-----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, FTGOlcOo18focQNKcsdj1QgFaMXlGvCVGV/f9PIaJVYETiDIcLt5kkC4WSbBRSib hP/5506jpKQvAZNg3P88IQ== 0001017062-97-000356.txt : 19970304 0001017062-97-000356.hdr.sgml : 19970304 ACCESSION NUMBER: 0001017062-97-000356 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970303 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-09028 FILM NUMBER: 97549510 BUSINESS ADDRESS: STREET 1: 4675 MACARTHUR COURT STE 1170 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7142511211 MAIL ADDRESS: STREET 1: 4675 MACARTHUR COURT STREET 2: STE 1170 CITY: NEWSPORT BEACH STATE: CA ZIP: 92660 FORMER COMPANY: FORMER CONFORMED NAME: BEVERLY INVESTMENT PROPERTIES INC DATE OF NAME CHANGE: 19890515 10-K405 1 FORM 10-K405 FOR PERIOD ENDING 12/31/96 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1996 OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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 (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 610 NEWPORT CENTER DRIVE, SUITE 1150 NEWPORT BEACH, CALIFORNIA 92660 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (714) 718-4400 Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- Common Stock, $.10 Par Value New York Stock Exchange 6.25% Convertible Debentures Due 1999 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE 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 [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the Company is approximately $947,090,000 as of January 31, 1997. 41,803,924 (NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF JANUARY 31, 1997) Part III is incorporated by reference from the registrant's definitive proxy statement for the Annual Meeting of Stockholders to be held on April 11, 1997. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS. Nationwide Health Properties, Inc., a Maryland corporation organized in October 1985 (the "Company"), is a real estate investment trust ("REIT") which invests primarily in health care related facilities and provides financing to health care providers. As of December 31, 1996, the Company had investments in 231 facilities located in 30 states. The facilities include 183 long-term health care facilities, 46 assisted living facilities and two rehabilitation hospitals. As of December 31, 1996, the Company had direct ownership of 140 long-term health care facilities, 40 assisted living facilities and two rehabilitation hospitals (the "Properties"). All of the Company's owned facilities are leased under "net" leases (the "Leases"), which are accounted for as operating leases, to 41 health care providers (the "Lessees") including Beverly Enterprises, Inc. ("Beverly"), ARV Assisted Living, Inc., Alternative Living Services, Sun Healthcare Group, Inc., Horizon/CMS Healthcare Corporation, Living Centers of America, Inc., GranCare, Inc., Retirement Care Associates, Inc., Mariner Health Group, Sterling House Corporation, Integrated Health Services, Inc. and HEALTHSOUTH Corporation. Of the Lessees, only Beverly is expected to account for more than 10% of the Company's revenues in 1997. 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. The base amounts, in most cases, are net patient revenues for the first year of the lease. Most Leases contain cross collateralization and cross default provisions tied to other Leases with the same Lessee, as well as grouped lease renewals and grouped purchase options. Obligations under the Leases have corporate guarantees, and leases covering 100 facilities are backed by irrevocable letters of credit or security deposits which cover from 2 to 12 months of monthly minimum rents. Under the terms of the Leases, the Lessee is responsible for all maintenance, repairs, taxes and insurance on the leased properties. As of December 31, 1996, the Company held 30 mortgage loans secured by 43 long-term health care facilities and six assisted living facilities. Such loans had an aggregate outstanding principal balance of approximately $169,983,000 and a net book value of approximately $160,464,000 at December 31, 1996. The mortgage loans have individual outstanding principal balances ranging from approximately $733,000 to $17,250,000 and have maturities ranging from 1998 to 2025. During 1996, the Company acquired, in 10 separate transactions, 10 assisted living facilities and four long-term health care facilities for an aggregate purchase price of $41,118,000. Additionally, the Company provided three mortgage loans, secured by eight long-term health care facilities and one assisted living facility in an aggregate amount of $26,730,000, and a $3,000,000 note was funded which is cross-colateralized by properties under existing mortgage loans with the Company. The Company anticipates providing lease or mortgage financing for health care facilities to qualified operators and acquiring additional health care related facilities, including long-term health care facilities, assisted living facilities, acute care hospitals and medical office buildings. 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. TAXATION OF THE COMPANY The Company believes that it has operated in such a manner as to qualify for taxation as a "real estate investment trust" under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its taxable year ending December 31, 1985, and the Company intends to continue to operate in such a manner. If the Company qualifies for taxation as a real estate investment trust, it will generally not be subject to federal corporate income taxes on its net income that is currently distributed to 1 stockholders. This treatment substantially eliminates the "double taxation" (e.g. at the corporate and stockholder levels) that generally results from investment in stock of a corporation. PROPERTIES Of the 231 facilities in which the Company has investments, the Company has direct ownership of 140 long-term health care facilities, 40 assisted living facilities and two rehabilitation hospitals. The properties are leased to other parties under terms which require the lessee, in addition to paying rent, to pay all additional charges, taxes, assessments, levies and fees incurred in the operation of the leased properties. Long-Term Health Care Facilities Long-term health care facilities provide rehabilitative, restorative, skilled nursing and medical treatment for patients and residents who do not require the high-technology, care-intensive, high-cost setting of an acute- care or rehabilitative hospital. Treatment programs include physical, occupational, speech, respiratory and other therapeutic programs, including sub-acute clinical protocols such as wound care and intravenous drug treatment. Assisted Living Facilities Assisted living facilities provide services to aid in everyday living, such as bathing, routine or special meals, security, transportation, recreation, medication supervision and limited therapeutic programs. More intensive medical needs of the residents are often met within the Company's assisted living facilities by home health providers, close coordination with the individual's physician and skilled nursing facilities. Assisted living facilities are increasingly successful as lower cost, less institutional alternatives to the health problems of the elderly or medically frail. Rehabilitation Hospitals Rehabilitation hospitals provide inpatient and outpatient medical care to patients requiring high intensity physical, respiratory, neurological, orthopedic and other treatment protocols and for intermediate periods in their recovery. These programs are often the most effective in treating severe skeletal or neurological injuries and traumatic diseases such as stroke or acute arthritis. 2 The following table sets forth certain information regarding the Company's owned facilities as of December 31, 1996.
NUMBER NUMBER ANNUAL 1996 OF OF BEDS/ MINIMUM ADDITIONAL FACILITY LOCATION FACILITIES UNITS(1) INVESTMENT RENT(2) RENT(2) ----------------- ---------- -------- ---------- ------- ---------- Long-Term Health Care Facilities: Arizona.................... 2 274 $ 6,076 $ 789 $ 164 Arkansas................... 2 397 5,982 666 283 California................. 10 1,178 34,236 3,959 704 Colorado................... 1 117 3,116 307 8 Connecticut................ 5 674 14,727 1,486 448 Florida.................... 8 1,173 26,213 2,825 957 Georgia.................... 1 163 7,343 867 70 Idaho...................... 1 64 792 81 56 Illinois................... 2 224 5,549 701 139 Indiana.................... 8 1,078 30,535 3,492 764 Kansas..................... 8 644 11,804 1,216 223 Maryland................... 4 740 22,057 2,634 1,055 Massachusetts.............. 10 1,015 35,135 3,804 366 Minnesota.................. 9 1,122 29,629 3,621 1,024 Missouri................... 1 108 2,740 337 93 Nevada..................... 1 140 4,034 480 79 New Jersey................. 1 180 6,809 749 129 North Carolina............. 1 150 2,360 294 159 Ohio....................... 6 811 29,537 2,740 527 Oklahoma................... 3 253 3,939 404 91 Oregon..................... 4 356 6,760 833 284 Tennessee.................. 8 882 24,389 2,546 179 Texas...................... 26 3,009 55,607 6,101 1,538 Virginia................... 4 613 18,568 2,291 732 Washington................. 5 506 18,527 1,903 210 Wisconsin.................. 9 957 21,169 2,301 956 --- ------ -------- ------- ------- Subtotals................ 140 16,828 427,633 47,427 11,238 --- ------ -------- ------- ------- Assisted Living Facilities: Alabama.................... 2 166 5,952 594 2 Arizona.................... 1 90 4,449 444 -- California................. 13 1,686 77,274 7,855 91 Colorado................... 3 377 19,266 1,877 -- Florida.................... 4 498 21,153 2,136 1 Idaho...................... 1 80 10,016 597 -- Michigan................... 1 144 7,239 810 29 Ohio....................... 1 121 4,238 479 8 Oklahoma................... 1 113 4,771 454 18 Oregon..................... 6 460 24,069 2,364 -- Tennessee.................. 1 48 2,901 274 3 Texas...................... 5 240 10,890 1,031 18 Washington................. 1 128 6,164 600 -- --- ------ -------- ------- ------- Subtotals................ 40 4,151 198,382 19,515 170 --- ------ -------- ------- ------- Rehabilitation Hospitals: Arizona.................... 2 116 16,826 1,770 230 --- ------ -------- ------- ------- Construction in Progress..... -- -- 9,168 -- -- --- ------ -------- ------- ------- TOTAL ALL OWNED FACILITIES... 182 21,095 $652,009 $68,712 $11,638 === ====== ======== ======= =======
- ------- (1) Assisted living facilities are measured in units, all other facilities are measured by bed count. (2) Annual Minimum Rent (as defined in the Leases) for each of the Company's owned properties. Additional rent, generally contingent upon increases in the facility net patient revenues in excess of a base amount and/or increases in the Consumer Price Index, may also be paid. The 1996 additional rent amounts reflect additional rent accrued in 1996. 3 As of December 31, 1996, 45 of the Company's 182 owned facilities were being leased to and operated by subsidiaries of Beverly. Beverly has guaranteed certain obligations of its subsidiaries and of certain parties unaffiliated with Beverly in connection with 24 properties operated by such parties. The Company expects that as new facilities are acquired, an increasing percentage of its facilities will be leased to operators unaffiliated with Beverly. For additional financial information regarding Beverly, see Appendix 1 attached as part of this Annual Report on Form 10-K. COMPETITION The Company generally competes with other REITs, real estate partnerships, health care providers and other investors, including, but not limited to, banks and insurance companies, in the acquisition, leasing and financing of health care facilities. The operators of the health care facilities compete on a local and regional basis with operators of facilities that provide comparable services. Operators compete for patients based on quality of care, reputation, physical appearance of facilities, services offered, family preferences, physicians, staff and price. REGULATION Payments for health care services provided by the operators of the Company's facilities are received principally from four sources: Medicaid, a medical assistance program for the indigent, operated by individual states with the financial participation of the federal government; private funds; Medicare, a federal health insurance program for the aged and certain chronically disabled individuals; and health and other insurance plans. Government revenue sources, particularly Medicaid programs, are subject to statutory and regulatory changes, administrative rulings, and government funding restrictions, all of which may materially increase or decrease the rates of payment to nursing facilities and the amount of additional rents payable to the Company under the Leases. There is no assurance that payments under such programs will remain at levels comparable to the present levels or be sufficient to cover all the operating and fixed costs allocable to Medicaid and Medicare patients. Health care facilities in which the Company invests are also generally subject to state licensure statutes and regulations and statutes which may require regulatory approval, in the form of a certificate of need ("CON"), prior to the addition or construction of new beds, the addition of services or certain capital expenditures. CON requirements generally do not apply to assisted living facilities. CON requirements are not uniform throughout the United States and are subject to change. The Company cannot predict the impact of regulatory changes with respect to licensure and CON's on the operations of the Company's lessees and mortgagees. EXECUTIVE OFFICERS OF THE COMPANY The table below sets forth the name, position and age of each executive officer of the Company. Each executive officer of the Company is appointed by its Board of Directors, serves at the pleasure of the Board and holds office until a successor is elected, or until the earliest of death, resignation or removal. There is no "family relationship" between any of the named executive officers or any director of the Company. All information is given as of January 31, 1997.
NAME POSITION AGE ---- -------- --- Milton J. Brock, Jr. ... Chairman of the Board 81 R. Bruce Andrews........ President and Chief Executive Officer 56 T. Andrew Stokes........ Senior Vice President of Corporate Development 48 Mark L. Desmond......... Senior Vice President and Chief Financial Officer 38 Gary E. Stark........... Vice President and General Counsel 41 John J. Sheehan, Jr. ... Vice President of Corporate Development 38
MILTON J. BROCK, JR.--Chairman of the Board of the Company since September 1989 and a director of the Company since its inception. Mr. Brock served as President and Chief Executive Officer of the Company from June 1988 to September 1989. Mr. Brock began his career in 1940 with M. J. Brock & Sons, Inc., a real estate 4 contractor and developer and was elected President in 1959, Chairman and Chief Executive Officer in 1973 and Chairman Emeritus upon his retirement in 1985. Mr. Brock was a director of Bank of America REIT (now BRE Properties) from its inception until his retirement in 1985, and had served for 26 years as a director of Hollywood Presbyterian Medical Center. R. BRUCE ANDREWS--President and Chief Executive Officer of the Company since September 1989 and a director of the Company since October 1989. Mr. Andrews had previously served as a director of American Medical International, Inc., a hospital management company, and served as its Chief Financial Officer from 1970 to 1985 and its Chief Operating Officer in 1985 and 1986. From 1986 through 1989, Mr. Andrews was engaged in various private investments. Mr. Andrews is also a director of Alexander Haagen Properties, Inc. and ARV Assisted Living, Inc. T. ANDREW STOKES--Senior Vice President of Corporate Development of the Company since January 1996. Mr. Stokes was Vice President of Development of the Company from August 1992 to December 1995. From 1984 to 1988, Mr. Stokes served as Vice President, Corporate Development for American Medical International, Inc., a hospital management company. From 1989 until joining the Company, Mr. Stokes was Healthcare Group Director of Houlihan, Lokey, Howard & Zukin, a national financial advisory firm. MARK L. DESMOND--Senior Vice President and Chief Financial Officer of the Company since January 1996. Mr. Desmond was Vice President and Treasurer of the Company from May 1990 to December 1995 and Controller, Chief Accounting Officer and Assistant Treasurer of the Company from June 1988 to April 1990. From 1986 until joining the Company, Mr. Desmond held various accounting positions with Beverly, an operator of nursing facilities, pharmacies and pharmacy related outlets. GARY E. STARK--Vice President and General Counsel of the Company since January 1993. From January 1988 to December 1989, Mr. Stark held the position of General Counsel with Care Enterprises, Inc., an operator of nursing facilities, pharmacies and other ancillary health care services, and served as its Corporate Counsel from April 1985 through December 1987. From January 1990 through August 1991, Mr. Stark was engaged in the private practice of law. Mr. Stark served as Vice President of Legal Services of Life Care Centers of America, Inc., an operator and manager of nursing facilities and retirement centers from July 1992 to December 1992 and served as General Counsel from September 1991 to July 1992. JOHN J. SHEEHAN, JR.--Vice President of Corporate Development of the Company since February 1996. From September 1987 through April 1990, Mr. Sheehan served as Director of Asset Management for Southmark Corporation, a real estate syndication company. From April 1990 until joining the Company, Mr. Sheehan was Vice President, Mortgage Finance for Life Care Centers of America, an operator and manager of nursing facilities. EMPLOYEES As of January 31, 1997, the Company employed ten full-time employees. ITEM 2. PROPERTIES. See Item 1 for details. ITEM 3. LEGAL PROCEEDINGS. There are various legal proceedings pending to which the Company is a party or to which some of its properties are subject arising in the normal course of business. The Company does not believe that the ultimate resolution of these proceedings will have a material adverse effect on the Company's consolidated financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None 5 PART II ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's common stock is listed on the New York Stock Exchange. It has been the Company's policy to declare quarterly dividends to holders of the Company's common stock so as to comply with applicable sections of the Internal Revenue Code governing real estate investment trusts. Set forth below are the high and low sales prices of the Company's common stock from January 1, 1995 to December 31, 1996 as reported by the New York Stock Exchange and the cash dividends per share paid with respect to such periods.
HIGH LOW DIVIDEND -------- --------- -------- 1996 First quarter.................................. $22 3/8 $20 3/4 $.37 Second quarter................................. 21 7/8 19 1/2 .37 Third quarter.................................. 23 1/4 21 1/4 .37 Fourth quarter................................. 24 1/4 21 1/4 .37 1995 First quarter.................................. $18 3/4 $17 7/16 $.34 Second quarter................................. 19 1/2 17 13/16 .35 Third quarter.................................. 20 9/16 19 .36 Fourth quarter................................. 21 1/16 19 1/4 .36
As of January 31, 1997 there were approximately 1,300 holders of record of the Company's common stock. 6 ITEM 6. SELECTED FINANCIAL DATA. The following table presents selected financial data with respect to the Company. Certain of this financial data has been derived from the Company's audited financial statements included elsewhere in this Annual Report on Form 10-K and should be read in conjunction with those financial statements and accompanying notes and with "Management's Discussion and Analysis of Financial Condition and Results of Operations". Reference is made to Note 3 of Notes to Consolidated Financial Statements for information regarding the Company's acquisitions.
