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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 12, 2007
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CHARTERMAC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)
1-13237 13-3949418
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NUMBER)
625 MADISON AVENUE, NEW YORK, NY 10022
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 317-5700
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
On March 12, 2007, CharterMac (the "Company") (NYSE: CHC) released a press
release announcing its financial results for the fourth quarter and year ended
December 31, 2006. A copy of this press release is attached to this Current
Report as Exhibit 99.1 and incorporated herein by reference.
The information included in this Current Report, including the information
included in Exhibit 99.1 attached hereto, is intended to be furnished pursuant
to "Item 2.02. Disclosure of Results of Operations and Financial Condition" and
not deemed to be "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in
any filing under the Securities Act of 1933, as amended ("Securities Act") or
the Exchange Act, or otherwise subject to the liabilities of that Section or
Sections 11 and 12 (a) (2) of the Securities Act.
ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(a). Financial Statements
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Not Applicable
(b). Pro Forma Financial Information
-------------------------------
Not Applicable
(c). Exhibits
--------
99.1 Press Release dated March 12, 2007, "CharterMac Reports Fourth Quarter and
Year-End Financial Results".
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CharterMac
(Registrant)
BY: /s/ Rob L. Levy
---------------
Rob L. Levy
Chief Financial Officer
March 12, 2007
AT THE COMPANY
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Brenda Abuaf, Corporate Communications
(800) 831-4826
CHARTERMAC REPORTS FOURTH QUARTER AND YEAR-END FINANCIAL RESULTS
NEW YORK, NY - MARCH 12, 2007 - CharterMac (the "Company") (NYSE: CHC) today
announced financial results for the fourth quarter and year ended December 31,
2006.
"We completed several major initiatives in 2006 that significantly changed our
Company and transformed CharterMac from a firm focused mainly on affordable and
multifamily housing to a full-service real estate finance and investment
company," said Marc D. Schnitzer, Chief Executive Officer and President of
CharterMac. "Our accomplishments included the acquisition of ARCap, one of the
nation's leading high-yield CMBS fund managers, the launch of Centerbrook
Financial, our credit risk products company, the rollout of a new credit
approval process, the divestiture of two non-core investments and the completion
of a corporate re-engineering. We believe that all of these initiatives will
help create a more efficient operating structure and provide us with a
best-in-class platform to grow and compete in a very competitive industry. Today
we can provide a broad array of debt and equity products for any type of real
estate property."
FINANCIAL HIGHLIGHTS
The table below summarizes CharterMac's revenues, revenues adjusted to exclude
the impact of consolidated partnerships, Cash Available for Distribution
("CAD"), CharterMac's primary performance measure, and net income for the three
and twelve months ended December 31, 2006 and 2005.
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31,
------------------------------ -------------------------------
2006 2005 % CHANGE 2006 2005 % CHANGE
(In thousands, except per share data) -------- -------- -------- -------- -------- --------
Revenues $127,942 $ 79,828 60.3% $387,259 $295,097 31.2%
Revenues Adjusted to exclude
Consolidated Partnerships* $107,783 $ 89,845 20.0% $371,242 $320,520 15.8%
CAD** $ 28,469 $ 27,287 4.3% $111,030 $114,710 (3.2%)
Net Income $ 7,818 $ 6,107 28.0% $ 41,294 $ 59,014 (30.0%)
Per Share Data (diluted):
CAD** $ 0.49 $ 0.47 4.3% $ 1.89 $ 1.97 (4.1%)
Net Income $ 0.11 $ 0.08 41.8% $ 0.62 $ 0.98 (36.5%)
* DISCUSSED ON PAGE (2) OF THIS PRESS RELEASE.
** SEE FOOTNOTE (2) ON PAGE 6 TO THE SELECTED FINANCIAL DATA FOR A DISCUSSION
OF CAD.
