NASHVILLE, Tenn., Nov. 3, 2011 /PRNewswire/ --
Highlights
- Cash From Facility Operations ("CFFO") was $65.6 million, a 9.9% increase from $59.7 million for the third quarter of 2010,
excluding $5.5 million of integration
and transaction-related costs in the third quarter of 2011.
CFFO was $0.54 per share for
the third quarter of 2011 versus $0.50 per share for the third quarter of 2010,
excluding integration and transaction-related costs in the third
quarter of 2011.
- Resident fees and management fee revenue increased over the
third quarter of 2010 by $20.0
million, or 3.6%, to $578.5
million.
- Average occupancy increased 80 basis points from the second
quarter of 2011 to the third quarter.
- Same store senior housing rate growth was 3.3% for the third
quarter of 2011 versus the third quarter of 2010.
- The Company completed the acquisition of the nation's ninth
largest senior housing operator with 91 communities and 16,213
units.
- Brookdale now operates 647 communities with over 67,000 units
in 36 states.
Brookdale Senior Living Inc. (NYSE: BKD) (the "Company") today
reported financial and operating results for the third quarter of
2011.
Bill Sheriff, Brookdale's CEO
said, "The Company delivered a solid operating performance for the
third quarter of 2011. Increasing average occupancy by 80
basis points with a portfolio our size is meaningful.
Continuing to focus on marketing led to an average occupancy
increase of 120 basis points from the year's low point in May to
87.6% in September. At the same time, our people have
executed extremely well on integrating the Horizon Bay communities,
a 30% increase in units operated, into our everyday business.
This is reflective of the strong capabilities of our
organization and operating platform."
Mark Ohlendorf, Co-President and
CFO of Brookdale, commented, "During the quarter, for our same
community portfolio of 532 communities, we achieved a senior
housing rate growth of 3.3%, managed our senior housing expenses
within an expected range at 2.8% and maintained our margins when
compared to the third quarter of 2010. With the financial
transactions we completed during the quarter, we also continued to
make progress with respect to our capital structure and debt
maturity profile."
Financial Results
Total revenue for the third quarter was $615.7 million, an increase of $39.9 million, or 6.9%, from the third quarter of
2010. Resident and management fees for the third quarter were
$578.5 million, an increase of
$20.0 million, or 3.6%, from the
third quarter of 2010. Average monthly revenue per unit was
$4,700 in the third quarter, an
increase of $243, or 5.5%, over the
third quarter of 2010. Average occupancy for all consolidated
communities for the third quarter of 2011 was 87.4%, flat with the
third quarter of 2010 and 80 basis points higher than the second
quarter of 2011. As of September, average occupancy for all
consolidated communities was 87.6%.
Facility operating expenses for the third quarter were
$381.4 million, an increase of
$12.5 million, or 3.4%, from the
third quarter of 2010. Operating contribution margin for the
Company during the third quarter of 2011 was 33.7% versus 33.8% for
the third quarter of 2010.
General and administrative expenses for the third quarter were
$38.7 million, up from $33.2 million in the third quarter of 2010.
Excluding non-cash stock-based compensation expense for both
periods and integration and transaction-related costs from the
third quarter of 2011, general and administrative expenses were
$28.0 million in the third quarter of
2011 versus $27.4 million for the
prior year same period. Demonstrating the Company's efficient
platform, general and administrative expenses for the quarter,
excluding non-cash stock-based compensation expense and integration
and transaction-related costs, were 4.3% of revenue (including
revenues under management).
Brookdale's management utilizes Adjusted EBITDA and Cash From
Facility Operations to evaluate the Company's performance and
liquidity because these metrics exclude non-cash expenses such as
depreciation and amortization, non-cash stock-based compensation
expense and straight-line lease expense, net of deferred gain
amortization. Third quarter Adjusted EBITDA and Cash From
Facility Operations included integration and transaction-related
costs of $5.5 million. For the
nine months ended September 30, 2011,
Adjusted EBITDA and Cash From Facility Operations included
integration and transaction-related costs of $6.4 million. Brookdale also uses Facility
Operating Income to assess the performance of its communities.
