<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
____________________________________
AMENDMENT NO. 1
____________________________________
[MARK ONE]
[X] AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-11999
_________________________________________
ALTERNATIVE LIVING SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 39-1771281
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
450 N. SUNNYSLOPE ROAD, SUITE 300
BROOKFIELD, WI 53005
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (414) 789-9565
______________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
COMMON STOCK, PAR VALUE $.01 AMERICAN STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(TITLE OF CLASS)
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 __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. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant is $156,741,747 as of March 24, 1997. The number of outstanding
shares of the Registrant's Common Stock is 12,996,496 shares as of March 24,
1997.
_____________________________
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<PAGE> 2
EXPLANATORY NOTE
This Report on Form 10-K/A amends and restates in their entirety the
following Items of the Annual Report on Form 10-K of Alternative Living
Services, Inc. (the "Company") for the fiscal year ended December 31, 1996 (the
"1996 Form 10-K").
Item 2 of the 1996 Form 10-K has been amended to correct the Date
Opened information relating to several of the Company's residences, and Item 8
of the 1996 Form 10-K has been amended to correct the transposition of certain
amounts between the 1995 and 1994 columns in the Company's Consolidated
Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.
ITEM 2. PROPERTIES
The table below sets forth certain information with respect to the
Company's residences which are operated by the Company as of December 31, 1996.
The Company owns, leases, holds equity interest in or manages, on behalf of
third parties, these residences.
<TABLE>
<CAPTION>
OWNERSHIP RESIDENT DATE
RESIDENCE MODEL LOCATION CARE LEVEL (% OWNED)(1) CAPACITY OPENED(2)
- --------------- ---------------- ------------- ------------ -------- ---------
OWNED/LEASED
WISCONSIN
<S> <C> <C> <C> <C> <C>
Clare Bridge Brookfield Dementia Care Leased 24 Nov-91
Clare Bridge Middleton Dementia Care Owned 24 Mar-91
Wynwood Madison Frail Elderly Leased 54 Feb-92
Wynwood Brookfield Frail Elderly Leased 61 Mar-94
WovenHearts Baraboo Frail Elderly Owned 20 Sep-96
WovenHearts Brown Deer Frail Elderly Leased 15 Apr-95
WovenHearts(3) Cambridge Frail Elderly Owned(50.0) 15 Jan-96
WovenHearts Clintonville Frail Elderly Owned 18 Nov-94
WovenHearts Edgerton Frail Elderly Owned 16 Aug-88
WovenHearts Fond du Lac Frail Elderly Owned 19 Sep-96
WovenHearts Janesville Dementia Care Owned 16 Mar-92
WovenHearts(3) Janesville Frail Elderly Owned(50.0) 20 Nov-96
WovenHearts Jefferson Frail Elderly Owned 16 Oct-95
WovenHearts Jefferson Dementia Care Leased 16 May-91
WovenHearts Kaukauna Frail Elderly Owned 16 Jul-95
WovenHearts Manitowoc Frail Elderly Owned 20 Dec-95
WovenHearts Medford Frail Elderly Owned 19 Jun-90
WovenHearts Menomonie Frail Elderly Owned(19.0) 19 Mar-95
WovenHearts Neenah Frail Elderly Owned 20 Apr-96
WovenHearts New London Frail Elderly Owned 18 Jul-95
WovenHearts New Richmond Frail Elderly Owned(19.0) 15 Mar-95
WovenHearts Onalaska Frail Elderly Leased 19 Jun-95
WovenHearts Oshkosh Frail Elderly Owned 20 Aug-96
WovenHearts Platteville Frail Elderly Owned(72.7) 20 Nov-95
WovenHearts Plover Frail Elderly Owned 37 Jun-92
WovenHearts Plymouth Frail Elderly Owned(19.0) 15 Jun-94
WovenHearts Rice Lake Frail Elderly Owned 19 Oct-95
WovenHearts River Falls Frail Elderly Owned 20 Dec-96
WovenHearts Shawano Frail Elderly Owned 15 Oct-93
WovenHearts Sun Prairie Frail Elderly Owned 20 May-94
WovenHearts Sussex Frail Elderly Leased 20 Aug-95
WovenHearts Wausau Frail Elderly Owned 40 Jun-92
WovenHearts(3) Whitewater Frail Elderly Owned(50.0) 20 Nov-96
WovenHearts Wisconsin Rapids Frail Elderly Owned 20 Dec-95
WovenHearts Wisconsin Rapids Frail Elderly Owned(19.0) 19 May-95
--------
