| Restatement | Restatement The restatement of the Company's consolidated financial statements results from the Company's subsequent accounting for goodwill resulting from the Cole II Merger. Previously, the Company did not allocate goodwill to the disposal of real estate assets or held for sale real estate assets that met the definition of a business under GAAP, as required by ASC 350 “Intangibles - Goodwill and Other” in order to determine gain on disposition of assets or impairments, if any, respectively. For the disposal of real estate assets that constituted a business, goodwill and gain on disposition of assets both should have been reduced by the proportionate amount of goodwill allocated to each disposed of real estate asset. The amount of goodwill allocated is derived as the proportionate fair value of the real estate considered to be a business under GAAP at the time of sale to the fair value of the Company’s reporting unit. As a result, the restated consolidated balance sheet includes a reduction to goodwill of $ 19.5 million at June 30, 2015 and the restated consolidated statement of operations includes a reduction to gain on disposition of assets of $ 11.5 million and $13.7 million for the three and six months ended June 30, 2015, respectively. The restated consolidated balance sheet includes a reduction to goodwill of $ 5.6 million at December 31, 2014. There was no reduction and a $0.2 million reduction to (loss) gain on disposition of assets for the three and six months ended June 30, 2014, respectively. Further, in evaluating the impairment on held for sale real estate assets considered to be a business under GAAP, the proportionate amount of goodwill attributable to the real estate asset held for sale should be considered in determining the amount of impairment, if any. The amount of goodwill attributed is derived as the proportionate fair value of the real estate asset considered to be a business under GAAP held for sale at measurement date to the fair value of the Company’s reporting unit. As a result, the restated consolidated balance sheet includes a reduction to real estate assets held for sale, net of $ 1.2 million at June 30, 2015 and the restated consolidated statement of operations includes an increase to impairments of $ 0.01 million and $0.6 million for the three and six months ended June 30, 2015, respectively. The restated consolidated balance sheet includes a reduction to real estate assets held for sale, net of $ 0.9 million at December 31, 2014 and the restated consolidated statement of operations includes an increase to impairments of $ 0.5 million and $0.7 million for the three and six month ended June 30, 2014, respectively. The Company has historically presented share repurchases as treasury stock (thereby reducing stockholders’ equity) in the consolidated balance sheets and consolidated statements of stockholders’ equity. However, the Company is incorporated in Maryland and under Maryland law, there is no concept of treasury stock. Therefore, shares repurchased should be considered retired and constitute authorized but unissued shares rather than treasury stock as previously presented. As a result, during the six months ended June 31, 2015, the Company has corrected the classification error and the amount previously reported as treasury stock of $4.9 million at December 31, 2014 is presented as a reduction to common stock and an increase in accumulated deficit in the restated consolidated balance sheet and consolidated statement of stockholders' equity. In addition, the number of shares previously disclosed as issued have been reduced by the number of shares repurchased of 473,599 December 31, 2014. This change does not affect previously disclosed shares outstanding, total stockholders’ equity or earnings per share computations. The consolidated financial statements included in this Form 10-Q/A have been restated as of June 30, 2015 and for the three and six months then ended to reflect the adjustments described above. The consolidated financial statements included in this Form 10-Q/A have been restated as of December 31, 2014 and for the three and six months ended June 30, 2014 to reflect the adjustments described above. The following statements present the effect of the restatement on (i) the Company's consolidated balance sheets at June 30, 2015 and December 31, 2014, (ii) the Company's consolidated statements of operations for the three and six months ended June 30, 2015 and 2014 and (iii) the Company's consolidated statements of cash flows for the six months ended June 30, 2015 and 2014. The Company did not