SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 3, 2001
Greenbriar Corporation
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(Exact name of registrant as specified in its charter)
Nevada 0-8187 75-2399477
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(State of incorporation) (Commission File No.) (IRS Employer
Identification No.)
14185 Dallas Parkway, Suite 650, Dallas, Texas 75240
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(Address of principal execute offices, including zip code)
(972) 407-8400
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(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
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On October 3, 2001, Registrant concluded and closed a transaction with LSOF
Pooled Equity, L.P. to settle and resolve litigation over the amount and nature
of LSOF's ownership of Registrant. The dispute had centered around the number of
shares of Registrant's common stock and extent of control to which LSOF was
entitled upon conversion of its Series F and G Preferred Stock and the amount
then due under a "Make Whole Agreement." LSOF's position would have resulted in
a change of voting control of Registrant to LSOF, which Registrant resisted in
the litigation between the parties.
Under the terms of the settlement, Registrant repurchased all of LSOF's
ownership interests in Registrant, which amounted to 1,054,202 shares of
Registrants common stock, and LSOF released all claims in exchange for
$4,000,000 in cash and the conveyance of 11 assisted living properties out of
the 24 owned and operated by Registrant, subject to any indebtedness thereon. In
addition Registrant released LSOF from all claims. On August 3, 2001 Registrant
sold an assisted living property in California. The cash proceeds from the sale
were used to provide the cash portion of the settlement with LSOF.
With the litigation concluded, Registrant will devote its efforts to rebuilding
its business by exploring attractive acquisitions in the assisted living
industry and in the general real estate market. Registrant existed from 1981 to
1989 as a real estate investment trust. After a change in management in 1989,
Registrant changed its primary focus to supplying products and services to the
elderly, although it continued its business of investing in commercial real
estate. Beginning in 1994, Registrant began liquidating its commercial real
estate and devoting its efforts to the assisted living sector of the eldercare
industry. Between 1995 and 1997, Registrant opened several residences and
acquired four assisted living companies. Registrant's assisted living business,
similar to the rest of the industry, has incurred ongoing financial losses
resulting from vacancies, high turnover, regulatory impediments and a general
state of over-building. Registrant believes the long-term prospects for the
assisted living industry are fundamentally sound and will continue to seek
attractive acquisition candidates. However, Registrant will also seek to
diversify its business by returning to its previously profitable operations in
general real estate development and investments.
Item 7. Financial Statements and Exhibits.
-----------------------------------------
The following pro forma financial information and exhibits regarding this
transaction are filed with this report.
(a) Unaudited Pro Forma Financial Statements
The accompanying pro forma consolidated balance sheet as of June 30,
2001 presents this transaction as though it had taken place on June 30,
2001. The accompanying pro forma consolidated statements of earnings
present earnings as though the transaction had taken place on January
1, 2000.
Pro Forma Consolidated Balance Sheet- F-16
June 30, 2001 (Unaudited)
Pro Forma Consolidated Statement of Operations- F-18
Six Months Ended June 30, 2001 (Unaudited)
Pro Forma Consolidated Statement of Operations- F-19
Twelve Months Ended December 31, 2000 (Unaudited)
Explanatory Notes to Consolidated Financial Statements F-20
(b) Exhibits
None
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 hereunto duly authorized.
October 18, 2001
GREENBRIAR CORPORATION
By: /s/ Gene S. Bertcher
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Gene S. Bertcher, Executive Vice President
Greenbriar Corporation
Pro Forma Consolidated Balance Sheet
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(Amounts in thousands)
June 30, 2001
Properties Pro forma
Assets Historical Sold(1) Adjustments(2) Notes(2) Pro forma
---------- ------- -------------- -------- ---------
Current Assets
Cash And Cash Equivalents $ 2,941 $ 5,084 $ (4,000) (a) $ 4,025
Accounts Receivable-Trade 396 - - 396
Other Current Assets 1,594 (369) - 1,225
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Total Current Assets 4,931 4,715 (4,000) 5,646
Deferred Income Tax Benefit 4,750 - (2,000) (b) 2,750
Notes Receivable, Net of Deferred
Gain of $3,720 310 - - 310
Property And Equipment, At Cost
Land And Improvements 9,164 (4,283) - 4,881
Buildings And Improvements 69,668 (36,120) - 33,548
Equipment And Furnishings 6,177 (2,627) - 3,550
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85,009 (43,030) - 41,979
Less Accumulated Depreciation 12,564 (6,414) - 6,150
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72,445 (36,616) - 35,829
Deposits 3,603 (1,254) - 2,349
Goodwill And Other Intangibles 5,040 (5,040) - -
Other Assets 1,098 (443) - 655
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$ 92,177 $ (38,638) $ (6,000) $ 47,539
===================================================================================
(1) See Note 1 to Consolidated Pro Forma Financial Statements
(2) See Note 2 to Consolidated Pro Forma Financial Statements
F-16
Greenbriar Corporation
Pro Forma Consolidated Balance Sheet
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(Amounts in thousands)
June 30, 2001
Properties Pro forma
Liabilities And Stockholders' Equity Historical Sold (1) Adjustments(2) Notes(2) Pro forma
---------- -------- -------------- -------- ---------
