<PAGE>
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 September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ___ to ____
<TABLE>
<S> <C>
Commission file number 0-9109 Commission file number 0-9110
MEDITRUST CORPORATION MEDITRUST OPERATING COMPANY
--------------------- ---------------------------
(Exact name of registrant as specified (Exact name of registrant as specified
in its charter) in its charter)
Delaware Delaware
-------- --------
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
95-3520818 95-3419438
---------- ----------
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
197 First Avenue, Suite 300 197 First Avenue, Suite 100
Needham Heights, Massachusetts 02194-9127 Needham Heights, Massachusetts 02194-9127
----------------------------------------- -----------------------------------------
(Address of principal executive (Address of principal executive
offices including zip code) offices including zip code)
(781) 433-6000 (781) 453-8062
-------------- --------------
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
</TABLE>
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No .
--- --
The number of shares outstanding of each of the issuers' classes of common
stock, as of the close of business on November 5, 1997 were:
Meditrust Corporation 87,949,522
Meditrust Operating Company 86,644,145
<PAGE>
MEDITRUST CORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page (s)
--------
<S> <C>
Item 1. Financial Statements of Meditrust
Consolidated Balance Sheets at September 30, 1997 (unaudited)
and December 31, 1996 3
Consolidated Statements of Income for the three months ended
September 30, 1997 and 1996 (unaudited) 4
Consolidated Statements of Income for the six months ended
September 30, 1997 and 1996 (unaudited) 5
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7-11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12-14
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
</TABLE>
-2-
<PAGE>
MEDITRUST
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- -----------
(Unaudited) (Audited)
(In thousands)
ASSETS
<S> <C> <C>
Real estate investments (Note 3):
Land....................................... $ 85,852 $ 68,098
Buildings and improvements, net of
accumulated depreciation of $117,206
and $98,082, respectively............. 1,084,092 938,162
Real estate mortgages...................... 1,384,269 1,181,818
---------- ----------
Total real estate investments......... 2,554,213 2,188,078
Other assets, net (Notes 4 and 8)............. 111,502 65,893
Fees, interest and other receivables.......... 28,679 20,178
Cash and cash equivalents..................... 24,985 42,726
---------- ----------
Total assets......................... $2,719,379 $2,316,875
========== ==========
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Indebtedness (Note 5):
Notes payable, net........................... $ 900,418 $ 494,790
Convertible debentures, net.................. 277,387 280,813
Bank notes payable, net...................... 24,625 24,114
Bonds and mortgages payable, net............. 59,286 59,043
---------- ----------
Total indebtedness....................... 1,261,716 858,760
Deferred income............................... 8,656 9,716
Accrued expenses and other liabilities........ 59,887 63,458
---------- ----------
Total liabilities........................ 1,330,259 931,934
---------- ----------
Commitments and contingencies (Notes 3 and 8)
Shareholders' equity (Notes 4, 5, 6 and 9):
Shares of beneficial interest without par
value:
Unlimited shares authorized; 61,703
and 61,349 shares issued and
outstanding in 1997 and 1996,
respectively.............................. 1,531,167 1,520,454
Distributions in excess of net income....... (142,047) (135,513)
---------- ----------
Total shareholders' equity.................. 1,389,120 1,384,941
---------- ----------
Total liabilities and shareholders'
equity.................................. $2,719,379 $2,316,875
========== ==========
</TABLE>
The accompanying notes, together with the Notes to the Consolidated Financial
Statements incorporated by reference in Meditrust's Form 10-K for the year
ended December 31, 1996, are an integral part of these financial statements.
-3-
<PAGE>
MEDITRUST
CONSOLIDATED STATEMENTS OF INCOME
for the three months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
(Amounts in thousands
except per Share amounts)
<S> <C> <C>
Revenues:
Rental income............................................ $34,826 $28,061
Interest income.......................................... 39,918 36,740
------- -------
Total revenues....................................... 74,744 64,801
------- -------
Expenses:
Interest................................................. 23,453 15,854
Depreciation and amortization............................ 7,278 5,919
General and administrative............................... 1,961 2,307
------- -------
Total expenses....................................... 32,692 24,080
------- -------
Net income................................................. $42,052 $40,721
======= =======
Net income per share, based on 61,652 and 60,809 weighted
average shares outstanding in 1997 and 1996, respectively.. $ .68 $ .67
======= =======
</TABLE>
The accompanying notes, together with the Notes to the Consolidated Financial
Statements incorporated by reference in Meditrust's Form 10-K for the year
ended December 31, 1996, are an integral part of these financial statements.
