Alterra Announces Second Quarter 2001 Results; Reports On Continued Restructuring Progress.Business Editors MILWAUKEE--(BUSINESS WIRE)--Aug. 13, 2001 Alterra Healthcare Corporation (AMEX AMEX See: American Stock Exchange : ALI Ali (älē`) (Ali ibn Abu Talib), 598?–661, 4th caliph (656–61). The debate over his right to the caliphate caused a major split in Islam into Sunni and Shiite branches, and he is regarded by the Shiites as the first Imam, or leader: ) today announced financial results for the three-month period ended June June: see month. 30, 2001. At quarter end, the Company operated or managed 453 residences with a total capacity to serve approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 21,358 residents. In addition, the Company commented on its ongoing progress related to the 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). of its capital structure including activities related to the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of certain of the Company's owned and leased residences. OPERATING AND FINANCIAL RESULTS For the three months ended June 30, 2001, the Company reported revenues of $126.9 million, an increase of 13% over revenues for the quarter ended June 30, 2000. The Company's pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss for the quarter ended June 30, 2001, was $28.6 million (excluding charges related to asset dispositions and losses on lease terminations) compared to a pre-tax loss of $10.9 million for the comparable period of 2000 (excluding the impact of non-recurring charges and expenses). The Company's net loss for the quarter ended June 30, 2001, was $192.2 million. The pre-tax loss for the quarter ended June 30, 2001, includes $182.5 million of non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) including the reserves for asset dispositions ($160.4 million), lease terminations ($3.1 million), depreciation, amortization, and payment-in-kind ("PIK PIK See: Payment-in-kind bond PIK See payment-in-kind security (PIK). ") interest expense. RECENT OPERATIONAL RESULTS In the second quarter of 2001, the Company's residence level operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were 31%, consistent with the first quarter of 2001. The Company's operating margins have improved through the first half of 2001 due to rate increases that have been implemented in a large portion of the portfolio. Monthly rates averaged $2,774 for the quarter ended June 30, 2001, an increase of 8.5% over the average monthly rate for the June 2000 quarter. In addition, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. (excluding costs related to the Company's restructuring activities) declined to $9.7 million in the June 2001 quarter, or 6.8% of total residence revenue. For the three months ended June 30, 2001, the Company reported overall average occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy of 83%, a 2% increase over occupancy of 81% for the comparable quarter of 2000 and a decrease of 1% from the March 2001 quarter. Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. Vick, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. said, "We are pleased that our management team continues to deliver quality service, optimize optimize - optimisation rates, and control costs. We look forward to continued growth in our cash flow as we proceed through 2001." STABILIZED sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. RESIDENCE RESULTS During the quarter ended June 30, 2001, the Company operated 460 stabilized residences with a resident capacity of 21,568. These residences had an average occupancy for the quarter of 84%. For the three months ended June 30, 2001, these residences achieved revenues of $141.8 million and had an operating margin of $42.7 million or 30%. The Company defines stabilized residences as those that have reached 95% occupancy or have been open for 12 months as of the beginning of the reporting period. Weighted average occupancy for all residences -- both stable and in lease-up -- was 83% for the quarter ended June 30, 2001. SAME RESIDENCE RESULTS The Company operated 368 residences that were stabilized for the entire second quarter of 2000 and 2001. For these residences with a capacity to serve 16,562 residents, revenues for the three months ended June 30, 2001, were $109.2 million. These residences produced operating margins of 33% and had average occupancy of 86% for the three-month period ended June 30, 2001. RESTRUCTURING ACTIVITIES As previously announced, the Company is seeking to comprehensively restructure its capital structure. To conserve cash and fund ongoing residence operations, the Company did not make selected scheduled debt service and lease payments during the first half of 2001 and, as a result, is in default under many of its major credit instruments (including its convertible subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before ) and certain of its lease facilities. The Company is currently prohibited pro·hib·it tr.v. pro·hib·it·ed, pro·hib·it·ing, pro·hib·its 1. To forbid by authority: Smoking is prohibited in most theaters. See Synonyms at forbid. 