-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NTV5aIesWjVNjGfeO3xuQp9wNQxbRijM8dQVifk5W0tLfHgad/GE0ZmR49UYtJtP lMnkQemMZTtg0vA1KjGadg== 0000950128-03-001134.txt : 20031024 0000950128-03-001134.hdr.sgml : 20031024 20031024082255 ACCESSION NUMBER: 0000950128-03-001134 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031024 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031024 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANOR CARE INC CENTRAL INDEX KEY: 0000878736 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 341687107 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10858 FILM NUMBER: 03955240 BUSINESS ADDRESS: STREET 1: 333 N. SUMMIT STREET CITY: TOLEDO STATE: OH ZIP: 43604-2617 BUSINESS PHONE: 4192525500 MAIL ADDRESS: STREET 1: P.O. BOX 10086 CITY: TOLEDO STATE: OH ZIP: 43699-0086 FORMER COMPANY: FORMER CONFORMED NAME: HCR MANOR CARE INC DATE OF NAME CHANGE: 19981001 FORMER COMPANY: FORMER CONFORMED NAME: HEALTH CARE & RETIREMENT CORP / DE DATE OF NAME CHANGE: 19930328 8-K 1 l03428ae8vk.txt MANOR CARE, INC. | FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 24, 2003 MANOR CARE, INC. (Exact name of registrant as specified in its charter) Delaware 1-10858 34-1687107 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 333 N. Summit Street, Toledo, Ohio 43604-2617 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (419) 252-5500 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibit. 99.1 Press Release dated October 24, 2003 issued by Manor Care, Inc. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following information, including the Exhibit attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934. On October 24, 2003, Manor Care, Inc. issued a news release to report its financial results for the third quarter of 2003. A copy of this press release is filed herewith as Exhibit 99.1. SIGNATURES 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 hereunto duly authorized. Manor Care, Inc. (Registrant) Date: October 24, 2003 By: /s/ Geoffrey G. Meyers ---------------------------------- Geoffrey G. Meyers Executive Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description - ------- ----------- 99.1 Press Release dated October 24, 2003 issued by Manor Care, Inc. EX-99.1 3 l03428aexv99w1.txt EX-99.1 PRESS RELEASE Exhibit 99.1 MANORCARE News Release FOR IMMEDIATE RELEASE CONTACT: Geoffrey G. Meyers, Chief Financial Officer 419/252-5545 e-mail: gmeyers@hcr-manorcare.com MANOR CARE REPORTS THIRD-QUARTER EARNINGS PER SHARE OF 35 CENTS BOARD DECLARES QUARTERLY DIVIDEND TOLEDO, Ohio, October 24, 2003 -- Manor Care, Inc. (NYSE:HCR) today announced third-quarter net income of $31.0 million, or 35 cents per fully diluted share. Revenues in the 2003 third quarter were $761 million, an increase of $28 million from the 2002 third quarter. For the nine months, revenues were $2.24 billion, compared with $2.18 billion for the first nine months of 2002. Also, Manor Care's Board of Directors declared a quarterly cash dividend of 12.5 cents per share of common stock. The dividend is payable November 20, 2003 to shareholders of record on November 7, 2003. Earnings during the quarter and first nine months were affected by unusually high costs related to the expense of stock appreciation rights, which have been awarded annually the past three years to more than 1,500 non-executive employees based on the company's performance. Each month the change in value of these rights, based on stock price appreciation, is expensed on the income statement. During the third quarter, this expense was about 3 cents per share higher than what has been usual prior to this year. In the third quarter, this resulted from a 20 percent increase in the market price of the company's stock, which followed a 30 percent increase in the market price in the 2003 second quarter. Paul A. Ormond, Manor Care chairman, president and CEO, said, "Increasing -More- Manor Care Reports Earnings, Page 2 revenues by improving census has been one of our primary strategies for growth. We have developed and implemented a wide variety of unique programs to build occupancy and improve quality in our skilled nursing centers, with particular emphasis on our intensive rehabilitation capabilities to serve the more complex needs of Medicare and managed care patients. During the 2003 third quarter, this led to our highest percentage of occupancy in our skilled centers in five years, and a record number of skilled nursing and Medicare patients. Complementing this growth was the continued strength in our home health care and hospice business which grew 16 percent from the 2002 third quarter, with hospice accounting for the majority of this growth. "Our operating performance once again led to substantial cash generation. We have now generated $255 million of cash from operations in 2003 for reinvesting in our businesses, repurchasing shares and paying out our first dividend. Stock repurchases during the quarter took our total for the year to $139 million, which amounts to more than 7 percent of our shares