ElderTrust Announces Second Quarter and Year to Date 2003 Results.Business Editors WILMINGTON Wilmington. 1 City (1990 pop. 71,529), seat of New Castle co., NE Del., on the Delaware River and tributary streams, the Christina and the Brandywine; settled 1638, inc. as a city 1832. , Del.--(BUSINESS WIRE)--July 28, 2003 ElderTrust (NYSE NYSE See: New York Stock Exchange :ETT ETT Empresa de Trabajo Temporal (Spain) ETT European Transactions on Telecommunications ETT Exercise Treadmill Test ETT Embedded Training Team ETT Exercise Tolerance Test (cardiology) ) Second Quarter 2003: -- Reported net loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the and after results of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. was $1.2 million for 2Q'03 -- Reported net loss of $0.15 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for 2Q'03 on revenues of $8.1 million -- Reported FFO FFO See: Funds from operations of $0.43 per basic share and $0.42 per diluted share for 2Q'03 ElderTrust (NYSE:ETT), an equity healthcare REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). , today reported results for the second quarter ended June June: see month. 30, 2003. Net loss for the second quarter ended June 30, 2003 totaled $1.2 million from continuing operations and after the results of discontinued operations, or a loss of $0.15 per basic and diluted share. For the comparable quarter of 2002, the net income from continuing operations was $0.6 million and net income after discontinued operations was $0.3 million, or $0.05 per basic and $0.04 per diluted share. During the quarter the Company recognized an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss of $2.0 million on its Harston Harston is a village to the south of Cambridge, England. Harston House Harston House is an historic private house in Harston. It was formerly known as Harston Hall. Hall property. Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. (FFO) for the second quarter, totaled $3.3 million, or $0.43 per basic and $0.42 per diluted share, respectively, on revenues of $8.1 million. In comparison, FFO for the second quarter of 2002 totaled $3.1 million, or $0.42 per basic and $0.40 per diluted share, on revenues of $5.6 million. For the six months ended June 30, 2003, FFO totaled $7.4 million, or $0.96 per basic share and $0.95 per diluted share, on revenues of $16.2 million. Net income for the six months ended June 30, 2003 was $0.4 million from continuing operations and after loss on discontinued operations, or $0.05 per basic share and $0.05 per diluted share. For the comparable period in 2002, FFO totaled $6.2 million, or $0.84 per basic share and $0.80 per diluted share, on revenues of $11.5 million. Net income from continuing operations was $1.2 million and $1.0 million after loss on discontinued operations for the six months ended June 30, 2002, or $0.13 per basic and $0.12 diluted share. Net income for the six months ended June 30, 2003, included income of $0.9 million, or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.12 per basic and diluted share, related to the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of a bad debt reserve. This income was recognized by the Company during the quarter ended March 31, 2003. This reserve was recorded against a receivable from ET Capital Corp. During the first quarter, the Company obtained operational control of ET Capital Corp., and has subsequently consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: its operations. As a result of the consolidation of ET Capital Corp., the Company has realized amounts previously deemed to be uncollectible Adj. 1. uncollectible - not capable of being collected; "a bad (or uncollectible) debt" bad invalid - having no cogency or legal force; "invalid reasoning"; "an invalid driver's license" , resulting in the recognition of this additional income during the six months ended June 30, 2003 through the reversal of previously recorded bad debt expense. The Company noted that during the quarter it has entered into a non-binding letter of intent (the "Agreement") with Genesis Health Ventures, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :GHVI; "Genesis"; after the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. , "HealthCare") in connection with the Genesis spin-off of its ElderCare eld·er·care n. Social and medical programs and facilities intended for the care and maintenance of the aged. business. The Company noted that, if completed, the Agreement represents a significant restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of its transactions with Genesis. Details of this agreement are noted in the Company's press release dated July July: see month. 