<PAGE>
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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 JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______.
COMMISSION FILE NUMBER 0-21159
ATRIA COMMUNITIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 61-1303738
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
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 x No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OF COMMON STOCK OUTSTANDING AT AUGUST 5, 1997
--------------------- -----------------------------
Common stock, $.10 par value 23,366,487 shares
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1 of 16
<PAGE>
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 six months ended June 30, 1997 and 1996............. 3
Condensed Consolidated Balance Sheet -- June 30,
1997 and December 31, 1996...................................... 4
Condensed Consolidated Statement of Cash Flows -- for
the six months ended June 30, 1997 and 1996..................... 5
Notes to Condensed Consolidated Financial Statements.............. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk........ 14
PART II. OTHER INFORMATION
Item 2. Changes in Securities............................................. 14
Item 4. Submission of Matters to a Vote of Security Holders............... 14
Item 6. Exhibits and Reports on Form 8-K.................................. 15
2
<PAGE>
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
QUARTER SIX MONTHS
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues.............................................. $16,982 $12,837 $31,199 $25,448
------- ------- ------- -------
Salaries, wages and benefits.......................... 6,846 4,727 12,506 9,404
Supplies.............................................. 1,518 1,223 2,808 2,450
Rent.................................................. 163 99 202 199
Depreciation and amortization......................... 1,735 1,313 3,123 2,625
Non-recurring transactions............................ - 1,050 - 1,050
Other operating expenses.............................. 3,383 2,495 6,169 4,929
------- ------- ------- -------
13,645 10,907 24,808 20,657
------- ------- ------- -------
Operating income...................................... 3,337 1,930 6,391 4,791
Interest expense...................................... 1,228 1,051 2,410 2,033
Investment income..................................... (353) (61) (1,106) (109)
------- ------- ------- -------
Income from operations before income taxes............ 2,462 940 5,087 2,867
Provision for income taxes............................ 983 372 2,030 1,133
------- ------- ------- -------
Income from operations................................ 1,479 568 3,057 1,734
Extraordinary loss on extinguishment of debt, net of
income tax benefit.................................. (199) - (199) -
------- ------- ------- -------
Net income........................................ $ 1,280 $ 568 $ 2,858 $ 1,734
======= ======= ======= =======
Earnings per common and common equivalent share:
Primary:
Income from operations............................. $ 0.09 $ 0.06 $ 0.19 $ 0.17
Extraordinary loss on extinguishment of debt....... (0.01) - (0.01) -
------- ------- ------- -------
Net income........................................ $ 0.08 $ 0.06 $ 0.18 $ 0.17
======= ======= ======= =======
Fully diluted:
Income from operations............................. $ 0.08 $ 0.06 $ 0.18 $ 0.17
Extraordinary loss on extinguishment of debt....... (0.01) - (0.01) -
------- ------- ------- -------
Net income........................................ $ 0.07 $ 0.06 $ 0.17 $ 0.17
======= ======= ======= =======
Shares used in computing earnings per common and
common equivalent share:
Primary............................................ 16,660 10,095 16,322 10,095
Fully diluted...................................... 16,825 10,095 16,489 10,095
</TABLE>
See accompanying notes.
3
<PAGE>
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................... $ 16,081 $ 65,238
Resident accounts receivable less allowance for loss of $144 -- June 30
and $130 -- December 31................................................... 551 356
Other....................................................................... 1,977 1,203
-------- --------
18,609 66,797
Property and equipment, at cost.............................................. 226,088 161,946
Accumulated depreciation..................................................... (30,051) (27,426)
-------- --------
196,037 134,520
Intangible assets less accumulated amortization of $1,574 -- June 30
and $3,599 -- December 31................................................... 9,985 3,353
Other........................................................................ 8,088 5,112
-------- --------
$232,719 $209,782
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................ $ 2,207 $ 2,536
Salaries, wages and other compensation...................................... 1,339 1,163
Other accrued liabilities................................................... 4,435 2,686
Long-term debt due within one year.......................................... 14,959 14,825
-------- --------
22,940 21,210
Long-term debt............................................................... 102,993 95,207
Deferred credits and other liabilities....................................... 9,585 4,419
Stockholders' equity:
Common stock, $.10 par value; authorized 50,000 shares;
issued and outstanding 16,466 shares at June 30 and 15,830 at December 31.. 1,647 1,583
Capital in excess of par value.............................................. 90,991 85,658
Retained earnings........................................................... 4,563 1,705
-------- --------
97,201 88,946
-------- --------
$232,719 $209,782
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
ATRIA COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................................... $ 2,858 $ 1,734
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization..................................................... 3,123 2,625
Extraordinary loss on extinguishment of debt...................................... 332 -
Deferred income taxes............................................................. - 35
Non-recurring transactions........................................................ - 1,050
Other............................................................................. (103) (13)
Changes in operating assets and liabilities:
Accounts receivable.............................................................. (120) (246)
Other assets..................................................................... 316 (151)
Accounts payable................................................................. (1,546) 896
Income taxes..................................................................... (180) 1,133
Other accrued liabilities........................................................ 1,407 (627)
-------- -------
Net cash provided by operating activities....................................... 6,087 6,436
-------- -------
Cash flows from investing activities:
Purchase of property and equipment................................................ (22,648) (1,753)
Acquisition of new businesses..................................................... (8,000) -
Acquisition of American ElderServe Corporation.................................... (8,720) -
Other............................................................................. (476) 8
-------- -------
Net cash used in investing activities........................................... (39,844) (1,745)
-------- -------
Cash flows from financing activities:
Issuance of long-term debt........................................................ 2,530 5,178
Repayment of long-term debt....................................................... (17,841) (6,020)
Net payments to Vencor, Inc....................................................... - (2,422)
Other............................................................................. (89) (97)
-------- -------
Net cash used in financing activities........................................... (15,400) (3,361)
-------- -------
Change in cash and cash equivalents................................................. (49,157) 1,330
Cash and cash equivalents at beginning of period.................................... 65,238 2,819
-------- -------
Cash and cash equivalents at end of period.......................................... $ 16,081 $ 4,149
======== =======
Supplemental information:
Interest payments................................................................. $ 2,673 $ 1,278
Income tax payments............................................................... 2,047 1,133
Fair value of common stock issued in connection with the acquisition of
American ElderServe Corporation.................................................. 5,195 -
</TABLE>
See accompanying notes.
