10-Q 1 e10-q.txt HEALTH CARE REIT, INC. FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (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, 2000 ------------------------------------------------ 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 1-8923 HEALTH CARE REIT, INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 34-1096634 ----------------------------------------- -------------------- (State or jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One SeaGate, Suite 1500, Toledo, Ohio 43604 ------------------------------------- --------------------- (Address of principal executive office) (Zip Code) (Registrant's telephone number, including area code) (419) 247-2800 -------------------------- ________________________________________________________________________________ (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 [ ]. APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _____. No _____. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of August 11, 2000. Class: Shares of Common Stock, $1.00 par value Outstanding 28,616,967 shares 2 HEALTH CARE REIT, INC. INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - June 30, 2000 and December 31, 1999 3 Consolidated Statements of Income - Three and six months ended June 30, 2000 and 1999 4 Consolidated Statements of Shareholders' Equity - Six months ended June 30, 2000 and 1999 5 Consolidated Statements of Cash Flows - Six months ended June 30, 2000 and 1999 6 Notes to Unaudited Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosure About Market Risk 11 Item 4. Submission of Matters to a Vote of Security Holders 12 PART II. OTHER INFORMATION Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14 EXHIBIT INDEX 15 -2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
JUNE 30 DECEMBER 31 2000 1999 (UNAUDITED) (NOTE) ----------- ------ ASSETS (IN THOUSANDS) Real estate investments: Real property owned: Land $ 72,374 $ 73,234 Buildings & improvements 740,290 730,337 Construction in progress 27,462 58,954 ----------- ----------- 840,126 862,525 Less accumulated depreciation (41,952) (35,746) ----------- ----------- Total real property owned 798,174 826,779 Loans receivable Real property loans 318,259 401,019 Subdebt investments 26,541 19,511 ----------- ----------- 1,142,974 1,247,309 Less allowance for loan losses (6,087) (5,587) ----------- ----------- Net real estate investments 1,136,887 1,241,722 Other Assets: Equity investment 5,790 6,713 Cash and cash equivalents 3,022 2,129 Deferred loan expenses 3,273 3,311 Receivables and other assets 20,354 17,296 ----------- ----------- 32,439 29,449 ----------- ----------- TOTAL ASSETS $ 1,169,326 $ 1,271,171 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Borrowings under line of credit obligations $ 122,800 $ 177,500 Senior unsecured notes 255,000 290,000 Secured debt 64,882 71,342 Accrued expenses and other liabilities 21,932 25,333 ----------- ----------- TOTAL LIABILITIES 464,614 564,175 Shareholders' equity: Preferred Stock, $1.00 par value: Authorized - 10,000,000 shares Issued and outstanding - 6,000,000 shares 150,000 150,000 Common Stock, $1.00 par value: Authorized - 75,000,000 shares Issued and outstanding - 28,659,714 in 2000 and 28,532,419 in 1999 28,660 28,532 Capital in excess of par value 525,980 524,204 Undistributed net income 4,956 8,883 Accumulated other comprehensive income (413) 593 Unamortized restricted stock (4,471) (5,216) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 704,712 706,996 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,169,326 $ 1,271,171 =========== ===========
NOTE: The consolidated balance sheet at December 31, 1999 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to unaudited consolidated financial statements -3- 4 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2000 1999 2000 1999 ----------------- ----------------- ------------ ------------ (IN THOUSANDS EXCEPT PER SHARE DATA) REVENUES: Rental income $ 22,087 $ 18,134 $ 43,718 $ 32,274 Interest income 10,192 12,142 21,713 23,937 Commitment fees and other income 1,591 1,718 3,266 3,764 Prepayment fees 57 475 57 658 ----------------- ----------------- ------------ ------------ Total revenue 33,927 32,469 68,754 60,633 EXPENSES: Interest expense 8,581 6,680 17,682 10,949 Loan expense 286 252 603 418 Provision for depreciation 5,311 4,451 10,574 8,006 Provision for losses 250 150 500 300 General and administrative expenses 1,930 1,872 3,830 3,546 ----------------- ----------------- ------------ ------------ Total expenses 16,358 13,405 33,189 23,219 ----------------- ----------------- ------------ ------------ Net