-----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, UK18uo64RJ2cqMYww4QFDz578u4Wx3OWJUUWUAFuSm5QLfN2/1i7F8noMzqhbzfN t6dspzvjy1AsljNvsBjPJg== 0000892569-96-001668.txt : 19960928 0000892569-96-001668.hdr.sgml : 19960928 ACCESSION NUMBER: 0000892569-96-001668 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960131 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960820 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARV ASSISTED LIVING INC CENTRAL INDEX KEY: 0000949322 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-NURSING & PERSONAL CARE FACILITIES [8050] IRS NUMBER: 330160968 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26980 FILM NUMBER: 96618144 BUSINESS ADDRESS: STREET 1: 245 FISCHER AVE CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7147517400 MAIL ADDRESS: STREET 2: 245 FISCHER AVE D-1 CITY: COSTA MESA STATE: CA ZIP: 92626 8-K/A 1 FORM 8-K/A DATED JANUARY 31, 1996 1 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): January 31, 1996 Commission file number 0-26980 ARV ASSISTED LIVING, INC. CALIFORNIA 33-016098 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 33-95712 (COMMISSION FILE NO.) 245 FISCHER AVENUE, D-1 92626 COSTA MESA, CA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 751-7400 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. The Registrant submits this Form 8-K/A in order to supply the financial statements and schedules required pursuant to Rule 3-14 of Regulation S-X and to provide the audited Historical Summary of Gross Income and Direct Operating Expenses of the Cardinal Retirement Village of Bedford not previously available when the Registrant filed its 8-K/A on April 15, 1996. This information should be read in conjunction with the Registrant's Form 8-K filed with the Commission on February 15, 1996 and Form 8-K/A filed with the Commission on April 15, 1996 and incorporated herein by reference. (a) Financial Statements of Real Estate Operations Acquired (1) "Historical Summary of Gross Income and Direct Operating Expenses of Cardinal Retirement Village of Bedford for the year ended December 31, 1995." (2) A statement showing the estimated taxable operating results for the Retirement Village of Bedford based on its most recent 12-month period. (3) "Unaudited Proforma Combined Balance Sheet of ARV Assisted Living, Inc. As of December 31, 1995 and the Unaudited Pro Forma Combined Statement of Operations for the year ended March 31, 1995 and the Unaudited Pro Forma Combined Statement of Operations for the nine months ended December 31, 1995 and the related notes thereon." 1 3 CARDINAL RETIREMENT VILLAGE OF BEDFORD Historical Summary of Gross Income and Direct Operating Expenses December 31, 1995 (With Independent Auditors' Report Thereon) 2 4 INDEPENDENT AUDITORS' REPORT To the Board of Directors ARV Assisted Living, Inc.: We have audited the accompanying historical summary of gross income and direct operating expenses of Cardinal Retirement Village of Bedford for the year ended December 31, 1995. This financial statement is the responsibility of Cardinal Retirement Village of Bedford's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the historical summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in that financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying historical summary of gross income and direct operating expenses was prepared for inclusion in the Form 8-K/A of ARV Assisted Living, Inc. and excludes certain material revenue and expenses, described in note 2, that would not be comparable to those resulting from the proposed future operations of the property. In our opinion, the historical summary of gross income and direct operating expenses referred to above presents fairly, in all material respects, the revenue and expenses, as described in note 2, of Cardinal Retirement Village of Bedford for the year ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ KMPG PEAT MARWICK LLP Lexington, Kentucky April 12, 1996 3 5 CARDINAL RETIREMENT VILLAGE OF BEDFORD Historical Summary of Gross Income and Direct Operating Expenses For the year ended December 31, 1995 Gross income: Independent living income $1,924,877 Other resident services 122,203 ---------- Total income 2,047,080 ---------- Direct operating expenses: Administrative expense 336,518 Cafeteria expense 369,000 Assisted living expense 94,029 Plant and operations 91,696 Property taxes 110,098 Utilities 202,024 Activities expense 32,269 Housekeeping expense 90,364 ---------- Total direct operating expenses 1,325,998 ---------- Income in excess of direct operating expenses $ 721,082 ==========
