8-K 1 green8k100301.txt 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): October 3, 2001 Greenbriar Corporation --------------------------------------- (Exact name of registrant as specified in its charter) Nevada 0-8187 75-2399477 ------------------------ --------------------- -------------------- (State of incorporation) (Commission File No.) (IRS Employer Identification No.) 14185 Dallas Parkway, Suite 650, Dallas, Texas 75240 ---------------------------------------------------- (Address of principal execute offices, including zip code) (972) 407-8400 -------------- (Registrant's telephone number, including area code) Item 2. Acquisition or Disposition of Assets --------------------------------------------- On October 3, 2001, Registrant concluded and closed a transaction with LSOF Pooled Equity, L.P. to settle and resolve litigation over the amount and nature of LSOF's ownership of Registrant. The dispute had centered around the number of shares of Registrant's common stock and extent of control to which LSOF was entitled upon conversion of its Series F and G Preferred Stock and the amount then due under a "Make Whole Agreement." LSOF's position would have resulted in a change of voting control of Registrant to LSOF, which Registrant resisted in the litigation between the parties. Under the terms of the settlement, Registrant repurchased all of LSOF's ownership interests in Registrant, which amounted to 1,054,202 shares of Registrants common stock, and LSOF released all claims in exchange for $4,000,000 in cash and the conveyance of 11 assisted living properties out of the 24 owned and operated by Registrant, subject to any indebtedness thereon. In addition Registrant released LSOF from all claims. On August 3, 2001 Registrant sold an assisted living property in California. The cash proceeds from the sale were used to provide the cash portion of the settlement with LSOF. With the litigation concluded, Registrant will devote its efforts to rebuilding its business by exploring attractive acquisitions in the assisted living industry and in the general real estate market. Registrant existed from 1981 to 1989 as a real estate investment trust. After a change in management in 1989, Registrant changed its primary focus to supplying products and services to the elderly, although it continued its business of investing in commercial real estate. Beginning in 1994, Registrant began liquidating its commercial real estate and devoting its efforts to the assisted living sector of the eldercare industry. Between 1995 and 1997, Registrant opened several residences and acquired four assisted living companies. Registrant's assisted living business, similar to the rest of the industry, has incurred ongoing financial losses resulting from vacancies, high turnover, regulatory impediments and a general state of over-building. Registrant believes the long-term prospects for the assisted living industry are fundamentally sound and will continue to seek attractive acquisition candidates. However, Registrant will also seek to diversify its business by returning to its previously profitable operations in general real estate development and investments. Item 7. Financial Statements and Exhibits. ----------------------------------------- The following pro forma financial information and exhibits regarding this transaction are filed with this report. (a) Unaudited Pro Forma Financial Statements The accompanying pro forma consolidated balance sheet as of June 30, 2001 presents this transaction as though it had taken place on June 30, 2001. The accompanying pro forma consolidated statements of earnings present earnings as though the transaction had taken place on January 1, 2000. Pro Forma Consolidated Balance Sheet- F-16 June 30, 2001 (Unaudited) Pro Forma Consolidated Statement of Operations- F-18 Six Months Ended June 30, 2001 (Unaudited) Pro Forma Consolidated Statement of Operations- F-19 Twelve Months Ended December 31, 2000 (Unaudited) Explanatory Notes to Consolidated Financial Statements F-20 (b) Exhibits None 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. October 18, 2001 GREENBRIAR CORPORATION By: /s/ Gene S. Bertcher ------------------------------------------ Gene S. Bertcher, Executive Vice President