income before gain on sale of properties 17,569 19,064 35,565 37,414 Gain on sale of properties 394 75 517 703 ----------------- ----------------- ------------ ------------ Net Income 17,963 19,139 36,082 38,117 Preferred stock dividends 3,376 3,352 6,738 6,111 ----------------- ----------------- ------------ ------------ Net Income Available to Common Shareholders $ 14,587 $ 15,787 $ 29,344 $ 32,006 ================= ================= ============ ============ Average number of common shares outstanding: Basic 28,384 28,145 28,350 28,111 Diluted 28,613 28,440 28,579 28,431 Net income per share: Basic $ 0.51 $ 0.56 $ 1.04 $ 1.14 Diluted 0.51 0.56 1.03 1.13 Dividends declared and paid per common share $ 0.585 $ 0.565 $ 1.165 $ 1.125
See notes to unaudited consolidated financial statements -4- 5 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
Six months ended June 30, 2000 --------------------------------------------------------------------------------------------- Capital In Unamortized Accum. Other Preferred Common Excess of Restricted Undistributed Comprehensive In thousands Stock Stock Par Value Stock Net Income Income Total -------------------------------------------------------------------------------------------- Balance at beginning of period $150,000 28,532 $524,204 $(5,216) $ 8,883 $ 593 $706,996 Comprehensive income: Net income 36,082 36,082 Unrealized gains on securities (571) (571) Foreign currency translation adjustment (435) (435) -------- Comprehensive income 35,076 Proceeds from issuance of common stock from dividend reinvestment and stock incentive plans, net of forfeitures 128 1,776 118 2,022 Restricted stock amortization 627 627 Cash dividends paid (40,009) (40,009) ------- ------- ------- -------- ---------- --------- ---------- Balance at end of period $150,000 $28,660 $525,980 $(4,471) $ 4,956 $ (413) $704,712 ======== ======= ======== ======== ========= ========= ========== Six months ended June 30, 1999 -------------------------------------------------------------------------------------------- Capital In Unamortized Accum. Other Preferred Common Excess of Restricted Undistributed Comprehensive Stock Stock Par Value Stock Net Income Income Total --------------------------------------------------------------------------------------------- Balance at beginning of period $75,000 $28,240 $520,692 $(4,589) $ 10,434 $ 3,982 $633,759 Comprehensive income: Net income 38,117 38,117 Unrealized gains on securities (2,602) (2,602) -------- Foreign currency translation adjustment (167) (167) -------- Comprehensive income 35,348 Proceeds from issuance of common stock from dividend reinvestment plan and stock incentive plans 139 3,125 (228) 3,036 Proceeds from sale of Preferred Stock 75,000 (2,455) 72,545 Restricted stock amortization 594 594 Cash dividends paid (37,930) (37,930) -------- ------- -------- -------- --------- --------- -------- Balance at end of period $150,000 $28,379 $521,362 $(4,223) $ 10,621 $ 1,213 $707,352 ======== ======= ======== ======== ========== ========= ========
See notes to unaudited consolidated financial statements -5- 6 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
SIX MONTHS ENDED JUNE 30 2000 1999 ------------------------------ (IN THOUSANDS) OPERATING ACTIVITIES Net income $ 36,082 $ 38,117 Adjustments to reconcile net income to net cash Provision for depreciation 10,702 8,107 Provision for losses 500 300 Amortization 1,229 1,012 Loan and commitment fees earned (more) less than cash received (1,154) 1,001 Direct financing lease income less than cash received - 65 Rental income in excess of cash received (2,441) (3,138) Interest and other income in excess of cash received (166) (138) Increase(decrease) in accrued expenses and other liabilities (2,246) 2,487 Decrease in receivables and other assets (156) (982) ---------- ---------- NET CASH PROVIDED FROM OPERATING ACTIVITIES 42,350 48,795 INVESTING ACTIVITIES Investment in real properties (28,063) (158,558) Investment in loans receivable (11,668) (37,211) Other investments, net (6,946) (3,822) Principal collected on loans 47,649 21,561 Proceeds from sale of properties 92,872 8,142 Other (589) (325) ------------ ------------ NET CASH PROVIDED FROM (USED IN) INVESTING ACTIVITIES 93,255 (170,213) FINANCING ACTIVITIES Net payments under line of credit arrangements (54,700) (14,950) Principal payments on long-term obligations (41,460) (43) Net proceeds from the issuance of Common Stock 2,022 3,036 Net proceeds from the issuance of Preferred Stock - 72,545 Proceeds from issuance of Senior Notes - 50,000 Proceeds from issuance of Secured Debt - 50,000 Increase in deferred loan expense (565) (1,604) Cash distributions to shareholders (40,009) (37,928) ------------ ------------ NET CASH PROVIDED FROM (USED IN)FINANCING ACTIVITIES (134,712) 121,056 ------------ ----------- Increase (decrease) in cash and cash equivalents 893 (362) Cash and cash equivalents at beginning of period 2,129 1,269 ------------ ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,022 $ 907 ============ =========== Supplemental Cash Flow Information -- Interest Paid $ 21,182 $ 15,353 ============ ===========
