<PAGE> 1
================================================================================
--------------------------------------------------------------------------------
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 JUNE 30, 1995
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 JULY 31, 1995 -- 98,210,053
--------------------------------------------------------------------------------
================================================================================
<PAGE> 2
BEVERLY ENTERPRISES, INC.
FORM 10-Q
JUNE 30, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I -- FINANCIAL INFORMATION PAGE
----
<S> <C>
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
1
<PAGE> 3
PART I
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
------------- -------------
(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,470 $ 67,964
Accounts receivable-patient, less allowance for doubtful accounts:
1995--$24,956; 1994--$28,293 . . . . . . . . . . . . . . . . . . . . . . . . 489,584 438,743
Accounts receivable-nonpatient, less allowance for doubtful accounts:
1995--$259; 1994--$302 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,043 10,896
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,288 5,028
Operating supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,081 60,243
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,593 35,098
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . 40,310 34,365
------------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 684,369 652,337
Property and equipment, net of accumulated depreciation and amortization:
1995--$622,217; 1994--$592,158 . . . . . . . . . . . . . . . . . . . . . . . 1,270,314 1,200,623
Other assets:
Notes receivable, less allowance for doubtful notes:
1995--$7,210; 1994--$6,429 . . . . . . . . . . . . . . . . . . . . . . . . 44,118 41,677
Designated and restricted funds . . . . . . . . . . . . . . . . . . . . . . . 41,198 41,939
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384,626 245,990
Operating and leasehold rights and licenses, net . . . . . . . . . . . . . . . 21,841 23,336
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,706 116,676
------------- ----------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618,489 469,618
------------- ----------
$ 2,573,172 $2,322,578
============= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 139,674 $ 117,001
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 --
Accrued wages and related liabilities . . . . . . . . . . . . . . . . . . . . 129,712 132,066
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,564 10,828
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 94,600 85,110
Current portion of long-term obligations . . . . . . . . . . . . . . . . . . . 57,090 60,199
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,835 4,421
------------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 444,475 409,625
Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 962,768 918,018
Deferred income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . 79,603 81,117
Other liabilities and deferred items . . . . . . . . . . . . . . . . . . . . . . 79,854 86,574
Commitments and contingencies
Stockholders' equity:
Preferred stock, shares issued and outstanding: 3,000,000 . . . . . . . . . . 150,000 150,000
Common stock, shares issued: 1995--102,149,511; 1994--89,620,822 . . . . . . 10,215 8,962
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 761,007 609,762
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,385 98,655
Treasury stock, at cost: 3,972,208 shares . . . . . . . . . . . . . . . . . . (40,135) (40,135)
------------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . 1,006,472 827,244
------------- ----------
$ 2,573,172 $2,322,578
============= ==========
</TABLE>
NOTE: The balance sheet at December 31, 1994 has been derived from the audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See accompanying notes.
2
<PAGE> 4
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -----------------------------
1995 1994 1995 1994
----------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Net operating revenues . . . . . . . . . . . $ 790,375 $ 724,507 $ 1,585,994 $ 1,441,200
Interest income . . . . . . . . . . . . . . . 3,262 3,637 6,762 7,369
------------ ---------- ----------- -----------
Total revenues . . . . . . . . . . . 793,637 728,144 1,592,756 1,448,569
Costs and expenses:
Operating and administrative:
Wages and related . . . . . . . . . . 424,979 390,249 842,412 777,674
Other . . . . . . . . . . . . . . . . 297,772 273,224 606,313 546,420
Interest . . . . . . . . . . . . . . . . . 21,725 15,664 42,274 31,214
Depreciation and amortization . . . . . . 26,087 20,601 51,991 42,296
------------ ---------- ----------- -----------
Total costs and expenses . . . . . . 770,563 699,738 1,542,990 1,397,604
------------ ---------- ----------- -----------
Income before provision for income taxes . . 23,074 28,406 49,766 50,965
Provision for income taxes . . . . . . . . . 8,768 9,374 18,911 16,818
------------ ---------- ----------- -----------
Net income . . . . . . . . . . . . . . . . . $ 14,306 $ 19,032 $ 30,855 $ 34,147
============ ========== =========== ===========
Net income applicable to common shares . . . $ 12,244 $ 16,970 $ 26,730 $ 30,022
============ ========== =========== ===========
Net income per share of common stock . . . . $ .14 $ .19 $ .31 $ .35
============ ========== =========== ===========
Shares used to compute net income per share . 87,864 87,064 87,593 86,987
============ ========== =========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 5
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,855 $ 34,147
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . 51,991 42,296
Provision for reserves and discounts on patient, notes and other
receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,336 6,706
Amortization of deferred financing costs . . . . . . . . . . . . . . . . . . 2,193 2,186
(Gains) losses on dispositions of facilities, net . . . . . . . . . . . . . . 3,848 (3,100)
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,398 231
Net increase (decrease) in insurance reserves . . . . . . . . . . . . . . . . (3,597) 198
Changes in operating assets and liabilities, net of acquisitions and
dispositions:
Accounts receivable - patient . . . . . . . . . . . . . . . . . . . . . . (42,390) (26,914)
Operating supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . 944 (677)
Prepaid expenses and other receivables . . . . . . . . . . . . . . . . . (1,624) (2,150)
Accounts payable and other accrued expenses . . . . . . . . . . . . . . . 1,481 1,793
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . 1,645 1,956
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (598) (7,603)
----------- ---------
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . 24,627 14,922
----------- ---------
Net cash provided by operating activities . . . . . . . . . . . . . . 55,482 49,069
Cash flows from investing activities:
Proceeds from dispositions of facilities and other assets . . . . . . . . . . . 14,068 32,764
Payments for acquisitions, net of cash acquired . . . . . . . . . . . . . . . . (18,159) (29,113)
Payments on notes receivable and REMIC investment . . . . . . . . . . . . . . . 10,445 5,756
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63,257) (40,508)
Construction and development in progress, net . . . . . . . . . . . . . . . . . (17,527) (18,224)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,433) (5,430)
----------- ---------
Net cash used for investing activities . . . . . . . . . . . . . . . . (79,863) (54,755)
Cash flows from financing activities:
Repayments of long-term obligations . . . . . . . . . . . . . . . . . . . . . . (24,896) (29,568)
Proceeds from issuance of long-term obligations . . . . . . . . . . . . . . . . 25,000 25,000
Net borrowings under revolving credit agreement . . . . . . . . . . . . . . . . 9,000 --
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . 683 13,508
Deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,329) (3,141)
Dividends paid on preferred stock . . . . . . . . . . . . . . . . . . . . . . . (4,125) (4,125)
Proceeds from designated funds and other, net . . . . . . . . . . . . . . . . . 554 2,818
----------- ---------
Net cash provided by financing activities . . . . . . . . . . . . . . 4,887 4,492
----------- ---------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . (19,494) (1,194)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . 67,964 77,058
----------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . $ 48,470 $ 75,864
=========== =========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . . . . . . . . . . . . . . $ 39,345 $ 28,799
Income taxes (net of refunds) . . . . . . . . . . . . . . . . . . . . . . . . . 14,868 14,631
</TABLE>
See accompanying notes.
4
<PAGE> 6
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(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-month and
six-month periods ended June 30, 1995 and 1994 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 1994 Annual Report on Form 10-K filed with the Securities and
Exchange Commission. The results of operations for the three-month and
six-month periods ended June 30, 1995 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.
Prior year amounts have been restated to reflect pooling of interests
accounting treatment for the 1994 merger of American Transitional Hospitals,
Inc. ("ATH"). Certain prior year amounts have been reclassified to conform
with the 1995 presentation.
(ii) The provisions for income taxes for the three-month and six-month
periods ended June 30, 1995 and 1994 were based on estimated annual tax rates
of 38% and 33%, as restated, respectively. The Company's effective tax rates
in 1995 and 1994 were different 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 1995 annual effective tax rate increased to
38% compared to 33% in 1994 as a result of a substantial utilization of certain
tax credit carryforwards in 1994 and prior years. The provisions for income
taxes consist of the following for the three-month and six-month periods ended
June 30 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- --------------------------
1995 1994 1995 1994
--------- -------- ------- -------
<S> <C> <C> <C> <C>
Federal:
Current . . . . . . . . . . . . . $ 5,871 $ 7,204 $12,985 $13,152
Deferred . . . . . . . . . . . . . 1,051 (103) 1,945 (411)
State:
Current . . . . . . . . . . . . . 1,569 2,134 3,528 3,435
Deferred . . . . . . . . . . . . . 277 139 453 642
--------- -------- ------- -------
$ 8,768 $ 9,374 $18,911 $16,818
========= ======== ======= =======
</TABLE>
(iii) During the six months ended June 30, 1995, the Company purchased 14
previously leased nursing facilities (1,777 beds), one previously leased
retirement living center (17 units), and certain other assets for approximately
$22,100,000 cash, approximately $40,400,000 acquired debt and approximately
$700,000 security and other deposits. The Company does not operate three of
such facilities which were subleased to other nursing home operators in prior
year transactions and currently remain under lease to such operators. Also
during such period, the Company sold, subleased or terminated the leases on
five nursing facilities (748 beds), 11 homes for the developmentally disabled
(982 beds) and certain other assets for cash proceeds of approximately
$13,800,000 and approximately $3,600,000 notes receivable. The Company
recognized pre-tax losses of approximately $3,800,000 as a result of these
dispositions. The operations of these facilities were immaterial to the
Company's financial position and results of operations.
5
<PAGE> 7
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
In June 1995, the Company completed the previously announced acquisition of
Pharmacy Management Services, Inc. ("PMSI") in exchange for approximately
12,361,000 shares of the Company's $.10 par value common stock plus closing and
related costs. PMSI is a leading nationwide provider of medical cost
containment and managed care services to workers' compensation payors and
claimants. The acquisition was accounted for as a purchase and was not
material to the Company's financial position or results of operations.
