<PAGE> 1
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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1994
--- 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 1-9550
BEVERLY ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4100309
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SOUTH WALDRON ROAD, NO. 155
FORT SMITH, ARKANSAS 72903
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (501) 452-6712
INDICATE BY CHECK MARK WHETHER 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 REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
SHARES OF REGISTRANT'S COMMON STOCK, $.10 PAR VALUE, OUTSTANDING,
EXCLUSIVE OF TREASURY SHARES, AT APRIL 29, 1994 -- 83,062,510
________________________________________________________________________________
================================================================================
<PAGE> 2
BEVERLY ENTERPRISES, INC.
FORM 10-Q
MARCH 31, 1994
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . 8
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
1
<PAGE> 3
PART I
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 AND DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1994 1993
--------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,898 $ 73,773
Accounts receivable-patient, less allowance for doubtful accounts:
1994--$21,802; 1993--$19,561 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351,213 340,249
Accounts receivable-nonpatient, less allowance for doubtful accounts:
1994--$297; 1993--$343 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,311 6,329
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,239 4,617
Operating supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,513 62,915
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,586 27,050
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,952 33,817
----------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576,712 548,750
Property and equipment, net of accumulated depreciation and amortization:
1994--$548,157; 1993--$544,611 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,143,878 1,153,370
Other assets:
Notes receivable, less allowance for doubtful notes:
1994--$10,527; 1993--$10,440 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,019 41,689
Designated and restricted funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,581 44,948
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,354 72,209
Operating and leasehold rights and licenses, net . . . . . . . . . . . . . . . . . . . . 24,710 25,819
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,731 106,745
----------- ----------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291,395 291,410
----------- ----------
$2,011,985 $1,993,530
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123,285 $ 119,212
Accrued wages and related liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 130,540 126,909
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,913 9,519
Accrued restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,435 34,310
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,087 63,433
Current portion of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . 37,006 42,873
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,438 625
----------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397,704 396,881
Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695,034 706,695
Deferred income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,702 72,765
Other liabilities and deferred items . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,327 78,180
Commitments and contingencies
Stockholders' equity:
Preferred stock:
Series B, shares issued and outstanding: 3,000,000 . . . . . . . . . . . . . . . . . 150,000 150,000
Series A, shares issued and outstanding: 999,999 . . . . . . . . . . . . . . . . . . -- 100,000
Funds designated for the redemption of Series A preferred stock . . . . . . . . . . . -- (100,000)
Common stock, shares issued: 1994--87,028,910; 1993--85,845,400 . . . . . . . . . . . . 8,703 8,585
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591,939 578,239
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,711 42,320
Treasury stock, at cost: 3,977,800 shares . . . . . . . . . . . . . . . . . . . . . . . (40,135) (40,135)
----------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 766,218 739,009
----------- ----------
$ 2,011,985 $1,993,530
=========== ==========
</TABLE>
See accompanying notes.
2
<PAGE> 4
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Net operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 712,188 $ 691,217
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,707 3,308
----------- -----------
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715,895 694,525
Costs and expenses:
Operating and administrative:
Wages and related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385,116 385,443
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,638 256,231
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,451 16,262
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . 22,626 21,131
----------- -----------
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . 692,831 679,067
----------- -----------
Income before provision for income taxes . . . . . . . . . . . . . . . . . . . . 23,064 15,458
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,611 5,101
----------- -----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,453 $ 10,357
=========== ===========
Net income per share of common stock . . . . . . . . . . . . . . . . . . . . . . $ 0.16 $ 0.13
=========== ===========
Shares used to compute net income per share . . . . . . . . . . . . . . . . . . . 84,365 81,317
=========== ===========
</TABLE>
Primary and fully diluted earnings per share for the three months ended
March 31, 1994 were computed by dividing net income after deduction of
preferred stock dividends by the weighted average number of shares of common
stock outstanding during the period and the weighted average number of shares
issuable upon exercise of stock options, calculated using the treasury stock
method. Conversion of the Company's Series B preferred stock (as defined
herein), 7.625% convertible subordinated debentures and zero coupon notes would
have an anti-dilutive effect and, therefore, were not assumed.
Primary earnings per share for the three months ended March 31, 1993 was
computed by dividing net income by the weighted average number of shares of
common stock and dilutive common stock equivalents outstanding during the
period. Common stock equivalents included the Company's Series A preferred
stock (as defined herein) and the weighted average number of shares issuable
upon exercise of stock options, calculated using the treasury stock method.
Fully diluted earnings per share for the three months ended March 31, 1993 was
computed as above and assumed conversion of the Company's 9% convertible
subordinated debentures. Conversion of the Company's 7.625% convertible
subordinated debentures and zero coupon notes would have an anti-dilutive
effect and, therefore, were not assumed.
See accompanying notes.
