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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
September 30, 1999
____________________________
Date of report (Date of earliest event reported)
ASSISTED LIVING CONCEPTS, INC.
(exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEVADA 1-13498 93-1148702
---------------------------- ---------------------- ------------------------
(State or other jurisdiction Commission File Number (I.R.S. Employer
of incorporation or organization) Identification Number)
</TABLE>
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 September 29, 1999, Assisted Living Concepts, Inc. (the "Company")
announced that it filed its restated financial statements with the Securities
and Exchange Commission ("SEC") for the fiscal years ended December 31, 1996 and
1997 and for the nine months ended September 30, 1998. In addition, the Company
also filed with the SEC its financial statements for the fiscal year ended
December 31, 1998, the quarter ended March 31, 1999 and the quarter ended June
30, 1999.
The Company also announced that it will continue to explore strategic
alternatives to maximize shareholder value, including a possible strategic
business combination, merger or sale of the Company.
Separately, the Company announced that its 1999 annual meeting of
shareholders will be held at 8:00 a.m. on November 16, 1999 at Kingstad Meeting
Center 5933 NE Win Sivers Drive, Portland, Oregon. Shareholders of record on
October 8, 1999 will be entitled to vote at such meeting.
A copy of the Company's press release dated September 29, 1999 has
been filed as an exhibit to this Current Report on Form 8-K and is 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:
99. Press release dated September 29, 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/ Sandra Campbell
-----------------------
Name: Sandra Campbell
Title: Senior Vice President,
General Counsel and
Secretary
Date: September 30, 1999
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EXHIBIT INDEX
EXHIBIT NO. DOCUMENT DESCRIPTION
99. Press release dated September 29, 1999 of Assisted Living
Concepts, Inc.
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EXHIBIT 99
NEWS
For Immediate Release
=====================
September 29, 1999
Assisted Living Concepts, Inc.
The Company Reports Financial Results, Expects to Resume Trading on the AMEX and
Announces Continuing Exploration of Strategic Alternatives
_______________________________________________________________
PORTLAND, OREGON, September 29, 1999 - Assisted Living Concepts, Inc.
(AMEX: ALF), a national provider of assisted living services, announced today
that it filed its restated financial statements with the Securities and Exchange
Commission ("SEC") for the fiscal years ended December 31, 1996 and 1997 and for
each of the first three fiscal quarters of the fiscal year ended December 31,
1998. In addition, the Company also filed with the SEC its financial statements
for the fiscal year ended December 31, 1998, the fiscal quarter ended March 31,
1999 and the fiscal quarter ended June 30, 1999. The Company believes that
trading in its securities listed on the American Stock Exchange should resume on
Monday, October 4, 1999.
Restatement of Historical Financial Results
- -------------------------------------------
After consultation with its independent auditors, the Company determined to
restate its financial statements for the fiscal years ended December 31, 1996
and 1997 and for each of the first three fiscal quarters of the fiscal year
ended December 31, 1998. The restatement substantially related to changes in
non-cash items and did not significantly affect the Company's previously
reported cash or working capital positions. The restatement resulted primarily
from:
. a modification in the accounting for certain of its acquisitions and former
joint venture arrangements;
. the recognition of expenses which were previously capitalized in conjunction
with development and financing activities;
. a modification in the method of accounting for certain lease arrangements;
. the capitalization of fees received which were previously recognized as
either income or as a reduction of expenses;
. an increase in the amount of goodwill written-off relating to the shut down
of the Company's
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home health operations;
. the elimination of accrued expenses previously recorded pursuant to a change
in accounting principle; and
. the elimination of an impairment write-down which had previously been
recorded on three residences.
