-----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, QZzu/Z9jWqduI+QiXSMG/Fx+wPwPvdUSoPfaKCXwQq3kSDVm0nYX3b8725DuZnYo Ibcu+AiSAnr1YNFu/4YLew== 0000877860-97-000029.txt : 19971114 0000877860-97-000029.hdr.sgml : 19971114 ACCESSION NUMBER: 0000877860-97-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 001-10822 FILM NUMBER: 97713450 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 9/30/97 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 September 30, 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 24,711,376 shares of common stock were outstanding as of October 31, 1997. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. NATIONAL HEALTH INVESTORS, INC. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)
Sept. 30 Dec. 31 1997 1996 (unaudited) ASSETS Real estate properties: Land $ 20,467 $ 20,468 Buildings and improvements 199,629 192,095 Construction in progress 13,225 587 233,321 213,150 Less accumulated depreciation (34,767) (28,895) Real estate properties, net 198,554 184,255 Mortgage and other notes receivable 590,177 519,229 Investment in real estate mortgage investment conduits 35,951 36,562 Cash and cash equivalents 14,120 3,400 Interest and rent receivable 4,597 5,382 Deferred costs and other assets 4,348 2,269 Total Assets $847,747 $751,097 LIABILITIES AND DEFERRED INCOME Long-term debt $207,343 $160,008 Credit facilities 45,000 59,000 Convertible subordinated debentures 120,133 90,735 Accounts payable and other accrued expenses 2,026 3,131 Accrued interest 4,126 1,984 Dividends payable 18,266 17,371 Deferred income 9,243 9,185 Total Liabilities and Deferred Income 406,137 341,414 Commitments, contingencies and guarantees STOCKHOLDERS' EQUITY Cumulative convertible preferred stock, $.01 par value; 10,000,000 shares authorized; 861,981 and 1,050,122 shares, respectively, issued and outstanding; stated at liquidation preference of $25 per share 21,550 26,253 Common stock, $.01 par value: 40,000,000 shares authorized; 24,684,259 and 23,474,751 shares, respectively, issued and outstanding 247 235 Capital in excess of par value 432,059 395,204 Cumulative net income 251,037 195,514 Cumulative dividends (263,283) (207,523) Total Stockholders' Equity 441,610 409,683 Total Liabilities and Stockholders' Equity $847,747 $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 Nine Months Ended September 30 September 30 1997 1996 1997 1996 (In thousands, except share amounts) REVENUES: Mortgage interest income $ 17,552 $ 15,735 $ 50,444 $ 45,612 Rental income 10,093 9,135 29,731 25,270 Investment interest and other income 715 405 1,834 1,624 28,360 25,275 82,009 72,506 EXPENSES: Interest 6,163 5,190 17,207 15,033 Depreciation of real estate 2,014 1,805 5,872 4,873 Amortization of loan and organization costs 200 388 609 919 Other operating 927 953 2,798 2,703 9,304 8,336 26,486 23,528 NET INCOME $ 19,056 $ 16,939 $ 55,523 $ 48,978 Dividends to preferred stockholders 462 695 1,470 2,558 NET INCOME APPLICABLE TO COMMON STOCK $ 18,594 $ 16,244 $ 54,053 $ 46,420 NET INCOME PER COMMON SHARE: Primary $ .76 $ .73 $ 2.22 $ 2.15 Fully diluted $ .74 $ .71 $ 2.16 $ 2.07 WEIGHED AVERAGE COMMON SHARES OUTSTANDING: Primary 24,523,128 22,218,269 24,315,652 21,596,934 Fully diluted 29,013,987 27,192,171 28,842,183 27,154,986 Common dividends per share declared $ .74 $ .70 $ 2.22 $ 2.10
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)
Nine Months Ended September 30 1997 1996 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 55,523 $ 48,978 Depreciation of real estate 5,872 4,873 Amortization of loan and organization costs 609 919 Deferred income 1,354 6,054 Amortization of deferred income (1,296) (4,260) Interest on debenture conversion 285 209 Decrease in interest & rent receivable 785 346 (Increase) decrease in other assets (462) 39 Increase in accounts payable and accrued liabilities 1,037 2,226 NET CASH PROVIDED BY OPERATING ACTIVITIES 63,707 59,384 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in mortgage notes receivable (108,001) (99,840) Collection of mortgage notes receivable 6,049 5,853 Prepayment of mortgage notes receivable 31,615 79,811 Acquisition of property and equipment, net (20,171) (66,837) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (90,508) (81,013) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of credit facilities (106,000) (46,750) Proceeds from credit facilities 92,000 64,500 Proceeds from long-term debt 99,651 78,168 Principal payments on long-term debt (52,316) (82,658) Proceeds from sale of subordinated convertible debentures 60,000 56,190 Financing costs paid (2,662) (1,548) Dividends paid to shareholders (54,866) (48,237) Sale of stock and exercise of options 1,714 1,271 NET CASH USED IN FINANCING ACTIVITIES 37,521 20,936 INCREASE IN CASH AND CASH EQUIVALENTS 10,720 (693) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,400 2,122 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,120 $ 1,429
