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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): May 4, 1998
Commission file number 0-26980
ARV ASSISTED LIVING, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 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 OFFICE) (ZIP CODE)
REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 751-7400
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of business acquired.
The audited financial statements of Golden Creek Inn, Hillcrest Inn,
Berkshire, Encino Hills Terrace, Willow Glen Villa and Hillsdale Manor
Retirement and Convalescent Home (collectively the "Assisted Living
Group"), as of March 31, 1998, required by this item are attached.
(b) Pro forma financial information
The Unaudited Pro Forma Condensed Financial Statements are presented which
reflect the acquisition of certain assets of the Assisted Living Group by
ARV Assisted Living ("ARV" or the "Registrant"). The Unaudited Pro Forma
Condensed Financial Statements are provided for informational purposes only
and are not necessarily indicative of the results that actually would have
occurred had the acquisition been in effect for the periods presented.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet is based on
the historical balance sheet as of March 31, 1998 and is presented as if
the acquisition had been consummated at that date. The Unaudited Pro Forma
Condensed Consolidated Statements of Operations is based on the historical
statements of operations of each of the Assisted Living Group and the
Registrant for the nine-months ended December 31, 1997 and the three-months
ended March 31, 1998, and reflects certain adjustments to give effect to
the acquisition as if it had occurred on April 1, 1997.
Pro forma adjustments are based on the purchase method of accounting and a
preliminary allocation of the purchase price. However, changes to the
adjustments included in the Unaudited Pro Forma Consolidated Financial
Statements are expected as evaluations of assets are completed and
additional information becomes available. Accordingly, the final allocation
values will differ from the amounts used to calculate the adjustments in
the Unaudited Pro Forma Condensed Consolidated Statement of Operations.
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ARV Assisted Living Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(Amounts in thousands)
AS REPORTED PRO FORMA PRO FORMA
MARCH 31, 1998 ADJUSTMENTS MARCH 31, 1998
-------------- ----------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 77,126 $ (40,975)(B) $ 36,151
Restricted cash 14,000 (14,000)(B) --
Fees receivable and other amounts due from affiliates 988 -- 988
Prepaids and other assets 4,137 -- 4,137
--------- --------- ---------
Total current assets 96,251 (54,975) 41,276
--------- --------- ---------
Property, furniture and equipment 118,896 50,200 (A) 169,096
Other non-current assets 7,227 20,025 (C) 27,252
Net non-current assets from discontinued operations 1,016 -- 1,016
--------- --------- ---------
127,139 70,225 197,364
--------- --------- ---------
$ 223,390 $ 15,250 $ 238,640
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,667 $ -- $ 7,667
Accrued liabilities 2,766 -- 2,766
Notes payable, current portion 10,174 88 (D) 10,262
Accrued interest payable 511 -- 511
Net current liabilities from discontinued operations 4,412 -- 4,412
--------- --------- ---------
Total current liabilities 25,530 88 25,618
Other non-current liabilities 1,099 -- 1,099
Notes payable, less current portion 80,633 15,162 (D) 95,795
--------- --------- ---------
Total liabilities 107,262 15,250 122,512
--------- --------- ---------
Minority interest in majority owned entities 7,548 -- 7,548
--------- --------- ---------
Shareholders' equity:
Common stock 143,104 -- 143,104
Accumulated equity (deficit) (34,524) -- (34,524)
--------- --------- ---------
Total shareholders' equity 108,580 -- 108,580
--------- --------- ---------
$ 223,390 $ 15,250 $ 238,640
========= ========= =========
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
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ARV Assisted Living Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
ARV ASSISTED THE ASSISTED ARV ASSISTED
LIVING, INC. LIVING GROUP LIVING, INC.
