[GRAPHIC OMITTED]
Contact: FOR IMMEDIATE RELEASE
Francie Nagy
Investor Relations
Tel: +1-212-515-4625
Brookdale Announces Second Quarter 2006 Results
_______________________________________________
Second Quarter 2006 Highlights
o Net loss of $(20.3) million, or $(0.31) per diluted common share,
including non-cash expenses of $38.9 million for depreciation and
amortization, non-cash compensation expense and straight-line lease
expense, net of deferred gain amortization.
o Facility Operating Income of $106.5 million and Adjusted EBITDA of
$46.2 million.
o For the six months ended June 30, 2006, excluding developments, same
store revenue growth of 7.0% and Facility Operating Income growth of
16.7% over the same period in 2005.
o Cash From Facility Operations increased approximately 28% over the
first quarter to $17.1 million, or $0.26 per outstanding common share,
at June 30, 2006.
o Average occupancy for the quarter was 90.0% compared to 88.3% for the
second quarter of 2005.
o Completed the acquisition of 54 facilities (4,394 units/beds) for
$344.7 million.
o Announced second quarter 2006 dividend of $0.35 per common share.
Dividend was paid on July 17, 2006.
Page 1 of 14
Subsequent Events to Second Quarter, 2006
o The final portion of the American Senior Living transaction closed on
July 27, 2006 and added 10
facilities to the Brookdale portfolio.
o The $1.2 billion acquisition of American Retirement Corporation closed
on July 25, 2006.
o Completed follow-on equity offering on July 25, 2006, raising $700
million in gross proceeds. In addition, the Company raised $650 million
from a fund managed by an affiliate of Fortress Investment Group LLC.
The proceeds were used to fund acquisitions, including that of American
Retirement Corporation, repay debt and for general corporate purposes.
Chicago, IL. August 14, 2006 - Brookdale Senior Living Inc. (NYSE: BKD) today
reported financial results for the second quarter of 2006. Net loss for the
quarter and six months ended June 30, 2006 was $(20.3) million and $(39.6)
million, respectively, or $(0.31) and $(0.61) per diluted common share.
As a dividend-paying company, Brookdale's management utilizes Adjusted EBITDA
and Cash From Facility Operations to evaluate the Company's performance and
liquidity because these metrics exclude non-cash expenses such as depreciation
and amortization, non-cash compensation expense and straight-line rent expense,
net of deferred gain amortization.
For the second quarter and the six months ended June 30, 2006, Adjusted EBITDA
was $46.2 million and $73.1 million, respectively. Facility Operating Income for
the second quarter and six months ended June 30, 2006 was $106.5 million and
$190.5 million, respectively
For the second quarter and the six months ended June 30, 2006, Cash From
Facility Operations was $17.1 million and $30.4 million, respectively, or $0.26
and $0.47 per diluted common share outstanding at June 30, 2006. This represents
an increase of $3.8 million, or approximately 28%, over first quarter 2006 Cash
From Facility Operations of $13.3 million, or $0.20 per diluted outstanding
common share at March 31, 2006.
Adjusted EBITDA and Cash From Facility Operations included non-recurring costs
of $3.7 million and $6.7 million for the second quarter and six months ended
June 30, 2006, respectively. The Facility Operating Income also included $0.5
million of integration expenses related to recent acquisitions for the second
quarter ended June 30, 2006.
Same-store revenues, excluding developments, grew 7.0% for the six months ended
June 30, 2006 over the six months ended June 30, 2005, and same-store Facility
Operating Income grew 16.7% for the same period. Facility Operating Income
same-store growth for the first half of 2006 benefited from cost synergies from
the September 2005 combination of Old Brookdale and Alterra.
Page 2 of 14
On July 25, 2006, Brookdale closed on the acquisition of American Retirement
Corporation ("ARC") for $1.2 billion, which was funded in part by a $700 million
follow-on equity offering and a $650 million sale of common shares to an
affiliate of Fortress. In addition, Brookdale repaid the $195 million
outstanding balance on the term portion of its senior secured credit facility.
Mark J. Schulte, Brookdale's Co-CEO, commented, "The second quarter was a very
productive time at Brookdale, as we continued to execute on our plan to grow
cash flow through acquisitions and operating improvements. We saw significant
year over year increases in revenues and Cash Flow From Operations, and we
continued to improve occupancy. Our team has done an outstanding job on every
front, and our operating results are a testament to the focus and commitment of
everyone at Brookdale. Subsequent to quarter end we welcomed ARC associates to
Brookdale, adding significantly to the depth and range of talent within our
Company."
