EMERITUS ANNOUNCES OPERATING RESULTS FOR
SECOND QUARTER 2010
Company Increases Revenue Guidance Range
SEATTLE, WA, August 09, 2010 - Emeritus Corporation (NYSE: ESC), a national provider of assisted living and memory care services to seniors, today announced its second quarter 2010 results.
Quarter Ended June 30, 2010 Operating Summary Compared to Prior Year Second Quarter
| · | Total revenues increased $16.9 million, or 7.6%, to $239.1 million. |
| · | Same community average monthly revenue per occupied unit improved by 3.1% to $3,742. |
| · | Total average occupancy increased 60 basis points to 87.2%. |
| · | Same community average occupancy increased 50 basis points to 87.4%. |
| · | Adjusted EBITDAR increased $4.8 million to $69.6 million. |
| · | CFFO per share was $0.31 compared to $0.36 in the prior year quarter. |
Granger Cobb, President and Co-Chief Executive Officer, stated, “Progress continued in the second quarter due to the need-driven fundamentals of our business. In addition, our external growth strategy remained vibrant as we added four communities to our consolidated portfolio in the quarter and more recently closed our joint venture acquisition of 143 Sunwest communities that we are managing.”
2010 Second Quarter Results
Total revenue in the second quarter of 2010 increased 7.6% to $239.1 million, compared to $222.2 million in the 2009 second quarter. The $16.9 million increase consisted of $8.3 million from improved rate and occupancy in our portfolio of 264 same communities that we have continuously operated since January 1, 2009, $10.3 million from the acquisition, development, and expansion of communities since the beginning of 2009, with offsets of $1.6 million from unallocated community revenue adjustments (primarily an increase in the deferral of move-in fee revenues) and a small decline in management fees The improvement in same community revenues consisted of $6.9 million in rate improvement and $1.4 million in occupancy gains.
Total average monthly revenue per occupied unit increased 3.1% to $3,739 in the second quarter of 2010 from $3,626 in the second quarter of 2009. On a same community basis, average monthly revenue per occupied unit also increased 3.1% to $3,742 in the second quarter of 2010 from $3,628 in the corresponding period in 2009.
In the second quarter of 2010, total average occupancy increased 60 basis points to 87.2% compared to 86.6% in second quarter of 2009, and same community average occupancy increased 50 basis points to 87.4% compared to 86.9% in the prior year second quarter.
Community operating expenses increased $16.5 million to $157.4 million in the second quarter of 2010 compared to $140.9 million in the prior year second quarter. Approximately $6.8 million of the increase resulted from the acquisition, development, or expansion of communities since the beginning of 2009, $4.0 million of the increase was from unallocated community expense adjustments (primarily representing actuarial self-insurance adjustments), and $5.7 million was from our 264 same community portfolio. The increase in same community operating expenses consisted primarily of a $2.8 million increase in labor and benefits, of which payroll taxes increased $0.6 million, workers’ compensation expense increased $0.4 million and sa lary and wages increased $1.7 million, or 2.6%. The remaining increase in same community operating expenses was due primarily to general expense increases across various operating expense categories.
Community operating income (community revenues less community operating expenses) increased $0.5 million to $80.3 million in the second quarter of 2010 compared with $79.8 million in the second quarter of 2009. Excluding the effect of actuarial self-insurance adjustments in both periods, community operating income increased $4.1 million over the same period.
Community Transactions
In June 2010, the Company acquired four additional communities under long-term lease agreements consisting of approximately 552 units. These four communities are accounted for as operating leases. The Company entered into a purchase and sale agreement for one community in June 2010 and recorded a loss classified in discontinued operations of approximately $0.9 million. As of June 30, 2010, the consolidated Emeritus portfolio consisted of 283 communities, of which 264 communities are included in our same community definition.
Balance Sheet
As of June 30, 2010, the Company had $50.9 million of cash and cash equivalents, and had no outstanding borrowings under its $25.0 million line of credit. On June 30, 2010, 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 $287.6 million.
Subsequent Event
In July 2010, the Company entered into an agreement to extend the maturity date on a $50.0 million loan from July 2011 to July 2014.
