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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
_________ THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 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: 1-11852
HEALTHCARE REALTY TRUST INCORPORATED
(Exact name of Registrant as specified in its charter)
MARYLAND 62 - 1507028
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3310 WEST END AVENUE
SUITE 700
NASHVILLE, TENNESSEE 37203
(Address of principal executive offices)
(615) 269-8175
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
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 Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
------ ------
As of November 1, 2000, 40,303,518 shares of the Registrant's Common Stock and
3,000,000 shares of the Registrant's Series A Voting Cumulative Preferred Stock
were outstanding.
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HEALTHCARE REALTY TRUST
INCORPORATED
FORM 10-Q
SEPTEMBER 30, 2000
TABLE OF CONTENTS
Part I - Financial Information
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
Part II - Other Information
Item 1. Legal Proceedings 21
Item 6. Exhibits and Reports on Form 8-K 21
Signature 22
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ITEM 1.
HEALTHCARE REALTY TRUST INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
ASSETS
Real estate properties:
Land $ 152,880 $ 150,591
Buildings and improvements 1,292,640 1,223,387
Personal property 5,752 5,165
Construction in progress 19,810 20,003
--------------- -------------
1,471,082 1,399,146
Less accumulated depreciation (111,419) (83,996)
--------------- -------------
Total real estate properties, net 1,359,663 1,315,150
Cash and cash equivalents 5,334 3,396
Restricted cash 574 990
Mortgage notes receivable 173,747 250,346
Other assets, net 37,677 38,082
--------------- -------------
Total assets $ 1,576,995 $ 1,607,964
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and bonds payable 537,006 563,884
Accounts payable and accrued liabilities 20,599 17,658
Other liabilities 9,696 8,519
--------------- -------------
Total liabilities 567,301 590,061
--------------- -------------
Commitments 0 0
Stockholders' equity:
Preferred stock, $.01 par value; 50,000,000 shares authorized;
issued and outstanding, 2000 and 1999 - 3,000,000 30 30
Common stock, $.01 par value; 150,000,000 shares authorized;
issued and outstanding, 2000 - 40,150,931; 1999 - 402 400
40,004,579
Additional paid-in capital 1,056,739 1,054,405
Deferred compensation (10,087) (9,509)
Cumulative net income 277,204 215,373
Cumulative dividends (314,594) (242,796)
--------------- -------------
Total stockholders' equity 1,009,694 1,017,903
--------------- -------------
Total liabilities and stockholders' equity $ 1,576,995 $ 1,607,964
=============== =============
The accompanying notes, together with the Notes to the Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, are an integral part of these financial statements.
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HEALTHCARE REALTY TRUST INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
(Dollars in thousands, except per share data)
2000 1999
---------- ----------
REVENUES:
Master lease rental income $ 24,108 $ 22,866
Property operating income 15,936 14,623
Straight line rent 1,890 1,394
Mortgage interest income 5,635 6,717
Management fees 659 687
Interest and other income 1,360 231
---------- ----------
49,588 46,518
---------- ----------
EXPENSES:
General and administrative 2,559 1,695
Property operating expenses 5,982 5,254
Interest 10,925 9,724
Depreciation 9,810 9,466
Amortization 116 117
---------- ----------
29,392 26,256
---------- ----------
NET INCOME BEFORE NET GAIN (LOSS) ON SALE OF REAL ESTATE
PROPERTIES 20,196 20,262
NET GAIN (LOSS) ON SALE OF REAL ESTATE PROPERTIES (5) (32)
---------- ----------
NET INCOME $ 20,191 $ 20,230
========== ==========
NET INCOME PER COMMON SHARE - BASIC $ 0.47 $ 0.47
========== ==========
NET INCOME PER COMMON SHARE - DILUTED $ 0.46 $ 0.47
========== ==========
COMMON SHARES OUTSTANDING - BASIC 39,537,234 39,304,676
========== ==========
COMMON SHARES OUTSTANDING - DILUTED 40,290,439 39,969,686
========== ==========
DIVIDENDS DECLARED, PER COMMON SHARE, DURING THE PERIOD $ 0.560 $ 0.540
========== ==========
The accompanying notes, together with the Notes to the Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, are an integral part of these financial statements.
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HEALTHCARE REALTY TRUST INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
(Dollars in thousands, except per share data)
2000 1999
---------- ----------
REVENUES:
Master lease rental income $ 72,216 $ 69,360
Property operating income 46,740 41,980
Straight line rent 6,358 4,453
Mortgage interest income 18,127 19,229
Management fees 2,129 2,010
Interest and other income 2,127 794
---------- ----------
147,697 137,826
---------- ----------
EXPENSES:
General and administrative 6,558 5,492
Property operating expenses 17,205 15,135
Interest 32,434 28,366
Depreciation 29,004 29,063
Amortization 349 357
---------- ----------
85,550 78,413
---------- ----------
NET INCOME BEFORE NET GAIN (LOSS) ON SALE OF REAL ESTATE
PROPERTIES 62,147 59,413
NET GAIN (LOSS) ON SALE OF REAL ESTATE PROPERTIES (316) 2,150
---------- ----------
NET INCOME $ 61,831 $ 61,563
========== ==========
NET INCOME PER COMMON SHARE - BASIC $ 1.44 $ 1.44
========== ==========
NET INCOME PER COMMON SHARE - DILUTED $ 1.42 $ 1.42
========== ==========
COMMON SHARES OUTSTANDING - BASIC 39,500,423 39,287,404
========== ==========
COMMON SHARES OUTSTANDING - DILUTED 40,284,615 39,948,987
========== ==========
DIVIDENDS DECLARED, PER COMMON SHARE, DURING THE PERIOD $ 1.665 $ 1.605
========== ==========
The accompanying notes, together with the Notes to the Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, are an integral part of these financial statements.
