<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1994
_______________
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
MANOR CARE, INC.
________________
COMMISSION FILE NUMBER 1-8195
_____________________________
Incorporated in Delaware E.I.#52-1200376
________________________ _______________
10750 Columbia Pike, Silver Spring, Maryland 20901
___________________________________________________
Telephone: (301) 681-9400
_________
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 twelve months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
_______ _______
62,360,364 Common Shares were outstanding as of October 6, 1994.
This report contains 10 pages.
<PAGE> 2
PART I. FINANCIAL INFORMATION
FINANCIAL STATEMENTS
MANOR CARE, INC. AND SUBSIDIARIES
The consolidated balance sheet as of August 31, 1994, the consolidated
statements of income and the consolidated statements of cash flows for the
three month periods ended August 31, 1994 and 1993, have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly
the financial position, results of operations and cash flows at August 31, 1994
and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's May 31, 1994 annual report to
shareholders, previously filed with the Commission. The results of operations
and cash flows for the three month periods ended August 31, 1994 and 1993 are
not necessarily indicative of the operating results or cash flows for the full
year.
2
<PAGE> 3
MANOR CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
August 31, 1994 May 31, 1994
--------------- ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 43,323 $ 60,487
Receivables (net of allowances
of $24,213 and $24,431) 88,503 84,766
Inventories 12,816 12,954
Current deferred income tax benefit 12,317 12,317
Prepaid expenses 29,873 10,588
Other current assets 2,094 2,240
--------- ---------
Total current assets 188,926 183,352
--------- ---------
Property and Equipment, at cost
Land 101,833 92,838
Buildings and improvements 841,218 813,131
Capitalized leases 18,991 18,991
Furniture, fixtures and equipment 196,907 187,804
Facilities in progress 23,446 19,632
--------- ---------
1,182,395 1,132,396
Less accumulated depreciation (323,421) (308,046)
--------- ---------
Net property and equipment 858,974 824,350
--------- ---------
Lodging franchise rights, net 63,732 64,454
--------- ---------
Other Assets 114,414 114,369
--------- ---------
$1,226,046 $1,186,525
========= =========
</TABLE>
NOTE: The balance sheet at May 31, 1994 has been taken from the audited
financial statements at that date.
3
<PAGE> 4
MANOR CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
August 31, 1994 May 31, 1994
--------------- ------------
(Unaudited) (Note)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 5,245 $ 5,869
Accounts payable 53,351 50,231
Accrued expenses 88,948 97,597
Income taxes payable 24,974 12,681
--------- ---------
Total current liabilities 172,518 166,378
--------- ---------
Mortgage and other Long-Term Debt 115,046 119,333
--------- ---------
Subordinated Long-Term Debt 157,648 157,602
--------- ---------
Deferred Income Taxes and Other 223,590 209,397
--------- ---------
Stockholders' Equity
Common stock 6,547 6,545
Contributed capital 167,590 167,316
Retained earnings 425,515 402,520
Cumulative translation adjustments 146 (31)
Treasury stock, at cost (42,554) (42,535)
--------- ---------
Total stockholders' equity 557,244 533,815
--------- ---------
$1,226,046 $1,186,525
========= =========
</TABLE>
NOTE: The balance sheet at May 31, 1994 has been taken from the audited
financial statements at that date.