In May 2010, the Company announced that the joint venture between Emeritus, Blackstone Real Estate Advisors and Columbia Pacific Advisors was selected as the successful bidder in the joint venture’s proposed acquisition of communities operated by an affiliate of Sunwest Management. The joint venture closed on 132 communities effective August 5, 2010, with the closing on 12 additional communities deferred until a later date. Emeritus began operating 143 of the 144 communities under management agreements effective as of August 5, 2010.
Revised Guidance
The Company is raising full year 2010 revenue guidance based on recent acquisitions and current business expectations. Total revenue is now expected to be in the range of $965.0 to $980.0 million, an increase from the prior range of $940.0 to $960.0 million. This revenue guidance includes estimated management fee revenues from the Sunwest joint venture. In addition, the Company is reducing its full year routine capital expenditures to a range of $13.5 to $15.5 million from a previous range of $16.0 to $18.0 million.
Conference Call:
The Company will host a conference call on Monday, August 9, 2010, at 5:00 P.M. Eastern Time to discuss its financial results for the quarter ended June 30, 2010. 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, August 9, 2010, until midnight Eastern Time, Monday, August 16, 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 353633.
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, al ong 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 for the year ended December 31, 2009, filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2010, and in any subsequent Quarterly Reports on Form 10-Q.
The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three and six month periods ended June 30, 2010 and 2009 (in thousands):
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Net loss | | $ | (14,143 | ) | | $ | (7,304 | ) | | $ | (28,545 | ) | | $ | (22,399 | ) |
| Equity earnings in unconsolidated joint ventures | | | (302 | ) | | | (560 | ) | | | (451 | ) | | | (1,184 | ) |
| Provision for income taxes | | | 326 | | | | 270 | | | | 645 | | | | 540 | |
| Depreciation and amortization | | | 20,655 | | | | 17,952 | | | | 41,101 | | | | 39,617 | |
| Interest expense | | | 27,211 | | | | 26,416 | | | | 54,252 | | | | 52,608 | |
| Interest income | | | (131 | ) | | | (189 | ) | | | (243 | ) | | | (327 | ) |
| Non-cash stock option compensation expenses | | | 1,495 | | | | 1,116 | | | | 2,931 | | | | 2,063 | |
| Amortization of deferred gains | | | (302 | ) | | | (74 | ) | | | (607 | ) | | | (148 | ) |
| Deferred straight-line rent | | | 3,480 | | | | 4,945 | | | | 7,071 | | | | 9,931 | |
| Above/below market rent amortization | | | 2,173 | | | | 2,427 | | | | 4,347 | | | | 4,914 | |
| Deferred revenues | | | 1,496 | | | | (57 | ) | | | 2,505 | | | | 15 | |
| Change in fair value of interest rate swaps | | | (42 | ) | | | (752 | ) | | | 12 | | | | (842 | ) |
| Impairments on long-lived assets | | | 320 | | | | 36 | | | | 320 | | | | 1,132 | |
| Acquisition and development expenses | | | 459 | | | | 351 | | | | 512 | | | | 464 | |
| Discontinued operations | | | 949 | | | | (23 | ) | | | 1,170 | | | | 51 | |
| Actuarial self-insurance reserve adjustments | | | 1,864 | | | | (1,726 | ) | | | 2,461 | | | | (1,726 | ) |
| Adjusted EBITDA | | $ | 45,508 | | | | 42,828 | | | | 87,481 | | | | 84,709 | |
| Community lease expense, net | | | 24,063 | | | | 21,975 | | | | 47,336 | | | | 43,571 | |
