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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
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 0-21159
ATRIA COMMUNITIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 61-1303738
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
515 WEST MARKET STREET
SUITE 200
LOUISVILLE, KY 40202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(502) 596-7540
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has 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) has been subject to such
filing requirements for the past 90 days.
YES NO X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS OF COMMON STOCK SEPTEMBER 30, 1996
--------------------- ------------------
Common stock, $.10 par value 15,845,000 shares
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1 OF 13
ATRIA COMMUNITIES, INC.
FORM 10-Q
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statement of Income -- for the quarter and nine months
ended September 30, 1996 and 1995................................................... 3
Condensed Consolidated Balance Sheet -- September 30, 1996
and December 31, 1995............................................................... 4
Condensed Consolidated Statement of Cash Flows -- for the nine months ended
September 30, 1996 and 1995......................................................... 5
Notes to Condensed Consolidated Financial Statements.................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................................................... 13
2
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER NINE MONTHS
------------------ -----------------
1996 1995 1996 1995
-------- -------- -------- --------
Revenues........................................... $13,038 $12,178 $38,486 $35,442
------- ------- ------- -------
Salaries, wages and benefits....................... 5,253 4,500 14,657 13,015
Supplies........................................... 1,233 1,210 3,683 3,569
Rent............................................... 114 93 313 289
Depreciation and amortization...................... 1,123 1,303 3,748 3,855
Non-recurring transactions......................... - 600 1,050 600
Other operating expenses........................... 2,750 2,465 7,679 7,179
------- ------- ------- -------
10,473 10,171 31,130 28,507
------- ------- ------- -------
Operating income................................... 2,565 2,007 7,356 6,935
Interest expense................................... 966 1,049 2,999 3,335
Investment income.................................. (404) (53) (513) (107)
------- ------- ------- -------
Income before income taxes and extraordinary loss.. 2,003 1,011 4,870 3,707
Provision for income taxes......................... 791 399 1,924 1,464
------- ------- ------- -------
Income before extraordinary loss................... 1,212 612 2,946 2,243
Extraordinary loss on extinguishment of debt,
net of income tax benefit....................... - (146) - (146)
------- ------- ------- -------
Net income............................. $ 1,212 $ 466 $ 2,946 $ 2,097
======= ======= ======= =======
Pro forma earnings per common and common
equivalent share:
Income before extraordinary loss................ $ .10 $ .07 $ .27 $ .23
Extraordinary loss on extinguishment of debt.... - (.02) - (.02)
------- ------- ------- -------
Net income............................. $ .10 $ .05 $ .27 $ .21
======= ======= ======= =======
Shares used in computing pro forma earnings
per common and common equivalent share.......... 12,595 10,095 11,008 10,095
See accompanying notes.
3
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 65,323 $ 2,819
Accounts receivable less allowance for
loss of $111--September 30 and $89--December 31....... 801 561
Other.................................................. 712 366
-------- --------
66,836 3,746
Property and equipment, at cost......................... 157,223 154,237
Accumulated depreciation................................ (26,481) (23,027)
-------- --------
130,742 131,210
Intangible assets less accumulated amortization
of $3,454--September 30 and $3,294--December 31........ 3,404 2,173
Other................................................... 4,266 3,788
-------- --------
$205,248 $140,917
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 2,467 $ 1,875
Salaries, wages and other compensation................. 1,414 1,019
Other accrued liabilities.............................. 3,086 784
Long-term debt due within one year..................... 14,825 844
-------- --------
21,792 4,522
Long-term debt.......................................... 94,960 104,506
Deferred credits and other liabilities.................. 4,488 3,442
Stockholders' equity:
Common stock, $.10 par value; authorized 50,000 shares;
issued and outstanding 15,845 shares--September 30.... 1,585 -
Capital in excess of par value......................... 82,041 -
Retained earnings...................................... 382 -
Investments by and advances from Vencor, Inc. ......... - 28,447
-------- --------
84,008 28,447
-------- --------
$205,248 $140,917
======== ========
See accompanying notes.