5
<PAGE>
ATRIA COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- REPORTING ENTITY
Atria Communities, Inc. ("Atria" or the "Company") is a national provider of
assisted and independent living communities for the elderly. At June 30, 1997,
Atria operated 40 communities located in 17 states with a total of 3,977 units,
including 1,718 assisted living units and 2,259 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 June 30, 1997, Vencor owned 10,000,000 shares, or 60.7%, of Atria's
outstanding common stock.
NOTE 2 -- BASIS OF PRESENTATION
For periods prior to the IPO, the accompanying condensed consolidated
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, these financial statements should be read in
conjunction with Atria's audited consolidated financial statements for the year
ended December 31, 1996 filed with the Securities and Exchange Commission on
Form 10-K.
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 all such adjustments are of a normal and recurring nature.
Prior year amounts have been reclassified to conform with current year
presentation.
NOTE 3 -- REVENUES
Revenues are recognized when services are rendered and consist of daily
resident fees and fees for other ancillary services. Agreements with residents
are generally for a term of one year. Revenues from management contracts are
recognized in the period earned in accordance with the terms of the management
agreement.
Substantially all revenues are derived from private pay sources. A summary of
revenues for the quarter and six months ended June 30, 1997 and 1996 follows
(dollars in thousands):
<TABLE>
<CAPTION>
QUARTER SIX MONTHS
---------------- ----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Owned and leased facilities.. $16,693 $12,770 $30,831 $25,314
Managed facilities........... 289 67 368 134
------- ------- ------- -------
$16,982 $12,837 $31,199 $25,448
======= ======= ======= =======
</TABLE>
6
<PAGE>
ATRIA COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4 -- NON-RECURRING TRANSACTIONS
In June 1996, Atria recorded a non-recurring pre-tax charge of $1.1 million in
connection with the settlement of certain litigation involving a minority
partner at one of its communities.
NOTE 5 -- EARNINGS PER COMMON SHARE
Shares used in the computation of earnings per common share include 10,000,000
shares of common stock issued to Vencor for its contribution of assets to Atria
and the assumption by Atria of related liabilities and shares of restricted
stock issued at the consummation date of the IPO. In addition, for the quarter
and six months ended June 30, 1997, the computation also gives effect to the
5,750,000 and 636,487 shares issued in connection with the IPO and American
ElderServe acquisition, respectively, and the dilution associated with the
issuance of common stock options. Share and per share amounts for periods prior
to the IPO are presented on a pro forma basis.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 "Earnings Per Share," which will require Atria to change the current
method of computing earnings per common share and restate all prior periods.
Statement No. 128 is required to be adopted on December 31, 1997 and requires,
among other things, that the calculation of primary earnings per common share
exclude the dilutive effect of common stock options. The change in the
calculation method is not expected to have a material impact on previously
reported earnings per common share.
NOTE 6 -- AMERICAN ELDERSERVE ACQUISITION
On April 1, 1997, Atria acquired American ElderServe Corporation ("American
ElderServe"), an operator of assisted living communities, for a combination of
Atria common stock, cash and assumption of debt valued at approximately $30.7
million. At the time of the acquisition, American ElderServe operated 12
assisted living communities consisting of 503 units and also had six additional
facilities under construction containing 345 units scheduled to open in 1997. A
summary of the American ElderServe acquisition follows (dollars in thousands):
<TABLE>
<CAPTION>
<S> <C>
Fair value of assets acquired....... $36,812
Fair values of liabilities assumed.. 22,873
-------
Net assets acquired.............. 13,939
Fair value of common stock issued... (5,195)
Cash received from acquired entity.. (24)
-------
Net cash paid.................... $ 8,720
=======
</TABLE>
The purchase price paid in excess of the fair value of identifiable net assets
acquired (to be amortized over 30 years by the straight-line method) aggregated
$5.7 million.
