<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): June 18, 1996
Commission file number 0-26980
ARV ASSISTED LIVING, INC.
CALIFORNIA 33-016098
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
33-95712
(COMMISSION FILE NO.)
245 FISCHER AVENUE, D-1 92626
COSTA MESA, CA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
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 acquisition of a majority interest in San Gabriel
Retirement Villa ("Villa Colima") and to provide the audited financial
statements of Villa Colima required thereby. The Registrant also submits this
Form 8-K/A in order to supply the financial statements and schedules required
pursuant to Rule 3-14 of Regulation S-X with respect to the Registrant's
acquisition of Nature Trail Retirement Community ("Amber Wood") and to provide
the audited Historical Summary of Gross Income and Direct Operating Expenses of
Amber Wood required thereby. This information should be read in conjunction
with the Registrant's Form 8-K filed with the Commission on July 3, 1996.
(a) Financial Statements of Business Acquired
(1) "Financial Statements of San Gabriel Retirement Villa (dba
Villa Colima) (A California Limited Partnership) December 31,
1995, 1994, 1993 with Independent Auditors' Report Thereon."
(b) Financial Statements of Real Estate Operations Acquired
(1) "Historical Summary of Gross Income and Direct Operating
Expenses of Nature Trail Retirement Community ("Amber Wood" )
for the year ended December 31, 1995."
(2) A statement showing the estimated taxable operating results
for Amber Wood based on its most recent 12-month period.
(3) "Unaudited Proforma Combined Balance Sheet of ARV Assisted
Living, Inc. As of June 30, 1996 and 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."
1
<PAGE> 3
SAN GABRIEL RETIREMENT VILLA
(dba Villa Colima)
(A California Limited Partnership)
Financial Statements
December 31, 1995, 1994 and 1993
(With Independent Auditors' Report Thereon)
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
The General Partners of
San Gabriel Retirement Villa:
We have audited the accompanying balance sheets of San Gabriel Retirement Villa
(dba Villa Colima), a California limited partnership, as of December 31, 1995
and 1994 and the related statements of operations, partners' capital and cash
flows for each of the years in the three-year period ended December 31, 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of San Gabriel Retirement Villa
(dba Villa Colima) as of December 31, 1995 and 1994 and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
Orange County, California
March 1, 1996
<PAGE> 5
SAN GABRIEL RETIREMENT VILLA
(dba Villa Colima)
(A California Limited Partnership)
Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
------------- ----------
<S> <C> <C>
Property held for investment, at cost (note 3):
Land $ 635,985 635,985
Buildings and improvements 3,384,164 3,380,680
Furniture, fixtures and equipment 132,226 115,380
------------- ----------
4,152,375 4,132,045
Less accumulated depreciation (1,075,434) (948,802)
------------- ----------
Net property held for investment 3,076,941 3,183,243
Cash 116,984 169,385
Prepaid expenses and other assets 32,689 26,144
Loan fees, less accumulated amortization of $6,729 in 1995 and
$3,624 in 1994 15,012 18,117
------------- ----------
$ 3,241,626 3,396,889
============= ==========
LIABILITIES AND PARTNERS' CAPITAL
Note payable (note 3) $ 445,664 544,564
Accounts payable and accrued liabilities 63,433 65,569
Amounts payable to general partner (note 4) 8,797 653
Distributions payable to partners 107,132 114,903
------------- ----------
Total liabilities 625,026 725,689
Partners' capital (note 2) 2,616,600 2,671,200
------------- ----------
$ 3,241,626 3,396,889
============= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
SAN GABRIEL RETIREMENT VILLA
(dba Villa Colima)
(A California Limited Partnership)
Statements of Operations
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rent $ 1,624,709 1,530,932 1,511,120
Other 29,589 22,034 21,740
------------- ---------- ----------
Total revenues 1,654,298 1,552,966 1,532,860
------------- ---------- ----------
Costs and expenses:
Rental property operations (note 4) 1,015,854 957,333 916,942
General and administrative (note 4) 182,344 154,510 163,555
Interest 45,693 52,856 36,423
------------- ---------- ----------
Costs and expenses 1,243,891 1,164,699 1,116,920
------------- ---------- ----------
Income before depreciation and
amortization 410,407 388,267 415,940
Depreciation and amortization 140,909 144,449 147,586
------------- ---------- ----------
Net income $ 269,498 243,818 268,354
============= ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
