-----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, NRqdPz16J4cVguc6uOX/6WYmuPQp6+5aswHwF2THGpzH7p20kQm4fNqvs4t+CYrd dAGpFROIaiVnPZMxdpEkpg== 0000877860-97-000021.txt : 19970520 0000877860-97-000021.hdr.sgml : 19970520 ACCESSION NUMBER: 0000877860-97-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL HEALTH INVESTORS INC CENTRAL INDEX KEY: 0000877860 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 621470956 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10822 FILM NUMBER: 97606641 BUSINESS ADDRESS: STREET 1: 100 VINE ST STE 1402 CITY: MURFREESBORO STATE: TN ZIP: 37130 BUSINESS PHONE: 6158909100 MAIL ADDRESS: STREET 1: P.O. BOX 1102 CITY: MURFREESBORO STATE: TN ZIP: 37133 10-Q 1 3/31/97 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 of 15(d) of the Securities Exchange Act of 1934 For quarter ended March 31, 1997 Commission file number 33-41863 NATIONAL HEALTH INVESTORS, INC. (Exact name of registrant as specified in its Charter) Maryland 62-1470956 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 100 Vine Street Murfreesboro, TN 37130 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code (615) 890-9100 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. Yes x No (2) Has been subject to such filing requirements for the past 90 days. Yes x No 24,375,670 shares of common stock were outstanding as of April 30, 1997. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. NATIONAL HEALTH INVESTORS, INC. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) March 31 Dec. 31 1997 1996 ASSETS (unaudited) Real estate properties: Land $ 20,468 $ 20,468 Buildings and improvements 192,095 192,095 Construction in progress 690 587 213,253 213,150 Less accumulated depreciation (30,824) (28,895) Real estate properties, net 182,429 184,255 Mortgage and other notes receivable 536,235 519,229 Investment in real estate mortgage investment conduits 36,378 36,562 Interest and rent receivable 5,312 5,382 Cash and cash equivalents 3,756 3,400 Deferred costs and other assets 3,423 2,269 Total Assets $767,533 $751,097 LIABILITIES AND DEFERRED INCOME Long-term debt $159,587 $160,008 Credit facilities 14,500 59,000 Convertible subordinated debentures 129,058 90,735 Accounts payable and other accrued expenses 2,931 3,131 Accrued interest 2,621 1,984 Dividends payable 17,979 17,371 Deferred income 9,126 9,185 Commitments, contingencies and guarantees --- --- Total Liabilities and Deferred Income 335,802 341,414 STOCKHOLDERS' EQUITY Cumulative convertible preferred stock, $.01 par value; 10,000,000 shares authorized; 943,297 and 1,050,122 shares, respectively, issued and outstanding; stated at liquidation preference of $25 per share 23,582 26,253 Common stock, $.01 par value: 40,000,000 shares authorized; 24,295,420 and 23,474,751 shares, respectively, issued and outstanding 243 235 Capital in excess of par value of common stock 420,475 395,204 Cumulative net income 213,456 195,514 Cumulative dividends (226,025) (207,523) Total Stockholders' Equity 431,731 409,683 Total Liabilities and Stockholders' Equity $767,533 $751,097 The accompanying notes to interim condensed consolidated financial statements are an integral part of these financial statements. The interim condensed balance sheet at December 31, 1996 is taken from the audited financial statements at that date. NATIONAL HEALTH INVESTORS, INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31 1997 1996 (in thousands, except share amounts) REVENUES: Mortgage interest income $ 16,142 $ 14,656 Rental income 9,796 8,075 Investment interest and other income 507 613 26,445 23,344 EXPENSES: Interest 5,430 5,038 Depreciation of real estate 1,929 1,533 Amortization of loan and organization costs 199 276 General and administrative 945 859 8,503 7,706 NET INCOME $ 17,942 $ 15,638 DIVIDENDS TO PREFERRED STOCKHOLDERS 524 980 NET INCOME APPLICABLE TO COMMON STOCK $ 17,418 $ 14,658 NET INCOME PER COMMON SHARE: Primary $ .73 $ .70 Fully diluted $ .71 $ .67 FUNDS FROM OPERATIONS PER COMMON SHARE: Primary $ .81 $ .78 Fully diluted $ .78 $ .73 WEIGHED AVERAGE COMMON SHARES OUTSTANDING: Primary 24,009,830 20,852,460 Fully diluted 28,487,643 26,931,633 Common dividends per share declared $ .74 $ .70 The accompanying notes to interim condensed consolidated financial statements are an integral part of these financial statements. NATIONAL HEALTH INVESTORS, INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended March 31 1997 1996 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 17,942 $ 15,638 Depreciation of real estate 1,929 1,533 Amortization of loan and organization costs 199 276 Interest on debenture conversion 160 54 Deferred income 301 5,182 Amortization of deferred income (360) (1,442) Decrease (increase) in interest & rent receivable 70 (1,346) Decrease in other assets (108) (102) Increase in accounts payable and