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
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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
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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
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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
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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
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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
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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.
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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27 Financial Data Schedule
99.1 Press release dated April 18, 2000
99.2 Press release dated April 26, 2000
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