present a summary of the effect of the restatement on the consolidated statement of stockholders' equity for any of the above referenced periods because the impact to stockholders' equity is reflected below in the restated consolidated balance sheets. The Company did not present a summary of the effect of the restatement on the consolidated statements of comprehensive income (loss) for any of the above referenced periods because the impact to net income (loss) is reflected below in the restated consolidated statements of operations and the restatement adjustments did not affect any other component of comprehensive income (loss). The following table presents the consolidated balance sheet as previously reported, restatement adjustments and the consolidated balance sheet as restated at June 30, 2015 (in thousands, except per share data): As Previously Reported Restatement Adjustments As Restated Assets Investments: Real estate investments: Land and improvements $ 2,679,387 $ — $ 2,679,387 Buildings and improvements 4,714,561 — 4,714,561 Total real estate investments 7,393,948 — 7,393,948 Less: accumulated depreciation (785,360 ) — (785,360 ) 6,608,588 — 6,608,588 Loans receivable, net 109,377 — 109,377 Intangible lease assets, net 557,214 — 557,214 Real estate assets under direct financing leases, net 44,382 — 44,382 Real estate assets held for sale, net 108,339 (1,239 ) 107,100 Net investments 7,427,900 (1,239 ) 7,426,661 Cash and cash equivalents 39,674 — 39,674 Deferred costs and other assets, net 170,244 — 170,244 Goodwill 291,421 (19,507 ) 271,914 Total assets $ 7,929,239 $ (20,746 ) $ 7,908,493 Liabilities and stockholders’ equity Liabilities: Revolving credit facilities $ 20,000 $ — $ 20,000 Mortgages and notes payable, net 3,291,679 — 3,291,679 Convertible Notes, net 684,066 — 684,066 Total debt, net 3,995,745 — 3,995,745 Intangible lease liabilities, net 202,021 — 202,021 Accounts payable, accrued expenses and other liabilities 120,134 — 120,134 Total liabilities 4,317,900 — 4,317,900 Commitments and contingencies (see Note 8) Stockholders’ equity: Common stock, $0.01 par value 4,420 (5 ) 4,415 Capital in excess of par value 4,715,340 — 4,715,340 Accumulated deficit (1,101,642 ) (26,323 ) (1,127,965 ) Accumulated other comprehensive loss (1,197 ) — (1,197 ) Treasury stock, at cost (5,582 ) 5,582 — Total stockholders’ equity 3,611,339 (20,746 ) 3,590,593 Total liabilities and stockholders’ equity $ 7,929,239 $ (20,746 ) $ 7,908,493 The following table presents the consolidated balance sheet as previously reported, restatement adjustments and the consolidated balance sheet as restated at December 31, 2014 (in thousands, except per share data): As Previously Reported Restatement Adjustments As Restated Assets Investments: Real estate investments: Land and improvements $ 2,614,630 $ — $ 2,614,630 Buildings and improvements 4,579,166 — 4,579,166 Total real estate investments 7,193,796 — 7,193,796 Less: accumulated depreciation (752,210 ) — (752,210 ) 6,441,586 — 6,441,586 Loans receivable, net 109,425 — 109,425 Intangible lease assets, net 590,073 — 590,073 Real estate assets under direct financing leases, net 56,564 — 56,564 Real estate assets held for sale, net 119,912 (866 ) 119,046 Net investments 7,317,560 (866 ) 7,316,694 Cash and cash equivalents 176,181 — 176,181 Deferred costs and other assets, net 185,507 — 185,507 Goodwill 291,421 (5,573 ) 285,848 Total assets $ 7,970,669 $ (6,439 ) $ 7,964,230 Liabilities and stockholders’ equity Liabilities: Revolving credit facilities $ 15,114 $ — $ 15,114 Mortgages and notes payable, net 3,629,998 — 3,629,998 Convertible Notes, net 678,190 — 678,190 Total debt, net 4,323,302 — 4,323,302 Intangible lease liabilities, net 205,968 — 205,968 Accounts payable, accrued expenses and other liabilities 123,298 — 123,298 Total liabilities 4,652,568 — 4,652,568 Commitments and contingencies (see Note 8) Stockholders’ equity: Common stock, $0.01 par value 4,118 (5 ) 4,113 Capital in excess of par value 4,361,320 — 4,361,320 Accumulated deficit (1,041,392 ) (11,296 ) (1,052,688 ) Accumulated other comprehensive loss (1,083 ) — (1,083 ) Treasury stock, at cost (4,862 ) 4,862 — Total stockholders’ equity 3,318,101 (6,439 ) 3,311,662 Total liabilities and stockholders’ equity $ 7,970,669 $ (6,439 ) $ 7,964,230 The following table presents the consolidated statement of operations as previously reported, restatement adjustments and the consolidated statement of operations as restated for the three months ended June 30, 2015 (in thousands, except share and per share data): As Previously Reported Restatement Adjustments