4
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
(IN THOUSANDS)
1996 1995
-------- --------
Cash flows from operating activities:
Net income............................................ $ 2,946 $ 2,097
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization...................... 3,748 3,855
Deferred income taxes.............................. 35 44
Non-recurring transactions......................... 750 600
Extraordinary loss on extinguishment of debt....... - 239
Other.............................................. 212 165
Changes in operating assets and liabilities:
Accounts receivable............................. (270) (365)
Other assets.................................... 433 374
Accounts payable................................ 592 (323)
Other accrued liabilities....................... 1,614 766
-------- -------
Net cash provided by operating activities 10,060 7,452
-------- -------
Cash flows from investing activities:
Purchase of property and equipment.................... (2,487) (2,303)
Net change in partnership investments................. 31 732
Other................................................. (203) (17)
-------- -------
Net cash used in investing activities..... (2,659) (1,588)
-------- -------
Cash flows from financing activities:
Issuance of long-term debt............................. 21,847 3,102
Repayment of long-term debt............................ (17,170) (3,817)
Payment of deferred financing costs.................... (1,816) -
Public offering of common stock........................ 52,939 -
Equity contribution from Vencor, Inc................... 4,350 -
Net payments to Vencor, Inc............................ (4,909) (2,973)
Other.................................................. (138) (87)
-------- -------
Net cash provided by (used in) financing
activities................................ 55,103 (3,775)
-------- -------
Change in cash and cash equivalents....................... 62,504 2,089
Cash and cash equivalents at beginning of period.......... 2,819 1,497
-------- -------
Cash and cash equivalents at end of period................$ 65,323 $ 3,586
======== =======
Supplemental information:
Interest payments......................................$ 2,374 $ 3,169
Income tax payments.................................... 1,675 1,733
Non-cash transactions:
Exchange of note receivable for additional
partnership interest.............................. - 4,552
See accompanying notes.
5
ATRIA COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- REPORTING ENTITY
Atria Communities, Inc. ("Atria") is a national provider of assisted and
independent living communities for the elderly, currently operating 22
communities located in 13 states with a total of 3,022 units, including 650
assisted living units and 2,372 independent living units.
In May 1996, the Board of Directors of Vencor, Inc. ("Vencor") authorized
management to establish Atria as a wholly owned subsidiary to operate Vencor's
assisted and independent living business. As part of that transaction,
management consummated an initial public offering (the "IPO") of 5,750,000
shares of Atria's common stock (including 750,000 shares in connection with the
exercise of the underwriters' overallotment option) in the third quarter of
1996. At September 30, 1996, Vencor owned 10,000,000 shares of Atria common
stock.
NOTE 2 -- BASIS OF PRESENTATION
For periods prior to the IPO, the accompanying condensed consolidated
historical financial statements reflect the operations of the assisted and
independent living business of Vencor which were transferred to Atria at or
prior to completion of the IPO. These financial statements have been derived
from the consolidated financial statements of Vencor and reflect the operations
of Atria as a separate entity for all periods presented.
The accompanying condensed consolidated financial statements do not include
all of the disclosures normally required by generally accepted accounting
principles or those normally made in Atria's annual audited financial
statements. Accordingly, the reader of these financial statements may wish to
refer to Atria's audited consolidated financial statements for the year ended
December 31, 1995 included in Form S-1 filed with the Securities and Exchange
Commission on August 20, 1996.
The accompanying condensed consolidated financial statements have been
prepared in accordance with Atria's customary accounting practices and have not
been audited. Management believes that the financial information included
herein reflects all adjustments necessary for a fair presentation of interim
results and, except as discussed in Note 4, all such adjustments are of a normal
and recurring nature.
NOTE 3 -- PRO FORMA EARNINGS PER COMMON SHARE
For periods prior to the IPO, the operations of Atria are included in the
consolidated financial statements of Vencor on a divisional basis. Accordingly,
stockholders' equity accounts and related earnings per common share data are not
presented on a historical basis in the accompanying condensed consolidated
financial statements.
Shares used in computing pro forma earnings per common and common equivalent
share include 10,000,000 shares of common stock issued to Vencor in exchange for
its contribution of assets to Atria and the assumption by Atria of related
liabilities, and the issuance of 95,000 shares of restricted stock. In
addition, for the third quarter and nine months ended September 30, 1996, the
computation also gives effect to the 5,750,000 shares issued in connection with
the IPO and the dilution associated with the issuance of common stock options.