3
<PAGE> 5
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,453 $ 10,357
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . 22,626 21,131
Provision for reserves and discounts on patient, notes and other receivables, net 3,945 4,070
Gains on dispositions of facilities, net . . . . . . . . . . . . . . . . . . . . (2,770) --
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 (1,702)
Net decrease in insurance reserves . . . . . . . . . . . . . . . . . . . . . . . (435) (5,453)
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable - patient . . . . . . . . . . . . . . . . . . . . . . . . (16,207) (6,962)
Operating supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (579) (270)
Prepaid expenses and other receivables . . . . . . . . . . . . . . . . . . . . (2,611) (2,528)
Accounts payable and other accrued expenses . . . . . . . . . . . . . . . . . 5,332 (1,347)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,291 5,213
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,792) (2,187)
----------- ----------
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,130 9,965
----------- ----------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . 26,583 20,322
Cash flows from investing activities:
Proceeds from dispositions of facilities and other assets . . . . . . . . . . . . . 31,228 106
Payments for acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . (8,409) (5,768)
Payments on notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,552 1,055
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23,295) (15,443)
Construction in progress, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,160) (5,247)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,970) (3,628)
----------- ----------
Net cash used for investing activities . . . . . . . . . . . . . . . . . . (5,054) (28,925)
Cash flows from financing activities:
Repayments of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . (18,478) (16,848)
Proceeds from issuance of long-term obligations . . . . . . . . . . . . . . . . . . -- 21,541
Net borrowings under revolving credit agreement . . . . . . . . . . . . . . . . . . -- 2,000
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . 13,228 388
Deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,135) (3,072)
Dividends paid on preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . (2,063) (250)
Proceeds from designated funds, net . . . . . . . . . . . . . . . . . . . . . . . . 2,044 7
----------- ----------
Net cash provided by (used for) financing activities . . . . . . . . . . . (6,404) 3,766
----------- ----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . 15,125 (4,837)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . 73,773 49,597
----------- ----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . $ 88,898 $ 44,760
=========== ==========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . . . . . . . . . . . . . . . . $ 13,057 $ 17,150
Income taxes (net of refunds) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,990 1,442
</TABLE>
See accompanying notes.
4
<PAGE> 6
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1994
(UNAUDITED)
(i) The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, and include all adjustments of a
normal recurring nature which are, in the opinion of management, necessary for
a fair presentation of the results of operations for the three months ended
March 31, 1994 and 1993 pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures in these
condensed consolidated financial statements are adequate to make the
information presented not misleading. These condensed consolidated financial
statements should be read in conjunction with the Company's consolidated
financial statements and the notes thereto included in the Company's 1993
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
The results of operations for the three months ended March 31, 1994 are not
necessarily indicative of the results for a full year. Unless the context
indicates otherwise, the Company means Beverly Enterprises, Inc. and its
consolidated subsidiaries.
Certain prior year amounts have been reclassified to conform with the 1994
presentation.
(ii) The provisions for income taxes for the three months ended March 31,
1994 and 1993 are based on estimated annual tax rates of 33%. The Company's
effective tax rate is lower than the federal statutory rate primarily due to
the utilization of certain tax credit carryforwards, partially offset by the
impact of state income taxes. The provisions for taxes on income consist of
the following for the three months ended March 31 (in thousands):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Federal:
Current . . . . . . . . . . . . . . . . . . . . . . . $ 5,972 $ 4,739
Deferred . . . . . . . . . . . . . . . . . . . . . . . (206) (875)
State:
Current . . . . . . . . . . . . . . . . . . . . . . . 1,309 1,074
Deferred . . . . . . . . . . . . . . . . . . . . . . . 536 163
--------- ---------
$ 7,611 $ 5,101
========= =========
</TABLE>
(iii) During the three months ended March 31, 1994, the Company acquired
four nursing facilities (425 beds), which were previously leased by the
Company, and certain other assets, for approximately $8,409,000 cash,
approximately $1,200,000 acquired debt and approximately $393,000 security and
other deposits. During the three months ended March 31, 1994, the Company
sold, subleased or terminated the leases on 40 nursing facilities (3,522 beds)
(11 of such facilities were included in the 1992 restructuring program
discussed below) and certain other assets for cash proceeds of approximately
$32,747,000 and approximately $50,000 notes receivable. The Company recognized
a pre-tax loss of approximately $9,000,000 for the 11 facilities included in
the 1992 restructuring program. Such loss was included in the $57,000,000
pre-tax restructuring charge discussed below. The Company recognized pre-tax
gains of approximately $3,000,000 related to the remaining dispositions, which
were primarily included in the Company's operating results for the three months
ended March 31, 1994. The operations of these facilities were immaterial to
the Company's financial position and results of operations.
During the year ended December 31, 1992, the Company recognized a $57,000,000
pre-tax restructuring charge related to a program to discontinue the Company's
operation of 33 nursing facilities with historically poor financial
performance, and to replace, relocate or sell certain other assets (the "1992
restructuring program"). This charge included the estimated operating losses
to be incurred by these 33 facilities during the anticipated period required to
implement the program. Certain transactions which were reserved as part of the
1992 restructuring program were not completed by the originally anticipated
one-year implementation period; however, it is anticipated that the remaining
transactions will be substantially completed during 1994. The Company
evaluates the reserves established in connection with the remaining
transactions on a regular basis and believes the current reserves are adequate.
5
<PAGE> 7
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
In April 1994, the Company entered into a letter of intent with American
Transitional Hospitals, Inc. ("ATH") for the acquisition of ATH by the Company
in exchange for 2,400,000 shares of the Company's common stock. The Company
anticipates that the acquisition will be accounted for as a pooling of
interests. The transaction is subject to the execution of a definitive
agreement and the satisfaction of certain conditions, including receipt of
regulatory and ATH stockholder approvals. The acquisition of ATH by the
Company is not expected to have a material effect on the Company's financial
position or results of operations.
