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): DECEMBER 12, 2001
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KOGER EQUITY, INC.
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(Exact Name of Registrant as Specified in Its Charter)
FLORIDA
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State or Other Jurisdiction of Incorporation)
1-9997 59-2898045
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(Commission File Number) (IRS Employer Identification No.)
433 PLAZA REAL, SUITE 335
BOCA RATON, FLORIDA 33432
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(Address of Principal Executive Offices) (Zip Code)
(561) 395-9666
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(Registrant's Telephone Number, Including Area Code)
NA
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(Former Name or Former Address, if Changed Since Last Reports)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 12, 2001, Koger Equity, Inc. (the "Company") closed the
sale of select non-core assets to AP-Knight, LP, an affiliate of Apollo Real
Estate Investment Fund ("AREIF") for an aggregate price of $303 million,
including approximately $206.7 million cash and the exchange of AREIF's 5.73
million shares of Koger Equity, Inc. Common Stock representing 21.4% of the
outstanding shares of the Company. This sale represented the disposition of
approximately 30% of the Company's consolidated assets.
In addition to the above consideration the Company received a
membership interest in an AREIF subsidiary. This interest will provide the
Company with a 20% participation in the net cash flow from the disposed assets
after AREIF has received a 15% internal rate of return on its equity
investment.
Included in the sale are ten properties comprising 75 suburban office
buildings and one retail center, which contained more than 3.9 million rentable
square feet, located throughout San Antonio and Austin, Texas; Greensboro and
Charlotte, North Carolina; Greenville, South Carolina and Birmingham, Alabama.
Koger will continue to manage the disposed assets for which it will receive
standard property management fees.
The net proceeds from the sale will be used to fund strategic
investment opportunities in high growth markets, repay debt and fund a one-time
capital gain distribution in the form of a special dividend to the Company's
shareholders. In regard to the latter, on December 17, 2001, the Company's
Board of Directors declared a $1.74 per share dividend on its Common Stock, par
value $.01 per share, payable on January 15, 2002, to the shareholders of
record on December 28, 2001.
John R. S. Jacobsson currently serves as a Director of the Company and
is the partner responsible for investments at Apollo Real Estate Funds, an
affiliate of AREIF. Lee S. Neibart who served as a Director of the Company
until December 12, 2001, is also a partner in charge of the day-to-day
operations of Apollo Real Estate Funds. Morgan Stanley acted as financial
advisor to the Company in connection with this transaction and provided a
fairness opinion to a committee of the Company Board of Directors whose members
were not affiliated with AREIF. The committee approved the terms of the
transaction and determined that such terms were similar to those that could be
obtained from an unaffiliated third party.
The above sale transaction was the subject of a Company News Release,
dated December 12, 2001, a copy of which is attached hereto as Exhibit 99 and
by this reference made a part hereof.
For more information on Koger Equity, Inc., contact the company at
904-732-1000 or visit its Web site at www.koger.com.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are the financial statements, pro forma financial
information and exhibits, if any, filed as part of this report.
(b) Pro Forma Financial Information
The following unaudited pro forma financial statements set
forth (i) the pro forma balance sheet as of September 30, 2001, as if
the sale occurred on September 30, 2001 and (ii) the pro forma
statements of operations for the year ended December 31, 2000 and the
nine months ended September 30, 2001, as if the sale occurred on
January 1, 2000. The pro forma financial statements are based upon
assumptions contained in the notes thereto and should be read in
conjunction with such notes.
The following unaudited pro forma financial statements may
not necessarily reflect the results of operations or financial
position of the Company which would have actually resulted had the
sale occurred as of the date and for the periods indicated, nor should
they be taken as indicative of the future results of operations or the
future financial position of the Company. Differences would result
from various factors, including the ability of the Company to reinvest
the proceeds from the sale at returns in excess of those earned on
temporary cash investments. The pro forma financial statements should
be read in conjunction with the consolidated financial statements and
notes of the Company included in its annual report on Form 10-K for
the year ended December 31, 2000.
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KOGER EQUITY, INC.
