-----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, DgAnGJG4t/oWDodDMGxETnD22TQH2PBBlDyWRCKkHAtbY+pBmItpAOzwCA1OGI/3 HhIElA98vg58jX07pO5jXw== 0001017062-98-000515.txt : 19980312 0001017062-98-000515.hdr.sgml : 19980312 ACCESSION NUMBER: 0001017062-98-000515 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980311 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: SEC FILE NUMBER: 001-09028 FILM NUMBER: 98563937 BUSINESS ADDRESS: STREET 1: 610 NEWPORT CENTER DR STREET 2: STE 1150 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7142511211 MAIL ADDRESS: STREET 1: 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 12/31/97 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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, 1997 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 7.677% Series A Cumulative Preferred None 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 $1,135,803,000 as of February 28, 1998. 43,323,679 (NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF FEBRUARY 28, 1998) Part III is incorporated by reference from the registrant's definitive proxy statement for the Annual Meeting of Stockholders to be held on April 17, 1998. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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, 1997, the Company had investments in 291 facilities located in 30 states. The facilities include 191 long-term health care facilities, 78 assisted living facilities, 11 continuing care retirement communities, two rehabilitation hospitals, eight residential care facilities for the elderly and one medical clinic As of December 31, 1997, the Company had direct ownership of 145 long-term health care facilities, 72 assisted living facilities, six continuing care retirement communities, two rehabilitation hospitals, eight residential care facilities for the elderly and one medical clinic (the "Properties"). All of the Company's owned facilities are leased under "net" leases (the "Leases"), which are accounted for as operating leases, to 61 health care providers (the "Lessees") including Beverly Enterprises, Inc. ("Beverly"), ARV Assisted Living, Inc., Alternative Living Services, Sun Healthcare Group, Inc., Laureate Group, Life Care Centers of America, Inc., Paragon Health Network, Retirement Care Associates, Inc., American Health Centers, Mariner Health Group, Liberty Healthcare, Integrated Health Services, Inc. and HEALTHSOUTH Corporation. Of the Lessees, only Beverly and Alternative Living Services are expected to account for more than 10% of the Company's revenues in 1998. 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 155 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, 1997, the Company held 35 mortgage loans secured by 46 long-term health care facilities, six assisted living facilities, and five continuing care retirement communities. Such loans had an aggregate outstanding principal balance of approximately $209,185,000 and a net book value of approximately $199,819,000 at December 31, 1997. The mortgage loans have individual outstanding principal balances ranging from approximately $646,000 to $20,892,000 and have maturities ranging from 1998 to 2025. During 1997, the Company acquired, in 38 separate transactions, 31 assisted living facilities, nine long-term health care facilities, four continuing care retirement communities, eight residential care facilities for the elderly and one medical clinic for an aggregate purchase price of $248,343,000. Additionally, the Company provided seven mortgage loans, secured by seven long-term health care facilities, three assisted living facilities and two continuing care retirement communities in an aggregate amount of $49,238,000. 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 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 291 facilities in which the Company has investments, the Company has direct ownership of 145 long-term health care facilities, 72 assisted living facilities, six continuing care retirement communities, two rehabilitation hospitals, eight residential care facilities for the elderly and one medical clinic. 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. Long-term health care facilities generally receive a significant portion of their revenues from state based Medicaid and the federal Medicare programs. 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. CONTINUING CARE RETIREMENT COMMUNITIES Continuing care retirement communities provide a broad continuum of care. At the most basic level, services are provided which aid in everyday living, much like in an assisted living facility. At the other end of the spectrum, skilled nursing, rehabilitation and medical treatment is provided to residents who need those services. This type of facility offers residents the ability to have the most independent lifestyle possible while providing a wide range of social, health and nursing services tailored to meet individual needs. RESIDENTIAL CARE FACILITIES FOR THE ELDERLY Residential care facilities for the elderly offer similar services to an assisted living facility, except they are provided in a residential home setting. These facilities are generally three to four bedroom houses in residential neighborhoods, which are slightly modified to enable adequate access and care for the residents. There is generally one 24-hour caregiver at each location to provide meals and assistance with activities such as bathing, dressing, laundry and cleaning. 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, 1997.
NUMBER ANNUAL 1997 NUMBER OF OF BEDS/ MINIMUM ADDITIONAL FACILITY LOCATION FACILITIES UNITS(1) INVESTMENT RENT(2) RENT(2) - ----------------- ---------- -------- ---------- ------- ---------- (DOLLARS IN THOUSANDS) ---------------------- Long-Term Health Care Facilities: Arizona................... 2 274 $ 6,076 $ 789 $ 181 Arkansas.................. 2 397 5,982 666 301 California................ 8 963 26,481 3,228 789 Connecticut............... 3 359 7,864 783 152 Florida................... 9 1,247 29,475 3,150 889 Georgia................... 1 163 7,343 867 5 Idaho..................... 1 64 792 81 69 Illinois.................. 2 220 5,549 701 171 Indiana................... 11 1,202 35,407 4,158 828 Kansas.................... 8 641 11,804 1,216 174 Maryland.................. 4 749 22,057 2,634 1,096 Massachusetts............. 14 1,418 51,975 5,381 444 Minnesota................. 10 1,247 37,690 4,392 1,077 Missouri.................. 1 108 2,740 337 115 Nevada.................... 1 140 4,034 480 107 New Jersey................ 1 180 6,809 749 160 North Carolina............ 1 150 2,360 294 216 Ohio...................... 6 811 29,547 3,304 505 Oklahoma.................. 3 253 3,939 404 100 Oregon.................... 4 356 6,760 833 266 Tennessee................. 8 882 24,417 2,546 284 Texas..................... 26 3,009 55,607 6,102 1,498 Virginia.................. 4 605 18,568 2,291 787 Washington................ 6 621 24,309 2,349 256 Wisconsin................. 9 936 21,169 2,301 1,032 --- ------ -------- ------- ------- Subtotals............... 145 16,995 448,754 50,036 11,502 --- ------ -------- ------- ------- Assisted Living Facilities: Alabama................... 2 166 5,952 594 7 Arizona................... 1 90 4,611 444 -- California................ 12 1,534 69,442 7,096 394 Colorado.................. 4 419 21,777 2,143 1 Florida................... 15 976 55,492 5,694 95 Idaho..................... 1 158 11,800 1,179 -- Illinois.................. 1 178 11,076 1,037 -- Kansas.................... 1 42 2,121 205 2 Michigan.................. 1 144 7,239 810 60 Nevada.................... 2 155 13,583 1,254 -- Ohio...................... 8 428 21,111 1,796 11 Oklahoma.................. 3 187 8,100 771 22 Oregon.................... 6 536 28,375 2,813 6 Tennessee................. 1 48 2,902 274 7 Texas..................... 9 393 18,415 1,764 30 Washington................ 3 271 16,987 1,650 -- Wisconsin................. 2 375 26,150 2,022 -- --- ------ -------- ------- ------- Subtotals............... 72 6,100 325,133 31,563 635 --- ------ -------- ------- -------
3
NUMBER ANNUAL 1997 NUMBER OF OF BEDS/ MINIMUM ADDITIONAL FACILITY LOCATION FACILITIES UNITS(1) INVESTMENT RENT(2) RENT(2) - ----------------- ---------- -------- ---------- ------- ---------- (DOLLARS IN THOUSANDS) ---------------------- Continuing Care Retirement Communities: California................ 1 279 $ 11,150 $ 1,083 $ 163 Colorado.................. 1 117 3,115 307 21 Kansas.................... 1 199 13,199 1,267 -- Texas..................... 1 268 23,870 1,508 -- Wisconsin................. 2 917 62,522 6,075 -- --- ------ -------- ------- ------- Subtotals............... 6 1,780 113,856 10,240 184 --- ------ -------- ------- ------- Residential Care Facilities for the Elderly: California................ 8 48 2,921 319 -- --- ------ -------- ------- ------- Rehabilitation Hospitals: Arizona................... 2 116 16,826 1,770 301 --- ------ -------- ------- ------- Medical Clinic: Alabama................... 1 -- 3,902 391 -- --- ------ -------- ------- ------- Construction in Progress.... -- -- 49,139 -- -- --- ------ -------- ------- ------- TOTAL ALL OWNED FACILITIES.. 234 25,039 $960,531 $94,319 $12,622 === ====== ======== ======= =======
- -------- (1) Assisted living facilities are measured in units, continuing care retirement communities are measured in beds and units, and 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, may also be paid. The 1997 additional rent amounts reflect additional rent accrued in 1997. As of December 31, 1997, 40 of the Company's 234 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 26 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: private funds; Medicaid, a medical assistance program for the indigent, operated by individual states with the financial participation of the federal government; 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. 4 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 February 28, 1998.
NAME POSITION AGE ---- -------- --- R. Bruce Andrews...... President and Chief Executive Officer 57 Mark L. Desmond....... Senior Vice President and Chief Financial Officer 39 T. Andrew Stokes...... Senior Vice President of Corporate Development 50 Steven J. Insoft...... Vice President of Development 34 John J. Sheehan, Jr... Vice President of Development 40 Gary E. Stark......... Vice President and General Counsel 42
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. 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. 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. STEVEN J. INSOFT--Vice President of Development of the Company since February 1998. From 1991 to 1997, Mr. Insoft served as President of CMI Senior Housing & Healthcare, Inc., an operator of nursing facilities. From 1988 to 1991, Mr. Insoft was an Associate in the Capital Markets Group of Prudential Insurance Company of America. JOHN J. SHEEHAN, JR.--Vice President of 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. 5 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. EMPLOYEES As of February 28, 1998, the Company employed thirteen 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. 6 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, 1996 to December 31, 1997 as reported by the New York Stock Exchange and the cash dividends per share paid with respect to such periods.
HIGH LOW DIVIDEND ------- ---------- -------- 1997 First quarter.................................. $23 3/8 $21 1/4 $.39 Second quarter................................. 23 1/2 19 7/8 .39 Third quarter.................................. 24 3/4 22 1/16 .39 Fourth quarter................................. 25 7/8 21 13/16 .39 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
As of February 28, 1998 there were approximately 1,200 holders of record of the Company's common stock. 7 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 4 of Notes to Consolidated Financial Statements for information regarding the Company's acquisitions.
