<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 June 30, 1996
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 1-9028
NATIONWIDE HEALTH PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 95-3997619
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NUMBER)
4675 MACARTHUR COURT, SUITE 1170
NEWPORT BEACH, CALIFORNIA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(714) 251-1211
(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
------ ------
Shares of registrant's common stock, $.10 par value, outstanding at July 31,
1996 -- 41,781,432.
===============================================================================
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
FORM 10-Q
JUNE 30, 1996
TABLE OF CONTENTS
PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets.................................. 2
Condensed Consolidated Statements of Operations........................ 3
Condensed Consolidated Statements of Cash Flows........................ 4
Notes to Condensed Consolidated Financial Statements................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................... 7
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.................... 9
Item 6. Exhibits and Reports on Form 8-K....................................... 9
</TABLE>
1
<PAGE>
PART I
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------ -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Investments in real estate
Real estate properties:
Land............................................................. $ 67,123 $ 61,748
Buildings and improvements....................................... 550,824 530,979
------------ -----------
617,947 592,727
Less accumulated depreciation....................................... (81,751) (73,722)
------------ -----------
536,196 519,005
Mortgage loans receivable, net...................................... 133,093 133,226
------------ -----------
669,289 652,231
Cash and cash equivalents............................................. 10,450 7,937
Receivables........................................................... 3,586 3,478
Other assets.......................................................... 5,455 6,465
------------ -----------
$688,780 $670,111
============ ===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Bank borrowings......................................................... $ 14,700 $ 93,900
Senior notes due 2000-2015.............................................. 150,000 100,000
Notes and bonds payable................................................. 9,882 23,364
Convertible debentures.................................................. 65,000 65,000
Accounts payable and accrued liabilities................................ 19,197 16,025
Stockholders' equity:
Preferred stock $1.00 par value; 5,000,000 shares authorized; none
issued or outstanding
Common stock $.10 par value; 100,000,000 shares authorized;
issued and outstanding: 1996 - 41,781,432, 1995 - 38,720,532........ 4,179 3,872
Capital in excess of par value........................................ 462,384 401,438
Cumulative net income................................................. 270,723 245,135
Cumulative dividends.................................................. (307,285) (278,623)
------------ -----------
Total stockholders' equity....................................... 430,001 371,822
------------ -----------
$ 688,780 $ 670,111
============ ===========
</TABLE>
See accompanying notes.
2
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Minimum rent............................................ $ 16,472 $ 13,195 $ 32,639 $ 26,001
Interest and other income............................... 3,972 3,927 7,928 7,157
Additional rent and additional interest................. 2,856 2,843 5,664 5,659
---------- ---------- ---------- ----------
23,300 19,965 46,231 38,817
Expenses:
Depreciation and non-cash charges....................... 4,144 3,396 8,256 6,683
Interest and amortization of deferred financing costs... 5,300 3,564 10,731 6,888
General and administrative.............................. 847 808 1,656 1,592
---------- ---------- ---------- ----------
10,291 7,768 20,643 15,163
---------- ---------- ---------- ----------
Net income................................................ $ 13,009 $ 12,197 $ 25,588 $ 23,654
========== ========== ========== ==========
Net income per share...................................... $ 0.33 $ .33 $ .66 $ .64
========== ========== ========== ==========
Dividends paid per share.................................. $ 0.37 $ .35 $ .74 $ .69
========== ========== ========== ==========
Weighted average shares outstanding....................... 39,168 37,228 38,948 36,880
========== ========== ========== ==========
</TABLE>
See accompanying notes.
3
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash flow from operating activities:
Net income.......................................... $ 25,588 $ 23,654
Depreciation and non-cash charges................... 8,256 6,683
-------- --------
Funds from operations............................ 33,844 30,337
Amortization of deferred financing costs............ 374 314
Net decrease in other assets and liabilities........ 3,308 1,293
-------- --------
Net cash provided by operating activities........ 37,526 31,944
Cash flow from investing activities:
Acquisition of real estate properties............... (25,220) (53,583)
Disposition of real estate properties............... - 586
Investment in mortgage loans receivable............. (3,800) (21,450)
Principal payments on mortgage loans receivable..... 4,672 10,741
-------- --------
Net cash used in investing activities............ (24,348) (63,706)
Cash flow from financing activities:
Issuance of common stock............................ 61,149 35,588
Bank borrowings, net................................ (79,200) (32,400)
Issuance of senior debt............................. 50,000 56,000
Dividends paid...................................... (28,662) (25,352)
Principal payments on notes and bonds............... (13,482) (466)
Other, net.......................................... (470) (444)
-------- --------
Net cash provided by financing activities........ (10,665) (32,926)
-------- --------
Increase in cash and cash equivalents................. 2,513 1,164
Cash and cash equivalents, beginning of period........ 7,937 3,742
-------- --------
Cash and cash equivalents, end of period.............. $ 10,450 $ 4,906
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
(i) The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, and include all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
results of operations for the three-month and six-month periods ended June 30,
1996 and 1995 pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. Although the Company believes that the disclosures in such
financial statements are adequate to make the information presented not
misleading, these condensed consolidated financial statements should be read in
conjunction with the Company's financial statements and the notes thereto
included in the Company's 1995 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The results of operations for the three-
month and six-month periods ended June 30, 1996 and 1995 are not necessarily
indicative of the results for a full year.
