Attached files
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| 8-K - 8-K FOR EARNINGS PRESS RELEASE Q3 2011 - EMERITUS CORP\WA\ | esc8kearningspressrelease.htm |
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NEWS RELEASE
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For Immediate Release
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EMERITUS ANNOUNCES OPERATING RESULTS FOR
THIRD QUARTER 2011
SEATTLE, WA, November 3, 2011 - Emeritus Corporation (NYSE: ESC), a national provider of senior living services, today announced its third quarter 2011 results.
Operating Summary for Third Quarter 2011 Compared to Third Quarter 2010
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Total revenues increased $73.3 million, or 29.3%, to $323.2 million
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Adjusted EBITDAR increased $20.5 million, or 29.4%, to $90.4 million
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CFFO, as adjusted, increased $4.2 million, or 34.6%, to $16.4 million
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Same community average monthly revenue per occupied unit improved by 0.6% to $3,833
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Same community average occupancy increased 20 basis points to 87.9%
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Same community operating margin for Q3 2011 was 34.3% compared to 34.4%
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Granger Cobb, President and Chief Executive Officer stated, “Our results for the third quarter reflect steady demand as we posted a 50 basis point sequential quarter improvement in same community occupancy and a 20 basis point improvement from the third quarter of last year. As we move forward we will strive to achieve the optimal balance between rate and occupancy growth while maintaining our commitment to aligning operating cost increases with rate growth.”
2011 Third Quarter Consolidated Results
Total revenue in the third quarter of 2011 increased 29.3% to $323.2 million. The $73.3 million revenue increase consisted primarily of $1.7 million in the Company’s same community portfolio of 266 communities operated during both periods, $70.7 million from the acquisition of communities (net of dispositions), and $1.1 million in management fees primarily from the August 2010 acquisition of communities through a joint venture structure.
Total average monthly revenue per occupied unit for the consolidated portfolio increased 6.2% to $4,065 in the third quarter of 2011 from $3,827 in the third quarter of 2010. This increase in rate was primarily due to the consolidated communities added in the fourth quarter of 2010 that had higher average rates.
In the third quarter of 2011, total average occupancy for the consolidated portfolio was 86.5% compared to 87.1% in the third quarter of 2010, primarily from the acquisition of communities with lower occupancy rates.
Community operating expenses increased $59.1 million to $223.4 million in the third quarter of 2011. Approximately $48.9 million of the increase resulted from the acquisition of communities (net of dispositions), $1.2 million from same community operating expenses, and the remaining increase primarily from an adjustment to professional liability self-insurance reserves of approximately $8.5 million.
Community operating income increased $13.1 million, or 16.1%, to $94.8 million in the third quarter of 2011 compared to $81.7 million in the third quarter of 2010.
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Excluding non-cash stock-based compensation expenses, general and administrative expenses as a percent of total operated community revenue, which includes revenues of managed communities, decreased to 4.6% in the third quarter of 2011 from 5.2% in the prior year quarter. General and administrative expenses increased $3.2 million to $21.7 million in the third quarter of 2011, with the increase resulting primarily from additional staffing to support the communities added to the Company’s operated portfolio since the third quarter of 2010, as well as an increase in non-cash stock-based compensation expenses.
For the quarter ended September 30, 2011, adjusted earnings before interest, taxes, depreciation and amortization, and rents (“Adjusted EBITDAR”) increased $20.5 million, or 29.4%, to $90.4 million, with the increase primarily driven by the $13.1 million improvement in community operating income. For the same period, adjusted cash from facility operations increased $4.2 million, or 34.6%, to $16.4 million.
2011 Third Quarter Same Community Results
As of September 30, 2011, the consolidated Emeritus portfolio consisted of 333 communities, of which 266 communities are included in our definition of same communities. Total same community revenue increased $1.7 million to $235.6 million in the third quarter of 2011, with $1.4 million coming from rate increases and the balance from occupancy improvements. Average monthly revenue per occupied unit increased 0.6% to $3,833 in the third quarter of 2011 from $3,811 in the corresponding period in 2010. Average occupancy increased 20 basis points to 87.9% in the third quarter of 2011 from 87.7% in the comparative period last year.
The Company’s same community operating expenses increased $1.2 million to $154.7 million in the third quarter of 2011. Operating expenses reflected a $0.6 million, or 0.9%, increase in salary and wages as well as increases in food, repairs and maintenance, and utilities, offset by reductions in property taxes and bad debts. On a per resident day basis, same community salaries and wages increased by 0.2%.
