Exhibit 99.1
FOR IMMEDIATE RELEASE | Contact: Timothy A. Bonang, Vice President, Investor Relations |
| Elisabeth A. Heiss, Manager, Investor Relations |
| (617) 796-8245 |
| www.fivestarseniorliving.com |
Five Star Quality Care, Inc. Reports Fourth Quarter 2010 Results
Newton, MA (February 22, 2011). Five Star Quality Care, Inc. (NYSE: FVE) today announced its financial results for the quarter and year ended December 31, 2010.
Fourth Quarter 2010 Financial Highlights:
· Total revenues for the fourth quarter of 2010 increased 5.4% to $315.7 million from $299.5 million for the same period the previous year.
· Income from continuing operations for the fourth quarter of 2010 was $6.4 million compared to $877,000 for the same period the previous year.
· Income per share from continuing operations for the fourth quarter of 2010 was $0.18 and $0.17 per share, basic and diluted, respectively, compared to $0.02 per basic and diluted share for the same period the previous year.
· Income from continuing operations for the fourth quarter of 2010 included certain items that, in the aggregate, resulted in a positive impact of $1.0 million, or $0.03 per basic and diluted share, to our earnings. These items were a $108,000 gain on early extinguishment of debt and a $933,000 gain on sale of available for sale securities. Income from continuing operations for the fourth quarter of 2009 included several similar items that, in the aggregate, resulted in a positive impact of $412,000, or $0.01 per basic and diluted share, to our earnings. These items were a $317,000 gain on early extinguishment of debt, a $73,000 unrealized gain on our UBS put right related to auction ra te securities and a $22,000 unrealized gain on our holdings of auction rate securities.
· Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the fourth quarter of 2010 was $11.7 million compared to $5.3 million for the same period the previous year. As discussed above: EBITDA for the fourth quarter of 2010 included items that, in aggregate, resulted in a positive impact of $1.0 million; and EBITDA for the fourth quarter of 2009 included items that, in aggregate, resulted in a positive impact of $412,000. EBITDA excluding these items was $10.7 million in the fourth quarter 2010 compared with $4.9 million for the same period the previous year. A reconciliation of income from continuing operations determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA and EBITDA excluding certain items for the quarters ended December 31, 2010 and 2009 appears later in this press release.
Fourth Quarter 2010 Operating Highlights (Senior Living Communities):
· Senior living occupancy for the fourth quarter of 2010 was 85.9% compared to 86.2% for the same period the previous year.
· Senior living average daily rate for the fourth quarter of 2010 increased by 4.0% to $150.11 from $144.29 in the same period the previous year.
· The percentage of senior living revenue derived from private sources other than Medicare and Medicaid for the fourth quarter of 2010 decreased to 70.1% from 71.1% for the same period the previous year.
· For those senior living communities that we have operated continuously since October 1, 2009 (comparable communities), occupancy for the fourth quarter of 2010 was 85.8% compared to 86.2% for the same period the previous year and 86.0% for the third quarter of 2010.
· The average daily rate at comparable communities for the fourth quarter of 2010 increased by 4.6% to $151.02 from $144.42 in the same period the previous year.
Fiscal Year Financial Highlights:
· Total revenue for the year ended December 31, 2010 increased 5.9% to $1.24 billion from $1.17 billion for the same period the previous year.
· Income from continuing operations for the year ended December 31, 2010 was $24.8 million compared to $39.7 million for the same period the previous year.
· Income per share from continuing operations for the year ended December 31, 2010 was $0.69 and $0.67 per share, basic and diluted, respectively, compared to $1.18 and $1.08 per share, basic and diluted, respectively, for the same period the previous year.
· Income from continuing operations for the year ended December 31, 2010 included certain items that, in aggregate, resulted in a positive impact of $1.7 million, or $0.05 and $0.04 per share, basic and diluted, respectively, to our earnings. These items were a $592,000 gain on early extinguishment of debt, a $4.9 million gain on our holdings of auction rate securities and a $933,000 gain on sale of available for sale securities, offset by a $4.7 million loss on our UBS put right related to our auction rate securities. Income from continuing operations for the year ended December 31, 2009 included several similar items that, in aggregate, resulted in a positive impact of $33.2 million, or $0.99 and $0.86 per share, basic and diluted, respectively, to our earnings. These items were a $34.6 million gain on early extinguishment of debt, a $3.5 million unrealized gain on our holdings of auction rate securities and a $795,000 gain on sale of available for sale securities, offset by a $2.9 million loss due to the impairment of our investments in certain marketable securities and a $2.8 million unrealized loss on our UBS put right related to auction rate securities.