YEARS ENDED DECEMBER 31, ------------------------------------------------- 1996 1995 1994 1993 1992 -------- --------- -------- -------- -------- (IN THOUSANDS EXCEPT PER SHARE DATA) OPERATING DATA: Total revenues.............. $ 95,776 $ 81,039 $ 69,985 $ 60,385 $ 49,807 Income from operations...... 54,944 49,382 44,813 40,996 29,543 Gain on sale of facilities.. -- 989 -- -- 138 Extraordinary charge(1)..... -- -- -- (2,004) -- Net income.................. 54,944 50,371 44,813 38,992 29,681 Dividends paid.............. 59,581 53,182 47,751 42,883 33,349 PER SHARE DATA: Income from operations...... $ 1.36 $ 1.31 $ 1.23 $ 1.17 $ .99 Net income.................. 1.36 1.33 1.23 1.11 1.00 Dividends paid.............. 1.48 1.41 1.31 1.21 1.11 BALANCE SHEET DATA: Investments in real estate, net........................ $722,506 $ 652,231 $501,862 $428,473 $380,539 Total assets................ 744,984 670,111 513,809 440,165 396,664 Senior unsecured notes due 2000-2015.................. 190,000 100,000 -- -- -- Bank borrowings............. 32,300 93,900 80,200 3,800 9,950 Convertible debentures...... 64,920 65,000 67,690 73,609 44,455 Notes and bonds payable..... 9,229 23,364 20,520 23,047 32,116 Stockholders' equity........ 428,588 371,822 336,106 332,927 301,895 OTHER DATA: Net cash provided by operating activities....... $ 74,129 $ 66,972 $ 56,756 $ 49,725 $ 38,207 Net cash used in investing activities................. (85,034) (151,476) (83,185) (56,261) (96,719) Net cash provided by financing activities....... 14,677 88,699 26,544 1,882 56,837 Funds from operations(2).... 71,667 63,267 57,057 51,111 38,762 Weighted average shares outstanding................ 40,373 37,808 36,356 35,188 29,734
- -------- (1) The Company incurred an extraordinary charge representing the write-off of unamortized deferred financing costs and fees in connection with the prepayment of a substantial portion of the Company's secured debt. (2) Industry analysts generally consider funds from operations to be an alternative measure of the performance of an equity REIT. The Company therefore discloses funds from operations, although it is a measurement that is not defined by generally accepted accounting principles. The Company uses the NAREIT measure of funds from operations, which is generally defined as income before extraordinary items plus certain non-cash items, primarily real estate depreciation, less gains on sales of facilities. The NAREIT measure may not be comparable to similarly titled measures used by other REITs. Consequently, the Company's funds from operations may not provide a meaningful measure of the Company's performance as compared to that of other REITs. Funds from operations does not represent cash generated from operating activities as defined by generally accepted accounting principles (funds from operations does not include changes in operating assets and liabilities) and, therefore, should not be considered as an alternative to net income as the primary indicator of operating performance or to cash flow as a measure of liquidity. 7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. LIQUIDITY AND CAPITAL RESOURCES During 1996, the Company acquired 10 assisted living facilities and four long-term health care facilities in 10 separate and independent transactions for an aggregate purchase price of approximately $41,118,000. The acquisitions were funded by bank borrowings on the Company's bank line of credit and cash on hand. The facilities were concurrently leased under terms generally similar to the Company's existing leases. Additionally, the Company provided three mortgage loans secured by eight long-term health care facilities and one assisted living facility in the aggregate amount of $26,730,000 and a $3,000,000 note was funded which is cross-collateralized by properties under existing mortgage loans with the Company. Such mortgages were funded by bank borrowings on the Company's bank line of credit and cash on hand. In addition, the Company received principal repayments of approximately $3,608,000 in connection with the maturity of two mortgage loans secured by two long-term health care facilities. The proceeds were used to repay bank borrowings. In addition to the acquisitions, the Company provided new construction financing of approximately $8,105,000 for two long-term health care facilities and five assisted living facilities and capital improvement funding in the aggregate amount of approximately $9,077,000 in accordance with certain existing lease provisions. Such capital improvements will result in an increase in the minimum rents earned by the Company. During 1996, the Company issued $90,000,000 in aggregate principal amount of medium-term notes. The notes bear fixed interest at a weighted average interest rate of 7.17% and have a weighted average maturity of 7.8 years. The proceeds were used to repay borrowings on the Company's bank line of credit. In June 1996, the Company issued 3,047,500 shares of common stock in a public offering at a price of $21.125 per share. Proceeds from the offering, net of underwriters' fees and associated expenses, were approximately $60,987,000. The net proceeds were used to repay borrowings under the Company's bank line of credit. At December 31, 1996, the Company had $67,700,000 available under its $100,000,000 bank line of credit. The Company also had effective shelf registrations on file with the Securities and Exchange Commission under which the Company may issue (a) up to $110,000,000 in aggregate principal amount of medium-term notes and (b) up to $333,122,000 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. 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, 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. 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. 8 OPERATING RESULTS Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 Revenues increased $14,737,000, or 18% in 1996 as compared to 1995. The increase was primarily due to increased minimum rent and interest income resulting from investments in 21 additional facilities during 1996, combined with a full year of revenues earned by investments in additional facilities in 1995. The increase was also attributable to increased additional rent and additional interest as provided in the Company's existing leases and mortgage loans receivable based on increases in the facility revenues and/or increases in the Consumer Price Index. Total expenses increased $9,175,000, or 29% in 1996 as compared to 1995. The increase was primarily due to increased interest expense as a result of the issuance of $90,000,000 in medium term notes during 1996 and the issuance of $100,000,000 in medium term notes during 1995. The increase in total expenses was also attributable to increased depreciation due to the acquisition of additional facilities in 1996 and 1995. The Company expects increased rental revenues due to the addition of facilities to its property base in the last twelve months. The Company also expects increased interest income resulting from additional investments in mortgage loans 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. Year Ended December 31, 1995 Compared to Year Ended December 31, 1994 Revenues increased $11,054,000, or 16% in 1995 as compared to 1994. The increase was primarily due to increased minimum rent and interest income resulting from the addition of 33 facilities during 1995, combined with a full year of revenues earned by facilities acquired in 1994. The increase was also attributable to increased additional rent and additional interest as provided in the Company's existing leases and mortgage loans receivable based on increases in the facility revenues and/or the Consumer Price Index. Total expenses increased $6,485,000, or 26% in 1995 as compared to 1994. The increase was primarily due to increased interest expense as a result of increased borrowings on the Company's bank line of credit and the issuance of $100,000,000 in medium term notes during 1995. The increase in total expenses was also attributable to increased depreciation due to the acquisition of additional facilities in the last 12 months. Year Ended December 31, 1994 Compared to Year Ended December 31, 1993 Revenues increased $9,600,000, or 16% in 1994 as compared to 1993. The increase was primarily due to increased minimum rent as a result of the addition of 15 facilities in 1994, combined with a full year's minimum rent on facilities acquired in 1993. The increase was also attributable to increased additional rent resulting from increased facility patient revenues and increased interest income due to additional investments in mortgage loans. Total expenses increased $5,783,000, or 30% in 1994 as compared to 1993. The increase was primarily due to an increase in interest expense due to the issuance of $65,000,000 of convertible debentures in November 1993 and to increased levels of bank borrowings and higher short-term interest rates in 1994. The increase was partially offset by a decrease in interest expense in connection with the conversion of a portion of the Company's senior subordinated convertible debentures during 1994. Increased expenses were also attributable to increased depreciation as a result of acquisitions during 1994 and 1993. 9 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Report of Independent Public Accountants................................ 11 Consolidated Balance Sheets............................................. 12 Consolidated Statements of Operations................................... 13 Consolidated Statements of Stockholders' Equity......................... 14 Consolidated Statements of Cash Flows................................... 15 Notes to Consolidated Financial Statements.............................. 16
10 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Directors of Nationwide Health Properties, Inc. We have audited the accompanying consolidated balance sheets of Nationwide Health Properties, Inc. (a Maryland corporation) and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Health Properties, Inc. and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Orange County, California January 17, 1997 11 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ------------------ 1996 1995 -------- -------- (IN THOUSANDS) ASSETS Investments in real estate Real estate properties: Land.................................................... $ 75,252 $ 61,748 Buildings and improvements.............................. 576,757 530,979 -------- -------- 652,009 592,727 Less accumulated depreciation........................... (89,967) (73,722) -------- -------- 562,042 519,005 Mortgage loans receivable, net............................ 160,464 133,226 -------- -------- 722,506 652,231 Cash and cash equivalents................................... 11,709 7,937 Receivables................................................. 4,321 3,478 Other assets................................................ 6,448 6,465 -------- -------- $744,984 $670,111 ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Bank borrowings.......................................... $ 32,300 $ 93,900 Senior notes due 2000-2015............................... 190,000 100,000 Convertible debentures................................... 64,920 65,000 Notes and bonds payable.................................. 9,229 23,364 Accounts payable and accrued liabilities................. 19,947 16,025 Commitments and contingencies Stockholders' equity: Preferred stock $1.00 par value; 5,000,000 shares authorized; none issued or outstanding................ -- -- Common stock $.10 par value; 100,000,000 shares authorized; issued and outstanding: 41,785,001 and 38,720,532 as of December 31, 1996 and 1995, respectively.......................................... 4,179 3,872 Capital in excess of par value......................... 462,534 401,438 Cumulative net income.................................. 300,079 245,135 Cumulative dividends................................... (338,204) (278,623) --------- --------- Total stockholders' equity......................... 428,588 371,822 --------- --------- $ 744,984 $ 670,111 ========= =========
See accompanying notes. 12 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, ----------------------- 1996 1995 1994 ------- ------- ------- Revenues: Minimum rent......................................... $66,536 $54,504 $47,805 Interest and other income............................ 17,104 14,759 12,413 Additional rent and additional interest.............. 12,136 11,776 9,767 ------- ------- ------- 95,776 81,039 69,985 Expenses: Depreciation and non-cash charges.................... 16,723 13,885 12,244 Interest and amortization of deferred financing costs............................................... 20,797 14,628 9,921 General and administrative........................... 3,312 3,144 3,007 ------- ------- ------- 40,832 31,657 25,172 ------- ------- ------- Income before gain on sale of facilities............... 54,944 49,382 44,813 Gain on sale of facilities............................. -- 989 -- ------- ------- ------- Net income............................................. $54,944 $50,371 $44,813 ======= ======= ======= Per share amounts: Income before gain on sale of facilities............. $ 1.36 $ 1.31 $ 1.23 ======= ======= ======= Net income........................................... $ 1.36 $ 1.33 $ 1.23 ======= ======= ======= Weighted average shares outstanding.................... 40,373 37,808 36,356 ======= ======= =======
See accompanying notes. 13 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
COMMON STOCK CAPITAL IN TOTAL ------------- EXCESS OF CUMULATIVE CUMULATIVE STOCKHOLDERS' SHARES AMOUNT PAR VALUE NET INCOME DIVIDENDS EQUITY ------ ------ ---------- ---------- ---------- ------------- Balances at December 31, 1993................... 35,960 $3,594 $357,072 $149,951 $(177,690) $332,927 Issuance of stock..... 26 6 252 -- -- 258 Exercise of stock options.............. 26 2 148 -- -- 150 Conversion of debentures........... 464 46 5,663 -- -- 5,709 Net income............ -- -- -- 44,813 -- 44,813 Dividends............. -- -- -- -- (47,751) (47,751) ------ ------ -------- -------- --------- -------- Balances at December 31, 1994................... 36,476 3,648 363,135 194,764 (225,441) 336,106 Issuance of stock..... 2,032 203 35,714 -- -- 35,917 Exercise of stock options.............. 2 -- 10 -- -- 10 Conversion of debentures........... 210 21 2,579 -- -- 2,600 Net income............ -- -- -- 50,371 -- 50,371 Dividends............. -- -- -- -- (53,182) (53,182) ------ ------ -------- -------- --------- -------- Balances at December 31, 1995................... 38,720 3,872 401,438 245,135 (278,623) 371,822 Issuance of stock..... 3,058 306 60,999 -- -- 61,305 Exercise of stock options.............. 3 -- 19 -- -- 19 Conversion of debentures........... 4 1 78 -- -- 79 Net income............ -- -- -- 54,944 -- 54,944 Dividends............. -- -- -- -- (59,581) (59,581) ------ ------ -------- -------- --------- -------- Balances at December 31, 1996................... 41,785 $4,179 $462,534 $300,079 $(338,204) $428,588 ====== ====== ======== ======== ========= ========
See accompanying notes. 14 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ------------------------------ 1996 1995 1994 --------- --------- -------- Cash flows from operating activities: Net income................................... $ 54,944 $ 50,371 $ 44,813 Depreciation and non-cash charges............ 16,723 13,885 12,244 Gain on sale of facilities................... -- (989) -- Amortization of deferred financing costs..... 772 490 585 Net (increase) decrease in other assets and liabilities................................. 1,690 3,215 (886) --------- --------- -------- Net cash provided by operating activities.. 74,129 66,972 56,756 Cash flows from investing activities: Acquisition of real estate properties........ (59,282) (136,783) (62,768) Disposition of real estate properties........ -- 8,940 -- Investment in mortgage loans receivable...... (31,430) (35,437) (30,289) Principal payments on mortgage loans receivable.................................. 5,678 11,804 9,872 --------- --------- -------- Net cash used in investing activities...... (85,034) (151,476) (83,185) Cash flows from financing activities: Bank borrowings.............................. 132,450 205,600 126,700 Repayment of bank borrowings................. (194,050) (191,900) (50,300) Issuance of common stock, net................ 60,903 35,494 117 Issuance of senior unsecured debt............ 90,000 100,000 -- Principal payments on notes and bonds payable..................................... (14,135) (6,460) (2,074) Dividends paid............................... (59,581) (53,182) (47,751) Deferred financing costs..................... (910) (853) (148) --------- --------- -------- Net cash provided by financing activities.. 14,677 88,699 26,544 --------- --------- -------- Increase in cash and cash equivalents.......... 3,772 4,195 115 Cash and cash equivalents, beginning of period. 7,937 3,742 3,627 --------- --------- -------- Cash and cash equivalents, end of period....... $ 11,709 $ 7,937 $ 3,742 ========= ========= ======== Supplemental schedule of cash flow information: Cash interest paid........................... $ 12,721 $ 12,680 $ 9,102 ========= ========= ========