7
<PAGE>
ATRIA COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 6 -- AMERICAN ELDERSERVE ACQUISITION (CONTINUED)
The pro forma effect of the American ElderServe acquisition assuming that the
transaction occurred on January 1, 1996 follows (dollars in thousands, except
per share amounts):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------
1997 1996
------- -------
<S> <C> <C>
Revenues................................................. $33,021 $27,598
Income (loss) from operations............................ (375) 1,397
Net income (loss)........................................ (574) 1,397
Earnings (loss) per common and common equivalent share:
Primary:
Income (loss) from operations....................... $ (0.02) $ 0.13
Net income (loss)................................... (0.03) 0.13
Fully diluted:
Income (loss) from operations....................... $ (0.02) $ 0.13
Net income (loss)................................... (0.03) 0.13
</TABLE>
Pro forma loss from operations for the six months ended June 30, 1997 includes
non-recurring compensation expense incurred by American ElderServe in connection
with accelerated vesting of certain stock options exercised in conjunction with
the American ElderServe acquisition, the effect of which reduced pro forma net
income by $2.2 million or $0.13 per common share.
In connection with the American ElderServe acquisition, the Company entered
into an agreement with Elder Healthcare Developers, L.L.C. ("Elder Healthcare"),
a limited liability company owned 10% by Atria and 90% by Assisted Care
Developers, L.L.C., to develop at least 15 assisted living communities for the
Company in the southeastern United States over the next three years. Assisted
Care Developers is wholly-owned by George A. Schoepf, former Executive Vice
President of American ElderServe and the brother of Andy L. Schoepf, the
Company's Chief Operating Officer.
NOTE 7 -- SUBSEQUENT EVENTS
In July 1997, the Company completed a secondary offering for the issuance of
6,900,000 shares of common stock at $14.00 per share (the "Secondary Offering").
The net proceeds from the Secondary Offering (approximately $91 million) will be
used to finance the development and acquisition of assisted living communities
and for general corporate purposes. As a result of the Secondary Offering,
Vencor will own approximately 42.8% of the outstanding common stock of Atria.
Additionally, in July 1997, the Company repaid the $14 million note payable to
Vencor (included in current liabilities at June 30, 1997).
8
<PAGE>
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 40 communities comprising 3,977 units
located in 17 states. At June 30, 1997, Atria had 35 assisted living
communities comprising approximately 2,459 units under development, including 15
communities under construction.
PLANNED EXPANSION AND DEVELOPMENT
Atria intends to expand its business by developing or acquiring 60 to 85
additional assisted living communities consisting of approximately 5,400 to
7,650 units by the year 2000 (including the 35 communities currently being
developed and the communities developed and acquired since the IPO) and
converting at least 750 of its existing independent living units to assisted
living units by the year 2000. The Company will pursue acquisitions in
conjunction with its development efforts in order to cluster assisted living
communities in targeted markets. The estimated cost to construct, equip or
otherwise acquire such communities could approximate $375 to $550 million,
substantially in excess of the Company's present capital resources.
The Company currently estimates that the net proceeds from the Secondary
Offering completed in July 1997, together with existing capital resources and
financing commitments under its $200 million bank credit facility (the "Atria
Credit Facility"), will be sufficient to fund its development and acquisition
program through mid-1998. 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 acceptable to Atria, nor can there be any assurance that
additional financing will not be required or sought by Atria in 1997.
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 approximately 12 months 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 reference to certain cautionary
statements detailed in Atria's Annual Report on Form 10-K for the year ended
December 31, 1996 filed with the Securities and Exchange Commission.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
A summary of operations follows:
PERCENTAGE OF REVENUES
-----------------------------
SECOND QUARTER SIX MONTHS
------------- -------------
1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
Revenues.......................... 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Salaries, wages and benefits...... 40.3 36.8 40.1 37.0
Supplies.......................... 8.9 9.5 9.0 9.6
Rent.............................. 1.0 0.8 0.6 0.7
Depreciation and amortization..... 10.2 10.2 10.0 10.3
Non-recurring transactions........ - 8.2 - 4.2
Other operating expenses.......... 19.9 19.5 19.8 19.4
----- ----- ----- -----
80.3 85.0 79.5 81.2
----- ----- ----- -----
Operating income.................. 19.7 15.0 20.5 18.8
Interest expense.................. 7.2 8.2 7.7 7.9
Investment income................. (2.0) (0.5) (3.5) (0.4)
----- ----- ----- -----
Income from operations before
income taxes.................... 14.5 7.3 16.3 11.3
Provision for income taxes........ 5.8 2.9 6.5 4.5
----- ----- ----- -----
Income from operations............ 8.7% 4.4% 9.8% 6.8%
===== ===== ===== =====
</TABLE>
Revenues increased 32.3% in the second quarter to $17.0 million from $12.8
million in the second quarter of 1996, and increased 22.6% for the six month
period of 1997 to $31.2 million from $25.4 million in the same period a year
ago. The increase in the second quarter of 1997 was primarily attributable to
price increases ($600,000), growth in ancillary services ($300,000) and the
acquisition of American ElderServe and two newly constructed communities ($3.3
million). The increase for the first six months of 1997 was primarily
attributable to price increases ($1.3 million), growth in ancillary services
($400,000) and the acquisition of American ElderServe and newly constructed
communities ($4.1 million). Same store occupancy was 94.7% and 95.7% for the
second quarter of 1997 and 1996, respectively and 95.2% and 95.8% for the first
six months of 1997 and 1996, respectively.