(iv) During 1993, the Company completed the sale of 3,000,000 shares of
$2.75 Cumulative Convertible Exchangeable Preferred Stock (the "Series B
preferred stock") through a public offering. On January 3, 1994, the Company
used approximately $100,000,000 of the net proceeds from such offering to
redeem all of the Company's cumulative convertible preferred stock (the "Series
A preferred stock").
(v) There are various lawsuits and regulatory actions pending against the
Company arising in the normal course of business, some of which seek punitive
damages. The Company does not believe that the ultimate resolution of these
matters will have a material adverse effect on the Company's consolidated
financial position or results of operations.
(vi) Effective July 31, 1987, Beverly Enterprises, a California corporation
("Beverly California"), became a wholly-owned subsidiary of Beverly
Enterprises, Inc., a Delaware corporation ("Beverly Delaware"). Beverly
Delaware (the parent) provides financial, administrative and legal services to
Beverly California for which Beverly California is charged management fees.
The following summarized unaudited financial information is being reported
because Beverly California's 7.625% convertible subordinated debentures due
March 2003 and its zero coupon notes (collectively, the "Debt Securities") and
its senior secured notes (the "Senior Secured Notes") are publicly held.
Beverly Delaware is co-obligor of the Debt Securities and guarantor of the
Senior Secured Notes. Summary unaudited financial information for Beverly
California is as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1994 MARCH 31, 1993
----------------- ------------------
<S> <C> <C>
Total revenues . . . . . . . . . . . . . . $ 716,148 $ 694,818
Total costs and expenses . . . . . . . . . 693,133 679,435
Net income . . . . . . . . . . . . . . . . 15,420 10,307
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
MARCH 31, 1994 DECEMBER 31, 1993
-------------- -----------------
<S> <C> <C>
Current assets . . . . . . . . . . . . . . $ 497,350 $ 468,441
Long-term assets . . . . . . . . . . . . . 1,472,652 1,483,400
Current liabilities . . . . . . . . . . . 394,967 392,244
Long-term liabilities . . . . . . . . . . 838,691 838,673
</TABLE>
In addition to Beverly Delaware, one of its direct wholly-owned subsidiaries
and each of Beverly California's material wholly- owned subsidiaries
(collectively, the "Subsidiary Guarantors") have guaranteed the obligations of
6
<PAGE> 8
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Beverly California under the Senior Secured Notes. Separate financial
statements of Beverly California and the Subsidiary Guarantors are not
considered to be material to holders of the Senior Secured Notes since the
guaranty of each of the Subsidiary Guarantors is joint and several and full and
unconditional (except that liability thereunder is limited to an aggregate
amount equal to the largest amount that would not render its obligations
thereunder subject to avoidance under Section 548 of the Bankruptcy Code of
1978, as amended, or any comparable provisions of applicable state law), and
the aggregate net assets, earnings and equity of the Subsidiary Guarantors and
Beverly California together, after adjustment for intercompany management fees,
are substantially equivalent to the net assets, earnings and equity of Beverly
Delaware on a consolidated basis.
7
<PAGE> 9
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1994
(UNAUDITED)
OPERATING RESULTS
FIRST QUARTER 1994 COMPARED TO FIRST QUARTER 1993
Net income was $15,453,000 or $.16 per share for the three months ended March
31, 1994, as compared to net income of $10,357,000 or $.13 per share for the
same period in 1993. Net operating revenues and operating and administrative
costs increased approximately $21,000,000 and $14,100,000, respectively, for
the three months ended March 31, 1994, as compared to the same period in 1993.
These increases consist of the following: increases in net operating revenues
and operating and administrative costs for facilities which the Company
operated during each of the three-month periods ended March 31, 1994 and 1993
("same facility operations") of approximately $62,400,000 and $52,000,000,
respectively; increases in net operating revenues and operating and
administrative costs of approximately $2,500,000 and $2,200,000, respectively,
due to the acquisition of three facilities in 1993; and decreases in net
operating revenues and operating and administrative costs of approximately
$43,900,000 and $40,100,000, respectively, due to the disposition of, or lease
terminations on, 40 facilities in 1994 and 43 facilities in 1993.
The increase in net operating revenues for same facility operations for the
three months ended March 31, 1994, as compared to the same period in 1993, was
due to the following: approximately $30,700,000 due to increased ancillary
revenues as a result of providing additional ancillary services to the
Company's Medicare and private-pay patients; approximately $26,700,000 due
primarily to increases in Medicaid room and board rates, and to a lesser
extent, private and Medicare room and board rates; approximately $3,500,000 due
to a shift in the Company's patient mix to a higher Medicare census; and
approximately $8,200,000 due to increases in pharmacy revenues and various
other items. The Company's Medicare, private and Medicaid census for same
facility operations was 12%, 19%, and 68%, respectively, for the three months
ended March 31, 1994, as compared to 11%, 19%, and 69%, respectively, for the
same period in 1993. These increases in net operating revenues were partially
offset by approximately $6,700,000 due to a decrease in same facility occupancy
to 88.5% for the three months ended March 31, 1994, as compared to 89.7% for
the same period in 1993.
The increase in operating and administrative costs for same facility
operations for the three months ended March 31, 1994, as compared to the same
period in 1993, was due to the following: approximately $21,300,000 due to
increased wages and related expenses principally due to higher wages and
greater benefits intended to attract and retain qualified personnel, increased
staffing levels in the Company's nursing facilities to cover increased patient
acuity, and the hiring of therapists on staff as opposed to contracting for
their services; approximately $26,000,000 due to additional ancillary costs
(excluding wages and related expenses) associated with the increase in
ancillary services provided to the Company's Medicare and private-pay patients;
and approximately $4,700,000 due primarily to increases in pharmacy-related
costs, insurance, utilities and various other items.
