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Equity | 9 Months Ended
--- | ---
Sep. 30, 2012
Equity |
Equity |
6. Equity Equity is allocated between controlling and non-controlling interests as follows (in thousands):
|  | LTC Properties, Inc. Stockholders’ Equity |  | Non-controlling Interest |  | Total Equity |
Balance at December 31, 2011 |  | $466,748 |  |  | $1,962 |  |  | $468,710 |  |
Net income |  | 38,519 |  |  | 30 |  |  | 38,549 |  |
Vested stock options and restricted stock |  | 1,355 |  |  | — |  |  | 1,355 |  |
Stock option exercises |  | 1,926 |  |  | — |  |  | 1,926 |  |
Reclassification adjustment |  | (40 | ) |  | — |  |  | (40 | ) |
Redemption of non-controlling interest |  | (1,190 | ) |  | (1,574 | ) |  | (2,764 | ) |
Non-controlling interest preferred return |  | — |  |  | (69 | ) |  | (69 | ) |
Preferred stock dividends |  | (2,454 | ) |  | — |  |  | (2,454 | ) |
Common stock dividends |  | (40,323 | ) |  | — |  |  | (40,323 | ) |
Balance at September 30, 2012 |  | $464,541 |  |  | $ 349 |  |  | $464,890 |  |
Preferred Stock. At September 30, 2012, we had 2,000,000 shares of our 8.5% Series C Cumulative Convertible Preferred Stock (or Series C preferred stock) outstanding. Our Series C preferred stock is convertible into 2,000,000 shares of our common stock at $19.25 per share. Total shares reserved for issuance of common stock related to the conversion of Series C preferred stock were 2,000,000 shares at September 30, 2012. During the nine months ended September 30, 2011, we redeemed 3,536,530 shares of our 8.0% Series F Cumulative Preferred Stock (or Series F preferred stock), representing all of the outstanding shares of Series F preferred stock. The Series F preferred stock had a liquidation value of $25.00 per share. The redemption price was $25.1333 per share, including accrued and unpaid dividends up to the redemption date. Accordingly, we recognized the $3,566,000 of original issue costs related to the Series F preferred stock as a preferred stock redemption charge in the consolidated income statement line item income allocated to preferred stockholders. During the three months ended September 30, 2012, we reclassified all of the authorized but unissued shares of the our 8.5% Series E Cumulative Convertible Preferred Stock (or Series E preferred stock) and our Series F preferred stock as authorized but unissued and unclassified shares of our preferred stock. No shares of Series E preferred stock or Series F preferred stock were outstanding immediately prior to the reclassification. Common Stock. 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 the nine months ended September 30, 2012 and 2011, we did not sell shares of our common stock under our equity distribution agreement. At September 30, 2012, we had $64,573,000 available under this amended equity distribution agreement. During the nine months ended September 30, 2011, we sold 3,990,000 shares of common stock at a price of $27.25 per share, before fees and costs, 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 the three months ended September 30, 2012, our Board of Directors terminated its authorization to repurchase up to 5,000,000 shares of our equity securities, including common and preferred stock in the open market. During the nine months ended September 30, 2012 and 2011, we did not purchase shares of our equity securities. At December 31, 2011, we had an open Board authorization to purchase 3,360,237 shares in total of equity securities. During the three months ended September 30, 2012, we amended our charter to increase the number of authorized shares of common stock from 45,000 to 60,000 shares. The charter amendment was approved by our stockholders at the 2012 annual meeting of stockholders held on May 22, 2012. Available Shelf Registrations. Our 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 September 30, 2012, we had availability of $167,614,000 under our effective shelf registration. 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. Since we exercise control, we consolidate the limited partnership and we carry the non-controlling interests at cost. During the three months ended September 30, 2012, our limited partner partially exercised his conversion rights to exchange 3,294 partnership units in the limited partnership. At our discretion, we converted his partnership units into an equal number of our common shares. The partnership conversion price is $17.00 per partnership unit. We accounted for this exchange as an equity transaction because there was no change in control requiring consolidation or deconsolidation and remeasurement. During the nine months ended September 30, 2012, two of our limited partners exercised their conversion rights. Excluding the conversion of the 3,294 partnership units, as previously discussed above, one limited partner exchanged all of its 67,294 partnership units and the other limited partner partially 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. We accounted 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. At September 30, 2012, we had reserved 20,000 shares of our common stock under this partnership agreement. At September 30, 2012, the carrying value and market value of the partnership conversion rights was $349,000 and $646,000, respectively. The following table represents the effect of changes in our ownership interest in the limited partnership on equity attributable to LTC Properties, Inc. (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