NATIONAL HEALTH INVESTORS, INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended September 30 1997 1996 (in thousands) Supplemental Information: Cash payments for interest expense $ 12,154 $ 10,364 During the September months ended September 30, 1997 and September 30, 1996, $30,602,000 and $24,980,000 respectively, of Senior Subordinated Convertible Debentures were converted into 984,036 shares and 916,811 shares, respectively, of NHI's common stock: Senior subordinated convertible debentures $(30,602) $(24,980) Financing costs $ 437 $ 384 Accrued interest $ (285) $ (209) Common stock $ 10 $ 10 Capital in excess of par $ 30,440 $ 24,795
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 NINE MONTHS ENDED SEPTEMBER 30, 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 -- -- -- -- -- 55,523 -- 55,523 Shares sold -- -- 54,243 -- 1,714 -- -- 1,714 Shares issued in con- version of con- vertible debentures to common stock -- -- 985,036 10 30,440 -- -- 30,450 Shares issued in conversion of pre- ferred stock to common stock (188,141) (4,703) 170,229 2 4,701 -- -- -- Common shares sold -- -- -- -- -- -- -- -- Dividends to common shareholders ($2.22 per share) -- -- -- -- -- -- (54,290) (54,290) Dividends to preferred shareholders ($1.594 per share) -- -- -- -- -- -- (1,470) (1,470) BALANCE AT 9/30/97 861,981 $ 21,550 24,684,259 $247 $432,059 $251,037 $(263,283) $441,610 BALANCE AT 12/31/95 2,311,533 $ 57,788 20,535,014 $205 $311,908 $128,350 $(141,270) $356,981 Net income -- -- -- -- -- 48,978 -- 48,978 Shares sold -- -- 45,524 -- 1,271 -- -- 1,271 Shares issued in con- version of con- vertible debentures to common stock -- -- 916,811 10 24,795 -- -- 24,805 Shares issued in conversion of pre- ferred stock to common stock (1,020,077) (25,502) 923,108 9 25,493 -- -- -- Dividends to common shareholders ($1.40 per share) -- -- -- -- -- -- (45,773) (45,773) Dividends to preferred shareholders ($1.0625 per share) -- -- -- -- -- -- (2,558) (2,558) BALANCE AT 9/30/96 1,291,456 $ 32,286 22,420,457 $224 $363,467 $177,328 $(189,601) $383,704
NATIONAL HEALTH INVESTORS, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 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. NATIONAL HEALTH INVESTORS, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 1997 1996 1997 1996 PRIMARY: Weighted avg. common shares 24,485,556 22,189,714 24,283,213 21,568,250 Stock options 37,572 28,555 32,439 28,684 Average common shares outstanding 24,523,128 22,218,269 24,315,652 21,596,934 Net income $19,056,000 16,939,000 55,523,000 $48,978,000 Dividends paid to pre- ferred shareholders (462,000) (695,000) (1,470,000) (2,558,000) Net income available to common stockholders $18,594,000 $16,244,000 $54,053,000 $46,420,000 Net income per common share $ .76 $ .73 $ 2.22 $ 2.15 FULLY DILUTED: Weighted average common shares 24,485,556 22,189,714 24,283,213 21,568,250 Stock options 37,572 29,964 36,830 29,964 Convertible subordinated debentures 3,685,206 3,723,291 3,666,080 4,008,791 Cumulative convertible preferred stock 805,653 1,249,202 856,060 1,547,981 Average common shares outstanding 29,013,987 27,192,171 28,842,183 27,154,986 Net income $19,056,000 $16,939,000 55,523,000 48,978,000 Interest expense on convertible sub- ordinated debentures 2,297,000 2,239,000 6,853,000 7,122,000 Net income assuming con- version of subordinated convertible debentures to common stock $21,353,000 $19,178,000 62,376,000 56,100,000 Net income per common share $ .74 $ .71 $ 2.16 $ 2.07
NATIONAL HEALTH INVESTORS, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (Unaudited) Note 3. COMMITMENTS AND GUARANTEES: At September 30, 1997, NHI was committed, subject to due diligence and financial performance goals, to fund approximately $169,254,000 in health care real estate projects of which approximately $99,254,000 is eligible to be funded within the next 12 months. The commitments include mortgage loans or purchase leaseback agreements for five long-term care centers, six retirement centers, three medical office buildings, and 16 assisted living facilities, all at rates ranging from 9.5% to 11.5%. Also, included in the $169,254,000 of commitments is a $95,300,000 commitment which declines, if unused, by $30,000,000 annually. 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 ($22,718,000 at September 30, 1997) of NHC. The debt is at fixed and variable interest rates with a weighted average interest rate of 8.4% at September 30, 1997. NHI receives from NHC compensation of approximately $114,000 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 $2,075,000 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. NATIONAL HEALTH INVESTORS, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (Unaudited) NOTE 4. DEBT On June 25, 1997, NHI received proceeds from the sale of $100,000,000 of 7.3% notes payable (the Notes). The Notes mature on July 16, 2007 and have no sinking fund provisions. Interest on the Notes is payable semi-annually on January 15 and July 15. The Notes are general unsecured obligations of NHI and rank equal with NHI's other unsecured and unsubordinated debt. NHI agrees in the note indenture that it will limit liens on assets to certain percentages of tangible assets and that it will limit the issuance of new debt to certain multiples of capital or net worth. Note 5. 