-----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, DqiudSjpXdTyz+0G6b2Jc7TpPi0mggyz3atZ+QMKZ17lcYWR2yIODPlSnlRvUGYc S3Fqzga9liZNXq7nShyl6Q== 0000892569-96-002115.txt : 19961028 0000892569-96-002115.hdr.sgml : 19961028 ACCESSION NUMBER: 0000892569-96-002115 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960822 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961025 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: 96648125 BUSINESS ADDRESS: STREET 1: 245 FISCHER AVE STREET 2: SUITE D-1 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7147517400 MAIL ADDRESS: STREET 1: 245 FISCHER AVENUE STREET 2: SUITE D-1 CITY: COSTA MESA STATE: CA ZIP: 92626 8-K/A 1 AMENDMENT TO THE FORM 8-K 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):August 22, 1996 Commission file number 0-26980 ARV ASSISTED LIVING, INC. (Exact name of Registrant as specified in its charter) CALIFORNIA 33-0160968 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 245 FISCHER AVENUE, D-1 COSTA MESA, CA 92626 (ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE) 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 3-05 of Regulation S-X with respect to the Registrant's acquisition of Syncare, Inc. ("Syncare"), a California corporation, and to provide the audited financial statements of Syncare required thereby. This information should be read in conjunction with the Registrant's Form 8-K filed with the Commission on August 22, 1996. Financial Statements of Business Acquired Exhibit 99.1 "Financial Statements of Syncare, Inc. and subsidiaries, (a California corporation) June 30, 1996 with Independent Auditors' Report Thereon." Exhibit 99.2 "Unaudited Proforma Combined Balance Sheet of ARV Assisted Living, Inc. as of June 30, 1996, the Unaudited Pro Forma Combined Statement of Operations for the year ended March 31, 1996 and the Unaudited Pro Forma Combined Statement of Operations for the three months ended June 30, 1996 and the related notes thereon." 1 3 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: October 25, 1996 EX-99.1 2 SYNCARE, INC. AND SUBSIDIARIES 1 EXHIBIT 99.1 SYNCARE, INC. AND SUBSIDIARIES Consolidated Financial Statements June 30, 1996 (With Independent Auditors' Report Thereon) 2 INDEPENDENT AUDITORS' REPORT The Board of Directors SynCare, Inc.: We have audited the accompanying consolidated balance sheet of SynCare, Inc. and subsidiaries (the Company) as of June 30, 1996 and the related consolidated statements of operations, shareholders' equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SynCare, Inc. and subsidiaries as of June 30, 1996 and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. Orange County, California September 11, 1996 3 SYNCARE, INC. AND SUBSIDIARIES Consolidated Balance Sheet June 30, 1996 ASSETS Current assets: Cash and cash equivalents $ 53,335 Accounts receivable, less allowance for doubtful accounts 1,184,840 of $100,000 (note 2) Prepaids 11,708 ---------- Total current assets 1,249,883 Furniture and equipment 50,056 Other noncurrent assets 31,959 ---------- Total Assets $1,331,898 ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 488,336 Income tax payable (note 5) 81,067 Deferred tax liability, net (note 5) 5,172 Amount due to Medicare (note 3) 548,219 ---------- Total current liabilities 1,122,794 ---------- Shareholders' equity: Common stock, no par value. Authorized 1,000 shares; issued and 500 outstanding 2 shares Retained earnings 208,604 ---------- Total shareholders' equity 209,104 Commitments and contingent liabilities (notes 6 and 8) Subsequent event (note 9) ---------- Total liabilities and shareholders' equity $1,331,898 ==========
See accompanying notes to consolidated financial statements. 4 SYNCARE, INC. AND SUBSIDIARIES Consolidated Statement of Operations Year ended June 30, 1996 Revenues: Net patient service revenue (note 2) $4,765,502 Other income 8,247 ---------- Net revenues 4,773,749 ---------- Operating expenses: Therapist services 2,923,226 General and administrative 1,537,325 Pension (note 6) 148,589 Provision for doubtful accounts 50,000 Depreciation and amortization 23,566 Interest expense 39,551 ---------- Total operating expenses 4,722,257 ---------- Income before income tax expense 51,492 Income tax expense (note 5) 41,450 ---------- Net income $ 10,042 ========== Net income per share $ 5,021 ==========
