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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 1-13498
ASSISTED LIVING CONCEPTS INC.
(Exact name of registrant as specified in its charter)
NEVADA 93-1148702
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9955 S.E. WASHINGTON, SUITE 300
PORTLAND, OR 97216
(503) 252-6233
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, PAR VALUE $.01 AMERICAN STOCK EXCHANGE
7% CONVERTIBLE SUBORDINATED DEBENTURES DUE AUGUST 2005 AMERICAN STOCK EXCHANGE
6% CONVERTIBLE SUBORDINATED DEBENTURES DUE NOVEMBER 2002 AMERICAN STOCK EXCHANGE
Securities Registered Pursuant to Section 12(g) of the Act:
Indicate by check mark whether the registrant (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) have been subject to such
filing requirements for at least the past 90 days. YES [X] NO [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: [ ]
As of February 28, 1998, 15,683,864 shares of the registrant's Common Stock, par
- -----------------------------------
value $.01 per share, were outstanding. The aggregate market value of the
voting stock held by non-affiliates of the registrant on such date was
approximately $292,111,967.
------------
Part III incorporates by reference the Company's definitive proxy statement
for the Annual Meeting of Stockholders to be held on May 20, 1998
EXPLANATORY NOTE
This Amendment No. 1 to the Annual Report on Form 10-K for Assisted
Living Concepts, Inc. (the "Company") for the fiscal year ended December 31,
1997 is being filed to amend Items 5 and 7 and Exhibit 12.1. The indicated
items/exhibits are being amended to correct typographical errors. In addition,
Exhibit 27.1 is being filed to provide restated financial information for the
year ended December 31, 1995, reflecting the adoption of Statement of Financial
Accounting Standards No. 128.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock, par value $0.01 (the "Common Stock"), is listed
and traded on the American Stock Exchange ("AMEX") under the symbol "ALF." The
following table sets forth the high and low closing sales prices of the Common
Stock, as reported by the AMEX, for the periods indicated.
1996 1997
HIGH LOW HIGH LOW
----------- ----------- ---------- ----------
Years ended December 31:
1st Quarter $10.06 $6.63 $10.68 $ 7.13
2nd Quarter 11.13 8.88 14.50 9.88
3rd Quarter 10.25 8.25 19.75 13.25
4th Quarter 9.94 7.19 22.38 15.75
As of February 27, 1998, the Company had approximately 81 holders of record of
Common Stock. The Company is unable to estimate the number of additional
stockholders whose shares are held for them in street name or nominee accounts.
The Company's current policy is to retain any earnings to finance the
operations and expansion of the Company's business. In addition, certain
outstanding indebtedness and certain lease agreements restrict the payment of
cash dividends. It is anticipated that the terms of future debt financing may
do so as well. Therefore, the payment of any cash dividends on the Common Stock
is unlikely in the foreseeable future.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company operates, owns, leases and develops free-standing assisted living
residences, primarily in small middle-market rural and suburban communities with
a population typically ranging from 10,000 to 40,000. Currently the Company has
operations in 13 states. The Company also provides personal care and support
services, and makes available routine nursing services (as permitted by
applicable regulations) designed to meet the personal and health care needs of
its residents.
The Company has experienced significant growth since the completion of its
initial public offering in November 1994, growing from a base of five residences
(137 units) primarily through the development of assisted living residences. As
of February 28, 1998, the Company owned or leased a total of 139 residences
(5,235 units). Of these the Company owned 71 residences (2,727 units) and
leased 68 residences (2,508 units).
The Company derives its revenues primarily from resident fees for the delivery
of assisted living services. Resident fees typically are paid monthly by
residents, their families, state Medicaid agencies or other responsible parties.
Resident fees include revenue derived from a multi-tiered rate structure which
varies based on the level of care required. Resident fees are recognized as
revenues when services are provided. Operating expenses include (i) residence
operating expenses, such as staff payroll, food, property taxes, utilities,
insurance and other direct residence operating expenses, (ii) general and
administrative expenses consisting of corporate and support function such as
legal, accounting and other administrative expenses, (iii) building rentals and
(iv) depreciation and amortization.
As of December 31, 1997, the Company was operating or had received a
Certificate of Occupancy on 130 residences (4,888 units) of which 105 residences
(3,875 units) had operating results.
Operating results for the year ended December 31, 1997, including the
operating results of 105 residences (3,875 units) and the Company's corporate
overhead, are not necessarily indicative of the Company's future operating
financial performance as the Company intends to significantly expand its
operating base of residences in 1998 and 1999. Based on the Company's
development schedule, the number of residences planned to open in 1998 ranges
from 60 to 70. The Company anticipates that each residence will have an
operating loss (prior to depreciation, rent or interest, if any) of $20,000
during the first four months of operation. To the extent the Company sells and
leases back or otherwise finances a residence, the aggregate loss for the first
four months of operation may increase up to $100,000. The Company estimates the
aggregate losses to be incurred during 1998 due to the opening of buildings will
range from $1.0 million to $3.2 million.
The estimated cost to complete construction and fund start up losses for the
new residences that are currently planned to be developed during the 12 months
ended December 31, 1998 is between $160 million and $190 million. The Company
anticipates that it will use a combination of the proceeds received from the
common stock offering and convertible debentures completed in October of 1997,
construction lines of credit, sale and leaseback transactions and cash generated
from operations to fund this development activity. The total capitalized cost to
develop, construct and open a new residence, including land acquisition and
construction costs currently ranges from approximately $1.6 million to $3.5
million. These costs vary considerably based on a variety of site-specific
factors. See "Liquidity and Capital Resources" and "Risk Factors - Need for
Additional Financing to Fund Future Development and Acquisitions; Leverage."
In April 1997, in order to mitigate the impact of start-up losses associated
with the opening of newly constructed residences, the Company entered into a
joint venture agreement with a third-party investor to operate certain new
assisted living residences owned and developed by the Company. Pursuant to the
joint venture agreement, the Company has acquired a 10% interest for $300,000
and the joint venture partner has acquired a 90% interest for $2.0 million in
the joint venture. The joint venture concurrently entered into a non-cancelable
management agreement with the Company pursuant to which the Company manages the
properties operated by the joint venture for an amount equal to the greater of
8% of gross revenues or $2,000 per month per property. As of December 31, 1997,
17 residences owned or leased by the Company were being operated by the joint
venture. The revenues and expenses of the joint venture are consolidated with
those of the Company. In addition, the Company recognizes 10% of the losses or
profits, if any, of the joint venture, net of management fees paid to the
Company. The Company may seek to acquire the joint venture partner's 90%
interest in the future, but currently has no contractual right to purchase such
interest. While the use of such joint venture agreements is intended to mitigate
the impact on the Company of start-up losses associated with the opening of new
residences the Company may, to the extent it does not acquire the partner's
interest, forgo a portion of future operating profits, if any, from the
residences operated by the joint venture. The Company expects it will, from time
to time, enter into up to five to ten additional partnering arrangements per
quarter, which may be similar to the current structure, for some of its future
development projects. There can be no assurance that the Company will be able to
enter into any such future arrangements or, if entered into, that such
arrangements will achieve the desired results.
