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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 29, 1996
Commission file number 0-26980
ARV ASSISTED LIVING, INC.
(Exact name of Registrant as specified in its charter)
CALIFORNIA 33-0160968
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
245 FISCHER AVENUE, D-1
COSTA MESA, CA 92626
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 751-7400
<PAGE> 2
Item 7. Financial Statements and Exhibits
The Registrant submits this Form 8-K/A in order to supply the financial
statements and schedules required pursuant to Rule 3-05 of Regulation S-X with
respect to the Registrant's acquisitions of Northgate Park ("Northgate"), an
Ohio limited partnership and 50.8% of the limited partnership units of American
Retirement Villas Properties II ("ARVP II"), and to provide the audited
financial statements of Northgate and ARVP II required thereby. This
information should be read in conjunction with the Registrant's Forms 8-K filed
with the Commission on August 29, 1996 and August 23, 1996, respectively.
Financial Statements of Real Estate Operations Acquired
Exhibit 99.1 "Historical Summary of Gross Income and Direct Operating
Expenses of Northgate Park for the year ended December 31, 1995.
Exhibit 99.2 A statement showing the estimated taxable operating results for
Northgate based on its most recent 12-month period.
Exhibit 99.3 "Unaudited Pro Forma Combined Balance Sheet of ARV Assisted
Living, Inc. as of June 30, 1996, the Unaudited Pro Forma
Combined Statement of Operations for the Three Months Ended June
30, 1996 and the Unaudited Pro Forma Combined Statement of
Operations for the year ended March 31, 1996 and the related
notes thereon."
<PAGE> 3
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ARV Assisted Living, Inc.
By: /s/ Patrick M. Donovan
-----------------------------
Patrick M. Donovan
Vice President, Finance
(Duly authorized officer)
Date: October 29, 1996
<PAGE> 1
EXHIBIT 99.1
NORTHGATE PARK
Historical Summary of Gross Income
and Direct Operating Expenses
December 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE> 2
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
ARV Assisted Living, Inc.
We have audited the accompanying historical summary of gross income and direct
operating expenses of Northgate Park (Northgate), for the year ended December
31, 1995. This financial statement is the responsibility of Northgate's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the historical summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in that financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying historical summary of gross income and direct operating
expenses was prepared for inclusion in the Form 8-K/A of ARV Assisted Living,
Inc. and excludes certain revenue and expenses, described in note 2, that would
not be comparable to those resulting from the proposed future operations of the
property.
In our opinion, the historical summary of gross income and direct operating
expenses referred to above presents fairly, in all material respects, the
income and expenses, as described in note 2, of Northgate for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
Cincinnati, Ohio
September 9, 1996
<PAGE> 3
NORTHGATE PARK
Historical Summary of Gross Income
and Direct Operating Expenses
Year ended December 31, 1995
<TABLE>
<S> <C>
Gross income:
Apartment income $1,726,027
Elderly and congregate services income 55,846
Other resident services 10,326
----------
Total income 1,792,199
----------
Direct operating expenses:
Service expenses 597,109
Administrative expenses 224,742
Taxes and insurance 151,764
Operating and maintenance expenses 141,803
Utilities expenses 141,166
Other financial expenses 11,543
----------
Total direct operating expenses 1,268,127
----------
Excess of gross income over direct operating expenses $ 524,072
==========
See accompanying notes to historical summary of gross income
and direct operating expenses.
</TABLE>
<PAGE> 4
(1) ORGANIZATION
Northgate Park is a 126 unit independent living facility for elderly
residents. The project is located in Northgate, Hamilton County,
Ohio.
(2) BASIS OF PRESENTATION
The Historical Summary presents only specified gross income and direct
operating expenses of Northgate Park for the year ended December 31,
1995. The Historical Summary has been prepared on the accrual basis
of accounting.
GROSS INCOME
Northgate Park's revenues are generated from rental agreements with
tenants on a month-to-month basis. Only revenue from the rental
agreements and other resident services are included in total revenue.
