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TheStreet Open House

Emeritus Announces Operating Results For Fourth Quarter And Full Year 2011

Stocks in this article: ESC

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 Tuesday, March 6, 2012, until midnight Eastern Time on Tuesday, March 13, 2012. 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 388395.

Non-GAAP Financial Measures

Adjusted EBITDA/EBITDAR and CFFO are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). The Company believes that these non-GAAP measures are useful in identifying trends in 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 the senior living industry. The Company strongly urges 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 the Company’s consolidated balance sheets, statements of operations, and cash flows. The Company defines Adjusted EBITDA/EBITDAR and CFFO and provides other information about these non-GAAP measures in the Company’s Annual Report on Form 10-K for the year ended December 31, 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 months and years ended December 31, 2011 and 2010 (in thousands):

Three Months Ended December 31,  

Years Ended December 31,

2011   2010 2011   2010
 
Net loss $ (27,976) $ (15,393) $ (72,263) $ (57,842)
Depreciation and amortization 32,307 25,352 122,372 86,697
Interest income (74) (128) (429) (494)
Interest expense 41,418 33,599 157,262 114,952
Net equity losses for unconsolidated JVs 1,829 596 3,081 915
Provision for income taxes 362 (1,733) 1,019 (762)
Loss from discontinued operations 3,915 (384) 21,570 1,345
Amortization of above/below market rents 1,754 2,104 7,532 8,635
Loss on lease termination - 2,419 - 2,419
Amortization of deferred gains (274) (293) (1,125) (1,197)
Stock-based compensation 1,224 1,457 8,106 5,934
Change in value of interest rate swaps (1,045) - (3,081) 182
Deferred revenue 316 (84) 2,601 3,372
Deferred straight-line rent 1,663 3,404 8,792 14,635
Contract buyout costs 1,586 - 7,842 -
Impairment of long-lived assets - - - 162
Loss (gain) on sale of assets (73) - (73) -
Gain on sale of investments - - (1,569) -
Acquisition gain - - (42,110) -
Acquisition, development and financing expenses (895) 1,212 2,403 2,325
Self-insurance reserve adjustments 4,133 2,668 15,911 5,263
Adjusted EBITDA $ 60,170 54,796 237,841 186,541
Operating lease expense, net 28,322 26,040 108,627 99,020
Adjusted EBITDAR $ 88,492 $ 80,836 $ 346,468 $ 285,561

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 months and years ended December 31, 2011 and 2010 (in thousands):

  Three Months Ended   Years Ended
December 31, December 31,
  2011     2010   2011     2010
 
Net cash provided by operating activities $ 10,349 $ 23,202 $ 74,102 $ 83,701
Changes in operating assets and liabilities, net 6,420 (480) (3,812) (9,097)
Contract buyout costs 1,586 - 7,842 -
Repayment of capital lease and financing obligations (3,793) (3,234) (14,249) (12,098)
Recurring capital expenditures (3,667) (4,389) (17,299) (14,092)
Distributions from unconsolidated joint ventures, net (1)   55   594   1,519     1,975
Cash From Facility Operations 10,950 15,693 48,103 50,389
Self-insurance reserve adjustments 4,133 2,668 15,911 5,263
Unusual income tax benefits adjustment   -   (2,037)   -   (2,037)
Cash From Facility Operations, as adjusted $ 15,083 $ 16,324 $ 64,014 $ 53,615
 
CFFO per share $ 0.25 $ 0.38 $ 1.09 $ 1.26
 
CFFO per share, as adjusted $ 0.34 $ 0.39 $ 1.44 $ 1.34

(1) Excludes a $1.2 million cash distribution of proceeds received in the third quarter of 2011 from the refinancing of debt.

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