UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, for the Quarterly Period ended September 30, 1998.
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 0-22253
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BROOKDALE LIVING COMMUNITIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 36-4103821
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
77 W. Wacker Drive, Suite 4400
Chicago, IL 60601
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(Address of principal executive offices) (Zip Code)
(312) 977-3700
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address, or former fiscal year, if changed since last
report)
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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of November 13, 1998, 9,572,082 shares of the registrant's Common Stock,
$0.01 par value per share, were outstanding.
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<CAPTION>
Brookdale Living Communities, Inc.
Form 10-Q/A
INDEX
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PART I: FINANCIAL INFORMATION Page
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Item 1. Financial Statements (Unaudited). ..................................................... 3
Consolidated Balance Sheets of Brookdale Living Communities, Inc. as of
September 30, 1998 and as of December 31, 1997 ........................................ 4
Consolidated Statements of Operations of Brookdale Living Communities,
Inc. for the three months ended September 30, 1998 and 1997 ........................... 5
Consolidated Statements of Operations of Brookdale Living Communities,
Inc. for the nine months ended September 30, 1998 and for the period
from May 7, 1997 through September 30, 1997 and Combined Statement of
Operations of Predecessor Properties (the predecessor to Brookdale
Living Communities, Inc.) for the period from January 1, 1997 through
May 6, 1997 ........................................................................... 6
Consolidated Statements of Cash Flows of Brookdale Living Communities,
Inc. for the nine months ended September 30, 1998 and for the period
from May 7, 1997 through September 30, 1997 and Combined Statement of
Cash Flows of Predecessor Properties (the predecessor to Brookdale
Living Communities, Inc.) for the period from January 1, 1997 through
May 6, 1997 ........................................................................... 7
Notes to Consolidated and Combined Financial Statements of Brookdale
Living Communities, Inc. and Predecessor Properties (the predecessor to
Brookdale Living Communities, Inc.) ................................................... 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. ........................................................................ 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk. ........................... 16
PART II: OTHER INFORMATION .................................................................... 17
Item 1. Legal Proceedings. .................................................................... 17
Item 2. Changes in Securities and Use of Proceeds. ............................................ 17
Item 3. Defaults Upon Senior Securities. ...................................................... 17
Item 4. Submission of Matters to a Vote of Security Holders. .................................. 17
Item 5. Other Information. .................................................................... 17
Item 6. Exhibits and Reports on Form 8-K. ..................................................... 17
Signatures ..................................................................................... 20
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
The information furnished in the accompanying unaudited consolidated
and combined balance sheets, statements of operations, and statements of cash
flows reflects all adjustments which are, in the opinion of management,
necessary for a fair presentation of the aforementioned financial statements for
the interim period.
Brookdale Living Communities, Inc. ("Brookdale") was incorporated on
September 4, 1996 and commenced operations upon the completion of its initial
public offering on May 7, 1997. The consolidated financial statements of
Brookdale and Subsidiaries (the "Company") represent the results of operations
of 16 facilities the Company operated during the period presented. The combined
financial statements of Predecessor Properties (the "Predecessor" to the
Company) are presented for comparative purposes due to common ownership and
management and represent the results of operations of the entities (five
facilities) which comprised the Predecessor Properties for the period from
January 1, 1997 to May 6, 1997.
The aforementioned financial statements should be read in conjunction
with the notes to the consolidated and combined financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the financial statements for the period ended December 31, 1997
included in the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission on March 31, 1998.
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BROOKDALE LIVING COMMUNITIES, INC. AND SUBSIDIARIES (THE "COMPANY")
CONSOLIDATED BALANCE SHEETS OF THE COMPANY
(In Thousands)
(Unaudited)
September 30, 1998 December 31, 1997
------------------ -----------------
<S> <C> <C>
Assets
Cash and cash equivalents.............................................. $ 410 $ 13,292
Accounts receivable.................................................... 601 214
Notes receivable....................................................... 6,028 -
Prepaid expenses and other............................................. 9,947 3,077
------------- -------------
Total current assets............................................. 16,986 16,583
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Property, plant and equipment.......................................... 115,727 113,294
Accumulated depreciation............................................... (4,787) (2,164)
------------- -------------
Property, plant and equipment, net..................................... 110,940 111,130
------------- -------------
Property under development............................................. 9,083 11,427
Cash and investments - restricted...................................... 7,470 5,920
Investment certificates - restricted................................... 13,132 -
Letter of credit deposits.............................................. 13,471 12,138
Lease security deposits................................................ 37,919 18,542
Other.................................................................. 9,411 7,429
------------- -------------
Total assets..................................................... $ 218,412 $ 183,169
============= =============
Liabilities and Stockholders' Equity
Current portion of long-term debt...................................... $ 3,304 $ 286
Unsecured line of credit............................................... 20,650 -
Current portion of deferred gain on sale of property................... 806 806
Accrued interest payable............................................... 878 566
Accounts payable and accrued expenses.................................. 6,971 4,256
Other.................................................................. 509 344
------------- -------------
Total current liabilities........................................ 33,118 6,258
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Long-term debt, less current portion................................... 92,650 95,881
Tenant refundable entrance fees and security deposits.................. 5,007 4,377
Deferred lease liability............................................... 2,637 1,811
Deferred gain on sale of property, less current portion................ 16,318 16,922
------------- -------------
Total liabilities................................................ 149,730 125,249
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Stockholders' Equity:
Common stock, $.01 par value, 75,000 shares authorized, 9,572 and 9,175
shares issued and outstanding at September 30, 1998 and December
31, 1997, respectively 96 92
Additional paid-in-capital............................................. 63,696 57,383
Retained earnings...................................................... 4,890 445
------------- -------------
Total stockholders' equity....................................... 68,682 57,920
------------- -------------
Total liabilities and stockholders' equity....................... $ 218,412 $ 183,169
============= =============
</TABLE>
See accompanying notes to consolidated and combined financial statements.
