Exhibit 99.6
ADVISOR FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
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Unaudited Condensed Consolidated Statements of Stockholders’ Equity | |
1
CNL RETIREMENT CORP.
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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| March 31, |
| December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 1,426,809 |
| $ | 1,492,063 |
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Due from related parties |
| 477,406 |
| 2,129,615 |
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Prepaid expenses and other assets |
| 66,221 |
| 70,057 |
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Total current assets |
| 1,970,436 |
| 3,691,735 |
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Property and equipment, net |
| 3,525,706 |
| 2,466,460 |
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Other assets, at cost |
| 245,137 |
| 245,137 |
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| $ | 5,741,279 |
| $ | 6,403,332 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
| $ | 1,164,527 |
| $ | 3,678,057 |
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Dividends payable |
| 50,492 |
| — |
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Due to related parties |
| 2,579,964 |
| — |
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Total current liabilities |
| 3,794,983 |
| 3,678,057 |
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Deferred rent expense |
| — |
| 202,133 |
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Total liabilities and deferred expense |
| 3,794,983 |
| 3,880,190 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Class A common stock; $1 par value per share; 10,000 shares authorized; 1,000 shares issued and outstanding |
| 1,000 |
| 1,000 |
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Class B common stock; $1 par value per share; 5,000 shares authorized; 1,027 shares issued and outstanding |
| 1,027 |
| 1,027 |
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Additional paid-in capital |
| 1,944,269 |
| 2,521,115 |
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Retained earnings |
| — |
| — |
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Total stockholders’ equity |
| 1,946,296 |
| 2,523,142 |
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| $ | 5,741,279 |
| $ | 6,403,332 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
CNL RETIREMENT CORP.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
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| Three Months Ended March 31, |
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| 2006 |
| 2005 |
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Revenue: |
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Acquisition fees |
| $ | 2,581,268 |
| $ | 3,490,727 |
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Debt acquisition fees |
| 4,327,935 |
| 10,450,657 |
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Management fees leases |
| 5,126,778 |
| 4,498,507 |
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Development fees |
| 3,905 |
| — |
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Interest and other income |
| 621,945 |
| 647,998 |
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| 12,661,831 |
| 19,087,889 |
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Expenses: |
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Corporate services provided by related parties |
| 860,423 |
| 2,174,642 |
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Salaries and benefits |
| 3,310,462 |
| 2,443,099 |
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General and administrative |
| 920,069 |
| 933,239 |
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Rent |
| 260,693 |
| 226,761 |
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Depreciation and amortization |
| 201,600 |
| 126,742 |
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| 5,553,247 |
| 5,904,483 |
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Income before provision for income taxes |
| 7,108,584 |
| 13,183,406 |
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Provision for income taxes |
| (2,719,034 | ) | (4,960,916 | ) | ||
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Net income |
| $ | 4,389,550 |
| $ | 8,222,490 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CNL RETIREMENT CORP.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
Three Months Ended March 31, 2006
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| Class A |
| Class B |
| Additional |
| Retained |
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| Shares |
| Par |
| Shares |
| Par |
| Paid-In |
| Earnings |
| Total |
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Balance at December 31, 2005 |
| 1,000 |
| $ | 1,000 |
| 1,027 |
| $ | 1,027 |
| $ | 2,521,115 |
| $ | — |
| $ | 2,523,142 |
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Dividends paid |
| — |
| — |
| — |
| — |
| (576,846 | ) | (4,389,550 | ) | (4,966,396 | ) | |||||
Net income |
| — |
| — |
| — |
| — |
| — |
| 4,389,550 |
| 4,389,550 |
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Balance at March 31, 2006 |
| 1,000 |
| $ | 1,000 |
| 1,027 |
| $ | 1,027 |
| $ | 1,944,269 |
| $ | — |
| $ | 1,946,296 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CNL RETIREMENT CORP.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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| Three Months Ended March 31, |
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| 2006 |
| 2005 |
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Cash flows from operating activities: |
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Net income |
| $ | 4,389,550 |
| $ | 8,222,490 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