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 2001
(IN THOUSANDS)
Historical Pro Forma
9/30/01 Pro Forma Adjustments 9/30/01
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ASSETS
Real Estate Investments:
Operating properties:
Land $ 140,448 $ (48,529)(b) $ 91,919
Buildings 831,406 (265,739)(b) 565,667
Furniture and equipment 3,228 3,228
Accumulated depreciation (180,983) 62,385 (b) (118,598)
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Operating properties - net 794,099 (251,883) 542,216
Undeveloped land held for investment 13,899 (120)(b) 13,779
Undeveloped land held for sale 76 76
Cash and cash equivalents 9,140 200,814 (a) $ (88,000)(c) 79,525
(5,854)(b) (36,575)(d)
Accounts receivable, net 12,338 (1,853)(b) 10,485
Cost in excess of fair value of net assets acquired, net 1,232 1,232
Other assets 13,997 (4,175)(b) 9,822
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TOTAL ASSETS $ 844,781 $ (63,071) $ (124,575) $ 657,135
========= ========= ========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgages and loan payable $ 337,879 $ (88,000)(c) $ 249,879
Accounts payable 3,090 3,090
Accrued real estate taxes payable 9,491 $ (3,551)(a) 5,940
Accrued liabilities - other 8,969 (250)(b) 8,719
Dividends payable 9,381 9,381
Advance rents and security deposits 6,489 (2,324)(a) 4,165
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Total Liabilities 375,299 (6,125) (88,000) 281,174
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Minority interest 23,132 23,132
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Shareholders' Equity:
Common stock 296 296
Capital in excess of par value 469,010 469,010
Notes receivable from stock sales (5,066) (5,066)
Retained earnings 17,460 303,016(a) (36,575)(d) 20,266
(263,635)(b)
Treasury stock, at cost (35,350) (96,327)(a) (131,677)
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Total Shareholders' Equity 446,350 (56,946) (36,575) 352,829
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 844,781 $ (63,071) $ (124,575) $ 657,135
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See accompanying notes to unaudited pro forma financial statements.
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KOGER EQUITY, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS)
Historical Pro Forma Pro Forma
2000 Adjustments 2000
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REVENUES
Rental and other rental services $ 164,733 $(55,231)(a) $ 109,502
Management fees 1,793 1,793
Interest 703 3,502(e) 4,205
Income from Koger Realty Services, Inc. 645 208(d) 853
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Total revenues 167,874 (51,521) 116,353
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EXPENSES
Property operations 61,868 (22,456)(a) 39,412
Depreciation and amortization 35,133 (11,789)(b) 23,344
Mortgage and loan interest 27,268 (7,466)(c) 19,802
General and administrative 20,217 20,217
Direct cost of management fees 898 898
Other 217 (8)(a) 209
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Total expenses 145,601 (41,719) 103,882
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INCOME BEFORE GAIN ON SALE OR DISPOSITION OF ASSETS,
INCOME TAXES AND MINORITY INTEREST 22,273 (9,802) 12,471
Gain on sale or disposition of assets 6,015 6,015
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INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 28,288 (9,802) 18,486
Income taxes (21) (21)
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INCOME BEFORE MINORITY INTEREST 28,309 (9,802) 18,507
Minority interest 1,156 1,156
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NET INCOME $ 27,153 $ (9,802) $ 17,351
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EARNINGS PER SHARE:
Basic $ 1.02 $ 0.83
Diluted $ 1.01 $ 0.82
WEIGHTED AVERAGE SHARES:
Basic 26,730 (5,734)(f) 20,996
Diluted 26,962 (5,734)(f) 21,228
See accompanying notes to unaudited pro forma financial statements.
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KOGER EQUITY, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMER 30, 2001
(IN THOUSANDS)
Historical Pro Forma Pro Forma
9/30/01 Adjustments 9/30/01
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REVENUES
Rental and other rental services $125,462 $(42,361)(a) $83,101
Management fees 3,530 2,524 (d) 6,054
Interest 596 1,900 (e) 2,496
Income from Koger Realty Services, Inc. 81 81
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Total revenues 129,669 (37,937) 91,732
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EXPENSES
Property operations 46,749 (16,370)(a) 30,379
Depreciation and amortization 27,834 (9,255)(b) 18,579
Mortgage and loan interest 19,379 (4,209)(c) 15,170
General and administrative 6,148 6,148
Direct cost of management fees 2,658 1,775 (d) 4,433
Other 171 (6)(a) 165
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Total expenses 102,939 (28,065) 74,874
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INCOME BEFORE GAIN ON SALE OR DISPOSITION OF ASSETS,
INCOME TAXES AND MINORITY INTEREST 26,730 (9,872) 16,858
Gain on sale or disposition of assets -- --
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INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 26,730 (9,872) 16,858
Income taxes 449 255 (d) 704
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INCOME BEFORE MINORITY INTEREST 26,281 (10,127) 16,154
Minority interest 937 937
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NET INCOME $ 25,344 $(10,127) $15,217
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EARNINGS PER SHARE:
Basic $ 0.94 $ 0.72
Diluted $ 0.94 $ 0.72
WEIGHTED AVERAGE SHARES:
Basic 26,872 (5,734)(f) 21,138
Diluted 26,888 (5,734)(f) 21,154
See accompanying notes to unaudited pro forma financial statements.