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<TABLE>
<CAPTION>
BROOKDALE LIVING COMMUNITIES, INC. AND SUBSIDIARIES (THE "COMPANY")
CONSOLIDATED STATEMENTS OF OPERATIONS OF THE COMPANY
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended
September 30, 1998 September 30, 1997
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<S> <C> <C>
Revenue
Resident fees............................................... $ 18,868 $ 11,192
Development fees............................................ 1,542 -
Management fees............................................. 72 50
-------------- -------------
Total revenue........................................ 20,482 11,242
-------------- -------------
Expenses
Facility operating.......................................... 10,715 5,795
General and administrative.................................. 1,280 659
Lease expense............................................... 4,790 2,566
Depreciation and amortization............................... 1,146 1,158
-------------- -------------
Total operating expenses............................. 17,931 10,178
-------------- -------------
Income from operations............................... 2,551 1,064
Interest income............................................. 1,277 274
Interest expense............................................ (1,033) (1,158)
-------------- -------------
Income before income tax (expense) benefit........... 2,795 180
Income tax (expense) benefit................................ (982) 10
-------------- -------------
Net income........................................... $ 1,813 $ 190
============== =============
Basic earnings per common share............................. $ 0.19 $ 0.03
============== =============
Weighted average shares used for computing basic earnings
per common share ....................................... 9,569 7,175
============== =============
Diluted earnings per common share........................... $ 0.19 $ 0.03
============== =============
Weighted average shares used for computing diluted earnings
per common share ....................................... 9,771 7,317
============== =============
</TABLE>
See accompanying notes to consolidated and combined financial statements.
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<TABLE>
<CAPTION>
BROOKDALE LIVING COMMUNITIES, INC. AND SUBSIDIARIES (THE "COMPANY")
AND PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS OF THE COMPANY AND
COMBINED STATEMENT OF OPERATIONS OF THE PREDECESSOR
(In Thousands, Except Per Share Amounts)
(Unaudited)
Brookdale Living Predecessor
Brookdale Living Communities, Inc. Properties
Communities, Inc. period from period from
nine months May 7, 1997 January 1, 1997
ended through through
September 30, 1998 September 30, 1997 May 6, 1997
------------------ ------------------- ---------------
<S> <C> <C> <C>
Revenue
Resident fees............................................... $ 51,723 $ 17,731 $ 10,473
Development fees............................................ 4,120 - -
Management fees............................................. 188 82 -
-------------- ------------- -------------
Total revenue........................................ 56,031 17,813 10,473
-------------- ------------- -------------
Expenses
Facility operating.......................................... 28,993 9,278 5,872
General and administrative.................................. 3,776 1,137 -
Lease expense............................................... 12,782 4,110 3,042
Depreciation and amortization............................... 3,577 1,849 857
Property management fees.................................... - - 230
-------------- ------------- -------------
Total operating expenses............................. 49,128 16,374 10,001
-------------- ------------- -------------
Income from operations............................... 6,903 1,439 472
Interest income............................................. 2,918 400 68
Interest expense............................................ (2,891) (1,873) (830)
-------------- ------------- -------------
Income (loss) before minority interest and income tax
(expense) benefit ................................. 6,930 (34) (290)
Minority interest........................................... - - (138)
Income tax (expense) benefit................................ (2,485) 143 (236)
-------------- ------------- -------------
Net income (loss).................................... $ 4,445 $ 109 $ (664)
============== ============= =============
Basic earnings per common share............................. $ 0.47 $ 0.02
============== =============
Weighted average shares used for computing basic earnings
per common share ......................................... 9,489 7,051
============== =============
Diluted earnings per common share........................... $ 0.46 $ 0.02
============== =============
Weighted average shares used for computing diluted earnings
per common share ......................................... 9,738 7,144
============== =============
</TABLE>
See accompanying notes to consolidated and combined financial statements.
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<PAGE>
<TABLE>
<CAPTION>
BROOKDALE LIVING COMMUNITIES, INC. AND SUBSIDIARIES (THE "COMPANY")
AND PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS OF THE COMPANY AND
COMBINED STATEMENT OF CASH FLOWS OF THE PREDECESSOR
(In Thousands, Except Per Share Amounts)
(Unaudited)
Brookdale Living Predecessor
Brookdale Living Communities, Inc. Properties
Communities, Inc. period from period from
nine months May 7, 1997 January 1, 1997
ended through through
September 30, 1998 September 30, 1997 May 6, 1997
------------------ ----------------- ---------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income (loss) ................................................. $ 4,445 $ 109 $ (664)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization .............................. 3,577 1,849 857
Deferred income taxes ...................................... 2,437 (143) -
Minority interest .......................................... - - 138
Change in deferred lease liability ......................... 826 560 419
Deferred gain on sale of property .......................... (604) (323) (281)
Changes in:
Accounts receivable ..................................... (387) (253) (61)
Prepaid expenses and other .............................. (6,034) (2,587) (110)
Accrued interest payable ................................ 312 170 111
Accounts payable and accrued expenses ................... 1,815 863 431
Other current liabilities ............................... (1,333) (1,275) 1,022
Tenant refundable entrance fees and security deposits ... (67) (9) 35
------------------ ----------------- ---------------
Net cash provided by (used in)operating activities ...... 4,987 (1,039) 1,897
------------------ ----------------- ---------------
Cash Flows from Investing Activities
Lease security deposits and acquisitions ...................... (18,647) (30,266) -
Increase in cash - restricted ................................. (280) (579) (1,180)
Increase in investments - restricted .......................... (13,132) - -
Property under development, net of related payables ........... (15,680) (4,546) (2)
Proceeds from sale of property under development, net ......... 3,370 - -
Payments received on notes receivable ......................... 7,446 - -
Additions to property, plant and equipment and
reimbursable leasehold improvements ......................... (4,940) (575) (149)
------------------ ----------------- ---------------
Net cash used in investing activities ................... (41,863) (35,966) (1,331)
------------------ ----------------- ---------------
Cash Flows from Financing Activities
Repayment of long-term debt ................................... (213) (110) -
Proceeds from unsecured line of credit ........................ 28,150 - -
Repayment of unsecured line of credit ......................... (7,500) - -
Increase in letter of credit deposit .......................... (1,333) (11,702) -
Payment of deferred financing costs ........................... (957) (50) (287)
Net distributions to partners ................................. - - (2,594)
Proceeds from issuance of common stock, net ................... 5,847 51,354 -
------------------ ----------------- ---------------
Net cash provided by (used in) financing activities ..... 23,994 39,492 (2,881)
------------------ ----------------- ---------------
Net (decrease) increase in cash and cash equivalents .... (12,882) 2,487 (2,315)
Cash and cash equivalents at beginning of period ........ 13,292 1,915 4,230
------------------ ----------------- ---------------
Cash and cash equivalents at end of period .............. $ 410 $ 4,402 $ 1,915
================== ================= ===============
</TABLE>
See accompanying notes to consolidated and combined financial statements.
