NASHVILLE, Tenn., Feb. 5,
2014 /PRNewswire/ -- Brookdale Senior Living Inc. (NYSE: BKD)
(the "Company") today reported financial and operating results for
the fourth quarter and full year 2013. Highlights were:
- Cash From Facility Operations ("CFFO") was $88.5 million, or $0.71 per share, excluding $4.1 million of integration, transaction-related
and electronic medical records ("EMR") roll-out costs in the fourth
quarter of 2013. Full year CFFO was $308.5 million, or $2.50 per share, excluding $14.5 million of integration, transaction-related
and EMR roll-out costs during the year.
- Adjusted EBITDA for the fourth quarter was $129.1 million, an 18.1% increase from the fourth
quarter of 2012, and Adjusted EBITDA for the full year was
$477.7 million, a 10.2% increase from
2012, excluding integration, transaction-related and EMR roll-out
costs in all periods.
- Fourth quarter same community Facility Operating Income grew by
12.5% over the fourth quarter of 2012, as same community revenue
grew by 2.9% and same community expenses decreased by 1.5%.
- Entry Fee CCRCs completed 130 independent living entry fee unit
closings and produced $21.7 million
of net cash flow, an increase of $6.6
million over the fourth quarter of 2012. For the full
year of 2013, independent living entry fee closings produced
$57.0 million of net cash flow.
- Fourth quarter average occupancy increased 30 basis points from
the fourth quarter of 2012 and average monthly revenue per unit for
the senior housing portfolio improved by 2.5% from the prior year
quarter.
- Execution of key growth strategy to build national Brookdale
brand, including national print, broadcast and social media, drives
increased inquiries, interaction and move-ins.
Andy Smith, Brookdale's CEO,
said, "We had an outstanding year with a strong finish, producing
record CFFO and Adjusted EBITDA for the fourth quarter and full
year 2013. Our results reflect increasing strength of the
senior living sector's fundamentals as well as the success of our
key operational strategies. We expect our ongoing investments
in our systems, real estate assets, branding and operational
excellence will continue to optimize value for all of our
stakeholders in 2014 and beyond, with the uppermost priority of
providing the highest level of service and care to our
residents."
Financial Results
Total revenue for the fourth quarter was $734.2 million, an increase of $34.8 million, or 5.0%, from the fourth quarter
of 2012. Revenue for the full year 2013 was $2.9 billion, a 4.5% increase from $2.8 billion for the full year 2012. Fourth
quarter 2013 total revenue is comprised of resident fee revenue of
$638.6 million, which increased
$29.8 million, or 4.9%, from the
fourth quarter of 2012, management fee revenue of $8.2 million, which decreased $0.3 million, or 3.4%, from the fourth quarter of
2012, and managed community reimbursed costs of $87.5 million, which increased $5.3 million, or 6.5%.
Resident fee revenue for the fourth quarter increased primarily
as a result of an increase in the average monthly revenue per unit
compared to the prior year period, an increase in occupancy and the
inclusion of revenue from communities acquired during the
period. Average monthly revenue per unit for the senior
housing portfolio was $4,387 in the
fourth quarter, an increase of $105,
or 2.5%, over the fourth quarter of 2012. Average occupancy
for all consolidated communities for the fourth quarter of 2013 was
89.0%, compared to 88.7% for the fourth quarter of 2012 and 89.0%
for the third quarter of 2013. For the managed community
portfolio, which includes a number of pre-stabilized communities in
the initial fill-up phase, average occupancy for the fourth quarter
was 86.1%, compared to 85.4% for the fourth quarter of 2012 and
85.7% for the third quarter of 2013.
For the full year of 2013, resident fee revenue increased from
$2.4 billion to $2.5 billion. Average monthly revenue per unit
increased to $4,383 for the full year
of 2013, a 2.6% increase over the full year of 2012. Average
occupancy for all consolidated communities for the full year was
88.7%, compared to 88.0% for the full year of 2012.
Facility operating expenses for the fourth quarter were
$422.3 million, an increase of
$5.2 million, or 1.2%, from the
fourth quarter of 2012. Facility operating expenses for the
full year 2013 were $1.7 billion, a
2.5% increase from $1.6 billion for
the full year 2012.
General and administrative expenses for the fourth quarter were
$46.1 million. Excluding
integration, transaction-related and EMR roll-out costs of
$4.1 million and $7.2 million in the fourth quarters of 2013 and
2012, respectively, and non-cash stock-based compensation expense
from both periods, general and administrative expenses were
$36.8 million in the fourth quarter
of 2013 versus $31.0 million for the
prior year same period. General and administrative expenses,
excluding these items, were 4.6% of resident fee revenue (including
resident fee revenues under management) in the fourth quarter of
2013.
