EXHIBIT 99.1
STRATFORD AMERICAN CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information is based on the historical financial statements of Stratford
American Corporation and its majority and wholly owned subsidiaries (the
"Company"), adjusted to give effect to the following transaction:
(1) The sale by Scottsdale Thompson Peak, LLC, of which the Company owns
80% of the membership interests in, of property located at 20225 North
Scottsdale Road, Scottsdale, Arizona (the "Property").
On August 30, 2004, Scottsdale Thompson Peak, LLC entered into a Purchase
and Sale Agreement to sell the Property to Holualoa Arizona, Inc. for
$31,400,000. The cash proceeds for the transaction amounted to approximately
$7,468,000.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations
Information for the year ended December 31, 2003 and the nine months ended
September 30, 2004 give effect to the above transaction as if it had occurred as
of January 1, 2003. The Unaudited Pro Forma Condensed Consolidated Balance Sheet
Information as of September 30, 2004 give effect to the transaction as if it had
been completed as of September 30, 2004. The pro forma adjustments are described
in the accompanying notes and are based upon available information and certain
assumptions that management believes are reasonable. The Company's historical
consolidated statement of operations for the year ended December 31, 2003
presents Stratford American Corporation's results of operations on a continuing
basis, while the historical consolidated statement of operations for the nine
months ended September 30, 2004 presents the Company's results of operations on
a discontinued operations basis.
The pro forma financial information does not purport to represent what the
Company's results of operations or financial condition would actually have been
had these transactions in fact occurred on such dates or to project the
Company's results of operations or financial condition for any future date or
period. The pro forma financial information should be read in conjunction with
the consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Company's most recent annual report on Form 10-KSB and quarterly
report on Form 10-QSB.
STRATFORD AMERICAN CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2003
Pro Forma
Adjustments
Historical for Sale Pro Forma
------------ ------------ ------------
REVENUES:
Oil and gas revenue $ 737,000 $ 0 $ 737,000
Property rental income 2,485,000 (2,485,000) (1) 0
Gain on restructuring of payables 614,000 0 614,000
Interest and other income 121,000 0 121,000
------------ ------------ ------------
3,957,000 (2,485,000) 1,472,000
EXPENSES:
General and administrative 642,000 0 642,000
Depreciation, depletion and amortization 825,000 (534,000) (2) 291,000
Oil and gas operations 207,000 0 207,000
Property rental operations 5,000 (5,000) (2) 0
Interest 1,572,000 (1,533,000) (2) 39,000
------------ ------------ ------------
3,251,000 (2,072,000) 1,179,000
------------ ------------ ------------
Net income (loss) before minority
interest income 706,000 (413,000) 293,000
Minority interest share of net income (72,000) 72,000 (3) 0
------------ ------------ ------------
Net income (loss) before income taxes 634,000 (341,000) 293,000
Income tax expense 12,000 0 12,000
------------ ------------ ------------
Net income (loss) $ 622,000 $ (341,000) $ 281,000
============ ============ ============
Basic and diluted net income (loss)
per share $ 0.06 $ (0.03) $ 0.03
============ ============ ============
Shares used to compute net income (loss)
per share 10,404,132 10,404,132 10,404,132
============ ============ ============
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
Information:
(1) Reflects the removal of property rental income.
(2) Reflects the removal of the property rental operating expenses,
depreciation, amortization and interest associated with the debt.
(3) Reflects the removal of the minority interest share of income.
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STRATFORD AMERICAN CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
Pro Forma
Adjustments
Historical for Sale Pro Forma
------------ ------------ ------------
REVENUES:
Oil and gas revenue $ 712,000 $ 0 $ 712,000
Interest and other income 5,000 0 5,000
------------ ------------ ------------
717,000 0 717,000
EXPENSES:
General and administrative 437,000 0 437,000
Depreciation, depletion and amortization 227,000 0 227,000
Oil and gas operations 167,000 0 167,000
------------ ------------ ------------
831,000 0 831,000
------------ ------------ ------------
Income (loss) from continuing
operations before income taxes (114,000) 0 (114,000)
Income tax expense 2,000 0 2,000
------------ ------------ ------------
Income (loss) from continuing
operations (116,000) 0 (116,000)
Income from discontinued operations 297,000 (297,000) (1) 0
------------ ------------ ------------
Net income $ 181,000 $ (297,000) $ (116,000)
============ ============ ============
Basic and diluted net income (loss)
per share:
Income (loss) from continuing operations $ (0.01) $ 0.00 $ (0.01)
Income from discontinued operations,
net of tax 0.03 (0.03) 0.00
------------ ------------ ------------
Basic and diluted net income per share $ 0.02 $ (0.03) $ (0.01)
============ ============ ============
Shares used to compute net income (loss)
per share 11,078,105 11,078,105 11,078,105
============ ============ ============
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
Information:
(1) Reflects the removal of the results of operations of the Company's
real estate investment, including property rental income, operating
expenses, depreciation, amortization, interest associated with the
debt, and minority interest.
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STRATFORD AMERICAN CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
AS OF SEPTEMBER 30, 2004
Pro Forma
Adjustments
Historical for Sale Pro Forma
------------ ------------ ------------
ASSETS
Cash and cash equivalents $ 751,000 $ 5,873,000 (1) $ 6,624,000
Receivables:
Oil and gas 129,000 0 129,000
Related party 14,000 0 14,000
Other 1,000 0 1,000
Oil and gas interests, net 1,175,000 0 1,175,000
Assets held for sale 25,215,000 (25,215,000) (2) 0
Other assets 102,000 0 102,000
------------ ------------ ------------
$ 27,387,000 $(19,342,000) $ 8,045,000
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 39,000 0 39,000
Accrued liabilities 63,000 0 63,000
Liabilities held for sale 23,941,000 (23,941,000) (3) 0
------------ ------------ ------------
Total liabilities 24,043,000 (23,941,000) 102,000
Shareholders' equity:
Non-redeemable preferred stock, par
value $.01 per share; authorized
50,000,000 shares, none issued
Common stock, par value $.01 per
share; authorized 100,000,000
shares; issued and outstanding
11,078,105 shares 111,000 0 111,000
Additional paid-in capital 28,511,000 0 28,511,000
Accumulated deficit (25,267,000) 4,599,000 (4) (20,668,000)
Treasury stock, 1,967 shares at cost (11,000) 0 (11,000)
------------ ------------ ------------
3,344,000 4,599,000 7,943,000
------------ ------------ ------------
$ 27,387,000 $(19,342,000) $ 8,045,000
============ ============ ============
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet Information:
(1) Reflects the following adjustments to cash:
a) Increase resulting from the proceeds of the sale $ 7,468,000
b) Decrease resulting from allocation of sale proceeds
to minority interest owner (1,494,000)
c) Decrease resulting from estimated reserve for
accounts payable (67,000)
d) Decrease resulting from allocation of prior period
cash to minority interest owner (34,000)
-----------
Total adjustments to cash $ 5,873,000
===========
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(2) Reflects the removal of the assets sold, including building, land,
loan guarantee fees, deferred rent and prepaid interest.
(3) Reflects the removal of the liabilities sold, including debt and other
accruals.
(4) Reflects increase resulting from the estimated gain from the sale of
office building and from the operating results of Scottsdale Thompson
Peak, LLC, from October 1 through November 9, 2004, the date of the
sale (estimated gain on sale may differ due to changes in accrued
liabilities).
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