14, 2003 and in a Current Report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed with the SEC on the same date. The Form 8-K contains a more detailed description of the transactions and preliminary pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma financial information and preliminary funds from operations information giving effect to the proposed transactions. The Form 8-K can also be found under the "Documents" tab at www.eldertrust.com. Investors and other interested parties are encouraged to review this information. In addition the Company noted that the $14.2 million mortgage loan secured by the Harston Hall and Pennsburg properties had been extended to August 10, 2003. Negotiations are ongoing with respect to the ultimate resolution of this loan. Finally, the Company announced that it had retained Wachovia Securities Wachovia Securities, located in Richmond, Virginia (soon to be moved to St. Louis), is the third largest brokerage firm in the United States as of 2006 with $689 billion retail client assets under management. It is a subsidiary of Wachovia Corporation. to provide a fairness opinion Fairness Opinion A report put together by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or acquisition. Notes: A fairness opinion serves as a document used for guidance in a merger, takeover, or acquisition. to the Company in connection with the Genesis restructuring transaction. The Company also announced that it had retained Wachovia Securities to assist the Board in analyzing the Company's future direction. ElderTrust is a real estate investment trust that invests in real estate properties used in the healthcare services industry, principally along the East Coast of the United States The "Eastern Seaboard," or "Atlantic Seaboard" are terms referring to the easternmost coastal states in the United States. They touch the Atlantic Ocean and stretch up to Canada. . The Company currently owns or has interests in 31 properties. Certain matters discussed within this press release may be deemed to be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Although ElderTrust believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. . Factors that could cause actual results to differ materially from ElderTrust's expectations include the extent to which it can consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. the proposed transactions with Genesis Health Ventures, Inc. (and after the spin-off, HealthCare), the Company's principal tenant, the extent to which Genesis (and after the spin-off, HealthCare) continues to make lease payments to the Company, the Company's ability to extend, restructure or pay-off mortgage loans totaling approximately $14.2 million that mature on August 10, 2003, real estate conditions, changes in the economic conditions and other risks detailed from time to time in the Company's SEC reports and filings. The Company assumes no obligation to update or supplement forward-looking statements that become untrue un·true adj. un·tru·er, un·tru·est 1. Contrary to fact; false. 2. Deviating from a standard; not straight, even, level, or exact. 3. Disloyal; unfaithful. because of subsequent events. ElderTrust will host a conference call at 2:00 pm (Eastern Time) on July 29, 2003 to discuss the results of this year's second quarter. To listen to the call please dial 877-591-1121 and reference the "ElderTrust Second Quarter Earnings Call" hosted by D. Lee McCreary McCreary can refer to a number of things: People
(Financial Tables Follow)
ELDERTRUST
Financial Supplement
CONDENSED CONSOLIDATED INCOME STATEMENT
(unaudited)
($000's, except per share data)
For the three For the six
months ended months ended
June 30, June 30,
---------------------------------
2003 2002 2003 2002
---------------------------------
Revenues:
Rental revenues $8,050 $4,618 $16,089 $9,254
Interest, net of amortization of
deferred loan origination costs 69 70 134 144
Interest from unconsolidated
equity investees - 922 - 1,837
Other income - 24 - 234
---------------------------------
Total revenues 8,119 5,634 16,223 11,469
---------------------------------
Expenses:
Property operating expenses 314 285 607 713
Interest expense, including
amortization of deferred finance
costs 3,600 2,100 7,223 4,220
Bad debt expense (recapture) - - (894) 19
Depreciation and amortization 2,614 1,491 5,226 2,982
General and administrative 777 606 1,601 1,223
Loss on impairment of assets 2,021 - 2,021 -
---------------------------------
Total expenses 9,326 4,482 15,784 9,157
---------------------------------
Net income (loss) before equity in
losses of unconsolidated entities
and minority interest from
continuing operations (1,207) 1,152 439 2,312
Equity in losses of unconsolidated
entities, net - (546) - (1,066)
Minority interest 43 (31) (11) (66)
---------------------------------
Net income (loss) from continuing
operations (1,164) 575 428 1,180
Income (loss) on discontinued
operations after minority interest - (234) 72 (229)
---------------------------------
Net income (loss) ($1,164) $341 $356 $951