See accompanying notes to consolidated financial statements. 5 SYNCARE, INC. AND SUBSIDIARIES Consolidated Statement of Shareholders' Equity Year ended June 30, 1996
COMMON STOCK TOTAL ---------------- RETAINED SHAREHOLDERS' SHARES AMOUNT EARNINGS EQUITY ------ ------ -------- ------------- Balance at July 1, 1995 2 $500 198,562 199,062 Net income - -- 10,042 10,042 --- ---- ------- ------- Balance at June 30, 1996 2 $500 208,604 209,104 === ==== ======= =======
See accompanying notes to consolidated financial statements. 6 SYNCARE, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flows Year ended June 30, 1996 Cash flows from operating activities: Net income $ 10,042 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 23,566 Provision for doubtful accounts 50,000 Provision for deferred taxes 35,383 Changes in assets and liabilities: Increase in accounts receivable, net (98,535) Increase in prepaids (2,031) Increase in other assets (27,446) Increase in accounts payable and accrued liabilities 138,759 Increase in income tax payable 81,067 Decrease in amount due to Medicare (128,607) --------- Net cash provided by operating activities 82,198 Cash flows from investing activities - capital expenditures (47,004) --------- Net increase in cash and cash equivalents 35,194 Cash and cash equivalents at beginning of year 18,141 --------- Cash and cash equivalents at end of year $ 53,335 ========= Supplemental cash flow disclosure: Cash paid for income taxes $ 1,600 Cash paid for interest 39,551 =========
See accompanying notes to consolidated financial statements. 7 SYNCARE, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1996 (1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Syncare, Inc. is the parent company for ProMotive Rehabilitation Services, Inc. (Geri Care), BayCare Rehabilitative Services, Inc. (BayCare) and Pro Motion Rehabilitation, Inc. (Pro Motion). SynCare, Inc. was incorporated on July 25, 1995 to be a holding company for Geri Care, BayCare and Pro Motion. Pro Motion was incorporated on August 6, 1991 as a provider of physical, occupational and/or speech therapy services on an outpatient basis. Pro Motion has service contracts with various Skilled Nursing Facilities (SNF) throughout Southern California. Geri Care and BayCare, incorporated on June 18, 1992 and August 9, 1995 respectively, provide rehabilitation services to residents of assisted living facilities. Geri Care and BayCare are Medicare certified and operate exclusively as Medicare service providers. Syncare, Inc. is owned and operated by the President and Vice President who are the sole shareholders of SynCare, Inc. and previously owned its subsidiaries (collectively referred to as the Company). The Company's main source of revenue is generated through providing physical, occupational and speech therapy services. The consolidated financial statements for the year ended June 30, 1996 include the activities of the aforementioned companies for the period they were in existence during the year ended June 30, 1996. PRINCIPLES OF CONSOLIDATIONS The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. NET PATIENT SERVICE REVENUE Net patient service revenue is reported at the estimated net realizable amounts due from patients, third-party payors and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Such contractual adjustments are accrued on an estimated basis the period the related services are rendered. Net patient service revenue is adjusted as required in subsequent periods based on final settlements. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS For purposes of reporting cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. 8 FURNITURE AND EQUIPMENT Furniture and equipment are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Furniture and equipment 3 to 7 years Automobiles 3 to 5 years Furniture and equipment consists of the following: Furniture and equipment $54,221 Automobiles 44,640 ------- 98,861 Less accumulated depreciation (48,805) ------- $50,056 =======
INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered as settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (2) NET PATIENT SERVICE REVENUE AND THIRD-PARTY REIMBURSEMENT Approximately 80% of net patient service revenue for the year ended June 30, 1996 was derived under Federal and state third-party reimbursement programs. The Company is reimbursed at a tentative rate with final settlement determined after submission of annual cost reports by the Company and audits thereof by the Medicare fiscal intermediary. Management has provided for its best estimate of amounts due upon settlement of cost reports, however, the ultimate outcome of such settlements may be different than amounts provided. The Company's Medicare cost reports have been audited by the Medicare fiscal intermediary through June 30, 1994. The Company has also entered into payment agreements with certain commercial insurance carriers, health maintenance organizations and preferred provider organizations. The basis for payment to the Company under these agreements includes discounts from established charges. Such discounts are recorded in the period the services are rendered. Both governmental and private pay sources have instituted cost-containment measures designed to limit payments made to providers of health services, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect reimbursements to the Company. Furthermore, government reimbursement programs are subject to statutory and regulatory changes, retroactive rate adjustments, administrative rulings and government funding restrictions, all of which could materially decrease the services covered or the rates paid to the Company for its services. In the opinion of management, retroactive adjustments, if any, would not be material to the financial position or results of operations of the Company. 9 (3) AMOUNT DUE TO MEDICARE Final settlement for third-party reimbursement programs is determined after submission of the annual cost reports by the Company and audits thereof by the Medicare fiscal intermediary. Based on an audit of the cost report for the fiscal year ended June 30, 1994 and the "as filed" cost report for the fiscal year ended June 30, 1995, it was determined that the Company had been overpaid by Medicare. This overpayment has been accrued for by the Company in the accompanying balance sheet as the amount due to Medicare. (4) OPERATING LEASES The Company is committed to operating leases for office space that require annual minimum lease payments as follows: 1997 $175,217 1998 140,496 1999 140,496 2000 140,496 2001 70,248 -------- $666,953 ========
Lease expense was $152,136 for the year ended June 30, 1996. (5) INCOME TAXES The provision for income tax expense for the year ended June 30, 1996 consists of the following: Current: Federal $ 63,539 State 17,528 -------- 81,067 -------- Deferred: Federal (32,272) State (7,345) -------- (39,617) -------- $ 41,450 ========
Federal statutory rate of 34% to the Company's provision for income taxes is as follows: Income tax expense at statutory rate $17,507 State income tax expense, net of Federal income tax benefit 11,569 Tax penalties 8,017 Other 4,357 ------- $41,450 =======
10 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at June 30, 1996 are presented below: Deferred tax assets: Allowance for doubtful accounts $ 43,300 Cost report reserve 59,321 State tax 5,959 Accrued vacation 20,569 -------- 129,149 Less valuation allowance (59,321) -------- 69,828 Deferred tax liability - reserve for penalties and interest 75,000 -------- Net deferred tax liability $ 5,172 ========