Non-GAAP Financial Measures
Brookdale's management utilizes Adjusted EBITDA and CFFO to
evaluate the Company's performance and liquidity because these
metrics exclude non-cash items such as depreciation and
amortization, asset impairment charges, non-cash stock-based
compensation expense, gain on facility lease termination and
straight-line lease expense, net of deferred gain
amortization. Adjusted EBITDA and CFFO include integration,
transaction-related and EMR roll-out costs of $4.1 million and $14.5
million for the three months and year ended December 31, 2013, respectively, and $7.2 million and $23.5
million for the three months and year ended December 31, 2012, respectively. Brookdale
also uses Facility Operating Income to assess the performance of
its communities.
For the quarter ended December 31,
2013, Facility Operating Income was $206.5 million, an increase of $19.2 million, or 10.2%, over the fourth quarter
of 2012, and Adjusted EBITDA, excluding integration,
transaction-related and EMR roll-out costs in 2013 and 2012, was
$129.1 million, an increase of
$19.8 million, or 18.1%, over the
fourth quarter of 2012. For the year ended December 31, 2013, Facility Operating Income was
$812.2 million, an increase of
$53.3 million, or 7.0%, over the full
year of 2012, and Adjusted EBITDA, excluding integration,
transaction-related and EMR roll-out costs in 2013 and 2012, was
$477.7 million, an increase of
$44.3 million, or 10.2%, over the
full year of 2012.
Cash From Facility Operations was $84.5
million for the fourth quarter of 2013, or $0.68 per share. CFFO, excluding
integration, transaction-related and EMR roll-out costs for both
periods, was $88.5 million for the
fourth quarter of 2013, or $0.71 per
share, an increase of $19.9 million,
or 29%, over CFFO of $68.7 million,
or $0.56 per share, for the fourth
quarter of 2012. CFFO, excluding integration,
transaction-related and EMR roll-out costs for both periods, was
$308.5 million for the year ended
December 31, 2013, or $2.50 per share, an increase of $46.1 million, or 17.6%, over CFFO of
$262.4 million, or $2.15 per share, for the full year of 2012.
Net Loss
Net loss for the fourth quarter of 2013 was $(1.0) million, or $(0.01) per diluted common share, versus a net
loss of $(24.7) million, or
$(0.20) per diluted common share, in
the fourth quarter of 2012.
Operating Activities
The Company reports information on six segments. Four
segments (Retirement Centers, Assisted Living, CCRCs – Rental and
CCRCs – Entry Fee) constitute the Company's consolidated senior
housing portfolio. The fifth segment, Brookdale Ancillary
Services, includes the Company's outpatient therapy, home health
and hospice services. The sixth segment, Management Services,
includes the services provided to unconsolidated communities that
are operated under management agreements.
Senior Housing
Revenue for the consolidated senior housing portfolio was
$576.5 million for the fourth quarter
of 2013, an increase of 4.3% from the fourth quarter of 2012.
Revenue was positively impacted by a 30 basis point increase in
occupancy and a 2.5% increase in rate over the fourth quarter of
2012. Facility operating expenses were $369.9 million for the fourth quarter of 2013, a
decrease of 0.6% from the fourth quarter of 2012. Operating
income for the senior housing portfolio for the fourth quarter of
2013 increased by $26.0 million, or
14.4%, to $206.6 million from the
fourth quarter of 2012, with operating margin increasing from 32.7%
to 35.8%.
Same community results for the consolidated senior housing
portfolio for the three months ended December 31, 2013 showed revenues grew 2.9% over
the corresponding period in 2012 as revenue per unit increased by
2.5% and occupancy grew by 40 basis points. Same community
expenses decreased by 1.5% over the fourth quarter of 2012.
Same community Facility Operating Income for the senior housing
portfolio increased by 12.5% over the fourth quarter of 2012.
Brookdale Ancillary Services (formerly called Innovative
Senior Care)
Revenue for the Company's ancillary services segment increased
$6.0 million, or 10.7%, to
$62.1 million for the fourth quarter
of 2013, primarily due to the roll-out of the Company's ancillary
services programs to additional locations. In comparison to
the fourth quarter of 2012, a volume increase in home health was
offset by a reduction in volume in outpatient therapy and a
reduction in Medicare reimbursement rates. The ancillary
services operating expenses increased $7.4
million, or 16.5%, primarily due to an increase in expenses
incurred in connection with the continued expansion of the
Company's ancillary services programs. As a result, ancillary
services operating income for the fourth quarter of 2013 was
$9.6 million, a decrease of
$1.4 million, or 12.8%, versus the
fourth quarter of 2012.
