Filed by Bowne Pure Compliance
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2007
OR
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-13232
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
401(k) RETIREMENT PLAN
(Full title of the plan)
Apartment Investment and Management Company
4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado 80237
(Name of issuer of the securities held pursuant to
the plan and the address of its principal executive office)
Financial Statements and Schedule
Apartment Investment and Management Company 401(k) Retirement Plan
Year Ended December 31, 2007
CONTENTS
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Benefits Committee
Apartment Investment and Management Company
We have audited the accompanying statements of net assets available for benefits of Apartment
Investment and Management Company 401(k) Retirement Plan as of December 31, 2007 and 2006, and the
related statement of changes in net assets available for benefits for the year ended December 31,
2007. These financial statements are the responsibility of the Plan’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We
were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Plan’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2007 and 2006, and the
changes in its net assets available for benefits for the year ended December 31, 2007, in
conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken
as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December
31, 2007 is presented for the purpose of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department of Labor’s Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental
schedule has been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
Denver, Colorado
June 23, 2008
2
Apartment Investment and Management Company 401(k) Retirement Plan
Statements of Net Assets Available for Benefits
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December 31, |
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2007 |
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2006 |
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Assets: |
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Investments |
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$ |
92,535,286 |
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$ |
85,637,944 |
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Total assets |
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92,535,286 |
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85,637,944 |
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Net assets available for benefits |
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$ |
92,535,286 |
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$ |
85,637,944 |
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See accompanying notes.
3
Apartment Investment and Management Company 401(k) Retirement Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2007
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Additions: |
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Employee contributions |
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$ |
9,602,608 |
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Employer contributions, net of forfeitures |
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5,179,055 |
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Rollover contributions |
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1,062,612 |
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15,844,275 |
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Net depreciation in fair value of investments |
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(2,876,462 |
) |
Interest and dividend income |
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6,594,757 |
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Net additions |
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19,562,570 |
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Deductions: |
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Benefit payments |
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12,596,714 |
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Administrative expenses |
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68,514 |
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Total deductions |
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12,665,228 |
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Net increase |
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6,897,342 |
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Net assets available for benefits at the beginning of the year |
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85,637,944 |
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Net assets available for benefits at the end of the year |
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$ |
92,535,286 |
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See accompanying notes.
4
Apartment Investment and Management Company 401(k) Retirement Plan
Notes to Financial Statements
December 31, 2007
1. Description of the Plan
The following description of the Apartment Investment and Management Company 401(k) Retirement
Plan (the “Plan”) provides only general information. Participants should refer to the Summary Plan
Description for a more complete description of the Plan’s provisions.
The Plan is a defined contribution plan covering all employees of Apartment Investment and
Management Company (the “Company” or “AIMCO”) who have completed 30 days of service and are age 18
or older, except Puerto Rico employees, who are not eligible to participate in the Plan, and
certain employees covered by collective bargaining agreements who are not eligible to participate
in the Plan, unless such collective bargaining agreement provides for the inclusion of such
employees as participants in the Plan. The Plan is administered by Fidelity Investments
Retirement Services Company and trusteed by the Fidelity Management Trust Company. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
Each year, participants may contribute to the Plan, on a pretax basis, up to 50% of their eligible
compensation, or $15,500 (for 2007), whichever is less. Participants who have attained age 50
before the end of the Plan year are eligible to make additional catch-up contributions. The
Company may make matching contributions in the following manner: (1) a 100% match on participant
contributions to the extent of the first 3% of the participant’s eligible compensation; and (2) a
50% match on participant contributions to the extent of the next 2% of the participant’s eligible
compensation.
Each participant’s account is credited with the participant’s contributions, Company matching
contributions and appreciation or depreciation in earnings from the fund(s) elected by the
participant. The benefit to which a participant is entitled is their vested account balance at
the time of distribution.
Participants are immediately vested in their voluntary contributions. The Company’s matching
contributions made on or after January 1, 2004 vest immediately. Matching contributions made prior
to January 1, 2004 vest fully after three years of service. Participants forfeit any unvested
matching contributions upon the earlier of a distribution following termination of employment or
five years from their break-in-service date. Upon withdrawal, any unvested portion of a
participant’s account may be used by the Company to reduce the next employer contribution or pay
expenses of the Plan. During the year ended December 31, 2007, $68,514 of forfeited unvested
participant balances were used to pay administrative expenses. For the year ended December 31,
2007, forfeited balances of terminated participants’ unvested accounts totaled $21,796. At
December 31, 2007 and 2006, Plan assets totaling $79,086 and $121,658, respectively, were
available to reduce employer contributions or pay administrative expenses in the future.
