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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
February 1, 1999
Date of report (Date of earliest event reported)
ASSISTED LIVING CONCEPTS, INC.
(exact name of registrant as specified in its charter)
NEVADA 1-13498 93-1148702
(State or other jurisdiction of Commission File Number (I.R.S. Employer
incorporation or organization) Identification Number)
11835 NE Glenn Widing Drive, Bldg. E, Portland, OR 97220-9057
(Address of Principal Executive Offices) (Zip Code)
(503) 252-6233
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On February 1, 1999, Assisted Living Concepts, Inc. (the "Company")
announced that it will restate its financial statements for the year ended
December 31, 1997 and subsequent quarterly periods. The restatement is expected
to reduce reported net income by approximately $1.6 million or $0.12 per diluted
share for the year ended December 31, 1997 and by approximately $3.4 million or
$0.19 per diluted share for the nine months ended September 30, 1998. This
restatement will not change previously reported revenues or operating income for
those periods. The Company also announced that it and American Retirement
Corporation ("ARC") have mutually agreed to terminate the Agreement and Plan of
Merger, dated as of November 18, 1998 (the "Merger Agreement") among the
Company, ARC and Pioneer Merger Corporation ("Merger Corp."), pursuant to which
Merger Corp. was to have merged with and into the Company, with the Company as
the surviving entity (the "Merger"). In conjunction with such termination, the
parties to the Merger Agreement have entered into a Termination and Release
Agreement, dated January 31, 1999 (the "Termination Agreement") whereby they
have released each other from any claims relating to the proposed Merger. The
Company also announced that it will record a one-time charge in the fourth
quarter of 1998 of approximately $1.0 million to cover costs related to the
proposed Merger and that, as a result of the restatement and the impact of the
proposed Merger and its subsequent termination, the Company expects to report
significantly lower earnings for the quarter and for the year ended December 31,
1998.
Copies of the Termination Agreement and the Company's press release
dated February 1, 1999 have been filed as exhibits to this current Report on
Form 8-K and are incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) and (b) None.
(c) The following documents are furnished as Exhibits to this Current
Report on Form 8-K pursuant to Item 601 of Regulation S-K:
10. Termination and Release Agreement, dated January 31,
1999, among American Retirement Corporation, Pioneer
Merger Corporation and Assisted Living Concepts,
Inc.
99. Press release dated February 1, 1999 of Assisted
Living Concepts, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ASSISTED LIVING CONCEPTS, INC.
By: /s/ RHONDA S. MARSH
Name: Rhonda S. Marsh
Title: Vice President/Treasurer
Chief Accounting Officer
Date: February 1, 1999
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EXHIBIT INDEX
EXHIBIT NO. DOCUMENT DESCRIPTION
10. Termination and Release Agreement, dated January 31,
1999, among American Retirement Corporation, Pioneer
Merger Corporation and Assisted Living Concepts, Inc.
99. Press release dated February 1, 1999 of Assisted Living Concepts, Inc.
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EXHIBIT 10
TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (the "Agreement") is made and
entered into this 31st day of January, 1999, by and among American Retirement
Corporation, a Tennessee corporation ("ARC"), Pioneer Merger Corporation, a
Tennessee corporation and a wholly-owned subsidiary of ARC (the "Subsidiary"),
and Assisted Living Concepts, Inc., a Nevada corporation ("ALC").
WITNESSETH:
WHEREAS, ARC, the Subsidiary, and ALC entered into that certain
Agreement and Plan of Merger, dated as of November 18, 1998 (the "Merger
Agreement");
WHEREAS, in connection with the negotiations surrounding the Merger
Agreement, ARC and ALC entered in that certain Confidentiality Agreement, dated
October 19, 1998 (the "Confidentiality Agreement");
WHEREAS, the parties hereto wish to terminate the Merger Agreement and
certain related agreements and release their respective rights, claims,
obligations, and liabilities thereunder.
NOW, THEREFORE, in consideration of the covenants and agreements herein
set forth, the parties agree as follows:
1. TERMINATION OF AGREEMENTS. Effective immediately upon execution of
this Agreement: (i) ARC, the Subsidiary, and ALC agree to mutually terminate the
Merger Agreement pursuant to Section 7.1(a) thereof; (ii) ARC and ALC agree to
terminate the Cross Option Agreement, dated November 18, 1998, among ARC and
ALC; and (iii) ARC and ALC agree that all covenants, undertakings, restrictions,
and limitations contained in the Shareholder Voting Agreements between ARC and
certain shareholders of ALC and between ALC and certain shareholders of ARC are
terminated and waived and shall be of no further force or effect.
