| | Contact: Investor Relations |
| | (206) 298-2909 |
| | |
EMERITUS ANNOUNCES OPERATING
RESULTS FOR FOURTH QUARTER AND FULL YEAR 2009
SEATTLE, WA, (March 15, 2010) - - Emeritus Corporation (NYSE: ESC), a national provider of assisted living and memory care services to seniors, today announced its fourth quarter and full year 2009 results.
Year and Quarter Ended December 31, 2009 Operating Summary
| | · | Total revenues increased by $126.3 million, or 16.3%, to $898.7 million for the year, and by $25.1 million, or 12.3%, to $229.6 million for the fourth quarter. |
| | · | Average monthly revenue per occupied unit improved by 6.8% to $3,648 for the year, and by 4.1% to $3,684 for the fourth quarter. |
| | · | Average occupancy increased 20 basis points to 86.7% for the year, and increased 70 basis points to 87.1% for the fourth quarter. |
| | · | Same Store average occupancy increased 80 basis points to 87.9% for the year, and increased 120 basis points to 88.3% for the fourth quarter. |
| | · | Operating income from continuing operations improved by $49.8 million for the year, and by $6.6 million for the fourth quarter. |
| | · | Adjusted EBITDAR improved 13.3% to $252.9 million for the year, and by 4.9% to $62.3 million for the fourth quarter. |
Granger Cobb, President and Co-Chief Executive Officer, stated, “In 2009, we improved occupancy, revenue per unit, and cash flows despite a difficult economy, underscoring the need-driven fundamentals of our business. As we enter this year, we are energized by the meaningful opportunities to drive further improvements in operating results throughout our existing portfolio, as well as through select acquisitions.”
2009 Annual Results
Total operating revenues increased by $126.3 million, or 16.3%, to $898.7 million for the year ended December 31, 2009, compared to $772.4 million in 2008. Of this increase, $98.2 million was from the acquisition, development, and expansion of 26 communities since the beginning of 2008, $27.4 million was from the 240 Same Store communities, and the balance was from an increase in management fee revenues. The $27.4 million improvement in Same Store revenues consisted of $20.3 million from increased average monthly revenue per occupied unit and $7.1 million from improved occupancy.
Average monthly revenue per occupied unit increased to $3,648 in 2009 from $3,417 in 2008, a 6.8% improvement. On a Same Store basis, average monthly revenue per occupied unit increased by 2.8% to $3,528 in 2009 from $3,433 in 2008.
Same Store average occupancy in 2009 was 87.9% compared to 87.1% in 2008. For the total consolidated portfolio, average occupancy for 2009 was 86.7% compared to 86.5% in 2008. Total occupancy was 88.7% on December 31, 2009, compared to 87.4% on December 31, 2008.
Community operating expenses were $585.8 million in 2009 compared to $490.9 million in 2008. Approximately $75.7 million of the increase resulted from the acquisition, development, or expansion of 26 communities since the beginning of 2008, while $19.2 million was from the 240 Same Store communities. The increase in Same Store expenses includes a $5.1 million increase in health insurance primarily from an increase in employee enrollment, a $2.6 million increase in workers’ compensation expense, base salary and wage increases of less than 1.0%, totaling $1.9 million, and a $1.0 million increase in sick pay benefits due to a change in employee sick pay policy. The remaining increase in community operating expenses was due to general expense increases across various categories.
The Company benefited from expense reductions of $1.9 million in 2009 and $6.0 million in 2008 related to actuarial adjustments to self-insurance programs. These adjustments, though representing benefits to each of the periods, had the impact of increasing comparative consolidated operating expenses by $4.1 million, of which $1.2 million is included in the Same Store expenses as discussed above.
General and administrative expenses were $63.6 million in 2009 compared to $58.8 million in 2008. As a percent of total operated community revenues, which includes revenues of managed communities, general and administrative expenses decreased to 6.3% in 2009 compared to 6.7% in 2008.
The net loss improved by $50.9 million for 2009 to $(53.9) million compared to $(104.8) million in 2008. The meaningful reduction in the Company’s net loss was principally attributed to a decrease in depreciation and amortization of $41.6 million, primarily from the full amortization of an intangible asset in early 2009; a decrease in impairment charges of $5.8 million, including impairment losses reported in discontinued operations; a decrease in the write-off of transaction, refinancing, and development costs of approximately $6.1 million; and a $4.5 million benefit on the Company’s interest rate swap value, including amounts reported in equity earnings from unconsolidated joint ventures. These positive impacts were partially offset by a net increase of $8.7 million in non-cash facility lease expenses, primarily straight-line rent accruals on leased communities acquired in December 2008, and the $4.1 million comparative increase in self-insurance expense as discussed above.
2009 Fourth Quarter Results
Total operating revenues increased by $25.1 million, or 12.3%, to $229.6 million for the fourth quarter ended December 31, 2009, compared to $204.5 million in the 2008 fourth quarter. Of this increase, $19.8 million was from the acquisition, development, and expansion of 26 communities since the beginning of 2008, and the remaining $5.3 million was from the 240 Same Store communities and management fees. The improvement in Same Store revenues consisted of approximately equal increases of average monthly revenue per occupied unit and improved occupancy.