Compensation costs and other operating expenses as a percentage of revenues
increased in both the second quarter and six month periods of 1997 compared to
the same periods a year ago. Increases in such costs resulted primarily from
the American ElderServe acquisition and growth in administrative expenses
associated with Atria's expansion and development program.
In June 1996, Atria recorded a non-recurring pre-tax charge of $1.1 million in
connection with the settlement of certain litigation involving a minority
partner at one of its communities.
Operating income increased 72.9% to $3.3 million in the second quarter of
1997 compared to $1.9 million in the same period of 1996. For the six month
period, operating income grew 33.4% to $6.4 million in 1997 compared to $4.8
million in 1996. Excluding the effect of non-recurring transactions, operating
income increased 12.0% in the second quarter of 1997 and increased 9.4% for the
six month period. In both the second quarter and six month periods, operating
income increased primarily as a result of improved same store operations as well
as the American ElderServe acquisition. However, operating income in the second
quarter and six month periods was adversely impacted by increased administrative
costs incurred in connection with Atria's expansion and development program.
Income from operations increased 160.4% to $1.5 million in the second quarter
of 1997 compared to $568,000 for the same period a year ago, and 76.3% to $3.1
million for the first six months of 1997 from $1.7 million for the same period
last year. Excluding the effect of non-recurring transactions, income from
operations grew 23.5% and 29.3% in the second quarter and six months,
respectively. The improvement was primarily attributable to growth in operating
income and a reduction in net interest expense.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
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 $115,000 and $150,000 for the
three months ended June 30, 1997 and 1996, respectively, and $229,000 and
$300,000 for the respective six month periods. Management believes that these
allocations reasonably reflect the proportional costs incurred by Vencor on
behalf of Atria.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations totaled $6.1 million and $6.4 million for the
six months ended June 30, 1997 and 1996, respectively. Cash flows from
operations decreased slightly as a result of net reductions in operating
liabilities.
Net cash used in investing activities totaled $39.8 million and $1.7 million
for the six months ended June 30, 1997 and 1996, respectively. Atria's
investing activities included capital expenditures related to the development of
new facilities and expansion of existing operations totaling $22.6 million and
$1.8 million for the respective periods. In addition, Atria acquired two
facilities for $8.0 million in the first quarter of 1997 and also acquired
American ElderServe for a combination of $8.7 million cash, common stock and
assumption of debt.
Net cash used in financing activities totaled $15.4 million and $3.4 million
for the six months ended June 30, 1997 and 1996, respectively. The 1997 amount
includes the payment of $14.4 million of long-term debt assumed in the American
ElderServe acquisition, resulting in the extraordinary loss on extinguishment of
debt, net of income taxes, of $199,000.
The Company's working capital deficit totaled $4.3 million at June 30, 1997,
compared to working capital of $45.6 million at December 31, 1996. The decline
in working capital resulted principally from the aforementioned acquisitions,
including the repayment of $14.4 million of long term debt, and continued
development and expansion activities. In connection with its expansion and
development plans, the Company maintains the Atria Credit Facility. At June 30,
1997, available borrowings under the Atria Credit Facility approximated $110
million.
In July 1997, the Company completed the Secondary Offering. The net proceeds
to the Company approximated $91 million. In July 1997, the Company repaid the
$14 million note payable to Vencor (included in current liabilities at June 30,
1997).
Capital expenditures related to acquisitions of existing communities,
construction of new communities, and expansion and improvement of existing
communities could approximate $100 to $110 million in 1997. Additionally, Atria
is committed to finance the development costs of its joint venture with Elder
Healthcare through the Atria Credit Facility. The Company does not anticipate
such commitment will exceed $10 million in 1997. Although management believes
that cash flows from operations, the proceeds from the Secondary Offering, and
available borrowings under the Atria Credit Facility are sufficient to meet
these capital needs, Atria will require substantial additional financing to
continue its growth plans beyond mid-1998. The Company currently has under
development 35 sites for new assisted living communities, 15 of which are under
construction. At June 30, 1997, the additional cost to complete and equip the
15 communities under construction approximated $35 million.
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 also prohibits Atria from paying cash
dividends.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
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 has guaranteed 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. Atria was in
compliance with all debt covenants at June 30, 1997.