See accompanying notes. 15 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 1. ORGANIZATION Nationwide Health Properties, Inc. (the "Company") was incorporated on October 14, 1985 in the State of Maryland. The Company operates as a real estate investment trust specializing in investments in health care related properties and as of December 31, 1996 had investments in 231 health care facilities, consisting of 183 long-term health care facilities, 46 assisted living facilities and two rehabilitation hospitals. At December 31, 1996, the Company owned 140 long-term health care facilities, 40 assisted living facilities and two rehabilitation hospitals and held 30 mortgage loans secured by 43 long-term health care facilities and six assisted living facilities. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its investment in its majority owned and controlled joint ventures. All material intercompany accounts and transactions have been eliminated. Stock Split & Reclassifications On January 19, 1996, the Board of Directors of Nationwide Health Properties, Inc. authorized a two-for-one split of the Company's common stock effective on March 8, 1996. The financial statements included herein have been restated to reflect the stock split. Additionally, certain amounts in the 1995 and 1994 financial statements have been reclassified for consistent financial statement presentation. Land, Buildings and Improvements The Company records properties at cost and uses the straight-line method of depreciation for buildings and improvements over their estimated remaining useful lives of up to 40 years. The Company provides accelerated depreciation on certain of its investments based primarily on an estimation of net realizable value of such investments at the end of the primary lease terms. Cash and Cash Equivalents Cash in excess of daily requirements is invested in money market mutual funds, commercial paper and repurchase agreements with maturities of three months or less. Such investments are deemed to be cash equivalents for purposes of presentation in the financial statements. Federal Income Taxes 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 95% of its real estate investment trust taxable income to its stockholders. Accordingly, the Company will not be subject to Federal income taxes on its income which is distributed to stockholders. Therefore, no provisions for Federal income taxes have been made in the Company's financial statements. The net difference in the tax basis and the reported amounts of the Company's assets and liabilities as of December 31, 1996 is approximately ($659,000). 16 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Revenue Recognition Rental income from operating leases is accrued as earned over the life of the lease agreements in accordance with generally accepted accounting principles. There are no step rent provisions in any of the lease agreements. Interest income on real estate mortgages is recognized using the effective interest method based upon the expected payments over the lives of the mortgages. Net Income Per Share Net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. The effect of common stock options and converted debentures is immaterial, and the effect of convertible debentures is anti-dilutive. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Impact of New Accounting Pronouncement The Company has adopted Statement of Accounting Standards ("SFAS") No. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of in 1996. The adoption of SFAS No. 121 has not materially impacted the Company's financial statements. 3. REAL ESTATE PROPERTIES All of the Company's owned facilities are leased under "net" leases which 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 Consumers 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 minimum rent. Under the terms of the leases, the lessee is responsible for all maintenance, repairs, taxes and insurance on the leased properties. 17 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Minimum future rentals on non-cancelable leases as of December 31, 1996 are as follows:
MINIMUM YEAR RENTALS ---- -------------- (IN THOUSANDS) 1997.......................... $68,383 1998.......................... 66,191 1999.......................... 63,157 2000.......................... 49,926 2001.......................... 41,835 2002.......................... 36,238 2003.......................... 33,792 2004.......................... 30,069 2005.......................... 25,608 2006.......................... 20,085 Thereafter.................... 52,085
During 1996, the Company acquired 10 assisted living facilities and four long-term health care facilities in 10 separate and independent transactions for an aggregate purchase price of $41,118,000. The facilities were concurrently leased under terms generally similar to the Company's existing leases. The acquisitions were funded by bank borrowings on the Company's bank line of credit and cash on hand. In addition to the acquisitions, the Company provided new construction financing of approximately $8,105,000 for two long-term health care facilities and five assisted living facilities and capital improvement funding in the aggregate amount of approximately $9,077,000 in accordance with certain existing lease provisions. Such capital improvements will result in an increase in the minimum rents earned by the Company. 18 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The following table lists the Company's real estate properties as of December 31, 1996:
NUMBER NOTES AND OF BUILDINGS AND TOTAL ACCUMULATED BONDS FACILITY TYPE AND LOCATION FACILITIES LAND IMPROVEMENTS INVESTMENT(1) DEPRECIATION PAYABLE - -------------------------- ---------- ------- ------------- ------------- ------------ --------- (DOLLAR AMOUNTS IN THOUSANDS) LONG-TERM HEALTH CARE FACILITIES: Arizona................. 2 $ 833 $ 5,243 $ 6,076 $ 1,178 $ -- Arkansas................ 2 209 5,773 5,982 1,718 -- California.............. 10 7,753 26,483 34,236 3,582 -- Colorado................ 1 400 2,716 3,116 249 -- Connecticut............. 5 1,465 13,262 14,727 2,821 -- Florida................. 8 2,684 23,529 26,213 4,786 -- Georgia................. 1 801 6,542 7,343 659 -- Idaho................... 1 15 777 792 194 -- Illinois................ 2 157 5,392 5,549 974 -- Indiana................. 8 898 29,637 30,535 5,018 -- Kansas.................. 8 517 11,287 11,804 1,706 -- Maryland................ 4 845 21,212 22,057 6,305 -- Massachusetts........... 10 5,518 29,617 35,135 4,677 -- Minnesota............... 9 1,545 28,084 29,629 10,217 -- Missouri................ 1 51 2,689 2,740 846 -- Nevada.................. 1 740 3,294 4,034 432 -- New Jersey.............. 1 360 6,449 6,809 2,535 -- North Carolina.......... 1 116 2,244 2,360 706 -- Ohio.................... 6 1,316 28,221 29,537 5,837 -- Oklahoma................ 3 98 3,841 3,939 955 -- Oregon.................. 4 435 6,325 6,760 1,989 -- Tennessee............... 8 1,040 23,349 24,389 2,304 -- Texas................... 26 4,805 50,802 55,607 8,753 -- Virginia................ 4 1,036 17,532 18,568 5,513 -- Washington.............. 5 2,350 16,177 18,527 1,764 -- Wisconsin............... 9 1,621 19,548 21,169 5,824 -- --- ------- -------- -------- ------- ------ Subtotals............. 140 37,608 390,025 427,633 81,542 -- --- ------- -------- -------- ------- ------ ASSISTED LIVING FACILITIES: Alabama................. 2 1,681 4,271 5,952 33 -- Arizona................. 1 519 3,930 4,449 49 -- California.............. 13 15,655 61,619 77,274 2,727 -- Colorado................ 3 1,936 17,330 19,266 508 -- Florida................. 4 4,096 17,057 21,153 463 -- Idaho................... 1 544 9,472 10,016 140 -- Michigan................ 1 300 6,939 7,239 364 -- Ohio.................... 1 225 4,013 4,238 210 -- Oklahoma................ 1 392 4,379 4,771 365 -- Oregon.................. 6 2,078 21,991 24,069 623 9,229 Tennessee............... 1 600 2,301 2,901 91 -- Texas................... 5 895 9,995 10,890 351 -- Washington.............. 1 172 5,992 6,164 169 -- --- ------- -------- -------- ------- ------ Subtotals............. 40 29,093 169,289 198,382 6,093 9,229 --- ------- -------- -------- ------- ------ REHABILITATION HOSPITALS: Arizona................. 2 1,517 15,309 16,826 2,332 -- --- ------- -------- -------- ------- ------ CONSTRUCTION IN PROGRESS.. -- 7,034 2,134 9,168 -- -- --- ------- -------- -------- ------- ------ TOTAL OWNED FACILITIES..... 182 $75,252 $576,757 $652,009 $89,967 $9,229 === ======= ======== ======== ======= ======
- -------- (1) Also represents the approximate aggregate cost for Federal income tax purposes. 19 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 4. MORTGAGE LOANS RECEIVABLE During 1996, the Company provided three mortgage loans, secured by eight long-term health care facilities and one assisted living facility in an aggregate amount of $26,730,000, and a $3,000,000 note was funded which is cross-collateralized by properties under existing mortgage loans with the Company. Additionally, proceeds of approximately $3,608,000 were received in connection with the repayment of two mortgage loans secured by two long-term health care facilities. At December 31, 1996, the Company had 30 mortgage loans receivable secured by 43 long-term health care facilities and six assisted living facilities. The loans have an aggregate principal balance of approximately $169,984,000 and are reflected in the Company's financial statements net of an aggregate discount of approximately $9,520,000. The principal balances of mortgage loans receivable as of December 31, 1996 mature approximately as follows: $2,052,000 in 1997, $8,754,000 in 1998, $2,234,000 in 1999, $2,386,000 in 2000, $2,657,000 in 2001 and $151,901,000 thereafter. The following table lists the Company's mortgage loans receivable at December 31, 1996:
NUMBER FINAL ESTIMATED ORIGINAL FACE CARRYING OF INTEREST MATURITY BALLOON AMOUNT OF AMOUNT OF LOCATION OF FACILITIES FACILITIES RATE DATE PAYMENT(1) MORTGAGES MORTGAGES(2) ---------------------- ---------- -------- -------- ---------- ------------- ------------ (DOLLARS IN THOUSANDS) LONG-TERM HEALTH CARE FACILITIES: Arkansas.............. 3 10.00% 12/06 $ 4,945 $ 5,500 $ 5,020 California............ 1 10.00% 05/25 1,489 8,200 8,200 California............ 1 7.58% 05/98 3,223 3,600 3,013 California............ 1 7.58% 05/98 2,193 2,425 2,047 California............ 3 9.50% 03/09 8,233 12,000 11,662 Florida............... 1 10.35% 07/03 -- 4,400 1,392 Florida............... 1 11.25% 07/06 4,432 4,400 4,400 Illinois.............. 1 9.00% 01/24 -- 9,500 7,709 Indiana............... 1 10.35% 07/03 -- 785 779 Kansas................ 1 9.07% 09/98 1,260 1,550 1,292 Louisiana............. 1 10.89% 04/15 2,429 3,850 3,850 Maryland.............. 1 10.90% 06/21 -- 6,900 7,497 Massachusetts......... 1 8.75% 02/24 -- 9,000 7,033 Michigan.............. 3 11.40% 12/06 6,846 7,817 7,121 Michigan.............. 2 11.25% 06/03 2,535 3,000 2,757 Michigan.............. 1 10.40% 01/05 1,519 1,800 1,716 Missouri.............. 7 10.33% 08/11 17,250 17,250 17,250 South Dakota.......... 1 9.95% 05/05 -- 4,275 1,127 Texas................. 1 10.13% 01/04 633 1,460 940 Texas................. 2 10.85% 01/02 1,963 2,519 2,229 Texas................. 3 10.75% 06/03 4,120 4,700 4,189 Virginia.............. 1 10.50% 04/13 10,192 16,250 16,082 Washington............ 4 11.00% 10/19 113 6,000 5,891 Wisconsin............. 1 9.95% 05/05 -- 1,350 733 --- ------- -------- -------- Subtotals........... 43 73,375 138,531 123,929 --- ------- -------- --------
20 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NUMBER FINAL ESTIMATED ORIGINAL FACE CARRYING OF INTEREST MATURITY BALLOON AMOUNT OF AMOUNT OF LOCATION OF FACILITIES FACILITIES RATE DATE PAYMENT(1) MORTGAGES MORTGAGES(2) ---------------------- ---------- -------- -------- ---------- ------------- ------------ (DOLLARS IN THOUSANDS) ASSISTED LIVING FACILITIES: Florida............... 1 10.19% 11/06 $ 5,131 $ 5,500 $ 5,080 Florida............... 2 10.31% 09/20 -- 7,230 7,230 Massachusetts......... 1 9.52% 06/23 -- 9,400 9,400 Oklahoma.............. 1 9.55% 03/24 -- 8,950 8,268 Washington............ 1 9.95% 12/15 6,456 6,557 6,557 --- ------- -------- -------- Subtotals........... 6 11,587 37,637 36,535 --- ------- -------- -------- Total............. 49 $84,962 $176,168 $160,464 === ======= ======== ========
- -------- (1) Most loans require monthly principal and interest payments at level amounts over life to maturity. Some loans are adjustable rate mortgages with varying principal and interest payments over life to maturity, in which case the balloon payments reflected are an estimate. Five of the loans have decreasing principal and interest payments over the life of the loans. Most loans require a prepayment penalty based on a percentage of principal outstanding or a penalty based upon a calculation maintaining the yield the Company would have earned if prepayment had not occurred. Seven loans have a provision that no prepayments are acceptable. (2) The aggregate cost for federal income tax purposes is approximately $164,094,000. The following table summarizes the changes in mortgage loans receivable during 1996, 1995 and 1994:
1996 1995 1994 -------- -------- -------- (IN THOUSANDS) Balance at January 1,.......................... $133,226 $105,824 $ 83,303 New mortgage loans........................... 31,430 37,544 30,289 Accretion of discount on loans............... 1,486 1,662 2,104 Collection of principal...................... (5,678) (11,804) (9,872) -------- -------- -------- Balance at December 31,........................ $160,464 $133,226 $105,824 ======== ======== ========
5. BANK BORROWINGS The Company has a $100,000,000 unsecured credit agreement with certain banks. The terms of the bank line of credit include an option to automatically extend the bank line of credit to a three year maturity with concurrence of the bank group. The Company exercised such option and the terms of the bank line of credit were amended in January 1996 to extend the maturity date an additional year to March 31, 1999. At the option of the Company, borrowings under the agreement bear interest at prime or LIBOR plus 90 basis points. The Company pays a facility fee of one-fourth of 1% per annum on the total commitment under the agreement. Under covenants contained in the credit agreement, the Company is required to maintain: (i) a minimum net worth of $300,000,000; (ii) a ratio of cash flow before interest expense and non-cash expenses to regularly scheduled debt service payments on all debt of at least 2.0 to 1.0; and (iii) a ratio of total liabilities to net worth of not more than 1.1 to 1.0. 21 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 6. NOTES AND BONDS PAYABLE Notes and bonds payable are due through the year 2024, at interest rates ranging from 8.6% to 10.9% and are secured by real estate properties with an aggregate net book value as of December 31, 1996 of approximately $10,474,000. The principal balances of the notes and bonds payable as of December 31, 1996 mature approximately as follows: $82,000 in 1997, $90,000 in 1998, $99,000 in 1999, $109,000 in 2000, $120,000 in 2001, and $8,729,000 thereafter. 7. SENIOR UNSECURED NOTES DUE 2000-2015 During 1996, the Company issued $90,000,000 in aggregate principal amount of medium term notes. The aggregate principal amount of Senior Notes outstanding at December 31, 1996 was $190,000,000. The weighted average interest rate on the Senior Notes was 7.5% and the weighted average maturity was 7.5 years. The principal balances of the Senior Notes as of December 31, 1996 mature approximately as follows: $30,000,000 in the year 2000, $38,000,000 in 2001 and $122,000,000 thereafter. 8. CONVERTIBLE DEBENTURES During 1993, the Company issued $65,000,000 of 6.25% unsecured convertible debentures due January 1, 1999. The debentures are convertible at any time prior to maturity into shares of the Company's common stock at a conversion price of $22.4125 per share. During 1996, $80,000 of such debentures converted into 3,569 shares of common stock. 9. STOCK INCENTIVE PLAN Under the terms of a stock incentive plan (the "Plan"), the Company has reserved for issuance 1,600,000 shares of common stock. Under the Plan, as amended, the Company may issue stock options, restricted stock, dividend equivalents and stock appreciation rights. The Company accounts for the Plan under APB Opinion No. 25. Had compensation cost for the Plan been determined consistent with FASB Statement No. 123, the Company's net income and net income per share in 1996, the only year in the three years ending December 31, 1996 in which stock options were granted, would have been the following pro forma amounts: Net income: As reported................................................ $54,944,000 Pro forma.................................................. $54,867,000 Net income per share: As reported................................................ $ 1.36 Pro forma.................................................. $ 1.36