AS REPORTED FOR THE PRO FORMA
THREE MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED PRO FORMA ENDED
MARCH 31, 1998 MARCH 31, 1998 ADJUSTMENTS MARCH 31, 1998
-------------- -------------- ----------- --------------
REVENUE:
Assisted living community revenue $ 27,138 $ 5,215 $ 121 (A) $ 32,474
Management fees from affiliates 189 -- -- 189
-------- -------- -------- --------
Total revenue 27,327 5,215 121 32,663
EXPENSES
Assisted living community operating expenses 16,670 3,429 8 (B) 20,107
Assisted living community lease expenses 5,635 1,209 (149)(C) 6,695
General and administrative 5,874 -- -- 5,874
Depreciation and amortization 1,815 280 335 (D) 2,430
-------- -------- -------- --------
Total expenses 29,994 4,918 194 35,106
-------- -------- -------- --------
Income (loss) from operations (2,667) 297 (73) (2,443)
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest income 1,256 -- -- 1,256
Other income, net 71 -- -- 71
Interest expense (1,284) (299) -- (E) (1,583)
-------- -------- -------- --------
Total other income (expense) 43 (299) -- (256)
-------- -------- -------- --------
Loss from operations before income taxes (2,624) (2) (73) (2,699)
Income tax expense 5 -- -- 5
-------- -------- -------- --------
Loss from operations before minority interest in
income of majority owned entities (2,629) (2) (73) (2,704)
Minority interest in income of majority owned entities 385 -- -- 385
-------- -------- -------- --------
Net loss $ (3,014) $ (2) $ (73) $ (3,089)
======== ======== ======== ========
Net loss per common share $ (0.19) $ (0.19)
======== ========
Weighted average common shares outstanding 15,855 15,855
======== ========
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
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ARV Assisted Living Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
ARV ASSISTED THE ASSISTED ARV ASSISTED
LIVING, INC. LIVING GROUP LIVING, INC.
AS REPORTED FOR THE PRO FORMA
NINE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED PRO FORMA ENDED
DECEMBER 31, 1997 DECEMBER 31, 1997 ADJUSTMENTS DECEMBER 31, 1997
----------------- ----------------- ----------- -----------------
REVENUE:
Assisted living community revenue $ 76,887 $ 10,781 $ 5,292 (A) $ 92,960
Management fees from affiliates 388 -- -- 388
--------- --------- --------- ---------
Total revenue 77,275 10,781 5,292 93,348
EXPENSES
Assisted living community operating expenses 51,247 7,036 3,303 (B) 61,586
Assisted living community lease expenses 15,773 3,320 (219)(C) 18,874
General and administrative 15,759 -- -- 15,759
Depreciation and amortization 4,896 375 1,470 (D) 6,741
--------- --------- --------- ---------
Total expenses 87,675 10,731 4,554 102,960
--------- --------- --------- ---------
Income (loss) from operations (10,400) 50 738 (9,612)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income 1,821 -- -- 1,821
Other income, net 321 -- -- 321
Gain on sale of LLC interests 5,511 -- -- 5,511
Interest expense (4,568) (350) (583)(E) (5,501)
--------- --------- --------- ---------
Total other income (expense) 3,085 (350) (583) 2,152
--------- --------- --------- ---------
Loss from continuing operations before income taxes (7,315) (300) 155 (7,460)
Income tax expense 484 -- -- 484
--------- --------- --------- ---------
Loss from continuing operations before minority
interest income of majority owned entities (7,799) (300) 155 (7,944)
Minority interest in income of majority owned entities 773 -- -- 773
--------- --------- --------- ---------
Loss from continuing operations $ (8,572) $ (300) $ 155 $ (8,717)
========= ========= ========= =========
Loss per share from continuing operations $ (0.77) $ (0.78)
========= =========
Weighted average common shares outstanding 11,171 11,171
========= =========
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
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ARV Assisted Living Inc. and Subsidiaries
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
NOTE 1: Unaudited Pro Forma Balance Sheet Adjustments
(A) To record the property, furniture and equipment acquired at
their estimated fair value. The property, furniture and
equipment will be depreciated over five to 35 years.
(B) To record the cash paid to acquire the property, furniture and
equipment.
(C) To record the goodwill related to the assets acquired. The
goodwill will be amortized over assumed lives of the related
properties ranging from 13.5 to 35 years.
(D) To record the assumption of the current and long-term portions
of the long-term debt, related to the property, furniture and
equipment acquired.
NOTE 2: Unaudited Pro Forma Statement of Operations Adjustments
(A) To record the revenues for all communities as if they had been
owned by the Assisted Living Group as of April 1, 1997.
