EMERITUS ANNOUNCES OPERATING RESULTS FOR
SECOND QUARTER 2012
SEATTLE, WA, August 2, 2012 - Emeritus Corporation (NYSE: ESC), a national provider of senior living services, today announced its second quarter 2012 results.
Operating Summary for Second Quarter 2012 Compared to Second Quarter 2011
| · | Community and management fee revenue increased $16.6 million, or 5.4%, to $323.8 million |
| · | Adjusted EBITDAR increased $5.5 million, or 6.4%, to $92.1 million |
| · | CFFO per share, as adjusted, increased 15.0% to $0.46 |
| · | Same community average monthly revenue per occupied unit increased 0.9% to $4,136 |
| · | Same community average occupancy increased 10 basis points to 86.6% |
| · | Same community operating margin increased to 34.0% from to 33.5% |
Granger Cobb, President and Chief Executive Officer commented, “Our rate initiatives have started to gain traction, and we have continued to show very good expense controls – leading to a 50-basis point improvement in same community operating margin compared to the second quarter of last year. We remain confident in our ability to maintain our year-over-year revenue growth rate ahead of our expense growth rate, resulting in enhanced margins and cash flow over time.”
2012 Second Quarter Consolidated Results
Total revenue in the second quarter of 2012 increased 3.1% to $374.8 million compared to the second quarter of 2011. In the second quarter of 2012, we began recording as expense the costs incurred on behalf of and reimbursed by managed communities, with a corresponding amount recorded as revenues. Prior-period amounts have been adjusted to reflect this new presentation, with no impact on net operating results, cashflow measures, or balance sheet accounts. Excluding the impact of these reimbursed costs, community and management fee revenues increased $16.6 million, or 5.4%, to $323.8 million. The $16.6 million increase includes $13.2 million from the acquisition of communities (net of dispositions), including 24 communities that the Company acquired in June 2011 that it had previously managed on behalf of a joint venture with an affiliate of Blackstone Real Estate Advisors; the remaining increase is due primarily to improved rate and occupancy at our same community portfolio.
Total average monthly revenue per occupied unit for the consolidated portfolio increased 2.2% to $4,148 in the second quarter of 2012 from $4,057 in the second quarter of 2011. This increase in rate was partially due to the 24 communities added in June 2011 that had higher average rates.
In the second quarter of 2012, total average occupancy for the consolidated portfolio increased 40 basis points to 86.4% compared to 86.0% in the second quarter of 2011. The increase was due to higher occupancy at acquired communities, as well as improved occupancy in the same community portfolio.
Community operating expenses increased $8.2 million to $213.6 million in the second quarter of 2012 compared to $205.4 million in the 2011 period. Approximately $8.3 million of the increase resulted from the
acquisition of communities (net of dispositions) with the remaining difference due to same community expenses and unallocated community expenses, net.
Community operating income increased $8.7 million, or 9.0%, to $105.1 million in the second quarter of 2012 compared to $96.4 million in the second quarter of 2011. As a result of improved occupancy and rate, combined with effective expense controls, community operating margin improved to 33.0%, compared to 31.9% in the second quarter of 2011.
Excluding noncash stock-based compensation expenses, general and administrative expenses as a percent of total operated community revenue (which includes revenues of managed communities but excludes reimbursed costs of managed communities) was 4.8% in the second quarter of 2012, compared to 4.7% in the second quarter of 2011.
For the second quarter of 2012, Adjusted EBITDAR increased $5.5 million, or 6.4%, to $92.1 million, with the increase primarily driven by the increase in community operating income. For the quarter ended June 30, 2012, cash from facility operations (CFFO), as adjusted, increased to $20.3 million, or $0.46 per share, compared to $17.9 million, or $0.40 per share, in the second quarter of 2011.
2012 Second Quarter Same Community Results
As of June 30, 2012, the consolidated Emeritus portfolio consisted of 327 communities, of which 295 communities are included in the Company’s definition of same communities. Total same community revenue increased $2.9 million to $290.5 million in the second quarter of 2012, due to rate and occupancy improvements. Average monthly revenue per occupied unit increased 0.9% to $4,136 in the second quarter of 2012 compared to $4,101 in the corresponding period in 2011. Average occupancy increased 10 basis points to 86.6% in the second quarter of 2012 from 86.5% in the prior-year period.
