| 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 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 $ 33.1 million at June 30, 2016 and the restated consolidated statement of operations includes a reduction to gain on disposition of assets of $ 2.9 million and $5.3 million for the three and six months ended June 30, 2016, respectively. The restated consolidated balance sheet includes a reduction to goodwill of $ 27.1 million at December 31, 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. 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 $ 1.4 million at June 30, 2016 and the restated consolidated statement of operations includes an increase to impairments of $ 0.6 million and $1.1 million for the three and six months ended June 30, 2016, respectively. The restated consolidated balance sheet includes a reduction to real estate assets held for sale, net of $ 0.9 million at December 31, 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 consolidated financial statements included in this Form 10-Q/A have been restated as of June 30, 2016 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, 2015 and for the three and six months ended June 30, 2015 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, 2016 and December 31, 2015, (ii) the Company's consolidated statements of operations for the three and six months ended June 30, 2016 and 2015 and (iii) the Company's consolidated statements of cash flows for the six months ended June 30, 2016 and 2015. 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 for any of the above referenced periods because the impact to net income is reflected below in the restated consolidated statements of operations and the restatement adjustments did not affect any other component of comprehensive income. The following table presents the consolidated balance sheet as previously reported, restatement adjustments and the consolidated balance sheet as restated at June 30, 2016 (in thousands, except per share data): As Previously Reported Restatement Adjustments As Restated Assets Investments: Real estate investments: Land and improvements $ 2,716,408 $ — $ 2,716,408 Buildings and improvements 4,821,840 — 4,821,840 Total real estate investments 7,538,248 — 7,538,248 Less: accumulated depreciation (931,834 ) — (931,834 ) 6,606,414 — 6,606,414 Loans receivable, net 86,165 — 86,165 Intangible lease assets, net 491,489 — 491,489 Real estate assets under direct financing leases, net 36,021 — 36,021 Real estate assets held for sale, net 80,665 (1,359 ) 79,306 Net investments 7,300,754 (1,359 ) 7,299,395 Cash and cash equivalents 29,410 — 29,410 Deferred costs and other assets, net 148,497 — 148,497 Goodwill 291,421 (33,052 ) 258,369 Total assets $ 7,770,082 $ (34,411 ) $ 7,735,671 Liabilities and stockholders’ equity Liabilities: Revolving credit facilities $ — $ — $ — Term Loan, net 368,207 — 368,207 Mortgages and notes payable, net 2,571,844 — 2,571,844 Convertible Notes, net 696,290 — 696,290 Total debt, net 3,636,341 — 3,636,341 Intangible lease liabilities, net 185,811 — 185,811 Accounts payable, accrued expenses and other liabilities 138,457 — 138,457 Total liabilities 3,960,609 — 3,960,609 Commitments and contingencies (see Note 8) Stockholders’ equity: Common stock, $0.01 par value 4,797 — 4,797 Capital in excess of par value 5,126,685 — 5,126,685 Accumulated deficit (1,321,973 ) (34,411 ) (1,356,384 ) Accumulated other comprehensive loss (36 ) — (36 ) Total stockholders’ equity 3,809,473 (34,411 ) 3,775,062 Total liabilities and stockholders’ equity $ 7,770,082 $ (34,411 ) $ 7,735,671 The following table presents the consolidated balance sheet as previously reported, restatement adjustments and the consolidated balance sheet as restated at December 31, 2015 (in thousands, except per share data): As Previously Reported Restatement Adjustments As Restated Assets Investments: Real estate investments: Land and improvements $ 2,710,888 $ — $ 2,710,888 Buildings and improvements 4,816,481 — 4,816,481 Total real estate investments 7,527,369 — 