Because the pro forma calculation reflects only amounts attributable to options granted since January 1, 1995, future pro forma affects may not be comparable to those above. 22 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) A summary of the status of the Plan at December 31, 1996, 1995 and 1994 and changes during the years then ended is as follows:
1996 1995 1994 ---------------- ---------------- --------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE ------- -------- ------- -------- ------ -------- Options: Outstanding at beginning of year...................... 3,400 $ 5.625 5,200 $ 5.625 32,000 $ 5.625 Granted.................... 89,000 20.78 -- -- -- -- Exercised.................. 3,400 5.625 1,800 5.625 26,800 5.625 Forfeited.................. -- -- -- -- -- -- Expired.................... -- -- -- -- -- -- ------- ------- ------ Outstanding at end of year... 89,000 20.78 3,400 5.625 5,200 5.625 ======= ======= ====== Exercisable at end of year... -- -- 3,400 5.625 5,200 5.625 Weighted average fair value of options granted.......... $2.77 $-- $-- Restricted Stock: Outstanding at beginning of year...................... 103,900 81,300 52,900 Awarded.................... 10,000 32,200 28,400 Vested..................... 4,800 9,600 -- Forfeited.................. -- -- -- ------- ------- ------ Outstanding at end of year... 109,100 103,900 81,300 ======= ======= ====== Weighted average fair value of restricted stock awarded. $20.88 $18.19 $17.81
Stock options granted under the Plan become exercisable each year following the date of grant in annual increments of one-third and are exercisable at the market price of the Company's common stock on the date of grant. Options at December 31, 1996 have a weighted average contractual life of 9 years. The fair value of each option grant is estimated on the date of grant using the Black Scholes option pricing model with the following weighted average assumptions: risk free rate of return: 6.43%; dividend yield: 7.13%; option term: 10 years; volatility: 22.78%. The restricted stock awards are granted at no cost. Restricted stock awards vest at the third anniversary of the award date with respect to non-employee directors and at the fifth anniversary with respect to officers and employees. The restricted stock awards are amortized over their respective vesting periods. Expense is determined based upon the market value at the date of award of the restricted stock and is recognized over the vesting period. Expense recorded in 1996, 1995 and 1994 related to restricted stock awards was approximately $372,000, $379,000 and $292,000, respectively. Awards of dividend equivalents are related to the 1996 stock option grants and a total of 89,000 dividend equivalents were awarded in 1996. Such dividend equivalents are payable in cash, until such time as the corresponding stock option is exercised, based upon a formula. That formula depends on the Company's performance measured for a minimum of a three-year period and up to a five-year period by total return to stockholders (increase in stock price and dividends paid) compared to peer companies and other companies comprising a general index of real estate investment trusts. Dividend equivalents would be earned depending upon the Company's actual performance, as follows: 50th percentile: 25% of award; 60th percentile: 50% of 23 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) award; 70th percentile: 75% of award; 80th percentile: 100% of award. Due to the uncertainty of the ultimate payment of dividend equivalents, no compensation expense was recorded during 1996 with respect to dividend equivalents. Compensation expense will be recognized when and if the performance criteria are met. No stock appreciation rights have been issued under the Plan. 10. PENSION PLAN During 1991, the Company adopted an unfunded benefit pension plan covering the current non-employee members of its board of directors upon completion of five years of service on the board. The benefits, limited to the number of years of service on the board, are based upon the then current annual retainer in effect. The following tables set forth the amounts recognized in the Company's financial statements:
DECEMBER 31, ------------------ 1996 1995 -------- -------- Actuarial present value of benefit obligations: Vested benefit obligation.............................. $694,000 $679,000 ======== ======== Accumulated benefit obligation......................... $723,000 $706,000 ======== ======== Projected benefit obligation............................. $780,000 $756,000 Unrecognized prior service cost.......................... 129,000 156,000 Unrecognized net (gain) or loss.......................... (38,000) 55,000 -------- -------- Accrued pension cost..................................... $689,000 $545,000 ======== ========
Net pension cost for the year included the following components:
1996 1995 1994 -------- -------- -------- Current service cost............................. $ 87,000 $ 73,000 $ 62,000 Interest cost.................................... 53,000 48,000 38,000 Amortization of prior service cost............... 27,000 27,000 27,000 -------- -------- -------- Net periodic pension cost........................ $167,000 $148,000 $127,000 ======== ======== ========
Discount rates of 7.5%, 7.0% and 8.5% in 1996, 1995 and 1994, respectively and a 5.0% increase in the annual retainer every other year were used in determining the actuarial present value of the projected benefit obligation. 11. TRANSACTIONS WITH BEVERLY ENTERPRISES, INC. As of December 31, 1996, 45 of the owned facilities are leased to and operated by subsidiaries of Beverly Enterprises, Inc. ("Beverly"). Beverly has guaranteed certain obligations of its subsidiaries and of certain parties unaffiliated with Beverly in connection with 24 properties operated by such parties. Additionally, Beverly is the Borrower on four of the Company's mortgage loans. Revenues from Beverly were approximately $21,837,000, $21,921,000 and $22,776,000, for the years ended December 31, 1996, 1995 and 1994, respectively. One of the directors of the Company is also an officer and director of Beverly. 24 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 12. DIVIDENDS Dividend payments by the Company to the stockholders were characterized in the following manner for tax purposes:
1996 1995 1994 ----- ----- ----- Ordinary income............................................ $1.48 $1.24 $1.26 Capital gain............................................... -- .17 .05 Return of capital.......................................... -- -- -- ----- ----- ----- Total dividends paid..................................... $1.48 $1.41 $1.31 ===== ===== =====
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED --------------------------------------------- MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, --------- -------- ------------- ------------ (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1996: Revenues..................... $22,931 $23,300 $24,304 $25,241 Net income................... 12,579 13,009 14,455 14,901 Net income per share......... .32 .33 .35 .36 Dividends per share.......... .37 .37 .37 .37 1995: Revenues..................... $18,852 $19,965 $20,865 $21,357 Net income................... 11,457 12,197 13,890 12,827 Net income per share......... .31 .33 .36 .33 Dividends per share.......... .34 .35 .36 .36
14. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and Cash Equivalents The carrying amount approximates fair value because of the short maturity of those instruments. Mortgage Loans Receivable Fair values are based upon the estimates of management and on rates currently prevailing for comparable loans. Long-Term Debt The fair value of long-term debt is estimated based on the quoted market prices for publicly traded debt and on the current rates offered to the Company for debt of the same remaining maturity. 25 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The estimated fair values of the Company's financial instruments are as follows:
1996 1995 ----------------- ----------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE -------- -------- -------- -------- (IN THOUSANDS) Cash and cash equivalents............... $ 11,709 $ 11,709 $ 7,937 $ 7,937 Mortgage loans receivable............... 160,464 178,437 133,226 157,306 Long-term debt.......................... 296,449 306,491 282,264 284,045
26 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Directors of Nationwide Health Properties, Inc.: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Nationwide Health Properties, Inc.'s annual report to shareholders included in this Form 10-K, and have issued our report thereon dated January 17, 1997. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index of consolidated financial statements is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. ARTHUR ANDERSEN LLP Orange County, California January 17, 1997 27 SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION NATIONWIDE HEALTH PROPERTIES, INC. DECEMBER 31, 1996
INITIAL COST COST GROSS AMOUNT AT WHICH CARRIED AT TO COMPANY CAPITALIZED CLOSE OF PERIOD(1) LIFE ON ------------ SUBSEQUENT --------------------------------- ORIGINAL WHICH FACILITY TYPE BUILDING AND TO BUILDING AND ACCUM. CONSTRUCTION DATE DEPR. IS AND LOCATION IMPROVEMENTS ACQUISITION LAND(2) IMPROVEMENTS TOTAL DEPR. DATE ACQUIRED COMPUTED - ------------- ------------ ----------- --------- ------------ ---------- ---------- ------------ -------- -------- LONG-TERM HEALTH CARE FACILITIES: Hot Springs AR $2,320,549 $ 0 $ 53,647 $2,320,549 $2,374,196 $ 690,639 1977 8/86 35 Jacksonville AR 3,452,650 0 155,206 3,452,650 3,607,856 1,027,574 1966 8/86 35 Prescott AZ 2,351,967 0 183,342 2,351,967 2,535,309 657,631 1985 3/88 40 Scottsdale AZ 2,790,266 100,000 650,000 2,890,266 3,540,266 520,742 1963 7/91 30 Chowchilla CA 1,119,040 0 108,996 1,119,040 1,228,036 258,780 1964 8/87 40 Gilroy CA 1,891,735 0 714,000 1,891,735 2,605,735 331,054 1968 9/91 30 Hayward CA 1,221,698 220,882 795,000 1,442,580 2,237,580 234,249 1967 9/91 30 Ojai CA 3,936,539 0 500,000 3,936,539 4,436,539 360,849 1973 4/94 30 Orange CA 5,059,079 0 1,140,921 5,059,079 6,200,000 558,606 1987 7/92 40 Palm Desert CA 2,918,318 200,000 200,000 3,118,318 3,318,318 204,716 1989 5/94 40 Pomona CA 1,247,000 0 365,000 1,247,000 1,612,000 392,109 1963 12/85 35 San Diego CA 4,925,213 0 842,000 4,925,213 5,767,213 670,376 1965 11/92 30 San Jose CA 1,136,353 571,191 1,595,000 1,707,544 3,302,544 251,750 1968 9/91 30 Santa Cruz CA 1,595,864 439,900 1,492,000 2,035,764 3,527,764 320,007 1967 9/91 30 Sterling CO 2,715,537 0 400,000 2,715,537 3,115,537 248,924 1979 4/94 30 Bloomfield CT 2,826,635 0 670,000 2,826,635 3,496,635 211,998 1967 10/94 30 Hartford CT 4,731,952 0 350,000 4,731,952 5,081,952 1,182,988 1968 12/86 40 Torrington CT 2,555,400 0 140,000 2,555,400 2,695,400 638,850 1969 1/87 40 West Haven CT 1,437,616 0 234,521 1,437,616 1,672,137 359,404 1965 12/86 40 Winsted CT 1,710,684 0 70,000 1,710,684 1,780,684 427,671 1965 12/86 40 Ft. Pierce FL 2,758,000 0 125,000 2,758,000 2,883,000 867,232 1966 12/85 35 Jacksonville FL 1,852,616 0 160,748 1,852,616 2,013,364 432,277 1964 9/87 40 Jacksonville FL 2,787,093 0 498,000 2,787,093 3,285,093 38,709 1965 8/96 30 Lakeland FL 5,028,699 0 1,000,000 5,028,699 6,028,699 377,152 1982 10/94 30 Live Oak FL 3,217,008 0 50,390 3,217,008 3,267,398 957,443 1983 8/86 35 Pensacola FL 1,833,333 0 76,923 1,833,333 1,910,256 435,417 1969 7/87 40 Tampa FL 2,726,244 0 563,461 2,726,244 3,289,705 687,241 1971 12/86 40 Winter Park FL 3,326,824 0 208,935 3,326,824 3,535,759 990,126 1983 8/86 35 Lawrenceville GA 3,993,005 2,549,381 800,619 6,542,386 7,343,005 659,066 1988 11/91 40 Buhl ID 777,353 0 14,754 777,353 792,107 194,338 1913 12/86 40 Lasalle IL 2,702,896 0 127,000 2,702,896 2,829,896 488,023 1973 7/91 30 Litchfield IL 2,688,920 0 30,000 2,688,920 2,718,920 485,499 1974 7/91 30 Brookville IN 4,119,500 0 80,500 4,119,500 4,200,000 429,115 1988 10/92 40 Evansville IN 5,324,304 0 280,000 5,324,304 5,604,304 961,333 1968 7/91 30 Gas City IN 3,053,500 0 147,000 3,053,500 3,200,500 0 1976 12/96 30 New Castle IN 5,172,887 0 43,000 5,172,887 5,215,887 933,994 1974 7/91 30 Petersburg IN 2,351,555 0 32,654 2,351,555 2,384,209 699,867 1968 8/86 35 Richmond IN 2,519,523 0 114,022 2,519,523 2,633,545 749,858 1973 8/86 35 Rochester IN 4,055,338 250,000 161,000 4,305,338 4,466,338 740,409 1969 7/91 30 Wabash IN 2,789,896 0 40,000 2,789,896 2,829,896 503,731 1974 7/91 30 Belleville KS 1,886,682 0 213,318 1,886,682 2,100,000 235,835 1977 4/93 30 Colby KS 599,074 0 49,863 599,074 648,937 152,265 1974 11/86 40 Derby KS 2,481,763 0 132,800 2,481,763 2,614,563 392,946 1978 4/92 30 Hutchinson KS 1,855,444 160,594 75,000 2,016,038 2,091,038 188,818 1964 2/94 30 Kensington KS 638,627 0 6,241 638,627 644,868 190,068 1965 8/86 35 Oakley KS 414,311 0 7,123 414,311 421,434 105,304 1964 11/86 40
28 SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION NATIONWIDE HEALTH PROPERTIES, INC. DECEMBER 31, 1996
INITIAL COST COST GROSS AMOUNT AT WHICH CARRIED TO COMPANY CAPITALIZED AT CLOSE OF PERIOD(1) LIFE ON ------------ SUBSEQUENT ------------------------------ ORIGINAL WHICH FACILITY TYPE BUILDING AND TO BUILDING AND ACCUM. CONSTRUCTION DATE DEPR. IS AND LOCATION IMPROVEMENTS ACQUISITION LAND(2) IMPROVEMENTS TOTAL DEPR. DATE ACQUIRED COMPUTED - ------------- ------------ ----------- ------- ------------ --------- --------- ------------ -------- -------- LONG-TERM HEALTH CARE FACILITIES: Onaga KS $ 651,993 $ 0 $ 5,811 $ 651,993 $ 657,804 $ 194,046 1959 8/86 35 Salina KS 2,463,266 134,986 27,000 2,598,252 2,625,252 246,567 1981 2/94 30 Brighton MA 2,211,935 0 300,000 2,211,935 2,511,935 165,895 1969 10/94 30 Brockton MA 3,586,307 0 525,000 3,586,307 4,111,307 378,555 1971 11/93 30 Buzzards Bay MA 4,815,000 0 415,000 4,815,000 5,230,000 1,514,040 1911 12/85 35 Haverhill MA 5,707,175 0 660,000 5,707,175 6,367,175 602,422 1973 11/93 30 Haverhill MA 1,399,002 0 775,000 1,399,002 2,174,002 147,672 1962 11/93 30 N. Billerica MA 3,137,206 300,000 800,000 3,437,206 4,237,206 290,300 1969 5/94 30 New Bedford MA 2,357,000 0 93,000 2,357,000 2,450,000 741,177 1889 12/85 35 Norton MA 2,571,792 0 781,000 2,571,792 3,352,792 50,007 1968 6/96 30 Sharon MA 1,096,678 0 844,000 1,096,678 1,940,678 21,324 1975 6/96 30 Wellesley MA 2,435,000 0 325,000 2,435,000 2,760,000 765,667 1962 12/85 35 Clinton MD 5,016,873 0 399,794 5,016,873 5,416,667 1,212,411 1965 5/87 40 Cumberland MD 5,260,000 0 150,000 5,260,000 5,410,000 1,653,966 1968 12/85 35 Hagerstown MD 4,140,000 0 215,000 4,140,000 4,355,000 1,301,791 1972 12/85 35 Westminster MD 6,795,000 0 80,000 6,795,000 6,875,000 2,136,635 1974 12/85 35 Faribault MN 2,785,000 0 90,000 2,785,000 2,875,000 1,186,917 1966 12/85 35 Minneapolis MN 5,752,000 0 333,000 5,752,000 6,085,000 2,222,582 1974 12/85 35 Minneapolis MN 2,934,000 0 141,000 2,934,000 3,075,000 922,574 1914 12/85 35 Minneapolis MN 4,184,000 0 436,000 4,184,000 4,620,000 1,579,174 1961 12/85 35 Minneapolis MN 3,833,000 0 322,000 3,833,000 4,155,000 1,677,897 1962 12/85 35 Osseo MN 2,927,000 0 123,000 2,927,000 3,050,000 920,372 1957 12/85 35 Ostrander MN 947,229 0 8,560 947,229 955,789 238,781 1967 12/86 40 Owatonna MN 2,140,014 0 58,680 2,140,014 2,198,694 535,004 1958 12/86 40 Willmar MN 2,582,000 0 33,000 2,582,000 2,615,000 933,510 1902 12/85 35 Maryville MO 2,689,000 0 51,000 2,689,000 2,740,000 845,535 1979 12/85 35 Hendersonville NC 2,244,000 0 116,000 2,244,000 2,360,000 705,608 1979 12/85 35 Lakewood NJ 6,448,340 0 360,357 6,448,340 6,808,697 2,534,743 1966 12/87 40 Sparks NV 3,294,261 0 740,000 3,294,261 4,034,261 432,372 1988 10/91 40 Alliance OH 1,859,086 0 83,000 1,859,086 1,942,086 335,669 1962 7/91 30 Boardman OH 7,042,484 0 60,000 7,042,484 7,102,484 1,271,559 1965 7/91 30 Columbus OH 4,332,851 0 342,550 4,332,851 4,675,401 1,142,230 1985 3/88 40 Galion OH 3,416,266 0 24,000 3,416,266 3,440,266 616,826 1967 7/91 30 Warren OH 7,484,807 0 450,000 7,484,807 7,934,807 1,351,424 1966 7/91 30 Wash Ct House OH 4,085,813 0 356,047 4,085,813 4,441,860 1,118,993 1983 2/88 40 Maud OK 802,731 0 12,464 802,731 815,195 202,355 1967 12/86 40 Sapulpa OK 2,243,607 0 67,961 2,243,607 2,311,568 560,902 1970 12/86 40 Tonkawa OK 794,801 0 17,838 794,801 812,639 192,077 1961 5/87 40 Corvallis OR 1,710,000 0 115,000 1,710,000 1,825,000 537,701 1962 12/85 35 Eugene OR 1,220,000 0 80,000 1,220,000 1,300,000 383,620 1966 12/85 35 Eugene OR 2,280,000 0 140,000 2,280,000 2,420,000 716,933 1969 12/85 35 Portland OR 1,115,000 0 100,000 1,115,000 1,215,000 350,604 1954 12/85 35 Brownsville TN 2,957,367 0 100,000 2,957,367 3,057,367 312,167 1970 11/93 30 Celina TN 853,001 0 150,000 853,001 1,003,001 90,039 1972 11/93 30 Clarksville TN 3,479,066 0 350,000 3,479,066 3,829,066 367,234 1970 11/93 30 Columbia TN 2,240,415 0 225,000 2,240,415 2,465,415 202,705 1984 11/93 35 Hohenwald TN 3,732,032 0 90,000 3,732,032 3,822,032 393,936 1975 11/93 30 Jonesborough TN 2,536,323 0 65,000 2,536,323 2,601,323 267,723 1981 11/93 30
