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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For The Quarterly Period Ended MARCH 31, 1994
or
___ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from ____ to ____
Commission file number 0-14022
MEDITRUST
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-6532031
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
197 First Avenue
Needham, Massachusetts 02194
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 433-6000
--------------
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 (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
As of March 31, 1994, there were outstanding 33,962,811 Shares of
Beneficial Interest, without par value.
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MEDITRUST
FORM 10-Q
INDEX
Part I. Financial Information Page (s)
--------
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1994 (unaudited)
and December 31, 1993 3
Consolidated Statements of Income for the three months ended
March 31, 1994 and 1993 (unaudited) 4
Consolidated Statements of Cash Flows for the three months ended
March 31, 1994 and 1993 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
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MEDITRUST
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1994 1993
--------- ------------
(Unaudited) (Audited)
(In thousands)
ASSETS
Real estate investments (Note 3):
Land $ 48,258 $ 48,258
Buildings and improvements, net of accumulated
depreciation of $77,253 and $73,294, respectively 560,609 564,344
Real estate mortgages 652,453 601,706
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Total real estate investments... 1,261,320 1,214,308
Other assets, net..................... 57,739 66,862
Short-term cash investments........... 27,651 16,306
Fees, interest and other receivables.. 14,718 12,925
---------- ----------
Total assets..................... $1,361,428 $1,310,401
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Indebtedness (Note 4):
Senior unsecured notes payable, net.. $ 284,831 $ 297,155
Senior mortgage notes payable, net... 31,855 31,804
Convertible debentures, net.......... 258,504 199,822
Bank notes payable, net.............. 50,375 69,375
Bonds and mortgages payable, net..... 59,888 60,089
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Total indebtedness 685,453 658,245
Deferred income....................... 14,279 14,468
Accrued expenses and other liabilities 48,340 51,893
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Total liabilities................ 748,072 724,606
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Commitments and contingencies (Note 3)
Shareholders' equity (Notes 5 and 6):
Shares of Beneficial Interest without par value:
Unlimited Shares authorized; 33,963
and 32,836 Shares issued and
outstanding in 1994 and 1993, respectively 697,680 666,220
Distributions in excess of net income (84,324) (80,425)
---------- ----------
Total shareholders' equity 613,356 585,795
---------- ----------
Total liabilities and shareholders' equity $1,361,428 $1,310,401
========== ==========
The accompanying notes, together with the Notes to the Consolidated
Financial Statements included in the Company's Form 10-K for the year ended
December 31, 1993, are an integral part of these financial statements.
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MEDITRUST
CONSOLIDATED STATEMENTS OF INCOME
for the three months ended March 31, 1994 and 1993
(Unaudited)
__________
1994 1993
---- ----
(Dollars in thousands
except per Share amounts)
Revenues:
Rental income.................... $21,314 $18,314
Interest income.................. 19,681 18,311
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Total revenues................. 40,995 36,625
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Expenses:
Interest expense................. 16,415 16,119
Depreciation and amortization.... 4,422 3,607
General and administrative expenses 2,453 2,061
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Total expenses................. 23,290 21,787
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Net income......................... $17,705 $14,838
======= =======
Net income per Share, based on 33,438,000
and 29,448,000 weighted average Shares
outstanding in 1994 and 1993, respectively $ .53 $ .50
======= =======
The accompanying notes, together with the Notes to the Consolidated
Financial Statements included in the Company's Form 10-K for the year ended
December 31, 1993, are an integral part of these financial statements.
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MEDITRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1994 and 1993
(Unaudited)
1994 1993
---- ----
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................. $17,705 $ 14,838
Depreciation and amortization 5,030 5,048
Other items, net............ 315 (274)
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CASH FLOWS FROM OPERATING ACTIVITIES
AVAILABLE FOR DISTRIBUTION.. 23,050 19,612
Net change in other assets and
liabilities 649 310
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Net cash provided by operating
activities 23,699 19,922
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity offering 100,374
Equity offering costs....... (4,937)
Proceeds from warrant conversions
and stock options 1,954 4,386
Proceeds from convertible
debenture offering 90,000 92,120
Proceeds from bank notes payable 69,000 20,000
Debt issuance costs......... (2,438) (3,091)
Payment of bank notes payable (88,000) (95,000)
Payment of senior unsecured notes (12,500)
Principal payments on bonds and
mortgages payable (256) (177)
Distributions to shareholders (21,604) (17,235)
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Net cash provided by financing
activities 36,156 96,440
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CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate mortgages and
development financing..... (51,723) (28,112)
Additions to real estate.... (223) (28)
Prepayment proceeds and principal
payments on real estate
mortgages and note 987 1,598
Working capital advances.... (9,815)
Collection of receivables and
repayment of working
capital advances.. 12,264
Increase in committed funds. (85,780)
Net cash used in investing
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activities (48,510) (112,322)
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Net increase in short-term
cash investments 11,345 4,040
Short-term cash investments at:
Beginning of period....... 16,306 24,858
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End of period............. $27,651 $ 28,898
======= ========
Supplemental disclosure of cash flow
information (see Note 2).
