UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): April 16, 2014

 

FIVE STAR QUALITY CARE, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

(State or Other Jurisdiction of Incorporation)

 

1-16817

 

04-3516029

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

 

400 Centre Street, Newton, Massachusetts

 

02458

(Address of Principal Executive Offices)

 

(Zip Code)

 

617-796-8387

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2 below):

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


 

Item 2.02.  Results of Operations and Financial Condition.

 

On April 16, 2014, Five Star Quality Care, Inc., or the Company, issued a press release setting forth certain financial data and information regarding the Company for 2011, 2012 and the first, second and third quarters of 2013.  A copy of the Company’s press release is furnished as Exhibit 99.1 hereto.

 

Item 5.03.  Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

On April 16, 2014, the Company filed Articles Supplementary to its Articles of Amendment and Restatement reclassifying the Company’s 100,000 authorized but unissued shares of Junior Participating Preferred Stock, par value $.01 per share, as shares of the Company’s preferred stock, par value $.01 per share, without further classification or designation, and with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption of undesignated preferred stock as set forth in the Company’s Articles of Amendment and Restatement. The Articles Supplementary were effective upon filing.

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)  Exhibits.

 

3.1                                Articles Supplementary, dated April 16, 2014.

 

99.1                         Press Release, dated April 16, 2014.

 

2


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

FIVE STAR QUALITY CARE, INC.

 

 

 

 

 

 

 

By:

/s/ Paul V. Hoagland

 

Name:

Paul V. Hoagland

 

Title:

Treasurer and Chief Financial Officer

 

 

 

Date:  April 16, 2014

 

 

 

3

Exhibit 3.1

 

FIVE STAR QUALITY CARE, INC.

 

ARTICLES SUPPLEMENTARY

 

Five Star Quality Care, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation that:

 

FIRST:             Under a power contained in Article V of the charter of the Corporation (the “Charter”), the Board of Directors, by duly adopted resolutions, reclassified and designated all 100,000 authorized but unissued shares of the Corporation’s Junior Participating Preferred Stock, par value $.01 per share, as shares of preferred stock, par value $.01 per share (the “Preferred Stock”), of the Corporation without further classification or designation, with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption of undesignated preferred stock as set forth in the Charter.

 

SECOND:        The foregoing shares of Preferred Stock have been reclassified and designated by the Board of Directors under the authority contained in the Charter.

 

THIRD:           These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law.

 

FOURTH:       The undersigned officer of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that, to the best of his or her knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

[SIGNATURE PAGE FOLLOWS]

 


 

IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President, and attested to by its Assistant Secretary this 16 th  day of April, 2014.

 

ATTEST:

FIVE STAR QUALITY CARE, INC.

 

 

 

 

 

 

/s/ Katherine E. Potter

 

By:

/s/ Bruce J. Mackey Jr.

Name: Katherine E. Potter

Name: Bruce J. Mackey Jr.

Title: Assistant Secretary

Title: President

 

Exhibit 99.1

 

GRAPHIC

 

FOR IMMEDIATE RELEASE

 

 

 

 

Contact:

 

Kimberly Brown, Director, Investor Relations

 

(617) 796-8245

 

www.fivestarseniorliving.com

 

Five Star Quality Care, Inc. Announces Filing of Restated Financial Statements

 

Company Is Now Current With its Filings through September 30, 2013

 

Newton, MA (April 16, 2014):  Five Star Quality Care, Inc. (NYSE: FVE) today announced that it has filed restated financial results for 2011, 2012 and the first and second quarters of 2013.  In addition, Five Star has filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.

 

“Five Star and our Audit Committee have concluded a thorough review and are satisfied that Five Star has appropriately addressed matters related to the restatement,” stated Bruce Mackey, President and Chief Executive Officer.  “We are very pleased to have completed the restatement process as it is an important step in becoming current with our financial reporting.  We can now turn our attention to completing our delayed Annual Report for 2013, which we expect to file as soon as reasonably possible.”

 

The net effects of correcting errors during the restatement process compared to the previously published financial statements are as follows:

 

·                             Increases to shareholders’ equity of $6.7 million and $8.1 million at December 31, 2012 and 2011, respectively.

 

·                             A decrease to net income of $1.4 million (approximately $0.04 per share) for the year ended December 31, 2012 and an increase to net income of $6.6 million (approximately $0.14 per share) for the year ended December 31, 2011.