Average monthly revenue per occupied unit increased to $3,684 in the fourth quarter of 2009 from $3,539 in the fourth quarter of 2008, a 4.1% improvement. On a Same Store basis, average monthly revenue per occupied unit increased by 1.5% to $3,555 in the fourth quarter of 2009 from $3,503 in the corresponding period in 2008.
Same Store average occupancy in the fourth quarter of 2009 was 88.3% compared to 87.1% in prior year fourth quarter. Average occupancy for the fourth quarter of 2009 was 87.1% compared to 86.4% in fourth quarter of 2008. From the third to fourth quarters of 2009, average occupancy was flat at 87.1% on a consolidated basis and also flat at 88.3% on a Same Store basis.
Community operating expenses increased $27.5 million to $151.5 million in the fourth quarter of 2009 compared to $124.0 million in the prior year fourth quarter. Approximately $17.3 million of the increase resulted from the acquisition, development, or expansion of 26 communities since the beginning of 2008, and $10.2 million was from the 240 Same Store communities. The increase in Same Store expenses includes a $2.4 million increase in workers’ compensation expense, a $1.2 million increase in health insurance primarily from an increase in employee enrollment, and salary and wage increases of 1.7%, totaling $1.0 million. In addition, professional and general liability expenses increased $2.0 million, primarily from an actuarial-based expense credit in the fourth quarter of 2008. The remaining increase in community operating expenses was due to general expense increases across various other operating expense categories.
The Company benefited from prior period net expense reductions of $0.8 million in the fourth quarter of 2009 and $6.6 million in the prior year quarter related to actuarial adjustments to self-insurance programs. These adjustments, though representing benefits to each of the periods, had the impact of increasing comparative consolidated operating expenses by $5.8 million in the 2009 quarter, of which $2.0 million in workers’ compensation and $2.0 million in professional liability expenses are included in the Same Store expenses as discussed above.
The net loss for the fourth quarter of 2009 was $(15.9) million compared to $(30.5) million in the fourth quarter of 2008, an improvement of $14.6 million. The meaningful reduction in the Company’s net loss was principally attributed to a decrease in depreciation and amortization of $10.4 million, primarily from the full amortization of an intangible asset in early 2009; a decrease in impairment charges of $3.9 million, including impairment losses reported in discontinued operations; a decrease in the write-off of transaction, refinancing, and development costs of approximately $5.3 million; and a $3.4 million benefit on the Company’s interest rate swap value, including amounts reported in equity earnings from unconsolidated joint ventures. These positive impacts were partially offset by a net increase of $1.0 million in non-cash facility lease expenses, primarily straight-line rent accruals on leased communities acquired in December 2008, and the $5.8 million comparative increase in self-insurance expense as discussed above.
Community Transactions
In January 2010, the Company announced that it had entered into a joint venture agreement with Blackstone Real Estate Advisors VI, L.P. and Columbia Pacific Advisors in connection with the acquisition by the joint venture of approximately 134 communities currently operated by an affiliate of Sunwest Management. The Company continues to work with the joint venture in pursuing this opportunity.
During both 2009 and 2008, the Company incurred impairment losses that related to communities sold or held for sale. For the year ended December 31, 2009, the impairment losses were $7.5 million, of which $1.2 million is included in discontinued operations. In 2008, impairment losses were $13.4 million, of which $1.7 million is included in other non-operating expense and $1.5 million is included in discontinued operations. Discontinued operations include four communities sold since December 2007. Five communities formerly classified as held for sale have been reclassified to continuing operations for all periods presented.
Balance Sheet
As of December 31, 2009, the Company had $46.1 million of cash and cash equivalents, and had no outstanding borrowings under its $25.0 million line of credit. On December 31, 2009, total assets were
$2.1 billion, including $1.7 billion of net investments in properties, total debt was $1.6 billion, including capital lease obligations, and shareholders’ equity was $312.1 million.
Conference Call:
The Company will host a conference call on Monday, March 15, 2010, at 5:00 P.M. Eastern Time to discuss its financial results for the year ended December 31, 2009. Hosting the call will be Mr. Daniel Baty, Chairman and Co-Chief Executive Officer, Mr. Granger Cobb, President and Co-Chief Executive Officer, and Mr. Robert Bateman, Executive Vice President and Chief Financial Officer.
The conference call will be webcast live over the internet from the Company’s web site at www.emeritus.com under the “investors” section. The conference call can also be accessed by dialing (877) 407-9039, or for international participants (201) 689-8470. A replay of the conference call will be available after 8:00 P.M. Eastern Time on Monday, March 15, 2010, until midnight Eastern Time, Monday, March 22, 2010. The dial in numbers for the replay are (877) 660-6853, or for international participants (201) 612-7415. To access the telephonic replay, enter account number 3055 along with the conference ID 346020.