See notes to unaudited consolidated financial statements -6- 7 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS HEALTH CARE REIT, INC. AND SUBSIDIARIES NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered for a fair presentation has been included. Operating results for the six months ended June 30, 2000, are not necessarily an indication of the results that may be expected for the year ending December 31, 2000. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1999. NOTE B - REAL ESTATE INVESTMENTS During the six months ended June 30, 2000, the Company invested $11,786,000 in real property, made construction advances of $20,535,000 and funded $9,941,000 of equity related investments. During the six months ended June 30, 2000, the Company sold $92,872,000 of real property, received principal payments on real estate mortgages of $47,649,000 and had net advances on working capital loans of $7,345,000. With respect to the above-mentioned construction advances, funding for construction in progress in connection with twelve properties owned directly by the Company totaled $16,277,000, and funding associated with six construction loans represented $4,258,000. During the six months ended June 30, 2000, five of the construction properties in progress with an investment balance of $34,989,000 completed the construction phase of the Company's investment process and were converted to permanent operating leases. Also, during the six months ended June 30, 2000, three of the construction loans with an investment balance of $10,690,000 completed the construction phase of the Company's investment process and were converted to investments in permanent mortgage loans. NOTE C - EQUITY INVESTMENTS Management determines the appropriate classification of an equity investment at the time of acquisition and reevaluates such designation as of each balance sheet date. Equity investments include direct investments and marketable securities. Direct investments are stated at historical cost. At June 30, 2000, direct investments included the preferred stock of one private corporation, and a 31% interest in Atlantic Healthcare Finance L.P., a property investment group that specializes in the financing, through sale and leaseback transactions, of nursing homes located in the United Kingdom and continental Europe. Marketable securities are stated at market value with unrealized gains and losses reported in a separate component of shareholders' equity. At June 30, 2000, marketable securities reflected the market value of the common stock of two publicly owned corporations which were obtained by the Company at no cost. -7- 8 NOTE D - CONTINGENT LIABILITIES As disclosed in the financial statements for the year ended December 31, 1999, the Company was contingently liable for certain obligations amounting to $12,425,000. NOTE E - DISTRIBUTIONS PAID TO COMMON SHAREHOLDERS On February 21, 2000, the Company paid a dividend of $0.58 per share to shareholders of record on February 1, 2000. This dividend related to the period from October 1, 1999 through December 31, 1999. On May 22, 2000, the Company paid a dividend of $0.585 per share to shareholders of record on May 2, 2000. This dividend related to the period from January 1, 2000 to March 31, 2000. NOTE F - EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Three months ended June 30 Six months ended June 30 --------------------------------- -------------------------------- 2000 1999 2000 1999 --------- --------- --------- -------- Numerator for basic and diluted earnings per share-income available to common shareholders $ 14,587 $ 15,787 $ 29,344 $ 32,006 ========= ========== ========= ========= Denominator for basic earnings per share - weighted average shares 28,384 28,145 28,350 28,111 Effect of dilutive securities: Employee stock options - 95 - 120 Nonvested restricted shares 229 200 229 200 --------- ---------- --------- --------- Dilutive potential common shares 229 295 229 320 --------- ---------- --------- --------- Denominator for diluted earnings per share - adjusted weighted average shares 28,613 28,440 28,579 28,431 ========= ========== ========= ========= Basic earnings per share $ .51 $ .56 $ 1.04 $ 1.14 Diluted earnings per share $ .51 $ .56 $ 1.03 $ 1.13