| 201,600 |
| 126,742 |
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Loss on retired assets |
| 232,850 |
| — |
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Changes in operating assets and liabilities: |
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Due from related parties |
| 1,652,209 |
| (3,609,342 | ) | ||
Prepaid expenses and other assets |
| 3,836 |
| 26,045 |
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Accounts payable and accrued expenses |
| (1,918,888 | ) | (1,943,068 | ) | ||
Dividends payable |
| 50,492 |
| — |
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Due to related parties |
| 1,985,322 |
| 4,954,832 |
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Deferred rent expense |
| (202,133 | ) | 9,564 |
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Net cash provided by operating activities |
| 6,394,838 |
| 7,787,263 |
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Cash flows from investing activities: |
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Purchases of property and equipment |
| (1,992,027 | ) | (39,034 | ) | ||
Proceeds from sale of assets |
| 498,331 |
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Net cash used in investing activities |
| (1,493,696 | ) | (39,034 | ) | ||
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Cash flow from financing activities: |
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Dividends paid to stockholders |
| (4,966,396 | ) | (12,978,098 | ) | ||
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Net cash used in financing activities |
| (4,966,396 | ) | (12,978,098 | ) | ||
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Net increase in cash and cash equivalents |
| (65,254 | ) | (5,229,869 | ) | ||
Cash and cash equivalents at beginning of period |
| 1,492,063 |
| 5,235,669 |
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Cash and cash equivalents at end of period |
| $ | 1,426,809 |
| $ | 5,800 |
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Supplemental disclosure of cash flow information: |
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Cash paid during the year for income taxes |
| $ | 2,719,034 |
| $ | 4,960,916 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
CNL RETIREMENT CORP. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Quarters Ended March 31, 2006 and 2005
1. Organization and Nature of Business
CNL Retirement Corp. (the “Company”) and its wholly owned subsidiary, CNL Retirement Development Company, provide management, advisory and administrative services and assist in identifying and acquiring seniors’ housing and health care-related properties and obtaining financing for CNL Retirement Properties, Inc. and it’s subsidiaries (“CRP”).
2. Interim Period Financial Statements
The interim statements have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The Company’s management believes the disclosures made are adequate to make the interim financial information presented not misleading.
In the opinion of management, the accompanying interim statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of March 31, 2006 and the results of operations and cash flows for the three months ended March 31, 2006 and 2005. Interim results are not necessarily indicative of fiscal year performance because of seasonal and short-term variations.
Amounts included in the financial statements as of December 31, 2005, have been derived from the audited financial statements of the Company for the year then ended.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of CNL Retirement Corp. for the year ended December 31, 2005. The accompanying unaudited condensed consolidated financial statements include the accounts of CNL Retirement Corp. and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated.
3. Related Party Transactions
One of the principal stockholders of the Company’s parent is a stockholder, director and officer of CRP and is also an officer and director of the Company. Additionally, the President of the Company’s parent is an officer and director of the Company as well as an officer and director of CRP.
The Company’s fee revenue is primarily earned for services provided to CRP. In addition, the Company provides accounting and administrative services to CRP and other related companies for which it receives personnel reimbursements. For the three months ended March 31, 2006 and 2005 such reimbursements amounted to $612,892 and $630,359, respectively and are included in interest and other income.
Amounts due from related parties at March 31, 2006 and December 31, 2005 consist of the following:
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| March 31, |
| December 31, |
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Acquisition fees |
| $ | (63,473 | ) | $ | 309,191 |
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Other |
| 540,879 |
| 1,820,424 |
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| $ | 477,406 |
| $ | 2,129,615 |
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6
Amounts due to related parties at March 31, 2006 and December 31, 2005 consist of the following:
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| March 31, |
| December 31, |
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Amounts due for furniture deposits paid by Parent |
| $ | 2,579,964 |
| $ | — |
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| $ | 2,579,964 |
| $ | — |
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Amounts due are unsecured, non-interest bearing and due on demand.
The Company maintains bank accounts in a bank in which certain officers and directors serve as directors and are stockholders. The amounts deposited with this bank were $1,426,209 and $1,492,063 as of March 31, 2006 and December 31, 2005, respectively.
7
