8-K/A 1 0001.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): August 15, 2000 Commission File Number: 0-18942 ILM II SENIOR LIVING, INC. -------------------------- (Exact name of registrant as specified in its charter) Virginia 06-1293758 --------------------------------------- ---------------------- (State of organization) (I.R.S. Employer Identification No.) 1750 Tysons Boulevard, Suite 1200, Tysons Corner, Virginia 22102 --------------------------------------- ---------------------- (Address of principal executive office) (Zip Code) (888) 257-3550 -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) (Page 1 of 12 pages) ILM II Senior Living, Inc. (the "Company") hereby amends and restates in its entirety its Current Report on Form 8-K, originally filed with the Securities and Exchange Commission (the "Commission") on August 30, 2000, as set forth below in order to: (i) clarify the transaction costs assumed by Capital Senior Living Corporation in connection with the previously announced proposed merger between the Company and Capital; and (ii) file with the Commission pro forma financial statements showing the effect of the sale of the Company's 75% co-tenancy interest in its senior living facility located in Santa Barbara, California. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On August 15, 2000, the Company caused ILM II Holding, Inc., its subsidiary ("Holding II") to sell to Capital Senior Living Corporation ("Capital") all of its right and title in and to its 75% co-tenancy interest in its senior living facility located in Santa Barbara, California. In consideration for the sale, Capital paid Holding II a cash payment of approximately $10 million and assumed certain then current transaction expenses incurred by the Company in connection with the previously announced proposed merger contemplated by the Amended and Restated Agreement and Plan of Merger dated October 19, 1999, as amended on April 18, 2000, by and among the Company, Capital and Capital's wholly owned acquisition subsidiary (the "Merger Agreement"). The remaining 25% co-tenancy interest in the Santa Barbara facility was formerly owned by ILM Holding, Inc., a subsidiary of ILM Senior Living, Inc. ("ILM I") and was transferred to Capital at the time the merger between ILM I and Capital was consummated. The Company determined to sell its interest in the Santa Barbara facility because of the following factors: Capital had publicly announced that it did not receive and was not at that time in possession of sufficient loan proceeds with which to consummate the previously announced proposed merger; the Company's Board of Directors believed that the purchase price was fair, from a financial point of view; and, the Merger Agreement provides that if the proposed merger was not consummated by September 30, 2000, it could be terminated by either the Company or Capital and that if Capital had consummated its proposed merger with ILM I (which it has), the Company would be contractually obligated to sell to Capital its 75% interest in the Santa Barbara facility. In connection with the proposed merger, Capital has recently announced that it is in the process of seeking alternative financing resources. At this time, there is no certainty as to whether Capital will be able to obtain alternative financing, or if so obtained, whether it will be sufficient to consummate the proposed merger. Similarly, there can be no assurance as to whether the merger will be consummated or, if consummated, as to the timing thereof. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. On August 30, 2000, ILM II Senior Living, Inc. ("ILM II") filed a Form 8-K that reported that ILM II caused its subsidiary, ILM II Holding, Inc. to sell all of its right and title in and to its 75% co-tenancy interest in its senior living facility located in Santa Barbara, California ("Santa Barbara"). In Item 7 of the Form 8-K, ILM II stated that the pro forma financial statements of ILM II showing the effect of the sale would be filed within 60 days of the filing of the Form 8-K. This Form 8-K/A includes such financial statements. (Page 2 of 12 pages) (a) Not Applicable. (b) Unaudited pro forma Consolidated Balance Sheet of ILM II as of May 31, 2000 and unaudited pro forma Consolidated Statements of Income for the nine months ended May 31, 2000 and for the year ended August 31, 1999 and giving effect to the sale of Santa Barbara. (c) Not Applicable. (Page 3 of 12 pages) ILM II SENIOR LIVING, INC. INDEX Page ---- Part I. Financial Information Item 1. Pro Forma Financial Statements Introduction to Pro Forma Consolidated Financial Statements (Unaudited)................................6 Pro Forma Consolidated Balance Sheet May 31, 2000 (Unaudited)........................................7 Pro Forma Consolidated Statement of Income For the nine months ended May 31, 2000 (Unaudited)..............8 Pro Forma Consolidated Statement of Income For the year ended August 31, 1999 (Unaudited)..................9 Notes to Pro Forma Consolidated Financial Statements (Unaudited)........10 Part II. Other Information Signatures....................................................................12 (Page 4 of 12 pages) ILM II SENIOR LIVING, INC. Part I. Financial Information Item I. Pro Forma Financial Statements (see next page) (Page 5 of 12 pages) ILM II SENIOR LIVING, INC. INTRODUCTION TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited pro forma consolidated financial statements of the Company are based on its audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1999, and its unaudited consolidated financial statements included in the Quarterly Report on Form 10-Q for the period ended May 31, 2000, adjusted where appropriate to give pro forma effect to the sale of the Company's 75% co-tenancy interest in Villa Santa Barbara on August 16, 2000. The Unaudited Pro Forma Consolidated Balance Sheet at May 31, 2000, gives pro forma effect to the sale of Villa Santa Barbara "as if" it had occurred on May 31, 2000. The Unaudited Pro Forma Consolidated Statement of Income for the year ended August 31, 1999, gives pro forma effect to the sale of Villa Santa Barbara "as if" it had occurred on September 1, 1998. The Unaudited Pro Forma Consolidated Statement of Income for the nine months ended May 31, 2000 gives effect to the sale of Villa Santa Barbara "as if" it had occurred on September 1, 1998. Further details about the pro forma adjustments are set forth in Footnote 2 of the accompanying notes to the unaudited pro forma consolidated financial statements. The Pro Forma Consolidated Balance Sheet and Pro Forma Consolidated Statements of Income are presented for informational purposes only and do not necessarily reflect the financial position or results of operations of the Company which would have actually resulted had the transaction for which the statements give pro forma effect actually occurred at the times assumed. Additionally, the statements do not purport to represent the Company's future financial position or results of operations. These statements and the accompanying notes should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the historical consolidated statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1999, and the Company's Unaudited Quarterly Report on Form 10-Q for the period ended May 31, 2000. (Page 6 of 12 pages)
ILM II SENIOR LIVING, INC. PRO FORMA CONSOLIDATED BALANCE SHEET May 31, 2000 (Unaudited) (Dollars in thousands, except per share data) Assets ------ Pro Forma May 31, 2000 Adjustments May 31, 2000 ------------ ----------- ------------ Operating investment properties, at cost: Operating investment properties, at cost: Land $ 5,842 $ (1,150)(1A) $ 4,692 Building and improvements 28,021 (4,010)(1B) 24,011 Furniture, fixtures and equipment 3,815 -- 3,815 -------- -------- -------- 37,678 (5,160) 32,518 Less: accumulated depreciation (9,727) 969 (1C) (8,758) -------- -------- -------- 27,951 (4,191) 23,760 Unamortized mortgage fees 1,425 (178)(1D) 1,247 Less: accumulated amortization (1,215) 121 (1E) (1,094) -------- -------- -------- 210 (57) 153 Loan origination fees 144 -- 144 Less: accumulated amortization (72) -- (72) -------- -------- -------- 72 -- 72 Cash and cash equivalents 621 9,184 (1F) 9,805 Accounts receivable - related 383 (149)(1G) 234 party Prepaid expenses and other assets 83 -- 83 Deferred rent receivable 14 -- 14 -------- -------- -------- $ 29,334 $ 4,787 $ 34,121 ======== ======== ======== Liabilities and Shareholders' Equity ------------------------------------ Accounts payable and accrued $ 79 $ -- $ 79 expenses Accounts payable-related party 129 -- 129 Construction loan payable 1,165 (600)(1H) 565 Preferred shareholders' minority Interest in subsidiary 141 -- 141 -------- -------- -------- Total liabilities 1,514 (600) 914 Contingencies Shareholders' equity: Common stock, $0.01 par value, 12,500,000 shares authorized 5,181,236 shares issued 52 -- 52 and outstanding Additional paid-in capital 44,823 -- 44,823 Accumulated deficit (17,055) $ 5,387(1I) (11,668) -------- -------- -------- Total shareholder's equity 27,820 $ 5,387 33,207 -------- -------- -------- $ 29,334 $ 4,787 $ 34,121 ======== ======== ========
The accompanying notes are an integral part of these pro forma consolidated financial statements. (Page 7 of 12 pages) ILM II SENIOR LIVING, INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME For the nine months ended May 31, 2000 (Unaudited) (Dollars in thousands, except per share data) Pro Forma Nine Months Nine Months Ended Ended May 31, 2000 Adjustments May 31, 2000 ------------ ----------- ------------ REVENUES Rental income $ 4,084 $ (509)(2A) $ 3,575 Interest income 32 -- 32 ------- ------- ------- 4,116 (509) 3,607 EXPENSES Depreciation expense 893 (108)(2B) 785 Amortization expense 137 (12)(2C) 125 General and administrative 202 (28)(2D) 174 Professional fees 1,022 (141)(2E) 881 Directors' compensation 70 -- 70 ------- ------- ------- 2,324 (289) 2,035 ------- ------- ------- NET INCOME $ 1,792 $ (220) $ 1,572 ======= ======= ======= Basic earnings per share of common $ 0.35 $ 0.30 stock ======= ======= The above earnings per share of common stock are based upon the 5,181,236 shares outstanding for each period. The accompanying notes are an integral part of these pro forma consolidated financial statements. (Page 8 of 12 pages) ILM II SENIOR LIVING, INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME For the year ended August 31, 1999 (Dollars in thousands, except per share data) Pro Forma Year Ended Year Ended August 31, August 31, 1999 Adjustments 1999 ----------- ----------- ----------- REVENUES: Rental and other income $ 5,265 $ (651)(3A) $ 4,614 Interest income 56 -- 56 ------- ------- ------- 5,321 (651) 4,670 EXPENSES: Depreciation expense 1,235 (149)(3B) 1,086 Amortization expense 184 (16)(3C) 168 General and administrative 344 (47)(3D) 297 Professional fees 1,778 (244)(3E) 1,534 Director compensation 83 -- 83 ------- ------- ------- 3,624 (456) 3,168 ------- ------- ------- NET INCOME $ 1,697 $ (195) $ 1,502 ======= ======= ======= Earnings per share of common stock $ 0.32 $ 0.03 $ 0.29 ======= ======= ======= The above earnings per share of common stock are based upon the 5,181,236 shares outstanding during the year. The accompanying notes are an integral part of these pro forma consolidated financial statements. (Page 9 of 12 pages) ILM II SENIOR LIVING, INC. Notes to Pro Forma Consolidated Financial Statements (Unaudited) 1. Disposition of Assets On August 15, 2000, ILM II Senior Living, Inc. (the "Company") caused ILM II Holding, Inc., its subsidiary ("Holding II"), to complete the sale of its 75% co-tenancy interest in its senior living facility located in Santa Barbara, California ("Villa Santa Barbara"), to Capital Senior Living Corporation ("Capital") for $10,143,750. In consideration for the sale, the Company received $9,543,750 in cash and Capital contributed $600,000 toward the Company's outstanding construction loan debt and assumed certain then current transaction expenses incurred by the Company in connection with the previously announced proposed merger contemplated by the Amended and Restated Agreement and Plan of Merger dated October 19, 1999, as amended on April 18, 2000 (the "Merger