Participants may borrow funds from their own account. Loans are permitted in amounts not to exceed
the lesser of $50,000 reduced by the highest outstanding loan balance for the preceding year or 50%
of the value of the vested interest in the participant’s account. Three loans may be outstanding at
any time; however, only one loan is permitted during any twelve-month period.
On termination of service or upon death, disability or retirement, a participant may elect to
receive a distribution equal to the vested value of his or her account, which will be paid out as
soon as administratively possible.
Although the Company has not expressed any intent to do so, it has the right under the Plan to
discontinue its contributions at any time and to terminate the Plan subject to the provisions of
ERISA. In the event of termination of the Plan, each participant will become fully vested and will
receive a total distribution of his or her account.
5
Apartment Investment and Management Company 401(k) Retirement Plan
Notes to Financial Statements (continued)
December 31, 2007
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements of the Plan are presented on the accrual basis of accounting.
Investments
Investments other than participant loans and the common collective trust fund are valued at fair
value as determined by reference to quoted market values. The participant loans are valued at their
outstanding balances. Investments held in the common collective trust
fund are carried at contract value,
which approximates fair value. As described in Financial Accounting Standards Board (FASB) Staff
Position AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held
by Certain Investment Companies Subject to the AICPA Investment Company Guide and
Defined-Contribution Health and Welfare and Pension Plans (the “FSP”), investment contracts held by
a defined contribution plan are required to be reported at fair value. However, contract value is
the relevant measurement attribute for that portion of the net assets available for benefits of a
defined contribution plan attributable to fully benefit-responsive investment contracts because
contract value is the amount participants would receive if they were to initiate permitted
transactions under the terms of the Plan. The Plan invests in guaranteed investment contracts
through a common collective trust (Fidelity Management Trust Company Managed Income Portfolio
Fund). The statements of net assets available for benefits present the contract value of the
Fidelity Management Trust Company Managed Income Portfolio Fund, which approximates the fair value.
The fair value of the Plan’s interest in the Fidelity Management Trust Company Managed Income
Portfolio Fund is based on information reported by the issuer of the common collective trust at
year-end. The contract value of the Fidelity Management Trust Company Managed Income Portfolio
Fund represents contributions plus earnings, less participant withdrawals and administrative
expenses.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded
on the accrual basis. Dividends are recorded on the ex-dividend date.
Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various
risks such as interest rate, market and credit risks. The Plan’s exposure to credit loss in the
event of nonperformance of investments is limited to the carrying value of such instruments. Due
to the level of risk associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in the near term and that
such changes could materially affect participants’ account balances and the amounts reported in the
statements of net assets available for benefits.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated February 7,
2001, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the
“Code”) and, therefore, the related trust is exempt from taxation. Subsequent to this determination
by the Internal Revenue Service, the Plan was amended. Once qualified, the Plan is required to
operate in conformity with the Code to maintain its qualification. AIMCO, the plan sponsor,
believes the Plan is being operated in compliance with the applicable requirements of the Code, and
therefore, believes that the Plan, as restated and amended, is qualified and the related trust is
tax exempt.
6
Apartment Investment and Management Company 401(k) Retirement Plan
Notes to Financial Statements (continued)
December 31, 2007
Plan Expenses
The Company pays certain expenses necessary to administer the Plan.
New Accounting Pronouncements
In September 2006, the FASB issued Statement on Financial Accounting Standards No. 157, Fair Value
Measurements, or SFAS 157. SFAS 157 defines fair value as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. SFAS 157 applies whenever other standards require assets or liabilities to
be measured at fair value and does not expand the use of fair value in any new circumstances. SFAS
157 establishes a hierarchy that prioritizes the information used in developing fair value
estimates and requires disclosure of fair value measurements by level within the fair value
hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1
measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the
reporting entity’s own data. SFAS 157 is effective for fiscal years beginning after November 15,
2007. The Company does not believe the adoption of SFAS 157 will have a material effect on the
Plan’s financial statements.
3. Investments
The Plan’s investments are held in trust by Fidelity Management Trust Company, the trustee of the
Plan. The Plan’s investments in the various funds (including investments bought, sold, and held
during the year) depreciated in fair value for the year ended December 31, 2007, as presented in
the following table:
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Net |
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Depreciation |
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in Fair Value |
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During Year |
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Investments in mutual funds |
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$ |
(1,847,914 |
) |
Investments in common stock |
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(1,028,548 |
) |
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Total |
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$ |
(2,876,462 |
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The AIMCO Stock Fund holds AIMCO common stock and cash. At December 31, 2007 and 2006, this fund
held 73,268 shares and 54,031 shares of AIMCO common stock with a market value of approximately
$2.5 million and $3.0 million, respectively.