-4-
<PAGE>
MEDITRUST
CONSOLIDATED STATEMENTS OF INCOME
for the nine months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
(Amounts in thousands
except per Share amounts)
Revenues:
<S> <C> <C>
Rental income........................................ $100,917 $ 79,016
Interest income...................................... 112,806 107,285
-------- --------
Total revenues................................... 213,723 186,301
-------- --------
Expenses:
Interest............................................. 61,831 46,450
Depreciation and amortization........................ 20,633 17,103
General and administrative........................... 6,207 6,251
-------- --------
Total expenses................................... 88,671 69,804
-------- --------
Net income............................................. $125,052 $116,497
======== ========
Net income per share, based on 61,557 and 58,883
weighted average shares outstanding in 1997 and 1996,
respectively........................................... $2.03 $1.98
======== ========
</TABLE>
The accompanying notes, together with the Notes to the Consolidated Financial
Statements incorporated by reference in Meditrust's Form 10-K for the year
ended December 31, 1996, are an integral part of these financial statements.
-5-
<PAGE>
MEDITRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................... $ 125,052 $ 116,497
Depreciation of real estate................................... 19,124 15,659
Goodwill amortization......................................... 1,168 1,168
Shares issued for compensation................................ 1,375 1,591
Other depreciation,amortization and other items, net.......... 721 832
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
AVAILABLE FOR DISTRIBUTION.................................... 147,440 135,747
Net change in other assets and liabilities.................... (19,350) (14,968)
--------- ---------
Net cash provided by operating activities................... 128,090 120,779
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity offering................................. - 312,800
Proceeds from debt issuance................................... 858,000 458,399
Repayment of bank notes payable............................... (447,000) (346,500)
Equity offering and debt issuance costs....................... (5,073) (18,943)
Principal payments on bonds and mortgages payable............. (774) (696)
Distributions to shareholders................................. (131,586) (119,671)
Proceeds from stock options................................... 5,355 8,106
--------- ---------
Net cash provided by financing activities................... 278,922 293,495
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of real estate and development funding............ (182,808) (235,219)
Investment in real estate mortgages and development funding... (211,272) (218,257)
Prepayment proceeds and principal payments received
on real estate mortgages.................................... 9,013 59,182
Working capital advances...................................... (494) (28,242)
Collection of receivables and repayment of working capital
advances.................................................... 267 28,707
Investment in equity securities (Notes 4 and 8)............... (39,459) (13,509)
--------- ---------
Net cash used in investing activities....................... (424,753) (407,338)
--------- ---------
Net increase (decrease) in cash and cash equivalents........ (17,741) 6,936
Cash and cash equivalents at:
Beginning of period......................................... 42,726 44,248
--------- ---------
End of period............................................... $ 24,985 $ 51,184
========= =========
Supplemental disclosure of cash flow information (see Note 2)
</TABLE>
The accompanying notes, together with the Notes to the Consolidated Financial
Statements incorporated by reference in Meditrust's Form 10-K for the year
ended December 31, 1996, are an integral part of these financial statements.
-6-
<PAGE>
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 Corporation (the "Company"), the
disclosures contained in this Form 10-Q are adequate to make the information
presented not misleading. See Meditrust's Annual Report on Form 10-K for
the year ended December 31, 1996 (and the Report on Form 8-K dated January
31, 1997 incorporated by reference therein) for additional information
relevant to significant accounting policies followed by the Company.
Basis of Presentation
---------------------
Financial statements and the accompanying notes are for Meditrust,
the real estate investment trust and are presented on the pre-
merger basis that existed at September 30, 1997, as described in Note 9
herein. Meditrust Operating Company, the accounting acquirer of Santa Anita
Operating Company had no activity for the period ended September 30, 1997
and as a result has not been included in this report.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) necessary to present fairly its financial position as of September
30, 1997 and its results of operations for each of the three- and nine-month
periods ended September 30, 1997 and 1996 and cash flows for each of the
nine-month periods ended September 30, 1997 and 1996. The results of
operations for the nine-month period ended September 30, 1997 are not
necessarily indicative of the results which may be expected for the entire
year.
