-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, N0cu6CtbDCnlV/ews4iEkl0X8A/jjQUjWz8t5uKDnWNdCekoV9lu8bMF3j4Fv3U6 rl1t0W+thNYs6UukcaCPvw== 0000765880-94-000021.txt : 19941117 0000765880-94-000021.hdr.sgml : 19941117 ACCESSION NUMBER: 0000765880-94-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH CARE PROPERTY INVESTORS INC CENTRAL INDEX KEY: 0000765880 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 330091377 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08895 FILM NUMBER: 94558479 BUSINESS ADDRESS: STREET 1: 10990 WILSHIRE BLVD STE 1200 CITY: LOS ANGELES STATE: CA ZIP: 90024 BUSINESS PHONE: 3104731990 10-Q 1 =========================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994. OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ..... TO ..... COMMISSION FILE NUMBER 1-8895 - - - -------------------------------------------------------------------------- HEALTH CARE PROPERTY INVESTORS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) - - - -------------------------------------------------------------------------- MARYLAND 33-0091377 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OF ORGANIZATION) IDENTIFICATION NO.) 10990 WILSHIRE BOULEVARD, SUITE 1200 LOS ANGELES, CALIFORNIA 90024 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (310) 473-1990 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ------------------------------ INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS: YES /X/ NO / / AS OF NOVEMBER 10, 1994 THERE WERE 26,733,734 SHARES OF $1.00 PAR VALUE COMMON STOCK OUTSTANDING. =========================================================================== HEALTH CARE PROPERTY INVESTORS, INC. INDEX PART I. FINANCIAL INFORMATION PAGE NO. -------- Item 1. Financial Statements: Consolidated Balance Sheets September 30, 1994 and December 31, 1993.............. 2 Consolidated Statements of Income Nine Months Ended September 30, 1994 and 1993......... 3 Consolidated Statements of Cash Flows Nine Months Ended September 30, 1994 and 1993......... 4 Notes to Consolidated Condensed Financial Statements............................................ 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................ 7 PART II. OTHER INFORMATION Signatures....................................................... 9 HEALTH CARE PROPERTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (unaudited) (amounts in thousands)
September 30, December 31, 1994 1993 ------------ ------------ ASSETS Real Estate Properties Buildings and Improvements $ 502,794 $ 474,181 Accumulated Depreciation (107,689) (96,350) ------------ ------------ 395,105 377,831 Construction in Progress 2,902 4,974 Land 54,441 52,012 ------------ ------------ 452,448 434,817 Investments in and Advances to Partnerships 9,841 10,709 Loans Receivable 78,813 70,471 Other Assets 6,548 6,431 Cash and Short-Term Investments 2,633 27,210 ------------ ------------ TOTAL ASSETS $ 550,283 $ 549,638 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Bank Notes Payable $ 2,000 $ --- Senior Notes due 1998-2003 135,873 135,845 Convertible Subordinated Notes Due 2000 100,000 100,000 Mortgage Notes Payable 10,024 9,446 Accounts Payable and Accrued Expenses 14,161 14,233 Minority Interests in Joint Ventures 19,653 20,241 Commitments Stockholders' Equity Common Stock 26,671 26,633 Additional Paid-In Capital 303,746 302,765 Cumulative Net Income 225,963 189,086 Cumulative Dividends (287,808) (248,611) ------------ ------------- Total Stockholders' Equity 268,572 269,873 ------------ ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 550,283 $ 549,638 ============ ============= See accompanying Notes to Consolidated Condensed Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.
HEALTH CARE PROPERTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (amounts in thousands, except per share amounts)
Three Months Nine Months Ended September 30, Ended September 30, ----------------------------------- ----------------------------------- 1994 1993 1994 1993 --------------- ------------- --------------- ------------- REVENUES Base Rental Income $ 16,365 $ 15,117 $ 48,238 $ 44,817 Additional Rental and Interest Income 4,003 3,674 12,233 10,947 Interest and Other Income 3,547 3,011 11,341 10,282 Facility Operating Revenue 610 571 1,719 1,704 --------------- ------------- -------------- ------------- 24,525 22,373 73,531 67,750 --------------- ------------- -------------- ------------- EXPENSES Interest Expense 5,030 4,744 15,058 14,251 Depreciation/Noncash Charges 4,427 4,116 13,290 13,074 Other Expenses 1,177 1,205 3,787 3,860 Facility Operating Expense 621 517 1,805 1,765 --------------- ------------- -------------- ------------ 11,255 10,582 33,940 32,950 --------------- ------------- -------------- ------------ INCOME FROM OPERATIONS 13,270 11,791 39,591 34,800 Minority Interests (853) (832) (2,714) (2,592) --------------- ------------- -------------- ------------ NET INCOME $ 12,417 $ 10,959 $ 36,877 $ 32,208 =============== ============= ============== ============ NET INCOME PER SHARE $ 0.46 $ 0.41 $ 1.38 $ 1.21 =============== ============= ============== ============ WEIGHTED AVERAGE SHARES OUTSTANDING 26,672 26,609 26,665 26,565 =============== ============= ============== ============ See accompanying Notes to Consolidated Condensed Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.