The Company’s same community operating expenses were held to an increase of 0.3%, totaling $191.8 million, in the second quarter of 2012 compared to $191.2 million in the prior-year period, primarily as a result of the Company’s efficiency initiatives.
Same community operating income increased by $2.3 million to $98.6 million in the second quarter of 2012 and same community operating income margin increased from 33.5% to 34.0% as compared to the second quarter of 2011.
2012 Guidance Update
The Company provides guidance for the Company’s existing portfolio and excludes future acquisitions and dispositions.
The Company’s guidance for 2012 is as follows:
| · | Community and management fee revenue in the range of $1.3 billion to $1.32 billion |
| · | Routine capital expenditures in the range of $21.0 million to $23.0 million |
| · | General and administrative expenses as a percent of total operated revenue of approximately 4.8%, excluding non-cash stock-based compensation expenses |
| · | CFFO, as adjusted, in the range of $1.65 to $1.75 per share |
Webcast and Conference Call
The Company will host a webcast and conference call on Thursday, August 2, 2012, at 5:00 P.M. Eastern Time to discuss its financial results for the second quarter of 2012.
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) 705-6003, or for international participants (201) 493-6725. A replay of the conference call will be available after 8:00 P.M. Eastern Time on Thursday, August 2, 2012, until midnight Eastern Time on Thursday, August 9, 2012. The dial-in numbers for the replay are (877) 870-5176 or, for international participants, (858) 384-5517. To access the telephonic replay, enter the conference ID 397336.
Non-GAAP Financial Measures
Adjusted EBITDA/EBITDAR and CFFO are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). The Company believes that these non-GAAP measures are useful in identifying trends in 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 the senior living industry. The Company strongly urges you to review the reconciliation of net income (loss) to Adjusted EBITDA/EBITDAR and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with the Company’s consolidated balance sheets, statements of operations, and statements of cash flows. The Company defines Adjusted EBITDA/EBITDAR and CFFO and provides other information about these non-GAAP measures in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, to be filed with the Securities and Exchange Commission.
The table below shows the reconciliation of net income (loss) to Adjusted EBITDA/EBITDAR for the three and six months ended June 30, 2012 and 2011 (in thousands):
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| Net income (loss) | | $ | (21,753 | ) | | $ | 22,096 | | | $ | (41,148 | ) | | $ | (582 | ) |
| Depreciation and amortization | | | 32,993 | | | | 29,438 | | | | 65,563 | | | | 57,525 | |
| Interest income | | | (98 | ) | | | (123 | ) | | | (202 | ) | | | (234 | ) |
| Interest expense | | | 38,587 | | | | 37,975 | | | | 77,632 | | | | 74,239 | |
| Net equity losses for unconsolidated joint ventures | | | 80 | | | | 61 | | | | 472 | | | | 435 | |
| Provision for income taxes | | | 324 | | | | 294 | | | | 596 | | | | 575 | |
| Loss from discontinued operations | | | 5,007 | | | | 397 | | | | 5,007 | | | | 397 | |
| Amortization of above/below market rents | | | 1,624 | | | | 1,966 | | | | 3,378 | | | | 3,933 | |
| Amortization of deferred gains | | | (264 | ) | | | (284 | ) | | | (533 | ) | | | (572 | ) |
