-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WcLBCDvuQ5WroQ5Vs5Njm2O9emMIfBBPlV5nN/EFqtKLF0PQHArng3i7vi7zbnPI PydFz3yURh68xZUQAKs32Q== 0000950134-96-002133.txt : 19960517 0000950134-96-002133.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950134-96-002133 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEVERLY ENTERPRISES INC /DE/ CENTRAL INDEX KEY: 0000812305 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 954100309 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09550 FILM NUMBER: 96565246 BUSINESS ADDRESS: STREET 1: 1200 S WALDRON RD STREET 2: STE 155 CITY: FORT SMITH STATE: AR ZIP: 72903 BUSINESS PHONE: 5014526712 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1996 1 ================================================================================ - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ----- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 ----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ COMMISSION FILE NUMBER 1-9550 BEVERLY ENTERPRISES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 95-4100309 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 5111 ROGERS AVENUE, SUITE 40-A FORT SMITH, ARKANSAS 72919-0155 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (501) 452-6712 INDICATE BY CHECK MARK WHETHER REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO ----- ----- SHARES OF REGISTRANT'S COMMON STOCK, $.10 PAR VALUE, OUTSTANDING, EXCLUSIVE OF TREASURY SHARES, AT APRIL 30, 1996 -- 100,051,266 - -------------------------------------------------------------------------------- ================================================================================ 2 BEVERLY ENTERPRISES, INC. FORM 10-Q MARCH 31, 1996 TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets ................... 2 Condensed Consolidated Statements of Income ............. 3 Condensed Consolidated Statements of Cash Flows ......... 4 Notes to Condensed Consolidated Financial Statements .... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ....................... 7 PART II -- OTHER INFORMATION Item 1. Legal Proceedings ........................................... 10 Item 6. Exhibits and Reports on Form 8-K ............................ 10
1 3 PART I BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND DECEMBER 31, 1995 (DOLLARS IN THOUSANDS)
MARCH 31, DECEMBER 31, 1996 1995 ----------- ----------- (UNAUDITED) (NOTE) ASSETS Current assets: Cash and cash equivalents ................................................... $ 50,054 $ 56,303 Accounts receivable - patient, less allowance for doubtful accounts: 1996--$26,809; 1995--$22,860 .............................................. 523,727 514,820 Accounts receivable - nonpatient, less allowance for doubtful accounts: 1996--$684; 1995--$497 .................................................... 11,810 15,995 Notes receivable ............................................................ 5,752 7,460 Operating supplies .......................................................... 57,270 59,109 Deferred income taxes ....................................................... 24,056 24,892 Prepaid expenses and other .................................................. 37,412 38,013 ----------- ----------- Total current assets ..................................................... 710,081 716,592 Property and equipment, net of accumulated depreciation and amortization: 1996--$596,692; 1995--$581,025 ............................................. 1,196,926 1,189,985 Other assets: Notes receivable, less allowance for doubtful notes: 1996--$4,931; 1995--$4,953 ............................................... 40,999 41,915 Designated and restricted funds ............................................. 58,941 57,082 Goodwill, net ............................................................... 384,146 380,681 Operating and leasehold rights and licenses, net ............................ 17,679 18,086 Other, net .................................................................. 101,674 102,120 ----------- ----------- Total other assets ....................................................... 603,439 599,884 ----------- ----------- $ 2,510,446 $ 2,506,461 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ............................................................ $ 130,191 $ 155,385 Short-term borrowings ....................................................... 29,000 78,000 Accrued wages and related liabilities ....................................... 153,187 134,391 Accrued interest ............................................................ 13,812 10,261 Other accrued liabilities ................................................... 84,136 88,869 Current portion of long-term obligations .................................... 37,447 84,639 Income taxes payable ........................................................ 1,607 -- ----------- ----------- Total current liabilities ................................................ 449,380 551,545 Long-term obligations .......................................................... 1,083,775 988,909 Deferred income taxes payable .................................................. 57,156 54,687 Other liabilities and deferred items ........................................... 84,525 90,987 Commitments and contingencies Stockholders' equity: Common stock, shares issued: 1996--103,893,435; 1995--102,618,241 .......... 10,389 10,262 Additional paid-in capital .................................................. 768,003 766,549 Retained earnings ........................................................... 97,353 83,657 Treasury stock, at cost: 3,972,208 shares .................................. (40,135) (40,135) ----------- ----------- Total stockholders' equity ............................................... 835,610 820,333 ----------- ----------- $ 2,510,446 $ 2,506,461 =========== ===========
NOTE: The balance sheet at December 31, 1995 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes. 2 4 BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1995 --------- --------- Net operating revenues ........................... $ 811,047 $ 795,619 Interest income .................................. 3,460 3,500 --------- --------- Total revenues ............................. 814,507 799,119 Costs and expenses: Operating and administrative: Wages and related ........................... 449,995 417,433 Other ....................................... 293,484 308,541 Interest ....................................... 23,145 20,549 Depreciation and amortization .................. 25,056 25,904 --------- --------- Total costs and expenses ................... 791,680 772,427 --------- --------- Income before provision for income taxes ......... 22,827 26,692 Provision for income taxes ....................... 9,131 10,143 --------- --------- Net income ....................................... $ 13,696 $ 16,549 ========= ========= Net income applicable to common shares ........... $ 13,696 $ 14,486 ========= ========= Net income per share of common stock ............. $ 0.14 $ 0.17 ========= ========= Shares used to compute net income per share ...... 99,978 87,304 ========= =========
Net income per share of common stock for the three months ended March 31, 1996 and 1995 were computed by dividing net income applicable to common shares by the weighted average number of shares of common stock outstanding during the period and the weighted average number of shares issuable upon exercise of stock options, calculated using the treasury stock method. For the three months ended March 31, 1995, net income applicable to common shares was computed by deducting preferred stock dividends from net income. During the fourth quarter of 1995, the Company exchanged its cumulative convertible exchangeable preferred stock into 5 1/2% convertible subordinated debentures. See accompanying notes. 3 5 BEVERLY ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) (IN THOUSANDS)
1996 1995 ---------- ---------- Cash flows from operating activities: Net income ............................................................................... $ 13,696 $ 16,549 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ......................................................... 25,056 25,904 Provision for reserves and discounts on patient, notes and other receivables, net ..... 6,550 2,455 Amortization of deferred financing costs .............................................. 1,893 1,078 Gains on dispositions of facilities and other assets, net ............................. (2,212) -- Deferred taxes ........................................................................ 3,264 1,070 Net decrease in insurance related accounts ............................................ (7,131) (1,962) Changes in operating assets and liabilities, net of acquisitions and dispositions: Accounts receivable - patient ..................................................... (16,211) (43,172) Operating supplies ................................................................ 1,610 794 Prepaid expenses and other receivables ............................................ (1,162) (1,612) Accounts payable and other accrued expenses ....................................... (5,166) 12,857 Income taxes payable .............................................................. 10,509 6,694 Other, net ........................................................................ (440) (221) ---------- ---------- Total adjustments .............................................................. 16,560 3,885 ---------- ---------- Net cash provided by operating activities ...................................... 30,256 20,434 Cash flows from investing activities: Proceeds from dispositions of facilities and other assets ................................ 6,692 1,032 Payments for acquisitions, net of cash acquired .......................................... (10,630) (12,117) Collections on notes receivable and REMIC investment ..................................... 3,425 6,421 Capital expenditures ..................................................................... (43,497) (28,040) Construction and development in progress, net ............................................ 