Beverly Earns 15 Cents Per Share Diluted; Expected Divestitures to Significantly Reduce Future Patient Care Liability Costs.Business Editors, Health/Medical Writers FORT SMITH, Ark.--(BUSINESS WIRE)--Oct. 31, 2002 Beverly Beverly, city (1990 pop. 38,195), Essex co., NE Mass., on Massachusetts Bay; inc. as a city 1894. Its chief manufactures are electronic and scientific equipment, consumer goods, and chemicals. Enterprises, Inc. (NYSE NYSE See: New York Stock Exchange : BEV) today announced that strong operating results and continued cost-containment initiatives produced net income for the third quarter of 2002 totaling $15.6 million (15 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. ), compared to $12.1 million (11 cents per share diluted) for the same period in 2001.(1) Third-quarter results for 2002 include a charge of $4.5 million, primarily for workforce reductions. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis - and assuming effective tax rates of 37 percent and 36 percent for the 2002 and 2001 periods, respectively - Beverly's net income for the 2002 third quarter totaled $13.3 million (13 cents per share diluted), compared to $14 million (13 cents per share diluted) in the year-earlier period. Beverly's pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share target for the 2002 third quarter had been 12 cents per share diluted. In 2002 a new accounting standard relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the amortization of goodwill (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142) was adopted. If this standard had been in effect last year, third quarter results in 2001 would have improved by $1.1 million (one cent per share diluted). Revenues for the 2002 third quarter totaled $630.5 million, compared to $691.9 million in the year-earlier period, due primarily to a 14 percent reduction in the number of beds. This reduced capacity primarily was due to the strategic sale of nursing home operations in Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and and 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 several other under-performing assets. On a same-facility basis, total revenues increased 3.8 percent - the result of a four percent increase in nursing home 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. rates, growth in third-party revenues for AEGIS Therapies and an increase in the mix of 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. patients. "The success of strategic initiatives to strengthen our nursing home portfolio and expand our eldercare eld·er·care n. Social and medical programs and facilities intended for the care and maintenance of the aged. service businesses can be seen in the growth of same-facility operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. ,(2) both during the third quarter and throughout 2002," said William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack R. Floyd Floyd is a variant spelling of the Welsh name Lloyd, which means grey, and may refer to: Places
A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (operating profit as a percentage of 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. ) to 9.7 percent. For the first nine months of 2002 and on a same-facility basis, total company operating profits were up 9.3 percent and revenues rose 6.3 percent. We increased our overall operating margin by 26 basis points to more than 9.3 percent." Business Unit Performance Remains Strong For the third quarter, nursing home 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 averaged 87.8 percent - an increase of 54 basis points from the same period in 2001 and a 14-basis point gain from the prior quarter. Patient mix remained strong, with Medicare accounting for 10.5 percent of patient days - the seventh consecutive quarter at double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. levels. As a percentage of revenue, Medicare averaged 25.8 percent for the 2002 third quarter, up 123 basis points from the same period a year earlier. Medicare as a percentage of revenue was down 79 basis points sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , reflecting a seasonal decline. Revenues from rehabilitation rehabilitation: see physical therapy. therapy services provided by AEGIS Therapies to third-party nursing homes have continued to grow throughout 2002. For both the quarter and first nine months, third-party revenues have more than tripled, compared to the same periods in 2001. AEGIS added 36 non-Beverly facilities during the quarter, bringing the outside client base to 362 facilities. Operating profits rose 10 percent on a comparable basis from the 2001 third quarter, as AEGIS slightly exceeded its internal profit objective. Operating profits for 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. operations increased 41 percent from the third quarter of 2001 and were up 47 percent sequentially. Revenues increased 9 percent from the 2001 third quarter and from the 2002 second quarter, reflecting average daily census daily census See Census. gains of 6 percent and 11 percent, respectively, over these same periods. Beverly operates 21 hospice programs in 10 states. Matrix achieved an operating profit for the 2002 third quarter, compared to continuing losses throughout 2001. Matrix primarily provides non-geriatric 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 services at 154 clinics. As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , Beverly has retained an independent third party to audit MK Medical's billing of government payors to determine the extent of any potential overpayments. It is anticipated that the results of this audit will not be determined before the end of the fourth quarter of 2002. 