| Stock-based compensation | | | 2,834 | | | | 2,366 | | | | 5,679 | | | | 4,709 | |
| Change in fair value of derivative financial instruments | | | 534 | | | | (509 | ) | | | 745 | | | | (509 | ) |
| Deferred revenue | | | (151 | ) | | | 654 | | | | (450 | ) | | | 1,140 | |
| Deferred straight-line rent | | | 1,096 | | | | 2,440 | | | | 2,298 | | | | 4,932 | |
| Contract buyout costs | | | – | | | | – | | | | – | | | | 6,256 | |
| Impairment of long-lived assets | | | – | | | | – | | | | 2,135 | | | | – | |
| Gain on sale of investments | | | – | | | | – | | | | – | | | | (1,569 | ) |
| Acquisition gain | | | – | | | | (42,110 | ) | | | – | | | | (42,110 | ) |
| Acquisition, development, and financing expenses | | | 1,112 | | | | 1,957 | | | | 1,433 | | | | 2,470 | |
| Self-insurance reserve adjustments | | | 1,849 | | | | 3,141 | | | | 2,246 | | | | 3,173 | |
| Adjusted EBITDA | | | 63,774 | | | | 59,759 | | | | 124,851 | | | | 114,208 | |
| Community lease expense, net | | | 28,296 | | | | 26,796 | | | | 56,511 | | | | 53,333 | |
| Adjusted EBITDAR | | $ | 92,070 | | | $ | 86,555 | | | $ | 181,362 | | | $ | 167,541 | |
The following table shows the reconciliation of net cash provided by operating activities to CFFO and CFFO as adjusted for self-insurance reserves relating to prior years (in thousands):
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| Net cash provided by operating activities | | $ | 42,324 | | | $ | 17,736 | | | $ | 68,516 | | | $ | 17,470 | |
| Changes in operating assets and liabilities, net | | | (16,009 | ) | | | 4,025 | | | | (17,273 | ) | | | 19,793 | |
| Contract buyout costs | | | – | | | | – | | | | – | | | | 6,256 | |
| Repayment of capital lease and financing obligations | | | (4,183 | ) | | | (3,503 | ) | | | (8,077 | ) | | | (6,898 | ) |
| Recurring capital expenditures | | | (3,718 | ) | | | (4,310 | ) | | | (8,173 | ) | | | (8,632 | ) |
| Distributions from unconsolidated joint ventures, net | | | 61 | | | | 801 | | | | 87 | | | | 1,351 | |
| Cash From Facility Operations | | | 18,475 | | | | 14,749 | | | | 35,080 | | | | 29,340 | |
| Self-insurance reserve adjustments, prior years | | | 1,849 | | | | 3,141 | | | | 2,246 | | | | 3,173 | |
| Cash From Facility Operations, as adjusted | | $ | 20,324 | | | $ | 17,890 | | | $ | 37,326 | | | $ | 32,513 | |
| | | | | | | | | | | | | | | | | |
| CFFO per share | | $ | 0.41 | | | $ | 0.33 | | | $ | 0.79 | | | $ | 0.66 | |
| CFFO per share, as adjusted | | $ | 0.46 | | | $ | 0.40 | | | $ | 0.84 | | | $ | 0.73 | |
The Company defines 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, to be filed with the SEC, or visit the Company’s web site at www.emeritus.com to obtain copies.
About Emeritus Corporation
Emeritus Corporation is the nation’s largest assisted living and memory care provider with capacity to serve approximately 49,600 residents. More than 28,000 employees serve residents at 477 communities throughout 44 states coast to coast. Emeritus offers the spectrum of senior residential choices, care options and life enrichment programs that fulfill individual needs and promote purposeful living throughout the aging process. Its experts provide insights on senior living, care, wellness, brain health, caregiving and family topics at www.emeritus.com, which also offers details on the organization’s services. Emeritus’ common stock is traded on the New York Stock Exchange under the symbol ESC.
“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, 2011 filed with the SEC. The Company undertakes no obligation to update the information provided herein.