The restatement reduced the previously reported net income for the fiscal
years ended December 31, 1996 and 1997 and for the nine months ended September
30, 1998 by $2.1 million, $6.7 million and $11.0 million, respectively. The
cumulative effect of the restatement reduced shareholders' equity by $19.7
million through September 30, 1998. The overall effect of the restatement on
net income and net income per share in each of the periods subject to the
restatement is illustrated in the following table:
<TABLE>
<CAPTION>
As Previously Reported As Restated
---------------------------------------------- ----------------------------------------------
Net Income Net Loss
Net Income (Loss) Per Net Per Diluted
(Loss) Diluted Share Loss Share
-------------------- -------------------- -------------------- --------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Year Ended 12/31/96 $ 149 $ 0.01 ($1,915) ($0.23)
Year Ended 12/31/97 $ 4,209 $ 0.34 ($2,479) ($0.21)
Nine Months Ended 9/30/98 ($2,361) ($0.14) ($13,335) ($0.84)
</TABLE>
As a result of the restatement, the Company's cash positions as of December
31, 1996 and 1997 and as of September 31, 1998 remained substantially unchanged
at $2.1 million, $63.3 million and $79.6 million, respectively, as compared to
$2.1 million, $63.4 million and $79.8 million, respectively, as previously
reported. After the restatement, the Company's working capital positions as of
December 31, 1996 and 1997 and as of September 30, 1998 remained substantially
unchanged at negative $27.1 million, positive $40.1 million and positive $63.0
million, respectively, as compared to previously reported working capital of
negative $26.4 million, positive $41.0 million and positive $64.1 million,
respectively.
Results of Operations
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The Company's operations during the fiscal year ended December 31, 1998 and
for the quarters ended March 31, 1999 and June 30, 1999 were negatively impacted
by the diversion of management's time and attention devoted to the terminated
merger with American Retirement Corporation, the occurrence and subsequent
resolution of certain
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regulatory issues, the restatement of historical financial results (commencing
in February 1999), changes in senior management, the reorganization and
expansion of the Company's operating infrastructure and securityholder
litigation (commencing in February 1999). In addition, the Company's results of
operations were also adversely impacted by increased competition for residents
and employees in certain markets. Several of these factors have led to a decline
in occupancy rates and increases in labor and certain other operating costs at
many of the Company's residences, as well as to an increase in the Company's
corporate general and administrative expenses. A number of these factors have
continued to adversely impact operating results into the third quarter of 1999.
As a result of these factors, the Company expects to report substantially lower
operating margins at its residences in fiscal year 1999 as compared to those
reported in fiscal year 1998.
The Year Ended December 31, 1998
- --------------------------------
The Company incurred a net loss (after the cumulative effect of change in
accounting principle and other charges) of $20.7 million, or $1.27 per basic and
diluted share, on revenue of $89.4 million for the year ended December 31, 1998
as compared to a net loss of $2.5 million, or $0.21 per basic and diluted share,
on revenue of $49.6 million for the year ended December 31, 1997.
Operating results for the year ended December 31, 1998 included charges and
other unusual items totaling approximately $15.1 million. These items were
comprised of expenses relating to the terminated merger, the write-off of
development sites, asset impairment write-offs, the write-off of certain
financing costs, losses recorded on sale and leaseback transactions, and a
charge recorded in connection with the adoption of a change in accounting
principle. Prior to such items, the Company reported a net loss of $5.6
million, or $0.35 per basic and diluted share for the year ended December 31,
1998. The Company recorded a $1.3 million loss on sale and leaseback
transactions during the year ended December 31, 1997. Prior to such loss, the
Company reported a net loss of $1.2 million, or $0.10 per basic and diluted
share for the year ended December 31, 1997.
The Quarter Ended March 31, 1999
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The Company incurred a net loss (after unusual items) of $7.7 million, or
$0.45 per basic and diluted share, on revenue of $26.6 million for the quarter
ended March 31, 1999 (the "March 1999 Quarter") as compared to a net loss (after
the cumulative effect of change
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in accounting principle and other charges) of $784,000, or $0.05 per basic and
diluted share, on revenue of $18.8 million for the quarter ended March 31, 1998
(the "March 1998 Quarter").
Operating results for the March 1999 Quarter included approximately $2.2
million of unusual items. These items were comprised of expenses relating to
the terminated merger, the write-off of development sites, severance costs, and
losses recorded on the disposal of assets. Prior to such items, the Company
reported a net loss of $5.5 million, or $0.32 per basic and diluted share for
the March 1999 Quarter. Operating results for the March 1998 Quarter included
approximately $1.7 million of unusual items. These items were comprised of a
charge recorded in connection with the adoption of a change in accounting
principle and losses recorded on sale and leaseback transactions. Prior to such
items, the Company reported net income of $948,000, or $0.06 per basic and
diluted share for the March 1998 Quarter.
The Quarter Ended June 30, 1999
- -------------------------------
The Company incurred a net loss (after unusual items) of $9.0 million, or
$0.53 per basic and diluted share, on revenue of $28.5 million for the quarter
ended June 30, 1999 (the "June 1999 Quarter") as compared to a net loss (after
the cumulative effect of change in accounting principle and other charges) of
$11.8 million, or $0.75 per basic and diluted share, on revenue of $21.2 million
for the quarter ended June 30, 1998 (the "June 1998 Quarter").
