EX-99.1 2 c88682exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(NATIONWIDE HEALTH PROPERTIES LOGO)
Contact:
Abdo H. Khoury
Chief Financial and Portfolio Officer
(949) 718-4400
NHP REPORTS 2009 SECOND QUARTER RESULTS
Second Quarter Highlights
   
Issued $47 Million of Equity and Retired $30 Million of Senior Notes
 
   
Hearthstone Lease Restructure Completed
 
   
Payout Ratio of 77% Supports $0.44 per Share Cash Dividend
 
   
Balance Sheet and Liquidity Position Strong
NEWPORT BEACH, CA — August 5, 2009 — Nationwide Health Properties, Inc. (NYSE: NHP) today announced results of operations for the second quarter and six months ended June 30, 2009. Contemporaneously with this press release, the Company filed its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 with the Securities and Exchange Commission.
“NHP’s strong balance sheet is anchored by low leverage, ample liquidity and modest capital commitments through June 2011. Always looking to improve our balance sheet in this economic environment, to date we raised $105 million of equity and retired $30 million of our senior notes. On an enterprise value basis, our leverage is 35% and after our recent equity issuances we have about $199 million of cash as well as the full capacity of our $700 million credit facility,” commented Douglas M. Pasquale, NHP’s Chairman and Chief Executive Officer. “NHP is well positioned to take advantage of investment opportunities as they arise. We expect assets will begin to become available at attractive prices and we are prepared to make excellent investments as these opportunities present themselves,” Mr. Pasquale added.

 

 


 

SECOND QUARTER 2009 RESULTS OF OPERATIONS
The following table presents selected unaudited financial information for the second quarter and the six months ended June 30, 2009 as compared to the same period of 2008:
SELECTED FINANCIAL DATA
($ in thousands, except per share amounts)
                                 
    Three Months Ended June 30,  
    2009     2008     $ Change     % Change  
 
Revenue
  $ 97,311     $ 93,071     $ 4,240       4.6 %
Income from Continuing Operations
  $ 34,809     $ 26,518     $ 8,291       31.3 %
Net Income Attributable to NHP Common Stockholders
  $ 33,299     $ 165,951     $ (132,652 )     -79.9 %
Net Income Attributable to NHP Common Stockholders Per Diluted Share
  $ 0.31     $ 1.69     $ (1.38 )     -81.7 %
Diluted FFO
  $ 66,630     $ 57,806     $ 8,824       15.3 %
Recurring Diluted FFO
  $ 62,066     $ 57,806     $ 4,260       7.4 %
Diluted FFO Per Share
  $ 0.61     $ 0.56     $ 0.05       8.9 %
Recurring Diluted FFO Per Share
  $ 0.57     $ 0.56     $ 0.01       1.8 %
Diluted FAD
  $ 66,242     $ 56,090     $ 10,152       18.1 %
Recurring Diluted FAD
  $ 61,678     $ 56,090     $ 5,588       10.0 %
Diluted FAD Per Share
  $ 0.61     $ 0.55     $ 0.06       10.9 %
Recurring Diluted FAD Per Share
  $ 0.57     $ 0.55     $ 0.02       3.6 %
                                 
    Six Months Ended June 30,  
    2009     2008     $ Change     % Change  
 
Revenue
  $ 194,562     $ 178,342     $ 16,220       9.1 %
Income from Continuing Operations
  $ 64,209     $ 49,461     $ 14,748       29.8 %
Net Income Attributable to NHP Common Stockholders
  $ 82,453     $ 201,344     $ (118,891 )     -59.0 %
Net Income Attributable to NHP Common Stockholders Per Diluted Share
  $ 0.78     $ 2.07     $ (1.29 )     -62.3 %
Diluted FFO
  $ 128,197     $ 114,099     $ 14,098       12.4 %
Recurring Diluted FFO
  $ 123,633     $ 114,099     $ 9,534       8.4 %
Diluted FFO Per Share
  $ 1.18     $ 1.12     $ 0.06       5.4 %
Recurring Diluted FFO Per Share
  $ 1.14     $ 1.12     $ 0.02       1.8 %
Diluted FAD
  $ 127,668     $ 110,661     $ 17,007       15.4 %
Recurring Diluted FAD
  $ 123,104     $ 110,661     $ 12,443       11.2 %
Diluted FAD Per Share
  $ 1.18     $ 1.09     $ 0.09       8.3 %
Recurring Diluted FAD Per Share
  $ 1.14     $ 1.09     $ 0.05       4.6 %