29 SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION NATIONWIDE HEALTH PROPERTIES, INC. DECEMBER 31, 1996
INITIAL COST COST GROSS AMOUNT AT WHICH TO COMPANY CAPITALIZED CARRIED AT CLOSE OF PERIOD(1) LIFE ON ------------ SUBSEQUENT ----------------------------------- ORIGINAL WHICH FACILITY TYPE BUILDING AND TO BUILDING AND ACCUM. CONSTRUCTION DATE DEPR. IS AND LOCATION IMPROVEMENTS ACQUISITION LAND(2) IMPROVEMENTS TOTAL DEPR. DATE ACQUIRED COMPUTED - ------------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ -------- -------- LONG-TERM HEALTH CARE FACILITIES: Martin TN $ 4,121,244 $ 0 $ 32,500 $ 4,121,244 $ 4,153,744 $ 435,020 1977 11/93 30 Selmer TN 2,229,622 1,200,000 28,000 3,429,622 3,457,622 235,315 1985 11/93 35 Baytown TX 1,853,302 0 61,000 1,853,302 1,914,302 289,578 1966 9/90 40 Baytown TX 2,326,487 0 90,000 2,326,487 2,416,487 363,514 1975 9/90 40 Bogota TX 1,820,005 0 13,463 1,820,005 1,833,468 541,668 1963 8/86 35 Bridge City TX 2,156,306 0 60,000 2,156,306 2,216,306 336,923 1970 9/90 40 Carrollton TX 1,373,892 0 236,000 1,373,892 1,609,892 214,670 1967 9/90 40 Center TX 1,388,420 0 22,000 1,388,420 1,410,420 216,941 1970 9/90 40 Eagle Lake TX 1,786,891 0 25,000 1,786,891 1,811,891 279,202 1972 9/90 40 El Paso TX 1,888,156 0 166,027 1,888,156 2,054,183 484,501 1980 2/88 40 Garland TX 1,573,127 0 238,000 1,573,127 1,811,127 245,801 1960 9/90 40 Gilmer TX 2,065,000 0 750,000 2,065,000 2,815,000 649,323 1970 12/85 35 Gladewater TX 2,017,965 0 124,642 2,017,965 2,142,607 241,034 1971 6/93 30 Houston TX 4,154,533 0 408,300 4,154,533 4,562,833 507,776 1986 5/93 35 Humble TX 1,772,363 0 140,000 1,772,363 1,912,363 276,931 1973 9/90 40 Huntsville TX 1,878,206 0 135,000 1,878,206 2,013,206 293,470 1968 9/90 40 Linden TX 2,519,626 0 24,909 2,519,626 2,544,535 300,955 1968 6/93 30 Marshall TX 864,650 0 19,300 864,650 883,950 219,765 1964 11/86 40 McKinney TX 1,455,904 0 1,318,310 1,455,904 2,774,214 354,877 1967 4/87 40 Mount Pleasant TX 2,504,551 0 39,960 2,504,551 2,544,511 299,154 1970 6/93 30 Nacogdoches TX 1,072,965 0 135,000 1,072,965 1,207,965 167,651 1973 9/90 40 New Boston TX 2,366,334 0 44,246 2,366,334 2,410,580 282,645 1966 6/93 30 Omaha TX 1,579,149 0 27,907 1,579,149 1,607,056 188,620 1970 6/93 30 San Antonio TX 1,981,974 0 32,000 1,981,974 2,013,974 309,683 1963 9/90 40 San Antonio TX 1,589,730 0 221,000 1,589,730 1,810,730 248,395 1965 9/90 40 Sherman TX 2,075,495 0 67,200 2,075,495 2,142,695 247,906 1971 6/93 30 Texarkana TX 1,243,520 0 87,270 1,243,520 1,330,790 370,096 1983 8/86 35 Waxahachie TX 3,493,338 0 318,798 3,493,338 3,812,136 822,390 1976 8/87 40 Annandale VA 7,752,000 0 487,000 7,752,000 8,239,000 2,437,557 1961 12/85 35 Charlottesville VA 4,620,250 0 362,000 4,620,250 4,982,250 1,452,802 1966 12/85 35 Petersburg VA 2,214,500 0 93,000 2,214,500 2,307,500 696,333 1973 12/85 35 Petersburg VA 2,944,750 0 94,000 2,944,750 3,038,750 925,953 1977 12/85 35 Batlleground WA 2,225,787 0 84,100 2,225,787 2,309,887 556,447 1949 12/86 40 Moses Lake WA 4,306,902 5,685 304,000 4,312,587 4,616,587 287,127 1972 9/94 35 Moses Lake WA 2,384,661 0 164,000 2,384,661 2,548,661 185,474 1988 9/94 30 Seattle WA 5,752,181 0 1,222,737 5,752,181 6,974,918 359,511 1993 7/94 40 Tacoma WA 1,503,190 0 575,000 1,503,190 2,078,190 375,797 1939 1/87 40 Chilton WI 2,275,183 0 54,953 2,275,183 2,330,136 677,138 1964 8/86 35 Florence WI 1,529,108 0 14,984 1,529,108 1,544,092 455,092 1971 8/86 35 Green Bay WI 2,254,673 0 299,765 2,254,673 2,554,438 671,033 1969 8/86 35 Oconto WI 2,070,879 0 49,976 2,070,879 2,120,855 616,333 1972 8/86 35 Sheboygan WI 1,696,673 0 219,243 1,696,673 1,915,916 500,922 1969 9/86 35 Shorewood WI 5,743,643 0 705,880 5,743,643 6,449,523 1,695,742 1971 9/86 35 St. Francis WI 535,324 0 79,725 535,324 615,049 158,047 1968 9/86 35 Tomah WI 1,744,999 0 115,000 1,744,999 1,859,999 548,702 1975 12/85 35 Wisconsin Dells WI 1,697,230 0 81,432 1,697,230 1,778,662 501,088 1970 9/86 35 ----------- --------- ---------- ----------- ----------- ---------- 383,892,899 6,132,619 37,607,673 390,025,518 427,633,191 81,542,126
30 SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION NATIONWIDE HEALTH PROPERTIES, INC. DECEMBER 31, 1996
INITIAL COST COST GROSS AMOUNT AT WHICH TO COMPANY CAPITALIZED CARRIED AT CLOSE OF PERIOD(1) LIFE ON ------------ SUBSEQUENT ------------------------------------- ORIGINAL WHICH FACILITY TYPE BUILDING AND TO BUILDING AND ACCUM. CONSTRUCTION DATE DEPR. IS AND LOCATION IMPROVEMENTS ACQUISITION LAND(2) IMPROVEMENTS TOTAL DEPR. DATE ACQUIRED COMPUTED - ------------- ------------ ----------- ----------- ------------ ------------ ----------- ------------ -------- -------- ASSISTED LIVING FACILITIES: Decatur AL $ 1,824,028 $ 0 $ 1,484,000 $ 1,824,028 $ 3,308,028 $ 13,028 1987 10/96 35 Hanceville AL 2,447,169 0 197,000 2,447,169 2,644,169 20,393 1996 8/96 40 Mesa AZ 1,391,652 2,538,818 519,000 3,930,470 4,449,470 49,216 1985 4/96 35 Carmichael CA 7,928,799 700,000 1,500,000 8,628,799 10,128,799 432,545 1983 5/95 30 Chula Vista CA 6,280,839 0 950,000 6,280,839 7,230,839 209,361 1989 10/95 35 Encinitas CA 5,016,511 0 1,000,000 5,016,511 6,016,511 246,507 1984 6/95 35 Mission Viejo CA 3,544,429 0 900,000 3,544,429 4,444,429 160,343 1985 6/95 35 Novato CA 3,657,065 0 2,500,000 3,657,065 6,157,065 142,219 1978 10/95 30 Palm Desert CA 6,181,258 250,000 1,400,000 6,431,258 7,831,258 428,751 1989 5/94 40 Placentia CA 3,800,106 0 1,320,000 3,800,106 5,120,106 200,561 1983 5/95 30 Rancho Cucamonga CA 4,155,552 0 610,000 4,155,552 4,765,552 187,989 1987 6/95 35 San Dimas CA 3,576,323 0 1,700,000 3,576,323 5,276,323 139,079 1975 10/95 30 Santa Maria CA 2,649,424 0 1,500,000 2,649,424 4,149,424 103,033 1977 10/95 30 SJ Capistrano CA 6,344,458 0 700,000 6,344,458 7,044,458 181,270 1985 12/95 35 Sn Jn Capistrano CA 3,833,162 0 1,225,000 3,833,162 5,058,162 182,532 1985 5/95 35 Vista CA 3,700,603 0 350,000 3,700,603 4,050,603 113,074 1980 2/96 30 Aurora CO 7,688,808 91,231 919,116 7,780,039 8,699,155 256,294 1983 12/95 30 Boulder CO 4,590,402 148,316 184,356 4,738,718 4,923,074 131,154 1992 12/95 40 Boulder CO 4,811,336 0 832,530 4,811,336 5,643,866 120,283 1985 12/95 35 Newport Richey FL 8,137,951 137,810 1,665,000 8,275,761 9,940,761 193,761 1987 3/96 35 North Miami FL 3,467,124 0 261,000 3,467,124 3,728,124 173,356 1970 6/95 30 Pensacola FL 1,580,083 400,000 170,000 1,980,083 2,150,083 24,185 1979 8/96 30 St Petersburg FL 2,396,070 937,762 2,000,000 3,333,832 5,333,832 71,893 1993 11/95 40 Boise ID 5,586,258 3,886,210 543,691 9,472,468 10,016,159 139,656 1978 12/95 30 Riverview MI 6,938,730 0 300,000 6,938,730 7,238,730 363,457 1987 2/95 35 Sharonville OH 4,012,894 0 225,000 4,012,894 4,237,894 210,199 1987 2/95 35 Oklahoma City OK 3,897,247 481,666 392,000 4,378,913 4,770,913 364,784 1982 5/94 30 Albany OR 3,542,458 50,392 511,290 3,592,850 4,104,140 118,064 1968 12/95 30 Albany(3) OR 2,334,536 47,259 92,160 2,381,795 2,473,955 77,818 1984 12/95 35 Forest Grove(4) OR 3,131,440 0 401,187 3,131,440 3,532,627 89,470 1994 12/95 40 Gresham OR 4,569,549 16,615 0 4,586,164 4,586,164 130,559 1988 12/95 35 McMinnville(5) OR 3,973,645 0 760,000 3,973,645 4,733,645 99,341 1989 12/95 35 Medford OR 4,325,518 0 313,389 4,325,518 4,638,907 108,138 1990 12/95 35 Brentwood TN 2,301,599 0 600,000 2,301,599 2,901,599 91,105 1995 6/95 40 Corsicana TX 1,490,261 0 117,000 1,490,261 1,607,261 3,104 1996 12/96 40 Dallas TX 3,499,929 718,334 308,000 4,218,263 4,526,263 338,490 1982 5/94 30 Denton TX 1,419,850 0 185,000 1,419,850 1,604,850 2,958 1996 12/96 40 Ennis TX 1,405,261 0 119,000 1,405,261 1,524,261 2,927 1996 12/96 40 Paris TX 1,460,895 0 166,000 1,460,895 1,626,895 3,043 1996 12/96 40 Richland WA 5,906,524 85,354 172,102 5,991,878 6,163,980 168,757 1990 12/95 35 ------------ ----------- ----------- ------------ ------------ ----------- 158,799,746 10,489,767 29,092,821 169,289,513 198,382,334 6,092,697 REHABILITATION HOSPITALS: Scottsdale AZ 5,874,214 0 241,762 5,874,214 6,115,976 1,260,508 1986 6/88 40 Tucson AZ 9,434,562 0 1,275,438 9,434,562 10,710,000 1,071,218 1992 6/92 40 ------------ ----------- ----------- ------------ ------------ ----------- 15,308,776 0 1,517,200 15,308,776 16,825,976 2,331,726 ------------ ----------- ----------- ------------ ------------ ----------- CONSTRUCTION IN PROGRESS: 2,132,918 0 7,034,114 2,132,918 9,167,032 -- ------------ ----------- ----------- ------------ ------------ ----------- GRAND TOTAL $560,134,339 $16,622,386 $75,251,808 $576,756,725 $652,008,533 $89,966,549 ============ =========== =========== ============ ============ =========== FACILITY TYPE AND LOCATION - ------------- ASSISTED LIVING FACILITIES: Decatur Hanceville Mesa Carmichael Chula Vista Encinitas Mission Viejo Novato Palm Desert Placentia Rancho Cucamonga San Dimas Santa Maria SJ Capistrano Sn Jn Capistrano Vista Aurora Boulder Boulder Newport Richey North Miami Pensacola St Petersburg Boise Riverview Sharonville Oklahoma City Albany Albany(3) Forest Grove(4) Gresham McMinnville(5) Medford Brentwood Corsicana Dallas Denton Ennis Paris Richland REHABILITATION HOSPITALS: Scottsdale Tucson CONSTRUCTION IN PROGRESS: GRAND TOTAL
31 (1) Also represents the approximate cost for Federal income tax purposes. (2) Gross amount at which land is carried at close of period also represents initial cost to the Company. (3) Real estate is security for notes payable in the aggregate of $2,116,279 at 12/31/96. (4) Real estate is security for notes payable in the aggregate of $3,413,919 at 12/31/96. (5) Real estate is security for notes payable in the aggregate of $3,699,000 at 12/31/96.
REAL ESTATE ACCUMULATED PROPERTIES DEPRECIATION ----------- ------------ (IN THOUSANDS) Balances at December 31, 1993: $395,350 $50,180 Acquisitions 61,286 11,824 Improvements 1,482 76 Sales -- -- -------- ------- Balances at December 31, 1994: 458,118 62,080 -------- ------- Acquisitions 143,944 13,227 Improvements 2,143 181 Sales (11,478) (1,766) -------- ------- Balances at December 31, 1995: 592,727 73,722 -------- ------- Acquisitions 48,963 15,797 Improvements 10,319 448 Sales -- -- -------- ------- Balances at December 31, 1996: $652,009 $89,967 ======== =======
32 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on April 11, 1997, filed or to be filed pursuant to Regulation 14A. ITEM 11. EXECUTIVE COMPENSATION. Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on April 11, 1997, filed or to be filed pursuant to Regulation 14A. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on April 11, 1997, filed or to be filed pursuant to Regulation 14A. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Incorporated herein by reference from the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on April 11, 1997, filed or to be filed pursuant to Regulation 14A. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a)(1) Financial Statements. Report of Independent Public Accountants Consolidated Balance Sheets at December 31, 1996 and 1995 Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements (2) Financial Statement Schedules Report of Independent Public Accountants Schedule III Real Estate and Accumulated Depreciation (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the three-month period ended December 31, 1996 33 (c) Exhibits
EXHIBIT NO. DESCRIPTION ----------- ----------- 3. Articles of Incorporation and Bylaws 3.1(a) Restated Articles of Incorporation, filed as Exhibit 3.1 to the Company's Registration Statement on Form S-11 (No. 33-1128), effective December 19, 1985, and incorporated herein by this reference. 3.1(b) Articles of Amendment of Amended and Restated Articles of Incorporation of the Company, filed as Exhibit 3.1 to the Company's Form 10-Q for the quarter ended March 31, 1989, and incorporated herein by this reference. 3.1(c) Articles of Amendment of Amended and Restated Articles of Incorporation of the Company, filed as Exhibit 3.1(c) to the Company's Registration Statement on Form S-11 (No. 33-32251), effective January 23, 1990, and incorporated herein by this reference. 3.1(d) Articles of Amendment of Amended and Restated Articles of Incorporation of the Company, filed as Exhibit 3.1(d) to the Company's Form 10-K for the year ended December 31, 1994, and incorporated herein by this reference. 3.2 Bylaws of the Company as amended January 19, 1996, filed as Exhibit 3.2 to the Company's Form 10-K for the year ended December 31, 1995, and incorporated herein by this reference. 4. Instruments Defining Rights of Security Holders, Including Indentures 4.1 Indenture dated as of November 16, 1992, between Nationwide Health Properties, Inc., Issuer to The Chase Manhattan Bank (National Association), Trustee, filed as Exhibit 4.1 to the Company's Form S-3 (No. 33-54870) dated November 24, 1992, and incorporated herein by this reference. 4.2 Indenture dated as of June 30, 1993, between the Company and First Interstate Bank of California, as Trustee, filed as Exhibit 4.2 to the Company's Registration Statement on Form S-3 (No. 33-64798), effective July 12, 1993, and incorporated herein by this reference. 4.3 First Supplemental Indenture dated November 15, 1993, between the Company and First Interstate Bank of California, as Trustee, filed as Exhibit 4.1 to the Company's Form 8-K dated November 15, 1993, and incorporated by reference herein. 4.4 Indenture dated as of January 12, 1996, between the Company and The Bank of New York, as Trustee, filed as Exhibit 4.1 to the Company's Registration Statement on Form S-3 (No 33-65423) dated December 27, 1995, and incorporated herein by this reference. 10. Material Contracts 10.1 Master Lease Document--General Terms and Conditions dated December 30, 1985, for Leases between various subsidiaries of Beverly as Lessees and the Company as Lessor, filed as Exhibit 10.3 to the Company's Form 10-K for the year ended December 31, 1985, and incorporated herein by this reference. 10.2 Guaranty by and between the Company and Beverly filed as Exhibit 10.7 to the Company's Registration Statement on Form S-11 (No. 33- 1128), effective December 19, 1985, and incorporated herein by this reference. 10.3 Corporate Guaranty of Obligations of Subsidiaries pursuant to Leases and Contract of Acquisition, dated as of August 1, 1986, of Beverly as Guarantor in favor of the Company filed as Exhibit 10.3 to the Company's Registration Statement on Form S-11 (No. 33- 32251), effective January 23, 1990, and incorporated herein by this reference. 10.4 Corporate Guaranty of Obligations of Subsidiaries pursuant to Leases and Contract of Acquisition, dated as of November 1, 1986, of Beverly as Guarantor in favor of the Company filed as Exhibit 10.4 to the Company's Registration Statement on Form S-11 (No. 33-32251), effective January 23, 1990, and incorporated herein by this reference.