7,527,369 Less: accumulated depreciation (860,954 ) — (860,954 ) 6,666,415 — 6,666,415 Loans receivable, net 104,003 — 104,003 Intangible lease assets, net 526,718 — 526,718 Real estate assets under direct financing leases, net 44,324 — 44,324 Real estate assets held for sale, net 85,145 (886 ) 84,259 Net investments 7,426,605 (886 ) 7,425,719 Cash and cash equivalents 21,790 — 21,790 Deferred costs and other assets, net 179,180 — 179,180 Goodwill 291,421 (27,071 ) 264,350 Total assets $ 7,918,996 $ (27,957 ) $ 7,891,039 Liabilities and stockholders’ equity Liabilities: Revolving credit facilities $ — $ — $ — Term Loan, net 322,902 — 322,902 Mortgages and notes payable, net 3,079,787 — 3,079,787 Convertible Notes, net 690,098 — 690,098 Total debt, net 4,092,787 — 4,092,787 Intangible lease liabilities, net 193,903 — 193,903 Accounts payable, accrued expenses and other liabilities 142,475 — 142,475 Total liabilities 4,429,165 — 4,429,165 Commitments and contingencies (see Note 8) Stockholders’ equity: Common stock, $0.01 par value 4,418 — 4,418 Capital in excess of par value 4,721,323 — 4,721,323 Accumulated deficit (1,234,882 ) (27,957 ) (1,262,839 ) Accumulated other comprehensive loss (1,028 ) — (1,028 ) Total stockholders’ equity 3,489,831 (27,957 ) 3,461,874 Total liabilities and stockholders’ equity $ 7,918,996 $ (27,957 ) $ 7,891,039 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, 2016 (in thousands, except share and per share data): As Previously Reported Restatement Adjustments As Restated Revenues: Rentals $ 160,506 $ — $ 160,506 Interest income on loans receivable 1,625 — 1,625 Earned income from direct financing leases 698 — 698 Tenant reimbursement income 3,200 — 3,200 Other income and interest from real estate transactions 5,697 — 5,697 Total revenues 171,726 — 171,726 Expenses: General and administrative 13,850 — 13,850 Restructuring charges 1,813 — 1,813 Property costs 6,611 — 6,611 Real estate acquisition costs 979 — 979 Interest 49,172 — 49,172 Depreciation and amortization 64,263 — 64,263 Impairments 12,732 639 13,371 Total expenses 149,420 639 150,059 Income from continuing operations before other income and income tax expense 22,306 (639 ) 21,667 Other income: Gain on debt extinguishment 14,016 — 14,016 Total other income 14,016 — 14,016 Income from continuing operations before income tax expense 36,322 (639 ) 35,683 Income tax expense (839 ) — (839 ) Income from continuing operations 35,483 (639 ) 34,844 Income before gain on disposition of assets 35,483 (639 ) 34,844 Gain on disposition of assets 14,027 (2,912 ) 11,115 Net income attributable to common stockholders $ 49,510 $ (3,551 ) $ 45,959 Net income per share of common stock—basic: Continuing operations $ 0.10 $ — $ 0.10 Net income per share attributable to common stockholders—basic $ 0.10 $ — $ 0.10 Net income per share of common stock—diluted: Continuing operations $ 0.10 $ — $ 0.10 Net income per share attributable to common stockholders—diluted $ 0.10 $ — $ 0.10 Weighted average shares of common stock outstanding: Basic 473,161,125 — 473,161,125 Diluted 473,164,386 — 473,164,386 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 six months ended June 30, 2016 (in thousands, except share and per share data): As Previously Reported Restatement Adjustments As Restated Revenues: Rentals $ 322,325 $ — $ 322,325 Interest income on loans receivable 3,284 — 3,284 Earned income from direct financing leases 1,422 — 1,422 Tenant reimbursement income 7,024 — 7,024 Other income and interest from real estate transactions 6,028 — 6,028 Total revenues 340,083 — 340,083 Expenses: General and administrative 25,499 — 25,499 Restructuring charges 2,462 — 2,462 Property costs 13,938 — 13,938 Real estate acquisition costs 1,036 — 1,036 Interest 102,189 — 102,189 Depreciation and amortization 128,927 — 128,927 Impairments 24,863 1,126 25,989 Total expenses 298,914 1,126 300,040 Income from continuing operations before other income and income tax expense 41,169 (1,126 ) 40,043 Other income: Gain on debt extinguishment 8,675 — 8,675 Total other income 8,675 — 8,675 Income from continuing operations before income tax expense 49,844 (1,126 ) 48,718 Income tax expense (920 ) — (920 ) Income from continuing operations 48,924 (1,126 ) 47,798 Income before gain on disposition of assets 48,924 (1,126 ) 47,798 Gain on disposition of assets 26,589 (5,328 ) 21,261 Net income attributable to common stockholders $ 75,513 $ (6,454 ) $ 69,059 Net income per share of common stock—basic: Continuing operations $ 0.16 $ (0.01 ) $ 0.15 Net income per share attributable to common stockholders—basic $ 0.16 $ (0.01 ) $ 0.15 Net income per share of common stock—diluted: Continuing operations $ 0.16 $ (0.01 ) $ 0.15 Net income per share attributable to common stockholders—diluted $ 0.16 $ (0.01 ) $ 0.15 Weighted average shares of common stock outstanding: Basic 457,263,526 — 457,263,526 Diluted 457,267,015 — 457,267,015 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 cash flows as previously reported, restatement adjustments and the consolidated statement of cash flows as restated for the six months ended June 30, 2016 (in thousands): As Previously Reported Restatement Adjustments As Restated Operating activities Net income attributable to common stockholders $ 75,513 $ (6,454 ) $ 69,059 Adjustments to reconcile net income attributable to common stockholders to net cash provided by operating activities: Depreciation and amortization 128,927 — 128,927 Impairments 24,863 1,126 25,989 Amortization of deferred financing costs 4,402 — 4,402 Payment to terminate interest rate swap (1,724 ) — (1,724 ) Derivative interest rate amortization and other interest rate swap losses 1,781 — 1,781 Amortization of debt discounts 1,507 — 1,507 Stock-based compensation expense 3,790 — 3,790 Gain on debt extinguishment (8,675 ) — (8,675 ) Debt extinguishment costs (10,625 ) — (10,625 ) Gains on dispositions of real estate and other assets, net (26,589 ) 5,328 (21,261 ) Non-cash revenue (11,954 ) — (11,954 ) Other 210 — 210 Changes in operating assets and liabilities: Deferred costs and other assets, net (179 ) — (179 ) Accounts payable, accrued expenses and other liabilities (3,620 ) — (3,620 ) Accrued restructuring charges (647 ) — (647 ) Net cash provided by operating activities 176,980 — 176,980 Investing activities Acquisitions of real estate (235,342 ) — (235,342 ) Capitalized real estate expenditures (5,978 ) — (5,978 ) Collections of principal on loans receivable and real estate assets under direct financing leases 16,783 — 16,783 Proceeds from dispositions of real estate and other assets 189,023 — 189,023 Transfers of net sales proceeds from restricted accounts pursuant to 1031 Exchanges 39,867 — 39,867 Transfers of net sales proceeds to Master Trust Release (3,862 ) — (3,862 ) Net cash provided by investing activities 491 — 491 Financing activities Borrowings under Revolving Credit Facilities 357,000 — 357,000 Repayments under Revolving Credit Facilities (357,000 ) — (357,000 ) Repayments under mortgages and notes payable (460,766 ) — (460,766 ) Borrowings under Term Loan 451,000 — 451,000 Repayments under Term Loan (406,000 ) — (406,000 ) Deferred financing costs (1,077 ) — (1,077 ) Proceeds from issuance of common stock, net of offering costs 401,953 — 401,953 Repurchase of shares of common stock (739 ) — (739 ) Dividends paid to equity owners (154,982 ) — (154,982 ) Transfers from reserve/escrow deposits with lenders 760 — 760 Net cash used in financing activities (169,851 ) — (169,851 ) Net increase in cash and cash equivalents 7,620 — 7,620 Cash and cash equivalents, beginning of period 21,790 — 21,790 Cash and cash equivalents, end of period $ 29,410 $ — $ 29,410 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 Payment to terminate interest rate swap (64 ) — (64 ) Derivative interest rate amortization and other interest rate swap gains (21 ) — (21 ) 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 Repurchase of shares of common stock (720 ) — (720 ) Dividends paid 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 |