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<TABLE>
<CAPTION>
BROOKDALE LIVING COMMUNITIES, INC. AND SUBSIDIARIES (THE "COMPANY")
AND PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS OF THE COMPANY AND
COMBINED STATEMENT OF CASH FLOWS OF THE PREDECESSOR
(In Thousands, Except Per Share Amounts)
(Unaudited)
Brookdale Living Predecessor
Brookdale Living Communities, Inc. Properties
Communities, Inc. period from period from
nine months May 7, 1997 January 1, 1997
ended through through
September 30, 1998 September 30, 1997 May 6, 1997
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Supplemental Disclosure of Cash Flow Information:
Interest paid, net of amounts capitalized................... $ 3,056 $ 1,988 $ 723
============== ============= =============
Income taxes paid........................................... $ 651 $ - $ -
============== ============= =============
Supplemental Schedule of Noncash Investing and Financing
Activities:
In connection with property acquisitions and net lease
transactions, assets acquired and liabilities assumed were
as follows:
Fair value of assets acquired.......................... $ 19,516 $ 68,545 $ -
Less: Cash consideration paid.......................... 17,319 30,266 -
-------------- ------------- -------------
Liabilities assumed.................................... $ 2,197 $ 38,279 $ -
============== ============= =============
</TABLE>
See accompanying notes to consolidated and combined financial statements.
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<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. AND SUBSIDIARIES (THE "COMPANY")
AND PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(In Thousands, Except Per Share Amounts)
(Unaudited)
1. Organization
Brookdale Living Communities, Inc. ("Brookdale") was incorporated in
Delaware on September 4, 1996 and commenced operations upon the completion of
its initial public offering (the "IPO"), which closed on May 7, 1997.
The consolidated financial statements of the Company include the properties
owned or leased by the Company. The combined financial statements of the
Predecessor Properties (defined below) include the facilities owned or leased by
the senior independent and assisted living division of The Prime Group, Inc. and
certain of its affiliates (collectively, "PGI"), which consisted of the five
facilities as indicated in the table below (PGI owned or leased The Heritage,
The Devonshire and The Hallmark facilities during the period from January 1,
1995 through May 6, 1997 and leased The Springs of East Mesa and The Gables at
Brighton facilities for the period from December 27, 1996 through May 6, 1997).
The following table sets forth the properties owned, leased, managed or under
development by the Company as of September 30, 1998 (collectively, the
"Properties").
Property Name Date Owned or Leased
- ------------- --------------------
Owned Facilities:
- ----------------
The Heritage (1) May 7, 1997
The Devonshire (1) May 7, 1997
Hawthorn Lakes May 7, 1997
Edina Park Plaza May 7, 1997
Leased Facilities:
- -----------------
The Hallmark (1) May 7, 1997
The Springs of East Mesa (1) May 7, 1997
The Gables at Brighton (1) May 7, 1997
The Park Place May 7, 1997
The Gables at Farmington November 24, 1997
The Classic at West Palm Beach December 18, 1997
The Brendenwood Retirement Community December 22, 1997
Harbor Village March 6, 1998
The Atrium of San Jose May 12, 1998
The Chatfield July 2, 1998
Managed Facilities:
- ------------------
The Island on Lake Travis (2)
The Kenwood (3)
Development Projects Under Construction(4):
- -----------------------------------------
Austin, Texas
Southfield, Michigan
Raleigh, North Carolina
Glen Ellyn, Illinois
New York (Battery Park City), New York
(1) Collectively referred to as the "Predecessor Properties"
(2) Management services commenced May 7, 1997
(3) Management services commenced July 1, 1997
(4) The Company is developing these projects for third party owners.
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2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Operating results for such interim
periods are not necessarily indicative of the results that may be expected for a
full fiscal year. For further information regarding significant accounting
policies please refer to the financial statements and footnotes thereto for the
period ended December 31, 1997 included in the Company's Annual Report on Form
10-K as filed with the Securities and Exchange Commission on March 31, 1998.
Significant intercompany accounts and transactions have been eliminated in
consolidation.
Use of Estimates
The preparation of the consolidated and combined financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect amounts reported in the consolidated
and combined financial statements and accompanying notes. Actual results could
differ from these estimates.
Development Fees
Development fees related to development activities provided for projects
owned by third parties are earned over the term of the development. Such fees
are recognized as revenues as the development services are provided to the owner
during the pre-construction and construction periods, which typically extend for
12 to 14 months.
Reclassifications
Certain prior period amounts have been reclassified to conform with the
current financial statement presentation.
3. Recent Developments
On April 15, 1998, the Company purchased land in Raleigh, North Carolina
(the "Raleigh Project") for the purpose of developing a Brookdale prototype
senior independent and assisted living facility. The Company acquired the land
for a total consideration of approximately $2,100 in cash. On June 30, 1998, the
Company sold the Raleigh Project to an unaffiliated third party, at cost
including additional costs of development incurred prior to such sale. The sales
price for the Raleigh Project was $2,903, of which $1,000 was received in cash
and $1,903 was received by the delivery of a promissory note bearing interest at
9.0% per annum. The Company continues to develop the Raleigh Project pursuant to
a development agreement with the owner.