Ancillary revenues are derived from providing services to residents beyond
room and board care. These services include occupational, physical, speech,
respiratory and IV therapy, as well as, sales of pharmaceutical products and
other services. The Company's overall ancillary revenues for the three months
ended March 31, 1994 were $170,193,000 and represented 24% of net operating
revenues, as compared to $141,337,000 of ancillary revenues for the same period
in 1993 which represented 20% of net operating revenues for the three months
ended March 31, 1993. Although the Company is pursuing further growth of
ancillary revenues through expansion of specialty services, such as
rehabilitation and subacute care, there can be no assurance that such growth
will continue. Growth in ancillary revenues, as well as increases in Medicare
census, have also resulted in higher costs for the Company due to higher acuity
services being provided to these patients. The Company's overall ancillary
costs, excluding wages and related expenses, were $95,471,000 for the three
months ended March 31, 1994, compared to $77,684,000 for the same period in
1993.
8
<PAGE> 10
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Interest expense decreased approximately $1,800,000 as compared to the same
period in 1993 primarily due to the repayment of approximately $45,000,000 of
debt with a portion of the proceeds from issuance of the Series B preferred
stock and the conversion of approximately $46,000,000 in principal amount of
the Company's 9% convertible subordinated debentures into common stock. Such
transactions were completed during the third quarter of 1993. Depreciation and
amortization expense increased approximately $1,500,000 as compared to the same
period in 1993 primarily due to the acquisition of previously-leased nursing
facilities, partially offset by a decrease due to the disposition of or lease
terminations on certain nursing facilities.
The Company's future operating performance will continue to be affected by
the issues facing the nursing home industry as a whole, including the
maintenance of occupancy, the availability of nursing personnel, the adequacy
of funding of governmental reimbursement programs, the demand for nursing home
care and the nature of any health care reform measures that may be taken by the
federal government, as discussed below, as well as by any state governments.
The Company's ability to control costs, including its wages and related
expenses which continue to rise and represent the largest component of the
Company's operating and administrative expenses, will also significantly impact
its future operating results.
As a general matter, increases in the Company's operating costs result in
higher patient rates under Medicaid programs in subsequent periods. However,
the Company's results of operations will continue to be affected by the time
lag in most states between the increases in reimbursable costs and the receipt
of related reimbursement rate increases. Medicaid rate increases, adjusted for
inflation, are generally based upon changes in costs for a full calendar year
period. The time lag before such costs are reflected in permitted rates varies
from state to state, with a substantial portion of the increases taking effect
up to 18 months after the related cost increases.
The Clinton Administration has made health care reform one of its top
priorities. The White House Task Force on Health Care Reform studied the
issue of health care reform and presented its report and recommendations to the
Administration. The Administration proposed health care reform legislation to
Congress in October 1993. Various other legislative and industry groups
continue to study numerous health care issues, including access, delivery and
financing of long-term health care. These and other groups' recommendations
will likely impact the form and content of future health care reform
legislation. As a result, the Company is unable to predict the type of
legislation or regulations that may be adopted affecting the long-term care
industry and their impact on the Company. There can be no assurance that any
health care reform will not adversely affect the Company's financial position
or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1994, the Company had approximately $88,898,000 in cash and cash
equivalents and net working capital of approximately $179,008,000. The Company
anticipates that approximately $21,506,000 of its existing cash at March 31,
1994, while not legally restricted, will be utilized for funding insurance
claims, and the Company does not expect to use such cash for other purposes.
The Company had $50,000,000 of unused commitments under its revolving credit
agreement and $15,000,000 of unused commitments under its commercial paper
program as of March 31, 1994.
9
<PAGE> 11
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
Net cash provided by operating activities for the three months ended March
31, 1994 was approximately $26,583,000, an increase of approximately $6,261,000
from the prior year due to various items, including an improvement in the
Company's operations and a reduction in insurance payments. Net cash used for
investing and financing activities was approximately $5,054,000 and
$6,404,000, respectively, for the three months ended March 31, 1994. The
Company primarily used cash generated from operations to fund capital
expenditures and construction totaling approximately $24,455,000. The Company
received cash proceeds of approximately $31,000,000 from the sale or sublease
of 27 nursing facilities in the state of Texas, and received $12,000,000 in
cash proceeds from the exercise of an option grant for 1,000,000 common shares
at $12.00 per share. A portion of such proceeds was used to repay
approximately $18,478,000 of long-term obligations and to fund acquisitions of
approximately $8,409,000. In April 1994, the Company filed a Registration
Statement on Form S-3 with the Securities and Exchange Commission to register
the 1,000,000 common shares purchased under the option grant. This will not
result in any additional proceeds to the Company.
During 1993, the Company completed the sale of 3,000,000 shares of $2.75
Cumulative Convertible Exchangeable Preferred Stock (the "Series B preferred
stock") through a public offering. On January 3, 1994, the Company used
approximately $100,000,000 of the net proceeds from such offering to redeem all
of the Company's cumulative convertible preferred stock (the "Series A
preferred stock"). The Series A preferred stock dividend rate was scheduled to
increase from 1% to 10% on January 1, 1994.