 

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NON-GAAP FINANCIAL MEASURES
Diluted Funds From Operations (“FFO”) and Diluted Funds Available for Distribution (“FAD”) are non-GAAP measures that we believe are important to understanding our operations. We believe diluted FFO is an important supplemental measure of operating performance because it excludes the effects of depreciation and amortization and gains (losses) from sales of facilities (both of which are based on historical costs and which may be of limited relevance in evaluating current performance). We believe diluted FAD is an important supplemental measure of operating performance because, like diluted FFO, it excludes the effects of depreciation and amortization and gains (losses) from sales of facilities (both of which are based on historical costs and which may be of limited relevance in evaluating current performance). It also excludes straight-lined rent and other non-cash items that have become more significant for us and our competitors over the last several years. We believe that net income is the most directly comparable GAAP measure to diluted FFO and diluted FAD. Reconciliations between net income and diluted FFO and net income and diluted FAD are included in the accompanying financial data. For guidance, we have also included in the accompanying financial data reconciliations between net income per share and diluted FFO and diluted FAD per share. We have also included recurring diluted FFO and recurring diluted FAD amounts which exclude the recognition of a gain on debt extinguishment in 2009.
SECOND QUARTER 2009 INVESTMENT ACTIVITY
During the second quarter of 2009, we invested $6.0 million in revenue producing capital expenditures at a blended yield of 8.5% on our existing triple net portfolio.
In July 2009, we reached an agreement with The Broe Group to acquire all of their interests in two of our medical office building joint ventures for $4.3 million.
On July 27, 2009, we amended our leases with Hearthstone Senior Services, L.P. (“Hearthstone”). Hearthstone’s only operations consist of the management of the 32 facilities under these leases. The lease terms were modified to (i) convert the annual Base Rent escalator to a fixed 3%, (ii) defer payment of the Supplemental Rent through December 31, 2011, (iii) tighten restrictions on distributions until such time as Hearthstone achieves and sustains defined rent coverage levels, (iv) provide for transfer of ownership of Hearthstone to us in the event of certain major events of default and (v) put in place certain bankruptcy protections and enhanced oversight rights for us.
SECOND QUARTER 2009 FINANCING TRANSACTIONS
On April 1, 2009, we retired $30.0 million of senior notes with an interest rate of 6.25% due in February 2013 for $25.4 million.
During the second quarter of 2009, we issued 1.8 million shares of our common stock through our controlled equity offering program at an average price of $27.14 per share, resulting in net proceeds of approximately $47.0 million.
From July 1, 2009 to August 5, 2009, we issued 2.1 million shares of our common stock through our controlled equity offering program at an average price of $27.80 per share, resulting in net proceeds of approximately $58.4 million.

 