Same community operating income (community revenues less community operating expenses) increased $0.5 million to $80.8 million with a 34.3% operating margin in the third quarter of 2011.
Significant Third Quarter 2011 Transactions
Acquisitions, Dispositions and Financings
In July 2011, the Company completed the acquisition of two communities consisting of 135 assisted living units located in Texas for a total purchase price of $19.7 million. These acquisitions were financed with mortgage debt of approximately $14.7 million and cash of $5.0 million. The 10-year mortgage debt is due in August 2021 and bears interest at an annual fixed rate of 6.02%.
In July 2011, the Company purchased a 101-unit assisted living, independent living, and memory care community located in Vermont for $20.9 million. The purchase was financed with mortgage debt of $15.8 million and cash of $5.1 million. The 10-year mortgage debt is due in August 2021 and bears interest at an annual fixed rate of 6.06%.
In August 2011, the Company sold a 170-unit assisted living community located in Texas for $5.8 million. The proceeds were used primarily to pay off the related mortgage debt.
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Debt Refinancings
In September 2011, the Company entered into a loan agreement to borrow up to $29.6 million, secured by four communities. At closing, the Company received $25.0 million in loan proceeds, of which $22.0 million was used to repay existing debt. The remaining $4.6 million available under the loan agreement is available to expand and update the communities. The loans bear interest at a rate equal to the one-month London Interbank Offered Rate (“LIBOR”) plus 3.75%, with a LIBOR floor of 2.0% (5.75% at closing) with a maturity date of October 2014.
In August 2011, the Company entered into a loan agreement to borrow $28.8 million, secured by three communities. The loan proceeds were used to repay existing debt of $24.4 million on these communities. The new loans are due in September 2021 and bear interest at an annual fixed rate of 5.29%.
Impairment Charges
During the third quarter of 2010, five communities were designated as held for sale and the property and equipment of these communities are classified as property held for sale on our balance sheet as of September 30, 2011. A non-cash impairment charge related to these communities in the aggregate amount of $17.5 million was recorded in the current quarter and was included in discontinued operations for the three months ended September 30, 2011.
Subsequent Events
In October 2011, we entered into a loan agreement with KeyBank in the amount of $112.0 million to refinance the existing mortgage debt on 16 of our communities. The loan agreement has a three-year term and interest accrues at a rate equal to the one-month LIBOR plus a margin, which ranges from 4.75% to 6.75%, depending upon the loan-to-value ratio of the communities each month. We are required to make monthly principal payments of $500,000 beginning December 1, 2011, decreasing to $250,000 per month beginning December 1, 2012. Additionally, we are required to reduce the overall principal balance to specified levels during the term of the loan agreement.
2011 Guidance Update
The Company provides annual guidance in certain key categories. The guidance pertains to the Company’s existing portfolio and excludes future acquisitions.
The Company has updated its guidance for 2011 as follows:
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Consolidated revenue in the range of $1.23 billion to $1.28 billion.
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Routine capital expenditures in the range of $18.0 million to $19.0 million, which equates to about $600 to $650 per consolidated unit.
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General and administrative expenses as a percent of total operated revenue to be approximately 4.8%, excluding non-cash stock-based compensation expenses.
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Conference Call
The Company will host a conference call on Thursday, November 3, 2011, at 5:00 P.M. Eastern Time to discuss its financial results for the third quarter of 2011.
The conference call will be webcast live over the internet from the Company’s web site at www.emeritus.com under the “investors” section. The conference call can also be accessed by dialing (877) 407-3982, or for international participants (201) 493-6780. A replay of the conference call will be available after 8:00 P.M. Eastern Time on Thursday, November 3, 2011, until midnight Eastern Time, Thursday, November 10, 2011. The dial in numbers for the replay are (877) 870-5176, or for international participants (858) 384-5517. To access the telephonic replay, enter the conference ID 380633.
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Non-GAAP Financial Measures
Adjusted EBITDA/EBITDAR and Cash From Facility Operations (CFFO) are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). We believe these non-GAAP measures are useful in identifying trends in our day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating performance. In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in our industry. We strongly urge you to review the reconciliation of net loss to Adjusted EBITDA/EBITDAR, and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with our consolidated balance sheets, statements of operations, and cash flows. We define Adjusted EBITDA/EBITDAR and CFFO and provide other information about these non-GAAP measures in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, to be filed with the Securities and Exchange Commission (the “SEC”).