ADJUSTED REVENUES
As previously reported, CharterMac's operating results include the results of
Low-Income Housing Tax Credit ("LIHTC") Partnerships consolidated pursuant to
FASB Interpretation 46 ( R ) or similar accounting pronouncements, as well as
other LIHTC and Property Partnerships we control, but in which we have little or
no equity interest. As CharterMac has virtually no equity interest in these
partnerships, the net losses they generated were allocated almost entirely to
their investors. The consolidation, therefore, has an insignificant impact on
net income, although certain CharterMac revenues are eliminated in consolidation
and revenues and expenses of the consolidated partnerships are reflected in the
income statement.
In connection with the ARCap acquisition, we also consolidate a number of funds
which we manage that invest in Commercial Mortgage Backed Securities and
re-securitization trusts ("CMBS Partnerships") and a Direct Loan Investment
fund. We maintain an equity interest in each of these funds and participate in
the profits they generate.
As many of our revenues are eliminated when consolidating these partnerships, we
are presenting our revenues adjusted to exclude the impact of the consolidation.
SUMMARY OF 2006 FINANCING AND INVESTMENT ACTIVITY
The following is a summary of CharterMac's and its subsidiaries' financing and
investment activity for the fourth quarter and twelve months ended December 31,
2006:
FINANCING/ INVESTMENT ACTIVITY:
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 2006 DECEMBER 31, 2006
------------------ -------------------
(In thousands)
Revenue Bonds $ 109,458 $ 379,027
Equity raised for Investment in LIHTC Properties 382,563 1,184,321
Credit Intermediation on LIHTC Funds 135,540 368,675
Agency Loans (Fannie Mae/Freddie Mac) 134,957 900,676
CharterMac Direct(1) 216,504 535,554
Conduits/Insurance Company/Other Loans 6,291 105,567
High-Yield CMBS Certificates(2) 94,567 94,567
Credit Default Swaps on Tax-Exempt Revenue Bonds(3) 164,404 1,145,711
CharterMac Urban Capital(4) 62,783 63,617
---------- ----------
TOTAL $1,307,067 $4,777,715
========== ==========
(1) CharterMac Direct includes first mortgages, bridge and mezzanine loans or
equity investments funded through American Mortgage Acceptance Company
("AMAC"), ARCap Investors, LLC ("ARCap") or a fund managed by ARCap. Loans
funded by ARCap or a fund managed by ARCap are for the period from August
15, 2006 (when ARCap became a subsidiary of CharterMac) to December 31,
2006.
(2) Total purchase price of the CMBS certificates purchased for the period from
August 15, 2006 (when ARCap became a subsidiary of CharterMac) to December
31, 2006.
(3) Most of the Credit Default Swaps were provided for the re-securitization of
existing revenue bonds within CharterMac's portfolio.
(4) Includes mezzanine loans and preferred equity investments in multifamily
properties for the period from September 5, 2006 (subsequent to CharterMac
ownership) to December 31, 2006.
MANAGEMENT CONFERENCE CALL
Management will conduct a conference call tomorrow, March 13, 2007, at 10:00
a.m. Eastern Time to review the Company's fourth quarter and year-end financial
results for the period ended December 31, 2006. Investors, brokers, analysts,
and shareholders wishing to participate should call (800) 310-6649. A webcast of
the presentation will be available live and can be accessed through the
Company's website, www.chartermac.com. To listen to the presentation via
webcast, please go to the website's "Investor Relations" section at least 15
minutes prior to the start of the presentation. For interested individuals
unable to join the conference call, a replay of the call will be available
through Saturday, March 17, 2007, at (888) 203-1112 (Passcode 4294865) or on our
website, through Wednesday, June 13, 2007.
ABOUT THE COMPANY
CharterMac, through its subsidiaries, is one of the nation's leading
full-service real estate finance and investment companies. CharterMac offers
capital solutions to developers and owners of properties throughout the country
and quality real estate investment products to institutional and retail
investors. For more information, please visit CharterMac's website at
http://www.chartermac.com or contact the Investor Relations Department directly
at 800-831-4826.
