-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BosA7+/0zHzTbccoJBauiriwHrhNcZuUWFjN3r1pVPo/7jRaQSGPuJHTdyizbETO RMbCe4OO8AnBU5fmNH7MNQ== 0000950135-96-001817.txt : 19960429 0000950135-96-001817.hdr.sgml : 19960429 ACCESSION NUMBER: 0000950135-96-001817 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960426 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITRUST CENTRAL INDEX KEY: 0000774350 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046532031 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09582 FILM NUMBER: 96551217 BUSINESS ADDRESS: STREET 1: 197 FIRST AVE CITY: NEEDHAM STATE: MA ZIP: 02194 BUSINESS PHONE: 6174336000 MAIL ADDRESS: STREET 1: 197 FIRST AVENUE CITY: NEEDHAM STATE: MA ZIP: 02194 10-Q 1 MEDITRUST 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange - --- Act of 1934 For The Quarterly Period Ended MARCH 31, 1996 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 0-14022 MEDITRUST --------- (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-6532031 ------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 197 First Avenue Needham Heights, Massachusetts 02194 ------------------------------ ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 433-6000 -------------- 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 (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of April 17, 1996, there were outstanding 60,620,883 shares of beneficial interest, without par value. 2 MEDITRUST FORM 10-Q INDEX Part I. Financial Information Page(s) -------
Item 1. Financial Statements Consolidated Balance Sheets at March 31, 1996 (unaudited) and December 31, 1995 3 Consolidated Statements of Income for the three months ended March 31, 1996 and 1995 (unaudited) 4 Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 (unaudited) 5 Notes to Consolidated Financial Statements (unaudited) 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 10 Signatures 10
-2- 3 MEDITRUST PART I. FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1996 1995 ----------- ------------ (Unaudited) (Audited) (In thousands) ASSETS Real estate investments (Note 3) Land ...................................................... $ 59,823 $ 47,993 Buildings and improvements, net of accumulated depreciation of $82,140 and $77,204, respectively........................................... 734,023 621,182 Real estate mortgages...................................... 1,141,535 1,108,623 ---------- ---------- Total real estate investments.......................... 1,935,381 1,777,798 Other assets, net.............................................. 51,180 49,400 Fees, interest and other receivables........................... 17,402 20,406 Cash and cash equivalents...................................... 92,607 44,248 ---------- ---------- Total assets.......................................... $2,096,570 $1,891,852 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Indebtedness (Note 4): Notes payable, net.......................................... $ 320,560 $ 300,813 Convertible debentures, net................................. 293,511 295,209 Bank notes payable, net..................................... 113,709 Bonds and mortgages payable, net............................ 59,738 52,560 ---------- ---------- Total indebtedness.................................... 673,809 762,291 Deferred income................................................ 9,780 9,222 Accrued expenses and other liabilities......................... 47,941 58,584 ---------- ---------- Total liabilities..................................... 731,530 830,097 ---------- ---------- Commitments and contingencies (Note 3) Shareholders' equity (Notes 4, 5 and 6): Shares of beneficial interest without par value: Unlimited shares authorized; 60,604 and 51,177 shares issued and outstanding in 1996 and 1995, respectively................................. 1,495,621 1,192,612 Distributions in excess of net income..................... (130,581) (130,857) ---------- ---------- Total shareholders' equity................................ 1,365,040 1,061,755 ---------- ---------- Total liabilities and shareholders' equity............ $2,096,570 $1,891,852 ========== ==========
The accompanying notes, together with the Notes to the Consolidated Financial Statements incorporated by reference in the Company's Form 10-K for the year ended December 31, 1995, are an integral part of these financial statements. -3- 4 MEDITRUST CONSOLIDATED STATEMENTS OF INCOME for the three months ended March 31, 1996 and 1995 (Unaudited) ----------
1996 1995 ---- ---- (In thousands, except per Share amounts) Revenues: Rental income.............................................. $23,806 $21,056 Interest income............................................ 35,521 27,877 ------- ------- Total revenues.......................................... 59,327 48,933 ------- ------- Expenses: Interest................................................... 16,105 18,474 Depreciation and amortization.............................. 5,424 4,343 General and administrative................................. 2,265 1,933 ------- ------- Total expenses.......................................... 23,794 24,750 -------- ------- Net income..................................................... $35,533 $24,183 ======= ======= Net income per share, based on 55,153 and 40,594 weighted average Shares outstanding in 1996 and 1995, respectively.. $ .64 $ .60 ======= =======
