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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020 

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 1-13445

 

Capital Senior Living Corporation

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

75-2678809

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

14160 Dallas Parkway, Suite 300, Dallas, Texas

 

75254

(Address of Principal Executive Offices)

 

(Zip Code)

(972) 770-5600

(Registrant’s Telephone Number, Including Area Code)

NONE

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of exchange on which registered

Common Stock, $0.01 par value per share

 

CSU

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes        No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes        No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

 

 

 

  

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of October 31, 2020, the Registrant had 31,914,264 outstanding shares of its Common Stock, $0.01 par value, per share.

 

 


 

CAPITAL SENIOR LIVING CORPORATION

INDEX

 

 

 

Page

Number

 

Part I. Financial Information

 

 

3

 

Item 1. Financial Statements.

 

 

3

 

Consolidated Balance Sheets — September 30, 2020 and December 31, 2019

 

 

3

 

Consolidated Statements of Operations and Comprehensive Loss — Three and Nine Months Ended September 30, 2020 and 2019

 

 

4

 

Consolidated Statements of Shareholders’ Equity (Deficit)— Three and Nine Months Ended September 30, 2020 and 2019

 

 

5

 

Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2020 and 2019

 

 

6

 

Notes to Unaudited Consolidated Financial Statements

 

 

7

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

25

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

 

38

 

Item 4. Controls and Procedures

 

 

38

 

Part II. Other Information

 

 

38

 

Item 1. Legal Proceedings

 

 

38

 

Item 1A. Risk Factors

 

 

38

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

 

41

 

Item 3. Defaults Upon Senior Securities

 

 

41

 

Item 4. Mine Safety Disclosures

 

 

41

 

Item 5. Other Information

 

 

41

 

Item 6. Exhibits

 

 

42

 

Signature

 

 

43

 

 

2


 

Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

CAPITAL SENIOR LIVING CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

September 30,

2020

 

 

December 31,

2019

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,293

 

 

$

23,975

 

Restricted cash

 

 

3,982

 

 

 

13,088

 

Accounts receivable, net

 

 

9,107

 

 

 

8,143

 

Federal and state income taxes receivable

 

 

76

 

 

 

72

 

Property tax and insurance deposits

 

 

8,863

 

 

 

12,627

 

Prepaid expenses and other

 

 

4,764

 

 

 

5,308

 

Total current assets

 

 

41,085

 

 

 

63,213

 

Property and equipment, net

 

 

692,746

 

 

 

969,211

 

Operating lease right-of-use assets, net

 

 

3,691

 

 

 

224,523

 

Deferred taxes, net

 

 

76

 

 

 

76

 

Other assets, net

 

 

2,863

 

 

 

10,673

 

Total assets

 

$

740,461

 

 

$

1,267,696

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,398

 

 

$

10,382

 

Accrued expenses

 

 

56,474

 

 

 

46,227

 

Current portion of notes payable, net of deferred loan costs

 

 

263,674

 

 

 

15,819

 

Current portion of deferred income

 

 

5,885

 

 

 

7,201

 

Current portion of financing obligations

 

 

 

 

 

1,741

 

Current portion of lease liabilities

 

 

8,971

 

 

 

45,988

 

Federal and state income taxes payable

 

 

307

 

 

 

420

 

Customer deposits

 

 

991

 

 

 

1,247

 

Total current liabilities

 

 

346,700

 

 

 

129,025

 

Financing obligations, net of current portion

 

 

 

 

 

9,688

 

Lease liabilities, net of current portion

 

 

590

 

 

 

208,967

 

Notes payable, net of deferred loan costs and current portion

 

 

652,194

 

 

 

905,637

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock, $.01 par value:

 

 

 

 

 

 

Authorized shares – 15,000; no shares issued or outstanding

 

 

 

 

 

 

 

 

Common stock, $.01 par value:

 

 

 

 

 

 

 

 

Authorized shares – 65,000; issued and outstanding shares – 31,429 and

   31,441 in 2020 and 2019, respectively

 

 

319

 

 

 

319

 

Additional paid-in capital

 

 

191,882

 

 

 

190,386

 

Retained deficit

 

 

(447,794

)

 

 

(172,896

)

Treasury stock, at cost – 494 shares in 2020 and 2019

 

 

(3,430

)

 

 

(3,430

)

Total shareholders’ equity (deficit)

 

 

(259,023

)

 

 

14,379

 

Total liabilities and shareholders’ equity (deficit)

 

$

740,461

 

 

$

1,267,696

 

 

See accompanying notes to unaudited consolidated financial statements.

