Ventas to Comply with SFAS 145 Regarding Three Prior Years' Financial Statements
LOUISVILLE, KY (July 23, 2003) - Ventas, Inc. (NYSE:VTR) ("Ventas" or the "Company") said today that normalized Funds From Operations (“FFO”) for the second quarter 2003 rose 18 percent to $31.2 million, or $0.39 per diluted share from $23.0 million, or $0.33 per diluted share, for the comparable 2002 period.
The increase in FFO resulted from increased rents from Ventas’s annual lease escalations, income from its 2002 investments, lower debt balances that reduced interest expense, and its June 30, 2003 sale of 16 skilled nursing facilities in Florida and Texas to the Company’s largest tenant, Kindred Healthcare, Inc. (NASDAQ: KIND)(“Kindred”).
“Ventas’s second quarter was excellent. Our 18 percent increase in FFO reflects the Company’s strong internal growth from its lease escalators, the results of its consistent debt pay down efforts and the impact of 2002 acquisitions,” Chairman, President and CEO Debra A. Cafaro said. “In addition, the successful sale of 16 skilled nursing assets to Kindred represented a major positive for both companies. We are entering the second half of the year with our focus clearly set on implementing our diversification strategy and maintaining reliable and growing cash flow.”
Normalized FFO for the six months ended June 30, 2003 was $59.1 million, or $0.74 per diluted share, a 16 percent increase from the same period in the prior year of $45.0 million, or $0.64 per diluted share.
Normalized FFO for all periods excludes (a) gains on sales of Kindred common stock, (b) a $20.2 million reversal of a previously recorded contingent liability, which was recorded as income in the first quarter of 2003, (c) losses from extinguishment of debt and (d) a one-time swap breakage incurred in connection with the Company’s refinancing in April 2002.
After discontinued operations of $0.5 million related to the sale of the 16 skilled nursing facilities, Ventas reported second quarter net income of $16.1 million, or $0.20 per diluted share. After discontinued operations of $23.4 million, or $0.34 per share, net income for the second quarter ended June 30, 2002 was $26.5 million, or $0.38 per diluted share. A breakdown of discontinued operations is included in a schedule attached to this Press Release.
After discontinued operations of $1.3 million, or $0.01 per diluted share, net income for the six months ended June 30, 2003 was $53.4 million, or $0.67 per diluted share. Net income for the six months ended June 30, 2002 was $39.2 million, or $0.56 per diluted share, after discontinued operations of $25.2 million, or $0.36 per diluted share.
SECOND QUARTER HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS
- Ventas completed its sale of 16 skilled nursing facilities in Florida and Texas to its primary tenant, Kindred, for $59.7 million, plus a $4.1 million lease termination fee. Annualized rent on the 16 facilities was $9 million.
- Ventas and Kindred amended the Master Leases (1) to increase rent on certain facilities by $8.6 million on an annualized basis for approximately seven years and (2) to make all lease escalations payable in cash.
- Ventas used a portion of the net proceeds from the sale of the 16 skilled nursing facilities to repay in full the Company’s settlement agreement with the Department of Justice (“United States Settlement”).
- The Company reduced its indebtedness during the second quarter by $30.3 million.
- Ventas appointed Thomas C. Theobald, a Managing Director with William Blair and the retired Chairman and Chief Executive Officer of Continental Bank Corporation, to its Board of Directors.
- The Company sold a total of 140,000 shares of Kindred common stock at an average price of $18.73 per share. As of June 30, 2003, the Company owned 780,814 shares of Kindred common stock. During the period July 1, 2003 through July 15, 2003, the Company sold an additional 428,407 shares of Kindred common stock at an average net price of $22.35 per share. As of July 15, 2003, the Company owned 352,407 shares of Kindred common stock.
- The 237 skilled nursing facilities and hospitals leased to Kindred produced EBITDAR to rent coverage of 1.7x for the trailing twelve month period ended March 31, 2003.
SECOND QUARTER 2003 RESULTS
Revenue for the quarter ended June 30, 2003 was $50.2 million, of which $46.0 million (or 91.6 percent) resulted from leases with Kindred. Expenses for the quarter ended June 30, 2003 totaled $34.5 million, and included $10.2 million of depreciation expense, $16.1 million of interest expense on debt financing and $3.8 million of interest expense on the United States Settlement, which was paid in full without prepayment penalty or premium. General, administrative and professional expenses for the second quarter totaled $3.8 million.