Contact:
Investor Relations
(206) 298-2909
Media Contacts:
Liz Brady
Liz.brady@icrinc.com
646-277-1226
Sari Martin
Sari.martin@icrinc.com
203-682-8345
EMERITUS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except share data)
| ASSETS | |
| | | | | | | |
| | | June 30, | | | December 31, | |
| | | 2012 | | | 2011 | |
| Current Assets: | | | | | | |
| Cash and cash equivalents | | $ | 74,792 | | | $ | 43,670 | |
| Short-term investments | | | 4,322 | | | | 3,585 | |
| Trade accounts receivable, net of allowance of $3,620 and $2,294 | | | 24,429 | | | | 26,195 | |
| Other receivables | | | 16,226 | | | | 16,117 | |
| Tax, insurance, and maintenance escrows | | | 21,423 | | | | 20,501 | |
| Prepaid insurance expense | | | 35,867 | | | | 36,020 | |
| Deferred tax asset | | | 22,072 | | | | 19,934 | |
| Other prepaid expenses and current assets | | | 6,213 | | | | 8,140 | |
| Property held for sale | | | 7,857 | | | | – | |
| Total current assets | | | 213,201 | | | | 174,162 | |
| Investments in unconsolidated joint ventures | | | 15,679 | | | | 15,428 | |
| Property and equipment, net of accumulated depreciation of $465,592 and $407,952 | | | 2,301,824 | | | | 2,355,425 | |
| Restricted deposits | | | 18,166 | | | | 16,427 | |
| Goodwill | | | 118,590 | | | | 118,725 | |
| Other intangible assets, net of accumulated amortization of $57,420 and $48,722 | | | 91,761 | | | | 100,873 | |
| Other assets, net | | | 26,801 | | | | 29,288 | |
| Total assets | | $ | 2,786,022 | | | $ | 2,810,328 | |
| | | | | | | | | |
| LIABILITIES, SHAREHOLDERS' EQUITY AND NONCONTROLLING INTEREST | | | | |
| | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Current portion of long-term debt | | $ | 63,689 | | | $ | 74,175 | |
| Current portion of capital lease and financing obligations | | | 21,471 | | | | 17,004 | |
| Trade accounts payable | | | 19,091 | | | | 7,959 | |
| Accrued employee compensation and benefits | | | 71,777 | | | | 70,936 | |
| Accrued interest | | | 8,120 | | | | 9,061 | |
| Accrued real estate taxes | | | 11,872 | | | | 11,791 | |
| Accrued professional and general liability | | | 32,091 | | | | 24,525 | |
| Other accrued expenses | | | 21,095 | | | | 19,477 | |
| Deferred revenue | | | 15,402 | | | | 16,348 | |
| Unearned rental income | | | 21,639 | | | | 22,965 | |
| Total current liabilities | | | 286,247 | | | | 274,241 | |
| Long-term debt obligations, less current portion | | | 1,521,920 | | | | 1,528,710 | |
| Capital lease and financing obligations, less current portion | | | 621,398 | | | | 619,088 | |
| Deferred gain on sale of communities | | | 4,256 | | | | 4,789 | |
| Deferred straight-line rent | | | 62,449 | | | | 61,481 | |
| Other long-term liabilities | | | 41,843 | | | | 39,283 | |
| Total liabilities | | | 2,538,113 | | | | 2,527,592 | |
| Commitments and contingencies | | | | | | | | |
| Shareholders' Equity and Noncontrolling Interest: | | | | | | | | |
| Preferred stock, $0.0001 par value. Authorized 20,000,000 shares, none issued | | | – | | | | – | |
| Common stock, $0.0001 par value. Authorized 100,000,000 shares, issued and | | | | | | | | |
| outstanding 45,061,359 and 44,989,861 shares | | | 4 | | | | 4 | |
| Additional paid-in capital | | | 828,666 | | | | 822,345 | |
| Accumulated deficit | | | (584,349 | ) | | | (543,249 | ) |
| Total Emeritus Corporation shareholders' equity | | | 244,321 | | | | 279,100 | |
| Noncontrolling interest-related party | | | 3,588 | | | | 3,636 | |
| Total shareholders' equity | | | 247,909 | | | | 282,736 | |