Current Liabilities
Current Maturities Of Long-Term Debt $ 2,664 $ (1,222) $ - $ 1,442
Accounts Payable - Trade 868 - - 868
Accrued Expenses 960 (136) 950 (c) 1,774
Other Current Liabilities 705 (18) 1,000 (b) 1,687
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Total Current Liabilities 5,197 (1,376) 1,950 5,771
Long-Term Debt 43,759 (30,647) - 13,112
Financing Obligations 10,815 - - 10,815
Other Long Term Liabilities 811 (552) - 259
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Total Liabilities 60,582 (32,575) 1,950 29,957
Preferred Stock Redemption Obligation 27,167 - (27,167) (d) -
Stockholders' Equity
Preferred Stock 69 - - 69
Common Stock $.01 Par Value;
Authorized, 100,000 shares
Shares; Issued And Outstanding, 8,348
Shares
And 7,514 Shares, Respectively 84 - - 84
Additional Paid-In Capital 60,214 - - 60,214
Accumulated Deficit (53,572) (6,063) 19,217 (40,418)
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6,795 (6,063) 19,217 19,949
Less Stock Purchase Notes Receivable
(Including $2,250 From Related Parties) (2,367) - - (2,367)
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4,428 (6,063) 19,217 17,582
$ 92,177 $ (38,638) $ (6,000) $ 47,539
=========================================================================
(1) See Note 1 to Consolidated Pro Forma Financial Statements
(2) See Note 2 to Consolidated Pro Forma Financial Statements
F-17
Greenbriar Corporation
Pro Forma Consolidated Statements Of Operations
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(Amounts in thousands, except per share data)
For the Six Month Period Ended June 30, 2001
Operations of
Properties Pro forma
Historical Sold (3) Adjustments (4) Notes Pro forma
---------- -------- --------------- ----- ---------
Revenue
Assisted living operations $ 19,223 $ (9,881) $ - $ 9,342
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19,223 (9,881) - 9,342
Operating Expenses
Assisted living community
operations $ 11,726 $ (5,856) $ - $ 5,870
Lease expense 2,077 (608) - 1,469
Depreciation and amortization 1,659 (758) - 901
Corporate general and
administrative 3,132 - (1,175) 1,957
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18,594 (7,222) (1,175) 10,197
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Operating income (loss) 629 (2,659) 1,175 (855)
Other income (expense)
Interest and dividend income $ 141 $ (22) $ - $ 119
Interest expense (2,674) 1,189 - (1,485)
Net gain (loss) on the sale of
assets 159
- - 159
Other (142) 142 - -
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(2,516) 1,309 - (1,207)
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Net loss (1,887) 1,175 (2,062)
(1,350)
Preferred stock dividend
requirement (160) - - (160)
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Loss allocable to common
stockholders (2,047) (1,350) 1,175 (2,222)
================================================ ============
Net loss per common share -
basic and diluted $ (0.24) $ (0.27)
Weighted average number
of common and equivalent
shares outstanding 8,348 8,348
(3) See Note 3 to Consolidated Pro Forma Financial Statements
(4) See Note 4 to Consolidated Pro Forma Financial Statements
F-18
Greenbriar Corporation
Pro Forma Consolidated Statements Of Operations
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(Amounts in thousands, except per share data)
For the Twelve Month Period Ended December 31, 2000
Operations of
Properties Pro forma
Historical Sold (3) Adjustments (4) Notes Pro forma
---------- -------- --------------- ----- ---------
Revenue
Assisted living operations $ 41,261 $ (19,418) $ - $ 21,843
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41,261 (19,418) - 21,843
Operating Expenses
Assisted living community
operations $ 24,750 $ (11,089) $ - $ 13,661
Lease expense 4,912 (1,196) - 3,716
Depreciation and amortization 3,740 (1,559) - 2,181
Corporate general and
administrative 5,448 - (810) 4,638
Write-off of impaired assets
and related expenses 7,461 (1,155) - 6,306
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46,311 (14,999) (810) 30,502
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Operating income (loss) (5,050) (4,419) 810 (8,659)
Other income (expense)
Interest and dividend income $ 406 $ (38) $ - $ 368
Interest expense (5,759) 2,513 - (3,246)
Other (220) 360 - 140
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(5,573) 2,835 - (2,738)
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Net loss (10,623) (1,584) 810 (11,397)
Preferred stock dividend
requirement (4,105) - 3,865 (240)
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Loss allocable to common
stockholders (14,728) (1,584) 4,675 (11,637)
=============================================== ============
Net loss per common share -
basic and diluted $ (1.96) $ (1.55)
Weighted average number
of common and equivalent
shares outstanding 7,514 7,514
(3) See Note 3 to Consolidated Pro Forma Financial Statements
(4) See Note 4 to Consolidated Pro Forma Financial Statements
F-19
Greenbriar Corporation
Explanatory Notes to Consolidated Pro Forma Financial Statements
(1) To reflect the sale of properties to LSOF Pooled Equity, L.P. and the
sale of an assisted living property in California. See further
discussion of these transactions in Item 2.
(2) To reflect the following pro forma adjustments:
(a) To reflect the $4,000,000 cash paid to LSOF Pooled
Equity L.P. as part of the settlement. See Item 2.
(b) To recognize the income tax effect of the sale.
(c) To reflect $450,000 of additional legal fees and
$500,000 in costs associated with closing down the
businesses at the properties sold.
(d) To reflect the settlement with LSOF Pooled Equity
L.P. See Item 2.
(3) To reflect the sale of the properties discussed in Item 2. This revenue
and expense is specifically identifiable to the communities sold.
(4) To reflect pro forma adjustments to general and administrative costs
for salaries and related benefit expenses as well as legal costs
associated with the settlement of the LSOF Pooled Equity Fund L.P
matter.
F-20