SIX MONTH 2003 RESULTS
Revenue for the six months ended June 30, 2003 was $98.4 million, of which $90.9 million (or 92.4%) resulted from leases with Kindred. Expenses for the six months ended June 30, 2003 totaled $46.3 million, were reduced by the $20.2 million reversal of a contingent liability and included $20.4 million of depreciation expense, $32.4 million of interest expense and $4.9 million of interest expense on the United States Settlement, which was paid in full. General and administrative and professional expenses for the six months ended totaled $7.7 million.
VENTAS TO COMPLY WITH SFAS 145 AND 144 REGARDING THREE PRIOR YEARS’ FINANCIAL STATEMENTS FOR EXTRAORDINARY ITEMS AND DISCONTINUED OPERATIONS
Ventas said that, as required by accounting principles generally accepted in the United States (“GAAP”), it will re-issue three prior years’ financial statements (2000-2002) in an updated format in accordance with the adoption of SFAS 145 to reclassify the loss on extinguishment of debt as continuing operations. SFAS 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB 13, and Technical Corrections” was adopted by the Company in 2003, as required by GAAP.
This reclassification does not change the Company’s net income or normalized FFO for any period and only affects the presentation of results for the prior periods by conforming the presentation of those prior financial statements to the format adopted in 2003. As required, the loss on the extinguishment of debt will be reflected as a separate line item in the Consolidated Statements of Operations and will be included in continuing operations rather than being shown as an extraordinary loss. The Company incurred charges for the extinguishment of debt in connection with the refinancing of the entire outstanding principal balance of its indebtedness during Kindred’s bankruptcy proceedings in 2000 and again in 2001 and 2002 to reposition itself following Kindred’s successful restructuring. The Company has excluded extinguishment of debt charges from normalized FFO.
Under SEC requirements for transitional disclosure, the reclassification of extraordinary items to continuing operations required by SFAS No. 145 is required for previously issued annual financial statements for each of the three years shown in the Company’s last annual report on Form 10-K if those financials are incorporated by reference in subsequent filings with the SEC made under the Securities Act of 1933, as amended, even though those financial statements relate to periods prior to adoption of SFAS No. 145.
In addition, Ventas will include in the re-issued financial statements the reclassification of the results of 15 Florida facilities and 1 Texas facility sold to Kindred on June 30, 2003 as discontinued operations. This reclassification does not change the Company’s net income or normalized FFO and only affects the presentation of results for the prior periods by conforming the presentation of those prior financial statements to the format adopted in 2002. In accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long Lived Assets” (“SFAS No. 144”), the results of operations and gain/(loss) on real estate properties sold or held for sale subsequent to December 31, 2001 are reclassified into a single line in the Consolidated Statement of Operations as discontinued operations for all periods presented.
The financial statements attached to this Press Release reflect the reclassification for all periods presented.
Ventas said it reaffirmed its 2003 normalized FFO guidance of $1.50 to $1.52 per diluted share and its 2004 normalized FFO guidance of $1.55 to $1.57.
The Company’s FFO guidance (and related GAAP earnings projections) for 2003 and 2004 exclude gains and losses on the sales of assets, the non-cash effect of swap ineffectiveness under SFAS 133 and the impact of acquisitions, additional divestitures and other capital transactions. Reconciliation of the FFO guidance to the Company’s projected GAAP earnings is provided on a schedule at the conclusion of this press release. The Company may from time to time update its publicly announced FFO guidance, but it is not obligated to do so.
The Company’s FFO guidance is based on a number of assumptions, which are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
SECOND QUARTER CONFERENCE CALL
The Company will hold a conference call to discuss this earnings release tomorrow morning, July 24, 2003, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The conference call is being web cast by CCBN and can be accessed at the Ventas website at www.ventasreit.com or www.companyboardroom.com. An online replay of the web cast will be available at approximately 12:00 p.m. Eastern time and will be archived for thirty (30) days.