NOTE 4 -- NON-RECURRING TRANSACTIONS
In June 1996, Atria recorded a non-recurring pretax charge of $1.1 million
($630,000 net of tax) in connection with the settlement of certain litigation
involving a minority partner at one of its communities. Results of operations
in 1995 include a charge of $600,000 ($360,000 net of tax) related to the
writedown of undeveloped property to its estimated net realizable value.
6
ATRIA COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5 -- LONG-TERM DEBT
On August 26, 1996, Atria entered into a bank credit facility (the "Atria
Credit Facility") aggregating $200 million (including a letter of credit option
not to exceed $70 million) which will have a maturity of four years and may be
extended at the option of the banks for one additional year. The Atria Credit
Facility will bear interest, at Atria's option, at either (i) a base rate based
on PNC Bank's prime rate or the daily federal funds rate or (ii) a LIBOR rate,
plus an additional percentage based on certain leverage ratios. The obligations
under the Atria Credit Facility will be secured by substantially all of Atria's
property, the capital stock of its present and future principal subsidiaries and
all intercompany indebtedness owed to Atria by its subsidiaries.
The Atria Credit Facility contains financial covenants and other restrictions
that (i) require Atria to meet certain financial tests, (ii) require that there
be no change of control of Atria, (iii) limit, among other things, the ability
of Atria and certain of its subsidiaries to borrow additional funds, dispose of
certain assets and engage in mergers and other business combinations, (iv)
prohibit distributions to Atria's stockholders and (v) require that Vencor own
at least 30% of Atria's common stock. Vencor will guarantee for four years
certain borrowings by Atria under the Atria Credit Facility in amounts up to
$100 million in the first year following the IPO, declining to $75 million, $50
million and $25 million in each respective year thereafter.
NOTE 6 -- TRANSACTIONS WITH VENCOR
For periods prior to the IPO, certain allocations and estimates have been
made by management in the consolidated financial statements to present the
historical financial position and results of operations of Atria as a separate
entity. Upon consummation of the IPO, Atria became contractually obligated to
pay Vencor for certain centralized management and administrative services
underlying such historical allocations and estimates. The operating results of
Atria include corporate costs and expenses of Vencor aggregating $162,000 and
$150,000 for the three months ended September 30, 1996 and 1995, respectively,
and $462,000 and $450,000 for the respective nine month periods. Management
believes that these allocations reasonably reflect the proportional costs
incurred by Vencor on behalf of Atria.
A subsidiary of Atria is indebted to Vencor in the amount of $14 million, due
one year after the IPO, which bears interest (payable quarterly) at a rate equal
to the floating prime rate of National City Bank, Kentucky plus 1%. The
promissory note may be prepaid without penalty at any time after six months.
Interest costs incurred by Atria in connection with this note aggregated
$151,000 for the three months ended September 30, 1996.
In connection with the IPO, all amounts previously classified as investments
by and advances from Vencor were contributed to Atria as part of its permanent
capitalization. In addition, Vencor also contributed approximately $4.3 million
in cash to Atria prior to the consummation of the IPO.
Common stockholders' equity at September 30, 1996 includes a $150,000 payment
to Vencor for Vencor's assistance provided to Atria in connection with the IPO.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Atria is a national provider of assisted and independent living communities
for the elderly, currently operating 22 communities comprising 3,022 units
located in 13 states. At September 30, 1996, Atria had 14 assisted living
communities containing approximately 900 units under development, including
three communities under construction.
PLANNED EXPANSION AND DEVELOPMENT
Atria intends to expand its business in the future through both construction
of additional communities and acquisition of existing facilities which could add
60 to 85 assisted and independent living communities by the year 2000 (including
14 communities currently being developed). The estimated cost to construct,
equip or otherwise acquire such communities could approximate $350 to $500
million.
The estimated cost of Atria's planned expansion and development is
significantly in excess of: (i) estimated cash flows from operations; (ii)
proceeds from the IPO; and (iii) borrowings available under the Atria Credit
Facility. Management believes that substantial additional financing will be
required in approximately 16 months following the IPO to complete Atria's growth
plans. Available sources of future capital may include, among other things,
equity, public or private debt, and additional bank revolving credits. However,
there can be no assurance that such financing will be available on terms which
are acceptable to Atria, nor can there be any assurance that additional
financing will not be required or sought by Atria prior to 16 months following
the IPO.