3


 

CAPITAL SENIOR LIVING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited, in thousands, except per share data)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Resident revenue

 

$

85,894

 

 

$

111,110

 

 

$

290,952

 

 

$

338,412

 

Management fees

 

 

604

 

 

 

 

 

 

819

 

 

 

 

Community reimbursement revenue

 

 

9,555

 

 

 

 

 

 

11,888

 

 

 

 

Total revenues

 

 

96,053

 

 

 

111,110

 

 

 

303,659

 

 

 

338,412

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (exclusive of facility lease expense and

   depreciation and amortization expense shown below)

 

 

65,165

 

 

 

80,394

 

 

 

211,874

 

 

 

230,229

 

General and administrative expenses

 

 

8,128

 

 

 

7,554

 

 

 

21,036

 

 

 

21,766

 

Facility lease expense

 

 

5,926

 

 

 

14,233

 

 

 

23,234

 

 

 

42,706

 

Stock-based compensation expense

 

 

421

 

 

 

898

 

 

 

1,494

 

 

 

1,558

 

Depreciation and amortization expense

 

 

15,547

 

 

 

16,136

 

 

 

47,584

 

 

 

48,085

 

Long-lived asset impairment

 

 

3,240

 

 

 

 

 

 

39,194

 

 

 

 

Community reimbursement expense

 

 

9,555

 

 

 

 

 

 

11,888

 

 

 

 

Total expenses

 

 

107,982

 

 

 

119,215

 

 

 

356,304

 

 

 

344,344

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

14

 

 

 

59

 

 

 

83

 

 

 

173

 

Interest expense

 

 

(11,141

)

 

 

(12,562

)

 

 

(34,044

)

 

 

(37,728

)

Write down of assets held for sale

 

 

 

 

 

 

 

 

 

 

 

(2,340

)

Gain (loss) on facility lease modification and termination, net

 

 

(753

)

 

 

 

 

 

10,487

 

 

 

(97

)

Gain (loss) on disposition of assets, net

 

 

(191,032

)

 

 

 

 

 

(198,388

)

 

 

38

 

Other income (expense)

 

 

9

 

 

 

1

 

 

 

2

 

 

 

8

 

Loss from continuing operations before provision for income taxes

 

 

(214,832

)

 

 

(20,607

)

 

 

(274,505

)

 

 

(45,878

)

Provision for income taxes

 

 

(132

)

 

 

(124

)

 

 

(393

)

 

 

(371

)

Net loss

 

$

(214,964

)

 

$

(20,731

)

 

$

(274,898

)

 

$

(46,249

)

Per share data:

 

 

 

 

 

 

 

 

 

0

 

 

 

 

 

Basic net loss per share

 

$

(7.00

)

 

$

(0.68

)

 

$

(8.99

)

 

$

(1.53

)

Diluted net loss per share

 

$

(7.00

)

 

$

(0.68

)

 

$

(8.99

)

 

$

(1.53

)

Weighted average shares outstanding — basic

 

 

30,730

 

 

 

30,324

 

 

 

30,578

 

 

 

30,236

 

Weighted average shares outstanding — diluted

 

 

30,730

 

 

 

30,324

 

 

 

30,578

 

 

 

30,236

 

Comprehensive loss

 

$

(214,964

)

 

$

(20,731

)

 

$

(274,898

)

 

$

(46,249

)

 

See accompanying notes to unaudited consolidated financial statements.