YEARS ENDED DECEMBER 31, --------------------------------------------------- 1997 1996 1995 1994 1993 ---------- -------- --------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) OPERATING DATA: Total revenues............ $ 115,705 $ 95,776 $ 81,039 $ 69,985 $ 60,385 Income from operations.... 62,988 54,944 49,382 44,813 40,996 Gain on sale of facilities............... 829 -- 989 -- -- Extraordinary charge(1)... -- -- -- -- (2,004) Net income................ 63,817 54,944 50,371 44,813 38,992 Preferred stock dividends. (1,962) -- -- -- -- Net income available to common stockholders...... 61,855 54,944 50,371 44,813 38,992 Dividends paid on common stock.................... 65,734 59,581 53,182 47,751 42,883 PER SHARE DATA: Basic/diluted income from continuing operations available to common stockholders(2).......... $ 1.45 $ 1.36 $ 1.30 $ 1.23 $ 1.17 Basic/diluted net income available to common stockholders............. 1.47 1.36 1.33 1.23 1.11 Dividends paid on common stock.................... 1.56 1.48 1.41 1.31 1.21 BALANCE SHEET DATA: Investments in real estate, net.............. $1,053,273 $722,506 $ 652,231 $501,862 $428,473 Total assets.............. 1,077,394 744,984 670,111 513,809 440,165 Senior unsecured notes due 2000-2037................ 355,000 190,000 100,000 -- -- Bank borrowings........... 19,600 32,300 93,900 80,200 3,800 Convertible debentures.... 64,512 64,920 65,000 67,690 73,609 Notes and bonds payable... 58,297 9,229 23,364 20,520 23,047 Stockholders' equity...... 553,046 428,588 371,822 336,106 332,927 OTHER DATA: Net cash provided by operating activities..... $ 86,010 $ 74,129 $ 66,972 $ 56,756 $ 49,725 Net cash used in investing activities............... (267,302) (85,034) (151,476) (83,185) (56,261) Net cash provided by financing activities..... 179,775 14,677 88,699 26,544 1,882 Funds from operations available to common stockholders(3).......... 80,851 71,667 63,267 57,057 51,111 Weighted average shares outstanding.............. 42,164 40,373 37,808 36,356 35,188
- ------- (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) For per share purposes, income from continuing operations is defined as income before the effect of any gains or losses on sales of properties. (3) 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. 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 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. LIQUIDITY AND CAPITAL RESOURCES During 1997, the Company acquired 31 assisted living facilities, nine long- term health care facilities, four continuing care retirement communities, eight residential care facilities for the elderly and one medical clinic in 38 separate and independent transactions for an aggregate purchase price of approximately $248,343,000. The acquisitions were funded by bank borrowings on the Company's bank line of credit, approximately $49,542,000 of debt assumption, 1,315,686 shares of the Company's common stock and cash on hand. The facilities were concurrently leased under terms generally similar to the Company's existing leases. Additionally, the Company provided seven mortgage loans secured by seven long-term health care facilities, three assisted living facilities and two continuing care retirement communities in the aggregate amount of $49,238,000. 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 $10,544,000 in connection with the maturity of two mortgage loans secured by three long-term health care facilities and one assisted living facility. The proceeds were used to repay bank borrowings. In addition to the acquisitions, the Company provided new construction financing of approximately $51,830,000 for three long-term health care facilities, 17 assisted living facilities and five medical clinics. During 1997, three properties completed the construction phase of the Company's investment process. The facilities were completed in three separate transactions for a total investment of $13,301,000 and included the construction of one long-term health care facility and two assisted living facilities. The facilities were leased under terms generally similar to the Company's existing leases. The Company also funded approximately $15,531,000 in capital improvements in accordance with certain existing lease provisions. Such capital improvements will result in an increase in the minimum rents earned by the Company. The construction advances and capital improvement advances are funded by bank borrowings on the Company's bank line of credit and by cash on hand. During June 1997, the Company sold two long-term health care facilities for an aggregate price of approximately $6,863,000. The Company received a mortgage note in the amount of the purchase price, which is secured by the two facilities. The related gain of approximately $1,676,000 on such sale will be recognized into income on a deferred basis in proportion to the receipt of principal payments on the mortgage loans provided by the Company. During August 1997, the Company sold one long-term health care facility to the lessee of such facility pursuant to a purchase option provision in the respective lease for a purchase price of approximately $4,829,000 resulting in a gain of approximately $829,000. The proceeds of the sale were used to repay bank borrowings on the Company's bank line of credit. During 1997, the Company issued $165,000,000 in aggregate principal amount of medium-term notes. The notes bear fixed interest at a weighted average interest rate of 7.1% and have a weighted average maturity of 19.2 years. The proceeds were used to repay borrowings on the Company's bank line of credit. 9 In September 1997, the Company sold 1,000,000 shares of 7.677% Series A Cumulative Preferred Step-Up REIT securities ("Preferred Stock") with a liquidation preference of $100 per share. Dividends on the Preferred Stock are cumulative from the date of original issue and are payable quarterly in arrears, commencing December 31, 1997 at the rate of 7.677% per annum of the liquidation preference per share (equivalent to $7.677 per annum per share) through September 30, 2012 and at a rate of 9.677% of the liquidation preference per annum per share (equivalent to $9.677 per annum per share) thereafter. The Preferred Stock is not redeemable prior to September 30, 2007. On or after September 30, 2007, the Preferred Stock may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $100 per share, plus accrued and unpaid dividends, if any, thereon. Proceeds from the sale of the Preferred Stock were used to repay $71,150,000 of bank borrowings on the Company's bank line of credit and fund additional investments. At December 31, 1997, the Company had $80,400,000 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 $245,000,000 in aggregate principal amount of medium-term notes and (b) up to $233,122,000 of securities including debt, convertible debt, common and preferred stock. The Company anticipates issuing securities under such shelf registrations to repay borrowings under the Company's bank line of credit, for the financing of additional investments or for general corporate purposes. 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. OPERATING RESULTS YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996 Revenues increased $19,929,000 or 21% in 1997 as compared to 1996. The increase was primarily due to increased minimum rent and interest income resulting from investments in 60 net additional facilities in 1997, combined with a full year of revenues earned by investments in additional facilities in 1996. 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 or the Consumer Price Index. Total expenses increased $11,885,000 or 29% in 1997 as compared to 1996. The increase was primarily due to an increase in interest expense due to the issuance of $165,000,000 in medium term notes during 1997 and the issuance of $90,000,000 in medium term notes in 1996. The increase in total expenses was also attributable to increased depreciation due to the acquisition of additional facilities in 1997 and 1996. 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 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 or interest income. As additional investments in facilities are made, depreciation or interest expense could also increase. Any such increases, however, are expected to be more than offset by rents or interest income associated with the investments. The Company does not expect any material costs or any material negative impact on its operations related to Year 2000 computer systems compliance issues. 10 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 or 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. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Report of Independent Public Accountants............................... 12 Consolidated Balance Sheets............................................ 13 Consolidated Statements of Operations.................................. 14 Consolidated Statements of Stockholders' Equity........................ 15 Consolidated Statements of Cash Flows.................................. 16 Notes to Consolidated Financial Statements............................. 17
11 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, 1997 and 1996, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1997. 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, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Orange County, California January 16, 1998 12 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS
DECEMBER 31, --------------------- 1997 1996 ---------- --------- (IN THOUSANDS) ASSETS Investments in real estate Real estate properties: Land................................................ $ 120,236 $ 75,252 Buildings and improvements.......................... 809,217 574,544 Construction in progress............................ 31,078 2,213 ---------- --------- 960,531 652,009 Less accumulated depreciation....................... (107,077) (89,967) ---------- --------- 853,454 562,042 Mortgage loans receivable, net........................ 199,819 160,464 ---------- --------- 1,053,273 722,506 Cash and cash equivalents............................... 10,192 11,709 Receivables............................................. 4,362 4,321 Other assets............................................ 9,567 6,448 ---------- --------- $1,077,394 $ 744,984 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Bank borrowings......................................... $ 19,600 $ 32,300 Senior notes due 2000-2037.............................. 355,000 190,000 Convertible debentures.................................. 64,512 64,920 Notes and bonds payable................................. 58,297 9,229 Accounts payable and accrued liabilities................ 26,939 19,947 Commitments and contingencies Stockholders' equity: Preferred stock $1.00 par value; 5,000,000 shares authorized; issued and outstanding: 1997--1,000,000; 1996--none; stated at liquidation preference of $100 per share............................................ 100,000 -- Common stock $.10 par value; 100,000,000 shares authorized; issued and outstanding: 43,128,889 and 41,785,001 as of December 31, 1997 and 1996, respectively......................................... 4,313 4,179 Capital in excess of par value........................ 490,737 462,534 Cumulative net income................................. 363,896 300,079 Cumulative dividends.................................. (405,900) (338,204) ---------- --------- Total stockholders' equity........................ 553,046 428,588 ---------- --------- $1,077,394 $ 744,984 ========== =========
See accompanying notes. 13 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, ------------------------- 1997 1996 1995 -------- ------- ------- Revenues: Minimum rent....................................... $ 79,587 $66,536 $54,504 Interest and other income.......................... 22,454 17,104 14,759 Additional rent and additional interest............ 13,664 12,136 11,776 -------- ------- ------- 115,705 95,776 81,039 -------- ------- ------- Expenses: Interest and amortization of deferred financing costs............................................. 28,899 20,797 14,628 Depreciation and non-cash charges.................. 19,825 16,723 13,885 General and administrative......................... 3,993 3,312 3,144 -------- ------- ------- 52,717 40,832 31,657 -------- ------- ------- Income before gain on sale of facilities............. 62,988 54,944 49,382 Gain on sale of facilities........................... 829 -- 989 -------- ------- ------- Net income........................................... 63,817 54,944 50,371 Preferred stock dividends............................ (1,962) -- -- -------- ------- ------- Net income available to common stockholders.......... $ 61,855 $54,944 $50,371 ======== ======= ======= Per share amounts: Basic/diluted income from continuing operations available to common stockholders.................. $ 1.45 $ 1.36 $ 1.30 ======== ======= ======= Basic/diluted net income available to common stockholders...................................... $ 1.47 $ 1.36 $ 1.33 ======== ======= ======= Weighted average shares outstanding.................. 42,164 40,373 37,808 ======== ======= =======
See accompanying notes. 14 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
COMMON STOCK PREFERRED STOCK ------------- --------------- CAPITAL IN TOTAL EXCESS OF CUMULATIVE CUMULATIVE STOCKHOLDERS' SHARES AMOUNT SHARES AMOUNT PAR VALUE NET INCOME DIVIDENDS EQUITY ------ ------ ------ -------- ---------- ---------- ---------- ------------- Balances at December 31, 1994................... 36,476 $3,648 -- $ -- $363,135 $194,764 $(225,441) $336,106 Issuance of common stock................. 2,032 203 -- -- 35,714 -- -- 35,917 Exercise of common stock options............... 2 -- -- -- 10 -- -- 10 Conversion of debentures............ 210 21 -- -- 2,579 -- -- 2,600 Net income............. -- -- -- -- -- 50,371 -- 50,371 Common dividends....... -- -- -- -- -- -- (53,182) (53,182) ------ ------ ----- -------- -------- -------- --------- -------- Balances at December 31, 1995................... 38,720 3,872 -- -- 401,438 245,135 (278,623) 371,822 Issuance of common stock................. 3,058 307 -- -- 60,998 -- -- 61,305 Exercise of common stock options............... 3 -- -- -- 19 -- -- 19 Conversion of debentures............ 4 -- -- -- 79 -- -- 79 Net income............. -- -- -- -- -- 54,944 -- 54,944 Common dividends....... -- -- -- -- -- -- (59,581) (59,581) ------ ------ ----- -------- -------- -------- --------- -------- Balances at December 31, 1996................... 41,785 4,179 -- -- 462,534 300,079 (338,204) 428,588 Issuance of common stock................. 1,326 132 -- -- 30,551 -- -- 30,683 Issuance of preferred stock................. -- -- 1,000 100,000 (2,750) -- -- 97,250 Conversion of debentures............ 18 2 -- -- 402 -- -- 404 Net income............. -- -- -- -- -- 63,817 -- 63,817 Preferred dividends.... -- -- -- -- -- -- (1,962) (1,962) Common dividends....... -- -- -- -- -- -- (65,734) (65,734) ------ ------ ----- -------- -------- -------- --------- -------- Balances at December 31, 1997................... 43,129 $4,313 1,000 $100,000 $490,737 $363,896 $(405,900) $553,046 ====== ====== ===== ======== ======== ======== ========= ========
See accompanying notes. 15 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ------------------------------- 1997 1996 1995 --------- --------- --------- Cash flows from operating activities: Net income.................................. $ 63,817 $ 54,944 $ 50,371 Depreciation and non-cash charges........... 19,825 16,723 13,885 Gain on sale of properties.................. (829) -- (989) Amortization of deferred financing costs.... 801 772 490 Net change in other assets and liabilities.. 2,396 1,690 3,215 --------- --------- --------- Net cash provided by operating activities. 86,010 74,129 66,972 --------- --------- --------- Cash flows from investing activities: Investment in real estate properties........ (239,775) (59,282) (136,783) Disposition of real estate properties....... 4,812 -- 8,940 Investment in mortgage loans receivable..... (44,947) (31,430) (35,437) Principal payments on mortgage loans receivable................................. 12,608 5,678 11,804 --------- --------- --------- Net cash used in investing activities..... (267,302) (85,034) (151,476) --------- --------- --------- Cash flows from financing activities: Bank borrowings............................. 263,700 132,450 205,600 Repayment of bank borrowings................ (276,400) (194,050) (191,900) Issuance of common stock, net............... -- 60,903 35,494 Issuance of preferred stock, net............ 97,250 -- -- Issuance of senior unsecured debt........... 165,000 90,000 100,000 Principal payments on notes and bonds payable.................................... (474) (14,135) (6,460) Dividends paid.............................. (67,696) (59,581) (53,182) Deferred financing costs.................... (1,605) (910) (853) --------- --------- --------- Net cash provided by financing activities. 179,775 14,677 88,699 --------- --------- --------- Increase (decrease) in cash and cash equivalents.................................. (1,517) 3,772 4,195 Cash and cash equivalents, beginning of period....................................... 11,709 7,937 3,742 --------- --------- --------- Cash and cash equivalents, end of period...... $ 10,192 $ 11,709 $ 7,937 ========= ========= ========= Supplemental schedule of cash flow information: Cash interest paid.......................... $ 22,467 $ 12,721 $ 12,680 ========= ========= =========
See accompanying notes. 16 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 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, 1997 had investments in 291 health care facilities, including 191 long-term health care facilities, 78 assisted living facilities, 11 continuing care retirement communities, two rehabilitation hospitals, eight residential care facilities for the elderly and one medical clinic. At December 31, 1997, the Company owned 145 long-term health care facilities, 72 assisted living facilities, six continuing care retirement communities, two rehabilitation hospitals, eight residential care facilities for the elderly and one medical clinic and held 35 mortgage loans secured by 46 long-term health care facilities, six assisted living facilities and five continuing care retirement communities. 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 1996 and 1995 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 original 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, 1997 is approximately ($4,309,000). 17 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. 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 Pronouncements The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 128 Earnings per Share and SFAS No. 129 Disclosure of Information About Capital Structure in 1997. The adoption of SFAS No. 128 and SFAS No. 129 has not materially impacted the Company's financial statements. SFAS No. 130 Reporting Comprehensive Income and SFAS No. 131 Disclosures about Segments of an Enterprise and Related Information were issued in June of 1997 and are effective for fiscal years beginning after December 15, 1997. The adoption of these pronouncements in the first quarter of 1998 is not expected to have a material impact on the Company's financial statements. 3. EARNINGS PER SHARE Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding. Income available to common stockholders is calculated by deducting dividends declared on preferred stock from income from continuing operations and net income. Diluted earnings per share includes the effect of the potential shares outstanding; dilutive stock options and dilutive convertible debentures. The table below details the components of the basic and diluted earnings per share from continuing operations calculations.
YEARS ENDED DECEMBER 31, --------------------------------------------- 1997 1996 1995 --------------- -------------- -------------- INCOME SHARES INCOME SHARES INCOME SHARES ------- ------ ------- ------ ------- ------ (AMOUNTS IN THOUSANDS) ---------------------- Income before gain on sale of facility........................ $62,988 $54,944 $49,382 Less: preferred stock dividends.. (1,962) -- -- ------- ------- ------- Basic EPS........................ 61,026 42,164 54,944 40,373 49,382 37,808 Effect of dilutive securities: Stock options.................. -- 9 -- 4 -- 3 8.9% convertible debentures.... -- -- -- -- 18 77 ------- ------ ------- ------ ------- ------ Diluted EPS...................... $61,026 42,173 $54,944 40,377 $49,400 37,888 ======= ====== ======= ====== ======= ======