The accompanying notes, together with the Notes to the Consolidated
Financial Statements included in the Company's Form 10-K for the year ended
December 31, 1993, are an integral part of these financial statements.
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MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
------------------------------------------
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted in this Form
10-Q in compliance with the Rules and Regulations of the Securities
and Exchange Commission. However, in the opinion of Meditrust
("the Company"), the disclosures contained in this Form 10-Q are
adequate to make the information presented not misleading. See
Report on Form 10-K for the year ended December 31, 1993 for
additional information relevant to significant accounting policies
followed by the Company.
Basis of Presentation
---------------------
In the opinion of the Company, the accompanying unaudited
consolidated financial statements reflect all adjustments
(consisting of normal recurring accruals) necessary to present
fairly the financial position as of March 31, 1994 and the results
of operations and cash flows for each of the three-month periods
ended March 31, 1994 and 1993. The results of operations for the
three-month period ended March 31, 1994 are not necessarily
indicative of the results which may be expected for the entire
year. Certain 1993 amounts have been reclassified to conform to
the 1994 presentation.
2. Supplemental Cash Flow Information
----------------------------------
Three Months Ended
March 31,
--------------------
1994 1993
---- ----
(Dollars in thousands)
Interest paid during the period..... $16,344 $11,372
Non-cash investing and financing transactions:
Acquisition and lease of real estate:
Value of real estate acquired.... 10,000
Reduction of real estate mortgages
net of participation reduction (7,041)
Issuance of demand note payable
related to participation reduction (2,959)
Shares issued for conversion of debentures 30,106 21,213
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MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
3. Real Estate Investments
-----------------------
During the three months ended March 31, 1994, the Company provided
permanent mortgage financing of $30,300,000 for 20 long-term care
facilities located in Texas and refinanced for $50,500,000 an
existing mortgage with a balance of $32,836,000 secured by 28
long-term care facilities located in Illinois and refinanced for
$5,765,000 an existing mortgage with a balance of $4,246,000
secured by a long-term care facility in Connecticut. In addition,
the Company also provided net development financing of $2,240,000
resulting in aggregate funding of $19,822,000 through March 31,
1994 for seven long-term care facilities, three medical office
buildings under construction and for additions to existing
long-term care facilities.
Also during the quarter ended March 31, 1994, the Company funded
additions of $223,000 to three rehabilitation facilities located in
New York and received principal payments on real estate mortgages
of $987,000.
At March 31, 1994, the Company was committed to providing
additional financings of approximately $54,700,000 relating to
seven long-term care facilities and three medical office buildings
currently under construction and additional funding for additions
to four existing long-term care facilities in the real estate
portfolio.
4. Indebtedness and Shareholders' Equity
-------------------------------------
In March 1994, the Company issued $90,000,000 of 7 1/2% convertible
debentures due 2001 which are convertible into Shares of the
Company at $36.18 per Share. The net proceeds from this debenture
issuance were used to repay $88,000,000 outstanding under its
unsecured credit facilities. During the quarter ended March 31,
1994, the Company also paid a principal installment in the amount
of $12,500,000 relating to its senior unsecured notes and borrowed
$69,000,000 from its unsecured credit facilities.
During the three months ended March 31, 1994, $14,500,000 of
principal amount of 9% convertible debentures were converted into
537,028 Shares and $15,606,000 of principal amount of 7%
convertible debentures were converted into 509,580 Shares.
The Company has a total of $130,000,000 in unsecured credit
facilities bearing interest at the lenders' prime rate or LIBOR
plus 1.5%, of which $104,000,000 is available at March 31, 1994.
Fees associated with the facilities are .5% per annum of the total
unused commitment.
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MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
5. Distributions Paid to Shareholders
----------------------------------
On February 15, 1994 the Company paid a dividend of $.6475 per
Share to shareholders of record on January 31, 1994. This dividend
related to the period from October 1, 1993 through December 31,
1993.
6. Subsequent Event
----------------
In April 1994, the Company declared a dividend of $.6525 per Share
payable on May 13, 1994 to shareholders of record on April 29,
1994. This dividend relates to the period from January 1, 1994
through March 31, 1994.
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MEDITRUST
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
Revenues for the three months ended March 31, 1994 were $40,995,000
compared to $36,625,000 for the three months ended March 31, 1993, an
increase of $4,370,000 or 11.9%. Revenue growth resulted from
increased rental income of $3,000,000 and increased interest income of
$1,370,000 as a result of additional real estate investments made
during the past twelve months.