|  | 2012 |  | 2011 |  | 2012 |  | 2011 |
Net income attributable to LTC Properties, Inc. |  | $12,495 |  | $12,375 |  | $38,519 |  | $36,695 |
Transfers from the non-controlling interest |  |  |  |  |  |  |  |  |
Increase in paid-in capital for limited partners conversion |  | 56 |  | — |  | 56 |  | — |
Decrease in paid-in capital for limited partners conversion |  | — |  | — |  | (1,246) |  | — |
Change from net income attributable to LTC Properties, Inc. and transfers from non-controlling interest |  | $12,551 |  | $12,375 |  | $37,329 |  | $36,695 |
Distributions. We declared and paid the following cash dividends (in thousands):
|  | Nine months ended September 30, 2012 |  | Nine months ended September 30, 2011 |
|  | Declared |  | Paid |  | Declared |  | Paid |
Preferred Stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Series C |  |  | $ 2,454 |  |  |  | $ 2,454 |  |  |  | $ 2,454 |  |  |  | $ 2,454 |
Series F (1) |  |  | — |  |  |  | — |  |  |  | 2,240 | (2) |  |  | 4,008 |
|  |  | 2,454 |  |  |  | 2,454 |  |  |  | 4,694 |  |  |  | 6,462 |
Common Stock |  |  | 40,323 | (3) |  |  | 40,323 | (3) |  |  | 36,549 | (4) |  |  | 36,549 | (4)
Total |  |  | $42,777 |  |  |  | $42,777 |  |  |  | $41,243 |  |  |  | $43,011 |
(1) During 2011, we redeemed all of our remaining Series F preferred Stock. (2) Includes the accrued and unpaid dividends on the Series F preferred stock up to the redemption date. (3) Represents $0.145 per share per month for January through July of 2012 and $0.155 per share per month for August through September of 2012. (4) Represents $0.14 per share per month for the nine months ended September 30, 2011. In October 2012, we declared a monthly cash dividend of $0.155 per share on our common stock for the months of October, November and December 2012, payable on October 31, November 30, and December 31, 2012, respectively, to stockholders of record on October 23, November 21, and December 21, 2012, respectively. Other Equity. At September 30, 2012 and December 31, 2011, other equity consisted of accumulated comprehensive income of $160,000 and $199,000, respectively. This balance represents the net unrealized holding gains on available-for-sale REMIC Certificates recorded in 2005 when we repurchased the loans in the underlying loan pool. This amount is being amortized to increase interest income over the remaining life of the loans that we repurchased from the REMIC Pool. Stock-Based Compensation. During the nine months ended September 30, 2012, a total of 85,000 stock options were exercised at a total option value of $1,926,000 and a total market value on the date of exercise of $2,761,000. No stock options were exercised during the nine months ended September 30, 2011. Also, during the nine months ended September 30, 2012 and 2011, no stock options were issued. At September 30, 2012, we have no stock options that are scheduled to vest through December 31, 2012 or beyond. Compensation expense related to the vesting of stock options for the three and nine months ended September 30, 2012 was $2,000 and $10,000, respectively. Compensation expense related to the vesting of stock options for the three and nine months ended September 30, 2011 was $5,000 and $13,000, respectively. During the nine months ended September 30, 2012, we granted 8,000 shares of restricted common stock at $31.87 per share. These shares vest ratably over a three-year period from the grant date. Also, during the nine months ended September 30, 2012, we granted 56,200 shares of restricted common stock at $31.77 per share. The vesting of these shares are as follows: 14,000 shares vest ratably over a five-year period from the grant date, 30,000 shares all vest on June 15, 2015, and 12,200 shares all vest on January 10, 2016. During the nine months ended September 30, 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. During the three and nine months ended September 30, 2012, we recognized $443,000 and $1,345,000, respectively, of compensation expense related to the vesting of restricted common stock. During the three and nine months ended September 30, 2011, we recognized $369,000 and $1,082,000, respectively, of compensation expense related to the vesting of restricted common stock.

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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 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 3: 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 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 5: 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 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 Reference 7: 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 8: 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 9: 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 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644 Reference 11: 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 12: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Section B -Paragraph 7, 11A -Chapter 1 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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