SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 1996
______________________________
Healthcare Realty Trust Incorporated
(Exact Name of Registrant as Specified in Its Charter)
Maryland 1-11852 62-1507028
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification
Incorporation) Number)
3310 West End Avenue
Fourth Floor
Nashville,Tennessee 37203
(Address of Principal Executive Offices) (Zip Code)
(615) 269-8175
(Registrant's Telephone Number,including Area Code)
Not Applicable
(Former Name)
Item 7. Financial Statements, Pro Forma Information and Exhibits
The Registrant hereby amends Item 7 to include the financial statements
required by Form 8-K for the acquisition reported on in Item 2 of the Current
Report filed on November 15, 1996.
(a) Financial Statements of Businesses Acquired
An audited statement of revenue and certain expenses of the properties of
Lewis-Gale Building Corporation for the year ended June 30, 1996 is filed as a
part of this report. These properties were described in Item 2 of Form 8-K filed
by the Registrant on November 15, 1996.
An unaudited statement of revenue and certain expenses of the properties of
Lewis-Gale Building Corporation for the three months ended September 30, 1996 is
filed as a part of this report. These properties were described in Item 2 of
Form 8-K filed by the Registrant on November 15, 1996.
(b) Pro Forma Information
An unaudited condensed consolidated balance sheet as of September 30, 1996
that includes the Registrants properties described in Item 2 of Form 8-K filed
on November 15, 1996 is filed as a part of this report.
Unaudited condensed consolidated statements of income for the nine months
ended September 30, 1996 and the year ended December 31, 1995 that include the
Registrants properties described in Item 2 of Form 8-K filed on November 15,
1996 are filed as parts of this report.
(c) Exhibits
Exhibit Index
EXHIBIT NO. DESCRIPTION PAGE
23 Consent of Brown, Edwards & Company, L.L.P. EX1
2
INDEPENDENT AUDITORS REPORT
To the Stockholders
Healthcare Realty Trust Incorporated
Nashville, Tennessee
We have audited the accompanying statement of revenue and certain expenses
of Lewis-Gale Building Corporation as described in Note 1 for the year ended
June 30, 1996. This statement of revenue and certain expenses is the
responsibility of Lewis-Gale Building Corporations management. Our
responsibility is to express an opinion on this statement of revenue and certain
expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenue and certain expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenue and
certain expenses. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the statement of revenue and certain expenses. We
believe that our audit of the statement of revenue and certain expenses provides
a reasonable basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K/A of Healthcare Realty Trust
Incorporated and is not intended to be a complete presentation of Lewis-Gale
Building Corporations revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of Lewis-Gale Building Corporation for the year ended June 30, 1996 in
conformity with generally accepted accounting principles.
/s/ BROWN, EDWARDS & COMPANY, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
Roanoke, Virginia
August 9, 1996
3
LEWIS-GALE BUILDING CORPORATION
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
Year Ended June 30, 1996 and Period from
July 1, 1996 to September 30, 1996
PERIOD FROM
JULY 1, 1996
TO SEPTEMBER
YEAR ENDED 30, 1996
JUNE 30, 1996 (UNAUDITED)
-------------------- --------------------
REVENUE:
Rental income:
Lewis-Gale Clinic, Inc., a related party $ 3,848,172 $ 962,043
Others 866,075 242,356
Investment income 37,902
46,647
-------------------- --------------------
Total revenue 4,760,894 1,242,301
-------------------- --------------------
CERTAIN EXPENSES:
Maintenance 118,919 26,730
Taxes and licenses 286,993 35,870
Utilities 119,776 23,959
Other 1,934
1,347
-------------------- --------------------
Total certain expenses 527,035 88,493
-------------------- --------------------
Revenue in excess of certain expenses $ 4,233,859 $ 1,153,808
==================== ====================
See accompanying notes.
4
LEWIS-GALE BUILDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying statements of revenue and certain expenses relate to the
operations of Lewis-Gale Building Corporation (the Corporation), which merged
with and into HRT of Roanoke, Inc., a Virginia corporation and wholly-owned
subsidiary of Healthcare Realty Trust Incorporated, on November 15, 1996. The
statements were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. The statements are not
representative of the actual operations of Lewis-Gale Building Corporation for
the periods presented nor indicative of future operations as certain expenses,
primarily consisting of interest expense, depreciation, management fees,
professional services and income taxes, have been excluded.
Revenue Recognition
The Corporation leases real property to various lessees, primarily to
Lewis-Gale Clinic, Inc., and recognizes minimum base rentals as revenue over the
terms of the operating leases. Most leases require the lessor to pay real estate
taxes and the lessee to pay all other operating costs.