2. Supplemental Cash Flow Information
----------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
1997 1996
---- ----
(In thousands)
<S> <C> <C>
Interest paid during the period......................... $68,175 53,754
Non-cash investing and financing transactions:
Value of real estate acquired:
Land and buildings.................................... 20,976
Increase (reduction) in real estate mortgages net of
participation reduction............................... 192 (20,813)
Change in market value of equity securities in excess
of cost............................................... (330) 465
Value of Shares issued for conversion of debentures.... 4,348 6,806
</TABLE>
-7-
<PAGE>
MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
3. Real Estate Investments
-----------------------
During the nine months ended September 30, 1997, the Company acquired 30
assisted living facilities, one long-term care facility and one medical
office building for $114,986,000. In addition, during the nine month period
ended September 30, 1997, the Company provided net funding of $21,088,000 for
the construction of nine assisted living facilities and $1,400,000 for
additions to four long-term care facilities already in the portfolio. The
Company also provided net funding of $45,334,000 for ongoing construction of
facilities already in the portfolio prior to 1997.
Also, during the nine months ended September 30, 1997, the Company provided
permanent mortgage financing of $45,523,000 for three long-term care
facilities, 19 assisted living facilities and one retirement living facility.
The Company also provided $10,015,000 in additions to permanent mortgages
already in the portfolio.
The Company commenced new development funding of $93,612,000 relating to six
long-term care facilities, eight assisted living facilities, and seven
medical office buildings. The Company also provided $62,122,000 for ongoing
construction of facilities already in the portfolio prior to 1997.
During the nine months ended September 30, 1997, the Company received
principal payments on real estate mortgages of $9,013,000.
At September 30, 1997, the Company was committed to provide additional
financing of approximately $265,405,000 relating to 34 assisted living
facilities, 14 medical office buildings, and 12 long-term care facilities
currently under construction, and additions to existing facilities already in
the portfolio.
4. Investment in Equity Securities
-------------------------------
On July 25, 1996, the Company invested approximately $13,509,000 in exchange
for 7,936,000 shares of common stock, representing a 19.99% interest in
Nursing Home Properties Plc (NHP Plc), a property investment group which
specializes in the financing, through sale and leaseback transactions, of
nursing homes located in the United Kingdom. The Company does not have the
right to vote more than 9.99% of the shares of NHP Plc.
As of September 30, 1997 the market value of this investment was $15,706,000
and is included in other assets in the accompanying balance sheet. The
resulting difference between the current market value and cost, $2,197,000,
is included in shareholders' equity in the accompanying balance sheet.
Pursuant to the Merger Agreement (see Note 4), Meditrust through its wholly
owned subsidiary, Meditrust Acquisition Company ("MAC") purchased
approximately 1.2 million paired common shares of Santa Anita at $31.00 per
paired common share on September 23, 1997. This investment in common shares
is included at cost in other assets in the accompanying balance sheet at
September 30, 1997. Additional cash of approximately $5 million was funded to
MAC to complete capitalization of the entity pursuant to the Merger Agreement
on September 25, 1997.
-8-
<PAGE>
MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. Indebtedness and Shareholders' Equity
-------------------------------------
On August 7, 1997, the Company completed the sale of $160,000,000 of 7% notes
due August 15, 2007. The Company also completed the sale of $100,000,000 in
notes due August 15, 2002 bearing interest at LIBOR plus .45%, such interest
is subject to reset quarterly during the first year of the loan. Subsequent
to the first year of the loan, the character and duration of the interest
rate will be determined periodically by the Company and the underwriter. The
Company also completed the sale of $150,000,000 of 7.114% notes due August
15, 2011. The notes were sold to a trust from which exercisable put option
securities due August 15, 2004, each representing a fractional undivided
beneficial interest in the trust, were issued. The trust has entered a call
option pursuant to which the callholder has the right to purchase the notes
from the trust on August 15, 2004 at par value. The trust also has a put
option, which it is required to exercise if the callholder does not exercise
the call option, pursuant to which the Company must repurchase the notes at
par value on August 15, 2004. A portion of the net proceeds from the sale of
the notes described above was used to repay the outstanding balance on the
unsecured revolving line of credit and other unsecured short-term borrowings.
During the nine months ended September 30, 1997, $1,190,000 of principal
amount of 9% convertible debentures were converted into 44,067 Shares;
$2,020,000 of principal amount of 7% convertible debentures were converted
into 65,955 Shares; $138,000 of principal amount of 7.5% convertible
debentures were converted into 3,812 Shares and $1,000,000 of principal
amount of 8.54% convertible debentures were converted into 30,651 Shares.