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. Outlook Reflects Medicare Uncertainty Floyd said: "The failure by Congress to address Medicare funding on a timely basis creates significant uncertainty in our short-term financial projections. If funding is restored and made retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a to October October: see month. 1, 2002, we believe we can achieve our pro forma earnings objective for the fourth quarter of 13 cents per share diluted. This objective reflects the 2.6 percent 'market basket' increase that took effect October 1, 2002, and is based on our current asset portfolio. If no additional funds are authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: by Congress, our fourth quarter revenues and operating profits would decline by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $14 million, and our pro forma earnings would total about five cents per share diluted. "We've we've Contraction of we have. we've have been assured by members of the leadership in both the House and Senate that Congress recognizes the need for additional Medicare funding and will address the issue during its post-election session. The healthcare system for the elderly in this country is as fragile fragile - brittle as the patients we serve, and it must be strengthened by adequate funding at both Federal and state levels. Otherwise, providers will find it increasingly difficult to attract and retain qualified caregivers - and the industry will not have access to the funds needed to upgrade an aging and technologically outmoded out·mod·ed adj. 1. Not in fashion; unfashionable: outmoded attire; outmoded ideas. 2. No longer usable or practical; obsolete: outmoded machinery. infrastructure." Aggressive Actions Being Taken to Reduce Patient Care Liabilities Floyd continued: "We recognize that we cannot rely solely on outside economic and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. factors to achieve and sustain meaningful improvements in our performance. We must continue to strengthen our nursing home portfolio, reduce overhead and improve our overall effectiveness. Our most pressing challenge, however, is to stop the alarming growth in patient care liability costs - an issue that threatens the entire 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. "The aggressive actions we're we're Contraction of we are. we're we are taking to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. these costs begin with our long-standing long-stand·ing adj. Of long duration or existence: a long-standing friendship. long-standing Adjective existing for a long time commitment to improve the quality of care we're providing. Our performance continues to be equal to or better than the average of other for-profit for-prof·it adj. Established or operated with the intention of making a profit: a for-profit organization. facilities in states where we operate in terms of the percentage of adverse actions resulting from state surveys, and our average number of deficiencies per survey continues to decline. We recently completed the integration of our existing quality management systems and programs with Nursing Home operations and our Professional Services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. organization, which provides the clinical expertise and resources to our homes. This integration is designed to bring greater focus and more effective use of clinical resources to this critical area. "We also are adding client service specialists at key nursing homes to counsel patients and their families on care planning objectives and treatment expectations. In addition, we've expanded our nurse-attorney function and more closely integrated it into our skilled nursing operations. These nurse attorneys now play a more proactive and preventative role with the nursing homes in addressing incidents and misunderstandings that might otherwise form the basis for claims and lawsuits. They also are providing our nursing homes with additional assistance on survey and regulatory issues. Another action we've taken that is designed to minimize lawsuits is the implementation, effective October 1, of voluntary arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the agreements as part of the admissions process at every one of our nursing homes. Strategic Review of Assets Primarily Designed to Cut Liability Costs, Strengthen Portfolio "We believe these initiatives will prove helpful in reducing the growth of patient care liability costs, but we recognize that even more aggressive and far-reaching far-reach·ing adj. Having a wide range, influence, or effect: the far-reaching implications of a major new epidemic. actions are required to cut these costs on an absolute basis. We are evaluating several strategic alternatives that address this issue, and analyzing our entire nursing home portfolio to identify facilities that account for a disproportionate dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por share of
projected patient care liability costs.
