-----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, VdZIr12pS1srwaapUJ4leRzXLZ6EruQFvp0NoCWy1NMso3692XnTirE7o8hFzHJJ tgIy3CtEcn0nalbBNCdI5w== 0001017062-98-001108.txt : 19980515 0001017062-98-001108.hdr.sgml : 19980515 ACCESSION NUMBER: 0001017062-98-001108 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE HEALTH PROPERTIES INC CENTRAL INDEX KEY: 0000780053 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 953997619 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09028 FILM NUMBER: 98619919 BUSINESS ADDRESS: STREET 1: 610 NEWPORT CENTER DR STREET 2: STE 1150 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7142511211 MAIL ADDRESS: STREET 1: 610 NEWPORT CENTER DR STREET 2: STE 1150 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 FORMER COMPANY: FORMER CONFORMED NAME: BEVERLY INVESTMENT PROPERTIES INC DATE OF NAME CHANGE: 19890515 10-Q 1 FORM 10-Q PERIOD ENDING 03/31/1998 ================================================================================ 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 March 31, 1998 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 1-9028 NATIONWIDE HEALTH PROPERTIES, INC. (Exact name of registrant as specified in its charter) Maryland 95-3997619 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification Number) 610 Newport Center Drive, Suite 1150 Newport Beach, California 92660 (Address of principal executive offices) (949) 718-4400 (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 (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 [_] Shares of registrant's common stock, $.10 par value, outstanding at April 30, 1998 - 44,639,534. ================================================================================ NATIONWIDE HEALTH PROPERTIES, INC. FORM 10-Q March 31, 1998 TABLE OF CONTENTS Part I--Financial Information Page ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets................ 2 Condensed Consolidated Statements of Operations...... 3 Condensed Consolidated Statements of Cash Flows...... 4 Notes to Condensed Consolidated Financial Statements. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................. 7 Part II--Other Information Item 6. Exhibits and Reports on Form 8-K..................... 9 1 PART I NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
March 31, December 31, 1998 1997 ----------- ------------ (Unaudited) (Dollars in thousands) Investments in real estate Real estate properties: Land........................................ $ 123,543 $ 120,236 Buildings and improvements.................. 814,040 809,217 Construction in progress.................... 48,994 31,078 ---------- ---------- 986,577 960,531 Less accumulated depreciation............... (112,163) (107,077) ---------- ---------- 874,414 853,454 Mortgage loans receivable, net................... 200,363 199,819 ---------- ---------- 1,074,777 1,053,273 Cash and cash equivalents.......................... 14,047 10,192 Receivables........................................ 4,502 4,362 Other assets....................................... 10,168 9,567 ---------- ---------- $1,103,494 $1,077,394 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Bank borrowings................................... $ 21,600 $ 19,600 Senior notes due 2000-2037........................ 370,000 355,000 Convertible debentures............................ 59,815 64,512 Notes and bonds payable........................... 58,161 58,297 Accounts payable and accrued liabilities.......... 36,385 26,939 Stockholders' equity: Preferred stock $1.00 par value; 5,000,000 shares authorized; Issued and outstanding: 1998-1,000,000; 1997-1,000,000, stated at liquidation preference of $100 per share.. 100,000 100,000 Common stock $.10 par value; 100,000,000 shares authorized; Issued and outstanding: 1998-43,350,449; 1997-43,128,889............. 4,334 4,313 Capital in excess of par value................. 495,428 490,737 Cumulative net income.......................... 383,786 363,896 Cumulative dividends........................... (426,015) (405,900) ---------- ---------- Total stockholders' equity.............. 557,533 553,046 ---------- ---------- $1,103,494 $1,077,394 ========== ==========
See accompanying notes. 2 NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands except per share amounts)
