The Glebe, Inc. Senior Vice President & Chief Financial Officer

Transcription

1 The Glebe, Inc. TO: FROM: Bloomberg Municipal Repository FT Interactive Data DPC Data Inc. Standard & Poor s J.J. Kenny Repository Bondholders US Bank, Trustee Kent Phillips Senior Vice President & Chief Financial Officer DATE: November 15, 2012 SUBJECT: Quarterly Disclosure: Virginia Small Business Financing Authority Residential Care Facility Revenue Refunding Bonds (The Glebe, Inc.), Series 2012A and Series 2012B Pursuant to its continuing disclosure obligations under the agreements executed in connection with the issuance of the above captioned Bonds ( Bonds ), The Glebe, Inc. submits the attached quarterly filing for the period ending September 30, If you have any questions, please feel free to contact me. Kent Phillips Senior Vice President & Chief Financial Officer (804) Office kphillips@vbh.org Page 1 of 15

2 STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS 9 Month Period Ended September 30, 2012 Increase Increase Actual Budget (Decrease) Prior Year (Decrease) Unrestricted revenues, gains and other support: Residential services $5,399,292 $5,699,289 ($299,997) $5,171,269 $228,023 Health care services 1,790,718 1,614, ,170 1,886,082 (95,364) Net assets released from restrictions used for operations 4,966 4, , Unrestricted gifts and donations: Cooperative Program ,377 (72,377) Churches ,948 (26,948) Gifts and bequests ,021 (15,601) (99,300) 99,720 Investment income designated for current operations 2,794 3,856 (1,062) 1, Gain on sale of assets Other 242, ,200 (104,410) 302,413 (59,623) 7,441,430 7,685,511 (244,081) 7,365,961 75,469 Expenses: Salaries, wages and professional fees 3,695,736 3,797,536 (101,800) 3,460, ,726 Provisions for depreciation and amortization 2,128,797 2,111,703 17,094 2,117,707 11,090 Interest 2,149, ,961 1,588,081 2,267,227 (118,185) Other 4,197,508 2,108,229 2,089,279 3,928, ,719 12,171,083 8,578,429 3,592,654 11,773, ,350 Operating Income (4,729,653) (892,918) (3,836,735) (4,407,772) (321,881) Investment income in excess of amounts designated for current operations Gain/(Loss) from Intercompany Debt Cancellation 8,251, ,251, ,251,650 Deferred Financing Cost Writeoff (1,528,268) 0 (1,528,268) 0 (1,528,268) Extraordinary Gain on Debt Extinguishment 4,838, ,838, ,838,784 Other Net Assets Transferred Decrease (increase) in obligation to provide future services and use of facilities to current residents Excess of revenues, gains and other support over expenses $6,832,513 ($892,918) $7,725,431 ($4,407,772) $11,240,285 (continued) Page 2 of 15

3 STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS 9 Month Period Ended September 30, 2012 Increase Increase Actual Budget (Decrease) Prior Year (Decrease) Unrestricted net assets (continued): Excess of revenues, gains and other support over expenses $6,832,513 ($892,918) $7,725,431 ($4,407,772) $11,240,285 Other changes in unrestricted net assets: Unrealized gains on investments Contributions of longlived assets Reclassification of net assets Net assets released from restrictions for acquisition of property, plant and equipment Increase (Decrease) in unrestricted net assets 6,832,655 (892,918) 7,725,573 (4,407,772) 11,240,427 Temporarily restricted net assets: Gifts, grants and bequests (380) Investment Income (Loss) Change in value of annuity obligations 1, , ,000 Reclassification of net assets Net assets released from restrictions 0 (4,597) 4,597 (4,320) 4,320 Increase in temporarily restricted net assets 1,000 (4,597) 5,597 (3,940) 4,940 Permanently restricted net assets: Gifts, grants and bequests Change in present value of perpetual trust funds Reclassification of net assets Increase in permanently restricted net assets Increase (Decrease) in net assets 6,833,655 (897,515) 7,731,170 (4,411,712) 11,245,367 Net assets at beginning of year (33,278,239) (33,278,239) 0 (28,012,372) (5,265,867) Net assets at end of period ($26,444,584) ($34,175,754) $7,731,170 ($32,424,084) $5,979,500 Page 3 of 15

