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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, 1995
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 Heights, Massachusetts 02194
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 433-6000
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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, 1995, there were outstanding 48,693,576 shares of beneficial
interest, without par value.
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MEDITRUST
FORM 10-Q
INDEX
Page (s)
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Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1995 (unaudited)
and December 31, 1994 3
Consolidated Statements of Income for the three months ended
March 31, 1995 and 1994 (unaudited) 4
Consolidated Statements of Cash Flows for the three months ended
March 31, 1995 and 1994 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
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MEDITRUST
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
March 31 December 31
1995 1994
-------- -----------
(Unaudited) (Audited)
(In thousands)
ASSETS
Real estate investments (Note 3):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,060 $ 42,060
Buildings and improvements, net of
accumulated depreciation of $69,792
and $65,918, respectively . . . . . . . . . . . . . . 580,231 518,428
Real estate mortgages . . . . . . . . . . . . . . . . . . 968,865 923,741
----------- -----------
Total real estate investments . . . . . . . . . . . . 1,591,156 1,484,229
Other assets, net . . . . . . . . . . . . . . . . . . . . . . 56,824 54,246
Cash and cash equivalents . . . . . . . . . . . . . . . . . . 44,224 39,937
Fees, interest and other receivables . . . . . . . . . . . . 22,123 16,718
----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . $ 1,714,327 $ 1,595,130
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Indebtedness (Note 4):
Senior unsecured notes, net . . . . . . . . . . . . . . . $ 273,044 $ 285,360
Senior mortgage notes, net . . . . . . . . . . . . . . . . 21,257 21,206
Convertible debentures, net . . . . . . . . . . . . . . . 222,500 231,277
Bank notes payable, net . . . . . . . . . . . . . . . . . 49,747 168,645
Bonds and mortgages payable, net . . . . . . . . . . . . . 59,047 59,264
----------- -----------
Total indebtedness . . . . . . . . . . . . . . . . . 625,595 765,752
Deferred income . . . . . . . . . . . . . . . . . . . . . . . 12,704 12,559
Accrued expenses and other liabilities . . . . . . . . . . . 48,866 46,672
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Total liabilities . . . . . . . . . . . . . . . . . 687,165 824,983
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Commitments and contingencies (Note 3)
Shareholders' equity (Notes 4, 5 and 6):
Shares of beneficial interest without par value:
Unlimited shares authorized: 48,694
and 39,619 shares issued and
outstanding in 1995 and 1994, respectively . . . . . 1,119,456 860,071
Distributions in excess of net income . . . . . . . . . (92,294) (89,924)
Total shareholders' equity . . . . . . . . . . . . . . . 1,027,162 770,147
----------- -----------
Total liabilities and shareholders' equity . . . . . $ 1,714,327 $ 1,595,130
=========== ===========
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, 1994, are an integral part of these financial statements.
