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Equity | 12 Months Ended
--- | ---
Dec. 31, 2011
Equity |
Equity |
10. Equity Preferred Stock. Preferred Stock is comprised of the series summarized as follows:
|  | Shares outstanding at December 31, |  |  |  |  |  | Carrying Value at December 31, |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  | Liquidation Value Per share |  | Dividend Rate |
Issuance |  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Series C Cumulative Convertible Preferred Stock |  |  | 2,000,000 |  |  | 2,000,000 |  | $ | 19.25 |  |  | 8.5 | % | $ | 18.80 |  | $ | 18.80 |
Series F Cumulative Preferred Stock |  |  | — |  |  | 3,536,530 |  | $ | 25.00 |  |  | 8.0 | % | $ | — |  | $ | 23.99 |
Total Cumulative Preferred Stock |  |  | 2,000,000 |  |  | 5,536,530 |  |  |  |  |  |  |  |  |  |  |  |  |
Our 8.5% Series C Cumulative Convertible Preferred Stock (or Series C preferred stock) is convertible into 2,000,000 shares of our common stock. Dividends are payable quarterly. Total shares reserved for issuance of common stock related to the conversion of Series C preferred stock were 2,000,000 shares at December 31, 2011 and 2010. At December 31, 2011 and 2010, we had no shares of our 8.5% Series E Cumulative Convertible Preferred Stock (or Series E preferred stock) outstanding. Our Series E preferred stock was convertible at any time into shares of our common stock at a conversion price of $12.50 per share of common stock. During 2010, holders of 32,895 shares of Series E preferred stock elected to convert such shares into 65,790 shares of common stock. During 2010, we redeemed the remaining 4,921 shares of outstanding Series E preferred stock at a redemption price of $25.4191 per share, including accrued and unpaid dividends up to and including the redemption date. Accordingly, we recognized the $6,000 of original issue costs related to the Series E preferred stock as a preferred stock redemption charge which is included in the income statement line item "Income allocated to preferred stockholders." Our 8.0% Series F Cumulative Stock (or Series F preferred stock) were redeemable by us, at our option, in whole or from time to time in part, for $25.00 per Series F Preferred Stock in cash plus any accrued and unpaid dividends up to the date of redemption. The dividend rate was 8.0% and the liquidation value was $25.00 per share. Dividends were cumulative from the date of original issue and were payable quarterly to stockholders of record on the first day of each quarter. During 2011, we redeemed 3,536,530 shares of our Series F preferred stock, representing all of our remaining outstanding shares. The redemption price was $25.1333 per share, including accrued and unpaid dividends. During 2010, we redeemed 2,357,686 shares of our Series F preferred stock, representing 40% of our outstanding shares, at a redemption price of $25.3889 per share, including accrued and unpaid dividends. Accordingly, we recognized the $3,566,000 and $2,377,000 in 2011 and 2010, respectively, of original issue costs related to the Series F preferred stock as a preferred stock redemption charge which is included in the income statement line item "Income allocated to preferred stockholders." During 2009, we invested $2,000,000 to repurchase a total of 109,484 shares of our Series F Preferred Stock at an average cost including fees and costs of $18.27 per share. In accordance with the accounting guidance regarding the effect on the calculation of earnings per share for the redemption or induced conversion of preferred stock, the discounted purchase price on these shares, which is equal to the liquidation value over the redemption value, netted with the original issuance costs has been added to net income in calculating net income allocable to common stockholders. While outstanding, the liquidation preferences of each share of preferred stock are pari passu with one another. None have any voting rights, any stated maturity, nor are they subject to any sinking fund or mandatory redemption. Common Stock. During 2011, we sold 3,990,000 shares of common stock at a price of $27.25 per share, before fees and costs of $5,096,000, in an underwritten public offering. The net proceeds of $103,631,000 were used to redeem all of our Series F preferred stock outstanding, as previously discussed, and the remaining net proceeds were used to partially repay amounts outstanding under our Unsecured Credit Agreement. During 2010, we sold 1,970,000 shares of common stock at a price of $24.70 per share, before fees and costs of $703,000, in a registered direct placement to