4
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MANOR CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per-share data)
<TABLE>
<CAPTION>
Three Months Ended August 31,
-----------------------------
1994 1993
---- ----
<S> <C> <C>
Revenues
Healthcare, net $242,974 $221,273
Lodging 78,427 63,355
------- -------
Total revenues 321,401 284,628
------- -------
Expenses
Healthcare 184,728 168,141
Lodging 54,019 45,699
Depreciation & amortization 17,724 16,201
General corporate 17,466 15,555
------- -------
Total expenses 273,937 245,596
------- -------
Income from operations 47,464 39,032
------- -------
Other income (expenses)
Interest income and other 354 530
Gain on sale of property 0 7,978
Interest expense (6,655) (8,978)
------- -------
Total other (expenses), net (6,301) (470)
------- -------
Income before income taxes 41,163 38,562
Income tax expenses
Effect of change in tax law - 3,600
Provision for quarter 16,800 15,200
------- -------
16,800 18,800
------- -------
Net income $ 24,363 $ 19,762
======= =======
Average shares outstanding 62,536 57,564
======= =======
Income per share of common stock $ .39 $ .34
======= =======
Dividends per share of common stock $ .022 $ .022
======= =======
</TABLE>
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MANOR CARE, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended August 31,
-----------------------------
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 24,363 $ 19,762
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 17,724 16,201
Amortization of debt discount 250 252
Provision for bad debts 2,792 2,823
Increase in deferred taxes (944) 3,404
Gain on sale of facilities - (7,978)
Changes in assets and liabilities
(excluding sold facilities):
Change in accounts receivable (6,592) (1,646)
Change in inventory and other current assets (19,000) (20,530)
Change in accounts payable and accrued expenses (5,529) (9,516)
Change in income taxes payable 12,293 9,524
Change in other liabilities 15,137 -
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 40,494 12,296
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (39,635) (15,614)
Acquisition of operating hotels (9,970) (2,233)
Acquisition of operating pharmacies - (4,846)
Proceeds from sale of facilities - 15,630
Other items, net (2,046) 727
------- -------
NET CASH UTILIZED BY INVESTING ACTIVITIES (51,651) (6,336)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of debt (4,911) (37,614)
Proceeds from exercise of stock options 276 220
Dividends paid (1,372) (1,263)
------- -------
NET CASH PROVIDED (UTILIZED) BY FINANCING
ACTIVITIES (6,007) (38,657)
------- -------
CHANGE IN CASH AND CASH EQUIVALENTS (17,164) (32,697)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 60,487 80,844
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 43,323 $ 48,147
======= =======
</TABLE>
6
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MANOR CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 31, 1994
(unaudited)
Long-Term Debt
During the three months ended August 31, 1994, the Company paid off
approximately $5 million in debt.
During the three months ended August 31, 1993, the Company paid off
approximately $37 million in debt. Debt reduced was primarily bank lines of
credit.
Acquisitions, Divestitures and Sales of Property
In August 1993, a pharmacy business in Oregon was purchased for approximately
$5.0 million. In January 1994, a pharmacy business in Colorado was acquired
for approximately $3.5 million.
During fiscal year 1994 the Company purchased thirteen operating hotels
containing a total of 1,900 rooms for approximately $44.2 million. In the
first quarter of fiscal 1995, three operating hotels containing 454 rooms were
purchased for approximately $10.0 million.
In July 1993, three nursing facilities were sold for $15.6 million resulting in
a pre-tax gain of approximately $8.0 million. In February 1994, one hotel was
sold for $7.2 million.
7
<PAGE> 8
MANOR CARE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Available cash balances and unused lines of credit remain adequate to ensure
sufficient liquidity and capital resources for the foreseeable future.
Results of Operations
Net income for the three months ended August 31, 1994 was $24.4 million or $.39
per share, compared to $19.8 million or $.34 per share, last year. Income from
operations for the three months ended August 31, 1994 was $47.5 million; this
compares to $39.0 million for the same period last year. Included in the prior
year results are pre-tax and after-tax gains on sale of three nursing
facilities of $8.0 million and $4.8 million, respectively. Also included in
the prior year results was an adjustment increasing income taxes $3.6 million
to reflect the increase in Federal income tax rates enacted in August 1993.
Gross profit for the healthcare division improved $5.1 million for the three
months ended August 31, 1994 when compared to the same period last year.
Healthcare revenues and expenses both rose 10%. The improvement in gross
profit was primarily due to higher occupancies in the Company's nursing
facilities and added capacity in Vitalink, the Company's institutional pharmacy
subsidiary.
Gross profit for the lodging division increased $6.8 million for the three
months ended August 31, 1994 when compared to the same period last year.
Lodging revenues rose 24% and operating expenses 18%. The improved operating
performance is attributable to added capacity in the Company's hotel division
and improved conditions in the overall travel industry.
General Corporate expense for the three months ended August 31, 1994 increased
$1.9 million when compared to the same period last year. General corporate
expense represented 5.4% of revenues during the three months ended August 31,
1994 as compared to 5.5% during the same period in the prior year. General
corporate expense includes risk management, treasury, accounting, legal, human
resources and other administrative support functions.
