-----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, Ww5K8ZsYXKvKbJHDUCHG7BmDpLNQRsCuyfUhfxsPWxWIcp4ROJKjh2JbFMx7A0sn Dh5UBMfo0w6CmwC1+VZSTg== 0001157523-06-003088.txt : 20060329 0001157523-06-003088.hdr.sgml : 20060329 20060329161602 ACCESSION NUMBER: 0001157523-06-003088 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060329 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060329 DATE AS OF CHANGE: 20060329 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12996 FILM NUMBER: 06719035 BUSINESS ADDRESS: STREET 1: 277 MALLORY STATION RD STREET 2: STE 130 CITY: FRANKLIN STATE: TN ZIP: 37067 BUSINESS PHONE: 6157717575 MAIL ADDRESS: STREET 1: 227 MALLORY STATION ROAD STREET 2: SUITE 130 CITY: FRANKLIN STATE: TN ZIP: 37064 8-K 1 a5112840.txt ADVOCAT INC., 8-K UNITED STATES 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) ------------------------------------------------ March 29, 2006 ADVOCAT INC. ------------ (Exact name of registrant as specified in its charter) Delaware 001-12996 62-1559667 -------- --------- ---------- (State or other jurisdiction (Commission File Number) (Employer Identification of incorporation) Number) 1621 Galleria Boulevard, Brentwood, TN 37027 -------------------------------------------- (Address of principal executive offices) (615) 771-7575 -------------- (Registrant's telephone number, including area code) Not applicable -------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On March 29, 2006, the Registrant announced its results of operations for the fourth quarter and year ended December 31, 2005. A copy of the related press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety. The information furnished pursuant to Item 2.02 herein, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933. Item 9.01. Financial Statements and Exhibits. (d) Exhibits Number Exhibit ------ ------- 99.1 News Release dated March 29, 2006. 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. ADVOCAT INC. By: /s/ L. Glynn Riddle, Jr. -------------------------------- L. Glynn Riddle, Jr. Chief Financial Officer Date: March 29, 2006 EXHIBIT INDEX - ------------- Number Exhibit - ------ ------- 99.1 News Release dated March 29, 2006. EX-99.1 2 a5112840ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Advocat Inc. Announces 2005 Year End Results BRENTWOOD, Tenn.--(BUSINESS WIRE)--March 29, 2006--Advocat Inc. (NASDAQ OTC: AVCA) today announced its results for the fourth quarter and year ended December 31, 2005. Advocat Inc. provides long-term care services to nursing home patients in eight states, primarily in the Southeast. The Company has 43 centers containing 4,505 licensed nursing beds. 2005 Results Income Statement Highlights Net income from continuing operations for 2005 was $30.6 million compared to $12.5 million in 2004 which amounted to $4.69 per diluted share versus the previous year's $1.93 per diluted share. The Company's results included a $4.0 million net benefit for professional liability costs compared to a $1.8 million net benefit in 2004. Furthermore, in 2005 a benefit for income taxes of $13.8 million was recorded versus a provision of $266,000 in 2004. Net income, after deducting a loss from discontinued operations of $5.3 million in 2005, was $25.0 million. In 2004, net income was $2.5 million after a loss from discontinued operations of $9.7 million. For 2005 there were 6.5 million weighted average shares outstanding on a fully diluted basis. Revenue Highlights For 2005, revenue grew to $203.7 million compared to $191.2 million in 2004. This increase of $12.5 million resulted mostly from Medicare rate increases, higher Medicaid rates in certain states, and increased Medicare utilization. Balance Sheet Highlights Shareholders' deficit decreased to $16.9 million at December 31, 2005, from $41.9 million at last year end, primarily as a result of 2005 net income of $25.0 million. Self-insured professional liability reserves were $34.5 million at December 31, 2005, compared to $42.9 million at December 31, 2004. The Company also reduced the valuation allowance on its deferred tax assets. The Company previously had a full valuation allowance on its net deferred tax assets, including tax loss carryforwards. Based on its improved performance, the Company was able to reduce this valuation allowance. More complete financials are available in the 2005 Form 10-K, which was filed today with the SEC. Included in this press release are comparisons of 2005 versus 2004 years and fourth quarters, and there is a table presenting condensed cash flows from operating activities of continuing operations as well as a condensed balance sheet. Mr. William Council, CEO of Advocat, stated, "Last year was a very good one for Advocat and the progress so far in 2006 is positive. In this regard, we recently reported new loan agreements with our primary bank lender. Revenue improvements, excellent income gains, occupancy rate increases, improved Medicare utilization rates, and the proposed sale of assisted living facilities are main measurements of our success. Creating these results is a dedicated Advocat staff that is committed to a program of quality care for our patients. As a result of these efforts, several of our nursing centers were awarded public recognition for excellence. Our goal is to become the leading nursing center within each community we serve. Building reputation, strengthening our marketing effort, and aesthetically