18 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 4. 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. 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. Minimum future rentals on non-cancelable leases as of December 31, 1997 are as follows:
MINIMUM YEAR RENTALS ---- -------------- (IN THOUSANDS) 1998........................... $ 93,267 1999........................... 90,232 2000........................... 77,001 2001........................... 69,613 2002........................... 64,017 2003........................... 61,571 2004........................... 58,085 2005........................... 53,793 2006........................... 48,260 2007........................... 39,363 Thereafter..................... 132,674
During 1997, the Company acquired 31 assisted living facilities, nine long- term health care facilities, four continuing care retirement communities, eight residential care facilities for the elderly and one medical clinic in 38 separate and independent transactions for an aggregate purchase price of approximately $248,343,000. 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, approximately $49,542,000 of debt assumption, 1,315,686 shares of the Company's common stock and cash on hand. In addition to the acquisitions, the Company provided new construction financing of approximately $51,830,000, including capitalized interest of approximately $1,651,000, for three long-term health care facilities, 17 assisted living facilities and five medical clinics. The Company also provided capital improvement funding in the aggregate amount of approximately $15,531,000 in accordance with certain existing lease provisions. Such capital improvements will result in an increase in the minimum rents earned by the Company. During June 1997, the Company sold two long-term health care facilities for an aggregate purchase price of approximately $6,863,000. The Company received a mortgage note in the amount of the purchase price, which is secured by the two facilities. The related gain of approximately $1,676,000 on such sale will be recognized into income on a deferred basis in proportion to the receipt of principal payments on the mortgage loans provided by the Company. During August 1997, the Company sold one long-term health care facility to the lessee of such facility pursuant to a purchase option provision in the respective lease for a purchase price of approximately $4,829,000 resulting in a gain of approximately $829,000. The proceeds of the sale were used to repay bank borrowings on the Company's bank line of credit. 19 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The following table lists the Company's real estate properties as of December 31, 1997:
BUILDINGS NOTES AND NUMBER OF AND TOTAL ACCUMULATED BONDS FACILITY LOCATION FACILITIES LAND IMPROVEMENTS INVESTMENT(1) DEPRECIATION PAYABLE ----------------- ---------- ------- ------------ ------------- ------------ --------- (DOLLAR AMOUNTS IN THOUSANDS) LONG-TERM HEALTH CARE FACILITIES: Arizona............... 2 $ 833 $ 5,243 $ 6,076 $ 1,329 $ -- Arkansas.............. 2 209 5,773 5,982 1,883 -- California............ 8 7,053 19,428 26,481 3,612 -- Connecticut........... 3 1,044 6,820 7,864 1,404 -- Florida............... 9 4,187 25,288 29,475 5,498 -- Georgia............... 1 801 6,542 7,343 828 -- Idaho................. 1 15 777 792 214 -- Illinois.............. 2 157 5,392 5,549 1,153 -- Indiana............... 11 2,044 33,363 35,407 6,069 -- Kansas................ 8 517 11,287 11,804 2,068 -- Maryland.............. 4 845 21,212 22,057 6,893 -- Massachusetts......... 14 6,753 45,222 51,975 5,836 -- Minnesota............. 10 2,559 35,131 37,690 10,822 -- Missouri.............. 1 51 2,689 2,740 922 -- Nevada................ 1 740 3,294 4,034 515 -- New Jersey............ 1 360 6,449 6,809 2,866 -- North Carolina........ 1 116 2,244 2,360 770 -- Ohio.................. 6 1,316 28,231 29,547 6,695 -- Oklahoma.............. 3 98 3,841 3,939 1,051 -- Oregon................ 4 435 6,325 6,760 2,170 -- Tennessee............. 8 1,041 23,376 24,417 3,061 -- Texas................. 26 4,805 50,802 55,607 10,183 -- Virginia.............. 4 1,036 17,532 18,568 6,013 -- Washington............ 6 2,647 21,662 24,309 2,253 -- Wisconsin............. 9 1,621 19,548 21,169 6,383 -- --- ------- -------- -------- ------- ------ Subtotals........... 145 41,283 407,471 448,754 90,491 -- --- ------- -------- -------- ------- ------ ASSISTED LIVING FACILITIES: Alabama............... 2 1,681 4,271 5,952 147 -- Arizona............... 1 519 4,092 4,611 188 -- California............ 12 14,255 55,187 69,442 4,012 -- Colorado.............. 4 2,146 19,631 21,777 1,067 -- Florida............... 16 8,480 49,914 58,394 1,233 -- Idaho................. 1 544 11,256 11,800 401 -- Illinois.............. 1 603 10,473 11,076 262 -- Kansas................ 1 200 1,921 2,121 36 -- Michigan.............. 1 300 6,939 7,239 562 -- Nevada................ 2 1,219 12,364 13,583 -- 7,003 Ohio.................. 7 1,795 16,414 18,209 420 -- Oklahoma.............. 3 745 7,355 8,100 586 -- Oregon................ 6 2,078 26,297 28,375 1,317 9,147 Tennessee............. 1 600 2,302 2,902 149 -- Texas................. 9 1,748 16,667 18,415 771 -- Washington............ 3 1,075 15,912 16,987 407 -- Wisconsin............. 2 4,843 21,307 26,150 145 16,526 --- ------- -------- -------- ------- ------ Subtotals........... 72 42,831 282,302 325,133 11,703 32,676 --- ------- -------- -------- ------- ------
20 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
BUILDINGS NOTES AND NUMBER OF AND TOTAL ACCUMULATED BONDS FACILITY LOCATION FACILITIES LAND IMPROVEMENTS INVESTMENT(1) DEPRECIATION PAYABLE ----------------- ---------- -------- ------------ ------------- ------------ --------- (DOLLAR AMOUNTS IN THOUSANDS) CONTINUING CARE RETIREMENT COMMUNITIES: California............ 1 $ 1,600 $ 9,550 $ 11,150 $ 872 $ -- Colorado.............. 1 400 2,715 3,115 339 -- Kansas................ 1 687 12,512 13,199 151 2,800 Texas................. 1 1,848 22,022 23,870 373 -- Wisconsin............. 2 11,057 51,465 62,522 385 22,821 --- -------- -------- -------- -------- ------- Subtotals........... 6 15,592 98,264 113,856 2,120 25,621 --- -------- -------- -------- -------- ------- RESIDENTIAL CARE FACILITIES FOR THE ELDERLY: California............ 8 704 2,217 2,921 10 -- --- -------- -------- -------- -------- ------- REHABILITATION HOSPITALS: Arizona............... 2 1,517 15,309 16,826 2,715 -- --- -------- -------- -------- -------- ------- MEDICAL CLINIC: Alabama............... 1 248 3,654 3,902 38 -- --- -------- -------- -------- -------- ------- CONSTRUCTION IN PROGRESS............... -- 18,061 31,078 49,139 -- -- --- -------- -------- -------- -------- ------- TOTAL OWNED FACILITIES.. 234 $120,236 $840,295 $960,531 $107,077 $58,297 === ======== ======== ======== ======== =======
- -------- (1) Also represents the approximate aggregate cost for Federal income tax purposes. 21 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 5. MORTGAGE LOANS RECEIVABLE During 1997, the Company provided seven mortgage loans, secured by seven long-term health care facilities, three assisted living facilities and two continuing care retirement communities in an aggregate amount of $49,238,000, inclusive of the note received related to the sale of two properties in June 1997 less the related deferred gain. Additionally, proceeds of approximately $10,544,000 were received in connection with the repayment of two mortgage loans secured by three long-term health care facilities and one assisted living facility. At December 31, 1997, the Company had 35 mortgage loans receivable secured by 46 long-term health care facilities, six assisted living facilities and five continuing care retirement communities. The loans have an aggregate principal balance of approximately $209,185,000 and are reflected in the Company's financial statements net of an aggregate discount of approximately $9,366,000. The principal balances of mortgage loans receivable as of December 31, 1997 mature approximately as follows: $9,235,000 in 1998, $2,239,000 in 1999, $2,393,000 in 2000, $2,663,000 in 2001, $4,768,000 in 2002 and $187,887,000 thereafter. The following table lists the Company's mortgage loans receivable at December 31, 1997:
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) ---------------------- ---------- -------- -------- ---------- ------------- ------------ (DOLLAR AMOUNTS IN THOUSANDS) LONG-TERM HEALTH CARE FACILITIES: Arkansas.............. 3 10.00% 12/06 $ 4,945 $ 5,500 $ 5,044 California............ 1 10.00% 05/25 1,489 8,200 8,200 California............ 1 7.69% 05/98 3,203 3,600 3,152 California............ 1 7.69% 05/98 2,179 2,425 2,144 California............ 2 9.50% 03/09 5,336 7,841 7,517 Connecticut........... 2 10.00% 06/22 -- 8,862 5,302 Florida............... 1 10.55% 07/03 -- 4,400 1,183 Florida............... 1 11.25% 07/06 4,400 4,400 4,400 Florida............... 2 10.78% 06/09 3,642 3,642 3,642 Georgia............... 1 10.78% 06/09 2,804 2,804 2,804 Illinois.............. 1 9.00% 01/24 -- 9,500 7,869 Indiana............... 1 10.55% 07/03 -- 785 660 Kansas................ 1 9.73% 09/98 1,253 1,550 1,282 Louisiana............. 1 10.89% 04/15 2,392 3,850 3,850 Maryland.............. 1 10.90% 06/21 -- 7,800 7,497 Massachusetts......... 1 8.75% 02/24 -- 9,000 7,165 Michigan.............. 3 12.61% 12/06 6,904 7,817 7,078 Michigan.............. 2 11.70% 01/05 2,506 3,000 2,698 Michigan.............. 1 10.82% 01/05 1,501 1,800 1,676 Missouri.............. 7 10.60% 08/11 17,725 17,725 17,725 South Dakota.......... 1 10.15% 05/05 -- 4,275 996 Tennessee............. 1 12.00% 06/07 3,000 3,000 3,000 Tennessee............. 1 9.77% 01/07 8,550 8,550 8,550 Texas................. 1 10.43% 01/04 633 1,460 913 Texas................. 2 10.85% 01/02 1,963 2,519 2,188 Virginia.............. 1 10.50% 04/13 10,192 16,250 16,012 Washington............ 4 11.00% 10/19 112 6,000 5,830 Wisconsin............. 1 10.15% 05/05 -- 1,350 646 --- ------- -------- -------- Subtotals........... 46 84,729 157,905 139,023 --- ------- -------- --------