Ventas, Inc. is a healthcare real estate investment trust that owns 44 hospitals, 204 nursing facilities and nine other healthcare and senior housing facilities in 37 states. The Company also has investments in 25 additional healthcare and senior housing facilities. More information about Ventas can be found on its website at www.ventasreit.com.
This Press Release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding Ventas, Inc.'s ("Ventas" or the "Company") 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, continued qualification as a real estate investment trust ("REIT"), plans and objectives of management for future operations and statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "could," "should," "will" and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and security holders must recognize that actual results may differ from the Company's expectations. The Company does not undertake a duty to update such forward-looking statements.
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 ability and willingness of Kindred Healthcare, Inc. ("Kindred") and certain of its affiliates to continue to meet and/or perform their obligations under their contractual arrangements with the Company and the Company's subsidiaries, including without limitation the lease agreements and various agreements entered into by the Company and Kindred at the time of the Company's spin-off of Kindred on May 1, 1998 (the "1998 Spin Off"), as such agreements may have been amended and restated in connection with Kindred's emergence from bankruptcy on April 20, 2001, (b) the ability and willingness of Kindred to continue to meet and/or perform its obligation to indemnify and defend the Company for all litigation and other claims relating to the healthcare operations and other assets and liabilities transferred to Kindred in the 1998 Spin Off, (c) the ability of Kindred 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 healthcare 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) changes in general economic conditions and/or economic conditions in the markets in which the Company may, from time to time, compete, (k) the ability of the Company to pay down, refinance, restructure, and/or extend its indebtedness as it becomes due, (l) the movement of interest rates and the resulting impact on the value of the Company's interest rate swap agreement and the Company's net worth, (m) the ability and willingness of the Company to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations, (n) final determination of the Company's taxable net income for the year ending December 31, 2003, (o) the ability and willingness of the Company's tenants to renew their leases with the Company upon expiration of the leases and the Company's ability to relet its properties on the same or better terms in the event such leases expire and are not renewed by the existing tenants, and (p) the impact on the liquidity, financial condition and results of operations of Kindred and the Company's other operators resulting from increased operating costs and uninsured liabilities for professional liability claims, and the ability of Kindred and the Company's other operators to accurately estimate the magnitude of such liabilities. Many of such factors are beyond the control of the Company and its management.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, Dec. 31,
2003 2002
----------- ----------
(Unaudited) (Audited)
Assets
Real estate investments:
Land. $108,816 $119,559
Building and improvements. 1,027,887 1,101,847
----------- ----------
1,136,703 1,221,406
Accumulated depreciation. (410,051) (409,132)
----------- ----------
Total net real estate property. 726,652 812,274
Loan receivable, net 16,489 16,528
----------- ----------
Total net real estate investments 743,141 828,802
Cash and cash equivalents. 9,173 2,455
Restricted cash. 7,031 19,953
Deferred financing costs, net. 15,684 17,704
Investment in Kindred Healthcare, Inc. common
stock 13,875 16,713
Notes receivable from employees, former
employees and accrued interest. 3,803 4,139
Other. 7,895 6,014
----------- ----------
Total assets. $800,602 $895,780
=========== ==========
Liabilities and stockholders' equity (deficit)
Liabilities:
Senior Notes payable and other debt. $720,160 $707,709
United States Settlement. -- 43,992
Securities settlement due (purchase of Senior