(iv) On April 6, 1995, the Company announced that its Board of Directors
had, on that date, preliminarily approved a plan to spin off to its
stockholders 80% or more of the common stock of Pharmacy Corporation of America
("PCA"), a wholly-owned subsidiary of the Company which provides institutional
pharmacy services to nursing homes, hospitals and other institutional customers
throughout the United States. The spin-off is intended to be structured as a
tax-free distribution to the Company's stockholders under Section 355 of the
Internal Revenue Code of 1986, as amended. The spin-off is subject to numerous
conditions and events which have not been met or determined as of the date
hereof, including obtaining final approval of the spin-off plan by the
Company's Board of Directors, obtaining the contemplated fundings described
below, obtaining regulatory and other third party approvals and confirmation by
independent advisors of the intended tax treatment of the transaction. The
Company does not presently intend to seek a ruling from the Internal Revenue
Service concerning the proposed spin-off. As of the date hereof, no conversion
or distribution ratio has been established by the Company with respect to a
specific number of shares of common stock of PCA to which each stockholder of
the Company would be entitled to receive in the distribution. The Company
anticipates that the record date for determining those stockholders of the
Company who will be entitled to participate in the distribution will occur by
the end of 1995, or in the first half of 1996.
In connection with the proposed spin-off transaction, on April 13, 1995, the
Company announced that it was also contemplating a public offering of up to
19.9% of PCA's common stock prior to the distribution of the remainder of such
stock to the Company's stockholders. The Company also announced that PCA may
borrow up to $275,000,000 from banks and other institutional lenders. Neither
the amount of proceeds from any future public offering of PCA's common stock
nor the amount or terms of any anticipated PCA indebtedness is determinable at
this time. It is expected, however, that substantially all of PCA's assets
would be pledged to secure the borrowings. In light of operational problems at
PCA, as discussed below, there can be no assurances, however, that a public
offering of PCA's common stock will be successfully completed or that PCA will
be able to obtain any funds through borrowings with third parties. Moreover,
the Company's Board of Directors has only preliminarily approved the concept of
the spin-off, and has made no commitment to a formal plan to dispose of the
stock of PCA at the present time. The Company intends to submit to its
stockholders later in 1995, or in the first half of 1996, the plan to spin off
PCA, and to solicit approval of the proposed spin-off from its stockholders at
that time.
On May 30, 1995, the Company announced that PCA was experiencing certain
operational difficulties which led to revenue and income deficiencies at PCA in
the second quarter of 1995. Changes in management and operational and pricing
policies have since been implemented to address these deficiencies.
6
<PAGE> 8
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Because of these PCA operational issues and other material
uncertainties associated with the proposed spin-off of PCA and related
transactions as described above, there can be no assurances that any of these
transactions will be concluded or, if ultimately concluded, will not be
materially different from those described above.
(v) In June 1995, the Company issued $25,000,000 of taxable revenue bonds
("Series 1995 Bonds"), which require semi-annual interest-only payments at the
rate of 6.88% per annum with respect to $7,000,000 of such bonds and
interest-only payments at the rate of 7.24% per annum with respect to
$18,000,000 of such bonds. The Series 1995 Bonds require a $7,000,000 payment
in June 2000 and mature in June 2005. The Series 1995 Bonds are secured by a
letter of credit.
(vi) 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.
(vii) 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"). Effective
January 1, 1995, Beverly California changed its name to Beverly Health and
Rehabilitation Services, Inc. ("BHRS") and distributed certain of its
wholly-owned subsidiaries to Beverly Delaware in an effort to better
focus management's attention on specific services delivered by the Company
within the long-term health care arena. Such subsidiaries include, among
others, PCA, ATH, Beverly Indemnity, Ltd. and Beverly REMIC Depositor, Inc.
Beverly Delaware (the parent) provides financial, administrative and legal
services to these subsidiaries, including BHRS, for which it charges management
fees.
The following summarized unaudited financial information concerning BHRS is
being reported because BHRS's 7.625% convertible subordinated debentures due
March 2003 and its zero coupon notes (collectively, the "Debt Securities") are
publicly held. Beverly Delaware is co-obligor of the Debt Securities. Summary
unaudited financial information for BHRS is as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1995 1994 1995 1994
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Total revenues . . . . . . . . . . . . . . . . . . . $ 697,967 $ 728,424 $1,400,205 $1,449,103
Total costs and expenses . . . . . . . . . . . . . . 676,533 700,012 1,358,365 1,398,180
Net income . . . . . . . . . . . . . . . . . . . . . 13,289 19,036 25,941 34,118
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 30, 1995 DECEMBER 31, 1994
--------------- -------------------
<S> <C> <C>
Current assets . . . . . . . . . . . . . . . . . . . $ 431,561 $ 577,307
Long-term assets . . . . . . . . . . . . . . . . . . 1,460,238 1,695,216
Current liabilities . . . . . . . . . . . . . . . . . 279,490 402,463
Long-term liabilities . . . . . . . . . . . . . . . . 895,766 1,071,276
</TABLE>
7
<PAGE> 9
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1995
(UNAUDITED)
OPERATING RESULTS
SECOND QUARTER 1995 COMPARED TO SECOND QUARTER 1994
Net income was $14,306,000 for the second quarter of 1995, as compared to
net income of $19,032,000, as restated per discussion below, for the same
period in 1994. Income before provision for income taxes was $23,074,000 for
the second quarter of 1995, as compared to $28,406,000, as restated, for the
same period in 1994. The Company's net income for the second quarter of 1995
was adversely impacted by a $4,000,000 pre-tax loss on the early termination of
leases on four Connecticut nursing facilities, operating shortfalls in its
wholly-owned subsidiary, Pharmacy Corporation of America ("PCA"), and an
increase in the Company's annual effective tax rate to 38% in 1995 compared to
33% in 1994 as a result of a substantial utilization of certain tax credit
carryforwards in 1994 and prior years. The Company's consolidated financial
statements for 1994 and prior periods have been restated ("as restated") to
reflect the 1994 merger of American Transitional Hospitals, Inc. ("ATH"), which
was accounted for as a pooling of interests.
Net operating revenues and operating and administrative costs increased
approximately $65,900,000 and $59,300,000, respectively, for the second quarter
of 1995, as compared to the same period in 1994. 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 quarters ended June 30, 1995 and 1994 ("same facility operations") of
approximately $46,800,000 and $38,900,000, respectively; increases in net
operating revenues and operating and administrative costs of approximately
$51,600,000 and $47,600,000, respectively, related to the operations of ATH and
the acquisitions of Insta-Care Holdings, Inc. ("Insta-Care") and the
institutional pharmacy subsidiaries of Synetic, Inc. ("Synetic pharmacies")
in late 1994 and PMSI in 1995; and decreases in net operating revenues and
operating and administrative costs of approximately $32,500,000 and
$27,200,000, respectively, due to the disposition of, or lease terminations on,
16 facilities in 1995 and 77 facilities in 1994.
The increase in net operating revenues for same facility operations for the
second quarter of 1995, as compared to the same period in 1994, was due to the
following: approximately $31,300,000 due primarily to increases in Medicaid
room and board rates, and to a lesser extent, private and Medicare room and
board rates; approximately $9,300,000 due to increased ancillary revenues as a
result of providing additional ancillary services to the Company's Medicare and
private-pay patients; approximately $8,200,000 due primarily to increases in
pharmacy-related revenues; and approximately $3,600,000 due to various other
items. These increases in net operating revenues were partially offset by
approximately $5,600,000 due to a decrease in same facility occupancy to 88.1%
for the second quarter of 1995, as compared to 89.1% for the same period in
1994.
The increase in operating and administrative costs for same facility
operations for the second quarter of 1995, as compared to the same period in
1994, was due to the following: approximately $34,300,000 due to increased
wages and related expenses (excluding pharmacy) principally due to higher wages
and greater benefits intended to attract and retain qualified personnel and the
hiring of therapists on staff as opposed to contracting for their services;
approximately $9,900,000 due to increases in nursing supplies and other
variable costs; and approximately $7,100,000 due primarily to increases in
pharmacy-related costs and various other items. These increases in operating
and administrative costs were partially offset by approximately $12,400,000 due
to a decrease in contracted therapy services as a result of hiring therapists
on staff as opposed to contracting for their services.
Ancillary revenues are derived from providing services to residents beyond
room, board and custodial care. These services include occupational, physical,
speech, respiratory and IV therapy, as well as, sales of pharmaceuticals and
other services. The Company's overall ancillary revenues for the second
quarter of 1995 were approximately $228,600,000 and represented 28.9% of net
operating revenues, as compared to approximately $176,000,000 of ancillary
revenues for the same period in 1994 which represented 24.3% of net operating
revenues for the second quarter of 1994. Although the Company is pursuing
further growth of ancillary revenues through
8
<PAGE> 10
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
expansion of specialty services, such as rehabilitation therapy and sales of
pharmaceuticals, there can be no assurance that such growth will continue. See
"--Liquidity and Capital Resources" below.
Interest expense increased approximately $6,100,000 as compared to the same
period in 1994 primarily due to additional interest related to the issuance of
approximately $306,000,000 of long-term obligations primarily in conjunction
with certain acquisitions. Depreciation and amortization expense increased
approximately $5,500,000 as compared to the same period in 1994 primarily due
to acquisitions, capital additions and improvements and the opening of newly
constructed facilities, partially offset by a decrease due to the disposition
of, or lease terminations on, certain nursing facilities.