certain institutional investors. We raised $47,956,000 in net proceeds from the offering. The net proceeds were used to redeem all of our Series E preferred stock and 40% of our Series F preferred stock outstanding, as previously discussed. We have an equity distribution agreement which allows us to issue and sell, from time to time, up to $85,686,000 in aggregate offering price of our common shares. Sales of common shares are made by means of ordinary brokers' transactions at market prices, in block transactions, or as otherwise agreed between us and our sales agents. During 2011, we did not sell shares of our common stock under our equity distribution agreement. During 2010, we sold 776,400 shares of common stock at a weighted average price, including fees and costs, of $25.55 per share, resulting in net proceeds of $19,838,000 after $492,000 of fees and costs. During 2009, we sold 30,000 shares of common stock at a weighted average price, including fees and costs, of $25.54 per share, resulting in net proceeds of $766,000 after $18,000 of fees and costs. At December 31, 2011, we had $64,573,000 available under this equity distribution agreement. Our Board of Directors authorized a share repurchase program enabling us to repurchase up to 5,000,000 shares of our equity securities, including common and preferred stock in the open market. This authorization does not expire until 5,000,000 shares of our equity securities have been repurchased or the Board of Directors terminates its authorization. During 2011 and 2010, we did not purchase shares of our equity securities. At December 31, 2011, we continue to have an open Board authorization to purchase an additional 3,360,237 shares in total of equity securities. Non-controlling Interests. We have one limited partnership. The limited partnership agreement allows the limited partners to convert, on a one-for-one basis, their limited partnership units into shares of common stock or the cash equivalent, at our option. At December 31, 2011, we have reserved 112,588 shares of our common stock under this partnership agreement. Since we exercise control, we consolidate the limited partnership and we carry the non-controlling interests at cost. At December 31, 2011, the carrying value and market value of the partnership conversion rights was $1,962,000 and $3,522,000, respectively. In January 2012, two of our limited partners exercised their conversion rights. One limited partner exchanged all of its 67,294 partnership units and the other limited partner exchanged 22,000 partnership units in the limited partnership. Upon receipt of the redemption notification of 89,294 limited partnership units, we elected to satisfy the redemption in cash. We paid the limited partners $2,764,000, which represents the closing price of our common stock on the redemption date plus $0.05 per share multiplied by the number of limited partnership units redeemed. The amount we paid upon redemption exceeded the book value of the limited partnership interest redeemed by $1,246,000. In accordance with FASB accounting guidance, we account for this exchange as an equity transaction because there was no change in control requiring consolidation or deconsolidation and remeasurement. Accordingly, the $1,246,000 excess book value of the limited partners' interest in the partnership was reclassified to stockholders' equity. Subsequent to these conversions, we have reserved 23,294 shares of our common stock under this partnership agreement. During 2011 and 2010, none of our limited partners exercised their conversion rights. During 2009, one of our limited partners exercised its conversion rights and exchanged all of its interest in the limited partnership. Upon receipt of the redemption notification of 67,294 limited partnership units, we elected to convert its partnership units into 67,294 shares of our common stock. In accordance with FASB accounting guidance, we account for this exchange as an equity transaction because there was no change in control requiring consolidation or deconsolidation and remeasurement. Accordingly, the $1,144,000 carrying amount of the limited partner's interest in the partnership was reclassified to stockholders' equity. The following table represents the change from net income attributable to us and transfers from non-controlling interest (in thousands):
|  | Years Ended December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2009 |
Net income attributable to LTC Properties, Inc. |  | $ | 49,252 |  | $ | 45,862 |  | $ | 44,064 |
Transfers from the non-controlling interest |  |  |  |  |  |  |  |  |  |