By the end of the fourth quarter, the Company's ancillary
services programs provided outpatient therapy services to
approximately 38,300 units and the Company's home health agencies
were serving approximately 33,900 units across the consolidated
Brookdale portfolio. Including non-consolidated
communities, the Company's outpatient therapy and home health
operations serve approximately 52,300 and 46,800 units,
respectively. The Company had 11 markets where hospice
services were provided during the fourth quarter, with three more
markets waiting for licensure approval.
Liquidity
Brookdale had $58.5 million of
unrestricted cash and cash equivalents and $95.8 million of restricted cash on its balance
sheet at the end of the fourth quarter. As of December 31, 2013, the Company had $250.0 million of availability on its secured
line of credit (of which $30.0
million had been drawn as of that date). The Company
also had secured and unsecured letter of credit facilities of up to
$92.5 million in the aggregate as of
December 31, 2013. Letters of
credit totaling $72.5 million had
been issued under these facilities as of that date.
Transactions
Effective October 1, 2013, the
Company acquired seven communities for an aggregate purchase price
of $80.9 million. The Company
managed six of the communities since the acquisition of Horizon Bay
in September 2011. The Company
financed the transaction with $60.8
million of first mortgage financing (substantially through
the assumption of existing debt), with the balance of the purchase
price paid from cash on hand. The results of operations of the
communities acquired are reported in the Assisted Living
segment.
During the fourth quarter, the Company sold two communities for
an aggregate selling price of $28.0
million. The results of operations of the communities
were previously reported in the Assisted Living and CCRCs - Rental
segments.
2014 Outlook
For the full year 2014, the Company expects Cash From Facility
Operations to range between $2.68 and
$2.75 per share, excluding integration, transaction-related
and EMR roll-out costs. These estimates do not include the
impact on operating results from possible future acquisitions or
dispositions.
Supplemental Information
The Company will shortly post on the Investor Relations section
of the Company's website at www.brookdale.com supplemental
information relating to the Company's fourth quarter and full year
2013 results. This information will also be furnished in a
Form 8-K to be filed with the SEC.
Earnings Conference Call
Brookdale's management will conduct a conference call to review
the financial results of its fourth quarter and full year ended
December 31, 2013 on Thursday, February 6, 2014 at 10:00 AM ET. The conference call can be
accessed by dialing (866) 900-2996 (from within the U.S.) or (706)
643-2685 (from outside of the U.S.) ten minutes prior to the
scheduled start and referencing the "Brookdale Senior Living Fourth
Quarter Earnings Call."
A webcast of the conference call will be available to the public
on a listen-only basis at www.brookdale.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 through
the website for three months following the call.
For those who cannot listen to the live call, a replay will be
available until 11:59 PM ET on
February 20, 2014 by dialing (855)
859-2056 (from within the U.S.) or (404) 537-3406 (from outside of
the U.S.) and referencing access code "57838935". A copy of
this earnings release is posted on the Investor Relations page of
the Brookdale website (www.brookdale.com).
About Brookdale Senior Living
Brookdale Senior Living Inc. is a leading owner and operator of
senior living communities throughout the United States. The
Company is committed to providing senior living solutions within
properties that are designed, purpose-built and operated to provide
the highest-quality service, care and living accommodations for
residents. Currently Brookdale operates independent living,
assisted living, and dementia-care communities and continuing care
retirement centers, with 649 communities in 36 states and the
ability to serve approximately 67,000 residents. Through its
ancillary services programs, the Company also offers a range of
outpatient therapy, home health, personalized living and hospice
services.