Depreciation and amortization for the three months ended August 31, 1994
increased $1.5 million primarily due to new construction and recent
acquisitions.
Interest expense of $6.7 million was $2.3 million below prior year's amount.
The net decrease is primarily due to the early redemption and conversion of the
$99 million of 6-3/8% debentures on October 25, 1993. Interest capitalized
amounted to $.3 million and $.2 million in the quarters ended August 31, 1994
and 1993, respectively.
8
<PAGE> 9
MANOR CARE, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual shareholders meeting on September 9, 1994, the shareholders
elected the directors who had been nominated by the Company. The number of
votes cast was as follows:
<TABLE>
<CAPTION>
For Against/Withheld
--- ----------------
<S> <C> <C>
Stewart Bainum, Jr. 55,420,969 896,801
Stewart Bainum 55,416,985 900,785
Jack R. Anderson 55,419,478 898,292
Regina E. Herzlinger 55,411,938 905,832
William H. Longfield 55,420,742 897,028
Frederic V. Malek 55,414,160 903,610
Jerry E. Robertson 55,422,979 894,791
</TABLE>
The shareholders approved an increase in authorized common stock from
80,000,000 shares to 160,000,000 shares. There were 52,239,933 shares voted in
favor of the proposal, 2,219,379 shares voted against, 347,917 shares
abstaining and 696,584 broker non-votes.
The shareholders also approved the Manor Care, Inc. Non-Employee Director Stock
Option and Deferred Compensation Stock Purchase Plan, under which 230,000
shares of Company common stock will be reserved for issuance upon exercise of
options and stock purchase rights by non-employee directors. There were
50,400,897 shares voted in favor of the proposal, 3,860,251 shares voted
against, 513,781 shares abstaining and 728,884 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 - Articles of Incorporation, as amended.
27 - Financial Data Schedule
(b) There were no reports filed on Form 8-K for the three months ended
August 31, 1994.
9
<PAGE> 10
MANOR CARE, INC. AND SUBSIDIARIES
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 thereunto duly authorized.
MANOR CARE, INC.
------------------
(Registrant)
Date:October 6, 1994 By: James A. MacCutcheon
--------------- Senior Vice President,
Chief Financial Officer
and Treasurer
Date:October 6, 1994 By: James H. Rempe
--------------- Senior Vice President,
General Counsel and Secretary
Date:October 6, 1994 By: Margarita Schoendorfer
--------------- Vice President and
Corporate Controller
10
<PAGE> 11
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation of Manor Care Holding Company
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
MANOR CARE HOLDING COMPANY
FIRST: The name of the Corporation is Manor Care Holding
Company.
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 100 West Tenth Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may now or hereafter be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock of all
classifications which the Corporation shall have authority to issue is Twenty
Million Five Hundred Thousand (20,500,000) shares, of which Twenty Million
(20,000,000) shares having a par value of Ten Cents ($.10) per share shall be
of a class designated "Common Stock" and Five Hundred Thousand (500,000) shares
having a par value of One Dollar ($1.00) per share shall be of a class
designated "Preferred Stock."
The designations, preferences, privileges and powers and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions of the above classifications of stock shall be as
follows:
I. Preferred Stock
(a) Shares of the Preferred Stock may be issued in one or
more series at such time or times and for such consideration or considerations
as the Board of Directors may determine. All shares of any one series shall be
of equal rank and identical in all respects.