The following table sets forth, for periods presented, the number of total
residences and units operated, average occupancy rates and the sources of
revenue for the Company. The portion of revenues received from state Medicaid
agencies are labeled as "Medicaid state portion" while the portion of the
Company's revenues that a Medicaid-eligible resident must pay out of his or her
own resources is labeled "Medicaid resident portion".
Year ended December 31,
Total Residences 1995 1996 1997
- ---------------------------------------------------------------- ---------------- ---------------- ----------------
Residences operated (end of period) 19 51 105
Units operated (end of period) 595 1,768 3,875
Average occupancy rate 82.3% 80.4% 74.4%
Sources of revenue
Medicaid state portion 21.4% 13.8% 11.3%
Medicaid resident portion 9.6% 7.6% 6.0%
Private 69.0% 78.6% 82.7%
---------------- ---------------- ----------------
Total 100.0% 100.0% 100.0%
================ ================ ================
The following table sets forth, for the periods presented for Stabilized
Residences, the total number of residences and units operated, average occupancy
rates and the sources of revenue for the Company. Stabilized Residences are
defined as those residences which were operating for more than twelve months
prior to the beginning of the period or had achieved a 95% occupancy rate as of
the beginning of the reporting period.
Year ended December 31,
Stabilized Residences 1995 1996 1997
- ---------------------------------------------------------------- ---------------- ---------------- ----------------
Residences operated (end of period) 5 7 27
Units operated (end of period) 137 204 905
Average occupancy rate 99.1% 96.5% 95.8%
Sources of revenue:
Medicaid state portion 23.9% 19.9% 13.1%
Medicaid resident portion 11.3% 11.5% 7.5%
Private 64.8% 68.6% 79.4%
---------------- ---------------- ----------------
Total 100.0% 100.0% 100.0%
================ ================ ================
The following table sets forth, for the periods presented for Start-up
Residences, the total number of residences and units operated, average occupancy
rates and the sources of revenue for the Company. Start-up Residences are
defined as those residences which were operating for less than twelve months
prior to the beginning of the period or had not achieved a 95% occupancy rate
as of the beginning of the reporting period.
Year ended December 31,
Start-up Residences 1995 1996 1997
- ---------------------------------------------------------------- ---------------- ---------------- ----------------
Residences operated (end of period) 14 44 78
Units operated (end of period) 458 1,564 2,970
Average occupancy rate 77.3% 76.9% 66.0%
Sources of revenue:
Medicaid state portion 16.4% 11.2% 10.6%
Medicaid resident portion 6.3% 6.0% 5.3%
Private 77.3% 82.8% 84.1%
---------------- ---------------- ----------------
Total 100.0% 100.0% 100.0%
================ ================ ================
The following table sets forth, for the periods presented for Same Store
Residences, the total number of residences and units operated, average occupancy
rates and the sources of revenue for the Company. Same Store Residences are
defined as those residences which were operating throughout comparable periods.
Year ended December 31,
Same Store Residences 1995 1996 1997
- ---------------------------------------------------------------- ---------------- ---------------- ----------------
Residences operated (end of period) 5 19 51
Units operated (end of period) 137 595 1,768
Average occupancy rate 99.1% 82.3% 80.4%
Sources of revenue:
Medicaid state portion 23.9% 21.4% 13.8%
Medicaid resident portion 11.3% 9.6% 7.6%
Private 64.8% 69.0% 78.6%
---------------- ---------------- ----------------
Total 100.0% 100.0% 100.0%
================ ================ ================
The following tables relating to Stabilized Residences, Start-up Residences
and Same Store Residences exclude the effects of corporate level expenses,
including general and administrative expenses and corporate level interest
expense. In addition, the following tables exclude the effect of the
capitalization of corporate and property level interest expense.
The following table sets forth, for the periods presented, the results of
operations for Stabilized Residences (in thousands).
Year ended December 31,
Stabilized Residences 1995 1996 1997
- ---------------------------------------------------------------- ---------------- ---------------- ----------------
Revenue $2,699 $4,084 $18,453
Residence operating expenses 1,667 2,412 10,437
---------------- ---------------- ----------------
Residence operating income 1,032 1,672 8,016
Building rentals 500 780 3,517
Depreciation and amortization 116 120 543
---------------- ---------------- ----------------
Total other operating expenses 616 900 4,060
---------------- ---------------- ----------------
Operating income 416 772 3,956
Other interest expense, net 147 217 1,107
---------------- ---------------- ----------------
Income before taxes $ 269 $ 555 $ 2,849
================ ================ ================
The following tables sets forth, for the periods presented, the results of
operations for Start-up Residences (in thousands).
Year ended December 31,
Start-up Residences 1995 1996 1997
- ---------------------------------------------------------------- ---------------- ---------------- ----------------
Revenue $ 1,368 $14,865 $29,024
Residence operating expenses 1,112 9,704 19,017
---------------- ---------------- ----------------
Residence operating income 256 5,161 10,007
Building rentals 298 3,372 6,277
Depreciation and amortization 180 809 2,256
---------------- ---------------- ----------------
Total other operating expenses 478 4,181 8,533
---------------- ---------------- ----------------
Operating income (loss) (222) 980 1,474
Other interest expense, net 4 603 1,525
---------------- ---------------- ----------------
Income (loss) before taxes $ (226) $ 377 $ (51)
================ ================ ================
The following table sets forth, for the periods presented, the results of
operations for the 19 residences which were operating for both periods in their
entirety (in thousands).
Year ended December 31,
Same Store Residences 1996 1997
- ---------------------------------------------------------------- ---------------- ----------------
Revenue $10,877 $12,397
Residence operating expenses 6,565 7,056
---------------- ----------------
Residence operating income 4,312 5,341
Building rentals 2,170 2,270
Depreciation and amortization 473 449
---------------- ----------------
Total other operating expenses 2,643 2,719
---------------- ----------------
Operating income 1,669 2,622
Other expense, net 722 782
---------------- ----------------
Income before taxes $ 947 $ 1,840
================ ================
RESULTS OF OPERATIONS
Year ended December 31, 1997 to year ended December 31, 1996
The Company had net income of $4.2 million or $.34 per diluted share, on
revenue of $48.7 million for the year ended December 31, 1997, compared to net
income of $149,000 or $.01 per diluted share, on revenues of $18.9 million for
the year ended December 31, 1996.
Revenue. For the year ended December 31, 1997, revenues were $48.7 million as
compared to $18.9 million for the year ended December 31, 1996, an increase of
$29.8 million. Of this increase, $15.1 million or 50.7% related to the opening
of an additional 54 operating residences (2,107 units) since December 31, 1996.