SIX MONTHS 1995 COMPARED TO SIX MONTHS 1994
Net income was $30,855,000 for the six months ended June 30, 1995, as
compared to net income of $34,147,000, as restated, for the same period in
1994. Income before provision for income taxes was $49,766,000 for the six
months ended June 30, 1995, as compared to $50,965,000, as restated, for the
same period in 1994.
Net operating revenues and operating and administrative costs increased
approximately $144,800,000 and $124,600,000, respectively, for the six months
ended June 30, 1995, as compared to the same period in 1994. 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 six-month periods ended June 30, 1995 and 1994 ("same facility
operations") of approximately $103,200,000 and $81,400,000, respectively;
increases in net operating revenues and operating and administrative costs of
approximately $106,800,000 and $99,100,000, respectively, related to the
operations of ATH and the acquisitions of Insta-Care and Synetic pharmacies in
late 1994 and PMSI in 1995; and decreases in net operating revenues and
operating and administrative costs of approximately $65,200,000 and $55,900,000,
respectively, due to the disposition of, or lease terminations on, 16
facilities in 1995 and 77 facilities in 1994.
The increase in net operating revenues for same facility operations for the
six months ended June 30, 1995, as compared to the same period in 1994, was due
to the following: approximately $62,100,000 due primarily to increases in
Medicaid room and board rates, and to a lesser extent, private and Medicare
room and board rates; approximately $26,500,000 due to increased ancillary
revenues as a result of providing additional ancillary services to the
Company's Medicare and private-pay patients; approximately $15,200,000 due
primarily to increases in pharmacy-related revenues; and approximately
$6,600,000 due to various other items. These increases in net operating
revenues were partially offset by approximately $7,200,000 due to a decrease in
same facility occupancy to 88.4% for the six months ended June 30, 1995, as
compared to 89.1% for the same period in 1994.
The increase in operating and administrative costs for same facility
operations for the six months ended June 30, 1995, as compared to the same
period in 1994, was due to the following: approximately $66,200,000 due to
increased wages and related expenses (excluding pharmacy) principally due to
higher wages and greater benefits intended to attract and retain qualified
personnel and the hiring of therapists on staff as opposed to contracting for
their services; approximately $18,900,000 due to increases in nursing supplies
and other variable costs; and approximately $9,700,000 due primarily to
increases in pharmacy-related costs and various other items. These increases
in operating and administrative costs were partially offset by approximately
$13,400,000 due to a decrease in contracted therapy services as a result of
hiring therapists on staff as opposed to contracting for their services.
The Company's overall ancillary revenues for the six months ended June 30,
1995 were approximately $462,900,000 and represented 29.2% of net operating
revenues, as compared to approximately $346,200,000 of ancillary revenues for
the same period in 1994 which represented 24.0% of net operating revenues for
the six months ended June 30, 1994.
9
<PAGE> 11
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Interest expense increased approximately $11,100,000 as compared to the same
period in 1994 primarily due to additional interest related to the issuance of
approximately $306,000,000 of long-term obligations primarily in conjunction
with certain acquisitions. Depreciation and amortization expense increased
approximately $9,700,000 as compared to the same period in 1994 primarily due
to acquisitions, capital additions and improvements and the opening of newly
constructed 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 long-term health care industry as a whole, including the
maintenance of occupancy, its ability to continue to expand higher margin
business from Medicare, managed care and private-pay payors, the availability
of nursing and therapy 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 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.
Health care system reform and concerns over rising Medicare and Medicaid
costs continue to be high priorities for the federal and certain state
governments. Although no comprehensive health care, Medicare or Medicaid
reform legislation has yet been implemented, the active discussion and issues
raised by the Clinton Administration, Congress and various other groups have
impacted the health care delivery system. Pressures to contain costs and cover
a larger percentage of the population have heightened public awareness and
scrutiny over the health care market. Reform proposals still under
consideration include insurance market reforms to increase the availability of
group health insurance to small businesses, requirements that all businesses
offer health coverage to their employees and the creation of a single
government health insurance plan that would cover all citizens. Various
discussions and proposals recommending cuts to the Medicare program, as well as
limiting the rate of increase of Medicare expenditures, are also at the
forefront of public debate. Various discussions and proposals to contain
Medicaid costs also are taking place. These proposals, as well as industry and
other groups' recommendations, will likely impact the form and content of any
future health care reform legislation. As a result, the Company is unable to
predict the type of legislation or regulations that may be adopted and their
impact on the Company. There can be no assurance that any health care reform
or other changes within the health care market will not adversely affect the
Company's financial position, results of operations or cash flows.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1995, the Company had approximately $48,500,000 in cash and cash
equivalents and net working capital of approximately $239,900,000. The Company
anticipates that approximately $26,700,000 of its existing cash at June 30,
1995, while not legally restricted, will be utilized to fund certain workers'
compensation and general liability claims, and the Company does not expect to
use such cash for other purposes. The Company had approximately $102,000,000
of unused commitments under its Revolver/Letter of Credit Facility as of
June 30, 1995.
10
<PAGE> 12
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Net cash provided by operating activities for the six months ended June 30,
1995 was approximately $55,500,000, an increase of approximately $6,400,000
from the prior year. Net cash used for investing activities was approximately
$79,900,000 and net cash provided by financing activities was approximately
$4,900,000 for the six months ended June 30, 1995. The Company primarily used
cash generated from operations and borrowings under its revolving credit
agreement to fund capital expenditures and construction totaling approximately
$80,800,000. The Company received cash proceeds of approximately $14,100,000
from the dispositions of facilities and other assets and approximately
$25,000,000 from the issuance of long-term obligations. Such proceeds were
primarily used to repay approximately $24,900,000 of long-term obligations and
to fund acquisitions of approximately $18,200,000.
In June 1995, the Company completed the previously announced acquisition of
Pharmacy Management Services, Inc. ("PMSI") in exchange for approximately
12,361,000 shares of the Company's $.10 par value common stock plus closing and
related costs. PMSI is a leading nationwide provider of medical cost
containment and managed care services to workers' compensation payors and
claimants. The acquisition was accounted for as a purchase.
In June 1995, the Company issued $25,000,000 of taxable revenue bonds
("Series 1995 Bonds"), which require semi-annual interest-only payments at the
rate of 6.88% per annum with respect to $7,000,000 of such bonds and
interest-only payments at the rate of 7.24% per annum with respect to
$18,000,000 of such bonds. The Series 1995 Bonds require a $7,000,000 payment
in June 2000 and mature in June 2005. The Series 1995 Bonds are secured by a
letter of credit.
On April 6, 1995, the Company announced that its Board of Directors had, on
that date, preliminarily approved a plan to spin off to its stockholders 80% or
more of the common stock of Pharmacy Corporation of America ("PCA"), a wholly-
owned subsidiary of the Company which provides institutional pharmacy services
to nursing homes, hospitals and other institutional customers throughout the
United States. The spin-off is intended to be structured as a tax-free
distribution to the Company's stockholders under Section 355 of the Internal
Revenue Code of 1986, as amended. The spin-off is subject to numerous
conditions and events which have not been met or determined as of the date
hereof, including obtaining final approval of the spin-off plan by the
Company's Board of Directors, obtaining the contemplated fundings described
below, obtaining regulatory and other third party approvals and confirmation by
independent advisors of the intended tax treatment of the transaction. The
Company does not presently intend to seek a ruling from the Internal Revenue
Service concerning the proposed spin-off. As of the date hereof, no conversion
or distribution ratio has been established by the Company with respect to a
specific number of shares of common stock of PCA to which each stockholder of
the Company would be entitled to receive in the distribution. The Company
anticipates that the record date for determining those stockholders of the
Company who will be entitled to participate in the distribution will occur by
the end of 1995, or in the first half of 1996.
In connection with the proposed spin-off transaction, on April 13, 1995, the
Company announced that it was also contemplating a public offering of up to
19.9% of PCA's common stock prior to the distribution of the remainder of such
stock to the Company's stockholders. The Company also announced that PCA may
borrow up to $275,000,000 from banks and other institutional lenders. Neither
the amount of proceeds from any future public offering of PCA's common stock
nor the amount or terms of any anticipated PCA indebtedness is determinable at
this time. It is expected, however, that substantially all of PCA's assets
would be pledged to secure the borrowings.
11
<PAGE> 13
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
In light of operational problems at PCA, as discussed below, there can
be no assurances, however, that a public offering of PCA's common stock will be
successfully completed or that PCA will be able to obtain any funds through
borrowings with third parties. Moreover, the Company's Board of Directors has
only preliminarily approved the concept of the spin-off, and has made no
commitment to a formal plan to dispose of the stock of PCA at the present time.
The Company intends to submit to its stockholders later in 1995, or in the
first half of 1996, the plan to spin off PCA, and to solicit approval of the
proposed spin-off from its stockholders at that time.
On May 30, 1995, the Company announced that PCA was experiencing certain
operational difficulties which led to revenue and income deficiencies at PCA in
the second quarter of 1995. Changes in management and operational and pricing
policies have since been implemented to address these deficiencies.
Because of these PCA operational issues and other material uncertainties
associated with the proposed spin-off of PCA and related transactions as
described above, there can be no assurances that any of these transactions will
be concluded or, if ultimately concluded, will not be materially different from
those described above.
The Company believes that its existing cash and cash equivalents, working
capital from operations, borrowings under its banking arrangements, issuance of
certain debt securities and refinancings of certain existing indebtedness will
be adequate to repay its debts due within one year of approximately
$57,100,000, to make normal recurring capital additions and improvements for
the twelve months ending June 30, 1996 of approximately $118,000,000, to make
selective acquisitions, including the purchase of previously leased facilities,
and to meet working capital requirements.
12
<PAGE> 14
PART II
BEVERLY ENTERPRISES, INC.