All other revenue has been excluded from the Historical Summary, as
they are not comparable to the proposed operations of Northgate Park
DIRECT OPERATING EXPENSES
Expenses include costs associated with the rental operations and the
general administration of the facility, which are comparable to the
proposed future operations of Northgate Park. Certain expenses,
including interest, management fees, accounting, depreciation, and
amortization, have been excluded from the Historical Summary.
<PAGE> 1
EXHIBIT 99.2
ARV Assisted Living, Inc.
Purchase of Northgate Park
Pro Forma Estimates of Cash Flow and Federal Taxable Income
For the Year Ended December 31, 1995
The following unaudited pro forma estimates present the cash flow and the
Federal Taxable Income of Northgate Park for the year ended December 31, 1995
as if Northgate had been acquired on January 1, 1995. The pro forma does not
purport to represent operations of ARV as a whole nor does it purport to
represent actual or expected operations of the Company for any period in the
future. These estimates were prepared on the basis described in the
accompanying notes, which should be read in conjunction herewith.
<TABLE>
<S> <C>
Estimate of Cash Flow:
Historical Operating Income $ 524,072
Less:
Property Taxes (93,565)
---------
Pro Forma Estimate of Cash Flow $ 430,507
=========
Estimate of Federal Taxable Income:
Pro Forma Estimate of Cash Flow $ 430,507
Less: Estimated Depreciation and
Amortization Expense (Federal Income Tax Basis) (217,714)
---------
Pro Forma Estimate of Federal Taxable Income $ 212,793
=========
</TABLE>
<PAGE> 2
NORTHGATE PARK
Notes to Pro Forma Estimate of Cash Flow and Federal Taxable Income
For the Year Ended December 31,1995
(1) Historical Operating Income
Historical operating income is based upon the excess of operating
revenues over certain expenses of Northgate Park (the "Facility") for
the year ended December 31, 1995.
(2) Property Taxes
Property taxes are estimated based upon reassessment of the Property
at its purchase price.
<PAGE> 1
EXHIBIT 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements give effect to
the acquisitions of Northgate Park ("Northgate") and 50.8% of the limited
partnership units of American Retirement Villas Properties II ("ARVP II"). The
Unaudited Pro Forma Combined Financial Statements are based on the assumptions
and adjustments described in the accompanying notes and should be read in
conjunction therewith and in conjunction with the historical financial
statements of ARV Assisted Living, Inc. and subsidiaries ("ARVAL" or the
"Company") and the notes thereto included in the Company's report on Form 10-Q
as of and for the three month period ended June 30, 1996 and the Company's
consolidated financial statements as of and for the year ended March 31, 1996.
The Unaudited Pro Forma Combined Financial Statements do not purport to present
the financial position or the results of operations of ARVAL had the
transaction assumed therein occurred on the dates indicated, not are they
necessarily indicative of the results of operations which may be achieved in
the future.
<PAGE> 2
ARV ASSISTED LIVING AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
HISTORICAL OTHER PRO FORMA PRO FORMA
ARVAL ACQUISITIONS (1) ADJUSTMENTS (6) ARVAL
----------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Cash $42,109,000 $90,000 ($341,000) (a) $41,858,000
Fees receivable from affiliates 908,000 - - 908,000
Accounts receivable, net - 1,185,000 - 1,185,000
Deferred project costs 1,162,000 - - 1,162,000
Investments in real estate 8,652,000 - - 8,652,000
Other assets 2,574,000 76,000 (22,000) (b) 2,628,000
---------------- ----------------- ----------------- ---------------
Total current assets 55,405,000 1,351,000 (363,000) 56,393,000
Restricted cash 5,366,000 - - 5,366,000
Property, furniture and equipment 65,833,000 3,080,000 861,000 (c) 69,774,000
Notes receivable from affiliates 277,000 - - 277,000
Deferred tax asset 2,044,000 (5,000) - 2,039,000
Other non-current assets 6,641,000 45,000 (1,881,000) (c) 5,180,000
375,000 (d)
---------------- ----------------- ----------------- ---------------
Total non-current assets 80,161,000 3,120,000 (645,000) 82,636,000