American Retirement Corporation Results
For the second quarter of 2006, ARC's resident fees and Facility Operating
Income (excluding amortization of entrance fees) totaled $130.7 million and
$41.3 million, respectively. Same-store Facility Operating Income grew by 10.8%
for six months ended June 30, 2006 over the same period in 2005. The ancillary
services business generated approximately $160 of monthly Facility Operating
Income per occupied unit at the ARC facilities for the three months ended June
30, 2006.
Acquisitions
During the second quarter 2006, Brookdale acquired 54 facilities (4,394
units/beds) for a total purchase price of $344.7 million. Subsequent to June 30,
2006, Brookdale completed the acquisition of the final portion of the American
Senior Living portfolio (5 owned and 5 leased facilities with 943 units/beds).
On July 25, 2006, Brookdale completed its previously announced acquisition of
ARC. Brookdale acquired all the outstanding stock of ARC at $33.00 per share or
total cash consideration of approximately $1.2 billion. ARC operated 83 senior
living facilities (16,100 units/beds) in 19 states.
Since Brookdale's IPO in November 2005, and including the ARC acquisition, the
Company has purchased or committed to purchase $3.2 billion in senior housing
assets. These acquisitions represent 189 facilities with 25,457 units/beds.
Brookdale has invested approximately $1.5 billion of cash in these transactions.
Bill Doniger, Brookdale's Vice Chairman said, "While we are extremely pleased
with the results for the second quarter, we remain most excited about completing
the acquisition of American Retirement in July. The acquisition was financed in
part by the $700 million follow-on offering that priced on July 19, 2006. We
were especially pleased that the offering was well-
Page 3 of 14
oversubscribed during a very difficult period in the public markets. This
acquisition leaves the company well-positioned to continue to deliver to our
shareholders superior growth in cash earnings and dividends over the coming
years."
Dividend
For the second quarter of 2006 Brookdale paid a dividend of $0.35 per share of
common stock, on July 17, 2006, to holders of record of Brookdale's common stock
on June 30, 2006.
Business Strategy
Brookdale's business strategy is to focus on increasing its earnings and
dividends to shareholders by growing Adjusted EBITDA and Cash From Facility
Operations through:
o Internal growth at its existing portfolio of facilities through
occupancy improvements, increases in annual rental rates and
operational savings due to economies of scale; and
o Accretive acquisitions of senior housing facilities and operators in a
fragmented industry.
Earnings Conference Call
Management will conduct a conference call on Monday, August 14, 2006 to review
the financial results for the three and six months ended June 30, 2006. The
conference call is scheduled for 10:00 AM EDT. All interested parties are
welcome to participate in the live call. The conference call can be accessed by
dialing (877) 704-5378 or (913) 312-1292 (from outside of the U.S.) up to ten
minutes prior to the scheduled start and referencing "The Brookdale Senior
Living Second Quarter 2006 Earnings Call."
A webcast of the conference call will be available to the public on a
listen-only basis at http://www.brookdaleliving.com. Please allow extra time
prior to the call to visit the site and download the necessary software required
to listen to the internet broadcast. A replay of the webcast will be available
for three months following the call.
For those who cannot listen to the live call, a replay will be available until
11:59 PM EDT on August 21, 2006 by dialing (888) 203-1112 (from within the U.S.)
or (719) 457-0820 (from outside of the U.S.) please reference access code
"742-3620." A copy of this earnings release is posted on the Investor Relations
page of the Brookdale website.
About Brookdale Senior Living
Brookdale Senior Living Inc. is a leading owner and operator of senior living
facilities throughout the United States. The Company is committed to providing
an exceptional living experience through properties that are designed,
purpose-built and operated to provide the highest-quality service, care and
living accommodations for residents. Currently the Company owns and operates
independent, assisted, dementia-care facilities and continuing care retirement
centers, with over 540 facilities in 35 states and the ability to serve over
51,000 residents.
Page 4 of 14
Safe Harbor
Certain items in this press release and the associated earnings conference call
may constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and are subject to various risks and
uncertainties, including without limitation, statements relating to commitments
to purchase senior housing assets, the amount of cash to be used in such
transactions and the continuation of leveraging the Company's national footprint
and operating infrastructure to invest capital accretively in acquisitions.