outstanding. Dividend payments in August totaled $11 million. We completed three nursing center expansions during the quarter, started another, and now have 14 expansions under way. In addition, we broke ground for a new 120-bed nursing center, the second currently under construction. We also opened a new home health care and hospice office and three rehabilitation therapy clinics. "Moderating cost trends and increasing productivity have contributed to the strong results," Mr. Ormond continued. "Wage rate increases remain below 5 percent, while the growth we have achieved in our skilled centers and home health care and hospice business is leading to economies that fuel productivity gains. A key part of managing costs and enhancing productivity is recruiting, training and retaining quality staff, and we have made this a central focus for each of our locations." General liability is still a serious industry-wide cost issue, but the company's claims activity remains similar with the past couple of years. The health care industry is making progress in state legislatures and at the national level to enact tort reform by raising awareness of the severe problems that have been created by abuses in the -More- Manor Care Reports Earnings, Page 3 legal system. On September 1, strong tort reform legislation capping medical malpractice awards became effective in Texas and later in the month was affirmed by an amendment to the Texas state constitution. Florida passed legislation that is another step toward more equitably addressing patient liability issues in that state. Other states and the Bush Administration nationally are working along similar paths to help ensure that access to quality health care is not jeopardized and that costs are more in line with appropriate compensation. On October 1, the company began to benefit from adjustments to its Medicare reimbursement rates. For skilled nursing centers, there was a 3 percent market basket adjustment increase and a 3.26 percent increase to correct prior years' inflation errors. This correction offsets approximately one-third of the loss incurred when PPS rates were reduced about 10 percent in October 2002. In addition, this month our hospice business received a 3.4 percent market basket adjustment increase, while home health received a 3.3 percent increase. Medicaid rates in the third quarter were 4 percent higher than in the prior year, despite the budgetary pressures that most states are still experiencing. "We have three quarters of operational strength under our belts, and are expecting our fourth quarter to expand on these successes," Mr. Ormond said. "A cornerstone of this success is improving on what we do every day. We are a `24/7' service organization, and we are committed to ensuring our patients, residents and clients receive the care they need and deserve every day. Meeting this commitment will continue to drive our revenue and earnings growth. Challenges remain in our environment, but we believe our operational strengths, the continued focus on our proven growth strategies, the boost in Medicare reimbursement and the headway being made on tort reform will all lead to improved results in the fourth quarter and beyond." At 9:00 a.m. Eastern Time today, Manor Care will hold a conference call to discuss the company's results and performance for the 2003 third quarter. The toll-free number for the call is 1-888-634-8435. Callers to this number will be able to listen to the company's discussion and have the opportunity to ask questions. The call will also be webcast live in the Investor Information section of Manor Care's website -More- Manor Care Reports Earnings, Page 4 www.hcr-manorcare.com. For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the live call. To access the rebroadcast, dial 1-800-642-1687. The conference ID number is 3067599. A recording of the call will also be available on Manor Care's website. Manor Care, Inc., through its operating group HCR Manor Care, is the leading owner and operator of long-term care centers in the United States. The company's 61,000 employees provide high-quality care for patients, residents and clients through a network of more than 500 long-term care centers, assisted living facilities, outpatient rehabilitation clinics, and home health care and hospice offices. Alliances and other ventures supply high-quality pharmaceutical products and management services for professional organizations. The company operates primarily under the respected Heartland, ManorCare and Arden Courts names. Manor Care is committed to being the preeminent care provider in the industry. Shares are traded on the New York Stock Exchange under the ticker symbol HCR. Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of federal law. Such forward-looking statements reflect management's beliefs and assumptions and are based on information currently available to management. The forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the company to differ materially from those expressed or implied in such statements. Such factors are identified in the public filings made by the company with the Securities and Exchange Commission and include changes in the health care industry because of political and economic influences, changes in regulations governing the industry, changes in reimbursement levels including those under the Medicare and Medicaid programs, changes in the competitive marketplace, changes in current trends in the cost and volume of general and professional liability claims, and our ability to complete the previously announced settlement with the Department of Justice. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements. -More- Manor Care Reports Earnings, page 5 Manor Care, Inc. Consolidated Statements of Income (unaudited)