See accompanying notes to historical summary. 4 6 CARDINAL RETIREMENT VILLAGE OF BEDFORD Notes to Historical Summary of Gross Income and Direct Operating Expenses For the year ended December 31, 1995 (1) ORGANIZATION Cardinal Retirement Village of Bedford is a 227-unit assisted living facility for senior citizens located in Cleveland, Ohio, which was acquired by ARV Assisted Living, Inc. in February 1996. (2) BASIS OF PRESENTATION The Historical Summary presents only specified gross income and direct operating expenses of Cardinal Retirement Village of Bedford for the year ended December 31, 1995. The Historical Summary has been prepared on the accrual basis of accounting. INCOME Cardinal Retirement Village's revenues are generated from rental agreements with tenants on a month-to-month basis. Only revenue from the rental agreements and other resident services are included in total income. All other revenue has been excluded from the Historical Summary, which are not comparable to the proposed operations of Cardinal Retirement Village of Bedford. EXPENSES Expenses include costs associated with the rental operations and the general administration of the facility, which are comparable to the proposed future operations of Cardinal Retirement Village of Bedford. Certain expenses, including interest, accounting, management fees, depreciation, amortization and legal fees, have been excluded from the Historical Summary. 5 7 UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS The following Unaudited Pro Forma Combined Financial Statements give effect to the acquisitions of the Retirement Village of Bedford ("Bedford") and Bella Vita, the leasing of Buena Vista Knolls, and the acquisition or lease of other properties and partnership interests acquired since January 1, 1995. As is more fully described in the Notes to Unaudited Pro Forma Combined Financial Statements, the pro forma balance sheet data and statement of operations data for the acquired and leased properties and the pro forma adjustments with respect thereto, have been combined to facilitate the presentation. The Unaudited Pro Forma Combined Financial Statements are based on the assumptions and adjustments described in the accompanying notes and should be read in conjunction therewith and in conjunction with the historical financial statements of ARV Assisted Living, Inc. and subsidiaries ("ARVAL" or the "Company") and the notes thereto included in the Company's report on Form 10-Q as of and for the nine month period ended December 31, 1995 and the Company's consolidated financial statements as of and for the year ended March 31, 1995. The Unaudited Pro Forma Combined Financial Statements do not purport to present the financial position or the results of operations of ARVAL had the transaction assumed therein occurred on the dates indicated, nor are they necessarily indicative of the results of operations which may be achieved in the future. 6 8 ARV ASSISTED LIVING, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED BALANCE SHEET December 31, 1995
Acquired or Historical Leased Pro Forma ARVAL Facilities Adjustments ------------ ------------- ------------- ASSETS Cash $ 34,085,000 $ (14,732,000) $ -- Management fees receivable from third parties 5,000 -- -- Fees receivable from affiliates 307,000 -- -- Amounts due from affiliates 575,000 -- -- Deferred project costs 1,884,000 -- -- Investments in real estate 3,513,000 -- -- Escrow deposits 2,175,000 -- Other assets 1,139,000 80,000 -- ------------ ------------- ------------ Total current assets 43,683,000 (14,652,000) -- Restricted cash 3,869,000 -- Property, furniture and equipment 10,771,000 21,926,000 Notes receivable from affiliates 1,736,000 -- (1,174,000)(k) Deferred cost of conv. debt offering -- -- Deferred tax asset 1,644,000 -- -- Other non-current assets 4,679,000 703,000 -- ------------ ------------- ------------ Total non-current assets 22,699,000 22,629,000 (1,174,000) ------------ ------------- ------------ Total assets $ 66,382,000 $ 7,977,000 $ (1,174,000) ============ ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued liabilities $ 2,298,000 $ 193,000 -- Deferred revenue, current portion 46,000 -- -- Owner's equity contributions payable 260,000 -- -- Notes payable, current portion 1,654,000 1,358,000 (1,174,000)(k) Notes payable and other amounts due to affiliates 89,000 33,000 -- ------------ ------------- ------------ Total current liabilities 4,347,000 1,584,000 (1,174,000) Deferred revenue 1,891,000 -- -- Convertible notes payable -- -- Notes payable, less current portion 17,150,000 6,393,000 Losses in excess of investment in partnership 1,000 -- -- ------------ ------------- ------------ Total non-current liabilities 19,042,000 6,393,000 -- Total liabilities 23,389,000 7,977,000 (1,174,000) Minority interest in joint venture 840,000 -- -- Series A preferred stock 4,585,000 -- -- Shareholders' equity: Common stock 45,420,000 -- Less receivable from ESOP -- -- -- Accumulated deficit (7,852,000) -- ------------ ------------- ------------ Total shareholders' equity (deficit) 37,568,000 -- -- ------------ ------------- ------------ Total liabilities and shareholders' equity $ 66,382,000 $ 7,977,000 $ (1,174,000) ============ ============= ============
Pro Forma Pro Forma Pro Forma ARVAL Adjustments Combined ------------ ------------- ------------- ASSETS Cash $ 19,353,000 $ (4,000,000)(i) $ 6,503,000 (8,850,000)(j) Management fees receivable from third parties 5,000 -- 5,000 Fees receivable from affiliates 307,000 -- 307,000 Amounts due from affiliates 575,000 -- 575,000 Deferred project costs 1,884,000 -- 1,884,000 Investments in real estate 3,513,000 -- 3,513,000 Escrow deposits 2,175,000 -- 2,175,000 Other assets 1,219,000 17,000 (j) 1,236,000 ------------ ------------- ------------ Total current assets 29,031,000 (12,833,000) 16,198,000 Restricted cash 3,869,000 3,869,000 Property, furniture and equipment 32,697,000 10,300,000 (i) 51,898,000 8,901,000 (j) Notes receivable from affiliates 562,000 -- 562,000 Deferred cost of conv. debt offering -- -- -- Deferred tax asset 1,644,000 -- 1,644,000 Other non-current assets 5,382,000 -- 5,382,000 ------------ ------------- ------------ Total non-current assets 44,154,000 19,201,000 63,355,000 ------------ ------------- ------------ Total assets $ 73,185,000 $ 6,368,000 $ 79,553,000 ============ ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued liabilities $ 2,491,000 68,000 (j) $ 2,559,000 Deferred revenue, current portion 46,000 -- 46,000 Owner's equity contributions payable 260,000 -- 260,000 Notes payable, current portion 1,838,000 -- 1,838,000 Notes payable and other amounts due to affiliates 122,000 -- 122,000 ------------ ------------- ------------ Total current liabilities 4,757,000 68,000 4,825,000 Deferred revenue 1,891,000 -- 1,891,000 Convertible notes payable -- -- -- Notes payable, less current portion 23,543,000 6,300,000 (i) 29,843,000 Losses in excess of investment in partnership 1,000 -- 1,000 ------------ ------------- ------------ Total non-current liabilities 25,435,000 6,300,000 31,735,000 Total liabilities 30,192,000 6,368,000 36,560,000 Minority interest in joint venture 840,000 -- 840,000 Series A preferred stock 4,585,000 (4,585,000)(h) -- Shareholders' equity: Common stock 45,420,000 4,585,000 (h) 50,005,000 Less receivable from ESOP -- -- -- Accumulated deficit (7,852,000) -- (7,852,000) ------------ ------------- ------------ Total shareholders' equity (deficit) 37,568,000 4,585,000 42,153,000 ------------ ------------- ------------ Total liabilities and shareholders' equity $ 73,185,000 $ 6,368,000 $ 79,553,000 ============ ============= ============
See accompanying notes to unaudited pro forma combined financial statements. 7 9 ARV ASSISTED LIVING, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS Year Ended March 31, 1995