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HEALTHCARE REALTY TRUST INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
(Dollars in thousands)
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 61,831 $ 61,563
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization 30,852 31,050
Deferred compensation 1,028 882
Increase (decrease) in other liabilities 1,593 (2,013)
(Increase) decrease in other assets 5,422 (2,386)
Increase (decrease) in accounts payable and accrued liabilities 2,941 (6,653)
Increase in straight line rent (6,358) (4,453)
(Gain) loss on sale of real estate 316 (2,150)
--------- ---------
Net cash provided by operating activities 97,625 75,840
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition and development of real estate properties (82,455) (41,803)
Funding of mortgages (7,719) (32,291)
Proceeds from sale of real estate 9,106 27,782
Proceeds from mortgage payments/sales 83,692 3,075
--------- ---------
Net cash (used in) provided by investing activities 2,624 (43,237)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes and bonds payable 129,500 101,500
Repayments on notes and bonds payable (156,743) (74,203)
Dividends paid (71,798) (68,886)
Proceeds from issuance of common stock 730 752
--------- ---------
Net cash used in financing activities (98,311) (40,837)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,938 (8,234)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,396 12,710
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,334 $ 4,476
========= =========
The accompanying notes, together with the Notes to the Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, are an integral part of these financial statements.
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HEALTHCARE REALTY TRUST
INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Healthcare Realty Trust Incorporated (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements which are included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. These financial statements should be read in
conjunction with the financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
The results of operations for the three-month and nine-month periods
ending September 30, 2000 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2000.
Certain reclassifications have been made for the period July 1, 1999
through September 30, 1999 and for the period January 1, 1999 through September
30, 1999 to conform to the 2000 presentation. These reclassifications had no
effect on the results of operations as previously reported.
NOTE 2. ORGANIZATION
The Company invests in healthcare-related properties and mortgages
located throughout the United States. The Company provides management, leasing
and build-to-suit development, and capital for the construction of new
facilities as well as for the acquisition of existing properties. As of
September 30, 2000, the Company had invested or committed to invest in 269
properties (the "Properties") located in 32 states, which are supported by 67
healthcare-related entities. The Properties include:
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NUMBER OF (IN THOUSANDS)
PROPERTIES INVESTMENT
---------- ----------
Ancillary hospital facilities 60 $ 461,531
Physician clinics 34 178,968
Skilled nursing facilities 52 260,318
Comprehensive ambulatory care centers 14 147,038
Assisted living facilities 72 307,072
Inpatient rehabilitation facilities 9 154,589
Medical office buildings 9 36,050
Other outpatient facilities 13 44,680
Other inpatient facilities 6 54,583
--- ----------
269 $1,644,829
=== ==========
NOTE 3. FUNDS FROM OPERATIONS
The National Association of Real Estate Investment Trusts, Inc.
("NAREIT") adopted a new definition of funds from operations as described in the
NAREIT White Paper issued October 1999. The adoption of this new definition
became effective January 1, 2000. Funds from operations, as defined by the
NAREIT 1999 White Paper, means net income before net gains on sales of real
estate properties (computed in accordance with generally accepted accounting
principles) plus depreciation from real estate assets. The Company calculates
its funds from operations ("FFO") using a modified version of the NAREIT's
October 1999 definition of funds from operations. The Company eliminates
straight-line rental revenue in computing FFO although NAREIT's definition of
FFO requires the inclusion of straight-line rental revenue in FFO.
The Company considers FFO to be an informative measure of the
performance of an equity real estate investment trust ("REIT") and consistent
with measures used by analysts to evaluate equity REITs. FFO does not represent
cash generated from operating activities in accordance with generally accepted
accounting principles, is not necessarily indicative of cash available to fund
cash needs, and should not be considered as an alternative to net income as an
indicator of the Company's operating performance or as an alternative to cash
flow as a measure of liquidity. FFO for the three months ended September 30,
2000 and 1999, was $26.3 million, basic ($26.4 million, diluted), or $0.67 per
basic common share ($0.66 per diluted common share) and $26.5 million, basic
($26.6 million, diluted), or $0.68 per basic common share ($0.67 per diluted
common share), respectively. FFO for the nine months ended September 30, 2000
and 1999, was $79.4 million, basic ($79.6 million, diluted), or $2.01 per basic
common share ($1.97 per diluted common share) and $78.6 million, basic ($78.8
million, diluted), or $2.00 per basic common share ($1.97 per diluted common
share), respectively.
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FUNDS FROM OPERATIONS (1)
(Dollars in thousands, except per share data)
Three Months Ended September 30,
-----------------------------------
2000 1999
----------- -----------
Income before net gain (loss) on sale of real estate properties $ 20,196 $ 20,262
Elimination of rental revenues
recognized on a straight line basis (2) (1,890) (1,394)
Preferred Stock Dividend (1,664) (1,664)
Real Estate Depreciation 9,654 9,326
----------- -----------
Total Adjustments 6,100 6,268
----------- -----------
Funds From Operations-Basic $ 26,296 $ 26,530
=========== ===========
Convertible Subordinated Debenture Interest 125 80
----------- -----------
Funds From Operations - Diluted $ 26,421 $ 26,610
=========== ===========
Funds From Operations Per Common Share - Basic $ 0.67 $ 0.68
=========== ===========
Funds From Operations Per Common Share - Diluted $ 0.66 $ 0.67
=========== ===========
Common Shares Outstanding - Basic 39,537,234 39,304,676
=========== ===========
Common Shares Outstanding - Diluted 40,290,439 39,969,686
=========== ===========
(1) FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles, is not
necessarily indicative of cash available to fund cash needs and should
not be considered as an alternative to net income as an indicator of
the Company's operating performance or as an alternative to cash flow
as a measure of liquidity.