On July 2, 1998, the Company entered into an agreement to lease The
Chatfield, a 125-unit senior independent living facility located in West
Hartford, Connecticut. The lease is an operating lease with an initial five-year
term and five one-year renewal terms, and annual lease payment amounts of
approximately $1,025 through the initial lease term. In connection with the
lease, the Company funded a security deposit of approximately $5,300.
On July 16, 1998, the Company increased its unsecured revolving line of
credit with LaSalle National Bank to $25,000. The maturity date for the amended
line of credit was revised so that the loan must be paid down to $10,000 upon
the earlier of completion of an offering of securities or November 30, 1998 (see
Note 7). The remaining $10,000 line of credit will continue to bear interest
according to the original terms of the loan agreement at prime plus 1/2% per
annum.
On July 23, 1998, the Company sold a development site located in Glen Ellyn,
Illinois (the "Glen Ellyn Project") to an unaffiliated third party, at cost
including additional costs of development incurred prior to such sale. The sales
price for the Glen Ellyn Project was $4,125 of which $1,400 was received in cash
and $2,725 was received by the delivery of a promissory note bearing interest at
9.0% per annum. The Company will develop the Glen Ellyn Project pursuant to a
development agreement with the owner. On October 26, 1998, construction
financing of $31,125 was put into place for the Glen Ellyn Project.
On September 28, 1998, the Company transferred to an unaffiliated third
party certain benefits associated with the Company's right to develop a site
located in Battery Park City, New York, New York (the "Battery Park Project").
The price received by the Company was $2,150, of which $750 was received in cash
and $1,400 was received by the delivery of a promissory note bearing interest at
9.0% per annum. The Company will develop the Battery Park Project pursuant to a
development agreement with the transferee.
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4. Income Taxes
Income tax expense differs from the amounts computed by applying the U.S.
federal income tax rate of 34% to income before income tax expense principally
as a result of non-taxable amortization of the deferred gain on sale of a
property and state income taxes.
5. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings
per share for the three months ended September 30, 1998 and September 30, 1997,
the nine months ended September 30, 1998 and the period from May 7, 1997 through
September 30, 1997.
<TABLE>
<CAPTION>
Period from
Three Months Three Months Nine Months May 7, 1997
Ended Ended Ended Through
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------ ------------------ ------------------ ------------------
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Numerator for basic and diluted earnings
per common share .......................... $ 1,813 $ 190 $ 4,445 $ 109
------------------ ------------------ ------------------ ------------------
Denominator:
Denominator for basic earnings per
share - weighted-average shares ......... 9,569 7,175 9,489 7,051
Effect of dilutive securities:
Employee stock options .................. 202 142 249 93
Warrants ................................ - - - -
------------------ ------------------ ------------------ ------------------
Denominator for diluted earnings per
share - adjusted weighted-average
shares and assumed conversions .......... 9,771 7,317 9,738 7,144
================== ================== ================== ===================
Basic earnings per share .................. $ 0.19 $ 0.03 $ 0.47 $ 0.02
================== ================== ================== ===================
Diluted earnings per share ................ $ 0.19 $ 0.03 $ 0.46 $ 0.02
================== ================== ================== ===================
</TABLE>
During the nine months ended September 30, 1998, certain employees exercised
stock options. The Company received a tax benefit with respect to the exercise
of non-qualified stock options and the disqualifying disposition of incentive
stock options of approximately $470 which was credited to additional paid-in
capital.
6. Pro Forma Information
On October 21, 1998, the Company entered into an agreement to lease the
Ponce de Leon facility, a 145-unit facility located in Santa Fe, New Mexico. The
lease is an operating lease with an initial five-year term and five one-year
renewal terms, and annual lease payment amounts of approximately $1,200 through
the initial lease term. In connection with the lease, the Company funded a lease
security deposit of approximately $4,750.
Without including the impact of the leasing of the Ponce de Leon facility
described above, the pro forma operations, revenue, net income, basic earnings
per share and diluted earnings per share would be $20,491, $1,813, $0.19 and
$0.19, respectively, for the three months ended September 30, 1998 and $18,311,
$845, $0.12 and $0.12, respectively, for the three months ended September 30,
1997 and $60,660, $4,807, $0.51 and $0.49, respectively, for the nine months
ended September 30, 1998 and $54,016, $1,277, $0.18 and $0.18, respectively, for
the nine months ended September 30, 1997.
The unaudited pro forma condensed, consolidated and combined statements of
operations are not necessarily indicative of what the actual results of
operations of the Company would have been assuming the Company had leased the
Ponce de Leon facility and completed the December, 1997 follow-on offering of
2,300 shares of common stock at the beginning of each period presented, nor do
they purport to represent the results of operations of the Company for future
periods.
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Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1998 1997 1998 1997
---- ---- ---- ----
Revenue $21,340 $19,159 $63,206 $56,561
Net income 1,930 962 5,157 1,628
Basic earnings per share 0.20 0.13 0.54 0.23
Diluted earnings per share 0.20 0.13 0.53 0.23
7. Subsequent Events
On October 19, 1998, the Company entered into definitive agreements to
purchase both a 274-unit senior and assisted living facility located in Redwood
City, California and an approximate 300-unit senior and assisted living facility
in the northeastern United States. The closing of the purchases of these
facilities is subject to customary closing contingencies, and there can be no
assurance that such closing contingencies will be satisfied in a timely manner,
if at all.
On November 13, 1998, the Company sold 2,000 shares of common stock at
$16.50 which is scheduled to close on November 18, 1998. The Company granted the
underwriters an option to purchase up to 300 additional shares at $16.50.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion is based on the Consolidated Financial Statements
of the Company as of September 30, 1998 and December 31, 1997, and for the nine
months ended September 30, 1998 and the period from May 7, 1997 through
September 30, 1997 and the Combined Statement of Operations of Predecessor
Properties for the period from January 1, 1997 to May 6, 1997. The financial
statements of the Predecessor Properties combine the results of operations of
five properties which were contributed by PGI to the Company simultaneously with
the consummation of its IPO and are now consolidated in the Company's
Consolidated Financial Statements. Historical results and any apparent
percentage relationships with respect thereto are not necessarily indicative of
future operations.