For the quarter ended September 30,
2011, Facility Operating Income was $187.2 million, an increase of $5.7 million, or 3.1%, from the third quarter of
2010, and Adjusted EBITDA was $105.2
million, excluding the integration and transaction-related
costs, an increase of $2.0 million,
or 1.9%, over the third quarter of 2010. For the nine months
ended September 30, 2011, Facility
Operating Income was $569.6 million,
an increase of $18.5 million, or
3.3%, from the nine months ended September
30, 2010, and Adjusted EBITDA was $312.7 million, excluding integration and
transaction-related costs, an increase of $12.8 million, or 4.3%, over the first nine
months of 2010.
Cash From Facility Operations was $60.1
million for the third quarter of 2011, or $0.49 per share, and, excluding integration and
transaction-related costs, was $65.6
million for the third quarter of 2011, or $0.54 per share, an increase of $5.9 million, or 9.9%, from CFFO of $59.7 million, or $0.50 per share, for the third quarter of 2010.
Cash From Facility Operations, excluding integration and
transaction-related costs, was $189.5
million for the nine months ended September 30, 2011, an increase of $18.5 million, or 10.8%, from CFFO of
$171.1 million for the first nine
months of 2010.
Net loss for the third quarter of 2011 was $7.0 million, or $(0.06) per diluted common share. The loss for
the quarter includes non-cash items for depreciation and
amortization, non-cash stock-based compensation expense, gain on
acquisition and straight-line lease expense, net of deferred gain
amortization.
Operating Activities
For the quarter ended September 30,
2011, same community revenues grew 2.7% over the same period
in 2010, as revenue per unit increased by 3.2% and occupancy
decreased by 50 basis points. Same community Facility
Operating Income for the quarter increased by 1.2% when compared to
the third quarter of 2010.
The same community results for senior housing, excluding
ancillary services, for the three months ended September 30, 2011 showed revenues grew 2.7% over
the corresponding period in 2010 as revenue per unit increased by
3.3%. Same community Facility Operating Income for senior
housing (excluding ancillary services) increased by 2.6% over the
third quarter of 2010.
By the end of the third quarter, the Company's ancillary
services programs provided therapy services to almost 38,800
Brookdale units. At the end of the quarter, the Company's
home health agencies were serving over 28,300 units across the
total consolidated Brookdale portfolio, up from approximately
24,600 units served a year ago. Outpatient therapy and home
health services produced $166 of
monthly Facility Operating Income per occupied unit in the third
quarter across all units served, versus $175 per month a year ago.
Balance Sheet
Brookdale had $39.2 million of
unrestricted cash and cash equivalents and $101.3 million of restricted cash on its balance
sheet at the end of the third quarter.
As of September 30, 2011, the
Company had an available secured line of credit with a $230.0 million commitment and separate secured
and unsecured letter of credit facilities of up to $82.5 million in the aggregate. As of
September 30, 2011, there were
$35.0 million of borrowings under the
revolving loan facility and $71.8
million of letters of credit had been issued under the
letter of credit facilities.
On July 29, 2011, the Company
obtained $437.8 million in loans
pursuant to the terms of a Master Credit Facility Agreement.
The loans are secured by first mortgages on 44 communities, and 75%
of such loans bear interest at a fixed rate of 4.25% while the
remaining 25% of such loans bear interest at a variable rate equal
to the 30-day LIBOR plus a margin of 182 basis points. The
loans mature on August 1, 2018 and
require amortization of principal over a 30 year period.
Proceeds of the loans, together with cash on hand, were used to
refinance or prepay $445.2 million of
mortgage debt which was scheduled to mature in February and
August 2012. The Company currently
has no mortgage debt maturities before 2013, other than periodic,
scheduled principal payments.