---------------- ----------------- ----------------- ---------------
Total assets $135,566,000 $4,471,000 ($1,008,000) $139,029,000
================ ================= ================= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $5,369,000 638,000 - 6,007,000
Deferred revenue, current portion 46,000 7,000 - 53,000
Income tax payable 81,000 - 81,000
Amount due to Medicare 548,000 - 548,000
Notes payable, current portion 3,458,000 - - 3,458,000
Notes payable and other amounts due
to affiliates 121,000 10,000 (22,000) (b) 109,000
---------------- ----------------- ----------------- ---------------
Total current liabilities 8,994,000 1,284,000 (22,000) 10,256,000
Deferred revenue 1,397,000 - - 1,397,000
Notes payable, less current portion 71,744,000 360,000 - 72,104,000
---------------- ----------------- ----------------- ---------------
Total non-current liabilities 73,141,000 360,000 - 73,501,000
Total liabilities 82,135,000 1,644,000 (22,000) 83,757,000
Minority interest 1,131,000 - 1,256,000 (c) 2,387,000
Shareholders' equity:
Common stock 60,035,000 1,000 584,000 (e) 60,620,000
Accumulated equity (deficit) (7,735,000) 2,826,000 (2,617,000) (c) (7,735,000)
(209,000) (e)
---------------- ----------------- ----------------- ---------------
Total shareholders' equity 52,300,000 2,827,000 (2,242,000) 52,885,000
---------------- ----------------- ----------------- ---------------
Total liabilities and
shareholders' equity $135,566,000 $4,471,000 ($1,008,000) $139,029,000
================ ================= ================= ===============
<CAPTION>
ARVP II Northgate Pro Forma Pro Forma
Acquisition (2) Acquisition (3) Adjustments (7) Combined
---------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Cash $300,000 ($7,500,000) ($12,590,000) (a) $22,068,000
Fees receivable from affiliates - - - 908,000
Accounts receivable, net - - - 1,185,000
Deferred project costs - - - 1,162,000
Investments in real estate - - - 8,652,000
Other assets 1,194,000 - (46,000) (b) 3,776,000
---------------- ----------------- ----------------- ---------------
Total current assets 1,494,000 (7,500,000) (12,636,000) 37,751,000
Restricted cash - - - 5,366,000
Property, furniture and equipment 19,154,000 7,500,000 6,473,000 (c) 102,901,000
Notes receivable from affiliates - - - 277,000
Deferred tax asset - - - 2,039,000
Other non-current assets - - (150,000) (c) 5,030,000
---------------- ----------------- ----------------- ---------------
Total non-current assets 19,154,000 7,500,000 6,323,000 115,613,000
---------------- ----------------- ----------------- ---------------
Total assets $20,648,000 - ($6,313,000) $153,364,000
================ ================= ================= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities 946,000 - - 6,953,000
Deferred revenue, current portion 26,000 - - 79,000
Income tax payable - - - 81,000
Amount due to Medicare - - - 548,000
Notes payable, current portion - - - 3,458,000
Notes payable and other amounts due
to affiliates 46,000 - (46,000) (b) 109,000
---------------- ----------------- ----------------- ---------------
Total current liabilities 1,018,000 - (46,000) 11,228,000
Deferred revenue - - 1,397,000
Notes payable, less current portion 6,892,000 - - 78,996,000
---------------- ----------------- ----------------- ---------------
Total non-current liabilities 6,892,000 - - 80,393,000
Total liabilities 7,910,000 - (46,000) 91,621,000
Minority interest - - 6,471,000 (c) 8,858,000
Shareholders' equity:
Common stock - - - 60,620,000
Accumulated equity (deficit) 12,738,000 - (12,738,000) (c) (7,735,000)
---------------- ----------------- ----------------- ---------------
Total shareholders' equity 12,738,000 - (12,738,000) 52,885,000
---------------- ----------------- ----------------- ---------------
Total liabilities and
shareholders' equity $20,648,000 - ($6,313,000) $153,364,000
================ ================= ================= ===============
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
<PAGE> 3
ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
HISTORICAL OTHER PRO FORMA PRO FORMA
ARVAL ACQUISITIONS (1) ADJUSTMENTS (6) ARVAL
--------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue:
Assisted living facility revenues $13,446,000 $938,000 - $14,384,000