For the three months ended March 31, 1994, total expenses increased by
$1,503,000. Interest expense increased by $296,000 and resulted from a
slightly higher level of debt outstanding during the quarter ended
March 31, 1994 than in the quarter ended March 31, 1993. Depreciation
and amortization increased by $815,000 primarily due to depreciation of
the additional real estate investments made during the previous
twelve-month period. General and administrative expenses increased by
$392,000 principally attributable due to a higher level of operating
expenses.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As of March 31, 1994, the Company's gross real estate investments
totaled approximately $1.3 billion including 182 long-term care
facilities, 20 rehabilitation hospitals, two alcohol and substance
abuse treatment facilities, six psychiatric hospitals, four retirement
living facilities and three medical office buildings.
The Company had shareholders' equity of $613,356,000 and a debt to
equity ratio of approximately 1.1 to 1.0 as of March 31, 1994.
The Company provides funding for its investments through a combination
of long-term and short-term financing including both debt and equity.
The Company obtains long-term financing through the issuance of Shares
, the issuance of convertible debentures, the issuance of long-term
secured and unsecured notes and the assumption of mortgage notes. The
Company obtains short-term financing through the use of bank lines of
credit which are replaced with long-term financing as appropriate. It
is the Company's objective to match mortgage and lease terms with the
terms of its borrowings. The Company seeks to maintain an appropriate
spread between its borrowing costs and the rate of return on its
investments. When development mortgage loans convert to sale/leaseback
transactions or permanent mortgage loans, the base rent or interest
rate, as appropriate, is fixed at the time of such conversion.
During the three-month period ended March 31, 1994, the Company issued
$90,000,000 of 7 1/2% convertible debentures due 2001. The aggregate
net proceeds to the Company from this offering amounted to
approximately $88,000,000, all of which was used to repay amounts
outstanding under the unsecured credit facilities. Also during the
quarter ended March 31, 1994, the Company borrowed $69,000,000 under
its unsecured credit facilities and paid a principal installment of
$12,500,000 on its senior unsecured notes.
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MEDITRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, Continued
As of March 31, 1994, the Company's outstanding commitments for
additional financing totaled approximately $54,700,000 for the
completion of ten facilities under construction and additional funding
for additions to four facilities in the real estate portfolio. Under
the Company's unsecured credit facilities, a total of $104,000,0000 was
available at March 31, 1994.
The Company believes that its various sources of capital are adequate
to finance its operations as well as pending property acquisitions,
mortgage financings, funding of existing development loans and future
dividends. For the balance of 1994, however, in the event that the
Company identifies appropriate investment opportunities, the Company
may raise additional capital through the sale of Shares of Beneficial
Interest or by the issuance of additional long-term debt.
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MEDITRUST
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit
No. Title Method of Filing
- ------- ----- ----------------
4.1 Form of Indenture dated March 9,
1994 between The Company and
Shawmut Bank, N.A. as trustee Incorporated by reference to Exhibit 4 to the Registration
Statement on Form S-3 (File No. 33-50835)
4.2 Form of 7 1/2% Convertible
Debenture due 2001 Included in Exhibit 4.1
11 Statement Regarding Computation
of Per Share Earnings Filed herewith
(b) Reports on Form 8-K
During the quarter ended March 31, 1994, the Company filed a Form 8-K
dated January 27, 1994 in which the Company reported it had entered into
a Consent Agreement with Sun Healthcare Group, Inc. ("Sun") pursuant to
a proposed merger of The Mediplex Group, Inc. and Sun and a Form 8-K
dated March 3, 1994 in which the Company reported certain financial
results for the three-month period and the year ended December 31, 1993.
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.
MEDITRUST
Date: April 26, 1994 By: /s/ Lisa M. Pavelka
---------------------------------------------
Lisa M. Pavelka, Vice President and Treasurer
(and Chief Accounting Officer)
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MEDITRUST
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(000 omitted except for per share amounts)
Quarter ended
March 31,
--------------------
1994 1993
---- ----
Primary
Weighted average shares 33,438 29,448
Dilutive effect of:
Stock options 103 129
Warrants 49 102
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Weighted average number of shares and
equivalent shares outstanding 33,590 29,679
======== =======
Net income $17,705 $14,838
======== =======
Net income per share (A) $ 0.53 $ 0.50
======== =======
<FN>
(A) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of
APB Opinion No. 15 because it results in dilution of less than 3%.
Fully Diluted
Weighted average number of shares used
in primary calculation 33,590 29,679
Assumed conversion of debentures 6,652 4,883
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Fully diluted weighted average shares
and equivalent shares outstanding 40,242 34,562
======= =======
Net income $17,705 $14,838
Interest and debt amortization on assumed
conversion of debentures 4,259 3,724
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Adjusted net income for fully diluted calculation $21,964 $18,562
======= =======
Net income per share (B) $ 0.55 $0.54
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<FN>
(B) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion
No. 15 because it produces anti-dilutive results.
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