OTHER INFORMATION
JUNE 30, 1995
(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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 18, 1995, the Company held its Annual Meeting of Stockholders in
Fort Smith, Arkansas, for the purposes of electing nine members of the Board of
Directors, considering the Stockholder Rights Plan, ratifying the appointment
of Ernst & Young LLP as independent auditors for 1995 and transacting such
other business as may have properly come before the meeting or any adjournment
thereof.
The following table sets forth the directors elected at such meeting and
the number of votes cast for and withheld for each director:
<TABLE>
<CAPTION>
DIRECTOR FOR WITHHELD
------------- ---------- ---------
<S> <C> <C>
Beryl F. Anthony, Jr. . . . . . . . . . . . 75,801,635 331,155
David R. Banks . . . . . . . . . . . . . . 75,814,979 317,811
James R. Greene . . . . . . . . . . . . . . 75,812,682 320,108
Edith E. Holiday . . . . . . . . . . . . . 75,806,107 326,683
Jon E. M. Jacoby . . . . . . . . . . . . . 75,815,396 317,394
Risa J. Lavizzo-Mourey, M.D. . . . . . . . 75,819,860 312,930
Louis W. Menk . . . . . . . . . . . . . . . 75,796,532 336,258
Marilyn R. Seymann . . . . . . . . . . . . 75,842,954 289,836
Will K. Weinstein . . . . . . . . . . . . . 75,825,463 307,327
</TABLE>
The Stockholder Rights Plan was approved at the meeting. The following
table sets forth the number of votes for and against, as well as abstentions as
to this matter:
<TABLE>
<S> <C>
For . . . . . . . . . . . . . . . . . . . . . 38,620,544
Against . . . . . . . . . . . . . . . . . . . 23,552,805
Abstentions . . . . . . . . . . . . . . . . . 1,207,613
</TABLE>
The appointment of Ernst & Young LLP as independent auditors for 1995 was
ratified at the meeting. The following table sets forth the number of votes
for and against, as well as abstentions as to this matter:
<TABLE>
<S> <C>
For . . . . . . . . . . . . . . . . . . . . . 75,620,520
Against . . . . . . . . . . . . . . . . . . . 382,633
Abstentions . . . . . . . . . . . . . . . . . 134,177
</TABLE>
13
<PAGE> 15
BEVERLY ENTERPRISES, INC.
OTHER INFORMATION (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
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, Inc. 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, Inc. 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, Inc.'s 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, Inc.'s 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, Inc.'s 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, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993)
4.6 Supplemental Indenture No. 5, dated as of November 1, 1994, to the Senior Secured Note Indenture (incorporated
by reference to Exhibit 4.6 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on
February 13, 1995 (File No. 33-57663))
4.7 Supplemental Indenture No. 6, dated as of December 30, 1994, to the Senior Secured Note Indenture
(incorporated by reference to Exhibit 4.7 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4
filed on February 13, 1995 (File No. 33-57663))
4.8 Subsidiary Guaranty dated as of December 27, 1990 by Beverly Enterprises, Inc., Beverly California Corporation
and the Subsidiary Guarantors listed therein (incorporated by reference to Exhibit 4.3 to the Registration
Statement on Form S-4 of Beverly California Corporation, Beverly Enterprises, Inc. and the Registrants set
forth on the Table of Additional Co-Registrants filed on February 8, 1991 (File No. 33-38954))
4.9 Subsidiary Guaranty dated as of April 1, 1991 by Beverly Enterprises, Inc., Beverly California Corporation and
the Subsidiary Guarantors listed therein (incorporated by reference to Exhibit 4.5 to Beverly Enterprises,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
4.10 Subsidiary Guaranty dated as of October 31, 1991 by Beverly Enterprises, Inc., Beverly California Corporation
and the Subsidiary Guarantors listed therein (incorporated by reference to Exhibit 4.6 to Beverly Enterprises,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
4.11 Subsidiary Guaranty dated as of December 30, 1991 by Beverly Enterprises, Inc., Beverly California Corporation
and Beverly Indemnity, Inc. as Subsidiary Guarantor (incorporated by reference to Exhibit 4.7 to Beverly
Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
4.12 Indenture dated as of August 1, 1993 between Beverly Enterprises, Inc. and Chemical Bank, as Trustee, with
respect to Beverly Enterprises, Inc.'s 5 1/2% Convertible Subordinated Debentures due August 1, 2018, issuable
upon exchange of Beverly Enterprises, Inc.'s $2.75 Cumulative Convertible Exchangeable Preferred Stock (the
"Subordinated Debenture Indenture") (incorporated by reference to Exhibit 4.10 to Beverly Enterprises, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.13 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, Inc. (the "$2.75 Certificate of
Designation")(incorporated by reference to Exhibit 4.12 to Beverly Enterprises, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993)
4.14 Indenture dated as of April 1, 1993 (the "First Mortgage Bond Indenture"), among Beverly Enterprises, Inc.,
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, Inc.'s Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993)
4.15 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, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1993)
4.16 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,
Inc.'s Current Report on Form 8-K dated July 15, 1993)(incorporated by reference to Exhibit 4.15 to Beverly
Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
4.17 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, Inc.'s Registration Statement on Form S-3 filed on November 9, 1993 (File No. 33-50965))
4.18 First Supplemental Indenture dated as of December 30, 1993 to the Notes Indenture, with respect to 8 3/4%
Notes due 2003 (incorporated by reference to Exhibit 4.4 to Beverly Enterprises, Inc.'s Current Report on Form
8-K dated January 4, 1994)
4.19 Rights Agreement dated as of September 29, 1994, between Beverly Enterprises, Inc. and The Bank of New York,
as Rights Agent (incorporated by reference to Exhibit 1 to Beverly Enterprises' Registration Statement on Form
8-A filed on October 18, 1994)
4.20 Amendment, dated as of April 6, 1995, to the Rights Agreement between Beverly Enterprises, Inc. and The Bank
of New York, as Rights Agent
In accordance with item 601(b)(4)(iii) of Regulation S-K, certain instruments pertaining to Beverly
Enterprises, Inc.'s 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 Incentive Stock Option Plan (incorporated by reference to Post-Effective
Amendment No. 2 on Form S-8 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on
July 31, 1987 (File No. 33-13243))
10.2* 1985 Beverly Nonqualified Stock Option Plan (incorporated by reference to Post-Effective Amendment No. 2 on
Form S-8 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on July 31, 1987
(File No. 33-13243))
10.3* Amended and Restated Beverly Enterprises, Inc. 1993 Long-Term Incentive Stock Plan (the "1993 Plan") (as
amended by Amendment No. 1) (incorporated by reference to Exhibit 10.4 to Beverly Enterprises, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994)
10.4* Beverly Enterprises, Inc. Annual Incentive Plan (incorporated by reference to Exhibit 10.4 to Beverly
Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.5* Form of Other Stock Unit Agreement under the 1993 Plan (incorporated by reference to Exhibit 10.5 to Beverly
Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.6* Retirement Plan for Outside Directors (incorporated by reference to Exhibit 10.5 to Beverly Enterprises,
Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
10.7* Beverly Enterprises, Inc. Non-Employee Directors' Stock Option Plan (incorporated by reference to Exhibit 4.1
to Beverly Enterprises, Inc.'s Registration Statement on Form S-8 filed on September 21, 1994 (File No. 33-
55571))
10.8* Executive Medical Reimbursement Plan (incorporated by reference to Exhibit 10.5 to Beverly Enterprises, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1987)
10.9* Amended and Restated Beverly Enterprises, Inc. Executive Life Insurance Plan and Summary Plan Description (the
"Executive Life Plan") (incorporated by reference to Exhibit 10.7 to Beverly Enterprises, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1993)
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.10* Amendment No. 1, effective September 29, 1994, to the Executive Life Plan (incorporated by reference to
Exhibit 10.10 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.11* Executive Physicals Policy (incorporated by reference to Exhibit 10.8 to Beverly Enterprises, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993)
10.12* Amended and Restated Deferred Compensation Plan effective July 18, 1991 (incorporated by reference to Exhibit
10.6 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
10.13* Amendment No. 1, effective September 29, 1994, to the Deferred Compensation Plan (incorporated by reference to
Exhibit 10.13 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.14* Executive Retirement Plan (incorporated by reference to Exhibit 10.9 to Beverly Enterprises, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1987)
10.15* Amendment No. 1, effective as of July 1, 1991, to the Executive Retirement Plan (incorporated by reference to
Exhibit 10.8 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
10.16* Amendment No. 2, effective as of December 12, 1991, to the Executive Retirement Plan (incorporated by
reference to Exhibit 10.9 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1991)
10.17* Amendment No. 3, effective as of July 31, 1992, to the Executive Retirement Plan (incorporated by reference to
Exhibit 10.10 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992)
10.18* Amendment No. 4, effective as of January 1, 1993, to the Executive Retirement Plan (incorporated by reference
to Exhibit 10.18 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1994)
10.19* Amendment No. 5, effective as of September 29, 1994, to the Executive Retirement Plan (incorporated by
reference to Exhibit 10.19 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1994)
10.20* Form of Indemnification Agreement between Beverly Enterprises, Inc. and its officers, directors and certain of
its employees (incorporated by reference to Exhibit 19.14 to Beverly Enterprises, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1987)
10.21* Form of request by Beverly Enterprises, Inc. to certain of its officers or directors relating to
indemnification rights (incorporated by reference to Exhibit 19.5 to Beverly Enterprises, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended September 30, 1987)
10.22* Form of request by Beverly Enterprises, Inc. to certain of its officers or employees relating to
indemnification rights (incorporated by reference to Exhibit 19.6 to Beverly Enterprises, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended September 30, 1987)
10.23* Agreement dated December 29, 1986 between Beverly Enterprises, Inc. and Stephens Inc. (incorporated by
reference to Exhibit 10.20 to Beverly Enterprises, Inc.'s Registration Statement on Form S-1 filed on
January 18, 1990 (File No. 33-33052))
10.24* 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, Inc. Registration Statement on Form S-1 filed on
February 26, 1990 (File No. 33-33052))
10.25* 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, Inc.'s Registration Statement
on Form S-1 filed on July 30, 1990 (File No. 33-36109))
10.26* Form of Agreement Concerning Benefits Upon Severance dated as of September 1, 1990 between Beverly
Enterprises, Inc. and certain officers of Beverly Enterprises, Inc. (incorporated by reference to
Exhibit 10.23 to Beverly Enterprises, Inc.'s Registration Statement on Form S-1 filed on July 30, 1990 (File
No. 33-36109))
10.27* First Amendment to Agreement Concerning Benefits Upon Severance dated as of April 25, 1993 between Beverly
Enterprises, Inc. and Ronald C. Kayne (incorporated by reference to Exhibit 10.22 to Beverly Enterprises,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993)
10.28* Form of Employment Agreement, made as of September 29, 1994, between Beverly Enterprises, Inc. and David R.