4 BALANCE SHEET September 30 September ASSETS Current assets: Cash and cash equivalents $2,872,153 $1,987,029 Shortterm investments 0 0 Current portion of assets whose use is limited 376,520 2,061,709 Accounts receivable 179, ,118 Notes receivable 0 0 Interest receivable 0 0 Prepaid expenses 79,006 62,250 Other 0 0 Total current assets 3,507,494 4,276,106 Investments 0 0 Beneficial Interest in Perpetual Trust 0 0 Assets whose use is limited: Externally restricted under bond indenture agreement (held by trustee) 1,324,854 2,064,377 Less amounts available for current liabilities 376,520 2,061,709 Total assets whose use is limited 948,334 2,668 Property, plant and equipment, less accumulated depreciation of $17,187,080 in 2012 and $14,788,960 in ,660,940 44,538,289 Other assets: Deferred development costs 0 0 Deferred marketing costs 1,206,129 1,570,923 Deferred financing costs 803,463 1,600,186 Notes receivable 0 0 Miscellaneous 0 0 Total other assets 2,009,592 3,171,109 TOTAL ASSETS $49,126,360 $51,988,172 Page 4 of 15

5 BALANCE SHEET (CONTINUED) September 30 September LIABILITIES AND NET ASSETS Current liabilities: Note payable to bank $0 $0 Accounts payable 2,348,400 1,919,539 Retainage payable 0 0 Salaries and wages 465, ,588 Interest payable 376,520 3,778,712 Deferred Revenue 5,899 0 Annuities payable 0 0 Deposits from prospective residents 158, ,283 Due to affiliates 3, ,227 Current portion of longterm debt 2,002,373 55,540,000 Refunds Payable 533, ,661 Deferred revenue from advance fees subject to refund 694, ,109 Total current liabilities 6,588,882 63,165,119 Advance fees: Deferred revenue from advance fees 6,839,500 8,074,387 6,839,500 8,074,387 Annuities payable 0 0 Due to affiliates long term 397,799 8,547,750 Estimated obligation to provide future services, in excess of amounts received or to be received 4,454,000 4,625,000 Other Liabilities 0 0 Longterm debt, less current portion 57,295,729 0 Total liabilities 75,575,910 84,412,256 Net assets: Unrestricted (26,484,014) (32,462,159) Temporarily restricted 26,848 30,459 Permanently restricted 7,616 7,616 Total net assets (26,449,550) (32,424,084) TOTAL LIABILITIES AND NET ASSETS $49,126,360 $51,988,172 Page 5 of 15

6 The Glebe, Inc. Debt Summary Total Current LTD Noncurrent LTD Accretion Long Term Debt Series A Bonds 30,002, , ,263, Series B Bonds 27,031, ,031, Exit Facility 2,002, ,002, Total 2,002, ,034, , ,298, Page 6 of 15

7 STATEMENT OF CASH FLOWS 9 Month Period ended September Cash flows from operating activities Decrease in net assets $6,828,689 ($4,411,713) Adjustments to reconcile decrease in net assets to net cash provided by operating activities: Amortization of deferred revenue from advance fees (922,377) (1,013,663) Proceeds from advance fees and deposits 0 0 Increase (decrease) in obligation to provide future services 0 0 Amortization of deferred marketing costs 273, ,595 Amortization of deferred financing costs 53,939 53,939 Write off of Bond Issuance Costs 1,528,268 0 Provision for Bad Debts (7,618) 19,259 Provision for depreciation 1,801,263 1,790,173 Increase (decrease) in annuity obligations 0 0 Contributions restricted for longterm investment (1,000) (380) Net realized and unrealized (gains) losses on longterm investments (454) 0 Otherthantemporary decline in value of investments 0 0 Change in present value of trust funds 0 0 (Gain)/loss on sales of assets 0 0 Other 0 0 Decrease (increase) in operating assets: Accounts receivable 102,303 41,109 Interest receivable 0 0 Prepaid expense (4,873) 313 Notes Receivable 0 0 Other current assets 0 0 Increase (decrease) in operating liabilities: Accounts payable 408, ,018 Deferred Revenue 3,727 0 Salaries and wages 169, ,726 Interest payable (4,157,935) 2,267,227 Refunds payable 0 209,806 Deposits from prospective residents 21,000 5,000 Net cash (used in) provided by operating activities $6,096,459 $285,409 (continued) Page 7 of 15