Three Months Ended March 31, --------------------- 1998 1997 -------- -------- Revenues: Minimum rent.......................................... $23,790 $18,278 Interest and other income............................. 5,693 4,723 Additional rent and additional interest............... 3,675 3,301 ------- ------- 33,158 26,302 Expenses: Interest and amortization of deferred financing costs. 8,252 6,101 Depreciation and non-cash charges..................... 6,145 4,558 General and administrative............................ 1,192 888 ------- ------- 15,589 11,547 ------- ------- Net income before gain on sale of properties........... 17,569 14,755 Gain on sale of properties............................. 2,321 -- ------- ------- Net income............................................. 19,890 14,755 Preferred stock dividends.............................. (1,919) -- ------- ------- Net income available to common stockholders............ $17,971 $14,755 ======= ======= Per share amounts: Basic/diluted income from continuing operations available to common stockholders.................... $ .36 $ .35 ======= ======= Basic/diluted net income available to common stockholders........................................ $ .42 $ .35 ======= ======= Dividends paid per share.............................. $ .42 $ .39 ======= ======= Weighted average shares outstanding.................... 43,265 41,800 ======= =======
See accompanying notes. 3 NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three Months Ended March 31, -------------------- 1998 1997 -------- -------- Cash flow from operating activities: Net income.......................................... $ 19,890 $ 14,755 Gain on sale of properties.......................... (2,321) -- Depreciation and non-cash charges................... 6,145 4,558 Amortization of deferred financing costs............ 225 187 Net decrease in other assets and liabilities........ 8,091 2,731 -------- -------- Net cash provided by operating activities....... 32,030 22,231 Cash flow from investing activities: Acquisition of real estate properties............... (30,191) (48,450) Disposition of real estate properties............... 5,496 -- Investment in mortgage loans receivable............. (707) (11,550) Principal payments on mortgage loans receivable..... 532 515 -------- -------- Net cash used in investing activities........... (24,870) (59,485) Cash flow from financing activities: Bank borrowings..................................... 33,900 68,900 Repayment of bank borrowings........................ (31,900) (38,200) Issuance of senior unsecured debt................... 15,000 25,000 Dividends paid...................................... (20,115) (16,304) Principal payments on notes and bonds............... (83) (20) Other, net.......................................... (107) (253) -------- -------- Net cash provided by (used in) financing activities..................................... (3,305) 39,123 -------- -------- Increase in cash and cash equivalents................... 3,855 1,869 Cash and cash equivalents, beginning of period.......... 10,192 11,709 -------- -------- Cash and cash equivalents, end of period................ $ 14,047 $ 13,578 ======== ========
See accompanying notes. 4 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1998 (Unaudited) (i) The condensed consolidated financial statements included herein have been prepared by the Company, without audit, and include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three-month periods ended March 31, 1998 and 1997 pursuant to the rules and regulations of the Securities and Exchange Commission. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Although the Company believes that the disclosures in such financial statements are adequate to make the information presented not misleading, these condensed consolidated financial statements should be read in conjunction with the Company's financial statements and the notes thereto included in the Company's 1997 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The results of operations for the three-month periods ended March 31, 1998 and 1997 are not necessarily indicative of the results for a full year. (ii) Basic earnings per share is computed by dividing income available to common stockholders by the weighted average common shares outstanding. Income available to common stockholders is calculated by deducting dividends declared on preferred stock from income from continuing operations and net income. Diluted earnings per share includes the effect of the potential shares outstanding; dilutive stock options and dilutive convertible debentures. The effect of common stock options is immaterial. The effect of convertible debentures was not dilutive in 1998 and 1997.
