SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A
Amendment No. 2
(Mark One)
x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 2002 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 0-25739
WELLS REAL ESTATE INVESTMENT
TRUST, INC.
(Exact name of registrant as specified in its charter)
| Georgia |
58-2328421 | |
| (State of other jurisdiction of incorporation) |
(I.R.S. Employer Identification No.) | |
| 6200 The Corners Parkway, Suite 250, Norcross, Georgia |
30092 | |
| (Address of principal executive offices) |
(Zip Code) |
(770) 449-7800
Registrant’s telephone number, including area code
(Former name, former address and former fiscal year, if changed since last report)
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 ¨
Explanatory Note: This Amendment No. 2 to the Form 10-Q of Wells Real Estate Investment Trust, Inc. (the
“Company”) for the period ended March 31, 2002 amends the Form 10-Q previously filed, as amended by Amendment No. 1 to the Form 10-Q dated July 10, 2002, by amending the Consolidated Statements of Income for the three months ended March
31, 2002 and Notes 1(k) and 2 to the Condensed Notes to Financial Statements and the “Results of Operations” subsection of the Management’s Discussion and Analysis of Financial Condition and Results of Operations. This amendment is
necessary in order to restate the presentation of certain operating costs of the Company reimbursed by tenants as revenue and the gross property operating costs as expenses pursuant to a FASB Emerging Issues Task Force release issued in November
2001. In addition, the comparative financial information for the prior period has been reclassified to conform with this revised presentation. Since this presentation does not impact the amount of reimbursements received by the Company or the
property operating costs incurred and requires equal adjustments to revenues and expenses, the adoption of this guidance will have no impact on the financial position, net income, earnings per share or cash flows of the Company.
1
Item 1. Financial Statements
Following is the amended and restated Consolidated Statements of Income for the three months ended March 31, 2002:
WELLS REAL ESTATE INVESTMENT TRUST, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| Three Months Ended | ||||||
| March 31, 2002 |
March 31, 2001 | |||||
| REVENUES: |
||||||
| Rental income |
$ |
16,738,163 |
$ |
9,860,085 | ||
| Operating cost reimbursements* |
|
4,414,919 |
|
1,562,308 | ||
| Equity in income of joint ventures |
|
1,206,823 |
|
709,713 | ||
| Interest income |
|
1,113,715 |
|
99,915 | ||
| Take out fee |
|
134,102 |
|
0 | ||
| |
|
|
| |||
| |
23,607,722 |
|
12,232,021 | |||
| |
|
|
| |||
| EXPENSES: |
||||||
| Depreciation |
|
5,744,452 |
|
3,187,179 | ||
| Management and leasing fees |
|
899,495 |
|
565,714 | ||
| Operating costs* |
|
5,039,617 |
|
2,653,493 | ||
| General and administrative |
|
529,031 |
|
175,107 | ||
| Interest expense |
|
440,001 |
|
2,160,426 | ||
| Amortization of deferred financing costs |
|
175,462 |
|
214,757 | ||
| |
|
|
| |||
| |
12,828,058 |
|
8,956,676 | |||
| |
|
|
| |||
| NET INCOME |
$ |
10,779,664 |
$ |
3,275,345 | ||
| |
|
|
| |||
| EARNINGS PER SHARE |
||||||
| Basic and diluted |
$ |
0.11 |
$ |
0.10 | ||
| |
|
|
| |||
See accompanying condensed notes to financial statements.
*These financial statement line items have been amended and restated as described in the accompanying Note 1(k).