Based on the Company's current and expected pretax earnings, management believes it is more likely than not that the Company will realize certain of the benefits of the existing deferred tax assets as of June 30, 1996. Recognition of the remaining balances will require generation of future taxable income. There can be no assurance that the Company will generate any earnings or any specific level of earnings in future years. Certain tax planning or other strategies could be implemented, if necessary, to supplement income from operations to fully realize recorded net tax benefits. (6) SIMPLIFIED EMPLOYEE PENSION PLAN The Company has a Simplified Employee Pension (SEP) plan, whereby contributions to each eligible employee's, account are made at the Company's discretion and range between 0% to 15% of the employees' gross wages. An employee becomes eligible to participate in the plan upon completing one year of continuous employment with the Company. The Company is to make 100% of the contributions and the employee is not required to match contributions in any way. Furthermore, all contributions vest immediately and are entirely self directed by the employees. Contributions by the Company to the SEP were $148,589 for the year ended June 30, 1996. At June 30, 1996, the Company had accrued a contribution of $77,287 which is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheet. (7) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of Statement of Financial Accounting Standards No. 106 (SFAS 107), "Disclosure about Fair Value of Instruments." The estimated fair value amounts have been determined using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions or estimation methodologies may have a material impact on the estimated fair value amounts. The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and amounts due to Medicare approximate fair value due to the short-term nature of these instruments. 11 (8) CONTINGENCIES The Company is involved in certain litigation arising in the ordinary course of business. Management believes that settlement of this litigation will not have a material adverse impact on the consolidated financial statements. (9) SUBSEQUENT EVENT On August 22, 1996, ARV Health Care Inc., a wholly-owned subsidiary of ARV Assisted Living, Inc. (ARVAL), entered into an agreement to acquire all of the Company's outstanding stock. The purchase price to be paid by ARVAL shall be based on the initial valuation of the Company plus the net asset value of the Company at the time of closing; provided, however, that the purchase price does not exceed $1,500,000. Thirty days after the closing date (the second closing date), the initial value, net asset value and purchase price is to be recalculated using updated financial and other information. EX-99.2 3 UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENT 1 EXHIBIT 99.2 UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS The following Unaudited Pro Forma Combined Financial Statements give effect to the acquisition of SynCare, Inc. 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 three month period ended June 30, 1996 and the Company's consolidated financial statements as of and for the year ended March 31, 1996. 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. 2 ARV ASSISTED LIVING, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED BALANCE SHEET JUNE 30, 1996
HISTORICAL OTHER PRO FORMA PRO FORMA ARVAL ACQUISITIONS(1) ADJUSTMENTS(5) ARVAL ------------- --------------- -------------- ------------- ASSETS Cash $ 42,109,000 $ 37,000 $ (341,000)(a) $ 41,805,000 Fees receivable from affiliates 908,000 -- -- 908,000 Accounts receivable, less allowance for doubtful accounts of $100,000 -- -- -- -- Deferred project costs 1,162,000 -- -- 1,162,000 Investments in real estate 8,652,000 -- -- 8,652,000 Other assets 2,574,000 64,000 (22,000)(b) 2,616,000 ------------- ---------- ----------- ------------- Total current assets 55,405,000 101,000 (363,000) 55,143,000 Restricted cash 5,366,000 -- -- 5,366,000 Property, furniture and equipment 65,833,000 3,030,000 861,000 (c) 69,724,000 Notes receivable from affiliates 277,000 -- -- 277,000 Deferred tax asset 2,044,000 -- -- 2,044,000 Other non-current assets 6,641,000 13,000 (1,881,000)(c) 4,773,000 ------------- ---------- ----------- ------------- Total non-current assets 80,161,000 3,043,000 (1,020,000) 82,184,000 ------------- ---------- ----------- ------------- Total assets $ 135,566,000 $3,144,000 $(1,383,000) $ 137,327,000 ============= ========== =========== ============= LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued liabilities $ 5,369,000 