(b) Authority is hereby expressly granted to the Board of
Directors to fix from time to time, by resolution or resolutions providing for
the issue of any series of Preferred Stock, the designation of such series and
the powers, preferences and rights of the shares of such series, and the
qualifications, limitations or restrictions thereof, including the following:
(1) The distinctive designation and number of shares
comprising such series, which number may (except where otherwise
provided by the Board of Directors in creating such series) be
increased or decreased (but not below the number of shares then
outstanding) from time to time by action of the Board of Directors;
<PAGE> 2
(2) The rate of dividend, if any, on the shares of that
series, whether dividends shall be cumulative and, if so, from which
date or dates and the relative rights of priority, if any, of payment
of dividends on shares of that series over shares of any other series;
(3) Whether the shares of that series shall be redeemable
and, if so, the terms and conditions of such redemption, including the
date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary
under different conditions and at different redemption dates;
(4) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms
and amounts payable into such sinking fund;
(5) The rights to which the holders of the shares of that
series shall be entitled in the event of voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of the
Corporation, and the relative rights of priority, if any, of payment
or shares of that series;
(6) Whether the shares of that series shall be convertible
into or exchangeable for shares of stock of any other class or any
other series of Preferred Stock and, if so, the terms and conditions
of such conversion or exchange, including the method of adjusting the
rates of conversion or exchange in the event of a stock split, stock
dividend, combination of shares or similar event;
(7) Whether the shares of that series shall have voting
rights, in addition to the voting rights provided by law, and, if so,
the terms of such voting rights;
(8) Whether the issuance of any additional shares of such
series, or of any shares of any other series, shall be subject to
restrictions as to issuance, or as to the powers, preferences or
rights of any such other series;
(9) Any other preferences, privileges and powers and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions of such series, as the
Board of Directors may deem advisable and as shall not be inconsistent
with the provisions of this Certificate of Incorporation and to the
full extent now or hereafter permitted by the laws of Delaware.
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(c) Payment of dividends shall be as follows:
(1) The holders of any series of Preferred Stock, in
preference to the holders of the Common Stock and the holders of any
junior-ranking series of Preferred Stock, shall be entitled to
receive, as and when declared by the Board of Directors out of funds
legally available therefor, cash dividends, at the rate for such
series fixed in accordance with the provisions of Paragraph I(b)(2) of
this Article FOURTH and no more.
(2) No dividend shall be paid upon, or declared or set
aside for, any series of Preferred Stock with respect to any dividend
period unless (i) all dividends on all senior-ranking series of
Preferred Stock shall, for the same and all past dividend periods,
have been fully paid or declared and provided for and (ii) at the same
time a like proportionate dividend with respect to the same dividend
period, ratably in proportion to the respective annual dividend rates
fixed therefor, shall be paid upon, or declared and set aside for, all
equally-ranking series of Preferred Stock.
(3) So long as any shares of Preferred Stock shall be
outstanding, in no event shall any dividend, whether in cash or
property, be paid or declared, nor shall any distribution be made, on
the Common Stock, nor shall any shares of the Common Stock be
purchased, redeemed or otherwise acquired for value by the
Corporation, unless all dividends on all cumulative series of
Preferred Stock with respect to all past dividend periods and unless
all dividends on all series of Preferred Stock for the then current
dividend period shall have been paid or declared and provided for, and
unless the Corporation shall not be in default under any of its
obligations with respect to any sinking fund for any series of
Preferred Stock. The foregoing provisions of this Subparagraph (3)
shall not, however, apply to a dividend payable in Common Stock.
(4) No dividends shall be deemed to have accrued on any
share of Preferred Stock of any series with respect to any period
prior to the date of original issue of such share or the dividend
payment date immediately preceding or following such date of original
issue, as may be provided in the resolution or resolutions of the
Board of Directors creating such series. The Preferred Stock shall
not be entitled to participate in any dividends declared and paid on
the Common Stock, whether payable in cash, stock or otherwise.
Accruals of dividends shall not bear interest.
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(d) In the event of any voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of the
Corporation, the holders of the shares of any series of the Preferred Stock
then outstanding shall be entitled to receive out of the net assets of the
Corporation, but only in accordance with the preferences, if any, provided for
such series, before any distribution or payment shall be made to the holders of
the Common Stock and the holders of any junior-ranking series of Preferred
Stock, the amount per share fixed by the resolution or resolutions of the Board
of Directors to be received by the holders of such shares on such voluntary or
involuntary liquidation, dissolution, distribution of assets or winding-up, as
the case may be. If such payment shall have been made in full to the holders
of all outstanding Preferred Stock of all series, or duly provided for, the
remaining assets of the Corporation shall be available for distribution among
the holders of the Common Stock ( as provided in Paragraph II(b) of this
Article FOURTH). If, upon any such liquidation, dissolution, distribution of
assets or winding-up, the net assets of the Corporation available for
distribution among the holders of any one or more series of the Preferred Stock
which (i) are entitled to a preference over the holders of the Common Stock
upon such liquidation, dissolution, distribution of assets or winding-up, and
(ii) rank equally in connection therewith, shall be insufficient to make
payment in full of the preferential amount to which the holders of such shares
shall be entitled, then such assets shall be distributed among the holders of
each such series of the Preferred Stock ratably according to the respective
amounts to which they would be entitled in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to such shares
were paid in full.