The Company has entered into a letter of intent with American Transitional
Hospitals, Inc. ("ATH") for the acquisition of ATH by the Company in exchange
for 2,400,000 shares of the Company's common stock. The Company anticipates
that the acquisition will be accounted for as a pooling of interests. The
acquisition of ATH by the Company is not expected to have a material effect on
the Company's financial position or results of operations.
The Company believes that working capital from operations, borrowings under
its banking arrangements and commercial paper program, proceeds from issuance
of certain debt securities, refinancings of certain existing indebtedness, and
the remaining proceeds from the sale of facilities and the exercise of the
option grant discussed above, will be adequate to repay its debts due within
one year of approximately $37,006,000, to make normal recurring capital
additions and improvements for the twelve months ending March 31, 1995 of
approximately $100,000,000, to make selective acquisitions, including the
purchase of previously-leased facilities, and to meet working capital
requirements.
10
<PAGE> 12
PART II
BEVERLY ENTERPRISES, INC.
OTHER INFORMATION
MARCH 31, 1994
(UNAUDITED)
ITEM 1. LEGAL PROCEEDINGS
There are various lawsuits and regulatory actions pending against the Company
arising in the normal course of business, some of which seek punitive damages.
The Company does not believe that the ultimate resolution of these matters will
have a material adverse effect on the Company's consolidated financial position
or results of operations.
ITEM 6(A). EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
<S> <C>
4.1 Indenture dated as of December 27, 1990 (the "Senior Secured Note
Indenture"), among Beverly California, Beverly Enterprises and Yasuda
Bank and Trust Company (U.S.A.) with respect to Senior Secured
Floating Rate Notes due 1995 and 14 1/4% Senior Secured Fixed Rate
Notes due 1997 (incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-4 of Beverly California, Beverly
Enterprises and the Registrants set forth on the Table of Additional
Co-Registrants filed on February 8, 1991 (File No. 33-38954))
4.2 Supplemental Indenture No. 1, dated as of September 20, 1991, to the
Senior Secured Note Indenture (incorporated by reference to Exhibit
4.1 to Beverly Enterprises' Quarterly Report on Form 10-Q for the
quarter ended September 30, 1991)
4.3 Supplemental Indenture No. 2, dated as of September 26, 1991, to the
Senior Secured Note Indenture (incorporated by reference to Exhibit
4.2 to Beverly Enterprises' Quarterly Report on Form 10-Q for the
quarter ended September 30, 1991)
4.4 Supplemental Indenture No. 3, dated as of March 11, 1992, to the
Senior Secured Note Indenture (incorporated by reference to Exhibit 4
to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter
ended March 31, 1992)
4.5 Supplemental Indenture No. 4, dated as of July 21, 1993, to the
Senior Secured Note Indenture (incorporated by reference to Exhibit
4.5 to Beverly Enterprises' Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993)
4.6 Subsidiary Guaranty dated as of December 27, 1990 by Beverly
Enterprises, Beverly California and the Subsidiary Guarantors listed
therein (incorporated by reference to Exhibit 4.3 to the Registration
Statement on Form S-4 of Beverly California, Beverly Enterprises and
the Registrants set forth on the Table of Additional Co-Registrants
filed on February 8, 1991 (File No. 33-38954))
4.7 Subsidiary Guaranty dated as of April 1, 1991 by Beverly Enterprises,
Beverly California and the Subsidiary Guarantors listed therein
(incorporated by reference to Exhibit 4.5 to Beverly Enterprises'
Annual Report on Form 10-K for the year ended December 31, 1991)
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
4.8 Subsidiary Guaranty dated as of October 31, 1991 by Beverly
Enterprises, Beverly California and Northshore Rehab Association,
Inc. as Subsidiary Guarantor (incorporated by reference to Exhibit
4.6 to Beverly Enterprises' Annual Report on Form 10-K for the year
ended December 31, 1991)
4.9 Subsidiary Guaranty dated as of December 30, 1991 by Beverly
Enterprises, Beverly California and Beverly Indemnity, Inc. as
Subsidiary Guarantor (incorporated by reference to Exhibit 4.7 to
Beverly Enterprises' Annual Report on Form 10-K for the year ended
December 31, 1991)
4.10 Indenture dated as of August 1, 1993 between Beverly Enterprises and
Chemical Bank, as Trustee with respect to Beverly Enterprises' 5 1/2%
Convertible Subordinated Debentures due August 1, 2018, issuable upon
exchange of Beverly Enterprises' $2.75 Cumulative Convertible
Exchangeable Preferred Stock (the "Subordinated Debenture Indenture")
(incorporated by reference to Exhibit 4.10 to Beverly Enterprises'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
4.11 Certificate of Designation of Cumulative Convertible Preferred Stock
of Beverly Enterprises (incorporated by reference to Exhibit 4.3 to
Beverly Enterprises' Current Report on Form 8-K dated July 31, 1987)
4.12 Certificate of Designation, Powers, Preferences and Rights, and the
Qualifications, Limitations or Restrictions Thereof, of the Series of
Preferred Stock to be designated $2.75 Cumulative Convertible
Exchangeable Preferred Stock of Beverly Enterprises (the "$2.75
Certificate of Designation")(incorporated by reference to Exhibit