2. from making cash payments on its convertible subordinated debentures pursuant to the subordination To put in an inferior class or order; to make subject to, or subservient. A legal status that refers to the establishment of priority between various existing liens or encumbrances on the same parcel of property. provisions of these debt securities. The Company previously announced that the principal components of its restructuring plan are: (i) the disposition of a substantial number of the Company's residences, which the Company expects to accomplish primarily by actively working with its lenders and lessors to identify new operators and by selling assets through an organized sales process A sales process is a systematic approach for performing product or service sales. The reasons for having a sales process include seller and buyer risk management, achieving standardized customer interaction in sales and scalable revenue generation. ; (ii) the restructuring of the Company's principal debt and lease obligations, including in certain instances payment deferrals, extensions of additional credit, the rescheduling of debt maturities and the elimination or modification A change or alteration in existing materials. Modification generally has the same meaning in the law as it does in common parlance. The term has special significance in the law of contracts and the law of sales. of certain covenants; and (iii) the exchange of new debt, equity or equity-linked securities of the restructured Company for the Company's currently outstanding convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. and joint venture interests held by third parties in certain of the Company's residences. While substantive Substantive may refer to: In grammar:
Effective July July: see month. 1, 2001, the Company concluded the restructuring of one of its leased portfolios which includes 42 residences with an aggregate resident capacity of 1,640 by entering into a master lease. The master lease includes negotiated covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the amendments and is for an initial term of sixteen years and includes one fifteen-year renewal option. For the quarter ended June 30, 2001, this leased portfolio generated approximately $5.5 million of cash flow after debt service and had an average occupancy of 89%. ASSET DISPOSITION ACTIVITY During the second quarter of 2001, the Company re-evaluated its previously announced disposition plan, increasing the number of total residences to be sold to 82 residences representing 3,396 beds. Residences included in the disposition plan were identified based on an assessment of a variety of factors including geographic location, residence size, and operating performance. The Company recorded a pre-tax loss of $160.4 million (net of a $3.6 million pre-tax gain on sale) in the quarter to reflect the assets held for sale at the lower of carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. or estimated liquidation value Liquidation value Net amount that could be realized by selling the assets of a firm after paying the debt. less costs to sell. During the quarter ended June 30, 2001, 15 of these residences representing 429 beds were sold for a net price of $20.1 million and three parcels of land were sold for a net sale price of $2.2 million. In conjunction with these sales, the Company repaid $18.8 million of debt or lease obligations and realized a net gain on sale of $3.6 million. In addition to these asset sales, the Company has effected the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the leases related to 17 residences representing a resident capacity of 940. Through June 30, 2001, the Company has recorded total charges of $12.6 million related to these lease terminations. Alterra offers supportive supportive adjective Pertaining to a Pt management philosophy in which only the Sx of a particular condition are treated; supportive measures are often taken when no specific and/or effective therapy is available or accessible–eg, viral meningitis, or and selected healthcare services to our nation's frail elderly frail elderly, n.pl older persons (usually over the age of 75 years) who are afflicted with physical or mental disabilities that may interfere with the ability to independently perform activities of daily living. and is the nation's largest operator of freestanding free·stand·ing adj. Standing or operating independently of anything else: a freestanding bell tower; a freestanding maternity clinic. Alzheimer's/ memory care residences. Alterra currently operates in 28 states. The Company's common stock is traded on the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. under the symbol "ALI." Statements in this release relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc matters that are not historical facts are 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. based on management's belief and assumptions based upon currently available information. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable; it is unable to provide assurances that these expectations will prove to be correct. Forward-looking statements involve a number of risks and uncertainties, including, but not limited to, risks associated with recent defaults under loan and lease obligations, risks associated with a shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in liquidity and the implementation of a restructuring plan, risks associated with the disposition of assets and termination of leases, substantial debt and operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. payment obligations, operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. associated with new residences, the Company's need for additional financing and liquidity, risks associated with construction activities, risks associated with competition, governmental regulation and other uncertainties outlined in the Company's reports filed with the Securities and Exchange Commission. Should one or more of these risks materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. (or the consequences of one or more of these risks worsen wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. worsen Verb to make or become worse worsening adjn ) or should the Company's underlying assumptions prove incorrect Incorrect means to not be correct and may also refer to:
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Data)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2001 2000 2001 2000
---------------------- ----------------------
Revenue:
Resident service
fees $ 125,207 $108,082 $ 251,743 $209,527
Other 1,720 3,957 3,487 9,068
---------------------- ----------------------
Operating revenue 126,927 112,039 255,230 218,595
Operating expenses:
Residence operations 87,619 72,309 174,684 138,495
Lease expense 17,157 20,592 38,107 40,839
Lease income (5,633) (8,334) (11,177) (17,063)
General and
administrative 11,664 16,209 23,075 27,185
Loss on disposal 160,448 12,054 162,925 12,054
Depreciation and
amortization 10,641 8,624 20,024 16,293
Loss on lease
terminations 3,056 --- 12,617 ---
---------------------- ----------------------
Total operating
expenses 284,952 121,454 420,253 217,803
---------------------- ----------------------
Operating (loss)
income (158,025) (9,415) (165,023) 792
---------------------- ----------------------
Other income (expense):
Interest expense, net (20,706) (17,234) (37,954) (32,535)
Amortization of
financing costs (2,631) (3,091) (5,059) (4,708)
PIK interest (5,823) (1,411) (12,175) (1,411)
Equity in losses of
unconsolidated
affiliates (5,184) (3,132) (9,706) (5,508)
Minority interest in
losses of
consolidated
subsidiaries 169 360 125 869
---------------------- ----------------------
Total other
expense, net (34,175) (24,508) (64,769) (43,293)
---------------------- ----------------------
(Loss) income before
income taxes,
extraordinary gain and
cumulative effect of a
change in accounting
principle (192,200) (33,923) (229,792) (42,501)
Income tax benefit
(expense) (30) 12,355 (60) 15,615
---------------------- ----------------------
(Loss) income before
extraordinary gain and
cumulative effect of a
change in accounting
principle (192,230) (21,568) (229,852) (26,886)
Extraordinary gain on
the early
extinguishment of debt,
net of tax expense
of $5,232 --- 8,536 --- 8,536
---------------------- ----------------------
Net loss $(192,230) $(13,032) $(227,671) $(18,350)
====================== ======================
Income per common
share before
extraordinary item
and cumulative
effect of a change
in accounting
principle:
Basic $(8.69) $(0.98) $(10.40) $(1.22)
====================== ======================
Diluted $(8.69) $(0.98) $(10.40) $(1.22)
====================== ======================
Net income per common
share:
Basic $(8.69) $(0.59) $(10.40) $(0.83)
====================== ======================
Diluted $(8.69) $(0.59) $(10.40) $(0.83)
====================== ======================
Weighted average
common shares
outstanding:
Basic 22,110 22,110 22,110 22,107
====================== ======================
Diluted 22,110 22,110 22,110 22,107
====================== ======================
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
June 30, December 31,
2001 2000
-------------- --------------
ASSETS
Cash $ 21,818 $ 23,688
Assets held for sale 125,979 154,775
Other current assets 46,439 73,577
-------------- --------------
Current assets 194,236 252,040
-------------- --------------
Land 70,249 82,218
Building and improvements 808,160 743,983
Furniture, fixtures and
equipment 87,504 94,199
Construction in progress 841 41,850
-------------- --------------
Total property and equipment 966,754 962,250
Less: accumulated depreciation (80,301) (70,370)
-------------- --------------
Property and equipment, net 886,453 891,880
Other assets 66,592 83,845
-------------- --------------
Total assets $1,147,281 $1,227,765
============== ==============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities 1,298,588 $ 381,266
Convertible debt --- 395,914
Long-term obligations, less
current installments 26,700 403,036
Deferred gain on sale and other 4,096 5,286
Minority interest 4,381 4,506
Redeemable preferred stock 5,185 4,898
-------------- --------------
Stockholders' equity (191,669) 32,859
-------------- --------------
Total liabilities and
stockholders' equity $1,147,281 $1,227,765
============== ==============
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
SELECTED FINANICAL INFORMATION FOR SECOND QUARTER 2001
(Unaudited)
Quarter ended Quarter ended
June 30, June 30,
2001 2000
-------------- --------------
Stabilized residence results:
Number of residences 460 372
Number of beds 21,568 16,558
Average occupancy 84% 89%
Revenues $141.8 million $104.9 million
Operating margin 30% 36%
Same store residence results:
Number of residences 368 254
Number of beds 16,562 10,901
Average occupancy 86% 91%
Revenues $109.2 million $73.4 million
Operating margin 33% 37%
Average rates:
Assisted living residences $2,564 $2,328
Memory care residences $3,392 3,306
Total residences $2,774 $2,556
Average occupancy percentages:
Stabilized residences 84% 89%
Leaseup residences
(including unconsolidated
entities) 59% 57%
Total residences (including
unconsolidated entities) 83% 81%
Residences opened during period:
Residences opened 3 6
Capacity added 142 235
Residences sold/leases terminated 31 ---
Capacity sold/leases terminated 1,193 ---
Capacity:
Capacity owned 11,831 11,378
Capacity leased 8,588 10,293
Capacity managed 939 90
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