The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three and nine month periods ended September 30, 2011 and 2010 (in thousands):
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2011
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2010
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2011
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2010
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Net loss
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$ | (43,705 | ) | $ | (13,904 | ) | $ | (44,287 | ) | $ | (42,449 | ) | ||||
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Depreciation and amortization
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32,540 | 20,244 | 90,065 | 61,345 | ||||||||||||
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Interest income
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(121 | ) | (123 | ) | (355 | ) | (366 | ) | ||||||||
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Interest expense
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41,605 | 27,101 | 115,844 | 81,353 | ||||||||||||
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Net equity losses for unconsolidated JVs
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817 | 770 | 1,252 | 319 | ||||||||||||
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Provision for income taxes
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82 | 326 | 657 | 971 | ||||||||||||
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Loss from discontinued operations
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17,258 | 559 | 17,655 | 1,729 | ||||||||||||
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Amortization of above/below market rents
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1,845 | 2,184 | 5,778 | 6,531 | ||||||||||||
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Amortization of deferred gains
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(279 | ) | (297 | ) | (851 | ) | (904 | ) | ||||||||
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Stock-based compensation
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2,173 | 1,546 | 6,882 | 4,477 | ||||||||||||
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Change in value of interest rate swaps
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(1,527 | ) | 170 | (2,036 | ) | 182 | ||||||||||
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Deferred revenue
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1,145 | 951 | 2,285 | 3,456 | ||||||||||||
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Deferred straight-line rent
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2,197 | 4,160 | 7,129 | 11,231 | ||||||||||||
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Contract buyout costs
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- | - | 6,256 | - | ||||||||||||
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Impairment of long-lived assets
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- | (158 | ) | - | 162 | |||||||||||
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Gain on sale of investments
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- | - | (1,569 | ) | - | |||||||||||
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Acquisition gain
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- | - | (42,110 | ) | - | |||||||||||
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Acquisition, development and financing expenses
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828 | 601 | 3,298 | 1,113 | ||||||||||||
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Self-insurance reserve adjustments
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8,605 | 134 | 11,778 | 2,595 | ||||||||||||
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Adjusted EBITDA
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$ | 63,463 | 44,264 | 177,671 | 131,745 | |||||||||||
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Operating lease expense, net
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26,972 | 25,644 | 80,305 | 72,980 | ||||||||||||
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Adjusted EBITDAR
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$ | 90,435 | $ | 69,908 | $ | 257,976 | $ | 204,725 | ||||||||
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The following table shows the reconciliation of net cash provided by operating activities to CFFO and CFFO as adjusted for self-insurance reserves relating to prior years, for the three and nine month periods ended September 30, 2011 and 2010 (in thousands):
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2011
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2010
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2011
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2010
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Net cash provided by operating activities
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$ | 46,283 | $ | 22,576 | $ | 63,753 | $ | 60,499 | ||||||||
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Changes in operating assets and liabilities, net
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(30,025 | ) | (4,159 | ) | (10,232 | ) | (8,617 | ) | ||||||||
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Contract buyout costs
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- | - | 6,256 | - | ||||||||||||
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Repayment of capital lease and financing obligations
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(3,558 | ) | (3,010 | ) | (10,456 | ) | (8,864 | ) | ||||||||
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Recurring capital expenditures
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(5,000 | ) | (3,856 | ) | (13,632 | ) | (9,703 | ) | ||||||||
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Distributions from unconsolidated joint ventures, net (1)
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113 | 512 | 1,464 | 1,381 | ||||||||||||
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Cash From Facility Operations
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7,813 | 12,063 | 37,153 | 34,696 | ||||||||||||
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Self-insurance reserve adjustments
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8,605 | 134 | 11,778 | 2,595 | ||||||||||||
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Cash From Facility Operations, as adjusted
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$ | 16,418 | $ | 12,197 | $ | 48,931 | $ | 37,291 | ||||||||
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CFFO per share
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$ | 0.18 | $ | 0.31 | $ | 0.84 | $ | 0.88 | ||||||||
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CFFO per share, as adjusted
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$ | 0.37 | $ | 0.31 | $ | 1.11 | $ | 0.95 | ||||||||
(1) Excludes a $1.2 million cash distribution of proceeds received in the third quarter of 2011 from the refinancing of debt.