SAN GABRIEL RETIREMENT VILLA
(dba Villa Colima)
(A California Limited Partnership)
Statements of Partners' Capital
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
TOTAL
GENERAL LIMITED PARTNERS'
PARTNERS PARTNERS CAPITAL
------------- ---------- ----------
<S> <C> <C> <C>
Balance (deficit) at a December 31, 1992 $ (88,452) 2,974,244 2,885,792
Distributions to partners (note 2) (3,143) (311,133) (314,276)
Net income (note 2) 2,684 265,670 268,354
------------- ---------- ----------
Balance (deficit) at December 31, 1993 (88,911) 2,928,781 2,839,870
Distributions to partners (4,126) (408,362) (412,488)
Net income 2,438 241,380 243,818
------------- ---------- ----------
Balance (deficit) at December 31, 1994 (90,599) 2,761,799 2,671,200
Distributions to partners (3,241) (320,857) (324,098)
Net income 2,695 266,803 269,498
------------- ---------- ----------
Balance (deficit) at December 31, 1995 $ (91,145) 2,707,745 2,616,600
============= ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
SAN GABRIEL RETIREMENT VILLA
(dba Villa Colima)
(A California Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 269,498 243,818 268,354
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 140,909 144,449 147,586
Gain on sale of property and other assets (8,325) -- --
Change in assets and liabilities:
(Increase) decrease in prepaid expenses and other
assets (6,545) 2,653 (2,588)
Increase (decrease) in amounts payable to general
partner 8,144 (2,362) (3,413)
(Decrease) increase in accounts payable and
accrued liabilities (2,136) 25,163 (8,853)
------------- --------- ---------
Net cash provided by operating
activities 401,545 413,721 401,086
------------- --------- ---------
Cash flows used in investing activities:
Capital expenditures (31,502) (27,394) (13,470)
Proceeds from sale of property and other assets 8,325 -- --
------------- --------- ---------
Net cash used in investing activities (23,177) (27,394) (13,470)
------------- --------- ---------
Cash flows from financing activities:
Proceeds from long-term debt -- -- 550,000
Payment of loan fees -- -- (21,741)
Principal repayments of long-term debt (98,900) (5,436) (362,667)
Net payments under line-of-credit agreement -- -- (50,000)
Distributions paid (331,869) (418,311) (326,151)
------------- --------- ---------
Net cash used in financing activities (430,769) (423,747) (210,559)
------------- --------- ---------
Net increase (decrease) in cash (52,401) (37,420) 177,057
Cash at beginning of year 169,385 206,805 29,748
------------- --------- ---------
Cash at end of year $ 116,984 169,385 206,805
============= ========= =========
Supplemental disclosure of cash flow information - cash
paid during the year for interest $ 44,493 52,856 34,123
============= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
SAN GABRIEL RETIREMENT VILLA
(dba Villa Colima)
(A California Limited Partnership)
Notes to Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The Partnership maintains its records on the accrual method of
accounting for financial reporting and Federal and state tax purposes.
PROPERTY HELD FOR INVESTMENT
Property held for investment is recorded at cost less accumulated
depreciation. Depreciation is computed using the straight-line method
over the estimated useful lives of buildings and improvements and
furniture, fixtures and equipment, ranging from 3 to approximately 30
years. Provision is made for impairment loss if the Partnership's
management determines a decline in property value is other than
temporary.
LOAN FEES
Amortization of loan fees is computed using the straight-line method
over the term of the related note payable.
RENTAL INCOME
Rent agreements with tenants are on a month-to-month basis. Advance
deposits are applied to the first month's rent.
INCOME TAXES
Under provisions of the Internal Revenue Code and California Revenue
and Taxation Code, partnerships are generally not subject to income
taxes. For tax purposes, any income or losses realized are those of
the individual partners, not the Partnership.
(2) ORGANIZATION AND PARTNERSHIP AGREEMENT
San Gabriel Retirement Villa is a California limited partnership (the
Partnership) which owns and operates the project under the name of
Villa Colima. Partnership interests were offered for sale to
California residents only. The Partnership was formed on June 21,
1985 to construct and operate a residential retirement facility in
Walnut, California. The term of the Partnership is to continue until
December 31, 2046, subject to certain early dissolution provisions as
stipulated in the Partnership Agreement. The residential retirement
facility commenced operations in 1987.