HEALTH CARE PROPERTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (amounts in thousands, except per share amounts)
Nine Months Ended September 30, ----------------------------------------- 1994 1993 -------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 36,877 $ 32,208 Depreciation/Noncash Charges 13,290 13,074 Distribution from Partnerships in Excess of Income 212 332 Distribution to Minority Interests in Excess of Income (608) (729) ------------- -------------- FUNDS FROM OPERATIONS 49,771 44,885 Change in Other Assets/Liabilities (843) 1,518 ------------- -------------- 48,928 46,403 ------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of Real Estate (25,856) (22,553) Advances Repaid by Partnerships, Net 64 5,619 Other Investments and Loans (8,214) 1,481 ------------- -------------- (34,006) (15,453) ------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES Net Increase/(Decrease) in Bank Notes Payable 2,000 (7,800) Issuance of Senior Notes Due 2003 --- 11,000 Cash Proceeds from Issuing Common Stock 412 2,249 Increase in Minority Interests 67 --- Final Payments of Mortgages (1,665) --- Periodic Payments on Mortgages (879) (940) Dividends Paid (39,197) (36,456) Other Financing Activities (237) 1,214 ------------- -------------- (39,499) (30,733) ------------- -------------- NET (DECREASE)/INCREASE IN CASH AND SHORT-TERM INVESTMENTS $ (24,577) $ 217 ============= ============== See accompanying Notes to Consolidated Condensed Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.
HEALTH CARE PROPERTY INVESTORS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS September 30, 1994 (UNAUDITED) (1) SIGNIFICANT ACCOUNTING POLICIES The unaudited financial information furnished herein in the opinion of management reflects all adjustments which are necessary to fairly state the Company's financial position, the results of its operations and its cash flows. The Company presumes that users of the interim financial information herein have read or have access to the audited financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations for the preceding fiscal year ended December 31, 1993 and that the adequacy of additional disclosures needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnotes and other disclosures which would substantially duplicate the disclosures contained in the Company's most recent annual report to security holders have been omitted. The interim financial information contained herein is not necessarily representative of a full year's operations for various reasons including acquisitions, changes in rents, interest rates and the timing of debt and equity financings. These same considerations apply to all year-to-year comparisons. Net Income Per Share Net income per share is calculated by dividing net income by the weighted average common shares outstanding during the period. There were 26,671,574 shares outstanding as of September 30, 1994. Funds From Operations Funds From Operations is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect Funds From Operations on the same basis. Funds From Operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to net income. (2) MAJOR LESSEES During the third quarter of 1994, the following approximate percentages of the Company's revenue were received from subsidiaries of: National Medical Enterprises, Inc. ("NME") - 8%; The Hillhaven Corporation ("Hillhaven") - 24%; and Healthsouth Corporation ("Healthsouth") - 5%. All of the leases with subsidiaries of NME, Hillhaven and Healthsouth are unconditionally guaranteed by NME. In addition, 12% of the Company's revenue was received from leases guaranteed by Beverly Enterprises, Inc. (3) STOCKHOLDERS' EQUITY The following tabulation is a summary of the activity for the Stockholders' Equity account for the nine months ended September 30, 1994 (amounts in thousands):
Par Additional Total Number of Value Paid In Cumulative Cumulative Stockholders' Shares Amount Capital Net Income Dividends Equity ----------------------------------------------------------------------------- Balance, December 31, 1993 26,633 $26,633 $302,765 $189,086 ($248,611) $269,873 Issuance of Stock, Net 17 17 575 592 Exercise of Stock Options 21 21 406 427 Net Income 36,877 36,877 Dividends Paid (39,197) (39,197) ----------------------------------------------------------------------------- Balance, September 30, 1994 26,671 $26,671 $303,746 $225,963 ($287,808) $268,572 =============================================================================
(4) COMMITMENTS The Company has remaining outstanding commitments to fund construction costs and acquire health care facilities aggregating approximately $49,000,000. (5) SUBSEQUENT EVENT On October 25, 1994 the Board of Directors declared a quarterly dividend of $0.51 per share payable on November 18, 1994, to stockholders of record on the close of business on November 8, 1994. HEALTH CARE PROPERTY INVESTORS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1994, the Company's portfolio of properties, including equity investments of 178 medical facilities located in 32 states, was comprised of 139 long term care facilities, 14 congregate care and assisted living centers, six acute care hospitals, six rehabilitation hospitals, 11 medical office buildings, one psychiatric care facility and one physician clinic. The gross acquisition price of the properties, which includes partnership acquisitions, was approximately $692,000,000. The Company had a direct investment in 134 facilities; investments in the remaining 44 were owned through partnerships in which the Company is the managing general partner. The Company has financed its acquisitions through the sale of Common Stock, the issuance of long-term debt, the assumption of mortgage notes payable, the use of short-term bank credit lines, and through internally generated cash flow. In November 1993, the Company issued $100,000,000 6% Subordinated Convertible Notes due 2000. With these proceeds, the Company redeemed $60,000,000 9-1/2% Senior Notes due 1996, without penalty. This financing