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. Those forward-looking statements are subject to various
risks and uncertainties and include all statements that are not
historical statements of fact and those regarding our intent,
belief or expectations, including, but not limited to, statements
relating to our operational initiatives and growth
strategies and our expectations regarding their effect on our
results; our expectations regarding the economy, the senior living
industry, occupancy, revenue, cash flow, operating income,
expenses, capital expenditures, Program Max opportunities, cost
savings, the demand for senior housing, the home resale market,
expansion, development and construction activity, acquisition
opportunities, asset dispositions, our share repurchase program,
taxes, capital deployment, returns on invested capital and CFFO;
our expectations regarding returns to shareholders and our growth
prospects; our expectations concerning the future performance of
recently acquired communities and the effects of acquisitions on
our financial results; our ability to secure financing or repay,
replace or extend existing debt at or prior to maturity; our
ability to remain in compliance with all of our debt and lease
agreements (including the financial covenants contained therein);
our expectations regarding liquidity and leverage; our expectations
regarding financings and refinancings of assets (including the
timing thereof) and their effect on our results; our expectations
regarding changes in government reimbursement programs and their
effect on our results; our plans to generate growth organically
through occupancy improvements, increases in annual rental rates
and the achievement of operating efficiencies and cost savings; our
plans to expand our offering of ancillary services (therapy, home
health and hospice); our plans to expand, renovate, redevelop and
reposition existing communities; our plans to acquire additional
communities, asset portfolios, operating companies and home health
agencies; the expected project costs for our expansion,
redevelopment and repositioning program; our expected levels of
expenditures and reimbursements (and the timing thereof); our
expectations regarding our sales, marketing and branding
initiatives and their impact on our results; our expectations for
the performance of our entrance fee communities; our ability to
anticipate, manage and address industry trends and their effect on
our business; our expectations regarding the payment of dividends;
and our ability to increase revenues, earnings, Adjusted EBITDA,
Cash From Facility Operations, and/or Facility Operating
Income. 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,"
"plan" 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 these forward-looking statements
include, but are not limited to, the risk associated with the
current global economic situation and its impact upon capital
markets and liquidity; changes in governmental reimbursement
programs; our inability to extend (or refinance) debt (including
our credit and letter of credit facilities) as it matures; the risk
that we may not be able to satisfy the conditions precedent to
exercising the extension options associated with certain of our
debt agreements; events which adversely affect the ability of
seniors to afford our monthly resident fees or entrance fees; the
conditions of housing markets in certain geographic areas; 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; the
risk of loss of property pursuant to our mortgage debt and
long-term lease obligations; the possibilities that changes in the
capital markets, including changes in interest rates and/or credit
spreads, or other factors could make financing more expensive or
unavailable to us; our determination from time to time to purchase
any shares under the repurchase program; our ability to fund any
repurchases; our ability to effectively manage our growth; our
ability to maintain consistent quality control; delays in obtaining
regulatory approvals; the risk that we may not be able to expand,
redevelop and reposition our communities in accordance with our
plans; our ability to complete acquisitions and integrate them into
our operations; competition for the acquisition of assets; our
ability to obtain additional capital on terms acceptable to us; a
decrease in the overall demand for senior housing; our
vulnerability to economic downturns; acts of nature in certain
geographic areas; terminations of our resident agreements and
vacancies in the living spaces we lease; early terminations or
non-renewal of management agreements; increased competition for
skilled personnel; increased union activity; 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
of complaints filed against us; the cost and difficulty of