Limited Partner units (minimum of 2 units per investor) were offered
for sale, each unit representing a $1,000 capital contribution, with a
maximum number of units offered totaling 5,300units. The Partnership's
initial capitalization represented a capital investment of $5,185,558.
No additional capital contributions are required from any Limited
Partner. Under the Partnership Agreement, the maximum liability of
the Limited Partners is the amount of their capital contributions and
share of undistributed profits.
The Managing General Partner is ARV Assisted Living, Inc. (ARVAL), a
California corporation, and the individual General Partners are John
A. Booty, Gary L. Davidson, John S. Jason, David P. Collins
2
<PAGE> 10
SAN GABRIEL RETIREMENT VILLA
(dba Villa Colima)
(A California Limited Partnership)
Notes to Financial Statements, Continued
and Tony Rota. The individual General Partners are shareholders of
the Managing General Partner. The General Partners are not required
to make capital contributions to the Partnership.
Profits and losses for financial and income tax reporting purposes
shall be allocated 1% to the General Partners and 99% to the Limited
Partners. Cash available for distribution is to be distributed 1% to
the General Partners and 99% to the Limited Partners.
Upon any sale or refinancing of the Partnership's real property, the
proceeds are to be distributed 1% to the General Partners and 99% to
the Limited Partners until the Limited Partners have received cash from
all sources equal to their capital contributions plus a 6% per annum
cumulative return thereon. Thereafter, distributions are to be 15% to
the General Partners and 85% to the Limited Partners.
(3) NOTE PAYABLE
The Partnership has a note payable to a bank bearing interest at 9.5%
and secured by a deed of trust on the Partnership's property. The
note is payable in monthly principal and interest installments of
$4,858 and all unpaid principal and interest is due on November 15,
2000.
The annual principal payments on the note payable are due as follows:
<TABLE>
<S> <C>
Year ending December 31:
1996 $ 16,076
1997 17,694
1998 19,476
1999 21,437
2000 370,981
--------------
$ 445,664
==============
</TABLE>
(4) TRANSACTIONS WITH AFFILIATES
The Partnership has an agreement with ARVAL providing for a property
management fee of 5% of gross operating revenues and a partnership
management fee of 10% of cash flow before distribution, as defined in the
Partnership Agreement. During 1995, 1994 and 1993, the property
management fee and partnership management fee under this agreement
amounted to $82,775, $77,648 and $76,643 and $45,743, $43,141 and
$46,216, respectively, and are included in rental property operations and
general and administrative expenses, respectively, in the accompanying
statements of operations.
ARVAL pays certain expenses such as repairs and maintenance, supplies,
payroll and retirement benefit expenses on behalf of the Partnership and
is subsequently reimbursed by the Partnership. The retirement benefit
expense consists of contributions made to an employee stock ownership
plan (ESOP). The ESOP contribution expense allocated to the Partnership
amounted to $1,787, $11,474 and $12,000 in 1995, 1994 and 1993,
respectively. The total reimbursements to ARVAL, including the
retirement benefit expense, amounted to approximately $546,993, $487,000
and $474,000 for 1995, 1994 and 1993, respectively, and are included in
rental property operations and general and administrative expenses in the
accompanying statements of operations. Amounts payable to general
partner includes reimbursements due to ARVAL.
3
<PAGE> 11
SAN GABRIEL RETIREMENT VILLA
(dba VILLA COLIMA)
(A California Limited Partnership)
Notes to Financial Statements, Continued
(5) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107 (SFAS 107), "Disclosures about
Fair Value of Financial Instruments." The estimated fair value amounts
have been determined using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily
required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that could be realized in current market
exchange. The use of different market assumptions or estimation
methodologies may have a material impact on the estimated fair value
amounts.
Fair value information related to financial instruments is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------
FINANCIAL INSTRUMENT BOOK VALUE FAIR VALUE
-------------------------------- ----------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash $ 117 117
Notes payable 446 446
</TABLE>
CASH
The carrying amount for cash approximates fair value because these
instruments are demand deposits and do not present unanticipated interest
rate or credit concerns.
NOTES PAYABLE
The fair value of the notes payable approximates book value as the notes
payable bears a fixed rate of interest which management deems to be a
market rate of interest.
