add greater clarity to property management and activity fee and asset management business activities;
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- Reflect only costs that are directly associated with property management and activity fee and asset management business activities and no longer include allocable indirect costs;
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- Separate recurring income generated by property management from transaction-based income generated by fee and asset management activities; and
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- Provide enhanced visibility of Aimco's core activities to facilitate a better understanding by our investors and easier modeling for investors and analysts.
In order to assist Aimco's shareholders in modeling and analyzing the company using this new income statement presentation, income statements for each quarter of 2003 in the new presentation format are attached.
1
Pro forma GAAP Income Statements as Modified for Presentation Purposes
(in thousands)
(unaudited)
| Three Months Ended March 31, 2003 | Three Months Ended June 30, 2003 | Three Months Ended September 30, 2003 | Three Months Ended December 31, 2003 | Year Ended December 31, 2003 | 10-K As Reported Year Ended December 31, 2003 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
REVENUES: | |||||||||||||||||||||
Rental and other property revenues | $ | 353,638 | $ | 361,969 | $ | 367,452 | $ | 362,737 | $ | 1,445,796 | $ | 1,445,796 | |||||||||
Property management revenues, primarily from affiliates | 9,239 | 9,607 | 9,652 | 9,494 | 37,992 | 70,487 | |||||||||||||||
Activity fees and asset management revenues, primarily from affiliates | 5,788 | 3,111 | 3,285 | 8,014 | 20,198 | — | |||||||||||||||
Total revenues | 368,665 | 374,687 | 380,389 | 380,245 | 1,503,986 | 1,516,283 | |||||||||||||||
EXPENSES: | |||||||||||||||||||||
Property operating expenses | 153,224 | 154,854 | 163,444 | 158,825 | 630,347 | 642,697 | |||||||||||||||
Property management expenses | 2,117 | 1,925 | 1,961 | 2,103 | 8,106 | 50,574 | |||||||||||||||
Activity and asset management expenses | 1,835 | 1,972 | 2,003 | 2,557 | 8,367 | — | |||||||||||||||
Depreciation and amortization | 85,123 | 86,712 | 85,844 | 91,073 | 348,752 | 328,379 | |||||||||||||||
Amortization of intangibles | 837 | 2,603 | 1,276 | 1,986 | 6,702 | 6,702 | |||||||||||||||
General and administrative expenses | 9,735 | 7,566 | 11,725 | 21,620 | 50,646 | 28,815 | |||||||||||||||
Other expenses (income), net | (3,595 | ) | (3,521 | ) | (2,971 | ) | 2,037 | (8,050 | ) | — | |||||||||||
Total expenses | 249,276 | 252,111 | 263,282 | 280,201 | 1,044,870 | 1,057,167 | |||||||||||||||
Operating income | 119,389 | 122,576 | 117,107 | 100,044 | 459,116 | 459,116 | |||||||||||||||
Interest income | 6,079 | 7,089 | 5,121 | 6,731 | 25,020 | 25,020 | |||||||||||||||
Provision for losses on notes receivable | (697 | ) | (791 | ) | 23 | (718 | ) | (2,183 | ) | (2,183 | ) | ||||||||||
Interest expense | (91,147 | ) | (93,509 | ) | (93,387 | ) | (94,703 | ) | (372,746 | ) | (372,746 | ) | |||||||||
Equity in earnings (losses) of unconsolidated real estate partnerships | (1,682 | ) | (3,132 | ) | (1,767 | ) | 164 | (6,417 | ) | (6,417 | ) | ||||||||||
Deficit distributions to minority partners | (5,468 | ) | (3,633 | ) | (11,827 | ) | (1,744 | ) | (22,672 | ) | (22,672 | ) | |||||||||
Impairment loss on investment in unconsolidated real estate partnerships | — | — | — | (4,122 | ) | (4,122 | ) | (4,122 | ) | ||||||||||||
Gain (loss) on dispositions of real estate related to unconsolidated real estate partnerships | (79 | ) | 839 | 1,449 | 969 | 3,178 | 3,178 | ||||||||||||||
Income before minority interests and discontinued operations | 26,395 | 29,439 | 16,719 | 6,621 | 79,174 | 79,174 | |||||||||||||||
Minority interests: | |||||||||||||||||||||
Minority interest in consolidated real estate partnerships | (1,055 | ) | (1,579 | ) | (1,511 | ) | 2,117 | (2,028 | ) | (2,028 | ) | ||||||||||
Minority interest in Aimco Operating Partnership | (2,708 | ) | (2,768 | ) | (428 | ) | (533 | ) | (6,437 | ) | (6,437 | ) | |||||||||
Total minority interests | (3,763 | ) | (4,347 | ) | (1,939 | ) | 1,584 | (8,465 | ) | (8,465 | ) | ||||||||||
Income from continuing operations | 22,632 | 25,092 | 14,780 | 8,205 | 70,709 | 70,709 | |||||||||||||||
Discontinued operations: | |||||||||||||||||||||
Income (loss) from discontinued operations, net | (809 | ) | 34,138 | 25,855 | 28,964 | 88,148 | 88,148 | ||||||||||||||
Net income | $ | 21,823 | $ | 59,230 | $ | 40,635 | $ | 37,169 | $ | 158,857 | $ | 158,857 | |||||||||
Net income attributable to preferred stockholders | $ | 22,141 | $ | 24,961 | $ | 26,930 | $ | 19,533 | $ | 93,565 | $ | 93,565 | |||||||||
Net income (loss) attributable to common stockholders | $ | (318 | ) | $ | 34,269 | $ | 13,705 | $ | 17,636 | $ | 65,292 | $ | 65,292 | ||||||||
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INCOME STATEMENT—PRESENTATION CHANGES