Beverly Earns 10 Cents Per Share Diluted in Third Quarter, Before Previously Announced Special Charge.Business Editors/Health & Medical Writers FORT SMITH, Ark.--(BW HealthWire)--Oct. 31, 2000 Beverly Enterprises, Inc. (NYSE NYSE See: New York Stock Exchange :BEV) today announced that it earned 10 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. in the third quarter of 2000, before a previously announced charge primarily related to increased reserves for patient care liability costs in Florida. After the special pre-tax non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $49,043,000, there was a net loss for the 2000 third quarter of $22,471,000 (22 cents per share diluted). This compares to net income in the 1999 third quarter of $7,897,000 (eight cents per share diluted), after Year 2000 (Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 ) remediation costs of $3,423,000. Revenues totaled $665,889,000 in the 2000 third quarter, compared to $638,331,000 in the year-earlier period. The 4.3 percent increase in revenues reflects a strong increase in per diem per diem adj. or n. Latin for "per day," it is short for payment of daily expenses and/or fees of an employee or an agent. nursing home rates (average rates up 7.5 percent for Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. , 6.5 percent for private/other and 4.4 percent for Medicare) that more than offset a 25-facility reduction in the average number of homes operated, compared to the 1999 third quarter. Net operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for nursing homes in operation for at least a year increased 7 percent over the comparable period in 1999, and the operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (earnings before interest, taxes, depreciation, amortization and special charges as a percentage of total net operating revenues) rose by 11 basis points. "I'm pleased with the progress our operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon are making and with the renewed commitment I see throughout the company to increased accountability," said David R. Banks, Chairman and Chief Executive Officer. "I'm also encouraged that Congress has recognized the need to restore some of the unintended reductions in Medicare funding." For the nine months ended September 30, 2000, Beverly recorded a net loss of $7,688,000 (eight cents per share diluted) on revenues of $1,968,704,000. For the same period the year earlier, Beverly recorded a net loss of $102,053,000 ($1.00 per share diluted) on revenues of $1,907,038,000. The 1999 period included special charges of $202,447,000 related to settlements of federal government investigations and Y2K remediation costs of $10,672,000. Nursing home occupancy averaged 86.9 percent for the 2000 third quarter, down 21 basis points from the year-earlier period, but up 12 basis points from the second quarter of 2000. Medicare census was 9.2 percent of total patient days in the 2000 third quarter, up slightly from the 1999 period but down 33 basis points sequentially. The third quarter operating margin for the entire company rose 17 basis points from the second quarter to just over 9 percent, the highest quarterly operating margin achieved during 2000. Compared to the 1999 third quarter, however, the margin declined by nearly one half a percentage point. (On October 16, 2000, Beverly disclosed that it would record a charge of approximately $50 million, primarily related to patient care liability costs in Florida. That announcement also discussed the process Beverly follows in accruing for patient care liability costs and the provisions Beverly has made for insurance coverage.) Beverly shareholders may listen today at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy to a discussion by senior management of the Company's performance and prospects by dialing 212/346-0203. A recording of this conference call will be available from 10:30 a.m. EST today until 6:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. Friday, November 3. Shareholders may dial 800/633-8284 or 858/812-6440 and enter reservation 16601870(pound) to access the recording. This release and the subsequent conference call are intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the Securities and Exchange Commission's Fair Disclosure Regulation. In addition, they may contain 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. , including statements related to expected 2000 performance, made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include: national and local economic conditions, including their effect on the availability and cost of labor and materials labor and materials (time and materials) n. what some builders or repair people contract to provide and be paid for, rather than a fixed price or a percentage of the costs. ; the effect of government regulations and changes in regulations governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. the healthcare industry, including the Company's compliance with such regulations; changes in Medicare and Medicaid Medicare and Medicaid U.S. government programs in effect since 1966. Medicare covers most people 65 or older and those with long-term disabilities. Part A, a hospital insurance plan, also pays for home health visits and hospice care. payment levels and methodologies and the application of such methodologies by the government and its fiscal intermediaries fiscal intermediary Part A Contractor Medicare A private company that has a contract with Medicare to pay part A and some part B bills. See Medicare, Part A. ; liabilities and other claims asserted against the Company, including patient care liabilities, as well as the resolution of lawsuits brought about by the announcement of the federal government investigations or the settlements of such investigations; the ability to predict future reserves related to patient care liabilities; the ability to attract and retain qualified personnel; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which the Company operates; the ability to maintain and increase census levels; and demographic changes. These and other risks and uncertainties that could affect future results are addressed in the Company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q. Beverly Enterprises and its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. comprise a leading provider of post-acute healthcare in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . They operate 536 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. , as well as 36 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. centers, 178 outpatient outpatient /out·pa·tient/ (-pa-shent) a patient who comes to the hospital, clinic, or dispensary for diagnosis and/or treatment but does not occupy a bed. out·pa·tient n. therapy clinics, and 59 home care and hospice hospice, program of humane and supportive care for the terminally ill and their families; the term also applies to a professional facility that provides care to dying patients who can no longer be cared for at home. agencies.