Notwithstanding the foregoing, nothing herein shall be deemed to affect the
provisions of the Merger Agreement that, pursuant to the terms of the Merger
Agreement, shall survive the termination of the Merger Agreement.
2. SURVIVAL OF CONFIDENTIALITY AGREEMENT. The Confidentiality Agreement
shall remain in full force and effect in accordance with its terms. In
accordance with Section 3 of the Confidentiality Agreement, ARC and ALC shall
each certify in writing to the other that all "Information" (as defined in the
Confidentiality Agreement) relating to the other consisting of memoranda, notes,
analyses, compilations, studies, or other documents prepared by the receiving
party for its use have been destroyed.
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3. EXPENSES. Except as provided in this Agreement, all costs and
expenses incurred in connection with or relating to this Agreement, the Merger
Agreement, and the agreements and transactions contemplated hereby and thereby,
including, without limitation, the fees and disbursements of counsel, financial
advisers, and accountants, shall be paid by the party incurring such costs and
expenses; provided, that all printing expenses incurred by the parties prior to
the date hereof in connection with the Merger Agreement shall be divided equally
between ARC and ALC. Accordingly, all charges of Bowne & Co., Inc. in connection
with the preparation of the Joint Proxy Statement Prospectus and the preparation
and filing of the Current Reports on Form 8-K and the Schedule 13Gs filed by
each of ARC and ALC in connection with the proposed transaction shall be paid
50% by ARC and 50% by ALC.
4. RELEASE AND WAIVER. (a) In consideration of the mutual covenants
herein, and upon execution of this Agreement, ARC hereby fully, finally, and
forever releases, relinquishes, and discharges all Released Claims (as
hereinafter defined) against ALC.
(b) In consideration of the mutual covenants herein, and upon execution
of this Agreement, ALC hereby fully, finally, and forever releases,
relinquishes, and discharges all Released Claims against ARC.
(c) As used in this Agreement, "Released Claims" shall mean all known
and unknown claims, counterclaims, demands, rights, liabilities, obligations,
and causes of action, of every nature and description whatsoever (in equity and
at law), including without limitation any of the foregoing that arise out of or
relate to the Merger Agreement and the transactions and agreements contemplated
thereby. Notwithstanding the foregoing, Released Claims shall not include any
known or unknown claims, counterclaims, demands, rights, liabilities,
obligations, and causes of action, of every nature and description whatsoever
(in equity and at law), arising under or related to the Confidentiality
Agreement or any provision of the Merger Agreement that survives the termination
thereof.
5. GOVERNING LAW. This Agreement, and all matters relating hereto,
shall be governed by, and construed in accordance with the laws of the State of
Tennessee applicable to contracts to be made and performed wholly within such
state without reference to the conflict of laws principles thereof.
6. ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement
constitute the entire agreement between the parties and supersede all prior
agreements and understandings, both written and oral, between the parties, or
any of them, with respect to the subject matter hereof.
7. AMENDMENT AND MODIFICATION. This Agreement may be amended, modified,
and supplemented only by a written document executed by the parties hereto.
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8. AUTHORIZATION. Each party represents and warrants that the person
executing this Agreement in its behalf is duly authorized and fully competent to
execute this Agreement in its behalf. In entering into this Agreement, the
undersigned represent that they have read all the terms hereof, have discussed
the terms with counsel and that such terms are fully understood and voluntarily
accepted.
9. CONSTRUCTION. This Agreement shall be construed without regard to
the party or parties responsible for its preparation, and it shall be deemed to
have been prepared jointly by both parties. Any ambiguity or uncertainty arising
herein shall not be interpreted or construed against any party hereto.
10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same document.
11. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
12. ENFORCEMENT. The parties agree that in the event of a breach of any
provision of this Agreement irreparable damage would occur, the aggrieved party
would be without an adequate remedy at law, and damages would be difficult to
determine. The parties therefore agree that in the event of a breach of any
provision of this Agreement, the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of such provision. By seeking or
obtaining such relief, the aggrieved party will not be precluded from seeking or
obtaining any other relief to which it may be entitled at law or in equity.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
AMERICAN RETIREMENT CORPORATION
By: /s/ W.E. Sheriff
Name: W.E. Sheriff
Title: Chief Executive Officer
PIONEER MERGER CORPORATION
By: /s/ W.E. Sheriff
Name: W.E. Sheriff
Title: Chief Executive Officer
ASSISTED LIVING CONCEPTS, INC.
