<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
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(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: March 19, 1996
(Date of earliest event reported)
EMERITUS CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 1-14012 91-1605464
(State or other jurisdiction (Commission file (I.R.S Employer
of incorporation or number) Identification No.)
organization)
Market Place One
2003 Western Ave, Suite 660
Seattle, WA 98121
(Address of principal executive offices)
(206) 443-4313
(Registrant's telephone number, including area code)
<PAGE>
On March 19, 1996, Emeritus Corporation completed a sale/leaseback
financing (the "Refinancing") of nine assisted-living communities, seven of
which were previously owned by the Company and two new developments. The
Company reported the Refinancing on its Current Report on Form 8-K dated
March 19, 1996 (the "Form 8-K"). Item 2 of the Form 8-K is hereby revised
in its entirety and Item 7 of the Form 8-K is hereby revised and
supplemented to include certain pro forma financial information with
respect to the Refinancing.
Item 2. Acquisition or Disposition of Assets.
- ------ ------------------------------------
On March 19, 1996, Emeritus Corporation (the "Company")
completed $58 million in sale/leaseback financing with a
healthcare real estate investment trust (REIT). The
financing included nine assisted-living communities, six
operating communities of which were previously owned by
the Company, one development community of which was
previously owned by the Company and two new developments.
Construction is expected to commence on the two new
developments in the second quarter of 1996. The $58
million transaction aggregated approximately 900 assisted-
living units in four states.
The six operating communities and one development
community previously owned were subject to mortgage
indebtedness of approximately $26.1 million which was
repaid upon closing. Pursuant to the sale/leaseback the
Company entered into operating leases on all seven
communities. Each of such leases has a term of eleven
years with an option to extend the lease for four
additional periods of five years each. Rent for the six
previously owned operating communities and one previously
owned development community consists of base rent, which
the Company expects will equal an annual aggregate of
approximately $3.5 million and $526,000, respectively,
plus additional rent, the calculation of which is based
on the revenue of each respective property. Such
additional rent shall be payable commencing during the
third year of the lease term.
The foregoing descriptions are qualified in their entirety
by reference to the full text of the leases which are
filed herewith and incorporated herein by reference.
1
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Item 7. Financial Statements and Exhibits.
- ------ ---------------------------------
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
(1) Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
The "Emeritus Combined" column set forth in the unaudited pro forma
consolidated balance sheet of the Company as of December 31, 1995 assumes
that the Refinancing had occurred on December 31, 1995.
The "Emeritus Combined" column set forth in the unaudited pro
forma consolidated statement of operations for the year ended December 31,
1995 assumes that the Refinancing had occurred on January 1, 1995.
The unaudited pro forma combined financial information set forth below
is not necessarily indicative of the Company's combined financial position
or the results of operations that actually would have occurred if the
transaction had been consummated on such dates. In addition, they are not
intended to be a projection of results of operations that may be obtained
in the Company's future.
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EMERITUS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Pro Forma Emeritus
Emeritus Adjustments Combined
---------- ----------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Assets
Current Assets:
Cash.................................................... $ 9,507 $ 124 (a)
39,452 (b)
(25,507) (f) $23,576
Restricted cash......................................... 1,025 1,025
Trade accounts receivable............................... 212 - 212
Prepaid expense and other current assets................ 1,835 20 (c) 1,855
---------- ----------- ----------
Total current assets............................. 12,579 14,089 26,668
---------- ----------- ----------
Property and equipment, net................................ 81,041 (32,294) (d) 48,747
Property held for development.............................. 14,111 - 14,111
Investment securities available for sale................... 2,825 - 2,825
Note receivable from and investment in affiliate, net...... 644 - 644
Other assets, net.......................................... 4,435 (124) (a)
1,013 (c)
417 (c)
(424) (e) 5,317
---------- ----------- ----------
Total assets..................................... $115,635 $(17,323) $98,312
========== =========== ==========
Liabilities and Shareholders' Equity:
Current Liabilities:
Short-term borrowings................................... $ 520 $ - $ 520
Current portion of long-term debt....................... 352 - 352
Accounts payable........................................ 4,249 - 4,249
Other current liabilities............................... 3,367 (194) (e) 3,173
---------- ----------- ----------
Total current liabilities........................ 8,488 (194) 8,294
---------- ----------- ----------
Security deposits.......................................... 740 - 740
Other long-term liabilities................................ 242 - 242
Deferred gain on sale of communities....................... 2,227 8,378 (g) 10,605
Long-term debt, less current portion....................... 66,814 (25,507) (f) 41,307
---------- ----------- ----------
Total liabilities................................ 78,511 (17,323) 61,188
---------- ----------- ----------
Minority interests......................................... 2,229 - 2,229
Shareholders' Equity:
Preferred stock......................................... - - -
Common stock............................................ 1 - 1
Additional paid-in capital.............................. 44,910 - 44,910
Unrealized gain on investment securities................ 400 - 400
Accumulated deficit..................................... (10,416) - (10,416)
---------- ----------- ----------
Total shareholders' equity....................... 34,895 - 34,895
---------- ----------- ----------
Total liabilities and shareholders' equity....... $115,635 $(17,323) $98,312
========== =========== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated
Financial Statements
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EMERITUS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Leased Pro Forma Emeritus
Emeritus Communities (h) Adjustments Combined
--------- --------------- ----------- ----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Revenues:
Rent................................................. $18,752 $4,896 $ - $23,648
Service fees......................................... 2,525 208 - 2,733
--------- --------------- ----------- ----------
Total operating revenues...................... 21,277 5,104 - 26,381
--------- --------------- ----------- ----------
Expenses:
Community operations................................. 15,864 4,124 - 19,988
General and administrative........................... 2,630 306 (231) (i) 2,705
Depreciation and amortization........................ 2,800 565 (1,282) (j) 2,083
Rent................................................. 1,138 - 33 (k)
3,524 (l)
(557) (l) 4,138
--------- --------------- ----------- ----------
Total operating expenses...................... 22,432 4,995 1,487 28,914
--------- --------------- ----------- ----------
Income (loss) from operations................. (1,155) 109 (1,487) (2,533)
--------- --------------- ----------- ----------
Other income (expense):
Interest expense, net................................ (5,351) (24) 1,084 (m) (4,291)
Other, net........................................... (1,181) - - (1,181)
--------- --------------- ----------- ----------
Net other expense............................. (6,532) (24) 1,084 (5,472)
--------- --------------- ----------- ----------
Net income (loss) before extraordinary loss... $(7,687) $ 85 $ (403) $(8,005)
========= =============== =========== ==========
Net loss per share, before extraordinary loss........ $ (0.73)
==========
Weighted average number of common and common
equivalent shares outstanding.................... 11,000
==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated
Financial Statements
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EMERITUS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated balance sheet as of
December 31, 1995 assumes, in the case of the "Emeritus Combined" column,
that the Refinancing occurred on December 31, 1995.
