Exhibit 99.1
[GRAPHIC OMITTED] Capital
Senior
Living
Corporation
For Immediate Release Contact: Ralph A. Beattie
972/770-5600
CAPITAL SENIOR LIVING CORPORATION
REPORTS FOURTH QUARTER AND FISCAL 2004 EARNINGS
DALLAS - (BUSINESS WIRE) - March 8, 2005 - Capital Senior Living Corporation
(NYSE:CSU), one of the country's largest operators of senior living communities,
announced today its operating results for the fourth quarter and fiscal year
2004.
Company highlights for the 2004 fiscal year include:
o Revenues of $93.3 million, an increase of $26.9 million or nearly 41% from
the previous year
o Adjusted EBITDA (income from operations plus depreciation and amortization)
of $18.7 million
o Net loss of $6.8 million, or $0.27 per share
o Cash earnings (net income plus depreciation and amortization) of $5.3
million, or $0.21 per diluted share
o Completed $34.5 million equity offering
o Retired $21.8 million of debt
o Acquired CGI Management, Inc., adding 14 senior living communities to our
portfolio of managed properties and increasing our capacity by
approximately 1,800 residents
o Through our joint venture structure, acquired an interest in four Spring
Meadows communities with capacity for approximately 700 residents
o Acquired the seven communities in Triad I, completing the acquisition of
the Triad entities
o Refinanced approximately $128 million of debt, extending maturities and
consolidating numerous loans with one lender
o Average occupancy rate on stabilized communities of 90%
o Operating margins (before property taxes, insurance and management fees) of
45% in stabilized independent and assisted living communities
o Stabilized same community revenue increase of 3% versus the prior year
o All community revenue increase of 7% versus the prior year
The Company reported a fourth quarter 2004 loss of $1.8 million or $0.07 per
share and a full year loss of $6.8 million or $0.27 per share. Excluding the
effects of transaction costs incurred in the fourth quarter of 2004 in
connection with the Spring Meadows transaction, the debt refinancing and first
year costs associated with Sarbanes-Oxley compliance (which occurred later in
the year than originally anticipated), the fourth quarter 2004 loss would have
been approximately $0.04 per share.
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2004 was a year of significant accomplishment for us," said James A. Stroud,
Chairman of the Company. "Along with 41 percent growth in revenues, we completed
a number of corporate initiatives that have provided a foundation for future
growth and improvements in cash flow."
OPERATING AND FINANCIAL RESULTS
Fourth Quarter Results
For the fourth quarter of 2004, the Company reported revenues of $23.9 million,
compared to revenues of $18.9 million in the fourth quarter of 2003, an increase
of approximately 27 percent.
Revenues in the fourth quarter of 2004 include approximately $3.7 million of
revenues from seven communities in Triad I which have been consolidated since
December 31, 2003 due to the adoption of FASB Interpretation No. 46
"Consolidation of Variable Interest Entities ("FIN 46"). While these seven
communities have been consolidated under FIN 46 throughout 2004, they became
wholly owned properties in the fourth quarter with the acquisition of Triad I.
All of the original 19 Triad communities have now been acquired by the Company.
Total expenses for the fourth quarter of 2004 were $21.9 million compared to
$18.7 million in the fourth quarter of 2003. Approximately $3.4 million of
additional expense was a result of consolidating the seven communities in Triad
I, including $0.5 million of additional depreciation expense.
General and administrative expenses in the fourth quarter of 2004 included
approximately $0.5 million of costs to comply with Section 404 of the
Sarbanes-Oxley Act. The costs to comply with this Act depressed quarterly
earnings by approximately one cent per share.
Adjusted EBITDA (defined as income from operations plus depreciation and
amortization) for the fourth quarter of 2004 was approximately $5.1 million,
compared to $2.8 million in the fourth quarter of 2003.
Interest expense net of interest income was $4.0 million in the fourth quarter
of 2004, compared to $3.1 million in the fourth quarter of 2003. The increase is
primarily due to the consolidation of the Triad I debt under FIN 46 since
December 31, 2003.
Other income (expense) for the fourth quarter of 2004 includes a write-off of
approximately $0.2 million which resulted from a transaction involving the four
Spring Meadows communities. The Company acquired from affiliates of Lehman
Brothers ("Lehman") their interests in the Spring Meadows communities and then
immediately sold these interests to a new joint venture with an affiliate of
Prudential Real Estate Investors. The Company has a five percent interest in
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this joint venture. Proceeds from the sale of 95 percent of the Spring Meadows
communities were approximately equal to the consideration paid to Lehman for
their interests, but resulted in a net loss including transaction costs of
approximately $0.2 million.