| Total liabilities, shareholders' equity, and noncontrolling interest | | $ | 2,786,022 | | | $ | 2,810,328 | |
EMERITUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| Revenues: | | | | | | | | | | | | |
| Community revenue | | $ | 318,628 | | | $ | 301,722 | | | $ | 636,551 | | | $ | 596,442 | |
| Management fees | | | 5,141 | | | | 5,485 | | | | 10,197 | | | | 10,946 | |
| Community and management fee revenue | | | 323,769 | | | | 307,207 | | | | 646,748 | | | | 607,388 | |
| Reimbursed costs incurred on behalf of managed communities | | | 51,033 | | | | 56,480 | | | | 102,645 | | | | 114,604 | |
| Total operating revenues | | | 374,802 | | | | 363,687 | | | | 749,393 | | | | 721,992 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Community operations | | | 213,571 | | | | 205,358 | | | | 427,044 | | | | 404,389 | |
| General and administrative | | | 22,987 | | | | 21,721 | | | | 46,410 | | | | 44,934 | |
| Transaction costs | | | 882 | | | | 1,844 | | | | 1,188 | | | | 8,593 | |
| Impairments of long-lived assets | | | – | | | | – | | | | 2,135 | | | | – | |
| Depreciation and amortization | | | 32,993 | | | | 29,438 | | | | 65,563 | | | | 57,525 | |
| Community leases | | | 31,016 | | | | 31,202 | | | | 62,187 | | | | 62,198 | |
| Costs incurred on behalf of managed communities | | | 51,033 | | | | 56,480 | | | | 102,645 | | | | 114,604 | |
| Total operating expenses | | | 352,482 | | | | 346,043 | | | | 707,172 | | | | 692,243 | |
| Operating income from continuing operations | | | 22,320 | | | | 17,644 | | | | 42,221 | | | | 29,749 | |
| | | | | | | | | | | | | | | | | |
| Other income (expense): | | | | | | | | | | | | | | | | |
| Interest income | | | 98 | | | | 123 | | | | 202 | | | | 234 | |
| Interest expense | | | (38,587 | ) | | | (37,975 | ) | | | (77,632 | ) | | | (74,239 | ) |
| Change in fair value of derivative financial instruments | | | (534 | ) | | | 509 | | | | (745 | ) | | | 509 | |
| Net equity losses for unconsolidated joint ventures | | | (80 | ) | | | (61 | ) | | | (472 | ) | | | (435 | ) |
| Acquisition gain | | | – | | | | 42,110 | | | | – | | | | 42,110 | |
| Other, net | | | 361 | | | | 437 | | | | 881 | | | | 2,462 | |
| Net other income (expense) | | | (38,742 | ) | | | 5,143 | | | | (77,766 | ) | | | (29,359 | ) |
| | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations before income taxes | | | (16,422 | ) | | | 22,787 | | | | (35,545 | ) | | | 390 | |
| Provision for income taxes | | | (324 | ) | | | (294 | ) | | | (596 | ) | | | (575 | ) |
| Income (loss) from continuing operations | | | (16,746 | ) | | | 22,493 | | | | (36,141 | ) | | | (185 | ) |
| Loss from discontinued operations | | | (5,007 | ) | | | (397 | ) | | | (5,007 | ) | | | (397 | ) |
| Net income (loss) | | | (21,753 | ) | | | 22,096 | | | | (41,148 | ) | | | (582 | ) |
| Net loss attributable to the noncontrolling interests | | | 34 | | | | 101 | | | | 48 | | | | 218 | |
| Net income (loss) attributable to Emeritus Corporation | | | | | | | | | | | | | | | | |
| common shareholders | | $ | (21,719 | ) | | $ | 22,197 | | | $ | (41,100 | ) | | $ | (364 | ) |
| | | | | | | | | | | | | | | | | |
| Basic income (loss) per common share attributable to | | | | | | | | | | | | | | | | |
| Emeritus Corporation common shareholders: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | (0.38 | ) | | $ | 0.51 | | | $ | (0.81 | ) | | $ | – | |
| Discontinued operations | | | (0.11 | ) | | | (0.01 | ) | | | (0.11 | ) | | | (0.01 | ) |