Non-GAAP Financial Measures
Adjusted EBITDA/EBITDAR and Cash From Facility Operations (CFFO) are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). We believe these non-GAAP measures are useful in identifying trends in our day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating performance. In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in our industry. We strongly urge you to review the reconciliation of net loss to Adjusted EBITDA/EBITDAR, and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with our consolidated balance sheets, statements of operations, and cash flows. We define Adjusted EBITDA/EBITDAR and CFFO and provide other information about these non-GAAP measures in our annual report on Form 10-K.
The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three months and years ended December 31, 2009 and 2008 (in thousands):
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | December 31, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| Net loss | | $ | (16,198 | ) | | $ | (30,661 | ) | | $ | (54,818 | ) | | $ | (104,939 | ) |
| Equity losses (earnings) for unconsolidated joint ventures | | | (177 | ) | | | 1,313 | | | | (1,285 | ) | | | 2,203 | |
| Provision for (benefit of) income taxes | | | (564 | ) | | | 270 | | | | 336 | | | | 1,020 | |
| Depreciation and amortization | | | 18,889 | | | | 29,256 | | | | 77,138 | | | | 118,776 | |
| Interest expense | | | 26,989 | | | | 26,084 | | | | 106,340 | | | | 95,590 | |
| Interest income | | | (133 | ) | | | (376 | ) | | | (1,035 | ) | | | (2,292 | ) |
| Non-cash stock option compensation expenses | | | 850 | | | | 1,109 | | | | 4,100 | | | | 4,895 | |
| Amortization of deferred gains | | | (309 | ) | | | (101 | ) | | | (769 | ) | | | (1,235 | ) |
| Straight-line rent expense | | | 4,095 | | | | 2,923 | | | | 18,866 | | | | 9,903 | |
| Above/below market rent amortization | | | 2,343 | | | | 2,494 | | | | 9,684 | | | | 9,978 | |
| Deferred revenues | | | 355 | | | | (671 | ) | | | 830 | | | | 2,017 | |
| Change in fair value of interest rate swaps | | | (228 | ) | | | 1,574 | | | | (849 | ) | | | 1,558 | |
| Loss on termination of leases | | | - | | | | 1,303 | | | | - | | | | 1,303 | |
| Impairment loss on long-lived assets and investments | | | 4,553 | | | | 7,369 | | | | 6,308 | | | | 11,918 | |
| Debt refinancing fees | | | 190 | | | | 336 | | | | 269 | | | | 1,460 | |
| Acquisition and development expenses | | | 52 | | | | 3,907 | | | | 517 | | | | 4,128 | |
| Discontinued operations | | | (35 | ) | | | 1,014 | | | | 1,335 | | | | 2,043 | |
| Professional and workers' compensation liability adjustments | | | (773 | ) | | | (6,603 | ) | | | (1,941 | ) | | | (6,054 | ) |
| Adjusted EBITDA | | | 39,899 | | | | 40,540 | | | | 165,026 | | | | 152,272 | |
| Community leases expense | | | 22,386 | | | | 18,847 | | | | 87,923 | | | | 70,971 | |
| Adjusted EBITDAR | | $ | 62,285 | | | $ | 59,387 | | | $ | 252,949 | | | $ | 223,243 | |
The following table shows the reconciliation of net cash provided by operating activities to CFFO for the three months and years ended December 31, 2009 and 2008 (in thousands):
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | December 31, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| Net cash provided by operating activities | | $ | 8,897 | | | $ | 6,053 | | | $ | 64,007 | | | $ | 62,510 | |
| Remove effect of changes in operating assets and liabilities | | | 7,688 | | | | 14,353 | | | | 3,916 | | | | 2,493 | |
| Recurring capital expenditures, net | | | (4,162 | ) | | | (3,710 | ) | | | (17,052 | ) | | | (10,450 | ) |
| Repayment of capital lease and financing obligations | | | (2,702 | ) | | | (1,764 | ) | | | (9,705 | ) | | | (13,507 | ) |
| Distributions from unconsolidated joint ventures, net | | | 564 | | | | 570 | | | | 2,153 | | | | 570 | |
| Cash From Facility Operations | | $ | 10,285 | | | $ | 15,502 | | | $ | 43,319 | | | $ | 41,616 | |
| | | | | | | | | | | | | | | | | |
| Capital expenditures related to new acquisitions (1) | | $ | (1,191 | ) | | $ | (131 | ) | | $ | (2,340 | ) | | $ | (4,936 | ) |
| | (1) | Represents investments in newly acquired communities subsequent to acquisition; previously included in above calculation |
CFFO per weighted average common shares outstanding was $0.26 and $0.40 for the three months ended December 31, 2009 and 2008, respectively, and $1.11 and $1.07 for the years ended December 31, 2009 and 2008, respectively. CFFO per share reflects the positive impacts from adjustments to professional liability and workers’ compensation reserves as detailed in the Adjusted EBITDAR schedule above.
For a more detailed understanding of Emeritus, please refer to the Company’s annual report on Form 10-K to be filed with the Securities and Exchange Commission on March 15, 2010, or visit the Company’s Internet site at www.emeritus.com to obtain a copy.