Also in the fourth quarter of 2004, the Company completed the refinancing of 14
senior housing properties with GMAC Commercial Mortgage Corporation ("GMAC").
The new loan facility refinanced eight properties previously financed by GMAC
and six properties previously financed under three separate loan agreements with
Key Corporate Capital ("Key"), Compass Bank and Bank of America, which were
prepaid. The Company wrote off approximately $0.5 million of deferred loan costs
on the debt which was refinanced.
The Company's previous loan agreements with Key required interest rate swaps and
treasury lock agreements. On December 30, 2004, the Company settled its interest
rate swap agreements with Key by paying approximately $0.5 million and
recognized a gain of approximately $1.4 million on this transaction. The
treasury lock agreements were originally required by Key to hedge the risk that
the costs of future issuance of debt may be adversely affected by changes in
interest rates. The settlement amount of these treasury lock agreements has been
reflected at fair value in the Company's balance sheet and the related gains or
losses on these agreements (due to changing interest rates) were deferred in
shareholders' equity as a component of other comprehensive income. As a result
of refinancing the underlying debt, the treasury lock agreements no longer
qualify as an interest rate hedge, resulting in the Company recording a loss of
approximately $1.4 million in the fourth quarter of 2004. Gains and losses
between now and the settlement date of January 3, 2006 will be recognized in the
income statement.
Other income in the fourth quarter of 2003 included $3.4 million that resulted
from the recognition of deferred income upon the liquidation of the HCP
partnership ("HCP"). During 2003, HCP sold its remaining community and
subsequently has been dissolved, with its remaining assets transferred to a
liquidating trust.
The Company reported a fourth quarter 2004 loss of $1.8 million, or $0.07 per
share. Of the $0.07 per share loss, approximately $0.02 per share is related to
the Spring Meadows transaction and the debt restructuring and derivative costs.
An additional $0.01 per share is the direct result of costs to comply with
Section 404 of the Sarbanes-Oxley Act. Excluding the effect of these items, the
Company would have reported a loss of approximately $0.04 per share in the
fourth quarter of 2004, versus a loss of $0.05 per share in the third quarter of
2004.
In the fourth quarter of 2003, the Company reported a profit of $0.4 million or
$0.02 per share, due to the recognition of approximately $0.10 per share of
deferred income upon the liquidation of the HCP partnership.
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Cash earnings (defined as net income plus depreciation and amortization) were
$1.3 million, or $0.05 per diluted share, in the fourth quarter of 2004.
2004 Full Year Results
For the year ended December 31, 2004, the Company reported revenues of $93.3
million, compared to $66.3 million in the prior year, an increase of
approximately 41 percent. Adjusted EBITDA for 2004 was $18.7 million, versus
$13.6 million in 2003, an increase of approximately 38 percent.
The Company reported a net loss of $6.8 million or $0.27 per share in fiscal
2004, compared to a net profit of $5.0 million or $0.25 per share in 2003. Cash
earnings in 2004 were $5.3 million, or $0.21 per diluted share.
As of December 31, 2004, the Company had $19.5 million of cash and cash
equivalents and $149.5 million in shareholders' equity, equivalent to
approximately $5.81 per share of book value.
"We completed a number of key strategic initiatives in 2004 which have both
strengthened the Company and positioned us for growth in 2005," said Lawrence A.
Cohen, Chief Executive Officer. "Our long-term strategies have converged with
improving industry fundamentals and we are excited about our prospects. We enter
2005 with a significantly improved capital structure, including reduced debt,
and an expanded portfolio of properties to fuel our growth going forward."
2005 STRATEGIC INITIATIVES
o Management is focused on incremental growth through improved
occupancies of the Company's communities in lease-up and renovation
status, while simultaneously pursuing improved occupancy and operating
margins in the Company's stabilized communities.
o Management is focused on increasing the number of ancillary services
offered to residents through the communities as well as third party
providers. The goal is to provide a higher level of care for residents
while increasing the Company's operating margins.
o The Company seeks to participate in acquisitions or co-investments, as
the current industry dynamics make acquisition an attractive avenue
for growth, either directly or with a financial partner. The Company's
national platform and strengthened balance sheet should enable the
Company to participate in opportunistic, well-fitting acquisitions.