22 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) ---------------------- ---------- -------- -------- ---------- ------------- ------------ (DOLLAR AMOUNTS IN THOUSANDS) ASSISTED LIVING FACILITIES: Florida............... 1 10.39% 11/06 $ 5,500 $ 5,500 $ 5,500 Florida............... 2 10.31% 09/20 -- 7,230 7,230 North Carolina........ 2 10.24% 05/07 2,475 2,700 2,475 Washington............ 1 9.95% 12/15 6,403 6,557 6,557 --- -------- -------- -------- Subtotals........... 6 14,378 21,987 21,762 --- -------- -------- -------- CONTINUING CARE RETIREMENT COMMUNITIES: California............ 1 9.50% 03/09 2,831 4,159 3,987 Florida............... 1 10.78% 06/09 14,446 14,550 14,446 Massachusetts......... 1 9.52% 06/23 -- 9,400 9,400 Oklahoma.............. 1 9.55% 03/24 -- 8,950 8,201 Tennessee............. 1 10.00% 02/07 3,000 3,000 3,000 --- -------- -------- -------- Subtotals........... 5 20,277 40,059 39,034 --- -------- -------- -------- Total............. 57 $119,384 $219,951 $199,819 === ======== ======== ========
- -------- (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 $209,272,000. The following table summarizes the changes in mortgage loans receivable during 1997, 1996 and 1995:
1997 1996 1995 -------- -------- -------- (IN THOUSANDS) Balance at January 1,.......................... $160,464 $133,226 $105,824 New mortgage loans........................... 50,134 31,430 37,544 Accretion of discount on loans............... 1,829 1,486 1,662 Collection of principal...................... (12,608) (5,678) (11,804) -------- -------- -------- Balance at December 31,........................ $199,819 $160,464 $133,226 ======== ======== ========
6. BANK BORROWINGS The Company has a $100,000,000 unsecured credit agreement with certain banks which matures on March 31, 2000. The terms of the bank line of credit include an option to automatically extend the bank line of credit by one year with concurrence of the bank group. At the option of the Company, borrowings under the agreement bear interest at prime or LIBOR plus 75 basis points. The Company pays a facility fee of .28% per annum on the total commitment under the agreement. 23 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 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 1.3 to 1.0. 7. NOTES AND BONDS PAYABLE Notes and bonds payable are due through the year 2035, at interest rates ranging from 3.5% to 10.9% and are secured by real estate properties with an aggregate net book value as of December 31, 1997 of approximately $49,111,000. The principal balances of the notes and bonds payable as of December 31, 1997 mature approximately as follows: $914,000 in 1998, $982,000 in 1999, $1,043,000 in 2000, $1,121,000 in 2001, $1,042,000 in 2002, and $53,195,000 thereafter. 8. SENIOR UNSECURED NOTES DUE 2000-2037 During 1997, the Company issued $165,000,000 in aggregate principal amount of medium term notes. The aggregate principal amount of Senior Notes outstanding at December 31, 1997 was $355,000,000. The weighted average interest rate on the Senior Notes was 7.3% and the weighted average maturity was 13.0 years. The principal balances of the Senior Notes as of December 31, 1997 mature approximately as follows: $30,000,000 in the year 2000, $38,000,000 in 2001, $50,000,000 in 2002, and $237,000,000 thereafter. There are $55,000,000 of medium term notes due in 2037 which may be put back to the Company at their face amount at the option of the holder on October 1st of any of the following years: 2004, 2007, 2009, 2012, 2017, or 2027. 9. 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 1997, $408,000 of such debentures converted into 18,202 shares of common stock. During 1996, $80,000 of such debentures converted into 3,569 shares of common stock. 10. PREFERRED STOCK During 1997, the Company sold 1,000,000 shares of 7.677% Series A Cumulative Preferred Step-Up REIT securities ("Preferred Stock") with a liquidation preference of $100 per share. Dividends on the Preferred Stock are cumulative from the date of original issue and are payable quarterly in arrears, commencing December 31, 1997 at the rate of 7.677% per annum of the liquidation preference per share (equivalent to $7.677 per annum per share) through September 30, 2012 and at a rate of 9.677% of the liquidation preference per annum per share (equivalent to $9.677 per annum per share) thereafter. The Preferred Stock is not redeemable prior to September 30, 2007. On or after September 30, 2007, the Preferred Stock may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price of $100 per share, plus accrued and unpaid dividends, if any, thereon. 11. 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 24 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 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 1997 and 1996 would have been the following pro forma amounts:
1997 1996 ----------- ----------- Net income available to common stockholders: As reported....................................... $61,855,000 $54,944,000 Pro forma......................................... 61,712,000 54,867,000 Basic/diluted net income per share: As reported....................................... $ 1.47 $ 1.36 Pro forma......................................... 1.46 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. A summary of the status of the Plan at December 31, 1997, 1996 and 1995 and changes during the years then ended is as follows:
1997 1996 1995 ----------------- ----------------- ----------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE ------- --------- ------- --------- ------- --------- Options: Outstanding at beginning of year..... 89,000 $20.78 3,400 $5.625 5,200 $5.625 Granted................ 90,000 23.00 89,000 20.78 -- -- Exercised.............. -- -- 3,400 5.625 1,800 5.625 Forfeited.............. -- -- -- -- -- Expired................ -- -- -- -- -- ------- ------- ------- Outstanding at end of year.................... 179,000 21.89 89,000 20.78 3,400 5.625 ======= ======= ======= Exercisable at end of year.................... 29,667 20.78 -- 3,400 5.625 Weighted average fair value of options granted................. $ 2.14 $ 2.77 Restricted Stock: Outstanding at beginning of year..... 109,100 103,900 81,300 Awarded................ 10,000 10,000 32,200 Vested................. 24,200 4,800 9,600 Forfeited.............. -- -- -- ------- ------- ------- Outstanding at end of year.................... 94,900 109,100 103,900 ======= ======= ======= Weighted average fair value of restricted stock awarded........... $23.19 $20.88 $18.19
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, 1997 have a weighted average contractual life of 8.5 years. 25 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 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:
1997 1996 ----- ----- Risk free rate of return....................................... 6.30% 6.43% Dividend yield................................................. 6.78% 7.13% Option Term.................................................... 10 10 Volatility..................................................... 16.45% 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 1997, 1996 and 1995 related to restricted stock awards was approximately $368,000, $372,000 and $379,000, respectively. Awards of dividend equivalents accompany the 1997 and 1996 stock option grants on a one-for-one basis. Such dividend equivalents are payable in cash until such time as the corresponding stock option is exercised, based upon a formula approved by the Compensation Committee. 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, in each case as selected by the Compensation Committee. Dividend equivalents may be earned in all or part depending upon the actual total return to shareholders as compared to peer groups of other real estate investment trusts. Due to the uncertainty of the ultimate payment of dividend equivalents, no compensation expense was recorded during 1997 or 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. 12. 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, -------------------- 1997 1996 --------- --------- Actuarial present value of benefit obligations: Vested benefit obligation............................ $ 789,000 $ 694,000 ========= ========= Accumulated benefit obligation....................... $ 834,000 $ 723,000 ========= ========= Projected benefit obligation........................... $ 887,000 $ 780,000 Unrecognized prior service cost........................ (101,000) (129,000) Unrecognized net gain.................................. 10,000 38,000 ========= ========= Accrued pension cost................................... $ 796,000 $ 689,000 ========= =========
26 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Net pension cost for the year included the following components:
1997 1996 1995 -------- -------- -------- Current service cost............................. $ 47,000 $ 87,000 $ 73,000 Interest cost.................................... 58,000 53,000 48,000 Amortization of prior service cost............... 27,000 27,000 27,000 -------- -------- -------- Net periodic pension cost........................ $132,000 $167,000 $148,000 ======== ======== ========
Discount rates of 7.0%, 7.5% and 7.0% in 1997, 1996 and 1995, 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. 13. TRANSACTIONS WITH BEVERLY ENTERPRISES, INC. As of December 31, 1997, 40 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 26 properties operated by such parties. Additionally, Beverly is the Borrower on four of the Company's mortgage loans. Revenues from Beverly were approximately $19,712,000, $21,837,000 and $21,921,000 for the years ended December 31, 1997, 1996 and 1995, respectively. One of the directors of the Company is also an officer and director of Beverly. 14. DIVIDENDS Dividend payments by the Company to the stockholders were characterized in the following manner for tax purposes:
1997 1996 1995 ------ ----- ----- Ordinary income........................................... $1.505 $1.48 $1.24 Capital gain.............................................. .055 -- .17 Return of capital......................................... -- -- -- ------ ----- ----- Total dividends paid.................................... $1.560 $1.48 $1.41 ====== ===== =====
27 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 15. QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED, ---------------------------------------------- MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, ---------- -------- ------------- ------------ (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1997: Revenues................... $26,302 $27,198 $29,296 $32,909 Net income available to common stockholders....... 14,755 14,914 16,499 15,687 Basic/diluted net income per share................. .35 .36 .39 .36 Dividends per share........ .39 .39 .39 .39 1996: Revenues................... $22,931 $23,300 $24,304 $25,241 Net income available to common stockholders....... 12,579 13,009 14,455 14,901 Basic/diluted net income per share................. .32 .33 .35 .36 Dividends per share........ .37 .37 .37 .37
16. 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. The estimated fair values of the Company's financial instruments are as follows:
1997 1996 ----------------- ----------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE -------- -------- -------- -------- (IN THOUSANDS) Cash and cash equivalents............... $ 10,192 $ 10,192 $ 11,709 $ 11,709 Mortgage loans receivable............... 199,819 225,997 160,464 178,437 Long-term debt.......................... 497,409 513,034 296,449 306,491
28 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 16, 1998. 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 16, 1998 29 SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION NATIONWIDE HEALTH PROPERTIES, INC. DECEMBER 31, 1997
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: Hot Springs AR $2,320,549 $ 0 $ 53,647 $2,320,549 $2,374,196 $ 756,941 1972 1986 35 Jacksonville AR 3,452,650 0 155,206 3,452,650 3,607,856 1,126,221 1962 1986 35 Prescott AZ 2,351,967 0 183,341 2,351,967 2,535,308 711,995 1985 1988 40 Scottsdale AZ 2,790,266 100,000 650,000 2,890,266 3,540,266 617,084 1963 1991 30 Chowchilla CA 1,119,040 0 108,996 1,119,040 1,228,036 286,754 1964 1987 40 Gilroy CA 1,891,735 0 714,000 1,891,735 2,605,735 394,111 1968 1991 30 Hayward CA 1,221,698 220,882 795,000 1,442,580 2,237,580 283,153 1967 1991 30 Orange CA 5,059,079 0 1,140,921 5,059,079 6,200,000 685,083 1987 1992 40 Pomona CA 1,247,000 0 365,000 1,247,000 1,612,000 427,738 1963 1985 35 San Diego CA 4,925,213 0 842,000 4,925,213 5,767,213 834,550 1965 1992 30 San Jose CA 1,136,353 571,191 1,595,000 1,707,544 3,302,544 310,783 1968 1991 30 Santa Cruz CA 1,595,864 439,900 1,492,000 2,035,764 3,527,764 389,495 1967 1991 30 Bloomfield CT 2,826,635 0 670,000 2,826,635 3,496,635 306,219 1967 1994 30 Torrington CT 2,555,400 0 140,000 2,555,400 2,695,400 702,735 1969 1987 40 West Haven CT 1,437,616 0 234,521 1,437,616 1,672,137 395,344 1965 1986 40 Ft. Pierce FL 2,758,000 0 125,000 2,758,000 2,883,000 946,032 1965 1985 35 Jacksonville FL 1,758,683 0 1,503,375 1,758,683 3,262,058 25,647 1997 1997 40 Jacksonville FL 1,852,616 0 160,748 1,852,616 2,013,364 478,592 1964 1987 40 Jacksonville FL 2,787,093 0 498,000 2,787,093 3,285,093 131,612 1965 1996 30 Lakeland FL 5,028,699 0 1,000,000 5,028,699 6,028,699 544,776 1982 1994 30 Live Oak FL 3,217,008 0 50,390 3,217,008 3,267,398 1,049,357 1983 1986 35 Pensacola FL 1,833,333 0 76,923 1,833,333 1,910,256 481,250 1969 1987 40 Tampa FL 2,726,244 0 563,461 2,726,244 3,289,705 755,398 1971 1986 40 Winter Park FL 3,326,824 0 208,935 3,326,824 3,535,759 1,085,178 1983 1986 35 Lawrenceville GA 3,993,005 2,549,381 800,619 6,542,386 7,343,005 827,965 1988 1991 40 Buhl ID 777,353 0 14,754 777,353 792,107 213,772 1913 1986 40 Lasalle IL 2,702,896 0 127,000 2,702,896 2,829,896 578,120 1975 1991 30 Litchfield IL 2,688,920 0 30,000 2,688,920 2,718,920 575,130 1972 1991 30 Brookville IN 4,119,500 0 80,500 4,119,500 4,200,000 532,102 1987 1992 40 Evansville IN 5,324,304 0 280,000 5,324,304 5,604,304 1,138,809 1968 1991 30 Gas City IN 3,082,041 0 147,000 3,082,041 3,229,041 102,737 1976 1996 30 Ligonier IN 1,668,811 0 54,000 1,668,811 1,722,811 55,627 1976 1997 30 Muncie IN 888,187 0 109,000 888,187 997,187 29,606 1975 1997 30 Muncie IN 1,141,065 0 983,000 1,141,065 2,124,065 32,602 1989 1997 35 New Castle IN 5,172,887 0 43,000 5,172,887 5,215,887 1,106,423 1972 1991 30 Petersburg IN 2,351,555 0 32,654 2,351,555 2,384,209 767,055 1968 1986 35 Richmond IN 2,519,523 0 114,022 2,519,523 2,633,545 821,845 1974 1986 35 Rochester IN 4,055,338 250,000 161,000 4,305,338 4,466,338 885,425 1969 1991 30 Wabash IN 2,789,896 0 40,000 2,789,896 2,829,896 596,728 1974 1991 30 Belleville KS 1,886,682 0 213,318 1,886,682 2,100,000 298,725 1977 1993 30 Colby KS 599,074 0 49,863 599,074 648,937 167,242 1974 1986 40 Derby KS 2,481,763 0 132,800 2,481,763 2,614,563 475,672 1978 1992 30 Hutchinson KS 1,855,444 160,594 75,000 2,016,038 2,091,038 256,284 1964 1994 30 Kensington KS 638,627 0 6,241 638,627 644,868 208,314 1965 1986 35 Oakley KS 414,311 0 7,123 414,311 421,434 115,662 1964 1986 40 Onaga KS 651,993 0 5,811 651,993 657,804 212,674 1959 1986 35 Salina KS 2,463,266 134,986 27,000 2,598,252 2,625,252 333,399 1981 1994 30 Amesbury MA 4,240,885 0 229,000 4,240,885 4,469,885 58,901 1971 1997 30 Brighton MA 2,211,935 0 300,000 2,211,935 2,511,935 239,626 1969 1994 30 Brockton MA 3,586,307 0 525,000 3,586,307 4,111,307 498,098 1971 1993 30 Buzzards Bay MA 4,815,000 0 415,000 4,815,000 5,230,000 1,651,611 1911 1985 35 Danvers MA 3,210,915 0 327,000 3,210,915 3,537,915 44,596 1966 1997 30 Danvers MA 2,890,708 0 305,000 2,890,708 3,195,708 40,149 1969 1997 30 Haverhill MA 1,399,002 0 775,000 1,399,002 2,174,002 194,306 1962 1993 30 Haverhill MA 5,707,175 0 660,000 5,707,175 6,367,175 792,663 1973 1993 30 New Bedford MA 2,357,000 0 93,000 2,357,000 2,450,000 808,520 1889 1985 35 N. Billerica MA 3,137,206 300,000 800,000 3,437,206 4,237,206 405,430 1969 1994 30 Norton MA 2,571,792 0 781,000 2,571,792 3,352,792 135,733 1968 1996 30 Saugus MA 5,262,233 0 374,000 5,262,233 5,636,233 73,087 1967 1997 30 Sharon MA 1,096,678 0 844,000 1,096,678 1,940,678 57,880 1975 1996 30 Wellesley MA 2,435,000 0 325,000 2,435,000 2,760,000 835,238 1962 1985 35 Clinton MD 5,016,873 0 399,794 5,016,873 5,416,667 1,337,833 1965 1987 40
30
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: Cumberland MD $5,260,000 $ 0 $ 150,000 $5,260,000 $5,410,000 $1,804,252 1968 1985 35 Hagerstown MD 4,140,000 0 215,000 4,140,000 4,355,000 1,420,076 1972 1985 35 Westminster MD 6,795,000 0 80,000 6,795,000 6,875,000 2,330,778 1974 1985 35 Deluth MN 7,046,928 0 1,014,000 7,046,928 8,060,928 58,724 1971 1997 30 Faribault MN 2,785,000 0 90,000 2,785,000 2,875,000 1,251,892 1967 1985 35 Minneapolis MN 3,833,000 0 322,000 3,833,000 4,155,000 1,785,852 1962 1985 35 Minneapolis MN 2,934,000 0 141,000 2,934,000 3,075,000 1,064,693 1914 1985 35 Minneapolis MN 5,752,000 0 333,000 5,752,000 6,085,000 2,261,174 1973 1985 35 Minneapolis MN 4,184,000 0 436,000 4,184,000 4,620,000 1,598,759 1961 1985 35 Osseo MN 2,927,000 0 123,000 2,927,000 3,050,000 1,004,001 1957 1985 35 Ostrander MN 947,229 0 8,560 947,229 955,789 262,461 1968 1986 40 Owatonna MN 2,140,014 0 58,680 2,140,014 2,198,694 588,504 1965 1986 40 Willmar MN 2,582,000 0 33,000 2,582,000 2,615,000 945,905 1905 1985 35 Maryville MO 2,689,000 0 51,000 2,689,000 2,740,000 922,364 1979 1985 35 Hendersonville NC 2,244,000 0 116,000 2,244,000 2,360,000 769,723 1979 1985 35 Lakewood NJ 6,448,340 0 360,357 6,448,340 6,808,697 2,866,103 1966 1987 40 Sparks NV 3,294,261 0 740,000 3,294,261 4,034,261 514,729 1988 1991 40 Alliance OH 1,861,163 0 83,000 1,861,163 1,944,163 397,652 1962 1991 30 Boardman OH 7,045,285 0 60,000 7,045,285 7,105,285 1,506,329 1962 1991 30 Columbus OH 4,332,851 0 342,550 4,332,851 4,675,401 1,244,603 1985 1988 40 Galion OH 3,418,805 0 24,000 3,418,805 3,442,805 730,719 1967 1991 30 Warren OH 7,487,808 0 450,000 7,487,808 7,937,808 1,600,938 1967 1991 30 Wash Ct House OH 4,085,813 0 356,047 4,085,813 4,441,860 1,214,453 1983 1988 40 Maud OK 802,731 0 12,464 802,731 815,195 222,423 1960 1986 40 Sapulpa OK 2,243,607 0 67,961 2,243,607 2,311,568 616,992 1970 1986 40 Tonkawa OK 794,801 0 17,838 794,801 812,639 211,947 1962 1987 40 Corvallis OR 1,710,000 0 115,000 1,710,000 1,825,000 586,558 1962 1985 35 Eugene OR 2,280,000 0 140,000 2,280,000 2,420,000 782,076 1969 1985 35 Eugene OR 1,220,000 0 80,000 1,220,000 1,300,000 418,477 1965 1985 35 Portland OR 1,115,000 0 100,000 1,115,000 1,215,000 382,461 1954 1985 35 Brownsville TN 2,957,367 0 100,000 2,957,367 3,057,367 410,745 1970 1993 30 Celina TN 853,001 0 150,000 853,001 1,003,001 118,472 1972 1993 30 Clarksville TN 3,479,066 0 350,000 3,479,066 3,829,066 483,203 1970 1993 30 Columbia TN 2,240,415 0 225,000 2,240,415 2,465,415 266,716 1984 1993 35 Jonesborough TN 2,536,323 0 65,000 2,536,323 2,601,323 352,267 1981 1993 30 Hohenwald TN 3,732,032 0 90,000 3,732,032 3,822,032 518,338 1975 1993 30 Martin TN 4,121,244 0 32,500 4,121,244 4,153,744 572,395 1977 1993 30 Selmer TN 2,256,591 1,200,000 28,000 3,456,591 3,484,591 338,871 1985 1993 35 Baytown TX 1,853,302 0 61,000 1,853,302 1,914,302 335,911 1966 1990 40 Baytown TX 2,326,487 0 90,000 2,326,487 2,416,487 421,676 1975 1990 40 Bogota TX 1,820,005 0 13,463 1,820,005 1,833,468 593,669 1963 1986 35 Bridge City TX 2,156,306 0 60,000 2,156,306 2,216,306 390,831 1970 1990 40 Carrollton TX 1,373,892 0 236,000 1,373,892 1,609,892 249,018 1967 1990 40 Center TX 1,388,420 0 22,000 1,388,420 1,410,420 251,651 1970 1990 40 Eagle Lake TX 1,786,891 0 25,000 1,786,891 1,811,891 323,874 1972 1990 40 El Paso TX 1,888,156 0 166,027 1,888,156 2,054,183 529,659 1980 1988 40 Garland TX 1,573,127 0 238,000 1,573,127 1,811,127 285,130 1970 1990 40 Gilmer TX 2,065,000 0 750,000 2,065,000 2,815,000 708,323 1970 1985 35 Gladewater TX 2,017,965 0 124,642 2,017,965 2,142,607 308,300 1971 1993 30 Houston TX 4,154,533 0 408,300 4,154,533 4,562,833 646,260 1986 1993 35 Humble TX 1,772,363 0 140,000 1,772,363 1,912,363 321,240 1973 1990 40 Huntsville TX 1,878,206 0 135,000 1,878,206 2,013,206 340,425 1968 1990 40 Linden TX 2,519,626 0 24,909 2,519,626 2,544,535 384,942 1968 1993 30 Marshall TX 864,650 0 19,300 864,650 883,950 241,382 1964 1986 40 McKinney TX 1,455,904 0 1,318,310 1,455,904 2,774,214 391,274 1967 1987 40 Mount Pleasant TX 2,504,551 0 39,960 2,504,551 2,544,511 382,639 1970 1993 30 Nacogdoches TX 1,072,965 0 135,000 1,072,965 1,207,965 194,475 1973 1990 40 New Boston TX 2,366,334 0 44,246 2,366,334 2,410,580 361,523 1966 1993 30 Omaha TX 1,579,149 0 27,907 1,579,149 1,607,056 241,258 1970 1993 30 San Antonio TX 1,981,974 0 32,000 1,981,974 2,013,974 359,232 1963 1990 40 San Antonio TX 1,589,730 0 221,000 1,589,730 1,810,730 288,139 1965 1990 40 Sherman TX 2,075,495 0 67,200 2,075,495 2,142,695 317,089 1971 1993 30 Texarkana TX 1,243,520 0 87,270 1,243,520 1,330,790 405,625 1983 1986 35 Waxahachie TX 3,493,338 0 318,798 3,493,338 3,812,136 909,724 1976 1987 40 Annandale VA 7,752,000 0 487,000 7,752,000 8,239,000 2,659,042 1961 1985 35 Charlottesville VA 4,620,250 0 362,000 4,620,250 4,982,250 1,584,809 1966 1985 35