complying with increasing and evolving regulation; and other risks
detailed from time to time in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q. 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 from time to time could cause our
actual results to differ significantly from those contained in any
forward-looking statement. 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.
Consolidated
Statements of Operations
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Years
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Revenue
|
|
|
|
|
|
|
|
Resident
fees
|
$
638,581
|
|
$
608,807
|
|
$
2,515,033
|
|
$
2,412,936
|
Management
fees
|
8,150
|
|
8,436
|
|
31,125
|
|
30,786
|
Reimbursed costs
incurred on behalf of managed communities
|
87,502
|
|
82,169
|
|
345,808
|
|
325,016
|
Total
revenue
|
734,233
|
|
699,412
|
|
2,891,966
|
|
2,768,738
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
Facility operating
expense (excluding depreciation and amortization of $60,558,
$56,090, $238,153, and $229,072, respectively)
|
422,336
|
|
417,168
|
|
1,671,945
|
|
1,630,919
|
General and
administrative expense (including non-cash stock-based compensation
expense of $5,202, $6,335, $25,978 and $25,520,
respectively)
|
46,078
|
|
44,627
|
|
184,548
|
|
178,829
|
Facility lease
expense
|
69,701
|
|
70,785
|
|
276,729
|
|
284,025
|
Depreciation and
amortization
|
68,200
|
|
62,500
|
|
268,757
|
|
252,281
|
Asset
impairment
|
10,233
|
|
19,348
|
|
12,891
|
|
27,677
|
Loss on
acquisition
|
-
|
|
-
|
|
-
|
|
636
|
Gain on facility
lease termination
|
-
|
|
(8,804)
|
|
-
|
|
(11,584)
|
Costs incurred on
behalf of managed communities
|
87,502
|
|
82,169
|
|
345,808
|
|
325,016
|
Total operating
expense
|
704,050
|
|
687,793
|
|
2,760,678
|
|
2,687,799
|
Income from
operations
|
30,183
|
|
11,619
|
|
131,288
|
|
80,939
|
|
|
|
|
|
|
|
|
|
Interest
income
|
312
|
|
1,792
|
|
1,339
|
|
4,012
|
Interest
expense:
|
|
|
|
|
|
|
|
Debt
|
(30,869)
|
|
(31,595)
|
|
(121,325)
|
|
(128,338)
|
Amortization of
deferred financing costs and debt discount
|
(4,037)
|
|
(4,479)
|
|
(17,054)
|
|
(18,081)
|
Change in fair value
of derivatives and amortization
|
386
|
|
7
|
|
980
|
|
(364)
|
Loss on
extinguishment of debt
|
(319)
|
|
-
|
|
(1,265)
|
|
(221)
|
Equity in earnings
(loss) of unconsolidated ventures
|
493
|
|
(3,277)
|
|
1,484
|
|
(3,488)
|
Other non-operating
income
|
1,360
|
|
201
|
|
2,725
|
|
593
|
Loss before income
taxes
|
(2,491)
|
|
(25,732)
|
|
(1,828)
|
|
(64,948)
|
Benefit (provision)
for income taxes
|
1,516
|
|
1,040
|
|
(1,756)
|
|
(1,519)
|
Net
loss
|
$
(975)
|
|
$
(24,692)
|
|
$
(3,584)
|
|
$
(66,467)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share
|
$
(0.01)
|
|
$
(0.20)
|
|
$
(0.03)
|
|
$
(0.54)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing basic and diluted net loss per
share
|
124,308
|
|
122,608
|
|
123,671
|
|
121,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2013
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
58,511
|
|
$
69,240
|
Cash and escrow
deposits - restricted
|
|
38,191
|
|
43,096
|
Accounts receivable,
net
|
|
104,262
|
|
100,401
|
Other current
assets
|
|
93,898
|
|
96,301
|
Total current
assets
|
|
294,862
|
|
309,038
|
Property, plant, and
equipment and
|
|
|
|
|
leasehold
intangibles, net
|
|
3,895,475
|
|
3,879,977
|
Other assets,
net
|
|
547,420
|
|
517,753
|
Total
assets
|
|
$
4,737,757
|
|
$
4,706,768
|
|
|
|
|
|
Current
liabilities
|
|
$
870,844
|
|
$
1,130,898
|
Long-term debt, less
current portion
|
|
2,434,624
|
|
2,169,826
|
Other
liabilities
|
|
411,352
|
|
409,058
|
Total
liabilities
|
|
3,716,820
|
|
3,709,782
|
Stockholders'
equity
|
|
1,020,937
|
|
996,986
|
Total liabilities and
stockholders' equity
|
|
$
4,737,757
|
|
$
4,706,768
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
(in
thousands)
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
2013
|
|
2012
|
Cash Flows from
Operating Activities
|
|
|
|
Net loss
|
$
(3,584)
|
|
$
(66,467)
|
Adjustments to
reconcile net loss to net cash provided by operating
|
|
|
|
activities:
|
|
|
|
Loss on
extinguishment of debt
|
1,265
|
|
221
|
Depreciation and
amortization
|
285,811
|
|
270,362
|
Asset
impairment
|
12,891
|
|
27,677
|
Equity in (earnings)
loss of unconsolidated ventures
|
(1,484)
|
|
3,488
|
Distributions from
unconsolidated ventures from cumulative share of net
|
|
|
|
earnings
|
2,691
|
|
1,507
|
Amortization of
deferred gain
|
(4,372)
|
|
(4,372)
|
Amortization of
entrance fees
|
(29,009)
|
|
(25,362)
|
Proceeds from
deferred entrance fee revenue
|
44,191
|
|
40,105
|
Deferred income tax
benefit
|
(183)
|
|
(525)
|
Change in deferred
lease liability
|
2,597
|
|
6,668
|
Change in fair value
of derivatives and amortization
|
(980)
|
|
364
|
(Gain) loss on sale
of assets
|
(972)
|
|
332
|
Loss on
acquisition
|
-
|
|
636
|
Gain on facility