| Adjusted EBITDAR | | $ | 69,571 | | | $ | 64,803 | | | $ | 134,817 | | | $ | 128,280 | |
The following table shows CFFO for the three and six month periods ended June 30, 2010 and 2009 (in thousands):
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Net cash provided by operating activities | | $ | 20,546 | | | $ | 12,159 | | | $ | 37,923 | | | $ | 33,349 | |
| Remove effect of changes in operating assets and liabilities | | | (2,954 | ) | | | 7,613 | | | | (4,458 | ) | | | 3,410 | |
| Recurring capital expenditures | | | (3,055 | ) | | | (3,723 | ) | | | (5,847 | ) | | | (7,582 | ) |
| Repayment of capital lease and financing obligations | | | (2,980 | ) | | | (2,274 | ) | | | (5,854 | ) | | | (4,508 | ) |
| Distributions from unconsolidated joint ventures, net | | | 490 | | | | 470 | | | | 869 | | | | 1,018 | |
| Cash From Facility Operations | | $ | 12,047 | | | $ | 14,245 | | | $ | 22,633 | | | $ | 25,687 | |
| | | | | | | | | | | | | | | | | |
| CFFO per share | | $ | 0.31 | | | $ | 0.36 | | | $ | 0.58 | | | $ | 0.66 | |
| | | | | | | | | | | | | | | | | |
| Adjust for actuarial self-insurance reserve adjustments | | | 1,864 | | | | (1,726 | ) | | | 2,461 | | | | (1,726 | ) |
| Cash From Facility Operations, as adjusted | | $ | 13,911 | | | $ | 12,519 | | | $ | 25,094 | | | $ | 23,961 | |
| | | | | | | | | | | | | | | | | |
| CFFO per share, as adjusted | | $ | 0.35 | | | $ | 0.32 | | | $ | 0.64 | | | $ | 0.61 | |
We define recurring capital expenditures as actual costs incurred to maintain our communities for their intended business purpose and exclude expenditures for acquisitions, development, expansions and general corporate purposes.
For a more detailed understanding of Emeritus, please refer to the Company’s annual report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 15, 2010 and any subsequent Quarterly Reports on Form 10-Q, or visit the Company’s Internet site at www.emeritus.com to obtain copies.
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 460 communities in 44 states representing capacity for approximately 39,000 units and approximately 45,000 residents, including the recent Sunwest acquisition of managed communities. Our common stock is traded on the New York Stock Exchange under the symbo l 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 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 and any subsequent Quarterly Report on Form 10-Q. The Company undertakes no obligation to update the information provided herein.
| Contact: | | |
| Investor Relations | | |
| (206) 298-2909 | | |
| | | |
| Media Contacts: | | |
| Liz Brady | | Sari Martin |
| Liz.brady@icrinc.com | | Sari.martin@icrinc.com |
| 646-277-1226 | | 203-682-8345 |
| EMERITUS CORPORATION | |
| CONSOLIDATED BALANCE SHEETS | |
| (In thousands, except share data) | |
| | | | | | | |
| ASSETS | |
| | | (unaudited) | | | | |
| | | June 30, | | | December 31, | |
| | | 2010 | | | 2009 | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 50,912 | | | $ | 46,070 | |
| Short-term investments | | | 2,398 | | | | 2,208 | |
| Trade accounts receivable, net of allowance of $895 and $1,009 | | | 12,746 | | | | 10,861 | |
| Other receivables | | | 7,426 | | | | 7,251 | |
| Tax, insurance, and maintenance escrows | | | 20,291 | | | | 23,565 | |
| Prepaid workers' compensation | | | 23,045 | | | | 21,397 | |
| Other prepaid expenses and current assets | | | 32,644 | | | | 27,790 | |
| Total current assets | | | 149,462 | | | | 139,142 | |
| Long-term investments | | | 3,696 | | | | 4,132 | |
