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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 8, 1999
HCR MANOR CARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10858 34-1687107
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One SeaGate, Toledo, Ohio 43604-2616
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (419) 252-5500
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Item 5. Other events
In the 4th quarter of 1998, HCR Manor Care amended the terms of the voting
rights of the Company's convertible preferred stock investment in In Home
Health, Inc. (IHHI). The amendment of the preferred stock rights along with
changes related to controlling interest resulted in the de-consolidation of IHHI
for reporting purposes. The Company did not change its ownership interest in
IHHI's common stock or preferred stock. The Company's investment in IHHI,
retroactive to January 1, 1998, is now recorded based on the equity method of
accounting. Due to the de-consolidation in 1998, the individual income statement
line items are not comparative to prior years, however, there is no effect on
net income (loss). IHHI's revenues of $26 million and $110 million for the three
months and year ended December 31, 1997, respectively, and operating expenses of
$30 million and $126 million for the same periods, respectively, continue to be
included in the Company's results for 1997.
Also, the Company elected to adopt Statement of Position 98-5, "Reporting on the
Costs of Start-up Activities," as of January 1, 1998. This Statement requires
costs related to start-up activities to be expensed when incurred. The after-tax
cumulative effect of this adoption was $5.6 million.
The effect of these items required the Company to restate its first three
reported quarters for 1998 which restatement is reflected in this document.
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RESTATED QUARTERLY INFORMATION
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
<TABLE>
<CAPTION>
3rd Quarter 2nd Quarter 1st Quarter
1998 1998 1998
---- ---- ----
(In thousands, except earnings per share)
<S> <C> <C> <C>
Revenues $ 557,386 $ 545,393 $ 551,149
Expenses:
Operating 428,085 430,430 423,314
General and administrative 22,027 24,492 27,778
Depreciation and amortization 31,270 29,829 28,383
Provision for restructuring charge, merger expenses,
asset impairment and other related charges 240,655 13,500
--------------- --------------- ---------------
722,037 498,251 479,475
--------------- --------------- ---------------
Income (loss) from continuing operations before
other income (expenses) and income taxes (164,651) 47,142 71,674
Other income (expenses):
Interest expense (11,942) (11,447) (10,675)
Minority interest (55) (161) (123)
Equity in earnings of affiliated companies 1,421 1,361 1,257
Interest income and other 4,962 2,652 2,984
Gain on conversion of Vitalink stock 99,769
Interest income from advances to discontinued lodging segment (901)
--------------- --------------- ---------------
94,155 (7,595) (7,458)
--------------- --------------- ---------------
Income (loss) from continuing operations before income taxes (70,496) 39,547 64,216
Income taxes 12,449 13,066 21,735
--------------- --------------- ---------------
Income (loss) from continuing operations (82,945) 26,481 42,481
Discontinued operations:
Income from discontinued pharmacy operations (net of taxes) 153 3,521 4,370
--------------- --------------- ---------------
Income (loss) before extraordinary item and cumulative effect (82,792) 30,002 46,851
Extraordinary item (net of taxes) (19,036)
Cumulative effect of change in accounting principle
(net of taxes) (5,640)
--------------- --------------- ---------------
Net income (loss) $ (101,828) $ 30,002 $ 41,211
=============== =============== ===============
Earnings per share - basic
Income (loss) from continuing operations $ (.76) $ .24 $ .39
Income from discontinued pharmacy operations (net of taxes) .03 .04
Extraordinary item (net of taxes) (.18)
Cumulative effect (net of taxes) (.05)
--------------- --------------- ---------------
Net income (loss) $ (.94) $ .28* $ .38
=============== =============== ===============
Earnings per share - diluted
Income (loss) from continuing operations $ (.76) $ .24 $ .38
Income from discontinued pharmacy operations (net of taxes) .03 .04
Extraordinary item (net of taxes) (.18)
Cumulative effect (net of taxes) (.05)
--------------- --------------- ---------------
Net income (loss) $ (.94) $ .27 $ .37
=============== =============== ===============
Weighted average shares:
Basic 108,475 108,296 108,175
Diluted 108,475 111,007 111,165
*Doesn't add due to rounding
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HCR MANOR CARE, INC
(Registrant)
Date: February 8, 1999 By:/s/ Geoffrey G. Meyers
----------------------
Geoffrey G. Meyers, Executive Vice
President and Chief Financial Officer