accrued liabilities 436 2,821 NET CASH PROVIDED BY OPERATING ACTIVITIES 20,569 22,614 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in mortgage notes receivable (22,152) (26,207) Collection of mortgage notes receivable 2,090 1,906 Prepayment of mortgage notes receivable 3,240 25,146 Acquisition of property and equipment, net (103) (417) NET CASH USED IN INVESTING ACTIVITIES (16,925) 428 CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of credit facilities (59,000) (31,750) Proceeds from credit facilities 14,500 --- Principal payments on long-term debt (421) (2,804) Proceeds from sale of subordinated convertible debentures 60,000 56,050 Financing costs paid (1,544) (1,453) Dividends paid to shareholders (17,894) (15,602) Sale of stock and exercise of options 1,071 808 NET CASH USED IN FINANCING ACTIVITIES (3,288) 5,249 INCREASE IN CASH AND CASH EQUIVALENTS 356 28,291 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,400 2,122 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,756 $ 30,413 NATIONAL HEALTH INVESTORS, INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended March 31 1997 1996 (in thousands) Supplemental Information: Cash payments for interest expense $ 3,701 $ 2,721 During the three months ended March 31, 1997, and March 31, 1996, $21,677,000 and $1,979,000 respectively, of Senior Subordinated Convertible Debentures were converted into 689,252 shares and 74,680 shares, respectively, of NHI's common stock: Senior subordinated convertible debentures $(21,677) $ (1,979) Financing costs $ 300 $ 28 Accrued interest $ (160) $ (54) Common stock $ 6 $ 3 Capital in excess of par $ 21,531 $ 2,002 The accompanying notes to interim condensed consolidated financial statements are an integral part of these financial statements. NATIONAL HEALTH INVESTORS, INC. INTERIM CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE Three MONTHS ENDED MARCH 31, 1997 AND 1996 (dollars in thousands)
Cumulative Convertible Capital in Total Preferred Stock Common Stock Excess of Cumulative Cumulative Stockholders Shares Amount Shares Amount Par Value Net Income Dividends Equity BALANCE AT 12/31/96 1,050,122 $ 26,253 23,474,751 $235 $395,204 $195,514 $(207,523) $409,683 Net income -- -- -- -- -- 17,942 -- 17,942 Shares sold -- -- 34,762 -- 1,071 -- -- 1,071 Shares issued in con- version of con- vertible debentures to common stock -- -- 689,252 6 21,531 -- -- 21,537 Shares issued in conversion of pre- ferred stock to common stock (106,825) (2,671) 96,655 2 2,669 -- -- -- Dividends to common shareholders ($.74 per share) -- -- -- -- -- -- (17,979) (17,979) Dividends to preferred shareholders ($.5313 per share) -- -- -- -- -- -- (523) (523) BALANCE AT 3/31/97 943,297 $ 23,582 24,295,420 $243 $420,475 $213,456 $(226,025) $431,731 BALANCE AT 12/31/95 2,311,533 $ 57,788 20,535,014 $205 $311,908 $128,350 $(141,270) $356,981 Net income -- -- -- -- -- 15,638 -- 15,638 Shares sold -- -- 30,779 -- 808 -- -- 808 Shares issued in con- version of con- vertible debentures to common stock -- -- 74,680 3 1,999 -- -- 2,002 Shares issued in conversion of pre- ferred stock to common stock (470,399) (11,759) 425,687 4 11,755 -- -- -- Common shares sold -- -- -- -- -- -- -- -- Dividends to common shareholders ($.70 per share) -- -- -- -- -- -- (14,746) (14,746) Dividends to preferred shareholders ($.5313 per share) -- -- -- -- -- -- (980) (980) BALANCE AT 3/31/96 1,841,134 $ 46,029 21,066,160 $212 $326,470 $143,988 $(156,996) $359,703
NATIONAL HEALTH INVESTORS, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1997 (Unaudited) Note 1. SIGNIFICANT ACCOUNTING POLICIES: The unaudited financial statements furnished herein in the opinion of the management include all adjustments which are necessary to fairly present the financial position, results of operations and cash flows of National Health Investors, Inc. ("NHI" or "Company"). NHI assumes that users of the interim financial statements herein have read or have access to the audited financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations for the preceding fiscal years ended December 31, 1996, 1995 and 1994 and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnotes and other disclosures which would substantially duplicate the disclosure contained in the Company's most recent annual report to stockholders have been omitted. The interim financial information contained herein is not necessarily indicative of the results that may be expected for a full year because of various reasons including changes in interest rates, rents and the timing of debt and equity financings. Note 2. EARNINGS PER SHARE Primary earnings per share is based on the weighted average number of common and common equivalent shares outstanding. Common equivalent shares result from the dilutive effect of stock options computed using the treasury stock method. Net income