| Property and equipment, net of accumulated depreciation of $261,360 and $222,518 | | | 1,730,105 | | | | 1,716,472 | |
| Restricted deposits | | | 15,121 | | | | 14,349 | |
| Lease acquisition costs, net of accumulated amortization of $2,118 and $1,889 | | | 3,880 | | | | 3,805 | |
| Goodwill | | | 74,376 | | | | 74,755 | |
| Other intangible assets, net of accumulated amortization of $32,744 and $28,883 | | | 110,325 | | | | 116,418 | |
| Other assets, net | | | 18,969 | | | | 20,867 | |
| Total assets | | $ | 2,105,934 | | | $ | 2,089,940 | |
| | | | | | | | | |
| LIABILITIES, SHAREHOLDERS' EQUITY AND NONCONTROLLING INTEREST | |
| | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Current portion of long-term debt | | $ | 41,671 | | | $ | 21,324 | |
| Current portion of capital lease and financing obligations | | | 12,705 | | | | 11,144 | |
| Trade accounts payable | | | 5,701 | | | | 5,928 | |
| Accrued employee compensation and benefits | | | 44,101 | | | | 37,624 | |
| Accrued interest | | | 7,773 | | | | 8,013 | |
| Accrued real estate taxes | | | 9,527 | | | | 10,715 | |
| Accrued professional and general liability | | | 9,385 | | | | 8,445 | |
| Accrued income taxes | | | 194 | | | | 542 | |
| Other accrued expenses | | | 14,336 | | | | 13,491 | |
| Deferred revenue | | | 12,883 | | | | 10,729 | |
| Unearned rental income | | | 17,479 | | | | 18,669 | |
| Total current liabilities | | | 175,755 | | | | 146,624 | |
| Long-term debt obligations, less current portion | | | 1,342,627 | | | | 1,375,088 | |
| Capital lease and financing obligations, less current portion | | | 201,826 | | | | 165,372 | |
| Deferred gain on sale of communities | | | 6,504 | | | | 7,111 | |
| Deferred straight-line rent | | | 42,775 | | | | 34,659 | |
| Other long-term liabilities | | | 42,051 | | | | 42,188 | |
| Total liabilities | | | 1,811,538 | | | | 1,771,042 | |
| | | | | | | | | |
| 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 | | | | | | | | |
| 39,361,205 and 39,274,590 shares | | | 4 | | | | 4 | |
| Additional paid-in capital | | | 729,300 | | | | 725,652 | |
| Accumulated other comprehensive income | | | 788 | | | | 807 | |
| Accumulated deficit | | | (442,509 | ) | | | (414,381 | ) |
| Total Emeritus Corporation shareholders' equity | | | 287,583 | | | | 312,082 | |
| Noncontrolling interest – related party | | | 6,813 | | | | 6,816 | |
| Total shareholders’ equity | | | 294,396 | | | | 318,898 | |
| Total liabilities, shareholders' equity and noncontrolling interest | | $ | 2,105,934 | | | $ | 2,089,940 | |
| EMERITUS CORPORATION | |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (unaudited) | |
| (In thousands, except per share data) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Revenues: | | | | | | | | | | | | |
| Community revenue | | $ | 237,787 | | | $ | 220,773 | | | $ | 470,660 | | | $ | 440,404 | |
| Management fees | | | 1,344 | | | | 1,453 | | | | 2,675 | | | | 2,920 | |
| Total operating revenues | | | 239,131 | | | | 222,226 | | | | 473,335 | | | | 443,324 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Community operations (exclusive of depreciation and amortization | | | | | | | | | | | | | | | | |
| and community lease expense shown separately below) | | | 157,452 | | | | 140,935 | | | | 312,474 | | | | 284,833 | |
| General and administrative | | | 17,109 | | | | 15,932 | | | | 34,271 | | | | 30,850 | |
| Acquisitions and development | | | 309 | | | | 312 | | | | 351 | | | | 387 | |
| Impairments on long-lived assets | | | - | | | | 36 | | | | - | | | | 1,132 | |