By: /s/ William McBride
Name: William McBride
Title: Chief Executive Officer
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EXHIBIT 99
FOR IMMEDIATE RELEASE:
ASSISTED LIVING CONCEPTS ANNOUNCES RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL
STATEMENTS AND THE TERMINATION OF ITS MERGER AGREEMENT WITH AMERICAN RETIREMENT
CORPORATION.
PORTLAND, OR -- FEBRUARY 1, 1999. Assisted Living Concepts, Inc. (AMEX: ALF)
today announced that it will restate its financial statements for the year ended
December 31, 1997 and subsequent quarterly periods. The restatement is expected
to reduce reported net income by approximately $1.6 million or $0.12 per diluted
share for the year ended December 31, 1997 and by approximately $3.4 million or
$0.19 per diluted share for the nine months ended September 30, 1998.
This restatement will not change previously reported revenues or operating
income for those periods.
Additionally, the company and American Retirement Corporation (NYSE: ACR) have
mutually agreed to terminate their previously announced merger agreement. In
conjunction with such termination, the company and American Retirement have
entered into a termination and release agreement whereby they have released each
other from any claims relating to the proposed merger. The company will record a
one-time charge in the fourth quarter of 1998 of approximately $1.0 million to
cover costs related to the proposed merger.
As a result of the restatement and the impact of the proposed merger and its
subsequent termination, the company expects to report significantly lower
earnings for the quarter and for the year ended December 31, 1998.
Commencing in 1997, the company entered into joint venture arrangements with
respect to the operation of certain of its start-up residences. The company
consolidates 100% of the revenues and expenses attributable to these residences
with the revenues and expenses of the company. Since the second quarter of 1997,
the company has been reimbursed by its joint venture partner for 90% of the
start-up losses of the joint venture residences and in prior periods recognized
such reimbursements as other income in its financial statements.
The restatement results primarily from a further review of whether the joint
venture arrangements represent a sufficient transfer of the operating risks and
rewards to the other party to the joint venture for the company to account for
the reimbursed losses as other income. While the company believed the accounting
treatment accorded to the joint venture arrangements was in conformity with
generally accepted accounting principles at the time of the preparation of its
financial statements, the company has determined to treat such loss
reimbursements as loans. The company will also reflect amounts paid to
repurchase joint venture residences in excess of reimbursed losses as interest
expense. Accordingly, the consolidated financial statements for the quarters
ended June 30, 1997 and September 30, 1997, for the year ended December 31, 1997
and for each of the first three quarters of 1998 will be restated to reflect
this accounting
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treatment. The company will review opportunities to acquire the operations of
joint venture residences and does not contemplate using such arrangements in the
future. No assurances can be given that the company will be successful in
acquiring any of such residences.
William McBride, the company's chairman and chief executive officer, stated, "We
are obviously very disappointed with these events. With respect to the
restatement, it is important to note that the company's revenue and operating
income have included the operating results of the joint venture residences and
are not impacted by the restatement."
Dr. Keren Brown Wilson, the company's president and chief operating officer,
added, "These events do not reflect any change in the operating fundamentals of
our business. We will continue to be committed to our model and to delivering
quality care and services to our residents."
A conference call has been scheduled for 9:00 AM eastern standard time. The call
in number is (888) 603-9753 with the password of "Assisted Living Concepts." The
call will also be available on replay beginning at 11:00 AM eastern standard
time. The call in number for the replay is (888) 568-0440 with the pass code of
2526233.
This press release and statements made by or on behalf of Assisted Living
Concepts relating hereto may be deemed to constitute forward-looking statements
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements may be affected by risks
and uncertainties, including those that may arise during the completion of the
company's 1998 audit or the preparation of restated financial statements for
each quarter commencing with the second quarter of 1997, the absence of any
contractual right to purchase our joint venture partner's 90% interest in the
operations of certain residences and other risks described in Assisted Living
Concept's filings with the Securities and Exchange Commission. In light of such
risks and uncertainties, Assisted Living Concept's actual results could differ
materially from such forward-looking statements. Prior to the filing of periodic
reports relating to the restatement, Assisted Living Concepts does not undertake
any obligation to publicly release any revisions to any forward-looking
statements contained herein to reflect events and circumstances occurring after
the date hereof or to reflect the occurrence of unanticipated events.
CONTACT INFORMATION:
William McBride
Chairman & Chief Executive Officer
Dr. Keren Brown Wilson
President & Chief Operating Officer
(503) 252-6233