The remaining $14.7 million or 49.3% of the increase was attributable to the 51
residences that had operating results as of December 31, 1997. For the year
ended December 31, 1997, revenues for the 19 Same Store Residences were $12.4
million as compared to $10.9 million for the year ended December 31, 1996, an
increase of $1.5 million or 13.8%. This increase for the 19 Same Store
Residences was primarily attributable to increases in average monthly rents to
$1,772 from $1,670 during 1997. Of the $48.7 million in revenues reported
for the year ended December 31, 1997, $18.5 million or 38.0% was attributable to
Stabilized Residences, $29.0 million or 59.6% was attributable to Start-up
Residences and the remaining $1.2 million was mainly due to the ancillary
revenues in connection with the acquisition of HCI.
General Operating Expenses. For the year ended December 31, 1997, general
operating expenses were $30.3 million as compared to $12.1 million for the year
ended December 31, 1996, an increase of $18.2 million. Of this increase, $10.5
million or 57.7% related to the opening of an additional 54 operating residences
(2,107 units) since December 31, 1996. The remaining $7.7 million or 42.3% of
the increase was attributable to the 51 residences that had operating results as
of December 31, 1997. For the year ended December 31, 1997, residence operating
expenses for the 19 Same Store Residences were $7.1 million as compared to $6.6
million for the year ended December 31, 1996, an increase of $500,000 on these
19 residences. This increase is due to the increase in staffing and food costs
to accommodate the increase in occupancy. Occupancy at these 19 residences
increased to 96.1% from 89.8% during the period. Of the $30.3 million in
residence operation expenses reported for the year ended December 31, 1997,
$10.4 million or 34.3% was attributable to Stabilized Residences, $19.0 million
or 62.7% was attributable to Start-Up Residences and approximately $900,000 was
attributable to the ancillary services provided by HCI.
Corporate General and Administrative. Corporate general and administrative
expenses for the year ended December 31, 1997 were $2.8 million compared to $1.6
million for 1996. This increase is a direct result of additional staffing to
cover the increase in corporate activity, travel associated with new residences
located in other states, and the establishment and on-going expenses of the
regional offices.
Building Rentals. Building rentals for the year ended December 31, 1997 were
$9.8 million, compared to the year ended December 31, 1996 of $4.2 million which
represents an increase of 133%. The increase in building rentals is directly
related to the 36 operating leases entered into during 1997, of which 30 were
sale lease back transactions. The Company ended the year with 67 leases compared
to the 31 leases at the end of 1996.
Depreciation and Amortization. Depreciation and amortization for the year
ended December 31, 1997 was $3.0 million, compared to the depreciation for the
year ended December 31, 1996 of $990,000 which represents an increase of 303%.
This increase is the result of additional facilities developed and owned by the
Company during 1997.
Other Income, Net. Interest expense, net of capitalized interest, was
$930,000 for the year ended December 31, 1997 compared to $0 for the year ended
December 31, 1996. The Company's gross interest expenses was $8.3 million for
the year ended December 31, 1997 compared to $2.2 million for the year ended
December 31, 1996, an increase of $6.1 million. The increase in interest
expense is due to temporary construction financing to fund development activity.
Capitalized interest for the year ended December 31, 1997 was $7.4 million
compared to $2.2 million for the year ended December 31, 1996.
Interest Income was $1.6 million for the year ended December 31, 1997 compared
to $455,000 for the year ended December 31, 1996, an increase of $1.2 million.
The increase in interest income is directly related to the offerings completed
in October of 1997 from which the Company received approximately $155 million
net of offering expense of approximately $8.4 million.
Other income (expense) was $2.9 million for the year ended December 31, 1997
compared to an expense of $348,000 for the year ended December 31, 1996, an
increase of $3.2 million. Approximately $2.3 million of other income for the
year ended December 31, 1997 represents that portion of the net operating losses
of a joint venture (including management fees paid to the Company) attributable
to the Company's joint venture partner. The remaining $600,000 related to
development fees received by the Company from HCI prior to its acquisition by
the Company. The $348,000 expense for the year ended December 31, 1996 is a
combination of a one-time charge of $426,000 relating to the conversion of $6.1
million of its $20.0 million 7% Debentures and, a gain on sale of real property
of $82,000 for the year ended December 31, 1996.
Income (Loss) Before Income Taxes. Income before income taxes for the year
ended December 31, 1997 was $6.3 million compared to $149,000 for the year ended
December 31, 1996, an increase of $6.2 million. The Company's income before
income taxes has continued to increase as the number of operating residences
increases. As the Company has matured in certain of its regions and occupancy
has increased, the operating income of the residences in such regions has been
able to cover general corporate overhead plus provide additional income.
Provision for Income Taxes. The Company's provision for income taxes for the
year ended December 31, 1997 was $2.1 million compared to $0 for the year ended
December 31, 1996. The Company utilized all its operating loss carryforwards
from previous periods to offset taxes otherwise payable through 1996.
Net Income (Loss). The Company achieved net income of $4.2 million or $.34
per diluted share for the year ended December 31, 1997, compared to $149,000, or
$.01 per diluted share for the year ended December 31, 1996. This is due to the
number of residences opened in 1997 and the stabilization of those residences
opened in 1996.
Year ended December 31, 1996 to year ended December 31, 1995
The Company had net income of $149,000 or $.01 per diluted share on revenue of
$18.9 million for the year ended December 31, 1996, compared to a net loss of
$575,000 or $.10 per diluted share, on revenues of $4.1 million for the year
ended December 31, 1995. The Company incurred a one-time charge of $426,000
during 1996 for the exchange of
405,666 shares of Common Stock on $6.1 million of 7% convertible debentures. The
Company's net income prior to this one-time charge was $574,000 or $.07 per
diluted share.
Revenue. For the year ended December 31, 1996, revenues were $18.9 million as
compared to $4.1 million for the year ended December 31, 1995, an increase of
$14.8 million. Of this increase $14.7 million or 99.0% related to the opening
of an additional 32 operating residences (1,173 units) since December 31, 1995.
For the year ended December 31, 1996, revenues for the Same Store Residences
were $2.8 million as compared to $2.7 million for the year ended December 31,
1995, an increase of $154,000 or 5.8% This increase for the Same Store
Residences was primarily attributable to increases in average monthly rents to
$1,756 from $1,704 during the period. Of the $18.9 million in revenues reported
for the year ended December 31, 1996, $4.1 million or 21.7% was attributable to
Stabilized Residences and $14.8 million or 78.3% was attributable to Start-Up
Residences.