On August 11, 2011, the Company's
board of directors approved a share repurchase program that
authorizes the Company to purchase up to $100.0 million in the aggregate of the Company's
common stock. Pursuant to this authorization, during the
three and nine months ended September 30,
2011, the Company purchased 1,217,100 shares at a cost of
approximately $17.6 million, or a
weighted average price of approximately $14.44 per share. As of September 30, 2011, approximately $82.4 million remains available under this share
repurchase authorization.
Acquisitions/Divestitures
On September 1, 2011, the Company
completed its previously announced acquisition of 100% of the
equity interests in Horizon Bay Realty, L.L.C. ("Horizon Bay").
As a result of the transaction, the Company added to its
portfolio 91 communities with over 16,200 units in 19 states.
In connection with the acquisition, the Company restructured
Horizon Bay's existing relationship with HCP, Inc. ("HCP") relating
to 33 communities that Horizon Bay leased from HCP. In
particular, the Company (i) formed a joint venture with HCP to own
and operate 21 communities, and (ii) leased the remaining 12
communities from HCP pursuant to long term, triple net leases.
The Company acquired a 10% interest in the joint venture,
which utilizes a RIDEA structure. The Company manages the
joint venture communities under a ten-year management agreement
with four five-year renewal options and retains all ancillary
services operations. Horizon Bay also leases an additional
community from HCP pursuant to a triple net lease and subleases
that community to a third-party operator.
The Company also provides management services to the remaining
58 Horizon Bay communities. In conjunction with the
acquisition, the Company entered into an agreement to restructure
the management agreements with Chartwell Seniors Housing Real
Estate Investment Trust ("Chartwell") relating to 45 of these
communities. As part of the restructuring of the management
agreements, Chartwell granted Brookdale an option through 2013 to
acquire a 20% interest in Chartwell's U.S. real estate assets
managed by Brookdale. Brookdale will also have a right of
first offer to acquire any of Chartwell's assets managed by
Brookdale.
Certain elements of the Chartwell management arrangement
restructuring are subject to lender and other third party
approvals. Until such approvals are received, the Company will
operate Chartwell's properties under the existing management
contracts.
Additionally, the Company sold one community during the quarter,
a Retirement Center with a total of 74 units, for $2.0 million. The Company had recorded a
$2.1 million impairment charge in the
first quarter of 2011 related to this community and recorded an
additional loss on disposition of $0.1
million.
Supplemental Information
The Company will shortly post on the Investor Relations section
of the Company's website at www.brookdaleliving.com supplemental
information relating to the Company's third quarter 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 discuss
the results on Friday, November 4,
2011 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 Third Quarter Earnings Call."
A webcast of the conference call will be available to the public
on a listen-only basis at www.brookdaleliving.com. Please
allow extra time prior to the call to visit the site and download
the necessary software required to listen to the internet
broadcast. A replay of the webcast will be available 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
November 11, 2011 by dialing (855)
859-2056 (from within the U.S.) or (404) 537-3406 (from outside of
the U.S.) and referencing access code "22294643". A copy of
this earnings release is posted on the Investor Relations page of
the Brookdale website (www.brookdaleliving.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
an exceptional living experience through properties that are
designed, purpose-built and operated to provide the highest-quality
service, care and living accommodations for residents.
Currently the Company operates independent living, assisted
living, and dementia-care communities and continuing care
retirement centers, with 647 communities in 36 states and the
ability to serve over 67,000 residents.