14,291 (555) Other, net ............................................................................... (4,016) (9,187) ---------- ---------- Net cash used for investing activities ......................................... (33,735) (42,446) Cash flows from financing activities: Revolver borrowings ...................................................................... 284,000 114,000 Repayments of Revolver borrowings ........................................................ (333,000) (109,000) Proceeds from issuance of long-term obligations .......................................... 180,000 -- Repayments of long-term obligations ...................................................... (128,673) (11,196) Proceeds from exercise of stock options .................................................. 361 264 Deferred financing costs ................................................................. (5,242) (241) Dividends paid on preferred stock ........................................................ (688) (2,063) Proceeds from designated funds, net ...................................................... 472 287 ---------- ---------- Net cash used for financing activities ......................................... (2,770) (7,949) ---------- ---------- Net decrease in cash and cash equivalents ...................................................... (6,249) (29,961) Cash and cash equivalents at beginning of period ............................................... 56,303 67,964 ---------- ---------- Cash and cash equivalents at end of period ..................................................... $ 50,054 $ 38,003 ========== ========== Supplemental schedule of cash flow information: Cash paid (received) during the period for: Interest (net of amounts capitalized) .................................................... $ 17,701 $ 19,148 Income tax payments (refunds), net ....................................................... (4,642) 2,379
See accompanying notes. 4 6 BEVERLY ENTERPRISES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) (i) The condensed consolidated financial statements included herein have been prepared by the Company, without audit, and include all adjustments of a normal recurring nature which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three months ended March 31, 1996 and 1995 pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures in these condensed consolidated financial statements are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and the notes thereto included in the Company's 1995 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results for a full year. Unless the context indicates otherwise, the Company means Beverly Enterprises, Inc. and its consolidated subsidiaries. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform with the 1996 presentation. (ii) The provisions for income taxes for the three months ended March 31, 1996 and 1995 were based on estimated annual effective tax rates of 40% and 38%, respectively. The Company's estimated annual effective tax rates for 1996 and 1995 are different than the federal statutory rate primarily due to the impact of state income taxes and amortization of nondeductible goodwill. The Company's estimated annual effective tax rate increased to 40% in 1996 primarily as a result of amortization of nondeductible goodwill. The provisions for income taxes consist of the following for the three months ended March 31 (in thousands):
1996 1995 -------- -------- Federal: Current .................................. $ 4,553 $ 7,114 Deferred ................................. 2,765 894 State: Current .................................. 1,314 1,959 Deferred ................................. 499 176 -------- -------- $ 9,131 $ 10,143 ======== ========
(iii) During the three months ended March 31, 1996, the Company purchased two previously leased nursing facilities (284 beds) and certain other assets for approximately $10,700,000 cash. Also during such period, the Company sold or terminated the leases on 37 nursing facilities (2,062 beds) for cash proceeds of approximately $9,800,000 (approximately $3,300,000 of which was included in accounts receivable-nonpatient at March 31, 1996 and was received in April 1996). The Company recognized net pre-tax gains during the first quarter of 1996 of approximately $2,200,000 as a result of these dispositions. The operations of these facilities were immaterial to the Company's financial position and results of operations. (iv) In February 1996, the Company completed the sale of $180,000,000 of 9% Senior Notes due February 15, 2006 (the "Senior Notes") through a public offering (the "Senior Notes offering") for net cash proceeds of approximately $174,850,000. The Company used approximately $87,500,000 of such net proceeds to prepay certain scheduled maturities under its 1994 Term Loan, approximately $28,000,000 to prepay certain scheduled maturities under its 1992 5 7 BEVERLY ENTERPRISES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED) Term Loan, approximately $8,750,000 to prepay certain scheduled maturities under its Nippon Term Loan, and the remaining net proceeds to repay Revolver borrowings and for general corporate purposes. The Senior Notes are unsecured obligations, guaranteed by substantially all of the Company's present and future subsidiaries, and impose on the Company certain restrictive covenants. In May 1996, the Company filed a Registration Statement covering $200,000,000 of debt securities, shares of preferred stock, shares of Common Stock and warrants to purchase Common Stock which may be offered, separately or together, in separate series in amounts, at prices and on terms to be determined at the time of sale. The net proceeds from the offerings are anticipated to be used for general corporate purposes, which may include, but are not limited to, working capital, capital expenditures, repayments of indebtedness and acquisitions. (v) There are various lawsuits and regulatory actions pending against the Company arising in the normal course of business, some of which seek punitive damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial position or results of operations. (vi) Effective July 31, 1987, Beverly Enterprises, a California corporation ("Beverly California"), became a wholly-owned subsidiary of Beverly Enterprises, Inc., a Delaware corporation ("Beverly Delaware"). Effective January 1, 1995, Beverly California changed its name to Beverly Health and Rehabilitation Services, Inc. ("BHRS") and distributed certain of its wholly-owned subsidiaries to Beverly Delaware in an effort to better focus management's attention on specific services delivered by the Company within the long-term healthcare arena. Such subsidiaries included, among others, Pharmacy Corporation of America, American Transitional Hospitals, Inc. and Beverly Indemnity, Ltd. Beverly Delaware (the parent) provides financial, administrative and legal services to these subsidiaries, including BHRS, for which it charges management fees. The following summarized unaudited financial information concerning BHRS is being reported because BHRS's 7 5/8% convertible subordinated debentures due March 2003 and its zero coupon notes (collectively, the "Debt Securities") are publicly held. Beverly Delaware is co-obligor of the Debt Securities. Summary unaudited financial information for BHRS is as follows (in thousands):
THREE MONTHS ENDED THREE MONTHS ENDED MARCH 31, 1996 MARCH 31, 1995 ------------------ ------------------ Total revenues .................... $680,273 $702,738 Total costs and expenses .......... 658,740 681,832 Net income ........................ 12,920 12,652
AS OF AS OF MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- Current assets ................ $ 423,640 $ 421,641 Long-term assets .............. 1,366,019 1,365,413 Current liabilities ........... 262,694 367,074 Long-term liabilities ......... 799,956 709,515
6 8 BEVERLY ENTERPRISES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MARCH 31, 1996 (UNAUDITED) GENERAL Healthcare system reform and concerns over rising Medicare and Medicaid costs continue to be high priorities for the federal and certain state governments. Although no comprehensive healthcare, Medicare or Medicaid reform legislation has yet been implemented, pressures to contain costs and the active discussion and issues raised by the Clinton Administration, Congress and various other groups have impacted the healthcare delivery system. In November 1995, Congress passed the Seven Year Balanced Budget Reconciliation Act of 1995 (the "1995 Balanced Budget Act") providing for, among other things, the reshaping of the Medicare and Medicaid programs. In December 1995, President Clinton vetoed the 1995 Balanced Budget Act and proposed alternative Medicare and Medicaid legislation. Each of the legislative proposals offered by the President and Congress provide for significant reductions in the overall rate of Medicare and Medicaid spending growth. There is active discussion concerning this proposed legislation and the form of any final legislation signed into law could differ significantly from current proposals. The impact of currently proposed legislation on the Company is not readily determinable. However, in their currently proposed form, such legislation could have a material adverse effect on the Company's future financial position, results of operations and cash flows. The Company's future operating performance will continue to be affected by the issues facing the long-term healthcare industry as a whole, including the maintenance of occupancy, its ability to continue to expand higher margin businesses, the availability of nursing, therapy and other personnel, the adequacy of funding of governmental reimbursement programs, the demand for nursing home care and the nature of any healthcare reform measures that may be taken by the federal government, as discussed above, as well as by any state governments. The Company's ability to control costs, including its wages and related expenses which continue to rise and represent the largest component of the Company's operating and administrative expenses, will also significantly impact its future operating results. As a general matter, increases in the Company's operating costs result in higher patient