EMERITUS CORP\WA\ - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT 1934

For the quarterly period ended March 31, 2005

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-14012

EMERITUS CORPORATION

(Exact name of registrant as specified in its charter)

WASHINGTON	91-1605464
(State or other jurisdiction	(I.R.S Employer
of incorporation or organization)	Identification No.)

3131 Elliott Avenue, Suite 500

(Address of principal executive offices)

(Registrant's telephone number, including area code)

____________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). [ ] Yes [X] No

As of April 29, 2005, there were 10,853,942 shares of the Registrant's Common Stock, par value $.0001, outstanding.

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EMERITUS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except share data)
ASSETS
	March 31,			December 31,
	2005			2004
Current Assets:
Cash and cash equivalents	$	6,761		$	10,748
Short-term investments		1,330			1,336
Trade accounts receivable, net of allowance of $740 and $542		4,058			3,982
Other receivables		1,916			2,270
Prepaid expenses and other current assets		20,073			18,317
Property held for sale		-			7,891
Total current assets		34,138			44,544
Long-term investments		6,884			6,884
Property and equipment, net		633,066			627,047
Property held for development		807			807
Notes receivable from and investments in affiliates		3,547			3,518
Restricted deposits		8,263			7,642
Lease acquisition costs, net		27,151			26,625
Other assets, net		2,280			2,571
Total assets	$	716,136		$	719,638

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities:
Current portion of long-term debt	$	3,068		$	4,133
Current portion of capital lease and financing obligations		16,748			15,479
Trade accounts payable		8,170			9,057
Accrued employee compensation and benefits		15,597			13,259
Accrued interest		888			1,547
Accrued real estate taxes		3,287			4,596
Accrued dividends on preferred stock		11,130			10,539
Accrued insurance liability		26,797			25,903
Other accrued expenses		7,640			7,952
Deferred revenue		6,799			6,516
Unearned rental income		7,624			8,227
Convertible debentures		32,000			-
Deposit on sales contract		-			9,212
Total current liabilities		139,748			116,420
Long-term debt, less current portion		51,385			50,528
Capital lease and financing obligations, less current portion		623,601			614,046
Convertible debentures		-			32,000
Deferred gain on sale of communities		27,670			28,517
Deferred rent		4,706			4,571
Other long-term liabilities		1,836			1,875
Total liabilities		848,946			847,957
Commitments and contingencies
Shareholders' Deficit:
Preferred stock, $.0001 par value. Authorized 5,000,000 shares.
Series B, Authorized 70,000 shares, issued and outstanding 36,604 and 36,242 shares at
March 31, 2005, and December 31, 2004, respectively		-			-
Common stock, $.0001 par value. Authorized 40,000,000 shares; issued and outstanding
10,839,193 and 10,811,531 shares at March 31, 2005, and December 31, 2004, respectively		1			1
Additional paid-in capital		76,284			75,779
Accumulated deficit		(209,095	)		(204,099	)
Total shareholders' deficit		(132,810	)		(128,319	)
Total liabilities and shareholders' deficit	$	716,136		$	719,638

See accompanying Notes to Condensed Consolidated Financial Statements and Management's

Discussion and Analysis of Financial Condition and Results of Operations.

EMERITUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)



	Three Months ended March 31,
	2005		2004
Revenues:
Community revenue	$	92,824	$	62,590
Other service fees		1,714		1,348
Management fees		598		1,633
Total operating revenues		95,136		65,571

Expenses:
Community operations		60,760		41,774
General and administrative		7,333


EMERITUS CORPORATION

Table of Contents

Part I. Financial Information
			Page No.

Item 1. Financial Statements (unaudited):			1

		Condensed Consolidated Balance Sheets as of March 31, 2005, and December 31, 2004	2

		Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2005 and 2004	3

		Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2005 and 2004	4

		Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26

Item 4.	Controls and Procedures		26

Part II. Other Information

Note:	Items 2 through 5 of Part II are omitted because they are not applicable.

Item 1.	Legal Proceedings		28

Item 6.	Exhibits		28


	Signature		30