765
--------
</TABLE>
8
<PAGE> 3
<TABLE>
<CAPTION>
OWNERSHIP RESIDENT DATE
RESIDENCE MODEL LOCATION CARE LEVEL (% OWNED)(1) CAPACITY OPENED(2)
--------------- -------- ------------- ------------ -------- ---------
OWNED/LEASED
(CONTINUED)
<S> <C> <C> <C> <C> <C>
MINNESOTA
WovenHearts Austin Frail Elderly Owned 20 Dec-96
WovenHearts Mankato Frail Elderly Owned 20 Oct-96
WovenHearts Owatonna Frail Elderly Owned 20 Dec-96
--------
60
--------
OREGON
Crossings Albany Support Services Leased 74 Aug-90
Crossings Albany Support Services Leased 63 Jun-89
Crossings Forest Grove Support Services/
Frail Elderly Leased 88 Sep-90
Crossings McMinnville Support Services/
Frail Elderly Leased 87 May-91
Crossings Tualatin Fruit Elderly Leased 112 Feb-89
Crossings Gresham Frail Elderly Leased 78 Jan-90
Crossings Medford Frail Elderly Leased 76 Jan-91
--------
578
--------
MICHIGAN
Clare Bridge Ann Arbor Dementia Care Leased 36 Jun-95
Clare Bridge Farmington Hills Dementia Care Leased 28 Jul-94
Clare Bridge Farmington Hills II Dementia Cue Leased 32 Oct-95
Clare Bridge Lansing Dementia Cue Leased 36 Jan-96
Clare Bridge Utica Dementia Care Leased 36 Jan-95
Wynwood Northville Frail Elderly Owned(76%) 72 Oct-96
Wynwood Utica Frail Elderly Owned(76%) 72 Dec-96
--------
312
--------
COLORADO
Crossings Aurora Support Services Leased 159 Apr-91
Crossings Aurora Frail Elderly Leased 60 Apr-91
Crossings Boulder Support Services Leased 82 Aug-88
Crossings Boulder Frail Elderly Leased 76 Jun-94
--------
377
FLORIDA --------
Clare Bridge Bradenton Dementia Care Leased 36 Oct-95
Clare Bridge Ft. Myers Dementia Care Leased 38 Dec-96
Clare Bridge Sarasota Dementia Cue Leased 38 Dec-95
Wynwood Sarasota Frail Elderly Owned 86 Jun-90
Clare Bridge Tampa Dementia Care Leased 38 Oct-96
--------
236
--------
IDAHO
Crossings Boise Frail Elderly Leased 80 Jul-92
Crossings Boise Frail Elderly Leased 78 Nov-96
--------
158
--------
</TABLE>
9
<PAGE> 4
<TABLE>
<CAPTION>
OWNERSHIP RESIDENT DATE
RESIDENCE MODEL LOCATION CARE LEVEL (% OWNED)(1) CAPACITY OPENED(2)
- --------------- -------- ----------------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
OWNED/LEASED
(CONTINUED)
WASHINGTON
Crossings Richland Support Services/
Frail Elderly Leased 128 Jul-88
Crossings Tacoma Support Services Leased 119 Jun-87
--------
247
--------
NORTH CAROLINA
Wynwood Chapel Hill Frail Elderly Owned(51%) 70 Dec-96
--------
PENNSYLVANIA
Clare Bridge Lower Makefield Dementia Care Leased 48 Feb-96
Clare Bridge Montgomery Dementia Care Leased 48 Sep-96
Wynwood Richboro Frail Elderly/
Dementia Leased 113 Jun-90
--------
209
--------
CALIFORNIA
Crossings (4) Loma Linda Support Services/
Frail Elderly Leased 140 Jun-91
--------
MANAGED
WISCONSIN
WovenHearts (5) Lodi Frail Elderly Managed 15 --
Elm Grove House Elm Grove Dementia Care Managed 8 --
Finch House Greendale Dementia Cue Managed 8 --
North Shore House Fox Point Dementia Cue Managed 8 --
Oak Ridge House Wauwatosa Dementia Cue Managed 8 --
Parkway House Milwaukee Dementia Cue Managed 8 --
Ridgefield House Madison Dementia Cue Managed 8 --
--------
63
--------
Total 3,215
========
</TABLE>
(1) Approximately 75% of the residences identified as being owned by the
Company are subject to one or more mortgages or deeds of trust that
typically mature within the next three to 20 years.
(2) The dates in this table represent the dates the residences were
originally opened by either ALS or an acquired company.
(3) ALS shares management responsibility with its joint venture partner,
Memorial Community Hospital Association, Inc. of Edgerton, Wisconsin.
(4) This residence is leased under a lease that expires upon the first to
occur of (i) December 1998 or (ii) the achievement of a 95% occupancy
rate.
(5) The Company holds a 2.5% equity interest in, and has a right of first
refusal to purchase, this residence.
The Company occupies executive offices located in Brookfield, Wisconsin
under a lease expiring in January 2000. The Company also leases office space in
Nokomis, Florida; Chapel Hill, North Carolina; Yardley, Pennsylvania; Tacoma,
Washington; and Madison, Wisconsin.