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 the consummation of the restructuring of the management
agreements with Chartwell Seniors Housing Real Estate Investment
Trust (including the anticipated timing thereof); statements
relating to our operational initiatives and our expectations
regarding their effect on our results; our expectations regarding
occupancy, revenue, cash flow, expenses, capital expenditures,
Program Max opportunities, cost savings, the demand for senior
housing, expansion and development activity, acquisition
opportunities, asset dispositions, our share repurchase program,
taxes and CFFO; our belief regarding the value of our common stock
and our growth prospects; 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; our plans to deleverage; 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, 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 for the performance of our entrance fee communities;
our ability to anticipate, manage and address industry trends and
their effect on our business; 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 that we may not be able to satisfy the conditions and
successfully complete the Chartwell management agreement
restructuring; the risk that we may not be able to successfully
integrate the new Horizon Bay communities into our operations; our
determination from time to time whether to purchase any shares
under the repurchase program; our ability to fund any repurchases;
the risk associated with the current global economic crisis and its
impact upon capital markets and liquidity; 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; changes
in governmental reimbursement programs; our ability to effectively
manage our growth; our ability to maintain consistent quality
control; delays in obtaining regulatory approvals; 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; 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.
Condensed
Consolidated Statements of Operations
(Unaudited,
in thousands, except for per
share data)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Revenue
|
|
|
|
|
|
|
|
|
Resident fees
|
$ 575,159
|
|
$ 557,125
|
|
$ 1,707,117
|
|
$ 1,647,714
|
|
Management fees
|
3,336
|
|
1,339
|
|
6,246
|
|
4,146
|
|
Reimbursed costs incurred
on behalf of managed communities
|
37,233
|
|
17,325
|
|
72,584
|
|
50,451
|
|
Total revenue
|
615,728
|
|
575,789
|
|
1,785,947
|
|
1,702,311
|
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
Facility operating expense
(excluding depreciation and amortization of $54,227, $54,070,
$155,206 and $158,277, respectively)
|
381,414
|
|
368,936
|
|
1,118,610
|
|
1,077,311
|
|
General and administrative
expense (including non-cash stock-based compensation expense of
$5,221, $5,823, $14,316 and $15,799, respectively)
|
38,711
|
|
33,231
|
|
105,935
|
|
97,017
|
|
Facility lease
expense
|
68,314
|
|
68,090
|
|
200,694
|
|
203,514
|
|
Depreciation and
amortization
|
64,071
|
|
74,951
|
|
206,430
|
|
221,180
|
|
Asset
impairment
|
-
|
|
-
|
|
14,846
|
|
-
|
|
Gain on
acquisition
|
(3,520)
|
|
-
|
|
(3,520)
|
|
-
|
|
Costs incurred on behalf
of managed communities
|
37,233
|
|
17,325
|
|
72,584
|
|
50,451
|
|