Emeritus Corporation is a national provider of assisted living and Alzheimer’s and related dementia care services to seniors. Emeritus is one of the largest and most experienced operators of freestanding assisted living communities located throughout the United States. These communities provide a residential housing alternative for senior citizens who need assistance with the activities of daily living, with an emphasis on personal care services, which provides support to the residents in the aging process. Emeritus currently operates 316 communities in 36 states representing capacity for approximately 27,500 units and approximately 32,800 residents. Our common stock is traded on the New York Stock Exchange under the symbol ESC, and our home page can be found on the Internet at www.emeritus.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: A number of the matters and subject areas discussed in this report that are not historical or current facts deal with potential future circumstances, operations, and prospects. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience as a result of such factors as: the effects of competition and economic conditions on the occupancy levels in our communities; our ability under current market conditions to maintain and increase our resident charges in accordance with our rate enhancement programs without adversely affecting occupancy levels; increases in interest costs as a result of refinancings; our ability to control community operation expenses, including insurance and utility costs, without adversely affecting the level of occupancy and the level of resident charges; our ability to generate cash flow sufficient to service our debt and other fixed payment requirements; our
ability to find sources of financing and capital on satisfactory terms to meet our cash requirements to the extent that they are not met by operations, and uncertainties related to professional liability and workers’ compensation claims. We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area. These and other risks and uncertainties are detailed in our reports filed with the Securities and Exchange Commission, including “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009.
| EMERITUS CORPORATION | |
| CONSOLIDATED BALANCE SHEETS | |
| (In thousands, except share data) | |
| | | | | | | |
| ASSETS | |
| | | December 31, | | | December 31, | |
| Current Assets: | | 2009 | | | 2008 | |
| Cash and cash equivalents | | $ | 46,070 | | | $ | 27,254 | |
| Short-term investments | | | 2,208 | | | | 1,802 | |
| Trade accounts receivable, net of allowance of $1,009 and $549 | | | 10,861 | | | | 11,596 | |
| Other receivables | | | 7,251 | | | | 5,556 | |
| Tax, insurance, and maintenance escrows | | | 23,565 | | | | 21,762 | |
| Prepaid workers' compensation | | | 21,397 | | | | 19,288 | |
| Other prepaid expenses and current assets | | | 27,790 | | | | 23,720 | |
| Property held for sale | | | - | | | | 13,712 | |
| Total current assets | | | 139,142 | | | | 124,690 | |
| Long-term investments | | | 4,132 | | | | 4,192 | |
| Property and equipment, net of accumulated depreciation of $222,518 and $144,441 | | | 1,716,472 | | | | 1,725,558 | |
| Restricted deposits | | | 14,349 | | | | 12,337 | |
| Lease acquisition costs, net of accumulated amortization of $1,889 and $1,877 | | | 3,805 | | | | 3,867 | |
| Goodwill | | | 74,755 | | | | 73,704 | |
| Other intangible assets, net of accumulated amortization of $28,883 and $76,368 | | | 116,418 | | | | 131,994 | |
| Other assets, net | | | 20,867 | | | | 18,851 | |
| Total assets | | $ | 2,089,940 | | | $ | 2,095,193 | |
| | | | | | | | | |
| LIABILITIES, SHAREHOLDERS' EQUITY AND NONCONTROLLING INTEREST | |
| | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Current portion of long-term debt | | $ | 21,324 | | | $ | 18,267 | |
| Current portion of capital lease and financing obligations | | | 11,144 | | | | 9,172 | |
| Trade accounts payable | | | 5,928 | | | | 7,474 | |
| Accrued employee compensation and benefits | | | 37,624 | | | | 32,778 | |
| Accrued interest | | | 8,013 | | | | 7,012 | |
| Accrued real estate taxes | | | 10,715 | | | | 9,791 | |
| Accrued professional and general liability | | | 8,445 | | | | 10,842 | |
| Accrued income taxes | | | 542 | | | | 3,715 | |
| Other accrued expenses | | | 13,491 | | | | 12,284 | |
| Deferred revenue | | | 10,729 | | | | 12,463 | |
| Unearned rental income | | | 18,669 | | | | 16,101 | |
| Total current liabilities | | | 146,624 | | | | 139,899 | |
| Long-term debt obligations, less current portion | | | 1,375,088 | | | | 1,355,149 | |