Forward-looking statements are generally identifiable by use of forward-looking
terminology such as "may," "will," "should," "potential," "intend," "expect,"
"endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate,"
"believe," "could," "would," "project," "predict," "continue" or other similar
words or expressions. Forward looking statements are based on certain
assumptions or estimates, discuss future expectations, describe future plans and
strategies, contain projections of results of operations or of financial
condition or state other forward-looking information. Our ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Although we believe that the expectations reflected in such forward
looking statements are based on reasonable assumptions, actual results and
performance could differ materially from those set forth in the forward-looking
statements. Factors which could have a material adverse effect on our operations
and future prospects or which could cause events or circumstances to differ from
the forward-looking statements include, but are not limited to, our limited
operating history on a combined basis, our ability to generate sufficient cash
flow to cover required interest and long-term operating lease payments, the
effect of our indebtedness and long-term operating leases on our liquidity, our
increased risk of loss of property pursuant to our mortgage debt and long-term
lease obligations, our ability to effectively manage our growth, our ability to
maintain consistent quality control, unforeseen costs associated with the
acquisition of new facilities, competition for the acquisition of strategic
assets, our ability to obtain additional capital on terms acceptable to us,
events which adversely affect the ability of seniors to afford our monthly
resident fees, our vulnerability to economic downturns, regulatory changes or
acts of nature in certain geographic areas, terminations of our resident
agreements and vacancies in the living spaces we lease, early termination or
non-renewal of our management agreements, increase competition for skilled
personnel, departure of our key officers, increases in market interest rates,
environmental contamination at any of our facilities, failure to comply with
existing environmental laws, an adverse determination or resolution in recent
complaints filed against us, the cost and difficulty of complying with
increasing and evolving regulation, and other risks detailed from time to time
in Brookdale's SEC reports, including its Annual Report on form 10-K filed with
the SEC on March 31, 2006. When considering forward-looking statements, you
should keep in mind the risk factors and other cautionary statements in such SEC
filings. Readers are cautioned not to place undue reliance on any of these
forward-looking statements, which reflect our management's views as of the date
of this press release and/or the associated earnings conference call. The
factors discussed above and the other factors noted in our SEC filings could
cause our actual results to differ significantly from those contained in any
forward-looking statement. Although we believe that the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements and we expressly
disclaim any obligation to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in our
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
Page 5 of 14
Consolidated and Combined Statements of Operations
(in thousands, except for per share data)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- -----------------------------
2006(1)(2) 2005(1)(3) 2006(1)(2) 2005(1)(3)
-------------- -------------- ------------- -------------
Revenue
Resident fees........................... $ 267,842 $ 192,350 $ 488,878 $ 366,462
Management fees......................... 585 945 1,732 1,816
-------------- -------------- ------------- -------------
Total revenue.......................... 268,427 193,295 490,610 368,278
-------------- -------------- ------------- -------------
Expenses
Facility operating (excluding
depreciation and amortization of
$30,012, $8,201, $51,452 and
$12,471, respectively)................. 161,281 122,866 298,226 233,215
General and administrative (including
non-cash stock compensation expense
of $3,150, $--, $6,168 and $ --,
respectively).......................... 23,125 11,323 44,210 22,981
Facility lease expense.................. 46,623 47,091 92,357 93,593
Depreciation and amortization........... 30,947 9,072 53,246 14,245
-------------- -------------- ------------- -------------
Total operating expenses............. 261,976 190,352 488,039 364,034
-------------- -------------- ------------- -------------
Income from operations.............. 6,451 2,943 2,571 4,244
Interest income........................... 625 680 1,677 1,376
Interest expense:
Debt.................................... (25,544) (11,188) (39,234) (20,313)
Amortization of deferred financing costs (1,335) (1,136) (2,038) (1,559)
Change in fair value of derivatives..... 519 85 418 4,147
Loss on extinguishment of debt.......... -- -- (1,334) (453)
Equity in loss of unconsolidated venture.. (469) (258) (637) (445)
-------------- -------------- ------------- -------------
Loss before income taxes............. (19,753) (8,874) (38,577) (13,003)
Provision for income taxes................ (273) (19) (659) (185)
-------------- -------------- ------------- -------------
Loss before minority interest........ (20,026) (8,893) (39,236) (13,188)
Minority interest......................... (233) 2,939 (349) 5,471
-------------- -------------- ------------- -------------
Loss before discontinued operations . (20,259) (5,954) (39,585) (7,717)
Discontinued operations .................. -- 112 -- 77
-------------- -------------- ------------- -------------
Net loss............................. $ (20,259) $ (5,842) $ (39,585) $ (7,640)
============== ============== ============= =============
Basic and diluted loss per share..... $ (0.31) $ (0.61)
============== =============
Weighted average shares used in
computing basic and diluted loss per
share................................. 65,007 65,007
============== =============
(1) Brookdale Senior Living Inc. was formed on September 30, 2005. Results
prior to that date represent the combined operations of the Predecessor
entities.