On September 15, 1997, the Company revised a Revolving Credit agreement and
increased borrowing capacity by $85 million to a total of $365,000,000 in
unsecured lines of credit, bearing interest at the lenders' prime rate or
LIBOR plus .875%. A total of $339,000,000 was available at September 30,
1997.
6. Distributions Paid to Shareholders
----------------------------------
On May 15, 1997, the Company paid a dividend of $.7125 per Share to
shareholders of record on April 30, 1997. This dividend related to the
period from January 1, 1997 through March 31, 1997.
On August 15, 1997, the Company paid a dividend of $.7175 per Share to
shareholders of record on July 31, 1997. This dividend related to the period
from April 1, 1997 through June 30, 1997.
7. Newly Issued Accounting Standards
---------------------------------
Financial Accounting Standards Board Statement No. 128 ("FAS No. 128")
"Earnings Per Share" is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods. The
Company intends to adopt the requirements of this pronouncement in its
financial statements for the year ended December 31, 1997. FAS No. 128
specifies the computation, presentation and disclosure requirements for net
income per share. As stated in the Summary of Significant Accounting
Policies included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 (and the Report on Form 8-K dated January 31, 1997
incorporated by reference therein), net income per Share is calculated using
weighted average
-9-
<PAGE>
MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
7. Newly Issued Accounting Standards, continued
----------------------------------
number of Shares outstanding during the year and the affect of common stock
equivalents is immaterial. FAS No. 128 also requires the presentation of
diluted net income per share which the Company was not previously required
to present under generally accepted accounting principles.
Financial Accounting Standards Board Statement No. 130 ("FAS No. 130")
"Reporting Comprehensive Income" is effective for fiscal years beginning
after December 15, 1997, although earlier application is permitted. The
Company intends to adopt the requirements of this pronouncement in its
financial statements for the year ended December 31, 1998. FAS No. 130
establishes standards for reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. FAS
No. 130 requires that all components of comprehensive income shall be
reported in the financial statements in the period in which they are
recognized. Furthermore, a total amount for comprehensive income shall be
displayed in the financial statement where the components of other
comprehensive income are reported. The Company was not previously required
to present comprehensive income or the components thereof in its financial
statements under generally accepted accounting principals.
The Company does not believe that the implementation of FAS No. 128 or FAS
No. 130 will have a material impact on its financial statements.
8. Contingencies
-------------
On April 23, 1997, the Company and certain of its subsidiaries were served
with a complaint in an action in the Suffolk County, Massachusetts Superior
Court entitled Temkin, et al. v. Meditrust, et al., alleging that a former
borrower of the Company had transferred funds to the Company without fair
consideration at a time when the transferors were insolvent. The plaintiffs,
who are unsecured creditors of the transferors, seek damages against the
Company in the amount of approximately $6.5 million, plus costs, attorneys
fees and multiple damages. The Company believes that there is no basis for
these claims and will defend the matter vigorously.
-10-
<PAGE>
MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
9. Subsequent Events
-----------------
On October 14, 1997, the Company declared a dividend of $.7225 per Share
payable on November 14, 1997 to shareholders of record on October 31, 1997.
This dividend relates to the period from July 1, 1997 through September 30,
1997.
On October 3, 1997, the Company paid a stock dividend to shareholders of
record on that date of one share of beneficial interest, without par value,
of its wholly-owned subsidiary Meditrust Acquisition Company, a Massachusetts
business trust ("MAC"), for each share of beneficial interest of Meditrust.
The Meditrust shares and the MAC shares, are jointly listed on the New York
Stock Exchange under the combined symbol MT, and trade only in combination as
units, each consisting of one Meditrust share and one MAC share.
On April 13, 1997, Meditrust and its wholly-owned subsidiary, Meditrust
Acquisition Company (together, "Meditrust") entered into a definitive
Agreement and Plan of Merger (the "Merger Agreement") with Santa Anita Realty
Enterprises, Inc. and Santa Anita Operating Company (together, "Santa
Anita"). On November 5, 1997 the merger was consummated, and Meditrust merged
into Santa Anita. Shareholders of Meditrust received 1.2016 paired common
shares of Santa Anita for each paired share of Meditrust and MAC they owned
in a tax-free exchange of shares. The surviving corporations are now called
Meditrust Corporation and Meditrust Operating Company.