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2009 GUIDANCE
As a result of the common shares issued to date in 2009, we are decreasing by $0.01 per share the high end of our full-year 2009 recurring diluted FFO guidance from $2.26 per share to $2.25 per share. We are also decreasing by $0.01 per share the high end of our full-year 2009 recurring diluted FAD guidance from $2.24 per share to $2.23 per share. Our revised guidance for recurring diluted FFO of $2.22 per share to $2.25 per share includes the retirement of $30.0 million of senior notes, the second quarter and post second quarter end issuances of common shares that are discussed above and excludes any acquisitions, investments, impairments or additional capital transactions that could occur for the remainder of 2009. Current guidance reflects the recent amendment of the Hearthstone leases and does not include any Supplemental Rent previously or prospectively deferred. Beginning in 2009, certain costs associated with acquisitions which were previously capitalized are now required to be expensed. While our guidance does not assume any acquisitions for the remainder of 2009, we would incur certain costs that would be expensed for any acquisitions we may make and those costs could be material.
CONFERENCE CALL INFORMATION
We have scheduled a conference call and webcast on Thursday, August 6, 2009 at 8:30 a.m. Pacific time (11:30 a.m. Eastern time) to discuss these results. The conference call is accessible by dialing 866-713-8566 and referencing conference ID number 76511885 or by logging on to our website at http://www.nhp-reit.com. The international dial-in number is 617-597-5325. The earnings release and any additional financial information that may be discussed on the conference call will also be available at the same location on our website. A digitized replay of the conference call will be available from 11:30 a.m. Pacific time (2:30 p.m. Eastern time) that day until 9:00 p.m. Pacific time (Midnight Eastern time) on September 6, 2009. Callers can access the replay by dialing 888-286-8010 or 617-801-6888 and entering conference ID number 32754392. Webcast replays will also be available on our website for at least 12 months following the conference call. Our supplemental information package for the quarter and six months ended June 30, 2009 is available on our website, free of charge, at http://www.nhp-reit.com by selecting “Investor Relations” followed by “Financial Information” and is included in our Current Report on Form 8-K filed August 5, 2009 with the SEC also containing this release. Shareholders may receive free of charge a complete set of our audited financial statements upon request.

 

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ABOUT NATIONWIDE HEALTH PROPERTIES, INC.
Nationwide Health Properties, Inc. is a real estate investment trust (REIT) that invests primarily in healthcare real estate in the United States. As of June 30, 2009, the Company’s portfolio of properties, including mortgage loans and properties owned by unconsolidated joint ventures, totaled 579 properties among the following segments: 279 senior housing facilities, 200 skilled nursing facilities, 82 medical office buildings, 11 continuing care retirement communities and 7 specialty hospitals. For more information on Nationwide Health Properties, Inc., visit our website at http://www.nhp-reit.com.
FORWARD LOOKING STATEMENTS
Certain information contained in this release includes forward-looking statements. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are not statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. Risks and uncertainties associated with our business include (without limitation) the following: deterioration in the operating results or financial condition, including bankruptcies, of our tenants; non-payment or late payment of rent, interest or loan principal amounts by our tenants; our reliance on two tenants for a significant percentage of our revenue; occupancy levels at certain facilities; our level of indebtedness; changes in the ratings of our debt securities; maintaining compliance with our debt covenants; access to the capital markets and the cost and availability of capital; government regulations, including changes in the reimbursement levels under the Medicare and Medicaid programs; the general distress of the healthcare industry; increasing competition in our business sector; the effect of economic and market conditions and changes in interest rates; the amount and yield of any additional investments; risks associated with acquisitions, including our ability to identify and complete favorable transactions, delays or failures in obtaining third party consents or approvals, the failure to achieve perceived benefits, unexpected costs or liabilities and potential litigation; the ability of our tenants to pay contractual rent and/or interest escalations in future periods; the ability of our tenants to obtain and maintain adequate liability and other insurance; our ability to attract new tenants for certain facilities; our ability to sell certain facilities for their book value; our ability to retain key personnel; potential liability under environmental laws; the possibility that we could be required to repurchase some of our senior notes; the rights and influence of holders of our outstanding preferred stock; changes in or inadvertent violations of tax laws and regulations and other factors that can affect our status as a real estate investment trust; and other factors discussed from time to time in our news releases, public statements and/or filings with the Securities and Exchange Commission, especially the “Risk Factors” sections of our Annual and Quarterly Reports on Forms 10-K and 10-Q. Forward-looking information is provided by us pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. We disclaim any intent or obligation to update these forward-looking statements.
***Financial Tables to Follow***

 

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NATIONWIDE HEALTH PROPERTIES, INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share data)
(Unaudited)
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2009     2008     2009     2008  
Revenue:
                               
Triple-net lease rent
  $ 73,650     $ 70,583     $ 147,913     $ 139,656  
Medical office building operating rent
    17,003       15,939       33,656       26,870  
 