10
<PAGE> 5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES:
Independent Auditors' Report ............................................................ 18
Consolidated Balance Sheets, as of December 31, 1996 and 1995 ........................... 19
Consolidated Statements of Operations for years ended December 31, 1996, 1995 and 1994 .. 20
Consolidated Statements of Changes in Stockholders' Equity for years ended December 31,
1996, 1995 and 1994 ................................................................. 21
Consolidated Statements of Cash Flows for years ended December 31, 1996, 1995 and 1994 .. 22
Notes to Consolidated Financial Statements .............................................. 23
</TABLE>
17
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Alternative Living Services, Inc.:
We have audited the accompanying consolidated balance sheets of
Alternative Living Services, Inc. and subsidiaries (the Company) as of December
31, 1996 and 1995, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
at December 31, 1996 and 1995, and the results of their operations and their
cash flows for each of the years in the three-year period ended December 31,
1996 in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Chicago, Illinois
February 21, 1997
18
<PAGE> 7
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents .............................. $25,796 $2,998
Resident receivables, net .............................. 1,614 55
Other current assets 4,989 283
-------- -------
Total current assets ............................... 32,399 3,336
-------- -------
Property, plant and equipment, net ........................ 79,816 28,460
Long-term investments ..................................... 1,171 1,183
Investments in and advances to unconsolidated affiliates .. 1,649 4,788
Other assets .............................................. 11,501 1,590
-------- -------
Total assets ....................................... $126,536 $39,357
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term obligations ...... $769 $163
Short-term notes payable ........................... 8,335 --
Accounts payable ................................... 1,985 786
Accrued expenses ................................... 8,130 1,180
-------- -------
Total current liabilities ................... 19,219 2,129
Long-term obligations, less current installments ...... 28,649 17,101
Other long-term liabilities ........................... 123 174
Deferred gain on sale ................................. 6,763 --
Minority interest ..................................... 5,888 610
Stockholders' equity :
Common Stock and additional paid-in capital ........ 76,108 21,746
Accumulated deficit ................................ (10,214) (2,403)
-------- -------
Total stockholders' equity .................. 65,894 19,343
-------- -------
Total liabilities and stockholders' equity .. $126,536 $39,357
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE> 8
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995 1994
-------- ----------- -------
<S> <C> <C> <C>
Revenue:
Resident service fees .......................... $38,634 $9,684 $4,506
Other .......................................... 965 780 451
-------- ----------- -------
Operating revenue ................................. 39,599 10,464 4,957
-------- ----------- -------
Operating expenses:
Residence operations ........................... 25,710 7,207 2,934
Lease expense .................................. 6,053 889 697
General and administrative ..................... 7,933 2,599 1,458
Depreciation and amortization .................. 2,994 815 258
Non-recurring charge ........................... 976 -- --
-------- ----------- -------
Total operating expenses .................... 43,666 11,510 5,347
-------- ----------- -------
Operating loss .................................... (4,067) (1,046) (390)
Other income (expense):
Interest expense, net .......................... (3,740) (813) (301)
Gain on sale of land ........................... -- 439 --
Equity in losses of unconsolidated affiliates .. (52) (438) (1)
Other expense .................................. (28) -- --
Minority interest in losses of consolidated
subsidiaries .................................. 76 112 49
-------- ----------- -------
Total other expense, net .................... (3,744) (700) (253)
-------- ----------- -------
Net loss .................................... $ (7,811) $ (1,746) $ (643)
======== =========== =======
Net loss per share ................................ $ (0.79) $ (0.30) $ (0.22)
======== =========== =======
Weighted average shares outstanding ............... 9,889 5,863 2,959
======== =========== =======
</TABLE>
See accompanying notes to consolidated financial statements.
20
<PAGE> 9
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
AND ADDITIONAL
PAID-IN CAPITAL STOCK
---------------------- ACCUMULATED SUBSCRIPTION
SHARES AMOUNTS DEFICIT RECEIVABLE TOTAL
---------------------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1993 .................. 1,813 $2,539 $ (14) $(2,200) $ 325
Receipt of stock subscription .................. -- -- -- 2,200 2,200
Contributed capital from majority
stockholder ................................ -- 2,678 -- -- 2,678
Net loss ....................................... -- -- (643) -- (643)
------ ------- -------- ------- -------
BALANCES AT DECEMBER 31, 1994 .................. 1,813 5,217 (657) -- 4,560
------ ------- -------- ------- -------
Net proceeds from private offering ............. 4,303 19,029 -- -- 19,029
Retirement of stock held by minority
stockholder ................................ (381) (2,500) -- -- (2,500)
Common Stock issued for contributed
capital .................................... 917 -- -- -- --
Net loss ....................................... -- -- (1,746) -- (1,746)
------ ------- -------- ------- -------
BALANCES AT DECEMBER 31, 1995 .................. 6,652 21,746 (2,403) -- 19,343
------ ------- -------- ------- -------
Proceeds from issuance of Common Stock ......... 3,873 41,648 -- -- 41,648
Shares issued in connection with acquisitions .. 2,483 12,877 -- -- 12.877
Purchase and retirement of Common Stock ........ (12) (163) -- -- (163)
Net loss ....................................... -- -- (7,811) -- (7,811)
------ ------- -------- ------- -------
BALANCES AT DECEMBER 31, 1996 .................. 12,996 $76,108 $(10,214) $ -- $65,894
====== ======= ======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE> 10
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