· EBITDA for the year ended December 31, 2010 was $44.2 million compared to $59.6 million for the same period the previous year. As discussed above: EBITDA for 2010 included items that, in aggregate, resulted in a positive impact of $1.7 million; and EBITDA for 2009 included items that, in aggregate, resulted in a positive impact of $33.2 million. EBITDA excluding these items was $42.6 million for 2010 compared with $26.4 million for the same period the previous year. A reconciliation of income from continuing operations determined in accordance with GAAP to EBITDA and EBITDA excluding certain items for the year ended December 31, 2010 and 2009 appears later in this press release.
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Conference Call:
On February 22, 2011 at 5:00 p.m. Eastern Time, Bruce J. Mackey Jr., President and Chief Executive Officer, and Paul V. Hoagland, Chief Financial Officer, will host a conference call to discuss the fourth quarter and year end financial results. Following the Company’s remarks, there will be a question and answer period.
The conference call telephone number is (800) 230-1059. Participants calling from outside the United States and Canada should dial (612) 234-9959. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Daylight Time Tuesday, March 1, 2011. To hear the replay, dial (800) 475-6701, or (320) 365-3844 from outside the United States and Canada. The replay pass code is 179293.
A live audio webcast of the conference call will also be available in a listen only mode on the Company’s website at www.fivestarseniorliving.com. Participants wanting to access the webcast should visit the Company’s website about five minutes before the call. The archived webcast will be available for replay on the Company’s website for about one week after the call.
About Five Star Quality Care, Inc.:
Five Star Quality Care, Inc. is a senior living and healthcare services company. Five Star owns or leases and operates 212 senior living communities with 22,562 living units located in 30 states. These communities include independent living, assisted living and skilled nursing communities. Five Star also operates five institutional pharmacies and two rehabilitation hospitals. Five Star is headquartered in Newton, Massachusetts.
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Supplemental Information
FIVE STAR QUALITY CARE, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)
(unaudited)
| | Three months ended
December 31, | | Year ended
December 31, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Revenues: | | | | | | | | | |
Senior living revenue | | $ | 270,039 | | $ | 254,986 | | $ | 1,061,402 | | $ | 996,787 | |
Rehabilitation hospital revenue | | 26,124 | | 25,452 | | 100,041 | | 100,460 | |
Institutional pharmacy revenue | | 19,515 | | 19,029 | | 79,285 | | 74,447 | |
| | | | | | | | | |
Total revenues | | 315,678 | | 299,467 | | 1,240,728 | | 1,171,694 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Senior living wages and benefits | | 136,192 | | 131,044 | | 532,118 | | 507,622 | |
Other senior living operating expenses | | 63,493 | | 62,554 | | 252,432 | | 242,789 | |
Rehabilitation hospital expenses | | 23,994 | | 22,946 | | 92,190 | | 90,957 | |
Institutional pharmacy expenses | | 19,329 | | 18,989 | | 77,552 | | 73,946 | |
Rent expense | | 47,487 | | 45,381 | | 188,380 | | 177,258 | |
General and administrative | | 14,511 | | 13,676 | | 55,486 | | 52,590 | |
Depreciation and amortization | | 4,346 | | 3,912 | | 16,802 | | 16,296 | |
| | | | | | | | | |
Total operating expenses | | 309,352 | | 298,502 | | 1,214,960 | | 1,161,458 | |
| | | | | | | | | |
Operating income | | 6,326 | | 965 | | 25,768 | | 10,236 | |
| | | | | | | | | |
Interest, dividend and other income | | 197 | | 599 | | 1,820 | | 2,993 | |
Interest and other expense | | (657 | ) | (975 | ) | (3,045 | ) | (4,365 | ) |
Gain on investments in trading securities | | — | | 22 | | 4,856 | | 3,495 | |
Gain (loss) on UBS put right related to auction rate securities | | — | | 73 | | (4,714 | ) | (2,759 | ) |
Equity in income (losses) of Affiliates Insurance Company | | 16 | | (2 | ) | (1 | ) | (134 | ) |
Gain on early extinguishment of debt | | 108 | | 317 | | 592 | | 34,579 | |
Gain on sale of available for sale securities | | 933 | | — | | 933 | | 795 | |
Impairment of investments in available for sale securities | | — | | — | | — | | (2,947 | ) |
| | | | | | | | | |
Income from continuing operations before income taxes | | 6,923 | | 999 | | 26,209 | | 41,893 | |