Capitalization of Construction Costs
Costs of construction, interest and property taxes are capitalized in
connection with major construction. The construction period interest and
property taxes are recorded as part of the cost of the asset to which they
relate.
Interim Statement
The interim financial data for the period from July 1, 1996 to September
30, 1996 is unaudited; however, in the opinion of the Corporations management,
the interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results of the interim
period. The results of the period presented are not necessarily indicative of
the results for the full year.
5
LEWIS-GALE BUILDING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
2. FUTURE MINIMUM RENTAL INCOME
The Corporation leases real property to various lessees, primarily
Lewis-Gale Clinic, Inc. All leases with Lewis-Gale Clinic, Inc. are for a term
of 12 months or less. Future minimum lease payments required under all
noncancelable operating leases as of June 30, 1996 are as follows:
3. SUBSEQUENT EVENTS
In November 1996, the Corporation paid a dividend of $5.8 million to its
shareholders. This dividend completely distributed all current and accumulated
earnings and profits. Subsequent to this distribution, the Corporation merged
with and into HRT of Roanoke, Inc., a Virginia corporation and wholly-owned
subsidiary of Healthcare Realty Trust Incorporated, in a tax-free
reorganization.
Also in November 1996, Lewis-Gale Clinic, Inc., the Corporations primary
lessee, sold its operating assets to PhyCor, Inc., which succeeded to its
predecessors leases with the Corporation.
6
LEWIS-GALE BUILDING CORPORATION
NOTES TO FINANCIAL STATEMENTS CONTINUED
JUNE 30, 1996
4. PRO FORMA TAXABLE OPERATING RESULTS, FUNDS FROM OPERATIONS, AND
CASH AVAILABLE FOR DISTRIBUTION UNAUDITED
The following pro forma table reflects the taxable operating results and
funds from operations of the properties of Lewis-Gale Building Corporation for
the twelve months ended June 30, 1996 including such adjustments as can be
factually supported. Funds from operations does not represent cash generated
from operating activities in accordance with generally accepted accounting
principles, is not necessarily indicative of cash available to fund cash needs
and should not be considered as an alternative to net income as an indicator of
the operating performance of Lewis-Gale Building Corporation or as an
alternative to cash flow as a measure of liquidity. This statement does not
purport to forecast actual operating results for any period in the future.
Revenues in excess of certain expenses $ 4,233,859
Less: Estimated depreciation 1,464,873
Interest expense 1,471,403
--------------
Pro forma taxable operating results $ 1,297,583
Add: Depreciation not requiring the outlay of funds 1,464,873
---------------
Pro forma funds from operations $ 2,762,456
Less: Estimated capital expenditures 550,000
----------------
Pro forma cash available for distribution $ 2,212,456
===============
Tax depreciation for buildings is computed using various accelerated and
straight-line methods over statutory lives ranging from 14 to 45 years.
Estimated capital expenditures is based upon actual capital expenditures for
existing properties during the twelve months ended June 30, 1996.
7
HEALTHCARE REALTY TRUST INCORPORATED
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following pro forma financial statements are derived from the
consolidated financial statements of Healthcare Realty Trust Incorporated (the
Historical HR columns) and the financial statements of Lewis-Gale Building
Corporation (the Historical Lewis-Gale columns) adjusted to give effect to the
merger of Lewis-Gale Building Corporation (the Merger) with and into HRT of
Roanoke, Inc., a Virginia corporation and wholly-owned subsidiary of Healthcare
Realty Trust Incorporated (collectively with this and other wholly-owned
subsidiaries, the Company).
The pro forma balance sheet as of September 30, 1996 gives effect to the
Merger as if such had occurred on that date. The pro forma statements of income
for the nine months ended September 30, 1996 and the year ended December 31,
1995 give effect to the Merger, as if such had occurred, and as if the
respective Clinic Leases and Non-Clinic Leases (as defined in Item 2 of Form 8-K
filed by the Company on November 15, 1996 and referred to hereinafter as the
Leases) had been in effect, on January 1, 1995.
The pro forma financial statements are otherwise based upon available
information and assumptions that management believes are reasonable. The pro
forma balance sheet does not purport to represent what the Companys financial
position would actually have been on September 30, 1996, nor do the pro forma
statements of income purport to represent what the Companys results of
operations would actually have been for the nine months ended September 30, 1996
or for the year ended December 31, 1995, if the Merger had occurred on January
1, 1995. The pro forma financial statements do not otherwise purport to project
the Companys financial position as of any future date or the Companys results
of operations for any future period. Differences would result from, among other
things, changes in interest rates.
The pro forma financial statements should be read in conjunction with the
financial statements of the Company and related notes thereto, and other
financial information pertaining to the Company, including information included
herein.