                       
 
    90,653       86,522       181,569       166,526  
Interest and other income
    6,658       6,549       12,993       11,816  
 
                       
 
    97,311       93,071       194,562       178,342  
 
                               
Expenses:
                               
Interest and amortization of deferred financing costs
    23,247       25,507       47,319       50,246  
Depreciation and amortization
    30,892       28,788       61,919       56,070  
General and administrative
    6,973       6,407       13,904       12,904  
Medical office building operating expenses
    7,128       6,699       13,962       11,562  
 
                       
 
    68,240       67,401       137,104       130,782  
 
                       
Operating income
    29,071       25,670       57,458       47,560  
Income from unconsolidated joint ventures
    1,174       848       2,187       1,901  
Gain on debt extinguishment, net
    4,564             4,564        
 
                       
Income from continuing operations
    34,809       26,518       64,209       49,461  
Discontinued operations
                               
Gains on sale of facilities, net
          140,226       21,152       151,092  
Income from discontinued operations
    17       1,223       98       4,861  
 
                       
 
    17       141,449       21,250       155,953  
 
                       
Net income
    34,826       167,967       85,459       205,414  
Net (income) loss attributable to noncontrolling interests
    (75 )     46       (102 )     55  
 
                       
Net income attributable to NHP
    34,751       168,013       85,357       205,469  
Preferred stock dividends
    (1,452 )     (2,062 )     (2,904 )     (4,125 )
 
                       
Income available to NHP common stockholders
  $ 33,299     $ 165,951     $ 82,453     $ 201,344  
 
                       
 
                               
Basic earnings per share (EPS):
                               
Income from continuing operations attributable to NHP common stockholders
  $ 0.32     $ 0.25     $ 0.59     $ 0.46  
Discontinued operations attributable to NHP common stockholders
          1.47       0.21       1.63  
 
                       
Net income attributable to NHP common stockholders
  $ 0.32     $ 1.72     $ 0.80     $ 2.09  
 
                       
 
                               
Diluted EPS:
                               
Income from continuing operations attributable to NHP common stockholders
  $ 0.31     $ 0.25     $ 0.58     $ 0.46  
Discontinued operations attributable to NHP common stockholders
          1.44       0.20       1.61  
 
                       
Net income attributable to NHP common stockholders
  $ 0.31     $ 1.69     $ 0.78     $ 2.07  
 
                       
 
                               
Weighted average shares outstanding for EPS:
                               
Basic
    103,089       96,351       102,724       95,813  
 
                       
Diluted
    105,182       98,013       104,797       96,823  
 
                       

 

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NATIONWIDE HEALTH PROPERTIES, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Reconciliation of Net Income to Diluted FFO
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2009     2008     2009     2008  
 
Net income
  $ 34,826     $ 167,967     $ 85,459     $ 205,414  
Preferred stock dividends
    (1,452 )     (2,062 )     (2,904 )     (4,125 )
Net (income) loss attributable to noncontrolling interests
    (75 )     46       (102 )     55  
Real estate related depreciation and amortization
    30,567       28,888       61,374       57,476  
Depreciation in income from unconsolidated joint ventures
    1,312       1,131       2,618       2,246  
Gains on sale of facilities, net
          (140,226 )     (21,152 )     (151,092 )
 
                       
FFO available to NHP common stockholders
    65,178       55,744       125,293       109,974  
Series B preferred dividend add-back
    1,452       2,062       2,904       4,125  
 
                       
Diluted FFO
    66,630       57,806       128,197       114,099  
Gain on extinguishment of debt, net
    (4,564 )           (4,564 )      
 
                       
Recurring diluted FFO
  $ 62,066     $ 57,806     $ 123,633     $ 114,099  
 
                       
 
                               
Weighted average shares outstanding for diluted FFO:
                               
Diluted weighted average shares outstanding (1)
    105,241       98,114       104,848       96,949  
Series B preferred stock conversion add-back if not already converted
    3,368       4,736       3,363       4,732  
 
                       
Fully diluted weighted average shares outstanding
    108,609       102,850       108,211       101,681  
 
