Advocat Announces Fourth Quarter and 1999 Results.Business Editors FRANKLIN, Tenn.--(BUSINESS WIRE)--March 30, 2000 Advocat Inc. (Nasdaq OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). :AVCA AVCA American Volleyball Coaches Association AVCA American Veterinary Chiropractic Association AVCA African Venture Capital Association AVCA Almaden Valley Community Association AVCA Automobil Veteranen Club Austria AVCA Apoyo Vital Cardiopulmonar Avanzado ) today announced its results for the fourth quarter and year ended December 31, 1999. The Company reported a pre-tax loss of $2.0 million in the fourth quarter of 1999 compared with a loss of $6.1 million for the same period in 1998. The net loss for the quarter and year ended December 31, 1999, were $13.9 million and $21.6 million, respectively, compared with $3.9 million and $3.0 million for the quarter and year ended December 31, 1998. The net loss per share for the quarter and year ended December 31, 1999, were $2.55 and $3.98, respectively, compared with a net loss per share of $0.72 and $0.57 for the quarter and year ended December 31, 1998. The net loss for 1999 includes a $7.6 million tax provision compared with a $1.7 million tax benefit in 1998. The 1999 tax provision is the result of a $12.8 million increase in the Company's valuation allowance against Advocat's deferred tax assets due to the uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the realization of the future benefits of those deferred tax assets. In 1998, the net loss included a non-recurring charge of $5.9 million due primarily to a charge for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of assets, legal and contractual settlements, the termination of proposed financing and acquisition transactions, and additional restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. associated with the Company's management information systems conversion. Revenues for 1999 were $182.0 million compared with revenues of $205.2 million in 1998. Net revenues for the fourth quarter of 1999 totaled $46.2 million compared with revenues of $49.7 million for the fourth quarter of 1998. The lower revenues were primarily due to Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. changes brought about by the implementation of prospective payment system (PPS (Packets Per Second) The measurement of activity in a local area network (LAN). In LANs such as Ethernet, Token Ring and FDDI, as well as the Internet, data is broken up and transmitted in packets (frames), each with a source and destination address. ), various initiatives in the Balanced Budget Balanced budget A budget in which the income equals expenditure. See: budget. balanced budget A budget in which the expenditures incurred during a given period are matched by revenues. Act of 1997 and reimbursement issues. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. decreased to $152.6 million in 1999 compared with $164.8 million in 1998. Operating expenses decreased to $37.1 million in the fourth quarter of 1999 compared with $41.2 million in the 1998 comparable period. Advocat initiated cost reduction programs in 1999 in response to Medicare reimbursement changes. The cost reduction initiatives were offset somewhat by a significant increase in the provision for doubtful accounts, rising to $7.0 million in 1999 from $2.4 million in 1998. The Company also reported that it is currently not in compliance with various financial covenants contained in its loan agreements with its primary bank and other lenders, including its primary lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. . Cross-default Cross-default A provision under which default on one debt obligation triggers default on another debt obligation. and other provisions contained in other loan agreements will under certain circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or permit the holders of a majority of the Company's debt to demand immediate repayment. The Company had total bank and other debt of $60.9 million as of December 31, 1999, of which the Company has classified $53.1 million as current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. . The Company is currently discussing potential restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , modification and refinancing Refinancing An extension and/or increase in amount of existing debt. alternatives with its lenders, primary lessor and potential investors. No assurance can be given that the Company will successfully negotiate a restructuring, including appropriate waivers, of its indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. . If any of the Company's lenders forced immediate repayment, the Company would not be able to repay the amounts outstanding. Advocat had negative working capital of $56.7 million as of December 31, 1999, primarily as a result of the majority of debt being reclassified as short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. . Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made in this release involve a number of risks and uncertainties, including but not limited to, factors affecting the long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. industry in general, governmental reimbursement, government regulation, health care reforms, the impact of future licensing surveys, changing economic and market conditions and other risk factors detailed in the Company's Securities and Exchange Commission filings. Advocat Inc. operated 119 facilities including 54 assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. facilities with 5,215 units and 65 skilled nursing facilities skilled nursing facility n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. containing 7,307 licensed beds as of December 31, 1999. The Company operates facilities in 12 states, primarily in the Southeast, and three provinces in Canada. For additional information about the Company, visit Advocat's web site: http://www.irinfo.com/avc
ADVOCAT INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
Ended December 31,
1999 1998
------------- ------------
REVENUES:
Patient revenues $ 35,951 $ 39,867
Resident revenues 9,943 8,821
Management fees 276 919
Interest 46 49
------------- -------------
Net revenues 46,216 49,656
------------- ------------
OPERATING EXPENSES:
Operating 37,091 41,223
Lease 5,220 4,730
General and administrative 2,381 2,810
Depreciation and amortization 1,720 1,020
Non-recurring charges 500 4,391
Interest 1,334 1,577
------------- -------------
Total expenses 48,246 55,751
------------- -------------
Loss before income taxes (2,030) (6,095)
Provision (benefit) for income taxes 11,840 (2,194)
------------- -------------
NET LOSS $ (13,870) $ (3,901)
============= ==============
Loss per share:
Basic $ (2.55) $ (0.72)
============== =============
Diluted $ (2.55) $ (0.72)
============= =============
Weighted Average Shares:
Basic 5,445,000 5,384,000
============== =============
Diluted 5,445,000 5,395,000
============== ============
ADVOCAT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the Year Ended
Ended December 31,
1999 1998
------------- ------------
REVENUES:
Patient revenues $ 141,022 $ 166,529
Resident revenues 37,905 34,804
Management fees 2,932 3,627
Interest 159 192
------------- -------------
Net revenues 182,018 205,152
------------- ------------
OPERATING EXPENSES:
Operating 152,557 164,769
Lease 20,375 19,109
General and administrative 11,753 10,969
Depreciation and amortization 5,167 3,838
Non-recurring charges 500 5,859
Interest 5,460 5,425
------------- -------------
Total expenses 195,812 209,969
------------- -------------
Loss before income taxes (13,794) (4,817)
Provision (benefit) for income taxes 7,605 (1,734)
------------- -------------
Loss before cumulative effect of
change in accounting principle (21,399) (3,083)
Cumulative effect of change in
accounting principle, net of tax (277) -0-
NET LOSS $ (21,676) $ (3,083)
============= ==============
Loss per share:
Basic $ (3.98) $ (0.57)
============= =============
Diluted $ (3.98) $ (0.57)
============= ============
Weighted Average Shares:
Basic 5,445,000 5,388,000
============= =============
Diluted 5,445,000 5,388,000
============= ============
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