The diluted earnings per share calculation excludes the dilutive effect of 1,813,000 and 179,000 shares for 2000 and 1999, respectively because the exercise price was greater than the average market price. The Series C Cumulative Convertible Preferred Stock was not included in this calculation as the effect of the conversion was anti-dilutive. -8- 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES At June 30, 2000, the Company's net real estate investments totaled $1,136,887,000, which included 159 assisted living facilities, 48 nursing facilities, six specialty care facilities and two behavioral care facilities. Depending upon the availability and cost of external capital, the Company anticipates making additional investments in health care related facilities. New investments are funded from temporary borrowings under the Company's line of credit arrangements, internally generated cash and the proceeds derived from asset sales. Permanent financing for future investments, which replaces funds drawn under the line of credit arrangements, is expected to be provided through a combination of private and public offerings of debt and equity securities and the assumption of secured debt. The Company believes its liquidity and various sources of available capital are sufficient to fund operations, meet debt service and dividend requirements, and finance future investments. During 1999 and the first half of 2000, the underperformance of publicly owned nursing home and assisted living companies, combined with the much publicized shift in equity funds flow from income-oriented investments to high-growth opportunities, impaired the stock valuations of all health care REITs. The availability of external capital is limited and expensive, constraining new investment activity and earnings growth. The Company believes the restrictive capital environment will continue until the prospects for the long-term care industry improve. In October 1999, the Company announced a $200 million asset divestiture program, which is proceeding as planned. The Company believes the limited asset sales will strengthen the Company's portfolio and generate liquidity, enhancing the Company's balance sheet. This strategy should position the Company for new investment and growth opportunities in the future. The Company has received $138,000,000 in proceeds from these sales through June 30, 2000. As of June 30, 2000, the Company had a total outstanding debt balance of $442,682,000 and shareholders' equity of $704,712,000 which represents a debt to equity ratio of 0.63 to 1.0, and a debt to total capitalization ratio of 0.39 to 1.0. As of June 30, 2000, the Company had an unsecured revolving line of credit expiring March 31, 2001 in the amount of $175,000,000 bearing interest at the lender's prime rate or LIBOR plus 1.0%. In addition, the Company had an unsecured revolving line of credit in the amount of $25,000,000 bearing interest at the lender's prime rate expiring April 30, 2001. At June 30, 2000, under the Company's line of credit arrangements, available funding totaled $77,200,000. As of June 30, 2000, the Company has effective shelf registrations on file with the Securities and Exchange Commission under which the Company may issue up to $380,319,000 of securities including debt, convertible debt, common and preferred stock. Depending upon market conditions, the Company anticipates issuing securities under such shelf registrations to invest in additional health care facilities and to repay borrowings under the Company's line of credit arrangements. -9- 10 RESULTS OF OPERATIONS Revenues for the three months ended June 30, 2000, were $33,927,000 as compared with 32,469,000 for the three months ended June 30, 1999. Revenue growth was generated primarily by increased rental income of $3,953,000 as a result of the completion of real property construction projects for which the Company began receiving rent and the purchase of properties previously financed by the Company. This offset a reduction in interest income of $1,950,000 due to the repayment of mortgage loans and the purchase of properties previously financed by the Company with mortgage loans. Revenues for the six months ended June 30, 2000, were $68,754,000 as compared with $60,633,000 for the six months ended June 30, 1999, an increase of $8,121,000 or 13%. Revenue growth resulted primarily from the completion of real property construction projects for which the Company began receiving rent. In