---------- -------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss .................................................... $ (7,811) $ (1,746) $ (643)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ............................... 2,994 815 258
Gain on sale of land ........................................ -- (439) --
Minority interest in losses of consolidated subsidiaries .... (76) (112) (49)
(Increase) decrease in net resident receivables ............. (1,290) 15 (93)
Increase in other current assets ............................ (1,742) (93) (172)
Increase (decrease) in accounts payable ..................... (687) 343 58
Increase in accrued expenses ................................ 3,452 223 168
---------- -------- -------
Net cash used in operating activities ............................ (5,160) (994) (473)
---------- -------- -------
Cash flows from investing activities:
Purchase of short-term investments .......................... -- -- (50)
Net proceeds from sale of land .............................. -- -- 972
Acquisitions of affiliates and facilities, net of cash ...... (7,798) (850) (67)
Payments for property, plant and equipment and project
development costs ...................................... (56,346) (12,667) (1,772)
Investments in and advances to unconsolidated affiliates .... (252) (3,187) (1,486)
Increase in long-term investments ........................... -- -- (1,183)
Payments for deferred costs ................................. -- (208) (30)
Changes in other long-term assets and liabilities ........... 3,836 (102) 116
-------- -------
Net cash used in investing activities ............................ (60,560) (17,225) (3,289)
----------- -------- -------
Cash flows from financing activities:
Contributions by minority partner and minority stockholder .. -- 1,275 745
Purchase of remaining limited partners ...................... -- -- (605)
Payments for financing costs ................................ -- (221) (37)
Repayment of line of credit and short-term note payable ..... (1,369) (4,208) --
Repayments of long-tem obligations .......................... (37,618) (6,575) (1,321)
Proceeds from issuance of long-term obligations ............. 33,863 15,890 --
Changes in advances from and notes payable to
unconsolidated affiliates .............................. -- (1,834) 217
Proceeds from sale/leaseback transactions ................... 51,996 -- --
Issuance of Common Stock and other capital contributions .... 41,648 19,029 2,677
Retirement of stock held by minority stockholder ............ -- -- (2,500)
Stock subscription received ................................. -- -- 2,200
----------- -------- -------
Net cash provided by financing activities ........................ 88,520 20,856 3,877
----------- -------- -------
Net increase in cash and cash equivalents ........................ 22,798 2,637 115
Cash and cash equivalents:
Beginning of period ......................................... 2,998 311 196
----------- -------- -------
End of period ............................................... $ 25,796 $ 2,998 $ 311
=========== ======== =======
Supplemental disclosure of cash flow information:
Cash paid for interest, including amounts capitalized ....... $ 4,047 $ 1,045 $ 142
----------- -------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE> 11
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) BUSINESS
Alternative Living Services, Inc. (the Company) was organized in December
1993 and develops, owns, and operates assisted living residences. As of
December 31, 1996, the Company operated 77 residences totaling 3,215 living
units located in Wisconsin, Michigan, Minnesota, Florida, Pennsylvania, Oregon,
Colorado, California, Washington, Idaho and North Carolina.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Company are as follows:
(A) Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. Results of operations of
the majority-owned subsidiaries are included from the date of
acquisition. All significant intercompany balances and transactions with
such subsidiaries have been eliminated in the consolidation.
(B) Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents for purposes of
the consolidated statements of cash flows.
(C) Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated
depreciation. Plant and equipment under capital leases are stated at the
present value of minimum lease payments. Depreciation is computed over
the estimated lives of the assets using the straight-line method.
Buildings and improvements are depreciated over 20 to 40 years, and
furniture, fixtures and equipment are depreciated over seven to twelve
years. Maintenance and repairs are expensed as incurred.
(D) Intangible Assets
Intangible assets, which are included in other assets, are composed
of organization costs and deferred financing costs. Organization costs
are amortized on a straight-line basis over five years. Deferred
financing costs are amortized on the effective-interest method over the
term of the related debt.
(E) Goodwill
Goodwill represents the cost of acquired net assets in excess of
their fair market values. Amortization of goodwill is computed using the
straight-line method over the expected periods to be benefitted,
generally forty years. The Company's management periodically evaluates
goodwill for impairment based upon expectations of nondiscounted
operating cash flows in relation to the net capital investment in the
subsidiary.
23
<PAGE> 12
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(F) Revenue
Revenue, which is recorded primarily when services are rendered,
consists primarily of resident service fees which are reported at net
realizable amounts. Other revenue consists primarily of management and
development fees from unconsolidated affiliates. Management fees are
recognized as earned in accordance with signed management agreements, and
reported at net realizable amounts. Development fees are deferred and
recognized as earned over the life of the development.
(G) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the expected
future tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date.
(H) Fair Value of Financial Instruments
The carrying amounts of cash, cash equivalents and short-term
investments approximate fair value due to the short-term nature of the
accounts and due to the accounts earning interest at current market
rates. The carrying amount of the Company's debt approximates fair value
due to the interest rates approximating the current rates available to
the Company for similar borrowing arrangements.