2
Condensed Notes to Financial Statements
1. Summary of Significant Accounting Policies
Following is new Note 1(k) to be inserted immediately following Note 1(j) in the Condensed Notes to Consolidated Financial Statements:
(k) Reclassifications and Change in Presentation
The Company has historically reported
property operating costs net of reimbursements from tenants as an expense in its Consolidated Statements of Income. These costs include property taxes, property insurance, utilities, repairs and maintenance, management fees and other expenses
related to the ownership and operation of the Company’s properties that are required to be reimbursed by the properties’ tenants in accordance with the terms of their leases. In response to a FASB Emerging Issues Task Force release issued
in November 2001, the Company will now present the reimbursements received from tenants as revenue and the gross property operating costs as expenses commencing in the first quarter of 2002. Consequently, the accompanying Consolidated Statement of
Income for the three months ended March 31, 2002 has been amended and restated to reflect the effects of this revised presentation. In addition, the comparative financial information for the prior period has been reclassified to conform to the
presentation in the 2002 financial statement.
Since this presentation does not impact the amount of reimbursements received or property
operating costs incurred and requires equal adjustments to revenues and expenses, the adoption of this guidance will have no impact on the financial position, net income, earnings per share or cash flows of the Company.
2. Investments in Joint Ventures
Following is the amended and restated Note 2(b) to the Condensed Notes to Consolidated Financial Statements:
(b) Summary of Operations
The following information summarizes the results of operations
of the unconsolidated joint ventures in which the Company, through Wells OP, had ownership interests as of March 31, 2002 and 2001, respectively. There were no additional investments in joint ventures made by the Company during the three months
ended March 31, 2002.
| Total Revenues |
Net Income |
Wells OP’s Share of Net Income | ||||||||||||||||
| Three Months Ended |
Three Months Ended |
Three Months Ended | ||||||||||||||||
| March 31, 2002 |
March 31, 2001 |
March 31, 2002 |
March 31, 2001 |
March 31, 2002 |
March 31, 2001 | |||||||||||||
| Fund IX-X-XI-REIT Joint Venture |
$ |
1,384,155 |
$ |
1,470,111 |
$ |
554,268 |
$ |
638,435 |
$ |
20,572 |
$ |
23,696 | ||||||
| Cort Joint Venture |
|
212,387 |
|
199,586 |
|
129,750 |
|
133,753 |
|
56,658 |
|
58,406 | ||||||
| Fremont Joint Venture |
|
225,443 |
|
227,193 |
|
135,948 |
|
142,612 |
|
105,365 |
|
110,530 | ||||||
| Fund XI-XII-REIT Joint Venture |
|
861,033 |
|
855,779 |
|
497,149 |
|
514,277 |
|
282,197 |
|
291,918 | ||||||
| Fund XII-REIT Joint Venture |
|
1,673,839 |
|
953,510 |
|
805,513 |
|
445,321 |
|
442,726 |
|
208,634 | ||||||
| Fund VIII-IX-REIT Joint Venture |
|
324,680 |
|
267,624 |
|
160,696 |
|
105,033 |
|
273,931 |
|
16,529 | ||||||
| Fund XIII REIT Joint Venture |
|
700,857 |
|
0 |
|
401,674 |
|
0 |
|
25,374 |
|
0 | ||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||||
| |
$5,382,394 |
|
$3,973,803 |
|
$2,684,998 |
|
$1,979,431 |
|
$1,206,823 |
|
$709,713 | |||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||||
Total revenues for the three months ended March 31, 2002 presented above have been amended
and restated to include operating cost reimbursements as revenue, consistent with the presentation described in Note 1(k).
3
Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Following is the amended and restated “Results of Operations” section of Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations:
Results of Operations
As of March 31, 2002, the Company’s real estate properties were 100% leased to tenants. Gross revenues were $23,607,722 and $12,232,021 for the three months
ended March 31, 2002 and 2001, respectively. Gross revenues for the three months ended March 31, 2002 and 2001 were attributable to rental income, operating cost reimbursements, interest income earned on funds held by the Company prior to the
investment in properties, and income earned from joint ventures. The increase in revenues in 2002 was primarily attributable to the purchase of additional properties for $104,051,998 during 2002 and the purchase of additional properties for
$227,933,858 in the last three quarters of 2001. The purchase of additional properties also resulted in an increase in expenses which totaled $12,828,058 for the three months ended March 31, 2002, as compared to $8,956,676 for the three months ended
March 31, 2001. Expenses in 2002 and 2001 consisted primarily of depreciation, interest expense, management and leasing fees and general and administrative costs. As a result, the Company’s net income also increased from $3,275,345 for the
three months ended March 31, 2001 to $10,779,664 for the three months ended March 31, 2002.