addition, the Company recognized gains on sales of properties and prepayment fees of $451,000 and $574,000 for the three and six months ended June 30, 2000, respectively. These compare to the recognition of gains on sales of properties and prepayment fees of $550,000 and $1,361,000 for the three and six months ended June 30, 1999, respectively. Expenses for the three months ended June 30, 2000, totaled $16,358,000, an increase of $2,953,000 from expenses of $13,405,000 for the same period in 1999. Expenses for the six months ended June 30, 2000 totaled $33,189,000, an increase of $9,970,000 from expenses of $23,219,000 for the same period in 1999. The increases in total expenses for the three and six month periods ended June 30, 2000 were related to an increase in interest expense and an additional expense associated with the provision for depreciation. Interest expense for the three months ended June 30, 2000, was $8,581,000 as compared to $6,680,000 for the same period in 1999. For the six month period ended June 30, 2000, interest expense totaled $17,682,000 as compared to $10,949,000 for the same period in 1999. The increase in the 2000 periods were primarily due to higher average borrowings under the Company's lines of credit and long-term debt. Interest expense is offset by the amount of capitalized interest recorded. The Company capitalizes certain interest costs associated with funds used to finance the construction of properties owned directly by the Company. The amount capitalized is based upon the borrowings outstanding during the construction period using the rate of interest which approximates the Company's cost of financing. Capitalized interest for the three and six month periods in 2000 totaled $953,000, and $2,174,000, respectively, as compared with $1,982,000 and $5,141,000 for the same periods in 1999. The provision for depreciation for the three and six month periods ended June 30, 2000 totaled $5,311,000 and $10,574,000, respectively, increases of $860,000 and $2,568,000 over the comparable periods in 1999 as a result of additional investments in properties owned directly by the Company. General and administrative expenses for the three and six month periods ended June 30, 2000 totaled $1,930,000 and $3,830,000, respectively, as compared with $1,872,000 and $3,546,000 for the same periods in 1999. The expenses for the three and six month periods in 2000 were 5.69% and 5.56% of revenues as compared with 5.75% and 5.78% for the same periods in 1999. Dividend expense, associated with the Company's outstanding preferred stock, for the three and six month periods ended June 30, 2000 totaled $3,376,000 and $6,738,000, respectively, as compared with $3,352,000 and $6,111,000 for the same periods in 1999. As a result of the various factors mentioned above, net income available to common shareholders for the three and six month periods ended June 30, 2000 was $14,587,000, or $0.51 per diluted share, and $29,344,000, or $1.03 per diluted share, respectively, as compared with $15,787,000, or $0.56 per diluted share, and $32,006,000, or $1.13 per diluted share for the comparable periods in 1999. -10- 11 IMPACT OF INFLATION During the past three years, inflation has not significantly affected the earnings of the Company because of the moderate inflation rate. Additionally, earnings of the Company reflect long-term investments with fixed rents or interest rates. These investments are mainly financed with a combination of equity, senior notes and borrowings under the revolving lines of credit. During inflationary periods, which generally are accompanied by rising interest rates, the Company's ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to various market risks, including the potential loss arising from adverse changes in interest rates. The Company seeks to mitigate the effects of fluctuations in interest rates by matching the term of new investments with new long-term fixed rate borrowings to the extent possible. The market value of the Company's long-term fixed rate borrowings is subject to interest rate risk. Generally, the market value of fixed rate financial instruments will decrease as interest rates rise and increase as interest rates fall. The estimated fair value of the Company's senior unsecured notes at June 30, 2000 was $225 million. A 1% increase in interest rates would result in a decrease in fair value of the Company's senior unsecured notes by approximately $__ million. The Company is subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of such refinancing may not be as favorable as the terms of current indebtedness. The majority of the