34
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.5 Corporate Guaranty of Obligations of Subsidiaries pursuant to Leases, dated as of July 31, 1987, of Beverly as Guarantor in favor of the Company filed as Exhibit 10.5 to the Company's Registration Statement on Form S-11 (No. 33-32251), effective January 23, 1990, and incorporated herein by this reference. 10.6 1989 Stock Option Plan of the Company as Amended and Restated January 19, 1996. 10.7 The Company's Retirement Plan for Directors effective July 26, 1991 filed as Exhibit 10.13 to the Company's Form 10-K for the year ended December 31, 1991, and incorporated herein by this reference. 10.8 Deferred Compensation Plan of the Company effective September 1, 1991 filed as Exhibit 10.14 to the Company's Form 10-K for the year ended December 31, 1991, and incorporated herein by this reference. 10.9 Commercial and Multi-family Mortgage Loan Sale Agreement dated as of June 5, 1992 by and between Resolution Trust Corporation, as Receiver, and Nationwide Health Properties, Inc. filed as Exhibit A to the Company's Form 8-K dated May 29, 1992, and incorporated herein by this reference. 10.10 Credit Agreement dated as of May 20, 1993 between the Company and Wells Fargo Bank National Association, National Westminster Bank USA, The Daiwa Bank Limited and Sanwa Bank of California filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June 30, 1993, and incorporated herein by this reference. 10.10(a) Amendment Number One to Credit Agreement dated as of May 20, 1993 between the Company and Wells Fargo Bank National Association, National Westminster Bank USA, The Daiwa Bank Limited, and Sanwa Bank California filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter ended March 31, 1994, and incorporated herein by this reference. 10.10(b) Amendment Number Two to Credit Agreement dated as of May 20, 1993 between the Company and Wells Fargo Bank, National Association, National Westminster Bank USA, The Daiwa Bank, Limited and Sanwa Bank California, filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June 30, 1995, and incorporated herein by this reference. 10.10(c) Amendment Number Three to Credit Agreement dated as of January 22, 1996 between the Company and Wells Fargo Bank, National Association, National Westminster Bank USA, The Daiwa Bank, Limited and Sanwa Bank California, filed as Exhibit 10.10 (c) to the Company's Form 10-K for the year ended December 31, 1995, and incorporated herein by this reference. 10.10(d) Amendment Number Four and Waiver to Credit Agreement dated December 10, 1996 between the Company and Wells Fargo Bank, National Association, The Sumitomo Bank Limited, The Bank of New York, Sanwa Bank California and BHF-Bank Aktiengesellschaft. 10.11 Form of Indemnity Agreement between officers and directors of the Company including David R. Banks, Milton J. Brock, Jr., Sam A. Brooks, Jr., Charles D. Miller and Jack D. Samuelson, R. Bruce Andrews, Mark L. Desmond, Don M. Pearson, Gary E. Stark, and T. Andrew Stokes, and John J. Sheehan, Jr., filed as Exhibit 10.11 to the Company's Form 10-K for the year ended December 31, 1995, and incorporated herein by this reference. 10.12 Executive Employment Security Policy, filed as Exhibit 10.12 to the Company's Form 10-K for the year ended December 31, 1995, and incorporated herein by this reference. 21. Subsidiaries of the Company 23. Consents of Experts and Counsel 23.1 Consent of Arthur Andersen LLP 27. Financial Data Schedule
35 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE COMPANY HAS DULY CAUSED THIS ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. NATIONWIDE HEALTH PROPERTIES, INC. By: /s/ R. Bruce Andrews ___________________________________ R. Bruce Andrews President and Chief Executive Officer Dated: March 3, 1997 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE COMPANY AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Milton J. Brock, Jr. Chairman and Director March 3, 1997 ____________________________________ Milton J. Brock, Jr. /s/ R. Bruce Andrews President, Chief Executive March 3, 1997 ____________________________________ Officer and Director R. Bruce Andrews (Principal Executive Officer) /s/ Mark L. Desmomd Senior Vice President and March 3, 1997 ____________________________________ Chief Financial Officer Mark L. Desmond (Principal Financial and Accounting Officer) /s/ David R. Banks Director March 3, 1997 ____________________________________ David R. Banks /s/ Sam A. Brooks Director March 3, 1997 ____________________________________ Sam A. Brooks /s/ Charles D. Miller Director March 3, 1997 ____________________________________ Charles D. Miller /s/ Jack D. Samuelson Director March 3, 1997 ____________________________________ Jack D. Samuelson
36 APPENDIX 1 BEVERLY ENTERPRISES, INC. SET FORTH BELOW IS CERTAIN CONDENSED FINANCIAL DATA OF BEVERLY ENTERPRISES, INC. ("BEVERLY") WHICH IS TAKEN FROM BEVERLY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), AND THE BEVERLY QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 AS FILED WITH THE COMMISSION. The information and financial data contained herein concerning Beverly was obtained and has been condensed from Beverly's public filings under the Exchange Act. The Beverly financial data presented includes only the most recent interim and fiscal year end reporting periods. The Company can make no representation as to the accuracy and completeness of Beverly's public filings but has no reason not to believe the accuracy and completeness of such filings. It should be noted that Beverly has no duty, contractual or otherwise, to advise the Company of any events subsequent to such dates which might affect the significance or accuracy of such information. Beverly is subject to the information filing requirements of the Exchange Act, and in accordance therewith, is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Such reports, proxy statements and other information may be inspected at the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available at the following Regional Offices of the Commission: 7 World Trade Center, New York, N.Y. 10048, and 500 West Madison Street, Suite 1400, Chicago, IL 60661. Such reports and other information concerning Beverly can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, Room 1102, New York, New York 10005. BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, 1996 1995 ------------- ------------ Total current assets................................. $ 694,297 $ 716,592 Property and equipment, net.......................... 1,241,029 1,189,985 Total other assets................................... 624,629 599,884 ---------- ---------- Total assets......................................... $2,559,955 $2,506,461 ========== ========== Total current liabilities............................ $ 447,685 $ 551,545 Long-term obligations................................ 1,085,234 988,909 Other liabilities and deferred items................. 160,384 145,674 Total stockholders' equity........................... 866,652 820,333 ---------- ---------- Total liabilities and stockholders' equity........... $2,559,955 $2,506,461 ========== ==========
A-1-2 BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED YEARS ENDED DECEMBER 31, SEPTEMBER 30, -------------------------- 1996 1995 1994 ----------------- ------------ ------------ Revenues......................... $2,442,254 $ 3,242,781 $ 2,983,817 Costs and expenses: Operating and administrative... 2,205,043 2,960,832 2,715,496 Interest....................... 69,545 84,245 64,792 Depreciation and amortization.. 78,384 103,581 88,734 Impairment of long lived assets........................ -- 100,277 -- ---------- ------------ ------------ 2,352,972 3,248,935 2,869,022 Income (loss) before provision for income taxes and extraordinary charge............ 89,282 (6,154) 114,795 Provision for income taxes....... 35,713 1,969 37,882 Extraordinary charge, net of income taxes.................... -- -- (2,412) ---------- ------------ ------------ Net income (loss)................ $ 53,569 $ (8,123) $ 74,501 ========== ============ ============ Net income (loss) applicable to common shares................... $ 53,569 $ (14,998) $ 66,251 ========== ============ ============ Income (loss) per share of common stock: Primary: Before extraordinary charge.... $ .54 $ (.16) $ .79 Extraordinary charge........... -- -- (.03) ---------- ------------ ------------ Net income per share............. $ .54 $ (.16) $ .76 ========== ============ ============ Shares used to compute per share amounts......................... 99,740 92,233 87,087 ========== ============ ============
A-1-3 BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED YEARS ENDED DECEMBER 31, SEPTEMBER 30, -------------------------- 1996 1995 1994 ----------------- ------------ ------------ Cash flows from operating activities: Net income (loss).............. $ 53,569 $ (8,123) $ 74,501 Adjustments to reconcile net income (loss) to net cash provided by operating activities.................... 63,110 113,324 19,719 --------- ------------ ------------ Net cash provided by operating activities...................... 116,679 105,201 94,220 Net cash used for investing activities...................... (150,639) (143,546) (317,553) Net cash provided by financing activities...................... 26,539 26,684 214,239 --------- ------------ ------------ Net decrease in cash and cash equivalents..................... (7,421) (11,661) (9,094) Cash and cash equivalents at beginning of period............. 56,303 67,964 77,058 --------- ------------ ------------ Cash and cash equivalents at end of period....................... $ 48,882 $ 56,303 $ 67,964 ========= ============ ============
A-1-4 EX-10.6 2 1989 STOCK OPTION PLAN AS AMENDED 01/19/96 NATIONWIDE HEALTH PROPERTIES, INC. 1989 STOCK OPTION PLAN AS AMENDED AND RESTATED JANUARY 19, 1996 1. Purpose The purpose of the Nationwide Health Properties, Inc. 1989 Stock Option Plan (the "Plan") is to strengthen Nationwide Health Properties, Inc. (the "Corporation") and those corporations which are or hereafter become subsidiary corporations (the "Subsidiary" or "Subsidiaries") by providing additional means of attracting and retaining competent managerial personnel and by providing to participating directors, officers and employees added incentive for high levels of performance and for unusual efforts to increase the earnings, value and distributions of the Corporation and any Subsidiaries. The Plan seeks to accomplish these purposes and achieve these results by providing a means whereby such directors, officers and employees may receive shares of Restricted Stock, and/or Stock Options and/or Stock Appreciation Rights in accordance with this Plan. Stock Options granted pursuant to this Plan are intended to be Incentive Stock Options or Non-Qualified Stock Options, as shall be determined and designated by the Plan Committee upon the grant of each Stock Option hereunder. 2. Definitions For purposes of this Plan, the following terms shall have the following meanings: (a) Class I Participant. This term shall mean any initial and continuing director of the Corporation who is not a full-time officer of the Corporation, and shall also include at the time of his appointment to serve as a member of the Compensation Committee of the Board of Directors, any other director who is not a full time officer of the Corporation and who, at the time of such appointment, qualifies as a disinterested person under Rule 16b-3(c)(2)(i) promulgated under the Securities Exchange Act of 1934, as amended. Initial directors are those who were the Corporation's first directors as listed in its Articles of Incorporation. As of the date of this Amendment and Restatement, the initial and continuing directors are David R. Banks, Milton J. Brock, Jr., Sam A. Brooks, Jr., Robert H. Finch and Charles D.Miller, and as of the date of this Amendment and Restatement, there are no other Class I Participants. This Plan is designed to provide formula awards only, as defined under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, to Class I Participants, and to permit them to act as disinterested persons as defined under Rule 16b-3 with respect to grants to Class II and Class III participants. (b) Class II Participant. This term shall mean any director of the Corporation who is also a full-time officer of the Corporation, and, except as set forth in Section 2(a) above with respect to non-initial directors who qualify as disinterested persons and are appointed to serve as members of the Compensation Committee, any director who is not an initial director of the Company. (c) Class III Participant. This term shall mean any officer or employee of the Corporation who is not a director. Class III participants shall also include any director or officer or employee of a Subsidiary of the Corporation who is not otherwise a Class I or Class II Participant. (d) Common Stock. This term shall mean shares of the Corporation's common stock, $.10 par value, subject to adjustment pursuant to Section 18 (Adjustment Upon Changes in Capitalization) hereunder. (e) Corporation. This term shall mean Nationwide Health Properties, Inc., a Maryland Corporation. (f) Eligible Participants. This term shall mean all directors of the Corporation or any Subsidiary, and all officers or employees (whether or not they are also directors) of the Corporation or any Subsidiary. 1 (g) Fair Market Value. This term shall mean the fair market value of the Common Stock as determined in accordance with any reasonable valuation method selected by the Plan Committee, including the valuation methods described in Treasury Regulations Section 20.2031-2. Unless determined otherwise by the Plan Committee, "fair market value" shall be as applied to any date specified in the Plan, the closing price of a share of Common Stock on the New York Stock Exchange's composite tape on such date, or, if no such sales were made on such date, the closing price of such share on the New York Stock Exchange's composite tape on the next preceding date on which there were such sales. (h) Grantee. This term shall mean any Eligible Participant to whom Restricted Stock or Stock Appreciation Rights have been granted pursuant to this Plan. (i) Incentive Stock Option. This term shall mean a Stock Option which is an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. (j) Non-Qualified Stock Option. This term shall mean a Stock Option which is not an Incentive Stock Option. (k) Option Shares. This term shall mean Common Stock covered by and subject to any outstanding unexercised Stock Option granted pursuant to this Plan. (l) Optionee. This term shall mean any Eligible Participant to whom a Stock Option has been granted pursuant to this Plan, provided that at least part of the Stock Option is outstanding and unexercised. (m) Plan. This term shall mean the Nationwide Health Properties, Inc. 1989 Stock Option Plan, as amended and restated January 24, 1992, and as embodied herein and as may be further amended from time to time in accordance with the terms hereof and applicable law. (n) Plan Committee. The Compensation Committee of the Board of Directors of the Corporation shall constitute the Plan Committee and have full authority to act in the matter. The Plan Committee shall consist at all times of a committee of two or more directors. Only members of the Board of Directors who qualify as "disinterested persons" under this Plan pursuant to the provisions of Rule 16b-3(c)(2)(i) as promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 may be appointed as members of the Compensation Committee of the Board of Directors. All references in the Plan to the "Plan Committee" shall be deemed to refer to the Compensation Committee of the Board of Directors. The Board of Directors of the Corporation shall have the right, in its sole and absolute discretion, to remove or replace any person from or on the Compensation Committee at any time for any reason whatsoever. (o) Restricted Stock. This term shall mean shares of Common Stock of the Company granted without cost to the Participant pursuant to either Section 6 or 7, and subject to the terms of Section 8. (p) Stock Appreciation Right. This term shall mean a stock appreciation right as described in Section 12 of this Plan. (q) Stock Option. This term shall mean the right to purchase Common Stock under this Plan in a specified number of shares, at a price and upon the terms and conditions as specified in this Plan or as determined by the Plan Committee. (r) Subsidiary. This term shall mean each "subsidiary corporation" (treating the Corporation as the employer corporation) as defined in Section 425(f) of the Internal Revenue Code of 1986, as amended. 3. Administration (a) Administration of the Plan. This Plan shall be administered by the Plan Committee. Any action of the Plan Committee with respect to the administration of the Plan shall be taken pursuant to a majority vote, or pursuant to the unanimous written consent, of its members. Any such action taken by the Plan Committee 2 in the administration of this Plan shall be valid and binding, so long as the same is not inconsistent with the terms and conditions of this Plan. Except for the amount, price and timing of formula awards (as those terms are defined in Rule 16b-3) to Class I Participants and to the extent consistent with the availability to the Plan of Rule 16b-3 under the Securities Exchange Act of 1934 as amended, and subject to compliance with the terms, conditions and restrictions set forth in this Plan, the Plan Committee shall have the exclusive right, in its sole and absolute discretion, to establish the terms and conditions of all Restricted Stock, Stock Options and Stock Appreciation Rights granted under the Plan, including, without limitation, the power to determine the duration and purposes, if any, of leaves of absence which may be permitted to holders of unexercised, unexpired Stock Options without such constituting a termination under the Plan, and to prescribe and amend the terms, provisions and form of each instrument and agreement setting forth the terms and conditions of Restricted Stock, Stock Options and Stock Appreciation Rights granted hereunder. (b) Decisions and Determinations. Except for the amount, price and timing of formula awards (as those terms are defined in Rule 16b-3) to Class I Participants and subject to the express provisions of this Plan, the Plan Committee shall have the authority to construe and interpret this Plan, to define the terms used herein, to prescribe, amend and rescind rules and regulations relating to the administration of the Plan, and to make all other determinations necessary or advisable for administration of the Plan. Determinations of the Plan Committee on matters referred to in this Section 3 shall be final and conclusive so long as the same are not inconsistent with the terms of this Plan. 4. Shares Subject to the Plan Subject to adjustments as provided in Section 18 hereof, the maximum number of shares of Common Stock which may be issued as Restricted Stock or upon exercise of all Stock Options or pursuant to Stock Appreciation Rights granted under this Plan is limited to One Million Six Hundred Thousand (1,600,000) shares in the aggregate. If for any reason, unreleased shares of Restricted Stock do not vest, said shares shall again be available for grants of Restricted Stock, Stock Options or Stock Appreciation Rights under this Plan. If any Stock Option and/or Stock Appreciation Right shall be cancelled, surrendered, or expire for any reason without having been exercised in full, the Shares represented thereby shall again be available for grants of Restricted Stock, Stock Options or Stock Appreciation Rights under this Plan. 5. Eligibility Only Eligible Participants shall be eligible to receive grants of Restricted Stock, Stock Options or Stock Appreciation Rights under this Plan. 6. Formula Awards of Restricted Stock and Stock Options to Class I Participants Initial grants of Restricted Stock made to each Class I Participant who first become eligible after January 1996 shall be in the amount of 2,000 shares. Additional grants of 2,000 shares shall be made to each Class I Participant on or after each anniversary of the initial grant made heretofore under the Plan, commencing January 1, 1996. Initial grants of Stock Options covering 15,000 shares each were made to Class I Participants on November 13, 1989. Class I Participants are not eligible for further grants of Stock Options nor for any grants of Stock Appreciation Rights. 7. Discretionary Awards of Restricted Stock, Stock Options and Stock Appreciation Rights to Class II and Class III Participants 3 The Plan Committee, in its sole and absolute discretion, subject to the provisions of the Plan, may grant Restricted Stock, Stock Options and/or Stock Appreciation Rights to Class II and Class III Participants at such times and in such amounts and on such terms and conditions as it deems advisable and specifies in the respective grants. 8. Restricted Stock and Forfeiture Restrictions (a) Certain Terms. The shares of Restricted Stock granted to a Participant shall be released to him in accordance with such schedule as the Plan Committee, in its sole discretion, shall determine at the time of grant but in no event less than six months from the date of the grant; except for Class I Participants whose shares shall be released three years after the date of grant, provided that any such shares shall be fully released upon normal retirement from the Board of Directors. All shares of Restricted Stock shall be fully released not later than ten years from the date of grant. Except for normal retirement, or pursuant to the terms of the written agreement with a Class II or Class III Participant, the Grantee shall have no vested interest in the unreleased stock of any grant in the event of his termination with the Corporation for any reason (including failure of re-election, unless the Plan Committee in its sole discretion decides to terminate the forfeiture restrictions following the termination of such Grantee) and the unreleased stock certificates shall be cancelled. During the Grantee's continued employment or affiliation, however, he shall have the right to vote all shares and to receive all dividends as though all shares granted were his without restrictions, provided however, that any dividends received prior to shareholder vote on the Plan, as amended and restated on January 24, 1992, shall be held by the Corporation for the benefit of Grantees until the Plan is approved by the Shareholders, and if not approved, said dividend monies shall be returned to the Corporation's accounts as if no dividend had been paid on said shares. (b) Written Agreement. The details of each grant regarding shares of Restricted Stock shall be evidenced by a written agreement covering terms and conditions, not inconsistent with the Plan, as the Plan Committee shall approve. Such agreement shall be promptly delivered by Management of the Corporation to each Grantee. 