The "Emeritus Combined" column set forth in the unaudited pro forma
consolidated statements of operations for the year ended December 31, 1995
gives effect to the Refinancing as if such transaction had occurred on
January 1, 1995.
(2) PRO FORMA ADJUSTMENTS
(a) To eliminate the holdback reserve in the amount of $124,000,
which had previously been used to make mortgage interest payments, as if
the Refinancing occurred on December 31, 1995.
(b) To record cash received relating to the sale of the six operating
communities and one development community in the amount of $39,452,000, as
if the Refinancing occurred on December 31, 1995.
(c) To record cash collateral, lease commitment fees and tax escrow
in the amount of $1,013,000, $417,000 and $20,000, respectively.
(d) To eliminate the property, plant and equipment, net in the amount
of $32,294,000, as if the refinancing occurred on December 31, 1995.
(e) To eliminate accrued interest expense in the amount of $194,000,
as if the Refinancing occurred on December 31, 1995.
(f) To record refinancings of long-term debt in the amount of
$25,507,000, as if the Refinancing occurred on December 31, 1995.
(g) To record the deferred gain resulting from the sale of the six
operating communities and one development community in the amount of
$8,378,000, as if the Refinancing occurred on December 31, 1995.
(h) To record the historical operations for the six months ended June
30, 1995 for the six operating communities as if the Refinancing occurred
on January 1, 1995.
(i) To eliminate general and administrative expenses in the amount
of $231,000 that would not have been incurred had the Refinancing been
consummated on January 1, 1995.
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EMERITUS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
(j) To eliminate depreciation and amortization in the amount of
$1,282,000 for the year ended December 31, 1995, that would not have been
incurred if the Refinancing had been consummated on January 1, 1995.
(k) To record amortization expense of deferred lease costs in the
amount of $33,000 for the year ended December 31, 1995.
(l) To record rent expense and amortization of the deferred gain for
the six previously owned operating communities in the amount of $3,524,000
and $557,000, respectively, for the year ended December 31, 1995, as if the
Refinancing had been consummated on January 1, 1995.
(m) To eliminate interest expense in the amount of $1,084,000 for the
year ended December 31, 1995 relating to the Refinancing as if it had been
consummated on January 1, 1995.
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(C) EXHIBITS.
99.1 Florida Properties (see below)
99.1.1* Lease Agreement dated March 15, 1996 between
Meditrust Acquisition Corporation I and Emeritus
Properties I, Inc., with respect to Beneva Park
Club (Exhibit 10.16.1)
99.1.2* Lease Agreement dated March 15, 1996 between
Meditrust Acquisition Corporation I and Emeritus
Properties I, Inc., with respect to Central Park
Club (Exhibit 10.16.2)
99.1.3* Lease Agreement dated March 15, 1996 between
Meditrust Acquisition Corporation I and Emeritus
Properties I, Inc., with respect to College Park
Club (Exhibit 10.16.3)
99.1.4* Lease Agreement dated March 15, 1996 between
Meditrust Acquisition Corporation I and ESC I,
G.P., Inc. with respect to Park Club of Brandon
(Exhibit 10.16.4)
99.1.5* Lease Agreement dated March 15, 1996 between
Meditrust Acquisition Corporation I and Emeritus
Properties I, Inc., with respect to Park Club of
Fort Myers (Exhibit 10.16.5)
99.1.6* Lease Agreement dated March 15, 1996 between
Meditrust Acquisition Corporation I and Emeritus
Properties I, Inc., with respect to Park Club of
Oakbridge (Exhibit 10.16.6)
99.2 The Pines at Tewksbury in Tewksbury, Massachusetts
99.2.1* Lease Agreement dated March 15, 1996 between
Meditrust Acquisition Corporation I and Emeritus
Properties I, Inc., with respect to Tewksbury
(Exhibit 10.37.1)
99.3** Press release relating to the sale/leaseback transaction.
* Incorporated by reference to the indicated exhibit filed
with the Company's Annual Report on Form 10-K (File No. 1-
14012) on March 29, 1996.
** Previously filed.
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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.
Dated: May 30, 1996
EMERITUS CORPORATION
(Registrant)
/s/ Kelly J. Price
-----------------------------------
Kelly J. Price, Chief Financial Officer
/s/ James S. Keller
-----------------------------------
James S. Keller, Controller and Director of Accounting
(Principal Accounting Officer)
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