lease termination
|
-
|
|
(11,584)
|
Change in future
service obligation
|
(1,917)
|
|
2,188
|
Non-cash stock-based
compensation
|
25,978
|
|
25,520
|
Other
|
-
|
|
(487)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
(5,449)
|
|
(3,415)
|
Prepaid expenses and
other assets, net
|
7,483
|
|
8,687
|
Accounts payable and
accrued expenses
|
33,837
|
|
4,854
|
Tenant refundable
fees and security deposits
|
(792)
|
|
(1,547)
|
Deferred
revenue
|
(1,881)
|
|
12,119
|
Net cash provided by
operating activities
|
366,121
|
|
290,969
|
Cash Flows from
Investing Activities
|
|
|
|
Increase in lease
security deposits and lease acquisition deposits, net
|
(2,051)
|
|
(7,999)
|
Decrease (increase)
in cash and escrow deposits — restricted
|
10,726
|
|
(4,810)
|
Purchase of
marketable securities — restricted
|
-
|
|
(1,557)
|
Sale of marketable
securities — restricted
|
-
|
|
35,124
|
Additions to
property, plant, and equipment and leasehold intangibles,
net
|
(257,527)
|
|
(208,412)
|
Acquisition of
assets, net of related payables and cash received
|
(34,686)
|
|
(272,523)
|
Payments on notes
receivable, net
|
168
|
|
131
|
Investment in
unconsolidated ventures
|
(17,172)
|
|
(5,368)
|
Distributions
received from unconsolidated ventures
|
1,600
|
|
350
|
Proceeds from sale of
assets, net
|
34,136
|
|
9,243
|
Other
|
-
|
|
487
|
Net cash used in
investing activities
|
(264,806)
|
|
(455,334)
|
Cash Flows from
Financing Activities
|
|
|
|
Proceeds from
debt
|
662,934
|
|
372,291
|
Repayment of debt and
capital lease obligations
|
(724,133)
|
|
(191,835)
|
Proceeds from line of
credit
|
425,000
|
|
375,000
|
Repayment of line of
credit
|
(475,000)
|
|
(360,000)
|
Payment of financing
costs, net of related payables
|
(11,576)
|
|
(5,563)
|
Refundable entrance
fees:
|
|
|
|
Proceeds from refundable entrance
fees
|
48,140
|
|
42,600
|
Refunds of entrance
fees
|
(35,325)
|
|
(27,356)
|
Cash portion of loss
on extinguishment of debt
|
(502)
|
|
(118)
|
Purchase of
derivatives and payment of swap termination
|
(2,863)
|
|
(1,908)
|
Other
|
1,281
|
|
(342)
|
Net cash (used in) provided by
financing activities
|
(112,044)
|
|
202,769
|
Net (decrease) increase in cash and cash equivalents
|
(10,729)
|
|
38,404
|
Cash and cash equivalents at beginning of year
|
69,240
|
|
30,836
|
Cash and cash equivalents at end of year
|
$
58,511
|
|
$
69,240
|
|
|
|
|
|
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 in isolation or as 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
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) expense items, (gain) loss on
sale or acquisition of communities (including gain (loss) on
facility lease termination), depreciation and amortization
(including non-cash impairment charges), straight-line lease
expense (income), amortization of deferred gain, amortization of
deferred entrance fees, non-cash stock-based compensation expense,
and change in future service obligation and including entrance fee
receipts and refunds (excluding (i) first generation entrance fee
receipts from the sale of units at a recently opened entrance fee
CCRC prior to stabilization and (ii) first generation entrance fee
refunds not replaced by second generation entrance fee receipts at
the recently opened community prior to stabilization).
We believe Adjusted EBITDA is useful to investors in evaluating
our performance, results of operations and financial position for
the following reasons:
- 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;
- It provides an assessment of controllable expenses and affords
management the ability to make decisions which are expected to
facilitate meeting current financial goals as well as achieve
optimal financial performance; and
- It is an indication to determine if adjustments to current
spending decisions are needed.
The table below reconciles Adjusted EBITDA from net loss for the
three months and years ended December 31,
2013 and 2012 (in thousands):
|
|
Three Months Ended
December 31(1),
|
|
Years Ended
December 31(1),
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net loss
|
$
(975)
|
|
$ (24,692)
|
|
$
(3,584)
|
|
$ (66,467)
|
(Benefit) provision
for income taxes
|
(1,516)
|
|
(1,040)
|
|
1,756
|
|
1,519
|
Equity in (earnings)
loss of unconsolidated ventures
|
(493)
|
|
3,277
|
|
(1,484)
|
|
3,488
|
Loss on
extinguishment of debt
|
319
|
|
-
|
|
1,265
|
|
221
|
Other non-operating
income
|
(1,360)
|
|
(201)
|
|
(2,725)
|
|
(593)
|
Interest
expense:
|
|
|
|
|
|
|
|
Debt
|
24,840
|
|
24,492
|
|
96,131
|
|
98,183
|
Capitalized lease
obligation
|
6,029
|
|
7,103
|
|
25,194
|
|
30,155
|
Amortization of deferred
financing costs and debt discount
|
4,037
|
|
4,479
|
|
17,054
|
|
18,081
|
Change in fair value of
derivatives and amortization
|
(386)
|
|
(7)
|
|
(980)
|
|
364
|
Interest
income
|
(312)
|
|
(1,792)
|
|
(1,339)
|
|
(4,012)
