SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 22, 1998
BROOKDALE LIVING COMMUNITIES, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-22253 36-4103821
- ------------------------------- ---------------------- -----------------------
(State or other jurisdiction of Commission File Number (I.R.S. Employer
incorporation or organization) Identification Number)
77 West Wacker Drive, Suite 4400, Chicago, Illinois 60601
- ------------------------------------------------------ -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 977-3700.
NOT APPLICABLE
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
Brookdale Living Communities, Inc. (the "Company") submits this Form 8-K/A
in order to supply the financial statements and schedules required pursuant to
Rule 3-05(b) of Regulation S-X and the pro forma financial information required
pursuant to Article 11 of Regulation S-X with respect to the Company's operating
lease transaction with respect to The Woodside Terrace facility (the
"Property"), a 274-unit senior independent and assisted living facility located
in Redwood City, California, This transaction constituted a "business"
acquisition pursuant to Rule 11-01(d) of Regulation S-X. This information should
be read in conjunction with the Registrant's Form 8-K filed with the Commission
on January 6, 1999.
This current report on Form 8-K contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. When
used in this report, the words "believes," "expects," "anticipates," "estimates"
and similar words and expressions are generally intended to identify
forward-looking statements. Statements that describe the Company's future
strategic plans, goals, objectives or expectations are also forward-looking
statements. Readers of this report are cautioned that any forward-looking
statements, including those regarding the intent, belief, or current
expectations of the Company or management, are not guarantees of future
performance, results or events and involve risks and uncertainties, and that
actual results and events may differ materially from those in the
forward-looking statements as a result of various factors, including, but not
limited to (i) general economic conditions in the markets in which the Company
operates, (ii) competitive pressures within the industry and/or the markets in
which the Company operates, (iii) the effect of future legislation or regulatory
changes on the Company's operations and (iv) other factors described from time
to time in the Company's filings with the Securities and Exchange Commission.
The forward-looking statements included in this report are made only as of the
date hereof. The Company undertakes no obligation to update such forward-looking
statements to reflect subsequent events or circumstances.
a) Financial statements of businesses acquired.
<PAGE>
Woodside Terrace Partners
(A California General Partnership)
Financial Statements
For the period from January 1, 1998
to September 30, 1998
Contents
Report of Independent Auditors.................................................1
Financial Statements
Balance Sheet..................................................................2
Statement of Income............................................................3
Statement of Partners' Deficit.................................................4
Statement of Cash Flows........................................................5
Notes to Financial Statements..................................................6
<PAGE>
Report of Independent Auditors
The Board of Directors
Brookdale Living Communities, Inc.
We have audited the accompanying balance sheet of Woodside Terrace Partners (A
California General Partnership) as of September 30, 1998 and the related
statements of income, partners' deficit and cash flows for the period from
January 1, 1998 to September 30, 1998. These financial' statements are the
responsibility of Woodside Terrace Partners' management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Woodside Terrace Partners at
September 30, 1998, and the results of its operations and its cash flows for the
period from January 1, 1998 to September 30, 1998, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
February 2, 1999
1
<PAGE>
Woodside Terrace Partners
(A California General Partnership)
Balance Sheet
September 30, 1998
Assets
Current assets:
Cash and cash equivalents $ 649,715
Accounts receivable 54,140
Prepaid and other expenses 52,443
------------
Total current assets 756,298
Real estate, at cost:
Land, building and improvements 21,143,142
Furniture and equipment 786,947
------------
21,930,089
Accumulated depreciation 7,078,330
------------
14,851,759
Restricted cash 207,798
------------
Total assets $15,815,855
============
Liabilities and partners' deficit
Current liabilities:
Accounts payable and accrued liabilities $ 302,147
Accrued real estate taxes 145,039
Tenant security deposits 576,778
Mortgage note payable 28,000,000
------------
Total current liabilities 29,023,964
Partners' deficit (13,208,109)
------------
Total liabilities and partners' deficit $15,815,855
============
See notes to financial statements.