rates under Medicaid programs in subsequent periods. However, the Company's results of operations will continue to be affected by the time lag in most states between increases in reimbursable costs and the receipt of related reimbursement rate increases. Medicaid rate increases, adjusted for inflation, are generally based upon changes in costs for a full calendar year period. The time lag before such costs are reflected in permitted rates varies from state to state, with a substantial portion of the increases taking effect up to 18 months after the related cost increases. OPERATING RESULTS FIRST QUARTER 1996 COMPARED TO FIRST QUARTER 1995 Net income was $13,696,000 for the first quarter of 1996, as compared to net income of $16,549,000 for the same period in 1995. Income before provision for income taxes was $22,827,000 for the first quarter of 1996, as compared to $26,692,000 for the same period in 1995. The Company's estimated annual effective tax rate increased to 40% in 1996, compared to 38% in 1995, primarily as a result of amortization of nondeductible goodwill. Net operating revenues and operating and administrative costs increased approximately $15,400,000 and $17,500,000, respectively, for the first quarter of 1996, as compared to the same period in 1995. These increases consist of the following: increases in net operating revenues and operating and administrative costs for facilities which the Company operated during each of the quarters ended March 31, 1996 and 1995 ("same facility operations") of approximately $5,900,000 and $14,100,000, respectively; increases in net operating revenues and operating and administrative costs of approximately $37,100,000 and $31,200,000, respectively, related to the expanded operations of American Transitional Hospitals, Inc. and the acquisition of Pharmacy Management Services, Inc. in mid-1995; and 7 9 BEVERLY ENTERPRISES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) MARCH 31, 1996 (UNAUDITED) decreases in net operating revenues and operating and administrative costs of approximately $27,600,000 and $27,800,000, respectively, due to the disposition of, or lease terminations on, 37 facilities in 1996 and 29 facilities in 1995. The increase in net operating revenues for same facility operations for the first quarter of 1996, as compared to the same period in 1995, was due to the following: approximately $37,300,000 due primarily to increases in Medicare room and board rates, and to a lesser extent, private and Medicaid room and board rates; and approximately $5,600,000 due to one additional calendar day for the first quarter of 1996, as compared to the same period in 1995. These increases in net operating revenues were partially offset by approximately $21,700,000 due to decreases in ancillary revenues primarily due to the Company's continuing efforts to bring therapists on staff as opposed to contracting for their services; approximately $8,600,000 due to a decrease in same facility occupancy to 87.8% for the first quarter of 1996, as compared to 89.3% for the same period in 1995; approximately $3,600,000 due to decreases in pharmacy-related revenues primarily related to changes in pricing and service levels at Pharmacy Corporation of America; and approximately $3,100,000 due to various other items. The increase in operating and administrative costs for same facility operations for the first quarter of 1996, as compared to the same period in 1995, was due to the following: approximately $34,500,000 of increased wages and related expenses (excluding pharmacy) principally due to the hiring of therapists on staff as opposed to contracting for their services, higher wages and greater benefits required to attract and retain qualified personnel and increased staffing levels in the Company's nursing facilities to cover increased patient acuity; approximately $3,600,000 due to increases in nursing supplies and other variable costs; and approximately $4,000,000 due primarily to increases in pharmacy-related costs and various other items. These increases in operating and administrative costs were partially offset by approximately $28,000,000 due to a decrease in contracted therapy expenses as a result of hiring therapists on staff as opposed to contracting for their services. Interest expense increased approximately $2,600,000 as compared to the same period in 1995 primarily due to the exchange of Preferred Stock into 5 1/2% Convertible Subordinated Debentures in November 1995, write-off of unamortized deferred financing costs associated with certain debt that was repaid with the net cash proceeds from the issuance of Senior Notes (as discussed below), as well as the issuance and assumption of approximately $65,000,000 of long-term obligations during 1995 in conjunction with certain acquisitions, partially offset by a reduction of approximately $52,800,000 of long-term obligations due to the disposition of certain facilities. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1996, the Company had approximately $50,100,000 in cash and cash equivalents and net working capital of approximately $260,700,000. The Company anticipates that approximately $29,100,000 of its existing cash at March 31, 1996, while not legally restricted, will be utilized to fund certain workers' compensation and general liability claims, and the Company does not expect to use such cash for other purposes. The Company had approximately $89,600,000 of unused commitments under its Revolver/Letter of Credit Facility as of March 31, 1996. 8 10 BEVERLY ENTERPRISES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) MARCH 31, 1996 (UNAUDITED) Net cash provided by operating activities for the first quarter of 1996 was approximately $30,300,000, an increase of approximately $9,800,000 from the prior year. Net cash used for investing and financing activities were approximately $33,700,000 and $2,800,000, respectively, for the first quarter of 1996. The Company primarily used cash generated from operations to fund capital expenditures, construction and development costs totaling approximately $29,200,000. The Company received net cash proceeds of approximately $174,850,000 from the issuance of Senior Notes (as discussed below) and approximately $6,700,000 from the dispositions of facilities and other assets which were primarily used to repay approximately $128,700,000 of long-term obligations, to fund acquisitions of approximately $10,600,000, and to repay Revolver borrowings. In February 1996, the Company completed the sale of $180,000,000 of 9% Senior Notes due February 15, 2006 (the "Senior Notes") through a public offering (the"Senior Notes offering") for net cash proceeds of approximately $174,850,000. The Company used approximately $87,500,000 of such net proceeds to prepay certain scheduled maturities under its 1994 Term Loan, approximately $28,000,000 to prepay certain scheduled maturities under its 1992 Term Loan, approximately $8,750,000 to prepay certain scheduled maturities under its Nippon Term Loan, and the remaining net proceeds to repay Revolver borrowings and for general corporate purposes. The Senior Notes are unsecured obligations, guaranteed by substantially all of the Company's present and future subsidiaries, and impose on the Company certain restrictive covenants. In May 1996, the Company filed a Registration Statement covering $200,000,000 of debt securities, shares of preferred stock, shares of Common Stock and warrants to purchase Common Stock which may be offered, separately or together, in separate series in amounts, at prices and on terms to be determined at the time of sale. The net proceeds from the offerings are anticipated to be used for general corporate purposes, which may include, but are not limited to, working capital, capital expenditures, repayments of indebtedness and acquisitions. The Company believes that its existing cash and cash equivalents, working capital from operations, borrowings under its banking arrangements, issuance of certain debt securities and refinancings of certain existing indebtedness will be adequate to repay its debts due within one year of approximately $37,400,000, to make normal recurring capital additions and improvements for the twelve months ending March 31, 1996 of approximately $170,000,000, to make selective acquisitions, including the purchase of previously leased facilities, and to meet working capital requirements. As of March 31, 1996, the Company had total indebtedness of approximately $1,121,200,000 (excluding $29,000,000 of Revolver borrowings) and total stockholders' equity of approximately $835,600,000. The ability of the Company to satisfy its long-term obligations will be dependent upon its future performance, which will be subject to prevailing economic conditions and to financial, business and other factors beyond the Company's control, such as federal and state healthcare reform. In addition, healthcare service providers, such as the Company, operate in an industry that is currently subject to significant changes from business combinations, new strategic alliances, legislative reform, increased regulatory oversight, aggressive marketing practices by competitors and market pressures. In this environment, the Company is frequently contacted by, and otherwise engages in discussions with, other healthcare companies and financial advisors regarding possible strategic alliances, joint ventures, business combinations and other financial alternatives. The terms of substantially all of the Company's debt instruments require the Company to repay or refinance indebtedness under such debt instruments in the event of a change of control. There can be no assurance that the Company will have the financial resources to repay such indebtedness upon a change of control. See "-- General." 9 11 PART II BEVERLY ENTERPRISES, INC. OTHER INFORMATION MARCH 31, 1996 (UNAUDITED) ITEM 1. LEGAL PROCEEDINGS There are various lawsuits and regulatory actions pending against the Company arising in the normal course of business, some of which seek punitive damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial position or results of operations. ITEM 6(a). EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.1* Form of Agreement between Beverly Enterprises, Inc. and Robert D. Woltil 10.2 Ninth Amendment dated as of April 22, 1996 to the Nippon Credit Agreement 11.1 Computation of Net Income Per Share 27.1 Financial Data Schedule for the three months ended March 31, 1996