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MEDITRUST
CONSOLIDATED STATEMENTS OF INCOME
for the three months ended March 31,
1995 and 1994 (Unaudited)
__________
1995 1994
---- ----
(In thousands, except per Share amounts)
Revenues:
Rental income . . . . . . . . . . . . . . . . . . . . $ 21,056 $ 21,314
Interest income . . . . . . . . . . . . . . . . . . . 27,877 19,681
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Total revenues . . . . . . . . . . . . . . . . . . 48,933 40,995
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Expenses:
Interest . . . . . . . . . . . . . . . . . . . . . . 18,474 16,415
Depreciation and amortization . . . . . . . . . . . . 4,343 4,422
General and administrative . . . . . . . . . . . . . 1,933 2,453
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Total expenses . . . . . . . . . . . . . . . . . . 24,750 23,290
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Net income . . . . . . . . . . . . . . . . . . . . . . . $ 24,183 $ 17,705
======== =========
Net income per share, based on 40,594
and 33,438 weighted average Shares
outstanding in 1995 and 1994, respectively . . . . . $ .60 $ .53
======== ==========
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, 1994, 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, 1995 and 1994
(Unaudited)
1995 1994
---- ----
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . $ 24,183 $ 17,705
Depreciation of real estate . . . . . . . . . 3,874 3,958
Goodwill amortization . . . . . . . . . . . . 389 389
Shares issued for compensation . . . . . . . 202 300
Other depreciation and amortization and other items, net 794 698
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
AVAILABLE FOR DISTRIBUTION . . . . . . . . . 29,442 23,050
Net change in other assets and liabilities . (3,937) 649
-------- --------
Net cash provided by operating activities . . 25,505 23,699
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity offering . . . . . . . . 263,594
Proceeds from convertible debenture offering 90,000
Proceeds from bank notes . . . . . . . . . . 161,700 69,000
Proceeds from stock options . . . . . . . . . 48 1,954
Equity offering and debt issuance costs . . . (13,594) (2,438)
Repayment of bank notes . . . . . . . . . . . (280,700) (88,000)
Repayment of senior unsecured notes . . . . . (12,500) (12,500)
Principal payments on bonds and mortgages payable (223) (256)
Distributions to shareholders . . . . . . . . (26,553) (21,604)
-------- -------
Net cash provided by financing activities 91,772 36,156
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CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate mortgages and
development funding . . . . . . . . . . . (46,665) (51,723)
Additions of real estate . . . . . . . . . . (65,677) (223)
Principal payments on real estate mortgages . 1,537 987
Working capital advances . . . . . . . . . . (10,865) (9,815)
Collection of receivables and repayment of
working capital advances . . . . . . . . . 8,680 12,264
--------- --------
Net cash used in investing activities . . (112,990) (48,510)
-------- -------
Net increase in cash and cash equivalents 4,287 11,345
Cash and cash equivalents at:
Beginning of period . . . . . . . . . . . 39,937 16,306
--------- --------
End of period . . . . . . . . . . . . . . $ 44,224 $ 27,651
========= ========
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, 1994, 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, 1994 (and the Report on Form 8-K dated
March 8, 1995 incorporated by reference therein) 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, 1995 and the results of operations and cash flows for
each of the three-month periods ended March 31, 1995 and 1994. The
results of operations for the three-month period ended March 31, 1995
are not necessarily indicative of the results which may be expected for
the entire year. Certain 1994 amounts have been reclassified to conform
to the 1995 presentation.
2. Supplemental Cash Flow Information
----------------------------------
Three Months Ended
March 31,
-----------------------
1995 1994
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(Dollars in thousands)
Interest paid during the period . . . . . . . . . . . . . $14,809 $ 16,344
Non-cash financing transaction:
Shares issued for conversion of debentures . . . . . . 9,129 30,106
3. Real Estate Investments
-----------------------
During the three months ended March 31, 1995, the Company provided
permanent mortgage financing of $34,898,000 for five long-term care
facilities and two retirement living facilities located in Kansas,
Kentucky, Massachusetts, Nevada, Tennessee, Utah and Washington. In
addition, the Company also provided net development financing of
$11,767,000 for four long-term care facilities and six medical office
buildings under construction. During the three months ended March 31,
1995, the Company received principal payments on real estate mortgages
of $1,537,000.
During the three months ended March 31, 1995, the Company acquired for
$65,650,000 an acute care hospital located in Arizona and provided
$27,000 for an addition to a facility currently owned by the Company.
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MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
At March 31, 1995, the Company was committed to providing additional
financings of approximately $19,000,000 relating to four long-term care
facilities and six medical office buildings currently under
construction.
4. Indebtedness and Shareholders' Equity
-------------------------------------
In March 1995, the Company completed the sale of 8,750,000 shares at
$30.125 per Share. The net proceeds to the Company from this offering
were used to repay short-term borrowings and for investments in
additional health care facilities.
During the three months ended March 31, 1995, $4,160,000 of principal
amount of 9% convertible debentures were converted into 154,064 Shares
and $4,969,000 of principal amount of 7% convertible debentures were
converted into 162,250 Shares.
