-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BRBPBqhE6kfztPtqDFttFlwkdiqPpo5aygIB3TlzxsUuZtytj3TuEKqZquJYgMvW 8af9fHE1F4a3OVw8FuD/wg== 0000950144-09-004533.txt : 20090522 0000950144-09-004533.hdr.sgml : 20090522 20090521172626 ACCESSION NUMBER: 0000950144-09-004533 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20090521 DATE AS OF CHANGE: 20090521 EFFECTIVENESS DATE: 20090521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVOCAT INC CENTRAL INDEX KEY: 0000919956 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 621559667 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12996 FILM NUMBER: 09846259 BUSINESS ADDRESS: STREET 1: 1621 GALLERIA BLVD. CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6157717575 MAIL ADDRESS: STREET 1: 1621 GALLERIA BLVD. CITY: BRENTWOOD STATE: TN ZIP: 37027 DEFA14A 1 g19231adefa14a.htm DEFA14A DEFA14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary proxy statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive proxy statement
x Definitive Additional Materials
o Soliciting Material pursuant to § 240.14a-12
Advocat Inc.
 
(Name of Registrant as Specified In Its charter)
 
(Name of Person(s) Filing proxy statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
     
(1)
  Title of each class of securities to which transaction applies:
 
   
 
 
   
(2)
  Aggregate number of securities to which transaction applies:
 
   
 
 
   
(3)
  Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
   
 
 
   
(4)
  Proposed maximum aggregate value of transaction:
 
   
 
 
   
(5)
  Total fee paid:
 
   
 
 
   
o
  Fee paid previously with preliminary materials.
o
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
   
(1)
  Amount Previously Paid:
 
   
 
 
   
(2)
  Form, Schedule or Registration Statement No.:
 
   
 
 
   
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(4)
  Date Filed:
 
   
 

 


 

     On May 19, 2009, Bristol Investment Fund Ltd. (“Bristol”) filed definitive additional proxy information that it sent to Advocat Inc. shareholders and used in a slide presentation to RiskMetrics Group. These proxy materials include several comparisons that we believe are skewed because of the different capital structures of the comparative companies and also focuses on only one year. As a result, in response, the Company is sending the following additional information to RiskMetrics Group.
     Bristol identified four companies in its proxy statement that Bristol believes are comparable to Advocat. These companies are The Ensign Group, Inc. (ENSG), Kindred Heathcare Inc. (KND), Skilled Healthcare Group, Inc. (SKH) and Sun Healthcare Group, Inc. (SUNH). Certain financial information and data used herein has been obtained from filings made with the Securities and Exchange Commission (the “SEC”) by these companies other than Advocat. Advocat is not responsible for any misinformation contained in any third party SEC filing or third party report.
     Advocat Inc. leases more of its skilled nursing portfolio than the other companies that Bristol included in its slide presentation. A more reflective analysis of pre-financing cash flow of a business is to look at EBITDAR (earnings before interest, taxes, depreciation, amortization and rent). Below is the ratio of EBITDAR to shares outstanding. As you can see, when you adjust the information to eliminate the difference in the capital structures of the companies, Advocat has performed favorably over the past three years.
(CHART)

 


 

Data Information
                             
        2008   2007   2006
KND
  Net Income     36,285,000       (46,870,000 )     78,711,000  
 
  EBITDAR     553,287,000       531,405,000       540,195,000  
 
  Dilutive shares     38,906,000       39,983,000       40,923,000  
 
  Ratio     14.221       13.291       13.200  
 
                           
SKH
  Net Income     37,209,000       9,795,000       17,337,000  
 
  EBITDAR     130,335,000       113,226,000       96,849,000  
 
  Dilutive shares     36,894,000       27,715,000       11,638,000  
 
  Ratio     3.533       4.085       8.322  
 
                           
ENSG
  Net Income     27,509,000       20,527,000       22,549,000  
 
  EBITDAR     72,613,000       60,359,000       59,517,000  
 
  Dilutive shares     20,715,000       17,470,000       16,823,000  
 
  Ratio     3.505       3.455       3.538  
 
                           
SUNH
  Net Income     109,287,000       57,510,000       27,118,000  
 
  EBITDAR     234,371,000       192,470,000       96,654,000  
 
  Dilutive shares     43,963,000       43,390,000       31,788,000  
 
  Ratio     5.331       4.436       3.041  
 
                           
AVCA
  Net Income     5,735,000       9,387,000       21,944,000  
 
  EBITDAR     40,417,000       41,709,000       35,589,000  
 
  Dilutive shares     5,887,000       6,127,000       6,507,000  
 
  Ratio     6.865       6.807       5.469  
     Advocat provides financial measures using accounting principles generally accepted in the United States (GAAP) and using adjustments to GAAP (non-GAAP). EBITDAR is not a measurement under GAAP. EBITDAR should be considered in addition to, but not as a substitute for, the information contained in our financial statements prepared in accordance with GAAP. EBITDAR is defined as net income before other income, interest income and expense, debt retirement costs, foreign currency transaction gains and losses, the provision or benefit for income taxes, depreciation and amortization expense, rent expense, and the net income or loss from discontinued operations. Management believes that EBITDAR is an important measurement of the Company’s performance because it eliminates the effect of differences in the financing of nursing homes by removing rent expense and interest expense from net income. Reconciliations for these non-GAAP financial measurements for Advocat to the most comparable GAAP measure as required by Regulation G are shown below.
Additional Information and Where To Find It
This information may be deemed to be solicitation material in respect of the matters to be considered at the 2009 annual meeting of shareholders. The Company has filed the definitive proxy statement with the Securities and Exchange Commission (“SEC”) on May 5, 2009. Investors and shareholders are urged to read the proxy statement, the white proxy card and any other relevant documents filed or that will be filed with the SEC because they contain important information. Investors and shareholders may obtain the proxy statement and other relevant documents free of charge at the SEC’s Web site, www.sec.gov; at Advocat’s website, www.irinfo.com/AVC; or from Advocat Inc., 1621 Galleria Boulevard, Brentwood, Tennessee 37027.

 


 

Participants in Solicitation
Advocat and its directors and certain executive officers may be deemed to be participants in the solicitation of proxies in respect of the matters to be considered at the 2009 annual meeting of shareholders. Information regarding the interests of Advocat’s directors and executive officers in the proxy contest is included in Advocat’s definitive proxy statement.
Reconciliation of Advocat’s EBITDAR to Net Income
                                   
 
  Advocat Inc.                          
  Reconciliation of EBITDAR to Net Income                          
  Dollars in thousands     2008       2007       2006    
 
Earnings before Interest, Taxes, Depreciation, Amortization and Rent (EBITDAR)
    $ 40,417       $ 41,709       $ 35,589    
 
Other income
                      207    
 
Interest income
      454         1,016         679    
 
Interest expense
      (2,870 )       (3,549 )       (3,707 )  
 
Debt retirement costs
              (116 )       (194 )  
 
Foreign currency transaction gain (loss)
      (1,005 )       808         21    
 
Net loss from discontinued operations
      (35 )       (99 )       (451 )  
 
Provision for income taxes
      (2,958 )       (6,270 )       9,496    
 
Depreciation and amortization
      (5,306 )       (4,093 )       (3,614 )  
 
Rent
      (22,962 )       (20,019 )       (16,082 )  
 
Net income
    $ 5,735       $ 9,387       $ 21,944    
 

 

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-----END PRIVACY-ENHANCED MESSAGE-----