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o The Company's expertise in developing communities providing quality
facilities that meet the unique needs of the senior population is well
established, and the Company is looking to assist other entities, such
as real-estate or financial investors, in selectively developing new
senior living communities.
4Q04 CONFERENCE CALL INFORMATION
The Company will host a conference call with senior management to discuss the
Company's fourth quarter 2004 financial results. The call will be held on
Wednesday March 9, 2005 at 11:00 am Eastern Time.
The call-in number is 913-981-5509, confirmation code 164923. A link to a
simultaneous webcast of the teleconference will be available at
www.capitalsenior.com through Windows Media Player or RealPlayer.
For the convenience of the Company's shareholders and the public, the conference
call will be recorded and available for replay starting March 9, 2005 at 2:00 pm
Eastern Time, until March 16, 2005 at 8:00 pm Eastern Time. To access the
conference call replay, call 719-457-0820, confirmation code 164923. The
conference call will also be made available for playback via the Company's
corporate website, www.capitalsenior.com, and will be available until the next
earnings release date.
ABOUT THE COMPANY
Capital Senior Living Corporation is one of the nation's largest operators of
residential communities for senior adults. The Company's operating philosophy
emphasizes a continuum of care, which integrates independent living, assisted
living and home care services, to provide residents the opportunity to age in
place.
The Company currently operates 54 senior living communities in 20 states with an
aggregate capacity of approximately 8,700 residents, including 39 senior living
communities which the Company owns or in which the Company has an ownership
interest, and 15 communities it manages for third parties. Two expansions, which
were previously reported as separate wholly owned communities have been
consolidated with their main campuses, reducing the total communities count by
two. In the communities operated by the Company, 85 percent of residents live
independently and 15 percent of residents require assistance with activities of
daily living.
This release contains certain financial information not derived in accordance
with generally accepted accounting principles (GAAP), including adjusted EBITDA,
cash earnings and cash earnings per share. The Company believes this information
is useful to investors and other interested parties. Such information should not
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be considered as a substitute for any measures derived in accordance with GAAP,
and may not be comparable to other similarly titled measures of other companies.
Reconciliation of this information to the most comparable GAAP measures is
included as an attachment to this release.
The forward-looking statements in this release are subject to certain risks and
uncertainties that could cause results to differ materially, including, but not
without limitation to, the Company's ability to find suitable acquisition
properties at favorable terms, financing, licensing, business conditions, risks
of downturns in economic conditions generally, satisfaction of closing
conditions such as those pertaining to licensure, availability of insurance at
commercially reasonable rates, and changes in accounting principles and
interpretations among others, and other risks and factors identified from time
to time in our reports filed with the Securities and Exchange Commission.
Contact Ralph A. Beattie, Chief Financial Officer, at 972-770-5600 or Matt
Hayden, Hayden Communications, Inc. at 858-704-5065 for more information.
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CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
2004 2003
----------- --------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents................................................ $ 19,515 $ 6,594
Restricted cash.......................................................... -- 7,187
Accounts receivable, net................................................. 2,073 1,295
Accounts receivable from affiliates...................................... 1,220 604
Federal and state income taxes receivable................................ 2,572 994
Deferred taxes........................................................... 642 385
Assets held for sale..................................................... 1,008 --
Property tax and insurance deposits...................................... 2,731 1,855
Prepaid expenses and other............................................... 2,766 2,437
----------- -----------
Total current assets............................................. 32,527 21,351
Property and equipment, net................................................ 381,051 380,115
Deferred taxes............................................................. 7,011 6,554
Notes receivable from affiliates........................................... -- 4,981