8 STATEMENT OF CASH FLOWS (CONTINUED) 9 Month Period ended September Cash flows from investing activities Acquisition of property, plant and equipment ($352,715) ($26,224) Proceeds from sales of property, plant and equipment 0 0 Decrease (increase) in deferred development costs 0 0 Change in investments and assets whose use is limited: Change in cash and cash equivalents 561,281 1,008,446 Net (Purchases)/Sales of Investments 0 0 Net cash used in investing activities 208, ,222 Cash flows from financing activities Proceeds from contributions restricted for longterm investment 1, Other financing activities: Refunds of advance fees and deposits (14,000) (8,000) Change in due (to) from affiliates (8,275,423) (1,124) Increase in deferred financing costs (803,463) 0 Increase in deferred marketing costs 0 0 Proceeds from debt issuance 59,298,102 0 Payments on longterm debt (55,540,000) 0 Increase in other liabilities 0 (209,806) Net cash provided by financing activities (5,333,784) (218,550) Net increase (decrease) in cash and cash equivalents 971,241 1,049,081 Cash and cash equivalents at beginning of year 1,900, ,948 Cash and cash equivalents at end of period $2,872,153 $1,987,029 Page 8 of 15

9 STATISTICAL SUMMARY Average YeartoDate Through 9/30/2012 UNITS AVAILABLE UNITS OCCUPIED OCCUPANCY PERCENT ILU AL MS HC Total ILU AL MS HC Total ILU AL MS HC TOTAL Culpeper % 63.0% N/A 86.7% 68.6% The Chesapeake % 100.1% 88.7% 88.8% 85.0% Lakewood Manor % 93.6% 86.1% 86.2% 84.1% OBLIGATED GROUP % 87.1% 87.4% 87.0% 82.1% The Glebe % 96.7% N/A 93.7% 79.7% TOTAL , % 88.7% 87.4% 88.0% 81.7% Average for the Month Ending 9/30/2012 UNITS AVAILABLE UNITS OCCUPIED OCCUPANCY PERCENT ILU AL MS HC Total ILU AL MS HC Total ILU AL MS HC TOTAL Culpeper % 57.8% N/A 84.2% 64.8% The Chesapeake % 100.5% 97.1% 86.1% 85.6% Lakewood Manor % 92.2% 92.9% 86.6% 83.6% OBLIGATED GROUP % 85.2% 95.1% 85.9% 81.5% The Glebe % 98.0% N/A 96.1% 82.0% TOTAL , % 87.3% 95.1% 87.4% 81.6% Page 9 of 15