| Capital lease and financing obligations, less current portion | | | 165,372 | | | | 180,684 | |
| Deferred gain on sale of communities | | | 7,111 | | | | 2,667 | |
| Deferred rent | | | 34,659 | | | | 14,022 | |
| Other long-term liabilities | | | 42,188 | | | | 36,744 | |
| Total liabilities | | | 1,771,042 | | | | 1,729,165 | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| Shareholders' Equity and Noncontrolling Interest: | | | | | | | | |
| Preferred stock, $.0001 par value. Authorized 20,000,000 shares, none issued | | | - | | | | - | |
| Common stock, $.0001 par value. Authorized 100,000,000 shares; issued and outstanding | | | | | | | | |
| 39,274,590 and 39,091,648 shares | | | 4 | | | | 4 | |
| Additional paid-in capital | | | 725,652 | | | | 719,903 | |
| Accumulated other comprehensive income | | | 807 | | | | – | |
| Accumulated deficit | | | (414,381 | ) | | | (360,506 | ) |
| Total Emeritus Corporation shareholders' equity | | | 312,082 | | | | 359,401 | |
| Noncontrolling interest – related party | | | 6,816 | | | | 6,627 | |
| Total shareholders’ equity | | | 318,898 | | | | 366,028 | |
| Total liabilities, shareholders' equity and noncontrolling interest | | $ | 2,089,940 | | | $ | 2,095,193 | |
| EMERITUS CORPORATION | |
CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended December 31, | |
| (In thousands, except per share data) | |
| | | | | | | |
| | | | |
| | | 2009 | | | 2008 | |
| Revenues: | | | | | | |
| Community revenue | | $ | 893,043 | | | $ | 767,411 | |
| Management fees | | | 5,689 | | | | 5,032 | |
| Total operating revenues | | | 898,732 | | | | 772,443 | |
| | | | | | | | | |
| Expenses: | | | | | | | | |
| Community operations (exclusive of depreciation and amortization | | | | | | | | |
| and community leases expense shown separately below) | | | 585,783 | | | | 490,867 | |
| General and administrative | | | 63,647 | | | | 58,784 | |
| Acquisitions and development | | | 517 | | | | 3,907 | |
| Impairments on long-lived assets | | | 6,308 | | | | 10,176 | |
| Depreciation and amortization | | | 77,138 | | | | 118,776 | |
| Community leases | | | 116,473 | | | | 90,852 | |
| Total operating expenses | | | 849,866 | | | | 773,362 | |
| Operating income (loss) from continuing operations | | | 48,866 | | | | (919 | ) |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest income | | | 1,035 | | | | 2,292 | |
| Interest expense | | | (106,340 | ) | | | (95,590 | ) |
| Change in fair value of interest rate swaps | | | 849 | | | | (1,558 | ) |
| Equity earnings (losses) for unconsolidated joint ventures | | | 1,285 | | | | (2,203 | ) |
| Other, net | | | 1,158 | | | | (3,898 | ) |
| Net other expense | | | (102,013 | ) | | | (100,957 | ) |
| | | | | | | | | |
| Loss from continuing operations before income taxes | | | (53,147 | ) | | | (101,876 | ) |
| Provision for income taxes | | | (336 | ) | | | (1,020 | ) |
| Loss from continuing operations | | | (53,483 | ) | | | (102,896 | ) |
| Loss from discontinued operations | | | (1,335 | ) | | | (2,043 | ) |
| Net loss | | | (54,818 | ) | | | (104,939 | ) |
| Net loss attributable to noncontrolling interest | | | 943 | | | | 188 | |
| Net loss attributable to Emeritus Corporation common shareholders | | $ | (53,875 | ) | | $ | (104,751 | ) |
| | | | | | | | | |
Basic and diluted loss per common share attributable to Emeritus Corporation common shareholders: | | | | | | | | |
| Continuing operations | | $ | (1.34 | ) | | $ | (2.63 | ) |
| Discontinued operations | | | (0.03 | ) | | | (0.05 | ) |
| | | $ | (1.37 | ) | | $ | (2.68 | ) |
| | | | | | | | | |
| Weighted average common shares outstanding; basic and diluted | | | 39,183 | | | | 39,075 | |
| EMERITUS CORPORATION | |
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, | |
(In thousands) | |
| | | | |
| | | 2009 | | | 2008 | |
| Cash flows from operating activities: | | | | | | |
| Net loss | | $ | (54,818 | ) | | $ | (104,939 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | | | 77,138 | | | | 118,776 | |
| Amortization of above/below market rents | | | 9,684 | | | | 9,978 | |
| Loss on lease termination | | | - | | | | 1,303 | |
| Amortization of deferred gain | | | (769 | ) | | | (1,235 | ) |
| Impairment of long-lived assets and investments | | | 7,542 | | | | 13,360 | |
| Amortization of loan fees | | | 3,227 | | | | 2,587 | |
| Allowance for doubtful receivables | | | 3,464 | | | | 1,895 | |
| Equity investment (earnings ) losses and distributions | | | (1,285 | ) | | | 2,203 | |
| Stock based compensation | | | 4,100 | | | | 4,895 | |