Increase in paid-in capital for limited partners conversion |  |  | — |  |  | — |  |  | 1,144 |
Change from net income attributable to LTC Properties, Inc. and transfers from non-controlling interest |  | $ | 49,252 |  | $ | 45,862 |  | $ | 45,208 |
Available Shelf Registrations. During 2010, we filed a Form S-3 "shelf" registration statement which became effective June 16, 2010 to replace our prior shelf registration statement. Our current shelf registration statement provides us with the capacity to offer up to $400,000,000 in common stock, preferred stock, warrants, debt, depositary shares, or units. We may from time to time raise capital under our current shelf registration in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering. At December 31, 2011, we had availability of $167,614,000 under our effective shelf registration. Dividend Distributions. We declared and paid the following cash dividends on our common and preferred stock (in thousands):
|  | Year Ended December 31, 2011 |  | Year ended December 31, 2010 |
--- | --- | --- | --- | --- | ---
|  | Declared |  | Paid |  | Declared |  | Paid |
Preferred Stock |  |  |  |  |  |  |  |  |  |  |  |  |
Series C |  | $ | 3,272 |  | $ | 3,272 |  | $ | 3,272 |  | $ | 3,272 |
Series E(1) |  |  | — |  |  | — |  |  | 42 |  |  | 62 |
Series F(2) |  |  | 2,240 | (3) |  | 4,008 |  |  | 10,348 | (3) |  | 11,527 |
Total Preferred |  |  | 5,512 |  |  | 7,280 |  |  | 13,662 |  |  | 14,861 |
Common Stock(4) |  |  | 49,292 |  |  | 49,292 |  |  | 39,041 |  |  | 39,041 |
Total(5) |  | $ | 54,804 |  | $ | 56,572 |  | $ | 52,703 |  | $ | 53,902 |
(1) During 2010, we redeemed all of our Series E preferred stock. (2) During 2010, we redeemed 40% of our Series F preferred stock. During 2011, we redeemed all of our remaining Series F preferred stock. (3) Includes the accrued and unpaid dividends on the series F preferred stock up to the redemption date. (4) Represents $0.14 per share per month for 2011. For 2010, represents $0.13 per share per month for January through October and $0.14 per share per month for November and December. (5) The difference between declared and paid is the change in distributions payable on the balance sheet at December 31. In January 2012, we declared a monthly cash dividend of $0.145 per share on our common stock for the months of January, February and March 2012, which is a 3.6% increase from the previous $0.14 per share per month dividend. The monthly cash dividends are payable on January 31, February 29 and March 30, 2012, respectively, to stockholders of record on January 23, February 21 and March 22, 2012, respectively. Other Equity. During the years we had investments in Real Estate Mortgage Investment Conduit (or REMIC) Certificates, we retained the non-investment grade certificates issued in the securitizations. During 2005, a loan was paid off in the last remaining REMIC pool which caused the last third party REMIC Certificate holders entitled to any principal payments to be paid off in full. After this transaction, we became the sole holder of the remaining REMIC Certificates and are therefore entitled to the entire principal outstanding of the loan pool underlying the remaining REMIC Certificates. Under the FASB accounting guidance relating to accounting for changes that result in a transferor regaining control of financial assets sold, a Special Purpose Entity (or SPE) may become non-qualified or tainted which generally results in the "repurchase" by the transferor of all the assets sold to and still held by the SPE. Since we were the sole REMIC Certificate holder entitled to principal from the underlying loan pool, we had all the risks and were entitled to all the rewards from the underlying loan pool. As required by the accounting guidance, the repurchase for the transferred assets was accounted for at fair value. The accumulated other comprehensive income balance represents the fair market value adjustment offset by any previously adjusted impairment charge which is amortized to increase interest income over the remaining life of the loans that we repurchased from the REMIC pool. At December 31, 2011 and 2010, Other Equity consisted of $199,000 and $264,000, respectively, of accumulated other comprehensive income. Stock Based Compensation Plans. During 2008 we adopted and our shareholders approved the 2008 Equity Participation Plan under which 600,000 shares of common stock have been reserved for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2008 Equity Participation Plan are set by our compensation committee at its discretion. Restricted Stock. During 2011 we granted 6,000 shares of restricted