31
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: Petersburg VA $ 2,214,500 $ 0 $ 93,000 $ 2,214,500 $ 2,307,500 $ 759,604 1973 1985 35 Petersburg VA 2,944,750 0 94,000 2,944,750 3,038,750 1,010,089 1977 1985 35 Battleground WA 2,225,787 0 84,100 2,225,787 2,309,887 612,091 1963 1986 40 Kennewick WA 4,459,156 0 297,000 4,459,156 4,756,156 49,546 1959 1997 30 Moses Lake WA 2,384,662 0 164,000 2,384,662 2,548,662 264,962 1988 1994 30 Moses Lake WA 4,306,902 1,030,417 304,000 5,337,319 5,641,319 410,181 1972 1994 35 Seattle WA 5,752,182 0 1,222,737 5,752,182 6,974,919 503,316 1993 1994 40 Tacoma WA 1,503,190 0 575,000 1,503,190 2,078,190 413,377 1939 1987 40 Chilton WI 2,275,183 0 54,953 2,275,183 2,330,136 742,143 1964 1986 35 Florence WI 1,529,108 0 14,984 1,529,108 1,544,092 498,780 1971 1986 35 Green Bay WI 2,254,673 0 299,765 2,254,673 2,554,438 735,453 1969 1986 35 Oconto WI 2,070,879 0 49,976 2,070,879 2,120,855 675,501 1972 1986 35 Sheboygan WI 1,696,673 0 219,243 1,696,673 1,915,916 549,399 1969 1986 35 Shorewood WI 5,743,643 0 705,880 5,743,643 6,449,523 1,859,846 1971 1986 35 St. Francis WI 535,325 0 79,725 535,325 615,050 173,342 1968 1986 35 Tomah WI 1,745,000 0 115,000 1,745,000 1,860,000 598,559 1975 1985 35 Wisconsin Dells WI 1,697,231 0 81,432 1,697,231 1,778,663 549,580 1972 1986 35 ----------- ---------- ---------- ----------- ----------- ---------- 400,513,373 6,957,351 41,283,047 407,470,724 448,753,771 90,491,151 ----------- ---------- ---------- ----------- ----------- ---------- ASSISTED LIVING FACILITIES: Decatur AL 1,824,028 0 1,484,000 1,824,028 3,308,028 65,141 1987 1996 35 Hanceville AL 2,447,169 0 197,000 2,447,169 2,644,169 81,572 1996 1996 40 Mesa AZ 1,391,652 2,700,025 519,000 4,091,677 4,610,677 188,263 1985 1996 35 Capistrano CA 3,833,162 0 1,225,000 3,833,162 5,058,162 292,050 1985 1995 35 Capistrano CA 6,344,458 0 700,000 6,344,458 7,044,458 362,540 1985 1995 35 Carmichael CA 7,928,799 700,000 1,500,000 8,628,799 10,128,799 720,976 1983 1995 30 Chula Vista CA 6,280,839 0 950,000 6,280,839 7,230,839 388,814 1989 1995 35 Encinitas CA 5,016,511 0 1,000,000 5,016,511 6,016,511 402,196 1984 1995 35 Mission Viejo CA 3,544,429 0 900,000 3,544,429 4,444,429 261,613 1985 1995 35 Novato CA 3,657,065 0 2,500,000 3,657,065 6,157,065 264,121 1978 1995 30 Placentia CA 3,800,106 0 1,320,000 3,800,106 5,120,106 327,231 1983 1995 30 Rancho Cucamonga CA 4,155,552 0 610,000 4,155,552 4,765,552 306,719 1987 1995 35 San Dimas CA 3,576,323 0 1,700,000 3,576,323 5,276,323 258,290 1975 1995 30 Santa Maria CA 2,649,424 0 1,500,000 2,649,424 4,149,424 191,347 1977 1995 30 Vista CA 3,700,603 0 350,000 3,700,603 4,050,603 236,427 1980 1996 30 Aurora CO 7,922,586 0 919,116 7,922,586 8,841,702 528,172 1983 1995 30 Boulder CO 4,738,529 0 184,356 4,738,529 4,922,885 270,773 1992 1995 40 Boulder CO 4,811,336 0 832,530 4,811,336 5,643,866 240,567 1985 1995 35 Brighton CO 2,158,078 0 210,000 2,158,078 2,368,078 26,976 1997 1997 40 Gainesville FL 2,699,035 0 356,000 2,699,035 3,055,035 28,115 1997 1997 40 Hudson FL 8,137,951 334,130 1,665,000 8,472,081 10,137,081 435,916 1987 1996 35 Jacksonville FL 2,375,479 0 366,000 2,375,479 2,741,479 44,540 1997 1997 40 Jacksonville FL 2,769,701 0 226,000 2,769,701 2,995,701 17,311 1997 1997 40 LeHigh Acres FL 2,599,506 0 307,000 2,599,506 2,906,506 10,831 1997 1997 40 Naples FL 4,082,689 0 1,182,453 4,082,689 5,265,142 42,528 1997 1997 40 North Miami FL 3,467,124 0 261,000 3,467,124 3,728,124 288,927 1970 1995 30 Palm Coast FL 2,579,797 0 406,000 2,579,797 2,985,797 0 1997 1997 40 Pensacola FL 1,580,083 400,000 170,000 1,980,083 2,150,083 90,301 1979 1996 30 Port Charlotte FL 2,655,252 0 245,000 2,655,252 2,900,252 22,127 1997 1997 40 Punta Gorda FL 2,691,405 0 210,000 2,691,405 2,901,405 28,035 1997 1997 40 Rotunda FL 2,628,403 0 267,000 2,628,403 2,895,403 0 1997 1997 40 St. Petersburg FL 2,396,070 984,802 2,000,000 3,380,872 5,380,872 157,201 1993 1995 40 Travares FL 2,466,463 0 156,000 2,466,463 2,622,463 41,109 1997 1997 40 Venice FL 2,534,967 0 376,000 2,534,967 2,910,967 10,562 1997 1997 40 Winter Haven FL 2,530,512 0 287,000 2,530,512 2,817,512 15,816 1997 1997 40 Boise ID 5,586,258 5,669,959 543,691 11,256,217 11,799,908 401,247 1978 1995 30 Oak Park IL 10,473,486 0 603,000 10,473,486 11,076,486 261,837 1993 1997 40 Salina KS 1,921,388 0 200,000 1,921,388 2,121,388 36,026 1997 1997 40 Riverview MI 6,938,730 0 300,000 6,938,730 7,238,730 561,707 1987 1995 35 Sparks(3) NV 5,102,161 0 505,000 5,102,161 5,607,161 0 1991 1997 40 Sparks(4) NV 7,261,868 0 714,000 7,261,868 7,975,868 0 1993 1997 40 Dayton OH 1,916,264 0 270,000 1,916,264 2,186,264 3,992 1997 1997 40 Fairfield OH 1,917,248 0 270,000 1,917,248 2,187,248 19,971 1997 1997 40
32
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 CONSTRUCTION DATE DEPR. IS AND LOCATION IMPROVEMENTS ACQUISITION LAND(2) IMPROVEMENTS TOTAL ACCUM. DEPR. DATE ACQUIRED COMPUTED - ------------- ------------ ----------- ------------ ------------ ------------ ------------ ------------ -------- -------- ASSISTED LIVING FACILITIES: Greenville OH $ 2,310,800 $ 0 $ 215,000 $ 2,310,800 $ 2,525,800 $ 24,071 1997 1997 40 Newark OH 2,047,242 0 225,000 2,047,242 2,272,242 25,591 1997 1997 40 Sharonville OH 4,012,894 0 225,000 4,012,894 4,237,894 324,853 1987 1995 35 Springdale OH 2,091,938 0 440,000 2,091,938 2,531,938 13,075 1997 1997 40 Urbana OH 2,117,731 0 150,000 2,117,731 2,267,731 8,824 1997 1997 40 Broken Arrow OK 1,444,544 0 178,000 1,444,544 1,622,544 36,114 1996 1997 40 Oklahoma City OK 3,897,246 481,666 392,000 4,378,912 4,770,912 511,643 1982 1994 30 Oklahoma City OK 1,531,497 0 175,000 1,531,497 1,706,497 38,287 1996 1997 40 Albany(5) OR 2,465,356 0 92,160 2,465,356 2,557,516 164,357 1984 1995 35 Albany OR 3,656,555 4,074,415 511,290 7,730,970 8,242,260 291,705 1968 1995 30 Forest Grove(6) OR 3,151,903 0 401,187 3,151,903 3,553,090 180,109 1994 1995 40 Gresham OR 4,646,900 0 0 4,646,900 4,646,900 265,537 1988 1995 35 McMinnville(7) OR 3,975,918 0 760,000 3,975,918 4,735,918 198,796 1989 1995 35 Medford OR 4,325,518 0 313,389 4,325,518 4,638,907 216,276 1990 1995 35 Brentwood TN 2,301,599 0 600,000 2,301,599 2,901,599 148,645 1995 1995 40 Corsicana TX 1,494,497 0 117,000 1,494,497 1,611,497 40,476 1996 1996 40 Dallas TX 3,499,928 718,334 308,000 4,218,262 4,526,262 480,433 1982 1994 30 Denton TX 1,425,035 0 185,000 1,425,035 1,610,035 38,595 1996 1996 40 Ennis TX 1,408,954 0 119,000 1,408,954 1,527,954 38,159 1996 1996 40 Lewisville TX 1,892,169 0 260,000 1,892,169 2,152,169 27,594 1997 1997 40 Mansfield TX 1,574,961 0 225,000 1,574,961 1,799,961 39,374 1996 1997 40 Paris TX 1,464,890 0 166,000 1,464,890 1,630,890 39,674 1996 1996 40 Richland Hills TX 1,592,030 0 223,000 1,592,030 1,815,030 39,801 1996 1997 40 Weatherford TX 1,596,002 0 145,000 1,596,002 1,741,002 26,600 1996 1997 40 Richland WA 6,051,886 117,641 172,102 6,169,527 6,341,629 346,118 1990 1995 35 Tacoma WA 4,902,629 0 402,500 4,902,629 5,305,129 61,283 1997 1997 40 Yakima WA 4,840,711 0 500,000 4,840,711 5,340,711 0 1997 1997 40 Menomonee Falls(8) WI 13,189,925 0 4,161,000 13,189,925 17,350,925 94,214 1990 1997 30 West Allis(9) WI 81,197,184 0 682,000 8,117,184 8,799,184 50,732 1996 1997 30 ------------ ----------- ------------ ------------ ------------ ------------ 266,120,931 16,180,972 42,830,774 282,301,903 325,132,677 11,702,823 CCRCS: Palm Desert CA 9,099,576 450,000 1,600,000 9,549,576 11,149,576 872,291 1989 1994 40 Sterling CO 2,715,537 0 400,000 2,715,537 3,115,537 339,442 1979 1994 30 Andover(10) KS 12,512,704 0 687,000 12,512,604 13,199,704 151,035 1987 1997 35 Corpus Christi TX 22,021,613 0 1,848,000 22,021,613 23,869,613 373,096 1985 1997 40 Glendale(11) WI 22,904,960 0 3,824,000 22,904,960 26,728,960 157,791 1988 1997 30 Waukesha(12) WI 28,559,636 0 7,233,000 28,559,636 35,792,636 226,797 1973 1997 30 ------------ ----------- ------------ ------------ ------------ ------------ 97,814,026 450,000 15,592,000 98,264,026 113,856,026 2,120,452 ------------ ----------- ------------ ------------ ------------ ------------ REHABILITATION HOSPITALS: Scottsdale AZ 5,874,213 0 241,762 5,874,213 6,115,975 1,407,363 1986 1988 40 Tucson AZ 9,434,562 0 1,275,438 9,434,562 10,710,000 1,307,080 1992 1992 40 ------------ ----------- ------------ ------------ ------------ ------------ 15,308,775 0 1,517,200 15,308,775 16,825,975 2,714,443 ------------ ----------- ------------ ------------ ------------ ------------ RESIDENTIAL CARE FACILITIES FOR THE ELDERLY: Costa Mesa CA 229,483 0 60,000 229,483 289,483 1,912 1970 1997 30 Irvine CA 338,141 0 78,000 338,141 416,141 0 1976 1997 30 Irvine CA 340,515 0 90,000 340,515 430,515 2,838 1975 1997 30 Laguna Hills CA 208,481 0 72,000 208,481 280,481 1,737 1977 1997 30 Lake Forest CA 167,492 0 160,000 167,492 327,492 1,396 1975 1997 30 Lake Forest CA 186,473 0 64,000 186,473 250,473 1,554 1973 1997 30 Newport Beach CA 302,170 0 69,000 302,170 371,170 771 1962 1997 30 Newport Beach CA 444,669 0 111,000 444,669 555,669 0 1965 1997 30 ------------ ----------- ------------ ------------ ------------ ------------ 2,217,424 0 704,000 2,217,424 2,921,424 10,208 ------------ ----------- ------------ ------------ ------------ ------------ CLINICS: Heflin AL 3,654,241 0 248,000 3,654,241 3,902,241 38,065 1997 1997 40 CONSTRUCTION IN PROGRESS: 31,078,268 0 18,060,733 31,078,268 49,139,001 0 ------------ ----------- ------------ ------------ ------------ ------------ GRAND TOTAL $816,707,038 $23,588,323 $120,235,754 $840,295,361 $960,531,115 $107,077,142 ============ =========== ============ ============ ============ ============