2
<PAGE>
Woodside Terrace Partners
(A California General Partnership)
Statement of Income
For the period from January 1, 1998
to September 30, 1998
Revenue
Resident fees $ 5,350,485
Interest income 34,439
------------
Total revenue 5,384,924
Expenses
Facility operating 2,335,538
Interest 1,709,780
Real estate taxes 195,901
Depreciation 532,017
Amortization of loan costs 255,467
Management fee - affiliate 269,615
------------
Total expenses 5,298,318
------------
Net income $ 86,606
============
See notes to financial statements.
3
<PAGE>
Woodside Terrace Partners
(A California General Partnership)
Statement of Partners' Deficit
For the period from January 1, 1998
to September 30, 1998
Partners' deficit at January 1,1998 $(11,294,715)
Distributions (2,000,000)
Net income 86,606
-------------
Partners' deficit at September 30, 1998 $(13,208,109)
=============
See notes to financial statements.
4
<PAGE>
Woodside Terrace Partners
(A California General Partnership)
Statement of Cash Flows
For the period from January 1, 1998
to September 30, 1998
Operating activities
Net income $ 86,606
Adjustments to reconcile net income cash provided by
operating activities:
Depreciation and amortization 787,484
Changes in operating assets and liabilities:
Increase in accounts receivable (19,481)
Decrease in prepaid and other expenses 26,408
Increase in tenant security deposits 4,568
Increase in accounts payable and accrued liabilities 63
Increase in accrued real estate taxes 75,604
------------
Net cash provided by operating activities 961,252
Investing activities
Additions to real estate (186,523)
------------
Cash used in investing activities (186,523)
Financing activities
Increase in restricted cash (70,365)
Distributions to partners (2,000,000)
------------
Net cash used in financing activities (2,070,365)
------------
Net decrease in cash and cash equivalents (1,295,636)
Cash and cash equivalents at beginning of period 1,945,351
------------
Cash and cash equivalents at end of period $ 649,715
============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,709,780
============
See notes to financial statements.
5
<PAGE>
Woodside Terrace Partners
(A California General Partnership)
Notes to Financial Statements
For the period from January 1, 1998
to September 30, 1998
1. Summary of Significant Accounting Policies
Basis of Presentation
Woodside Terrace Partners (the Partnership) is a general partnership that owns,
operates, and manages a 274-unit independent and assisted living facility known
as Woodside Terrace (the Facility) located in Redwood City, California. At
September 30, 1998, the Property was 91% occupied. Leases are generally
month-to-month and expire throughout the year.
The Partnership's records are maintained on the accrual basis of accounting as
adjusted for Federal income tax reporting purposes. The accompanying financial
statements have been prepared from such records after making appropriate
adjustments to present the Partnership's accounts in accordance with generally
accepted accounting principles (GAAP). Such adjustments are not recorded on the
records of the Partnership and relate principally to the carrying basis of the
real estate and partners' deficit.
Resident Fee Revenue
Resident fee revenue is recorded when services are rendered and consists of fees
for basic housing, support services and fees associated with additional services
such as personalized health and assisted living care.
Cash Equivalents
The Partnership considers all cash accounts and money market funds with a
maturity of three months or less when purchased to be cash equivalents.
Deferred Costs
Deferred costs consisted of capitalized financing costs which were amortized
using the straight-line method over the original term of the mortgage note. As
of September 30, 1998, these costs were fully amortized and written off.
6
<PAGE>
1. Summary of Significant Accounting Policies (continued)
Real Estate
Expenditures for ordinary maintenance and repairs are expensed to operations as
incurred. Significant renovations and improvements which improve and/or extend
the useful life of the asset are capitalized and depreciated over their
estimated useful life.
Depreciation is calculated using the straight-line method over the estimated
useful lives of assets, which are as follows:
Building and improvements 7-39 years
Furniture and equipment 5-7 years
Restricted Cash
Pursuant to the terms of the mortgage note payable (see Note 2), the Partnership
is required to maintain an escrow account to fund real estate taxes and
insurance payments. At September 30, 1998, the amounts held for real estate
taxes and insurance are $166,261 and $41,537, respectively.