|
Income from
operations
|
30,183
|
|
11,619
|
|
131,288
|
|
80,939
|
Gain on facility
lease termination
|
-
|
|
(8,804)
|
|
-
|
|
(11,584)
|
Loss on
acquisition
|
-
|
|
-
|
|
-
|
|
636
|
Depreciation and
amortization
|
68,200
|
|
62,500
|
|
268,757
|
|
252,281
|
Asset
impairment
|
10,233
|
|
19,348
|
|
12,891
|
|
27,677
|
Straight-line lease
expense
|
347
|
|
1,344
|
|
2,597
|
|
6,668
|
Amortization of
deferred gain
|
(1,093)
|
|
(1,093)
|
|
(4,372)
|
|
(4,372)
|
Amortization of
entrance fees
|
(7,831)
|
|
(6,527)
|
|
(29,009)
|
|
(25,362)
|
Non-cash stock-based
compensation expense
|
5,202
|
|
6,335
|
|
25,978
|
|
25,520
|
Change in future
service obligation
|
(1,917)
|
|
2,188
|
|
(1,917)
|
|
2,188
|
Entrance fee
receipts(2)
|
32,482
|
|
22,890
|
|
92,331
|
|
82,705
|
Entrance fee
disbursements
|
(10,821)
|
|
(7,801)
|
|
(35,325)
|
|
(27,356)
|
Adjusted
EBITDA
|
$ 124,985
|
|
$ 101,999
|
|
$ 463,219
|
|
$ 409,940
|
|
|
|
|
|
|
|
|
|
(1) The calculation of Adjusted EBITDA includes
integration, transaction-related and EMR roll-out costs of
$4.1 million and $14.5 million for the three months and year ended
December 31, 2013, respectively. The
calculation of Adjusted EBITDA includes integration,
transaction-related and EMR roll-out costs of $7.2 million and $23.5
million for the three months and year ended December 31, 2012, respectively.
(2) Includes the receipt of refundable and
non-refundable entrance fees.
Cash From Facility Operations
Cash From Facility Operations (CFFO) is a measurement of
liquidity that is not calculated in accordance with GAAP and should
not be considered in isolation as a substitute for cash flows
provided by or used in operations, as determined in accordance with
GAAP. We define CFFO as net cash provided by (used in)
operating activities adjusted for changes in operating assets and
liabilities, deferred interest and fees added to principal,
refundable entrance fees received, first generation entrance fee
receipts at a recently opened entrance fee CCRC prior to
stabilization, entrance fee refunds disbursed adjusted for first
generation entrance fee refunds not replaced by second generation
entrance fee receipts at the recently opened community prior to
stabilization, lease financing debt amortization with fair market
value or no purchase options, gain (loss) on facility lease
termination, recurring capital expenditures (net), distributions
from unconsolidated ventures from cumulative share of net earnings,
CFFO from unconsolidated ventures, and other. Recurring
capital expenditures include routine expenditures capitalized in
accordance with GAAP that are funded from current operations.
Amounts excluded from recurring capital expenditures consist
primarily of major projects, renovations, community repositionings,
expansions, systems projects or other non-recurring or unusual
capital items (including integration capital expenditures) or
community purchases that are funded using lease or financing
proceeds, available cash and/or proceeds from the sale of
communities that are held for sale.
We believe CFFO is useful to investors in evaluating our
liquidity for the following reasons:
- It provides an assessment of our ability to facilitate meeting
current financial and liquidity goals.
- 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 CFFO from net cash provided by
operating activities for the three months and years ended
December 31, 2013 and 2012 (in
thousands):
|
|
Three Months Ended
December 31(1),
|
|
Years Ended
December 31(1),
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$ 117,046
|
|
$ 82,991
|
|
$ 366,121
|
|
$ 290,969
|
Changes in operating
assets and liabilities
|
(27,473)
|
|
(14,772)
|
|
(33,198)
|
|
(20,698)
|
Refundable entrance
fees received(2)
|
18,875
|
|
13,088
|
|
48,140
|
|
42,600
|
Entrance fee refunds
disbursed
|
(10,821)
|
|
(7,801)
|
|
(35,325)
|
|
(27,356)
|
Recurring capital
expenditures, net
|
(10,786)
|
|
(10,168)
|
|
(42,901)
|
|
(38,306)
|
Lease financing debt
amortization with fair market value or no purchase
options
|
(3,594)
|
|
(3,132)
|
|
(13,927)
|
|
(12,120)
|
Distributions from
unconsolidated ventures from cumulative share of net
earnings
|
(602)
|
|
(72)
|
|
(2,691)
|
|
(1,507)
|
CFFO from
unconsolidated ventures
|
1,825
|
|
1,279
|
|
7,804
|
|
5,376
|
Cash From Facility
Operations
|
$
84,470
|
|
$ 61,413
|
|
$ 294,023
|
|
$ 238,958
|
|
|
|
|
|
|
|
|
|
(1) The calculation of Cash From Facility Operations
includes integration, transaction-related and EMR roll-out costs of
$4.1 million and $14.5 million for the three months and year ended
December 31, 2013, respectively. The
calculation of Cash From Facility Operations includes integration,
transaction-related and EMR roll-out costs of $7.2 million and $23.5
million for the three months and year ended December 31, 2012, respectively.