upgrading the centers are ongoing processes for our Company." Occupancy and Medicare Utilization The average rate of occupancy at the Company's nursing centers for 2005 was 76.2%, a total increase of 30 basis points over 2004. The average rate of occupancy during the fourth quarter 2005 was 77.6%. This is 120 basis points better than the same quarter last year. The quality mix of occupancy is also very important. Medicare revenues were 30% of the totals for 2005 which was 70 basis points better than a year ago. For the fourth quarter, Medicare revenues were 29.7% in 2005, which was 20 basis points better than 2004. For 2005, Medicare patient days accounted for approximately 13.0% of total patient days, compared to 12.7% for 2004. For the fourth quarter of 2005, Medicare patient days were 13.0% of total patient days, compared to 12.3% for the same quarter last year. Liquidity and Capital Resources As of December 31, 2005, the Company had $31.5 million of scheduled debt maturities that must be repaid or refinanced during the next twelve months. The Company is actively working with its lenders to address these issues. On March 17, 2006, the Company entered into a two year renewal of its term notes and working capital line of credit agreement with its primary bank lender. The Company expects to close during the second quarter of this year the sale of 11 assisted living facilities in North Carolina for approximately $11.0 million, although no assurances can be given that this sale will be completed. The Company has also entered into an agreement to sell its remaining assisted living facility in North Carolina, which sale is subject to certain contingencies. These facilities and three nursing centers are collateral for mortgage debt with a commercial finance company totaling approximately $27.7 million as of December 31, 2005. These mortgages were scheduled to mature on April 1, 2006, and the Company has entered into a 60 day extension for $17.7 million of this debt that is secured by the assisted living facilities and has entered into a 90 day extension for $10.0 million of this debt that is secured by the three nursing centers. The Company is actively working with this lender in an effort to obtain a longer term extension of these debt maturities, but no agreement has been reached, and no assurances can be made that these efforts will be successful. Facility Improvements As announced last summer, Omega, a real estate investment trust and our largest financial partner, is providing additional financing of up to $5 million for the renovation of facilities leased by the Company. The first project was completed in early January and three additional projects are in progress. Two other projects are in the design phase. Conference Call A conference call has been scheduled to discuss the fourth quarter and year end results for the period ended December 31, 2005, on Thursday, March 30, 2006 at 1:00 P.M. central time (2:00 P.M. eastern time). The conference call information is as follows: Date: Thursday, March 30, 2006 Time: 1:00 P.M. Central Time, 2:00 P.M. Eastern Webcast Links: http://phx.corporate-ir.net/playerlink.zhtml?c=77083&s=wm&e=1235156 www.streetevents.com www.earnings.com www.irinfo.com/avc Dial in numbers: (866) 277-1184 (domestic) or (617) 597-5360 (international) Passcode: 77584680 A replay of the conference call will be accessible two hours after its completion through April 13, 2006 by dialing (617) 801-6888 and entering passcode 75328937. Forward-Looking Statements Forward-looking statements made in this release involve a number of risks and uncertainties, including but not limited to, uncertainty regarding our ability to complete all of the described transactions and restructure the remaining debt, changes in governmental reimbursement, government regulation and health care reforms, the increased cost of borrowing under our credit agreements, covenant waivers from our lenders, possible amendments to our credit agreements, ability to control ultimate professional liability costs, the accuracy of our estimate of our anticipated professional liability expense, the impact of future licensing surveys, the outcome of regulatory proceedings alleging violations of laws and regulations governing quality of care or violations of other laws and regulations applicable to our business, changing economic conditions as well as other risk factors detailed in the Company's Securities and Exchange Commission filings. The Company has provided additional information in its Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as well as in other filings with the Securities and Exchange Commission, which readers are encouraged to review for further disclosure of other factors that could cause actual results to differ materially from those indicated in the forward-looking statements. Advocat Inc. is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services. For additional information about the Company, visit Advocat's web site: http://www.irinfo.com/avc -Financial Tables to Follow- ADVOCAT INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 31, December 31, 2005 2004 ----------- ----------- ASSETS: Current Assets Cash and cash equivalents $ 7,070 $ 5,829 Restricted cash 625 773 Receivables, net 18,147 16,073 Deferred income taxes 1,004 - Other current assets 5,180 3,325 --------- --------- Total current assets 32,026 26,000 Property and equipment, net 39,421 36,835 Deferred