Income Taxes
The Partnership pays no income taxes and the income or loss from the Partnership
is includable on the respective federal income tax returns of the partners.
Use of Estimates
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
7
<PAGE>
2. Mortgage Note Payable
The Partnership has a mortgage note payable (the Note) for $28 million which
requires monthly interest only payments with interest calculated at
approximately 8.12% per annum. The Note had an original maturity date of July 1,
1998, which was extended to July 1, 1999. The Note is collaterized by the
Facility.
3. Related Party Transactions
In connection with the operation of the Facility, an affiliate of one of the
partners is entitled to management fees equal to 5% of gross receipts, as
defined. During the period from January 1, 1998 to September 30, 1998,
management fees of $269,615 were incurred. At September 30, 1998, $30,991 was
payable for management fees and is included in accounts payable and accrued
liabilities.
During the period from January 1, 1998 to September 30, 1998, the Partnership
also incurred $1,326,282 for payroll and other costs related to the operations
of the Facility. Such amounts were paid to an affiliate and are included in
facility operating expense. At September 30, 1998, $69,094 was payable for
payroll and other costs and is included in accounts payable and accrued
liabilities.
4. Subsequent Events
On December 22, 1998, the Partnership sold the Facility to The Woodside Business
Trust (Woodside) for approximately $41 million. Woodside, in turn, leased the
Facility to Brookdale Living Communities of California - RC, Inc., a
wholly-owned subsidiary of Brookdale Living Communities, Inc. A portion of the
sale proceeds were used to repay the mortgage note payable.
8
<PAGE>
b) Pro forma financial information.
The unaudited Pro Forma Balance Sheet of Brookdale Living Communities,
Inc. and its subsidiaries (collectively, the "Company") is presented as if at
September 30, 1998, the Company had leased the Property and funded the
investments collateralizing the lease obligation. The unaudited Pro Forma
Consolidated Condensed Statements of Operations for the year ended December 31,
1997 and the nine months ended September 30, 1998 are presented as if the above
transaction occurred as of January 1, 1997. The unaudited Pro Forma Condensed
Financial Statements of the Company should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 and
the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998. In management's opinion, all adjustments necessary to reflect the
transaction have been made.
The unaudited Pro Forma Consolidated Condensed Financial Statements of the
Company are not necessarily indicative of what the actual results of operations
would have been assuming the acquisition of the Property had occurred at the
dates indicated above, nor do they purport to represent the future results of
operations of the Company.
Basis of Presentation
Brookdale Living Communities of California-RC, Inc., the entity which
entered into the operating lease for the Property, was required to fund $10.5
million of investments collateralizing its lease obligations. No other
adjustments of the Company's Balance Sheet as of September 30, 1998 are
necessary.
The Pro Forma Consolidated Condensed Statements of Operations of the
Company include the historical operations of the Company (for the period from
May 7, 1997 to December 31, 1997), the Original Facilities (for the period from
January 1, 1997 to May 6, 1997), the IPO (initial public offering) Properties
(for the period from January 1, 1997 to May 6, 1997), the 1997 Leases, the 1998
Leases and the Current Lease (for the period from January 1, 1998 to September
30, 1998 and the year ended December 31, 1997). The Adjustments for Acquisitions
and Leases Prior to or at the IPO reflect the ownership prior to May 6, 1997.
The foregoing facilities and transactions are described below along with the pro
forma effects of the consolidation:
Acquisitions and Leases
Original Facilities Prior to or at the IPO(1) 1997 Leases(2)
- ------------------- ------------------------- ---------------------------
The Devonshire The Springs of East Mesa(3) The Gables at Farmington(7)
The Heritage Edina Park Plaza The Classic at West Palm
The Hallmark(3) Hawthorn Lakes Beach(8)
The Gables at Brighton(3) The Brendenwood Retirement
The Park Place(6) Community(9)
BLC Property, Inc.
1998 Leases(4) Current Lease(5)
- ----------------- -------------------------
Harbor Village(10) The Woodside Terrace (14)
The Atrium of San
Jose(11)
The Chatfield(12)
Ponce De Leon(13)
<PAGE>
(1) These properties are collectively referred to as the IPO Properties.