The fair value of individual investments that represent 5% or more of the Plan’s net assets are as
follows:
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December 31, |
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2007 |
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2006 |
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Fidelity Investment Mutual Funds: |
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Growth Company Fund |
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$ |
8,970,992 |
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$ |
7,436,719 |
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Growth and Income Fund |
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13,410,442 |
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14,791,672 |
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Retirement Money Market Fund |
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6,214,819 |
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6,205,719 |
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Asset Manager Fund |
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* |
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4,901,890 |
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Equity Income II Fund |
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6,370,591 |
|
|
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5,954,097 |
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Diversified International Fund |
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7,119,887 |
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4,631,080 |
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Fidelity Management Trust Company Common
Collective Trust Fund: |
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Managed Income Portfolio Fund |
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8,316,831 |
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8,908,461 |
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* Investment less than 5%.
7
Apartment Investment and Management Company 401(k) Retirement Plan
Schedule H, line 4i — Schedule of Assets (Held at End of Year)
December 31, 2007
EIN: 84-1259577
Plan Number: 002
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Description of Investment, including |
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Maturity Date, Rate of Interest, |
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Current |
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| Identity of Issue, Borrower, Lessor or Similar Party |
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Collateral, Par or Maturity Value |
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Value |
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Common stock: |
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*AIMCO Stock Fund (1) |
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155,937 shares |
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$ |
2,845,704 |
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*Fidelity Investment mutual funds: |
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Growth Company Fund |
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108,110 shares |
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8,970,992 |
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Growth and Income Fund |
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491,585 shares |
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13,410,442 |
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Asset Manager Fund |
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282,355 shares |
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4,379,328 |
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Equity Income II Fund |
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277,223 shares |
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|
6,370,591 |
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Diversified International Fund |
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178,443 shares |
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7,119,887 |
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Low Priced Stock Fund |
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85,214 shares |
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3,504,871 |
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Spartan US Equity Index Fund |
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55,956 shares |
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2,904,099 |
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Retirement Money Market Fund |
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6,214,819 shares |
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6,214,819 |
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Fidelity Real Estate Fund |
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90,231 shares |
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2,344,204 |
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Fidelity Small Cap Stock Fund |
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129,729 shares |
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2,261,173 |
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Fidelity Freedom Income Fund |
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38,868 shares |
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|
445,034 |
|
Fidelity Freedom 2000 Fund |
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17,243 shares |
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|
213,290 |
|
Fidelity Freedom 2010 Fund |
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|
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|
131,652 shares |
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|
1,951,080 |
|
Fidelity Freedom 2020 Fund |
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|
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194,668 shares |
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|
3,077,703 |
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Fidelity Freedom 2030 Fund |
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210,247 shares |
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|
3,473,277 |
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Fidelity Freedom 2040 Fund |
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311,522 shares |
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3,031,112 |
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*Fidelity Management Trust Company |
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Common collective trust fund: |
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Managed Income Portfolio Fund |
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8,316,831 shares |
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8,316,831 |
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Other investment funds: |
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Pacific Investment Management Company Total Return Fund — Administrative Class |
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366,345 shares |
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3,916,231 |
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Pacific Investment Management Company Real Return Fund — Institutional Class |
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56,556 shares |
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619,857 |
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Vanguard Explorer Fund |
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39,862 shares |
|
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2,641,224 |
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American Beacon Small Cap Value Fund |
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72,383 shares |
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|
1,246,441 |
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| *Participant loans |
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Interest rates range from 6.00% to 10.25% |
|
|
3,277,096 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
92,535,286 |
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*Indicates a party-in-interest to the Plan
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| (1) |
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AIMCO Stock Fund holds AIMCO common stock and cash. At December 31, 2007, this fund held
73,268 shares of AIMCO common stock with a market value of approximately $2.5 million. |
9
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Plan Administrator has
duly caused this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
Date:
June 26, 2008
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APARTMENT INVESTMENT AND |
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MANAGEMENT COMPANY |
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401(k) RETIREMENT PLAN |
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By:
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/s/ JAMES G. PURVIS |
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James G. Purvis |
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Executive Vice President, Human Resources |
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By:
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/s/ THOMAS M. HERZOG |
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Thomas M. Herzog |
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Executive Vice President and Chief Financial Officer |
10
EXHIBIT INDEX
| |
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|
| EXHIBIT NO. |
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|
23.1
|
|
Consent of Ernst & Young LLP |
11