Newly opened communities are expected to incur operating losses until
sufficient occupancy levels and operating efficiencies are achieved. Based upon
historical experience, management believes that a typical community will achieve
its targeted occupancy levels one year from commencement of operations.
Accordingly, Atria will require substantial amounts of liquidity to maintain the
operations of newly opened communities. In addition, if sufficient occupancy
levels related to newly opened communities are not achieved within a reasonable
period, the results of operations, financial position and liquidity of Atria
could be materially and adversely impacted.
The statements contained under "Planned Expansion and Development" are
forward looking statements and are qualified by certain risks detailed in
Atria's Form 8-K filed with the Securities and Exchange Commission on
October 15, 1996.
RESULTS OF OPERATIONS
A summary of operations follows:
PERCENTAGE OF REVENUES
----------------------------
THIRD QUARTER NINE MONTHS
------------- -------------
1996 1995 1996 1995
----- ----- ----- -----
Revenues............................................. 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Salaries, wages and benefits......................... 40.3 37.0 38.1 36.7
Supplies............................................. 9.5 9.9 9.6 10.1
Rent................................................. 0.9 0.8 0.8 0.8
Depreciation and amortization........................ 8.6 10.7 9.7 10.9
Non-recurring transactions........................... - 4.9 2.7 1.7
Other operating expenses............................. 21.0 20.2 20.0 20.2
----- ----- ----- -----
80.3 83.5 80.9 80.4
----- ----- ----- -----
Operating income..................................... 19.7 16.5 19.1 19.6
Interest expense..................................... 7.4 8.6 7.8 9.4
Investment income.................................... (3.1) (0.4) (1.4) (0.3)
----- ----- ----- -----
Income before income taxes and extraordinary loss.. 15.4 8.3 12.7 10.5
Provision for income taxes........................... 6.1 3.3 5.0 4.2
----- ----- ----- -----
Income before extraordinary loss................... 9.3% 5.0% 7.7% 6.3%
===== ===== ==== ====
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
Revenues increased 7.1% to $13.0 million in the third quarter of 1996
compared to $12.2 million in the same period last year, and 8.6% to $38.5
million in the first nine months of 1996 compared to $35.4 million a year ago.
The increases were primarily attributable to price increases approximating 5%,
growth in occupancy and expansion of ancillary services.
Compensation costs as a percentage of revenues increased in both the third
quarter and nine month periods of 1996 compared to the same periods a year ago.
In addition, other operating expenses increased as a percentage of revenues in
the third quarter of 1996. Increases in such costs resulted primarily from
growth in administrative expenses associated with Atria's expansion and
development program.
Operating income increased 27.8% to $2.6 million in the third quarter of 1996
compared to $2.0 million in the same period of 1995, and operating income
margins improved to 19.7% from 16.5%. For the nine month period, operating
income grew 6.1% to $7.4 million in 1996 compared to $6.9 million in 1995, and
operating income margins declined to 19.1% from 19.6%. Excluding the effect of
non-recurring transactions, operating income declined slightly in the third
quarter of 1996 and increased 11.6% for the nine month period, and operating
income margins declined to 19.7% from 21.4% in the respective third quarters,
and improved to 21.8% for the first nine months of 1996 compared to 21.3% for
the same period in 1995. In both the third quarter and nine month periods,
operating income increased due primarily to growth in revenues, operating
efficiencies associated with higher occupancy levels and growth in ancillary
services. However, operating income in the third quarter of 1996 was adversely
impacted by administrative costs incurred in connection with Atria's expansion
and development program.
Income before extraordinary loss increased 98.0% to $1.2 million in the third
quarter of 1996 compared to $612,000 a year ago, and 31.3% to $2.9 million for
the first nine months of 1996 from $2.2 million last year. Excluding the effect
of non-recurring transactions, income before extraordinary loss grew 24.7% and
37.4% in the third quarter and nine months, respectively. The improvement was
primarily attributable to a decline in interest costs, increased investment
income in 1996 resulting from the IPO, and for the nine month period, growth in
operating income.