Acquired or Historical Leased Pro Forma Pro Forma Bella Vita ARVAL Facilities Adjustments ARVAL Acquisition ------------ ------------ ------------ ------------ ------------ Revenues Assisted living facility revenues $ 4,838,000 $ 35,520,000 (a) $ - $ 40,358,000 $ 2,472,000 (a) Management fees from affiliate 3,463,000 - (1,318,000) (b) 2,145,000 - Management fees from other - - - - Development and construction fees 702,000 - - 702,000 - Other income 476,000 - - 476,000 - ------------ ------------ ------------ ------------ ------------ Total revenue $ 9,479,000 $ 35,520,000 $ (1,318,000) $ 43,681,000 $ 2,472,000 Expenses Assisted living facility operating expenses $ 3,201,000 $ 24,133,000 (c) $ - $ 27,334,000 $ 1,471,000 (c) Assisted living facility issued expenses 814,000 9,215,000 (d) - 10,029,000 - ESOP contribution - - - - General and administrative 8,264,000 - 80,000 (b) 8,344,000 - Depreciation and amortization 320,000 702,000 (e) - 1,022,000 308,000 (e) Bad debts 1,465,000 - - 1,465,000 - Interest, net 143,000 949,000 (f) 717,000 (f) 1,809,000 - ------------ ------------ ------------ ------------ ------------ Total expenses $ 14,207,000 $ 34,999,000 $ 797,000 $ 50,003,000 $ 1,779,000 ------------ ------------ ------------ ------------ ------------ Income (loss) before income tax expense (benefit) $ (4,728,000) $ 521,000 $ (2,115,000) $ (6,322,000) $ 693,000 Income tax expense (benefit) (1,729,000) 177,000 (g) (719,000) (g) (2,271,000) 236,000 (g) ------------ ------------ ------------ ------------ ------------ Net loss $ (2,999,000) $ 344,000 $ (1,396,000) $ (4,051,000) $ 457,000 ============ ============ ============ ============ ============ Preferred dividends paid $ 398,000 $ (398,000) (h) $ - ------------ ------------ ------------ Net loss available for common shares $ (3,397,000) $ (998,000) $ (4,051,000) ============ ============ ============ Net loss per common share $ (0.69) $ (0.73) ============ ============ Weighted average common shares outstanding 4,903,000 658,000 (h) 5,561,000 ============ ============ ============
Bedford Buena Vista Knolls Pro Forma Pro Forma Acquisition Sale Leaseback Adjustments Combined ------------ ------------------ ------------ ------------ Revenues Assisted living facility revenues $ 1,683,000 (a) $ 1,371,000 (a) $ - $ 45,884,000 Management fees from affiliate - - - 2,145,000 Management fees from other - - - - Development and construction fees - - - 702,000 Other income - - - 476,000 ------------ ------------ ------------ ------------ Total revenue $ 1,683,000 $ 1,371,000 $ - $ 49,207,000 Expenses Assisted living facility operating expenses $ 1,128,000 (c) $ 1,068,000 (c) $ - $ 31,001,000 Assisted living facility issued expenses - 379,000 (d) - 10,408,000 ESOP contribution - - - - General and administrative - - - 8,344,000 Depreciation and amortization 239,000 (e) - - 1,569,000 Bad debts - - - 1,465,000 Interest, net - - 591,000 (f) 2,400,000 ------------ ------------ ------------ ------------ Total expenses $ 1,367,000 $ 1,447,000 $ 591,000 $ 55,187,000 ------------ ------------ ------------ ------------ Income (loss) before income tax expense (benefit) $ 316,000 $ (76,000) $ (591,000) $ (5,930,000) Income tax expense (benefit) 107,000 (g) (26,000) (g) (201,000) (g) (2,155,000) ------------ ------------ ------------ ------------ Net loss $ 209,000 $ (50,000) $ (390,000) $ (3,825,000) ============ ============ ============ ============ Preferred dividends paid $ - ------------ Net loss available for common shares $ (3,825,000) ============ Net loss per common share $ (0.69) ============ Weighted average common shares outstanding 5,561,000 ============
See accompanying notes to unaudited pro forma combined financial statements. 8 10 ARV ASSISTED LIVING, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA STATEMENT OF OPERATIONS Nine Months Ended December 31, 1995
Acquired or Historical Leased Pro Forma Pro Forma Bella Vita ARVAL Facilities Adjustments ARVAL Acquisition ------------ ----------- ----------- ----------- ----------- Revenue: Assisted living facility revenues $ 14,803,000 $19,517,000(a) $ -- $34,340,000 $1,942,000(a) Management fees from affiliates 2,202,000 -- (583,000)(b) 1,619,000 -- Management fees from other -- -- -- -- Development and construction fees 834,000 -- -- 834,000 -- Other income 1,824,000 -- -- 1,824,000 -- ------------ ----------- ----------- ----------- ---------- Total revenue $ 19,663,000 $19,517,000 $ (583,000) $38,597,000 $1,942,000 Expenses: Assisted living facility operating expenses $ 9,595,000 $13,833,000(c) $ -- $23,428,000 $1,155,000(c) Assisted living facility lease expenses 4,179,000 3,471,000(d) -- 7,650,000 -- ESOP contribution -- -- -- -- -- General and administrative 5,745,000 -- 42,000(e) 5,787,000 -- Depreciation and amortization 566,000 555,000(e) -- 1,121,000 231,000(e) Bad debts 