BEVERLY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
-------- -------- ---------- ----------
Net operating revenues $665,284 $637,396 $1,966,625 $1,903,748
Interest income 605 935 2,079 3,290
-------- -------- ---------- ----------
Total revenues 665,889 638,331 1,968,704 1,907,038
Costs and expenses:
Operating and administrative:
Wages and related 409,657 389,710 1,215,208 1,177,676
Other 195,552 186,993 579,072 549,692
Interest 20,011 20,001 59,942 54,029
Depreciation and amortization 24,457 25,669 75,171 74,511
Special charges related to
settlements of federal
government investigations -- -- -- 202,447
Additional provision for
patient care and other
claims 44,416 -- 44,416 --
Workforce reductions and
other unusual items 4,627 -- 4,627 --
Year 2000 remediation -- 3,423 -- 10,672
-------- -------- ---------- ----------
Total costs and expenses 698,720 625,796 1,978,436 2,069,027
-------- -------- ---------- ----------
Income (loss) before provision
for (benefit from) income
taxes (32,831) 12,535 (9,732) (161,989)
Provision for (benefit from)
income taxes (10,360) 4,638 (2,044) (59,936)
-------- -------- ---------- ----------
Net income (loss) $(22,471) $ 7,897 $ (7,688) $ (102,053)
======== ======== ========== ==========
Net income (loss) per share of
common stock:
Basic and diluted:
Net income (loss) per share
of common stock $ (0.22) $ 0.08 $ (0.08) $ (1.00)
======== ======== ========== ==========
Shares used to compute
basic net income (loss)
per share 102,473 102,495 102,027 102,490
======== ======== ========== ==========
Shares used to compute
diluted net income (loss)
per share 102,473 102,715 102,027 102,490
======== ======== ========== ==========
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
PRO FORMA ANALYSIS OF EARNINGS
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
-------- -------- -------- ---------
Income (loss) before provision
for (benefit from) income
taxes, as reported $(32,831) $ 12,535 $ (9,732) $(161,989)
Adjustments for non-recurring
items:
Special charges related to
settlements of federal
government investigations -- -- -- 202,447
Additional provision for
patient care and other
claims 44,416 -- 44,416 --
Workforce reductions and
other unusual items 4,627 -- 4,627 --
Year 2000 remediation -- 3,423 -- 10,672
-------- -------- -------- ---------
Income before provision for
income taxes, as adjusted 16,212 15,958 39,311 51,130
Provision for income taxes,
as adjusted 5,836 5,904 14,152 18,918
-------- -------- -------- ---------
Net income $ 10,376 $ 10,054 $ 25,159 $ 32,212
======== ======== ======== =========
Diluted income per common
share, as adjusted $ 0.10 $ 0.10 $ 0.25 $ 0.31
======== ======== ======== =========
Weighted average shares used
to compute diluted income per
common share, as adjusted 103,165 102,715 102,299 102,739
======== ======== ======== =========
Note: For purposes of this pro forma analysis, the provision for
income taxes, as adjusted, assumes annual effective tax rates of 36%
for 2000 and 37% for 1999.
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