General Operating Expenses. For the year ended December 31, 1996, general
operating expenses were $12.1 million as compared to $2.8 million for the year
ended December 31, 1995, an increase of $9.3 million. Substantially all of this
increase was attributable to the addition of 32 operating residences (1,173
units) since December 31, 1995. For the year ended December 31, 1996, residence
operating expenses for the Same Store Residences were relatively unchanged at
approximately $1.6 million. Of the $12.1 million in general operating expenses
reported for the year ended December 31, 1996, $2.4 million or 19.8% was
attributable to Stabilized Residences and $9.7 million or 80.2% was attributable
to Start-Up Residences.
Corporate General and Administrative. Corporate general and administrative
expenses for the year ended December 31, 1996 was $1.6 million compared to $1.3
million for 1995. This increase is a direct result of additional staffing to
cover the increase in corporate activity, travel associated with new residences
located in other states, and the establishment and on going expenses of the
regional offices.
Building Rentals. Building rentals for the year ended December 31, 1996 was
$4.2 million, compared to $798,000 for the year ended December 31, 1995 which
represents an increase of 426%. The increase in building rentals is directly
related to the additional 22 sale leaseback transactions completed
during 1996. The Company ended the year with 31 leases compared to the
nine leases at the end of 1995.
Depreciation and Amortization. Depreciation and amortization for the year
ended December 31, 1996 was $990,000, compared to the depreciation for the year
ended December 31, 1995 of $296,000 which represents an increase of 234%. This
increase is the result of an additional 14 residences that were developed
by the Company in 1996 and were still owned as of December 31, 1996.
Other income, net. For the year ended December 31, 1996, net interest
expense was $0 compared to $96,000 for the year ended December 31, 1995. Gross
interest expense for 1996 was $2.2 million as compared to $673,000 for 1995, an
increase of $1.5 million. Of the increase, $1.4 million or 93.3% was
attributable to the full year effect of interest expense associated with the 7%
Debentures and the balance of $100,000 and 6.7% was attributable to mortgage
bond financing. The Company capitalized $2.2 million of interest expense for
1996 compare to $577,000 for the comparable period in 1995. Interest income for
the year ended December 31, 1996 was $455,000 as compared to $579,000 in 1995.
In addition, in September 1996, the Company incurred a one-time charge of
$426,000 relating to the conversion of $6.1 million of its $20.0 million 7%
Debentures.
Net Income (Loss). The Company achieved net income of $149,000 or $.01 per
diluted share for the year ended December 31, 1996, compared to a net loss of
$575,000, or $.10 per diluted share for the year ended December 31, 1995. This
is due to the number of residences opened in 1996 and the stabilization of those
residences opened in 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997, the Company had positive working capital of $41.0
million. The Company had $63.4 million in cash and cash equivalents as of
December 31, 1997, compared to $2.1 million as of December 31, 1996. The
increase is attributed primarily to the underwritten public offering of 4.1
million shares of Common Stock and $86.3 million in principal amount of
Convertible Subordinated Debentures due 2002 completed in October of 1997 which
netted the Company approximately $155 million after deducting underwriters
discounts and offering expenses.
Net cash provided by operating activities was approximately $6.9 million for
the year ended December 31, 1997. The primary source of funds was from net
income of $4.2 adjusted for noncash changes in depreciation and amortization of
$3.0 million. Other operating type items netted to a use of cash of $300,000. As
of December 31, 1997, restricted cash balances were $1.9 million.
Net cash used in investing activities totaled approximately $85.0 million for
the year ended December 31, 1997. The primary use of cash was $160.8 million
related to the development of new assisted living residences in Idaho, Oregon,
Washington, Arizona, Texas, Indiana, Ohio, New Jersey, Pennsylvania and South
Carolina. This was offset by proceeds of $74.1 million related to the sale
lease back of 30 residences. In addition, the Company completed the acquisitions
of Carriage House and HCI using $4.9 million. The Company received $6.6 million
from restricted funds that were released by the Washington Housing Finance
Commission.
Net cash provided by financing activities totaled $139.4 million during the
year ended December 31, 1997. The Company entered into an additional 19
construction financing loans which netted the Company $43.4 million. As of
December 31, 1997, the Company had repaid $63.5 million of construction
financing with $2.2 million in construction financing remaining. The Company
completed mortgage financing with Idaho Housing and Finance Association on four
Idaho Properties for $7.4 million.
Capital expenditures for 1998 are estimated to approximate $160 million to
$190 million, related primarily to the development of additional residences. As
of February 28, 1998, the Company had started construction on 26 residences
(1,006 units) in Washington, Indiana, Pennsylvania, Arizona, Ohio, Iowa,
Nebraska, New Jersey, South Carolina and Louisiana. The Company had also entered
into agreements pursuant to which it may purchase, subject to completion of due
diligence and various other conditions, 24 (959 units) undeveloped sites. The
Company intends to utilize current working capital resources to develop
additional residences. In addition, as of February 28, 1998, the Company had
outstanding $138 million in commitments from several health care REITs to
finance additional residences through sale and leaseback transactions and $50
million in mortgage financing. The Company also anticipates being able to
continue to utilize tax-exempt bond financing for approximately $28 million from
the states of Ohio, Oregon and Washington. The Company does not anticipate any
significant capital expenditures within the foreseeable future with respect to
the residences developed since 1994 and those currently operating or those
pending licensure as of February 28, 1998.
The Company expects that its cash on hand, together with cash flow from
operations and available REIT and mortgage financing, will be sufficient to
meet its operating requirements and to fund its anticipated growth for at least
the next 12 months. The Company expects to use a wide variety of financing
sources to fund its future growth, including public and private debt and equity,
conventional mortgage financing, unsecured bank financing, among other sources.
There can be no assurances that financing from such sources will be available in
the future, or if available that such financing will be available, on terms
acceptable to the Company.
As of December 31, 1997, the Company had invested excess cash balances in
short-term certificates of deposit.
INFLATION
Management believes that the Company's operations have not been materially
adversely affected by inflation. The Company expects salary and wage increases
for its skilled staff will continue to be higher than average salary and wage
increases, as is common in the health care industry. The Company expects that
it will be able to offset the effects of inflation on salaries and other
operating expenses by increases in rental and service rates, subject to
applicable restrictions with respect to services that are provided to residents
eligible for Medicaid reimbursement.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which established requirements for disclosure
of comprehensive income. The objective of SFAS No. 130 is to report all changes
in equity that result from transactions and economic events other than
transactions with owners. Comprehensive income is the total of net income and
all other non-owner changes in equity. The Company will comply with the
provisions of SFAS No. 130 in 1998.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
changes the way segment information is reported for public companies and
requires those companies to report selected segment information in interim
financial reports to stockholders. The Statement is effective for financial
statements for fiscal years beginning after December 15, 1997. The Company plans
to adopt SFAS No. 131 for the fiscal year ended December 31, 1998.
RISK FACTORS
Except for the historical information contained herein, the matters discussed
herein are forward looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. The following discussion highlights
some of these risks and others are discussed elsewhere herein or in other
documents filed by the Company with the Securities and Exchange Commission.