Agreement"), by and among the Company, Capital and Capital's wholly-owned acquisition subsidiary. The remaining 25% co-tenancy interest in Villa Santa Barbara was formerly owned by ILM Holding, Inc. ("Holding I"), a subsidiary of ILM Senior Living, Inc. ("ILM I") and was transferred to Capital at the time the merger between ILM I and Capital was consummated. A gain on the sale of approximately $5.8 million has been presented on the accompanying Pro Forma Consolidated Balance Sheet at May 31, 2000, as an increase to equity. It is anticipated that this gain will result in a built-in gain tax which would be reduced by available Net Operating Loss Carryforwards from the period when the Company was a so-called "C" Corporation (prior to the Company's conversion to a Real Estate Investment Trust (REIT) for 1996). No additional interest income has been presented in the accompanying unaudited statements of income, as some portion of the cash received in the transaction is available for dividends. 2. Pro Forma Adjustments The pro forma adjustments to the consolidated balance sheet and consolidated statements of income are detailed below (dollars in thousands): PRO FORMA CONSOLIDATED BALANCE SHEET MAY 31, 2000 ------------ [1] To reflect the sale of ILM II Holding, Inc.'s 75% co-tenancy interest in its senior living facility located in Santa Barbara, California and repayment of related debt. (A) To record land sold. $ - $ 1,150 (B) To record buildings and improvements sold. 4,010 (C) To record accumulated depreciation on buildings and improvements sold. 969 (D) To record unamortized mortgage fees relating to the Santa Barbara facility sold. 178 (E) To record accumulated amortization on unamortized mortgage fees relating to the Santa Barbara facility sold. 121 (F) To record cash proceeds from sale, net of debt repayment of $600 and base rent of $361. 9,184 (G) To record accounts receivable-related party relating to the Santa Barbara facility sold. 149 (H) To record payment on construction loan payable. 600 (I) To record approximate gain on sale of assets net of Pro Forma income and expense adjustments. 5,387 ------------------ $10,874 $ 10,874 ================== (Page 10 of 12 pages) ILM II SENIOR LIVING, INC. Notes to Pro Forma Consolidated Financial Statements (Unaudited) (Continued) PRO FORMA CONSOLIDATED STATEMENT OF INCOME Nine Months Ended May 31,2000 ----------- [2] Adjustment to reflect the elimination of revenues and expenses relating to the 75% co-tenancy interest in ILM II Holding, Inc.'s senior living facility located in Santa Barbara, California. (A) To eliminate rental income received from ILM II Lease Corporation. $509 (B) To eliminate depreciation expense recorded on the buildings and improvements sold. 108 (C) To eliminate amortization expense on mortgage fees relating to debt on the Santa Barbara facility. 12 (D) To eliminate general and administrative expenses specific to the Santa Barbara facility. 28 (E) To eliminate professional fees specific to the Santa Barbara facility. 244 PRO FORMA CONSOLIDATED STATEMENT OF INCOME Year Ended August 31, 1999 ---------- [3] Adjustment to reflect the elimination of revenues and expenses relating to the 75% co-tenancy interest in ILM II Holding, Inc.'s senior living facility located in Santa Barbara, California. (A) To eliminate rental income received from ILM II Lease Corporation. $651 (B) To eliminate depreciation expense recorded on the buildings and improvements sold. 149 (C) To eliminate amortization expense on mortgage fees relating to debt on the Santa Barbara 16 facility. (D) To eliminate general and administrative expenses specific to the Santa Barbara facility. 47 (E) To eliminate professional fees specific to the Santa Barbara facility. 244 (Page 11 of 12 pages) ILM II SENIOR LIVING, INC. 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. By: ILM II SENIOR LIVING, INC. By: /s/ J. William Sharman, Jr. ------------------------------------- J. William Sharman, Jr. Chairman of the Board of Directors President and Chief Executive Officer Dated: November 1, 2000 (Page 12 of 12 pages)