150,000 -- 5,519,000 Deferred revenue, current portion 46,000 7,000 -- 53,000 Income tax payable -- Amount due to Medicare -- Notes payable, current portion 3,458,000 -- -- 3,458,000 Notes payable and other amounts due to affiliates 121,000 10,000 (22,000)(b) 109,000 ------------- ---------- ----------- ------------- Total current liabilities 8,994,000 167,000 (22,000) 9,139,000 Deferred revenue 1,397,000 -- -- 1,397,000 Notes payable, less current portion 71,744,000 360,000 -- 72,104,000 ------------- ---------- ----------- ------------- Total non-current liabilities 73,141,000 360,000 -- 73,501,000 Total liabilities 82,135,000 527,000 (22,000) 82,640,000 Minority interest 1,131,000 -- 1,256,000 (c) 2,387,000 Shareholders' equity: Common stock 60,035,000 -- -- 60,035,000 Accumulated equity (deficit) (7,735,000) 2,617,000 (2,617,000)(c) (7,735,000) ------------- ---------- ----------- ------------- Total shareholders' equity 52,300,000 2,617,000 (2,617,000) 52,300,000 ------------- ---------- ----------- ------------- Total liabilities and shareholders' equity $ 135,566,000 $3,144,000 $(1,383,000) $ 137,327,000 ============= ========== =========== =============
SYNCARE, INC. PRO FORMA PRO FORMA ACQUISITION(2) ADJUSTMENTS(6) COMBINED -------------- -------------- ------------- ASSETS Cash $ 53,000 $ -- $ 41,858,000 Fees receivable from affiliates -- -- 908,000 Accounts receivable, less allowance for doubtful accounts of $100,000 1,185,000 -- 1,185,000 Deferred project costs -- -- 1,162,000 Investments in real estate -- -- 8,652,000 Other assets 12,000 -- 2,628,000 ----------- --------- ------------- Total current assets 1,250,000 -- 56,393,000 Restricted cash -- -- 5,366,000 Property, furniture and equipment 50,000 -- 69,774,000 Notes receivable from affiliates -- -- 277,000 Deferred tax asset (5,000) -- 2,039,000 Other non-current assets 32,000 375,000 (a) 5,180,000 ----------- --------- ------------- Total non-current assets 77,000 375,000 82,636,000 ----------- --------- ------------- Total assets $ 1,327,000 $ 375,000 $ 139,029,000 =========== ========= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued liabilities 488,000 -- 6,007,000 Deferred revenue, current portion -- -- 53,000 Income tax payable 81,000 -- 81,000 Amount due to Medicare 548,000 -- 548,000 Notes payable, current portion 0 -- 3,458,000 Notes payable and other amounts due to affiliates 0 -- 109,000 ----------- --------- ------------- Total current liabilities 1,117,000 -- 10,256,000 Deferred revenue -- -- 1,397,000 Notes payable, less current portion -- -- 72,104,000 ----------- --------- ------------- Total non-current liabilities -- -- 73,501,000 Total liabilities 1,117,000 -- 83,757,000 Minority interest -- -- 2,387,000 Shareholders' equity: Common stock 1,000 584,000 (b) 60,620,000 Accumulated equity (deficit) 209,000 (209,000)(b) (7,735,000) ----------- --------- ------------- Total shareholders' equity 210,000 375,000 52,885,000 ----------- --------- ------------- Total liabilities and shareholders' equity $ 1,327,000 $ 375,000 $ 139,029,000 =========== ========= =============
See accompanying notes to unaudited pro forma combined financial statements. 3 ARV ASSISTED LIVING, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 1996
Historical Other Pro Forma Pro Forma ARVAL Acquisitions(1) Adjustments(5) ARVAL ------------ --------------- -------------- ------------ Revenues: Assisted living facility revenues $ 25,479,000 $ 3,615,000 $ -- $ 29,094,000 Therapy services revenue -- -- Management fees 2,822,000 -- (67,000)(d) 2,755,000 Development fees 1,500,000 -- -- 1,500,000 Interest income 1,070,000 -- (327,000)(d) 743,000 Other income 2,192,000 50,000 -- 2,242,000 ------------ ----------- ----------- ------------ Total revenue 33,063,000 3,665,000 (394,000) 36,334,000 Expenses Assisted living facility operating expenses 16,395,000 2,529,000 -- 18,924,000 Assisted living facility lease expenses 6,644,000 -- 6,644,000 Therapy services operating expenses -- -- -- -- General and administrative 7,644,000 -- 7,644,000 Depreciation and amortization 1,031,000 304,000 -- 1,335,000 Discontinued project costs and accounts