Therapy services revenue - 1,247,000 170,000 (f) 1,417,000
Management fees 612,000 - (16,000)(g) 596,000
Development fees 333,000 - - 333,000
Interest Income 817,000 - (69,000)(g) 748,000
Other income 137,000 5,000 - 142,000
--------------- ------------- --------------- ---------------
Total revenue 15,345,000 2,190,000 85,000 17,620,000
Expenses
Assisted living facility operating expenses 8,462,000 657,000 - 9,119,000
Assisted living facility lease expenses 2,747,000 - - 2,747,000
Therapy services operating expenses - 1,062,000 - 1,062,000
General and administrative 1,606,000 344,000 - 1,950,000
Depreciation and amortization 667,000 83,000 4,000 (h) 754,000
Discontinued project costs and accounts
receivable written-off 61,000 - - 61,000
Interest 1,401,000 35,000 - 1,436,000
--------------- ------------- --------------- ---------------
Total expenses 14,944,000 2,181,000 4,000 17,129,000
--------------- ------------- --------------- ---------------
Income before minority interest and
income tax expense 401,000 9,000 81,000 491,000
Minority interest - - - -
--------------- ------------- --------------- ---------------
Income before income tax expense 401,000 9,000 81,000 491,000
Income tax expense 150,000 3,000 21,000 (i) 174,000
--------------- ------------- --------------- ---------------
Net income (loss) $251,000 $6,000 $60,000 $317,000
=============== ============= =============== ===============
Net income (loss) available for common shares $251,000 $317,000
=============== ===============
Net income (loss) per common share $0.03 $0.04
=============== ===============
Weighted average common shares outstanding 8,805,000 42,573 (j) 8,847,573
=============== =============== ===============
<CAPTION>
ARVP II NORTHGATE PRO FORMA PRO FORMA
ACQUISITION (2) ACQUISITION (3) ADJUSTMENTS (7) COMBINED
--------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue:
Assisted living facility revenues $4,391,000 $481,000 ($234,000) $19,022,000
Therapy services revenue - - - 1,417,000
Management fees - - (164,000)(d) 432,000
Development fees - - - 333,000
Interest Income - - (157,000)(e) 497,000
(94,000)(e)
Other income 15,000 - - 157,000
--------------- ------------- --------------- ---------------
Total revenue 4,406,000 481,000 (649,000) 21,858,000
Expenses
Assisted living facility operating expenses 3,373,000 318,000 - 12,810,000
Assisted living facility lease expenses - - - 2,747,000
Therapy services operating expenses - - - 1,062,000
General and administrative - - - 1,950,000
Depreciation and amortization 412,000 52,000 123,000 (f) 1,296,000
(45,000)(g)
Discontinued project costs and accounts
receivable written-off - - - 61,000
Interest 145,000 - - 1,581,000
--------------- ------------- --------------- ---------------
Total expenses 3,930,000 370,000 78,000 21,507,000
--------------- ------------- --------------- ---------------
Income before minority interest and
income tax expense 476,000 111,000 (727,000) 351,000
Minority interest (232,000) - - (232,000)
--------------- ------------- --------------- ---------------
Income before income tax expense 244,000 111,000 (727,000) 119,000
Income tax expense 181,000 42,000 (276,000)(h) 121,000
--------------- ------------- --------------- ---------------
Net income (loss) $63,000 $69,000 ($451,000) ($2,000)
=============== ============= =============== ===============
Net income (loss) available for common shares ($2,000)
===============
Net income (loss) per common share ($0.00)
===============
Weighted average common shares outstanding
8,847,573
===============
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
<PAGE> 4
ARV ASSISTED LIVING AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
HISTORICAL OTHER PRO FORMA PRO FORMA
ARVAL ACQUISITIONS (1) ADJUSTMENTS (6) ARVAL
---------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES:
Assisted living facility revenues $25,479,000 $3,615,000 - $29,094,000
Therapy services revenue - 4,766,000 680,000 (f) 5,446,000
Management fees 2,822,000 - (67,000)(g) 2,755,000
Development fees 1,500,000 - - 1,500,000
Interest income 1,070,000 - (327,000)(g) 743,000
Other income 2,192,000 58,000 - 2,250,000
---------------- ------------------ ---------------- ----------------
