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Published: Saturday, 2/23/2002

Manor Care earnings reduced after arbiter's decision

Toledo's Manor Care, Inc., has restated its 2001 fourth-quarter and full-year profits to reflect the recent decision by an arbitrator that it must pay more than $24 million to another company.

One of the nation's largest owners of nursing homes, Manor Care said yesterday it had a profit of $68.5 million, or 66 cents a share, up from $39 million, or 38 cents a share, a year ago. Those numbers compare with the $84 million, or 81 cents a share, it had said on Feb. 1 that it had made last year.

For last year's fourth quarter, the company reported a loss of $18 million, or 18 cents a share, compared with a profit of $22.9 million, or 22 cents a share, for the same period last year. It had reported a net loss of $2.7 million, or 3 cents a share, for the 2001 fourth quarter.

The restatement came as no surprise to principal analyst Jerry Doctrow of Legg Mason Wood Walker, Inc., in Baltimore.

“We view this as a one-time charge,” he said. “It's clearly the premier nursing home company in the country and it's very well-managed.”

Manor Care said it had to revise its 2001 numbers to reflect an arbitration ruling last week that ordered it to pay $24.6 million in damages to the NeighborCare Pharmacy Services subsidiary of Genesis Health Ventures, Inc., of Kennett Square, Pa. Manor Care said its fourth-quarter operating expenses now include $38 million for general liability, $23.6 million to cover the damage award and related expenses, and $1 million in interest expense related to the decision.

NeighborCare said that it lost profits when Manor Care terminated a contract in 1999 made by a predecessor firm. The contract was to run through September, 2004, and an arbitrator decided the pact was valid until then.

Manor Care's stock closed yesterday at $19.40 a share, down 23 cents, in New York Stock Exchange trading.

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