Management believes the Company's FFO is not directly comparable to
other healthcare REIT's, which own a portfolio of triple net leased
properties or mortgages, as the Company develops projects through a
development and lease-up phase before they reach their targeted cash
flow returns. Furthermore, the Company eliminates, in consolidation,
fee income for developing, leasing and managing owned properties and
expenses or capitalizes, as the case may be, related internal costs.
(2) The Company calculates its FFO using a modified version of the National
Association of Real Estate Investment Trust's ("NAREIT") October 1999
definition of funds from operations. The Company eliminates
straight-line rental revenue in computing FFO although NAREIT's
definition of funds from operations requires the inclusion of
straight-line rental revenue. If the Company had followed the NAREIT
definition of funds from operations, as other healthcare REIT's do, FFO
on a diluted basis would have been $0.70 per common share for the three
months ended September 30, 2000.
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FUNDS FROM OPERATIONS (1)
(Dollars in thousands, except per share data)
Nine Months Ended September 30,
-----------------------------------
2000 1999
----------- -----------
Income before net gain (loss) on sale of real estate properties $ 62,147 $ 59,413
Elimination of rental revenues
recognized on a straight line basis (2) (6,358) (4,453)
Preferred Stock Dividend (4,992) (4,990)
Real Estate Depreciation 28,558 28,652
----------- -----------
Total Adjustments 17,208 19,209
----------- -----------
Funds From Operations-Basic $ 79,355 $ 78,622
=========== ===========
Convertible Subordinated Debenture Interest 204 213
----------- -----------
Funds From Operations - Diluted $ 79,559 $ 78,835
=========== ===========
Funds From Operations Per Common Share - Basic $ 2.01 $ 2.00
=========== ===========
Funds From Operations Per Common Share - Diluted $ 1.97 $ 1.97
=========== ===========
Common Shares Outstanding - Basic 39,500,423 39,287,404
=========== ===========
Common Shares Outstanding - Diluted 40,284,615 39,948,987
=========== ===========
(1) FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles, is not
necessarily indicative of cash available to fund cash needs and should
not be considered as an alternative to net income as an indicator of
the Company's operating performance or as an alternative to cash flow
as a measure of liquidity.
Management believes the Company's FFO is not directly comparable to
other healthcare REIT's, which own a portfolio of triple net leased
properties or mortgages, as the Company develops projects through a
development and lease-up phase before they reach their targeted cash
flow returns. Furthermore, the Company eliminates, in consolidation,
fee income for developing, leasing and managing owned properties and
expenses or capitalizes, as the case may be, related internal costs.
(2) The Company calculates its FFO using a modified version of the National
Association of Real Estate Investment Trust's ("NAREIT") October 1999
definition of funds from operations. The Company eliminates
straight-line rental revenue in computing FFO although NAREIT's
definition of funds from operations requires the inclusion of
straight-line rental revenue. If the Company had followed the NAREIT
definition of funds from operations, as other healthcare REIT's do, FFO
on a diluted basis would have been $2.13 per common share for the nine
months ended September 30, 2000.
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NOTE 4. NOTES AND BONDS PAYABLE
Notes and bonds payable at September 30, 2000 consisted of the
following (in thousands):
Unsecured credit facility $265,000
Term loan facility 39,300
Senior notes due 2002 36,000
Senior notes due 2006 70,000
6.55% Convertible subordinated debentures, net 74,330
10.5% Convertible subordinated debentures, net 3,444
Mortgage notes payable 43,099
Other note payable 5,833
--------
$537,006
========
Unsecured Credit Facility
In 1998, the Company entered into a $265.0 million unsecured credit
facility (the "Unsecured Credit Facility") with ten commercial banks. The
Unsecured Credit Facility bears interest at LIBOR rates plus 1.05%, payable
quarterly, and matures on October 15, 2001. In addition, the Company pays,
quarterly, a commitment fee of 0.225 of 1% on the unused portion of funds
available for borrowings. The Unsecured Credit Facility contains certain
representations, warranties, and financial and other covenants customary in such
loan agreements. At September 30, 2000, the Company had no additional borrowing
capacity under the Unsecured Credit Facility.
Term Loan Facility
In 1998, the Company entered into a $200.0 million unsecured term loan
(the "Term Loan Facility") with Bank of America (formerly NationsBank).
Effective May 30, 2000, the Company amended its Term Loan Facility agreement
with Bank of America. The Term Loan Facility, as amended, bears interest at
LIBOR plus 2.50%, payable quarterly, and matures on November 30, 2000. The Term
Loan Facility contains certain representations, warranties and financial and
other covenants customary in such loan agreements, as well as restrictions on
dividend payments if minimum tangible capital requirements are not met. At
September 30, 2000, the Company had no additional borrowing capacity under the
Term Loan Facility.
Senior Notes due 2002
In 1995, the Company privately placed $90.0 million of unsecured senior
notes (the "Senior Notes due 2002") with 16 institutions. The Senior Notes due
2002 bear interest at 7.41%, payable semi-annually, and mature on September 1,
2002. Each September 1, beginning in 1998, the Company must repay $18.0 million
of the principal. The note agreements pursuant to which the Senior Notes due
2002 were purchased contain certain representations, warranties and financial
and other covenants customary in such loan agreements.
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Senior Notes due 2006
On April 7, 2000, the Company privately placed $70.0 million of
unsecured senior notes (the "Senior Notes due 2006") with multiple purchasers
affiliated with two lending institutions. The Senior Notes due 2006 bear
interest at 9.49%, payable semi-annually, and mature on April 1, 2006. On April
1, 2004 and 2005, the Company must repay $20.3 million of the principal with the
remaining principal balance of $29.4 million payable upon maturity. The note
agreements pursuant to which the Senior Notes due 2006 were purchased contain
certain representations, warranties and financial and other covenants customary
in such loan agreements. The proceeds from the issuance of these notes were
applied to the partial repayment of the Term Loan Facility.