4
<PAGE> 12
NATURE TRAIL RETIREMENT COMMUNITY
Historical Summary of Gross Revenue and
Direct Operating Expenses
December 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE> 13
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
ARV Assisted Living, Inc.:
We have audited the accompanying historical summary of gross revenue and direct
operating expenses of Nature Trail Retirement Community (Nature Trail) for the
year ended December 31, 1995. This financial statement is the responsibility
of Nature Trail'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 financial statement 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 revenue and direct operating
expenses was prepared for inclusion in the Form 8-K/A of ARV Assisted Living,
Inc. and excludes certain material revenues and expenses, as 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 revenue and direct operating
expenses referred to above presents fairly, in all material respects, the gross
revenue and direct operating expenses, as described in note 2, of Nature Trail
Retirement Community for the year ended December 31, 1995 in conformity with
generally accepted accounting principles.
Fort Lauderdale, Florida
June 10, 1996
<PAGE> 14
NATURE TRAIL RETIREMENT COMMUNITY
Historical Summary of Gross Revenue
and Direct Operating Expenses
Year ended December 31, 1995
<TABLE>
<S> <C>
Gross revenue:
Rental revenue $ 1,989,961
Other revenue 20,093
--------------
Total revenue 2,010,054
--------------
Direct operating expenses:
Administrative 153,019
Marketing 105,527
Food service 351,576
Assisted living 162,944
Housekeeping 92,712
Activities 33,274
Transportation 17,822
Maintenance 161,264
Utilities 149,777
Taxes 89,383
Insurance 80,491
--------------
Total expenses 1,397,789
--------------
Excess of revenue over direct operating expenses $ 612,265
==============
</TABLE>
See accompanying notes to historical summary.
<PAGE> 15
Notes to Historical Summary of Gross Revenue
and Direct Operating Expenses
December 31, 1995
(1) BUSINESS
Nature Trail Retirement Community (Nature Trail) is an independent and
assisted living facility (ALF) located in Port Richey, Florida. The
mission at Nature Trail is to provide residents with housing and
assisted living care. Nature Trail has 187 living units (124
independent living units and 63 ALF units).
(2) BASIS OF PRESENTATION
The historical summary presents only specified revenues and expenses
and is not a complete presentation of Nature Trail's revenues and
expenses. The historical summary has been prepared on the accrual
basis of accounting.
(a) Gross Revenue
Gross revenue is comprised of monthly rental charges for Nature Trail's
independent living and ALF units as well as ancillary charges for
services such as housekeeping, beauty and barber.
(b) Direct Operating Expenses
Direct operating expenses include only those costs comparable to the
proposed future operations of Nature Trail. Costs such as
depreciation, amortization, management fees and attorneys' fees are
excluded from the historical summary.
<PAGE> 16
ARV Assisted Living, Inc.
Purchase of Amber Wood
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 Amber Wood (the "Facility") for the year ended
December 31, 1995 as if the Facility 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 $612,265
Less:
Property Taxes (4,182)
--------
Pro Forma Estimate of Cash Flow $608,083
========
Estimate of Federal Taxable Income:
Pro Forma Estimate of Cash Flow $608,083
Less: Estimated Depreciation and
Amortization Expense (Federal Income Tax Basis) (177,143)
--------
Pro Forma Estimate of Federal Taxable Income $430,940
========
</TABLE>
12
<PAGE> 17
AMBER WOOD
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 Nature Trail Retirement Community
("Amber Wood") for the year ended December 31, 1995.
(2) Property Taxes
Property taxes are estimated based upon reassessment of the Property
at its purchase price.
13
<PAGE> 18
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements give effect to
the acquisition of Nature Trail Retirement Community ("Amber Wood"), a 187 unit
retirement and assisted living facility, and the acquisition of the majority
interest in Villa San Gabriel Limited Partnership, which operates San Gabriel
Retirement Villa ("Villa Colima"). 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 transactions assumed therein occurred on the dates
indicated, nor are they necessarily indicative of the results of operations
which may be achieved in the future.