For periods prior to the IPO, certain allocations and estimates have been
made by management in the consolidated financial statements to present the
historical financial position and results of operations of Atria as a separate
entity. Upon consummation of the IPO, Atria became contractually obligated to
pay Vencor for certain centralized management and administrative services
underlying such historical allocations and estimates. The operating results of
Atria include corporate costs and expenses of Vencor aggregating $162,000 and
$150,000 for the three months ended September 30, 1996 and 1995, respectively,
and $462,000 and $450,000 for the respective nine month periods. Management
believes that these allocations reasonably reflect the proportional costs
incurred by Vencor on behalf of Atria.
In June 1996, Atria recorded a non-recurring pretax charge of $1.1 million
($630,000 net of tax) in connection with the settlement of certain litigation
involving a minority partner at one of its communities. Results of operations
in 1995 include a charge of $600,000 ($360,000 net of tax) related to the
writedown of undeveloped property to its estimated net realizable value.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations totaled $10.1 million and $7.5 million for the
nine months ended September 30, 1996 and 1995, respectively. The improvement in
cash flows from operations resulted primarily from growth in net income
(excluding non-recurring transactions) and growth in accounts payable and other
accrued liabilities.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Net cash used in investing activities totaled $2.7 million and $1.6 million
for the nine months ended September 30, 1996 and 1995, respectively. Atria's
investing activities included capital expenditures related to the development of
new facilities and expansion of existing operations totaling $2.5 million and
$2.3 million for the respective periods.
Net cash provided by financing activities was $55.1 million (including $52.9
million of proceeds from the IPO) for the nine months ended September 30, 1996,
while net cash used in financing activities totaled $3.8 million for the same
period of 1995. In both periods, operating cash flows in excess of capital
expenditures were used primarily to repay advances from Vencor, improve Atria's
liquidity and, for the first nine months of 1995, reduce long-term debt.
As a result of the IPO, working capital at September 30, 1996 totaled $45
million. Current liabilities exceeded current assets by $776,000 at December
31, 1995, primarily as a result of the timing of cash settlements of advances
from Vencor (which were included in stockholders' equity prior to the IPO).
Substantially all cash and cash equivalents in excess of working capital needs
will be used to fund Atria's expansion and development program.
Atria is currently developing 14 sites for new assisted living communities,
three of which are under construction. The estimated aggregate cost of these
projects will approximate $60 to $65 million and such communities are expected
to be in operation at various dates through June 1998. Management believes that
cash flows from operations, proceeds from the IPO and available borrowings under
the Atria Credit Facility will be sufficient to meet liquidity needs for
approximately 16 months following the IPO. At September 30, 1996, the additional
cost to complete and equip the three communities under construction approximated
$10.3 million.
Excluding acquisitions and development of new facilities, management
believes that capital expenditures related to the expansion and improvement of
existing communities could approximate $3 million in 1996. Management believes
that its capital expenditure program is adequate to expand, improve and equip
existing communities, and expects to finance such expenditures primarily through
cash flows from operations.
Atria plans to retain future earnings to finance the growth of its business
rather than to pay cash dividends. Payment of cash dividends in the future will
depend on the financial condition, results of operations and capital
requirements of Atria as well as other factors deemed relevant by the Board of
Directors. The Atria Credit Facility prohibits Atria from paying cash
dividends.
In connection with the IPO, all amounts previously classified as investments
by and advances from Vencor were contributed to Atria as part of its permanent
capitalization. In addition, Vencor also contributed approximately $4.3 million
in cash to Atria prior to the consummation of the IPO.