| Change in fair value of interest rate swaps | | | (849 | ) | | | 1,558 | |
| Deferred revenue | | | 830 | | | | 2,017 | |
| Deferred rent | | | 18,866 | | | | 9,903 | |
| Other | | | 793 | | | | 2,702 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Trade accounts receivable and other receivables | | | (3,612 | ) | | | (465 | ) |
| Prepaid expenses | | | (10,626 | ) | | | (1,693 | ) |
| Other assets | | | (493 | ) | | | 946 | |
| Trade accounts payable | | | (1,418 | ) | | | (370 | ) |
| Other accrued expenses and current liabilities | | | 7,186 | | | | 882 | |
| Security deposits and other long-term liabilities | | | 5,047 | | | | (1,793 | ) |
| Net cash provided by operating activities | | | 64,007 | | | | 62,510 | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Acquisition of property and equipment | | | (30,452 | ) | | | (716,724 | ) |
| Community acquisitions | | | (32,626 | ) | | | (6,935 | ) |
| Sale of property and equipment | | | 2,677 | | | | 6,754 | |
| Lease and contract costs and acquisition deposits | | | (1,339 | ) | | | (1,146 | ) |
| Payments from affiliates and other managed communities, net | | | 918 | | | | 33 | |
| Distributions from (investments in) unconsolidated joint ventures/other | | | 2,153 | | | | (413 | ) |
| Purchase of available-for-sale securities | | | - | | | | (2,976 | ) |
| Net cash used in investing activities | | | (58,669 | ) | | | (721,407 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Proceeds from sale of stock | | | 1,028 | | | | 1,121 | |
| Repurchase of common stock | | | - | | | | (399 | ) |
| Decrease (increase) in restricted deposits | | | (1,710 | ) | | | 7,932 | |
| Debt issuance and other financing costs | | | (885 | ) | | | (12,205 | ) |
| Proceeds from long-term borrowings and financings | | | 42,439 | | | | 691,020 | |
| Repayment of long-term borrowings and financings | | | (19,443 | ) | | | (62,336 | ) |
| Repayment of capital and financing lease obligations | | | (9,705 | ) | | | (13,507 | ) |
| Tax benefit of stock compensation | | | 622 | | | | - | |
| Non-controlling interest contribution | | | 1,132 | | | | 6,815 | |
| Net cash provided by financing activities | | | 13,478 | | | | 618,441 | |
| Net increase (decrease) in cash and cash equivalents | | | 18,816 | | | | (40,456 | ) |
| Cash and cash equivalents at the beginning of the year | | | 27,254 | | | | 67,710 | |
| Cash and cash equivalents at the end of the year | | $ | 46,070 | | | $ | 27,254 | |
| EMERITUS CORPORATION | |
CONSOLIDATED STATEMENTS OF OPERATIONS For the Calendar Quarters Ended | |
| Unaudited | |
| (In thousands, except per share data) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | Q4 -2009 | | | | Q4 -2008 | |
| Revenues: | | | | | | | | |
| Community revenues | | $ | 228,290 | | | $ | 203,088 | |
| Management fees | | | 1,330 | | | | 1,384 | |
| Total operating revenues | | | 229,620 | | | | 204,472 | |
| | | | | | | | | |
| Expenses: | | | | | | | | |
| Community operations (exclusive of depreciation, amortization | | | | | | | | |
| and community leases expense shown separately below) | | | 151,557 | | | | 124,012 | |
| General and administrative | | | 16,444 | | | | 14,717 | |
| Acquisitions and development | | | 52 | | | | 3,907 | |
| Impairments on long-lived assets | | | 4,553 | | | | 5,609 | |
| Depreciation and amortization | | | 18,889 | | | | 29,256 | |
| Community leases | | | 28,824 | | | | 24,264 | |
| Total operating expenses | | | 220,319 | | | | 201,765 | |
| | | | | | | | | |
| Operating income from continuing operations | | | 9,301 | | | | 2,707 | |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest income | | | 133 | | | | 376 | |
| Interest expense | | | (26,989 | ) | | | (26,084 | ) |
| Change in fair value of interest rate swaps | | | 228 | | | | (1,574 | ) |
| Equity earnings (losses) for unconsolidated joint ventures | | | 177 | | | | (1,313 | ) |
| Other, net | | | 353 | | | | (3,489 | ) |
| Net other expense | | | (26,098 | ) | | | (32,084 | ) |
| | | | | | | | | |
| Loss from continuing operations before income taxes | | | (16,797 | ) | | | (29,377 | ) |
| Benefit of (provision for) income taxes | | | 564 | | | | (270 | ) |
| Loss from continuing operations | | | (16,233 | ) | | | (29,647 | ) |
| Loss from discontinued operations | | | 35 | | | | (1,014 | ) |
| Net loss | | | (16,198 | ) | | | (30,661 | ) |
| Net loss attributable to noncontrolling interests | | | 268 | | | | 188 | |
| Net loss attributable to Emeritus Corporation common shareholders | | $ | (15,930 | ) | | $ | (30,473 | ) |
| | | | | | | | | |
| Basic and diluted loss per common share | | | | | | | | |