Company's borrowings were completed pursuant to indentures or contractual agreements which limit the amount of indebtedness the Company may incur. Accordingly, in the event that the Company is unable to raise additional equity or borrow money because of these limitations, the Company's ability to acquire additional properties may be limited. At June 30, 2000, the Company's variable interest rate debt exceeded its variable interest rate assets, presenting an exposure to rising interest rates. The Company may or may not elect to use financial derivative instruments to hedge variable interest rate exposure. Such decisions are principally based on the Company's policy to match its variable rate investments with comparable borrowings, but is also based on the general trend in interest rates at the applicable dates and the Company's perception of future volatility of interest rates. POTENTIAL RISKS FROM BANKRUPTCIES The Company is exposed to the risk that its operators may not be able to meet the rent and interest payments due the Company, which may result in an operator bankruptcy or insolvency. Although the Company's operating lease agreements and loans provide the Company the right to terminate an investment, evict an operator, demand immediate repayment, and other remedies, the bankruptcy laws afford certain rights to a party that has filed for bankruptcy or reorganization. An operator in bankruptcy may be able to restrict the Company's ability to collect unpaid rent or interest, and collect interest during the bankruptcy proceeding. The receipt of liquidation proceeds or the replacement of an operator that has defaulted on its lease or loan could be delayed by the approval process of any federal, state or local agency necessary for the transfer of the property or the replacement of the operator licensed to manage the facility. In addition, the Company may be required to fund certain expenses (i.e. real estate taxes and maintenance) to retain control of a property. In some instances the Company may take possession of a property, which may expose the Company to successor liabilities. Should such events occur, the Company's revenue and operating cash flow may be adversely affected. -11- 12 ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of shareholders of Health Care REIT, Inc. was duly called and held on May 4, 2000 in Toledo, Ohio. Proxies for the meeting were solicited on behalf of the Company's management and Board of Directors pursuant to Regulation 14A of the General Rules and Regulations of the Commission. There was no solicitation in opposition to the management's nominees for election as directors as listed in the Proxy Statement, and all such nominees were elected. Votes were cast at the meeting upon the proposals described in the Proxy Statement for the meeting (filed with the Commission pursuant to Regulation 14A and incorporated herein by reference) as follows: Proposal #1 - The election of three directors: Nominee For Withheld --------------------- --------------- -------------- Pier C. Borra 28,217,613 293,755 George L. Chapman 28,223,373 287,995 Sharon M. Oster 28,185,423 325,945 Proposal #2 - The ratification of the appointment of Ernst & Young LLP as independent auditors for the fiscal year 2000: For 28,289,132 Against 94,949 Abstain 127,287 -12- 13 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION On April 18, 2000 the Company issued a press release in which it announced an increase in quarterly dividend. On April 26, 2000, the Company issued a press release in which it announced first quarter 2000 operating results. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 Financial Data Schedule 99.1 Press release dated April 18, 2000 99.2 Press release dated April 26, 2000 (b) Reports on Form 8-K None -13- 14 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEALTH CARE REIT, INC. Date: August 14, 2000 By: /S/ GEORGE L. CHAPMAN ----------------------- --------------------------- George L. Chapman, Chairman, Chief Executive Officer and President Date: August 14, 2000 By: /S/ RAYMOND W. BRAUN ----------------------- ------------------------- Raymond W. Braun, Chief Financial Officer Date: August 14, 2000 By: /S/ MICHAEL A. CRABTREE ----------------------- --------------------------- Michael A. Crabtree, Chief Accounting Officer -14- 15 EXHIBIT INDEX The following documents are included in this Form 10-Q as Exhibits: DESIGNATION NUMBER UNDER ITEM 601 OF REGULATION S-K EXHIBIT DESCRIPTION -------------- ----------------------------- 27 Financial Data Schedule 99.1 Press release dated April 18, 2000 99.2 Press release dated April 26, 2000 -15-