                       
 
                               
Diluted FFO per share
  $ 0.61     $ 0.56     $ 1.18     $ 1.12  
 
                       
Recurring diluted FFO per share
  $ 0.57     $ 0.56     $ 1.14     $ 1.12  
 
                       
 
                               
Dividends declared per common share
  $ 0.44     $ 0.44     $ 0.88     $ 0.88  
 
                       
 
                               
Recurring diluted FFO payout ratio
    77 %     79 %     77 %     79 %
 
                       
Recurring diluted FFO coverage
    1.30       1.27       1.30       1.27  
 
                       
     
(1)  
Diluted weighted average shares outstanding includes the effect of all participating and non-participating share-based payment awards which for us consists of stock options and other share-based payment awards if the effect is dilutive. The dilutive effect of all share-based payment awards is calculated using the treasury stock method. Additionally, our redeemable OP units are included as if converted to common stock on a one-for-one basis.

 

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NATIONWIDE HEALTH PROPERTIES, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Reconciliation of Net Income to Diluted FAD
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2009     2008     2009     2008  
 
Net income
  $ 34,826     $ 167,967     $ 85,459     $ 205,414  
Preferred stock dividends
    (1,452 )     (2,062 )     (2,904 )     (4,125 )
Net (income) loss attributable to noncontrolling interests
    (75 )     46       (102 )     55  
Real estate related depreciation and amortization
    30,567       28,888       61,374       57,476  
Gains on sale of facilities, net
          (140,226 )     (21,152 )     (151,092 )
Straight-lined rent
    (1,599 )     (2,759 )     (3,188 )     (5,597 )
Amortization of intangible assets and liabilities
    (48 )     (150 )     (271 )     (274 )
Non-cash stock-based compensation expense
    1,837       1,440       3,410       2,771  
Deferred finance cost amortization
    756       777       1,570       1,524  
Lease commissions and tenant and capital improvements
    (1,343 )     (1,047 )     (2,069 )     (1,894 )
Unconsolidated joint ventures:
                               
Real estate related depreciation and amortization
    1,312       1,131       2,618       2,246  
Straight-lined rent
    (12 )           (23 )     (10 )
Deferred finance cost amortization
    21       23       42       42  
 
                       
FAD available to NHP common stockholders
    64,790       54,028       124,764       106,536  
Series B preferred dividends
    1,452       2,062       2,904       4,125  
 
                       
Diluted FAD
    66,242       56,090       127,668       110,661  
Gain on extinguishment of debt, net
    (4,564 )           (4,564 )      
 
                       
Recurring diluted FAD
  $ 61,678     $ 56,090     $ 123,104     $ 110,661  
 
                       
 
                               
Weighted average shares outstanding for diluted FAD:
                               
Diluted weighted average shares outstanding (1)
    105,241       98,114       104,848       96,949  
Series B preferred stock add-back if not already converted
    3,368       4,736       3,363       4,732  
 
                       
Fully diluted weighted average shares outstanding
    108,609       102,850       108,211       101,681  
 
                       
 
                               
Diluted FAD per share
  $ 0.61     $ 0.55     $ 1.18     $ 1.09  
 
                       
Recurring diluted FAD per share
  $ 0.57     $ 0.55     $ 1.14     $ 1.09  
 
                       
 
                               
Dividends declared per common share
  $ 0.44     $ 0.44     $ 0.88     $ 0.88  
 
                       
 
                               
Diluted FAD payout ratio
    77 %     80 %     77 %     81 %
 
                       
Diluted FAD coverage
    1.30       1.25       1.30       1.24  
 
                       
     
(1)  
Diluted weighted average shares outstanding includes the effect of all participating and non-participating share-based payment awards which for us consists of stock options and other share-based payment awards if the effect is dilutive. The dilutive effect of all share-based payment awards is calculated using the treasury stock method. Additionally, our redeemable OP units are included as if converted to common stock on a one-for-one basis.