is reduced by dividends to holders of cumulative convertible preferred stock. Fully diluted earnings per share assumes, in addition to the above, the conversion of convertible subordinated debentures, the conversion of cumulative convertible preferred stock and the exercise of all stock options using the treasury stock method. Net income is increased for interest expense on the convertible subordinated debentures. The following table summarizes the earnings and the average number of common shares and common equivalent shares used in the calculation of primary and fully diluted earnings per share. Three Months Ended March 31 1997 1996 PRIMARY: Weighted avg. common shares 23,976,219 20,816,570 Stock options 33,611 35,890 Average common shares outstanding 24,009,830 20,852,460 Net income $17,942,000 15,638,000 Dividends paid to preferred shareholders (524,000) 980,000 Net income available to common stockholders $17,418,000 $14,658,000 Net income per common share $ .73 $ .70 FULLY DILUTED: Weighted average common shares 23,976,219 20,816,570 Stock options 33,611 37,780 Convertible subordinated debentures 3,563,116 4,224,901 Cumulative convertible preferred stock 920,027 1,852,382 Average common shares outstanding 28,492,973 26,931,633 Net income $17,942,000 $15,638,000 Interest expense on convertible subordinated debentures 2,212,000 2,465,000 Net income assuming conversion of subordinated convertible debentures to common stock $20,154,000 $18,103,000 Net income per common share $ .71 $ .67 Note 3. COMMITMENTS AND GUARANTEES: At March 31, 1997, NHI was committed, subject to due diligence and financial performance goals, to fund approximately $223,288,000 in health care real estate projects of which approximately $109,688,000 is expected to be funded within the next 12 months. The commitments include mortgage loans or purchase leaseback agreements for ten long-term care centers, eight retirement centers, two medical office buildings, two acute care facilities and 13 assisted living facilities, all at rates ranging from 10.0% to 12.0%. Included in the $223,288,000 of commitments is an agreement to fund a total of $100,000,000 in mortgage and purchase leaseback transactions. This $100,000,000 commitment will be funded at a maximum of $30,000,000 per year with no carryover of any commitment not used in a given year. Also included in the $223,288,000 of commitments is a $22,300,000 commitment secured by first mortgages on 43 long-term care centers. Draws on the $22,300,000 commitment are limited to $3,700,000 annually. Additionally, the total commitments includes a $50,000,000 commitment to fund mortgage loans for eight assisted living centers, $25,000,000 of which is expected to be funded in 1997. NHI has recorded deferred income for commitment fees related to these loans where applicable. In order to obtain the consent of appropriate lenders to NHC's transfer of assets to NHI, NHI guaranteed certain debt ($24,397,000 at March 31, 1997) of NHC. The debt is at fixed and variable interest rates with a weighted average interest rate of 8.4% at March 31, 1997. NHI receives from NHC compensation of approximately $122,000 per annum for the guarantees which is credited against NHC's base rent requirements. In management's opinion, these guarantee fees approximate the guarantee fees that NHI would currently charge to enter into similar guarantees. All of the guaranteed indebtedness discussed above is secured by first mortgages and rights which may be enforced if either party is required to pay under their respective guarantees. NHC has agreed to indemnify and hold harmless NHI against any and all loss, liability or harm incurred by NHI as a result of having to perform under its guarantee of any or all of the guaranteed debt. Also additionally, NHI has also guaranteed bank loans in the amount of $1,632,000 to key employees and directors which amount was utilized for the exercise of NHI stock options. Shares of NHI stock are held as security by NHI and the loans are limited to $100,000 per individual per year. Note 4. CONVERTIBLE SUBORDINATED DEBENTURES: On January 29, 1997, NHI sold $60,000,000 of 7% convertible subordinated debentures (the "1997 debentures") due on February 1, 2004. The 1997 debentures are convertible at the option of the holder into common stock at a conversion price of $37.50, subject to adjustment. The 1997 debentures will not be redeemable prior to February 8, 2002 except in the event of certain tax-related events or to the extent necessary to preserve and protect NHI's status as a real estate investment trust. The 1997 debentures are subordinated in right of payment to the prior payment in full of all senior indebtedness of NHI. Interest is payable semiannually on February 1 and August 1 of each year. NHI has reserved 1,600,000 shares of common stock for conversions of 