(ii) On January 19, 1996, the Board of Directors of Nationwide Health
Properties, Inc. authorized a two-for-one stock split of the Company's common
stock effective March 8, 1996. The financial statements included herein have
been restated to reflect the stock split. Additionally, certain amounts in the
1995 financial statements have been reclassified for consistent financial
statement presentation.
(iii) The Company qualifies as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended. The Company
intends to continue to qualify as such and therefore to distribute at least 95
percent of its taxable income to its stockholders. Accordingly, no provision
has been made for federal income taxes.
(iv) The Company invests in health care related real estate and, as of June
30, 1996, had investments in 213 facilities, including 173 long-term health care
facilities, 38 assisted living facilities and 2 rehabilitation hospitals.
The Company's facilities which are owned and leased under "net" leases
are accounted for as operating leases. The leases have initial terms ranging
from 10 to 19 years, and the leases generally have two or more multiple-year
renewal options. The Company earns fixed monthly minimum rents and may earn
periodic additional rents. The additional rent payments are generally computed
as a percentage of facility net patient revenues in excess of base amounts. The
base amounts, in most cases, are net patient revenues for the first year of the
lease. Under the terms of the leases, the lessee is responsible for all
maintenance, repairs, taxes and insurance on the leased properties. Forty-five
of the facilities were leased to and operated by subsidiaries of Beverly
Enterprises, Inc.
(v) During the six-month period ended June 30, 1996, the Company acquired
three assisted living facilities and two long-term care facilities in four
separate transactions for an aggregate purchase price of approximately
$20,800,000. The acquisitions were funded by bank borrowings on the Company's
bank line of credit and cash on hand. The facilities were concurrently leased
under terms generally similar to the Company's existing leases.
In addition to the acquisitions, the Company provided capital improvement
funding in the aggregate amount of approximately $2,830,000 in accordance with
certain existing lease agreements. Such capital improvements will result in an
increase in the minimum rents earned by the Company.
5
<PAGE>
Proceeds of approximately $3,608,000 were received in connection with the
repayment of two mortgage loans secured by two long-term health care facilities.
Additionally, a $3,000,000 note was funded which is cross-collateralized by
properties under existing mortgage loans with the Company.
During the first six months of 1996, the Company issued $50,000,000 in
medium-term notes. The notes bear fixed interest at a weighted average of 7.19%
and have a weighted average maturity of 6 years. The proceeds were used to
reduce borrowings on the Company's bank line of credit.
In June 1996, the Company issued 3,047,500 shares of common stock in a
public offering at a price of $21.125 per share. Proceeds from the offering,
net of underwriters' fees and associated expenses, were approximately
$61,159,000. The net proceeds were used to repay borrowings under the Company's
bank line of credit.
6
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1996
OPERATING RESULTS
Six Months 1996 Compared to Six Months 1995
Revenues for the six-months ended June 30, 1996 increased $7,414,000 or 19%
over the same period in 1995. The increase is due to increased minimum rent and
interest income resulting from investments in additional facilities during the
last twelve months.
Total expenses for the six-month period increased $5,480,000 or 36% over
the same period in 1995. The increase is primarily due to increased interest
expense as a result of the issuance of medium term notes during 1995 and 1996
and greater borrowings under the Company's bank line of credit. The increase in
total expenses was also attributable to increased depreciation due to the
acquisition of additional facilities in the last twelve months.
Second Quarter 1996 Compared to Second Quarter 1995
Revenues for the three months ended June 30, 1996 increased $3,335,000 or
17% over the same period in 1995. The increase is primarily due to increased
minimum rent and interest income resulting from investments in additional
facilities during the last twelve months.
Total expenses for the three-months ended June 30, 1996 increased
$2,523,000 or 32% over the same period in 1995. The increase is primarily due
to the issuance of medium term notes during 1995 and 1996 and increased interest
expense as a result of greater borrowings under the Company's bank line of
credit. The increase in total expenses was also attributable to increased
depreciation due to the acquisition of additional facilities in the last twelve
months.
The Company expects increased rental revenues due to the addition of
facilities to its property base in the last twelve months and due to increased
additional rents under its leases. The Company also expects increased interest
income resulting from additional investments in mortgage loans over the last
twelve months. Additional investments in health care facilities would also
increase rental and/or interest income. As additional investments in facilities
are made, depreciation and/or interest expense could also increase. Any such
increases, however, are expected to be more than offset by rents or interest
income associated with the investments.