-11-
<PAGE>
MEDITRUST CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
--------
Management's Discussion and Analysis of Financial Condition and Results of
Operations include certain forward-looking statements. In addition, forward-
looking statements may be included in various other company documents to be
issued in the future and in various oral statements by management to security
analysts from time to time. Any such statements are not guarantees of future
performance as the Company's business is dependent upon general economic
conditions as well as various conditions specific to its industry as detailed
in Meditrust's Annual Report on Form 10-K for the year ended December 31,
1996. The Company's future results may differ materially from those expressed
in these forward-looking statements.
RESULTS OF OPERATIONS
---------------------
Revenues for the three months ended September 30, 1997 were $74,744,000
compared to $64,801,000 for the three months ended September 30, 1996, an
increase of $9,943,000 or 15.3%. Revenue growth was attributed to increased
rental income of $6,765,000 and increased interest income of $3,178,000.
These increases were principally the result of additional real estate
investments made during the past year.
For the three months ended September 30, 1997, total expenses increased by
$8,612,000 compared to the three months ended September 30, 1996. Interest
expense increased by $7,599,000 due to increases in debt outstanding
resulting from additional real estate investments made during the past year.
Depreciation and amortization increased by $1,359,000, as a result of
increased real estate investments. General and administrative expenses
decreased by $346,000.
Revenues for the nine months ended September 30, 1997 were $213,723,000
compared to $186,301,000 for the nine months ended September 30, 1996, an
increase of $27,422,000 or 14.7%. Revenue growth resulted from increased
rental income of $21,901,000 and increased interest income of $5,521,000
which resulted primarily from additional real estate investments during the
past twelve months.
For the nine months ended September 30, 1997, total expenses increased by
$18,867,000. Interest expense increased by $15,381,000 due to increases in
debt outstanding resulting from additional real estate investments made
during the past year. Depreciation and amortization expenses increased by
$3,530,000, as a result of increased real estate investments. General and
administrative expenses decreased by $44,000.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As of September 30, 1997, the Company's gross real estate investments totaled
approximately $2,671,419,000 consisting of 281 long-term care facilities, 26
rehabilitation hospitals, 151 retirement and assisted living facilities, 26
medical office buildings, six alcohol and substance abuse treatment facilities
and psychiatric hospitals, and one acute care hospital campus. As of September
30, 1997, the Company's outstanding commitments for additional financing
totaled
-12-
<PAGE>
MEDITRUST CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, Continued
approximately $265,405,000 for the completion of 60 facilities under
construction and additions to existing facilities in the portfolio.
The Company had shareholders' equity of $1,389,120,000 and debt constituted
48% of the Company's total capitalization as of September 30, 1997.
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 unsecured notes and 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.
On September 23, 1997 Meditrust purchased approximately 1.2 million paired
common shares of Santa Anita at $31.00 per paired common share.
On October 3, 1997, the Company paid a stock dividend to shareholders of
record on that date of one share of beneficial interest, without par value,
of its wholly-owned subsidiary Meditrust Acquisition Company, a Massachusetts
business trust ("MAC"), for each share of beneficial interest of Meditrust.
The Meditrust shares and the MAC shares, are jointly listed on the New York
Stock Exchange under the combined symbol MT, and are transferable and
tradable only in combination as units, each consisting of one Meditrust share
and one MAC share.
On October 14, 1997, the Company declared a dividend of $.7225 per Share
payable on November 14, 1997 to shareholders of record on October 31, 1997.
This dividend relates to the period from July 1, 1997 through September 30,
1997.
-13-
<PAGE>
MEDITRUST CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, Continued
Liquidity and Capital Resources, Continued
------------------------------------------
As of October 31, 1997, the Company had unsecured revolving lines of credit
expiring September 23, 1999 in the aggregate amount of $365,000,000, bearing
interest at the lender's prime rate (8.5%) or LIBOR plus .875% (6.5% at
October 31, 1997). A total of $285,000,000 was available from all credit
facilities at October 31, 1997.
On August 7, 1997, the Company completed the sale of $160,000,000 of 7% notes
due August 15, 2007. The Company also completed the sale of $100,000,000 in
notes due August 15, 2002 bearing interest at LIBOR plus .45 % (6.17% on
August 7, 1997), such interest is subject to reset quarterly during the first
year of the loan. Subsequent to the first year of the loan, the character
and duration of the interest rate will be determined periodically by the
Company and the underwriter. The Company also completed the sale of
$150,000,000 of 7.114% notes due August 15, 2011. The notes were sold to a
trust from which exercisable put option securities due August 15, 2004, each
representing a fractional undivided beneficial interest in the trust, were
issued. The trust has entered a call option pursuant to which the callholder
has the right to purchase the notes from the trust on August 15, 2004 at par
value. The trust also has a put option, which it is required to exercise if
the callholder does not exercise the call option, pursuant to which the
Company must repurchase the notes at par value on August 15, 2004. A portion
of the net proceeds from the sale of the notes described above was used to
repay the outstanding balance on the unsecured revolving line of credit and
other unsecured short-term borrowings.