(I) Use of Estimates
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles. The
preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
(J) Net Loss Per Share
Net loss per share is based upon the weighted average number of the
Company's common and common equivalent shares outstanding during each
period. Common equivalent shares include stock options, which have been
included using the treasury stock method only when their effect is
dilutive.
In connection with the initial public offering (IPO), which became
effective on August 9, 1996 and pursuant to the requirements of the
Securities and Exchange Commission, for purposes of net loss per share,
Common Stock issued and Common Stock options granted at per share amounts
less than the IPO price per share subsequent to May 1995 have been
reflected as outstanding for all periods prior to the effective date of
the IPO. Accordingly, weighted average shares outstanding was increased
by 1,146,928 shares for the effect of such Common Stock and stock
options.
24
<PAGE> 13
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(K) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
of
The Company adopted the provisions of SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, on January 1, 1996. This Statement requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an
asset to future net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the
assets exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to
sell. Adoption of this Statement did not have a material impact on the
Company's financial position, results of operations, or liquidity.
(L) Stock Option Plan
Prior to January 1, 1996 the Company accounted for its stock option
plan in accordance with the provisions of Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. As such, compensation expense would be recorded
on the date of grant only if the current market price of the underlying
stock exceeded the exercise price. On January 1, 1996, the Company
adopted SFAS No. 123, Accounting for Stock-Based Compensation, which
permits entities to recognize as expense over the vesting period the fair
value of all stock-based awards on the date of grant. Alternatively,
SFAS No. 123 also allows entities to continue to apply the provisions of
APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in
1995 and future years as if the fair-value-based- method defined in SFAS
No. 123 had been applied. The Company has elected to continue to apply
the provisions of APB Opinion No. 25 and provide the pro forma
disclosure provisions of SFAS No. 123.
(3) PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment at December 31, follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Land ................................. $9,919 $4,592
Land improvements .................... 86 529
Buildings ............................ 54,343 16,563
Furniture, fixtures and equipment .... 7,204 3,275
Construction in progress ............. 12,744 5,259
------- -------
Total property, plant and equipment .. 84,296 30,218
Less accumulated depreciation ........ 4,480 1,758
------- -------
Property, plant and equipment, net ... $79,816 $28,460
======= =======
</TABLE>
At December 31, 1996, property and equipment includes $10,608,402 of
buildings and improvements and $592,000 of fixtures and equipment held under
capital leases and related financing obligations. Related accumulated
amortization totaled $2,077,929.
Interest is capitalized in connection with the construction of residences
and is amortized over the estimated useful lives of the residences. Interest
capitalized in 1996 and 1995 was approximately $490,718 and $62,000,
respectively.
25
<PAGE> 14
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Construction in process at December 31, 1996 consisted principally of
costs related to the construction of assisted living residences, with
outstanding construction commitments totaling approximately $72.8 million.
(4) ACQUISITIONS
On March 31, 1995, the Company acquired the Palmer Ranch, an 86-unit
assisted living residence in Sarasota, Florida. The total purchase cost of
$850,000, including acquisition costs of $52,000, was paid in cash. This
transaction was accounted for as a purchase.
On January 26, 1996, the Company acquired Heartland Retirement Services,
Inc. (Heartland) for $5,500,000 cash plus 261,424 shares of the Company's
Common Stock with an estimated market value of $1,749,000. The acquisition
was effective as of January 1, 1996. This acquisition was financed by a bridge
loan of approximately $8,700,000 which was obtained from a private financial
management firm whose president is a director of the Company. As of January 1,
1996, Heartland operated 20 assisted living residences. This transaction was
accounted for as a purchase.
On May 24, 1996, the Company acquired New Crossings International
Corporation, a company which operated 15 assisted living facilities as of May,
1996. The total purchase consideration was 2,007,049 shares of the Company's
Common Stock with an estimated value of $9,281,000. This transaction was
accounted for as a purchase.
On May 24, 1996, the Company acquired the limited partnership interest in
five Michigan limited partnerships owned by unrelated investors for aggregate
consideration of 115,024 shares of Common Stock valued at $1,000,000 for
accounting purposes and promissory notes in the aggregate principal amount of
$2,900,000. These promissory notes are due and payable on January 31, 1997 and
bear interest at the rate of 8% per annum. The Company also acquired 100% of
the outstanding stock of ALS-Midwest pursuant to a merger transaction whereby
the shareholders of ALS-Midwest, other than the Company, received, in exchange
for their shares of ALS-Midwest, $300,000 in cash and 57,512 shares of the
Company's Common Stock valued at $500,000 for accounting purposes.
Contemporaneously with the merger, the Company refunded certain advances made
to the partnership by a cash payment of $700,000 and delivery of a promissory
note in the amount of $1.4 million which was paid in 1996.