We define recurring capital expenditures as actual costs incurred to maintain our communities for their intended business purpose and exclude expenditures for acquisitions, development, expansions and general corporate purposes.
For a more detailed understanding of Emeritus, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC and any subsequent Quarterly Reports on Form 10-Q, or visit the Company’s Internet site at www.emeritus.com to obtain copies.
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ABOUT THE COMPANY
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Emeritus Corporation is a national provider of senior living services. Emeritus is one of the largest and most experienced operators of freestanding assisted living communities located throughout the United States. These communities provide a residential housing alternative for senior citizens who need assistance with the activities of daily living, with an emphasis on personal care services, which provides support to the residents in the aging process. Emeritus currently operates 483 communities in 44 states representing capacity for approximately 43,100 units and approximately 50,300 residents. Our common stock is traded on the New York Stock Exchange under the symbol ESC, and our home page can be found on the Internet at www.emeritus.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: A number of the matters and subject areas discussed in this report that are not historical or current facts deal with potential future circumstances, operations, and prospects. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience as a result of such factors as: the effects of competition and economic conditions on the occupancy levels in our communities; our ability under current market conditions to maintain and
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increase our resident charges in accordance with our rate enhancement programs without adversely affecting occupancy levels; increases in interest costs as a result of refinancings; our ability to control community operation expenses without adversely affecting the level of occupancy and the level of resident charges; our ability to generate cash flow sufficient to service our debt and other fixed payment requirements; our ability to find sources of financing and capital on satisfactory terms to meet our cash requirements to the extent that they are not met by operations, and uncertainties related to professional liability and workers’ compensation claims. We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area. These and other risks and uncertainties are detailed in our reports filed with the Securities and Exchange Commission, including “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010 and any subsequent Quarterly Report on Form 10-Q. The Company undertakes no obligation to update the information provided herein.
Contact:
Investor Relations
(206) 298-2909
Media Contacts:
Liz Brady
Liz.brady@icrinc.com
646-277-1226
Sari Martin
Sari.martin@icrinc.com
203-682-8345
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EMERITUS CORPORATION
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CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
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(In thousands, except share data)
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ASSETS
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September 30,
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December 31,
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Current Assets:
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2011
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2010
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Cash and cash equivalents
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$ | 60,753 | $ | 110,124 | ||||
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Short-term investments
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3,296 | 2,874 | ||||||
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Trade accounts receivable, net of allowance of $2,419 and $1,497
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29,196 | 23,055 | ||||||
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Other receivables
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11,292 | 7,215 | ||||||
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Tax, insurance, and maintenance escrows
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22,806 | 22,271 | ||||||
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Prepaid insurance expense
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30,370 | 28,852 | ||||||
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Deferred tax asset
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19,121 | 15,841 | ||||||
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Other prepaid expenses and current assets
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6,789 | 6,417 | ||||||
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Property held for sale
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26,082 | - | ||||||
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Total current assets
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209,705 | 216,649 | ||||||
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Investments in unconsolidated joint ventures