Cautionary Statements
This quarterly report on Form 10-Q 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 or objectives 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 successful completion of the acquisition of the facilities which the
Company has under contract, the successful completion of development activities,
the successful integration of newly acquired, leased or developed facilities
with the operations of the Company's existing facilities, fluctuations in
operating results, occupancy levels in the markets in which the Company
competes, and/or unanticipated changes in expenses or capital expenditures, (iv)
the effect of future legislation or regulatory changes on the Company's
operations and (v) 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.
Overview
As of September 30, 1998, the Company operated 16 senior independent and
assisted living facilities containing a total of 3,470 units. Four facilities
are owned by the Company, ten facilities are leased by the Company and two
facilities (one of which is owned by PGI) are managed by the Company pursuant to
management contracts. The Company's senior independent and assisted living
facilities offer residents a supportive, "home-like" setting as well as
assistance with certain activities of daily living. By providing residents a
range of service options as their needs change, the Company seeks to achieve
greater continuity of care, enabling senior residents to "age-in-place" and
thereby maintain their stay for a longer time period. The ability to allow
residents to age-in-place is beneficial to the Company's residents as well as
their families who are burdened with care decisions for their elderly relatives.
The Company derives its revenues from resident fees, development fees and
management fees. Resident fees consist of charges for leasing units, providing
basic care services, and, in certain instances, providing supplemental care
services to residents. Basic care services include meal service, housekeeping
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services within the resident units, social and recreational activities,
scheduled transportation, security, emergency call response, access to on-site
medical services and medical education and wellness programs. In addition to
basic care services, the Company offers custom tailored supplemental care
services for residents who desire or need such services. Optional supplemental
care services include check-in services and escort and companion services, and
depending on the particular facility and as dictated by state licensing
requirements, the Company also provides assistance with activities of daily
living, such as dressing, bathing, eating and medication administration or
reminders. The Company plans to expand its supplemental service offerings, as
permitted by applicable licensing, in order to capture incremental revenue and
enable its residents to remain in its facilities longer. Resident fees typically
are paid monthly by residents, their families or other responsible parties. As
of September 30, 1998, over 99% of the Company's revenue was derived from
private pay sources.
The Company derives additional revenue from development fees associated with
developing senior independent and assisted living facilities for unaffiliated
third parties and management fees from managing senior independent and assisted
living facilities for PGI and a third party pursuant to management contracts.
Management services income consists of management fees, which typically range
from 3.0% to 5.0% of a managed facility's total gross revenues. All such fees
are recognized as revenues when management services are rendered.
The Company classifies its operating expenses into the following categories:
(i) facility operating expenses, which include facility personnel payroll and
related costs, food, marketing, other direct facility expenses and real estate
taxes; (ii) general and administrative expenses, which primarily include
corporate and other overhead costs; (iii) lease expenses; and (iv) depreciation
and amortization.
Comparison of nine months ended September 30, 1998 to nine months ended
September 30, 1997
For the nine months ended September 30, 1998, results reflect the operations
of the Company's 16 facilities. For the nine months ended September 30, 1997,
results reflect the operations of the Predecessor's five facilities, the
operations of the Company's three properties acquired at the IPO and the
management by the Company of two facilities after the IPO.
Revenue. Total revenue increased by $27.7 million, or 98.1%, to $56.0
million for the nine months ended September 30, 1998 when compared to the nine
months ended September 30, 1997. Resident fees increased by $23.5 million, or
83.4%, to $51.7 million. Of this increase, approximately $1.1 million (or a
"same store" increase of 4.7%) reflects an increase in resident fees at the
properties that have been operated during both periods, which resulted primarily
from increases in monthly charges under residency agreements. Approximately
$22.4 million of such increase reflects revenue from facilities acquired, leased
or managed subsequent to the IPO. The remaining $4.2 million of the total
revenue increase reflects revenue from development and management fees
associated with projects being developed and managed by the Company for
unaffiliated third parties.
Operating Expenses. Total operating expenses increased by $22.8 million, or
86.3%, to $49.1 million for the nine months ended September 30, 1998 when
compared to the nine months ended September 30, 1997. Facility operating
expenses increased by $13.8 million, or 91.4%, to $29.0 million primarily due to
the addition of the expenses of the facilities acquired or leased subsequent to
the IPO. From the commencement of its operations on May 7, 1997, the Company has
managed all of its facilities and, accordingly, incurred general and
administrative expenses of approximately $3.8 million for the nine months ended
September 30, 1998 compared to $1.1 million for the period from May 7, 1997
through September 30, 1997. For the period January 1, 1997 through May 6, 1997,
two of the Predecessor Properties incurred property management fees of
approximately $230,000.
Lease expense increased by approximately $5.6 million, or 78.7%, to $12.8
million for the nine months ended September 30, 1998 when compared to the nine
months ended September 30, 1997 due primarily to the addition of lease expense
for the facilities leased subsequent to the IPO. Depreciation and amortization
increased by approximately $871,000, or 32.2%, to $3.6 million for the nine
months ended September 30, 1998 when compared to the nine months ended September
30, 1997. This increase primarily reflects the depreciation of the step-up in
basis of two of the Predecessor Properties that resulted in connection with the
IPO and the depreciation of two of the IPO Properties acquired on May 7, 1997.
Interest income increased by approximately $2.5 million to $2.9 million for
the nine months ended September 30, 1998 when compared to the nine months ended
September 30, 1997 due to an increase in average cash balances and various
deposits and restricted investments.
Net Income. For the nine months ended September 30, 1998, the Company
generated net income of approximately $4.4 million, as compared to a net loss of
$555,000 for the nine months ended September 30, 1997, primarily due to the
changes in revenue and expenses described above.
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<PAGE>
Comparison of three months ended September 30, 1998 to three months ended
September 30, 1997
For the three months ended September 30, 1998, results reflect the
operations of the Company's 16 facilities. For the three months ended September
30, 1997, results reflect the operations of the Company's ten facilities.