Investments in limited partnerships........................................ 3,202 1,762
Assets held for sale....................................................... 1,026 2,391
Other assets, net.......................................................... 6,358 4,179
----------- -----------
Total assets..................................................... $ 431,175 $ 421,333
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................................... $ 2,162 $ 1,931
Accounts payable to affiliates........................................... 318 --
Accrued expenses......................................................... 7,478 6,838
Current portion of notes payable......................................... 42,242 23,488
Customer deposits........................................................ 1,936 1,929
----------- -----------
Total current liabilities........................................ 54,136 34,186
Deferred income............................................................ 680 112
Deferred income from affiliates............................................ 125 102
Other long-term liabilities................................................ 6,909 6,736
Notes payable, net of current portion...................................... 219,526 255,549
Minority interest in consolidated partnership.............................. 252 281
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value:
Authorized shares -- 15,000; no shares issued or outstanding........... -- --
Common stock, $.01 par value:
Authorized shares -- 65,000
Issued and outstanding shares -- 25,751 and 19,847 in
2004 and 2003, respectively.......................................... 258 198
Additional paid-in capital............................................... 124,963 92,336
Retained earnings........................................................ 24,326 31,833
----------- -----------
Total shareholders' equity....................................... 149,547 124,367
----------- -----------
Total liabilities and shareholders' equity....................... $ 431,175 $ 421,333
=========== ===========
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CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share)
Three Months Ended Year Ended
December 31, December 31,
-------------------------------- --------------------------------
2004 2003 2004 2003
--------------- --------------- --------------- ---------------
Revenues:
Resident and health care revenue................. $ 22,975 $ 18,074 $ 90,544 $ 62,564
Unaffiliated management services revenue......... 416 41 726 336
Affiliated management services revenue........... 532 769 1,992 3,236
Affiliated development fees...................... -- 26 -- 189
--------------- ----------- ------------ ----------
Total revenues.............................. 23,923 18,910 93,262 66,325
Expenses:
Operating expenses............................... 14,128 12,331 57,801 40,208
General and administrative expenses.............. 4,705 3,726 16,523 12,343
Provision for bad debts.......................... 22 36 198 168
Depreciation and amortization.................... 3,078 2,564 12,009 7,791
--------------- ----------- ----------- -----------
Total expenses.............................. 21,933 18,657 86,531 60,510
--------------- ----------- ----------- -----------
Income from operations............................. 1,990 253 6,731 5,815
Other income (expense):
Interest income.................................. 104 416 572 4,278
Interest expense................................. (4,112) (3,527) (15,769) (12,481)
(Loss) gain on sale of properties................ (196) 148 (37) 6,751
Debt restructuring / derivative costs:
Write-off of deferred loan costs............... (542) -- (824) --
Gain on interest rate swap agreement.......... 1,435 -- 1,435 --
Loss on treasury lock agreement................ (1,356) -- (1,356) --
Other income..................................... 66 3,474 182 3,616
--------------- ----------- -----------
(Loss) income before income taxes and minority
interest in consolidated partnership............. (2,611) 764 (9,066) 7,979
Benefit (provision) for income taxes............... 849 (315) 2,270 (3,098)
--------------- ----------- ----------- -----------
(Loss) income before minority interest in
consolidated partnership......................... (1,762) 449 (6,796) 4,881
Minority interest in consolidated partnership...... 2 (7) 38 109
--------------- ----------- ----------- -----------
Net (loss) income.................................. $ (1,760) $ 442 $ (6,758) $ 4,990
=============== =========== =========== ===========
Per share data:
Basic (loss) earnings per share.................. $ (0.07) $ 0.02 $ (0.27) $ 0.25
=============== ============ =========== ===========
Diluted (loss) earnings per share................ $ (0.07) $ 0.02 $ (0.27) $ 0.25
=============== ============ =========== ===========
Weighted average shares outstanding -- basic..... 25,744 19,847 25,213 19,784
=============== =========== =========== ===========
Weighted average shares outstanding -- diluted... 25,744 20,133 25,213 19,975
=============== =========== =========== ===========