| Depreciation and amortization | | | 20,655 | | | | 17,952 | | | | 41,101 | | | | 39,617 | |
| Community leases | | | 29,716 | | | | 29,347 | | | | 58,754 | | | | 58,416 | |
| Total operating expenses | | | 225,241 | | | | 204,514 | | | | 446,951 | | | | 415,235 | |
| Operating income from continuing operations | | | 13,890 | | | | 17,712 | | | | 26,384 | | | | 28,089 | |
| | | | | | | | | | | | | | | | | |
| Other income (expense): | | | | | | | | | | | | | | | | |
| Interest income | | | 131 | | | | 189 | | | | 243 | | | | 327 | |
| Interest expense | | | (27,211 | ) | | | (26,416 | ) | | | (54,252 | ) | | | (52,608 | ) |
| Change in fair value of interest rate swaps | | | 42 | | | | 752 | | | | (12 | ) | | | 842 | |
| Equity earnings for unconsolidated joint ventures | | | 302 | | | | 560 | | | | 451 | | | | 1,184 | |
| Other, net | | | (22 | ) | | | 146 | | | | 456 | | | | 358 | |
| Net other expense | | | (26,758 | ) | | | (24,769 | ) | | | (53,114 | ) | | | (49,897 | ) |
| | | | | | | | | | | | | | | | | |
| Loss from continuing operations before income taxes | | | (12,868 | ) | | | (7,057 | ) | | | (26,730 | ) | | | (21,808 | ) |
| Provision for income taxes | | | (326 | ) | | | (270 | ) | | | (645 | ) | | | (540 | ) |
| Loss from continuing operations | | | (13,194 | ) | | | (7,327 | ) | | | (27,375 | ) | | | (22,348 | ) |
| Income (loss) from discontinued operations | | | (949 | ) | | | 23 | | | | (1,170 | ) | | | (51 | ) |
| Net loss | | | (14,143 | ) | | | (7,304 | ) | | | (28,545 | ) | | | (22,399 | ) |
| Net loss attributable to the noncontrolling interest | | | 226 | | | | 229 | | | | 417 | | | | 443 | |
| Net loss attributable to Emeritus Corporation common shareholders | | $ | (13,917 | ) | | $ | (7,075 | ) | | $ | (28,128 | ) | | $ | (21,956 | ) |
| | | | | | | | | | | | | | | | | |
| Basic and diluted loss per common share attributable to | | | | | | | | | | | | | | | | |
| Emeritus Corporation common shareholders: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | (0.33 | ) | | $ | (0.18 | ) | | $ | (0.69 | ) | | $ | (0.56 | ) |
| Discontinued operations | | | (0.02 | ) | | | 0.00 | | | | (0.03 | ) | | | (0.00 | ) |
| | | $ | (0.35 | ) | | $ | (0.18 | ) | | $ | (0.72 | ) | | $ | (0.56 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding-basic and diluted | | | 39,301 | | | | 39,147 | | | | 39,290 | | | | 39,132 | |
| | | | | | | | | | | | | | | | | |
| EMERITUS CORPORATION | |
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, | |
(unaudited) (In thousands) | |
| | | | |
| | | 2010 | | | 2009 | |
| Cash flows from operating activities: | | | | | | |
| Net loss | | $ | (28,545 | ) | | $ | (22,399 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | | | 41,101 | | | | 39,617 | |
| Amortization of above/below market rents | | | 4,347 | | | | 4,914 | |
| Amortization of deferred gains | | | (607 | ) | | | (148 | ) |
| Loss on sale of assets | | | 1,179 | | | | - | |
| Impairments on long-lived assets | | | 320 | | | | 1,132 | |
| Amortization of loan fees | | | 1,512 | | | | 1,572 | |
| Allowance for doubtful receivables | | | 2,135 | | | | 1,634 | |
| Equity investment earnings | | | (451 | ) | | | (1,184 | ) |
| Stock based compensation | | | 2,931 | | | | 2,063 | |
| Change in fair value of interest rate swaps | | | 12 | | | | (842 | ) |
| Other | | | (45 | ) | | | 454 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Deferred straight-line rent | | | 7,071 | | | | 9,931 | |
| Deferred revenue | | | 2,505 | | | | 15 | |