| | | $ | (0.49 | ) | | $ | 0.50 | | | $ | (0.92 | ) | | $ | (0.01 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding | | | 44,612 | | | | 44,283 | | | | 44,597 | | | | 44,247 | |
| | | | | | | | | | | | | | | | | |
| Diluted income (loss) per common share attributable to | | | | | | | | | | | | | | | | |
| Emeritus Corporation common shareholders: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | (0.38 | ) | | $ | 0.50 | | | $ | (0.81 | ) | | $ | – | |
| Discontinued operations | | | (0.11 | ) | | | (0.01 | ) | | | (0.11 | ) | | | (0.01 | ) |
| | | $ | (0.49 | ) | | $ | 0.49 | | | $ | (0.92 | ) | | $ | (0.01 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted average diluted common shares outstanding | | | 44,612 | | | | 44,874 | | | | 44,597 | | | | 44,247 | |
EMERITUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
| | | Six Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Cash flows from operating activities: | | | | | | |
| Net loss | | $ | (41,148 | ) | | $ | (582 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) | | | | | | | | |
| operating activities: | | | | | | | | |
| Depreciation and amortization | | | 65,563 | | | | 57,525 | |
| Amortization of above/below market rents | | | 3,378 | | | | 3,933 | |
| Amortization of deferred gains | | | (533 | ) | | | (572 | ) |
| Acquisition gain | | | – | | | | (42,110 | ) |
| Loss on early extinguishment of debt | | | 625 | | | | – | |
| Impairments of long-lived assets | | | 6,678 | | | | – | |
| Gain on sale of investments | | | – | | | | (1,569 | ) |
| Gain (loss) on sale of assets | | | (205 | ) | | | 384 | |
| Amortization of loan fees | | | 1,680 | | | | 1,474 | |
| Allowance for doubtful receivables | | | 5,225 | | | | 4,507 | |
| Equity investment losses | | | 473 | | | | 435 | |
| Stock-based compensation | | | 5,679 | | | | 4,709 | |
| Change in fair value of derivative financial instruments | | | 745 | | | | (509 | ) |
| Deferred straight-line rent | | | 2,298 | | | | 4,932 | |
| Deferred revenue | | | (450 | ) | | | 1,140 | |
| Other | | | 1,235 | | | | 3,566 | |
| Change in other operating assets and liabilities | | | 17,273 | | | | (19,793 | ) |
| Net cash provided by operating activities | | | 68,516 | | | | 17,470 | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Acquisition of property and equipment | | | (11,399 | ) | | | (14,390 | ) |
| Community acquisitions, net of cash acquired | | | – | | | | (139,568 | ) |
| Proceeds from the sale of assets | | | 3,725 | | | | 10,557 | |
| Other assets | | | (179 | ) | | | (304 | ) |
| Advances from (to) affiliates and other managed communities, net | | | 481 | | | | (450 | ) |
| Distributions from (contributions to) unconsolidated joint ventures, net | | | (637 | ) | | | 1,351 | |
| Net cash used in investing activities | | | (8,009 | ) | | | (142,804 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Sale of stock, net | | | 623 | | | | 1,281 | |
| Distribution to noncontrolling interest | | | – | | | | (4,078 | ) |
| Increase in restricted deposits | | | (1,655 | ) | | | (2,342 | ) |
| Debt issuance and other financing costs | | | (1,118 | ) | | | (3,510 | ) |
| Proceeds from long-term borrowings and financings | | | 10,553 | | | | 108,316 | |
| Repayment of long-term borrowings and financings | | | (29,711 | ) | | | (40,880 | ) |
| Repayment of capital lease and financing obligations | | | (8,077 | ) | | | (6,898 | ) |
| Net cash provided by (used in) financing activities | | | (29,385 | ) | | | 51,889 | |
| | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | 31,122 | | | | (73,445 | ) |
| Cash and cash equivalents at the beginning of the period | | | 43,670 | | | | 110,124 | |
| Cash and cash equivalents at the end of the period | | $ | 74,792 | | | $ | 36,679 | |
| Emeritus Corporation |
| Cash Lease and Interest Expense |
| Three Months Ended June 30, 2012 |
| | | | | | | |
| | | | | | Projected | |
| | | Actual | | | Range | |
| | | | Q2-12 | | | | Q3-2012 | |
| Facility lease expense - GAAP | | $ | 31,016 | | | $ | 31,000 - $31,300 | |
| Less: | | | | | | | | |
| Straight-line rents | | | (1,096 | ) | | | (900) - (1,100 | ) |
| Above/below market rents | | | (1,624 | ) | | | (1,600) - (1,700 | ) |
| Plus: | | | | | | | | |
| Capital lease interest | | | 12,986 | | | | 12,900 -13,200 | |
| Capital lease principal | | | 3,943 | | | | 5,000 - 5,300 | |
| Facility lease expense - CASH | | $ | 45,225 | | | $ | 46,400 - $47,000 | |
| | | | | | | | | |
| | | | | | | | | |
| Interest expense - GAAP | | $ | 38,587 | | | $ | 38,500 - $38,900 | |
| Less: | | | | | | | | |
| Capital lease interest | | | (12,986 | ) | | | (12,900) - (13,100 | ) |
| Loan fee amortization and other | | | (845 | ) | | | (800) - (900 | ) |
| Interest expense - CASH | | $ | 24,756 | | | $ | 24,800 - $24,900 | |
| | | | | | | | | |
| | | | | | | | | |
| Depreciation - owned assets | | $ | 19,011 | | | $ | 18,500 - 19,000 | |
| Depreciation - capital leases | | | 11,300 | | | | 11,200 - 11,400 | |
| Amortization - intangible assets | | | 2,682 | | | | 2,600 - 2,700 | |
| Total depreciation and amortization | | $ | 32,993 | | | $ | 32,300 - 33,100 | |
EMERITUS CORPORATION |
Consolidated Supplemental Financial Information For the Quarters Ended |
| (unaudited) |
(Dollars in thousands, except non-financial and per-unit data) |
Non-Financial Data: | | | Q2 2011 | | | | Q3 2011 | | | | Q4 2011 | | | | Q1 2012 | | | | Q2 2012 | |
| Average consolidated communities | | | 316.0 | | | | 333.3 | | | | 332.8 | | | | 328.0 | | | | 327.0 | |
| Average available units | | | 28,843 | | | | 30,173 | | | | 30,096 | | | | 29,667 | | | | 29,629 | |
| Average occupied units | | | 24,793 | | | | 26,095 | | | | 26,059 | | | | 25,694 | | | | 25,603 | |
| Average occupancy | | | 86.0 | % | | | 86.5 | % | | | 86.6 | % | | | 86.6 | % | | | 86.4 | % |
| Average monthly revenue per occupied unit | | $ | 4,057 | | | $ | 4,065 | | | $ | 4,080 | | | $ | 4,124 | | | $ | 4,148 | |
| Calendar days | | | 91 | | | | 92 | | | | 92 | | | | 91 | | | | 91 | |
| | | | | | | | | | | | | | | | | | | | | |
| Community revenues: | | | | | | | | | | | | | | | | | | | | |
| Community revenues | | $ | 297,501 | | | $ | 313,711 | | | $ | 313,613 | | | $ | 312,724 | | | $ | 314,170 | |
| Move-in fees | | | 5,135 | | | | 5,456 | | | | 5,751 | | | | 5,816 | | | | 5,816 | |
| Move-in incentives | | | (914 | ) | | | (930 | ) | | | (378 | ) | | | (617 | ) | | | (1,358 | ) |
| Total community revenues | | $ | 301,722 | | | $ | 318,237 | | | $ | 318,986 | | | $ | 317,923 | | | $ | 318,628 | |
| | | | | | | | | | | | | | | | | | | | | |
| Community operating expenses: | | | | | | | | | | | | | | | | | | | | |
| Salaries and wages - regular and overtime | | $ | 94,607 | | | $ | 100,223 | | | $ | 100,884 | | | $ | 98,277 | | | $ | 98,030 | |
| Average daily salary and wages | | $ | 1,040 | | | $ | 1,089 | | | $ | 1,097 | | | $ | 1,080 | | | $ | 1,077 | |
| Average daily wages per occupied unit | | $ | 41.93 | | | $ | 41.75 | | | $ | 42.08 | | | $ | 42.03 | | | $ | 42.08 | |