(2) On January 1, 2006 we consolidated three limited partnerships
controlled by us pursuant to EITF 04-5. Resident service fees, facility
operating expenses, depreciation and amortization, interest income and
interest expense for the entities was $3,088 and $6,135 ,$2,179 and
$4,403 , $231 and $522, $-- and $7, and $408 and $814 for the three and
six months ended June 30, 2006, respectively.
(3) We excluded the loss per share for the periods ended June 30, 2005. We
believe this calculation is not meaningful to investors due to the
different ownership and legal structures (e.g., corporation and limited
liability companies) of the various entities prior to the formation
transactions on September 30, 2005.
Page 6 of 14
Condensed Consolidated and Combined Balance Sheets
(in thousands)
June 30, December 31,
2006 (1) 2005 (1)
----------- ---------------
(Unaudited)
Cash and cash equivalents............................................ $ 30,398 $ 77,682
Cash and investments -- restricted.................................... 40,054 37,314
Other current assets................................................. 49,225 30,881
------------- ---------------
Total current assets............................................. 119,677 145,877
------------- ---------------
Property, plant and equipment, net................................... 2,108,759 1,408,732
Lease security deposits.............................................. 20,005 25,271
Other long term assets............................................... 132,745 117,931
------------- ---------------
Total assets..................................................... $ 2,381,186 $ 1,697,811
============= ===============
Current liabilities.................................................. $ 409,428 $ 171,443
Long-term debt, less current portion................................. 1,231,208 754,169
Other long term liabilities.......................................... 167,414 141,760
------------- ---------------
Total liabilities................................................ 1,808,050 1,067,372
------------- ---------------
Minority interests................................................... 12,500 36
------------- ---------------
Stockholders' equity................................................. 560,636 630,403
------------- ---------------
Total liabilities and stockholders' equity....................... $ 2,381,186 $ 1,697,811
============= ===============
(1) Brookdale Senior Living Inc. was formed on September 30, 2005. Results
prior to that date represent the combined operations of the Predecessor
entities.
Page 7 of 14
Consolidated and Combined Statements of Cash Flow
(in thousands)
(Unaudited)
Six Months Ended June 30,
------------------------------
2006 (1) 2005 (1)
------------ ------------
Cash Flows from Operating Activities
Net loss............................................................ $ (39,585) $ (7,640)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Loss on extinguishment of debt................................... 1,334 453
Depreciation and amortization.................................... 55,284 15,803
Minority interest................................................ 349 (5,471)
Equity in loss of unconsolidated ventures........................ 637 445
Loss on discontinued operations.................................. -- (77)
Amortization of deferred gain.................................... (2,173) (4,585)
Amortization of entrance fees.................................... (145) (3)
Proceeds from deferred entrance fee revenue...................... 613 273
Deferred income taxes provision.................................. -- 185
Change in deferred lease liability............................... 10,498 11,975
Change in fair value of derivatives.............................. (418) (4,147)
Compensation expenses related to restricted stock grants......... 6,773 --
Changes in operating assets and liabilities:
Accounts receivable, net......................................... (10,715) 338
Prepaid expenses and other assets, net........................... 7,376 1,444
Accounts payable and accrued expenses............................ (3,596) 2,113
Tenant refundable fees and security deposits..................... 2,182 1,157
Other............................................................ (5,175) (702)
------------ ------------
Net cash provided by (used in) operating activities............. 23,239 11,561
------------ ------------
Cash Flows from Investing Activities
Increase (decrease) in lease security deposits and lease
acquisition deposits, net........................................ 5,266 (180)
Decrease in cash and investments -- restricted..................... 14,854 (4,576)
Net proceeds from sale of property, plant and equipment........... -- 544
Additions to property, plant and equipment, net of related payables..........(14,957) (10,258)
Acquisition of assets, net of related payables.................... (531,895) (444,030)
------------ ------------
Net cash used in investing activities........................... (526,732) (458,500)
------------ ------------
Cash Flows from Financing Activities