* Exhibit 10.1 is a management contract, compensatory plan, contract or arrangement in which a named executive officer participates. ITEM 6(b). REPORTS ON FORM 8-K The Company filed a Current Report on Form 8-K, dated January 30, 1996, which reported under Item 5 the Company's financial results for the fourth quarter and full year ended December 31, 1995. 10 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BEVERLY ENTERPRISES, INC. Registrant Dated: May 15, 1996 By: /s/ SCOTT M. TABAKIN ------------------------------------ Scott M. Tabakin Senior Vice President, Controller, Chief Accounting Officer and Acting Chief Financial Officer 11 13 INDEX TO EXHBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.1* Form of Agreement between Beverly Enterprises, Inc. and Robert D. Woltil 10.2 Ninth Amendment dated as of April 22, 1996 to the Nippon Credit Agreement 11.1 Computation of Net Income Per Share 27.1 Financial Data Schedule for the three months ended March 31, 1996
* Exhibit 10.1 is a management contract, compensatory plan, contract or arrangement in which a named executive officer participates. EX-10.1 2 FORM OF AGREEMENT 1 EXHIBIT 10.1 AGREEMENT DATE: FEBRUARY 22, 1996 PARTIES: First Party: BEVERLY ENTERPRISES, INC., a Delaware corporation, and its consolidated subsidiaries, hereinafter collectively referred to as "Company"; and Second Party: ROBERT D. WOLTIL, hereinafter referred to as "WOLTIL" AGREEMENT: FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which is hereby acknowledged, the parties hereto do agree between themselves as follows: Section 1. DEFINITIONS. (a) As used herein, "WOLTIL" shall mean Robert D. Woltil, his successors-in-interest, predecessors-in-interest, assigns, administrators and executors. (b) As used herein, the term the "Company" shall mean Beverly Enterprises, Inc., its affiliates, subsidiaries, divisions, agents, assigns, pension plans, compensation plans, other benefit plans, predecessors- in-interest, successors-in-interest, and any officer, director, employee, agent or other representative of any of the foregoing. Section 2. RESIGNATION. (a) WOLTIL hereby tenders his resignation from the office of Executive Vice President of the Company and President of Pharmacy Corporation of America ("PCA") effective January 17, 1996. WOLTIL further tenders his resignation as an employee of the Company effective February 17, 1996. The -1- 2 Company hereby accepts such resignations effective on such dates. All duties and obligations of WOLTIL in those positions are ended as of those dates, and all obligations of the Company to WOLTIL with respect to those positions or otherwise are terminated as of those dates, except as otherwise provided herein. (b) The Parties enter into this Agreement to resolve and finalize any disputes which have arisen or may arise between them concerning WOLTIL's employment with the Company, and the termination thereof. Nothing in this Agreement and no action taken pursuant to this Agreement constitutes or is intended to constitute any admission or finding of fact or allegation, admission of liability or fault, or assessment of liability with respect to any claim which has been brought or which may be brought by either party concerning WOLTIL's employment with the Company, or the termination thereof. This Agreement and the Company's actions performed pursuant hereto shall not be deemed to be or construed as an admission of any allegation of WOLTIL'S, nor shall they constitute any admission of any fact, liability or fault as to any claim or proceeding which has been, is now being or may be pursued by any person, agency or entity, including without limitation, WOLTIL or any other past or present employee of the Company. This Agreement shall not be used and is not intended to be used as evidence in any action or proceeding for any other purpose other than as evidence of the Parties' compromise of their disputes and discharge of their claims. Section 3. PAYMENTS. The Company agrees to pay WOLTIL the following sums in consideration of his voluntary resignation: -2- 3 (a) Vacation. The sum of Twenty-three Thousand Six Hundred Fifty-three and 84/100 Dollars ($23,653.84), which shall be subject to all normal withholding taxes, in full payment for four (4) weeks of vacation pay due to WOLTIL, which shall be payable on the date that this Agreement is fully-executed by the Parties and becomes effective; (b) Severance Payments. WOLTIL will receive a severance payment equal to the sum of: (1) fifty-two (52) weeks of pay in the aggregate sum of Three Hundred Seven Thousand Five Hundred and No/100 Dollars ($307,500.00); and (2) 40% of base salary as a target bonus amount, which is One Hundred Twenty-three Thousand and No/100 Dollars ($123,000.00); for a total severance payment of Four Hundred Thirty Thousand Five Hundred and No/100 Dollars ($430,500.00), payable in full on the date that this Agreement is fully executed by the Parties and becomes effective. Lump sum federal and state withholding taxes will be withheld. Section 4. BONUS AND CAR ALLOWANCE. It is understood and agreed between the Parties hereto that WOLTIL shall not be entitled to any bonus from the Company for 1995 or 1996 performance. It is further understood and agreed between the parties hereto that WOLTIL's car allowance, if any, shall terminate effective February 17, 1996. Section 5 MEDICAL COVERAGE. WOLTIL's COBRA period for coverage under the Beverly Medical Plan, Executive Medical Plan and Management Dental Plan shall commence as of February 17, 1996 and will continue for forty-two (42) months. The cost of coverage for the first twenty-four months shall be paid for at the sole cost and expense of the Company. The premiums paid by the Company for this coverage are taxable to WOLTIL, who shall be solely -3- 4 responsible for any such tax. If WOLTIL becomes eligible for another group health plan prior to the expiration of the forty-two (42) months of COBRA, then, after the first twenty-four (24) months of COBRA, the coverage will be terminated according to COBRA law. If coverage continues for the first twenty-four (24) months, then WOLTIL will be notified by the Company on or after February 17, 1998 as to what the cost will be for COBRA conversion for continued coverage for WOLTIL and his spouse and eligible dependents under its Beverly Medical Plan, Executive Medical Plan and Management Dental Plan. If coverage is desired by WOLTIL for the additional eighteen (18) months of the COBRA conversion period, all costs and expenses for continued COBRA coverage shall be paid by WOLTIL. WOLTIL shall be solely responsible for presenting any claims incurred by himself or any eligible dependent in accordance with the provisions of the Beverly Medical Plan, Executive Medical Plan and the Management Dental Plan. Section 6. LIFE AND DISABILITY INSURANCE. The Executive Life Insurance Plan, Basic Group Term Life Insurance Plan, the Long Term Disability Insurance Plan and the Group Universal Life program will be handled as follows: (a) Executive Life Insurance on WOLTIL will be deemed to be One Hundred Percent (100%) vested on January 17, 1996 and as such will remain in force for the duration of WOLTIL'S life. The premium thereon shall be paid by the Company. The face amount of the life insurance policy to be provided by the Company shall be Three Hundred Thousand Dollars ($300,000). The economic value on this benefit is taxable to WOLTIL, who shall be solely responsible for any such tax. -4- 5 (b) The Company's Basic Group Term Life Insurance coverage on WOLTIL's life in the amount of Two Hundred Ninety-three Thousand Dollars ($293,000) insuring WOLTIL's life, may be converted at the sole cost and expense of WOLTIL in accordance with the provisions of the existing policy within thirty-one (31) days of February 17, 1996, or coverage will terminate as of said date. It is Woltil's sole responsibility to submit the appropriate conversion forms to the carrier. (c) The Long Term Disability coverage may be converted to an individual policy within thirty-one days of February 17, 1996 or the coverage will terminate as of said date in accordance with the provisions of the existing policy. It is Woltil's sole responsibility to submit the appropriate conversion forms to the carrier. Woltil will be reimbursed for one year of coverage that is approved by the carrier from February 17, 1996 upon submission to the Company of a bill from the carrier or a cancelled check to the carrier. The reimbursement for the long term disability coverage will be taxable to WOLTIL, who shall be solely responsible for any such tax. (d) The Group Universal Life Insurance coverage is portable and Woltil will be billed by the carrier at the address he has on file with the carrier. The Company will have no further responsibility in regards to the Group Universal Life Insurance coverage after February 17, 1996 except to forward any premiums withheld from WOLTIL'S pay to date. Section 7. EMPLOYEE STOCK PURCHASE PLAN. WOLTIL will continue to participate in the Employee Stock Purchase Plan through February 17, 1996 according to the provisions of the plan and the Company will forward WOLTIL'S contributions and related Company match as it normally would to Merrill Lynch. -5- 6 WOLTIL will continue to maintain sole discretion in managing his account balance and the Company will have no further responsibility regarding his account after the final payroll deductions and Company match have been forwarded to WOLTIL'S account. If WOLTIL elects to maintain the account after February 17, 1996, he will be notified by Merrill Lynch as to the cost of maintaining his account. The fees related to maintaining the Merrill Lynch account will be the sole responsibility of WOLTIL. Section 8. OPTIONS AND RESTRICTED STOCK. WOLTIL understands and agrees that all issued option grants and restricted stock awarded to him under any of the Company's stock option plans (i.e., the Company's Amended and Restated 1981 Beverly Incentive Stock Option Plan, or the Amended and Restated 1981 and 1985 Non-qualified Stock Option Plans, or the Amended and Restated Beverly Enterprises, Inc. 1993 Long-Term Incentive Stock Plan, all of such plans together hereinafter referred to as the "Stock Plans") shall be fully vested on and after February 17, 1996, and must be exercised, if at all, no later than ninety (90) days following February 17, 1996. To the extent WOLTIL does not exercise any of the stock options or other benefits issued pursuant to the Stock Plans (the "Stock Options") within said ninety (90) day period, the Stock Options shall be and are hereby cancelled effective as of the close of business on May 18, 1996 and all right, title and interest in and to said stock options in WOLTIL's name as of such date shall be and hereby is declared null and void and cancelled. WOLTIL was granted the following stock options which have not been exercised by WOLTIL or cancelled: -6- 7