Notes). -- 37,366
Deferred revenue 16,916 18,883
Interest rate swap agreements. 53,280 47,672
Accrued dividend. -- 16,596
Accrued interest 6,664 7,237
Accounts payable and other accrued
liabilities. 19,940 25,402
Other liabilities--disputed federal, state
and local tax refunds. 452 14,156
Deferred income taxes. 30,394 30,394
----------- ----------
Total liabilities. 847,806 949,407
----------- ----------
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, unissued. -- --
Common stock 20,652 20,652
Capital in excess of par value. 185,153 191,779
Unearned compensation on restricted stock. (1,421) (793)
Accumulated other comprehensive loss. (33,382) (26,116)
Retained earnings (deficit). (123,177) (134,279)
----------- ----------
47,825 51,243
Treasury stock. (95,029) (104,870)
----------- ----------
Total stockholders' equity (deficit). (47,204) (53,627)
----------- ----------
Total liabilities and stockholders'
equity (deficit).. $800,602 $895,780
=========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2003 and 2002
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
---------------- -----------------
2003 2002 2003 2002
------- ------ -------- -------
Revenues:
Rental income. $47,952 $44,974 $94,935 $88,948
Interest income from loan
receivable. 758 -- 1,505 --
Gain on sale of Kindred
common stock. 922 3,822 922 3,822
Interest and other income. 553 373 1,045 715
-------- ------- -------- --------
Total revenues. 50,185 49,169 98,407 93,485
-------- ------- -------- --------
Expenses:
General and administrative. 3,080 2,601 6,220 4,912
Professional fees. 702 936 1,462 1,501
Reversal of contingent liability -- -- (20,164) --
Amortization of restricted stock
grants. 310 715 601 1,137
Depreciation. 10,211 9,823 20,425 19,637
Swap ineffectiveness 369 180 369 180
Net loss on swap breakage -- 5,407 -- 5,407
Loss on extinguishment of debt -- 6,919 -- 6,919
Interest 16,090 18,098 32,448 36,936
Interest on United States
Settlement 3,761 1,402 4,943 2,873
-------- ------- -------- --------
Total expenses. 34,523 46,081 46,304 79,502
-------- ------- -------- --------
Income before discontinued
operations. 15,662 3,088 52,103 13,983
Discontinued operations (including
gain/loss on sale of assets) 467 23,380 1,314 25,186
-------- ------- -------- --------
Net income $16,129 $26,468 $53,417 $39,169
======== ======= ======== ========
Earnings per common share:
Basic:
Income before discontinued
operations. $0.20 $0.04 $0.66 $0.20
======== ======= ======== ========
Net income. $0.20 $0.38 $0.68 $0.57
======== ======= ======== ========
Diluted:
Income before discontinued
operations. $0.20 $0.04 $0.66 $0.20
======== ======= ======== ========
Net income. $0.20 $0.38 $0.67 $0.56
======== ======= ======== ========
Shares used in computing earnings
per common share:
Basic 78,935 68,850 78,885 68,792
Diluted 79,575 70,002 79,435 69,941
Dividends declared per common share$0.2675 $0.2375 $0.5350 $0.4750
======== ======= ======== ========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2003 and 2002
(In thousands)
(Unaudited)
2003 2002
---------- --------
Cash flows from operating activities:
Net income. $53,417 $39,169
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation (including discontinued
operations). 21,599 20,918
Amortization of deferred financing costs. 2,040 1,642
Amortization of restricted stock grants. 601 1,137
Normalized rents. (86) (96)
Loss on extinguishment of debt -- 6,919
Gain on sale of Kindred common stock (922) (3,822)
(Gain) loss on sale of real estate assets
(included in discontinued operations). 5,254 (23,450)
Amortization of deferred revenue. (2,030) (1,374)
Net loss on swap breakage -- 5,407
Non-cash interest on the United
States Settlement 2,655 --
Other (383) 74
Changes in operating assets and liabilities:
Decrease in restricted cash. 12,922 1,089
Increase in other assets. (2,900) (5,188)
Increase (decrease) in accrued interest (573) 10,254
Increase (decrease) in accounts payable and
accrued and other liabilities. (17,578) 3,784
---------- --------
Net cash provided by operating
activities. 74,016 56,463
Cash flows from investing activities:
Net proceeds from sale of real estate 58,897 28,620
Proceeds from sale of Kindred common stock 2,622 5,273
Collection from loan receivable. 102 --
Purchase of furniture and equipment. (38) (135)
Decrease (increase) in notes receivable from