Facility lease termination
expense
|
-
|
|
4,616
|
|
-
|
|
4,616
|
|
Total
operating expense
|
586,223
|
|
567,149
|
|
1,715,579
|
|
1,654,089
|
|
Income from
operations
|
29,505
|
|
8,640
|
|
70,368
|
|
48,222
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
1,171
|
|
441
|
|
2,569
|
|
1,521
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
Debt
|
(30,433)
|
|
(33,357)
|
|
(92,667)
|
|
(100,540)
|
|
Amortization of deferred
financing costs and debt discount
|
(4,310)
|
|
(2,244)
|
|
(9,024)
|
|
(7,250)
|
|
Change in fair value of
derivatives and amortization
|
(1,508)
|
|
(176)
|
|
(4,151)
|
|
(5,023)
|
|
Loss on extinguishment of debt,
net
|
(715)
|
|
(856)
|
|
(18,863)
|
|
(1,557)
|
|
(Loss) equity in earnings of
unconsolidated ventures
|
(117)
|
|
272
|
|
295
|
|
788
|
|
Other non-operating (expense)
income
|
(116)
|
|
(1,454)
|
|
260
|
|
(1,454)
|
|
Loss before income
taxes
|
(6,523)
|
|
(28,734)
|
|
(51,213)
|
|
(65,293)
|
|
(Provision) benefit for income
taxes
|
(513)
|
|
11,821
|
|
(2,087)
|
|
24,528
|
|
Net
loss
|
$ (7,036)
|
|
$ (16,913)
|
|
$
(53,300)
|
|
$
(40,765)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per
share
|
$
(0.06)
|
|
$
(0.14)
|
|
$
(0.44)
|
|
$
(0.34)
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
used in computing basic and diluted net loss per share
|
121,616
|
|
120,404
|
|
121,232
|
|
119,817
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
(in
thousands)
|
|
|
September
30, 2011
|
|
December 31,
2010
|
|
|
(Unaudited)
|
|
|
|
Cash and cash
equivalents
|
$
39,195
|
|
$
81,827
|
|
Cash and escrow deposits -
restricted
|
50,143
|
|
81,558
|
|
Accounts receivable,
net
|
93,447
|
|
88,033
|
|
Other current assets
|
90,506
|
|
76,691
|
|
Total current
assets
|
273,291
|
|
328,109
|
|
Property, plant, and equipment
and
|
|
|
|
|
leasehold
intangibles, net
|
3,681,280
|
|
3,736,842
|
|
Other assets, net
|
483,870
|
|
465,519
|
|
Total assets
|
$
4,438,441
|
|
$
4,530,470
|
|
|
|
|
|
|
Current liabilities
|
$
607,187
|
|
$
606,358
|
|
Long-term debt, less current
portion
|
2,365,990
|
|
2,498,620
|
|
Other liabilities
|
415,878
|
|
365,495
|
|
Total
liabilities
|
3,389,055
|
|
3,470,473
|
|
Stockholders’ equity
|
1,049,386
|
|
1,059,997
|
|
Total liabilities and
stockholders’ equity
|
$
4,438,441
|
|
$
4,530,470
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
(Unaudited,
in
thousands)
|
|
|
Nine Months
Ended September 30,
|
|
|
2011
|
|
2010
|
|
Cash Flows from Operating
Activities
|
|
|
|
|
Net loss
|
$ (53,300)
|
|
$ (40,765)
|
|
Adjustments to reconcile net
loss to net cash provided by operating activities:
|
|
|
|
|
Loss on extinguishment of
debt
|
18,863
|
|
1,557
|
|
Depreciation and
amortization
|
215,454
|
|
228,430
|
|
Asset
impairment
|
14,846
|
|
-
|
|
Equity in earnings of
unconsolidated ventures
|
(295)
|
|
(788)
|
|
Distributions from
unconsolidated ventures from cumulative share of net
earnings
|
700
|
|
375
|
|
Amortization of deferred
gain
|
(3,280)
|
|
(3,258)
|
|
Amortization of entrance
fees
|
(18,865)
|
|
(18,160)
|
|
Proceeds from deferred
entrance fee revenue
|
26,475
|
|
27,716
|
|
Deferred income tax
benefit
|
-
|
|
(26,544)
|
|
Change in deferred lease
liability