12
<PAGE>
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 STATISTICAL DATA)
<TABLE>
<CAPTION>
1996 QUARTERS 1997 QUARTERS
-------------------------------------- ------------------
FIRST SECOND THIRD FOURTH FIRST SECOND
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues.................................. $12,611 $12,837 $13,038 $13,360 $14,217 $16,982
------- ------- ------- ------- ------- -------
Salaries, wages and benefits.............. 4,677 4,727 5,253 5,204 5,660 6,846
Supplies.................................. 1,227 1,223 1,233 1,341 1,290 1,518
Rent...................................... 100 99 114 40 39 163
Depreciation and amortization............. 1,312 1,313 1,123 1,312 1,388 1,735
Non-recurring transactions................ - 1,050 - - - -
Other operating expenses.................. 2,434 2,495 2,750 2,915 2,786 3,383
------- ------- ------- ------- ------- -------
9,750 10,907 10,473 10,812 11,163 13,645
------- ------- ------- ------- ------- -------
Operating income.......................... 2,861 1,930 2,565 2,548 3,054 3,337
Interest expense.......................... 982 1,051 966 1,288 1,182 1,228
Investment income......................... (48) (61) (404) (926) (753) (353)
------- ------- ------- ------- ------- -------
Income from operations before income
taxes.................................... 1,927 940 2,003 2,186 2,625 2,462
Provision for income taxes................ 761 372 791 863 1,047 983
------- ------- ------- ------- ------- -------
Income from operations.................... 1,166 568 1,212 1,323 1,578 1,479
Extraordinary loss on extinguishment of
debt, net of income tax benefit.......... - - - - - (199)
------- ------- ------- ------- ------- -------
Net income............................ $ 1,166 $ 568 $ 1,212 $ 1,323 $ 1,578 $ 1,280
======= ======= ======= ======= ======= =======
Earnings per common and common
equivalent share (a):
Primary:
Income from operations................. $ 0.11 $ 0.06 $ 0.10 $ 0.08 $ 0.10 $ 0.09
Extraordinary loss on
extinguishment of debt................ - - - - - (0.01)
------- ------- ------- ------- ------- -------
Net income............................ $ 0.11 $ 0.06 $ 0.10 $ 0.08 $ 0.10 $ 0.08
======= ======= ======= ======= ======= =======
Fully diluted:
Income from operations................. $ 0.11 $ 0.06 $ 0.10 $ 0.08 $ 0.10 $ 0.08
Extraordinary loss on
extinguishment of debt................ - - - - - (0.01)
------- ------- ------- ------- ------- -------
Net income............................ $ 0.11 $ 0.06 $ 0.10 $ 0.08 $ 0.10 $ 0.07
======= ======= ======= ======= ======= =======
Shares used in computing earnings per
common and common equivalent share (a):
Primary................................. 10,095 10,095 12,595 15,924 15,987 16,660
Fully diluted........................... 10,095 10,095 12,595 15,924 15,987 16,825
Average occupancy......................... 95.7% 95.4% 96.2% 97.0% 94.6% 87.9%
Number of communities at end of period.... 22 22 22 21 25 40
Number of units at end of period.......... 3,022 3,022 3,022 2,942 3,226 3,977
</TABLE>
(a) Share and per share amounts for periods prior to the IPO are presented on a
pro forma basis.
13
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On April 1, 1997, the Company completed its previously announced
acquisition of American ElderServe for a combination of common stock and cash
plus debt assumption with a total value of approximately $30.7 million (the
"Acquisition"). In connection with the Acquisition, the Company issued 636,487
shares of its common stock to Andy L. Schoepf, the current Chief Operating
Officer and a director of the Company. Mr. Schoepf was a stockholder in
American ElderServe and was serving as its President and Chief Executive Officer
at the time of the Acquisition. Prior to the Acquisition, American ElderServe
operated 12 assisted living communities consisting of 503 units and had six
additional communities under construction and scheduled to open in 1997. The
636,487 shares of common stock were acquired by Mr. Schoepf for investment
purposes. These shares issued to Mr. Schoepf were not registered under the
Securities Act of 1933, as amended (the "Securities Act"), but were issued
without registration in reliance on the exemption afforded by Section 4(2)
thereof.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on May 21, 1997 in
Louisville, Kentucky. At the meeting, stockholders elected a Board of eight
directors to serve in the classes indicated pursuant to the following votes:
<TABLE>
<CAPTION>
DIRECTOR VOTES IN VOTES
-------- FAVOR WITHHELD
---------- --------
<S> <C> <C>
CLASS I
-------
William C. Ballard Jr.. 15,376,754 17,574
Peter J. Grua.......... 15,378,504 15,824
CLASS II
--------
Sandra Harden Austin... 15,378,604 15,724
Thomas T. Ladt......... 15,378,504 15,824
R. Gene Smith.......... 15,376,554 17,774
CLASS III
---------
W. Bruce Lunsford...... 15,375,454 18,874
W. Patrick Mulloy, II.. 15,378,304 16,024
Andy L. Schoepf........ 15,378,404 15,924
</TABLE>
14
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
EXHIBIT NO. DESCRIPTION
4.1 Amendment No. 3 to Credit Agreement dated as of May 27, 1997
among Atria Communities, Inc., as borrower, the lending
institutions named therein, PNC Bank, National Association
as Administrative Agent, PNC Bank Kentucky, Inc., as
Managing Agent, and National City Bank of Kentucky, as
Documentation Agent. Exhibit 4.6 to the Company's
Registration Statement on Form S-1 (Comm. File No. 333-
28577) is hereby incorporated by reference.
10.1 Letter from Vencor, Inc. to Andy L. Schoepf dated April 1,
1997, agreeing to vote all of Vencor, Inc.'s shares of Atria
Common Stock for Mr. Schoepf's nominee for the Board of
Directors. Exhibit 10.30 to the Company's Registration
Statement on Form S-1 (Comm. File No. 333-28577) is hereby
incorporated by reference.