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KOGER EQUITY, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. Basis of Presentation
On December 12, 2001, the Company completed the sale of ten properties
comprising 75 suburban office buildings and one retail center (the "2001
Property Sale"). The Company expects to record a gain for financial purposes of
approximately $39.4 million on the sale.
2. Unaudited Pro Forma Balance Sheet
The unaudited pro forma balance sheet as of September 30, 2001 is based
on the historical balance sheet for the Company presented in the Quarterly
Report on Form 10-Q for the period ended September 30, 2001. The unaudited pro
forma balance sheet includes adjustments assuming this sale occurred as of
September 30, 2001. Significant pro forma adjustments in the unaudited pro forma
balance sheet include the following:
(a) Adjustment for revenue and proceeds from the 2001 Property
Sale. The sale proceeds include receipt of 5,733,772 shares of
the Company's common stock at $16.80 per share, the closing
price on August 23, 2001, the date the agreement was signed
and announced.
(b) Adjustment for cost of sale for the 2001 Property Sale. This
includes $7,112,000 of selling costs.
(c) Adjustment for repayment of outstanding balance on the
Company's secured revolving credit facility.
(d) Adjustment for payment of tax basis capital gain dividend.
3. Unaudited Pro Forma Statement of Operations for the Year Ended December
31, 2000
The unaudited pro forma statement of operations for the year ended
December 31, 2000 is based on the historical statement of operations for the
Company presented in the Annual Report on Form 10-K for the year ended December
31, 2000. The unaudited pro forma statement of operations includes adjustments
assuming that the 2001 Property Sale occurred as of January 1, 2000. Significant
pro forma adjustments in the unaudited pro forma statement of operations include
the following:
(a) Adjustment required for the historical rental revenues and
property operations expenses for the properties sold.
(b) Adjustment required for the historical depreciation and
amortization expense for the properties sold.
(c) Adjustment required for the historical interest expense for
the secured revolving credit facility.
(d) Adjustment required for impact on Income from Koger Realty
Services, Inc. due to management contract for the properties
sold.
(e) Adjustment required for interest earned on investment of
unused proceeds from the 2001 Property Sale.
(f) Adjustment required for shares of the Company's common stock
received as consideration for the 2001 Property Sale.
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4. Unaudited Pro Forma Statement of Operations for the Nine Months Ended
September 30, 2001
The unaudited pro forma statement of operations for the nine months
ended September 30, 2001 is based on the historical statement of operations for
the Company presented in the Quarterly Report on Form 10-Q for the period ended
September 30, 2001. The unaudited pro forma statement of operations includes
adjustments assuming that the 2001 Property Sale occurred as of January 1, 2000.
Significant pro forma adjustments in the unaudited pro forma statement of
operations for the nine months ended September 30, 2001 include the following:
(a) Adjustment required for the historical rental revenues and
property operations expenses for the properties sold.
(b) Adjustment required for the historical depreciation and
amortization expense for the properties sold.
(c) Adjustment required for the historical interest expense for
the secured revolving credit facility.
(d) Adjustment required for management fee revenues ($1,694,000)
and leasing commissions ($830,000) earned by Koger Realty
Services, Inc. from the properties sold. Also includes
adjustment for costs incurred due to management contract for
properties sold.
(e) Adjustment required for interest earned on investment of
unused proceeds from the 2001 Property Sale.
(f) Adjustment required for shares of the Company's common stock
received as consideration for the 2001 Property Sale.
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(C) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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99 Koger Equity, Inc. News Release, dated December 12,
2001, which is also on the Company's web site.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KOGER EQUITY, INC.
Dated: December 19, 2001 By: s/ James L. Stephens
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James L. Stephens
Title: Vice President and
Chief Accounting Officer
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EXHIBIT INDEX
The following designated exhibit is filed herewith:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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99 Koger Equity, Inc. News Release, dated December 12, 2001,
which is also on the Company's web site.
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