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 September 30, 1997, $47,537,000 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 nine months ended September 30, 1997, $27,357,000 of the 1995 debentures have been converted into 865,030 shares of common stock. NHI has reserved 1,503,146 shares of common stock for conversions of 1995 debentures. At September 30, 1997, debentures in the amount of $6,406,000, bearing interest at 7% (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 September 30, 1997, none of the debentures have been converted. At September 30, 1997, $5,960,000 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 nine months ended September 30, 1997, $3,175,000 of the 1993 debentures were converted into 116,506 shares of common stock. The Company has reserved 218,716 shares of common stock for conversion of the 1993 debentures. NATIONAL HEALTH INVESTORS, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (Unaudited) At September 30, 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 nine months ended September 30, 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 6. 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. At September 30, 1997 $21,550,000 of the preferred stock remains outstanding. 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 780,090 shares of common stock for Preferred Stock conversions. The Preferred Stock is listed on the NYSE under the symbol "NHIPr." Note 7. 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. NATIONAL HEALTH INVESTORS, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (Unaudited) 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 8. STOCK OPTION PLAN On January 15, 1997, NHI granted options to purchase 194,000 shares of NHI at $36.00 per share. During the nine months ended September 30, 1997, options to purchase 37,315 shares of NHI were exercised at exercise prices ranging from $25.00 to $36.00. In October 1995, the Financial Accounting Standards Board issued State- ment 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 September 30, 1997, NHI had interests in net real estate owned by it and mortgage investments totaling $824.7 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. NATIONAL HEALTH INVESTORS, INC. September 30, 1997 (Unaudited) As of September 30, 1997, the Company has investments in 267 health care facilities located in 27 states consisting of 219 long-term care facilities, three acute care hospitals, nine medical office buildings, ten assisted living facilities, nine independent living centers, and 17 residential projects for the developmentally disabled. These investments consist of approximately $590.2 million aggregate principal amount of loans to 48 borrowers, $198.6 million of purchase leaseback transactions with six lessees and $36.0 million invested in REMIC pass through certificates backed by first mortgage loans to five operators. Of these 267 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 19.1% of total real estate assets on September 30, 1997. Capital Resources and Liquidity NHI has generated net cash from operating activities for the first nine months of 1997 in the amount of $63.7 million. The funds were used along with $58.5 million net proceeds from the sale of subordinated convertible debentures, $99.7 million proceeds from the issuance of 7.3% senior unsecured notes, $37.7 million from prepayments and collections of mortgage notes receivable, $92.0 million proceeds from credit facilities and $1.7 million from the sale of common stock to make additional investments in income producing assets and real estate properties totaling approximately $128.2 million, to repay debt and credit facilities of $158.3 million and to pay dividends to stockholders of $54.9 million. During the second quarter NHI received an investment grade rating of BBB- from Standard & Poor's which confirms comparable ratings previously received by Moody's and Duff & Phelps. These ratings have already allowed NHI to lower its costs of both debt and equity capital and expand its financing alternatives. To illustrate, in June, NHI successfully placed its first $100 million public debt offering of 7.3% senior unsecured notes due 2007. The amount available to be drawn on NHI's $100 million revolving line of credit was $55 million at September 30, 1997. The Company's balance sheet was further strengthened by the conversion of $4.7 million of NHI's outstanding convertible preferred stock and $30.6 million of convertible debentures to common equity during the first nine months of 1997. NHI's nonconvertible debt as a percentage of total capitalization has been lowered from 45% at the end of 1994 to 30% at December 31, 1996 and to 27% at September 30, 1997. The Company continues to be well positioned to take advantage of new investment opportunities. In October after the close of the third quarter, NHI received prepayment of mortgages receivable of $149.8 million. Prepayment penalties and commitments arrangements with the borrower are expected to offset the reduced net income from this investment while the amount repaid is being reinvested. NATIONAL HEALTH INVESTORS, INC. September 30, 1997 (Unaudited) At September 30, 1997, the Company was committed, subject to due diligence and financial performance goals, to fund approximately $169.2 million in health care real estate projects, of which approximately $99.2 million is eligible to be funded within the next 12 months. The commitments include mortgage loans or purchase leaseback agreements for five long-term health care centers, six retirement centers, 16 assisted living centers and three medical office buildings, generally at rates ranging from 9.5% to 11.5%. 