Proceeds from debt................................................ 321,170 449,156
Proceeds from line of credit...................................... 195,000 --
Repayment of debt................................................. (11,356) (181,359)
Payment of dividends.............................................. (39,714) (20,000)
Payment of financing costs, net of related payables............... (10,636) (2,909)
Refundable entrance fees:
Proceeds from refundable entrance fees......................... 2,756 986
Refunds of entrance fees....................................... (1,011) (257)
Costs incurred related to initial public offering................. - (14,065)
Payment of swap termination....................................... - -
Proceeds from issuance of common stock, net of underwriters
discount....................................................... - 188,395
------------ ------------
Net cash provided by (used in) financing activities............ 456,209 419,947
------------ ------------
Net increase in cash and cash equivalents...................... (47,284) (26,992)
Cash and cash equivalents at beginning of period............... 77,682 86,858
------------ ------------
Cash and cash equivalents at end of period..................... $ 30,398 $ 59,866
============ ============
(1) Brookdale Senior Living Inc. was formed on September 30, 2005. Results
prior to that date represent the combined operations of the Predecessor
entities.
Page 8 of 14
Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA is a measure of operating performance that is not calculated in
accordance with U.S. generally accepted accounting principles ("GAAP"). Adjusted
EBITDA should not be considered a substitute for net income, income from
operations or cash flows provided by or used in operations, as determined in
accordance with GAAP. Adjusted EBITDA is a key measure of the Company's
operating performance used by management and the board of directors to focus on
operating performance and management without mixing in items of income and
expense that relate to long-term contracts and the financing and capitalization
of the business. We define Adjusted EBITDA as net income (loss) before provision
(benefit) for income taxes, non-operating income (loss) items, depreciation and
amortization, straight-line lease expense (income), amortization of deferred
gain, amortization of deferred entrance fees, and non-cash compensation expense
and including entrance fee receipts and refunds.
We believe Adjusted EBITDA is useful to investors in evaluating our performance,
results of operations and financial position for the following reasons:
o It is helpful in identifying trends in our day-to-day performance
because the items excluded have little or no significance to our
day-to-day operations
o It provides an assessment of controllable expenses and affords
management the ability to make decisions that facilitate meeting
current financial goals as well as achieve optimal financial
performance
o It is an indication to determine if adjustments to current spending
decisions are needed
Page 9 of 14
o The table below reconciles Adjusted EBITDA from net loss for the three
and six months ended June 30, 2006 and 2005 (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
--------------------------------- --------------------------------
2006 2005(1) 2006 2005(1)
---------------- ------------- ------------- --------------
Net loss.................................. $ (20,259) $ (5,842) $ (39,585) $ (7,640)
Loss on discontinued operations........... -- (112) -- (77)
Minority interest......................... 233 (2,939) 349 (5,471)
Provision for income taxes................ 273 19 659 185
Equity in loss of unconsolidated ventures. 469 258 637 445
Loss extinguishment of debt............... -- -- 1,334 453
Interest Expense:
Debt...................................... 18,963 8,913 30,493 15,762
Amortization of deferred financing costs.. 1,335 1,136 2,038 1,559
Capitalized lease obligation.............. 6,581 2,275 8,741 4,551
Change in fair value of derivatives....... (519) (85) (418) (4,147)
Interest income........................... (625) (680) (1,677) (1,376)
---------------- ------------- ------------- --------------
Income from operations.................... 6,451 2,943 2,571 4,244
Depreciation and amortization............. 30,947 9,072 53,246 14,245
Straight-line lease expense............... 5,239 5,881 10,498 11,975
Amortization of deferred gain............. (1,086) (2,289) (2,173) (4,585)
Amortization of entrance fees............. (62) -- (145) --
Non-cash compensation expense............. 3,755 -- 6,773 --
Entrance fee receipts..................... 1,300 1,259 3,369 1,259
Entrance fee disbursements................ (308) (257) (1,011) (257)
---------------- ------------- ------------- --------------
Adjusted EBITDA........................... $ 46,236 $ 16,609 $ 73,128 $ 26,881
================ ============= ============= ==============
(1) Brookdale Senior Living Inc. was formed on September 30, 2005. Results
prior to that date represent the combined operations of the Predecessor
entities.