Banks (incorporated by reference to Exhibit 10.28 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1994)
10.29* Amendment Number One to the Employment Contract dated as of June 19, 1995 between Beverly Enterprises, Inc.
and David R. Banks
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.30* Form of Change In Control Severance Agreement, made as of September 29, 1994, between Beverly Enterprises,
Inc. and its Executive Vice Presidents (incorporated by reference to Exhibit 10.29 to Beverly Enterprises,
Inc.'s Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.31* Form of Change In Control Severance Agreement, made as of September 29, 1994, between Beverly Enterprises,
Inc. and certain of its officers (incorporated by reference to Exhibit 10.30 to Beverly Enterprises, Inc.'s
Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.32* Beverly Enterprises Company Car Policy effective May 1, 1988 (incorporated by reference to Exhibit 10.18 to
Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992)
10.33* American Transitional Hospitals, Inc. 1993 Nonqualified Stock Option Plan assumed by Beverly Enterprises, Inc.
(incorporated by reference to Exhibit 10.39 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4
(Amendment No. 1) filed on August 5, 1994 (File No. 33-54501))
10.34* Stock Option Agreement between Beverly Enterprises, Inc. and Robert C. Crosby dated September 2, 1994
(incorporated by reference to Exhibit 4.4 to Beverly Enterprises, Inc.'s Registration Statement on Form S-8
filed on September 21, 1994 (File No. 33-55571))
10.35 Master Lease Document - General Terms and Conditions dated December 30, 1985 for Leases between Beverly
California Corporation and various subsidiaries thereof as lessees and Beverly Investment Properties, Inc. as
lessor (incorporated by reference to Exhibit 10.12 to Beverly California Corporation's Annual Report on
Form 10-K for the year ended December 31, 1985)
10.36 Agreement dated as of December 29, 1986 among Beverly California Corporation, Beverly Enterprises - Texas,
Inc., Stephens Inc. and Real Properties, Inc. (incorporated by reference to Exhibit 28 to Beverly California
Corporation's Current Report on Form 8-K dated December 30, 1986) and letter agreement dated as of
July 31, 1987 among Beverly Enterprises, Inc., Beverly California Corporation, Beverly Enterprises - Texas,
Inc. and Stephens Inc. with reference thereto (incorporated by reference to Exhibit 19.13 to Beverly
Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1987)
10.37 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, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
10.38 Amendment No. 1 dated as of April 7, 1992 to the LTCB Credit Agreement (incorporated by reference to Exhibit
10.3 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
10.39 Second Amendment dated as of May 11, 1992 to the LTCB Credit Agreement (incorporated by reference to Exhibit
10.23 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992)
10.40 Third Amendment dated as of March 1, 1993 to the LTCB Credit Agreement (incorporated by reference to Exhibit
10.24 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992)
10.41 Seventh Amendment dated as of May 2, 1994 to the LTCB Credit Agreement (incorporated by reference to Exhibit
10.31 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994)
10.42 Eighth Amendment dated as of November 1, 1994 to the LTCB Credit Agreement (incorporated by reference to
Exhibit 10.41 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.43 Ninth Amendment dated as of November 9, 1994 to the LTCB Credit Agreement (incorporated by reference to
Exhibit 10.42 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.44 Tenth Amendment dated as of December 6, 1994 to the LTCB Credit Agreement (incorporated by reference to
Exhibit 10.43 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.45 Eleventh Amendment dated as of March 27, 1995 to the LTCB Credit Agreement (incorporated by reference to
Exhibit 10.44 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31,
1995)
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.46 First Amendment and Restatement dated as of December 1, 1994 to Master Sale and Servicing Agreement dated as
of December 1, 1990 among Beverly Funding Corporation, Beverly California Corporation, the wholly-owned
subsidiaries of Beverly Enterprises, Inc. listed therein, Beverly Enterprises, Inc. and certain wholly-owned
subsidiaries of Beverly Enterprises, Inc. which may become parties thereto (incorporated by reference to
Exhibit 10.44 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.47 Trust Indenture dated as of December 1, 1994 from Beverly Funding Corporation, as Issuer, to Chemical Bank, as
Trustee (the "Chemical Indenture") (incorporated by reference to Exhibit 10.45 to Beverly Enterprises, Inc.'s
Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.48 Series Supplement dated as of December 1, 1994 to the Chemical Indenture (incorporated by reference to Exhibit
10.46 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995 (File No.
33-57663))
10.49 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, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1992)
10.50 Second Amendment dated as of May 19, 1994 to the Nippon Credit Agreement (incorporated by reference to Exhibit
10.37 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994)
10.51 Third Amendment dated as of November 1, 1994 to the Nippon Credit Agreement (incorporated by reference to
Exhibit 10.49 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.52 Fourth Amendment dated as of November 9, 1994 to the Nippon Credit Agreement (incorporated by reference to
Exhibit 10.50 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.53 Fifth Amendment dated as of December 30, 1994 to the Nippon Credit Agreement (incorporated by reference to
Exhibit 10.52 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31,
1995)
10.54 Credit Agreement dated as of November 1, 1994 among Beverly California Corporation, Beverly Enterprises, Inc.,
the Banks listed therein, and Morgan Guaranty Trust Company of New York, as Issuing Bank and as Agent (the
"Morgan Credit Agreement") (incorporated by reference to Exhibit 10.51 to Beverly Enterprises, Inc.'s
Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.55 First Amendment dated as of December 30, 1994 to the Morgan Credit Agreement (incorporated by reference to
Exhibit 10.52 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.56 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,
Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1992)
10.57 Form of Employment Agreement to be executed by Robert C. Crosby and ATH at the time ATH became a wholly-owned
subsidiary of Beverly Enterprises, Inc. (incorporated by reference to Exhibit 10.38 to Beverly Enterprises,
Inc.'s Registration Statement on Form S-4 filed on July 8, 1994 (File No. 33-54501))
10.58 Form of Irrevocable Trust Agreement for the Beverly Enterprises, Inc. Executive Benefits Plan (incorporated by
reference to Exhibit 10.55 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February
13, 1995 (File No. 33-57663))
11.1 Computation of Net Income Per Share
27.1 Financial Data Schedule for the six months ended June 30, 1995
</TABLE>
* Exhibits 10.1 through 10.34 are the management contracts,
compensatory plans, contracts and arrangements in which any
director or named executive officer participates.
ITEM 6(b). REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K, dated June 27, 1995,
which reported under Item 5 the acquisition of PMSI.