Total revenue 33,063,000 8,439,000 286,000 41,788,000
EXPENSES
Assisted living facility operating expenses 16,395,000 5,651,000 - 22,046,000
Assisted living facility lease expenses 6,644,000 - - 6,644,000
Therapy services operating expenses - 1,537,000 - 1,537,000
General and administrative 7,644,000 - - 7,644,000
Depreciation and amortization 1,031,000 328,000 16,000 (h) 1,375,000
Discontinued project costs and accounts
receivable written-off 395,000 - - 395,000
Interest 1,544,000 86,000 - 1,630,000
---------------- ------------------ ---------------- ----------------
Total expenses 33,653,000 7,602,000 16,000 41,271,000
Income (loss) before minority interest and ---------------- ------------------ ---------------- ----------------
income tax expense (590,000) 837,000 270,000 517,000
Minority interest - - - -
---------------- ------------------ ---------------- ----------------
Income (loss) before income tax expense (590,000) 837,000 270,000 517,000
Income tax expense 375,000 308,000 92,000 (i) 775,000
---------------- ------------------ ---------------- ----------------
Net income (loss) (965,000) 529,000 178,000 (258,000)
================ ================== ================ ================
Preferred dividends declared $351,000 $351,000
---------------- ----------------
Net loss available for common shares ($1,316,000) ($609,000)
================ ================
Net loss per common share ($0.21) ($0.10)
================ ================
Weighted average common shares outstanding 6,246,000 42,573 (j) 6,288,573
================ ================ ================
<CAPTION>
ARVP II Northgate Pro Forma Pro Forma
Acquisition (2) Acquisition (3) Adjustments (7) Combined
---------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES:
Assisted living facility revenues $14,595,000 $1,792,000 - $45,481,000
Therapy services revenue - - - 5,446,000
Management fees - - (599,000)(d) 2,156,000
Development fees - - - 1,500,000
Interest income - - (630,000)(e) (262,000)
(375,000)(e)
Other income 174,000 - - 2,424,000
---------------- ------------------ ---------------- ----------------
Total revenue 14,769,000 1,792,000 (1,604,000) 56,745,000
EXPENSES
Assisted living facility operating expenses 10,474,000 1,268,000 - 33,788,000
Assisted living facility lease expenses - - - 6,644,000
Therapy services operating expenses - - - 1,537,000
General and administrative - - - 7,644,000
Depreciation and amortization 2,076,000 209,000 496,000 (f) 3,973,000
(183,000)(g)
Discontinued project costs and accounts
receivable written-off - - - 395,000
Interest 572,000 - - 2,202,000
---------------- ------------------ ---------------- ----------------
Total expenses 13,122,000 1,477,000 313,000 56,183,000
Income (loss) before minority interest and ---------------- ------------------ ---------------- ----------------
income tax expense 1,647,000 315,000 (1,917,000) 562,000
Minority interest (802,000) - - (802,000)
---------------- ------------------ ---------------- ----------------
Income (loss) before income tax expense 845,000 315,000 (1,917,000) (240,000)
Income tax expense 287,000 107,000 (652,000)(h) 517,000
---------------- ------------------ ---------------- ----------------
Net income (loss) 1,360,000 422,000 (2,569,000) 277,000
================ ================== ================ ================
Preferred dividends declared $351,000
----------------
Net loss available for common shares ($74,000)
================
Net loss per common share ($0.01)
================
Weighted average common shares outstanding 6,288,573
================
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
<PAGE> 5
ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(1) Since March 31, 1996, the Company has acquired Nature Trail Retirement
Community ("Amber Wood"), a 187 unit retirement and assisted living
facility, the majority interest in Villa San Gabriel Limited
Partnership, which operates San Gabriel Retirement Villa ("Villa
Colima"), and SynCare, Inc. and subsidiaries, a diversified health
services provider. The depreciation charge included in the
accompanying unaudited pro forma combined statements of operations
represents the increased depreciation and amortization expense
associated with the aforementioned acquisitions.