- ------------------------------------------------------------------------------------------------------------------ GRANT DATE OF TYPE SHARES PRICE OF VESTED AS VESTED VESTED CANCELLED NUMBER GRANT OR UNITS GRANT - $ OF 2/17/96 AND AND NOT GRANTED PURSUANT EXERCISED EXERCISED TO CONTRACT - ------------------------------------------------------------------------------------------------------------------ 050064 5/20/92 RSP 3,000 $-0- 3,000 1,800 1,200 -0- - ------------------------------------------------------------------------------------------------------------------ 090286 5/20/92 NQ 7,000 $7.875 7,000 -0- 7,000 -0- - ------------------------------------------------------------------------------------------------------------------ 050070 7/15/93 RSP 24,000 $-0- 24,000 9,600 14,400 -0- - ------------------------------------------------------------------------------------------------------------------ 051002 7/15/93 RSP 6,000 $-0- 6,000 2,400 3,600 -0- - ------------------------------------------------------------------------------------------------------------------ 090293 7/15/93 NQ 25,000 $13.125 25,000 -0- 25,000 -0- - ------------------------------------------------------------------------------------------------------------------ 091002 7/15/93 NQ 6,000 $13.125 6,000 -0- 6,000 -0- - ------------------------------------------------------------------------------------------------------------------ 006705 12/9/93 ISO 15,000 $12.50 15,000 -0- 15,000 -0- - ------------------------------------------------------------------------------------------------------------------ 091010 12/9/93 NQ 35,000 $12.50 35,000 -0- 35,000 -0- - ------------------------------------------------------------------------------------------------------------------ 060004 2/15/94 PH/NQ 2,750 $14.00 2,750 -0- 2,750 -0- - ------------------------------------------------------------------------------------------------------------------ 006739 12/8/94 ISO 12,000 $14.00 12,000 -0- 12,000 -0- - ------------------------------------------------------------------------------------------------------------------ 091042 12/8/94 NQ 18,000 $14.00 18,000 -0- 18,000 -0- - ------------------------------------------------------------------------------------------------------------------ 060035 2/15/95 PH/NQ 2,951 $13.75 2,951 -0- 2,951 -0- - ------------------------------------------------------------------------------------------------------------------ 075022 2/15/95 OU/NQ 1,181 $-0- 1,181 -0- 1,181 -0- - ------------------------------------------------------------------------------------------------------------------
LEGENDS o ISO = Incentive Stock Option o RSP = Restricted Stock Plan o NQ = Nonqualified Stock Option o PH = Phantom Stock Option o OU = Other Units Section 9. DEFERRED COMPENSATION. All benefits related to the Deferred Compensation Plan were paid to WOLTIL in 1991; therefore, the Company has no further obligation to WOLTIL related to this plan. Section 10. RELOCATION. If, on or before February 17, 1997, WOLTIL gives written notice to the Company that he desires to relocate within the Continental United States, the Company will reimburse WOLTIL for any reasonable relocation expenses (in accordance with the general relocation -7- 8 policy for Executives of PCA as then in effect, or at WOLTIL's election as in effect on January 17, 1996, in connection with such relocation). Section 11. EXECUTIVE RETIREMENT PLAN. For the plan year 1996, the Company will make a contribution to the Company's Executive Retirement Plan on behalf of WOLTIL that it would have made if WOLTIL had not terminated his employment and as specified by the plan. In no event, shall the Company's match for 1996 be less than the percentage contribution it made for WOLTIL for the 1995 plan year nor will it exceed or be less than the percentage contribution made by the Company on behalf of the other participating employees for the 1996 plan year. It will be WOLTIL'S sole responsibility to submit a written election to participate and deliver same to the Company by July 1, 1996 and to make arrangements with the Company to forward such contributions to the Company. The Company will continue to be responsible for forwarding the funds to WOLTIL'S account in accordance with the plan. The Company shall determine if it will make a Company contribution for the 1996 plan year in accordance with the provisions of the plan. Section 12. CONFIDENTIALITY. The Company and WOLTIL each agree to keep the terms of this Agreement confidential and that neither of them nor any of their respective employees, agents, officers, representatives, heirs or assigns will publicize the terms of this Agreement in any way, nor will they issue, distribute, or make available any bulletin or written statement of any kind concerning the subject matter of this Agreement or WOLTIL's termination except, however, as required by legal process or to their tax advisors or heirs, or as they both may otherwise agree in writing. -8- 9 Section 13. NON-SOLICITATION AND NON-COMPETITION AGREEMENT. (a) WOLTIL shall not during the period from January 17, 1996 through January 17, 1997, or at any time thereafter, make, use for his own purposes or divulge to any person, firm or corporation (except under the authority of the Company or if ordered to do so by a court of competent jurisdiction) any information or fact relating to the management, business (including prospective business), finances, its customers or the terms of any of the contracts of the Company which has heretofore or may hereafter come to the knowledge of WOLTIL which is not freely available to the public. (b) WOLTIL hereby covenants with the Company that he will not for any reason whatsoever and whether directly or indirectly, either alone or jointly with any person, firm or corporation and whether as principal, servant or agent: (i) During the thirteen month period commencing on January 17, 1996 and terminating on February 17, 1997, solicit or endeavor to entice away, offer employment to or employ, or offer or conclude any contract for services with any person who is employed by the Company as of the date of this Agreement; (ii) At any time, in any way defame the Company or disparage its business capabilities, products, plans or management to any customer, potential customer, vendor, supplier, contractor, subcontractor of the Company so as to affect adversely the goodwill or business of the Company; and (iii) At any time, use to the detriment of the Company any confidential information of a technical, trade, financial or other character which constitutes a legally protectable trade secret -9- 10 and which WOLTIL has acquired or may acquire in the course of or as a result of his employment by the Company. (c) During the thirteen (13) months commencing on January 17, 1996 and terminating on February 17, 1997 (the "non-compete period"), WOLTIL shall not, without the prior written consent of the Company, directly or indirectly work for, engage in, or have any interest in, provide services to or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in any of the health care businesses in which the Company is engaged as of February 17, 1996. Provided, however, WOLTIL shall be permitted to acquire a stock interest in such a corporation provided such stock is publicly traded and the stock so acquired is not more than one percent of the outstanding shares of such corporation, and, provided further, that WOLTIL may engage in a business that is a non-competitive supplier to the Company or that is a customer of Company products or services. In addition, WOLTIL shall not, during the non-compete period, without the prior written consent of the Company, directly or indirectly, work for, engage in, or have any interest in, provide services to, manage or operate, in any capacity, Eckerd Corp. or any institutional pharmacy, including, without limitation, Omnicare, Inc., Symphony, a subsidiary of Integrated Health Services, or Vitalink Pharmacy Services, Inc., a subsidiary of ManorCare, Inc. Except as limited in the immediately preceding sentence, during the non-compete period, WOLTIL shall be permitted to: (1) serve as the chief financial officer of a health care company, even if such company has an institutional pharmacy business, provided that the services WOLTIL performs -10- 11 for the institutional pharmacy business are limited to those which are consistent with his responsibilities as chief financial officer; (2) serve as an investment banker who would provide services to health care companies; or (3) serve as a consultant who would provide services to health care companies. (d) WOLTIL covenants and agrees that a breach of these subparagraphs (a), (b) or (c) would immediately and irreparably harm the Company and that a remedy at law would be inadequate to compensate the Company for its losses by reason of such breach and therefore that the Company shall, in addition to any rights and remedies available under this Agreement or WOLTIL's Employment Contract dated as of December 8, 1995, at law or otherwise, be entitled to an injunction to be issued by any court of competent jurisdiction enjoining and restraining WOLTIL from committing any violation of these subparagraphs (a), (b) or (c). (e) For purposes of this Section 13 and in consideration of