Three months ended March 31, 1998 1997 ---------------- --------------- (in thousands) Income Shares Income Shares ------- ------ ------ ------ Income before gain on sale of properties $17,569 $14,755 Less: preferred stock dividends 1,919 -- ------- ------- Amounts used to calculate Basic EPS 15,650 43,265 14,755 41,800 Effect of dilutive securities: Stock options -- 3 -- 3 6.25% Convertible debentures -- -- -- -- ------- ------ ------- ------ Amounts used to calculate Diluted EPS $15,650 43,268 $14,755 41,803 ======= ====== ======= ======
(iii) The Company qualifies as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. The Company intends to continue to qualify as such and therefore to distribute at least ninety-five percent (95%) of its taxable income to its stockholders. Accordingly, no provision has been made for federal income taxes. (iv) The Company invests in health care related real estate and, as of March 31, 1998, had investments in 297 facilities, including 189 skilled nursing facilities, 79 assisted living facilities, 12 continuing care retirement communities, 14 residential care facilities for the elderly, two rehabilitation hospitals and one medical clinic. The Company's facilities are operated by 61 different operators. 5 The Company's facilities which are owned and leased under "net" leases are accounted for as operating leases. The leases have initial terms ranging from 10 to 19 years, and the leases generally have two or more multiple- year renewal options. The Company earns fixed monthly minimum rents and may earn periodic additional rents. The additional rent payments are generally computed as a percentage of facility net patient revenues in excess of base amounts and/or increases in the Consumer Price Index. The base amounts, in most cases, are net patient revenues for the first year of the lease. Certain of the leases contain provisions such that the percentage of further revenue increases due to the Company as additional rent is limited to 1% at such time as additional rent exceeds 41% of base rent. Under the terms of the leases, the lessee is responsible for all maintenance, repairs, taxes and insurance on the leased properties. Forty of the Company's 240 owned facilities were leased to and operated by subsidiaries of Beverly Enterprises, Inc. (v) During the three-month period ended March 31, 1998, the Company acquired one continuing care retirement community and six residential care facilities for the elderly in three separate transactions for an aggregate purchase price of approximately $4,118,000. Construction of one assisted living facility was also completed, in which the Company's total investment was $2,674,000. These facilities were concurrently leased under terms generally similar to the Company's existing leases. During the three-month period ended March 31, 1998, the Company provided new construction financing of approximately $22,344,000. The Company also funded approximately $1,777,000 in capital improvements in accordance with certain existing lease provisions. Such capital improvements will result in an increase in the minimum rents earned by the Company. During the three-month period ended March 31, 1998, the Company sold two skilled nursing facilities in two separate transactions for an aggregate price of approximately $5,512,000, less transaction costs, resulting in an aggregate gain of approximately $2,321,000. During the three months ended March 31, 1998, the Company issued $15,000,000 in aggregate principal amount of medium-term notes. The notes bear fixed interest at a weighted average rate of 6.71% and have a weighted average maturity of 10.3 years. (vi) On April 29, 1998, the Company issued 1,048,128 shares of common stock resulting in aggregate proceeds, net of the underwriter's fee, of approximately $23,214,000 before expenses related to the offering. The net proceeds were used to repay borrowings under the Company's bank line of credit. (vii) The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 130 Reporting Comprehensive Income and SFAS No. 131 Disclosures about Segments of an Enterprise and Related Information which were issued in June 1997. The adoption of SFAS No. 130 and SFAS No. 131 has not materially impacted the Company's financial statements. Issue No. 97-11 Accounting for Internal Costs Relating to Real Estate Property Acquisitions released by the Emerging Issues Task Force of the Financial Accounting Standards Board which prohibits the capitalization of internal costs related to the acquisition of operating property became effective during the first quarter of 1998. The impact of this pronouncement is immaterial to the Company's financial statements. 6 NATIONWIDE HEALTH PROPERTIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS March 31, 1998 Statement Regarding Forward Looking Disclosure Certain information contained in this report includes forward looking statements, which can be identified by the use of forward looking terminology such as "may," "will," "expect," "should" or comparable terms or the negative thereof. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include (without limitation) the following: the effect of economic and market conditions and changes in interest rates, government regulations, including changes in Medicare and Medicaid payment levels, changes in the health industry, the amount of any additional investments, access to capital markets and changes in the ratings of the Company's debt securities or preferred stock. Operating Results Three Months 1998 Compared to Three Months 1997 Revenues for the three months ended March 31, 1998 increased $6,856,000 or 26% over the same period in 1997. The increase is due to increased minimum rent and interest income resulting from additional investments in real estate properties and mortgage loans receivable during the last twelve months. The increase was also attributable to increased additional rent and additional interest earned under the Company's existing leases and mortgage loans receivable based on increases in the facility revenues and the Consumer Price Index. Total expenses for the three-month period ended March 31, 1998 increased $4,042,000 or 35% over the same period in 