| Change in other operating assets and liabilities | | | 4,458 | | | | (3,410 | ) |
| Net cash provided by operating activities | | | 37,923 | | | | 33,349 | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Acquisition of property and equipment | | | (10,073 | ) | | | (16,108 | ) |
| Community acquisition | | | - | | | | (10,579 | ) |
| Sale of property and equipment | | | - | | | | 2,677 | |
| Lease and contract costs and acquisition deposits | | | (4,527 | ) | | | (170 | ) |
| Payments (to) from affiliates and other managed communities, net | | | (1.639 | ) | | | 699 | |
| Distributions from unconsolidated joint ventures/other | | | 869 | | | | 1,018 | |
| Net cash used in investing activities | | | (15,370 | ) | | | (22,463 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Proceeds from sale of stock and noncontrolling interest contribution | | | 1,132 | | | | 257 | |
| Increase in restricted deposits | | | (730 | ) | | | (256 | ) |
| Debt issuance and other financing costs | | | (145 | ) | | | (274 | ) |
| Proceeds from long-term borrowings and financings | | | - | | | | 10,864 | |
| Repayment of long-term borrowings and financings | | | (12,114 | ) | | | (2,736 | ) |
| Repayment of capital lease and financing obligations | | | (5,854 | ) | | | (4,508 | ) |
| Net cash provided by (used in) financing activities | | | (17,711 | ) | | | 3,347 | |
| Net increase in cash and cash equivalents | | | 4,842 | | | | 14,233 | |
| Cash and cash equivalents at the beginning of the period | | | 46,070 | | | | 27,254 | |
| Cash and cash equivalents at the end of the period | | $ | 50,912 | | | $ | 41,487 | |
| EMERITUS CORPORATION | |
| CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (unaudited) | |
| (In thousands, except per share data) | |
| | | | | | | |
| | | Three Months Ended | |
| | | June 30, 2010 | | | March 31, 2010 | |
| Revenues: | | | | | | |
| Community revenue | | $ | 237,787 | | | $ | 232,873 | |
| Management fees | | | 1,344 | | | | 1,331 | |
| Total operating revenues | | | 239,131 | | | | 234,204 | |
| | | | | | | | | |
| Expenses: | | | | | | | | |
| Community operations (exclusive of depreciation and amortization | | | | | | | | |
| and community lease expense shown separately below) | | | 157,452 | | | | 155,022 | |
| General and administrative | | | 17,109 | | | | 17,162 | |
| Acquisitions and development | | | 309 | | | | 42 | |
| Depreciation and amortization | | | 20,655 | | | | 20,446 | |
| Community leases | | | 29,716 | | | | 29,038 | |
| Total operating expenses | | | 225,241 | | | | 221,710 | |
| Operating income from continuing operations | | | 13,890 | | | | 12,494 | |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest income | | | 131 | | | | 112 | |
| Interest expense | | | (27,211 | ) | | | (27,041 | ) |
| Change in fair value of interest rate swaps | | | 42 | | | | (54 | ) |
| Equity earnings (losses) in unconsolidated joint ventures | | | 302 | | | | 149 | |
| Other, net | | | (22 | ) | | | 478 | |
| Net other expense | | | (26,758 | ) | | | (26,356 | ) |
| | | | | | | | | |
| Loss from continuing operations before income taxes | | | (12,868 | ) | | | (13,862 | ) |
| Provision for income taxes | | | (326 | ) | | | (319 | ) |
| Loss from continuing operations | | | (13,194 | ) | | | (14,181 | ) |
| Income (loss) from discontinued operations | | | (949 | ) | | | (221 | ) |
| Net loss | | | (14,143 | ) | | | (14,402 | ) |
| Net loss attributable to the noncontrolling interest | | | 226 | | | | 191 | |