 

 

4


 

CAPITAL SENIOR LIVING CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(unaudited, in thousands)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Retained

 

 

Treasury

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Stock

 

 

Total

 

Balance at December 31, 2018

 

 

31,273

 

 

$

318

 

 

$

187,879

 

 

$

(149,502

)

 

$

(3,430

)

 

$

35,265

 

Adoption of ASC 842

 

 

 

 

 

 

 

 

 

 

 

12,636

 

 

 

 

 

 

12,636

 

Restricted stock awards (cancellations), net

 

 

(150

)

 

 

(2

)

 

 

2

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

(978

)

 

 

 

 

 

 

 

 

(978

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,984

)

 

 

 

 

 

(12,984

)

Balance at March 31, 2019

 

 

31,123

 

 

 

316

 

 

 

186,903

 

 

 

(149,850

)

 

 

(3,430

)

 

 

33,939

 

Restricted stock awards (cancellations), net

 

 

346

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,638

 

 

 

 

 

 

 

 

 

1,638

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,534

)

 

 

 

 

 

(12,534

)

Balance at June 30, 2019

 

 

31,469

 

 

 

320

 

 

 

188,537

 

 

 

(162,384

)

 

 

(3,430

)

 

 

23,043

 

Restricted stock awards (cancellations), net

 

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

898

 

 

 

 

 

 

 

 

 

898

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(20,731

)

 

 

 

 

 

(20,731

)

Balance at September 30, 2019

 

 

31,463

 

 

 

320

 

 

 

189,435

 

 

 

(183,115

)

 

 

(3,430

)

 

 

3,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

31,441

 

 

$

319

 

 

$

190,386

 

 

$

(172,896

)

 

$

(3,430

)

 

$

14,379

 

Restricted stock awards (cancellations), net

 

 

(52

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

597

 

 

 

 

 

 

 

 

 

597

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(47,181

)

 

 

 

 

 

(47,181

)

Balance at March 31, 2020

 

 

31,389

 

 

$

319

 

 

$

190,983

 

 

$

(220,077

)

 

$

(3,430

)

 

$

(32,205

)

Restricted stock awards (cancellations), net

 

 

43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

478

 

 

 

 

 

 

 

 

 

478

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,753

)

 

 

 

 

 

(12,753

)

Balance at June 30, 2020

 

 

31,432

 

 

$

319

 

 

$

191,461

 

 

$

(232,830

)

 

$

(3,430

)

 

$

(44,480

)

Restricted stock awards (cancellations), net

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

421

 

 

 

 

 

 

 

 

 

421

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(214,964

)

 

 

 

 

 

(214,964

)

Balance at September 30, 2020

 

 

31,429

 

 

$

319

 

 

$

191,882

 

 

$

(447,794

)

 

$

(3,430

)

 

$

(259,023

)

 

See accompanying notes to unaudited consolidated financial statements.

 

 

 

5


 

CAPITAL SENIOR LIVING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(274,898

)

 

$

(46,249

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

47,584

 

 

 

48,085

 

Amortization of deferred financing charges

 

 

1,399

 

 

 

1,237

 

Deferred income

 

 

(217

)

 

 

790

 

Operating lease expense adjustment

 

 

(18,460

)

 

 

(4,285

)

Loss on disposition of assets, net

 

 

198,388

 

 

 

59

 

Gain on facility lease modification and termination, net

 

 

(10,487

)

 

 

 

Long-lived asset impairment

 

 

39,194

 

 

 

 

Write-down of assets held for sale

 

 

 

 

 

2,340

 

Provision for bad debts

 

 

2,190

 

 

 

2,182

 

Stock-based compensation expense

 

 

1,494

 

 

 

1,558

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(3,616

)

 

 

(385

)

Property tax and insurance deposits

 

 

1,091

 

 

 

690

 

Prepaid expenses and other

 

 

911

 

 

 

(2,001

)

Other assets

 

 

(2,056

)

 

 

(373

)

Accounts payable

 

 

1,101

 

 

 

(4,683

)

Accrued expenses

 

 

11,317

 

 

 

430

 

Federal and state income taxes receivable/payable

 

 

(117

)

 

 

(103

)

Deferred resident revenue

 

 

1

 

 

 

(6

)

Customer deposits

 

 

(189

)

 

 

(38

)

Net cash used in operating activities

 

 

(5,370

)

 

 

(752

)

Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(11,211

)

 

 

(14,271

)

Proceeds from disposition of assets

 

 

6,396

 

 

 

4,888

 

Net cash used in investing activities

 

 

(4,815

)

 

 

(9,383

)

Financing Activities