8
HEALTHCARE REALTY TRUST INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
Historical Historical Pro Forma
HR Lewis-Gale Combined Adjustments Pro Forma
--------------- --------------- --------------- ---------------- ---------------
ASSETS
Real estate properties:
Land $ 43,649,286 $ 2,040,539 $ 45,689,825 $ 1,768,479 (1) $ 47,458,304
Buildings and improvements 291,199,064 34,777,664 325,976,728 5,476,403 (1) 331,453,131
Personal property 3,042,853 3,042,853 3,042,853
Construction in progress 39,716,995 39,716,995 0 (1) 39,716,995
--------------- --------------- --------------- ---------------- ---------------
377,608,198 36,818,203 414,426,401 7,244,882 421,671,283
Less accumulated depreciation (20,731,105) (9,630,035) (30,361,140) 9,630,035 (1) (20,731,105)
--------------- --------------- --------------- ---------------- ---------------
Real estate properties, net 356,877,093 27,188,168 384,065,261 16,874,917 400,940,178
Cash and cash equivalents 1,440,371 47,973 1,488,344 (42,777) (1) 1,445,567
Restricted cash 597,000 597,000 597,000
Receivables 1,499,060 57,959 1,557,019 381 (1) 1,557,400
Deferred costs, net 1,246,803 238,812 1,485,615 (238,812) (1) 1,246,803
Other assets 6,740,109 72,921 6,813,030 (449,867) (1) 6,363,163
=============== =============== =============== ================ ===============
Total assets $368,400,436 $ 27,605,833 $396,006,269 $ 16,143,842 $412,150,111
=============== =============== =============== ================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and bonds payable 129,155,000 19,418,773 148,573,773 5,232,333 (1) 153,806,106
Security deposits payable 4,172,490 4,172,490 4,172,490
Accounts payable and accrued liabilities 3,255,730 2,207,103 5,462,833 816,666 (1) 6,279,499
Deferred income 689,753 689,753 689,753
Commitments and contingencies 0 0 0
--------------- --------------- --------------- ---------------- ---------------
Total liabilities 137,272,973 21,625,876 158,898,849 6,048,999 164,947,848
--------------- --------------- --------------- ---------------- ---------------
Stockholders' equity:
Preferred stock, $.01 par value 0 0 0
Common stock, $.01 par value 132,012 277,650 409,662 (270,773) (1) 138,889
Additional paid-in capital 248,451,336 1,397,614 249,848,950 14,670,309 (1) 264,519,259
Deferred compensation (4,663,927) (4,663,927) (4,663,927)
Cumulative net income 52,547,589 4,304,693 56,852,282 (4,304,693) (1) 52,547,589
Cumulative dividends (65,339,547) (65,339,547) (65,339,547)
--------------- --------------- --------------- ---------------- ---------------
Total stockholders' equity 231,127,463 5,979,957 237,107,420 10,094,843 247,202,263
--------------- --------------- --------------- ---------------- ---------------
Total liabilities and stockholders' $368,400,436 $ 27,605,833 $396,006,269 $ 16,143,842 $412,150,111
equity
=============== =============== =============== ================ ===============
9
HEALTHCARE REALTY TRUST INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996
Historical Historical Pro Forma
HR Lewis-Gale Combined Adjustments Pro Forma
--------------- --------------- --------------- ---------------- ---------------
REVENUES:
Gross rental income $ 0 $ 0 $ 0 $ 5,176,594 (2) $ 5,176,594
Net rental income 26,020,223 3,553,917 29,574,140 (3,553,917) (2) 26,020,223
Management fees 881,938 881,938 0 881,938
Interest and other income 725,307 46,635 771,942 (46,635) (3) 725,307
--------------- --------------- -------------- --------------- --------------
--------------- --------------- --------------- ---------------- ---------------
27,627,468 3,600,552 31,228,020 1,576,042 32,804,062
--------------- --------------- --------------- ---------------- ---------------
EXPENSES:
Property operating 0 0 0 1,428,931 (2) 1,428,931
General and administrative 1,566,186 1,087,129 2,653,315 (1,087,129) (4) 1,566,186
Interest 4,946,790 1,036,698 5,983,488 164,669 (5) 6,148,157
Depreciation 6,239,214 1,057,004 7,296,218 (283,994) (6) 7,012,224
Amortization 250,927 250,927 0 250,927
--------------- --------------- --------------- ---------------- ---------------
13,003,117 3,180,831 16,183,948 222,477 16,406,425
--------------- --------------- --------------- ---------------- ---------------
NET INCOME $ 14,624,351 $ 419,721 $ 15,044,072 $ 1,353,565 $ 16,397,637
=============== =============== =============== ================ ===============