"As a result of this analysis, we expect to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. a significant portion of our current nursing home capacity over the next two years. The facilities that are being considered are currently projected to account for more than 50 percent of our anticipated patient care liability costs in 2002, and their liability exposure currently is expected to continue in that proportion in the future. This process represents a significant acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of our strategy to strengthen the nursing home portfolio in order to generate larger and more predictable operating and free cash flows. "We've already made important progress toward this objective. Since year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2000, we've divested 73 under-performing or non-strategic nursing homes. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of these divestitures have been utilized to reduce overall debt by more than $110 million - and to make capital investments to improve our remaining facilities. From this stronger base of operations Noun 1. base of operations - installation from which a military force initiates operations; "the attack wiped out our forward bases" base air base, air station - a base for military aircraft army base - a large base of operations for an army , we believe we can achieve an even more dramatic transformation in the size and composition of the Beverly portfolio. We plan to use the net proceeds from any divestitures of nursing homes or other non-strategic assets to further reduce our debt level and to reinvest re·in·vest tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. in facilities, technology and other business opportunities consistent with our strategic objectives. "To help us execute this program in a strategic manner, we will retain an investment bank to assist us with asset dispositions. Obviously, a commitment of this magnitude requires considerable patience Patience, poem Patience: see Pearl, The. patience, card game patience: see solitaire. Patience See also Longsuffering. and prudence to ensure that we obtain fair value for the assets that will be sold and that we maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. the performance of these properties while we are operating them. As a result, we do not intend to make further announcements regarding specific assets to be divested or to discuss specific timetables until the process has advanced. Prudent execution of this plan also makes it impracticable to provide interim guidance about quarterly performance objectives, at least during 2003. "At the same time we're executing this divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). strategy, we also will be implementing several initiatives to improve our fundamental business processes and reduce costs throughout our organization. We've set an objective of reducing costs by at least $40 million over the next three years. In addition to cutting costs, this also will help ensure that our overhead structure is effectively aligned with a smaller-but-stronger portfolio of operating assets Operating Assets Another term for working capital. . "The overall objective of these actions is to transform Beverly into a more profitable provider of eldercare services, with more predictable operating margins and free cash flows. Projected patient care liability costs for future years should be reduced significantly. Our balance sheet will be stronger, with improved ratios. In summary, Beverly will be a company that provides quality care for our patients and clients - and better returns for our investors." Beverly shareholders may listen to a discussion by senior management of the Company's performance and prospects at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy today by dialing 1-800-946-0712 or 1-719-457-2642 and entering reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number 567535. A recording of this conference call will be available from 11:30 a.m. EST today until midnight Thursday Thursday: see week. , November November: see month. 7. Shareholders may dial 1-888-203-1112 or 1-719-457-0820 and enter reservation number 567535 to access the recording. This release is 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. The release 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 future 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, utilities and materials; 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 the Class Action and Derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. lawsuits; the ability to execute possible divestitures in a timely manner at fair value; 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 census, periodic official count of the number of persons and their condition and of the resources of a country. In ancient times, among the Jews and Romans, such enumeration was mainly for taxation and conscription purposes. levels; and demographic See demographics. 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, Inc. 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 To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise a leading provider of healthcare services to the elderly 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 461 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 29 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, 54 home care and hospice centers and 154 outpatient clinics. Through AEGIS Therapies, they also offer rehabilitative re·ha·bil·i·tate tr.v. re·ha·bil·i·tat·ed, re·ha·bil·i·tat·ing, re·ha·bil·i·tates 1. To restore to good health or useful life, as through therapy and education. 2. services on a contract basis to nursing homes operated by other care providers. (1) Net income for the 2002 third quarter reflects the fact that, as previously disclosed, no Federal income tax expense is expected to be recorded through 2003. The annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. tax rate in effect for the 2001 third quarter was 45 percent, a higher than normal rate that resulted from significant charges related to the then-pending sale of operations in Florida. (2) Earnings before interest, taxes, depreciation, amortization and special charges.