Neither the consolidation or merger of the Corporation, nor
the sale, lease or conveyance (whether for cash, securities or other property)
of all or part of its assets, shall be deemed a liquidation, dissolution,
distribution of assets or winding-up of the Corporation within the meaning of
the foregoing provisions.
(e) Except to the extent otherwise required by law or
provided in the resolution or resolutions of the Board of Directors adopted
pursuant to authority granted in this Paragraph I of Article FOURTH, the shares
of Preferred Stock shall have no voting power with respect to any matter
whatsoever.
In no event shall the Preferred Stock be entitled to more than
one vote in respect of each share of stock.
(f) Shares of Preferred Stock which have been redeemed,
converted, exchanged, purchased, retired or surrendered to the Corporation, or
which have been reacquired in any manner, shall have the status of authorized
and unissued Preferred Stock and may be reissued by the Board of Directors as
shares of the same or any other series.
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<PAGE> 5
II. Common Stock
(a) After the requirements with respect to preferential
dividends, if any, on the Preferred Stock (fixed pursuant to Paragraph I(b)(2)
and as further provided for in Paragraph I(c) both of this Article FOURTH)
shall have been met, and after the Corporation shall have complied with all
requirements, if any, with respect to the setting aside of sums in a sinking
fund for the purchase or redemption of shares of any series of Preferred Stock
(fixed pursuant to Paragraph I(b)(4) of this Article FOURTH), then, and not
otherwise, the holders of Common Stock shall receive, to the extent permitted
by law, such dividends as may be declared from time to time by the Board of
Directors;
(b) After distribution in full of the preferential
amount, if any (fixed pursuant to Paragraph I(b)(5) of this Article FOURTH), to
be distributed to the holders of Preferred Stock in the event of the voluntary
or involuntary liquidation, dissolution, distribution of assets or winding-up
of the Corporation, the holders of the Common Stock shall be entitled to
receive all the remaining assets of the Corporation of whatever kind available
for distribution to stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively;
(c) Except as may be otherwise required by law or by this
Certificate of Incorporation, each holder of Common Stock shall have one vote
in respect of each share of such stock held by him on all matters voted upon by
the stockholders.
III. Other Provisions
(a) The stockholders of the Corporation are expressly
denied the preemptive right to subscribe to any or all additional shares of
stock of the Corporation of any or all classes or series thereof.
(b) Any and all shares issued by the Corporation for
which the full consideration fixed in accordance with Paragraph (3)(d) of
Article FIFTH hereof has been paid or delivered shall be deemed fully paid and
non-assessable shares.
FIFTH: The following provisions are inserted for the
management of the business and for the conduct of the affairs of the
Corporation, and for further definition, limitation and regulation of the
powers of the Corporation and of its directors and stockholders:
(1) The number of directors of the Corporation shall be
such as from time to time shall be fixed by, or in the manner provided
in, the bylaws, but shall not be less than three unless the shares of
the Corporation are owned beneficially and of record by either one or
two
5
<PAGE> 6
stockholders in which event the bylaws may provide that the number of
directors may be less than three, but not less than the number of
stockholders.
(2) The election of directors need not be by written
ballot unless the bylaws of the Corporation shall so provide.
(3) The board of directors is expressly authorized:
(a) To make, alter or repeal the bylaws of the
Corporation.
(b) To authorize and cause to be executed
mortgages and liens upon the real and personal property of the
Corporation.
(c) To set apart out of any of the funds of the
Corporation available for dividends a reserve or reserves for
any proper purpose and to abolish any such reserve in the
manner in which it was created.
(d) To determine or fix the consideration for
which shares of any class of the capital stock of the
Corporation may be issued or sold, and to purchase, sell and
transfer shares of the capital stock of the Corporation.