18
<PAGE> 20
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: August 11, 1995 By: SCOTT M. TABAKIN
--------------------------------------
Scott M. Tabakin
Senior Vice President, Controller and
Chief Accounting Officer
19
<PAGE> 21
INDEX TO 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, Inc. 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, Inc. 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, Inc.'s 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, Inc.'s 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, Inc.'s 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, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993)
4.6 Supplemental Indenture No. 5, dated as of November 1, 1994, to the Senior Secured Note Indenture (incorporated
by reference to Exhibit 4.6 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on
February 13, 1995 (File No. 33-57663))
4.7 Supplemental Indenture No. 6, dated as of December 30, 1994, to the Senior Secured Note Indenture
(incorporated by reference to Exhibit 4.7 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4
filed on February 13, 1995 (File No. 33-57663))
4.8 Subsidiary Guaranty dated as of December 27, 1990 by Beverly Enterprises, Inc., Beverly California Corporation
and the Subsidiary Guarantors listed therein (incorporated by reference to Exhibit 4.3 to the Registration
Statement on Form S-4 of Beverly California Corporation, Beverly Enterprises, Inc. and the Registrants set
forth on the Table of Additional Co-Registrants filed on February 8, 1991 (File No. 33-38954))
4.9 Subsidiary Guaranty dated as of April 1, 1991 by Beverly Enterprises, Inc., Beverly California Corporation and
the Subsidiary Guarantors listed therein (incorporated by reference to Exhibit 4.5 to Beverly Enterprises,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
4.10 Subsidiary Guaranty dated as of October 31, 1991 by Beverly Enterprises, Inc., Beverly California Corporation
and the Subsidiary Guarantors listed therein (incorporated by reference to Exhibit 4.6 to Beverly Enterprises,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
4.11 Subsidiary Guaranty dated as of December 30, 1991 by Beverly Enterprises, Inc., Beverly California Corporation
and Beverly Indemnity, Inc. as Subsidiary Guarantor (incorporated by reference to Exhibit 4.7 to Beverly
Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
4.12 Indenture dated as of August 1, 1993 between Beverly Enterprises, Inc. and Chemical Bank, as Trustee, with
respect to Beverly Enterprises, Inc.'s 5 1/2% Convertible Subordinated Debentures due August 1, 2018, issuable
upon exchange of Beverly Enterprises, Inc.'s $2.75 Cumulative Convertible Exchangeable Preferred Stock (the
"Subordinated Debenture Indenture") (incorporated by reference to Exhibit 4.10 to Beverly Enterprises, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.13 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, Inc. (the "$2.75 Certificate of
Designation")(incorporated by reference to Exhibit 4.12 to Beverly Enterprises, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993)
4.14 Indenture dated as of April 1, 1993 (the "First Mortgage Bond Indenture"), among Beverly Enterprises, Inc.,
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, Inc.'s Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993)
4.15 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, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1993)
4.16 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,
Inc.'s Current Report on Form 8-K dated July 15, 1993)(incorporated by reference to Exhibit 4.15 to Beverly
Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
4.17 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, Inc.'s Registration Statement on Form S-3 filed on November 9, 1993 (File No. 33-50965))
4.18 First Supplemental Indenture dated as of December 30, 1993 to the Notes Indenture, with respect to 8 3/4%
Notes due 2003 (incorporated by reference to Exhibit 4.4 to Beverly Enterprises, Inc.'s Current Report on Form
8-K dated January 4, 1994)
4.19 Rights Agreement dated as of September 29, 1994, between Beverly Enterprises, Inc. and The Bank of New York,
as Rights Agent (incorporated by reference to Exhibit 1 to Beverly Enterprises' Registration Statement on Form
8-A filed on October 18, 1994)
4.20 Amendment, dated as of April 6, 1995, to the Rights Agreement between Beverly Enterprises, Inc. and The Bank
of New York, as Rights Agent
In accordance with item 601(b)(4)(iii) of Regulation S-K, certain instruments pertaining to Beverly
Enterprises, Inc.'s 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 Incentive Stock Option Plan (incorporated by reference to Post-Effective
Amendment No. 2 on Form S-8 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on
July 31, 1987 (File No. 33-13243))
10.2* 1985 Beverly Nonqualified Stock Option Plan (incorporated by reference to Post-Effective Amendment No. 2 on
Form S-8 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on July 31, 1987
(File No. 33-13243))
10.3* Amended and Restated Beverly Enterprises, Inc. 1993 Long-Term Incentive Stock Plan (the "1993 Plan") (as
amended by Amendment No. 1) (incorporated by reference to Exhibit 10.4 to Beverly Enterprises, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994)
10.4* Beverly Enterprises, Inc. Annual Incentive Plan (incorporated by reference to Exhibit 10.4 to Beverly
Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.5* Form of Other Stock Unit Agreement under the 1993 Plan (incorporated by reference to Exhibit 10.5 to Beverly
Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.6* Retirement Plan for Outside Directors (incorporated by reference to Exhibit 10.5 to Beverly Enterprises,
Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
10.7* Beverly Enterprises, Inc. Non-Employee Directors' Stock Option Plan (incorporated by reference to Exhibit 4.1
to Beverly Enterprises, Inc.'s Registration Statement on Form S-8 filed on September 21, 1994 (File No. 33-
55571))
10.8* Executive Medical Reimbursement Plan (incorporated by reference to Exhibit 10.5 to Beverly Enterprises, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1987)
10.9* Amended and Restated Beverly Enterprises, Inc. Executive Life Insurance Plan and Summary Plan Description (the
"Executive Life Plan") (incorporated by reference to Exhibit 10.7 to Beverly Enterprises, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1993)
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.10* Amendment No. 1, effective September 29, 1994, to the Executive Life Plan (incorporated by reference to
Exhibit 10.10 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.11* Executive Physicals Policy (incorporated by reference to Exhibit 10.8 to Beverly Enterprises, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993)
10.12* Amended and Restated Deferred Compensation Plan effective July 18, 1991 (incorporated by reference to Exhibit
10.6 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
10.13* Amendment No. 1, effective September 29, 1994, to the Deferred Compensation Plan (incorporated by reference to
Exhibit 10.13 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.14* Executive Retirement Plan (incorporated by reference to Exhibit 10.9 to Beverly Enterprises, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1987)
10.15* Amendment No. 1, effective as of July 1, 1991, to the Executive Retirement Plan (incorporated by reference to
Exhibit 10.8 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991)
10.16* Amendment No. 2, effective as of December 12, 1991, to the Executive Retirement Plan (incorporated by
reference to Exhibit 10.9 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1991)
10.17* Amendment No. 3, effective as of July 31, 1992, to the Executive Retirement Plan (incorporated by reference to
Exhibit 10.10 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992)
10.18* Amendment No. 4, effective as of January 1, 1993, to the Executive Retirement Plan (incorporated by reference
to Exhibit 10.18 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1994)
10.19* Amendment No. 5, effective as of September 29, 1994, to the Executive Retirement Plan (incorporated by
reference to Exhibit 10.19 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1994)
10.20* Form of Indemnification Agreement between Beverly Enterprises, Inc. and its officers, directors and certain of
its employees (incorporated by reference to Exhibit 19.14 to Beverly Enterprises, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1987)
10.21* Form of request by Beverly Enterprises, Inc. to certain of its officers or directors relating to
indemnification rights (incorporated by reference to Exhibit 19.5 to Beverly Enterprises, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended September 30, 1987)
10.22* Form of request by Beverly Enterprises, Inc. to certain of its officers or employees relating to
indemnification rights (incorporated by reference to Exhibit 19.6 to Beverly Enterprises, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended September 30, 1987)
10.23* Agreement dated December 29, 1986 between Beverly Enterprises, Inc. and Stephens Inc. (incorporated by
reference to Exhibit 10.20 to Beverly Enterprises, Inc.'s Registration Statement on Form S-1 filed on
January 18, 1990 (File No. 33-33052))
10.24* 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, Inc. Registration Statement on Form S-1 filed on
February 26, 1990 (File No. 33-33052))
10.25* 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, Inc.'s Registration Statement
on Form S-1 filed on July 30, 1990 (File No. 33-36109))
10.26* Form of Agreement Concerning Benefits Upon Severance dated as of September 1, 1990 between Beverly
Enterprises, Inc. and certain officers of Beverly Enterprises, Inc. (incorporated by reference to
Exhibit 10.23 to Beverly Enterprises, Inc.'s Registration Statement on Form S-1 filed on July 30, 1990 (File
No. 33-36109))
10.27* First Amendment to Agreement Concerning Benefits Upon Severance dated as of April 25, 1993 between Beverly
Enterprises, Inc. and Ronald C. Kayne (incorporated by reference to Exhibit 10.22 to Beverly Enterprises,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993)
10.28* Form of Employment Agreement, made as of September 29, 1994, between Beverly Enterprises, Inc. and David R.
Banks (incorporated by reference to Exhibit 10.28 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1994)
10.29* Amendment Number One to the Employment Contract dated as of June 19, 1995 between Beverly Enterprises, Inc.
and David R. Banks
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.30* Form of Change In Control Severance Agreement, made as of September 29, 1994, between Beverly Enterprises,
Inc. and its Executive Vice Presidents (incorporated by reference to Exhibit 10.29 to Beverly Enterprises,
Inc.'s Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.31* Form of Change In Control Severance Agreement, made as of September 29, 1994, between Beverly Enterprises,
Inc. and certain of its officers (incorporated by reference to Exhibit 10.30 to Beverly Enterprises, Inc.'s
Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.32* Beverly Enterprises Company Car Policy effective May 1, 1988 (incorporated by reference to Exhibit 10.18 to
Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992)
10.33* American Transitional Hospitals, Inc. 1993 Nonqualified Stock Option Plan assumed by Beverly Enterprises, Inc.
(incorporated by reference to Exhibit 10.39 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4
(Amendment No. 1) filed on August 5, 1994 (File No. 33-54501))
10.34* Stock Option Agreement between Beverly Enterprises, Inc. and Robert C. Crosby dated September 2, 1994
(incorporated by reference to Exhibit 4.4 to Beverly Enterprises, Inc.'s Registration Statement on Form S-8
filed on September 21, 1994 (File No. 33-55571))
10.35 Master Lease Document - General Terms and Conditions dated December 30, 1985 for Leases between Beverly
California Corporation and various subsidiaries thereof as lessees and Beverly Investment Properties, Inc. as
lessor (incorporated by reference to Exhibit 10.12 to Beverly California Corporation's Annual Report on
Form 10-K for the year ended December 31, 1985)
10.36 Agreement dated as of December 29, 1986 among Beverly California Corporation, Beverly Enterprises - Texas,
Inc., Stephens Inc. and Real Properties, Inc. (incorporated by reference to Exhibit 28 to Beverly California
Corporation's Current Report on Form 8-K dated December 30, 1986) and letter agreement dated as of
July 31, 1987 among Beverly Enterprises, Inc., Beverly California Corporation, Beverly Enterprises - Texas,
Inc. and Stephens Inc. with reference thereto (incorporated by reference to Exhibit 19.13 to Beverly
Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1987)
10.37 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, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
10.38 Amendment No. 1 dated as of April 7, 1992 to the LTCB Credit Agreement (incorporated by reference to Exhibit
10.3 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
10.39 Second Amendment dated as of May 11, 1992 to the LTCB Credit Agreement (incorporated by reference to Exhibit
10.23 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992)
10.40 Third Amendment dated as of March 1, 1993 to the LTCB Credit Agreement (incorporated by reference to Exhibit
10.24 to Beverly Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1992)
10.41 Seventh Amendment dated as of May 2, 1994 to the LTCB Credit Agreement (incorporated by reference to Exhibit
10.31 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994)
10.42 Eighth Amendment dated as of November 1, 1994 to the LTCB Credit Agreement (incorporated by reference to
Exhibit 10.41 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.43 Ninth Amendment dated as of November 9, 1994 to the LTCB Credit Agreement (incorporated by reference to
Exhibit 10.42 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.44 Tenth Amendment dated as of December 6, 1994 to the LTCB Credit Agreement (incorporated by reference to
Exhibit 10.43 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.45 Eleventh Amendment dated as of March 27, 1995 to the LTCB Credit Agreement (incorporated by reference to
Exhibit 10.44 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31,
1995)
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.46 First Amendment and Restatement dated as of December 1, 1994 to Master Sale and Servicing Agreement dated as
of December 1, 1990 among Beverly Funding Corporation, Beverly California Corporation, the wholly-owned
subsidiaries of Beverly Enterprises, Inc. listed therein, Beverly Enterprises, Inc. and certain wholly-owned
subsidiaries of Beverly Enterprises, Inc. which may become parties thereto (incorporated by reference to
Exhibit 10.44 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.47 Trust Indenture dated as of December 1, 1994 from Beverly Funding Corporation, as Issuer, to Chemical Bank, as
Trustee (the "Chemical Indenture") (incorporated by reference to Exhibit 10.45 to Beverly Enterprises, Inc.'s
Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.48 Series Supplement dated as of December 1, 1994 to the Chemical Indenture (incorporated by reference to Exhibit
10.46 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995 (File No.