| Continuing operations | | $ | (0.41 | ) | | $ | (0.75 | ) |
| Discontinued operations | | | (0.00 | ) | | | (0.03 | ) |
| | | $ | (0.41 | ) | | $ | (0.78 | ) |
| | | | | | | | | |
| Weighted average common shares outstanding - basic and diluted | | | 39,259 | | | | 39,122 | |
| Emeritus Corporation | |
| Lease, Interest and Depreciation Expense | |
| For the Calendar Quarters Ended | |
| (Unaudited) | |
| (In Thousands) | |
| | | | | | | |
| | | | | | Projected | |
| | | | | | Range | |
| | | | Q4-2009 | | | | Q1-2010 | |
| Community leases expense - GAAP | | $ | 28,824 | | | $ | 29,000 - $29,300 | |
| Less: | | | | | | | | |
| Straight-line rents | | | (4,095 | ) | | | (3,500) - (3,600 | ) |
| Above/below market rents | | | (2,343 | ) | | | (2,200)-(2,300 | ) |
| Plus: | | | | | | | | |
| Capital lease interest | | | 3,270 | | | | 3,900 - 4,000 | |
| Capital lease principal | | | 2,562 | | | | 2,800 - 2,900 | |
| Community leases expense - CASH | | $ | 28,218 | | | $ | 30,000 - $30,300 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Interest expense - GAAP | | $ | 26,989 | | | $ | 27,130 - $27,640 | |
| Less: | | | | | | | | |
| Straight-line interest | | | (28 | ) | | | (30) -(40 | ) |
| Capital lease interest | | | (3,270 | ) | | | (3,900) - (4,000 | ) |
| Capitalized interest | | | - | | | | - | |
| Loan fee amortization | | | (794 | ) | | | (800)- (900 | ) |
| Interest expense - CASH | | $ | 22,897 | | | $ | 22,400 - $22,700 | |
| | | | | | | | | |
| Depreciation – owned assets | | $ | 15,334 | | | $ | 15,400 – $15,500 | |
| Depreciation – capital leases | | | 2,738 | | | | 4,300 – 4,400 | |
| Amortization – intangible assets | | | 817 | | | | 1,000 – 1,100 | |
| Total depreciation and amortization expense | | $ | 18,889 | | | $ | 20,700 - $21,000 | |
| | | | | | | | | |
| EMERITUS CORPORATION |
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION For the Calendar Quarters Ended |
| Unaudited |
(Dollars in thousands, except non-financial and per-unit data) |
Non-Financial Data | | | Q1 2009 | | | | Q2 2009 | | | | Q3 2009 | | | | Q4 2009 | | | 2009 Total | | | % of Total | |
| Average consolidated communities | | | 268.0 | | | | 268.3 | | | | 269.0 | | | | 271.0 | | | | 269.1 | | | | |
| Average available units | | | 23,404 | | | | 23,439 | | | | 23,529 | | | | 23,710 | | | | 23,521 | | | | |
| Average occupied units | | | 20,157 | | | | 20,298 | | | | 20,495 | | | | 20,654 | | | | 20,401 | | | | |
| Average occupancy | | | 86.1 | % | | | 86.6 | % | | | 87.1 | % | | | 87.1 | % | | | 86.7 | % | | | |
| Average monthly revenue per occupied unit | | $ | 3,632 | | | $ | 3,626 | | | $ | 3,649 | | | $ | 3,684 | | | $ | 3,648 | | | | |
| Calendar days | | | 90 | | | | 91 | | | | 92 | | | | 92 | | | | 365 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Community revenues: | | | | | | | | | | | | | | | | | | | | | | | |
| Community revenues | | $ | 215,869 | | | $ | 217,304 | | | $ | 221,017 | | | $ | 225,206 | | | $ | 879,396 | | | | 98.5 | % |
| Move-in fees | | | 4,531 | | | | 4,549 | | | | 4,196 | | | | 3,948 | | | | 17,224 | | | | 1.9 | % |
| Move-in incentives | | | (770 | ) | | | (1,079 | ) | | | (864 | ) | | | (864 | ) | | | (3,577 | ) | | | -0.4 | % |
| Total community revenues | | $ | 219,630 | | | $ | 220,774 | | | $ | 224,349 | | | $ | 228,290 | | | $ | 893,043 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Community operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| Salaries and wages - regular and overtime | | $ | 66,942 | | | $ | 67,707 | | | $ | 68,627 | | | $ | 70,323 | | | $ | 273,599 | | | | 46.7 | % |
| Average daily salary and wages | | $ | 744 | | | $ | 744 | | | $ | 746 | | | $ | 764 | | | $ | 750 | | | | | |
| Average daily wages per occupied unit | | $ | 36.90 | | | $ | 36.66 | | | $ | 36.40 | | | $ | 37.01 | | | $ | 36.74 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Payroll taxes and employee benefits | | $ | 23,041 | | | $ | 22,116 | | | $ | 23,689 | | | $ | 24,503 | | | $ | 93,349 | | | | 15.9 | % |
| Percent of salaries and wages | | | 34.4 | % | | | 32.7 | % | | | 34.5 | % | | | 34.8 | % | | | 34.1 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Actuarial self-insurance reserve adjustments | | $ | - | | | $ | (1,726 | ) | | $ | 818 | | | $ | (1,033 | ) | | $ | (1,941 | ) | | | -0.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Utilities | | $ | 11,236 | | | $ | 9,406 | | | $ | 11,420 | | | $ | 9,878 | | | $ | 41,940 | | | | 7.2 | % |