NET INCOME PER SHARE $ 1.11 $ 1.97 $ 1.18
=============== ================ ===============
FUNDS FROM OPERATIONS $ 20,602,529 $ 1,476,725 $ 22,079,254 $ 1,069,571 (7) $ 23,148,825
=============== =============== =============== ================ ===============
FUNDS FROM OPERATIONS PER SHARE $ 1.57 $ 1.67
=============== ===============
AVERAGE SHARES OUTSTANDING 13,155,689 13,155,689 687,717 (8) 13,843,406
=============== =============== ================ ===============
10
HEALTHCARE REALTY TRUST INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
Historical Historical Pro Forma
HR Lewis-Gale Combined Adjustments Pro Forma
--------------- -------------- -------------- --------------- ---------------
REVENUES:
Gross rental income $ 0 $ 0 $ 0 $ 6,902,126 (2) $ 6,902,126
Net rental income 32,402,507 4,652,454 37,054,961 (4,652,454) (2) 32,402,507
Management fees 465,766 465,766 0 465,766
Interest and other income 492,888 53,664 546,552 (53,664) (3) 492,888
--------------- --------------- --------------- ---------------- ---------------
33,361,161 4,706,118 38,067,279 2,196,008 40,263,287
--------------- --------------- --------------- ---------------- ---------------
EXPENSES:
Property operating 0 0 0 1,905,242 (2) 1,905,242
General and administrative 2,143,505 1,420,183 3,563,688 (1,420,183) (4) 2,143,505
Interest 5,083,172 1,547,953 6,631,125 32,282 (5) 6,663,407
Depreciation 7,567,060 1,226,246 8,793,306 (195,566) (6) 8,597,740
Amortization 309,808 309,808 0 309,808
--------------- --------------- --------------- ---------------- ---------------
15,103,545 4,194,382 19,297,927 321,775 19,619,702
--------------- --------------- --------------- ---------------- ---------------
NET INCOME $ 18,257,616 $ 511,736 $ 18,769,352 $ 1,874,233 $ 20,643,585
=============== =============== =============== ================ ===============
NET INCOME PER SHARE $ 1.41 $ 2.73 $ 1.51
=============== ================ ===============
FUNDS FROM OPERATIONS $ 25,490,401 $ 1,737,982 $ 27,228,383 $ 1,678,667 (7) $ 28,907,050
=============== =============== =============== ================ ===============
FUNDS FROM OPERATIONS PER SHARE $ 1.97 $ 2.12
=============== ===============
AVERAGE SHARES OUTSTANDING 12,967,132 12,967,132 687,717 (8) 13,654,849
=============== =============== ================ ===============
11
HEALTHCARE REALTY TRUST INCORPORATED
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
BALANCE SHEET
(1) Adjustment reflects the Merger, including the acquisition of the
Lewis-Gale properties, the assumption of bank and other indebtedness, and the
issuance of 687,717 Shares of Common Stock in connection therewith, as follows:
Lewis-Gale Assets Purchase Price & Other Costs
Land $ 3,809,018 Bank and other indebtedness $ 24,651,106
Buildings 40,254,067 Accounts payable and
Cash and cash equivalents 5,196 accrued liabilities 3,023,769
Accounts receivable 58,340 Common Stock 16,074,800
Other assets 106,382 Acquisition costs 483,328
============== ================
$ 44,233,003 $ 44,233 003
============== ================
STATEMENTS OF INCOME
(2) Adjustments reflect rental income and expenses of the Lewis-Gale
properties calculated under the terms of the Leases, as if such had been in
effect on January 1, 1995.
(3) Adjustment reflects the reduction of interest and other income to
eliminate investment earnings on funds invested by Lewis-Gale Building
Corporation which the Company used to reduce indebtedness.
(4) Adjustment to eliminate the cost of general and administrative
functions performed by Lewis-Gale Building Corporation which duplicate functions
performed by the Company, the cost of which is already reflected in the
Companys historical results of operations.
(5) Increase interest expense due to increased levels of outstanding
indebtedness.
(6) Adjustment to reflect depreciation of the Lewis-Gale properties using
the straight-line method over a 39-year period.
(7) Adjustment to reflect the effect of the Merger upon funds from
operations.
(8) Adjustment to reflect the issuance of 687,717 Shares of Common Stock in
connection with the Merger, as if such Shares were issued on January 1, 1995.
12
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 hereunto duly authorized.
HEALTHCARE REALTY TRUST INCORPORATED
By: /s/ ROGER O. WEST
Roger O. West
Executive Vice President and General Counsel
Date: January 10, 1997
13