The Company has a total of $205,000,000 in unsecured credit facilities
bearing interest at the lenders' prime rate or LIBOR plus 1.0% to 1.5%
of which approximately $149,000,000 is available at March 31, 1995. In
January 1995, the Company entered into an 8% interest rate cap for
$100,000,000 of its unsecured credit facilities.
5. Distributions Paid to Shareholders
----------------------------------
On February 15, 1995, the Company paid a dividend of $.6675 per Share to
shareholders of record on January 31, 1995. This dividend related to
the period from October 1, 1994 through December 31, 1994.
6. Subsequent Events
-----------------
On April 4, 1995, the Company completed the sale of an additional
500,000 shares at $30.125 per Share. The net proceeds to the Company
from this offering were used to repay short-term borrowings and for
investments in additional health care facilities.
On April 11, 1995, the Company declared a dividend of $.6725 per Share
payable on May 15, 1995 to shareholders of record on April 28, 1995.
This dividend relates to the period from January 1, 1995 through
March 31, 1995.
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MEDITRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
Revenues for the three months ended March 31, 1995 were $48,933,000 compared to
$40,995,000 for the three months ended March 31, 1994, an increase of
$7,938,000 or 19%. Rental income decreased by $258,000 and resulted primarily
from the termination of leases in June 1994 on three facilities which became
mortgage investments. Interest income increased by $8,196,000 and resulted
from additional real estate investments made during the past twelve months.
For the three months ended March 31, 1995, total expenses increased by
$1,460,000. Interest expense increased by $2,059,000 and resulted from the
issuance of $90,000,000 of 7 1/2% debentures in March 1994 and a higher level
of short-term borrowings during the 1995 period and was partially offset by the
prepayment of $10,800,000 of senior mortgage notes at 10.75% in December 1994,
the prepayment of $12,500,000 of senior unsecured notes at 10.86% in February
1995 and the conversion of $38,025,000 principal amount of 9% and 7%
convertible debentures during the past twelve months. Depreciation and
amortization decreased by $79,000 and general and administrative expenses
decreased by $520,000.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As of March 31, 1995, the Company's gross real estate investments totaled $1.66
billion including 238 long-term care facilities, 23 rehabilitation hospitals,
two alcohol and substance abuse treatment facilities, six psychiatric
hospitals, six retirement living facilities, six medical office buildings and
one acute care hospital. As of March 31, 1995, the Company's outstanding
commitments for additional financing totaled approximately $19,000,000 for the
completion of ten facilities under construction.
The Company had shareholders' equity of $1,027,162,000 and a debt to equity
ratio of .61 to 1.0 as of March 31, 1995.
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
long-term unsecured notes, the issuance of convertible debentures 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. From time to time, the Company may utilize interest rate caps or
swaps to hedge interest rate volatility. 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 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, 1995, the Company completed the
sale of 8,750,000 shares at $30.125 per share. The net proceeds to the Company
from this offering were used to repay short-term borrowings and for investments
in additional health care facilities.
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MEDITRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, Continued
Under the Company's unsecured credit facilities, a total of approximately
$149,000,000 was available at March 31, 1995. In addition, the Company has an
effective shelf registration on file with the Securities and Exchange
Commission under which the Company may issue up to approximately $165,000,000
of securities including debt, convertible debt and shares of beneficial
interest.
The Company believes that its various sources of capital are adequate to
finance its operations as well as pending property acquisitions, mortgage
financings and future dividends. For the balance of 1995, 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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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit
No. Title Method of Filing
- -------- ----- ----------------
11 Statement Regarding Computation of Per Share
Earnings. . . . . . . . . . . . . . . . . . . . . Filed herewith
27 Financial Data Schedule . . . . . . . . . . . . . Filed herewith
(b) Reports on Form 8-K
During the quarter ended March 31, 1995, the Company filed a Form 8-K dated
March 8, 1995 which included the consolidated financial statements of the
Company for the year ended December 31, 1994.
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 25, 1995 By: /s/ Lisa P. McAlister
-------------------------------------
Lisa P. McAlister, Vice President and
Treasurer (and Chief Accounting Officer)
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