Convertible Subordinated Debentures
In 1998, the Company assumed in an acquisition and recorded at fair
value $74.7 million aggregate face amount of 6.55% Convertible Subordinated
Debentures (the "6.55% Debentures"). At September 30, 2000, the Company had
approximately $74.3 million aggregate principal amount of 6.55% Debentures
outstanding with a face amount of $74.7 million and unaccreted discount of $0.4
million. Such rate of interest and accretion of discount represents a yield to
maturity of 7.5% per annum (computed on a semiannual bond equivalent basis). The
6.55% Debentures are due on March 14, 2002, unless redeemed earlier by the
Company or converted by the holder, and became callable on March 16, 2000.
Interest on the 6.55% Debentures is payable on March 14 and September 14 in each
year. The 6.55% Debentures are convertible into shares of common stock of the
Company at the option of the holder at any time prior to redemption or stated
maturity, at a conversion rate of 33.6251 shares per $1 thousand bond.
In 1998, the Company assumed in an acquisition and recorded at fair
value $3.75 million aggregate face amount of 10.5% Convertible Subordinated
Debentures (the "10.5% Debentures"). At September 30, 2000, the Company had
approximately $3.44 million aggregate principal amount of 10.5% Debentures
outstanding with a face amount of $3.38 million and unamortized premium of $0.06
million. Such rate of interest and amortization of premium represents a yield to
maturity of 7.5% per annum (computed on a semiannual bond equivalent basis). The
10.5% Debentures are due on April 1, 2002, unless redeemed earlier by the
Company or converted by the holder, and became callable on April 5, 2000.
Interest on the 10.5% Debentures is payable on April 1 and October 1 in each
year. The 10.5% Debentures are convertible into shares of common stock of the
Company at the option of the holder at any time prior to redemption or stated
maturity, at a conversion rate of 52.8248 shares per $1 thousand bond.
Mortgage Notes
In 1998, the Company assumed in an acquisition nonrecourse mortgage
notes payable, and the related collateral, as follows (dollars in millions):
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Book Value
Original Interest Of Collateral at Balance at
Mortgagor Balance Rate Collateral September 30, 2000 September 30, 2000
- --------------------------------------------------------------------------------------------------------------------------
Life Insurance Co. $ 23.3 8.500% Ancillary hospital facility $ 43.4 $ 22.4
Life Insurance Co. 4.7 7.625% Ancillary hospital facility 10.7 4.3
Life Insurance Co. 17.1 8.125% Two ambulatory surgery centers 37.2 16.4
& one ancillary hospital facility
------- ---------- --------
$ 45.1 $ 91.3 $ 43.1
======= ========== ========
The $23.3 million note is payable in monthly installments of principal
and interest based on a 30 year amortization with the final payment due in July
2026. The $4.7 million note is payable in monthly installments of principal and
interest based on a 20 year amortization with the final payment due in January
2017. The three notes totaling $17.1 million are payable in monthly installments
of principal and interest based on a 25 year amortization with a balloon payment
of the unpaid balance in September 2004.
Other Note
In July 1999, the Company entered into a $7.0 million note with a
commercial institution. The note bears interest at 7.53%, is payable in equal
semi-annual installments of principal and interest, and fully amortizes in July
2005.
NOTE 5. COMMITMENTS
As of September 30, 2000, the Company had a net investment of
approximately $19.8 million in five build-to-suit developments in progress and
one expansion of an existing facility, which have a total remaining funding
commitment of approximately $41.2 million.
As part of the merger with Capstone Capital Corporation ("Capstone") in
1998, agreements were entered into with three individuals affiliated with
Capstone that restrict competitive practices and that the Company believes will
protect and enhance the value of the real estate properties acquired from
Capstone. These agreements provide for the issuance of 150,000 shares of common
stock of the Company to the individuals on October 15 of the years 1999, 2000,
2001 and 2002, provided all terms of the agreements are met. Upon issuance,
these shares are valued by the Company at $28.0714 per share. The Company issued
150,000 shares during each of the years 1999 and 2000 pursuant to these
agreements.
NOTE 6. ASSET ACQUISITIONS/DISPOSITIONS
During the first quarter of 2000, the Company sold two parcels of land,
adjacent to owned, operating properties in Missouri and Florida, for $1.0
million in net proceeds.
During the second quarter of 2000, the Company sold a 4,642 square foot
physician clinic in West Palm Beach, Florida for $0.7 million in net proceeds;
sold a 19,000 square foot comprehensive ambulatory care center in Soddy Daisy,
Tennessee for $2.7 million in net proceeds; and sold a 35,512 square foot
assisted living facility in Lawton, Oklahoma for $0.6 million in net proceeds.
These three sales resulted in a net loss of $0.3 million.
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14
During the second quarter of 2000, a commercial bank acquired, from the
Company, a net 52% interest in a mortgage note receivable, at par (approximately
$6.4 million). Further, the Company purchased ten properties from two separate
operators for a total purchase price of approximately $31.9 million and the
operators concurrently repaid mortgage notes receivable held by the Company. The
Company recognized no gain or loss on these transactions.
During the third quarter of 2000, the Company sold a 41,515 square foot
physician clinic in Harlingen, Texas for $3.6 million in net proceeds; sold a
2,185 square foot physician clinic in Floyd, Virginia for $0.1 million in net
proceeds; and sold a parcel of land, adjacent to an owned and operating property
in Pennsylvania for $0.1 million in net proceeds. These three sales resulted in
a net loss of $5,000.