The accompanying notes, together with the Notes to the Consolidated Financial Statements incorporated by reference in the Company's Form 10-K for the year ended December 31, 1995, are an integral part of these financial statements. -4- 5 MEDITRUST CONSOLIDATED STATEMENTS OF CASH FLOWS for the three months ended March 31, 1996 and 1995 (Unaudited)
1996 1995 ---- ---- (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income................................................. $ 35,533 $ 24,183 Depreciation of real estate................................ 4,937 3,874 Goodwill amortization...................................... 389 389 Shares issued for compensation............................. 359 202 Other depreciation and amortization and other items, net... 492 794 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES AVAILABLE FOR DISTRIBUTION................................. 41,710 29,442 Net change in other assets and liabilities................. (9,883) (3,937) --------- --------- Net cash provided by operating activities.................. 31,827 25,505 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from equity offering.............................. 312,800 263,594 Proceeds from debt issuance................................ 110,399 161,700 Repayment of bank notes payable............................ (197,000) (280,700) Repayment of senior unsecured notes and mortgage notes payable.................................. (12,500) Equity offering and debt issuance costs.................... (16,435) (13,594) Principal payments on bonds and mortgages payable.......... (227) (223) Distributions to shareholders.............................. (35,257) (26,553) Proceeds from stock options................................ 3,987 48 --------- --------- Net cash provided by financing activities............... 178,267 91,772 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of real estate................................. (129,607) (65,677) Investment in real estate mortgages and development funding..................................... (39,369) (46,665) Prepayment proceeds and principal payments on real estate mortgages................................ 6,511 1,537 Working capital advances................................... (9,884) (10,865) Collection of receivables and repayment of working capital advances................................ 10,614 8,680 --------- --------- Net cash used in investing activities................... (161,735) (112,990) --------- --------- Net increase in cash and cash equivalents............... 48,359 4,287 Cash and cash equivalents at: Beginning of period..................................... 44,248 39,937 --------- --------- End of period........................................... $ 92,607 $ 44,224 ========= ========= Supplemental disclosure of cash flow information (see Note 2).
The accompanying notes, together with the Notes to the Consolidated Financial Statements incorporated by reference in the Company's Form 10-K for the year ended December 31, 1995, are an integral part of these financial statements. -5- 6 MEDITRUST NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Summary of Significant Accounting Policies ------------------------------------------ Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted in this Form 10-Q in compliance with the Rules and Regulations of the Securities and Exchange Commission. However, in the opinion of Meditrust ("the Company"), the disclosures contained in this Form 10-Q are adequate to make the information presented not misleading. See the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (and the Report on Form 8-K dated January 29, 1996 incorporated by reference therein) for additional information relevant to significant accounting policies followed by the Company. Basis of Presentation --------------------- In the opinion of the Company, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly its financial position as of March 31, 1996 and its results of operations and cash flows for each of the three-month periods ended March 31, 1996 and 1995. The results of operations for the three-month period ended March 31, 1996 are not necessarily indicative of the results which may be expected for the entire year. Certain 1995 amounts have been reclassified to conform to the 1996 presentation. 2. Supplemental Cash Flow Information ----------------------------------
Three Months Ended March 31, -------------------- 1996 1995 ---- ---- (in thousands) Interest paid during the period............................. $23,954 $14,809 Non-cash financing transaction: Value of shares issued upon conversion of debentures..... $ 2,080 $ 9,129