4.12 to Beverly Enterprises' Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993)
4.13 Indenture dated as of April 1, 1993 (the "First Mortgage Bond
Indenture"), among Beverly Enterprises, Delaware Trust Company, as
Corporate Trustee, and Richard N. Smith, as Individual Trustee, with
respect to First Mortgage Bonds (incorporated by reference to Exhibit
4.1 to Beverly Enterprises' Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993)
4.14 First Supplemental Indenture dated as of April 1, 1993 to the
First Mortgage Bond Indenture, with respect to 8 3/4% First
Mortgage Bonds (Series A) due 2008 (incorporated by reference to
Exhibit 4.2 to Beverly Enterprises' Quarterly Report on Form 10-Q for
the quarter ended March 31, 1993)
4.15 Second Supplemental Indenture dated as of July 1, 1993 to the First
Mortgage Bond Indenture, with respect to 8 5/8% First Mortgage Bonds
(Series B) due 2008 (replaces Exhibit 4.1 to Beverly Enterprises'
Current Report on Form 8-K dated July 15, 1993)(incorporated by
reference to Exhibit 4.15 to Beverly Enterprises' Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993)
4.16 Indenture dated as of December 30, 1993 (the "Notes Indenture"),
between Beverly Enterprises, Inc. and Boatmen's Trust Company, as
Trustee, with respect to the Notes (incorporated by reference to
Exhibit 4.2 to Beverly Enterprises' Registration Statement on Form
S-3 filed on November 9, 1993 (File No. 33-50965))
4.17 First Supplemental Indenture dated as of December 30, 1993 to the
Notes Indenture, with respect to 8.75% Notes due 2003 (incorporated
by reference to Exhibit 4.4 to Beverly Enterprises' Current Report on
Form 8-K dated January 4, 1994)
In accordance with item 601(b)(4)(iii) of Regulation S-K, certain
instruments pertaining to Beverly Enterprises' long-term obligations
have not been filed; copies thereof will be furnished to the
Securities and Exchange Commission upon request.
10.1 * Amended and Restated 1981 Beverly Stock Option Plan (incorporated by
reference to Post-Effective Amendment No. 2 on Form S-8 to Beverly
Enterprises' Registration Statement on Form S-4 filed on July 31,
1987 (File No. 33-13243))
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
10.2 * Amended and Restated 1981 Beverly Incentive Stock Option Plan
(incorporated by reference to Post-Effective Amendment No. 2 on Form
S-8 to Beverly Enterprises' Registration Statement on Form S-4 filed
on July 31, 1987 (File No. 33-13243))
10.3 * 1985 Beverly Nonqualified Stock Option Plan (incorporated by
reference to Post-Effective Amendment No. 2 on Form S-8 to Beverly
Enterprises' Registration Statement on Form S-4 filed on July 31,
1987 (File No. 33-13243))
10.4 * Amended and Restated Beverly Enterprises, Inc. 1993 Long-Term
Incentive Stock Plan (incorporated by reference to Beverly
Enterprises' Registration Statement on Form S-8 filed on June 30,
1993 (File No. 33-65242))
10.5 * Retirement Plan for Outside Directors (incorporated by reference to
Exhibit 10.5 to Beverly Enterprises' Quarterly Report on Form 10-Q
for the quarter ended June 30, 1993)
10.6 * Executive Medical Reimbursement Plan (incorporated by reference to
Exhibit 10.5 to Beverly Enterprises' Annual Report on Form 10-K for
the year ended December 31, 1987)
10.7 * Amended and Restated Beverly Enterprises, Inc. Executive Life
Insurance Plan and Summary Plan Description (incorporated by
reference to Exhibit 10.7 to Beverly Enterprises' Annual Report on
Form 10-K for the year ended December 31, 1993)
10.8 * Executive Physicals Policy (incorporated by reference to Exhibit
10.8 to Beverly Enterprises' Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993)
10.9 * Amended and Restated Deferred Compensation Plan effective July 18,
1991 (incorporated by reference to Exhibit 10.6 to Beverly
Enterprises' Annual Report on Form 10-K for the year ended December
31, 1991)
10.10 * Executive Retirement Plan (incorporated by reference to Exhibit 10.9
to Beverly Enterprises' Annual Report on Form 10-K for the year ended
December 31, 1987)
10.11 * Amendment No. 1, effective as of July 1, 1991, to the Executive
Retirement Plan (incorporated by reference to Exhibit 10.8 to Beverly
Enterprises' Annual Report on Form 10-K for the year ended December
31, 1991)
10.12 * Amendment No. 2, effective as of December 12, 1991, to the Executive
Retirement Plan (incorporated by reference to Exhibit 10.9 to Beverly
Enterprises' Annual Report on Form 10-K for the year ended December
31, 1991)
10.13 * Amendment No. 3, effective as of July 31, 1992, to the Executive
Retirement Plan (incorporated by reference to Exhibit 10.10 to
Beverly Enterprises' Annual Report on Form 10-K for the year ended
December 31, 1992)
10.14 * Form of Indemnification Agreement between Beverly Enterprises and its
officers, directors and certain of its employees (incorporated by
reference to Exhibit 19.14 to Beverly Enterprises' Quarterly Report
on Form 10-Q for the quarter ended June 30, 1987)
10.15 * Form of request by Beverly Enterprises to certain of its officers or
directors relating to indemnification rights (incorporated by
reference to Exhibit 19.5 to Beverly Enterprises' Quarterly Report on
Form 10-Q for the quarter ended September 30, 1987)
10.16 * Form of request by Beverly Enterprises to certain of its officers or
employees relating to indemnification rights (incorporated by