During the third quarter of 2000, a commercial bank acquired, from the
Company, a net 72.13% interest in a note receivable, at par (approximately $12.0
million). Also, nine mortgage notes receivable with an accumulated principal
balance of approximately $13.3 million were repaid by two separate operators.
Further, the Company purchased four properties from an operator for a total
purchase price of approximately $28 million and the operator concurrently repaid
mortgage notes receivable held by the Company. The Company recognized loan
prepayment penalty and exit fee income of approximately $1 million on these
transactions.
NOTE 7. CONTINGENCIES
On March 22, 1999, HR Acquisitions I Corporation, formerly known as
Capstone Capital Corporation ("HRT"), a wholly-owned subsidiary of the Company,
filed suit against Medistar Corporation and its affiliate, Medix Construction
Company in United States District Court for the Northern District of Alabama,
Southern Division. HRT is seeking damages in excess of $2 million arising out of
the development and construction of four real estate projects located in
different parts of the United States. Medistar and Medix served as the developer
and contractor, respectively, for the projects. HRT has asserted claims for
damages relating to, among others, alleged breaches of the development and
contracting obligations, failure to perform in accordance with contract terms
and specifications, and other deficiencies in performance by Medistar and Medix.
On June 10, 1999, Medistar and Medix filed its answer and counterclaim asserting
a variety of alleged legal theories, claims for damages for alleged deficiencies
by HRT and the Company in the performance of alleged obligations, and for damage
to their business reputation. Attempts at mediation have not resulted in a
settlement of the disputes. The Company's prosecution of its claims and defense
of the counterclaims will continue to be vigorous. While the Company cannot
predict the range of possible loss or outcome, the Company believes that, even
though the asserted cross claims seek substantial monetary damages, the
allegations made by Medistar and Medix are not factually or legally meritorious,
are subject to sustainable defenses and are, to a significant extent, covered by
liability insurance.
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NOTE 8. NET INCOME PER SHARE
The table below sets forth the computation of basic and diluted
earnings per share as required by FASB Statement No. 128 for the three and nine
months ended September 30, 2000 and 1999 (dollars in thousands, except per share
data).
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- --------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
BASIC EPS
Average Shares Outstanding 40,144,276 39,835,669 40,107,465 39,818,397
Actual Restricted Stock Shares (607,042) (530,993) (607,042) (530,993)
------------ ------------ ------------ ------------
Denominator - Basic 39,537,234 39,304,676 39,500,423 39,287,404
============ ============ ============ ============
Net Income $ 20,191 $ 20,230 $ 61,831 $ 61,563
Preferred Stock Dividend (1,664) (1,664) (4,992) (4,990)
------------ ------------ ------------ ------------
Numerator - Basic $ 18,527 $ 18,566 $ 56,839 $ 56,573
============ ============ ============ ============
Per Share Amount $ 0.47 $ 0.47 $ 1.44 $ 1.44
============ ============ ============ ============
DILUTED EPS
Average Shares Outstanding 40,144,276 39,835,669 40,107,465 39,818,397
Actual Restricted Stock Shares (607,042) (530,993) (607,042) (530,993)
Restricted Shares - Treasury 517,809 482,134 564,485 476,759
Dilution for Convertible
Debentures 179,076 181,136 181,136 181,136
Dilution for Employee Stock
Purchase Plan 56,320 1,740 38,571 3,688
------------ ------------ ------------ ------------
Denominator - Diluted 40,290,439 39,969,686 40,284,615 39,948,987
============ ============ ============ ============
Numerator - Basic $ 18,527 $ 18,566 $ 56,839 $ 56,573
Convertible Subordinated
Debenture Interest 125 79 204 213
------------ ------------ ------------ ------------
Numerator - Diluted $ 18,652 $ 18,645 $ 57,043 $ 56,786
============ ============ ============ ============
Per Share Amount $ 0.46 $ 0.47 $ 1.42 $ 1.42
============ ============ ============ ============
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
Third Quarter 2000 Compared to Third Quarter 1999
For the three months ended September 30, 2000, net income was $20.2
million, or $0.47 per basic common share ($0.46 per diluted common share), on
total revenues of $49.6 million compared to net income of $20.2 million, or
$0.47 per basic and diluted common share, on total revenues of $46.5 million,
for the three months ended September 30, 1999. Funds from operations ("FFO") was
$26.3 million, basic ($26.4 million, diluted), or $0.67 per basic common share
($0.66 per diluted common share), for the three months ended September 30, 2000
compared to $26.5 million, basic ($26.6 million, diluted), or $0.68 per basic
common share ($0.67 per diluted common share), in 1999.
THREE MONTHS ENDED SEPTEMBER 30,
2000 1999
---------- ----------
(in thousands)
REVENUES:
Master lease rental income $ 24,108 $ 22,866
Property operating income 15,936 14,623
Straight line rent 1,890 1,394
Mortgage interest income 5,635 6,717
Management fees 659 687
Interest and other income 1,360 231
---------- ----------
49,588 46,518
---------- ----------
EXPENSES:
General and administrative 2,559 1,695
Property operating expenses 5,982 5,254
Interest 10,925 9,724
Depreciation 9,810 9,466
Amortization 116 117
---------- ----------
29,392 26,256
---------- ----------
NET INCOME BEFORE NET GAIN (LOSS) ON SALE OF REAL ESTATE PROPERTIES 20,196 20,262
NET GAIN (LOSS) ON SALE OF REAL ESTATE PROPERTIES (5) (32)
---------- ----------
NET INCOME $ 20,191 $ 20,230
========== ==========
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Total revenues for the three months ended September 30, 2000 compared
to the three months ended September 30, 1999, increased $3.1 million or 6.6%.
Master lease rent and property operating income increased $2.6 million
or 6.8%. During 1999 and 2000, the Company has acquired 19 revenue producing
properties, and 13 properties under construction were completed and began
operations.