Provision for income taxes | | (518 | ) | (122 | ) | (1,448 | ) | (2,196 | ) |
Income from continuing operations | | 6,405 | | 877 | | 24,761 | | 39,697 | |
Loss from discontinued operations | | (309 | ) | (605 | ) | (1,269 | ) | (1,367 | ) |
| | | | | | | | | |
Net income | | $ | 6,096 | | $ | 272 | | $ | 23,492 | | $ | 38,330 | |
| | | | | | | | | |
Weighted average shares outstanding — basic | | 35,849 | | 35,542 | | 35,736 | | 33,558 | |
| | | | | | | | | |
Weighted average shares outstanding - diluted | | 38,924 | | 35,542 | | 39,207 | | 38,775 | |
| | | | | | | | | |
Basic income per share from: | | | | | | | | | |
Continuing operations | | $ | 0.18 | | $ | 0.02 | | $ | 0.69 | | $ | 1.18 | |
Discontinued operations | | (0.01 | ) | (0.01 | ) | (0.03 | ) | (0.04 | ) |
Net income per share — basic | | $ | 0.17 | | $ | 0.01 | | $ | 0.66 | | $ | 1.14 | |
| | | | | | | | | |
Diluted income per share from: | | | | | | | | | |
Continuing operations | | $ | 0.17 | | $ | 0.02 | | $ | 0.67 | | $ | 1.08 | |
Discontinued operations | | (0.01 | ) | (0.01 | ) | (0.03 | ) | (0.03 | ) |
Net income per share - diluted | | $ | 0.16 | | $ | 0.01 | | $ | 0.64 | | $ | 1.05 | |
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FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands, except share data)
(unaudited)
| | December 31,
2010 | | December 31,
2009 | |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 20,770 | | $ | 5,017 | |
Accounts receivable, net of allowance | | 64,806 | | 61,418 | |
Investments in trading securities | | — | | 65,961 | |
Investments in available for sale securities | | 13,854 | | 11,893 | |
Restricted cash | | 6,594 | | 7,597 | |
UBS put right related to auction rate securities | | — | | 8,322 | |
Prepaid expenses and other current assets | | 17,373 | | 20,162 | |
Total current assets | | 123,397 | | 180,370 | |
| | | | | |
Property and equipment, net | | 213,791 | | 192,742 | |
Restricted cash | | 14,535 | | 9,383 | |
Restricted investments in available for sale securities | | 3,259 | | 5,287 | |
Goodwill, equity investment and other long term assets | | 24,812 | | 25,318 | |
Total assets | | $ | 379,794 | | $ | 413,100 | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | | |
Current liabilities | | $ | 130,222 | | $ | 178,204 | |
Mortgage notes payable | | 7,689 | | 12,284 | |
Convertible senior notes | | 37,905 | | 49,707 | |
Other long term liabilities | | 39,211 | | 33,590 | |
Shareholders’ equity - 36,019,864 and 35,668,814 shares issued and outstanding at December 31, 2010 and 2009, respectively | | 164,767 | | 139,315 | |
Total liabilities and shareholders’ equity | | $ | 379,794 | | $ | 413,100 | |
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FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)
| | Three months ended | | Year ended | |
| | December 31, | | December 31, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Number of communities (end of period) | | 212 | | 211 | | 212 | | 211 | |
Number of living units (end of period) | | 22,562 | | 22,452 | | 22,562 | | 22,452 | |
Number of living units % growth | | 0.5 | % | — | | 0.5 | % | — | |
| | | | | | | | | |
Occupancy | | 85.9 | % | 86.2 | % | 86.1 | % | 86.4 | % |
Average daily rate (ADR) | | $ | 150.11 | | $ | 144.29 | | $ | 148.84 | | $ | 144.74 | |
ADR % growth | | 4.0 | % | — | | 2.8 | % | — | |
| | | | | | | | | |
Percent breakdown of net senior living revenues: | | | | | | | | | |
Medicaid | | 14.6 | % | 15.4 | % | 14.7 | % | 15.1 | % |
Medicare | | 15.3 | % | 13.5 | % | 14.4 | % | 14.2 | % |
Private and other sources | | 70.1 | % | 71.1 | % | 70.9 | % | 70.7 | % |
Total | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
| | | | | | | | | |
Senior living revenues | | $ | 270,039 | | $ | 254,986 | | $ | 1,061,402 | | $ | 996,787 | |
Senior living revenues % growth | | 5.9 | % | — | | 6.5 | % | — | |
| | | | | | | | | |
Senior living wages and benefits | | $ | 136,192 | | $ | 131,044 | | $ | 532,118 | | $ | 507,622 | |
Senior living wages and benefits as a % of senior living revenues | | 50.4 | % | 51.4 | % | 50.1 | % | 50.9 | % |
Other senior living operating expenses | | $ | 63,493 | | $ | 62,554 | | $ | 252,432 | | $ | 242,789 | |
Other senior living operating expenses as a % of senior living revenues | | 23.5 | % | 24.5 | % | 23.8 | % | 24.4 | % |
Community expenses(2) % growth | | 3.1 | % | — | | 4.5 | % | — | |
(1) Excludes data for institutional pharmacy, rehabilitation hospital operations and discontinued senior living operations.