(e) To acquire the goodwill, rights, assets,
business and property or any classes of stock or other
securities of any person, firm, association or corporation, by
paying cash, property, or such other consideration as is
deemed appropriate, or by issuing shares of any class of
capital stock of the Corporation or any notes, debentures,
bonds or other securities or instruments convertible into or
carrying options or warrants to purchase shares of any class
of capital stock which the Corporation is authorized to issue,
privately or to the public, directly or through underwriters,
and to undertake or assume the whole or any part of the
obligations or liabilities of any such person, firm,
association or corporation in connection with such
acquisition.
(f) When and as authorized by the affirmative
vote of the holders of a majority of the capital stock of the
Corporation issued and outstanding having voting power given
at a stockholders' meeting duly called for the purpose, or
when and as authorized by the written consent of the holders
of a majority of the voting capital stock of the Corporation
issued and outstanding, to sell, lease or exchange all of the
property and assets of the
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Corporation, including its goodwill and its corporate
franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of
stock in, and/or other securities of, any other corporation or
corporations, as the board of directors shall deem expedient
and for the best interests of the Corporation.
(4) The directors, in their discretion, may submit any
contract or act for approval or ratification at any annual meeting of
the stockholders or at any meeting of the stockholders called for the
purpose of considering any such contract or act, any contract or act
that shall be approved or be ratified by the vote of the holders of a
majority of the capital stock of the Corporation which is represented
in person or by proxy at such meeting and entitled to vote thereat
(provided that a lawful quorum of stockholders be there represented in
person or by proxy) shall be as valid and as binding upon the
Corporation and upon all the stockholders as though it had been
approved or ratified by every stockholder of the Corporation, whether
or not the contract or act would otherwise be open to legal attack
because of directors' interest or for any other reason.
(5) No act of a director of the Corporation in connection
with a business of the same or similar type as that conducted by the
Corporation, or in connection with any activities similar to
activities carried on by the Corporation, or with respect to any
business opportunity related to the business of the Corporation, shall
be deemed improper if the said action of such director is appropriate
under the bylaws of the Corporation.
(6) In addition to the powers and authorities
hereinbefore or by statute expressly conferred upon them, the
directors are hereby empowered to exercise all such powers and do all
such acts and things as may be exercised or done by the Corporation;
subject, nevertheless, to the provisions of the statutes of the State
of Delaware, of this Certificate, and of any bylaws from time to time
made by the board of directors; provided, however, that no bylaws so
made shall invalidate any prior act of the directors which would have
been valid if such bylaw had not been made.
SIXTH: No contract or other transaction between this
Corporation and any other corporation or any individual or firm shall be in any
way invalidated or otherwise affected by the fact that any one or more of the
directors of this Corporation are pecuniarily or otherwise interested in, or
are directors or officers of, such other corporation, provided that such
contract or transaction, shall at the time it was entered into, have been a
reasonable one to have been entered into, and shall have been upon
7
<PAGE> 8
terms that at the time were fair. Any director of this Corporation
individually, or any firm or association of which any directors may be a
member, may be a party to, or may be pecuniarily or otherwise interested in,
any contract or transaction of this Corporation, provided that the fact that he
individually or as a member of such firm or association is so interested shall
be disclosed or shall have been known to the board of directors; and any
director of this Corporation who is also a director or officer of such other
corporation, or a member of such firm or association, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
board of directors or of any committee of this Corporation which shall
authorize any such contract or transaction, with like force and effect as if he
were not such director or officer of such other corporation or not so
interested. Any director of this Corporation may vote upon any contract or
other transaction between this Corporation and any subsidiary or affiliated
corporation without regard to the fact that he is also a director of such
subsidiary or affiliated corporation.
SEVENTH: Meetings of stockholders may be held within or
without the State of Delaware, as the bylaws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the bylaws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
NINTH: The name and mailing address of the sole Incorporator
is as follows:
<TABLE>
<CAPTION>
Name Address
<S> <C>
Roslyn Tucker 80 Pine Street
New York, New York 10005
</TABLE>
TENTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in
a summary way of this Corporation or of any creditor or stockholder thereof or
on the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of three creditors or class of creditors,
and/or of the
8
<PAGE> 9
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
I, THE UNDERSIGNED, being the sole Incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this Certificate, hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 22nd day of
July, 1981.