employees, former employees and accrued interest 336 (535)
---------- --------
Net cash provided by investing activities. 61,919 33,223
Cash flows from financing activities:
Net change in borrowings under Revolving Credit
Facility. 13,700 (36,500)
Proceeds from Senior Notes Offering and
Revolving Credit Facility. -- 620,300
Purchase of Senior Notes. (37,366) --
Repayment of debt. (1,249) (17,399)
Repayment of debt through refinancing -- (607,106)
Payment on United States Settlement (46,647) (2,583)
Payment of deferred financing costs (20) (15,139)
Payment of swap breakage fee -- (12,837)
Proceeds from (cost of) issuance of stock. 1,276 (45)
Cash dividends to stockholders. (58,911) (33,637)
---------- --------
Net cash used in financing activities. (129,217)(104,946)
---------- --------
Increase (decrease) in cash and cash equivalents. 6,718 (15,260)
Cash and cash equivalents at beginning of period. 2,455 18,596
---------- --------
Cash and cash equivalents at end of period. $9,173 $3,336
========== ========
Supplemental schedule of noncash activities:
Dividend distribution of Kindred common stock. $-- $17,086
========== ========
SUPPLEMENTAL DATA
Funds from Operations
FFO and Normalized FFO for the three months and six months
ended June 30, 2003 and 2002
(in thousands except per share amounts):
Three Months Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
---------------- ----------------
Net Income $16,129 $26,468 $53,417 $39,169
Adjustments:
Depreciation on real estate assets 10,147 9,772 20,297 19,544
Other Items:
Discontinued operations:
Real estate depreciation -
discontinued 587 629 1,174 1,281
(Gain) loss on sale of real estate 5,254 (22,393) 5,254 (23,450)
---------------- ----------------
FFO 32,117 14,476 80,142 36,544
Realized gain on sale of
Kindred common stock (922) (3,822) (922) (3,822)
Reversal of contingent liability -- -- (20,164) --
Loss on extinguishment of debt -- 6,919 -- 6,919
Net loss on swap breakage -- 5,407 -- 5,407
---------------- ----------------
Normalized FFO $31,195 $22,980 $59,056 $45,048
================ ================
Per diluted share:
Net Income $0.20 $0.38 $0.67 $0.56
Adjustments:
Depreciation on real estate assets 0.13 0.14 0.26 0.28
Other items:
Discontinued operations:
Real estate depreciation -
discontinued -- 0.01 0.01 0.02
(Gain) loss on sale of real
estate 0.07 (0.32) 0.07 (0.34)
---------------- ----------------
FFO 0.40 0.21 1.01 0.52
Realized gain on sale of
Kindred common stock (0.01) (0.06) (0.01) (0.06)
Reversal of contingent liability -- -- (0.26) --
Loss on extinguishment of debt -- 0.10 -- 0.10
Net loss swap breakage -- 0.08 -- 0.08
---------------- ----------------
Normalized FFO $0.39 $0.33 $0.74 $0.64
================ ================
Projected FFO per diluted share for the years ended
December 31, 2003 and 2004:
2003 Projected 2004 Projected
---------------- ----------------
Per diluted share:
Net income $1.18 - $1.20 $1.08 - $1.10
Adjustments:
Depreciation on real estate
assets 0.52 - 0.52 0.47 - 0.47
Realized (gain) loss on
sale of real estate assets 0.07 - 0.07 -- - --
------ ------ ------ ------
FFO $1.77 - 1.79 $1.55 - 1.57
Adjustments:
Gain on sale of Kindred Common
Stock (0.01) - (0.01) -- - --
Reversal of contingent
liability (0.26) - (0.26) -- - --
------ ------ ------ ------
Normalized Funds from Operations $1.50 - $1.52 $1.55 - $1.57
====== ====== ====== ======
Historical cost accounting for real estate assets implicitly
assumes that the value of real estate assets diminishes predictably
over time. Since real estate values instead have historically risen or
fallen with market conditions, many industry investors have considered
presentations of operating results for real estate companies that use
historical cost accounting to be insufficient by themselves. To
overcome this problem, the Company considers an appropriate measure of
performance of an equity REIT and 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), excluding gains (or losses) from
sales of property, plus depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operations on the same basis.
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 accounting principles generally accepted in the United States
("GAAP")), as an indicator of the Company's financial performance, 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 elsewhere in this Press Release.