(2) Community expenses consist of senior living wages and benefits and other senior living operating expenses as shown on our consolidated statement of income.
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FIVE STAR QUALITY CARE, INC.
COMPARABLE SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)
| | Three months ended | | Year ended | |
| | December 31,(2) | | December 31,(3) | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Number of communities (end of period) | | 201 | | 201 | | 200 | | 200 | |
Number of living units (end of period) | | 21,763 | | 21,763 | | 21,504 | | 21,504 | |
| | | | | | | | | |
Occupancy | | 85.8 | % | 86.2 | % | 86.0 | % | 86.4 | % |
Average daily rate (ADR) | | $ | 151.02 | | $ | 144.42 | | $ | 149.15 | | $ | 144.70 | |
ADR % growth | | 4.6 | % | — | | 3.1 | % | — | |
| | | | | | | | | |
Percent breakdown of net senior living revenues: | | | | | | | | | |
Medicaid | | 15.0 | % | 15.5 | % | 15.0 | % | 15.1 | % |
Medicare | | 15.8 | % | 13.8 | % | 14.8 | % | 14.3 | % |
Private and other sources | | 69.2 | % | 70.7 | % | 70.2 | % | 70.6 | % |
Total | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
| | | | | | | | | |
Senior living revenues | | $ | 262,068 | | $ | 251,312 | | $ | 1,015,931 | | $ | 989,384 | |
Senior living revenues % growth | | 4.3 | % | — | | 2.7 | % | — | |
| | | | | | | | | |
Senior living wages and benefits | | $ | 132,137 | | $ | 129,291 | | $ | 509,172 | | $ | 503,754 | |
Senior living wages and benefits as a % of senior living revenues | | 50.4 | % | 51.4 | % | 50.1 | % | 50.9 | % |
Other senior living operating expenses | | $ | 61,637 | | $ | 61,874 | | $ | 242,248 | | $ | 241,211 | |
Other senior living operating expenses as a % of senior living revenues | | 23.5 | % | 24.6 | % | 23.8 | % | 24.4 | % |
Community expenses(4) % growth | | 1.4 | % | — | | 0.9 | % | — | |
(1) Excludes data for institutional pharmacy, rehabilitation hospital operations and discontinued senior living operations.
(2) Communities that we have operated continuously since October 1, 2009.
(3) Communities that we have operated continuously since January 1, 2009.
(4) Community expenses consist of senior living wages and benefits and other senior living operating expenses as shown on our consolidated statement of income.
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FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA(1)
(dollars in thousands, except average daily rate)
| | Three months ended | | Year ended | |
| | December 31, | | December 31, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Independent and assisted living community revenue(2) | | $ | 207,904 | | $ | 194,457 | | $ | 817,713 | | $ | 755,308 | |
Skilled nursing facility revenue | | 62,135 | | 60,529 | | 243,689 | | 241,479 | |
Total senior living revenue | | $ | 270,039 | | $ | 254,986 | | $ | 1,061,402 | | $ | 996,787 | |
| | | | | | | | | |
Independent and assisted living community wages and benefits | | $ | 96,878 | | $ | 91,874 | | $ | 376,411 | | $ | 351,163 | |
Skilled nursing facility wages and benefits | | 39,314 | | 39,170 | | 155,707 | | 156,459 | |
Total senior living wages and benefits | | $ | 136,192 | | $ | 131,044 | | $ | 532,118 | | $ | 507,622 | |
| | | | | | | | | |
Independent and assisted living community operating expenses | | $ | 48,991 | | $ | 47,630 | | $ | 194,831 | | $ | 185,167 | |
Skilled nursing facility operating expenses | | 14,502 | | 14,924 | | 57,601 | | 57,622 | |
Total other senior living operating expenses | | $ | 63,493 | | $ | 62,554 | | $ | 252,432 | | $ | 242,789 | |
(1) Excludes data for discontinued senior living operations.