 

·                             An increase to shareholders’ equity of $6.9 million at March 31, 2013.

 

·                             An increase to net income of $205,000 (less than $0.01 per share) and $103,000 (less than $0.01 per share) for the three months ended March 31, 2013 and 2012, respectively.

 

·                             An increase to shareholders’ equity of $7.0 million at June 30, 2013.

 


 

·                             A decrease to net income of $27,000 (less than $0.01 per share) and an increase to net income of $178,000 (less than $0.01 per share) for the three and six months ended June 30, 2013, respectively.

 

·                             Increases to net income of $272,000 (less than $0.01 per share) and $375,000 (less than $0.01 per share) for the three month and six months ended June 30, 2012, respectively.

 

The quarterly report on Form 10-Q for the quarter ended September 30, 2013, was filed by Five Star today.  A balance sheet and income statement as of, and for the period ended, September 30, 2013, are attached.  Five Star expects to schedule a conference call during which management will discuss, and take questions, regarding the restatements and updated financial results after its public reporting becomes current.

 

Five Star Quality Care, Inc. is a senior living and healthcare services company which owns, leases and manages senior living communities, including primarily private pay independent and assisted living communities located throughout the U.S.  Five Star is headquartered in Newton, Massachusetts.

 

WARNING CONCERNING FORWARD LOOKING STATEMENTS

 

THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.  FOR EXAMPLE, ALTHOUGH FIVE STAR EXPECTS TO FILE ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2013 AS SOON AS REASONABLY POSSIBLE, THE AUDIT OF THE ANNUAL FINANCIAL STATEMENTS WHICH ARE TO BE INCLUDED IN THE 2013 FORM 10-K IS NOT FINISHED AND WILL REQUIRE ADDITIONAL TIME TO COMPLETE AND THERE CAN BE NO ASSURANCE AS TO WHEN THE 2013 FORM 10-K WILL BE COMPLETED AND FILED. IN ADDITION, THIS PRESS RELEASE MAY IMPLY THAT WE WILL BE CURRENT WITH OUR FINANCIAL REPORTING UPON FILING OUR 2013 FORM 10-K AND THAT WE WILL MAINTAIN CURRENT FILING STATUS.  HOWEVER, IN LIGHT OF THE TIME AND EFFORT INVOLVED WITH COMPLETING OUR RESTATED FINANCIAL STATEMENTS AND TO COMPLETE OUR 2013 FORM 10-K, WE MAY BE DELAYED IN COMPLETING FUTURE FILINGS, INCLUDING OUR QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDING MARCH 31, 2014, WHICH IS CURRENTLY DUE ON MAY 12, 2014. YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

 


 

FIVE STAR QUALITY CARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

 

September 30,
2013

 

December 31,
2012
(Restated)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

19,580

 

$

24,638

 

Accounts receivable, net of allowance of $4,308 and $2,792 at September 30, 2013 and December 31, 2012, respectively

 

38,226

 

39,205

 

Due from related persons

 

6,884

 

6,881

 

Investments in available for sale securities, of which $5,100 and $3,684 are restricted at September 30, 2013 and December 31, 2012, respectively

 

19,042

 

12,920

 

Restricted cash

 

8,913

 

6,548

 

Prepaid expenses and other current assets

 

34,534

 

38,318

 

Assets of discontinued operations

 

21,499

 

30,100

 

Total current assets

 

148,678

 

158,610

 

 

 

 

 

 

 

Property and equipment, net

 

331,108

 

337,494

 

Equity investment in Affiliates Insurance Company

 

5,781

 

5,629

 

Restricted cash

 

8,184

 

12,166

 

Restricted investments in available for sale securities

 

11,597

 

10,580

 

Goodwill and other intangible assets

 

26,829

 

27,708

 

Other long term assets

 

40,548

 

40,382

 

 

 

$

572,725

 

$

592,569

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Revolving credit facility, secured, principally by real estate

 

$

10,000

 

$

—

 

Revolving credit facility, secured, principally by accounts receivable

 

—

 

—

 

Convertible senior notes

 

—

 

24,872

 

Accounts payable

 

30,743

 

38,035

 

Accrued expenses

 

26,780

 

28,010

 

Accrued compensation and benefits

 

39,302

 

35,302

 

Due to related persons

 

21,227

 

19,484

 

Mortgage notes payable

 

1,142

 

1,092

 

Accrued real estate taxes

 