 

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NATIONWIDE HEALTH PROPERTIES, INC.
RECONCILIATION OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
2009 Guidance
Reconciliation of Net Income to Recurring Diluted FFO and FAD Per Share
                 
    Year Ended December 31, 2009  
    Guidance  
    Low     High  
 
               
Net income
  $ 156,213     $ 159,767  
Preferred stock dividends
    (5,810 )     (5,810 )
Real estate related depreciation and amortization
    119,517       119,517  
Depreciation in income from unconsolidated joint ventures
    5,155       5,155  
Minority interest — NHP/PMB
    165       165  
Gains on sale of facilities, net
    (31,499 )     (31,499 )
 
           
FFO available to common stockholders
    243,741       247,295  
Series B preferred dividends
    5,810       5,810  
 
           
Diluted FFO
    249,551       253,105  
Gain on extinguishment of debt, net
    (4,564 )     (4,564 )
 
           
Recurring diluted FFO
    244,987       248,541  
Straight-lined rent
    (6,272 )     (6,272 )
Amortization of intangible assets and liabilities
    (535 )     (535 )
Non-cash stock-based compensation expense
    7,092       7,092  
Deferred finance cost amortization
    3,120       3,120  
Lease commissions and tenant and capital improvements
    (5,608 )     (5,608 )
Unconsolidated Joint Ventures:
               
Straight-lined rent
    (27 )     (27 )
Deferred finance cost amortization
    84       84  
 
           
Recurring diluted FAD
  $ 242,841     $ 246,395  
 
           
 
               
Diluted FFO per share
  $ 2.26     $ 2.29  
 
           
Recurring diluted FFO per share
  $ 2.22     $ 2.25  
 
           
Recurring diluted FAD per share
  $ 2.20     $ 2.23  
 
           
 
               
Weighted average shares outstanding:
               
Diluted weighted average shares outstanding
    105,354       105,354  
NHP/PMB OP units
    1,830       1,830  
Series B preferred stock conversion
    3,375       3,375  
 
           
Total
    110,559       110,559  
 
           

 

9


 

NATIONWIDE HEALTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
                 
    June 30,     December 31,  
    2009     2008  
    (Unaudited)        
 
Assets
               
Investments in real estate:
               
Land
  $ 318,852     $ 320,394  
Buildings and improvements
    3,078,118       3,079,819  
 
           
 
    3,396,970       3,400,213  
Less accumulated depreciation
    (538,705 )     (490,112 )
 
           
 
    2,858,265       2,910,101  
Mortgage loans receivable, net
    110,902       112,399  
Mortgage loan receivable from related party
    47,500       47,500  
Investments in unconsolidated joint ventures
    50,765       54,299  
 
           
Net real estate related investments
    3,067,432       3,124,299  
Cash and cash equivalents
    121,729       82,250  
Receivables, net
    7,858       6,066  
Asset held for sale
          4,542  
Intangible assets
    103,666       109,434  
Other assets
    131,531       131,534  
 
           
Total assets
  $ 3,432,216     $ 3,458,125  
 
           
 
               
Liabilities and Equity
               
Unsecured senior credit facility
  $     $  
Senior notes
    994,233       1,056,233  
Notes and bonds payable
    438,612       435,199  
Accounts payable and accrued liabilities
    130,339       144,566  
 
           
Total liabilities
    1,563,184       1,635,998  
 
Redeemable OP unitholder interests
    55,070       56,778  
 
               
Equity:
               
NHP stockholders’ equity
               
Series B convertible preferred stock
    74,918       74,918  
Common stock
    10,449       10,228  
Capital in excess of par value
    1,845,817       1,786,193  
Cumulative net income
    1,642,246       1,556,889  
Accumulated other comprehensive (loss) income
    (608 )     1,846  
Cumulative dividends
    (1,763,129 )     (1,669,407 )
 
           
Total NHP stockholders’ equity
    1,809,693       1,760,667  
Noncontrolling interests
    4,269       4,682  
 
           
Total equity
    1,813,962       1,765,349  
 
           
Total liabilities and equity
  $ 3,432,216     $ 3,458,125  
 
           

 

10