(B) To record the elimination of management fees paid to the
Hillsdale Group. LP. ARV will not pay management fees in
connection with the operation of these communities.
To record an estimated increase in property taxes related to
higher property tax basis for the assets acquired.
To record the assisted living community operating expenses for
all communities as if they had been owned by the Assisted
Living Group as of April 1, 1997.
(C) To record the elimination of lease expense for a community
leased by the Assisted Living Group, which ARV has acquired in
fee and to record the effects of an amendment to one
community's lease agreement.
(D) To record the depreciation and amortization expense associated
with the goodwill and increased book value of the assets
acquired.
To record the depreciation and amortization expenses for all
communities as if they had been owned by the Assisted Living
Group as of April 1, 1997.
(E) To record additional interest expenses on debt related to
acquisitions made by the Assisted Living Group during the
nine-month period ended December 31, 1997 as if these
acquisitions took place as of April 1, 1997.
(c) Exhibits
Number Exhibit
10.1 Purchase and Sale Agreement by and between
270 Center Associates, Limited Partnership
and ARV Assisted Living, Inc. dated as of
February 12, 1998, incorporated by reference
to Exhibit 10.1 to the Company's 8-K filed
with the Securities and Exchange Commission
on May 11, 1998.
10.2 Amendment to Purchase and Sale Agreement by
and between 270 Center Associated, Limited
Partnership and ARV Assisted Living, Inc.
dated as of March 2, 1998, incorporated by
reference to Exhibit 10.2 to the Company's
8-K filed with the Securities and Exchange
Commission on May 11, 1998.
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10.3 Second Amendment to Purchase and Sale
Agreement by and between 270 Center
Associated, Limited Partnership and ARV
Assisted Living, Inc. dated as of April 10,
1998, incorporated by reference to Exhibit
10.3 to the Company's 8-K filed with the
Securities and Exchange Commission on May 11,
1998.
10.4 Purchase and Sale Agreement by and between
TH Group, Inc. and ARV Assisted Living, Inc.
dated as of February 12, 1998, incorporated
by reference to Exhibit 10.4 to the
Company's 8-K filed with the Securities and
Exchange Commission on May 11, 1998.
10.5 Amendment to Purchase and Sale Agreement by
and between TH Group, Inc. and ARV Assisted
Living, Inc. dated as of March 2, 1998,
incorporated by reference to Exhibit 10.5 to
the Company's 8-K filed with the Securities
and Exchange Commission on May 11, 1998.
10.6 Second Amendment to Purchase and Sale
Agreement by and between TH Group, Inc. and
ARV Assisted Living, Inc. dated as of April
10, 1998, incorporated by reference to
Exhibit 10.6 to the Company's 8-K filed with
the Securities and Exchange Commission on
May 11, 1998.
10.7 Purchase and Sale Agreement by and between
The Hillsdale Group, LP and ARV Assisted
Living, Inc. dated as of February 12, 1998,
incorporated by reference to Exhibit 10.7 to
the Company's 8-K filed with the Securities
and Exchange Commission on May 11, 1998.
10.8 Amendment to Purchase and Sale Agreement by
and between The Hillsdale Group, LP and ARV
Assisted Living, Inc. dated as of March 2,
1998, incorporated by reference to Exhibit
10.8 to the Company's 8-K filed with the
Securities and Exchange Commission on May
11, 1998.
10.9 Second Amendment to Purchase and Sale
Agreement by and between The Hillsdale
Group, LP and ARV Assisted Living, Inc.
dated as of April 6, 1998, incorporated by
reference to Exhibit 10.9 to the Company's
8-K filed with the Securities and Exchange
Commission on May 11, 1998.
10.10 Letter Re: Assignment of right to take title
of Encino Hills Terrace dated June 30, 1998,
incorporated by reference to Exhibit 10.10
to the Company's 8-K filed with the
Securities and Exchange Commission on July
17, 1998.
99.1 The Assisted Living Group Audited Financial
Statements for the Year Ended March 31, 1998.
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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/ Graham Espley-Jones
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Graham Espley-Jones
Executive Vice President and Chief Financial Officer
(Duly authorized officer)
Date: July 20, 1998