Straight line rent income increased $0.5 million or 35.6% for the three
months ended September 30, 2000 compared to the same period in 1999. This
increase is primarily attributable to the identification in the second quarter
of 2000 of additional leases acquired in 1998 for which straight line rent
should be recognized.
Mortgage interest income decreased $1.1 million or 16.1% for 2000
compared to 1999 due to repayment of 30 mortgages during 1999 and 2000.
Interest and other income increased $1.1 million, or 488.7% for the
three months ended September 30, 2000 compared to the same period in 1999. The
Company recognized during the third quarter of 2000 approximately $1.0 million
in loan prepayment penalties and exit fees resulting from the repayment of 13
mortgage notes receivable (see Note 6).
Total expenses for the three months ended September 30, 2000 were $29.4
million compared to $26.3 million for the same period in 1999, an increase of
$3.1 million or 11.9%.
General and administrative expenses increased $0.9 million, or 51.0%
for 2000 compared to 1999. Due to current capital market conditions, the Company
is pursuing fewer projects and, as a result, has capitalized less overhead in
2000. Further, changes in state tax laws increased the Company's state tax
liability for 1999 and 2000. This additional liability was determined and
recognized during the third quarter of 2000. The additional expense related to
1999 was approximately $0.1 million and for the first two quarters of 2000 was
approximately $0.05 million. These adjustments had no material affect on
previously reported earnings or earnings per share.
Property operating expenses and depreciation expense for the three
months ended September 30, 2000 compared to 1999 increased for the same reasons
property operating income increased, as discussed above.
Interest expense for the three months ended September 30, 2000,
compared to the same period in 1999, increased $1.2 million, or 12.4% due
primarily to $1.7 million in interest expense for the three months ended
September 30, 2000 on the Senior Notes due 2006. Interest expense on the
Unsecured Credit Facility and Term Loan Facility increased $0.3 million from
1999 to 2000 due to an increase in the combined weighted average interest rate
of approximately 2.2% while the combined weighted average balance outstanding
decreased approximately $82.8 million. Interest expense on the Senior Notes due
2002 decreased $0.3 million for the three months ended September 30, 2000
compared to the same period in 1999 due to annual principal payments of $18.0
million. One mortgage note payable assumed in 1998 was defeased, by the Company,
at maturity in June 2000 which resulted in a decrease of approximately $0.4
million in interest expense from 1999 to 2000.
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Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999
For the nine months ended September 30, 2000, net income was $61.8
million, or $1.44 per basic common share ($1.42 per diluted common share), on
total revenues of $147.7 million compared to net income of $61.6 million, or
$1.44 per basic common share ($1.42 per diluted common share), on total revenues
of $137.8 million, for the nine months ended September 30, 1999. Funds from
operations ("FFO") was $79.4 million, basic ($79.6 million, diluted), or $2.01
per basic common share ($1.97 per diluted common share), for the nine months
ended September 30, 2000 compared to $78.6 million, basic ($78.8 million,
diluted), or $2.00 per basic common share ($1.97 per diluted common share), in
1999.
NINE MONTHS ENDED SEPTEMBER 30,
2000 1999
---------- ----------
(in thousands)
REVENUES:
Master lease rental income $ 72,216 $ 69,360
Property operating income 46,740 41,980
Straight line rent 6,358 4,453
Mortgage interest income 18,127 19,229
Management fees 2,129 2,010
Interest and other income 2,127 794
---------- ----------
147,697 137,826
---------- ----------
EXPENSES:
General and administrative 6,558 5,492
Property operating expenses 17,205 15,135
Interest 32,434 28,366
Depreciation 29,004 29,063
Amortization 349 357
---------- ----------
85,550 78,413
---------- ----------
NET INCOME BEFORE NET GAIN (LOSS) ON SALE OF REAL ESTATE
PROPERTIES 62,147 59,413
NET GAIN (LOSS) ON SALE OF REAL ESTATE PROPERTIES (316) 2,150
---------- ----------
NET INCOME $ 61,831 $ 61,563
========== ==========
Total revenues for the nine months ended September 30, 2000 compared to
the nine months ended September 30, 1999, increased $9.9 million or 7.2%.
Master lease rent and property operating income increased $7.6 million
or 6.8%. During 1999 and 2000, the Company has acquired 19 revenue producing
properties, and 13 properties under construction were completed and began
operations.
Straight line rent income increased $1.9 million or 42.8% for the nine
months ended September 30, 2000 compared to the same period in 1999. This
increase is primarily attributable to the identification in the second quarter
of 2000 of additional leases acquired in 1998 for which straight line rent
should be recognized. The amount of straight line rent income that relates to
prior years totaled approximately $1.2 million, or $0.03 per basic and diluted
common share.
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Mortgage interest income decreased $1.1 million or 5.7% for 2000
compared to 1999 due to repayment of 30 mortgages since during 1999 and 2000.
Interest and other income increased $1.3 million or 167.9% for the nine
months ended September 30, 2000 compared to the same period in 1999. In 2000,
the Company recognized approximately $1.0 million in loan prepayment penalties
and exit fees resulting from the repayment of 13 mortgage notes receivable (see
Note 6). In 2000, the Company also recognized approximately $0.3 million due for
inspection fees on many of its properties and mortgages.
Total expenses for the nine months ended September 30, 2000 were $85.6
million compared to $78.4 million for the same period in 1999, an increase of
$7.1 million or 9.1%.
General and administrative expenses increased $1.1 million, or 19.4%
for 2000 compared to 1999. Due to current capital market conditions, the Company
is pursuing fewer projects and as a result, has capitalized less overhead in
2000. Further, changes in state tax laws increased the Company's state tax
liability for 1999 and 2000. This additional liability was determined and
recognized in 2000. The additional expense related to 1999 was approximately
$0.1 million and for the first two quarters of 2000 was approximately $0.05
million. These adjustments had no material affect on previously reported
earnings or earnings per share.