/s/ Roslyn Tucker
--------------------------------
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Manor Care Holding Company, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of MANOR CARE
HOLDING COMPANY, resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing Article FIRST so that the existing first paragraph
shall be deleted and in lieu thereof the following new paragraph of
said Article shall be inserted:
"FIRST: The name of the Corporation is:
MANOR CARE, INC."
9
<PAGE> 10
SECOND: That in lieu of a meeting and vote of the sole stockholder,
the stockholder has given its written consent to said amendment in accordance
with the provisions of Section 228 of the General Corporation Law of the State
of Delaware and the Certificate of Incorporation and Bylaws of said
corporation.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said MANOR CARE HOLDING COMPANY has caused its
corporate seal to be hereunto affixed and this certificate to be signed by
James H. Rempe, Senior Vice President, and attested by Everett F. Casey,
Assistant Secretary, this 27th day of August, 1981.
MANOR CARE HOLDING COMPANY
(CORPORATE SEAL)
By /s/ James H. Rempe
--------------------------------
James H. Rempe
Senior Vice President
ATTEST
By /s/ Everett F. Casey
----------------------------
Everett F. Casey
Assistant Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
MANOR CARE, INC., a corporation organized and existing under an by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of MANOR CARE,
INC. resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that the first paragraph of Article Fourth of the
Certificate of Incorporation of Manor Care, Inc. shall be amended to
read as follows:
10
<PAGE> 11
FOURTH: The total number of shares of capital stock
of all classifications which the Corporation shall have
authority to issue is Forty Million Five Hundred Thousand
(40,500,000) shares, of which Forty Million (40,000,000)
shares having a par value of Ten Cents ($.10) per share shall
be of a class designated "Common Stock" and Five Hundred
Thousand (500,000) shares having a par value of One Dollar
($1.00) per share shall be of a class designated "Preferred
Stock."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held upon notice given in accordance with Section 222 of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation
and Bylaws of said corporation. At such meeting there was taken a vote of the
stockholders entitled to vote, by ballot, in person or by proxy, for and
against the proposed amendment, and the necessary number of shares as required
by said General Corporation Law and the Certificate of Incorporation of said
corporation were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said MANOR CARE, INC. has caused its corporate
seal to be hereunto affixed and this certificate to be signed by James H.
Rempe, its Senior Vice President, and attested by Everett F. Casey, its
Assistant Secretary, this 1st day of October, 1983.
MANOR CARE, INC.
By: /s/ James H. Rempe
--------------------------------
James H. Rempe
Senior Vice President
ATTEST
By: /s/ Everett F. Casey
---------------------------
Everett F. Casey
Assistant Secretary
11
<PAGE> 12
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
MANOR CARE, INC., a corporation organized and existing under an by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That a meeting of the Board of Directors of MANOR CARE, INC.,
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that the first paragraph of Article Fourth of the
Certificate of Incorporation of Manor Care, Inc. shall be amended to
read as follows:
FOURTH: The total number of shares of capital stock
of all classifications which the Corporation shall have
authority to issue is Eighty-five Million (85,000,000) shares,
of which Eighty Million (80,000,000) shares having a par value
of Ten Cents ($.10) per share shall be of a class designated
"Common Stock" and Five Million (5,000,000) shares having a
par value of One Dollar ($1.00) per share shall be of a class
designated "Preferred Stock".
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a meeting of the stockholders of said corporation was duly called
and held upon notice given in accordance with Section 222 of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation
and Bylaws of said corporation. At such meeting there was taken a vote of the
stockholders entitled to vote, by ballot, in person or by proxy, for and
against the proposed amendment, and the necessary number of shares as required
by said General Corporation Law and the Certificate of Incorporation of said
corporation were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced
under or by reason of said amendment.
12
<PAGE> 13
IN WITNESS WHEREOF, said MANOR CARE, INC. has caused its corporate
seal to be hereunto affixed and this certificate to be signed by James H.
Rempe, its Senior Vice President, and attested by Everett F. Casey, its
Assistant Secretary, this 29th day of August, 1985.
MANOR CARE, INC.
