UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
(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
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrantx
Filed by a Party other than the Registranto
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
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.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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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. | |
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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.
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.
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.
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 | |||||||||||