1997 debentures. At March 31, 1997, $53,787,000 of 7.75% convertible subordinated debentures (the "1995 debentures") remain outstanding. The 1995 debentures are convertible at the option of the holder into the common stock of NHI at a conversion price of $31.625, subject to adjustment. During the three months ended March 31, 1997, $21,707,000 of the 1995 debentures have been converted into 667,407 shares of common stock. NHI has reserved 1,700,775 shares of common stock for conversions of 1995 debentures. At March 31, 1997, debentures in the amount of $6,406,000 (the "1995 debt service debentures") have been issued to mortgagees or lessees to satisfy debt service escrow requirements. The debentures are convertible at the option of the holder into common stock of the Company at a conversion price of 110% of the market price on the date of issuance of the debentures, subject to adjustment. At March 31, 1997, none of the debentures have been converted. At March 31, 1997, $8,635,000 of 7.375% convertible subordinated debentures (the "1993 debentures") remain outstanding. The 1993 debentures are convertible at the option of the holder into the common stock of the Company at a conversion price of $27.25 per share, subject to adjustment. During the three months ended March 31, 1997, $500,000 of the 1993 debentures were converted into 18,435 shares of common stock. The Company has reserved 316,881 shares of common stock for conversion of the 1993 debentures. At March 31, 1997, $230,000 of the 10% senior convertible subordinated debentures (the "senior debentures") remain outstanding. The senior debentures are convertible into the common stock of the Company at $20 per share. During the three months ended March 31, 1997, $70,000 of the senior debentures were converted into 3,500 shares of common stock. The Company has reserved 11,500 shares of common stock for conversion of the senior debentures. Note 5. CUMULATIVE CONVERTIBLE PREFERRED STOCK In February and March, 1994, NHI issued $109,558,000 of 8.5% Cumulative Convertible Preferred Stock ("Preferred Stock") with a liquidation preference of $25 per share. Dividends at an annual rate of $2.125 are cumulative from the date of issuance and are paid quarterly. The Preferred Stock is convertible into NHI common stock at the option of the holder at any time at a conversion price of $27.625 per share of common stock, which is equivalent to a conversion rate of 0.905 per share of common stock for each share of Preferred Stock, subject to adjustment in certain circumstances. The Preferred Stock is not redeemable by NHI prior to February 15, 1999 and is not redeemable for cash. On or after February 15, 1999, the Preferred Stock will be redeemable by NHI for common stock. NHI may redeem the Preferred Stock only if the trading price of the Common Stock on the New York Stock Exchange (NYSE) exceeds $27.625 per share for 20 trading days within a period of 30 trading days prior to the exercise. NHI has reserved 853,684 shares of common stock for Preferred Stock conversions. The Preferred Stock is listed on the NYSE under the symbol "NHIPr." Note 6. NEW ACCOUNTING PRONOUNCEMENTS: In February 1997, the FASB issued Statement of Financial Accounting Standards No. 129, "Disclosure of Information about Capital Structure", ("SFAS 129"). SFAS 129 establishes standards for disclosing information about an entity's capital structure. NHI will be required to adopt SFAS 129 in the fourth quarter of 1997. Management does not expect the adoption to have a material impact on NHI's financial position, results of options or cash flow. Statement of Financial Accounting Standards No. 128, "Earnings per Share", ("SFAS 128"), has been issued effective for fiscal periods ending after December 15, 1997. SFAS No. 128 establishes standards for computing and presenting earnings per share. NHI is required to adopt the provisions of SFAS No. 128 in the fourth quarter of 1997. Under the standards established by SFAS 128, earnings per share is measured at two levels: basic earnings per share and diluted earnings per share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares after considering the additional dilution related to preferred stock, convertible debt, options and warrants. Management does not expect the adoption to have a material impact on NHI's financial position, results of operation or cash flows. Note 7. STOCK OPTION PLAN On January 15, 1997, NHI granted options to purchase 194,000 shares of NHI at $36.00 per share. During the three months ended March 31, 1997, options to purchase 35,315 shares of NHI were exercised at exercise prices ranging from $25.00 to $36.00. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock- based Compensation ("SFAS 123"). SFAS 123 establishes new financial accounting and reporting standards for stock-based compensation plans. NHI has adopted the disclosure-only provisions of SFAS 123. As a result, no compensation cost has been recognized for NHI's stock option plans. Based on the number of options outstanding and the historical and expected future trends of factors affecting valuation of those options, management believes that any compensation cost attributable to options granted is immaterial. Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations Overview National Health Investors, Inc. ("NHI" or the "Company") is a real estate investment trust which invests primarily in income producing health care properties with emphasis on the long-term care sector. As of March 31, 1997, NHI had interests in net real estate owned by it and mortgage investments totaling $755.0 million. NHI's strategy is to invest in health care real estate which generates current income which will be distributed to stockholders. NHI intends to implement this strategy by making mortgage loans and acquiring properties to lease nationwide. As of March 31, 1997, the Company has investments in 251 health care facilities located in 26 states consisting of 206 long-term care facilities, three acute care hospitals, nine medical office buildings, eight assisted living facilities, eight retirement centers, and 17 residential projects for the developmentally disabled. These investments consist of approximately $536.2 million aggregate principal amount of loans to 47 borrowers, $182.4 million of purchase leaseback transactions with five lessees and $36.4 million invested in REMIC pass through certificates backed by first mortgage loans to six operators. Of these 251 facilities, 43 are leased to NHC and nine additional facilities are managed by NHC. (NHC is the Company's investment advisor.) Consistent with its strategy of diversification, the Company has reduced the portion of its portfolio operated by NHC from 100.0% of total real estate assets on October 17, 1991 to approximately 18.5% of total real estate assets on March 31, 1997. Capital Resources and Liquidity NHI has generated net cash from operating activities for the first three months of 1997 in the amount of $20.6 million. The funds were used along with $58.5 million (net of financing costs paid) proceeds from the sale of subordinated convertible debentures, $5.3 million from the collection of mortgage notes receivable, $14.5 million of net proceeds from credit facilities and $1.1 million from the sale of common stock to make additional investments in income producing assets and real estate properties totaling approximately $22.3 million, to repay credit facilities and long-term debt in a net amount of $59.4 million and to pay dividends to stockholders of $17.9 million. In March, 1997, NHI received a second investment grade rating on its senior unsecured debt. Moody's Investors Service assigned a Baa3- debt rating citing NHI's proven track record in the long-term care facility finance business, its good operating performance, strengthened capital structure, as well as its moderate financial leverage. Previously, NHI received a BBB- debt rating from Duff & Phelps Credit Rating Co. The amount available to be drawn on NHI's $100 million revolving line of credit was $85.5 million at March 31, 1997. In January of 1997, NHI collected $58.5 million in proceeds from the sale of 7.00% convertible subordinated debentures. The Company's balance sheet was further strengthened by the conversion of $2.7 million of NHI's outstanding convertible preferred stock and $22.3 million of convertible debentures to common equity during the first three months of 1997. NHI's nonconvertible debt as a percentage of total capitalization has been lowered from 30% at December 31, 1996 to 24% at March 31, 1997. The Company continues to be well positioned to take advantage of new investment opportunities. At March 31, 1997, the Company was committed, subject to due diligence and financial performance goals, to fund approximately $223.3 million in health care real estate projects, of which approximately $109.7 million is expected to be funded within the next 12 months. The commitments include mortgage loans or purchase leaseback agreements for 10 long-term health care centers, eight retirement centers, two medical office buildings, and 13 assisted living facilities, generally at rates ranging from 10.0% to 12.0%. Included in the $223.3 million of commitments is an agreement to fund a total of $100.0 million in mortgage and purchase leaseback transactions. This $100.0 million commitment will be funded at $30.0 million per year with no carryover of any commitment not used in a given year. Included in the $223.3 million of commitments is a $22.3 million commitment which amount is secured by first mortgages on 43 long-term care centers. Draws on the $22.3 million commitment are limited to $3.7 million annually. Additionally, the