receivable written-off 395,000 -- -- 395,000 Interest 1,544,000 46,000 -- 1,590,000 ------------ ----------- ----------- ------------ Total expenses 33,653,000 2,879,000 -- 36,532,000 ------------ ----------- ----------- ------------ Income (loss) before income tax expense (590,000) 786,000 (394,000) (198,000) Income tax expense 375,000 267,000 (134,000)(e) 508,000 ------------ ----------- ----------- ------------ Net income (loss) (965,000) 519,000 (260,000) (706,000) ============ =========== =========== ============ Preferred dividends declared $ 351,000 $ 351,000 ------------ ------------ Net loss available for common shares $ (1,316,000) $ (1,057,000) ============ ============ Net loss per common share $ (0.21) $ (0.17) ============ ============ Weighted average common shares outstanding 6,246,000 6,246,000 ============ ============
SynCare, Inc Pro Forma Pro Forma Acquisition(2) Adjustments(6) Combined -------------- -------------- ------------ Revenues: Assisted living facility revenues $ -- $ -- $ 29,094,000 Therapy services revenue 4,766,000 680,000(c) 5,446,000 Management fees -- -- 2,755,000 Development fees -- -- 1,500,000 Interest income -- -- 743,000 Other income 8,000 -- 2,250,000 ---------- --------- ------------ Total revenue 4,774,000 680,000 41,788,000 Expenses Assisted living facility operating expenses 3,122,000 -- 22,046,000 Assisted living facility lease expenses -- -- 6,644,000 Therapy services operating expenses 1,537,000 1,537,000 General and administrative -- -- 7,644,000 Depreciation and amortization 24,000 16,000(d) 1,375,000 Discontinued project costs and accounts receivable written-off -- -- 395,000 Interest 40,000 -- 1,630,000 ---------- --------- ------------ Total expenses 4,723,000 16,000 41,271,000 ---------- --------- ------------ Income (loss) before income tax expense 51,000 664,000 517,000 Income tax expense 41,000 226,000(e) 775,000 ---------- --------- ------------ Net income (loss) 10,000 438,000 (258,000) ========== ========= ============ Preferred dividends declared $ 351,000 ------------ Net loss available for common shares $ (609,000) ============ Net loss per common share $ (0.10) ============= Weighted average common shares outstanding 42,573(f) 6,288,573 ========= =============
See accompanying notes to unaudited pro forma combined financial statements. 4 ARV ASSISTED LIVING, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1996
Historical Other Pro Forma Pro Forma ARVAL Acquisitions(1) Adjustments(5) ARVAL ----------- --------------- -------------- ----------- Revenue: Assisted living facility revenues $13,446,000 $938,000 $ -- $14,384,000 Therapy services revenue -- -- -- -- Management fees 612,000 -- (16,000)(d) 596,000 Development fees 333,000 -- -- 333,000 Interest Income 817,000 -- (69,000)(d) 748,000 Other income 137,000 5,000 -- 142,000 ----------- -------- -------- ----------- Total revenue 15,345,000 943,000 (85,000) 16,203,000 Expenses Assisted living facility operating expenses 8,462,000 657,000 -- 9,119,000 Assisted living facility lease expenses 2,747,000 -- -- 2,747,000 Therapy services operating expenses -- -- -- -- General and administrative 1,606,000 -- -- 1,606,000 Depreciation and amortization 667,000 77,000 -- 744,000 Discontinued project costs and accounts receivable written-off 61,000 -- -- 61,000 Interest 1,401,000 10,000 -- 1,411,000 ----------- -------- -------- ----------- Total expenses 14,944,000 744,000 -- 15,688,000 ----------- -------- -------- ----------- Income (loss) before income tax expense 401,000 199,000 (85,000) 515,000 Income tax expense (benefit) 150,000 68,000 (29,000)(e) 189,000 ----------- -------- -------- ----------- Net income (loss) $ 251,000 $131,000 $(56,000) $ 326,000 =========== ======== ======== =========== Net income available for common shares $ 251,000 $ 326,000 =========== =========== Net income per common share $ 0.03 $ 0.04 =========== =========== Weighted average common shares outstanding 8,805,000 8,805,000 =========== ===========
