AFG INVESTMENT TRUST C
UNAUDITED PRO FORMA FINANCIAL INFORMATION
FORM 8-KA
Exhibit 99.2
Summary
In December 2000, the Trust formed MILPI Holdings LLC ("MILPI") for the purpose
of acquiring up to 100% of the outstanding common stock of PLM International,
Inc. ("PLM"), an equipment leasing and asset management company. MILPI formed
MILPI Acquisition Corp. ("MILPI Acquisition") to facilitate the transaction. The
Trust reported on its Form 8-K dated December 22, 2000 that MILPI Acquisition, a
wholly owned subsidiary of MILPI, entered into a definitive agreement and plan
of merger to acquire PLM and in connection with the merger, MILPI Acquisition
would make a tender offer to purchase any and all shares of PLM's outstanding
common stock. On February 22, 2001, MILPI Acquisition announced that it had
completed its cash tender offer and accepted for purchase 6,284,261 shares of
PLM common stock, representing approximately 83% of PLM's issued and outstanding
common stock. The aggregate consideration MILPI Acquisition paid to PLM
stockholders in connection with the tender offer was approximately $21.7 million
in cash. The Trust owns 34% of MILPI and has paid $7,466,733 as its share of the
acquisition price, including acquisition fees paid to AFG ASIT Corporation, the
Trust's Managing Trustee, and has accrued $255,000 for an estimate of amounts to
be reimbursed to MILPI for acquisition costs.
The accompanying unaudited pro forma statement of financial position presents
the financial position of the Trust, assuming that the tender offer for PLM by
MILPI Acquisition was completed as of December 31, 2000. Such pro forma
information is based on the historical balance sheets of the Trust and PLM at
December 31, 2000 and estimated fair value of the assets and liabilities of PLM.
The Trusts are obtaining additional information to refine the estimates of fair
value. This additional information may result in changes to the estimated fair
values.
As required by Rule 11-02 of Regulation S-X, the unaudited pro forma statement
of operations has been prepared assuming that the tender offer of PLM by MILPI
Acquisition was consummated as of the beginning of the period presented. The
unaudited statement of operations reflects the historical results of operations
for the Trust and PLM for the year ended December 31, 2000, as adjusted by the
effect of pro forma adjustments.
The unaudited pro forma financial statements give effect to certain pro forma
adjustments which are described in the accompanying notes. The unaudited pro
forma financial statements do not reflect any operating synergies anticipated by
the Trust as a result of the acquisition of its ownership interest in MILPI.
The unaudited pro forma results are presented for informational purposes only
and are not necessarily indicative of the results of operations or financial
position which would have been achieved had the transaction been completed as of
the beginning of the period presented, nor is it necessarily indicative of the
Trust's future results of operations or financial position.
The audited pro forma financial statements should be read in conjunction with
the historical audited financial statements of the Trust and PLM, including the
related notes thereto.
AFG Investment Trust C
UNAUDITED PRO FORMA STATEMENT OF FINANCIAL POSITION
As of December 31, 2000
Pro forma
Adjustments
Trust C MILPI Acquisition Pro forma
------- ----------------- ---------
ASSETS
Cash and cash equivalents............................... $ 8,848,816 $(7,058,087)(a) $ 1,790,729
Rents receivable........................................ 257,399 257,399
Accounts receivable - affiliate......................... 424,853 424,853
Interest receivable..................................... 8,930 8,930
Loan receivable - Kettle Valley......................... 77,059 77,059
Guarantee fee receivable................................ 126,000 126,000
Interest in Kettle Valley............................... 4,315,263 4,315,263
Interest in EFG Kirkwood................................ 3,803,949 3,803,949
Investments - other..................................... 238,382 238,382
Interest in MILPI....................................... -- 7,721,733(a) 7,721,733
Other assets............................................ 886,793 (408,646)(a) 478,147
-----------
Equipment at cost, net of accumulated depreciation
of $20,018,229 at December 31, 2000.................. 33,364,106 33,364,106
----------- -----------
Total assets......................................... $52,351,550 $ 255,000 $52,606,550
=========== =========== ===========
LIABILITIES AND PARTICIPANTS' CAPITAL
Notes payable........................................... $26,220,794 $ $26,220,794
Accrued interest........................................ 344,871 344,871
Accrued liabilities..................................... 284,691 284,691
Accrued liabilities - affiliate......................... 47,835 255,000(a) 302,835
Deferred rental income.................................. 29,882 29,882
Other liabilities....................................... 1,524,803 1,524,803
----------- ----------- -----------
Total liabilities.................................... 28,452,876 255,000 28,707,876
----------- ----------- -----------
Participants' capital (deficit):
Managing Trustee..................................... 23,386 23,386
Special Beneficiary.................................. 192,938 192,938
Class A Beneficiary Interests (1,787,153 Interests;
Initial purchase price of $25 each)................ 25,570,027 25,570,027
Class B Beneficiary Interests (3,024,740 Interests;
Initial purchase price of $5 each)................. 450,690 450,690
Treasury Interests (223,861 Class A Interests at Cost) (2,338,367) (2,338,367)
----------- ----------- -----------
Total participants' capital........................ 23,898,674 23,898,674
----------- ----------- -----------
Total liabilities and participants' capital........ $52,351,550 $ 255,000 $52,606,550
=========== =========== ===========
See accompanying notes.