3. Real Estate Investments ----------------------- During the three months ended March 31, 1996, the Company acquired for $129,607,000 13 long-term care facilities and 13 assisted living facilities. During the three months ended March 31, 1996, the Company provided permanent mortgage financing of $17,800,000 for two long-term care facilities and one retirement living facility located in Washington and North Carolina. The Company also provided $1,890,000 in additional permanent mortgage financing secured by 24 long-term care facilities located in 12 states. -6- 7 MEDITRUST NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued (Unaudited) In addition, the Company provided net development financing of $19,679,000 for 12 medical office buildings, four long-term care facilities and two assisted living facilities under construction. During the three months ended March 31, 1996, the Company received principal payments on real estate mortgages of $3,434,000 and received $3,077,000 in mortgage prepayments for one facility located in North Carolina. At March 31, 1996, the Company was committed to provide additional financing of approximately $102,961,000 relating to 12 medical office buildings, four long-term care facilities, and three assisted living facilities currently under construction and additions to permanent mortgages secured by eight long-term care facilities. 4. Indebtedness and Shareholders' Equity ------------------------------------- In February 1996, the Company completed the sale of 9,200,000 shares of beneficial interest, without par value ("Shares") at $34.00 per Share. The net proceeds to the Company from this offering were used to repay short-term borrowings and for investments in additional health care facilities. During the three months ended March 31, 1996, the Company issued a total of $40,000,000 in notes payable with maturity dates ranging from January 17, 1997 to August 17, 2015, bearing interest at rates between 6.35% to 8.625%. The net proceeds from the issuance of these securities were utilized to reduce the outstanding balance of the Company's unsecured credit facilities. On March 18, 1996, $20,000,000 of these notes were repaid. During the three months ended March 31, 1996, $865,000 of principal amount of 9% convertible debentures were converted into 32,034 Shares and $1,215,000 of principal amount of 7% convertible debentures were converted into 39,672 Shares. The Company has a total of $205,000,000 in unsecured lines of credit, bearing interest at the lenders' prime rate or LIBOR plus 1.0%, all of which was available at March 31, 1996. 5. Distributions Paid to Shareholders ---------------------------------- On February 15, 1996, the Company paid a dividend of $.6875 per Share to shareholders of record on January 31, 1996. This dividend related to the period from October 1, 1995 through December 31, 1995. 6. Subsequent Events ----------------- On April 9, 1996, the Company declared a dividend of $.6925 per Share payable on May 15, 1996 to shareholders of record on April 30, 1996. This dividend relates to the period from January 1, 1996 through March 31, 1996. -7- 8 MEDITRUST MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS --------------------- Revenues for the three months ended March 31, 1996 were $59,327,000 compared to $48,933,000 for the three months ended March 31, 1995, an increase of $10,394,000 or 21%. Revenue growth was comprised of increased interest income of $7,644,000 and increased rental income of $2,750,000, which resulted primarily from additional real estate investments made during the past year. For the three months ended March 31, 1996, total expenses decreased by $956,000 compared to the three months ended March 31, 1995. Interest expense decreased by $2,369,000 primarily due to reductions in debt outstanding as a result of an equity offering in February 1996, and lower interest rates on the notes outstanding during the three months ended March 31, 1996, compared to those outstanding during the three months ended March 31, 1995. Depreciation and amortization expenses increased by $1,081,000, as a result of increased real estate investments made during the past year. General and administrative expenses increased by $332,000 due to growth in the Company's investment portfolio. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1996, the Company's gross real estate investments totaled approximately $2,018,000,000 consisting of 261 long-term care facilities, 24 rehabilitation hospitals, 22 retirement and assisted living facilities, 15 medical office buildings, ten alcohol and substance abuse treatment facilities and psychiatric hospitals, and one acute care hospital campus. As of March 31, 1996, the Company's outstanding commitments for additional financing totaled approximately $102,961,000 for the completion of 19 facilities under construction and additions to permanent mortgages secured by eight long-term care facilities. The Company had shareholders' equity of $1,365,040,000 and debt constituted 33% of the Company's total capitalization as of March 31, 1996. The Company provides funding for its investments through a combination of long-term and short-term financing including both debt and equity. The Company obtains long-term financing through the issuance of Shares, the issuance of long-term unsecured notes, the issuance of convertible debentures and the assumption of mortgage notes. The Company obtains short-term financing through the use of unsecured notes and bank lines of credit which are replaced with long-term financing as appropriate. From time to time, the Company may utilize interest rate caps or swaps to hedge interest rate volatility. It is the Company's objective to match mortgage and lease terms with the terms of its borrowings. The Company seeks to maintain an appropriate spread between its borrowing costs and the rate of return on its investments. When development loans