LIQUIDITY AND CAPITAL RESOURCES
During the six-month period ended June 30, 1996, the Company acquired three
assisted living facilities and two long-term care facilities in four separate
transactions for an aggregate purchase price of approximately $20,800,000. The
acquisitions were funded by bank borrowings under the Company's bank line of
credit and cash on hand. The facilities were concurrently leased under terms
generally similar to the Company's existing leases.
In addition to the acquisitions, the Company provided capital improvement
funding in the aggregate amount of approximately $2,830,000 in accordance with
certain existing lease agreements. Such capital improvements will result in an
increase in the minimum rents earned by the Company.
7
<PAGE>
Proceeds of approximately $3,608,000 were received in connection with the
repayment of two mortgage loans secured by two long-term health care facilities.
Additionally, a $3,000,000 note was funded which is cross-collateralized by
properties under existing mortgage loans with the Company.
During the first six months of 1996, the Company issued $50,000,000 in
medium-term notes. The notes bear fixed interest at a weighted average of 7.19%
and have a weighted average maturity of 6 years. The proceeds were used to
reduce borrowings under the Company's bank line of credit.
In June 1996, the Company issued 3,047,500 shares of common stock in a
public offering at a price of $21.125 per share. Proceeds from the offering,
net of underwriters' fees and associated expenses were approximately
$61,129,000. The net proceeds were used to repay borrowings under the Company's
bank line of credit.
At June 30, 1996, the Company had $85,300,000 available under its
$100,000,000 bank line of credit. The Company has effective shelf registrations
on file with the Securities and Exchange Commission under which the Company may
issue (a) up to $150,000,000 in aggregate principal amount of medium term notes
and (b) up to $33,121,562 of securities including debt, convertible debt, common
and preferred stock.
The Company anticipates making additional investments in health care
related facilities. Financing for such future investments may be provided by
borrowings under the Company's bank line, private placements or public offerings
of debt or equity, and the assumption of secured indebtedness. The Company
believes it has sufficient liquidity and financing capability to finance future
investments as well as repay borrowings at or prior to their maturity.
STATEMENT REGARDING FORWARD LOOKING DISCLOSURE
Certain information contained in this report includes forward looking
statements, which can be identified by the use of forward looking terminology
such as "may", "will", "expect", "should" or comparable terms or the negative
thereof. These statements involve risks and uncertainties that could cause
actual results to differ materially from those described in the statements.
These risks and uncertainties include (without limitation) the following; the
effect of economic and market conditions and changes in interest rates,
government regulations, changes in the health industry, the amount of any
additional investments, access to capital markets and changes in the ratings of
the Company's debt securities.
8
<PAGE>
OTHER INFORMATION
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Stockholders was held on April 19, 1996 ("Annual
Meeting"). At the Annual Meeting, R. Bruce Andrews and Charles D. Miller were
re-elected as directors to serve for a three-year terms until the 1999 Annual
Meeting of Stockholders. The other directors whose term of office continued
after the meeting are Milton J. Brock, Jr., David R. Banks, Sam A. Brooks, Jr.
and Jack Samuelson.
At the Annual Meeting, the proposal to amend the Company's Stock Option and
Restricted Stock Plan, as set forth in the Company's Proxy Statement dated March
14, 1996, was approved and the selection of Arthur Andersen LLP as independent
accountants for the year ending December 31, 1996 was ratified.
Voting at the Annual Meeting was as follows:
<TABLE>
<CAPTION>
Abstentions
Votes Votes and broker
Matter cast for cast against non-votes
------ ------------ ------------ -----------
<S> <C> <C> <C>
Election of R. Bruce Andrews 26,036,179 96,321 -
Election of Charles D. Miller 26,050,360 82,130 -
Amendment to the Company's Stock Option and
Restricted Stock Plan 22,325,610 3,582,324 136,422
Ratification of selection of Arthur Andersen LLP 26,065,347 23,636 43,507
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<C> <S>
(a) Exhibits
None.
(b) Reports on Form 8-K
During the three-month period ended June 30, 1996, the Company filed a
report on Form 8-K dated June 12, 1996 to file exhibits with respect
to the Company's public offering of 3,047,500 shares of common stock
in June 1996.
</TABLE>
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 12, 1996
NATIONWIDE HEALTH PROPERTIES, INC.
By /s/ MARK L. DESMOND
---------------------------------------
Mark L. Desmond
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 10,450
<SECURITIES> 0
<RECEIVABLES> 3,586
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,455
<PP&E> 617,947
<DEPRECIATION> 81,751
<TOTAL-ASSETS> 688,780
<CURRENT-LIABILITIES> 19,197
<BONDS> 239,582
0
0
<COMMON> 4,179
<OTHER-SE> 425,822
<TOTAL-LIABILITY-AND-EQUITY> 688,780
<SALES> 0
<TOTAL-REVENUES> 46,231
<CGS> 0
<TOTAL-COSTS> 20,643
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,731
<INCOME-PRETAX> 25,588
<INCOME-TAX> 0
<INCOME-CONTINUING> 25,588
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,588
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
</TABLE>