Discontinued Operations
Set forth below is a summary of the results of operations of the
sold facilities during the three and six months ended
June 30, 2003 and 2002 (in thousands):
Three Months Six Months Ended
Ended June 30, June 30,
---------------- ----------------
2003 2002 2003 2002
------- -------- ------- --------
Rental income $2,948 $2,597 $5,149 $5,020
Lease termination fee 4,116 -- 4,116 --
------- -------- ------- --------
7,064 2,597 9,265 5,020
------- -------- ------- --------
Interest 756 981 1,523 2,003
Depreciation 587 629 1,174 1,281
------- -------- ------- --------
1,343 1,610 2,697 3,284
------- -------- ------- --------
Income before gain(loss) on sale
of real estate 5,721 987 6,568 1,736
Gain (loss) on sale of real estate (5,254) 22,393 (5,254) 23,450
------- -------- ------- --------
Discontinued operations $467 $23,380 $1,314 $25,186
======= ======== ======= ========
Ventas, Inc.
2003 QUARTERLY STATEMENTS OF INCOME
($000, except per share amounts)
Six
Month
Ended
June 30,
First Second 2003
------- ------- --------
Revenues:
Rental Income $46,983 $47,952 $94,935
Interest income from loan receivable 747 758 1,505
Gain on sale of Kindred common stock -- 922 922
Interest and other income 492 553 1,045
---------------- --------
Total revenues 48,222 50,185 98,407
Expenses:
General and administrative 3,140 3,080 6,220
Professional fees 760 702 1,462
Reversal of contingent liability (20,164) -- (20,164)
Amortization of restricted stock grants 291 310 601
Depreciation 10,214 10,211 20,425
Swap ineffectiveness -- 369 369
Interest 16,358 16,090 32,448
Interest on United States Settlement 1,182 3,761 4,943
---------------- --------
Total expenses 11,781 34,523 46,304
---------------- --------
Income before discontinued operations 36,441 15,662 52,103
Discontinued operations (including loss on
sale of assets) 847 467 1,314
---------------- --------
Net income $37,288 $16,129 $53,417
================ ========
Weighted average number of shares
outstanding, basic 78,834 78,935 78,885
Weighted average number of shares
outstanding, diluted 79,296 79,575 79,435
Earnings per common share:
Basic:
Income before discontinued operations $0.46 $0.20 $0.66
Discontinued operations 0.01 -- 0.02
---------------- --------
Net income $0.47 $0.20 $0.68
================ ========
Diluted:
Income before discontinued operations $0.46 $0.20 $0.66
Discontinued operations 0.01 -- 0.01
---------------- --------
Net income $0.47 $0.20 $0.67
================ ========
Discontinued Operations
Revenues $2,201 $7,064 $9,265
Interest 767 756 1,523
Depreciation 587 587 1,174
---------------- --------
Income before loss on sale of real
estate 847 5,721 6,568
Loss on sale of real estate - (5,254) (5,254)
---------------- --------
Discontinued operations $847 $467 $1,314
================ ========
Ventas, Inc.
2002 QUARTERLY STATEMENTS OF INCOME
($000, except per share amounts)
First Second Third Fourth Year
------- ------- ------- ------- ---------
Revenues:
Rental Income $43,974 $44,974 $45,449 $46,413 $180,810
Interest income from loan
receivable - - - 995 995
Gain on sale of Kindred
common stock - 3,822 1,192 - 5,014
Interest and other
income 342 373 237 226 1,178
-------------------------------- ---------
Total revenues 44,316 49,169 46,878 47,634 187,997
-------------------------------- ---------
Expenses:
General and
administrative 2,311 2,601 2,410 2,441 9,763
Professional fees 565 936 900 749 3,150
Amortization of
restricted stock grants 422 715 354 362 1,853
Depreciation 9,814 9,823 9,823 10,184 39,644
Net loss on swap breakage - 5,407 - - 5,407
Swap ineffectiveness - 180 118 1,552 1,850
Loss on extinguishment
of debt - 6,919 - 4,158 11,077
Interest 18,838 18,098 17,807 18,286 73,029
Interest on United States
Settlement 1,471 1,402 1,331 1,257 5,461
-------------------------------- ---------
Total expenses 33,421 46,081 32,743 38,989 151,234
-------------------------------- ---------
Income before benefit for
income taxes, gain on
disposal of real estate
assets and discontinued
operations 10,895 3,088 14,135 8,645 36,763
Benefit for income taxes - - (2,200) - (2,200)
-------------------------------- ---------
Income before gain on
disposal of real estate
assets and discontinued
operations 10,895 3,088 16,335 8,645 38,963