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16,579 | 19,394 | ||||||
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Property and equipment, net of accumulated depreciation of $379,272 and $304,495
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2,374,827 | 2,163,556 | ||||||
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Restricted deposits
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16,725 | 14,165 | ||||||
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Goodwill
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118,872 | 75,820 | ||||||
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Other intangible assets, net of accumulated amortization of $44,644 and $36,109
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104,931 | 100,239 | ||||||
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Other assets, net
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23,066 | 23,969 | ||||||
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Total assets
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$ | 2,864,705 | $ | 2,613,792 | ||||
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LIABILITIES, SHAREHOLDERS' EQUITY AND NONCONTROLLING INTEREST
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Current Liabilities:
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Current portion of long-term debt
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$ | 127,152 | $ | 73,197 | ||||
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Current portion of capital lease and financing obligations
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15,911 | 14,262 | ||||||
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Trade accounts payable
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6,974 | 7,840 | ||||||
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Accrued employee compensation and benefits
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66,294 | 53,663 | ||||||
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Accrued interest
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9,342 | 7,969 | ||||||
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Accrued real estate taxes
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17,039 | 12,306 | ||||||
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Accrued professional and general liability
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20,608 | 10,810 | ||||||
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Other accrued expenses
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18,939 | 18,759 | ||||||
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Deferred revenue
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15,988 | 13,757 | ||||||
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Unearned rental income
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24,934 | 21,814 | ||||||
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Total current liabilities
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323,181 | 234,377 | ||||||
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Long-term debt obligations, less current portion
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1,503,805 | 1,305,757 | ||||||
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Capital lease and financing obligations, less current portion
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622,993 | 629,797 | ||||||
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Deferred gain on sale of communities
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5,063 | 5,914 | ||||||
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Deferred straight-line rent
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58,213 | 50,142 | ||||||
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Other long-term liabilities
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41,101 | 36,299 | ||||||
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Total liabilities
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2,554,356 | 2,262,286 | ||||||
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Commitments and contingencies
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Shareholders' Equity and Noncontrolling Interest:
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Preferred stock, $.0001 par value. Authorized 20,000,000 shares, none issued
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- | - | ||||||
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Common stock, $.0001 par value. Authorized 100,000,000 shares; issued and outstanding
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44,360,382 and 44,193,818 shares
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4 | 4 | ||||||
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Additional paid-in capital
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820,906 | 814,209 | ||||||
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Accumulated other comprehensive income
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- | 1,472 | ||||||
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Accumulated deficit
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(515,312 | ) | (471,340 | ) | ||||
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Total Emeritus Corporation shareholders' equity
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305,598 | 344,345 | ||||||