Greenbriar Corporation Pro Forma Consolidated Balance Sheet ------------------------------------ (Amounts in thousands) June 30, 2001 Properties Pro forma Assets Historical Sold(1) Adjustments(2) Notes(2) Pro forma ---------- ------- -------------- -------- --------- Current Assets Cash And Cash Equivalents $ 2,941 $ 5,084 $ (4,000) (a) $ 4,025 Accounts Receivable-Trade 396 - - 396 Other Current Assets 1,594 (369) - 1,225 ------------------------------------------------------- --------------- Total Current Assets 4,931 4,715 (4,000) 5,646 Deferred Income Tax Benefit 4,750 - (2,000) (b) 2,750 Notes Receivable, Net of Deferred Gain of $3,720 310 - - 310 Property And Equipment, At Cost Land And Improvements 9,164 (4,283) - 4,881 Buildings And Improvements 69,668 (36,120) - 33,548 Equipment And Furnishings 6,177 (2,627) - 3,550 ------------------------------------------------------- --------------- 85,009 (43,030) - 41,979 Less Accumulated Depreciation 12,564 (6,414) - 6,150 ------------------------------------------------------- --------------- 72,445 (36,616) - 35,829 Deposits 3,603 (1,254) - 2,349 Goodwill And Other Intangibles 5,040 (5,040) - - Other Assets 1,098 (443) - 655 ------------------------------------------------------- --------------- $ 92,177 $ (38,638) $ (6,000) $ 47,539 ===================================================================================
(1) See Note 1 to Consolidated Pro Forma Financial Statements (2) See Note 2 to Consolidated Pro Forma Financial Statements F-16
Greenbriar Corporation Pro Forma Consolidated Balance Sheet ------------------------------------ (Amounts in thousands) June 30, 2001 Properties Pro forma Liabilities And Stockholders' Equity Historical Sold (1) Adjustments(2) Notes(2) Pro forma ---------- -------- -------------- -------- --------- Current Liabilities Current Maturities Of Long-Term Debt $ 2,664 $ (1,222) $ - $ 1,442 Accounts Payable - Trade 868 - - 868 Accrued Expenses 960 (136) 950 (c) 1,774 Other Current Liabilities 705 (18) 1,000 (b) 1,687 ------------------------------------------------ ------------- Total Current Liabilities 5,197 (1,376) 1,950 5,771 Long-Term Debt 43,759 (30,647) - 13,112 Financing Obligations 10,815 - - 10,815 Other Long Term Liabilities 811 (552) - 259 ------------------------------------------------ ------------- Total Liabilities 60,582 (32,575) 1,950 29,957 Preferred Stock Redemption Obligation 27,167 - (27,167) (d) - Stockholders' Equity Preferred Stock 69 - - 69 Common Stock $.01 Par Value; Authorized, 100,000 shares Shares; Issued And Outstanding, 8,348 Shares And 7,514 Shares, Respectively 84 - - 84 Additional Paid-In Capital 60,214 - - 60,214 Accumulated Deficit (53,572) (6,063) 19,217 (40,418) ------------------------------------------------ ------------- 6,795 (6,063) 19,217 19,949 Less Stock Purchase Notes Receivable (Including $2,250 From Related Parties) (2,367) - - (2,367) ------------------------------------------------ ------------- 4,428 (6,063) 19,217 17,582 $ 92,177 $ (38,638) $ (6,000) $ 47,539 =========================================================================
(1) See Note 1 to Consolidated Pro Forma Financial Statements (2) See Note 2 to Consolidated Pro Forma Financial Statements F-17
Greenbriar Corporation Pro Forma Consolidated Statements Of Operations ----------------------------------------------- (Amounts in thousands, except per share data) For the Six Month Period Ended June 30, 2001 Operations of Properties Pro forma Historical Sold (3) Adjustments (4) Notes Pro forma ---------- -------- --------------- ----- --------- Revenue Assisted living operations $ 19,223 $ (9,881) $ - $ 9,342 ------------------------------------------------ ------------ 19,223 (9,881) - 9,342 Operating Expenses Assisted living community operations $ 11,726 $ (5,856) $ - $ 5,870 Lease expense 2,077 (608) - 1,469 Depreciation and amortization 