total commitments includes a $50.0 million commitment to fund mortgage loans for eight assisted living centers, $25.0 million of which is expected to be funded in 1997. Furthermore, the Company anticipates that it will in the future continue to make additional investments in health care properties. Financing for NHI's current commitments and future commitments to others may be provided by borrowings under NHI's bank credit facilities, new lines of credit, private placements or public offerings of debt or equity, and the assumption of secured or unsecured indebtedness or by the sale of all or a portion of certain currently held investments. Results of Operations Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996 Net income for the three months ended March 31, 1997 is $17.9 million versus $15.6 million for the same period of 1996, an increase of 14.7%. Fully diluted earnings per common share increased four cents or 6.0% to $0.71 in the 1997 period from $0.67 in the 1996 period. Total revenues for the three months ended March 31, 1997 increased $3.1 million or 13.3% to $26.4 million from $23.3 million for the three months ended March 31, 1996. Revenues from mortgage interest income increased $1.4 million or 9.5% in the 1997 period as compared to the 1996 period. Revenues from rental income increased $1.7 million or 21.0% when compared to the same period in 1996. These increases resulted primarily from investments in additional facilities during the last 12 months and increased "revenue participations" and "additional rent" earned under the Company's existing mortgages and leases. Total expenses for the 1997 three month period increased $0.8 million or 10.4% to $8.5 million from $7.7 million for the 1996 three month period. Interest expenses increased $.4 million or 7.8% in the 1997 three month period as compared to the 1996 three month period. Depreciation and amortization increased $0.3 million or 17.6% when compared to the same period in 1996. General and administrative expenses in 1997 remained constant at $0.9 million when compared to the 1996 period. The increase in interest expense was due to increased debt levels resulting from borrowing the remaining $25.0 million of long-term debt in the last quarter of 1996, which remained outstanding for the entire three month period ending March 31, 1997. This additional $25.0 million was not outstanding during the first quarter of 1996. Depreciation increased as a result of the Company's placing of newly constructed assets in service in 1995 and 1996. Future Growth The Company expects increases in both mortgage interest income and rental income from additional investments in mortgage loans and owned facilities during 1997. The Company expects to continue to make additional investments in health care facilities that would increase interest and rental revenues as well as interest and depreciation expense. Increases in revenues are expected to more than offset increases in associated expenses. PART II. OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities. Not applicable Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. (a) The annual meeting of the shareholders was held on March 20, 1997. (b) Matters voted upon at the meeting are as follows: PROPOSAL NO. 1: Election of Robert T. Webb to serve as director for a term of three years or until his successor has been fully elected and qualified. Other directors whose terms of office continue are Mr. Ted Welch; Mr. Richard F. LaRoche, Jr.; and Mr. W. Andrew Adams. Voting For Withholding Percent For Authority 20,297,933 50,274 84.6% PROPOSAL NO. 2: Adoption of 1997 Stock Option Plan which authorizes the issuance for up to ten years from January 15 1997 options to purchase 600,000 shares of the common stock of National Health Investors, Inc. Voting For Voting Against Abstaining Percent For 19,134,465 1,058,618 155,124 79.9% PROPOSAL NO. 3: Ratify the appointment of Arthur Andersen LLP as the Company's independent accountants for the fiscal year 1997. Voting For Voting Against Abstaining Percent For 20,250,083 36,963 61,161 84.56% Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) List of exhibits - Exhibit 27 - Financial Data Schedule (for SEC purposes only) (b) Reports on Form 8-K - none required SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NATIONAL HEALTH INVESTORS, INC. (Registrant) Date May 15, 1997 s/Richard F. LaRoche, Jr. Richard F. LaRoche, Jr. Secretary Date May 15, 1997 s/Donald K. Daniel Donald K. Daniel Principal Accounting Officer EX-27 2
5 0000877860 NATIONAL HEALTH INVESTORS, INC. 3-MOS DEC-31-1997 MAR-31-1997 3,756,000 0 572,613,000 0 0 0 213,253,000 (30,824,000) 767,533,000 0 0 0 23,582,000 243,000 407,906,000 767,533,000 0 26,445,000 0 0 945,000 0 5,430,000 0 0 0 0 0 0 17,942,000 .73 .71
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