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Noncontrolling interest – related party
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4,751 | 7,161 | ||||||
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Total shareholders’ equity
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310,349 | 351,506 | ||||||
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Total liabilities, shareholders' equity and noncontrolling interest
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$ | 2,864,705 | $ | 2,613,792 | ||||
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EMERITUS CORPORATION
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(unaudited)
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(In thousands, except per share data)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2011
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2010
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2011
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2010
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Revenues:
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Community revenue
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$ | 318,237 | $ | 246,030 | $ | 914,679 | $ | 716,690 | ||||||||
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Management fees
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5,000 | 3,934 | 15,946 | 6,609 | ||||||||||||
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Total operating revenues
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323,237 | 249,964 | 930,625 | 723,299 | ||||||||||||
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Expenses:
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Community operations (exclusive of depreciation and amortization
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and community lease expense shown separately below)
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223,423 | 164,343 | 627,812 | 476,817 | ||||||||||||
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General and administrative
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21,671 | 18,423 | 66,605 | 52,694 | ||||||||||||
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Transaction costs
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492 | 547 | 9,085 | 898 | ||||||||||||
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Depreciation and amortization
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32,540 | 20,244 | 90,065 | 61,345 | ||||||||||||
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Community leases
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31,014 | 31,988 | 93,212 | 90,742 | ||||||||||||
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Total operating expenses
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309,140 | 235,545 | 886,779 | 682,496 | ||||||||||||
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Operating income from continuing operations
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14,097 | 14,419 | 43,846 | 40,803 | ||||||||||||
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Other income (expense):
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Interest income
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121 | 123 | 355 | 366 | ||||||||||||
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Interest expense
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(41,605 | ) | (27,101 | ) | (115,844 | ) | (81,353 | ) | ||||||||
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Change in fair value of interest rate swaps
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1,527 | (170 | ) | 2,036 | (182 | ) | ||||||||||
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Net equity losses from unconsolidated joint ventures
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(817 | ) | (770 | ) | (1,252 | ) | (319 | ) | ||||||||
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Acquisition gain
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- | - | 42,110 | - | ||||||||||||
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Other, net
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312 | 480 | 2,774 | 936 | ||||||||||||
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Net other expense
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(40,462 | ) | (27,438 | ) | (69,821 | ) | (80,552 | ) | ||||||||
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Loss from continuing operations before income taxes
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(26,365 | ) | (13,019 | ) | (25,975 | ) | (39,749 | ) | ||||||||
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Provision for income taxes
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(82 | ) | (326 | ) | (657 | ) | (971 | ) | ||||||||
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Loss from continuing operations
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(26,447 | ) | (13,345 | ) | (26,632 | ) | (40,720 | ) | ||||||||
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Loss from discontinued operations
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(17,258 | ) | (559 | ) | (17,655 | ) | (1,729 | ) | ||||||||
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Net loss
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(43,705 | ) | (13,904 | ) | (44,287 | ) | (42,449 | ) | ||||||||
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Net loss attributable to the noncontrolling interest
