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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): September 25, 1996
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Commission file number 0-26980
ARV ASSISTED LIVING, INC.
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(Exact name of Registrant as specified in its charter)
CALIFORNIA 33-0160968
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
245 FISCHER AVENUE, D-1
COSTA MESA, CA 92626
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (714) 751-7400
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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 3-14 of Regulation S-X with
respect to the Registrant's acquisition of Shorehaven Manor ("Shorehaven"), a
120 unit retirement and congregate care facility located in Sterling Heights,
Michigan and to provide the audited financial statements of Shorehaven required
thereby. This information should be read in conjunction with the Registrant's
Form 8-K filed with the Commission on October 9, 1996.
Financial Statements of Real Estate Operations Acquired
Exhibit 99.1 "Historical Summary of Gross Income and Direct Operating Expenses
of Shorehaven Manor for the year ended December 31, 1995."
Exhibit 99.2 A statement showing the estimated taxable operating results for
Shorehaven based on its most recent 12-month period.
Exhibit 99.3 "Unaudited Pro Forma Combined Statement of Operations for the six
months ended September 30, 1996 and the Unaudited Pro Forma
Combined Statement of Operations for the year ended March 31, 1996
and the related notes thereon."
2
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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
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Patrick M. Donovan
Vice President, Finance
(Duly authorized officer)
Date: November 25, 1996
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EXHIBIT 99.1
SHOREHAVEN MANOR
Historical Summary of Gross Income and
Direct Operating Expenses
August 31, 1996
(With Independent Auditors' Report Thereon)
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[PEAT MARWICK LLP LOGO AND LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
ARV Assisted Living, Inc.:
We have audited the accompanying historical summary of gross income and direct
operating expenses of Shorehaven Manor for the year ended August 31, 1996. This
financial statement is the responsibility of Shorehaven Manor'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 the 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 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 income and direct operating
expenses referred to above presents fairly, in all material respects, the gross
income and direct operating expenses, as described in Note 2, of Shorehaven
Manor for the year ended August 31, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
October 7, 1996
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SHOREHAVEN MANOR
Historical Summary of Gross Income and
Direct Operating Expenses
Year ended August 31, 1996
<TABLE>
<S> <C>
Gross income
Rental income $1,589,540
Other income 629,860
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Total gross income 2,219,400
Direct operating expenses
Advertising 3,629
Bad debts 364
Beauty salon services 2,483
Cleaning and maintenance 44,352
Food service 193,223
Grounds and landscaping 17,662
Insurance 52,819
Office and miscellaneous 40,434
Painting and decorating 9,897
Payroll and benefits 476,608
Real estate taxes 115,730
Repairs and replacements 19,247
Telephone 11,109
Utilities 106,899
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Total direct operating expenses 1,094,456
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Excess of gross income over direct operating expenses $1,124,944
==========
</TABLE>
See accompanying notes to historical summary of gross income and direct
operating expenses.
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SHOREHAVEN MANOR
Notes to Historical Summary of Gross Income and
Direct Operating Expenses
Year ended August 31, 1996
(1) Business
Shorehaven Manor is a congregate care community located in Sterling Heights,
Michigan whose mission is to provide residents with housing and assisted
care. Shorehaven Manor has 120 living units.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The historical summary of gross income and direct operating expenses
presents only specified revenues and expenses and is not a complete
presentation of Shorehaven Manor's revenues and expenses. The historical
summary has been prepared on the accrual basis of accounting.
(b) Gross Income
Gross income is comprised of monthly rental charges for Shorehaven
Manor's congregate care units as well as ancillary charges for services
such as housekeeping, beauty, and barber.
(c) Direct Operating Expenses
Direct operating expenses include only those costs comparable to the
proposed future operations of Shorehaven Manor. Costs such as
depreciation, amortization, management fees, interest, and attorneys'
fees are excluded from the historical summary.
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EXHIBIT 99.2
ARV Assisted Living, Inc.
Purchase of Shorehaven Manor
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 Shorehaven Manor for the year ended December 31, 1995
as if Shorehaven 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.
Estimate of Cash Flow:
Historical Operating Income $1,124,944
Less: Property Taxes (339,924)
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Pro Forma Estimate of Cash Flow 785,020
Estimate of Federal Taxable Income:
Pro Forma Estimate of Cash Flow 785,020
Less: Estimated Depreciation & Amortization
Expense (Federal Income Tax Basis) (272,143)
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Pro Forma Estimate of Federal Taxable Income $ 512,877
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EXHIBIT 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements give effect to
the acquisition of Shorehaven Manor. 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 six month period ended
September 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, nor are they necessarily indicative of the results of operations
which may be achieved in the future.