On August 9, 1996, the Company acquired the 40% partnership interests not
already owned by it in three partnerships for an aggregate purchase price of
$3.2 million. This transaction has been accounted for as a purchase.
On August 13, 1996, the Company acquired a residence it leased for $1.1
million. This transaction was accounted for as a purchase.
On September 13, 1996, the Company acquired a residence it managed and had
a 0.5% equity interest in for $800,000. This transaction has been accounted for
as a purchase.
On September 30, 1996, the Company acquired a residence it managed and had
a 2.5% equity interest in for $1.1 million. This transaction has been
accounted for as a purchase.
On December 19, 1996, the Company acquired 6 assisted living residences
for $5.5 million. This transaction has been accounted for as a purchase.
As of December 31, 1996, the Company had an 80% ownership interest in four
development projects and a 51% ownership interest in ten development projects.
The 20% and 49% interests in these consolidated affiliates not held by the
Company and the losses therefrom have been reflected as minority interest in
the consolidated balance sheets and as minority interest in losses of
consolidated subsidiaries in the consolidated statements of operations.
26
<PAGE> 15
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(5) LONG-TERM INVESTMENTS
Long-term investments are comprised of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Collateral reserve fund, $1,000,000 certificate of deposit
required to be maintained until July 10, 2000 ............ $1,005 $1,016
Debt reserve fund, $112,000 certificate of deposit
required to be maintained until July 10, 2000 ............ 113 114
Debt reserve fund, $53,000 certificate of deposit
required to be maintained until August 15, 2002 .......... 53 53
------ ------
Total long-term investments .............................. $1,171 $1,183
====== ======
</TABLE>
(6) INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates consist of the
following at December 31, 1995 (in thousands):
<TABLE>
<S> <C> <C>
1996 1995
------ ------
Investments in unconsolidated affiliates .......... $285 $1,581
Advances to unconsolidated affiliates:
Partnerships ................................... 1,089 2,540
Notes receivable ............................... 275 383
Other .......................................... -- 284
------ ------
Total advances to unconsolidated affiliates ....... 1,364 3,207
------ ------
Total investments in and advances to unconsolidated
affiliates ..................................... $1,649 $4,788
====== ======
</TABLE>
Advances to unconsolidated affiliates also includes management fees
pursuant to an agreement with an affiliate, which is 50% owned and controlled
by an officer and a shareholder. Under the terms of the agreement, this
affiliate is obligated to pay a monthly management fee of 11% of
gross operating revenue. During 1996 and 1995, the management fees, included
in other revenue, were $175,000 and $252,000 respectively.
Notes receivable at December 31, 1996 includes $200,000 due from an
officer and a shareholder of the Company which accrues interest at 6% and is
payable in full on December 30, 1999. Notes receivable at December 31, 1995
included $150,000 due from an officer and a shareholder of the Company, which
was repaid on December 31, 1996.
27
<PAGE> 16
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(7) OTHER ASSETS
Other assets are comprised of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
---- ----
Goodwill, net .................................................... $5,216 $955
Organizational and other costs, net .............................. 1,982 89
Deferred financing costs, net .................................... 948 273
Deposits and other ............................................... 3,355 273
------- ------
Total other assets ............................................... $11,501 $1,590
======= ======
</TABLE>
Accumulated amortization of goodwill was $163,134 and $800 as of December
31, 1996 and 1995, respectively.
(8) LONG-TERM DEBT, CAPITAL LEASE AND FINANCING OBLIGATIONS
Long-term debt, capital leases, and financing obligations consist of the
following at December 31 (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
Mortgage payable, due in 25 quarterly installments, the first ---- ----
four quarterly installments represent interest only, interest at
8% through June 30, 1996, thereafter interest at the prime rate
plus 1% not to exceed 10% (9.25% at December 31, 1996),
outstanding principal balance due on March 31, 2000................. $998 $1,000
Mortgage payable, due in 25 quarterly installments, the first
four quarterly installments represent interest only, interest at
8% through June 30, 1996, thereafter interest at the prime rate
plus 1% not to exceed 10% (9.25% at December 31, 1996),
outstanding principal balance due on April 2, 2000.................. 391 400
Mortgage payable, due in 60 monthly installments including
interest at 9.21%, outstanding principal balance
due on July 10, 2000................................................ 4,234 4,279
Mortgage payable, due in 83 monthly installments including interest
at 9.985%, outstanding principal balance due on August 15, 2002..... 1,875 1,914
Mortgages payable, due in 300 monthly installments including
interest at 9.75%................................................... 2,945 --
Mortgage payable, interest at the prime rate plus 1% (9.25%
at December 31, 1996) 36 interest only payments
with all remaining interest and principal due on
April 1, 1999....................................................... 3,355 --
</TABLE>
28
<PAGE> 17
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C>
Mortgage payable, interest at the prime rate plus 1% (9.25%
at December 31, 1996) 36 interest only payments
with all remaining interest and principal due on
April 1, 1999 ...................................................... 2,636 --
Mortgage payable, due December 10, 2000, the first 13 of 60
total payments represent interest only, interest at LIBOR
plus applicable LIBOR margin based on debt service coverage
ratio .............................................................. 2,137 --
Sale/leaseback financing obligation, variable interest
at the 11th District FHLB rate plus 2 3/4% payable in
monthly installments, due 2000 ..................................... 5,316 --
Capital lease obligations, interest at rates between 3.4%
and 23% payable in monthly installments, due
through 2000 ....................................................... 114 --
Mortgage payable, due in 120 monthly installments including interest
at 8.46% through June 30, 2000, thereafter at the five-year
U.S. Treasury rate plus 2.5% ....................................... -- 6,567
Note payable, due November 20, 2020, first twelve monthly payments
represent interest only, interest at the prime rate plus 1% ........ -- 3,104
Debt refinanced long-term through a sale/leaseback
financing transaction:
Mortgage notes payable, fixed interest rates
of 8% to 10.9% ............................................ 3,290 --
Equity participation notes, including contingent
participation obligations ................................. 2,127
------- -------
Total long-term obligations ........................................ 29,418 17,264
Less current installments .......................................... 769 163
------- -------
Total long-term obligations less current installments .............. $28,649 $17,101
======= =======
</TABLE>
The mortgages payable are secured by security agreements and guarantees by
the Company. In addition, certain security agreements require the Company to
maintain collateral and debt reserve funds (see Notes 5 and 13).