Page 10 of 14
Cash From Facility Operations
Cash From Facility Operations is a measurement of liquidity that is not
calculated in accordance with GAAP and should not be considered a substitute for
cash flows provided by or used in operations, as determined in accordance with
GAAP. We define Cash From Facility Operations as cash flows provided by (used
in) operations adjusted for changes in operating assets and liabilities,
refundable entrance fees received, entrance fees disbursed, other and recurring
capital expenditures. Recurring capital expenditures include expenditures
capitalized in accordance with GAAP that are funded from Cash From Facility
Operations. Amounts excluded from recurring capital expenditures consist
primarily of unusual or non-recurring capital items, facility purchases and/or
major renovations that are funded using financing proceeds and/or proceeds from
the sale of facilities.
We believe Cash From Facility Operations is useful to investors in evaluating
our liquidity for the following reasons:
o It provides an assessment of our ability to facilitate meeting current
financial and liquidity goals
o To assess our ability to:
(i) service our outstanding indebtedness;
(ii) pay dividends; and
(iii) make regular recurring capital expenditures to maintain and
improve our facilities
The table below reconciles Cash From Facility Operations from net cash provided
by operating activities for the three and six months ended June 30, 2006 (in
thousands):
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- -----------------------------
2006 2005(1) 2006 2005(1)
----------- ----------- ----------- -----------
Net cash provided by operating activities $ 11,120 $ 15,989 $ 23,239 $ 11,561
Reconciliation of GAAP operating cash
flows to Cash From Facility Operations:
Changes in operating assets and liabilities 9,097 (10,621) 9,928 (4,350)
Refundable entrance fees received 1,135 1,672 2,756 1,672
Refundable entrance fees paid (308) (794) (1,011) (794)
Reimbursement of operating expenses 1,350 -- 2,850 --
Recurring capital expenditures, net (5,299) (4,598) (7,360) (8,026)
----------- ----------- ----------- -----------
Cash From Facility Operations $ 17,095 $ 1,648 $ 30,402 $ 63
=========== =========== =========== ===========
(1) Brookdale Senior Living Inc. was formed on September 30, 2005. Results
prior to that date represent the combined operations of the Predecessor
entities.
Page 11 of 14
Facility Operating Income
Facility Operating Income is not a measurement of operating performance
calculated in accordance with GAAP and should not be considered a substitute for
net income, income from operations, or cash flows provided by or used in
operations, as determined in accordance with GAAP. We define Facility Operating
Income as net income (loss) before provision (benefit) for income taxes,
non-operating income (loss) items, depreciation and amortization, facility lease
expense, general and administrative expense, including compensation expense,
amortization of deferred entrance fee revenue and management fees.
We believe Facility Operating Income is useful to investors in evaluating our
facility operating performance for the following reasons:
o It is helpful in identifying trends in our day-to-day facility
performance
o It provides an assessment of our revenue generation and expense
management
o It provides an indicator to determine if adjustments to current
spending decisions are needed.
The table below reconciles Facility Operating Income from net loss for the three
and six months ended June 30, 2006. (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- -------------------------------
2006 2005 2006 2005
--------------- -------------- ------------- --------------
Net loss............................................ $ (20,259) $ (5,842) $ (39,585) $ (7,640)
Loss on discontinued operations..................... -- (112) -- (77)
Minority interest................................... 233 (2,939) 349 (5,471)
Provision (benefit) for income taxes................ 273 19 659 185
Equity in loss of unconsolidated ventures........... 469 258 637 445
Loss on extinguishment of debt...................... -- -- 1,334 453
Interest expense:
Debt............................................. 18,963 8,913 30,493 15,762
Amortization of deferred financing costs......... 1,335 1,136 2,038 1,559
Capitalized lease obligation..................... 6,581 2,275 8,741 4,551
Change in fair value of derivatives.............. (519) (85) (418) (4,147)
Interest income..................................... (625) (680) (1,677) (1,376)
--------------- -------------- ------------- --------------
Income from operations.. 6,451 2,943 2,571 4,244
Depreciation and amortization....................... 30,947 9,072 53,246 14,245
Facility lease expense.............................. 46,623 47,091 92,357 93,593
General and administrative (including non-cash stock
compensation expense).............................. 23,125 11,323 44,210 22,981
Amortization of entrance fees....................... (62) -- (145) --
Management fees..................................... (585) (945) (1,732) (1,816)
--------------- -------------- ------------- --------------
Facility Operating Income........................... $ 106,499 $ 69,484 $ 190,507 $ 133,247
=============== ============== ============= ==============
(1) Brookdale Senior Living Inc. was formed on September 30, 2005. Results
prior to that date represent the combined operations of the Predecessor
entities.