Operating results for the June 1999 Quarter included approximately $3.9
million of unusual items. These items were comprised of expenses relating to
the write-off of development sites and severance costs. Prior to such items,
the Company reported a net loss of $5.1 million, or $0.30 per basic and diluted
share for the June 1999 Quarter. Operating results for the June 1998 Quarter
included approximately $11.1 million of unusual items. These items were
comprised of expenses relating to the write-off of development sites, asset
impairment write-offs, the write-off of certain financing costs, and losses
recorded on sale and leaseback transactions. Prior to such items, the Company
reported a net loss of $720,000, or $0.05 per basic and diluted share for the
June 1998 Quarter.
Assisted Living Residences
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As of June 30, 1999, the Company had 181 assisted living residences with
certificates of occupancy, 175 of which (6,741 units) were included in its
operating results. Of such residences, the Company owned 105 residences (4,108
units) and leased 70 residences (2,633 units). Of the owned residences, 37
residences (1,369 units) were subject to permanent mortgage financing and 68
residences (2,739 units) were unencumbered. The 175 residences in operation as
of June 30, 1999 had an average occupancy rate of approximately 74.3% and an
average monthly rental rate of approximately $1,881 per unit. Upon completion
of its development activities (as discussed below), the Company expects to have
185 residences (approximately 7,150 units) included in its operating results by
December 31, 1999.
As of June 30, 1999, the Company had reorganized its operating
infrastructure including (i) the hiring of a new chief operating officer and new
chief financial officer, (ii) the expansion from three to five operating
regions, (iii) the addition of eight operations supervisors, and (iv) the
expansion of its marketing, quality assurance and information technology
resources.
Stabilized Residences
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Stabilized Residences are defined as those residences which either (i) had
achieved a 95% occupancy rate as of the beginning of the period or (ii) were
operating for more than twelve months prior to the beginning of such reporting
period, regardless of the level of occupancy achieved. For the June 1999
Quarter, the Company had 127 Stabilized Residences (4,851 units) with an average
occupancy rate of 83.9% and an average monthly rental rate of $1,860 per unit as
compared to 73 Stabilized Residences (2,642 units) with an average occupancy
rate of 92.1% and an average monthly rental rate of $1,772 per unit for the June
1998 Quarter. This reduction in occupancy rates for Stabilized Residences has
primarily been a result of slower fill-up associated with the 54 residences
(2,209 units) which were added to Stabilized Residence results subsequent to the
June 1998 Quarter. By comparison, occupancy rates for the 73 Stabilized
Residences which were operating throughout both periods (the "Same Store
Stabilized Residences") were 91.0% for the June 1999 Quarter.
The Company reported revenue from Stabilized Residences of $23.0 million,
representing approximately 81% of total reported revenue for the June 1999
Quarter as compared to $12.9 million, representing approximately 61% of total
reported revenue for the
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June 1998 Quarter. The residence operating margin for Stabilized Residences for
the June 1999 Quarter was 33.5% as compared to 43.0% for the June 1998 Quarter.
The residence operating margin for 73 Same Store Stabilized Residences was 33.2%
for the June 1999 Quarter as compared to 43.0% for the June 1998 Quarter.
Operating margins were negatively affected by the diversion of management's time
and attention and, to a lesser extent, increased competition in certain markets
which resulted in slower fill-up in certain residences and increases in
operating expenses in a majority of the Company's residences.
Start-Up Residences
- -------------------
For the June 1999 Quarter, the Company had 48 Start-Up Residences (1,890
units) with an average occupancy rate of 48.7% and an average monthly rental
rate of $1,975 per unit as compared to 70 Start-Up Residences (2,772 units) with
an average occupancy rate of 48.0% and an average monthly rental rate of $1,890
per unit for the June 1998 Quarter. The Company reported revenue from Start-Up
Residences of $5.5 million, representing approximately 19% of total reported
revenue for the quarter ended June 30, 1999 as compared to $7.3 million,
representing approximately 35% of total reported revenue for the June 1998
Quarter. Residence operating margin for Start-Up Residences for the June 1999
Quarter was 17.8% as compared to 32.4% for the June 1998 Quarter.