AFG Investment Trust C
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2000
Pro forma
Adjustments MILPI
Trust C Acquisition Pro forma
------- ----------------- ---------
Income:
Lease revenue.......................... $ 7,733,941 $ 7,733,941
Interest income........................ 666,975 666,975
Gain on sale of investment securities.. 70,095 70,095
Gain on sale of equipment.............. 2,012,657 2,012,657
Other income........................... 301,400 301,400
--------------- ------------------- ---------------
Total income........................ 10,785,068 10,785,068
--------------- ------------------- ---------------
Expenses:
Depreciation and amortization.......... 4,255,457 4,255,457
Amortization of intangible assets...... -- 49,330(b) 49,330
Interest expense....................... 2,463,263 2,463,263
Management fees - affiliates........... 431,078 431,078
Loss from interests in Kettle Valley... 91,066 91,066
Loss from interests in EFG Kirkwood.... 190,201 190,201
Loss from interest in MILPI............ -- 228,784(c) 228,784
Write-down of other investment......... 50,510 50,510
Operating expenses - affiliate......... 543,363 543,363
--------------- ------------------- ---------------
Total expenses...................... 8,024,938 278,114 8,303,052
--------------- ------------------- ---------------
Net income (loss)............................ $ 2,760,130 (278,114)(d) $ 2,482,016
=============== =================== ===============
Net income
per Class A Beneficiary Interest......... $0.94 $0.85
=============== ===============
per Class B Beneficiary Interest......... $0.22 $0.20
=============== ===============
Cash distributions declared
per Class A Beneficiary Interest......... $ -- $ --
=============== ===============
per Class B Beneficiary Interest......... $ -- $ --
=============== ===============
See accompanying notes.
AFG Investment Trust C
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
For the Year Ended December 31, 2000
The pro forma adjustments outlined below present separate adjustments related to
the purchase of equity interest in MILPI Holdings LLC ("MILPI").
The Trust will account for the acquisition of the membership interest using the
equity method of accounting. Accordingly, the Trust's cost to acquire the
ownership interest in MILPI will be accounted for as "Interest in MILPI" and the
Trust's share of the operations of MILPI will be accounted for as "Income/Loss
from interest in MILPI". The excess of the "Interest in MILPI" over the fair
market value of the net identifiable assets purchased is considered to be
goodwill and is amortized over the preliminarily estimated economic life of 7
years from the date of acquisition, based on the estimated economic lives of
PLM's assets. See Note (b).
The pro-forma adjustments reflect the interest in MILPI, and the related
interest in MILPI's purchase of 83% of the outstanding common stock of PLM
International, Inc. as if the acquisition had occurred on December 31, 2000 for
purposes of the pro forma statement of financial position and on January 1, 2000
for purposes of the pro forma statement of operations. Such pro forma
information is based on the historical financial statements of the Trust and
the estimated fair values of the assets and liabilities of PLM as of and
for the year ended December 31, 2000.
(a) Adjustment reflects the purchase of the membership interest in MILPI. The
purchase price is calculated as follows:
Total Purchase Price - See Note (b) $22,710,979
Proportionate interest owned by the Trust 34%
-----------
Proportion of purchase price payable by the Trust 7,721,733
Less: amount previously paid and held in escrow (408,646)
-----------
Total cash due from the Trust 7,313,087
Cash paid by the Trust at closing (7,058,087)
-----------
Transaction costs to be reimbursed by Trust to MILPI $ 255,000
===========
(b) Adjustment reflects the amortization resulting from the allocation of the
purchase price to the net assets acquired for the Trust's membership
interest in MILPI. The Trust is evaluating the appropriate economic useful
life for the goodwill. For purposes of these pro forma financial
statements, the Trust has preliminarily estimated a useful life for
goodwill of 7 years. To the extent that the Trust ultimately concludes the
useful life should be different from 7 years, the adjustment for
amortization expense for the year ended December 31, 2000 would be
different than the amount included herein. The purchase price and
preliminary allocation of the purchase price, based on estimated fair
values, are as follows:
Purchase Price Allocation:
--------------------------
Estimated fair value of total assets $ 46,523,000
Estimated fair value of total liabilities (17,753,000)
------------
Estimated fair value of net identifiable assets 28,770,000
Less: estimated transition liabilities assumed (2,631,000)
------------
Estimated fair value of net identifiable assets purchased 26,139,000
Percentage of Stock of PLM purchased by MILPI 83%
-----------
Estimated fair value of net identifiable assets acquired 21,695,370
Amount paid for shares of PLM $ 21,743,543
Total 1% acquisition fee paid 217,436
Other estimated transaction costs accrued 750,000
------------
Total Purchase Price 22,710,979
------------
Total estimated goodwill 1,015,609
Trust's proportionate interest in MILPI 34%
------------
Estimated goodwill purchased by Trust $ 345,307
============
Annual amortization of goodwill over estimated life of 7 years $ 49,330
============
The 1% acquisition fee was paid to a wholly owned subsidiary of Semele
Group Inc. for facilitating the tender offer for PLM.
(c) Adjustment reflects the Trust's ownership interest in PLM's net income from
continuing operations, adjusted for MILPI's 83% ownership and the Trust's
34% ownership of MILPI, less the additional depreciation expense from the
adjustment to increase PLM's assets to fair value.
Net Income from continuing operations of PLM
for the year ended December 31, 2000 $ 63,000
Write-up in value of PLM's assets to fair value $6,116,000
Estimated remaining useful lives of assets (years) 7
----------
Annual estimated depreciation expense (873,714)
---------
Pro forma loss of PLM for the year ended
December 31, 2000 (810,714)
MILPI's ownership interest in PLM 83%
---------
(672,893)
Trust's proportionate interest 34%
---------
Trust's pro forma loss from interest in MILPI $(228,784)
=========
(d) The Trust is not a taxable entity for income tax purposes and therefore no
pro forma income tax adjustments are applicable.