BEVERLY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Quarter ended Nine months ended
September 30, September 30,
------------------- ----------------------
2002 2001 2002 2001
--------- --------- ---------- ----------
Net operating revenues $629,036 $690,875 $1,884,500 $2,030,321
Interest income 1,449 1,027 3,592 2,225
--------- --------- ---------- ----------
Total revenues 630,485 691,902 1,888,092 2,032,546
Costs and expenses:
Operating and
administrative:
Wages and related 379,164 418,970 1,120,327 1,228,689
Provision for
insurance and
related items 28,870 27,111 96,793 83,480
Other 162,584 180,865 502,853 538,800
Interest 16,610 19,637 50,437 59,020
Depreciation and
amortization 22,135 23,369 66,121 69,983
Florida insurance
reserve adjustment -- -- 22,179 --
California investigation
settlement and
related costs -- -- 6,300 --
Adjustment to estimated
reserves related to
settlements of
federal government
investigations -- -- (6,940) --
Asset impairments,
workforce reductions and
other unusual items 4,523 -- 4,523 115,543
--------- --------- ---------- ----------
Total costs and expenses 613,886 669,952 1,862,593 2,095,515
--------- --------- ---------- ----------
Income (loss) before
provision for (benefit
from) income taxes 16,599 21,950 25,499 (62,969)
Provision for (benefit
from) income taxes 1,021 9,877 3,431 (28,336)
--------- --------- ---------- ----------
Net income (loss) $15,578 $12,073 $22,068 $(34,633)
========= ========= ========== ==========
Net income (loss) per
share of common stock:
Basic:
Net income (loss)
per share of
common stock $0.15 $0.12 $0.21 $(0.33)
========= ========= ========== ==========
Shares used to
compute net income
(loss) per share 104,865 104,264 104,681 103,953
========= ========= ========== ==========
Diluted:
Net income (loss)
per share of
common stock $0.15 $0.11 $0.21 $(0.33)
========= ========= ========== ==========
Shares used to
compute net income
(loss) per share 104,937 106,572 105,310 103,953
========= ========= ========== ==========
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
PRO FORMA ANALYSIS OF EARNINGS
(Unaudited)
(In thousands, except per share amounts)
Quarter ended Nine months ended
September 30, September 30,
---------------- ------------------
2002 2001 2002 2001
------- ------- ------- -------
Income (loss) before provision
for (benefit from)income taxes,
as reported $16,599 $21,950 $25,499 $(62,969)
Adjustment for special charges:
Florida insurance reserve
adjustment -- -- 22,179 --
California investigation
settlement and related costs -- -- 6,300 --
Adjustment to estimated
reserves related to
settlements of federal
government investigations -- -- (6,940) --
Asset impairments, workforce
reductions and other
unusual items 4,523 -- 4,523 115,543
------- ------- ------- -------
Income before provision for
income taxes, as adjusted 21,122 21,950 51,561 52,574
Provision for income taxes, as
adjusted 7,816 7,902 19,078 18,927
------- ------- ------- -------
Net income $13,306 $14,048 $32,483 $33,647
======= ======= ======= =======
Diluted income per common share,
as adjusted $0.13 $0.13 $0.31 $0.32
======= ======= ======= =======
Weighted average shares used to
compute diluted income per
common share, as adjusted 104,937 106,572 105,310 105,813
======= ======= ======= =======
Note: For purposes of this pro forma analysis, the provision for
income taxes, as adjusted, assumes an annual effective tax
rate of 37% for 2002 and 36% for 2001.