ANTICIPATED OPERATING LOSSES OF NEW RESIDENCES. The Company anticipates that
each residence will have an operating loss (prior to depreciation, rent or
interest, if any) of $20,000 during the first three to four months of operation.
To the extent the Company sells a residence and leases it back or otherwise
finances it, the aggregate loss may increase by up to an additional $100,000.
The Company currently plans to open 60 to 70 residences in 1998. The Company
estimates that the losses to be incurred during 1998 due to start-up residences
could range from $1.0 million to $3.2 million. The success of the Company's
future operations is directly tied to the expansion of its operational base.
There can be no assurance that the Company will not experience unforeseen
expenses, difficulties, complications and delays in connection with the
expansion of its operational base which could have a material adverse effect on
the Company's financial condition and results of operations.
In April 1997, in order to mitigate the impact of start-up losses associated
with the opening of newly constructed residences, the Company entered into a
joint venture agreement with a third-party investor to operate certain new
assisted living residences owned and developed by the Company. Pursuant to the
joint venture agreement, the Company has acquired a 10% interest for $300,000
and the joint venture partner has acquired a 90% interest for $2.0 million in
the joint venture. The joint venture concurrently entered into a non-cancelable
management agreement with the Company pursuant to which the Company will manage
the properties operated by the joint venture for an amount equal to the greater
of 8% of gross revenues or $2,000 per month per property. As of December 31,
1997, 17 residences owned or leased by the Company were being operated by the
joint venture. The revenues and expenses of the joint venture are consolidated
with those of the Company. In addition, the Company will recognize 10% of the
losses or profits, if any, of the joint venture, net of the effect of management
fees paid to the Company. The Company may seek to acquire the joint venture
partner's 90% interest in the future, but has no contractual right to purchase
such interest. While the use of such joint venture agreements is intended to
mitigate the impact on the Company of start-up losses associated the opening of
new residences or otherwise, the Company may, to the extent it does not acquire
the partner's interest, forgo a portion of future operating profits, if any,
from the residences operated by the joint venture. The Company expects it will,
from time to time, enter into additional partnering arrangements, which may be
similar to the current structure, for some of its future development projects.
There can be no assurance that the Company will be able to enter into any such
future arrangements or, if entered into, that such arrangements will achieve the
desired results.
Due to the completion of the common stock and convertible subordinated
debenture offerings in October of 1997 and the completion of the acquisitions of
Carriage House and HCI, the Company expects to retain ownership of a greater
number of its assisted living residences as well as to accelerate its
development program. Historically, the Company has relied extensively on
sale leaseback financings from REITs to finance its development efforts. The
Company also expects to make additional investments in its management
infrastructure to further support its growth strategy. While the Company
believes that the resulting effects of the recent completed offerings, the
increased focus on asset ownership, its accelerated development program and
anticipated additions to its corporate infrastructure will negatively impact its
earnings prospects over the next 12 to 18 months, it believes that these
measures will positively affect its long-term prospects.
NO ASSURANCE AS TO ABILITY TO DEVELOP OR ACQUIRE ADDITIONAL ASSISTED LIVING
RESIDENCES. The Company's prospects for growth are directly affected by its
ability to develop and, to a lesser extent, acquire additional assisted living
residences. While the Company currently plans to open 60 to 70 residences in
1998, there can be no assurance that such residences will be completed. The
success of the Company's growth strategy will also depend upon, among other
factors, the Company's ability to obtain government licenses and approvals, the
Company's ability to obtain financing and the competitive environment for
development and acquisitions. The nature of such licenses and approvals and the
timing and likelihood of obtaining them vary widely from state to state,
depending upon the residence, or its operation, and the type of services to be
provided. The successful development of additional assisted living residences
will involve a number of risks, including the possibility that the Company may
be unable to locate suitable sites at acceptable prices or may be unable to
obtain, or may experience delays in obtaining, necessary zoning, land use,
building, occupancy, and other required governmental permits and authorizations.
The Company is dependent upon these permits and authorizations to construct and
operate its residences and any delay or inability to obtain such permits could
adversely affect the results of operations. The Company may also incur
construction costs that exceed original estimates, may not complete construction
projects on schedule and may experience competition in the search for suitable
development sites. The Company relies on third-party general contractors to
construct its new assisted living facilities. There can be no assurance that
the Company will not experience difficulties in working with general contractors
and subcontractors, which could result in increased construction costs and
delays. Further, facility development is subject to a number of contingencies
over which the Company will have little control and that may adversely affect
project cost and completion time, including shortages of, or the inability to
obtain, labor or materials, the inability of the general contractor or
subcontractors to perform under their contracts, strikes, adverse weather
conditions and changes in applicable laws or regulations or in the method of
applying such laws and regulations. Accordingly, if the Company is unable to
achieve its development plans, its business, financial condition and results of
operations could be adversely affected. There can be no assurance that the
Company will be successful in developing or acquiring any particular residence,
that the Company's rapid expansion will not adversely affect its operations or
that any residence developed or acquired by the Company will be successful. The
various risks associated with the Company's development or acquisition of
assisted living residences and uncertainties regarding the profitability of such
operations could have a material adverse effect on the Company's financial
condition and results of operations.
NEED FOR ADDITIONAL FINANCING TO FUND FUTURE DEVELOPMENT AND ACQUISITIONS. To
achieve its growth objectives, the Company will need to obtain sufficient
financial resources to fund its development, construction and acquisition
activities. The estimated cost to complete and fund start-up losses for new
facilities that will be developed during 1998 is between $160 million and $190
million; accordingly, the Company's future growth will depend on its ability to
obtain additional financing on acceptable terms. The Company will, from time to
time, seek additional funding through public and/or private financing sources,
including equity and/or debt financing. If additional funds are raised by
issuing equity securities, the Company's stockholders may experience dilution.
There can be no assurance that adequate funding will be available as needed or
on terms acceptable to the Company. A lack of available funds may require the
Company to delay or eliminate all or some of its development projects and
acquisition plans.
The Company's aggregate annual fixed debt and lease payment obligations as of
February 28, 1998 totaled approximately $23 million. These fixed payment
obligations will significantly increase as the Company pursues its development
plan. Failure to meet these obligations may result in the Company being in
default of its financing agreements and, as a consequence, the Company may lose
its ability to operate any individual residence or other residences which may be
cross-defaulted. There can no assurance that the Company will generate
sufficient cash flow to meet its current or future obligations. The Company has
not historically covered its fixed charges with earnings. In addition, the
Company anticipates, there is a risk that, upon completion of construction,
permanent financing for newly developed residences may not be available or may
be available only on terms that are unfavorable or unacceptable to the Company.