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CAPITAL SENIOR LIVING CORPORATION
RECONCILATION OF NON GAAP ITEMS
(in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
--------------------------------- ---------------------------------
2004 2003 2004 2003
--------------- ---------------- --------------- ----------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash earnings reconciliation:
Net (loss) income......................... $ (1,760) $ 442 $ (6,758) $ 4,990
Depreciation and amortization............. 3,078 2,564 12,009 7,791
-------------- ------------- ------------ -------------
Cash earnings......................... $ 1,318 $ 3,006 $ 5,251 $ 12,781
=============== ============= ============ =============
Cash earnings per diluted share reconciliation:
Net (loss) income per diluted share....... $ (0.07) $ 0.02 $ (0.27) $ 0.25
Depreciation and amortization per diluted share 0.12 0.13 0.48 0.39
--------------- ------------ ------------ -------------
Cash earnings per diluted share....... $ 0.05 $ 0.15 $ 0.21 $ 0.64
=============== ============ ============ =============
Adjusted EBITDA reconciliation:
Income from operations.................... $ 1,990 $ 253 $ 6,731 $ 5,815
Depreciation and amortization............. 3,078 2,564 12,009 7,791
--------------- ------------ ------------ -------------
Adjusted EBITDA....................... $ 5,068 $ 2,817 $ 18,740 $ 13,606
=============== ============ ============ =============
Reconciliation of net loss before Spring Meadows
transaction, debt restructuring/derivative
costs and Sarbanes/Oxley compliance costs:
Net loss................................... $ (1,760)
Loss on Spring Meadows transactions (net of tax) 133
Debt restructuring / derivative costs (net of tax) 369
Sarbanes/Oxley compliance costs (net of tax) 354
-----------
Adjusted net loss..................... $ (904)
===========
Reconciliation of net loss per share before Spring
Meadows transaction, debt restructuring/
derivative costs and Sarbanes/Oxley compliance
costs:
Net loss per share......................... $ (0.07)
Per share adjustment for:
Loss on Spring Meadows transactions
(net of tax)........................... 0.01
Debt restructuring / derivative costs
(net of tax)........................... 0.01
Sarbanes/Oxley compliance costs (net of tax) 0.01
------------
Adjusted net loss..................... $ (0.04)
============
Reconciliation of shareholders' equity per
outstanding share:
Shareholders' equity...................... $ 149,547
Common shares outstanding at December 31, 2004 25,751
-----------
Shareholders' equity per outstanding share $ 5.81
===========
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Capital Senior Living Corporation
Supplemental Information
Communities Resident Capacity
------------------------ --------------------------
Q4 04 Q4 03 Q4 04 Q4 03
-------- -------- --------- ---------
Portfolio Data
I. Property Ownership / Management
Consolidated properties 29 24 4,831 4,109
Joint Venture properties (equity method) 10 17 1,867 2,745
Third party property managed 14 1 1,824 -
Third party property managed (prelease) 1 - 146 -
--------- --------- --------- ---------
Total 54 42 8,668 6,854
Independent living 7,313 5,925
Assisted living 1,185 759
Skilled nursing 170 170
--------- ---------
Total 8,668 6,854
II. Percentage of Operating Portfolio
Consolidated properties 53.7% 57.1% 55.7% 60.0%
Joint venture properties (Equity Method) 18.5% 40.5% 21.5% 40.0%
Third Party property managed 25.9% 2.4% 21.0% 0.0%
Third party property managed (prelease) 1.9% 0.0% 1.79% 0.0%
--------- --------- --------- ---------
Total 100.0% 100.0% 100.0% 100.0%
Independent living 84.4% 86.4%
Assisted living 13.6% 11.1%
Skilled nursing 2.0% 2.5%
---------- ---------
Total 100.0% 100.0%
Selected Operating Results
I. Consolidated Properties
Number of properties 29 24
Resident capacity 4,831 3,953
Occupancy 85.9% 83.6%
Revenue (in millions) 22.9 21.7
Average monthly rent 2,053 2,017
Operating margin 37% 35%
II. Waterford / Wellington properties
Number of properties 19 19
Resident capacity 2,548 2,548
Occupancy 86.4% 83.3%
Revenue (in millions) 10.5 9.7
Average monthly rent 1,812 1,751
Operating margin 37% 30%
III. Total Portfolio
Number of properties 54 42
Resident capacity 8,668 6,854
Occupancy 85.4% 82.3%
Revenue (in millions) 40.0 31.7
Average monthly rent 2,079 2,126
Operating margin 41% 37%
IV. General and Administrative Expenses (in
thousands)
Corporate 2,721 1,976
Property 2,006 1,786
--------- -------
Total 4,727 3,762
V. Consolidated Debt Information (in thousands, except for interest
rates) Excludes insurance premium financing
Fixed rate debt 42,759 69,217
Variable rate debt with a floor - 44,411
Variable rate debt, with a cap 184,585 35,657
Variable rate debt, no cap or floor 28,595 127,532
--------- --------
Total debt 255,938 276,816
--------- --------
Fixed rate debt - weighted average rate 8.0% 7.8%
Variable rate debt - weighted average rate 5.5% 4.7%
Total debt - weighted rate 5.9% 5.5%
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