Development Activities
- ----------------------
The Company has significantly reduced its development activities and number
of new residence openings in 1999 in order to focus on stabilizing its base of
operating residences and to respond to changes in market conditions. As a
result, the Company wrote-off previously capitalized development costs of $2.4
million in the fiscal year ended December 31, 1998 and $4.8 million through the
six months ended June 30, 1999 primarily associated with sites the Company no
longer intended to develop. The Company does not anticipate incurring any
similar write-offs relating to its current development activity.
The Company intends to complete construction and commence operations on 20
residences (approximately 800 units) during the fiscal year ended December 31,
1999, 10 of which (412 units) have commenced operations through June 30, 1999.
As of June 30, 1999, the Company had six residences (245 units) that had
received a certificate of occupancy but were not yet operating. In addition,
the Company had four residences (156 units) under construction as of the same
date. The Company expects to incur up to $30.0 million of
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capital expenditures and related start-up costs for the fiscal year ended
December 31, 1999 relating to its development activities, approximately $25.0
million of which was incurred through June 30, 1999. As of June 30, 1999, the
Company had working capital of approximately $17.5 million including cash and
marketable securities of $25.2 million ($8.3 million of which was restricted as
to its use during the third quarter of 1999). Based on its anticipated operating
results and its current balance sheet (including 68 unencumbered residences as
of June 30, 1999), the Company believes its cash on hand and cash available from
working capital resources will be sufficient to meet its capital needs over the
next 12 to 18 months.
Exploration of Strategic Alternatives
- -------------------------------------
The Company further announced that it will continue to explore strategic
alternatives to maximize shareholder value, including a possible strategic
business combination, merger or sale of the Company.
"With the restatement finally behind us, we want to assure our shareholders
and employees that we are committed to focusing on stabilizing our base of
operations and believe we have the financial resources to do so. In addition,
we will also continue to explore alternatives available to the Company in order
to maximize shareholder value," stated Dr. Keren Brown Wilson, President and
Chief Executive Officer of the Company.
Conference Call
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A conference call has been scheduled for Thursday, September 30, 1999 at
11:30AM EDT to discuss the press release. The call in number is (888) 550-5969
and reference "ALC."
There will be a recorded playback of the conference call available
beginning at 3:30PM EDT on Thursday, September 30, 1999 through the close of
business on Tuesday, October 5, 1999. The call in number for the playback is
(800) 938-3250 and reference.
The call will also be available to international callers on (402) 220-1154.
The playback number for international callers is (908) 228-5000.
Annual Meeting of Shareholders
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Separately, the Company announced that its 1999 annual meeting of
shareholders will be held at 8:00AM on November 16, 1999 at Kingstad Meeting
Center 5933 NE Win Sivers Drive, Portland, Oregon. Shareholders of record on
October 8, 1999 will be entitled to vote at such meeting.
Assisted Living Concepts, Inc. owns, operates, and develops assisted living
residences for older adults who need help with the activities of daily living,
such as bathing and dressing. In addition to housing, the Company provides
personal care, support services, and nursing services according to the
individual needs of its residents, as permitted by state regulation. This
combination of housing and services provides a cost efficient alternative and
provides an independent lifestyle for individuals who do not require the broader
array of medical and health services provided by nursing facilities. The
Company currently has operations or development activities in Oregon,
Washington, Idaho, Nebraska, Iowa, Arizona, Texas, New Jersey, Ohio,
Pennsylvania, Indiana, Louisiana, Florida, Michigan, Georgia, and South
Carolina.
This press release and statements made by or on behalf of Assisted Living
Concepts, Inc. 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 without limitation (i) the ability of the
Company to control costs and improve operating margins, (ii) the degree to which
the Company's future operating results and financial condition will be affected
by the securityholder litigation and the resulting distraction of management's
time and attention, (iii) the possibility that the Company may incur start-up
costs in excess of its present expectations, (iv) the ability of the Company to
develop an appropriate strategy to maximize shareholder value, (v) the
possibility the Company may not have the financial resources to stabilize its
base of operations, (vi) material changes in the regulatory environment for the
Company's business, and (vii) other risks described in Assisted Living Concept's
filings with the Securities and Exchange Commission. In light of such risks and
uncertainties, Assisted Living Concepts' actual results could differ materially
from such forward-looking statements. 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:
- --------------------
Assisted Living Concepts, Inc.
Dr. Keren Brown Wilson, President and Chief Executive Office
James Cruckshank, Vice President and Chief Financial Officer
(503) 252-6233
Broadgate Consultants, Inc.
Joseph W. McDonnell
(212) 232-2222
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