| Average monthly cost per occupied unit | | $ | 186 | | | $ | 154 | | | $ | 186 | | | $ | 159 | | | $ | 171 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Facility maintenance and repairs | | $ | 4,903 | | | $ | 5,027 | | | $ | 5,508 | | | $ | 5,683 | | | $ | 21,121 | | | | 3.6 | % |
| Average monthly cost per occupied unit | | $ | 81 | | | $ | 83 | | | $ | 90 | | | $ | 92 | | | $ | 86 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| All other community operating expenses | | $ | 37,776 | | | $ | 38,405 | | | $ | 39,331 | | | $ | 42,203 | | | $ | 157,715 | | | | 26.9 | % |
| Average monthly cost per occupied unit | | $ | 625 | | | $ | 631 | | | $ | 640 | | | $ | 681 | | | $ | 644 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total community operating expenses | | $ | 143,898 | | | $ | 140,935 | | | $ | 149,393 | | | $ | 151,557 | | | $ | 585,783 | | | | 100.0 | % |
| Community operating income | | $ | 75,732 | | | $ | 79,839 | | | $ | 74,956 | | | $ | 76,733 | | | $ | 307,260 | | | | | |
| EMERITUS CORPORATION |
CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION For the Calendar Quarters Ended |
| Unaudited |
(Dollars in thousands, except non-financial and per-unit data) |
Non-Financial Data | | | Q1 2008 | | | | Q2 2008 | | | | Q3 2008 | | | | Q4 2008 | | | 2008 Total | | | % of Total | |
| Average consolidated communities | | | 252.0 | | | | 252.3 | | | | 253.0 | | | | 257.3 | | | | 253.7 | | | | |
| Average available units | | | 21,388 | | | | 21,427 | | | | 21,583 | | | | 22,137 | | | | 21,634 | | | | |
| Average occupied units | | | 18,614 | | | | 18,473 | | | | 18,659 | | | | 19,126 | | | | 18,718 | | | | |
| Average occupancy | | | 87.0 | % | | | 86.2 | % | | | 86.5 | % | | | 86.4 | % | | | 86.5 | % | | | |
| Average monthly revenue per occupied unit | | $ | 3,320 | | | $ | 3,364 | | | $ | 3,439 | | | $ | 3,539 | | | $ | 3,417 | | | | |
| Calendar days | | | 91 | | | | 91 | | | | 92 | | | | 92 | | | | 366 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Community revenues: | | | | | | | | | | | | | | | | | | | | | | | |
| Community revenues | | $ | 182,358 | | | $ | 182,765 | | | $ | 188,607 | | | $ | 199,383 | | | $ | 753,113 | | | | 98.1 | % |
| Move-in fees | | | 3,888 | | | | 4,414 | | | | 4,555 | | | | 4,578 | | | | 17,435 | | | | 2.3 | % |
| Move-in incentives | | | (854 | ) | | | (770 | ) | | | (640 | ) | | | (873 | ) | | | (3,137 | ) | | | -0.4 | % |
| Total community revenues | | $ | 185,392 | | | $ | 186,409 | | | $ | 192,522 | | | $ | 203,088 | | | $ | 767,411 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Community operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| Salaries and wages - regular and overtime | | $ | 57,267 | | | $ | 58,375 | | | $ | 60,534 | | | $ | 63,284 | | | $ | 239,460 | | | | 48.8 | % |
| Average daily salary and wages | | $ | 629 | | | $ | 641 | �� | | $ | 658 | | | $ | 688 | | | $ | 654 | | | | | |
| Average daily wages per occupied unit | | $ | 33.81 | | | $ | 34.73 | | | $ | 35.26 | | | $ | 35.97 | | | $ | 34.95 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Payroll taxes and employee benefits | | $ | 19,508 | | | $ | 18,855 | | | $ | 17,069 | | | $ | 18,184 | | | $ | 73,616 | | | | 15.0 | % |
| Percent of salaries and wages | | | 34.1 | % | | | 32.3 | % | | | 28.2 | % | | | 28.7 | % | | | 30.7 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Actuarial self-insurance reserve adjustments | | $ | - | | | $ | (1,855 | ) | | $ | (637 | ) | | $ | (3,562 | ) | | $ | (6,054 | ) | | | -1.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Utilities | | $ | 10,009 | | | $ | 8,763 | | | $ | 10,853 | | | $ | 9,447 | | | $ | 39,072 | | | | 8.0 | % |
| Average monthly cost per occupied unit | | $ | 179 | | | $ | 158 | | | $ | 194 | | | $ | 165 | | | $ | 174 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Facility maintenance and repairs | | $ | 3,947 | | | $ | 4,285 | | | $ | 4,324 | | | $ | 4,400 | | | $ | 16,956 | | | | 3.4 | % |
| Average monthly cost per occupied unit | | $ | 71 | | | $ | 77 | | | $ | 77 | | | $ | 77 | | | $ | 75 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| All other community operating expenses | | $ | 31,161 | | | $ | 31,907 | | | $ | 32,490 | | | $ | 32,259 | | | $ | 127,817 | | | | 26.0 | % |
| Average monthly cost per occupied unit | | $ | 558 | | | $ | 576 | | | $ | 580 | | | $ | 562 | | | $ | 569 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total community operating expenses | | $ | 121,892 | | | $ | 120,330 | | | $ | 124,633 | | | $ | 124,012 | | | $ | 490,867 | | | | 100.0 | % |
| Community operating income | | $ | 63,500 | | | $ | 66,079 | | | $ | 67,889 | | | $ | 79,076 | | | $ | 276,544 | | | | | |
| | |
| | |