(2) These properties are collectively referred to as the 1997 Leases.
(3) The Company has leased these properties from a third party since
December 27, 1996.
(4) These properties are collectively referred to as the 1998 Leases.
(5) This property is sometimes referred to as the Current Lease.
(6) The Company has leased this property from a third party since May 7,
1997.
(7) The Company has leased this property from a third party since November
24, 1997.
(8) The Company has leased this property from a third party since December
18, 1997.
(9) The Company has leased this property from a third party since December
22, 1997.
(10) The Company has leased this property from a third party since March 6,
1998.
(11) The Company has leased this property from a third party since May 12,
1998.
(12) The Company has leased this property from a third party since July 2,
1998.
(13) The Company has leased this property from a third party since October
21, 1998.
(14) The Company has leased this property from a third party since December
22, 1998.
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Brookdale Living Adjustments for
Communities, Inc. Acquisitions and
and Predecessor Leases prior to or 1997 1998 The Woodside Total
Properties at the IPO Leases Leases Terrace Leases
------------------------------------ ---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Resident Fees $ 40,578 $ 4,448 $ 14,802 $ 16,446 $ 7,135 $ 38,383
Management Fees 132 - - - - -
------------------------------------ ---------------------------------------------------
Total Revenue 40,710 4,448 14,802 16,446 7,135 38,383
Facility Operating (21,994) (2,973) (8,872) (11,056) (3,736) (23,664)
Lease Expense (9,984) - - - - -
General & Administrative (2,187) - - - - -
Depreciation & Amortization (3,824) (510) (1,454) (1,908) (1,049) (4,411)
------------------------------------ ---------------------------------------------------
Income (Loss) From Operations 2,721 965 4,476 3,482 2,350 10,308
Interest and Financing Fees Expense, Net (3,088) (1,086) (4,236) (4,594) (2,235) (11,065)
------------------------------------ ---------------------------------------------------
(Loss) Income Before Minority Interest,
Income Taxes and Extraordinary Item (367) (121)(g) 240 (1,112) 115 (757)
(Income) Loss in Minority Interest (138) - - - - -
Benefit (Provision) For Income Taxes 322 - - - - -
------------------------------------ ---------------------------------------------------
(Loss) Income From Continuing
Operations Before Extraordinary Item (183) (121) 240 (1,112) 115 (757)
Extraordinary Item Net of Tax (36) - - - - -
------------------------------------ ---------------------------------------------------
Net (Loss) Income $ (219) $ (121) $ 240 $ (1,112) $ 115 $ (757)
==================================== ===================================================
(Loss) Income From Continuing
Operations Per Share - Basic EPS $ (0.03)
=================
(Loss) Income From Continuing
Operations Per Share - Diluted EPS $ (0.03)
=================
Common Shares Used For Computing
Basic EPS 7,208
=================
Common Shares Used For Computing
Diluted EPS 7,351
=================
Consolidating
Pro Forma Pro Forma
Adjustments As Adjusted
----------------- -----------------
<S> <C> <C>
Revenue
Resident Fees $ - $ 83,409
Management Fees 76 (a) 208
----------------- ------------------
Total Revenue 76 83,617
Facility Operating 2,281 (b) (46,350)
Lease Expense (13,557)(c) (23,541)
General & Administrative (945)(d) (3,132)
Depreciation & Amortization 4,067 (e) (4,678)
----------------- ------------------
Income (Loss) From Operations (8,078) 5,916
Interest and Financing Fees Expense, Net 14,407 (f) (832)
----------------- ------------------
(Loss) Income Before Minority Interest,
Income Taxes and Extraordinary Item 6,329 5,084
(Income) Loss in Minority Interest 138 (h) -
Benefit (Provision) For Income Taxes (2,070)(i) (1,748)
----------------- ------------------
(Loss) Income From Continuing
Operations Before Extraordinary Item 4,397 3,336
Extraordinary Item Net of Tax - (36)
----------------- ------------------
Net (Loss) Income $ 4,397 $ 3,300
================= ==================
Income From Continuing Operations
Per Share - Basic EPS $ 0.46
==================
Income From Continuing Operations
Per Share - Diluted EPS $ 0.45
==================
Common Shares Used For Computing
Basic EPS 7,208
==================
Common Shares Used For Computing
Diluted EPS 7,351
==================
</TABLE>
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Consolidating
Brookdale Living 1998 The Woodside Total Pro Forma Pro Forma
Communities, Inc. Leases Terrace Leases Adjustments As Adjusted
----------------- --------------------------------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Resident Fees $ 51,723 $ 7,175 $ 5,351 $ 12,526 $ - $ 64,249
Development Fees 4,120 - - - - 4,120
Management Fees 188 - - - - 188
----------------- --------------------------------------- -------------- ------------
Total Revenue 56,031 7,175 5,351 12,526 - 68,557