- ---------------------------------------------------------------------------------------------------------------------------------- Three months ended September 30, Nine months ended September 30, 2003 2002 2003 2002 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- (In thousands, except earnings per share) Revenues $ 761,279 $ 732,920 $ 2,242,385 $ 2,177,342 Expenses Operating 638,235 603,025 1,882,746 1,796,822 General and administrative 36,649 29,227 113,995 89,575 Depreciation and amortization 32,058 30,826 95,595 94,182 Asset impairment 2,745 27,621 ----------- ----------- ----------- ----------- 706,942 665,823 2,092,336 2,008,200 ----------- ----------- ----------- ----------- Income before other income (expenses) and income taxes 54,337 67,097 150,049 169,142 Other income (expenses): Interest expense (10,842) (9,436) (31,034) (28,768) Gain on sale of assets 1,731 150 4,054 30,403 Equity in earnings of affiliated companies 2,090 1,741 5,230 3,614 Interest income and other 307 228 1,439 1,110 ----------- ----------- ----------- ----------- Total other income (expenses), net (6,714) (7,317) (20,311) 6,359 ----------- ----------- ----------- ----------- Income before income taxes 47,623 59,780 129,738 175,501 Income taxes 16,584 22,717 48,652 66,691 ----------- ----------- ----------- ----------- Income before cumulative effect 31,039 37,063 81,086 108,810 Cumulative effect of change in accounting for goodwill (1,314) ----------- ----------- ----------- ----------- Net income $ 31,039 $ 37,063 $ 81,086 $ 107,496 =========== =========== =========== =========== Earnings per share -basic: Income before cumulative effect $ .35 $ .38 $ .90 $ 1.10 Cumulative effect (.01) ----------- ----------- ----------- ----------- Net income $ .35 $ .38 $ .90 $ 1.08(a) =========== =========== =========== =========== Earnings per share - diluted: Income before cumulative effect $ .35 $ .38 $ .89 $ 1.08 Cumulative effect (.01) ----------- ----------- ----------- ----------- Net income $ .35 $ .38 $ .89 $ 1.07 =========== =========== =========== =========== Weighted-average shares: Basic 88,060 97,239 90,272 99,133 Diluted 89,720 98,429 91,532 100,365 Cash dividends declared per common share $ .125 $ .125
(a) Doesn't add due to rounding -More- Manor Care Reports Earnings, page 6 Manor Care, Inc. Condensed Consolidated Balance Sheets (unaudited)
- ----------------------------------------------------------------------------------------- September 30, December 31, 2003 2002 - ----------------------------------------------------------------------------------------- (In thousands) Cash $ 83,631 $ 30,554 Other current assets 474,419 480,263 Property and equipment 1,519,345 1,534,339 Other 269,375 261,776 ---------- ---------- Total assets $2,346,770 $2,306,932 ========== ========== Current liabilities $ 398,742 $ 641,864 Long-term debt 661,808 373,112 Other long-term liabilities 334,951 275,909 Shareholders' equity 951,269 1,016,047 ---------- ---------- Total liabilities and shareholders' equity $2,346,770 $2,306,932 ========== ========== Shares outstanding 88,972 95,052 YTD shares repurchased $139.3 million 6,766 - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- Selected Statistics (unaudited) - ----------------------------------------------------------------------------------------- Quarter ended September 30, 2003 2002 - ----------------------------------------------------------------------------------------- Occupancy 88% 87% Revenue allocation: Private and other 35% 36% Medicare 32% 31% Medicaid 33% 33% Quality Mix 67% 67% Per Diems: Private and other (excluding assisted living) $190.34 $182.16 Private and other (assisted living) $104.72 $100.39 Medicare $311.98 $335.42 Medicaid $131.04 $125.93 Number of Facilities: Skilled nursing facilities 293 296 Assisted living facilities: Springhouses 16 16 Arden Courts 54 54 -- -- Total 70 70 == == Number of Beds: Skilled nursing facilities 40,815 41,115 Assisted living facilities 5,459 5,494 Outpatient therapy clinics 94 93 Home health offices 89 88 Skilled nursing facility wage rate increases third quarter 2003 to 2002 4% Cash flow from operations (in millions): $ 61 $ 94 Capital Expenditures (in millions): Maintenance and renovations $ 22 $ 22 New construction $ 6 $ 3
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