Property operating expenses for the nine months ended September 30,
2000 compared to 1999 increased for the same reasons property operating income
increased, as discussed above.
Interest expense for the nine months ended September 30, 2000, compared
to the nine months ended September 30, 1999, increased $4.1 million or 14.3%.
Interest expense on the Unsecured Credit Facility and Term Loan Facility
increased $2.0 million for the nine months ended September 30, 2000 compared to
the same period in 1999 due to an increase in the combined weighted average
interest rate of approximately 2.0% while the combined weighted average balance
outstanding decreased approximately $53.6 million. Also, interest expense of
$3.2 million on the Senior Notes due 2006 is reflected in the nine months ended
September 30, 2000, while interest expense on the Senior Notes due 2002
decreased $1.0 million due to annual principal payments of $18.0 million.
Further, one mortgage note payable assumed in 1998 was defeased, by the Company,
at maturity in June 2000 which resulted in a decrease of approximately $0.4
million in interest expense from 1999 to 2000.
LIQUIDITY AND CAPITAL RESOURCES
As discussed in more detail in Note 4, the Company has various
commitments to pay interest and outstanding principal balances on its notes and
bonds payable as follows (dollars in millions):
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20
BALANCE AT MATURITY INTEREST INTEREST
SEPT. 30, 2000 DATE RATE PAYMENTS PRINCIPAL PAYMENTS
--------------------------------------------------------------------------------------------------------------------
Unsecured Credit Facility (1) $ 265.0 10/01 LIBOR +1.05% Quarterly At maturity
--------------------------------------------------------------------------------------------------------------------
Term Loan Facility 39.3 11/00 LIBOR +2.50% Quarterly At maturity
--------------------------------------------------------------------------------------------------------------------
Senior Notes due 2002 36.0 9/02 7.41% Semi-Annual $18 million annually
--------------------------------------------------------------------------------------------------------------------
Senior Notes due 2006 70.0 4/06 9.49% Semi-Annual $20.3 million in 2004,
2005 and $29.4 million
in 2006
--------------------------------------------------------------------------------------------------------------------
10.5% Convertible Subordinated
Debentures, net 74.3 4/02 10.5% Semi-Annual At maturity
--------------------------------------------------------------------------------------------------------------------
6.55% Convertible Subordinated
Debentures, net 3.5 3/02 6.55% Semi-Annual At maturity
--------------------------------------------------------------------------------------------------------------------
Mortgage notes payable 43.1 9/04-7/26 7.625%-8.5% Monthly Monthly
--------------------------------------------------------------------------------------------------------------------
Other note payable 5.8 7/05 7.53% Semi-Annual Semi-Annual
--------------------------------------------------------------------------------------------------------------------
$ 537.0
--------------------------------------------------------------------------------------------------------------------
(1) The Company pays a quarterly commitment fee of 0.225 of 1% on the
unused portion of its Unsecured Credit Facility.
The Company currently has no additional borrowing capacity under its
Unsecured Credit Facility or Term Loan Facility. The Term Loan Facility, if not
repaid by its maturity date, may be extended or refinanced which may result in
higher interest costs.
As of September 30, 2000, the Company can issue an aggregate of $100.0
million of securities remaining under its currently effective registration
statement. Due to capital market conditions and the current market price of the
Company's stock, the Company does not presently plan to offer securities under
such registration statements. The Company may, under certain circumstances,
borrow additional amounts in connection with the renovation or expansion of its
properties, the acquisition or development of additional properties or, as
necessary, to meet distribution requirements for REITs under the Internal
Revenue Code. The Company may raise additional capital or make investments by
issuing, in public or private transactions, its equity and debt securities, but
the availability and terms of any such issuance will depend upon market and
other conditions.
As discussed in more detail in Note 6, throughout the year 2000, the
Company has received net proceeds from the sale of various parcels of land, real
estate property, participations in mortgage notes receivable and has received
net proceeds from repayments on mortgage notes receivable. The net proceeds from
these transactions were applied to the partial repayment of the Term Loan
Facility reducing the outstanding balance from $113.7 million at December 31,
1999 to $39.3 million at September 30, 2000.
As of September 30, 2000, the Company had an investment of
approximately $19.8 million in five build-to-suit developments in progress and
one expansion of an existing facility, which have a total remaining funding
commitment of approximately $41.2 million. The Company intends to fund these
commitments with funds available from operations, sales of real estate
investments, payments of mortgage notes receivable, and capital market
financings.
At September 30, 2000, the Company had stockholders' equity in excess
of $1.0 billion. The debt to total capitalization ratio was approximately .347
to 1 at September 30, 2000.
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21
On July 25, 2000, the Company declared an increase in its quarterly
common stock dividend from $0.555 per share ($2.22 annualized) to $0.560 per
share ($2.24 annualized) payable to stockholders of record on August 4, 2000.
This dividend was paid on August 16, 2000. In October 2000, the Company
announced payment of a common stock dividend of $0.565 per share ($2.26
annualized) to holders of record of common shares on November 15, 2000. This
dividend is payable on December 6, 2000 and relates to the period July 1, 2000
through September 30, 2000. The Company presently plans to continue to pay its
common stock dividends in a manner consistent with its current practice. Should
access to new capital not be available, the Company is uncertain of its ability
to increase its quarterly common stock dividend in the future.
During 2000, the Company expects to pay quarterly dividends on its 8
7/8% Series A Voting Cumulative Preferred Stock in the annualized amount of
$2.22 per share.