SynCare, Inc. Pro Forma Pro Forma Acquisition(2) Adjustments(6) Combined -------------- -------------- ----------- Revenue: Assisted living facility revenues -- $ -- $14,384,000 Therapy services revenue $1,247,000 170,000(c) 1,417,000 Management fees -- -- 596,000 Development fees -- -- 333,000 Interest Income -- -- 748,000 Other income -- -- 142,000 ---------- -------- ----------- Total revenue 1,247,000 170,000 17,620,000 Expenses Assisted living facility operating expenses -- -- 9,119,000 Assisted living facility lease expenses -- -- 2,747,000 Therapy services operating expenses 1,062,000 -- 1,062,000 General and administrative 344,000 -- 1,950,000 Depreciation and amortization 6,000 4,000(d) 754,000 Discontinued project costs and accounts receivable written-off -- -- 61,000 Interest 25,000 -- 1,436,000 ---------- -------- ----------- Total expenses 1,437,000 4,000 17,129,000 ---------- -------- ----------- Income (loss) before income tax expense (190,000) 166,000 491,000 Income tax expense (benefit) (65,000) 50,000(e) 174,000 ---------- -------- ----------- Net income (loss) $ (125,000) $116,000 $317,000 ========== ======== =========== Net income available for common shares $317,000 =========== Net income per common share $0.04 =========== Weighted average common shares outstanding 42,573(f) 8,847,573 ======== ===========
See accompanying notes to unaudited pro forma combined financial statements. 5 ARV ASSISTED LIVING, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (1) As of June 30, 1996, the Company has acquired 2 assisted living facilities and increased ownership in ARVP II since March 31, 1996, through direct purchases for its own account, or purchases of controlling partnership interests. (2) On August 19, 1996 the Company acquired SynCare in a stock for stock merger. Pursuant to the terms of the purchase agreement, the ARVI stock issued as consideration for SynCare was valued at $13.75 per share, ARVI's closing price on August 19, 1996. The purchase price was $1,171,000. At the close of October 7, 1996 ARVI issued 85,146 new shares to the founders of SynCare, 50% of which are subject to a three year earn-out. (3) The Unaudited Pro Forma Combined Balance Sheet at June 30, 1996 presents the historical balance sheet of the Company as of June 30, 1996, the pro forma balance sheet of the Company as if the acquisitions described in note (1) above, had been completed as of June 30, 1996, and the pro forma balance sheet of the Company after giving effect to the acquisition described in note (2) above as if the event had also occurred on June 30, 1996. (4) The Unaudited Pro Forma Combined Statement of Operations for the year ended March 31, 1996 and the three months ended June 30, 1996 present the historical operations of the Company, the pro forma operations of the Company as if the acquisitions described in note (1) above had occurred at the beginning of each period, and the pro forma combined operations of the Company as if the acquisition described in note (2) had occurred at the beginning of each period. (5) Pro forma adjustments related to acquisitions described in note (1) above are as follows: a) To reflect the use of cash for the purchase of the limited partnership interests described in note (1) above b) To eliminate amounts owed to/from entities acquired c) To record the assets and liabilities acquired in connection with the purchase of the majority partnership interest at fair value, minority interest and the elimination of the partners' equity in the limited partnerships referenced in note (1) and note (2) above d) To eliminate management fees and interest income from entities acquired e) To reflect the pro forma change in income tax expense (benefit). (6) Pro forma adjustments for the acquisition described in note (2) above are as follows: a) To record the goodwill in connection with the purchase b) To record the stock issued in connection with the purchase c) To reflect the additional revenue related to additional cost reimbursement d) To reflect the new amortization expense e) To reflect the pro forma change in income tax expense (benefit). f) To reflect additional shares issued in conjunction with the acquisition, net of the shares subject to a three year earn-out agreement. -----END PRIVACY-ENHANCED MESSAGE-----