14
<PAGE> 19
ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ASSETS ARVAL VILLA COLIMA ADJUSTMENTS COMBINED
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Cash $ 42,109,000 $ 37,000 $ (341,000)(a) $ 41,805,000
Fees receivable from affiliates 908,000 - - 908,000
Deferred project costs 1,162,000 - - 1,162,000
Investments in real estate 8,652,000 - - 8,652,000
Other assets 2,574,000 64,000 (22,000)(b) 2,616,000
------------ ---------- ----------- ------------
Total current assets 55,405,000 101,000 (363,000) 55,143,000
Restricted cash 5,366,000 - - 5,366,000
Property, furniture and equipment 65,833,000 3,030,000 861,000 (c) 69,724,000
Notes receivable from affiliates 277,000 - - 277,000
Deferred tax asset 2,044,000 - - 2,044,000
Other non-current assets 6,641,000 13,000 (1,881,000)(c) 4,773,000
------------ ---------- ----------- ------------
Total non-current assets 80,161,000 3,043,000 (1,020,000) 82,184,000
------------ ---------- ----------- ------------
Total assets $135,566,000 $3,144,000 $(1,383,000) $137,327,000
============ ========== =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 5,369,000 150,000 - 5,519,000
Deferred revenue, current portion 46,000 7,000 - 53,000
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 8,994,000 167,000 (22,000) 9,139,000
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 82,135,000 527,000 (22,000) 82,640,000
Minority interest 1,131,000 - 1,256,000 (c) 2,387,000
Shareholders' equity:
Common stock 60,035,000 - - 60,035,000
Accumulated equity (deficit) (7,735,000 2,617,000 (2,617,000)(c) (7,735,000)
------------ ---------- ----------- ------------
Total shareholders' equity 52,300,000 2,617,000 (2,617,000) 52,300,000
------------ ---------- ----------- ------------
Total liabilities and shareholders' equity $135,566,000 $3,144,000 $(1,383,000) $137,327,000
============ ========== =========== ============
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
<PAGE> 20
ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
HISTORICAL AMBER WOOD VILLA COLIMA PRO FORMA PRO FORMA
ARVAL ACQUISITION ACQUISITION ADJUSTMENTS COMBINED
------------ ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
REVENUE:
Assisted living facility revenues $13,446,000 $543,000(d) $395,000(d) $ - $14,384,000
Management fees 612,000 - - (16,000)(e) 596,000
Development fees 333,000 - - - 333,000
Interest income 817,000 - - (69,000)(h) 748,000
Other income 137,000 4,000(d) 1,000(d) - 142,000
----------- -------- -------- -------- -----------
Total revenue $15,345,000 $547,000 $396,000 $(85,000) $16,203,000
EXPENSES
Assisted living facility operating expenses $ 8,462,000 $379,000(f) $278,000(f) - $ 9,119,000
Assisted living facility lease expenses 2,747,000 - - - 2,747,000
General and administrative 1,606,000 - - - 1,606,000
Depreciation and amortization 667,000 41,000(g) 36,000(g) - 744,000
Discontinued project costs and accounts
receivable written-off 61,000 - - - 61,000
Interest 1,401,000 - 10,000(h) - 1,411,000
----------- -------- -------- -------- -----------
Total expenses $14,944,000 $420,000 $324,000 $ - $15,688,000
----------- -------- -------- -------- ----------
Income before income tax expense $ 401,000 $127,000 $ 72,000 $(85,000) $ 515,000
Income tax expense 150,000 43,000(i) 24,000(i) (29,000)(i) $ 188,000
----------- -------- -------- -------- -----------
Net income $ 251,000 $ 84,000 $ 48,000 $(56,000) $ 327,000
=========== ======== ======== ======== ===========
Net income available for common shares $ 251,000 $ 327,000
=========== ===========
Net income per common share $ 0.03 $ 0.04
=========== ===========
Weighted average common shares outstanding 8,805,000 8,805,000
=========== ===========
</TABLE>
See accompanying notes to unaudited pro forma combined financial
<PAGE> 21
ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
HISTORICAL AMBER WOOD VILLA COLIMA PRO FORMA PRO FORMA
ARVAL ACQUISITION ACQUISITION ADJUSTMENTS COMBINED
------------ ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Assisted living facility revenues $25,479,000 $1,990,000 (d) $1,625,000 (d) $ - $29,094,000
Management fees 2,822,000 - - (67,000)(e) 2,755,000
Development fees 1,500,000 - - - 1,500,000
Interest income 1,070,000 - - (327,000)(h) 743,000
Other income 2,192,000 20,000 (d) 30,000 (d) - 2,242,000
----------- ---------- ---------- --------- -----------
Total revenue $33,063,000 $2,010,000 $1,655,000 $(394,000) $36,334,000
EXPENSES
Assisted living facility operating