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
Quarter ended Nine months ended
September 30, September 30,
--------------------- -----------------------
2002 2001 2002 2001
---------- ---------- ----------- -----------
Number of nursing home
facilities:
Owned 320 358 320 358
Leased 140 164 140 164
Managed 1 2 1 2
---------- ---------- ----------- -----------
Total 461 524 461 524
========== ========== =========== ===========
Number of beds:
Owned 34,971 39,458 34,971 39,458
Leased 15,590 19,217 15,590 19,217
Managed 75 112 75 112
---------- ---------- ----------- -----------
Total 50,636 58,787 50,636 58,787
========== ========== =========== ===========
Assisted Living Centers 29 34 29 34
Outpatient Clinics 154 161 154 161
Home Care Centers 54 56 54 56
Patient Days 4,023,000 4,650,000 12,002,000 13,860,000
Nursing Home Occupancy
(based on operational beds) 87.76% 87.22% 87.82% 86.71%
Patient Mix (based on
patient days):
Medicaid 71.32% 71.35% 70.70% 71.08%
Medicare 10.51% 10.11% 10.96% 10.27%
Private & Other 18.17% 18.54% 18.34% 18.65%
Sources of Revenue (based
on $):
Medicaid 51.56% 53.05% 50.91% 52.59%
Medicare 25.75% 24.52% 26.24% 24.50%
Private & Other 22.69% 22.43% 22.85% 22.91%
Average per diem rate
(including ancillaries) $146.37 $140.90 $146.93 $138.40
Wages and related
expenses as a % of
net operating revenues 60.28% 60.64% 59.45% 60.52%
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
ANALYSIS OF REVENUES
Quarter ended Nine months ended
September 30, September 30,
------------------- -----------------------
2002 2001 2002 2001
--------- --------- ----------- -----------
REVENUES (In thousands)
----------------------
NURSING FACILITIES:
MEDICAID $323,204 $364,719 $952,530 $1,061,860
MEDICARE 136,965 147,469 422,966 433,809
PRIVATE & OTHER 114,530 126,643 346,928 378,690
--------- --------- ----------- -----------
SUBTOTAL 574,699 638,831 1,722,424 1,874,359
AEGIS THERAPIES 13,612 4,030 37,700 10,515
HOME CARE 18,321 24,365 57,087 73,937
MATRIX 21,494 22,567 66,167 69,769
OTHER 910 1,082 1,122 1,741
--------- --------- ----------- -----------
TOTALS $629,036 $690,875 $1,884,500 $2,030,321
========= ========= =========== ===========
PATIENT DAYS (In thousands)
--------------------------
MEDICAID 2,869 3,318 8,485 9,852
MEDICARE 423 470 1,316 1,423
PRIVATE & OTHER 731 862 2,201 2,585
--------- --------- ----------- -----------
TOTALS 4,023 4,650 12,002 13,860
========= ========= =========== ===========
PER DIEM RATE (Including Ancillaries)
------------------------------------
MEDICAID $112.21 $110.01 $112.09 $107.75
MEDICARE - PART A 322.87 313.93 321.01 304.85
PRIVATE & OTHER 146.45 140.75 147.22 140.20
--------- --------- ----------- -----------
TOTALS(1) $146.37 $140.90 $146.93 $138.40
========= ========= =========== ===========
(1) Weighted Average Rates
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
ANALYSIS OF OPERATING AND ADMINISTRATIVE EXPENSES
(In thousands)
Quarter ended Nine months ended
September 30, September 30,
------------------- -----------------------
2002 2001 2002 2001
--------- --------- ----------- -----------
WAGES & RELATED $379,164 $418,970 $1,120,327 $1,228,689
PROVISION FOR INSURANCE
AND RELATED ITEMS 28,870 27,111 96,793 83,480
SUPPLIES 40,544 47,968 125,740 146,515
FOOD 15,703 18,444 46,130 55,080
UTILITIES 17,389 20,154 51,748 62,218
OTHER CONTROLLABLES 63,983 61,428 201,204 175,964
REAL ESTATE RENTAL 16,389 19,870 50,190 61,773
EQUIPMENT RENTAL 5,684 6,694 16,744 20,512
OTHER NONCONTROLLABLES 2,892 6,307 11,097 16,738
--------- --------- ----------- -----------
TOTALS $570,618 $626,946 $1,719,973 $1,850,969
========= ========= =========== ===========
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Sept. 30, Dec. 31,
2002 2001
---------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $105,672 $89,343
Accounts receivable - patient, less
allowance for doubtful accounts:
2002 - $41,274; 2001 - $51,400 202,606 242,865
Accounts receivable - nonpatient, less
allowance for doubtful accounts:
2002 - $863; 2001 - $908 8,461 12,914
Notes receivable, less allowance for