this Agreement, these non-solicitation and non-competition agreements have been separately negotiated and bargained for, and constitute a substantial portion of the consideration for this Agreement. Section 14. LITIGATION. WOLTIL recognizes that as a key member of the staff of the Company, WOLTIL has occupied a position of trust and confidence with respect to information of a secret or confidential nature which is or will become the property of the Company, including but not limited to information concerning various claims and lawsuits that have arisen or may arise out of the Company's operations in which WOLTIL was directly or indirectly involved (collectively, the "Litigation"). WOLTIL agrees that -11- 12 WOLTIL will not at any time for so long as any such information shall remain confidential or otherwise remain wholly or partially protectable, use, divulge, furnish, or make accessible such information to anyone outside of the Company, the Company's agents or representatives, except as required by legal process. For purposes of this Section 14, the term "information of a secret or confidential nature" shall mean any information of any nature in any form which at the time or times concerned is not generally known to or which could not be obtained by persons engaged in a business similar to that conducted or contemplated by Company and which relates to any one or more of the aspects of the present or past businesses of the Company. For purposes hereof any such confidential information which is disclosed to any third party by a present or past employee or representative of the Company not authorized to make such disclosures shall be deemed to remain confidential and protected. WOLTIL further agrees that WOLTIL shall continue to reasonably cooperate with the Company and its attorneys concerning all aspects of the Litigation, including but not limited to making himself available for a reasonable period of time for reviews, conferences, meetings, depositions, and testimony until such time as the Litigation has been finally resolved to the Company's satisfaction. For purposes of this Section 14, WOLTIL acknowledges that the Litigation consists or may consist of several lawsuits of a complex nature such that it is difficult to estimate the exact number of hours that WOLTIL will be needed to devote to the Litigation. WOLTIL therefore agrees to make himself available to the Company in compliance with this Section 14, for reasonable periods of time as is required for lawsuits of a complexity similar to those comprising (or which may in the future comprise) the Litigation and will -12- 13 reasonably make himself available to the extent his professional schedule permits. The Company agrees that its attorneys shall work with WOLTIL to insure that, to the extent possible, the time that WOLTIL shall be required to devote to the Litigation shall be scheduled in accordance with WOLTIL's preferences. WOLTIL agrees that he will provide his services (including actual travel time) required in connection with the Litigation at no cost to the Company for the first One Hundred Seventy-six (176) hours which are required by the Litigation; provided, however, the Company shall reimburse WOLTIL for the costs and expenses reasonably incurred by WOLTIL in connection with the provision of such services. All services required of WOLTIL in the Litigation in excess of One Hundred Seventy-six (176) hours shall be compensated to WOLTIL at the rate of One Hundred Fifty and No/100 Dollars ($150.00) per hour, and, in addition, the Company shall reimburse WOLTIL for the costs and expenses reasonably incurred by WOLTIL in connection with the provision of such services. Section 15. RELEASES. In consideration of the provisions of this Agreement and for other good and sufficient consideration, receipt whereof is hereby acknowledged, the Company and WOLTIL do each hereby release and discharge the other from all actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, attorneys' fees, costs, disbursements, bonds, bills, covenants, contracts, controversies, agreements, promises, and demands whatsoever, at law or in equity, present and future, known or unknown, in any manner arising out of the employment relationship between the Company and WOLTIL, and the termination thereof, including, without limitation, any and all rights, duties and obligations arising out of or relating to that certain Employment Contract between WOLTIL and the Company dated as of -13- 14 December 8, 1995 and all said actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, attorneys' fees, costs, disbursements, bonds, bills, covenants, contracts, controversies, agreements, promises, and demands whatsoever, at law or in equity, are hereby satisfied in full, terminated and forever discharged. No further action whatsoever shall be taken before any tribunal or forum regarding said actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, attorneys' fees, costs, disbursements, bonds, bills, covenants, contracts, controversies, agreements, promises, and demands whatsoever, at law or in equity. WOLTIL and the Company further agree not to file or lodge or bring any charges, complaints, grievances or other claims in any forum including, but not limited to judicial, administrative or arbitral forums relating to or arising out of WOLTIL's employment with the Company or his resignation and severance therefrom. WOLTIL affirms that there is no administrative or judicial proceeding against the Company to which WOLTIL is a party or which has been filed on his behalf. In the event that there is outstanding any such proceeding, WOLTIL agrees to cause the immediate withdrawal and dismissal with prejudice of that proceeding. In the event that any agency, court or other forum does not dismiss with prejudice such proceeding, WOLTIL agrees that he will not give testimony or evidence voluntarily against the Company in such proceeding. The prohibition contained herein shall not apply with respect to information or testimony provided by WOLTIL pursuant to a subpoena enforced by order of the court. Section 16. INDEMNIFICATION. The Company will indemnify WOLTIL to the fullest extent permitted (including payment of expenses in advance of final -14- 15 disposition of a proceeding) by the Certificate of Incorporation and By-Laws of the Company, as in effect at such time or on the effective date of this Agreement, whichever affords or afforded greater protection to WOLTIL, and WOLTIL shall be entitled to the protection of any insurance policies the Company may elect to maintain generally for the benefit of its directors and officers, against all costs, charges and expenses whatsoever incurred or sustained by his in connection with any action, suit or proceeding to which he may be made a party by reason of his being or having been an officer or employee of the Company or any of its subsidiaries or affiliates or his serving or having served any other enterprises as an officer or employee at the request of the Company. The Indemnification Agreement between Beverly Enterprises, Inc. and WOLTIL dated December 31, 1991 shall remain in full force and effect for its stated term for the services provided by WOLTIL to the Company during the period up to and including February 17, 1996. Section 17. POSITIVE RECOMMENDATION. The Company shall respond, verbally, to inquiries from a potential employer of WOLTIL with a positive recommendation, and upon request of either WOLTIL or any such potential employers, shall provide a positive letter of recommendation, provided WOLTIL shall inform any such potential employers to direct their inquiries to the attention of Boyd W. Hendrickson, President and Chief Operating Officer of the Company. The Company shall use its best efforts to assure that neither its Chairman or its Chief Operating Officer disparage WOLTIL's business capabilities or reputation in the financial community from and after the date hereof. As of the date hereof, WOLTIL is unaware of any action of the Company which would be a breach hereunder if this Agreement had been in effect. -15- 16 Section 18. THE COMPANY'S RIGHT OF SET-OFF. In the event the Company, in its discretion, believes that WOLTIL has breached any obligation under this Agreement, in addition to any other legal or equitable remedies it may have, the Company may suspend making the payments to WOLTIL provided for in this Agreement and instead shall place such payments in an interest bearing account to be held in escrow by the Company pending judicial resolution of the issue of whether WOLTIL has breached this Agreement. Within a reasonable time of suspending such payments, the Company shall commence an action in any court of competent jurisdiction within the State of Florida seeking, in addition to whatever other remedies may be available to it, an order that WOLTIL has breached any provision of the this Agreement. Upon the entry of a final judgment to that effect (and after any appeals, if any), then any damages to the Company resulting from said breach, including but not limited to liquidated damages, may be set-off by the Company from the amounts it holds in escrow under this Section. Upon entry of any final judgment that WOLTIL has not breached any provision of this Agreement (and after any appeals, if any) then all funds held in escrow, including interest thereon, shall be released to WOLTIL. As of the date of execution of this Agreement, the Company is unaware of any action by WOLTIL which, if this Agreement had been in effect, would constitute a breach hereunder. Section 19. AUTHORITY OF COMPANY TO ENTER INTO THIS AGREEMENT. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and qualified to transact business in the State of Arkansas as a foreign corporation. In addition, the execution and delivery of this Agreement and the performance by it of its obligations under this Agreement have been duly authorized by all necessary corporate -16- 17 action of the Company and do not violate or conflict with: (a) any provision of the Company's Articles of Incorporation or By-laws; (b) any law or any order, writ, injunction, decree, rule, regulation of any Court, administrative agency or any other governmental authority; or (c) any agreement to which the Company is a party or by which the Company is bound. Section 20. EXPERTS. Each of the parties declares that prior to the execution of this Agreement, it apprised itself of sufficient relevant data, either through experts or through other sources of its own selection, including without limitation full legal review by attorneys chosen by each party, in order that it might intelligently exercise its own judgment in deciding whether to execute this Agreement. Section 21. NOTICE. All notices and other communications to be given pursuant to this Agreement shall be in writing and shall be delivered telegraphed or mailed by first class registered or certified mail, postage prepaid and return receipt requested to the other party, as set forth below: If to WOLTIL: ROBERT D. WOLTIL 316 Crestwood Lane Largo, FL 34640 If to the COMPANY: Beverly Enterprises, Inc. Attention: President 5111 Rogers Avenue, Suite 40-A Fort Smith, AR 72919-0155 Communications which are delivered or telegraphed shall be deemed to have been given when delivered or telegraphed. Communications which are mailed shall be deemed to have been given 72 hours after deposit in the U.S. Postal Service as required in this Section 20. Section 22. CHOICE OF LAW. The parties agree that the laws of the State of Florida shall govern the enforcement and construction of the provisions of this Agreement. -17- 18 Section 23. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the parties hereto, and any and all prior agreements, whether oral or written, on the subject matter contained herein, are superseded by this Agreement. This Agreement may only be modified by a later agreement in writing duly executed by each of the parties hereto. In the event of the commencement of any litigation for the enforcement of any rights under this Agreement, the prevailing party in such litigation shall be entitled to receive from the unsuccessful party, all costs incurred in connection with such litigation, including a reasonable amount as attorneys' fees. Section 24. DISCLAIMER. WOLTIL understands and agrees that he: (a) Has had a full twenty-one (21) days within which to consider this Agreement before executing it; (b) Has carefully read and fully understands all of the provisions of this Agreement; (c) Is, through this Agreement, releasing the Company from any and all claims he may have against the Company; (d) Knowingly and voluntarily agrees to all of the terms set forth in this Agreement; (e) Knowingly and voluntarily intends to be legally bound by the same; (f) Was advised and hereby is advised in writing to consider the terms of this Agreement and consult with an attorney of his choice prior to executing this Agreement; (g) Has a full seven (7) days following the execution of this Agreement to revoke this Agreement and has been and hereby is advised in writing that this Agreement shall not become effective or enforceable until -18- 19 the revocation period has expired; and WOLTIL understands that rights or claims under the Age Discrimination in Employment Act of 1967 (29 U.S.C. Section 621, et seq.) that may arise after the date this Agreement is executed are not waived or released. IN WITNESS WHEREOF, the undersigned, having read the foregoing Agreement, and understanding all of its terms, execute it voluntarily, on the date first set forth above, with full knowledge of its significance. FIRST PARTY ----------- Beverly Enterprises, Inc. By: /s/ BOYD W. HENDRICKSON ------------------------------ Boyd W. Hendrickson President and Chief Operating Officer SECOND PARTY ------------ /s/ ROBERT D. WOLTIL --------------------------------- Robert D. Woltil -19- EX-10.2 3 NINTH AMENDMENT TO THE NIPPON CREDIT AGREEMENT 1 Exhibit 10.2 EXECUTION COPY NINTH AMENDMENT TO CREDIT AGREEMENT AMONG BEVERLY ENTERPRISES, INC., BEVERLY HEALTH AND REHABILITATION SERVICES, INC., (FORMERLY KNOWN AS BEVERLY CALIFORNIA CORPORATION) THE SUBSIDIARY GUARANTORS LISTED HEREIN, THE LENDERS LISTED HEREIN, AND THE NIPPON CREDIT BANK, LTD. LOS ANGELES AGENCY, AS AGENT DATED AS OF APRIL 22, 1996 THIS NINTH AMENDMENT dated as of April 22, 1996 (this "AMENDMENT"), is entered into by and among BEVERLY ENTERPRISES, INC., a Delaware corporation ("BEI"), BEVERLY HEALTH AND REHABILITATION SERVICES, INC. (formerly known as Beverly California Corporation), a California corporation ("BORROWER"), the SUBSIDIARY GUARANTORS listed on the signature pages hereof (together with BEI, the "GUARANTORS"), the LENDERS listed on the signature pages hereof (such lenders, together with each Person that may or has become a party to the Credit Agreement (as hereinafter defined) pursuant to subsection 10.8 thereof, are referred to herein individually as a "LENDER" and collectively as the "LENDERS"), and THE NIPPON CREDIT BANK, LTD., Los Angeles Agency ("NIPPON"), as agent for the Lenders (in such capacity, the "AGENT"). This Amendment amends the Credit Agreement dated as of March 2, 1993 by and among BEI, Borrower, Agent and Lenders, as amended by that certain First Amendment to Credit Agreement dated as of May 6, 1994, as further amended by that certain Second Amendment to Credit Agreement dated as of May 19, 1994, as further amended by that certain Third Amendment to Credit Agreement dated as of November 1, 1994, as further amended by that certain Fourth Amendment to Credit Agreement dated as of November 9, 1994, as further amended by that certain Fifth Amendment to Credit Agreement dated as of December 30, 1994, as further amended by that certain Sixth Amendment to Credit Agreement dated as of July 25, 1995, as further amended by that certain Seventh Amendment to Credit Agreement dated as of September 29, 1995, and as further amended by that certain Eighth Amendment to Credit Agreement dated as of February 14, 1996 (as so amended, the "CREDIT AGREEMENT"), as set forth herein. RECITALS WHEREAS, Borrower desires to amend the Credit Agreement in certain respects; 2 WHEREAS, Lenders and Agent have agreed to approve such amendments; WHEREAS, Guarantors desire to reaffirm the effectiveness respectively of the subsidiary Guaranty Agreement and the BEI Guaranty Agreement; AGREEMENT NOW, THEREFORE, in consideration of the terms and conditions herein contained, BEI, Borrower, Guarantors, Agent and Lenders agree as follows: 1. Definitions, Interpretation. All capitalized terms defined above and elsewhere in this Amendment shall be used herein as so defined. Unless otherwise defined herein, all other capitalized terms used herein shall have the respective meanings given to those terms in the Credit Agreement, as amended by this Amendment. The rules of construction set forth in Section I of the Credit Agreement shall, to the extent not inconsistent with the terms of this Amendment, apply to this Amendment and are hereby incorporated by reference. 2. Amendment to Credit Agreement. Subject to conditions set forth in paragraph 4 hereof, the Credit Agreement is hereby amended as follows: (a) The definition of "Adjusted Eurodollar Rate" appearing Section 1.1 is hereby amended to read in its entirety as follows: "Adjusted Eurodollar Rate" means for each Interest Period (i) the arithmetic average (rounded upward, if necessary, to the next higher 1/16 of 1%), as determined by the Agent, of the respective rates per annum quoted by Barclays Bank PLC, Bankers Trust Company, The Bank of Tokyo and National Westminster Bank PLC (or any successors of any of the foregoing) on the "LIBO" page of the Reuters Monitor Money Rate Service (or any successor publication) on the second Business Day prior to the commencement of such Interest Period (or, if such rates do not appear, the rate at which Dollar deposits are offered to NCB in the London interbank eurodollar currency market on the second Business Day prior to the commencement of such Interest Period) at or about 11:00 A.M. (London time) for delivery on the first day of such Interest Period, divided by (ii) a number equal to 1.00 minus the maximum rate or rates (expressed as a decimal fraction) of reserve requirements in effect on the day which is two Business Days prior to the beginning of such Interest Period (including, without limitation, basic, supplemental, marginal and emergency reserves under any 2 3 regulations of the Board of Governors of the Federal Reserve System or other governmental authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board) which are required to be maintained by a member bank of such System (such rate to be rounded upward, if necessary, to the next higher 1/16 of 1%). 3. Representations and Warranties. In order to induce the Agent and the Lenders to enter into this Amendment, each of BEI and Borrower represents and warrants to the Agent and the Lenders that: (a) The representations and warranties of each Loan Party contained in the Credit Agreement are true, correct and complete in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof except to the extent that such representations and warranties specifically relate to an earlier date, in which case they are true, correct and complete in all material respects as of such earlier date; (b) No event has occurred and is continuing or would result from the execution of this Amendment that constitutes an Event of Default or Potential Event of Default; (c) Each Loan Party has performed in all material respects all agreements and satisfied all conditions that the Credit Agreement and this Amendment provide shall be performed by it on or before the date hereof; (d) The execution, delivery and performance of this Amendment, and the Credit Agreement as amended by this Amendment, by each Loan Party which is a party thereto are within the corporate power and authority of each such Loan Party and, as of the Ninth Amendment Effective Date (as hereinafter defined), will be duly authorized by all necessary corporate action on the part of each Loan Party, and this Amendment as of the Ninth Amendment Effective Date, are duly executed and delivered by each of such Loan Parties which is a party thereto and will constitute a valid and binding agreement of each of such Loan Parties, enforceable against such Loan Parties in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. The Credit Agreement constitutes and, as of the Ninth