33 - ------- (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 $3,744,638 at 12/31/97. (4) Real estate is security for notes payable in the aggregate of $3,258,321 at 12/31/97. (5) Real estate is security for notes payable in the aggregate of $2,103,354 at 12/31/97. (6) Real estate is security for notes payable in the aggregate of $3,391,628 at 12/31/97. (7) Real estate is security for notes payable in the aggregate of $3,652,212 at 12/31/97. (8) Real estate is security for notes payable in the aggregate of $12,275,000 at 12/31/97. (9) Real estate is security for notes payable in the aggregate of $4,250,863 at 12/31/97. (10) Real estate is security for notes payable in the aggregate of $2,800,000 at 12/31/97. (11) Real estate is security for notes payable in the aggregate of $13,226,256 at 12/31/97. (12) Real estate is security for notes payable in the aggregate of $9,594,238 at 12/31/97.
REAL ESTATE ACCUMULATED PROPERTIES DEPRECIATION ----------- ------------ (IN THOUSANDS) 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 -------- -------- Acquisitions.................................... 304,213 18,665 Improvements.................................... 15,608 574 Sales........................................... (11,299) (2,129) -------- -------- Balances at December 31, 1997: $960,531 $107,077 ======== ========
34 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 17, 1998, 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 17, 1998, 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 17, 1998, 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 17, 1998, 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, 1997 and 1996 Consolidated Statements of Operations for the years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995. 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 A Form 8-K dated October 7, 1997 was filed with respect to the acquisition of assets during the period August 15, 1997 through October 1, 1997, including audited proforma statements of income for the acquired facilities and unaudited proforma financial statements for the Company giving effect to the acquisitions. 35 (c) Exhibits
EXHIBIT NO. DESCRIPTION ----------- ----------- 2. Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession 2.1 Agreement to Merge, dated August 19, 1997, among the Company, Laureate Investments, Inc. and Laureate Properties, Inc., filed as Exhibit 2.1 to the Company's Form 8-K dated October 7, 1997, and incorporated herein by this reference. 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. 3.1(e) Articles Supplementary to the Registrant's Amended and Restated Articles of Incorporation, dated September 24, 1997, filed as Exhibit 3.1 to the Company's Form 8-K dated September 24, 1997, 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.
36
EXHIBIT NO. DESCRIPTION ----------- ----------- 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. 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. 10.10(e) Amendment Number Five to Credit Agreement dated April 1, 1997 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, filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter ended March 31, 1997, and incorporated herein by this reference.
37
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.10(f) Amendment Number Six to Credit Agreement dated August 15, 1997 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, filed as exhibit 10.1 to the Company's Form 10-Q for the quarter ended September 30, 1997, and incorporated herein by this reference. 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
38 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 11, 1998 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/ Charles D. Miller Chairman and Director March 11, 1998 ____________________________________ Charles D. Miller /s/ R. Bruce Andrews President, Chief Executive March 11, 1998 ____________________________________ Officer and Director R. Bruce Andrews (Principal Executive Officer) /s/ Mark L. Desmond Senior Vice President and March 11, 1998 ____________________________________ Chief Financial Officer Mark L. Desmond (Principal Financial and Accounting Officer) /s/ John C. Argue Director March 11, 1998 ____________________________________ John C. Argue /s/ David R. Banks Director March 11, 1998 ____________________________________ David R. Banks /s/ Milton J. Brock, Jr. Director March 11, 1998 ____________________________________ Milton J. Brock Jr. /s/ Sam A. Brooks Director March 11, 1998 ____________________________________ Sam A. Brooks /s/ Jack D. Samuelson Director March 11, 1998 ____________________________________ Jack D. Samuelson
39 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, 1996 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, 1997 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. A-1-1 BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------- ------------ Total current assets................................. $ 694,151 $ 697,245 Property and equipment, net.......................... 1,195,019 1,248,785 Total other assets................................... 579,654 579,052 ---------- ---------- Total assets ........................................ $2,468,824 $2,525,082 ========== ========== Total current liabilities............................ $ 379,672 $ 379,030 Long-term obligations................................ 845,886 1,106,256 Other liabilities and deferred items................. 175,698 178,701 Total stockholders' equity........................... 1,067,568 861,095 ---------- ---------- Total liabilities and stockholders' equity........... $2,468,824 $2,525,082 ========== ==========
A-1-2 BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER NINE MONTHS ENDED 31, SEPTEMBER 30, ---------------------- 1997 1996 1995 ----------------- ---------- ---------- Revenues............................. $2,448,871 $3,281,028 $3,242,781 Costs and expenses: Operating and administrative....... 2,192,135 2,958,942 2,960,832 Interest........................... 64,303 91,111 84,245 Depreciation and amortization...... 81,489 105,468 103,581 Impairment of long lived assets.... -- -- 100,277 ---------- ---------- ---------- 2,337,927 3,155,521 3,248,935 Income (loss) before provision for income taxes and extraordinary charge.............................. 110,944 125,507 (6,154) Provision for income taxes........... 44,378 73,481 1,969 Extraordinary charge, net of income taxes............................... -- (1,726) -- ---------- ---------- ---------- Net income (loss).................... $ 66,566 $ 50,300 $ (8,123) ========== ========== ========== Net income (loss) applicable to common shares $ 66,566 $ 50,300 $ (14,998) ========== ========== ========== Income (loss) per share of common stock: Primary: Before extraordinary charge........ $ .66 $ .52 $ (.16) Extraordinary charge............... -- (.02) -- ---------- ---------- ---------- Net income per share................. $ .66 $ .50 $ (.16) ========== ========== ========== Shares used to compute per share amounts............................. $ 101,206 $ 99,646 $ 92,233 ========== ========== ========== Fully-diluted: Before extraordinary charge........ $ .66 $ .50 $ (.16) Extraordinary change............... -- (.02) -- ---------- ---------- ---------- Net income per share................. $ .66 $ .48 $ (.16) ========== ========== ========== Shares used to compute per share amounts............................. $ 101,622 $ 111,002 $ 92,233 ========== ========== ==========
A-1-3 BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED YEARS ENDED DECEMBER 31, SEPTEMBER 30, ------------------------ 1997 1996 1995 ----------------- ------------ ------------ Cash flows from operating activities: Net income (loss)............... $ 66,566 $ 50,300 $ (8,123) --------- ----------- ------------ Adjustments to reconcile net income (loss) to net cash provided by operating activities..................... 20,934 82,880 114,332 --------- ----------- ------------ Net cash provided by operating activities....................... 87,500 133,180 106,209 --------- ----------- ------------ Net cash provided by (used for) investing activities............. 6,137 (91,501) (144,554) --------- ----------- ------------ Net cash provided by (used for) financing activities............. (120,717) (28,221) 26,684 --------- ----------- ------------ Net increase (decrease) in cash and cash equivalents............. (27,080) 13,458 (11,661) Cash and cash equivalents at beginning of period.............. 69,761 56,303 67,964 --------- ----------- ------------ Cash and cash equivalents at end of period........................ $ 42,681 $ 69,761 $ 56,303 ========= =========== ============
A-1-4 EX-21 2 SUBSIDIARIES OF THE COMPANY EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT AS OF DECEMBER 31, 1997
STATE OF NAME INCORPORATION ---- ------------- Nationwide Health Properties Finance Corporation................. Delaware MLD Financial Capital Corporation................................ Delaware MLD Wisconsin SNF, Inc. ......................................... Wisconsin
EX-23.1 3 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 File No. 33-35276, Registration Statement File No. 33- 64798, Registration Statement File No. 333-32135, Registration Statement File No. 333-17061 and Registration Statement File No. 333-20589. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Orange County, California January 16, 1998 1 EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 10,192 0 4,362 0 0 24,121 960,531 107,077 1,077,394 26,939 497,409 0 100,000 4,313 448,733 1,077,394 0 115,705 0 23,818 0 0 28,899 62,988 0 62,988 0 829 0 63,817 1.47 1.47
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