(2) Includes rehabilitation and other specialty service revenues provided at residential facilities and expenses associated with our captive insurance company.
COMPARABLE SENIOR LIVING COMMUNITY FINANCIAL DATA(1)
| | Three months ended | | Year ended | |
| | December 31,(3) | | December 31,(4) | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Independent and assisted living community revenue(2) | | $ | 199,933 | | $ | 190,783 | | $ | 772,242 | | $ | 747,905 | |
Skilled nursing facility revenue | | 62,135 | | 60,529 | | 243,689 | | 241,479 | |
Total senior living revenue | | $ | 262,068 | | $ | 251,312 | | $ | 1,015,931 | | $ | 989,384 | |
| | | | | | | | | |
Independent and assisted living community wages and benefits | | $ | 92,823 | | $ | 90,121 | | $ | 353,465 | | $ | 347,295 | |
Skilled nursing facility wages and benefits | | 39,314 | | 39,170 | | 155,707 | | 156,459 | |
Total senior living wages and benefits | | $ | 132,137 | | $ | 129,291 | | $ | 509,172 | | $ | 503,754 | |
| | | | | | | | | |
Independent and assisted living community operating expenses | | $ | 47,135 | | $ | 46,950 | | $ | 184,647 | | $ | 183,589 | |
Skilled nursing facility operating expenses | | 14,502 | | 14,924 | | 57,601 | | 57,622 | |
Total other senior living operating expenses | | $ | 61,637 | | $ | 61,874 | | $ | 242,248 | | $ | 241,211 | |
(1) Excludes data for discontinued senior living operations.
(2) Includes rehabilitation and other specialty service revenues provided at residential facilities and expenses associated with our captive insurance company.
(3) Communities that we have continuously operated since October 1, 2009.
(4) Communities that we have continuously operated since January 1, 2009.
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FIVE STAR QUALITY CARE, INC.
OTHER OPERATING DATA(1)
(dollars in thousands, except average daily rate)
| | Three months ended | | Year ended | |
| | December 31, | | December 31, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Number of senior living communities(2) (end of period): | | | | | | | | | |
Assisted and independent living communities, owned | | 24 | | 23 | | 24 | | 23 | |
Assisted and independent living communities, leased | | 148 | | 148 | | 148 | | 148 | |
Total number of assisted and independent living communities | | 172 | | 171 | | 172 | | 171 | |
| | | | | | | | | |
Skilled nursing communities, owned | | 2 | | 2 | | 2 | | 2 | |
Skilled nursing communities, leased | | 38 | | 38 | | 38 | | 38 | |
Total number of skilled nursing communities | | 40 | | 40 | | 40 | | 40 | |
| | | | | | | | | |
Total number of senior living communities | | 212 | | 211 | | 212 | | 211 | |
| | | | | | | | | |
Number of senior living units (end of period): | | | | | | | | | |
Assisted and independent living communities, owned | | 2,089 | | 1,979 | | 2,089 | | 1,979 | |
Assisted and independent living communities, leased(3) | | 16,756 | | 16,756 | | 16,756 | | 16,756 | |
Total number of assisted and independent living units | | 18,845 | | 18,735 | | 18,845 | | 18,735 | |
| | | | | | | | | |
Skilled nursing communities, owned | | 271 | | 271 | | 271 | | 271 | |
Skilled nursing communities, leased(4) | | 3,446 | | 3,446 | | 3,446 | | 3,446 | |
Total number of skilled nursing units | | 3,717 | | 3,717 | | 3,717 | | 3,717 | |
| | | | | | | | | |
Total number of senior living units | | 22,562 | | 22,452 | | 22,562 | | 22,452 | |
| | | | | | | | | |
Senior living revenues: | | | | | | | | | |
Assisted and independent living communities | | $ | 205,638 | | $ | 192,534 | | $ | 809,116 | | $ | 748,234 | |
Skilled nursing communities | | 62,135 | | 60,529 | | 243,689 | | 241,479 | |
Other(5) | | 2,266 | | 1,923 | | 8,597 | | 7,074 | |
Total senior living revenues | | $ | 270,039 | | $ | 254,986 | | $ | 1,061,402 | | $ | 996,787 | |
| | | | | | | | | |
Senior living data: | | | | | | | | | |
Assisted and independent living communities occupancy | | 86.3 | % | 86.3 | % | 86.4 | % | 86.4 | % |
Assisted and independent living communities ADR | | $ | 137.26 | | $ | 131.85 | | $ | 136.44 | | $ | 132.08 | |
Assisted and independent living communities ADR % growth | | 4.1 | % | — | | 3.3 | % | — | |