As Restated Revenues: Rentals $ 159,607 $ — $ 159,607 Interest income on loans receivable 1,730 — 1,730 Earned income from direct financing leases 779 — 779 Tenant reimbursement income 3,492 — 3,492 Other income and interest from real estate transactions 2,326 — 2,326 Total revenues 167,934 — 167,934 Expenses: General and administrative 11,972 — 11,972 Property costs 6,414 — 6,414 Real estate acquisition costs 453 — 453 Interest 56,167 — 56,167 Depreciation and amortization 64,671 — 64,671 Impairments 33,766 5 33,771 Total expenses 173,443 5 173,448 Loss from continuing operations before other income and income tax expense (5,509 ) (5 ) (5,514 ) Other income: Gain on debt extinguishment 3,377 — 3,377 Total other income 3,377 — 3,377 Loss from continuing operations before income tax expense (2,132 ) (5 ) (2,137 ) Income tax expense (161 ) — (161 ) Loss from continuing operations (2,293 ) (5 ) (2,298 ) Discontinued operations: Loss from discontinued operations (96 ) — (96 ) Gain on disposition of assets 590 — 590 Income from discontinued operations 494 — 494 Loss before gain on disposition of assets (1,799 ) (5 ) (1,804 ) Gain on disposition of assets 62,690 (11,541 ) 51,149 Net income attributable to common stockholders $ 60,891 $ (11,546 ) $ 49,345 Net income per share of common stock—basic: Continuing operations $ 0.14 $ (0.03 ) $ 0.11 Discontinued operations — — — Net income per share attributable to common stockholders—basic $ 0.14 $ (0.03 ) $ 0.11 Net income per share of common stock—diluted: Continuing operations $ 0.14 $ (0.03 ) $ 0.11 Discontinued operations — — — Net income per share attributable to common stockholders—diluted $ 0.14 $ (0.03 ) $ 0.11 Weighted average shares of common stock outstanding: Basic 436,619,138 — 436,619,138 Diluted 436,923,755 — 436,923,755 The following table presents the consolidated statement of operations as previously reported, restatement adjustments and the consolidated statement of operations as restated for the three months ended June 30, 2014, (in thousands, except share and per share data): As Previously Reported Restatement Adjustments As Restated Revenues: Rentals $ 143,142 $ — $ 143,142 Interest income on loans receivable 1,821 — 1,821 Earned income from direct financing leases 838 — 838 Tenant reimbursement income 2,921 — 2,921 Other income and interest from real estate transactions 3,067 — 3,067 Total revenues 151,789 — 151,789 Expenses: General and administrative 10,451 — 10,451 Finance restructuring costs 13,016 — 13,016 Property costs 6,576 — 6,576 Real estate acquisition costs 226 — 226 Interest 55,992 — 55,992 Depreciation and amortization 61,968 — 61,968 Impairments 27,627 525 28,152 Total expenses 175,856 525 176,381 Loss from continuing operations before other expense and income tax expense (24,067 ) (525 ) (24,592 ) Other expense: Loss on debt extinguishment (64,708 ) — (64,708 ) Total other expense (64,708 ) — (64,708 ) Loss from continuing operations before income tax expense (88,775 ) (525 ) (89,300 ) Income tax expense (127 ) — (127 ) Loss from continuing operations (88,902 ) (525 ) (89,427 ) Discontinued operations: Income from discontinued operations 279 — 279 Gain on disposition of assets 92 — 92 Income from discontinued operations 371 — 371 Loss before loss on disposition of assets (88,531 ) (525 ) (89,056 ) Loss on disposition of assets (1,290 ) — (1,290 ) Net loss attributable to common stockholders $ (89,821 ) $ (525 ) $ (90,346 ) Net loss per share of common stock—basic: Continuing operations $ (0.24 ) $ — $ (0.24 ) Discontinued operations — — — Net loss per share attributable to common stockholders—basic $ (0.24 ) $ — $ (0.24 ) Net loss per share of common stock—diluted: Continuing operations $ (0.24 ) $ — $ (0.24 ) Discontinued operations — — — Net loss per share attributable to common stockholders—diluted $ (0.24 ) $ — $ (0.24 ) Weighted average shares of common stock outstanding: Basic 381,775,203 — 381,775,203 Diluted 381,775,203 — 381,775,203 The following table presents the consolidated statement of operations as previously reported, restatement adjustments and the consolidated statement of operations as restated for the six months ended June 30, 2015 (in thousands, except share and per share data): As Previously Reported Restatement Adjustments As Restated Revenues: Rentals $ 314,125 $ — $ 314,125 Interest income on loans receivable 3,452 — 3,452 Earned income from direct financing leases 1,574 — 1,574 Tenant reimbursement income 8,123 — 8,123 Other income and interest from real estate transactions 2,947 — 2,947 Total revenues 330,221 — 330,221 Expenses: General and