33-57663))
10.49 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, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1992)
10.50 Second Amendment dated as of May 19, 1994 to the Nippon Credit Agreement (incorporated by reference to Exhibit
10.37 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994)
10.51 Third Amendment dated as of November 1, 1994 to the Nippon Credit Agreement (incorporated by reference to
Exhibit 10.49 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.52 Fourth Amendment dated as of November 9, 1994 to the Nippon Credit Agreement (incorporated by reference to
Exhibit 10.50 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.53 Fifth Amendment dated as of December 30, 1994 to the Nippon Credit Agreement (incorporated by reference to
Exhibit 10.52 to Beverly Enterprises, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31,
1995)
10.54 Credit Agreement dated as of November 1, 1994 among Beverly California Corporation, Beverly Enterprises, Inc.,
the Banks listed therein, and Morgan Guaranty Trust Company of New York, as Issuing Bank and as Agent (the
"Morgan Credit Agreement") (incorporated by reference to Exhibit 10.51 to Beverly Enterprises, Inc.'s
Registration Statement on Form S-4 filed on February 13, 1995 (File No. 33-57663))
10.55 First Amendment dated as of December 30, 1994 to the Morgan Credit Agreement (incorporated by reference to
Exhibit 10.52 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February 13, 1995
(File No. 33-57663))
10.56 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,
Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1992)
10.57 Form of Employment Agreement to be executed by Robert C. Crosby and ATH at the time ATH became a wholly-owned
subsidiary of Beverly Enterprises, Inc. (incorporated by reference to Exhibit 10.38 to Beverly Enterprises,
Inc.'s Registration Statement on Form S-4 filed on July 8, 1994 (File No. 33-54501))
10.58 Form of Irrevocable Trust Agreement for the Beverly Enterprises, Inc. Executive Benefits Plan (incorporated by
reference to Exhibit 10.55 to Beverly Enterprises, Inc.'s Registration Statement on Form S-4 filed on February
13, 1995 (File No. 33-57663))
11.1 Computation of Net Income Per Share
27.1 Financial Data Schedule for the six months ended June 30, 1995
</TABLE>
* Exhibits 10.1 through 10.34 are the management contracts,
compensatory plans, contracts and arrangements in which any
director or named executive officer participates.
<PAGE> 1
EXHIBIT 4.20
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of April 6, 1995, to the Rights Agreement dated as
of September 29, 1994 by Beverly Enterprises, Inc., a Delaware corporation (the
"Company"), and The Bank of New York, a New York corporation, as rights agent
(the "Rights Agent").
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement, and, pursuant to the Rights Agreement, the
Company and the Rights Agent may from time to time supplement or amend the
Rights Agreement in accordance with the provisions of Section 26 thereof; and
WHEREAS, acts and things necessary to make this Amendment a valid
agreement according to its terms have been done and performed, and the
execution and delivery of this Amendment by the Company and the Rights Agent
have been in all respects duly authorized by the Company and the Rights Agent.
NOW THEREFORE, in consideration of the foregoing premises and mutual
agreements set forth in the Rights Agreement and this Amendment, the parties
hereby agree as follows:
1. Section 7.1 of the Rights Agreement is hereby amended to read
as follows:
First, clause (i) of the first sentence of Section 7.1 shall
read in its entirety as follows:
"The close of business on the Final Expiration Date (as such
term is hereinafter defined)."
Second, the following sentence shall be added after the first
sentence of Section 7.1:
"The Final Expiration Date shall mean (x) the date of the
annual meeting of stockholders in 1995 (the "1995 Meeting"),
unless a proposal approving the Rights Agreement, as amended
by this Rights Amendment, shall have received the affirmative
vote of a majority of the shares voting thereon at the 1995
Meeting, in which case the Final Expiration Date shall be
extended to (y) the date of the annual meeting of stockholders
in 1998 (the "1998 Meeting"), unless a proposal requiring
extension of the Final Expiration Date to the date of the
annual meeting of stockholders in the year 2001 (the "2001
Meeting") shall have received the affirmative vote of a
majority of the shares voting thereon at the 1998 Meeting, in
which case the Final Expiration Date (z) shall be extended to
the 2001 Meeting."
2. Section 23 of the Rights Agreement is hereby amended to read
as follows:
<PAGE> 2
First, the following sentence shall be added after the title
of Section 23:
"The Rights may be redeemed by action of the Board of
Directors pursuant to Section 23.1 or by Stockholder action
pursuant to Section 23.2 and shall not be redeemed in any
other manner."
Second, the following Section 23.2 shall be added after
Section 23.1 of Section 23:
"23.2 Redemption by Shareholder Action. (1) In the event (i)
the Company receives an Offer from any Offeror (as such terms
are hereinafter defined), and (ii) within 60 days after such
receipt (such sixtieth day being referred to herein as the
"Offer Date"), the Board of Directors has not either (x)
redeemed all but not less than all of the then outstanding
Rights or (y) approved an alternative transaction which the
Board of Directors has determined to be financially superior
for the holders of shares of Common Stock other than the
Offeror and its Affiliates, the Board of Directors shall call
a special meeting of stockholders (the "Special Meeting") for
the purpose of voting on a precatory resolution requesting the
Board of Directors to accept such Offer, as such Offer may be
amended or revised by the Offeror from time to time to
increase the price per share to be paid to holders of shares
of Common Stock (the "Resolution"). The Board of Directors
shall select a date for the Special Meeting and shall use its
best efforts to ensure that the Special Meeting actually be
held on such date, which date shall not be later than the
later of (A) the earliest date after the Offer Date on which
it is reasonably practicable to arrange a Special Meeting and
(B) the date of any meeting of stockholders already scheduled
as of the Offer Date; provided, however, that if (x) such
other meeting shall have been called for the purpose of voting
on a precatory resolution with respect to another Offer and
(y) the Offer Date shall be not later than 15 days after the
date such other Offer was received by the Company, then both
the Resolution and such other resolution shall be voted on at
such meeting and such meeting shall be deemed to be the
Special Meeting. The Board of Directors shall set a date for
determining the stockholders of record entitled to notice of
and to vote at the Special Meeting in accordance with the
Company's Certificate of Incorporation and By-Laws and with
applicable law. At the Offeror's request, the Company shall
include in any proxy soliciting material prepared by it in
connection with the Special Meeting proxy soliciting material
submitted by the Offeror; provided, however, that the Offeror
shall by written agreement with the Company contained in or
delivered with such request have indemnified the Company
against any and all liabilities resulting from any
misstatements, misleading statements and omissions contained
in the Offeror's proxy soliciting material and have agreed to
pay the Company's incremental costs incurred as a result of
including such material in the Company's proxy soliciting
2
<PAGE> 3
material. Notwithstanding the foregoing, no Special Meeting
shall be held from and after such time as any Person becomes
an Acquiring Person, and any Special Meeting scheduled prior
to such time and not theretofore held shall be cancelled.
(2) If at the Special Meeting the Resolution receives
the affirmative vote of a majority of the outstanding Common
Shares as of the record date of the Special Meeting, then all
of the Rights shall be redeemed by such stockholder action at
the Redemption Price, effective immediately prior to the
consummation of any tender or exchange offer (provided that
such offer is consummated prior to 60 days after the date of
the Special Meeting) pursuant to which any Person offers to
purchase all of the shares of Common Stock held by Persons
other than such Person and its Affiliates at a price per share
in cash and/or at an exchange ratio which is financially
superior to the cash price and/or the exchange ratio contained
in the Resolution approved as the Special Meeting; provided,
however, that the Rights shall not be redeemed at any time
from and after such time as any Person becomes an Acquiring
Person.
(3) Nothing contained in this Section 23.2 shall be
deemed to be in delegation of the obligation of the Board of
Directors of the Company to exercise its fiduciary duty.
Without limiting the foregoing, nothing contained herein shall
be construed to suggest or imply that the Board of Directors
shall not be entitled to reject any Offer, or to recommend
that holders of shares of Common Stock reject any tender or
exchange offer, or to take any other action (including,
without limitation, the commencement, prosecution, defense or
settlement of any litigation and the submission of additional
or alternative Offers or other proposals to the Special
Meeting) with respect to any Offer or any tender or exchange
offer that the Board of Directors believes is necessary or
appropriate in the exercise of such fiduciary duty.
(4) Nothing in this Section 23.2 shall be construed
as limiting or prohibiting the Company or any Offeror from
proposing or engaging, at any time, in any acquisition,
disposition or other transfer of any securities of the
Company, any merger or consolidation involving the Company,
any sale or other transfer of assets of the Company, any
liquidation, dissolution or winding-up of the Company, or any
other business combination or other transaction, or any other
action by the Company or such Offeror; provided, however, that
the holders of Rights shall have the rights set forth in this
Agreement with respect to any such acquisition, disposition,
transfer, merger, consolidation, sale, liquidation,
dissolution, winding-up, business combination, transaction or
action.