(2) Total entrance fee receipts for the three months
ended December 31, 2013 and 2012 were
$32.5 million and $22.9 million, respectively, including
$13.6 million and $9.8 million, respectively, of non-refundable
entrance fee receipts included in net cash provided by operating
activities. Total entrance fee receipts for the years ended
December 31, 2013 and 2012 were
$92.3 million and $82.7 million, respectively, including
$44.2 million and $40.1 million, respectively, of non-refundable
entrance fee receipts included in net cash provided by operating
activities.
The calculation of CFFO per share is based on weighted average
outstanding common shares for the period, excluding any unvested
restricted shares. Annual CFFO per share for all periods is
calculated as the sum of the quarterly amounts for the year.
Facility Operating Income
Facility Operating Income is not a measurement of operating
performance calculated in accordance with GAAP and should not be
considered in isolation as 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) expense items, (gain) loss
on sale or acquisition of communities (including gain (loss) on
facility lease termination), depreciation and amortization
(including non-cash impairment charges), facility lease expense,
general and administrative expense, including non-cash stock-based
compensation expense, change in future service obligation,
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:
- It is helpful in identifying trends in our day-to-day facility
performance;
- It provides an assessment of our revenue generation and expense
management; and
- 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 months and years ended December 31, 2013 and 2012 (in
thousands):
|
|
Three Months Ended December
31,
|
|
Years Ended
December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(975)
|
|
$ (24,692)
|
|
$
(3,584)
|
|
$ (66,467)
|
(Benefit) provision
for income taxes
|
(1,516)
|
|
(1,040)
|
|
1,756
|
|
1,519
|
Equity in (earnings)
loss of unconsolidated ventures
|
(493)
|
|
3,277
|
|
(1,484)
|
|
3,488
|
Loss on
extinguishment of debt
|
319
|
|
-
|
|
1,265
|
|
221
|
Other non-operating
income
|
(1,360)
|
|
(201)
|
|
(2,725)
|
|
(593)
|
Interest
expense:
|
|
|
|
|
|
|
|
Debt
|
24,840
|
|
24,492
|
|
96,131
|
|
98,183
|
Capitalized lease
obligation
|
6,029
|
|
7,103
|
|
25,194
|
|
30,155
|
Amortization of deferred
financing costs and debt discount
|
4,037
|
|
4,479
|
|
17,054
|
|
18,081
|
Change in fair value of
derivatives and amortization
|
(386)
|
|
(7)
|
|
(980)
|
|
364
|
Interest
income
|
(312)
|
|
(1,792)
|
|
(1,339)
|
|
(4,012)
|
Income from
operations
|
30,183
|
|
11,619
|
|
131,288
|
|
80,939
|
Gain on facility
lease termination
|
-
|
|
(8,804)
|
|
-
|
|
(11,584)
|
Depreciation and
amortization
|
68,200
|
|
62,500
|
|
268,757
|
|
252,281
|
Asset
impairment
|
10,233
|
|
19,348
|
|
12,891
|
|
27,677
|
Loss on
acquisition
|
-
|
|
-
|
|
-
|
|
636
|
Facility lease
expense
|
69,701
|
|
70,785
|
|
276,729
|
|
284,025
|
General and
administrative (including non-cash
|
|
|
|
|
|
|
|
stock-based
compensation expense)
|
46,078
|
|
44,627
|
|
184,548
|
|
178,829
|
Change in future
service obligation
|
(1,917)
|
|
2,188
|
|
(1,917)
|
|
2,188
|
Amortization of
entrance fees
|
(7,831)
|
|
(6,527)
|
|
(29,009)
|
|
(25,362)
|
Management
fees
|
(8,150)
|
|
(8,436)
|
|
(31,125)
|
|
(30,786)
|
Facility Operating
Income
|
$ 206,497
|
|
$ 187,300
|
|
$ 812,162
|
|
$ 758,843
|
|
|
|
|
|
|
|
|
|
SOURCE Brookdale Senior Living Inc.