The Company expects to file a shelf registration with the Securities and
Exchange Commission under which the Company would like to issue up to
approximately $2,000,000,000 of securities including Shares, Preferred shares
of beneficial interest ("Preferred Shares"), debt, convertible debt and
warrants to purchase Shares, Preferred Shares, debt and convertible debt.
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 1997, however, in the event that the
Company identifies appropriate investment opportunities, the Company may
raise additional capital through the sale of Shares or Preferred Shares or by
the issuance of additional long-term debt or through a securitization
transaction.
-14-
<PAGE>
MEDITRUST CORPORATION
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Title Method of Filing
- ------- ----- ----------------
<S> <C> <C>
11 Statement Regarding Computation of Per Share Earnings.......... Filed herewith
27 Financial Data Schedule........................................ Filed herewith
</TABLE>
(b) Reports on Form 8-K
During the quarter ended June 30, 1997, the Company filed a current report on
Form 8-K dated April 16, 1997, which included a description of the proposed
merger with Santa Anita.
During the quarter ended September 30, 1997, Meditrust filed a current report on
Form 8-K dated July 30, 1997, which included pro forma financial information and
Business Strategy related to the Proposed Merger with Santa Anita.
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 CORPORATION
Date: November 10, 1997 By: /s/ Laurie T. Gerber
-------------------------
Laurie T. Gerber, Chief Financial Officer
MEDITRUST OPERATING COMPANY
Date: November 10, 1997 By: /s/ Abraham D. Gosman
-------------------------
Abraham D. Gosman, Chief Executive Officer
-15-
<PAGE>
Exhibit 11
----------
MEDITRUST CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 30, September 30,
----------------------- ------------------
1997 1996 1997 1996
------- ----- -------- --------
<S> <C> <C> <C> <C>
Primary
- -------
Weighted average shares 61,652 60,809 61,557 58,883
Dilutive effect of:
Stock options 240 155 194 143
------- ------- -------- --------
Weighted average number of
shares and
equivalent shares
outstanding 61,892 60,964 61,752 59,026
======= ======= ======== ========
Net income $42,027 $40,721 $125,027 $116,497
======= ======= ======== ========
Net income per share (A) $0.68 $0.67 $ 2.02 $ 1.97
======= ======= ======== ========
</TABLE>
(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%.
<TABLE>
<CAPTION>
Fully Diluted
- -------------
<S> <C> <C> <C> <C>
Weighted average shares 61,652 60,809 61,557 58,883
Assumed conversion of
debentures 8,064 8,513 8,090 8,593
Dilutive effect of:
Stock options 350 158 350 158
------- ------- -------- --------
Fully diluted weighted
average shares
and equivalent shares
outstanding 70,066 69,480 69,998 67,634
======= ======= ======== ========
Net income $42,027 $40,721 $125,027 $116,497
Interest and debt
amortization on
assumed conversion of
debentures 5,659 5,950 16,971 17,994
------- ------- -------- --------
Adjusted net income for
fully diluted calculation $47,687 $46,671 $141,998 $134,491
======= ======= ======== ========
Net income per share (B) $0.68 $0.67 $2.03 $ 1.99
======= ======= ======== ========
</TABLE>
(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.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 OF MEDITRUST
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMETS.
</LEGEND>
<CIK> 0000314661
<NAME> SANTA ANITA REALTY ENTERPRISES INC
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 24,985
<SECURITIES> 0
<RECEIVABLES> 28,679
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,287,150
<DEPRECIATION> 117,206
<TOTAL-ASSETS> 2,719,379
<CURRENT-LIABILITIES> 0
<BONDS> 1,261,716
0
0
<COMMON> 1,531,167
<OTHER-SE> (142,047)
<TOTAL-LIABILITY-AND-EQUITY> 2,719,379
<SALES> 0
<TOTAL-REVENUES> 213,723
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,831
<INCOME-PRETAX> 125,052
<INCOME-TAX> 0
<INCOME-CONTINUING> 125,052
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,052
<EPS-PRIMARY> 2.03
<EPS-DILUTED> 2.03
</TABLE>