GEOGRAPHIC CONCENTRATION; DEPENDENCE ON STATE MEDICAID WAIVER PROGRAMS. As
of December 31, 1997, 28.5% of the Company's properties are in Texas, 15.4% are
in Oregon, 13.1% in Ohio and 10.8% in Washington; therefore, the Company is
dependent on the economies of Texas, Oregon, Ohio and Washington and, to a
certain extent, on the continued funding of state Medicaid waiver programs.
During the year ended December 31, 1995, 1996 and 1997, direct payments received
from state Medicaid agencies accounted for approximately 21.4%, 13.8%, and
11.3%, respectively of the Company's revenue while the tenant-paid portion of
Medicaid residents accounted for approximately 9.6%, 7.6%, and 6.0%,
respectively, of the Company's revenue during these periods. The Company
expects that state Medicaid reimbursement programs will constitute a significant
source of revenue for the Company in the future. The Company intends to
continue developing and operating assisted living residences in other states.
Adverse changes in general economic factors affecting these states' respective
health care industries or in these states' laws and regulatory environment,
including Medicaid reimbursement rates, could have a material adverse effect on
the Company's financial condition and results of operations.
DEPENDENCE ON REIMBURSEMENT BY THIRD-PARTY PAYORS. A portion of the Company's
revenues will be dependent upon reimbursement from third-party payors, including
state Medicaid programs and private insurers. For the years ended December 31,
1995, 1996 and 1997, the Company received, as a percentage of total revenue,
under Medicaid programs 21.4%, 13.8%, and 11.3%, respectively. Furthermore,
there can be no assurance the Company's proportionate percentage of revenue
received from Medicaid programs will not increase. The revenues and
profitability of the Company will be affected by the continuing efforts of
governmental and private third-party payors to contain or reduce the costs of
health care by attempting to lower reimbursement rates, increasing case
management review of services and negotiating reduced contract pricing. In an
attempt to reduce the federal and certain state budget deficits, there have
been, and management expects that there will continue to be, a number of
proposals to limit Medicaid reimbursement in general. Adoption of any such
proposals at either the federal or the state level could have a material adverse
effect on the Company's business, financial condition, results of operations and
prospects.
GOVERNMENT REGULATION. Federal and state governments regulate various aspects
of the Company's business. The development and operation of assisted living
facilities and the provision of health care services are subject to federal,
state and local licensure, certification and inspection laws that regulate,
among other matters, the number of licensed beds, the provision of services,
equipment, staffing (including professional licensing), operating policies and
procedures, fire prevention measures, environmental matters, resident
characteristics, physical design and compliance with building and safety codes.
Failure to comply with these laws and regulations could result in the denial of
reimbursement, the imposition of fines, suspension or decertification from the
Medicare and Medicaid program and, in extreme cases, the revocation of a
facility's license or closure of a facility. There can be no assurance that
federal, state, or local governments will not impose additional restrictions on
the Company's activities that could materially adversely affect the Company.
State and local laws regulating the Company's operations vary significantly
from one jurisdiction to another. In certain states in which the Company is
currently developing assisted living facilities, a certificate of need or other
similar approval may be required for the acquisition or construction of new
facilities, the expansion of the number of licensed units or beds or services,
or the opening of a home health care agency or hospice. The Company could be
adversely affected by the failure or inability to obtain such approval, changes
in the standards applicable for such approval and possible delays and expenses
associated with obtaining such approval.
Federal and state fraud and abuse laws, such as "anti-kickback" laws and
"self-referral" laws, govern certain financial arrangements among health care
providers and others who may be in a position to refer or recommend patients to
such providers. Although the Company has established policies and procedures
that it believes are sufficient to ensure that its facilities will operate in
substantial compliance with applicable regulatory requirements, there can be no
assurance that such fraud and abuse laws will be interpreted in a manner
consistent with the practices of the Company.
PRICING PRESSURES. The health care services industry is currently experiencing
market-driven reforms from forces within and outside the industry that are
exerting pressure on health care and related companies to reduce health care
costs. These market-driven reforms are resulting in industry-wide consolidation
that is expected to increase the downward pressure on health care service
providers' margins, as larger buyer and supplier groups exert pricing pressure
on health care providers. The ultimate timing or effect of market-driven
reforms cannot be predicted. No assurance can be given that any such reforms
will not have a material adverse effect on the Company's business, results of
operations, financial condition and prospects.
HEALTH CARE REFORM. Health care and related services is an area of extensive
and dynamic regulatory change. Changes in the law, new interpretations of
existing laws, or changes in payment methodology, may have a dramatic effect on
the definition of permissible or impermissible activities, the relative costs
associated with doing business and the amount of reimbursement by both
government and other third-party payors and may be applied retroactively.
In addition, to the reforms enacted and considered by Congress from time to
time, state legislatures periodically consider various health care reform
proposals. Congress and state legislatures can be expected to continue to
review and assess alternative health care delivery systems and payment
methodologies and public debate of these issues can be expected to continue in
the future. The ultimate timing or effect of legislative efforts cannot be
predicted and may impact the Company in different ways. There can be no
assurances that either the states or the federal government will not impose
additional regulations upon the activities of the Company or HCI which might
adversely affect their businesses, the financial condition, results of
operations and prospects.
STAFFING AND LABOR COSTS. The Company will compete with other providers of
long-term care with respect to attracting and retaining qualified personnel.
The Company will also be dependent upon the available labor pool of low-wage
employees. A shortage of nurses and/or trained personnel may require the
Company to enhance its wage and benefits package in order to compete. No
assurance can be given that the Company's labor costs will not increase, or
that, if they do increase, they can be matched by corresponding increases in
revenues.
COMPETITION. The long-term care industry is highly competitive and the Company
expects that the assisted living business, in particular, will become more
competitive in the future. The Company will be competing with numerous other
companies providing similar long-term care alternatives, such as home health
agencies, life care at home, community-based service programs, retirement
communities and convalescent centers. The Company expects that as assisted
living receives increased attention and the number of states which include
assisted living in their Medicaid
waiver programs increases, competition will grow from new markets entrants,
including publicly and privately held companies focusing primarily on assisted
living. Nursing facilities that provide long-term care services are also a
source of competition to the Company. Moreover, in the implementation of the
Company's expansion program, the Company expects to face competition for
development and acquisitions of assisted living residences. Some of the
Company's present and potential competitors are significantly larger and have,
or may obtain, greater financial resources than those of the Company.
Consequently, there can be no assurance that the Company will not encounter
increased competition in the future which could limit its ability to attract
residents or expand its business and could have a material adverse effect on the
Company's financial condition, results of operations and prospects.
DIFFICULTIES OF MANAGING RAPID GROWTH. The Company expects that the number of
residences which it owns, leases or otherwise operates will increase
substantially as it pursues its growth strategy. This rapid growth will place
significant demands on the Company's management resources. The Company's
ability to manage its growth effectively will require it to continue to expand
its operational, financial and management information systems and to continue to
attract, train, motivate, manage and retain key employees. To the extent such
growth is attributable to acquisitions of existing facilities or businesses, the
Company's success will depend partly on its ability to integrate effectively
such facilities and businesses into the Company's management, information and
operating systems. If the Company is unable to manage its growth effectively,
its business, financial condition and results of operations could be adversely
affected.