CHARTERMAC AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
December 31, December 31,
2006 2005
------------ ------------
Revenue bonds - at fair value $2,397,738 $2,294,787
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Net addition to assets from consolidation of partnerships $5,498,208 $3,355,614
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Total assets $9,688,516 $6,968,757
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Liabilities:
Financing arrangements $1,801,170 $1,429,692
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Preferred shares of subsidiary (subject to mandatory
repurchase) $ 273,500 $ 273,500
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Notes payable $ 591,165 $ 304,888
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Liabilities of consolidated partnerships $2,700,154 $1,618,395
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Total liabilities $5,580,333 $3,804,840
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Minority interests in consolidated subsidiaries $ 247,390 $ 262,274
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Preferred shares of subsidiary (not subject to mandatory
repurchase) $ 104,000 $ 104,000
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Partners' interests in consolidated partnerships $2,806,661 $1,747,808
---------- ----------
Total shareholders' equity $ 950,132 $1,049,835
---------- ----------
======================================================================================
Three Months Ended December 31,
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2006 2005
---------------------------------------- -----------------------------------------
As As As As
Reported Adjustments(1) Adjusted(1) Reported Adjustments(1) Adjusted(1)
--------- -------------- ----------- ---------- -------------- -----------
Total revenues $ 127,942 $ (20,159) $ 107,783 $ 79,828 $ 10,017 $ 89,845
Interest expense (35,130) -- (35,130) (23,002) -- (23,002)
General and administrative (49,543) -- (49,543) (38,964) -- (38,964)
Depreciation and amortization (12,966) -- (12,966) (10,728) -- (10,728)
Write-off of goodwill and intangible assets (97) -- (97) (22,567) -- (22,567)
Loss on impairment of mortgage revenue bonds
and other assets (2,338) -- (2,338) (2,653) -- (2,653)
Expenses and equity losses of consolidated
partnerships (117,032) 117,032 -- (83,889) 83,889 --
Equity and other income 1,703 3,225 4,928 5,547 (3) 5,544
Gain on sale or repayment of loans and
revenue bonds 2,113 -- 2,113 (2,824) -- (2,824)
Income allocated to preferred shareholders
and minority interests (4,349) -- (4,349) (3,405) -- (3,405)
Loss allocated to partners of consolidated
partnerships 100,098 (100,098) -- 93,903 (93,903) --
--------- --------- --------- --------- --------- ---------
Income before income taxes 10,401 -- 10,401 (8,754) -- (8,754)
Income tax (provision) benefit (2,583) -- (2,583) 14,861 -- 14,861
--------- --------- --------- --------- --------- ---------
Net income $ 7,818 $ -- $ 7,818 $ 6,107 $ -- $ 6,107
========= ========= ========= ========= ========= =========
4.4% CRA Preferred dividend requirements (1,188) -- (1,188) (1,188) -- (1,188)
--------- --------- --------- --------- --------- ---------
Net income available to common and CRA
shareholders $ 6,630 $ -- $ 6,630 $ 4,919 $ -- $ 4,919
========= ========= ========= ========= ========= =========
Net income per share:
Basic $ 0.11 $ -- $ 0.11 $ 0.08 $ -- $ 0.08
========= ========= ========= ========= ========= =========
Diluted $ 0.11 $ -- $ 0.11 $ 0.08 $ -- $ 0.08
========= ========= ========= ========= ========= =========
Weighted average shares outstanding:
Basic 57,878 -- 57,878 58,294 -- 58,294
========= ========= ========= ========= ========= =========
Diluted 58,458 -- 58,458 58,532 -- 58,532
========= ========= ========= ========= ========= =========
CHARTERMAC AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
======================================================================================
Twelve Months Ended December 31,
--------------------------------------------------------------------------------------
2006 2005
---------------------------------------- -----------------------------------------
As As As As
Reported Adjustments(1) Adjusted(1) Reported Adjustments(1) Adjusted(1)