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, the assumption of secured or unsecured indebtedness, repayments of existing investments or by the sale of all or a portion of certain currently held investments. Results of Operations Three Months ended September 30, 1997 Compared to Three Months Ended September 30, 1996. Net income for the three months ended September 30, 1997 is $19.1 million versus $16.9 million for the same period of 1996, an increase of 12.4%. Fully diluted earnings per common share increased three cents or 4.2% to 74 cents in the 1997 period from 71 cents in the 1996 period. Total revenues for the three months ended September 30, 1997 increased $3.1 million or 12.2% to $28.4 million from $25.3 million for the three months ended September 30, 1996. Revenues from mortgage interest income increased $1.8 million or 11.5% in the 1997 period as compared to the 1996 period. Revenues from rental income increased $1.0 million or 10.5% 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 NHI's existing mortgages and leases. Total expenses for the 1997 three month period increased $1.0 million or 11.6% to $9.3 million from $8.3 million for the 1996 three month period. Interest expenses increased $1.0 million or 18.7% in the 1997 three month period as compared to the 1996 three month period. Depreciation and amortization increased $0.2 million or 11.6% 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 compared to the quarter a year ago. The increase in interest expense was offset in part by the conversion of $6.9 million of 7.375% and 7.75% debentures during the three months ended September 30, 1997 and a reduced interest rate on the $100 million term loan and the $100 million revolving line of credit as a result of investment grade ratings. Depreciation increased as a result of the Company's placing of newly constructed assets in service in 1997 and 1996. NATIONAL HEALTH INVESTORS, INC. September 30, 1997 (Unaudited) Nine Months ended September 30, 1997 Compared to Nine Months Ended September 30, 1996. Net income for the nine months ended September 30, 1997 is $55.6 million versus $49.0 million for the same period of 1996, an increase of 13.3%. Fully diluted earnings per common share increased 9 cents or 4.3% to $2.16 per share in the 1997 period from $2.07 per share in the 1996 period. Total revenues for the nine months ended September 30, 1997 increased $9.5 million or 13.1% to $82.0 million from $72.5 million for the nine months ended September 30, 1996. Revenues from mortgage interest income increased $4.8 million or 10.6% in the 1997 period as compared to the 1996 period. Revenues from rental income increased $4.5 million or 17.7% when compared to the same period in 1996. These increases resulted primarily from the net increase in investments in real estate properties during the last 12 months and increased "additional rent" and "revenue participations" earned under the Company's existing leases and mortgage agreements. Total expenses for the 1997 nine month period increased $3.0 million or 12.6% to $26.5 million from $23.5 million for the 1996 period. Interest expenses increased $2.2 million or 20.5% in the 1997 nine month period as compared to the 1996 period. Depreciation and amortization increased $1.0 million or 20.5% when compared to the same period in 1996. The increase in interest expense was due to increased debt levels compared to the nine month period a year ago. The increase in interest expense was offset in part by the conversion of $30.6 million of convertible debentures during the nine months ended September 30, 1997, and by a reduced interest rate on the $100 million term loan and $100 million revolving line of credit as a result of investment grade ratings. Depreciation increased as a result of the Company's placing of newly constructed assets in service in 1996 and 1997. Future Growth The Company expects increases in both mortgage interest income and rental income from additional investments (net of repayments) in mortgage loans and owned facilities during 1997 and 1998. 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. NATIONAL HEALTH INVESTORS, INC. September 30, 1997 (Unaudited) 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. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) List of exhibits - none required (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 November 12, 1997 /s/ Richard F. LaRoche, Jr. Richard F. LaRoche, Jr. Secretary Date November 12, 1997 /s/ Donald K. Daniel Donald K. Daniel Principal Accounting Officer EX-27 2
5 0000877860 NATIONAL HEALTH INVESTORS, INC. 9-MOS DEC-31-1997 SEP-30-1997 14,120,000 0 630,725,000 0 0 0 233,321,000 (34,767,000) 847,747,000 0 0 0 21,550,000 247,000 419,813,000 847,747,000 0 82,009,000 0 0 2,798,000 0 17,207,000 0 0 0 0 0 0 55,523,000 2.22 2.16
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