Facility Operating (28,993) (4,575) (2,801) (7,376) 722 (b) (35,647)
Lease Expense (12,782) - - - (3,327)(c) (16,109)
General & Administrative (3,776) - - - - (3,776)
Depreciation & Amortization (3,577) (679) (787) (1,466) 1,466 (e) (3,577)
----------------- --------------------------------------- -------------- ------------
Income (Loss) From Operations 6,903 1,921 1,763 3,684 (1,139) 9,448
Interest and Financing Fees Expense, Net 27 (1,791) (1,676) (3,467) 4,416 (f) 976
----------------- --------------------------------------- -------------- ------------
Income Before Income Taxes And
Extraordinary Item 6,930 130 87 217 3,277 10,424
Provision For Income Taxes (2,485) - - - (1,363)(i) (3,848)
----------------- --------------------------------------- -------------- ------------
Income From Continuing Operations
Before Extraordinary Item 4,445 130 87 217 1,914 6,576
Extraordinary Item Net of Tax - 634 - 634 (634)(j) -
----------------- --------------------------------------- -------------- ------------
Net Income $ 4,445 $ 764 $ 87 $ 851 $ 1,280 $ 6,576
================= ======================================= ============== ============
Net Income Per Share - Basic EPS $ 0.47 $ 0.69
================= ============
Net Income Per Share - Diluted EPS $ 0.46 $ 0.68
================= ============
Common Shares Used For Computing
Basic EPS 9,489 9,489
================= ============
Common Shares Used For Computing
Diluted EPS 9,738 9,738
================= ============
</TABLE>
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the nine months ended September 30, 1998 and
for the year ended December 31, 1997
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
(a) Management fees:
Management fees for management services performed by the
Company ................................................ $ -- $ 76
============= =============
(b) Facility operating:
Elimination of historical management fees paid by the
Original Facilities and the IPO Properties and
administrative fees paid by the Original Facilities not
be incurred by the Company ............................. $ -- $ 514
Elimination of historical management fees paid by the
1997 Leases, the 1998 Leases and the Current Lease...... 722 1,767
------------- -------------
$ 722 $ 2,281
============= =============
(c) Lease expense:
Adjustment to reflect a full year of lease payments
related to the IPO Properties........................... $ -- $ (546)
Adjustment to reflect lease payments related to the 1997
Leases, the 1998 Leases and the Current Lease........... (3,327) (13,011)
------------- -------------
$ (3,327) $ (13,557)
============= =============
(d) General and administrative expenses:
Estimated increase in salaries and related
benefits and additional administrative and
financial reporting expenses which would have
been incurred by the Company had it been
operating as a public company during all of
1997:
Salaries and wages...................................... $ -- $ (604)
Legal and accounting.................................... -- (70)
Other................................................... -- (271)
------------- -------------
$ -- $ (945)
============= =============
</TABLE>
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(continued)
For the nine months ended September 30, 1998 and
for the year ended December 31, 1997
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
(e) Depreciation and amortization:
Adjustment to historical depreciation expense associated
with (*):
Decrease in depreciation expense associated with the change
in depreciable lives of the Original Facilities .......... $ -- $ 67
Additional depreciation associated with the increase in
basis resulting from the purchase of the third party
owners' interest in the Original Facilities .............. -- (138)
Adjustment to depreciation expense associated with the
increase in the basis from the purchase and the increase
in depreciable lives of the IPO Properties ............... -- (133)
Elimination of historical depreciation and amortization
expense of the IPO Properties ............................ -- 78
Additional amortization expense associated with the fees and
costs for credit enhancement on tax-exempt bonds of the
Original Facilities ...................................... -- (218)
Elimination of historical depreciation and amortization
expense of the 1997 Leases, the 1998 Leases and the
Current Lease ............................................ 1,466 4,411
------------- -------------
$ 1,466 $ 4,067
============= =============
*The Company has determined the estimated useful lives of buildings to be
45 years and furniture and equipment to be 5 years, as compared to 40
years and 3-12 years, respectively used by the Original Facilities. This
change was made to better reflect the estimated periods during which such
assets will remain in service. For financial statement reporting
purposes, the above will be recorded prospectively as a change in
estimate for the Original Facilities over their remaining lives.