reference to Exhibit 19.6 to Beverly Enterprises' Quarterly Report on
Form 10-Q for the quarter ended September 30, 1987)
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
10.17 * Agreement dated December 29, 1986 between Beverly Enterprises and
Stephens Inc. (incorporated by reference to Exhibit 10.20 to Beverly
Enterprises' Registration Statement on Form S-1 filed on January 18,
1990 (File No. 33-33052))
10.18 * Severance Plan for Corporate and Regional Employees effective
December 1, 1989 (incorporated by reference to Exhibit 10.21 to
Amendment No. 1 to Beverly Enterprises' Registration Statement on
Form S-1 filed on February 26, 1990 (File No. 33-33052))
10.19 * Form of Restricted Stock Performance Agreement dated June 28, 1990
under the 1985 Beverly Nonqualified Stock Option Plan (incorporated
by reference to Exhibit 10.22 to Beverly Enterprises' Registration
Statement on Form S-1 filed on July 30, 1990 (File No. 33-36109))
10.20 * Form of Agreement Concerning Benefits Upon Severance dated as of
September 1, 1990 between Beverly Enterprises and certain officers of
Beverly Enterprises (incorporated by reference to Exhibit 10.23 to
Beverly Enterprises' Registration Statement on Form S-1 filed on July
30, 1990 (File No. 33-36109))
10.21 * Beverly Enterprises Company Car Policy effective May 1, 1988
(incorporated by reference to Exhibit 10.18 to Beverly Enterprises'
Annual Report on Form 10-K for the year ended December 31, 1992)
10.22 * First Amendment to Agreement Concerning Benefits Upon Severance
dated as of April 25, 1993 between Beverly Enterprises and Ronald C.
Kayne (incorporated by reference to Exhibit 10.22 to Beverly
Enterprises' Annual Report on Form 10-K for the year ended December
31, 1993)
10.23 Master Lease Document -- General Terms and Conditions dated December
30, 1985 for Leases between Beverly California and various
subsidiaries thereof as lessees and Beverly Investment Properties,
Inc. as lessor (incorporated by reference to Exhibit 10.12 to Beverly
California's Annual Report on Form 10-K for the year ended December
31, 1985)
10.24 Agreement dated as of December 29, 1986 among Beverly California,
Beverly Enterprises -- Texas, Inc., Stephens Inc. and Real
Properties, Inc. (incorporated by reference to Exhibit 28 to Beverly
California's Current Report on Form 8-K dated December 30, 1986) and
letter agreement dated as of July 31, 1987 among Beverly Enterprises,
Beverly California, Beverly Enterprises -- Texas, Inc. and Stephens
Inc. with reference thereto (incorporated by reference to Exhibit
19.13 to Beverly Enterprises' Quarterly Report on Form 10-Q for
the quarter ended June 30, 1987)
10.25 Credit Agreement, dated as of March 24, 1992, among Beverly
Enterprises, Inc., Beverly California Corporation, the Lenders listed
therein, Bank of Montreal as Co-Agent, and The Long Term Credit Bank
of Japan, Ltd. Los Angeles Agency as Agent (the "LTCB Credit
Agreement") (incorporated by reference to Exhibit 10.2 to Beverly
Enterprises' Quarterly Report on Form 10-Q for the quarter ended
March 31, 1992)
10.26 Amendment No. 1 dated as of April 7, 1992 to the LTCB Credit
Agreement (incorporated by reference to Exhibit 10.3 to Beverly
Enterprises' Quarterly Report on Form 10-Q for the quarter ended
March 31, 1992)
10.27 Second Amendment dated as of May 11, 1992 to the LTCB Credit
Agreement (incorporated by reference to Exhibit 10.23 to Beverly
Enterprises' Annual Report on Form 10-K for the year ended December
31, 1992)
10.28 Third Amendment dated as of March 1, 1993 to the LTCB Credit
Agreement (incorporated by reference to Exhibit 10.24 to Beverly
Enterprises' Annual Report on Form 10-K for the year ended December
31, 1992)
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
<S> <C>
10.29 Master Sale and Servicing Agreement dated as of December 1, 1990
among Beverly Funding Corporation, Beverly California, the
wholly-owned subsidiaries of Beverly Enterprises listed therein,
Beverly Enterprises and certain wholly-owned subsidiaries of Beverly
Enterprises which may become parties thereto (incorporated by
reference to Exhibit 10.27 to the Registration Statement on Form S-4
of Beverly California, Beverly Enterprises and the Registrants set
forth on the Table of Additional Co-Registrants filed on February 8,
1991 (File No. 33-38954))
10.30 First Omnibus Amendment to Liquidity Agreement, Depository Agreement,
Pledge and Security Agreement and Master Sale and Servicing Agreement
dated as of July 1, 1991 (incorporated by reference to Exhibit 10.1
to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991)
10.31 Second Amendment to Master Sale and Servicing Agreement dated as of
March 1, 1992 (incorporated by reference to Exhibit 10.4 to Beverly
Enterprises' Quarterly Report on Form 10-Q for the quarter ended
March 31, 1992)
10.32 Second Omnibus Amendment to Master Sale and Servicing Agreement,
Pledge Agreement and Selling Subsidiary Agreements dated as of
September 28, 1992, among Beverly Funding Corporation, Beverly
California Corporation, Beverly Enterprises, Inc., the wholly-owned
subsidiaries of Beverly Enterprises, Inc. listed on the signature
pages and the Banks listed on the signature pages (incorporated by
reference to Exhibit 10 to Beverly Enterprises' Quarterly Report on
Form 10-Q for the quarter ended September 30, 1992)
10.33 Credit Agreement dated as of March 2, 1993 among Beverly Enterprises,