convert to sale/leaseback transactions or permanent mortgage loans, the base rent or interest rate, as appropriate, is fixed at the time of such conversion. -8- 9 MEDITRUST MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued Liquidity and Capital Resources, Continued - ------------------------------------------ On August 10, 1995, the Company commenced a Medium-Term Note program, offering on a continuing basis, notes due from nine months to 30 years from date of issue, as selected by the purchaser and agreed to by the Company at an aggregate initial public offering price not to exceed $200 million. During the three months ended March 31, 1996, $40,000,000 of these notes were issued with maturity dates ranging from January 17, 1997 to August 17, 2015, and bearing interest at annual rates between 6.35% to 8.625%. The net proceeds from the issuance of these securities were utilized to reduce the outstanding balance of the Company's unsecured credit facilities. On March 18, 1996, $20,000,000 of these notes were repaid. During February 1996, the Company completed the sale of 9,200,000 Shares at $34.00 per Share. The net proceeds to the Company from this offering were used to repay short-term borrowings and for investments in additional health care facilities. As of April 4, 1996, the Company has unsecured revolving lines of credit expiring June 30, 1997 in the aggregate amount of $205,000,000 bearing interest at the lender's prime rate (8.25%) or LIBOR plus 1.0% (6.4375% at April 4, 1996). The total amount was available at April 4, 1996. In addition, the Company has effective shelf registrations on file with the Securities and Exchange Commission under which the Company may issue up to approximately $81,000,000 of securities including debt, convertible debt and warrants to purchase debt, convertible debt and Shares. The Company has also filed with the Securities and Exchange Commission an additional Shelf Registration with respect to $500,000,000 of Securities. The Company believes that its various sources of capital are adequate to finance its operations as well as pending property acquisitions, mortgage financings and future dividends. For 1996, however, in the event that the Company identifies appropriate investment opportunities, the Company may raise additional capital through the sale of Shares or by the issuance of additional long-term debt. -9- 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits
Exhibit No. Title Method of Filing - ------- ----- ---------------- 10 Agreement dated as of March 8, 1996 between the Company and Robert Cataldo..................... Incorporated by reference to the Registration Statement on Form S-8 (File No. 333-0891) 11 Statement Regarding Computation of Per Share Earnings........................................... Filed herewith 27 Financial Data Schedule............................ Filed herewith
(b) Reports on Form 8-K During the quarter ended March 31, 1996, the Company filed (i) a current report on Form 8-K dated January 29, 1996, which included the consolidated financial statements of the Company for the year ended December 31, 1995, and (ii) an amendment dated March 20, 1996 to its current report on Form 8-K dated March 4, 1992, which updated the Company's discussion of potential tax consequences from an investment in the Company's securities. 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. MEDITRUST Date: April 26, 1996 By: /s/ Lisa P. McAlister --------------------- Lisa P. McAlister, Chief Financial Officer -10- EX-11 2 STATEMENT REGARDING COMPUTATION OF EARNINGS 1 Exhibit 11 MEDITRUST STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (000 omitted except for per share amounts)
Quarter ended March 31, -------------------- 1996 1995 Primary - ------- Weighted average shares 55,153 40,594 Dilutive effect of: Stock options 172 65 ------- ------- Weighted average number of shares and equivalent shares outstanding 55,325 40,659 ======= ======= Net income $35,533 $24,183 ======= ======= Per Share: Net income (A) $ 0.64 $ 0.59 ======= ======= (A) This calculation is submitted in accordance with Regulation S-K item 601(b) (11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
Fully Diluted - ------------- Weighted average shares 55,153 40,594 Assumed conversion of debentures 8,680 6,675 Dilutive effect of: Stock options 172 65 ------- ------- Weighted average shares and equivalent shares outstanding 64,005 47,334 ======= ======= Net income $35,533 $24,183 Interest and debt amortization on assumed conversion of debentures 6,060 4,472 ------- ------- Adjusted net income for fully diluted calculation $41,593 $28,655 ======= ======= Per Share: Net income (B) $ 0.65 $ 0.61 ======= ======= (B) This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it produces anti-dilutive results.
-11- EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheet as of March 31, 1996 and the Consolidted Statement of Income for the three months ended March 31, 1996 of Meditrust and is qualified in its entirety by reference to such financial statements. 1,000 U.S. DOLLARS 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 92,607 0 17,402 0 0 0 875,986 82,140 2,096,570 0 673,809 0 0 1,495,621 (130,581) 2,096,570 0 59,327 0 0 0 0 16,105 35,533 0 35,533 0 0 0 35,533 .64 .64
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