| | | | | | | | | | | | | | | | | | | | | |
| Payroll taxes and employee benefits | | $ | 31,588 | | | $ | 33,366 | | | $ | 32,347 | | | $ | 34,839 | | | $ | 33,203 | |
| Percent of salaries and wages | | | 33.4 | % | | | 33.3 | % | | | 32.1 | % | | | 35.4 | % | | | 33.9 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Prior year self-insurance reserve adjustments | | $ | 3,141 | | | $ | 8,605 | | | $ | 4,133 | | | $ | 397 | | | $ | 1,849 | |
| | | | | | | | | | | | | | | | | | | | | |
| Utilities | | $ | 12,073 | | | $ | 15,351 | | | $ | 12,586 | | | $ | 13,532 | | | $ | 12,141 | |
| Average monthly cost per occupied unit | | $ | 162 | | | $ | 196 | | | $ | 161 | | | $ | 176 | | | $ | 158 | |
| | | | | | | | | | | | | | | | | | | | | |
| Facility maintenance and repairs | | $ | 7,687 | | | $ | 8,498 | | | $ | 8,178 | | | $ | 7,877 | | | $ | 8,427 | |
| Average monthly cost per occupied unit | | $ | 103 | | | $ | 109 | | | $ | 105 | | | $ | 102 | | | $ | 110 | |
| | | | | | | | | | | | | | | | | | | | | |
| All other community operating expenses | | $ | 56,262 | | | $ | 57,380 | | | $ | 61,227 | | | $ | 58,551 | | | $ | 59,921 | |
| Average monthly cost per occupied unit | | $ | 756 | | | $ | 733 | | | $ | 783 | | | $ | 760 | | | $ | 780 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total community operating expenses | | $ | 205,358 | | | $ | 223,423 | | | $ | 219,355 | | | $ | 213,473 | | | $ | 213,571 | |
| | | | | | | | | | | | | | | | | | | | | |
| Community operating income | | $ | 96,364 | | | $ | 94,814 | | | $ | 99,631 | | | $ | 104,450 | | | $ | 105,057 | |
| | | | | | | | | | | | | | | | | | | | | |
| Operating income margin | | | 31.9 | % | | | 29.8 | % | | | 31.2 | % | | | 32.9 | % | | | 33.0 | % |
| EMERITUS CORPORATION |
Selected Consolidated and Same Community Information For the Quarters Ended |
(unaudited) (Community revenue and operating expense in thousands) |
| | | | Q2 2011 | | | | Q3 2011 | | | | Q4 2011 | | | | Q1 2012 | | | | Q2 2012 | |
| Consolidated: | | | | | | | | | | | | | | | | | | | | |
| Average consolidated communities | | | 316.0 | | | | 333.3 | | | | 332.8 | | | | 328.0 | | | | 327.0 | |
| Community revenue | | $ | 301,722 | | | $ | 318,237 | | | $ | 318,986 | | | $ | 317,923 | | | $ | 318,628 | |
| Community operating expense | | $ | 205,358 | | | $ | 223,423 | | | $ | 219,355 | | | $ | 213,473 | | | $ | 213,571 | |
| Average occupancy | | | 86.0 | % | | | 86.5 | % | | | 86.6 | % | | | 86.6 | % | | | 86.4 | % |
| Average monthly revenue per unit | | $ | 4,057 | | | $ | 4,065 | | | $ | 4,080 | | | $ | 4,124 | | | $ | 4,148 | |
| Operating income margin | | | 31.9 | % | | | 29.8 | % | | | 31.2 | % | | | 32.9 | % | | | 33.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Same Community: | | | | | | | | | | | | | | | | | | | | |
| Average consolidated communities | | | 295.0 | | | | 295.0 | | | | 295.0 | | | | 295.0 | | | | 295.0 | |
| Community revenue | | $ | 287,536 | | | $ | 288,909 | | | $ | 288,455 | | | $ | 289,030 | | | $ | 290,479 | |
| Community operating expense | | $ | 191,208 | | | $ | 192,434 | | | $ | 192,853 | | | $ | 193,012 | | | $ | 191,838 | |
| Average occupancy | | | 86.5 | % | | | 86.9 | % | | | 87.1 | % | | | 86.8 | % | | | 86.6 | % |
| Average monthly revenue per unit | | $ | 4,101 | | | $ | 4,097 | | | $ | 4,083 | | | $ | 4,104 | | | $ | 4,136 | |
| Operating income margin | | | 33.5 | % | | | 33.4 | % | | | 33.1 | % | | | 33.2 | % | | | 34.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