By: /s/ James H. Rempe
--------------------------------
James H. Rempe
Senior Vice President
ATTEST
By: /s/ Everett F. Casey
---------------------------
Everett F. Casey
Assistant Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
MANOR CARE, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of MANOR CARE,
INC. resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The Resolution setting forth the proposed amendment is
as follows:
RESOLVED, that an Article Eleventh of the Certificate of
Incorporation of Manor Care, Inc. shall be added to read as follows:
ELEVENTH: No director of the Corporation shall be
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper
personal benefit.
13
<PAGE> 14
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held upon notice given in accordance with Section 222 of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation
and Bylaws of said corporation. At such meeting there was taken a vote of the
stockholders entitled to vote, by ballot, in person or by proxy, for and
against the proposed amendment, and the necessary number of shares as required
by said General Corporation Law and the Certificate of Incorporation of said
corporation were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provision of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said MANOR CARE, INC. has caused its corporate
seal to be hereunto affixed and this certificate to be signed by James H.
Rempe, its Senior Vice President, and attested by Everett F. Casey, its
Assistant Secretary, this 29th day of September, 1986.
MANOR CARE, INC.
By: /s/ James H. Rempe
--------------------------------
James H. Rempe
Senior Vice President
ATTEST:
By: /s/ Everett F. Casey
--------------------------
Everett F. Casey
Assistant Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
MANOR CARE, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That at a meeting of the Board of Directors of MANOR CARE,
INC., resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
14
<PAGE> 15
RESOLVED, that the first paragraph of Article Fourth of the
Certificate of Incorporation of Manor Care, Inc. shall be amended to
read as follows:
FOURTH: The total number of shares of capital stock
of all classifications which the Corporation shall have
authority to issue is One Hundred Sixty-Five Million
(165,000,000) shares, of which One Hundred Sixty Million
(160,000,000) shares having a par value of Ten Cents ($.10)
per share shall be of a class designated "Common Stock" and
Five Million (5,000,000) shares having a par value of One
Dollar ($1.00) per share shall be of a class designated
"Preferred Stock".
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a meeting of the stockholders of said corporation was duly called
and held upon notice given in accordance with Section 222 of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation
and Bylaws of said corporation. At such meeting there was taken a vote of the
stockholders entitled to vote, by ballot, in person or by proxy, for and
against the proposed amendment, and the necessary number of shares as required
by said General Corporation Law and the Certificate of Incorporation of said
corporation were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said MANOR CARE, INC. has caused its corporate
seal to be hereunto affixed and this certificate to be signed by James H.
Rempe, its Senior Vice President, and attested by Everett F. Casey, its
Assistant Secretary, this 12th day of September, 1994.
MANOR CARE, INC.
By: /s/ James H. Rempe
--------------------------------
James H. Rempe
Senior Vice President
ATTEST:
By: /s/ Everett F. Casey
---------------------------
Everett F. Casey
Assistant Secretary
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
MANOR CARE, INC. AND SUBSIDIARIES
Financial Data Schedule For
Commercial and Industrial Companies (*)
* This schedule contains summary financial information extracted
from the Consolidated Balance Sheets, the Consolidated Statements
of Income and the Consolidated Statements of Cash Flows and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> AUG-31-1994
<CASH> 43,323
<SECURITIES> 0
<RECEIVABLES> 112,716
<ALLOWANCES> 24,213
<INVENTORY> 12,816
<CURRENT-ASSETS> 188,926
<PP&E> 1,182,395
<DEPRECIATION> 323,421
<TOTAL-ASSETS> 1,226,046
<CURRENT-LIABILITIES> 172,518
<BONDS> 272,694
<COMMON> 6,547
0
0
<OTHER-SE> 550,697
<TOTAL-LIABILITY-AND-EQUITY> 1,226,046
<SALES> 0
<TOTAL-REVENUES> 321,401
<CGS> 0
<TOTAL-COSTS> 253,679
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,792
<INTEREST-EXPENSE> 6,655
<INCOME-PRETAX> 41,163
<INCOME-TAX> 16,800
<INCOME-CONTINUING> 24,363
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,363
<EPS-PRIMARY> .39<F1>
<EPS-DILUTED> .39<F1>
<FN>
<F1>The Company presents simple earnings per share (EPS) on the face of its income
statement as fully dilutive EPS is within 97% of simple EPS. The figures
presented above are simple EPS.
</FN>
</TABLE>