14,058

 

10,723

 

Security deposit liability

 

8,493

 

9,057

 

Other current liabilities

 

15,675

 

14,775

 

Liabilities of discontinued operations, of which $0 and $7,547 relate to mortgage notes payable at September 30, 2013 and December 31, 2012, respectively

 

9,232

 

16,977

 

Total current liabilities

 

176,652

 

198,327

 

 

 

 

 

 

 

Long term liabilities:

 

 

 

 

 

Mortgage notes payable

 

36,758

 

37,621

 

Continuing care contracts

 

1,635

 

1,708

 

Accrued self-insurance obligations

 

35,148

 

34,647

 

Other long term liabilities

 

5,583

 

6,712

 

Total long term liabilities

 

79,124

 

80,688

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common stock, par value $.01; 75,000,000 shares authorized, 48,271,522 and 48,234,022 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively

 

482

 

482

 

Additional paid in capital

 

354,956

 

354,164

 

Accumulated deficit

 

(41,715

)

(44,455

)

Accumulated other comprehensive income

 

3,226

 

3,363

 

Total shareholders’ equity

 

316,949

 

313,554

 

 

 

$

572,725

 

$

592,569

 

 


 

FIVE STAR QUALITY CARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (in thousands, except per share data)

(unaudited)

 

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

 

 

2013

 

2012
(Restated)

 

2013

 

2012
(Restated)

 

Revenues:

 

 

 

 

 

 

 

 

 

Senior living revenue

 

$

269,839

 

$

268,645

 

$

807,906

 

$

804,543

 

Management fee revenue

 

2,290

 

1,277

 

6,873

 

3,667

 

Reimbursed costs incurred on behalf of managed communities

 

51,983

 

27,247

 

156,194

 

76,750

 

Total revenues

 

324,112

 

297,169

 

970,973

 

884,960

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Senior living wages and benefits

 

130,824

 

131,384

 

393,641

 

393,446

 

Other senior living operating expenses

 

68,227

 

64,579

 

200,317

 

192,636

 

Costs incurred on behalf of managed communities

 

51,983

 

27,247

 

156,194

 

76,750

 

Rent expense

 

48,743

 

47,659

 

145,035

 

142,451

 

General and administrative

 

15,081

 

14,647

 

45,664

 

45,580

 

Depreciation and amortization

 

6,736

 

6,175

 

19,691

 

18,196

 

Gain on settlement

 

—

 

—

 

—

 

(3,365

)

Total operating expenses

 

321,594

 

291,691

 

960,542

 

865,694

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

2,518

 

5,478

 

10,431

 

19,266

 

 

 

 

 

 

 

 

 

 

 

Interest, dividend and other income

 

191

 

199

 

599

 

638

 

Interest and other expense

 

(1,179

)

(1,762

)

(3,990

)

(4,793

)

Acquisition related costs

 

(78

)

(100

)

(119

)

(100

)

(Loss) gain on early extinguishment of debt

 

(599

)

—

 

(599

)

45

 

Gain on sale of available for sale securities reclassified from other comprehensive income

 

36

 

63

 

6

 

62

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes and equity in earnings of Affiliates Insurance Company

 

889

 

3,878

 

6,328

 

15,118

 

Provision for income taxes

 

(226

)

(905

)

(582

)

(5,523

)

Equity in earnings of Affiliates Insurance Company

 

64

 

115

 

219

 

236

 

Income from continuing operations

 

727

 

3,088

 

5,965

 

9,831

 

(Loss) income from discontinued operations

 

(925

)

13,125

 

(3,225

)

11,764

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(198

)

$

16,213

 

$

2,740

 

$

21,595

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

48,272

 

47,927

 

48,253

 

47,913

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

48,417

 

49,840

 

49,571

 

50,185

 

 

 

.

 

 

 

 

 

 

 

Basic income per share from:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.02

 

$

0.06

 

$

0.12

 

$

0.21

 

Discontinued operations

 

(0.02

)

0.28

 

(0.06

)

0.24

 

Net income per share - basic

 

$

—

 

$

0.34

 

$

0.06

 

$

0.45

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share from:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.02

 

$

0.06

 

$

0.12

 

$

0.21

 

Discontinued operations

 

(0.02

)

0.27

 

(0.06

)

0.23

 

Net income per share - diluted

 

$

—

 

$

0.33

 

$

0.06

 

$

0.44

 

 

(end)