VENTAS REPORTS FIRST QUARTER 2000 RESULTS
Louisville, Ky. (May 10, 2000) -- Ventas, Inc. (NYSE:VTR) (the "Company") announced today the results of its operations for the first quarter of 2000.
RESULTS OF OPERATIONS
Funds from operations ("FFO") for the three months ended March 31, 2000 totaled $17.6 million, or $.26 per diluted share. FFO for the comparable period in 1999 totalled $31.3 million, or $.46 per diluted share. Net income for the three months ended March 31, 2000 was $2.7 million, or $.04 per diluted share after the extraordinary loss (described below) of $4.2 million, or $.06 per diluted share. Net income for the three months ended March 31, 1999 was $20.3 million, or $.30 per diluted share.
Rental income for the three months ended March 31, 2000 was $57.5 million, of which $56.7 million resulted from leases with Vencor, Inc. (OTC/BB:VCRIQ), its principal tenant ("Vencor"). Vencor filed for bankruptcy court protection in mid-September 1999. Interest and other income totaled approximately $1.6 million, and was primarily the result of earnings from investment of cash reserves during the quarter.
Expenses for the quarter totaled $52.2 million, and included $10.6 million of depreciation on real estate assets and $23.8 million of interest expense. Included in interest expense is amortized deferred financing fees of approximately $1.4 million, which included $.8 million of amortization for fees incurred in connection with the interim extension of the October 30, 1999 maturity of the $275 million bridge loan. Expenses also included a charge to earnings of $11.3 million representing unpaid rents from Vencor during the first quarter of 2000.
General and administrative expenses totaled $2.3 million. Professional fees totaled $3.3 million and included approximately $2.7 million in unusual professional fees (legal and financial advisory fees) incurred as a result of ongoing discussions with Vencor and the evaluation of the Company's business strategy alternatives. Substantial legal and financial advisory expenses will continue to be incurred by the Company until a resolution of these matters is reached, although there can be no assurance that such a resolution will be reached. The Company also incurred $.4 million in employee severance costs in the three months ended March 31, 2000.
During the three months ended March 31, 2000, the Company incurred an extraordinary loss of approximately $4.2 million relating to the write-off of unamortized deferred financing costs associated with the Company's 1998 bank credit agreement. The 1998 bank credit agreement was replaced in full with a new $1 billion long-term amended credit agreement between the Company and all its lenders, which was consummated on January 31, 2000.
Ventas intends to qualify as a REIT for federal income tax purposes for the tax years beginning with the year ended December 31, 1999. Accordingly, no provision for federal corporate income taxes has been made for the three month periods ended March 31, 2000 and 1999. Although the Company currently expects to qualify as REIT, it is possible that economic, market, legal, tax or other considerations may cause the Company to fail or elect not to qualify as a REIT.
FFO for the three months ended March 31, 2000 and 1999 is summarized in the following table:
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
(In Thousands)
--------- --------
Net income $ 2,733 $ 20,338
Add: Depreciation on real estate
investments 10,634 10,944
Extraordinary loss on
extinguishment of debt 4,207 -
--------- --------
Funds from operations $ 17,574 $ 31,282
========= ========
The Company considers FFO an appropriate measure of performance of an equity REIT, and the Company uses the National Association of Real Estate Investment Trusts' ("NAREIT") definition of FFO. NAREIT defines FFO as net income (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation on real estate assets and after adjustments for unconsolidated partnerships and joint ventures. FFO presented herein is not necessarily comparable to FFO presented by other real estate companies due to the fact that not all real estate companies use the same definition. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of the Company's financial performance or as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is FFO necessarily indicative of sufficient cash flow to fund all of the Company's needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO should be examined in conjunction with net income as presented in the consolidated financial statements and data included elsewhere in this Press Release.
Ventas, Inc. is a real estate company whose properties include 45 hospitals, 218 nursing centers, and eight personal care facilities in 36 states.
This Press Release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). All statements regarding the Company's and its subsidiaries' expected future financial position, results of operations, cash flows, funds from operations, dividends and dividend plans, financing plans, business strategy, budgets, projected costs, capital expenditures, competitive positions, growth opportunities, expected lease income, ability to qualify as a real estate investment trust, plans and objectives of management for future operations and statements that include words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "may," "could," and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and stockholders must recognize that actual results may differ from the Company's expectations.