Principal payments on long-term debt, capital leases and financing
obligations for the next five years and thereafter are as follows (in
thousands):
<TABLE>
<S> <C>
1997 ..................................................................... $ 769
1998 ..................................................................... 802
1999 ..................................................................... 12,150
2000 ..................................................................... 13,917
2001 ..................................................................... 30
Thereafter ............................................................... 1,750
-------
Total long-term debt, capital leases and financing obligations ........... $29,418
=======
</TABLE>
29
<PAGE> 18
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(9) ACCRUED EXPENSES
Accrued expenses are comprised of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Accrued salaries and wages ........... $2,071 $ 332
Advance rents and deposits ........... 2,754 546
Other ................................ 3,305 302
------ ------
Total accrued expenses ............... $8,130 $1,180
====== ======
</TABLE>
(10) STOCKHOLDERS' EQUITY
The Company was organized in December 1993, and was initially capitalized
by Evergreen Healthcare, Inc. ("Evergreen") and Care Living Centers, Inc.
("CLC"), two unrelated companies.
The Company completed a private placement equity offering on May 26, 1995,
resulting in net proceeds of $19,029,080 for 4,302,994 shares of its Common
Stock. Simultaneously, the Company issued 917,150 shares of its stock to
Evergreen as consideration for $2,677,342 cash received during 1994, which is
reflected as Common Stock and additional paid-in capital in the accompanying
balance sheet. Subsequent to the issuance of stock in May 1995 the Company was
no longer a majority-owned subsidiary of Evergreen.
In August 1996, the Company completed an initial public offering of
6,000,000 shares of Common Stock, of which 3,443,206 shares were sold by the
Company and 2,556,794 shares were sold by existing stockholders. After
deducting underwriting discounts, commissions and offering expenses, the net
proceeds to the Company were approximately $40 million.
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, $.01 par value, and 5,000,000 shares of $.01 par value
preferred stock. At December 31, 1996, there were 13,008,135 shares of Common
Stock issued, of which 12,996,496 were outstanding. 11,639 are held in
treasury. At December 31, 1995 there were 6,652,059 shares of Common Stock
issued and outstanding. At December 31, 1996 and 1995 no shares of preferred
stock were issued and outstanding.
(11) STOCK OPTION PLAN
In 1995, the Company adopted a stock option plan (the "1995 Plan")
pursuant to which the Company's Board of Directors may grant stock options to
officers and key employees. The Plan authorizes grants of options to purchase
up to 1,425,000 shares of authorized but unissued Common Stock. Stock
options are granted with an exercise price equal to the stock's fair market
value at the date of grant. Generally, stock options have 10-year terms and
vest 25% per year and become fully exercisable after 4 years from the date of
grant.
At December 31, 1996, 786,821 additional shares were available for grant
under the 1995 Plan. The per share weighted-average fair value of stock
options granted during 1996 and 1995 was $3.49 on the date of grant using the
Black Scholes option-pricing model with the following weighted-average
assumptions: 1996 - expected dividend yield 0.0%, risk-free interest rate of
6.5% and an expected life of 7 years; 1995 - expected dividend yield 0.0%,
risk-free interest rate of 6.5%, and an expected life of 7 years.