|
5,006
|
|
8,109
|
|
Change in fair value of
derivatives and amortization
|
4,151
|
|
5,023
|
|
(Gain) loss on sale of
assets
|
(1,180)
|
|
1,548
|
|
Gain on
acquisition
|
(3,520)
|
|
-
|
|
Change in future service
obligation
|
-
|
|
(1,064)
|
|
Non-cash stock-based
compensation
|
14,316
|
|
15,799
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
(2,375)
|
|
(6,480)
|
|
Prepaid expenses and other
assets, net
|
(17,065)
|
|
(4,007)
|
|
Accounts payable and
accrued expenses
|
2,826
|
|
5,721
|
|
Tenant refundable fees and
security deposits
|
(1,941)
|
|
(2,720)
|
|
Deferred
revenue
|
3,609
|
|
(5)
|
|
Other
|
7,577
|
|
(11,332)
|
|
Net cash provided by
operating activities
|
212,002
|
|
179,155
|
|
Cash Flows from Investing
Activities
|
|
|
|
|
(Increase) decrease in
lease security deposits and lease acquisition deposits,
net
|
(1,591)
|
|
2,067
|
|
Decrease (increase) in
cash and escrow deposits — restricted
|
56,244
|
|
(2,567)
|
|
Net proceeds from the sale
of assets
|
30,817
|
|
1,487
|
|
Additions to property,
plant, and equipment and leasehold intangibles,
|
|
|
|
|
net of related payables
|
(114,588)
|
|
(70,604)
|
|
Purchase of marketable
securities — restricted
|
(32,724)
|
|
-
|
|
Sale of marketable
securities — restricted
|
1,415
|
|
-
|
|
Acquisition of assets, net
of related payables and cash received
|
(54,597)
|
|
(26,116)
|
|
Purchase of Horizon Bay
Realty, L.L.C., net of cash acquired
|
5,516
|
|
-
|
|
Receipt of notes
receivable, net
|
1,674
|
|
1,013
|
|
Investment in
unconsolidated ventures
|
(13,711)
|
|
(659)
|
|
Distributions received
from unconsolidated ventures
|
156
|
|
77
|
|
Proceeds from the sale of
unconsolidated venture
|
-
|
|
675
|
|
Other
|
(821)
|
|
(638)
|
|
Net cash used in investing
activities
|
(122,210)
|
|
(95,265)
|
|
Cash Flows from Financing
Activities
|
|
|
|
|
Proceeds from
debt
|
477,525
|
|
382,076
|
|
Proceeds from issuance of
convertible debt, net
|
308,233
|
|
-
|
|
Issuance of
warrants
|
45,066
|
|
-
|
|
Purchase of bond
hedge
|
(77,007)
|
|
-
|
|
Repayment of debt and
capital lease obligations
|
(879,573)
|
|
(444,940)
|
|
Proceeds from line of
credit
|
120,000
|
|
60,000
|
|
Repayment of line of
credit
|
(85,000)
|
|
(60,000)
|
|
Payment of financing
costs, net of related payables
|
(8,170)
|
|
(8,436)
|
|
Other
|
(454)
|
|
(590)
|
|
Refundable entrance
fees:
|
|
|
|
|
Proceeds from
refundable entrance fees
|
18,594
|
|
27,303
|
|
Refunds of entrance
fees
|
(16,886)
|
|
(16,106)
|
|
Cash portion of loss on
extinguishment of debt
|
(17,040)
|
|
(179)
|
|
Recouponing and payment of
swap termination
|
(99)
|
|
(20,427)
|
|
Purchase of treasury
stock
|
(17,613)
|
|
-
|
|
Net cash used in
financing activities
|
(132,424)
|
|
(81,299)
|
|
Net (decrease) increase in cash and cash
equivalents
|
(42,632)
|
|
2,591
|
|
Cash and cash equivalents at beginning of
period
|
81,827
|
|
66,370
|
|
Cash and cash equivalents at end of
period
|
$ 39,195
|
|
$ 68,961
|
|
|
|
|
|
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 facility lease
termination expense), 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 first generation entrance fee receipts on a
newly opened entrance fee CCRC).