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ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ARVAL SHOREHAVEN(1) ADJUSTMENTS(4) COMBINED
------------ ------------- -------------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Assisted living facility revenues $ 25,479,000 $ 2,189,000 $ -- $ 27,668,000
Services 4,322,000 -- -- 4,322,000
Interest income 1,070,000 -- (470,000)(a) 600,000
Other income 2,192,000 -- -- 2,192,000
------------ ------------ ------------ ------------
Total revenue 33,063,000 2,189,000 (470,000) 34,782,000
EXPENSES
Assisted living facility operating expenses 16,395,000 1,141,000 -- 17,536,000
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 -- 262,000 (b) 1,293,000
Interest 1,544,000 -- -- 1,544,000
Other 395,000 -- -- 395,000
------------ ------------ ------------ ------------
Total expenses 33,653,000 1,141,000 262,000 35,056,000
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Income (loss) before income tax expense (590,000) 1,048,000 (732,000) (274,000)
Income tax expense (benefit) 375,000 356,000 (249,000)(c) 482,000
------------ ------------ ------------ ------------
Net income (loss) (965,000) 692,000 (483,000) (756,000)
============ ============ ============ ============
Preferred dividends declared $ 351,000 $ 351,000
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Net loss available for common shares $ (1,316,000) $ (1,107,000)
============ ============
Net loss per common share $ (0.21) $ (0.18)
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Weighted average common shares outstanding 6,246,000 6,246,000
============ ============
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
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ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ARVAL SHOREHAVEN(1) ADJUSTMENTS(4) COMBINED
------------ ------------- -------------- ----------
<S> <C> <C> <C> <C>
REVENUE:
Assisted living facility revenues $ 30,031,000 $ 1,346,000 $ -- $ 31,377,000
Services 2,708,000 -- -- 2,708,000
Interest income 1,278,000 -- (235,000)(a} 1,043,000
Other income 425,000 -- -- 425,000
------------ ------------ ------------ ------------
Total revenue 34,442,000 1,346,000 (235,000) 35,553,000
EXPENSES
Assisted living facility operating expenses 18,802,000 731,000 -- 19,533,000
Assisted living facility lease expenses 5,615,000 -- -- 5,615,000
General and administrative 3,244,000 -- -- 3,244,000
Depreciation and amortization 1,571,000 -- 131,000 (b) 1,702,000
Interest 2,653,000 -- -- 2,653,000
Other 795,000 -- -- 795,000
------------ ------------ ------------ ------------
Total expenses 32,680,000 731,000 131,000 33,542,000
------------ ------------ ------------ ------------
Income before income tax expense,
minority interest and extraordinary item 1,762,000 615,000 (366,000) 2,011,000
Income tax expense (benefit) 659,000 209,000 (124,000)(c) 744,000
------------ ------------ ------------ ------------
Income before minority interest and
extraordinary item 1,103,000 406,000 (242,000) 1,267,000
Minority interest in earnings of majority owned partnerships 105,000 -- -- 105,000
------------ ------------ ------------ ------------
Income before extraordinary item 998,000 406,000 (242,000) 1,162,000
Extraordinary item, loss from early extinguishment of debt,
net of income tax benefit (386,000) -- -- (386,000)
------------ ------------ ------------ ------------
Net income $ 612,000 $ 406,000 $ (242,000) $ 776,000
============ ============ ============ ============
Net income available for common shares $ 612,000 $ 776,000
============ ============
Net income per common share $ 0.07 $ 0.08
============ ============
Weighted average common shares outstanding 9,215,000 9,215,000
============ ============
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
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ARV ASSISTED LIVING, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(1) On September 25, 1996, the Company finalized the acquisition of
Shorehaven Manor ("Shorehaven") from Shorehaven Manor Limited
Partnership, a Michigan limited partnership. Shorehaven is a 120 unit
assisted living facility constructed in 1989 and located in the City of
Sterling Heights, Macomb County, Michigan. The purchase price of $9.4
million was paid for with cash on hand.
(2) The Unaudited Pro Forma Combined Balance Sheet at September 30, 1996 is
not included as the transaction mentioned in note (1) above is already
reflected in the September 30, 1996 consolidated balance sheet.
(3) The Unaudited Pro Forma Combined Statements of Operations for
the year ended March 31, 1996 and the six months ended September 30,
1996 present the historical operations of the Company and the pro forma
operations of the Company as if the acquisition described in note (1)
above had occurred at the beginning of each period. The operating
results of Shorehaven for the 12 month period ended June 30, 1996 are
included in the Unaudited Pro Forma Combined Statements of Operations
for the year ended March 31, 1996. The operating results for Shorehaven
for the six month period ended August 31, 1996 are included in the
Unaudited Pro Forma Combined Statements of Operations for the six
months ended September 30, 1996. The revenue and net income for the
period of March 1, 1996 through June 30, 1996 is $608,000 and $369,000,
respectively.
(4) Pro forma adjustments related to the acquisition described in note (1)
above are as follows:
a) To reflect the decrease in interest income due to cash used to
fund the acquisition mentioned in note (1) above, based upon
the rate of 5% earned on cash equivalents.
b) To reflect the new depreciation expense associated with the
acquisition.
c) To reflect the pro forma change in income tax expense
(benefit).