--------- -------------- ----------- ---------- -------------- -----------
Total revenues $ 387,259 $ (16,017) $ 371,242 $ 295,097 $ 25,423 $ 320,520
Interest expense (115,953) -- (115,953) (75,596) -- (75,596)
General and administrative (165,648) -- (165,648) (128,613) -- (128,613)
Depreciation and amortization (47,527) -- (47,527) (44,195) -- (44,195)
Write-off of goodwill and intangible assets (2,644) -- (2,644) (22,567) -- (22,567)
Loss on impairment of assets (5,003) -- (5,003) (4,555) -- (4,555)
Expenses and equity losses of consolidated
partnerships (402,104) 402,104 -- (324,118) 324,118 --
Equity and other income 1,978 15,290 17,268 7,037 (10) 7,027
--------- --------- --------- --------- --------- ---------
Gain on sale or repayment of loans and
revenue bonds 18,370 -- 18,370 8,062 -- 8,062
Income allocated to preferred shareholders
and minority interests (22,319) -- (22,319) (29,646) -- (29,646)
Loss allocated to partners of consolidated
partnerships 401,377 (401,377) -- 349,531 (349,531) --
--------- --------- --------- --------- --------- ---------
Income before income taxes 47,786 -- 47,786 30,437 -- 30,437
Income tax (provision) benefit (6,492) -- (6,492) 28,577 -- 28,577
--------- --------- --------- --------- --------- ---------
Net income $ 41,294 $ -- $ 41,294 $ 59,014 $ -- $ 59,014
========= ========= ========= ========= ========= =========
4.4% CRA Preferred dividend requirements (4,752) -- (4,752) (2,020) -- (2,020)
--------- --------- --------- --------- --------- ---------
Net income available to common
and CRA shareholders $ 36,542 $ -- $ 36,542 $ 56,994 $ -- $ 56,994
========= ========= ========= ========= ========= =========
Net income per share:
Basic $ 0.63 $ -- $ 0.63 $ 0.98 $ -- $ 0.98
========= ========= ========= ========= ========= =========
Diluted $ 0.62 $ -- $ 0.62 $ 0.98 $ -- $ 0.98
========= ========= ========= ========= ========= =========
Weighted average shares outstanding:
Basic 58,154 -- 58,154 58,018 -- 58,018
========= ========= ========= ========= ========= =========
Diluted 58,711 -- 58,711 58,291 -- 58,291
========= ========= ========= ========= ========= =========
Reconciliation of Net Income to Cash Available for Distribution ("CAD")(2)
------------------------------- -------------------------------
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------- -------------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(In thousands)
Net income $ 7,818 $ 6,107 $ 41,294 $ 59,014
4.4% CRA Preferred dividends (1,188) (1,188) (4,752) (2,020)
Interest income yield adjustments 52 64 4,137 (596)
Fees deferred for GAAP 6,612 2,172 30,426 23,930
Depreciation and amortization expense 13,065 33,295 50,171 66,762
Gain on sale of loans (1,855) (773) (10,855) (11,140)
Tax adjustment 1,898 (15,839) 2,180 (27,866)
Non-cash compensation 6,766 3,242 19,348 8,541
Difference between subsidiary equity distributions
and income allocated to subsidiary equity holders (6,031) (6,873) (19,243) (11,245)
Non-cash equity income (499) 124 (6,253) 358
Loss on impairment of assets 2,338 2,653 5,003 4,555
Other, net (507) 4,303 (426) 4,417
--------- --------- --------- ---------
CAD $ 28,469 $ 27,287 $ 111,030 $ 114,710
========= ========= ========= =========
(1) As previously reported, CharterMac's earnings results include the results of
LIHTC Partnerships consolidated pursuant to FASB Interpretation 46 (R) or
similar accounting pronouncements, as well as other LIHTC and Property
Partnerships we control, but in which we have little or no equity interest. As
CharterMac has virtually no equity interest in these partnerships, the net
losses generated by them were allocated almost entirely to their investors. The
consolidation of these partnerships, therefore, has an insignificant impact on
net income, although certain CharterMac revenues are eliminated in consolidation
and revenues and expenses of the consolidated partnerships are reflected in the
income statement. We act as a general partner of the CMBS Partnerships we
sponsor and own a portion of the funds. Adjusted equity income includes our
proportionate share of the profits as well as other allocations for general
partner services. The adjusted figures presented are not in accordance with
generally accepted accounting principles ("GAAP") but are presented for the
purpose of comparability.