Revenue. Total revenue increased by $9.2 million, or 82.2%, to $20.5 million
for the three months ended September 30, 1998 when compared to the three months
ended September 30, 1997. Resident fees increased by $7.7 million, or 68.6%, to
$18.9 million. Of this increase, approximately $496,000 (or a "same store"
increase of 4.5%) reflects an increase in resident fees at the properties that
have been operated during both periods, which resulted primarily from increases
in monthly charges under residency agreements. Approximately $7.2 million of
such increase reflects revenue from facilities acquired, leased or managed
subsequent to June 30, 1997. The remaining $1.5 million of the total revenue
increase reflects revenue from development and management fees associated with
projects being developed and managed by the Company for unaffiliated third
parties.
Operating Expenses. Total operating expenses increased by $7.8 million, or
76.2%, to $17.9 million for the three months ended September 30, 1998 when
compared to the three months ended September 30, 1997. Facility operating
expenses increased by $4.9 million, or 84.9%, to $10.7 million primarily due to
the addition of the expenses of the facilities acquired or leased subsequent to
June 30, 1997. From the commencement of operations on May 7, 1997, the Company
has managed all of its facilities and, accordingly, incurred general and
administrative expenses of approximately $1.3 million for the three months ended
September 30, 1998 compared to $659,000 for the three months ended September 30,
1997.
Lease expense increased by approximately $2.2 million, or 86.7%, to $4.8
million for the three months ended September 30, 1998 when compared to the three
months ended September 30, 1997 due to the addition of lease expense for the
facilities leased subsequent to June 30, 1997.
Interest income increased by approximately $1.0 million to $1.3 million for
the three months ended September 30, 1998 when compared to the three months
ended September 30, 1997 due to an increase in average cash balances and various
deposits and restricted investments.
Net Income. For the three months ended September 30, 1998, the Company
generated net income of approximately $1.8 million, as compared to net income of
$190,000 for the three months ended September 30, 1997, primarily due to the
changes in revenue and expenses described above.
Liquidity and Capital Resources
Cash and cash equivalents (which does not include cash and
investments-restricted of $20.6 million, the letter of credit deposit of $13.5
million and lease security deposits of $37.9 million) decreased by $12.9 million
to $410,000 at September 30, 1998 as compared to December 31, 1997 primarily due
to cash utilized for the acquisition, leasing and development of facilities
offset in part by the proceeds from equity offerings and borrowings under the
unsecured line of credit.
Net cash provided by operating activities for the nine months ended
September 30, 1998 totaled approximately $5.0 million as a result of increased
property operations before depreciation and amortization and properties acquired
and leased subsequent to December 31, 1997.
Net cash used in investing activities totaled approximately $41.9 million
for the nine months ended September 30, 1998. Investing activities included cash
paid for lease security deposits in connection with the lease of four facilities
of $18.6 million, cash paid for property under development of $15.7 million, net
of sale proceeds, payments received on notes receivable of $7.4 million, an
increase in cash and investments-restricted of $13.4 million and other uses of
$1.6 million.
Net cash provided by financing activities was approximately $24.0 million
for the nine months ended September 30, 1998. Financing activities included
proceeds from equity offerings of $4.7 million, $1.1 million from the exercise
of employee stock options and net proceeds from an unsecured line of credit of
$20.7 million offset by other net uses of approximately $2.5 million.
The Company currently plans to acquire or lease four to six senior
independent and assisted living facilities per year containing an aggregate of
approximately 800 to 1,200 units and to commence development of at least three
new facilities per year containing approximately 220 units. The total
construction costs, including construction period financing costs and operating
deficits during the lease-up period, for the 220-unit prototype are estimated to
be approximately $30.0 million, or approximately $135,000 per unit. At September
30, 1998, the Company had five facilities under construction and several sites
under consideration for development for new senior independent and assisted
living facilities. Capital expenditures related to the Company's existing
facilities are estimated to be approximately $5.0 million to $10.0 million in
the aggregate in 1998. The Company anticipates that it will use a combination of
cash on hand, additional equity financing and debt financing, lease transactions
and cash generated from operations to fund its acquisition and development
activities. In order to achieve its growth plans, the Company will be required
to obtain a substantial amount of additional financing. The Company presently
has no
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<PAGE>
commitment, arrangement or understanding regarding financing to fund the debt
portion of the Company's acquisition and development plans other than the
follow-on offering of common stock scheduled to be completed November 18, 1998,
and the $100.0 million commitment from The Capital Company of America (successor
to Nomura Asset Capital Corporation) for development projects of which
approximately $51 million is committed to the Austin, Texas and Southfield,
Michigan development projects. There can be no assurance that the Company will
be able to obtain the financing necessary for its acquisition and development
programs.
As of September 30, 1998, the Company had $65.0 million of long-term
indebtedness in tax-exempt bonds with floating rates. The interest rates
(exclusive of credit enhancement and other fees) on such debt averaged 3.6%
during the nine months ended September 30, 1998. Such tax-exempt bonds contain
covenants requiring the facilities to maintain a minimum number of units for
income qualified residents. The Company may obtain similar bond financing for
future facilities.
As of September 30, 1998, the Company also had $20.7 million outstanding
under its unsecured line of credit at a floating rate of prime plus 1/2%. The
interest rate on the line was at 9% during the three months ended September 30,
1998.
The Company is dependent on third-party financing for its acquisition,
leasing and development programs. Financing obtained in the future is generally
expected to contain terms and conditions and representations and warranties that
are customary for such loans and may contain financing covenants and other
restrictions that (i) require the Company to meet certain financial tests and
maintain certain amounts of funds in escrow, (ii) limit, among other things, the
ability of the Company to borrow additional funds, dispose of assets and engage
in mergers or other business combinations and (iii) restrict the ability of the
Company to operate competing facilities within certain distances from mortgaged
facilities. There can be no assurance that financing for the Company's
acquisition and development program will be available to the Company on
acceptable terms or at all. A lack of funds may require the Company to delay or
eliminate all or some of its development projects and acquisition and leasing
plans and could therefore have a material adverse effect on the Company's growth
plans and on its future results of operations.