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97 | 229 | 315 | 646 | ||||||||||||
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Net loss attributable to Emeritus Corporation common shareholders
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$ | (43,608 | ) | $ | (13,675 | ) | $ | (43,972 | ) | $ | (41,803 | ) | ||||
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Basic and diluted loss per common share attributable to
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Emeritus Corporation common shareholders:
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Continuing operations
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$ | (0.59 | ) | $ | (0.34 | ) | $ | (0.59 | ) | $ | (1.02 | ) | ||||
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Discontinued operations
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(0.39 | ) | (0.01 | ) | (0.40 | ) | (0.04 | ) | ||||||||
| $ | (0.98 | ) | $ | (0.35 | ) | $ | (0.99 | ) | $ | (1.06 | ) | |||||
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Weighted average common shares outstanding
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44,316 | 39,477 | 44,270 | 39,353 | ||||||||||||
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EMERITUS CORPORATION
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(unaudited)
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(In thousands)
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Nine Months Ended September 30,
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2011
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2010
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Cash flows from operating activities:
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Net loss
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$ | (44,287 | ) | $ | (42,449 | ) | ||
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Adjustments to reconcile net loss to net cash provided by
operating activities:
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Depreciation and amortization
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90,065 | 61,345 | ||||||
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Amortization of above/below market rents
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5,778 | 6,531 | ||||||
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Amortization of deferred gains
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(851 | ) | (904 | ) | ||||
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Acquisition gain
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(42,110 | ) | - | |||||
|
Net loss on sale of assets
|
119 | 1,179 | ||||||
|
Impairment of long-lived assets
|
17,497 | 721 | ||||||
|
Gain on sale of investments
|
(1,569 | ) | - | |||||
|
Amortization of loan fees
|
2,280 | 2,251 | ||||||
|
Allowance for doubtful receivables
|
5,839 | 3,614 | ||||||
|
Equity investment losses
|
1,252 | 319 | ||||||
|
Stock-based compensation
|
6,882 | 4,477 | ||||||
|
Change in fair value of interest rate swaps
|
(2,036 | ) | 182 | |||||
|
Deferred straight-line rent
|
7,129 | 11,231 | ||||||
|
Deferred revenue
|
2,285 | 3,456 | ||||||
|
Other
|
5,248 | (71 | ) | |||||
|
Changes in other operating assets and liabilities
|
10,232 | 8,617 | ||||||
|
Net cash provided by operating activities
|
63,753 | 60,499 | ||||||
|
Cash flows from investing activities:
|
||||||||
|
Acquisition of property and equipment
|
(23,114 | ) | (15,427 | ) | ||||
|
Community acquisitions, net of cash acquired
|
(180,229 | ) | - | |||||
|
Deposits
|
522 | - | ||||||
|
Proceeds from the sale of assets
|
16,339 | 2,733 | ||||||
|
Lease and contract acquisition costs
|
(309 | ) | (739 | ) | ||||
|
Advances (to) from affiliates and other managed communities, net
|
(1,697 | ) | 850 | |||||
|
Distributions from (contributions to) unconsolidated joint ventures, net
|
2,680 | (19,295 | ) | |||||
|
Net cash used in investing activities
|
(185,808 | ) | (31,878 | ) | ||||
|
Cash flows from financing activities:
|
||||||||
|
Sale of stock, net
|
1,756 | 1,402 | ||||||
|
(Distributions to) contributions from noncontrolling interest
|
(4,073 | ) | 414 | |||||
|
(Increase) decrease in restricted deposits
|
(2,432 | ) | 297 | |||||
|
Debt issuance and other financing costs
|
(4,419 | ) | (1,978 | ) | ||||
|
Proceeds from long-term borrowings and financings
|
168,300 | - | ||||||
|
Repayment of long-term borrowings and financings
|
(75,992 | ) | (23,209 | ) | ||||
|
Repayment of capital lease and financing obligations
|
(10,456 | ) | (8,864 | ) | ||||
|
Net cash provided by (used in) financing activities
|
72,684 | (31,938 | ) | |||||
|
Net decrease in cash and cash equivalents
|
(49,371 | ) | (3,317 | ) | ||||
|
Cash and cash equivalents at the beginning of the period
|
110,124 | 46,070 | ||||||
|
Cash and cash equivalents at the end of the period
|
$ | 60,753 | $ | 42,753 | ||||
10
|
EMERITUS CORPORATION
|
||||||||
|
Lease, Interest and Depreciation Expense
|
||||||||
|
For the Quarters Ended
|
||||||||
|
(unaudited)
|
||||||||
|
(In thousands)
|
||||||||
|
Projected
|
||||||||
|
Range
|
||||||||
| Q3 2011 | Q4 2011 | |||||||
|
Community leases expense - GAAP
|
$ | 31,014 | $ | 31,100 - $31,400 | ||||
|
Less:
|
||||||||
|
Deferred straight-line rent
|
(2,197 | ) | (2,200) - (2,300 | ) | ||||
|
Above/below market rent
|
(1,845 | ) | (1,900) - (2,000 | ) | ||||
|
Plus:
|