administrative 24,572 — 24,572 Property costs 13,821 — 13,821 Real estate acquisition costs 1,546 — 1,546 Interest 114,081 — 114,081 Depreciation and amortization 130,967 — 130,967 Impairments 35,390 581 35,971 Total expenses 320,377 581 320,958 Income from continuing operations before other income and income tax expense 9,844 (581 ) 9,263 Other income: Gain on debt extinguishment 2,147 — 2,147 Total other income 2,147 — 2,147 Income from continuing operations before income tax expense 11,991 (581 ) 11,410 Income tax expense (523 ) — (523 ) Income from continuing operations 11,468 (581 ) 10,887 Discontinued operations: Income from discontinued operations 131 — 131 Gain on disposition of assets 590 — 590 Income from discontinued operations 721 — 721 Income before gain on disposition of assets 12,189 (581 ) 11,608 Gain on disposition of assets 74,026 (13,726 ) 60,300 Net income attributable to common stockholders $ 86,215 $ (14,307 ) $ 71,908 Net income per share of common stock—basic: Continuing operations $ 0.20 $ (0.03 ) $ 0.17 Discontinued operations — — — Net income per share attributable to common stockholders—basic $ 0.20 $ (0.03 ) $ 0.17 Net income per share of common stock—diluted: Continuing operations $ 0.20 $ (0.03 ) $ 0.17 Discontinued operations — — — Net income per share attributable to common stockholders—diluted $ 0.20 $ (0.03 ) $ 0.17 Weighted average shares of common stock outstanding: Basic 423,889,238 — 423,889,238 Diluted 424,343,232 — 424,343,232 The following table presents the consolidated statement of operations as previously reported, restatement adjustments and the consolidated statement of operations as restated for the six months ended June 30, 2014 (in thousands, except share and per share data): As Previously Reported Restatement Adjustments As Restated Revenues: Rentals $ 280,621 $ — $ 280,621 Interest income on loans receivable 3,658 — 3,658 Earned income from direct financing leases 1,684 — 1,684 Tenant reimbursement income 6,240 — 6,240 Other income and interest from real estate transactions 3,558 — 3,558 Total revenues 295,761 — 295,761 Expenses: General and administrative 21,501 — 21,501 Finance restructuring costs 13,033 — 13,033 Property costs 11,858 — 11,858 Real estate acquisition costs 1,507 — 1,507 Interest 110,391 — 110,391 Depreciation and amortization 122,517 — 122,517 Impairments 29,334 729 30,063 Total expenses 310,141 729 310,870 Loss from continuing operations before other expense and income tax expense (14,380 ) (729 ) (15,109 ) Other expense: Loss on debt extinguishment (64,708 ) — (64,708 ) Total other expense (64,708 ) — (64,708 ) Loss from continuing operations before income tax expense (79,088 ) (729 ) (79,817 ) Income tax expense (344 ) — (344 ) Loss from continuing operations (79,432 ) (729 ) (80,161 ) Discontinued operations: Income from discontinued operations 3,333 — 3,333 Gain on disposition of assets 85 — 85 Income from discontinued operations 3,418 — 3,418 Loss before gain on disposition of assets (76,014 ) (729 ) (76,743 ) Gain on disposition of assets 432 (187 ) 245 Net loss attributable to common stockholders $ (75,582 ) $ (916 ) $ (76,498 ) Net (loss) income per share of common stock—basic: Continuing operations $ (0.21 ) $ — $ (0.21 ) Discontinued operations 0.01 — 0.01 Net loss per share attributable to common stockholders—basic $ (0.20 ) $ — $ (0.20 ) Net (loss) income per share of common stock—diluted: Continuing operations $ (0.21 ) $ — $ (0.21 ) Discontinued operations 0.01 — 0.01 Net loss per share attributable to common stockholders—diluted $ (0.20 ) $ — $ (0.20 ) Weighted average shares of common stock outstanding: Basic 375,266,233 — 375,266,233 Diluted 375,266,233 — 375,266,233 The following table presents the consolidated statement of cash flows as previously reported, restatement adjustments and the consolidated statement of cash flows as restated for the six months ended June 30, 2015 (in thousands): As Previously Reported Restatement Adjustments As Restated Operating activities Net income attributable to common stockholders $ 86,215 $ (14,307 ) $ 71,908 Adjustments to reconcile net income attributable to common stockholders to net cash provided by operating activities: Depreciation and amortization 130,967 — 130,967 Impairments 35,424 581 36,005 Amortization of deferred financing costs 3,973 — 3,973 Derivative net settlements, amortization and other interest rate hedge losses (85 ) — (85 ) Amortization of debt discounts 1,139 — 1,139 Stock-based compensation expense 7,288 — 7,288 Gain on debt extinguishment (2,147 ) — (2,147 ) Debt extinguishment costs (3,623 ) — (3,623 ) Gains on dispositions of real estate and other assets, net (74,616 ) 13,726 (60,890 ) Non-cash revenue (10,551 ) — (10,551 ) Other (27 ) — (27 ) Changes in operating assets and liabilities: — Deferred costs and other assets, net (1,641 ) — (1,641 ) Accounts payable, accrued expenses and other liabilities (4,677 ) — (4,677 ) Net cash provided by operating activities 167,639 — 167,639 Investing activities Acquisitions of real estate (547,487 ) — (547,487 ) Capitalized real estate expenditures (3,175 ) — (3,175 ) Investments in loans receivable (4,000 ) — (4,000 ) Collections of principal on loans receivable and real estate assets under direct financing leases 2,924 — 2,924 Proceeds from dispositions of real estate and other assets 340,971 — 340,971 Transfers of net sales proceeds to restricted accounts pursuant to 1031 Exchanges (40,034 ) — (40,034 ) Transfers of net sales proceeds from Master Trust Release 43,442 — 43,442 Net cash used in investing activities (207,359 ) — (207,359 ) Financing activities Borrowings under Revolving Credit Facilities 405,000 — 405,000 Repayments under Revolving Credit Facilities (400,181 ) — (400,181 ) Repayments under mortgages and notes payable (321,884 ) — (321,884 ) Deferred financing costs (3,782 ) — (3,782 ) Proceeds from issuance of common stock, net of offering costs 347,255 — 347,255 Proceeds from exercise of stock options 46 — 46 Purchase of shares of common stock (720 ) — (720 ) Dividends paid/distributions to equity owners (141,174 ) — (141,174 ) Transfers from reserve/escrow deposits with lenders 18,653 — 18,653 Net cash used in financing activities (96,787 ) — (96,787 ) Net decrease in cash and cash equivalents (136,507 ) — (136,507 ) Cash and cash equivalents, beginning of period 176,181 — 176,181 Cash and cash equivalents, end of period $ 39,674 $ — $ 39,674 The following table presents the consolidated statement of cash flows as previously reported, restatement adjustments and the consolidated statement of cash flows as restated for the six months ended June 30, 2014 (in thousands): As Previously Reported Restatement Adjustments As Restated Operating activities Net loss attributable to common stockholders $ (75,582 ) $ (916 ) $ (76,498 ) Adjustments to reconcile net loss attributable to common stockholders to net cash provided by operating activities: Depreciation and amortization 122,517 122,517 Impairments 29,334 729 30,063 Amortization of deferred financing costs 2,297 2,297 Derivative net settlements, amortization and other interest rate hedge losses (50 ) (50 ) Amortization of debt premiums (1,043 ) (1,043 ) Stock-based compensation expense 5,484 5,484 Loss on debt extinguishment 64,708 64,708 Debt extinguishment costs (59,069 ) (59,069 ) Gains on dispositions of real estate and other assets, net (517 ) 187 (330 ) Non-cash revenue (8,344 ) (8,344 ) Other 242 242 Changes in operating assets and liabilities: — — Deferred costs and other assets, net (2,352 ) (2,352 ) Accounts payable, accrued expenses and other liabilities (9,062 ) (9,062 ) Net cash provided by operating activities 68,563 — 68,563 Investing activities Acquisitions of real estate (363,643 ) (363,643 ) Capitalized real estate expenditures (2,250 ) (2,250 ) Investments in loans receivable — — Collections of principal on loans receivable and real estate assets under direct financing leases 3,286 3,286 Proceeds from dispositions of real estate and other assets 14,218 14,218 Transfers of net sales proceeds from restricted accounts pursuant to 1031 Exchanges 20,784 20,784 Transfers of net sales proceeds to Master Trust Release (13,054 ) (13,054 ) Net cash used in investing activities (340,659 ) — (340,659 ) Financing activities Borrowings under Revolving Credit Facilities 405,535 405,535 Repayments under Revolving Credit Facilities (425,127 ) (425,127 ) Borrowings under mortgages and notes payable 757,500 757,500 Repayments under mortgages and notes payable (553,882 ) (553,882 ) Deferred financing costs (20,000 ) (20,000 ) Proceeds from issuance of common stock, net of offering costs 287,704 287,704 Proceeds from exercise of stock options 183 183 Offering costs paid on equity component of Convertible Notes (1,609 ) (1,609 ) Purchase of shares of common stock (110 ) (110 ) Dividends paid/distributions to equity owners (123,207 ) (123,207 ) Transfers to reserve/escrow deposits with lenders (503 ) (503 ) Net cash provided by financing activities 326,484 — 326,484 Net increase in cash and cash equivalents 54,388 — 54,388 Cash and cash equivalents, beginning of period 66,588 66,588 Cash and cash equivalents, end of period $ 120,976 $ — $ 120,976 |