| Net loss attributable to Emeritus Corporation common shareholders | | $ | (13,917 | ) | | $ | (14,211 | ) |
| | | | | | | | | |
| Basic and diluted loss per common share attributable to | | | | | | | | |
| Emeritus Corporation common shareholders: | | | | | | | | |
| Continuing operations | | $ | (0.33 | ) | | $ | (0.35 | ) |
| Discontinued operations | | | (0.02 | ) | | | (0.01 | ) |
| | | $ | (0.35 | ) | | $ | (0.36 | ) |
| | | | | | | | | |
| Weighted average common shares outstanding-basic and diluted | | | 39,301 | | | | 39,279 | |
| Emeritus Corporation | |
| Lease, Interest and Depreciation Expense | |
| For the Calendar Quarters Ended | |
| (unaudited) | |
| (In Thousands) | |
| | | | | | | |
| | | | | | Projected | |
| | | | | | Range | |
| | | | Q2-2010 | | | | Q3-2010 | |
| Community leases expense - GAAP | | $ | 29,716 | | | $ | 31,500 - $31,800 | |
| Less: | | | | | | | | |
| Deferred straight-line rent | | | (3,480 | ) | | | (3,500) - (3,600 | ) |
| Above/below market rent | | | (2,173 | ) | | | (2,200) - (2,300 | ) |
| Plus: | | | | | | | | |
| Capital lease interest | | | 3,918 | | | | 3,900 - 4,000 | |
| Capital lease principal | | | 2,819 | | | | 2,800 - 2,900 | |
| Community leases expense - CASH | | $ | 30,800 | | | $ | 32,500 - $32,800 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Interest expense - GAAP | | $ | 27,211 | | | $ | 27,530 - $28,040 | |
| Less: | | | | | | | | |
| Straight-line interest | | | (19 | ) | | | (30) - (40 | ) |
| Capital lease interest | | | (3,918 | ) | | | (3,900) - (4,000 | ) |
| Loan fee amortization | | | (760 | ) | | | (800) - (900 | ) |
| Interest expense - CASH | | $ | 22,514 | | | $ | 22,800 - $23,100 | |
| | | | | | | | | |
| Depreciation – owned assets | | $ | 15,459 | | | $ | 15,500 – $15,600 | |
| Depreciation – capital leases | | | 4,232 | | | | 4,300 – 4,400 | |
| Amortization – intangible assets | | | 964 | | | | 1,000 – 1,100 | |
| Total depreciation and amortization expense | | $ | 20,655 | | | $ | 20,800 - $21,100 | |
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 | | | Q2 2009 | | | | Q3 2009 | | | | Q4 2009 | | | | Q1 2010 | | | | Q2 2010 | |
| Average consolidated communities | | | 268.3 | | | | 269.0 | | | | 271.0 | | | | 279.5 | | | | 281.3 | |
| Average available units | | | 23,439 | | | | 23,529 | | | | 23,710 | | | | 24,080 | | | | 24,305 | |
| Average occupied units | | | 20,298 | | | | 20,495 | | | | 20,654 | | | | 20,986 | | | | 21,198 | |
| Average occupancy | | | 86.6 | % | | | 87.1 | % | | | 87.1 | % | | | 87.2 | % | | | 87.2 | % |
| Average monthly revenue per occupied unit | | $ | 3,626 | | | $ | 3,649 | | | $ | 3,684 | | | $ | 3,699 | | | $ | 3,739 | |
| Calendar days | | | 91 | | | | 92 | | | | 92 | | | | 90 | | | | 91 | |
| | | | | | | | | | | | | | | | | | | | | |
| Community revenues: | | | | | | | | | | | | | | | | | | | | |
| Community revenues | | $ | 217,303 | | | $ | 221,016 | | | $ | 225,206 | | | $ | 229,815 | | | $ | 234,560 | |
| Move-in fees | | | 4,549 | | | | 4,196 | | | | 3,948 | | | | 3,753 | | | | 3,838 | |
| Move-in incentives | | | (1,079 | ) | | | (864 | ) | | | (864 | ) | | | (695 | ) | | | (611 | ) |
| Total community revenues | | $ | 220,773 | | | $ | 224,348 | | | $ | 228,290 | | | $ | 232,873 | | | $ | 237,787 | |
| | | | | | | | | | | | | | | | | | | | | |
| Community operating expenses: | | | | | | | | | | | | | | | | | | | | |
| Salaries and wages - regular and overtime | | $ | 67,707 | | | $ | 68,627 | | | $ | 70,323 | | | $ | 69,808 | | | $ | 72,574 | |