Inc., Beverly California Corporation, the Lenders listed therein, and
the Nippon Credit Bank, Ltd. Los Angeles Agency as Agent (the
"Nippon Credit Agreement") (incorporated by reference to Exhibit
10.29 to Beverly Enterprises' Annual Report on Form 10-K for the year
ended December 31, 1992)
10.34 Credit Agreement dated as of March 1, 1993 among Beverly California
Corporation, Beverly Enterprises, Inc., the Banks listed therein,
Morgan Guaranty Trust Company of New York as Issuing Bank and Agent
(the "Morgan Credit Agreement") (incorporated by reference to Exhibit
10.30 to Beverly Enterprises' Annual Report on Form 10-K for the year
ended December 31, 1992)
10.35 First Amendment dated as of May 3, 1993 to the Morgan Credit
Agreement (incorporated by reference to Exhibit 10.34 to Beverly
Enterprises' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993)
10.36 Second Amendment dated as of September 30, 1993 to the Morgan Credit
Agreement (incorporated by reference to Exhibit 10.35 to Beverly
Enterprises' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993)
10.37 Data Processing Agreement, dated as of August 1, 1992, by and between
Systematics Telecommunications Services, Inc. and Beverly California
Corporation (incorporated by reference to Exhibit 10 to Beverly
Enterprises' Quarterly Report on Form 10-Q for the quarter ended June
30, 1992)
11.1 Computation of Net Income Per Share
* Exhibits 10.1 through 10.22 are the management contracts,
compensatory plans, contracts and arrangements in which any
director or named executive officer participates.
</TABLE>
ITEM 6(B). REPORTS ON FORM 8-K
The Company filed Current Reports on Form 8-K and Form 8-K/A, each dated
January 4, 1994, which reported under Item 5 that the Company's Registration
Statement No. 33-50965 became effective on November 17, 1993, and filed under
Item 7 the Underwriting Agreement dated December 21, 1993, and the First
Supplemental Indenture for the Notes dated December 30, 1993, pursuant to such
Registration Statement.
15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BEVERLY ENTERPRISES, INC.
Registrant
Dated: May 12, 1994 By: /s/ SCOTT M. TABAKIN
Scott M. Tabakin
Vice President, Controller and
Chief Accounting Officer
16
<PAGE> 1
BEVERLY ENTERPRISES, INC.
EXHIBIT 11.1
COMPUTATION OF NET INCOME PER SHARE
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
PRIMARY:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,453 $ 10,357
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,063) --
--------- ---------
Net income applicable to common shares . . . . . . . . . . . . . . . . . . . . . . $ 13,390 $ 10,357
========= =========
Applicable common shares:
Weighted average outstanding shares during the period . . . . . . . . . . . . . 82,708 74,406
Assumed conversion of Series A preferred stock . . . . . . . . . . . . . . . . . -- 5,300
Weighted average shares issuable upon exercise of common stock
equivalents outstanding (principally stock options) using the
"treasury stock" method . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,657 1,611
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,365 81,317
========= =========
Net income per share of common stock . . . . . . . . . . . . . . . . . . . . . . . $ 0.16 $ 0.13
========= =========
FULLY DILUTED:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,453 $ 10,357
Reduction of interest and amortization expenses resulting from
assumed conversion of 7.625% convertible subordinated debentures . . . . . . . . -- (a) -- (a)
Reduction of interest and amortization expenses resulting from
assumed conversion of 9% convertible subordinated debentures . . . . . . . . . . -- 1,089
Reduction of interest and amortization expenses resulting from assumed
conversion of zero coupon notes . . . . . . . . . . . . . . . . . . . . . . . . -- (a) -- (a)
Less applicable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (359)
--------- ---------
Adjusted net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,453 $ 11,087
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,063) --
--------- ---------
Adjusted net income applicable to common shares . . . . . . . . . . . . . . . . . $ 13,390 $ 11,087
========= =========
Applicable common shares:
Weighted average outstanding shares during the period . . . . . . . . . . . . . 82,708 74,406
Assumed conversion of Series A preferred stock . . . . . . . . . . . . . . . . . -- 5,300
Assumed conversion of Series B preferred stock . . . . . . . . . . . . . . . . . -- (a) --
Weighted average shares issuable upon exercise of common stock
equivalents outstanding (principally stock options) using the
"treasury stock" method . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,654 1,611
Assumed conversion of 7.625% convertible subordinated debentures . . . . . . . . -- (a) -- (a)
Assumed conversion of 9% convertible subordinated debentures . . . . . . . . . . -- 7,131
Assumed conversion of zero coupon notes . . . . . . . . . . . . . . . . . . . . -- (a) -- (a)
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,362 88,448
========= =========
Net income per share of common stock . . . . . . . . . . . . . . . . . . . . . . . $ 0.16 $ 0.13
========= =========
</TABLE>
(a) Conversion would be anti-dilutive and is therefore not assumed in the
computation of primary or fully diluted net income per share of common
stock.