Page 12 of 14
Our facility breakdown at June 30, 2006, was as follows:
Number of Number of Percentage of Q2 2006
Facilities Units/Beds Revenue
---------- ---------- -------
Ownership Type
Owned 106 11,854 35.9%
Leased 340 21,191 63.9%
Managed 7 1,301 0.2%
---------- ---------- -------
Total 453 34,346 100.0%
========== ========== =======
Operating Type
Brookdale Living (IL & CCRC) 70 14,802 44.7%
Alterra (Assisted Living) 376 18,243 55.1%
Managed 7 1,301 0.2%
---------- ---------- -------
Total 453 34,346 100.0%
========== ========== =======
Our facility breakdown as of August 11, 2006 (including ARC and other
acquisitions that closed after June 30, 2006), is as follows:
Number of Number of
Facilities Units/Beds
========== ==========
Ownership Type
Owned 144 17,476
Leased 389 30,691
Managed 13 3,219
---------- ----------
Total 546 51,386
========== ==========
Operating Type
Brookdale Living (IL & CCRC) 71 14,936
Alterra (Assisted Living) 385 19,052
ARC 77 14,179
Managed 13 3,219
---------- ----------
Total 546 51,386
========== ==========
Our quarterly financial data for the three months ended June 30, 2006 and March
31, 2006 was as follows (in thousands, except occupancy and average rate):
For the Three Months Ended
------------------------------------- Increase
June 30, 2006 March 31, 2006 (Decrease) Percentage
-------------- -------------- ---------- ----------
Average Occupancy 90.0% 89.5% 0.5% 0.1%
Average rate ($) $ 3,098 $ 3,116 $ (18) (0.1)%
Resident Fees(1) $ 267,780 $ 220,953 $ 46,827 21.2%
Facility Operating Expenses 161,281 136,945 24,336 17.8%
-------------- -------------- ---------- ----------
Facility Operating Income $ 106,499 $ 84,008 $ 22,491 26.8%
-------------- -------------- ---------- ----------
Facility Operating Income Margin 39.8% 38.0%
(1) Excluding amortization of entrance fees of $62 and $83, respectively.
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The quarterly financial data for ARC for the three months ended June 30, 2006
and March 31, 2006 was as follows (in thousands, except occupancy and average
rate):
For the Three Months Ended
---------------------------------------- Increase
June 30, 2006 March 31, 2006 (Decrease) Percentage
---------------- -------------------- ---------- ----------
Average Occupancy 94% 95% (1.0)% (1.1)%
Average rate ($) $ 3,789 $ 3,645 144 4.0%
Resident Fees(1) $ 130,701 $ 123,227 7,474 6.1%
Facility Operating Expenses 89,360 83,454 5,906 7.1%
Facility Operating Income $ 41,341 $ 39,773 1,568 3.9%
Facility Operating Income Margin 31.6% 32.3%
Ancillary Services
Number of Clinics 137 134 3 2.2%
Number of Therapists 760 693 67 9.7%
NOI per Occupied Unit $160 $156 4 2.6%
(1) Excluding amortization of entrance fees of $4.5 million and $4.6
million, respectively.
Our capital expenditures for the three and six months ended June 30, 2006 and
2005 were as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ----------------------------
2006 (1) 2005 2006 2005
------------- ---------- ------------ -------------
Type
- ----
Recurring $ 5,970 $ 4,598 $ 8,702 $ 8,026
Reimbursements (671) -- (1,342) --
------------- ---------- ------------ -------------
Net recurring 5,299 4,598 7,360 8,026
EBITDA enhancing(1) 2,250 -- 3,524 2,161
Other/Corporate(2) -- -- 2,731 71
------------- ---------- ------------ -------------
Gross Total Capital Expenditures $ 7,549 $ 4,598 $ 13,615 $ 10,258
============= ========== ============ =============
(1) EBITDA-enhancing capital expenditures generally represent unusual
or non-recurring capital items and/or major renovations.
(2) Corporate primarily includes capital expenditures for information
technology systems and equipment.
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