enabled the Company to significantly reduce its average borrowing rates. As of September 30, 1994, the Company had issued a total of $61,000,000 and had remaining capacity to issue an additional $69,000,000 under its Medium- Term Note Programs. On March 31, 1994, the Company instituted a new $100,000,000 three year revolving line of credit with a group of seven banks. The Company believes it has a strong financial position with $268,572,000 in stockholders' equity as of September 30, 1994, a total debt-to-equity ratio of approximately 0.92:1 and committed and unused bank lines of credit aggregating $98,000,000. As of September 30, 1994, the Company had commitments to purchase and construct health care facilities totaling $49,000,000 which are expected to be funded during 1994 and 1995. Facilities under construction are generally financed by means of cash on hand or short-term borrowings under the Company's existing bank lines. In the future, the Company may use its Medium-Term Note program to finance a portion of the construction. At the completion of construction and commencement of the lease, short term borrowings used are generally refinanced with new long-term debt or equity offerings. The Company has the option to prepay without penalty its $75,000,000 9-7/8% Senior Notes due 1998 at any time after February 15, 1995; it may refinance the foregoing by raising new long term funds if it appears advantageous to do so. The Company has unconditional guarantees from National Medical Enterprises, Inc. in respect of Lease obligations of subsidiaries of NME (3 facilities), subsidiaries of Hillhaven (63 facilities) and Healthsouth Corporation (2 facilities) which are discussed in Footnote (3) to the consolidated financial statements of the Company as of December 31, 1993. The following discussion is derived from public reports distributed by NME. NME has been involved in significant legal proceedings and investigations of an unusual nature related principally to its psychiatric business and has settled the most significant of these matters. Its related reserves include $75,000,000 for unusual litigation costs and legal fees for matters that have not been settled as of August 31, 1994 and its estimate of the net costs of the ultimate disposition of these matters. However, there can be no assurance that the ultimate liability will not exceed such estimates. During the quarter ended August 31, 1994, NME generated Net Income of $64,000,000. As of August 31, 1994, NME's balance sheet reflects stockholders' equity of $1.4 billion and a ratio of debt to equity of 0.61:1. On October 11, 1994, NME and American Medical Holdings, Inc. jointly announced the signing of a definitive merger agreement which is expected to close in the first part of calendar 1995. This new company will own 85 general hospitals in the U.S. and overseas, and will be the second largest investor-owned hospital management company. The Company currently has approximately $30,675,000 in irrevocable letters of credit from commercial banks to back the obligations of many of its lessees' lease and borrowers' loan obligations. The Company may draw upon the letters of credit if there are any defaults under the leases and/or loans. The third quarter 1994 dividend of $0.50 per share or $13,336,000 in the aggregate was paid on August 19, 1994. Total dividends paid during the nine months ended September 30, 1994 as a percentage of Funds From Operations for the corresponding period was 79%. Management believes that the Company's liquidity and sources of capital are adequate to finance its operations as well as its future investments in additional facilities. RESULTS OF OPERATIONS Net Income for the three months ended September 30, 1994 totaled $12,417,000 or $0.46 per share, on revenues of $24,525,000 compared to Net Income of $10,959,000 or $0.41 per share, on revenues of $22,373,000 for the corresponding quarter in 1993. On a year-to-date basis, Net Income amounted to $36,877,000 or $1.38 per share compared to $32,208,000 or $1.21 per share for the year ago nine month period which represents an increase of 14 percent per share over the 1993 results. Funds From Operations of $16,704,000 were up from $14,932,000 for the comparable quarter of the prior year. For the nine months ended September 30, 1994, Funds From Operations increased to $49,771,000, compared with $44,885,000 for the corresponding period in the prior year. Dividends paid by the Company during the third quarter of 1994 amounted to $0.50 per share of common stock or a distribution of about 79 percent of aggregate Funds From Operations for the three month period. Earnings and Funds From Operations were significantly higher than a year ago due to increases in rental and interest income. Increases in base rental income and interest income were generated from new investments, including the $34,000,000 invested in new facilities during the first nine months of the year. Additional rental and interest income increased from $3,674,000 in the third quarter of 1993 to $4,003,000 in the corresponding quarter of 1994, which was attributable to revenue growth at many of the Company's facilities and from interest income increases on other investments. PART II. OTHER INFORMATION Items 1. through 6. Not applicable - - - ------------------- 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. Date: November 10, 1994 HEALTH CARE PROPERTY INVESTORS, INC. (REGISTRANT) /S/ James G. Reynolds ------------------------------ James G. Reynolds Senior Vice President and Chief Financial Officer (Principal Financial Officer) /S/ Devasis Ghose ------------------------------ Devasis Ghose Vice President-Finance and Treasurer (Principal Accounting Officer) EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000765880 HEALTH CARE PROPERTY INVESTORS, INC. 1,000 9-MOS DEC-31-1994 SEP-30-1994 2,633 0 0 0 0 0 560,137 107,689 550,283 0 247,897 26,671 0 0 241,901 550,283 0 73,531 0 17,809 3,787 0 15,058 36,877 0 36,877 0 0 0 36,877 1.38 1.38
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