377,000 -- -- 377,000 -- Interest, net 196,000 606,000(f) 403,000(f) 1,205,000 -- ------------ ----------- ----------- ----------- ---------- Total expenses $ 20,658,000 $18,465,000 $ 445,000 $39,568,000 $1,386,000 Income (loss) before income tax ------------ ----------- ----------- ----------- ---------- (expense) benefit $ (995,000) $ 1,052,000 $(1,028,000) $ (971,000) $ 556,000 Income tax expense (benefit) 273,000 357,000(g) (350,000)(g) 280,000 190,000(g) ------------ ----------- ----------- ----------- ---------- Net loss $(1,268,000) $ 695,000 $ (678,000) $(1,251,000) $ 366,000 ============ =========== =========== =========== ========== Preferred dividends paid $ 300,000 $ (300,000)(k) $ -- ------------ ----------- ----------- Net loss available for common shares $ (1,568,000) $ (378,000) $(1,251,000) ============ =========== =========== Net loss per common share $ (0.28) $ (0.20) ============ =========== Weighted average common shares outstanding 5,638,000 $ 658,000(k) $ 6,296,000 ============ =========== =========== Buena Vista Bedford Knolls Pro Forma Pro Forma Acquisition Sale Leaseback Adjustments Combined ------------ -------------- ----------- ----------- Revenue: Assisted living facility revenues $1,524,000(a) $1,209,000(a) $ -- $38,995,000 Management fees from affiliates -- -- -- 1,619,000 Management fees from other -- -- -- Development and construction fees -- -- -- 834,000 Other income -- -- -- 1,824,000 ---------- ---------- ----------- ----------- Total revenue $1,524,000 $1,209,000 $ -- $43,272,000 Expenses: Assisted living facility operating expenses $ 887,000(c) $ 803,000(c) $ -- $26,273,000 Assisted living facility lease expenses -- 284,000(d) -- 7,934,000 ESOP contribution -- -- -- -- General and administrative -- -- -- 5,787,000 Depreciation and amortization 180,000(e) -- -- 1,532,000 Bad debts -- -- -- 377,000 Interest, net -- -- 420,000(f) 1,625,000 ---------- ---------- ----------- ----------- Total expenses $1,067,000 $1,087,000 $ 420,000 $43,528,000 Income (loss) before income tax ---------- ---------- ----------- ----------- (expense) benefit $ 457,000 $ 122,000 $ (420,000) $ (256,000) Income tax expense (benefit) 155,000(g) 42,000(g) (143,000)(g) 524,000 ---------- ---------- ----------- ----------- Net loss $ 302,000 $ 80,000 $ (277,000) $ (780,000) ========== ========== =========== =========== Preferred dividends paid $ -- ----------- Net loss available for common shares $ (780,000) =========== Net loss per common share $ (0.12) =========== Weighted average common shares outstanding $ 6,296,000 ===========
See accompanying notes to unaudited pro forma combined financial statements. 9 11 ARV ASSISTED LIVING, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (1) As of March 11, 1996, the Company has acquired 22 assisted living facilities since January 1, 1995, through direct purchases for its own account, long-term operating lease, or purchases of controlling partnership interests. The Company issued approximately $15 million of 10% Convertible Subordinated Notes in July 1995 and raised approximately $43 million (net proceeds) through the sale of its common stock in an initial public offering in October 1995 to finance its acquisitions. As of February 7, 1996, the Company exercised its right to redeem all outstanding shares of Series A preferred stock on May 9, 1996. Preferred shareholders have the option of converting their Series A preferred stock into common stock at any time prior to April 29, 1996. The unaudited pro forma combined financial statements assume all shares of Series A preferred stock will be converted into common stock. (2) On January 31, 1996, the Company completed the acquisition of the Retirement Village of Bedford, a 217 unit assisted living facility located in the city of Bedford, Ohio, for $8.9 million. On February 8, 1996, the Company entered into a long-term operating lease with Nationwide Health Properties for Buena Vista Knolls, a 91 unit assisted living facility located in the city of Vista, San Diego County, California. On April 1, 1996, the Company also completed the acquisition of Bella Vita, a 120 unit assisted living facility located in Venice, Florida, for $10.3 million. Approximately $6.3 million of the purchase price was financed by the Company's assumption of an existing first mortgage loan. (3) The