expenses $16,395,000 $1,398,000 (f) $1,131,000 (f) $ - $18,924,000
Assisted living facility lease
expenses 6,644,000 - - - 6,644,000
General and administrative 7,644,000 - - - 7,644,000
Depreciation and amortization 1,031,000 163,000 (g) 141,000 (g) - 1,335,000
Discontinued project costs and accounts
receivable written-off 395,000 - - - 395,000
Interest 1,544,000 - 46,000 (h) - 1,590,000
----------- ---------- ---------- --------- -----------
Total expenses $33,653,000 $1,561,000 $1,318,000 $ - $36,532,000
----------- ---------- ---------- --------- -----------
Income (loss) before income tax expense $ (590,000) $ 449,000 $ 337,000 $(394,000) $ (198,000)
Income tax expense 375,000 153,000 (i) 115,000 (i) (134,000)(i) 509,000
----------- ---------- ---------- --------- -----------
Net income (loss) $ (965,000) $ 296,000 $ 222,000 $(260,000) $ (707,000)
=========== ========== ========== ========= ===========
Preferred dividends declared $ 351,000 $ 351,000
----------- -----------
Net loss available for common shares $(1,316,000) $(1,058,000)
=========== ===========
Net loss per common share $ (0.21) $ (0.17)
=========== ===========
Weighted average common shares
outstanding 6,246,000 6,246,000
=========== ===========
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
<PAGE> 22
ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
I. On June 18, 1996, the Company completed the acquisition of Nature
Trail Retirement Community ("Amber Wood"), a 187 unit assisted living
facility located in the city of Port Richey, Pasco County, Florida,
for $6.2 million, which is reflected in the Company's consolidated
balance sheet as of June 30, 1996. The purchase price, including
personal property, was fully financed with the Company's cash on hand.
Beginning on July 1, 1995, the Company began tendering for the
Partnership units of Villa San Gabriel Limited Partnership, which
operates San Gabriel Retirement Villa ("Villa Colima"). The Company
made a final tender offer which began on May 6, 1996 and expired on
June 30, 1996. The final purchases of partnership units occurred
through August 1996 at which time the Company obtained a majority
interest in Villa Colima. During the final tender offer,
approximately 702 units or 13.5% of all limited partnership units were
acquired. Therefore, when added to the previously tendered units,
the Company now owns 2,697 units or approximately 52% of the total
limited partnership units. Villa Colima's purchase price of
approximately $1.95 million was fully financed over the course of the
year with cash on hand with the exception of approximately $311,000
which was paid in July and August 1996.
II. The Unaudited Pro Forma Combined Balance Sheet at June 30, 1996
presents the historical balance sheet of the Company as of June 30,
1996 and the pro forma balance sheet of the Company as if the
acquisition of a majority interest in Villa Colima had been completed
as of June 30, 1996.
III. 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 and the pro forma combined
operations of the Company as if the acquisitions described in note (1)
above had occurred at the beginning of each period.
IV. Pro forma adjustments are as follows:
A. To reflect the use of cash in July and August 1996 for the
purchase of the final partnership interests in Villa Colima to
increase the Company's limited partnership ownership interest
to 52%
B. To eliminate the receivables and payables between entities
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 partners'
equity in Villa Colima
D. To reflect the assisted living facility revenue and other
income of the acquired facilities
E. To reflect the decrease in property management and partnership
administration fees received from Villa Colima
F. To reflect the increase in assisted living facility operating
expenses
G. To reflect the new depreciation expense associated with the
acquisitions mentioned in note (1) above
H. To reflect in increase in interest expense associated with the
debt of Villa Colima and the decrease in interest income due
to cash used to fund the acquisitions mentioned in note (1)
above
I. To reflect the pro forma change in income tax expense
(benefit).
<PAGE> 23
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, thereunto duly authorized.
ARV Assisted Living, Inc.
By: /s/ Patrick M. Donovan
------------------------------
Patrick M. Donovan
Vice President Finance
(Duly authorized officer)
Date: September 3, 1996