common stock at $28.70 per share. These shares vest ratably over a three-year period from the grant date. In January 2012, we granted 14,000 shares of restricted common stock at $31.77 per share. These shares vest ratably over a five-year period from the grant date. Additionally, we granted 30,000 shares of restricted common stock at $31.77 per share. These shares all vest on June 15, 2015. We also granted 12,200 shares of restricted common stock at $31.77 per share in January 2012. These shares all vest on January 10, 2016. During 2010, we granted 4,000 shares of restricted stock at $25.95 per share, 1,000 shares of restricted stock at $25.04 per share and 11,030 shares of restricted stock at $26.53 per share. These shares vest ratably over a three-year period from the grant date. Additionally, during 2010, we granted 92,900 shares of restricted stock at $26.59 per share. These shares vest ratably over a five-year period from the grant date. We also granted 99,661 shares of restricted stock at $26.53 per share during 2010. These shares vest ratably over a five-year period with the first date of vesting beginning in December 31, 2010. Dividends are payable on the restricted shares to the extent and on the same date as dividends are paid on all of our common stock. Restricted stock activity for the years ended December 31, 2011 and 2010 was as follows:
|  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | ---
Outstanding, January 1 |  |  | 217,317 |  |  | 84,866 |
Granted |  |  | 6,000 |  |  | 208,591 |
Vested |  |  | (58,183 | ) |  | (76,140 | )
Canceled |  |  | — |  |  | — |
Outstanding, December 31 |  |  | 165,134 |  |  | 217,317 |
Compensation expense for the year(1) |  | $ | 1,450,000 |  | $ | 1,210,000 |
(1) At December 31, 2011, the total compensation cost related to unvested restricted stock granted is $3,892,000, which will be recognized ratably over the remaining vesting period. Stock Options. No stock options were issued during 2011 and 2010. Nonqualified stock option activity for the years ended December 31, 2011 and 2010, was as follows:
|  | Shares |  | Weighted Average Price |
--- | --- | --- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Outstanding, January 1 |  |  | 185,334 |  |  | 197,000 |  | $ | 23.34 |  | $ | 22.88 |
Granted |  |  | — |  |  | — |  | $ | — |  | $ | — |
Exercised |  |  | (5,000 | ) |  | (11,666 | ) | $ | 23.79 |  | $ | 15.62 |
Canceled |  |  | — |  |  | — |  | $ | — |  | $ | — |
Outstanding, December 31 |  |  | 180,334 |  |  | 185,334 |  | $ | 23.33 |  | $ | 23.34 |
Exercisable, December 31(1) |  |  | 175,334 |  |  | 175,334 |  | $ | 23.29 |  | $ | 23.27 |
(1) The aggregate intrinsic value of exercisable options at December 31, 2011, based upon the closing price of our common shares at December 30, 2011, amounted to approximately $1,327,000. Options exercisable at December 31, 2011 have a weighted average remaining contractual life of approximately 3.5 years. The options exercised during 2011 and 2010 were as follows:
|  | Options Exercised |  | Weighted Average Exercise Price |  | Option Value |  | Market Value(1) |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
2011 |  |  | 5,000 |  | $ | 23.79 |  | $ | 119,000 |  | $ | 152,000 |
2010 |  |  | 11,666 |  | $ | 15.62 |  | $ | 182,000 |  | $ | 315,000 |
(1) As of the exercise dates. We use the Black-Scholes-Merton formula to estimate the value of stock options granted to employees. This model requires management to make certain estimates including stock volatility, expected dividend yield and the expected term. If management incorrectly estimates these variables, the results of operations could be affected. The weighted average exercise share price of the options was $23.33 and $23.34 and the weighted average remaining contractual life was 0.0 and 0.1 years as of December 31, 2011 and 2010, respectively. At December 31, 2011, the total compensation cost related to unvested stock options granted was $10,000, which will be recognized over the remaining vesting period.

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- Definition The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 3, 4, 5, 6, 7, 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 15 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 4 -Section 08 -Paragraph d Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Chapter 1 -Section B -Paragraph 7, 11A -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 20: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644 Reference 21: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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