Impact of Recently Issued Accounting Standards
In April 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-5, "Reporting on the Cost of Start-Up Activities" (SOP 98-5)
which is effective for fiscal years beginning after December 15, 1998. SOP 98-5
provides guidance on financial reporting of start-up costs and organization
costs. Adoption of SOP 98-5 is not anticipated to affect the financial position
or results of operations of the Company.
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
FASB 133, "Accounting for Derivative Investments and Hedging Activities" which
is effective for fiscal years beginning after June 15, 1999. FASB 133 provides
guidance for the recognition and measurement of derivatives and hedging
activities. Adoption of FASB 133 is not anticipated to affect the financial
position or results of operations of the Company.
Impact of Inflation
Resident fees from senior independent and assisted living facilities owned
or leased by the Company, management fees from facilities managed by the Company
for third parties and development fees from facilities developed by the Company
for third parties are the Company's primary sources of revenue. These revenues
are affected by monthly resident fee rates and facility occupancy rates. The
rates charged for senior independent and assisted living services are highly
dependent upon local market conditions and the competitive environment in which
the facilities operate. Substantially all of the Company's resident agreements
allow for adjustments in the monthly fees payable thereunder upon each
anniversary of the commencement of the residency agreement, thereby enabling the
Company to seek increases in monthly fees due to inflation, demand or other
factors. Any such increase would be subject to market and competitive
conditions. The Company believes, however, that the ability to adjust the
monthly fees payable under the residency agreements on an annual basis serves to
reduce the risk to the Company of the adverse effect of inflation. In addition,
employee compensation expense is a principal cost element of facility operations
and is also dependent upon local market conditions. There can be no assurance
that resident fees will increase or that costs will not increase due to
inflation or other causes. In addition, as of September 30, 1998, approximately
$85.7 million in principal amount of the Company's indebtedness bore interest at
floating rates (including $65.0 million at the tax-exempt bond floating rate of
approximately 3.6% for nine months ending September 30, 1998) and future
indebtedness may bear floating rate interest. Inflation, and its impact on
floating interest rates, could affect the amount of interest payments due on
such indebtedness.
Readiness for Year 2000
The Company has implemented a program to assess, remediate and mitigate the
potential impact of the Year 2000 Issue throughout the Company. The Company's
program has been structured to address its internal computer systems and
applications, network services operations, facilities operations and third-party
vendors and suppliers. The Company believes that it is taking the necessary
steps within its control to mitigate the potential impact of the Year 2000 Issue
on the Company.
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<PAGE>
Information Systems
The Company intends to replace its accounting system prior to the assessment
of its Year 2000 Issue. The Company expects that the replacement of its current
system will mitigate the impact of the Year 2000 Issue on its accounting
operations. The corporate software selection has been completed and a contract
has been executed in the third quarter of 1998 to commence development and
implementation in the fourth quarter of 1998. The Company has one vendor
software package that is used to process accounting information at each facility
which is not Year 2000 compliant. The vendor is developing a conversion to
ensure that the software package is Year 2000 compliant. The Company is in the
process of identifying replacement software at the facilities it owns or
operates and is expected to select a replacement in the first quarter of 1999 in
the event it is determined that the vendor is unable to ensure the software
package is Year 2000 compliant. The Company anticipates completing the corporate
project no later than the second quarter of 1999.
Facilities
The Company has commenced an assessment of each facility, including an
assessment of infrastructure equipment such as elevators, HVAC and security
systems, and other critical service provider readiness issues. The Company
anticipates completing its preliminary assessment by December 31, 1998. The
vendor software package at each facility is used for resident billing and
payables processing. As noted above, the Company is in the process of
identifying replacement software in the event the vendor is unable to ensure
that the existing software is Year 2000 compliant. During the first half of
1999, the Company will undertake contingency planning for each of its facilities
as necessary.
Third-Party Vendors and Suppliers
The Company's approach to third-party suppliers involves the process of
identification and prioritization of critical suppliers and communicating with
them about their plans and progress in addressing the Year 2000 Issue. This
evaluation, including prioritization of critical suppliers, and the subsequent
contingency planning will be undertaken during the first half of calendar 1999.
Costs
The final cost to complete the project has not yet been determined; however,
the estimated total cost, including capital expenditures, will approximate $1.5
million to $2.0 million through December 31, 2000. The Company's costs include
outside consultants and contractors and hardware and software replacements and
upgrades.
The Company anticipates that cash on hand, cash generated from operations
and additional debt and equity financings will provide sufficient cash to fund
Year 2000 compliance expenditures. The Company's allocation of personnel
resources and planned expenditures has not resulted in the deferral of any
information technology projects. Remediation costs, other than the planned
expenditures described above, are not expected to be material.
Risks
The Company may face potential risks related to the Year 2000 compliance
issue and may experience business interruption to its operations as a result of
third-party vendors and suppliers failing to address their Year 2000 compliance
issues. The Company's plan includes an assessment of third-party vendors and
suppliers to identify Year 2000 compliance issues and the potential impact upon
the Company and its operations.
The project completion date is based on management's best estimates, which
were derived utilizing numerous assumptions of future events, including the
ability of third parties to modify the Company's systems on a timely basis.
There can be no guarantee that the project will be completed in a timely manner.
Specific factors that might delay completion of the project include, but are not
limited to, the availability of qualified personnel, the ability to locate and
correct all relevant computer codes, and similar uncertainties. Although the
Company intends to continue preparations for Year 2000, it is not possible to
quantify potential indirect effects resulting from the lack of readiness of any
third party with whom the Company conducts its business.
Readers are cautioned that forward-looking statements contained in the Year
2000 disclosure should be read in conjunction with the Company's disclosure
under the heading "Cautionary Statements" on page 12.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable.
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<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
No material developments with respect to legal proceedings
occurred during the period covered by this quarterly
report.