1,659 (758) - 901 Corporate general and administrative 3,132 - (1,175) 1,957 ------------------------------------------------ ------------ 18,594 (7,222) (1,175) 10,197 ------------------------------------------------ ------------ Operating income (loss) 629 (2,659) 1,175 (855) Other income (expense) Interest and dividend income $ 141 $ (22) $ - $ 119 Interest expense (2,674) 1,189 - (1,485) Net gain (loss) on the sale of assets 159 - - 159 Other (142) 142 - - ------------------------------------------------ ------------ (2,516) 1,309 - (1,207) ------------------------------------------------ ------------ Net loss (1,887) 1,175 (2,062) (1,350) Preferred stock dividend requirement (160) - - (160) ------------------------------------------------ ------------ Loss allocable to common stockholders (2,047) (1,350) 1,175 (2,222) ================================================ ============ Net loss per common share - basic and diluted $ (0.24) $ (0.27) Weighted average number of common and equivalent shares outstanding 8,348 8,348 (3) See Note 3 to Consolidated Pro Forma Financial Statements (4) See Note 4 to Consolidated Pro Forma Financial Statements F-18 Greenbriar Corporation Pro Forma Consolidated Statements Of Operations ----------------------------------------------- (Amounts in thousands, except per share data) For the Twelve Month Period Ended December 31, 2000 Operations of Properties Pro forma Historical Sold (3) Adjustments (4) Notes Pro forma ---------- -------- --------------- ----- --------- Revenue Assisted living operations $ 41,261 $ (19,418) $ - $ 21,843 ----------------------------------------------- ------------ 41,261 (19,418) - 21,843 Operating Expenses Assisted living community operations $ 24,750 $ (11,089) $ - $ 13,661 Lease expense 4,912 (1,196) - 3,716 Depreciation and amortization 3,740 (1,559) - 2,181 Corporate general and administrative 5,448 - (810) 4,638 Write-off of impaired assets and related expenses 7,461 (1,155) - 6,306 ----------------------------------------------- ------------ 46,311 (14,999) (810) 30,502 ----------------------------------------------- ------------ Operating income (loss) (5,050) (4,419) 810 (8,659) Other income (expense) Interest and dividend income $ 406 $ (38) $ - $ 368 Interest expense (5,759) 2,513 - (3,246) Other (220) 360 - 140 ----------------------------------------------- ------------ (5,573) 2,835 - (2,738) ----------------------------------------------- ------------ Net loss (10,623) (1,584) 810 (11,397) Preferred stock dividend requirement (4,105) - 3,865 (240) ----------------------------------------------- ------------ Loss allocable to common stockholders (14,728) (1,584) 4,675 (11,637) =============================================== ============ Net loss per common share - basic and diluted $ (1.96) $ (1.55) Weighted average number of common and equivalent shares outstanding 7,514 7,514
(3) See Note 3 to Consolidated Pro Forma Financial Statements (4) See Note 4 to Consolidated Pro Forma Financial Statements F-19 Greenbriar Corporation Explanatory Notes to Consolidated Pro Forma Financial Statements (1) To reflect the sale of properties to LSOF Pooled Equity, L.P. and the sale of an assisted living property in California. See further discussion of these transactions in Item 2. (2) To reflect the following pro forma adjustments: (a) To reflect the $4,000,000 cash paid to LSOF Pooled Equity L.P. as part of the settlement. See Item 2. (b) To recognize the income tax effect of the sale. (c) To reflect $450,000 of additional legal fees and $500,000 in costs associated with closing down the businesses at the properties sold. (d) To reflect the settlement with LSOF Pooled Equity L.P. See Item 2. (3) To reflect the sale of the properties discussed in Item 2. This revenue and expense is specifically identifiable to the communities sold. (4) To reflect pro forma adjustments to general and administrative costs for salaries and related benefit expenses as well as legal costs associated with the settlement of the LSOF Pooled Equity Fund L.P matter. F-20