Certain long-term debt agreements contain customary covenants which include,
among other things: (i) limitations on additional debt and capital expenditures;
(ii) limitations on sales of assets, mergers and changes in ownership; and (iii)
maintenance of certain financial ratios. Atria was in material compliance with
all such covenants at September 30, 1996.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND STATISTICS)
1996 QUARTERS
-------------------------------------
FIRST SECOND THIRD NINE MONTHS
------- -------- -------- -----------
Revenues....................... $12,611 $12,837 $13,038 $38,486
------- ------- ------- -------
Salaries, wages and benefits... 4,677 4,727 5,253 14,657
Supplies....................... 1,227 1,223 1,233 3,683
Rent........................... 100 99 114 313
Depreciation and amortization.. 1,312 1,313 1,123 3,748
Non-recurring transactions..... - 1,050 - 1,050
Other operating expenses....... 2,434 2,495 2,750 7,679
------- ------- ------- -------
9,750 10,907 10,473 31,130
------- ------- ------- -------
Operating income............... 2,861 1,930 2,565 7,356
Interest expense............... 982 1,051 966 2,999
Investment income.............. (48) (61) (404) (513)
------- ------- ------- -------
Income before income taxes..... 1,927 940 2,003 4,870
Provision for income taxes..... 761 372 791 1,924
------- ------- ------- -------
Net income............ $ 1,166 $ 568 $ 1,212 $ 2,946
======= ======= ======= =======
Pro forma earnings per common
and common equivalent
share ........................ $ .11 $ .06 $ .10 $ .27
======= ======= ======= =======
Shares used in computing
pro forma earnings per common
and common equivalent share... 10,095 10,095 12,595 11,008
Average occupancy.............. 95.7% 95.4% 96.2% 95.8%
Number of communities at
end of period................. 22 22 22
Number of units at end of
period........................ 3,022 3,022 3,022
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND STATISTICS)
1995 QUARTERS
--------------------------------------
FIRST SECOND THIRD FOURTH YEAR
-------- -------- -------- -------- --------
Revenues................................. $11,367 $11,897 $12,178 $12,534 $47,976
------- ------- ------- ------- -------
Salaries, wages and benefits............. 4,198 4,317 4,500 4,440 17,455
Supplies................................. 1,125 1,234 1,210 1,291 4,860
Rent..................................... 94 102 93 94 383
Depreciation and amortization............ 1,246 1,306 1,303 1,258 5,113
Non-recurring transactions............... - - 600 - 600
Other operating expenses................. 2,367 2,347 2,465 2,286 9,465
------- ------- ------- ------- -------
9,030 9,306 10,171 9,369 37,876
------- ------- ------- ------- -------
Operating income......................... 2,337 2,591 2,007 3,165 10,100
Interest expense......................... 1,158 1,128 1,049 987 4,322
Investment income........................ (24) (30) (53) (40) (147)
------- ------- ------- ------- -------
Income from operations before income
taxes and extraordinary loss.......... 1,203 1,493 1,011 2,218 5,925
Provision for income taxes............... 475 590 399 877 2,341
------- ------- ------- ------- -------
Income before extraordinary loss......... 728 903 612 1,341 3,584
Extraordinary loss on extinguishment of
debt, net of income tax benefit....... - - (146) - (146)
------- ------- ------- ------- -------
Net income...................... $ 728 $ 903 $ 466 $ 1,341 $ 3,438
======= ======= ======= ======= =======
Pro forma earnings per common share:
Income before extraordinary loss...... $ .07 $ .09 $ .07 $ .13 $ .36
Extraordinary loss on extinguishment
of debt............................ - - (.02) - (.02)
------- ------- ------- ------- -------
Net income...................... $ .07 $ .09 $ .05 $ .13 $ .34
======= ======= ======= ======= =======
Shares used in computing pro forma
earnings per common share............. 10,095 10,095 10,095 10,095 10,095
Average occupancy........................ 92.7% 94.4% 94.9% 95.8% 94.5%
Number of communities at end of period... 22 22 22 22
Number of units at end of period......... 3,022 3,022 3,022 3,022
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
11 Statement Re: Computation of pro forma earnings per common and
common equivalent share for the quarter and nine months ended
September 30, 1996 and 1995.
27 Financial Data Schedule (included only in filings submitted under
the Electronic Data Gathering Analysis and Retrieval system).
(b) REPORTS ON FORM 8-K:
A report on Form 8-K was filed on September 10, 1996 which included
certain agreements related to the Atria Credit Facility dated August
26, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATRIA COMMUNITIES, INC.
Date: October 22, 1996 /s/ W. Patrick Mulloy, II
- ----------------------- --------------------------------------------
W. Patrick Mulloy, II
President and Chief Executive Officer
Date: October 22, 1996 /s/ J. Timothy Wesley
- ----------------------- --------------------------------------------
J. Timothy Wesley
Chief Financial Officer, Vice President
of Development and Secretary
(Principal Financial Officer)
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