9. Stock Options (a) Designation as Incentive or Nonqualified Options. The Plan Committee shall designate in each grant of a Stock Option whether the Stock Option is an Incentive Stock Option or a Non-Qualified Stock Option. The terms upon which and the times at which, or the periods within which, the Option Shares subject to such Stock Options may become acquired or such Stock Options may be acquired and exercised shall be as set forth in the Plan and the related Stock Option Agreements. (b) Date of Grant and Rights of Optionee. The determination of the Plan Committee to grant a Stock Option shall not in any way constitute or be deemed to constitute an obligation of the Corporation, or a right of the Eligible Participant who is the proposed subject of the grant, and shall not constitute or be deemed to constitute the grant of a Stock Option hereunder unless and until both the Corporation and the Eligible Participant have executed and delivered to the other a Stock Option Agreement in the form then required by the Plan Committee as evidencing the grant of the Stock Option, together with such other instrument or instruments as may be required by the Plan Committee pursuant to this Plan; provided, however, that the Plan Committee may fix the date of grant as any date on or after the date of its final determination to grant the Stock Option (or if no such date is fixed, then the date of grant shall be the date on which the determination was finally made by the Plan Committee to grant the Stock Option), and such date shall be set forth in the Stock Option Agreement. The date of grant as so determined shall be deemed the date of grant of the Stock Option for purposes of this Plan. (c) 10% Shareholder. A Stock Option granted hereunder to an Eligible Participant who owns, directly or indirectly, at the date of the grant of the Stock Option, more than ten percent (10%) of the total combined voting power of all classes of capital stock of the Corporation or a Subsidiary shall not qualify as an Incentive 4 Stock Option unless: (i) the purchase price of the Option Shares subject to said Stock Option is at least one hundred and ten percent (110%) of the Fair Market Value of the Option Shares, determined as of the date said Stock Option is granted; and (ii) the Stock Option by its terms is not exercisable after five (5) years from the date that it is granted. The attribution rules of Section 425(d) of the Internal Revenue Code of 1986 as amended, shall apply in the determination of indirect ownership of stock. (d) Maximum Value of Stock Options. No grant of Incentive Stock Options hereunder may be made when the aggregate fair market value of Option Shares with respect to which Incentive Stock Options (pursuant to this Plan or any other Incentive Stock Option Plan of the Corporation or any Subsidiary) are exercisable for the first time by the Eligible Participant during any calendar year exceeds $100,000. (e) Non-Qualified Stock Options. Stock Options granted by the Plan Committee shall be deemed Non-Qualified Stock Options under this Plan if they: (i) are designated at the time of grant as Incentive Stock Options but do not so qualify under the provisions of Section 422 of the Code or any regulations or rulings issued by the Internal Revenue Service for any reason; (ii) are not granted in accordance with the provisions of Section 9(c); (iii) are in excess of the fair market value limitations set forth in Section 9(d); (iv) are granted to an Eligible Participant who is not an employee of the Corporation or any Subsidiary; or (v) are designated at the time of grant as Non-Qualified Stock Options. Non-Qualified Stock Options granted hereunder shall be so designated in the Stock Option Agreement entered into between the Corporation and the Optionee. (f) Dividend Equivalents. In addition to Stock Options granted under this Plan, "Dividend Equivalents" may be granted under this Plan. The Dividend Equivalents shall be based on the dividends declared on the Common Stock and shall be credited as of dividend payment dates, during the period between the date of grant and the date the Stock Option is exercised or expires, as determined by the Plan Committee. Such Dividend Equivalents shall be payable in cash or additional shares of Common Stock by such formula and at such time and subject to such conditions as may be determined by the Plan Committee. Sections 13 through 21, Sections 24 through 26 and Section 29 of the Plan, as such sections apply to stock options, also shall apply to Dividend Equivalents. 10. Stock Option Exercise Price The exercise price of Option Shares shall be determined by the Committee at the date of grant, except that the exercise price of any Option Shares designated as Incentive Stock Options shall be one hundred percent (100%) of the Fair Market Value of the Common Stock represented by the Option Shares on the date of grant of the related Incentive Stock Option. 11. Exercise of Stock Options (a) Exercise. Except as otherwise provided elsewhere herein, if an Optionee shall not in any given period exercise any part of a Stock Option which has become exercisable during that period, the Optionee's right to exercise such part of the Stock Option shall continue until expiration of the Stock Option or any part thereof as may be provided in the related Stock Option Agreement. No Stock Option shall, except as provided in Section 19 hereof, become exercisable until one (1) year following the date of grant, and (i) as to Class I Participants, a Stock Option first becomes exercisable as to one-third ( 1/3) of the Option Shares called for thereby during the second year following the date of the grant, as to an additional one-third ( 1/3) during the third year and as to the remaining one-third ( 1/3) during the fourth year, and (ii) as to Class II or Class III Participants, Stock Options shall be exercisable as set forth by the Committee. No Stock Option or part thereof shall be exercisable except with respect to whole shares of Common Stock, and fractional share interests shall be disregarded except that they may be accumulated. (b) Prior Outstanding Incentive Stock Options. Incentive Stock Options granted to an Optionee under the Plan shall be exercisable even while such Optionee has outstanding and unexercised any Incentive Stock Option previously granted to him or her pursuant to this Plan or any other Incentive Stock Option Plan of 5 the Corporation or any Subsidiary. An Incentive Stock Option shall be treated as outstanding until it is exercised in full or expires by reason of lapse of time, or is otherwise cancelled by mutual action of the Optionee and the Corporation. (c) Notice and Payment. Stock Options granted hereunder shall be exercised by written notice delivered to the Corporation specifying the number of Option Shares with respect to which the Stock Option is being exercised, together with concurrent payment in full of the exercise price as hereinafter provided. If the Stock Option is being exercised by any person or persons other than the Optionee, said notice shall be accompanied by proof, satisfactory to the counsel for the Corporation, of the right of such person or persons to exercise the Stock Option. (d) Payment of Exercise Price. The exercise price of any Option Shares purchased upon the proper exercise of a Stock Option shall be paid in full at the time of each exercise of a Stock Option in cash or check and/or in Common Stock of the Corporation which, when added to the cash payment, if any, has an aggregate Fair Market Value equal to the full amount of the exercise price of the Stock Option, or part thereof, then being exercised. Payment by an Optionee as provided herein shall be made in full concurrently with the Optionee's notification to the Corporation of his intention to exercise all or part of a Stock Option. If all or any part of a payment is made in shares of Common Stock as heretofore provided, such payment shall be deemed to have been made only upon receipt by the Corporation of all required share certificates, and all stock powers and all other required transfer documents necessary to transfer the shares of Common Stock to the Corporation. In addition, Options may be exercised and payment made by delivering a properly executed exercise notice together with irrevocable instructions to a broker or bank to promptly deliver to the Corporation the amount of sale proceeds necessary to pay the exercise price and any applicable tax withholding. The date of exercise shall be deemed to be the date the Corporation receives the notice. (e) Minimum Exercise. Not less than ten (10) Options Shares may be purchased at any one time upon exercise of a Stock Option unless the number of shares purchased is the total number which remains to be purchased under the Stock Option. 12. Stock Appreciation Rights. (a) Grant of Stock Appreciation Rights. A Stock Appreciation Right may be granted to any Class II or Class III Participant selected by the Plan Committee to whom Option Shares may be granted under this Plan. A Stock Appreciation Right may be granted (a) in connection and simultaneously with the grant of an Option, (b) independent of an Option. A Stock Appreciation Right shall be subject to such terms and conditions not inconsistent with this Plan as the Plan Committee shall impose and shall be evidenced by a written Stock Appreciation Right Agreement, which shall be executed by the Grantee and an authorized officer of the Corporation. (b) Coupled Stock Appreciation Rights (i) A Coupled Stock Appreciation Right ("CSAR") shall be related to a particular Option and shall be exercisable only when and to the extent the related Option is exercisable. (ii) A CSAR may be granted to the Grantee for not more than the number of shares subject to the simultaneously granted Option to which it is coupled. (iii) A CSAR shall entitle the Grantee to surrender to the Company unexercised a portion of the Option to which the CSAR relates and to receive from the Company in exchange therefor an amount determined by multiplying the difference obtained by subtracting the Option exercise price of the Option from the Fair Market Value of a share of Common Stock on the date of exercise of the CSAR by the number of shares of Common Stock with respect to which the CSAR shall have been exercised, subject to any limitations the Committee may impose. 6 (c) Independent Stock Appreciation Rights (i) An Independent Stock Appreciation Right ("ISAR") shall be unrelated to any Option and shall have a term set by the Committee. Except as otherwise set forth in this Plan, an ISAR shall be exercisable at such times and in such installments as the Committee may determine, and shall cover such number of shares of Common Stock as the Committee may determine. The exercise price per share of Common Stock subject to each ISAR shall be set by the Committee. (ii) An ISAR shall entitle the Grantee to exercise all or a specified portion of the ISAR (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the ISAR from the Fair Market Value of a share of Common Stock on the date of exercise of the ISAR by the number of shares of Common Stock with respect to which the ISAR shall have been exercised, subject to any limitations the Committee may impose. (d) Payment and Limitations on Exercise (i) Payment of the amount determined under this Section 12 shall be in cash, in Common Stock or a combination of both, as determined by the Committee. (ii) So long as Rule 16b-3 under the Exchange Act, or any successor thereto, so provides, no CSAR shall be exercisable during the first six months after it is granted with respect to an outstanding Option, except to the extent that the Committee in its discretion permits such exercise in the event of the Grantee's death or disability within the meaning of Section 105(d)(4) of the Code. (iii) So long as Rule 16b-3 under the Exchange Act, or any successor thereto, so provides, cash payment upon exercise of a Stock Appreciation Right may only be made if such Stock Appreciation Right is exercised during the period beginning on the third business day following the date of the Company's release of its quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date. 13. Nontransferability Except as otherwise provided herein each Stock Option and Stock Appreciation Right and all unreleased shares of Restricted Stock shall, by their terms, be nontransferable by the Optionee or Grantee other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income Security Act, or the rules thereunder. Stock Options and Stock Appreciation Rights shall be exercisable during the lifetime of the Optionee or Grantee only by the Optionee or Grantee. 14. Affiliation Nothing contained in this Plan (or in any Stock Option, Stock Appreciation Rights or Restricted Stock Agreement) shall obligate the Corporation or any Subsidiary to employ or continue to employ or remain affiliated with any Participant for any period of time or interfere in any way with the right of the Corporation or a Subsidiary to reduce or increase the Participant's compensation. Except as provided in Section 15 hereof, if, for any reason other than disability or death, an Optionee ceases to be affiliated with the Corporation or a Subsidiary, the Stock Options and/or Stock Appreciation Rights granted to such Optionee shall expire on the expiration dates specified for said Stock Options and/or Stock Appreciation Rights at the time of their grant, or three (3) months after the Optionee ceases to be so affiliated, whichever is earlier. During such period after cessation of affiliation, such Stock Options and/or Stock Appreciation Rights shall be exercisable only as to those increments, if any, which had become exercisable as of the date on which such Optionee ceased to be affiliated with the Corporation or the Subsidiary, and any Stock Options and/or Stock Appreciation Rights or increments which had not become exercisable as of such date shall expire automatically on such date. 7 15. Termination for Cause If the Stock Option and/or Stock Appreciation Rights Agreement so provides and if an Optionee's or Grantee's employment by or affiliation with the Corporation or a Subsidiary is terminated for cause, the Stock Options and/or Stock Appreciation Rights granted to such Optionee or Grantee shall automatically expire and terminate in their entirety immediately upon such termination; provided, however, that the Plan Committee may, in its sole discretion, within thirty (30) days of such termination, reinstate such Stock Options and/or Stock Appreciation Rights by giving written notice of such reinstatement to the Optionee or Grantee. In the event of such reinstatement, the Optionee or Grantee may exercise the Stock Options and/or Stock Appreciation Rights only to such extent, for such time, and upon such terms and conditions as if the Optionee or Grantee had ceased to be employed by or affiliated with the Corporation or a Subsidiary upon the date of such termination for a reason other than cause, disability or death. Termination for cause shall include, but shall not be limited to, termination for malfeasance or gross misfeasance in the performance of duties or conviction of illegal activity in connection therewith and, in any event, the determination of the Plan Committee with respect thereto shall be final and conclusive. 16. Death of Optionee or Grantee If an Optionee or Grantee dies while employed by or affiliated with the Corporation or a Subsidiary, or during the three-month period referred to in Section 14 hereof, the Stock Options and/or Stock Appreciation Rights granted to such Optionee or Grantee shall expire on the expiration dates specified for said Stock Options and/or Stock Appreciation Rights at the time of their grant, or one (1) year after the date of such death, whichever is earlier. After such death, but before such expiration, subject to the terms and provisions of the Plan and the related Stock Option and/or Stock Appreciation Rights Agreements, the person or persons to whom such Optionee's or Grantee's rights under the Stock Options and/or Stock Appreciation Rights shall have passed by will or by the applicable laws of descent and distribution, or the executor or administrator of the Optionee's or Grantee's estate, shall have the right to exercise such Stock Options and/or Stock Appreciation Rights to the extent that increments, if any, had become exercisable as of the date on which the Optionee or Grantee died. 17. Disability of Optionee or Grantee If an Optionee or Grantee is disabled while employed by or affiliated with the Corporation or a Subsidiary or during the three-month period referred to in Section 14 hereof, the Stock Options and/or Stock Appreciation Rights granted to such Optionee or Grantee shall expire on the expiration dates specified for said Stock Options and/or Stock Appreciation Rights at the time of their grant, or one (1) year after the date such disability occurred, whichever is earlier. After such disability occurs, but before such expiration, the Optionee or Grantee or the guardian or conservator of the Optionee's or Grantee's estate, as duly appointed by a court of competent jurisdiction, shall have the right to exercise such Stock Options and/or Stock Appreciation Rights to the extent that increments, if any, had become exercisable as of the date on which the Optionee or Grantee became disabled or ceased to be employed by or affiliated with the Corporation or a Subsidiary as a result of the disability. An Optionee or Grantee shall be deemed to be "disabled" if it shall appear to the Plan Committee, upon written certification delivered to the Corporation of a qualified licensed physician, that the Optionee or Grantee has become permanently and totally unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in the Optionee's or Grantee's death, or which has lasted or can be expected to last for a continuous period of not less than 12 months. 18. Adjustment Upon Changes in Capitalization If the outstanding shares of Common Stock of the Corporation are increased, decreased, or changed into or exchanged for a different number or kind of shares or securities of the Corporation, through a reorganization, merger, recapitalization, reclassification, stock split, stock dividend, stock consolidation, or otherwise, without consideration to the Corporation, an appropriate and proportionate adjustment shall be made in the number and kind of shares as to which Stock Options and Stock Appreciation Rights may be granted. A corresponding 8 adjustment changing the number or kind of Option Shares and the exercise prices per share allocated unexercised Stock Options, or portions thereof, and/or with respect to Stock Appreciation Rights which shall have been granted prior to any such change, shall likewise be made. Such adjustments shall be made without change in the total price applicable to the unexercised portion of the Stock Option and/or Stock Appreciation Rights, but with a corresponding adjustment in the price for each share subject to the Stock Option and/or Stock Appreciation Rights. Adjustments under this Section shall be made by the Plan Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final and conclusive. No fractional shares of stock shall be issued or made available under the Plan on account of such adjustments, and fractional share interests shall be disregarded, except that they may be accumulated. 19. Terminating Events Upon consummation of a plan of dissolution or liquidation of the Corporation, or upon consummation of a plan of reorganization, merger or consolidation of the Corporation with one or more corporations, as a result of which the Corporation is not the surviving entity, or upon the sale of all or substantially all the assets of the Corporation to another corporation, the Plan shall automatically terminate and all unreleased shares of Restricted Stock shall be released (but in no event during the first six months after the date of grant of such shares of Restricted Stock so long as Rule 16b-3(c), or any successor thereto, so provides) under such circumstances, and all Stock Options and/or Stock Appreciation Rights theretofore granted shall be terminated, subject to provisions of the immediately following paragraph in this Section 19, unless provision is made in connection with such transaction for assumption of Stock Options and/or Stock Appreciation Rights theretofore granted, or substitution for such Stock Options and/or Stock Appreciation Rights with new options covering stock of a successor employer corporation, or a parent or subsidiary corporation thereof, solely at the discretion of such successor corporation, or parent or subsidiary corporation, with appropriate adjustments as to number and kind of shares and prices. Notwithstanding the immediately preceding paragraph and/or any provision in any Stock Option or Stock Appreciation Right Agreement pertaining to the time of exercise of a Stock Option or Stock Appreciation Right, or part thereof, upon adoption by the requisite holders of the outstanding shares of Common Stock of any plan of dissolution, liquidation, reorganization, merger, consolidation or sale of all or substantially all of the assets of the Corporation to another corporation which would, upon consummation, result in termination of a Stock Option or Stock Appreciation Right, all Stock Options or Stock Appreciation Rights previously granted shall become immediately exercisable (but in no event shall be exercisable during the first six months after they are granted so long as Rule 16b-3(c), or any successor thereto, so provides) as to all unexercised Shares for such period of time as may be determined by the Plan Committee, but in any event not less than 30 days, on the condition that the terminating event is consummated. If such terminating event is not consummated, Stock Options or Stock Appreciation Rights granted pursuant to the Plan shall be exercisable in accordance with the terms of their respective Stock Option or Stock Appreciation Right Agreements. 