=================================
Basic weighted average number of
common shares outstanding 7,712 7,361 7,655 7,349
=================================
Diluted weighted average number of
common shares outstanding 7,976 7,705 7,716 7,692
=================================
Basic income (loss) per share:
Income from continuing operations (0.15) 0.08 0.06 0.16
Loss from discontinued operations - (0.03) (0.01) (0.03)
Net income (0.15) 0.05 0.05 0.13
Diluted income (loss) per share:
Income from continuing operations (0.15) 0.07 0.06 0.15
Loss from discontinued operations - (0.03) (0.01) (0.03)
Net income (0.15) 0.04 0.05 0.12
Funds from operations $3,294 $3,080 $7,360 $6,177
Basic per share funds from
operations 0.43 0.42 0.96 0.84
Diluted per share funds from
operations 0.42 0.40 0.95 0.80
ELDERTRUST
Financial Supplement
SELECTED BALANCE SHEET DATA
(unaudited)
($000's)
June 30, December 31,
2003 2002
-------------------------
Balance Sheet Data
---------------------------------------------
Investments in real estate, net 275,128 $282,057
Properties held for sale, net - 926
----------- -------------
Total real estate assets 275,128 282,983
Investments in and advances to unconsolidated
entities, net - 3,187
Working capital (1) (12,110) (14,340)
Total assets 294,590 306,775
Total debt 201,612 212,807
Shareholders' equity 82,036 82,744
(1) The Company's working capital deficit is $12.1 million and
$14.3 million at June 30, 2003 and December 31, 2002, respectively.
These amounts include the outstanding mortgage balance on the Harston
Hall and Pennsburg properties of $14.2 million and $14.9 million,
respectively, which has been extended to August 10, 2003. The working
capital deficit at December 31, 2002 includes an additional $2.0
million, the current portion of the $3.1 million outstanding balance
on the Guidance Line at December 31, 2002. The $3.1 million Guidance
Line was paid off on January 27, 2003.
The following table presents the Company's Funds from Operations
for the quarters ended June 30, 2003 and 2002:
Three months Six months
ended ended
June 30, June 30,
--------------------------------
2003 2002 2003 2002
--------------------------------
($000's)
Funds from Operations: (1)
Net income ($1,164) $341 $356 $951
Minority interest (43) 20 8 56
--------------------------------
Net income before minority interest (1,207) 361 364 1,007
Adjustments to derive funds from
operations:
Add:
Real estate depreciation and
amortization:
Consolidated
entities 2,608 1,499 5,215 2,999
Unconsolidated
entities - 1,122 - 2,244
Impairment charge on
real estate 2,021 - 2,021 -
Loss on sale of real
estate property - 250 38 250
--------------------------------
Funds from operations before
allocation to minority interest 3,422 3,232 7,638 6,500
Funds from operations allocable
to minority interest (128) (152) (278) (323)
--------------------------------
Funds from operations attributable
to the common shareholders 3,294 3,080 7,360 6,177
--------------------------------
Other Data:
Cash flow provided by operating
activities 3,496 2,803 6,825 4,681
Cash flow provided by (used in)
investing activities (207) (299) (414) 437
Cash flow used in financing
activities (2,259) (1,602) (7,461) (4,719)
(1) The White Paper on Funds from Operations approved by the Board
of Governors of NAREIT in October, 1999 defines Funds from Operations
as net income (loss), 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. The Company believes
that Funds from Operations is helpful to investors as a measure of the
performance of an equity REIT because, along with cash flow from
operating activities, financing activities and investing activities,
it provides investors with an indication of the ability of the Company
to incur and service debt, to make capital expenditures and to fund
other cash needs. The Company computes Funds from Operations using
standards established by NAREIT which may not be comparable to Funds
from Operations reported by other REITs that do not define the term
using the current NAREIT definition or that interpret the current
NAREIT definition differently than the Company. Funds from Operations
does not represent cash generated from operating activities using
generally accepted accounting principles and should not be considered
as an alternative to net income as an indication of the Company's
financial performance, or to cash flow from operating activities as a
measure of the Company's liquidity, nor is it indicative of funds
available to fund the Company's cash needs, including its ability to
make cash distributions. Effective January 1, 2000, Funds from
Operations includes both recurring and non-recurring results of
operations, except those results defined as "extraordinary items"
under generally accepted accounting principles and gains and losses
from sales of depreciable operating property.
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