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 and nine months ended
September 30, 2011 and 2010 (in
thousands):
|
|
|
Three
Months Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2011(1)
|
|
2010
|
|
2011(1)
|
|
2010
|
|
Net loss
|
$ (7,036)
|
|
$ (16,913)
|
|
$ (53,300)
|
|
$ (40,765)
|
|
Provision (benefit) for income
taxes
|
513
|
|
(11,821)
|
|
2,087
|
|
(24,528)
|
|
Loss (equity) in earnings of
unconsolidated ventures
|
117
|
|
(272)
|
|
(295)
|
|
(788)
|
|
Loss on extinguishment of
debt
|
715
|
|
856
|
|
18,863
|
|
1,557
|
|
Other non-operating expense
(income)
|
116
|
|
1,454
|
|
(260)
|
|
1,454
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
Debt
|
22,602
|
|
25,817
|
|
68,762
|
|
77,786
|
|
Capitalized lease
obligation
|
7,831
|
|
7,540
|
|
23,905
|
|
22,754
|
|
Amortization of
deferred financing costs and debt discount
|
4,310
|
|
2,244
|
|
9,024
|
|
7,250
|
|
Change in fair
value of derivatives and amortization
|
1,508
|
|
176
|
|
4,151
|
|
5,023
|
|
Interest income
|
(1,171)
|
|
(441)
|
|
(2,569)
|
|
(1,521)
|
|
Income from
operations
|
29,505
|
|
8,640
|
|
70,368
|
|
48,222
|
|
Facility lease termination
expense
|
-
|
|
4,616
|
|
-
|
|
4,616
|
|
Depreciation and
amortization
|
64,071
|
|
74,951
|
|
206,430
|
|
221,180
|
|
Asset impairment
|
-
|
|
-
|
|
14,846
|
|
-
|
|
Gain on acquisition
|
(3,520)
|
|
-
|
|
(3,520)
|
|
-
|
|
Straight-line lease
expense
|
1,834
|
|
2,812
|
|
5,016
|
|
8,109
|
|
Amortization of deferred
gain
|
(1,094)
|
|
(1,086)
|
|
(3,280)
|
|
(3,258)
|
|
Amortization of entrance
fees
|
(6,499)
|
|
(6,634)
|
|
(18,865)
|
|
(18,160)
|
|
Non-cash stock-based
compensation expense
|
5,221
|
|
5,823
|
|
14,316
|
|
15,799
|
|
Change in future service
obligation
|
-
|
|
-
|
|
-
|
|
(1,064)
|
|
Entrance fee
receipts(2)
|
18,019
|
|
22,054
|
|
45,069
|
|
55,019
|
|
First generation entrance fees
received (3)
|
(2,293)
|
|
(2,921)
|
|
(7,177)
|
|
(14,488)
|
|
Entrance fee
disbursements
|
(5,475)
|
|
(4,984)
|
|
(16,886)
|
|
(16,106)
|
|
Adjusted EBITDA
|
$ 99,769
|
|
$ 103,271
|
|
$ 306,317
|
|
$ 299,869
|
|
(1) The calculation of Adjusted
EBITDA includes integration and transaction-related costs of $5.5
million and $6.4 million for the three and nine months ended
September 30, 2011, respectively.
(2) Includes the receipt of
refundable and non-refundable entrance fees.
(3) First generation entrance
fees received represents initial entrance fees received from the
sale of units at a newly opened entrance fee CCRC.
|
|
|
|
|
|
|
|
|
|
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 on a newly opened entrance fee CCRC, entrance fee refunds
disbursed, lease financing debt amortization with fair market value
or no purchase options, facility lease termination expense,
recurring capital expenditures, 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.
In the fourth quarter of 2010, we revised the definition of Cash
From Facility Operations to exclude distributions from
unconsolidated ventures from cumulative share of net earnings and
include our proportionate share (based on equity ownership
percentages) of the Cash From Facility Operations generated by our
unconsolidated ventures. This impact is included in the Cash
From Facility Operations for the three and nine months ended
September 30, 2011. Due to
immateriality, the prior periods have not been restated.
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:
- service our outstanding indebtedness;
- pay dividends; and
- 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 and
nine months ended September 30, 2011 and 2010
(in
thousands):
|
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2011(1)
|
|
2010
|
|
2011(1)
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
$ 54,650
|
|
$ 64,384
|
|
$ 212,002
|
|
$ 179,155
|
|
Changes in operating assets and
liabilities
|
16,617
|
|
(3,812)
|
|
7,369
|
|
18,823
|
|
Refundable entrance fees
received(2)
|
7,204
|
|
12,242
|
|
18,594
|
|
27,303
|
|
First generation entrance fees
received (3)
|
(2,293)
|
|
(2,921)
|
|
(7,177)
|
|
(14,488)
|
|
Entrance fee refunds
disbursed
|
(5,475)
|
|
(4,984)
|
|
(16,886)
|
|
(16,106)
|
|
Recurring capital expenditures,
net
|
(8,675)
|
|
(7,572)
|
|
(25,000)
|
|
(21,583)
|
|
Lease financing debt
amortization with fair market value or no purchase
options
|
(2,645)
|
|
(2,267)
|
|
(7,765)
|
|
(6,659)
|
|
Facility lease termination
expense
|
-
|
|
4,616
|
|
-
|
|
4,616
|
|
Cash From Facility Operations
from unconsolidated ventures
|
738
|
|
-
|
|
2,040
|
|
-
|
|
Cash From Facility
Operations
|
$ 60,121
|
|
$ 59,686
|
|
$ 183,177
|
|
$ 171,061
|
|
(1) The calculation of CFFO
includes integration and transaction-related costs of $5.5 million
and $6.4 million for the three and nine months ended September 30,
2011, respectively.