10.2 Agreement by and among MedGroup Management, Inc., Atria
Communities, Inc. and Atrium at St. Matthews, LLC dated June
3, 1997. Exhibit 10.31 to the Company's Registration
Statement on Form S-1 (Comm File No. 333-28577) is hereby
incorporated by reference.
10.3 Amendment No. 2 to Parent Guaranty dated as of May 27, 1997
by Atria Communities, Inc., as Borrower, Vencor, Inc., as
Parent Guarantor, the Supporting Guarantors named therein,
and PNC Bank, National Association, as Administrative Agent.
27 Financial Data Schedule (included only in filings submitted
under the Electronic Data Gathering Analysis Retrieval
system).
(b) REPORTS ON FORM 8-K:
The Company filed a Current Report on Form 8-K on April 11, 1997 reporting
the acquisition of American ElderServe.
15
<PAGE>
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: August 5, 1997 /s/ W. PATRICK MULLOY, II
- ---------------------- ------------------------------------------
W. Patrick Mulloy, II
President and Chief Executive Officer
Date: August 5, 1997 /s/ J. TIMOTHY WESLEY
- ---------------------- ------------------------------------------
J. Timothy Wesley
Chief Financial Officer, Vice President of
Development and Secretary
(Principal Financial Officer)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM ATRIA COMMUNITIES,
INC.'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 16,081
<SECURITIES> 0
<RECEIVABLES> 695
<ALLOWANCES> (144)
<INVENTORY> 136
<CURRENT-ASSETS> 18,609
<PP&E> 226,088
<DEPRECIATION> (30,051)
<TOTAL-ASSETS> 232,719
<CURRENT-LIABILITIES> 22,940
<BONDS> 102,993
0
0
<COMMON> 1,647
<OTHER-SE> 95,554
<TOTAL-LIABILITY-AND-EQUITY> 232,719
<SALES> 0
<TOTAL-REVENUES> 31,199
<CGS> 0
<TOTAL-COSTS> 15,516
<OTHER-EXPENSES> 6,149
<LOSS-PROVISION> 20
<INTEREST-EXPENSE> 2,410
<INCOME-PRETAX> 5,087
<INCOME-TAX> 2,030
<INCOME-CONTINUING> 3,057
<DISCONTINUED> 0
<EXTRAORDINARY> (199)
<CHANGES> 0
<NET-INCOME> 2,858
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.17
</TABLE>
<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 2 TO PARENT GUARANTY
THIS AMENDMENT, dated as of May 27, 1997, by (i) ATRIA COMMUNITIES, INC., a
Delaware corporation (herein, together with its successors and assigns, the
"BORROWER"); (ii) VENCOR, INC., a Delaware corporation (herein, together with
its successors and assigns, the "PARENT GUARANTOR"); (iii) each of the entities
whose signature appears at the end hereof as a Supporting Guarantor (each,
together with its successors and assigns, a "SUPPORTING GUARANTOR" and
collectively, the "SUPPORTING GUARANTORS"); and (iv) PNC BANK, NATIONAL
ASSOCIATION, a national banking association, as Administrative Agent (the
"ADMINISTRATIVE AGENT") under the Credit Agreement referred to in the Parent
Guaranty identified below:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Parent Guarantor and the Supporting Guarantors have
heretofore entered into the Parent Guaranty, dated as of August 15, 1996, and
Amendment No. 1 to Parent Guaranty, dated as of March 27, 1997, in favor of the
Administrative Agent (as so amended, the "PARENT GUARANTY"; with the terms
defined therein, or the definitions of which are incorporated therein, being
used herein as so defined).
(2) The parties hereto desire to amend certain of the terms and provisions
of the Parent Guaranty, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1. ADDITIONAL SUPPORTING GUARANTORS. For the avoidance of doubt:
(a) Each Supporting Guarantor which was not a party to the Parent
Guaranty as originally executed and delivered in August 1996 hereby (i) joins in
and becomes a party to the Parent Guaranty as a Supporting Guarantor thereunder,
and (ii) becomes bound by all of the representations, warranties, covenants and
provisions of the Parent Guaranty applicable to any Supporting Guarantor.
(b) The Parent Guarantor hereby confirms that such joinder has been
made at the request and with the consent of the Parent Guarantor.
(c) Each such Additional Supporting Guarantor represents and warrants
that (i) it is a corporation or partnership duly formed and validly existing
under the laws of the jurisdiction of its formation; (ii) it has the corporate
or partnership power and authority to enter into and perform its obligations
hereunder; (iii) this Amendment has been duly authorized by all requisite
corporate or partnership action on its part, has been duly executed and
delivered by it and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms; (iv) its execution, delivery and
performance of this Amendment will not conflict with or violate any of the terms
or provisions of (A) its corporate charter or partnership agreement, (B) any
law, regulation, rule or order of any governmental authority or court applicable
to it or to any of its property, or (C) any agreement or instrument to which
it is a party or by which any of its property is bound; (v) no consent or
approval of any governmental authority is required to be obtained as a condition
to the valid execution, delivery or performance by it of this Amendment; and
(vi) there is no litigation or other proceeding pending which questions the
valid execution, delivery or performance by it of this Amendment.