Amendment Effective Date, the Credit Agreement, as amended by this Amendment, will constitute, a valid and binding agreement of each applicable Loan Party, enforceable against each applicable Loan Party in accordance with their respective terms, except as may be limited by bankruptcy, 3 4 insolvency, reorganization, moratorium or similar laws or equitable principles, relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. (e) The execution and delivery by each applicable Loan Party of this Amendment, and the performance by each such Loan Party of the Credit Agreement as amended by this Amendment, do not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to any Loan Party, the Certificate or Articles of Incorporation or Bylaws of any Loan Party or any order, judgment or decree of any court or other agency of government binding on any Loan Party, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any instrument that is material, individually or in the aggregate, and that is binding on such Loan Party, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of any Loan Party, or (iv) require any approval or consent of any Person under any instrument that is material, individually or in the aggregate, and that is binding on such Loan Party. (f) The execution and delivery by each applicable Loan Party of this Amendment, and the performance by each such Loan Party of the Credit Agreement as amended by this Amendment, do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body. 4. Conditions to Effectiveness. Section 2 of this Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the "Ninth Amendment Effective Date"): (a) On or before the Ninth Amendment Effective Date, Borrower shall deliver to the Lenders (or to the Agent for the Lenders with sufficient originally executed copies, as appropriate, for each Lender and its counsel) the following, each, unless otherwise noted, dated the Ninth Amendment Effective Date, duly executed and delivered by the parties thereto: (i) Signature and incumbency certificates of each of BEI, Borrower and each Subsidiary Guarantor of its respective officers executing this Amendment certified by such party's respective secretary or assistant secretary; and (ii) Executed counterparts of this Amendment. 4 5 (b) On or before the Ninth Amendment Effective Date, all corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by the Agent, acting on behalf of the Lenders, and its counsel shall be satisfactory in form and substance to the Agent and such counsel, and the Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as the Agent may reasonably request. (c) On or before the Ninth Amendment Effective Date, the Borrower shall have caused payment to the Agent of all amounts regarding the costs and expenses reasonably incurred by Agent in connection with this Amendment. 5. Acknowledgment and Agreement of Guarantors. Each Guarantor acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment and consents to the amendment of the Credit Agreement effected pursuant to this Amendment. Each Guarantor hereby confirms that the Guaranty Agreement and the Collateral Documents to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guaranty or secure, as the case may be, to the fullest extent possible the payment and performance of all Obligations, Guarantied Obligations (as defined in the applicable Guaranty Agreements) and Secured Obligations (as defined in the Collateral Documents), as the case may be, including, without limitation, the payment and performance of all obligations of Borrower now or hereafter existing under or in respect of the Credit Agreement as amended by this Amendment and the Notes defined therein. Each Guarantor acknowledges and agrees that any of the Guaranty Agreements and the Collateral Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment. Each Guarantor represents and warrants that all representations and warranties contained in the Credit Agreement as amended by this Amendment and the Guaranty Agreements and the Collateral Documents to which it is a party or otherwise bound are true, correct and complete in all material respects on and as of the Ninth Amendment Effective Date to the same extent as though made on and as of that date except to the extent that such representations and warranties specifically relate to an earlier date, in which case they are true, correct and complete in all material respects as of such earlier date. Each Guarantor acknowledges and agrees that in addition to all the other waivers agreed to and made by Guarantor as set forth in the Guaranty Agreement and the Collateral Documents to which it is a party or otherwise bound, and pursuant to the 5 6 provisions of California Civil Code Section 2856, "Guarantor waives all rights and defenses arising out of an election of remedies by the creditor, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed the Guarantor's rights of subrogation and reimbursement against the principal by the operation of Section 580d of the Code of Civil Procedure or otherwise." Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment or any other Loan Document and (ii) that neither the terms of the Credit Agreement, any other Loan Document nor this Amendment shall be deemed to require the consent of any Guarantor to any future amendments to the Credit Agreement. 6. Effectiveness; Counterparts. This Amendment may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. This Amendment (other than the provisions of Section 2) shall become effective upon the execution of a counterpart hereof by all Lenders and each of the Loan Parties and receipt of written or telephonic notification of such execution and authorization of delivery thereof. 7. Fees and Expenses. The Borrower acknowledges that all costs, fees and expenses as described in subsection 10.4 of the Credit Agreement incurred by the Agent and its counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of the Borrower. 8. Effect of Amendment. It is hereby agreed that, except as specifically provided herein, this Amendment does not in any way affect or impair the terms and conditions of the Credit Agreement, and all terms and conditions of the Credit Agreement are to remain in full force and effect unless otherwise specifically amended or changed pursuant to the terms and conditions of this Amendment. 9. Applicable Law. This Amendment and the rights and obligations of the parties hereto and all other aspects hereof shall be deemed to be made under, shall be governed by, and shall be construed and enforced in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. 6 EX-11.1 4 COMPUTATION OF EARNINGS PER SHARE 1 BEVERLY ENTERPRISES, INC. EXHIBIT 11.1 COMPUTATION OF NET INCOME PER SHARE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1995 ------------ ------------- PRIMARY: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 13,696 $ 16,549 Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- (2,063) ----------- ------------ Net income applicable to common shares . . . . . . . . . . . . . . . . . . . . . . . $ 13,696 $ 14,486 =========== ============ Applicable common shares: Weighted average outstanding shares during the period . . . . . . . . . . . . . . . 98,739 85,665 Weighted average shares issuable upon exercise of common stock equivalents outstanding (principally stock options) using the "treasury stock" method . . . . 1,239 1,639 ----------- ------------ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,978 87,304 =========== ============ Net income per share of common stock . . . . . . . . . . . . . . . . . . . . . . . . $ 0.14 $ 0.17 =========== ============ FULLY DILUTED: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,696 $ 16,549 Reduction of interest expense resulting from assumed conversion of 7 5/8% convertible subordinated debentures . . . . . . . . . . . . . . . . . . . --- (a) --- (a) Reduction of interest expense resulting from assumed conversion of 5 1/2% convertible subordinated debentures . . . . . . . . . . . . . . . . . . . 2,063 --- Reduction of interest expense resulting from assumed conversion of zero coupon notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- (a) --- (a) Less applicable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (825) --- ----------- ------------ Adjusted net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,934 $ 16,549 Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- (2,063) ----------- ------------ Adjusted net income applicable to common shares . . . . . . . . . . . . . . . . . . . $ 14,934 $ 14,486 =========== ============ Applicable common shares: Weighted average outstanding shares during the period . . . . . . . . . . . . . . . 98,739 85,665 Assumed conversion of cumulative convertible exchangeable preferred stock . . . . . --- (b) --- (a) Weighted average shares issuable upon exercise of common stock equivalents outstanding (principally stock options) using the "treasury stock" method . . . . 1,239 1,771 Assumed conversion of 7 5/8% convertible subordinated debentures . . . . . . . . . --- (a) --- (a) Assumed conversion of 5 1/2% convertible subordinated debentures . . . . . . . . . 11,253 --- Assumed conversion of zero coupon notes . . . . . . . . . . . . . . . . . . . . . . --- (a) --- (a) ----------- ------------ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,231 87,436 =========== ============ Net income per share of common stock . . . . . . . . . . . . . . . . . . . . . . . . $ 0.13 $ 0.17 =========== ============
_________________ (a) Conversion would be anti-dilutive and is therefore not assumed in the computation of earnings per share of common stock. (b) The cumulative convertible exchangeable preferred stock was exchanged into 5 1/2% convertible subordinated debentures during the fourth quarter of 1995. EX-27.1 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 MAR-31-1996 50,054 0 568,782 27,493 57,270 710,081 1,793,618 596,692 2,510,446 449,380 1,083,775 10,389 0 0 825,221 2,510,446 811,047 814,507 0 743,479 25,056 0 23,145 22,827 9,131 13,696 0 0 0 13,696 .14 .13 Excludes $45,930 of long-term notes receivable. Excludes $4,931 of allowance for long-term notes receivable. Included in Total costs and expenses line.
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