(5) An "Offer" shall mean a written proposal
delivered to the Company by any Person (an "Offeror"), which
proposal:
3
<PAGE> 4
(A) provides for the acquisition at the same
price of all of the outstanding shares of Common
Stock held by any Person other than the Offeror and
its Affiliates.
(B) if an offer all or partially for cash
consideration, states that the Offeror has obtained
written financing commitments from recognized
financing sources, and/or has on hand cash or cash
equivalents, for the full amount of all financing
necessary to consummate the Offer;
(C) if an offer all or partially for
consideration other than cash, (i) provides for any
non-cash consideration to consist only of securities
which are listed and trading on the New York Stock
Exchange and (ii) is determined by the Board of
Directors of the Company to be one of a series of
transactions which will provide tax-deferred
treatment for the holders of shares of Common Stock
other than the Offeror and its Affiliates;
(D) is not subject to any financing, funding
or similar condition, nor any condition relating to
completion of or satisfaction with any due diligence
or similar investigation and otherwise provides for
usual and customary terms and conditions; and
(E) requests the Company to call a special
meeting of the holders of Common Stock for the
purpose of voting on a precatory resolution
requesting the Board of Directors to accept such
Offer and contains a written agreement of the Offeror
to pay (or share with any other Offeror) at least
one-half of the Company's costs of such special
meeting (exclusive of the Company's costs of
preparing and mailing proxy material for its own
solicitation)."
Third, Section 23.2 shall be renumbered 23.3, and the first
sentence of such Section 23.2 shall be amended to read in its entirety as
follows:
"In the case of a redemption permitted under Section 23.1 or Section
23.2, immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to
Section 23.1, or upon the effectiveness of the redemption of the
Rights pursuant to Section 23.2, evidence of which shall have been
filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price."
4
<PAGE> 5
Fourth, the third sentence of Section 23.2 (Section 23.3 upon
the effectiveness of this Amendment) shall be amended to add the following
after the words "Within ten days after the action of the Board of Directors
ordering any such redemption":
"pursuant to Section 23.1 or the effectiveness of the redemption of
the Rights to Section 23.2"
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
5
<PAGE> 1
EXHIBIT 10.29
AMENDMENT NUMBER ONE TO THE
EMPLOYMENT CONTRACT
AGREEMENT made as of September 29, 1994 between BEVERLY ENTERPRISES,
INC., a Delaware corporation (the "Company"), and David R. Banks (the
"Executive").
WHEREAS, this Amendment Number One to the Employment Contract (the
"Contract") is dated as of June 19, 1995;
WHEREAS, the Executive has had the Contract reviewed in detail by his
personal attorney;
WHEREAS, the Executive's attorney has pointed out several areas which
will need to be changed to more correctly reflect the facts and circumstances
surrounding the Executive's employment with the Company and those matters which
might impact upon such employment, or the termination thereof;
WHEREAS, the Company and Executive desire to amend the Contract as set
forth herein in order to more properly reflect the understanding of the
parties.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree to amend the Contract as follows:
(1) Paragraph 1(h) of the Contract is hereby amended to read as
follows:
"1(h) The Competitive Businesses shall mean any of the health
care businesses in which the Company is engaged on the
execution date of this Agreement, except that ownership of
nursing homes or other medical facilities (as distinguished
from the operation of said facilities) shall not be deemed to
be competitive businesses, and the Executive's serving on the
Board of Directors or as the Chairman of such Board of
Directors of Nationwide Health Properties, Inc. or of
Wellpoint Health Networks, Inc. is specifically excluded from
the definition of competitive businesses."
(2) Paragraph 7(c)(i) of the Contract shall be amended to read
as follows:
"7(c)(i) For the benefit period, or for two (2) years,
whichever is longer, the Executive shall be treated as if he
had continued to be an Executive employee for all purposes
under the Company's Medical Plan, Executive Medical
Reimbursement Plan and Dental Plan, as described in Paragraph
4(b). Following this period, the Executive shall be entitled
to receive continuation coverage under Part Six of Title I of
ERISA ("COBRA Benefits") treating the end of this period as a
termination of the Executive's employment other than for gross
misconduct."
All other terms and conditions of the Contract shall remain in full
force and effect as amended by this Amendment Number One to the Employment
Contract.
<PAGE> 2
The parties have duly executed this Amendment Number One to the
Employment Contract as of the date first above written.
BEVERLY ENTERPRISES, INC. EXECUTIVE
By: /s/ ROBERT W. POMMERVILLE /s/ DAVID R. BANKS
------------------------------ ------------------------------
Robert W. Pommerville David R. Banks
Executive Vice President, 3421 Free Ferry Road
General Counsel and Fort Smith, AR 72903
Secretary
By: /s/ CHRISTINE MURRAY
------------------------------
Christine Murray
Assistant Secretary
5111 Rogers Avenue, Suite 40-A
Fort Smith, AR 72919
Attention: Secretary
2
<PAGE> 1
BEVERLY ENTERPRISES, INC.
EXHIBIT 11.1
COMPUTATION OF NET INCOME PER SHARE
THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- -----------------------
1995 1994 1995 1994
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
PRIMARY:
Net income . . . . . . . . . . . . . . . . $ 14,306 $ 19,032 $ 30,855 $ 34,147
Preferred stock dividends . . . . . . . . . (2,062) (2,062) (4,125) (4,125)
----------- ------------ ---------- ----------
Net income applicable to common shares . . $ 12,244 $ 16,970 $ 26,730 $ 30,022
=========== ============ ========== ==========
Applicable common shares:
Weighted average outstanding shares during
the period . . . . . . . . . . . . . . . 86,304 85,481 85,986 85,296
Weighted average shares issuable upon
exercise of common stock equivalents
outstanding (principally stock options)
using the "treasury stock" method . . . 1,560 1,583 1,607 1,691
----------- ------------ ---------- ----------
Total . . . . . . . . . . . . . . . . . . 87,864 87,064 87,593 86,987
=========== ============ ========== ==========
Net income per share of common stock . . . $ 0.14 $ 0.19 $ 0.31 $ 0.35
=========== ============ ========== ==========
FULLY DILUTED:
Net income . . . . . . . . . . . . . . . . $ 14,306 $ 19,032 $ 30,855 $ 34,147
Reduction of interest and amortization
expenses resulting from assumed conversion
of 7.625% convertible subordinated
debentures . . . . . . . . . . . . . . . -- (a) -- (a) -- (a) -- (a)
Reduction of interest and amortization expenses
resulting from assumed conversion of zero
coupon notes . . . . . . . . . . . . . . -- (a) -- (a) -- (a) -- (a)
Less applicable income taxes . . . . . . . -- -- -- --
----------- ------------ ---------- ----------
Adjusted net income . . . . . . . . . . . . 14,306 19,032 30,855 34,147
Preferred stock dividends . . . . . . . . . (2,062) -- (4,125) (4,125)
----------- ------------ ---------- ----------
Adjusted net income applicable to common
shares . . . . . . . . . . . . . . . . . . $ 12,244 $ 19,032 $ 26,730 $ 30,022
=========== ============ ========== ==========
Applicable common shares:
Weighted average outstanding shares during
the period . . . . . . . . . . . . . . . 86,304 85,481 85,986 85,296
Assumed conversion of cumulative convertible
exchangeable preferred stock . . . . . -- (a) 11,253 -- (a) -- (a)
Weighted average shares issuable upon exercise
of common stock equivalents outstanding
(principally stock options) using the
"treasury stock" method . . . . . . . . 1,560 1,583 1,673 1,692
Assumed conversion of 7.625% convertible
subordinated debentures . . . . . . . . -- (a) -- (a) -- (a) -- (a)
Assumed conversion of zero coupon notes . -- (a) -- (a) -- (a) -- (a)
----------- ------------ ---------- ----------
Total . . . . . . . . . . . . . . . . . . 87,864 98,317 87,659 86,988
=========== ============ ========== ==========
Net income per share of common stock . . . $ 0.14 $ 0.19 $ 0.30 $ 0.35
=========== ============ ========== ==========
</TABLE>
(a) Conversion would be anti-dilutive and is therefore not assumed in the
computation of earnings per share of common stock.
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITS QUARTERLY
REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 48,470
<SECURITIES> 0
<RECEIVABLES> 528,130<F1>
<ALLOWANCES> 25,215<F2>
<INVENTORY> 61,081
<CURRENT-ASSETS> 684,369
<PP&E> 1,892,531
<DEPRECIATION> 622,217
<TOTAL-ASSETS> 2,573,172
<CURRENT-LIABILITIES> 444,475
<BONDS> 962,768
<COMMON> 10,215
0
150,000
<OTHER-SE> 846,257
<TOTAL-LIABILITY-AND-EQUITY> 2,573,172
<SALES> 1,585,994
<TOTAL-REVENUES> 1,592,756
<CGS> 0
<TOTAL-COSTS> 1,448,725
<OTHER-EXPENSES> 51,991
<LOSS-PROVISION> 0<F3>
<INTEREST-EXPENSE> 42,274
<INCOME-PRETAX> 49,766
<INCOME-TAX> 18,911
<INCOME-CONTINUING> 30,855
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,855
<EPS-PRIMARY> .31
<EPS-DILUTED> .30
<FN>
<F1>Excludes $51,328 of long-term notes receivable.
<F2>Excludes $7,210 of allowance for long-term notes receivable.
<F3>Included in Total costs and expenses line.
</FN>
</TABLE>