DEPENDENCE ON SENIOR MANAGEMENT AND SKILLED PERSONNEL. The Company depends,
and will continue to depend, upon the services of Mr. McBride, its Chief
Executive Officer, Dr. Wilson, its Chief Operating Officer and President, Ms.
Marsh, its Vice President/Controller and Chief Accounting Officer, Mrs. Baldwin,
its Director of Operations, Mr. Gordon, its Vice President/Treasurer, Ms. Haile,
its Vice President/Financial Operations, Ms. Campbell, its Senior Vice
President/General Counsel and Ms. Gorshe, its Vice President/Community
Relations. The Company has entered into employment agreements with Mr. McBride
and Dr. Wilson and has obtained a $500,000 key employee insurance policy
covering Dr. Wilson's life. The Company is also dependent upon its ability to
attract and retain management personnel who will be responsible for the day-to-
day operations of each residence. The loss of the services of any or all of such
officers or the Company's inability to attract additional management personnel
in the future could have a material adverse effect on the Company's financial
condition or results of operations.
LIABILITY AND INSURANCE. The provision of health care services entails an
inherent risk of liability. In recent years, participants in the long-term care
industry have become subject to an increasing number of lawsuits alleging
malpractice or related legal theories, many of which involve large claims and
significant defense costs. The Company currently maintains liability insurance
intended to cover such claims and the Company believes that its insurance is in
keeping with industry standards. There can be no assurance, however, that
claims in excess of the Company's insurance coverage or claims not covered by
the Company insurance coverage (e.g., claims for punitive damages) will not
arise. A successful claim against the Company not covered by, or in excess of,
the Company's insurance coverage could have a material adverse effect upon the
Company's financial condition and results of operations. Claims against the
Company regardless of their merit or eventual outcome, may also have a material
adverse effect upon the Company's ability to attract residents or expand its
business and would require management to devote time to matters unrelated to the
operation of the Company's business. In addition, the Company's insurance
policies must be renewed annually. There can be no assurance that the Company
will be able to obtain liability insurance coverage in the future or that, if
such coverage is available, it will be available on acceptable terms.
ENVIRONMENTAL RISKS. Under various federal, state and local environmental
laws, ordinances and regulations, a current or previous owner or operator of
real property may be held liable for the cost of removal or remediation of
certain hazardous or toxic substances, including, without limitation, asbestos-
containing materials, that could be located on, in or under such property. Such
laws and regulations often impose liability whether or not the owner or operator
knew of, or was responsible for, the presence of the hazardous or toxic
substances. The costs of any required remediation or removal of these
substances could be substantial and the liability of an owner or operator as to
any property is generally not limited under such laws and regulations and could
exceed the property's value and the aggregate assets of the owner or operator.
The presence of these substances or failure to remediate such substances
properly may also adversely affect the owner's ability to sell or rent the
property, or to borrow using the property as collateral. Under these laws and
regulations, an owner, operator or an entity that arranges for the disposal of
hazardous or toxic substances, such as
asbestos-containing materials, at a disposal site may also be liable for the
costs of any required remediation or removal of the hazardous or toxic
substances at the disposal site. In connection with the ownership or operation
of its properties, the Company could be liable for these costs, as well as
certain other costs, including governmental fines and injuries to persons or
properties. As a result, the presence, with or without the Company's knowledge,
of hazardous or toxic substances at any property held or operated by the
Company, or acquired or operated by the Company in the future, could have an
adverse effect on the Company's business, financial condition and results of
operations. Environmental audits performed on the Company's properties have not
revealed any significant environmental liability that management believes would
have a material adverse effect on the Company's business, financial condition or
results of operations. No assurance can be given that existing environmental
audits with respect to any other Company's properties reveal all environmental
liabilities.
POSSIBLE VOLATILITY OF STOCK PRICE. The market price of the Common Stock could
be subject to significant fluctuations in response to various factors and
events, including the liquidity of the market for the Common Stock, variations
in the Company's operating results, new statutes or regulations or changes in
the interpretation of existing statutes or regulations affecting the health care
industry generally or assisted living residence businesses in particular. In
addition, the stock market in recent years has experienced broad price and
volume fluctuations that often have been unrelated to the operating performance
of particular companies. These market fluctuation also may adversely affect the
market price of the Common Stock.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1 and 2. Consolidated Financial Statements and Financial Statement
Schedules.
The financial statements and financial statement schedules listed in the
accompanying index to financial statements and financial statement schedules are
filed as part of this Annual Report.
3. Exhibits
Those Exhibits required to be filed by Item 601 of Regulation S-K are listed
on the accompanying index immediately following the signature page and are filed
as part of this Report.
(b) Reports on Form 8-K
On October 2, 1997, the Company filed a report on Form 8-K reporting the
Company's plans to acquire Home and Community Care, Inc., the resignation of Mr.
Andre Dimitriadis from the Board of Directors of the Company as of September 8,
1997 and the election of Mr. William McBride III as the Company's New Chief
Executive Officer and the election of Dr. Keren Brown Wilson who has been the
Chief Executive Officer and President of the Company as the Chief Operating
Officer, President and Vice Chairman of the Company.
On October 6, 1997, the Company filed a report on Form 8-K of a preliminary
prospectus supplement to the prospectus dated October 2, 1997 for the proposed
offering of 3,000,000 shares of the Company's common stock and the concurrent
offering of $50,000,000 of convertible subordinated debentures due 2002.
On October 21, 1997, the Company filed a report on Form 8-K containing certain
material contracts.
17
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) the Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ASSISTED LIVING CONCEPTS INC.
Registrant
May 8, 1998 By: /s/ WILLIAM McBRIDE
---------------
Name: WILLIAM McBRIDE
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ WILLIAM MCBRIDE III Chairman of the Board & May 8, 1998
------------------- Chief Executive Officer,
William McBride III (Principal Executive Officer)
/s/ KEREN BROWN WILSON* Vice Chairman, President and May 8, 1998
------------------ Chief Operating Officer
Keren Brown Wilson
/s/ RHONDA S. MARSH* Vice President & Controller May 8, 1998
--------------- (Principal Financial Officer and
Rhonda S. Marsh Accounting Officer)
/s/ GLORIA CAVANAUGH* Director May 8, 1998
----------------
Gloria Cavanaugh
/s/ RICHARD C. LADD* Director May 8, 1998
---------------
Richard C. Ladd
/s/ BRADLEY RAZOOK* Director May 8, 1998
--------------
Bradley Razook
* By /s/ WILLIAM McBRIDE
----------------------
WILLIAM McBRIDE
18
ASSISTED LIVING CONCEPTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ASSISTED LIVING CONCEPTS INC., AND SUBSIDIARIES
INDEX TO EXHIBITS
-----------------
Exhibit No. Description
- --------------------------------------------------------------------------------
2.1 Merger Agreement between the Company and CCL Sub, Inc.
(incorporated by reference to the same titled exhibit to the
Company's Registration Statement on Form S-1, File No. 33-
83938).