2. AMENDMENT RELATIVE TO 1997 CREDIT AGREEMENT OF PARENT GUARANTOR.
Clause (f) of section 7 of the Parent Guaranty is amended to read in its
entirety as follows:
(f) promptly after execution thereof, copies of any amendment to its
existing Credit Agreement, dated as of March 17, 1997, with the banks named
therein and Morgan Guaranty Trust Company of New York, as Documentation Agent
and Collateral Agent, and NationsBank, N.A., as Administrative Agent, as in
effect on March 18, 1997, which is the closing date thereunder (as so in effect
on March 18, 1997, and as the same may be amended (including the proposed
amendment to be entered into on or about May 30, 1997 to inter alia increase the
credit facilities thereunder to $2,000,000,000), supplemented or modified,
amended and restated, or replaced, with an agreement with substantially the same
bank group (i.e., with most of the lenders with the largest commitments
remaining lenders at significant commitment levels), whether in the same or a
larger or smaller aggregate amount of credit facilities), the "1997 CREDIT
AGREEMENT"), and copies of any other credit agreement entered into after the
Closing Date in connection with a replacement or refinancing thereof (and any
amendments thereto); and
<PAGE>
3. AMENDMENT OF INCORPORATED LEVERAGE COVENANT. Section 14(a) of the
Parent Guaranty is amended to read in its entirety as follows:
(a) LEVERAGE COVENANTS IN 1997 CREDIT AGREEMENT. The Parent Guarantor
will comply with the covenants contained in Sections 5.17 and 5.26 of the
1997 Credit Agreement.
4. AMENDMENT OF SEPARATE LEVERAGE COVENANT. Section 14(b) of the Parent
Guaranty is amended to read in its entirety as follows:
(b) SEPARATE LEVERAGE COVENANT. The Parent Guarantor will maintain at
the end of each Fiscal Quarter (a "QUARTERLY MEASUREMENT DATE"), the ratio
of (x) Consolidated Debt for Borrowed Money to (y) Consolidated EBITDA for
the four consecutive Fiscal Quarters then ended not in excess of the ratio
set forth below opposite the period in which such Quarterly Measurement
Date falls:
<TABLE>
<CAPTION>
Period Ratio
-------------------------------------------- ------------
<S> <C>
June 1, 1997 through September 29, 1998 4.75 to 1.00
September 30, 1998 through December 30, 1998 4.60 to 1.00
December 31, 1998 through December 30, 1999 4.50 to 1.00
December 31, 1999 and thereafter 4.00 to 1.00
</TABLE>
For purposes of calculating the foregoing ratio at any Quarterly
Measurement Date, if any corporation or other entity shall have been
acquired by any Vencor Company during the relevant period of four
consecutive Fiscal Quarters, Consolidated EBITDA for such period shall be
calculated as if such corporation or other entity had been acquired at the
beginning of such period, to the extent that the relevant financial
information with respect to it for the portion of such period prior to such
acquisition can be determined with reasonable accuracy. As used in this
Agreement, the terms "FISCAL QUARTERS", "CONSOLIDATED DEBT FOR BORROWED
MONEY", "CONSOLIDATED EBITDA", "VENCOR COMPANY", "CONSOLIDATED NET WORTH"
and "DEBT" shall have the same meanings as are ascribed to such terms in
the 1997 Credit Agreement as in effect on May 30, 1997 (which is the date
Amendment No. 2 to the 1997 Credit Agreement became effective, herein the
"VENCOR CLOSING DATE"), without giving effect to any subsequent
modification or termination thereof, and any other defined terms which are
used in such terms in the 1997 Credit Agreement shall likewise have such
meanings without giving effect to any subsequent modification or
termination thereof.
2
<PAGE>
5. ADDITION OF SENIOR DEBT LEVERAGE RATIO COVENANT. The Parent Guaranty
is amended by adding section 14(c) thereto, reading in its entirety as follows:
(c) SENIOR DEBT LEVERAGE RATIO COVENANT. The Parent Guarantor will
maintain at the end of each Fiscal Quarter (a "QUARTERLY MEASUREMENT
DATE"), the ratio of (x) Consolidated Senior Debt for Borrowed Money to (y)
Consolidated EBITDA for the four consecutive Fiscal Quarters then ended not
in excess of the ratio set forth below opposite the period in which such
Quarterly Measurement Date falls:
<TABLE>
<CAPTION>
Period Ratio
-------------------------------------------- ------------
<S> <C>
June 1, 1997 through December 30, 1997 4.50 to 1.00
December 31, 1997 through March 30, 1998 4.00 to 1.00
March 31, 1998 through June 29, 1998 3.85 to 1.00
June 30, 1998 through September 29, 1998 3.80 to 1.00
September 30, 1998 through December 30, 1998 3.75 to 1.00
December 31, 1998 through December 30, 1999 3.50 to 1.00
December 31, 1999 and thereafter 3.00 to 1.00
</TABLE>
For purposes of calculating the foregoing ratio at any Quarterly
Measurement Date, if any corporation or other entity shall have been
acquired by any Vencor Company during the relevant period of four
consecutive Fiscal Quarters, Consolidated EBITDA for such period shall be
calculated as if such corporation or other entity had been acquired at the
beginning of such period, to the extent that the relevant financial
information with respect to it for the portion of such period prior to such
acquisition can be determined with reasonable accuracy. As used in this
Agreement, the terms "FISCAL QUARTERS", "CONSOLIDATED SENIOR DEBT FOR
BORROWED MONEY", "CONSOLIDATED EBITDA", "VENCOR COMPANY", "CONSOLIDATED NET
WORTH" and "DEBT" shall have the same meanings as are ascribed to such
terms in the 1997 Credit Agreement as in effect on the Vencor Closing Date,
without giving effect to any subsequent modification or termination
thereof, and any other defined terms which are used in such terms in the
1997 Credit Agreement shall likewise have such meanings without giving
effect to any subsequent modification or termination thereof.
6. RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Parent Guaranty, and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Parent Guaranty are ratified and
confirmed and shall continue in full force and effect.
7. MISCELLANEOUS. The terms and provisions of sections 20 [Survival of
Agreements, etc.], 24 [Costs and Expenses of Enforcement, etc.], 28 [Jury Trial
Waiver], 29 [Waiver; Amendment], 30 [Kentucky Notice of Guaranteed Amount and
Termination Date], and 31 [Miscellaneous] of the Parent Guaranty are hereby
incorporated into this Amendment as if set forth in full herein, except that
references in such incorporated terms and provisions to "this Agreement",
"herein", "hereby" and words of similar import shall be deemed to refer to this
Amendment instead of the Parent Guaranty.
[The balance of this page is intentionally blank.]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
VENCOR, INC.
FIRST HEALTHCARE CORPORATION
NORTHWEST HEALTH CARE, INC.
MEDISAVE PHARMACIES, INC.
NATIONWIDE CARE, INC.
THERATX, INCORPORATED
VENCOR HOSPITALS ILLINOIS, INC.
VENCOR HOSPITALS SOUTH, INC.
VENCOR HOSPITALS EAST, INC.
VENCOR HOSPITALS CALIFORNIA, INC.
VENCOR HOSPITALS TEXAS, LTD.
BY: VCI SPECIALTY SERVICES, INC.,
ITS GENERAL PARTNER
VENTECH SYSTEMS, INC.
PASATIEMPO DEVELOPMENT CORP.
VCI SPECIALTY SERVICES, INC.
VENCOR PROPERTIES, INC.
BY:
-----------------------------------------
VICE PRESIDENT
[SIGNATURES CONTINUED ON FOLLOWING PAGES]
4
<PAGE>
PERSONACARE, INC.
RESPIRATORY CARE SERVICES, INC.
THERATX MEDICAL SUPPLIES, INC.
THERATX HEALTHCARE MANAGEMENT INC.
THERATX STAFFING, INC.
HORIZON HEALTHCARE SERVICES, INC.
PERSONACARE OF CONNECTICUT, INC.
PERSONACARE OF HUNTSVILLE, INC.
PERSONACARE OF OHIO, INC.
PERSONACARE OF OWENSBORO, INC.
PERSONACARE OF PENNSYLVANIA, INC.
PERSONACARE OF READING, INC.
PERSONACARE OF SAN ANTONIO, INC.
PERSONACARE OF SAN PEDRO, INC.
PERSONACARE OF WISCONSIN, INC.
PERSONACARE OF RHODE ISLAND, INC.
PERSONACARE OF ST. PETERSBURG, INC.
PERSONACARE OF POMPANO WEST, INC.
PERSONACARE OF CLEARWATER, INC.
PERSONACARE OF BRADENTON, INC.
PERSONACARE OF POMPANO EAST, INC.
PERSONACARE OF SHREVEPORT, INC.
TUCKER NURSING CENTER, INC.
LAFAYETTE HEALTH CARE CENTER, INC.
PERSONACARE OF WARNER ROBINS, INC.
NFM, INC.
STAMFORD HEALTH FACILITIES, INC.
COURTLAND GARDENS HEALTH CENTER, INC.
COURTLAND GARDENS RESIDENCE, INC.
HOMESTEAD HEALTH CENTER, INC.
TUNSTALL ENTERPRISES, INC.
STAMFORD HEALTH ASSOCIATES LIMITED
PARTNERSHIP
BY: STAMFORD HEALTH FACILITIES, INC.,
ITS GENERAL PARTNER
CARE VENTURE PARTNERS, L.P.
BY: PERSONACARE OF RHODE ISLAND, INC.
ITS GENERAL PARTNER
OAK HILL NURSING ASSOCIATES LIMITED
PARTNERSHIP
BY: PERSONACARE OF RHODE ISLAND, INC.,
ITS GENERAL PARTNER
HEALTH HAVENS ASSOCIATES LIMITED PARTNERSHIP
BY: PERSONACARE OF RHODE ISLAND, INC.,
ITS GENERAL PARTNER
BY:
----------------------------------------
VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
BY:
----------------------------------------
VICE PRESIDENT
5