20. Amendment and Termination The Board of Directors of the Corporation may at any time and from time to time suspend, amend, or terminate the Plan. However, except as permitted under the provisions of Section 18 hereof, if any amendment would (a) materially increase the benefits accruing to Participants under this Plan, (b) materially increase the aggregate number of securities that may be issued under this Plan, or (c) materially modify the requirements as to eligibility for participation in this Plan, then to the extent then required by Rule 16b-3 to secure benefits thereunder or to avoid liability under Section 16 of the Exchange Act (and Rules thereunder) or required under the provisions of the Internal Revenue Code for qualification of Incentive Stock Options, or as required by the rules of the New York Stock Exchange or required by any applicable law, or deemed necessary or advisable by the Board, such amendment shall be subject to shareholder approval. 9 The provisions of this Plan shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. No Stock Option or Stock Appreciation Right and no shares of Restricted Stock may be granted during any suspension of the Plan or after termination of the Plan. Amendment, suspension, or termination of the Plan shall not (except as otherwise provided in Section 19 hereof), without the consent of the Participant, alter or impair any rights or obligations theretofore granted. 21. Rights of Eligible Participants No Eligible Participant or other person shall have any claim or right to be granted Restricted Stock or Stock Options or Stock Appreciation Rights under this Plan, and neither this Plan nor any action taken hereunder shall be deemed to give or be construed as giving any Eligible Participant or other person any right to be retained in the employ of the Corporation or any Subsidiary. Without limiting the generality of the foregoing, no person shall have any rights as a results of his or her classification as an Eligible Participant, such classification being made solely to describe, define and limit those persons who are eligible for consideration for privileges under the Plan. 22. Privileges of Stock Ownership; Regulatory Law Compliance; Notice of Sale No Optionee or Grantee shall be entitled to the privileges of stock ownership as to any shares not actually issued and delivered. No shares may be purchased upon the exercise of a Stock Option or Stock Appreciation Right unless and until all then applicable requirements of all regulatory agencies having jurisdiction and all applicable requirements of the securities exchanges upon which securities of the Corporation are listed (if any) shall have been fully complied with. 23. Effective Date of the Plan The Plan, prior to any amendments, was adopted by the Board of Directors on November 13, 1989, and was approved by the shareholders on April 27, 1990. The amendments to the Plan as embodied in this Amended and Restated Plan dated January 24, 1992, shall be effective on January 24, 1992 subject to approval of the Amended and Restated Plan by the holders of at least a majority of the Corporation's outstanding shares of Common Stock. 24. Termination Unless previously terminated as aforesaid, the Plan shall terminate on November 12, 1999. No Stock Options or Stock Appreciation Rights or shares of Restricted Stock shall be granted under the Plan thereafter, but such termination shall not affect any Stock Option or Stock Appreciation Right or grant of Restricted Stock theretofore granted. 25. Stock Option and Stock Appreciation Right Period Each Stock Option and Stock Appreciation Right and all rights and obligations thereunder shall expire on such date as the Plan Committee may determine, but not later than ten (10) years from the date such Stock Option is granted in the case of Incentive Stock Options and eleven (11) years from the date of grant in the case of Non-Qualified Stock Options and Stock Appreciation Rights, and each Stock Option and Stock Appreciation Right shall be subject to earlier termination as provided elsewhere in this Plan. 26. Exculpation and Indemnification of Plan Committee The present, former and future members of the Plan Committee, and each of them, who is or was a director, officer or employee of the Corporation shall be indemnified by the Corporation to the extent 10 authorized in and permitted by the Corporation's Certificate of Incorporation, and/or Bylaws in connection with all actions, suits and proceedings to which they or any of them may be a party by reason of any act or omission of any member of the Plan Committee under or in connection with the Plan or any Stock Option or Stock Appreciation Right granted thereunder. 27. Compliance With Law and Representations of Participant No shares of Common Stock shall be issued upon exercise of any Stock Option or Stock Appreciation Rights, and an Optionee or Grantee shall have no right or claim to such shares, unless and until: (i) payment in full has been received by the Corporation with respect to the exercise of any Stock Option; (ii) in the opinion of the counsel for the Corporation, all applicable requirements of law and of regulatory bodies having jurisdiction over such issuance and delivery have been fully complied with; and (iii) if required by federal or state law or regulation, the Optionee or Grantee shall have paid to the Corporation the amount, if any, required to be withheld on the amount deemed to be compensation to the Optionee or Grantee as a result of the exercise of his or her Stock Option or Stock Appreciation Rights, or made other arrangements satisfactory to the Corporation, in its sole discretion, to satisfy applicable income tax withholding requirements. Unless the shares of Common Stock covered by this Plan have been registered with the Securities and Exchange Commission pursuant to the registration requirements under the Securities Act of 1933, each Participant shall: (i) by and upon accepting shares of Restricted Stock or a Stock Option or Stock Appreciation Right, represent and agree in writing, that the Stock or Stock Appreciation Right will be acquired for investment purposes and not for resale or distribution; and (ii) by and upon the exercise of a Stock Option or Stock Appreciation Right, or a part thereof, furnish evidence satisfactory to counsel for the Corporation, including written and signed representations to the effect that the Shares are being acquired for investment purposes and not for resale or distribution, and that the Shares being acquired shall not be sold or otherwise transferred by the Participant except in compliance with the registration provisions under the Securities Act of 1933, as amended, or an applicable exemption therefrom. Furthermore, the Corporation, at its sole discretion, to assure itself that any sale or distribution by the Participant complies with this Plan and any applicable federal or state securities laws, may take all reasonable steps, including placing stop transfer instructions with the Corporation's transfer agent prohibiting transfers in violation of the Plan and affixing the following legend (and/or such other legend or legends as the Plan Committee shall require) on certificates evidencing the shares: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION OF COUNSEL FOR THE HOLDER THEREOF, WHICH OPINION SHALL BE ACCEPTABLE TO NATIONWIDE HEALTH PROPERTIES, INC., THAT REGISTRATION IS NOT REQUIRED." 28. Notices All notices and demands of any kind which the Plan Committee, or any Participant, or other person may be required or desires to give under the terms of this Plan shall be in writing and shall be delivered in hand to the person or persons to whom addressed (in the case of the Plan Committee, with the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Treasurer, any Vice President, or Secretary or any Assistant Secretary of the Corporation), by leaving a copy of such notice or demand at the address of such person or person as may be reflected in the records of the Corporation, or by mailing a copy thereof, properly addressed as above, by certified or registered mail, postage prepaid, with return receipt requested. Delivery by mail shall be deemed made upon receipt by the notifying party of the return receipt request acknowledging receipt of the notice or demand. 11 29. Limitation on Obligations of the Corporation All obligations of the Corporation arising under or as a result of this Plan or Stock Options, Restricted Stock or Stock Appreciation Rights granted hereunder shall constitute the general unsecured obligations of the Corporation, and not of the Board of Directors of the Corporation, any member thereof, the Plan Committee, any member thereof, any officer of the Corporation, or any other person or any Subsidiary, and none of the foregoing, except the Corporation, shall be liable for any debt, obligation, cost or expense hereunder. 30. Limitation of Rights Except as otherwise provided by the terms of the Plan, the Plan Committee, in its sole and absolute discretion, is entitled to determine who, if anyone, is an Eligible Participant under this Plan, and which, if any, Eligible Participant shall receive any grant. No oral or written agreement by any other person not acting on behalf of the Plan Committee relating to this Plan is authorized, and such may not bind the Corporation or the Plan Committee to make any grant to any person. 31. Severability If any provision of this Plan is applied to any person or to any circumstance shall be adjudged by a court of competent jurisdiction to be void, invalid, or unenforceable, the same shall in no way affect any other provision hereof, the application of any such provision in any other circumstances, or the validity or enforceability hereof. 32. Construction Where the context or construction requires, all words applied in the plural herein shall be deemed to have been used in the singular and vice versa, and the masculine gender shall include the feminine and the neuter and vice versa. 33. Headings The headings of the several paragraphs herein are inserted solely for convenience of reference and are not intended to form a part of and are not intended to govern, limit or aid in the construction of any term or provision hereof. 34. Successors This Plan shall be binding upon the respective successors, assigns, heirs, executors, administrators, guardians and personal representatives of the Corporation and participants. 12 EX-10.10(D) 3 AMENDMENT #4 AND WAIVER TO CREDIT AGREEMENT AMENDMENT NUMBER FOUR AND WAIVER TO CREDIT AGREEMENT This AMENDMENT NUMBER FOUR AND WAIVER TO CREDIT AGREEMENT, dated as of December 10, 1996 (this "Amendment"), is entered into among NATIONWIDE HEALTH PROPERTIES, INC., a Maryland corporation (the "Borrower"), the financial institutions which are signatories to the Credit Agreement (each a "Bank" and, collectively, the "Banks"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as agent for the Banks thereunder (in such capacity, the "Agent"). WHEREAS, the Borrower has requested that the Banks amend certain provisions of the Credit Agreement to provide for, among other things, the reduction of certain minimum amounts for Borrowings, conversions into or continuations of Eurodollar Rate Portions, and optional prepayments. WHEREAS, the Borrower has informed the Banks and the Agent that the Borrower intends to enter into a transaction pursuant to which the Borrower will acquire two (2) continuing care retirement community facilities located in Oak Park, Illinois and Corpus Christi, Texas (the "Properties"), lease the Properties to American Retirement Communities, L.P. ("ARC"), and make renovations to the Corpus Christi, Texas Property, all as more particularly described in a memorandum (the "Memorandum") from Andy Stokes and John Sheehan to the Borrower's Investment Committee, dated November 13, 1996, a true and complete copy of which is attached hereto as Exhibit "A" (the transaction substantially as described in the Memorandum is referred to herein as the "Transaction"); WHEREAS, the Borrower has requested that the Banks and the Agent waive the Borrower's compliance with certain covenants set forth in Section 9.4 of the Credit Agreement in connection with the consummation of the Transaction; and WHEREAS, on the terms and conditions contained herein, the Banks and the Agent have agreed to amend such provisions of the Credit Agreement and to waive the Borrower's compliance with certain covenants set forth in Section 9.4 of the Credit Agreement. NOW, THEREFORE, in consideration of the above premises and the mutual covenants, conditions, and provisions hereinafter set forth, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS; CONSTRUCTION 1.1. Definitions for this Amendment. Any and all initially capitalized terms used herein shall have the meanings ascribed thereto in the Credit Agreement unless specifically defined herein. For purposes of this Amendment, the following initially capitalized terms shall have the following meanings: "Agent" shall have the meaning set forth in the introduction to this Amendment. "Amendment" means this Amendment Number Four and Waiver to Credit Agreement among the Borrower, the Banks, and the Agent. "Bank" and "Banks" shall have the respective meanings set forth in the introduction to this Amendment. "Borrower" shall have the meaning set forth in the introduction to this Amendment. "Credit Agreement" means that certain Credit Agreement, dated as of May 20, 1993, among the Borrower, the Banks, and the Agent, as amended by that certain Amendment Number One to Credit Agreement dated as of April 28, 1994, that certain Amendment Number Two to Credit Agreement dated as of July 11, 1995, and that certain Amendment Number Three to Credit Agreement dated as of January 22, 1996. 1 1.2. Construction. Unless the context of this Amendment clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the part includes the whole, the terms "include" and "including" are not limiting, and the term "or" has the inclusive meaning represented by the phrase "and/or". ARTICLE 2 AMENDMENT OF CERTAIN PROVISIONS OF THE CREDIT AGREEMENT 2.1 Amendment of Section 2.2(a) of the Credit Agreement. Section 2.2(a) of the Credit Agreement is amended by deleting clause (C) therefrom in its entirety and substituting therefor the following clause: (C) the aggregate amount of the Borrowing, which (1) in the case of the Base Rate Portions thereof shall be in the amount of $500,000 or a greater amount which is an integral multiple of $100,000, and (2) in the case of the Eurodollar Rate Portions thereof shall be in the amount of $2,000,000 or a greater amount which is an integral multiple of $100,000; 2.2 Amendment of Section 3.5(a) of the Credit Agreement. Section 3.5(a) of the Credit Agreement is amended by deleting clause (C) therefrom in its entirety and substituting therefor the following clause: (C) the aggregate amount of the Loans that are the subject of such continuation or conversion, which in the case of a conversion into or continuation of Eurodollar Rate Portions shall be in the amount of $2,000,000 or a greater amount which is an integral multiple of $100,000; and 2.3 Amendment of Section 4.3 of the Credit Agreement. Section 4.3 of the Credit Agreement is amended by deleting subsection (a) therefrom in its entirety and substituting therefor the following subsection: (a) Optional Prepayments. The Borrower may, upon at least one Business Day's written notice to the Agent for Base Rate Portions and three Eurodollar Business Days written notice to the Agent for Eurodollar Rate Portions, prepay the outstanding amount of the Loans in whole or ratably in part, without premium or penalty, subject to a Bank's right to make a request for compensation as provided in Section 5.2. Partial prepayments of Base Rate Portions shall be in an aggregate principal amount of at least $500,000 or a greater amount which is an integral multiple of $100,000, and partial prepayments of Eurodollar Rate Portions in each case shall be in an aggregate principal amount of at least $2,000,000 or a greater amount which is an integral multiple of $100,000. ARTICLE 3 WAIVERS OF CERTAIN PROVISIONS OF THE CREDIT AGREEMENT 3.1 Waiver of Section 9.4(f)(iii) of the Credit Agreement. The Banks hereby agree to waive the Borrower's compliance with subsection (f)(iii) of Section 9.4 of the Credit Agreement in connection with the consummation of the Transaction to the extent the Transaction includes the purchase of the Properties for a consideration which exceeds $20,000,000; provided, however, that such purchase consideration shall not exceed $27,000,000 (exclusive of Borrower's transaction expenses). 3.2 Waiver of Section 9.4(g) of the Credit Agreement. The Banks hereby agree to waive the Borrower's compliance with subsection (g) of Section 9.4 of the Credit Agreement in connection with the consummation of the Transaction to the extent the Transaction includes expenditures for fixed or capital assets in connection with the renovation of the Corpus Christi, Texas Property; provided, however, that such expenditures shall not exceed $14,000,000 in the aggregate and shall be made, if at all, on or before December 31, 1998. 2 ARTICLE 4 MISCELLANEOUS 4.1 Loan Documents. This Amendment shall be one of the Loan Documents. 4.2 Execution. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original. All of such counterparts shall constitute but one and the same instrument. Delivery of an executed counterpart of the signature pages of this Amendment by telecopier shall be equally effective as delivery of a manually executed counterpart. Any party delivering an executed counterpart of the signature pages of this Amendment by telecopier shall thereafter also promptly deliver a manually executed counterpart, but the failure to deliver such manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment. 4.3 Effectiveness. This Amendment shall be effective as of the date first written above, when one or more counterparts hereof shall have been executed by the Borrower, the Banks, and the Agent and shall have been delivered to the Agent. 4.4 No Other Amendment. Except as expressly amended hereby and except with respect to the specific waivers set forth in Article 3 hereof, the Credit Agreement shall remain unchanged and in full force and effect. To the extent any terms or provisions of this Amendment conflict with those of the Credit Agreement, the terms and provisions of this Amendment shall control. This Amendment shall be deemed a part of and is hereby incorporated in the Credit Agreement. 4.5 Governing Law and Venue. THE VALIDITY OF THIS AMENDMENT, ITS CONSTRUCTION, INTERPRETATION AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO, SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. 4.6 Definitive Agreements. Promptly after the consummation of the purchase and leaseback portion of the Transaction, the Borrower shall deliver to the Agent fully-executed copies of the definitive agreements entered into by the Borrower, ARC and any other Persons in connection with such purchase and leaseback, together with copies of such further documents relating to such definitive agreements as are requested by the Agent. In addition, the Borrower shall deliver to the Agent copies of such agreements, plans and other documentation regarding the renovation of the Corpus Christi, Texas Property as are requested by the Agent. 3 IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of the date first above written. WELLS FARGO BANK, NATIONAL SANWA BANK CALIFORNIA ASSOCIATION, in its individual capacity and as Agent By __________________________________ By __________________________________ Title: ______________________________ Title: ______________________________ THE SUMITOMO BANK, LIMITED BHF-BANK AKTIENGESELLSCHAFT By __________________________________ By __________________________________ Title: ______________________________ Title: ______________________________ By __________________________________ By __________________________________ Title: ______________________________ Title: ______________________________ THE BANK OF NEW YORK By __________________________________ Title: ______________________________ NATIONWIDE HEALTH PROPERTIES, INC. By __________________________________ Title: ______________________________ 4 EX-21 4 SUBSIDIARIES OF THE COMPANY EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT AS OF DECEMBER 31, 1996
STATE OF NAME INCORPORATION ---- ------------- Nationwide Health Properties Finance Corporation.................. Delaware MLD Financial Capital Corporation................................. Delaware
EX-23.1 5 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into the Company's previously filed Registration Statement No. 33-35276, Registration Statement No. 33-39156, Registration Statement No. 33-64798, Registration Statement No. 33-65423, Registration Statement No. 333-17061 and Registration Statement No. 333-20589. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Orange County, California January 17, 1997 1 EX-27 6 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 11,709 0 4,321 0 0 6,448 652,009 89,967 744,984 19,947 296,449 0 0 4,179 424,409 744,984 0 95,776 0 40,832 3,312 0 20,797 54,944 0 0 0 0 0 54,944 1.36 0
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