| Average daily salary and wages | | $ | 744 | | | $ | 746 | | | $ | 764 | | | $ | 776 | | | $ | 798 | |
| Average daily wages per occupied unit | | $ | 36.66 | | | $ | 36.40 | | | $ | 37.01 | | | $ | 36.96 | | | $ | 37.62 | |
| | | | | | | | | | | | | | | | | | | | | |
| Payroll taxes and employee benefits | | $ | 22,116 | | | $ | 23,689 | | | $ | 24,503 | | | $ | 26,244 | | | $ | 24,672 | |
| Percent of salaries and wages | | | 32.7 | % | | | 34.5 | % | | | 34.8 | % | | | 37.6 | % | | | 34.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Actuarial self-insurance reserve adjustments | | $ | (1,726 | ) | | $ | 818 | | | $ | (1,033 | ) | | $ | 584 | | | $ | 1,859 | |
| | | | | | | | | | | | | | | | | | | | | |
| Utilities | | $ | 9,406 | | | $ | 11,420 | | | $ | 9,878 | | | $ | 11,522 | | | $ | 9,792 | |
| Average monthly cost per occupied unit | | $ | 154 | | | $ | 186 | | | $ | 159 | | | $ | 183 | | | $ | 154 | |
| | | | | | | | | | | | | | | | | | | | | |
| Facility maintenance and repairs | | $ | 5,027 | | | $ | 5,508 | | | $ | 5,683 | | | $ | 5,898 | | | $ | 5,715 | |
| Average monthly cost per occupied unit | | $ | 83 | | | $ | 90 | | | $ | 92 | | | $ | 94 | | | $ | 90 | |
| | | | | | | | | | | | | | | | | | | | | |
| All other community operating expenses | | $ | 38,405 | | | $ | 39,331 | | | $ | 42,203 | | | $ | 40,966 | | | $ | 42,840 | |
| Average monthly cost per occupied unit | | $ | 631 | | | $ | 640 | | | $ | 681 | | | $ | 651 | | | $ | 674 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total community operating expenses | | $ | 140,935 | | | $ | 149,393 | | | $ | 151,557 | | | $ | 155,022 | | | $ | 157,452 | |
| | | | | | | | | | | | | | | | | | | | | |
| Community operating income | | $ | 79,838 | | | $ | 74,955 | | | $ | 76,733 | | | $ | 77,851 | | | $ | 80,335 | |
| | | | | | | | | | | | | | | | | | | | | |
| Operating income margin | | | 36.2 | % | | | 33.4 | % | | | 33.6 | % | | | 33.4 | % | | | 33.8 | % |
| EMERITUS CORPORATION | |
Selected Consolidated and Same Community Information For the Calendar Quarters Ended | |
(unaudited) (Community revenue and operating expense in thousands) | |
| | | | Q2 2009 | | | | Q3 2009 | | | | Q4 2009 | | | | Q1 2010 | | | | Q2 2010 | |
| Consolidated: | | | | | | | | | | | | | | | | | | | | |
| Average consolidated communities | | | 268.3 | | | | 269.0 | | | | 271.0 | | | | 279.5 | | | | 281.3 | |
| Community revenue | | $ | 220,773 | | | $ | 224,348 | | | $ | 228,290 | | | $ | 232,873 | | | $ | 237,787 | |
| Community operating expense | | $ | 140,935 | | | $ | 149,393 | | | $ | 151,557 | | | $ | 155,022 | | | $ | 157,452 | |
| Average occupancy | | | 86.6 | % | | | 87.1 | % | | | 87.1 | % | | | 87.2 | % | | | 87.2 | % |
| Average monthly revenue per unit | | $ | 3,626 | | | $ | 3,649 | | | $ | 3,684 | | | $ | 3,699 | | | $ | 3,739 | |
| | | | | | | | | | | | | | | | | | | | | |
| Same Community: | | | | | | | | | | | | | | | | | | | | |
| Average consolidated communities | | | 264.0 | | | | 264.0 | | | | 264.0 | | | | 264.0 | | | | 264.0 | |
| Community revenue | | $ | 219,398 | | | $ | 222,344 | | | $ | 224,418 | | | $ | 225,917 | | | $ | 227,648 | |
| Community operating expense | | $ | 140,658 | | | $ | 145,611 | | | $ | 148,252 | | | $ | 148,433 | | | $ | 146,348 | |
| Average occupancy | | | 86.9 | % | | | 87.4 | % | | | 87.4 | % | | | 87.3 | % | | | 87.4 | % |
| Average monthly revenue per unit | | $ | 3,628 | | | $ | 3,656 | | | $ | 3,690 | | | $ | 3,718 | | | $ | 3,742 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