income taxes 12,856 - Note receivable, net 5,198 5,214 Other assets, net 4,261 4,343 --------- --------- TOTAL ASSETS $ 93,762 $ 72,392 ========= ========= LIABILITIES AND SHAREHOLDERS' DEFICIT: Current Liabilities Short-term debt and current portion of long-term debt and settlement promissory notes $ 47,419 $ 45,953 Trade accounts payable 4,415 4,905 Accrued expenses: Payroll and employee benefits 8,495 6,826 Current portion of self- insurance reserves 5,952 10,002 Other current liabilities 5,715 3,803 --------- --------- Total current liabilities 71,996 71,489 Noncurrent Liabilities Settlement promissory notes, less current portion 128 1,071 Self-insurance reserves, less current portion 29,041 32,695 Other noncurrent liabilities 4,717 4,559 --------- --------- Total noncurrent liabilities 33,886 38,325 REDEEMABLE CONVERTIBLE PREFERRED STOCK 4,750 4,432 SHAREHOLDERS' DEFICIT (16,870) (41,854) --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 93,762 $ 72,392 ========= ========= ADVOCAT INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) For the For the Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 -------- -------- -------- -------- (Unaudited)(Unaudited) REVENUES: Patient revenues, net $ 53,744 $ 50,674 $203,658 $191,224 -------- -------- -------- -------- EXPENSES: Operating 39,652 38,297 155,512 147,842 Lease 3,911 3,814 15,836 15,283 Professional liability 851 264 (3,962) (1,834) General and administrative 3,424 3,032 13,311 11,692 Depreciation 922 827 3,493 3,228 Asset impairment and other charges - 219 - 219 -------- -------- -------- -------- 48,760 46,453 184,190 176,430 -------- -------- -------- -------- OPERATING INCOME 4,984 4,221 19,468 14,794 -------- -------- -------- -------- OTHER INCOME (EXPENSE): Foreign currency transaction gain 25 288 161 784 Interest income 133 131 534 286 Interest expense (965) (789) (3,382) (3,069) -------- -------- -------- -------- (807) (370) (2,687) (1,999) -------- -------- -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 4,177 3,851 16,781 12,795 PROVISION (BENEFIT) FOR INCOME TAXES (13,705) 38 (13,820) 266 -------- -------- -------- -------- NET INCOME FROM CONTINUING OPERATIONS 17,882 3,813 30,601 12,529 INCOME (LOSS ) FROM DISCONTINUED OPERATIONS: Operating loss, net of tax provision (benefit) of $394, $(20), $359 and $88, respectively (4,957) (8,109) (5,698) (10,038) Gain on sale, net of tax provision of $0, $12 , $0 and $436, respectively 8 131 399 290 -------- -------- -------- -------- NET LOSS FROM DISCONTINUED OPERATIONS (4,949) (7,978) (5,299) (9,748) -------- -------- -------- -------- NET INCOME (LOSS) 12,933 (4,165) 25,302 2,781 PREFERRED STOCK DIVIDENDS, ACCRUED BUT NOT PAID 81 76 318 297 -------- -------- -------- -------- NET INCOME (LOSS) FOR COMMON STOCK $ 12,852 $ (4,241) $ 24,984 $ 2,484 ======== ======== ======== ======== NET INCOME (LOSS) PER COMMON SHARE: Per common share - basic Income from continuing operations $ 3.11 $ 0.66 $ 5.29 $ 2.16 Loss from discontinued operations (0.87) (1.40) (0.93) (1.72) -------- -------- -------- -------- $ 2.24 $ (0.74) $ 4.36 $ 0.44 ======== ======== ======== ======== Per common share - diluted Income from continuing operations $ 2.75 $ 0.58 $ 4.69 $ 1.93 Loss from discontinued operations (0.76) (1.23) (0.81) (1.51) -------- -------- -------- -------- $ 1.99 $ (0.65) $ 3.88 $ 0.42 ======== ======== ======== ======== WEIGHTED AVERAGE COMMON SHARES: Basic 5,725 5,699 5,725 5,660 ======== ======== ======== ======== Diluted 6,499 6,476 6,498 6,437 ======== ======== ======== ======== ADVOCAT INC. CONDENSED STATEMENTS OF CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS (In thousands) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 --------- --------- --------- --------- (Unaudited)(Unaudited) NET INCOME (LOSS) $ 12,933 $ (4,165) $ 25,302 $ 2,781 Net loss from discontinued operations (4,949) (7,978) (5,299) (9,748) --------- --------- --------- --------- Net income from continuing operations 17,882 3,813 30,601 12,529 Adjustments to reconcile net income from continuing operations to net cash provided by continuing operations: Depreciation 922 827 3,493 3,228 Provision for doubtful accounts 342 283 1,560 1,359 Deferred income taxes, net (13,860) - (13,860) - Provision for (benefit from) accrual for self-insured professional liability, net 697 113 (4,569) (2,560) Payment of professional liability costs (913) (1,141) (4,111) (3,286) Amortization of deferred balances 80 114 342 386 Provision for leases in excess of cash payments (10) 50 158 467 Asset impairment and other charges - 219 - 219 Foreign currency transaction gain (25) (288) (161) (784) Non-cash interest expense 42 39 164 153 Non-cash interest income (105) (104) (428) (229) --------- --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES BEFORE CHANGES IN OTHER ASSETS AND LIABILITIES 5,052 3,925 13,189 11,482 CHANGES IN OTHER ASSETS AND LIABILITIES AFFECTING OPERATING ACTIVITIES: Receivables, net (1,950) (1,689) (3,798) (1,856) Prepaid expenses and other assets (588) (490) (2,516) (1,546) Trade accounts payable and occurred expenses 1,608 23 2,745 (2,516) --------- --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS $ 4,122 $ 1,769 $ 9,620 $ 5,564 ========= ========= ========= ========= CONTACT: Advocat Inc., Brentwood William R. Council, III, 615-771-7575 or Cameron Associates Investor Relations: Rodney O'Connor, 212-554-5470 -----END PRIVACY-ENHANCED MESSAGE-----