Beverly Earns Six Cents Per Share Diluted in Fourth Quarter, Before Special Charges/Unusual Items.Business Editors, Health & Medical Writers FORT SMITH, Ark.--(BW HealthWire)--Feb. 22, 2000 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 it earned six 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 fourth quarter of 1999, before special charges and other unusual items, compared on a similar basis to 20 cents per share diluted in the fourth quarter of 1998. After unusual pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $60,003,000 and Year 2000 (Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 ) remediation costs of $1,730,000, there was a net loss for the 1999 fourth quarter of $32,594,000 (32 cents per share diluted), compared to a net loss of $87,527,000 (86 cents per share diluted) in the year earlier period. The 1998 fourth quarter included unusual pre-tax charges of $168,368,000, Y2K remediation costs of $5,844,000, expenses of $1,369,000 related to federal government investigations 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. cost-allocation practices and a $1,660,000 extraordinary charge, net of tax. Revenues totaled $643,969,000 in the 1999 fourth quarter, compared to $707,230,000 in the year-earlier period. The revenue reduction reflects a 14 percent drop in Medicare 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, a one percentage-point decline in nursing home 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 from the 1998 fourth quarter and continued pricing pressure on 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 by managed-care organizations. The 1999 fourth quarter unusual pre-tax charges include: -- "The dramatic shift in Medicare payment systems, coupled with an increasingly punitive approach to regulatory enforcement, severely damaged the financial capabilities of several long-term care providers, large and small, in 1999. At least ten percent of all nursing home beds in this country are now being operated by bankrupt providers." -- "Our strategy has been to provide quality care in a cost-effective operating environment. Because of this, as well as a conservative approach to cash management, we were able to weather the financial hardships of Medicare Prospective Payment. We lowered capital expenditures and acquisition costs by two-thirds from 1998 levels, while still investing $95 million - well above the minimum level required - to maintain, improve and expand our nursing home operations. In addition, we were able to reduce total funded debt during 1999 by more than $125 million." -- "Last fall's Balanced Budget Refinement Act, which restored a portion of the deeper-than-intended cuts in Medicare spending, should result in an increase in Medicare billings for Beverly of about $20 million in 2000. This includes the favorable financial impact of converting approximately 300 of our nursing homes to the full federal rate effective January 1 of this year." -- "During the last six months of 1999, we raised our average nursing home occupancy by more than a full percentage point, to 87.6 percent, compared to 86.5 percent for the second quarter of 1999. Our Performance Plan for 2000 is based on a similar increase in occupancy." -- "The availability and cost of labor continues to be a major operating and financial challenge. Our weighted average wage rate for the 1999 fourth quarter was up 6.4 percent from the year-earlier period and reflected steady increases throughout the year, which continue into 2000. Improving recruiting, retention and training of caregivers is a major focus for us this year." -- "Our Plan calls for operating earnings (earnings before interest, taxes, depreciation and amortization) to increase over 1999 levels by approximately 7 to 9 percent." -- "Florida has become a particularly difficult environment for even the best of nursing home operators. Industry costs per bed in Florida for alleged patient care liability issues are nearly eight times higher than the average in the other 49 states. That's the result of certain plaintiff attorneys exploiting that state's well-intentioned `patient rights' laws, which provide attorneys a strong financial incentive to bring suit. Not surprising, half of the industry's total patient liability costs go to lawyers." -- "The rising cost of patient care liability in Florida is a significant factor in the $32 million increase in insurance reserves we booked in the 1999 fourth quarter. We will continue to closely monitor the economics of doing business in that deteriorating environment." For the full year 1999 and including the unusual fourth-quarter items, as well as investigation costs and charges totaling $202,447,000 related to previously announced settlements of government Medicare investigations and Y2K remediation costs of $12,402,000, Beverly reported a net loss of $134,647,000 ($1.31 per share diluted) on revenues totaling $2,551,007,000. Excluding these unusual items, Beverly's net income for full-year 1999 totaled $38,509,000 (37 cents per share diluted). David R. Banks, Chairman and Chief Executive Officer, made the following comments about the company's performance and outlook: -- "The dramatic shift in Medicare payment systems, coupled with an increasingly punitive approach to regulatory enforcement, severely damaged the financial capabilities of several long-term care providers, large and small, in 1999. At least ten percent of all nursing home beds in this country are now being operated by bankrupt providers." -- "Our strategy has been to provide quality care in a cost-effective operating environment. Because of this, as well as a conservative approach to cash management, we were able to weather the financial hardships of Medicare Prospective Payment. We lowered capital expenditures and acquisition costs by two-thirds from 1998 levels, while still investing $95 million - well above the minimum level required - to maintain, improve and expand our nursing home operations. In addition, we were able to reduce total funded debt during 1999 by more than $125 million." -- "Last fall's Balanced Budget Refinement Act, which restored a portion of the deeper-than-intended cuts in Medicare spending, should result in an increase in Medicare billings for Beverly of about $20 million in 2000. This includes the favorable financial impact of converting approximately 300 of our nursing homes to the full federal rate effective January 1 of this