10 The Glebe Independent Living Accommodation Agreement Type Room type Sq ftg # of units Standard Refundable Effective 2/1/2012 Single 50% Refundable 90% Refundable 100% Refundable Monthly fee Allegheny Life Care 1 Bedroom/1 Bath , , ,000 2,520 fee for Service , , ,000 2,153 Blue Ridge Life Care 1 Bedroom/11/2 Baths/Den , , ,000 2,851 fee for Service , , ,000 2,363 Catawba Life Care 2 Bedroom/2 Baths , , ,000 3,098 fee for Service , , ,000 2,688 Draper Life Care 2 Bedroom /2 Baths/Corner , , ,000 3,234 fee for Service , , ,000 2,793 Elliston Life Care 2 Bedroom/2 Baths/Den/Dining room , , ,000 3,476 fee for Service , , ,000 3,014 Elliston Delux Life Care 2 Bedroom/2 Baths/Den/Dining room , , ,000 3,476 fee for Service , , ,000 3,014 Fairview Life Care 2 Bedroom/2 Baths With Garage , , ,000 4,059 fee for Service , , ,000 3,329 Fincastle Life Care 2 Bedroom/2 Baths/Den/Dining room , , ,000 3,927 fee for Service , , ,000 3,224 Greyledge Life Care 2 Bedroom/2 Baths With Garage , , ,000 4,059 fee for Service , , ,000 3,329 Hawthorne Life Care 2 Bedroom/2 Baths With Garage , , ,000 4,059 fee for Service , , ,000 3,329 Santillane Life Care 2 Bedroom/2 Baths With Garage , , ,000 4,059 fee for Service , , ,000 3,329 Double Occupancy Life Care 27,000 27,000 27,000 1,100 fee for Service 27,000 27,000 27, Daily Rates Assisted Living 1st Person 2nd Person Level Level Level Assisted Living Respite Level Level Level Health Care Page 10 of 15

11 DEBT SERVICE COVERAGE RATIO 12 Months Ended /30/2012 Change in unrestricted net assets $ (4,085,121) $ (5,718,974) $ (5,419,149) $ 5,978,144 Deduct: Entrance fee amortization 1,777,481 1,600,103 1,387,549 1,296,261 Unrealized gains on investments Gain from Intercompany Debt Cancellation 8,251,650 Adjustment for contributions Net assets released from restriction for acquisition of property, plant and equipment 142 Adjustment for gains on disposal of fixed assets 450 1,777,481 1,600,103 1,387,624 9,548,650 Add: Provision for depreciation and amortization 2,961,024 2,905,626 2,823,742 2,834,832 Interest expense 3,036,220 3,025,472 3,022,970 2,904,785 Entrance fees received, net of refunds (472,338) (192,096) (1) Deferred Entrance Fees receivable 3,427,900 6,300,300 8,121,800 (1) Deferred Entrance Fees payable (622,499) (533,661) (533,661) Increase in future service obligation 554,000 (171,000) (171,000) Write off of deferred financing costs 1,528,268 Adjustment on refinancing of debt (4,838,784) Other than temporary decline in investments Adjustment for realized (gains) / losses 2,653 2,473 2,592 2,176 8,332,960 12,062,114 13,266,443 2,260,277 Income available for debt service $ 2,470,358 $ 4,743,037 $ 6,459,670 $ (1,310,229) Maximum annual debt service $ 2,997,970 $ 2,997,970 $ 2,997,970 $ 2,966,724 Debt service coverage ratio (0.11) (0.34) (0.38) (0.44) Minimum DSCR required by Bond Documents (1) Excluded from the debt service coverage ratio calculation Presented for informational purposes only: this ratio is not tested for covenant purposes until the quarter ending 12/31/2012. Page 11 of 15