4
PART II—OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) |
The Exhibits to this Amendment No. 2 to Quarterly Report are set forth on the Exhibit Index to First Quarter Amendment No. 2 to Form 10-Q/A attached hereto.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| WELLS REAL ESTATE INVESTMENT TRUST, INC. (Registrant) | ||
| By: |
/s/ DOUGLAS P.
WILLIAMS | |
| Douglas P. Williams Executive Vice President, Treasurer and Principal Financial Officer Dated: January 15, 2003 | ||
5
CERTIFICATIONS
I, Leo F. Wells, III, certify that:
1. |
I have reviewed this Amendment No. 2 to Quarterly Report on Form 10-Q/A and Amendment No. 1 to Quarterly Report on Form 10-Q/A and the Quarterly Report on Form
10-Q previously filed (collectively, this “Report”) of the registrant; |
2. |
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report; |
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: |
a) |
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this Report is being prepared, |
b) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this Report (the
“Evaluation Date”); and |
c) |
presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
|
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit
committee of the registrant’s board of directors: |
a) |
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process,
summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and |
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
|
6. |
The registrant’s other certifying officers and I have indicated in this Report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
| Dated: January 15, 2003 |
By: |
/s/ LEO F. WELLS, III | ||||||
| Leo F. Wells, III Principal Executive Officer | ||||||||
6
CERTIFICATIONS
I, Douglas P. Williams, certify that:
1. |
I have reviewed this Amendment No. 2 to Quarterly Report on Form 10-Q/A and Amendment No. 1 to Quarterly Report on Form 10-Q/A and the Quarterly Report on Form
10-Q previously filed (collectively, this “Report”) of the registrant; |
2. |
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report; |
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: |
a) |
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this Report is being prepared, |
b) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this Report (the
“Evaluation Date”); and |
c) |
presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
|
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit
committee of the registrant’s board of directors: |
a) |
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process,
summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and |
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
|
6. |
The registrant’s other certifying officers and I have indicated in this Report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
| Dated: January 15, 2003 |
By: |
/s/ DOUGLAS P. WILLIAMS | ||||||
| Douglas P. Williams Principal Financial Officer | ||||||||
7
EXHIBIT INDEX
TO
FIRST QUARTER AMENDMENT NO. 2 TO FORM 10-Q/A
OF
WELLS REAL ESTATE INVESTMENT TRUST, INC.
| Exhibit No.
|
||
| Description | ||
| 99.1 |
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 99.2 |
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
EXHIBIT 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)
In connection with the Quarterly Report of Wells Real Estate Investment Trust, Inc. (the “Registrant”) on Form 10-Q for the three month
period ended March 31, 2002, as amended by Amendment No. 1 and this Amendment No. 2 filed with the Securities and Exchange Commission on the date hereof (collectively, the “Report”), the undersigned, Leo F. Wells, III, Chief Executive
Officer of the corporate General Partner of the Registrant, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that, to the best of his knowledge and belief:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
/S/ LEO F. WELLS, III
Leo F. Wells, III
Chief Executive Officer
January 15, 2003
EXHIBIT 99.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)
In connection with the Quarterly Report of Wells Real Estate Investment Trust, Inc. (the “Registrant”) on Form 10-Q for the three month
period ended March 31, 2002, as amended by Amendment No.1 and this Amendment No. 2 filed with the Securities and Exchange Commission on the date hereof (collectively, the “Report”), the undersigned, Douglas P. Williams, Chief Financial
Officer of the corporate General Partner of the Registrant, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that, to the best of his knowledge and belief:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
/S/ DOUGLAS P. WILLIAMS
Douglas P. Williams
Chief Financial Officer
January 15, 2003