Unaudited Pro Forma Combined Balance Sheet at December 31, 1995 presents the historical balance sheet of the Company as of December 31, 1995, the pro forma balance sheet of the Company as if the acquisitions described in note (1) above, except for the acquisition of the Retirement Village of Bedford and Bella Vita and the leasing of Buena Vista Knolls, had been completed as of December 31, 1995, and the pro forma balance sheet of the Company after giving effect to acquisition of the Retirement Village of Bedford and Bella Vita and the leasing of Buena Vista Knolls as if those events had also occurred on December 31, 1995. (4) The Unaudited Pro Forma Combined Statement of Operations for the year ended March 31, 1995 and the nine months ended December 31, 1995 present the historical operations of the Company, the pro forma operations of the Company as if the acquisitions and financing transactions described in note (1) above, except for the acquisitions and lease described in note (2), had occurred at the beginning of each period, and the pro forma combined operations of the Company as if the acquisitions and lease had occurred at the beginning of each period. (5) Pro forma adjustments are as follows: (a) To reflect the assisted living facility revenue of the acquired facilities (b) To reflect the decrease in property management and partnership administration fees received from assisted living facilities formerly managed and currently owned or leased by the Company (c) To reflect the increase in assisted living facility operating expenses (d) To reflect the increase in assisted living facility lease expense (e) To reflect the increase in depreciation expense (f) To reflect the increase in interest expense for the interest incurred on debt assumed, the interest related to the issuance of the 10% Convertible Subordinated Notes, offset by interest income on the unused portion of the financings at an assumed rate of 5% (g) To reflect the pro forma change in income tax expense (benefit) (h) To reflect the pro forma change in preferred stock and common stock and the decrease in preferred dividends due to the assumed conversion of Series A preferred stock into common stock increasing the weighted average shares outstanding by 658,000 shares (i) To reflect the acquisition of Bella Vita (j) To reflect the acquisition of the Retirement Village of Bedford (k) To eliminate the note receivable and note payable between entities. 10 12 ARV Assisted Living, Inc. Purchase of the Retirement Village of Bedford Pro Forma Estimates of Cash Flow and Federal Taxable Income For the Year Ended December 31, 1995 The following unaudited pro forma estimates present the cash flow and the Federal Taxable Income of the Retirement Village of Bedford for the year ended December 31, 1995 as if the Retirement Village of Bedford had been acquired on January 1, 1995. The pro forma does not purport to represent operations of ARV as a whole nor does it purport to represent actual or expected operations of the Company for any period in the future. These estimates were prepared on the basis described in the accompanying notes, which should be read in conjunction herewith. Estimate of Cash Flow: Historical Operating Income 721,082 Less: Property Taxes (60,000) --------- Pro Forma Estimate of Cash Flow $ 661,082 ========= Estimate of Federal Taxable Income: Pro Forma Estimate of Cash Flow $661,082 Less: Estimated Depreciation and Amortization Expense (Federal Income Tax Basis) (201,000) --------- Pro Forma Estimate of Federal Taxable Income $ 461,082 =========
11 13 CARDINAL RETIREMENT VILLAGE OF BEDFORD Notes to Pro Forma Estimate of Cash Flow and Federal Taxable Income For the Year Ended December 31,1995 (1) Historical Operating Income Historical operating income is based upon the excess of operating revenues over certain expenses of the Cardinal Retirement Village of Bedford (the "Facility") for the year ended December 31, 1995. (2) Property Taxes Property taxes are estimated based upon reassessment of the Property at its purchase price. 12 14 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. ARV Assisted Living, Inc. By: /s/ Patrick M. Donovan --------------------------- Patrick M. Donovan Vice President Finance (Duly authorized officer) Date: August 19, 1996 13 -----END PRIVACY-ENHANCED MESSAGE-----