Depreciation expense included in the "Pro Forma As Adjusted" column was
based upon the Company's new estimated useful lives.
</TABLE>
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(continued)
For the nine months ended September 30, 1998 and
for the year ended December 31, 1997
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
(f) Interest and financing fees expense, net:
Elimination of interest expense incurred related to the
debt of the IPO Properties ........................... $ -- $ 140
Elimination of interest expense incurred related to the
debt of the 1997 Leases, the 1998 Leases and the
Current Lease ........................................ 3,467 11,065
Interest income on investments collateralizing lease
obligations .......................................... 949 3,202
------------- -------------
$ 4,416 $ 14,407
============= =============
(g) Income (loss) before minority interest and income taxes:
The income (loss) before minority interest and income
taxes presented in the historical statements of the IPO
Properties is before gain on sale of property and
represents income (loss) from continuing operations. The
gains on sale of properties are not included due to the
non-recurring nature of the transactions
(h) (Income) loss allocated to minority interest:
Elimination of income allocated to minority interest due
to the acquisition of the third party's interest ....... $ -- $ 138
============= =============
(i) (Provision) benefit for income taxes:
The Original Facilities, the IPO Properties and the 1997
and 1998 Leases were not taxable entities. The
realization of the deferred gain on the sale of the
Hallmark facility as a reduction of lease expenses is
considered a permanent difference between book income
(loss) and tax income (loss) and is not taxable. The
difference has the following impact on the Company's
benefit (provision) for income tax (includes federal and
state statutory income tax rates) ...................... $ (1,363) $ (2,070)
============= =============
Provision on income before
permanent difference $ (1,363) $ (2,180)
Benefit related to
permanent difference -- 110
------------ -----------
$ (1,363) $ (2,070)
============ ===========
</TABLE>
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(continued)
For the nine months ended September 30, 1998 and
for the year ended December 31, 1997
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
(j) Extraordinary item:
Elimination of extraordinary item related to the early
extinguishment of debt for one of the 1998 Leases ...... $ (634) $ --
============= =============
</TABLE>
<PAGE>
c) Exhibits.
Exhibit
Number Description
23.1 Consent of Independent Auditors
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BROOKDALE LIVING COMMUNITIES, INC.
Registrant
Dated: March 8, 1999 By: /s/ Robert J. Rudnik
----------------------------------
Robert J. Rudnik
Executive Vice President/
General Counsel
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
indicated below of Brookdale Living Communities, Inc. of our report indicated
below filed with the Securities and Exchange Commission.
Registration Statements
- -----------------------
Form S-8 No. 333-51493
Form S-3 No. 333-53969
Form S-3 No. 333-65843
<TABLE>
<CAPTION>
Financial Statements Date of Auditor's Report
-------------------- ------------------------
<S> <C>
Financial Statements of Woodside Terrace Partners February 2, 1999
as of September 30, 1998 and for the period from
January 1, 1998 to September 30, 1998 included in
the Current Report (Form 8-K/A) of Brookdale
Living Communities, Inc. dated March 8, 1999.
</TABLE>
/s/Ernst & Young LLP
Chicago, Illinois
March 8, 1999