Item 2. Changes in Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
3.1 Restated Certificate of Incorporation of the Company, as filed
with the Securities and Exchange Commission on June 16, 1997 as
Exhibit 3.1 to the Company's Form 10-Q for the period ended
March 31, 1997 (File No. 0-22253) and incorporated herein by
reference
3.2 Amended and Restated By-laws of the Company, as filed with the
Securities and Exchange Commission on June 16, 1997 as Exhibit
3.2 to the Company's Form 10-Q for the period ended March 31,
1997 (File No. 0-22253) and incorporated herein by reference
4.1 Form of certificate representing Common Stock of the Company,
as filed with the Securities and Exchange Commission on March
17, 1997 as Exhibit 10.14 to the Company's Registration
Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
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<PAGE>
Exhibit
Number Description
------- -----------
10.1 Lease, dated as of July 1, 1998, by and between Brookdale
Living Communities of Connecticut-WH, Inc., as lessee, and The
Chatfield Business Trust, S.T., as lessor-owner, as filed with
the Securities and Exchange Commission on July 16, 1998 as
Exhibit 10.1 to the Company's Form 8-K dated July 2, 1998 (File
No. 0-22253) and incorporated herein by reference
10.2 Fixed Rate Program Promissory Note Secured by Mortgage, dated
July 1, 1998, from The Chatfield Business Trust, S.T., as
maker, payable to the order of Heller Financial, Inc., as filed
with the Securities and Exchange Commission on July 16, 1998 as
Exhibit 10.2 to the Company's Form 8-K dated July 2, 1998 (File
No. 0-22253) and incorporated herein by reference
10.3 Guaranty, dated as of July 1, 1998, issued by Brookdale Living
Communities of Connecticut-WH, Inc. in favor of Heller
Financial, Inc., as filed with the Securities and Exchange
Commission on July 16, 1998 as Exhibit 10.3 to the Company's
Form 8-K dated July 2, 1998 (File No. 0-22253) and incorporated
herein by reference
10.4 Certificate A Pledge Agreement, dated as of July 1, 1998, by
Brookdale Living Communities of Connecticut-WH, Inc. in favor
of The Chatfield Business Trust, S.T., Wilmington Trust Company
and LaSalle National Bank, as filed with the Securities and
Exchange Commission on July 16, 1998 as Exhibit 10.4 to the
Company's Form 8-K dated July 2, 1998 (File No. 0-22253) and
incorporated herein by reference
10.5 Certificate B Pledge Agreement, dated as of July 1, 1998, by
Brookdale Living Communities of Connecticut-WH, Inc. in favor
of The Chatfield Business Trust, S.T., Wilmington Trust Company
and LaSalle National Bank, as filed with the Securities and
Exchange Commission on July 16, 1998 as Exhibit 10.5 to the
Company's Form 8-K dated July 2, 1998 (File No. 0-22253) and
incorporated herein by reference
10.6 Hazardous Substance Indemnification Agreement, dated as of July
1, 1998, from Brookdale Living Communities of Connecticut-WH,
Inc. and Brookdale Living Communities, Inc. in favor of Heller
Financial, Inc., as filed with the Securities and Exchange
Commission on July 16, 1998 as Exhibit 10.6 to the Company's
Form 8-K dated July 2, 1998 (File No. 0-22253) and incorporated
herein by reference
10.7 Indemnity Agreement, dated as of July 1, 1998, from Brookdale
Living Communities, Inc. in favor of Wilmington Trust Company
and Bank Hapoalim, B.M., as filed with the Securities and
Exchange Commission on July 16, 1998 as Exhibit 10.7 to the
Company's Form 8-K dated July 2, 1998 (File No. 0-22253) and
incorporated herein by reference
10.8 Letter Agreement regarding liability for carve-outs to
non-recourse provisions, dated July 1, 1998, issued by
Brookdale Living Communities, Inc. in favor of Heller
Financial, Inc., as filed with the Securities and Exchange
Commission on July 16, 1998 as Exhibit 10.8 to the Company's
Form 8-K dated July 2, 1998 (File No. 0-22253) and incorporated
herein by reference
10.9* First Amendment to Loan Agreement and Documents, dated as of
July 16, 1998, by and between the Company and LaSalle National
Bank
10.10* Amended and Restated Note dated July 16, 1998 issued by the
Company payable to the order of LaSalle National Bank
12* Computation of Ratio of Earnings to Combined Fixed Charges
27* Financial Data Schedule
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* Previously filed.
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<PAGE>
(b) Reports on Form 8-K:
On July 14, 1998, the Company filed a Current Report on Form 8-K/A dated May
12, 1998 with the Securities and Exchange Commission including pursuant to Item
7 of Form 8-K/A the audited statements of The Atrium of San Jose which was
leased by the Company on May 12, 1998 and the unaudited pro forma statements of
the Company reflecting all acquisitions and leases through The Atrium of San
Jose.
On July 16, 1998, the Company filed a Current Report on Form 8-K dated June
25, 1998 with the Securities and Exchange Commission announcing pursuant to Item
5 of Form 8-K the Company's $100,000,000 financing agreement with Nomura Asset
Management Corporation providing financing for the development and construction
of senior living facilities to be owned or developed and managed by the Company
or an affiliate of the Company.
On July 16, 1998, the Company filed a Current Report on Form 8-K dated July
2, 1998 with the Securities and Exchange Commission announcing pursuant to Item
2 of Form 8-K the lease of The Chatfield which commenced on July 2, 1998.
On July 17, 1998, the Company filed a Current Report on Form 8-K dated June
30, 1998 with the Securities and Exchange Commission announcing pursuant to Item
5 of Form 8-K the Development Agreement for a construction site in Raleigh,
North Carolina.
On September 15, 1998, the Company filed a Current Report on Form 8-K/A dated
July 2, 1998 with the Securities and Exchange Commission announcing pursuant to
Item 7 of Form 8-K/A the audited statements of The Chatfield which was leased by
the Company on July 2, 1998 and the unaudited pro forma statements of the
Company reflecting all acquisitions and leases through The Chatfield.
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<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.
BROOKDALE LIVING COMMUNITIES, INC.
----------------------------------
Registrant
Date: March 30, 1999
----------------- /s/ Mark J. Schulte
----------------------------------
President and
Chief Executive Officer
Date: March 30, 1999
----------------- /s/ Darryl W. Copeland, Jr.
----------------------------------
Executive Vice President and
Chief Financial Officer
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