(2) CharterMac believes that Cash Available for Distribution ("CAD") is helpful
to investors in measuring the performance of our Company. CAD is the performance
measure used by our chief decision-makers to allocate resources among our
segments. CAD represents net income (computed in accordance with GAAP), adjusted
for:
o Cash fees and other revenues received but deferred in accordance with
GAAP. Fees recognized for CAD but deferred for GAAP purposes are
generally earned over a period of time in connection with certain of
our product lines, such as fund sponsorship and credit intermediated
fees.
o The effect of straight line revenue recognition of interest income on
revenue bonds with fixed changes in interest rates.
o Depreciation and amortization, including write-off of intangible
assets.
o Non-cash gains recognized on sale of mortgage loans when servicing
rights are retained.
o Losses on sales of loans or repayment of revenue bonds.
o Impairment losses.
o The portion of tax benefit or provision that is not expected to be
realized in cash.
o Non-cash compensation expenses.
o The difference between earnings allocated to Subsidiary Equity in
accordance with GAAP and distributions to holders of that equity.
There is no generally accepted methodology for computing CAD, and the Company's
computation of CAD may not be comparable to CAD reported by other companies. CAD
does not represent net cash provided by operating activities determined in
accordance with GAAP and should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of the Company's
performance, as an alternative to net cash provided from operating activities
(determined in accordance with GAAP) as a measure of our liquidity, or as an
indication of our ability to make cash distributions.
CERTAIN STATEMENTS IN THIS DOCUMENT MAY CONSTITUTE FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THESE STATEMENTS ARE BASED ON MANAGEMENT'S
CURRENT EXPECTATIONS AND BELIEFS AND ARE SUBJECT TO A NUMBER OF FACTORS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
DESCRIBED IN THE FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES ARE
DETAILED IN CHARTERMAC'S MOST RECENT ANNUAL REPORT ON FORM 10-K AND IN ITS OTHER
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, AND INCLUDE, AMONG OTHERS,
ADVERSE CHANGES IN THE REAL ESTATE MARKETS INCLUDING, AMONG OTHER THINGS,
COMPETITION WITH OTHER COMPANIES; INTEREST RATE FLUCTUATIONS; GENERAL ECONOMIC
AND BUSINESS CONDITIONS, WHICH WILL, AMONG OTHER THINGS, AFFECT THE AVAILABILITY
AND CREDIT WORTHINESS OF PROSPECTIVE TENANTS, LEASE RENTS AND THE TERMS AND
AVAILABILITY OF FINANCING FOR PROPERTIES FINANCED BY MORTGAGE REVENUE BONDS WE
OWN; ENVIRONMENT/SAFETY REQUIREMENTS; CHANGES IN APPLICABLE LAWS AND
REGULATIONS; OUR TAX TREATMENT, THE TAX TREATMENT OF OUR SUBSIDIARIES AND THE
TAX TREATMENT OF OUR INVESTMENTS; RISK OF DEFAULT ASSOCIATED WITH THE MORTGAGE
REVENUE BONDS AND OTHER SECURITIES HELD BY US OR OUR SUBSIDIARIES; RISKS
ASSOCIATED WITH PROVIDING CREDIT INTERMEDIATION; RISK OF LOSS UNDER MORTGAGE
BANKING LOSS SHARING AGREEMENTS; THE RISK THAT RELATIONSHIPS WITH KEY INVESTORS
AND DEVELOPERS MAY NOT CONTINUE; OUR ABILITY TO GENERATE FEE INCOME MAY NOT
CONTINUE; AND RISKS RELATED TO THE FORM AND STRUCTURE OF OUR FINANCING
ARRANGEMENTS.. SUCH FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS
DOCUMENT. CHARTERMAC EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO
RELEASE PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN TO REFLECT ANY CHANGE IN CHARTERMAC'S EXPECTATIONS WITH REGARD
THERETO OR CHANGE IN EVENTS, CONDITIONS, OR CIRCUMSTANCES ON WHICH ANY SUCH
STATEMENT IS BASED.
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