UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003. |
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: 1-10989
Ventas, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 61-1055020 | |
| (State or other jurisdiction) | (I.R.S. Employer Identification No.) |
4360 Brownsboro Road, Suite 115
Louisville, Kentucky
(Address of principal executive offices)
40207-1642
(Zip Code)
(502) 357-9000
(Registrant’s telephone number, including area code)
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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class of Common Stock: | Outstanding at July 21, 2003: | |
| Common Stock, $.25 par value | 79,388,947 Shares |
VENTAS, INC.
FORM 10-Q
2
VENTAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| June 30, 2003 (Unaudited) |
December 31, 2002 (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 | ||||
See notes to condensed consolidated financial statements
3
VENTAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended June 30, |
Six Months Ended June 30, | ||||||||||||
| 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 Healthcare, Inc. common stock |
922 | 3,822 | 922 | 3,822 | |||||||||
| Interest and other income |
553 | 373 | 1,045 | 715 | |||||||||
| 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 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 | |||||||||
| Dividend declared per common share |
$ | 0.2675 | $ | 0.2375 | $ | 0.535 | $ | 0.475 | |||||
See notes to condensed consolidated financial statements
4
VENTAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
| For the Six Months Ended June 30, |
||||||||
| 2003 |
2002 |
|||||||
| Net income |
$ | 53,417 | $ | 39,169 | ||||
| Other comprehensive income (loss): |
||||||||
| Unrealized loss on interest rate swaps |
(15,520 | ) | (20,353 | ) | ||||
| Reclassification adjustment for realized loss on interest rate swaps included in net income during the period |
9,395 | 18,723 | ||||||
| Unrealized loss on Kindred Healthcare, Inc. common stock |
(219 | ) | (7,118 | ) | ||||
| Reclassification adjustment for realized gain on Kindred Healthcare, Inc. common stock included in net income during the period |
(922 | ) | (3,822 | ) | ||||
| (7,266 | ) | (12,570 | ) | |||||
| Net comprehensive income |
$ | 46,151 | $ | 26,599 | ||||
See notes to condensed consolidated financial statements
5
VENTAS, INC.