12 DAYS CASH ON HAND For Period Ended 12/31/ /31/ /31/2011 3/31/2012 6/30/2012 9/30/2012 Unrestricted Cash and Securities 251, ,948 1,900,912 2,127,295 2,327,772 2,872,153 Total Operating Expenses YTD 13,075,207 14,580,374 15,270,089 3,616,210 7,849,409 12,171,083 Less: Depreciation & Amortization 2,961,024 2,905,626 2,823, ,853 1,415,707 2,128,797 10,114,183 11,674,748 12,446,347 2,908,357 6,433,702 10,042,286 Average day's expenses 27,710 31,986 34,100 31,960 35,350 36,651 Day's Cash on Hand Minimum Days Cash on Hand Better or Worse than requirement Worse Worse Worse Worse Worse Worse Presented for informational purposes only: the Liquidity Covenant is not tested until the quarter ending 12/31/2012. RESERVE RATIO For Period Ended 12/31/ /31/ /31/2011 3/31/2012 6/30/2012 9/30/2012 Unrestricted Cash and Securities 251, ,948 1,900,912 2,127,295 2,327,772 2,872,153 Debt Service Reserve Fund 659,692 2,662 2,668 2,668 2,669 2,669 Total Funds Available 911, ,610 1,903,580 2,129,963 2,330,441 2,874,822 Total Indebtedness 55,540,000 55,540,000 55,540,000 55,540,000 55,540,000 57,039,580 Less Intermediate Term Bonds 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 Less Current Portion of LTD Net Indebtedness 40,540,000 40,540,000 40,540,000 40,540,000 40,540,000 57,039,580 Ratio 2.2% 2.3% 4.7% 5.3% 5.7% 5.0% Page 12 of 15

13 Virginia Baptist Homes The Glebe Entry Fee analysis YeartoDate through 9/30/2012 Beginning Month Ending Balance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Balance The Glebe Fees collected Deferrals Granted 123, , , , , , , , ,091, ,091, Deferrals Withdrawn (311,000.00) (311,000.00) (311,000.00) Net Deferred Entry Fee Balance 8,071, , , , , , , , , ,780, ,851, Refunds New Refunds Payments Remaining Refunds Due 533, , , , , , , , , , , , , , , Per agreement with the Virginia Bureau of Insurance dated May 7, 2008, The Glebe could not accept any cash entrance fees until the Bureau of Insurance could be satisfied that The Glebe's financial situation is stable. Shortly after confirmation of the Plan of Reorganization, this stay was released. Following the Effective Date of the Plan, entrance fees can now be collected. Page 13 of 15

14 The Glebe, Inc. Interim Financial Statements Nine Months Ending September 30, 2012 Narrative on Financial Condition Revenues: Revenues for The Glebe of $7.4M through Q were below the budget by approximately $244K, and exceeded last year s results by $75K. Combined independent living (IL) unit occupancy for The Glebe averaged 112, slightly exceeding the annual budget expectation of 110. The negative revenue variance is primarily due to belowbudget earned entrance fees; this variance will gradually be corrected now that the entrance fee stay imposed by the SCC has been released. Inquiry activity continues to be fairly strong given The Glebe s reorganization activities; five moveins are scheduled for Q The health care center (HCC) census in all care levels (assisted living, memory support and nursing) averaged 61 through Q versus a budget of 50. Operating Expenses: Operating expenses for The Glebe of $12.2M through Q exceeded the budget by approximately $3.6M, and exceeded last year s results by $397K. Both variances are primarily the result of professional fees incurred in connection with the reorganization proceedings ($2,210,043 YTD), and interest expense budget assumptions which were below those ultimately negotiated in the plan of reorganization. Page 14 of 15

15 Entrance Fee Deferrals: Outstanding net entrance fee deferrals have grown to $10.3M at 9/30/2012, up from $8.8M at 6/30/2012. Shortly after confirmation of the Plan of Reorganization in July 2012, this stay was released. Following the Effective Date of the Plan (9/28/2012), entrance fees can now be collected. To date through midnovember 2012, approximately $7.5M in outstanding entrance fees has been received. Marketing Consultant: The Glebe management and marketing teams have been coordinating with SB&A on marketing efforts postreorganization. They have been instrumental in the communication effort with existing residents owing entrance fees and finetuning our marketing themes going forward. Extraordinary Activity: Pursuant to the Plan of Reorganization taking effect on 9/28/2012, certain intercompany debts were cancelled resulting in a gain of $8.3M. The bond exchange between the Series 2003 Bonds and the Series 2012 Bonds occurred shortly after the Effective Date of the Plan resulting in an extraordinary gain on debt extinguishment of $4.8M and an extraordinary loss of $1.5M reflecting the writeoff of related deferred financing costs. Page 15 of 15