doubtful notes: 2002 - $2,027; 2001 - $714 1,539 18,662
Operating supplies 21,503 25,701
Assets held for sale 6,696 120,843
Prepaid expenses and other 25,294 13,720
---------- ----------
Total current assets 371,771 524,048
Property and equipment, net of accumulated
depreciation and amortization:
2002 - $793,381; 2001 - $744,163 881,362 873,585
Goodwill, net 144,579 144,884
Other, less allowance for doubtful accounts
and notes: 2002 - $4,428; 2001 - $4,393 135,787 138,553
---------- ----------
$1,533,499 $1,681,070
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $69,772 $93,728
Accrued wages and related liabilities 94,059 109,295
Accrued interest 13,859 14,708
General and professional liabilities 85,628 51,784
Federal government settlement liabilities 46,630 45,891
Other accrued liabilities 76,213 112,609
Current portion of long-term debt 26,261 64,231
---------- ----------
Total current liabilities 412,422 492,246
Long-term debt 604,013 677,442
Other liabilities and deferred items 196,154 214,885
Commitments and contingencies
Stockholders' equity:
Preferred stock, shares authorized:
25,000,000 -- --
Common stock, shares issued:
2002 - 113,268,227; 2001 - 112,813,303 11,327 11,281
Additional paid-in capital 891,096 887,668
Accumulated deficit (473,135) (495,203)
Accumulated other comprehensive income 522 2,029
Treasury stock, at cost: 2002 - 8,403,737
shares; 2001 - 8,515,758 shares (108,900) (109,278)
---------- ----------
Total stockholders' equity 320,910 296,497
---------- ----------
$1,533,499 $1,681,070
========== ==========
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine months ended
September 30,
-------------------
2002 2001
-------- --------
Cash flows from operating activities:
Net income (loss) $22,068 $(34,633)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 66,121 69,983
Provision for reserves on patient, notes
and other receivables, net 34,468 27,509
Amortization of deferred financing costs 2,332 2,746
Florida insurance reserve adjustment 22,179 --
California investigation settlement and
related costs 6,300 --
Adjustment to estimated reserves related to
settlements of federal government
investigations (6,940) --
Asset impairments, workforce reductions and
other unusual items 4,523 115,543
Losses (gains) on dispositions of
facilities and other assets, net 2,605 (153)
Deferred income taxes -- (31,290)
Insurance related accounts 14,850 22,138
Changes in operating assets and liabilities, net
of acquisitions and dispositions:
Accounts receivable - patient 6,640 443
Operating supplies 2,457 (37)
Prepaid expenses and other receivables (1,756) (325)
Accounts payable and other accrued expenses (72,405) (18,599)
Income taxes payable 4,496 (3,450)
Other, net (9,046) (4,812)
-------- --------
Total adjustments 76,824 179,696
-------- --------
Net cash provided by operating
activities 98,892 145,063
Cash flows from investing activities:
Capital expenditures (84,170) (56,439)
Proceeds from dispositions of facilities
and other assets 156,965 11,874
Collections on notes receivable 1,106 67
Proceeds from designated funds, net (145) (8,908)
Other, net (3,817) (4,215)
-------- --------
Net cash provided by (used in)
investing activities 69,939 (57,621)
Cash flows from financing activities:
Revolver borrowings -- 442,000
Repayments of Revolver borrowings -- (606,000)
Proceeds from issuance of long-term debt -- 202,617
Repayments of long-term debt (111,399) (74,695)
Repayments of off-balance sheet financing (42,901) --
Proceeds from exercise of stock options 1,699 3,280
Deferred financing costs paid 99 (9,540)
-------- --------
Net cash used in financing activities (152,502) (42,338)
-------- --------
Net increase in cash and cash equivalents 16,329 45,104
Cash and cash equivalents at beginning of period 89,343 25,908
-------- --------
Cash and cash equivalents at end of period $105,672 $71,012
======== ========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $48,954 $56,194
Income tax payments (refunds), net (1,065) 6,404
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