(2) Total entrance fee receipts
for the three months ended September 30, 2011 and 2010 were $18.0
million and $22.1 million, respectively, including $10.8 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 nine months ended
September 30, 2011 and 2010 were $45.1 million and $55.0 million,
respectively, including $26.5 million and $27.7 million,
respectively, of non-refundable entrance fee receipts included in
net cash provided by operating activities.
(3) First generation entrance
fees received represents initial entrance fees received from the
sale of units at a newly opened entrance fee CCRC.
|
|
|
|
|
|
|
|
|
|
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 facility lease
termination expense), 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
nine months ended September 30, 2011 and 2010
(in
thousands):
|
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$ (7,036)
|
|
$ (16,913)
|
|
$ (53,300)
|
|
$ (40,765)
|
|
Provision (benefit) for income
taxes
|
513
|
|
(11,821)
|
|
2,087
|
|
(24,528)
|
|
Loss (equity) in earnings of
unconsolidated ventures
|
117
|
|
(272)
|
|
(295)
|
|
(788)
|
|
Loss on extinguishment of
debt
|
715
|
|
856
|
|
18,863
|
|
1,557
|
|
Other non-operating expense
(income)
|
116
|
|
1,454
|
|
(260)
|
|
1,454
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
Debt
|
22,602
|
|
25,817
|
|
68,762
|
|
77,786
|
|
Capitalized lease
obligation
|
7,831
|
|
7,540
|
|
23,905
|
|
22,754
|
|
Amortization of
deferred financing costs and debt discount
|
4,310
|
|
2,244
|
|
9,024
|
|
7,250
|
|
Change in fair
value of derivatives and amortization
|
1,508
|
|
176
|
|
4,151
|
|
5,023
|
|
Interest income
|
(1,171)
|
|
(441)
|
|
(2,569)
|
|
(1,521)
|
|
Income from
operations
|
29,505
|
|
8,640
|
|
70,368
|
|
48,222
|
|
Facility lease termination
expense
|
-
|
|
4,616
|
|
-
|
|
4,616
|
|
Depreciation and
amortization
|
64,071
|
|
74,951
|
|
206,430
|
|
221,180
|
|
Asset impairment
|
-
|
|
-
|
|
14,846
|
|
-
|
|
Gain on acquisition
|
(3,520)
|
|
-
|
|
(3,520)
|
|
-
|
|
Change in future service
obligation
|
-
|
|
-
|
|
-
|
|
(1,064)
|
|
Facility lease
expense
|
68,314
|
|
68,090
|
|
200,694
|
|
203,514
|
|
General and administrative
(including non-cash
|
|
|
|
|
|
|
|
|
stock-based
compensation expense)
|
38,711
|
|
33,231
|
|
105,935
|
|
97,017
|
|
Amortization of entrance
fees
|
(6,499)
|
|
(6,634)
|
|
(18,865)
|
|
(18,160)
|
|
Management fees
|
(3,336)
|
|
(1,339)
|
|
(6,246)
|
|
(4,146)
|
|
Facility Operating
Income
|
$ 187,246
|
|
$ 181,555
|
|
$ 569,642
|
|
$ 551,179
|
|
|
|
|
|
|
|
|
|
SOURCE Brookdale Senior Living Inc.