2.2 Agreement and Plan of Corporate Separation and Reorganization
between Concepts In Community Living, Inc. and Keren Wilson
(Incorporated by reference to the same titled exhibit to the
Company's Registration Statement on Form S-1, File No. 33-
83938).
2.3 Assignment, Bill of Sale, License, and Assumption Agreement
between Concepts In Community Living, Inc., and CCL Sub, Inc.
(Incorporated by reference to the same titled exhibit to the
Company's Registration Statement on Form S-1, File No. 33-
83938.)
2.4 Purchase Agreement between the Company and Lincoln City Limited
Partnership (Incorporated by reference to the same titled
exhibit to the Company's Registration Statement on Form S-1,
File No. 33-83938).
2.5 Letter Purchase Agreement between the Company and Madras Senior
Residence, LRW partners, Keren Brown Wilson and Joseph Hughes
(Incorporated by reference to the same titled exhibit to the
Company's Registration Statement on Form S-1, File No. 33-
83938).
3.1 Articles of Incorporation of the Company (Incorporated by
reference to the same titled exhibit to the Company's
Registration Statement on Form S-1, File No. 33-83938).
3.2 By laws of the Company (Incorporated by reference to the same
titled exhibit to the Company's Registration Statement on Form
S-1, File No. 33-83938).
4.1 Indenture, dated as of August 15, 1995, between the Company and
Harris Trust and Savings Bank, as Trustee, in respect of the
Company's 7.0% Convertible Subordinated Debentures due 2005.
(Incorporated by reference to the same titled exhibit to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1995, File No. 1-83938).
4.2 Form of 7.0% Convertible Subordinated Debentures due 2005
(Incorporated by reference to the same titled exhibit to the
Company Quarterly Report on Form 10-Q for the period ended
September 30, 1995, File No. 1-83938).
4.3 Registration Rights Agreement dated August 2, 1995 between the
Company and the Purchasers of its 7% Convertible Subordinated
Debentures due 2005 (Incorporated by reference to the same
titled exhibit to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1995, File No. 1-83938).
4.4 Indenture, dated as of October 2, 1997 by and between the
Company and Harris Trust and Savings Bank, as Trustee providing
for Issuance of Securities in Series. (Incorporated by reference
to Exhibit 4.1 to the Company's Report on Form 8-K, dated
October 20, 1997, File No. 1-13498)
4.5 Rights Agreement dated as of June 12, 1997, between Assisted
Living Concepts Inc. and American Stock Transfer & Trust
Company, as Rights Agent, which includes the form of Certificate
of Resolution Establishing Designations, Preferences and Rights
of Series A Junior Participating Preferred Stock of Assisted
Living Concepts Inc. as Exhibit A, the form of Right Certificate
as Exhibit B and the Summary of Rights to Purchase Preferred
Shares as Exhibit C (Incorporated by reference to the same
titled exhibit to the Company's Form 8-K, dated July 24, 1997,
File No. 1-83938).
10.1 Restricted Stock Agreement dated October 3, 1997 by and between
the Company and William McBride III. (Incorporated by reference
to the same titled exhibit to the Company's Report on Form 8-K,
dated October 20, 1997, File No. 1-13498)
19
10.2 Restricted Stock Agreement dated October 3, 1997 by and between the
Company and Keren Brown Wilson (Incorporated by reference to the
same titled exhibit to the Company's Report on Form 8-K, dated
October 20, 1997, File No. 1-13498)
10.3 Employment Agreement dated October 3, 1997 by and between the
Company and William McBride III. (Incorporated by reference to the
same titled exhibit to the Company's Report on Form 8-K, dated
October 20, 1997, File No. 1-13498)
10.4 Amended and Restated Employment Agreement dated October 3, 1997 by
and between the Company and Keren Brown Wilson (Incorporated by
reference to the same titled exhibit to the Company's Report on Form
8-K, dated October 20, 1997, File No. 1-13498)
10.5 Indemnification Agreement dated October 3, 1997 by and between the
Company and William McBride III (Incorporated by reference to the
same titled exhibit to the Company's Report on Form 8-K, dated
October 20, 1997, File No. 1-13498)
10.6 Indemnification Agreement dated October 3, 1997 by and between the
Company and Keren Brown Wilson. (Incorporated by reference to the
same titled exhibit to the Company's Report on Form 8-K, dated
October 20, 1997, File No. 1-13498)
10.7 Amended and Restated 1994 Stock Option Plan of the Company.
(Incorporated by reference to the same titled exhibit to the
Company's Report on Form 8-K, dated October 20, 1997, File No. 1-
13498)
10.8 Merger Agreement dated as of October 4, 1997 by and between the
Company and Home and Community Care, Inc. (Incorporated by reference
to the same titled exhibit to the Company's Report on Form 8-K,
dated October 20, 1997, File No. 1-13498)
10.9 $20,440,000 Agreement to Purchase and Leae Assisted Living
Residences dated October 3, 1997 by and between the Company and LTC
Properties, Inc. (Incorporated by reference to the same titled
exhibit to the Company's Report on Form 8-K, dated October 20, 1997,
File No. 1-13498)
10.10 $50,000,000 Agreement to Purchase and Lease Assisted Living
Residences dated October 3, 1997 by and between the Company and LTC
Properties, Inc. (Incorporated by reference to the same titled
exhibit to the Company's Report on Form 8-K, dated October 20, 1997,
File No. 1-13498)
10.11 Management Agreement dated as of April 1, 1997 by and between the
Company and Health Equity Investors, LLC. (Incorporated by reference
to the same titled exhibit to the Company's Report on Form 8-K,
dated October 20, 1997, File No. 1-13498)
10.12 Joint Venture Agreement dated as of April 1, 1997 by and between the
Company and Health Equity Investors, LLC. (Incorporated by reference
to the same titled exhibit to the Company's Report on Form 8-K,
dated October 20, 1997, File No. 1-13498)
10.13+ Form of Employment Agreement Between Company and Certain Executive
Officers.
12.1* Computation of Ratio of Earnings to Fixed Charges
12.2+ Calculation of Earnings Per Share
23.1+ Consent of KPMG Peat Marwick LLP
27.0+ Financial Data Schedule Article 5 of Regulation S-X
27.1* Financial Data Schedule Article 5 of Regulation S-X
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+ Previously filed with Annual Report on Form 10-K for the year ended December
31, 1997.
* Filed herewith.
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