Under the terms of the leases and other financial support agreements
relating to most of the properties, tenants or healthcare providers are
generally responsible for operating expenses and taxes relating to the
properties. As a result of these arrangements, with limited exceptions not
material to the performance of the Company, the Company does not believe that
any increases in the property operating expenses or taxes would significantly
impact the operating results of the Company during the respective terms of the
agreements. The Company anticipates entering into similar arrangements with
respect to additional properties it acquires or develops. After the term of the
lease or financial support agreement, or in the event the financial obligations
required by the agreement are not met, the Company anticipates that any
expenditures it might become responsible for in maintaining the properties will
be funded by cash from operations and, in the case of major expenditures,
possibly by borrowings. To the extent that unanticipated expenditures or
significant borrowings are required, the Company's cash available for
distribution and liquidity may be adversely affected.
The Company plans to continue to meet its liquidity needs, including
funding additional investments in 2000, paying its quarterly dividends and
funding its debt service from its cash flows, the proceeds of mortgage loan
repayments, sales of real estate investments, payments of mortgage notes
receivable, and capital market financings. The Company continues negotiations
for additional capital market financings and asset sales, the proceeds of which
would be used to repay the Term Loan Facility, the Unsecured Credit Facility and
for other general corporate purposes. The Company believes that its liquidity
and sources of capital are adequate to satisfy its cash requirements. The
Company, however, cannot be certain that these sources of funds will be
available at a time and upon terms acceptable to the Company in sufficient
amounts to meet its liquidity needs.
Impact of Inflation
Inflation has not significantly affected the earnings of the Company
because of the moderate inflation rate and the fact that most of the Company's
leases and financial support arrangements require tenants and sponsors to pay
all or some portion of the increases in operating expenses, thereby reducing the
risk of any adverse effects of inflation to the Company. In addition, inflation
will have the effect of increasing the gross revenue the Company is to receive
under the terms of the leases and financial support arrangements. Leases
19
22
and financial support arrangements vary in the remaining terms of obligations
from one to 23 years, further reducing the risk of any adverse effects of
inflation to the Company. The Unsecured Credit Facility bears interest at a
variable rate; therefore, the amount of interest payable under the Unsecured
Credit Facility will be influenced by changes in short-term rates, which tend to
be sensitive to inflation. Generally, changes in inflation and interest rates
tend to move in the same direction. During periods when interest rate increases
outpace inflation; the Company's operating results will be negatively impacted.
Likewise, when increases in inflation outpace increases in interest rates, the
Company's operating results will be positively impacted.
Year 2000 Issue
During 1999, the Company completed its remediation and testing of
systems in connection with the Year 2000 issue. As a result of these efforts,
the Company experienced no disruptions or malfunctions at any of its properties.
Market Risk
The Company is exposed to market risk in the form of changing interest
rates on its debt and mortgage notes receivable. The Company has no market risk
with respect to derivatives and foreign currency fluctuations. Management uses
daily monitoring of market conditions and analytical techniques to manage this
risk. The Company does not believe there have been significant changes in its
market risk since December 31, 1999. For a more detailed discussion, see page 16
of Exhibit 13 "Annual Report to Shareholders" of the Company's Form 10-K for the
fiscal year ended December 31, 1999.
Cautionary Language Regarding Forward Looking Statements
Statements in this Form 10-Q that are not historical, factual
statements are "forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The statements include, among other
things, statements regarding the intent, belief or expectations of the Company
and its officers and can be identified by the use of terminology such as "may",
"will", "expect", "believe", "intend", "plan", "estimate", "should" and other
comparable terms. In addition, the Company, through its senior management, from
time to time makes forward looking oral and written public statements concerning
the Company's expected future operations and other developments. Shareholders
and investors are cautioned that, while forward looking statements reflect the
Company's good faith beliefs and best judgment based upon current information,
they are not guarantees of future performance and are subject to known and
unknown risks and uncertainties. Actual results may differ materially from the
expectations contained in the forward looking statements as a result of various
factors. For a more detailed discussion of these, and other, factors see pages
25 through 29 of Item 1 of the Company's Form 10-K for the fiscal year ended
December 31, 1999.
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23
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 22, 1999, HR Acquisitions I Corporation, formerly known as
Capstone Capital Corporation ("HRT"), a wholly-owned subsidiary of the Company,
filed suit against Medistar Corporation and its affiliate, Medix Construction
Company in United States District Court for the Northern District of Alabama,
Southern Division. HRT is seeking damages in excess of $2 million arising out of
the development and construction of four real estate projects located in
different parts of the United States. Medistar and Medix served as the developer
and contractor, respectively, for the projects. HRT has asserted claims for
damages relating to, among others, alleged breaches of the development and
contracting obligations, failure to perform in accordance with contract terms
and specifications, and other deficiencies in performance by Medistar and Medix.
On June 10, 1999, Medistar and Medix filed its answer and counterclaim asserting
a variety of alleged legal theories, claims for damages for alleged deficiencies
by HRT and the Company in the performance of alleged obligations, and for damage
to their business reputation. Attempts at mediation have not resulted in a
settlement of the disputes. The Company's prosecution of its claims and defense
of the counterclaims will continue to be vigorous. While the Company cannot
predict the range of possible loss or outcome, the Company believes that, even
though the asserted cross claims seek substantial monetary damages, the
allegations made by Medistar and Medix are not factually or legally meritorious,
are subject to sustainable defenses and are, to a significant extent, covered by
liability insurance.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
Exhibit 27. Financial Data Schedule (For SEC use only)
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the Company during the three
months ended September 30, 2000.
21
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SIGNATURE
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.
HEALTHCARE REALTY TRUST INCORPORATED
By: /s/ Timothy G. Wallace
-----------------------------------
Timothy G. Wallace
Executive Vice President, Finance
and Chief Financial Officer
Date: November 13, 2000
22