| | | | | | | | | |
Skilled nursing communities occupancy | | 83.6 | % | 86.0 | % | 84.3 | % | 86.6 | % |
Skilled nursing communities ADR | | $ | 217.36 | | $ | 205.96 | | $ | 213.02 | | $ | 205.67 | |
Skilled nursing communities ADR % growth | | 5.5 | % | — | | 3.6 | % | — | |
| | | | | | | | | |
Rehabilitation hospital data: | | | | | | | | | |
Rehabilitation hospital units | | 321 | | 321 | | 321 | | 321 | |
Rehabilitation hospital occupancy | | 52.5 | % | 59.8 | % | 54.2 | % | 60.3 | % |
(1) Excludes data for institutional pharmacy operations and discontinued senior living operations.
(2) Communities are categorized by the type of living units which constitute a majority of the total living units at the community.
(3) Includes 2,026 skilled nursing units in communities where assisted living and independent living services are the predominant services provided for the three months and year ended December 31, 2010 and 2009.
(4) Includes 95 assisted living and independent living units in communities where skilled nursing services are the predominant services provided for the three months and year ended December 31, 2010 and 2009.
(5) Other senior living revenues relates primarily to rehabilitation and other specialty service revenues provided at residential facilities and does not include revenues from institutional pharmacy or rehabilitation hospital operations.
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FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
Earnings before interest, taxes, depreciation and amortization, or EBITDA, and EBITDA excluding certain items are not financial measures determined according to U.S. generally accepted accounting principles, or GAAP. We consider EBITDA and EBITDA excluding certain items to be a meaningful disclosure because we believe that the inclusion of these non-GAAP financial measures may help investors to gain a better understanding of changes in our core operating results, and can also help investors who wish to make comparisons between us and other companies on both a GAAP and a non-GAAP basis. EBITDA and EBITDA excluding certain items as presented may not, however, always be comparable to amounts calculated by other companies. These non-GAAP financial measures are used by management to evaluate financial performance and resource allocation for our communities and for us as a whole and for comparing such performance to that of prior periods and to the performance of our competitors. This information should not be considered as an alternative to net income or any other financial operating or performance measure established by GAAP. The reconciliation of income from continuing operations to EBITDA and EBITDA excluding certain items, for the three months and year ended December 31, 2010 and 2009 is as follows:
| | For the three months | | For the year | |
| | ended December 31, | | ended December 31, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Income from continuing operations | | $ | 6,405 | | $ | 877 | | $ | 24,761 | | $ | 39,697 | |
Add: interest and other expense | | 657 | | 975 | | 3,045 | | 4,365 | |
Add: income tax expense | | 518 | | 122 | | 1,448 | | 2,196 | |
Add: depreciation and amortization | | 4,346 | | 3,912 | | 16,802 | | 16,296 | |
Less: interest, dividend and other income | | (197 | ) | (599 | ) | (1,820 | ) | (2,993 | ) |
EBITDA | | 11,729 | | 5,287 | | 44,236 | | 59,561 | |
Add: impairment of certain investments | | — | | — | | — | | 2,947 | |
Add: unrealized loss on UBS put right related to auction rate securities | | — | | — | | 4,714 | | 2,759 | |
Less: unrealized gain on investments in trading securities | | — | | (22 | ) | (4,856 | ) | (3,495 | ) |
Less: unrealized gain on UBS put right related to auction rate securities | | — | | (73 | ) | — | | — | |
Less: gain on sale of investments in available for sale securities | | (933 | ) | — | | (933 | ) | (795 | ) |
Less: gain on early extinguishment of debt | | (108 | ) | (317 | ) | (592 | ) | (34,579 | ) |
EBITDA excluding certain items | | $ | 10,688 | | $ | 4,875 | | $ | 42,569 | | $ | 26,398 | |
7