year." -- "During the last six months of 1999, we raised our average nursing home occupancy by more than a full percentage point, to 87.6 percent, compared to 86.5 percent for the second quarter of 1999. Our Performance Plan for 2000 is based on a similar increase in occupancy." -- "The availability and cost of labor continues to be a major operating and financial challenge. Our weighted average wage rate for the 1999 fourth quarter was up 6.4 percent from the year-earlier period and reflected steady increases throughout the year, which continue into 2000. Improving recruiting, retention and training of caregivers is a major focus for us this year." -- "Our Plan calls for operating earnings (earnings before interest, taxes, depreciation and amortization) to increase over 1999 levels by approximately 7 to 9 percent." -- "Florida has become a particularly difficult environment for even the best of nursing home operators. Industry costs per bed in Florida for alleged patient care liability issues are nearly eight times higher than the average in the other 49 states. That's the result of certain plaintiff attorneys exploiting that state's well-intentioned `patient rights' laws, which provide attorneys a strong financial incentive to bring suit. Not surprising, half of the industry's total patient liability costs go to lawyers." -- "The rising cost of patient care liability in Florida is a significant factor in the $32 million increase in insurance reserves we booked in the 1999 fourth quarter. We will continue to closely monitor the economics of doing business in that deteriorating environment." This news 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 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; 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; 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 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; demographic See demographics. changes; and 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. . 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 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 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 561 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 37 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, 186 outpatient clinics, and 63 home health 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 Years ended
December 31, December 31,
------------------- ----------------------
1999 1998 1999 1998
-------- --------- ---------- ----------
Net operating revenues $642,924 $ 704,480 $2,546,672 $2,812,232
Interest income 1,045 2,750 4,335 10,708
-------- --------- ---------- ----------
Total revenues 643,969 707,230 2,551,007 2,822,940
Costs and expenses:
Operating and
administrative:
Wages and related 401,274 429,034 1,578,950 1,713,540
Other 189,501 206,377 739,193 820,670
Interest 18,549 17,069 72,578 65,938
Depreciation and
amortization 24,649 23,775 99,160 93,722
Special charges related
to settlements of
federal government
investigations ___ 1,369 202,447 1,865
Asset impairments,
workforce reductions
and other unusual
items 28,418 86,208 28,418 86,208
Additional provision
for patient care and
other claims 31,585 82,160 31,585 82,160
Year 2000 remediation 1,730 5,844 12,402 9,719
-------- --------- ---------- ----------
Total costs and
expenses 695,706 851,836 2,764,733 2,873,822
-------- --------- ---------- ----------
Loss before benefit from
income taxes,
extraordinary
charge and cumulative
effect of change in
accounting for start-up
costs (51,737) (144,606) (213,726) (50,882)
Benefit from income taxes (19,143) (58,739) (79,079) (25,936)
-------- --------- ---------- ----------
Loss before extraordinary
charge and cumulative
effect of change in
accounting for start-up
costs (32,594) (85,867) (134,647) (24,946)
Extraordinary charge, net
of income tax benefit of
$1,057 ___ (1,660) ___ (1,660)
Cumulative effect of
change in accounting for
start-up costs, net of
income tax benefit of
$2,811 ___ ___ ___ (4,415)
-------- --------- ---------- ----------
Net loss $(32,594) $ (87,527) $ (134,647) $ (31,021)
======== ========= ========== ==========
Loss per share of common
stock:
Basic and Diluted:
Before extraordinary
charge and
cumulative
effect of change in
accounting for
start-up costs $ (0.32) $ (0.84) $ (1.31) $ (0.24)
Extraordinary charge ___ (0.02) ___ (0.02)
Cumulative effect of
change in accounting
for start-up costs ___ ___ ___ (0.04)
-------- --------- ---------- ----------
Net loss $ (0.32) $ (0.86) $ (1.31) $ (0.30)
======== ========= ========== ==========
Shares used to
compute per share
amounts 102,496 102,389 102,491 103,762
======== ========= ========== ==========
BEVERLY ENTERPRISES, INC.
SUPPLEMENTARY INFORMATION
PRO FORMA ANALYSIS OF EARNINGS
(In thousands, except per share amounts)
Three months ended Years ended
December 31, December 31,
-------------------- --------------------
1999 1998 1999 1998
--------- ---------- ---------- ---------
Loss before benefit
from income taxes,
extraordinary charge
and cumulative effect
of change in accounting
principle, as reported $(51,737) $(144,606) $(213,726) $(50,882)
Adjustments for
non-recurring items:
Special charges
related to
settlements of
federal government
investigations ___ 1,369 202,447 1,865
Asset impairments,
workforce reductions
and other unusual
items 28,418 86,208 28,418 86,208
Additional provision
for patient care and
other claims 31,585 82,160 31,585 82,160
Year 2000 remediation 1,730 5,844 12,402 9,719
--------- ---------- ---------- ---------
Income before provision
for income taxes,
extraordinary charge and
cumulative effect of change
in accounting principle,
as adjusted 9,996 30,975 61,126 129,070
Provision for income taxes,
as adjusted 3,699 10,841 22,617 45,175
--------- ---------- ---------- ---------
Income before extraordinary
charge and cumulative
effect of change in
accounting principle, as
adjusted $ 6,297 $ 20,134 $ 38,509 $ 83,895
======== ========= ========= =========
Diluted income per common
share, as adjusted $ 0.06 $ 0.20 $ 0.37 $ 0.80
======== ========= ========= =========
Weighted average shares
used to compute diluted
income per common share,
as adjusted 102,599 102,661 102,704 104,704
======== ========= ========= =========
Note: For purposes of this pro forma analysis, the provision for
income taxes, as adjusted, assumes annual effective tax rates of 37%
for 1999 and 35% for 1998.
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