1997. The increase is primarily due to increased interest expense as a result of the issuance of fixed rate medium- term notes during the last twelve months and to increased depreciation in connection with the acquisition of additional facilities during the last twelve months. In addition, during the three months ended March 31, 1998, the Company recognized a gain of approximately $2,321,000 from the sale of two skilled nursing facilities. The Company expects increased rental revenues and interest income due to the addition of facilities to its property base and mortgage loans receivable over the last twelve months. The Company also expects increased additional rent and additional interest because the Company's leases and mortgages generally contain provisions under which additional rents or interest income increase with increases in facility revenues and/or increases in the Consumer Price Index. Historically, revenues at the Company's facilities and the Consumer Price Index generally have increased; although, there are no assurances that they will continue to increase in the future. Sales of facilities or repayments of mortgages would serve to offset the aforementioned revenue increases. Additional investments in health care facilities would also increase rental and/or interest income. As additional investments in facilities are made, depreciation and/or interest expense could also increase. Any such increases, however, are expected to be more than offset by rents or interest income associated with the investments. The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 130 Reporting Comprehensive Income and SFAS No. 131 Disclosures about Segments of an Enterprise and Related Information which were issued in June 1997. The adoption of SFAS No. 130 and SFAS No. 131 has not materially impacted the Company's financial statements. 7 Issue No. 97-11 Accounting for Internal Costs Relating to Real Estate Property Acquisitions released by the Emerging Issues Task Force of the Financial Accounting Standards Board which prohibits the capitalization of internal costs related to the acquisition of operating property became effective during the first quarter of 1998. The impact of this pronouncement is immaterial to the Company's financial statements. Liquidity and Capital Resources During the three-month period ended March 31, 1998, the Company acquired one continuing care retirement community and six residential care facilities for the elderly in three separate transactions for an aggregate purchase price of approximately $4,118,000. Construction of one assisted living facility was also completed, in which the Company's total investment was 2,674,000. These facilities were concurrently leased under terms generally similar to the Company's existing leases. During the three-month period ended March 31, 1998, the Company provided new construction financing of approximately $22,344,000. The Company also funded approximately $1,777,000 in capital improvements in accordance with certain existing lease provisions. Such capital improvements will result in an increase in the minimum rents earned by the Company. The acquisitions, construction advances and capital improvement advances were funded by borrowings on the Company's bank line of credit and by cash on hand. During the three-month period ended March 31, 1998, the Company sold two skilled nursing facilities in two separate transactions for an aggregate price of approximately $5,512,000, less transaction costs, resulting in an aggregate gain of approximately $2,321,000. The proceeds of the sales were used to repay borrowings on the Company's bank line of credit. During the three months ended March 31, 1998, the Company issued $15,000,000 in aggregate principal amount of medium-term notes. The notes bear fixed interest at a weighted average rate of 6.71% and have a weighted average maturity of 10.3 years. The proceeds were used to repay borrowings on the Company's bank line of credit. At March 31, 1998, the Company had $78,400,000 available under its $100,000,000 bank line of credit. The Company has effective shelf registrations on file with the Securities and Exchange Commission under which the Company may issue (a) up to $230,000,000 in aggregate principal amount of medium term notes and (b) up to approximately $233,122,000 of securities including debt, convertible debt, common and preferred stock. The Company anticipates issuing securities under such shelf registrations to repay borrowings under the Company's bank line of credit. On April 29, 1998, the Company issued 1,048,128 shares of common stock resulting in aggregate proceeds, net of the underwriter's fee, of approximately $23,214,000 before expenses related to the offering. The proceeds were used to repay borrowings under the Company's bank line of credit. This issuance reduced the amount of securities including debt, convertible debt, common and preferred stock the Company may issue under its effective shelf registrations on file with the Securities and Exchange Commission to approximately $208,622,000. The Company anticipates making additional investments in health care related facilities. Financing for such future investments may be provided by borrowings under the Company's bank line of credit, private placements or public offerings of debt or equity, and the assumption of secured indebtedness. The Company believes it has sufficient liquidity and financing capability to finance future investments as well as repay borrowings at or prior to their maturity. 8 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits None. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the three-month period ended March 31, 1998. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 14, 1998 NATIONWIDE HEALTH PROPERTIES, INC. By /s/ MARK L. DESMOND ----------------------------------------- Mark L. Desmond Senior Vice President and Chief Financial Officer (Principal Financial Officer) 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 14,047 0 4,502 0 0 28,717 986,577 112,163 1,103,494 36,385 509,576 0 100,000 4,334 453,199 1,103,494 0 33,158 0 7,337 0 0 8,252 17,569 0 17,569 0 2,321 0 19,890 .42 .42
-----END PRIVACY-ENHANCED MESSAGE-----