30
<PAGE> 19
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The Company applies APB Opinion No. 25 in accounting for its 1995 Plan
and, accordingly, no compensation cost has been recognized for its stock
options in the financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under SFAS
No. 123, the Company's net loss and net loss per share would have been
increased to the pro forma amounts indicated below, (in thousands, except per
share data):
<TABLE>
<CAPTION>
Net Loss Net Loss Per Share
1996 1995 1996 1995
------- ------- ------ ------
<S> <C> <C> <C> <C>
As reported $(7,811) $(1,746) $(0.79) $(0.30)
Pro forma $(8,406) $(1,922) $(0.85) $(0.33)
</TABLE>
Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
Number of Weighted-Average
Shares Exercise Price
--------- ----------------
<S> <C> <C>
Balance at December 31, 1994 -- --
Granted 430,883 $ 4.67
Exercised -- --
Forfeited -- --
Expired -- --
------- ------
Balance at December 31, 1995 430,883 4.67
Granted 279,799 9.21
Exercised -- (7.22)
Forfeited (2,175) (4.65)
Expired -- --
------- ------
Balance at December 31, 1996 708,507 $ 6.31
======= ======
</TABLE>
At December 31, 1996, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $2.92 - $13.00 and 8
years, respectively.
At December 31, 1996 and 1995, the number of options exercisable was
145,922 and 103,483, respectively, and the weighted-average exercise price of
those options was $4.22 and $5.92, respectively.
31
<PAGE> 20
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(12) INCOME TAXES
Deferred tax assets and liabilities consist of the following at December
31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ -----
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ............... $1,928 $ 800
Investment in unconsolidated affiliates ........ 104 105
Deferred gain sale/leaseback ................... 2,887 --
Vacation accrual ............................... 198 --
Tax versus book depreciation ................... 107 --
Other accruals - Crossings' purchase ........... 270 --
Investment in consolidated affiliates .......... 1,566 --
AMT credit carryover ........................... 31
Other .......................................... 184 104
------ -----
Total deferred tax assets ........................ 7,275 1,009
Less valuation allowance ......................... 5,539 917
------ -----
Deferred tax assets, net of valuation allowance .. $1,736 $ 92
====== =====
Deferred tax liabilities:
Tax versus book depreciation ................... -- 92
Book versus tax basis (Crossings' purchase) .... 1,736 --
------ -----
Tax deferred tax liabilities ..................... $1,736 $ 92
====== =====
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1996 and
1995 was $5,538,500 and $917,500, respectively. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon
the generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. As a result of acquisitions
during 1996, subsequent recognition of $537,000 of tax benefits relating to the
valuation allowance for deferred tax assets will be allocated to goodwill.
The Company has approximately $4,881,000 of net operating loss
carryforwards at December 31, 1996. Unused net operating loss carryforwards of
approximately $3,222,650 will expire commencing in the year 2001 through 2009.
The remaining $1,658,350 of net operating loss carryforwards will begin to
expire, if unused, beginning in the year 2008 through 2010. The utilization of
net operating loss carryforwards may be further limited as to future use due to
the change in control provisions in the Internal Revenue Code which apply
because of the Crossings purchase in May 1996. In addition, the Company has
alternative minimum tax credit carryforwards of approximately $31,000 which are
available to reduce future federal regular income taxes, if any, over an
indefinite period.
(13) COMMITMENTS AND CONTINGENCIES
The Company leases certain properties under noncancelable operating and
capital leases that expire at various dates through the year 2014.
<PAGE> 21
ALTERNATIVE LIVING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
Future annual minimum operating lease payments and future minimum capital
lease payments as of December 31, 1996 are as follows (in thousands):
Capital Operating
<S> <C> <C>
1997 ................................................. $ 1,359 $ 12,857
1998 ................................................. 1,341 12,924
1999 ................................................. 6,118 12,979
2000 ................................................. 4,922 13,051
2001 ................................................. -- 12,892
Thereafter ........................................... -- 129,275
------- --------
Total minimum lease payments ......................... 13,740 $193,978
Less amount representing interest .................... 2,894 ========
-------
Present value of net minimum capital lease payments .. 10,846
Less current portion ................................. 345
-------
Long-term capital lease obligations .................. $10,501
=======
</TABLE>
(14) SALE/LEASEBACK TRANSACTIONS
On January 22, 1996, the Company sold two assisted living residences for
approximately $7,022,000 and leased them back under a ten-year sale and
leaseback agreement. The transaction produced a gain of approximately
$1,083,000, which was deferred and is being amortized over the lease period.
On December 31, 1996, the Company sold twelve assisted living residences
for approximately $45.0 million and leased them back under a twelve-year sale
and leaseback agreement. The transaction produced a gain of approximately $5.7
million which will be deferred and amortized over the lease period.
(15) SUBSEQUENT EVENTS
On February 12, 1997, the Company entered into an agreement to acquire
interests in three recently constructed assisted living residences in upstate
New York with an aggregate capacity of 313 residents. The acquisition will
represent an investment by the Company of approximately $21.5 million (cash and
assumed debt).
33
<PAGE> 22
Signature
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Brookfield, State of Wisconsin, on the 12th day of May, 1997.
ALTERNATIVE LIVING SERVICES, INC.
By: /s/ THOMAS E. KOMULA
-----------------------------------------
Senior Vice President, Treasurer, Chief
Financial Officer and Assistant Secretary
51