(2) On May 16, 1996, the Company tendered for the limited partnership
units in ARVP II, at a net cash price per unit of $720. As of June
30, 1996, the Company had paid approximately $71,000 of the
acquisition-related costs. In July 1996, the Company paid $11.1
million for the 15,518 units tendered with cash on hand to acquire
these limited partnership units inclusive of other acquisition-related
costs. Therefore, when added to previously acquired units, the
Company owned approximately 15,628 units or approximately 44.6% of the
limited partnership units.
On July 26, 1996, the Company filed a second tender offer to purchase
up to 3,715 limited partnership units of ARVP II at a net cash price
per unit of $720, less second quarter distributions. The offer closed
on August 23, 1996 and approximately 2,148 unitholders tendered their
units representing approximately 6.2% of all units for a total costs to
the Company of approximately $1.5 million. When added to the
previously acquired units, the Company now owns 17,776 units or
approximately 50.8% of the limited partnership units of ARVP II.
(3) On August 29, 1996, the Company acquired Northgate Park ("Northgate),
a 126 unit independent living facility located in the city of
Cincinnati, Hamilton County, Ohio. The purchase price of $7.5 million
was paid for with cash on hand. The depreciation charge included in
the accompanying unaudited pro forma combined statements of operations
represents the new depreciation expense associated with the
aforementioned acquisition.
(4) The Unaudited Pro Forma Combined Balance Sheet at June 30, 1996
presents the historical balance sheet of the Company as of June 30,
1996, the pro forma balance sheet of the Company as if the
acquisitions described in note (1) above had been completed as of June
30, 1996, and the pro forma balance sheet of the Company after giving
effect to the acquisitions described in notes (2) and (3) above as if
the events had also occurred on June 30, 1996.
(5) The Unaudited Pro Forma Combined Statement of Operations for the year
ended March 31, 1996 and the three months ended June 30, 1996 present
the historical operations of the Company, the pro forma operations of
the Company as if the acquisitions described in note (1) above had
occurred at the beginning of each period, and the pro forma combined
operations of the Company as if the acquisitions described in notes
(2) and (3) had occurred at the beginning of each period.
1
<PAGE> 6
(6) Pro forma adjustments related to acquisitions described in note (1)
above are as follows:
a) To reflect the use of cash for the purchase of the limited
partnership interests described in note (1) above
b) To eliminate amounts owed to/from entities acquired
c) To record the assets and liabilities acquired in connection
with the purchase of the majority partnership interest at fair
value, minority interest and the elimination of the investment
and partners' equity in the limited partnerships referenced in
note (1) above
d) To record the goodwill in connection with the purchase of
SynCare, Inc. and subsidiaries
e) To record the stock issued in connection with the purchase and
the elimination of accumulated shareholders' equity in
consolidation of the entities
f) To reflect the additional revenue related to additional cost
reimbursement for entities acquired
g) To eliminate management fees and interest income from
entities acquired
h) To reflect the new depreciation and amortization expense
associated with the acquisitions
i) To reflect the pro forma change in income tax expense
(benefit)
j) To reflect additional shares issued in conjunction with the
acquisition, net of the shares subject to a three year
earn-out agreement.
(7) Pro forma adjustments for the acquisition described in notes (2) and
(3) above are as follows:
a) To reflect the use of cash subsequent to June 30, 1996 for the
purchase of the additional partnership interests in ARVP II to
increase the Company's limited partnership ownership interest
to 50.8%
b) To eliminate amounts owed to/from entities acquired
c) To record the assets and liabilities acquired in connection
with the purchase of the majority partnership interest at fair
value, minority interest and the elimination of the investment
and partners' equity in ARVP II
d) To reflect the decrease in property management and partnership
administration fees received by the Company
e) To reflect the decrease in interest income due to cash used to
fund the acquisitions mentioned in notes (2) and (3) above
f) To reflect the new depreciation expense associated with the
acquisitions mentioned in notes (2) and (3) above
g) To reflect the change in the estimated useful lives of ARVP
II's buildings in conjunction with the acquisition mentioned
in note (2) above
h) To reflect the pro forma change in income tax expense
(benefit)
1
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