Net gain on real estate
disposals - - - 64 64
-------------------------------- ---------
Income before discontinued
operations 10,895 3,088 16,335 8,709 39,027
Discontinued operations 1,806 23,380 758 735 26,679
-------------------------------- ---------
Net income $12,701 $26,468 $17,093 $9,444 $65,706
================================ =========
Weighted average number of
shares outstanding, basic 68,698 68,850 69,098 70,637 69,336
Weighted average number of
shares outstanding,
diluted 69,844 70,002 70,047 71,204 70,290
Earnings per common share:
Basic:
Income before
discontinued
operations $0.16 $0.04 $0.24 $0.12 $0.56
Discontinued operations 0.02 0.34 0.01 0.01 0.39
-------------------------------- ---------
Net income $0.18 $0.38 $0.25 $0.13 $0.95
================================ =========
Diluted:
Income before
discontinued operations $0.16 $0.04 $0.23 $0.12 $0.56
Discontinued operations 0.02 0.34 0.01 0.01 0.37
-------------------------------- ---------
Net income $0.18 $0.38 $0.24 $0.13 $0.93
================================ =========
Discontinued Operations
Revenues $2,423 $2,597 $2,201 $2,201 $9,422
Interest 1,022 981 852 875 3,730
Depreciation 652 629 591 591 2,463
-------------------------------- ---------
Income before gain on
sale of real estate 749 987 758 735 3,229
Gain on sale of real
estate 1,057 22,393 - - 23,450
-------------------------------- ---------
Discontinued
operations $1,806 $23,380 $758 $735 $26,679
================================ =========
Portfolio of Properties
The following information provides an overview of the Company's
portfolio of healthcare properties as of and for the six months ended
June 30, 2003, excluding discontinued operations ($'s in thousands):
As of and for the
Six Months Ended June 30, 2003
----------------------------------------
Percent
of
# of # of Rental # of
Portfolio by Type Properties Beds Revenue Revenue States
----------------- ---------- ------ ------- ------- ------
Healthcare Property
Skilled Nursing Facilities 204 25,417 $63,164 66% 30
Hospitals 44 3,916 31,213 33% 20
Other Facilities 9 181 558 1% 2
---------- ------ ------- -------
Total Rental Income 257 29,514 $94,935 100% 37
========== ====== ======= =======
Other Real Estate Investments
Loan Receivable 25 1,982 $1,505
========== ====== =======
Kindred Coverage Ratios
The following is based on data provided by Kindred to the Company
or obtained from Kindred's public filings. This information reflects
Kindred's EBITDAR coverage by Master Lease after management fees and
excluding the 16 skilled nursing facilities sold in June 2003:
TTM (1)
EBITDAR
Master Coverage
Lease (2), (3)
---------- -------------
1 1.6
2 1.8
3 1.6
4 1.8
5 1.6
--------------------------
Portfolio 1.7
--------------------------
(1) Trailing Twelve Months EBITDAR ended March 31, 2003 (the latest
available data provided by Kindred) to the sum of (a) the
Company's Trailing Twelve Months cash rental revenue, plus (b) the
$8.6 million in annual rental revenue added by the June 30, 2003
Master Lease amendments.
(2) Coverage reflects the ratio of EBITDAR to rent. EBITDAR is defined
as earnings before interest, income taxes, depreciation,
amortization and rent but after deducting management fees. EBITDAR
is adjusted to normalize Kindred professional liability expense.
EBITDAR is adjusted for the $20.2 million re-allocation of third
quarter 2002 to first quarter 2003 professional liability expense
to the appropriate prior period, as derived from Kindred's public
announcements and detailed property-level information.
(3) These computations reflect the fourth quarter 2002 and first
quarter 2003 impact of the reduction in Medicare reimbursement to
skilled nursing facilities, which took effect October 1, 2002.
Application of that reduction to the second and third quarter 2002
would result in a pro forma reduction of property level EBITDAR:
rent coverage to approximately 1.6(x).
Scheduled Maturities of Borrowing Arrangements
The Company's indebtedness has the following maturities
(in thousands):
2003 $1,610
2004 3,412
2005 76,990
2006 214,810
2007 57,300
Thereafter 366,038
--------------------------
Total $720,160
==========================
- END -
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