Actual future results and trends for the Company may differ materially depending on a variety of factors discussed in the Company's filings with the Securities and Exchange Commission. Factors that may affect the plans or results of the Company include, without limitation, (a) the treatment of the Company's claims in the chapter 11 cases of its primary tenant, Vencor and certain of its affiliates (collectively referred to in this paragraph as "Vencor"), as well as certain of its other tenants, (b) the ability and willingness of Vencor to continue to meet and/or honor its obligations under the agreements the Company and Vencor entered into in connection with the 1998 spin off by the Company of Vencor (the "1998 Spin Off"), including, without limitation, the obligation to indemnify and defend the Company for all litigation and other claims relating to the health care operations and other assets and liabilities transferred to Vencor in the 1998 Spin Off, (c) the ability of Vencor and the Company's other operators to maintain the financial strength and liquidity necessary to satisfy their respective obligations and duties under the leases and other agreements with the Company, and their existing credit agreements, (d) the Company's success in implementing its business strategy, (e) the nature and extent of future competition, (f) the extent of future health care reform and regulation, including cost containment measures and changes in reimbursement policies and procedures, (g) increases in the cost of borrowing for the Company, (h) the ability of the Company's operators to deliver high quality care and to attract patients, (i) the results of litigation affecting the Company, (j) the results of the settlement discussions Vencor and Ventas have been engaged in with the federal government seeking to resolve federal civil and administrative claims against them arising from the participation of Vencor facilities in various federal health benefit programs, (k) changes in general economic conditions and/or economic conditions in the markets in which the Company may, from time to time, compete, (l) the ability of the Company to pay down, refinance, restructure, and/or extend its indebtedness as it becomes due, and (m) the ability of the Company to qualify as a real estate investment trust. Many of such factors are beyond the control of the Company and its management.
VENTAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 2000
(Unaudited) (Audited)
(In Thousands)
Assets
Real estate investments:
Land $ 120,891 $ 120,891
Building and improvements 1,061,656 1,061,656
----------- -----------
1,182,547 1,182,547
Accumulated depreciation (298,390) (287,756)
----------- -----------
Total real estate investments 884,157 894,791
Cash and cash equivalents
Cash and cash equivalents 94,829 139,594
Cash and cash equivalents
disputed federal tax refunds
and accumulated interest 26,819 -
----------- -----------
Total cash and cash equivalents 121,648 139,594
Deferred financing costs, net 12,708 5,702
Notes receivable from employees 3,629 3,611
Recoverable federal income taxes - 26,610
Other 2,146 891
----------- -----------
Total assets $ 1,024,288 $ 1,071,199
=========== ===========
Liabilities and stockholders' equity
Liabilities:
Notes payable and other debt $ 923,368 $ 974,247
Deferred gain on partial
termination of interest
rate swap agreement 21,605 21,605
Accounts payable and other
accrued liabilities 9,981 9,886
Other liabilities - disputed
federal tax refunds and
accumulated interest 26,819 26,610
Deferred income taxes 30,506 30,506
----------- ----------
Total liabilities 1,012,279 1,062,854
----------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, unissued - -
Common stock 18,402 18,402
Capital in excess of par value 132,237 139,723
Unearned compensation on
restricted stock (2,353) (2,080)
Retained earnings 9,142 6,409
----------- ----------
157,428 162,454
Treasury stock (145,419) (154,109)
----------- ----------
Total stockholders' equity 12,009 8,345
----------- ----------
Total liabilities and
stockholders' equity $ 1,024,288 $ 1,071,199
=========== ==========
Note - The Condensed Consolidated Balance Sheet at
December 31, 1999 has been derived from the Company's
audited consolidated financial statements for the year
ended December 31, 1999.
VENTAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three months Three months
ended ended
March 31, March 31,
2000 1999
(Unaudited)
(In Thousands, Except
Per Share Amounts)
Revenues:
Rental income $ 57,483 $ 56,436
Interest and other income 1,617 197
-------- ---------
Total revenues 59,100 56,633
Expenses:
General and administrative 2,288 1,754
Professional fees 3,322 797
Non-recurring employee severance costs 355 1,272
Loss on uncollectible amounts due
from tenants 11,307 -
Amortization of restricted
stock grants 405 652
Depreciation on real estate
investments 10,634 10,944
Interest 23,849 20,876
-------- ---------
Total expenses 52,160 36,295
-------- ---------
Income before extraordinary loss 6,940 20,338
Extraordinary loss on extinguishment
of debt (4,207) -
-------- ---------
Net income $ 2,733 $ 20,338
======== =========
Earnings per common share:
Basic:
Income before extraordinary loss $ 0.10 $ 0.30
Extraordinary loss on
extinguishment of debt (0.06) -
-------- --------
Net income $ 0.04 $ 0.30
======== ========
Diluted:
Income before extraordinary loss $ 0.10 $ 0.30
Extraordinary loss on
extinguishment of debt (0.06) -
-------- --------
Net income $ 0.04 $ 0.30
======== ========
Funds from operations $ 17,574 $ 31,282
Funds from operations per common share:
Basic $ .26 $ .46
Diluted $ .26 $ .46
Shares used in computing earnings
and funds from operations
per common share:
Basic 67,898 67,712
Diluted 67,912 67,976
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