||||||||
|
Capital and financing lease interest
|
13,367 | 13,400 – 13,500 | ||||||
|
Capital lease principal
|
1,773 | 1,800 – 1,900 | ||||||
|
Community leases expense - CASH
|
$ | 42,112 | $ | 42,200 - $42,500 | ||||
|
Interest expense – GAAP
|
$ | 41,605 | $ | 41,620 - $42,130 | ||||
|
Less:
|
||||||||
|
Straight-line interest
|
(10 | ) | (10) - (15 | ) | ||||
|
Capital and financing lease interest
|
(13,367 | ) | (13,400) - (13,500 | ) | ||||
|
Equipment capital lease interest
|
(12 | ) | (10) - (15 | ) | ||||
|
Loan fee amortization
|
(806 | ) | (800) - (900 | ) | ||||
|
Interest expense - CASH
|
$ | 27,410 | $ | 27,400 - $27,700 | ||||
|
Depreciation – owned assets
|
$ | 18,465 | $ | 18,500 - $18,600 | ||||
|
Depreciation – capital and financing leases
|
11,325 | 11,300 - 11,400 | ||||||
|
Amortization – intangible assets
|
2,750 | 2,800 - 2,900 | ||||||
|
Total depreciation and amortization expense
|
$ | 32,540 | $ | 32,600 - $32,900 | ||||
11
|
EMERITUS CORPORATION
|
|
Consolidated Supplemental Financial Information
For the Quarters Ended
|
|
(unaudited)
|
|
(Dollars in thousands, except non-financial and per-unit data)
|
|
Non-Financial Data
|
Q3 2010 | Q4 2010 | Q1 2011 | Q2 2011 | Q3 2011 | |||||||||||||||
|
Average consolidated communities
|
277.3 | 296.7 | 306.7 | 316.0 | 333.3 | |||||||||||||||
|
Average available units
|
24,618 | 26,926 | 28,134 | 28,843 | 30,173 | |||||||||||||||
|
Average occupied units
|
21,432 | 23,212 | 24,205 | 24,793 | 26,095 | |||||||||||||||
|
Average occupancy
|
87.1 | % | 86.2 | % | 86.0 | % | 86.0 | % | 86.5 | % | ||||||||||
|
Average monthly revenue per occupied unit
|
$ | 3,827 | $ | 3,999 | $ | 4,059 | $ | 4,057 | $ | 4,065 | ||||||||||
|
Calendar days
|
92 | 92 | 90 | 91 | 92 | |||||||||||||||
|
Community revenues:
|
||||||||||||||||||||
|
Community revenues
|
$ | 242,034 | $ | 274,845 | $ | 290,489 | $ | 297,501 | $ | 313,711 | ||||||||||
|
Move-in fees
|
4,543 | 4,856 | 4,960 | 5,135 | 5,456 | |||||||||||||||
|
Move-in incentives
|
(547 | ) | (1,212 | ) | (729 | ) | (914 | ) | (930 | ) | ||||||||||
|
Total community revenues
|
$ | 246,030 | $ | 278,489 | $ | 294,720 | $ | 301,722 | $ | 318,237 | ||||||||||
|
Community operating expenses:
|
||||||||||||||||||||
|
Salaries and wages - regular and overtime
|
$ | 75,726 | $ | 88,031 | $ | 91,549 | $ | 94,607 | $ | 100,223 | ||||||||||
|
Average daily salary and wages
|
$ | 823 | $ | 957 | $ | 1,017 | $ | 1,040 | $ | 1,089 | ||||||||||
|
Average daily wages per occupied unit
|
$ | 38.41 | $ | 41.22 | $ | 42.02 | $ | 41.93 | $ | 41.75 | ||||||||||
|
Payroll taxes and employee benefits
|
$ | 25,232 | $ | 27,016 | $ | 33,425 | $ | 31,588 | $ | 33,366 | ||||||||||
|
Percent of salaries and wages
|
33.3 | % | 30.7 | % | 36.5 | % | 33.4 | % | 33.3 | % | ||||||||||
|
Prior year self-insurance reserve adjustments
|
$ | 134 | $ | 2,668 | $ | 32 | $ | 3,141 | $ | 8,605 | ||||||||||
|
Utilities
|
$ | 12,158 | $ | 11,453 | $ | 13,492 | $ | 12,073 | $ | 15,351 | ||||||||||
|
Average monthly cost per occupied unit
|
$ | 189 | $ | 164 | $ | 186 | $ | 162 | $ | 196 | ||||||||||
|
Facility maintenance and repairs
|
$ | 6,123 | $ | 6,023 | $ | 7,420 | $ | 7,687 | $ | 8,498 | ||||||||||
|
Average monthly cost per occupied unit
|
$ | 95 | $ | 86 | $ | 102 | $ | 103 | $ | 109 | ||||||||||
|
All other community operating expenses
|
$ | 44,970 | $ | 50,132 | $ | 53,113 | $ | 56,262 | $ | 57,380 | ||||||||||
|
Average monthly cost per occupied unit
|
$ | 699 | $ | 720 | $ | 731 | $ | 756 | $ | 733 | ||||||||||
|
Total community operating expenses
|
$ | 164,343 | $ | 185,323 | $ | 199,031 | $ | 205,358 | $ | 223,423 | ||||||||||
|
Community operating income
|
$ | 81,687 | $ | 93,166 | $ | 95,689 | $ | 96,364 | $ | 94,814 | ||||||||||
|
Operating income margin
|
33.2 | % | 33.5 | % | 32.5 | % | 31.9 | % | 29.8 | % |
12
|
EMERITUS CORPORATION
|
||||||||||||||||||||
|
Selected Consolidated and Same Community Information
For the Quarters Ended
|
||||||||||||||||||||
|
(unaudited)
(Community revenue and operating expense in thousands)
|
||||||||||||||||||||
| Q3 2010 | Q4 2010 | Q1 2011 | Q2 2011 | Q3 2011 | ||||||||||||||||
|
Consolidated:
|
||||||||||||||||||||
|
Average consolidated communities
|
277.3 | 296.7 | 306.7 | 316.0 | 333.3 | |||||||||||||||
|
Community revenue
|
$ | 246,030 | $ | 278,489 | $ | 294,720 | $ | 301,722 | $ | 318,237 | ||||||||||
|
Community operating expense
|
$ | 164,343 | $ | 185,323 | $ | 199,031 | $ | 205,358 | $ | 223,423 | ||||||||||
|
Average occupancy
|
87.1 | % | 86.2 | % | 86.0 | % | 86.0 | % | 86.5 | % | ||||||||||
|
Average monthly revenue per unit
|
$ | 3,827 | $ | 3,999 | $ | 4,059 | $ | 4,057 | $ | 4,065 | ||||||||||
|
Operating income margin
|
33.2 | % | 33.5 | % | 32.5 | % | 31.9 | % | 29.8 | % | ||||||||||
|
Same Community:
|
||||||||||||||||||||
|
Average consolidated communities
|
266.0 | 266.0 | 266.0 | 266.0 | 266.0 | |||||||||||||||
|
Community revenue
|
$ | 233,830 | $ | 232,853 | $ | 233,921 | $ | 233,233 | $ | 235,576 | ||||||||||
|
Community operating expense
|
$ | 153,509 | $ | 149,689 | $ | 154,678 | $ | 152,800 | $ | 154,736 | ||||||||||
|
Average occupancy
|
87.7 | % | 87.6 | % | 87.6 | % | 87.4 | % | 87.9 | % | ||||||||||
|
Average monthly revenue per unit
|
$ | 3,811 | $ | 3,803 | $ | 3,817 | $ | 3,820 | $ | 3,833 | ||||||||||
|
Operating income margin
|
34.4 | % | 35.7 | % | 33.9 | % | 34.5 | % | 34.3 | % | ||||||||||
13