This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Emeritus Announces Operating Results For Fourth Quarter And Full Year 2011

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, 2011, to be filed with the SEC, or visit the Company’s Internet site at www.emeritus.com to obtain copies.

ABOUT THE COMPANY

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 478 communities in 44 states representing capacity for approximately 42,600 units and approximately 49,700 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 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, 2011 to be filed with the SEC. The Company undertakes no obligation to update the information provided herein.

EMERITUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share data)

 

ASSETS

 

 
December 31, December 31,
Current Assets: 2011 2010
Cash and cash equivalents $ 43,670 $ 110,124
Short-term investments 3,585 2,874
Trade accounts receivable, net of allowance of $2,294 and $1,497 26,195 23,055
Other receivables 16,117 7,215
Tax, insurance, and maintenance escrows 20,501 22,271
Prepaid insurance expense 36,020 28,852
Deferred tax asset 19,934 15,841
Other prepaid expenses and current assets 8,140   6,417
Total current assets 174,162 216,649
Investments in unconsolidated joint ventures 15,428 19,394
Property and equipment, net of accumulated depreciation of $407,952 and $304,495 2,355,425 2,163,556
Restricted deposits 16,427 14,165
Goodwill 118,725 75,820
Other intangible assets, net of accumulated amortization of $48,722 and $36,109 100,873 100,239
Other assets, net 29,288 23,969
Total assets $ 2,810,328 $ 2,613,792
 
LIABILITIES, SHAREHOLDERS' EQUITY AND NONCONTROLLING INTEREST
 
Current Liabilities:
Current portion of long-term debt $ 74,175 $ 73,197
Current portion of capital lease and financing obligations 17,004 14,262
Trade accounts payable 7,959 7,840
Accrued employee compensation and benefits 70,936 53,663
Accrued interest 9,061 7,969
Accrued real estate taxes 11,791 12,306
Accrued professional and general liability 24,525 10,810
Other accrued expenses 19,477 18,759
Deferred revenue 16,348 13,757
Unearned rental income 22,965 21,814
Total current liabilities 274,241 234,377
Long-term debt obligations, less current portion 1,528,710 1,305,757
Capital lease and financing obligations, less current portion 619,088 629,797
Deferred gain on sale of communities 4,789 5,914
Deferred straight-line rent 61,481 50,142
Other long-term liabilities 39,283 36,299
Total liabilities 2,527,592 2,262,286
 
Commitments and contingencies
Shareholders' Equity and Noncontrolling Interest:
Preferred stock, $.0001 par value. Authorized 20,000,000 shares, none issued - -
Common stock, $.0001 par value. Authorized 100,000,000 shares; issued and outstanding
44,989,861 and 44,193,818 shares 4 4
Additional paid-in capital 822,345 814,209
Accumulated other comprehensive income - 1,472
Accumulated deficit (543,249)   (471,340)
Total Emeritus Corporation shareholders' equity 279,100 344,345
Noncontrolling interest – related party 3,636   7,161
Total shareholders’ equity 282,736   351,506
Total liabilities, shareholders' equity and noncontrolling interest $ 2,810,328 $ 2,613,792

EMERITUS CORPORATION

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

 

 
  Three Months Ended   Years Ended
December 31, December 31,
2011   2010 2011   2010
Revenues:
Community revenue $ 318,986 $ 278,489 $ 1,233,665 $ 995,179
Management fees 5,159 5,277 21,105 11,886
Total operating revenues 324,145 283,766 1,254,770 1,007,065
 
Expenses:
Community operations (exclusive of depreciation and amortization
and community lease expense shown separately below) 219,355 185,323 847,167 662,140
General and administrative 22,162 21,786 88,767 74,480
Transaction costs 741 944 9,826 1,842
Depreciation and amortization 32,307 25,352 122,372 86,697
Community leases 31,739 31,548 124,951 122,290
Total operating expenses 306,304 264,953 1,193,083 947,449
Operating income from continuing operations 17,841 18,813 61,687 59,616
 
Other income (expense):
Interest income 74 128 429 494
Interest expense (41,418) (33,599) (157,262) (114,952)
Change in fair value of interest rate swaps 1,045 - 3,081 (182)
Net equity losses from unconsolidated joint ventures (1,829) (596) (3,081) (915)
Acquisition gain - - 42,110 -
Other, net 588 (2,256) 3,362 (1,320)
Net other expense (41,540) (36,323) (111,361) (116,875)
 
Loss from continuing operations before income taxes (23,699) (17,510) (49,674) (57,259)
Provision for income taxes (362) 1,733 (1,019) 762
Loss from continuing operations (24,061) (15,777) (50,693) (56,497)
Loss from discontinued operations (3,915) 384 (21,570) (1,345)
Net loss (27,976) (15,393) (72,263) (57,842)
Net loss attributable to the noncontrolling interest 39 237 354 883
Net loss attributable to Emeritus Corporation common shareholders $ (27,937) $ (15,156) $ (71,909) $ (56,959)
 
Basic and diluted loss per common share attributable to
Emeritus Corporation common shareholders:
Continuing operations $ (0.54) $ (0.37) $ (1.14) $ (1.39)
Discontinued operations (0.09) 0.01 (0.49) (0.03)
$ (0.63) $ (0.36) $ (1.63) $ (1.42)
 
Weighted average common shares outstanding 44,437 41,816 44,312 39,974
EMERITUS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands)
  Years Ended December 31,
2011   2010
Cash flows from operating activities:
Net loss $ (72,263) $ (57,842)
Adjustments to reconcile net loss to net cash provided by

operating activities:

Depreciation and amortization 122,372 86,697
Amortization of above/below market rents 7,532 8,635
Loss on lease termination - 2,419
Amortization of deferred gains (1,125) (1,197)
Acquisition gain (42,110) -
Net loss on sale of assets 902 795
Impairment of long-lived assets 17,947 722
Loss on early extinguishment of debt 1,978 -
Gain on sale of investments (1,569) -
Amortization of loan fees 3,283 2,964
Allowance for doubtful receivables 8,090 5,418
Equity investment losses 3,081 915
Stock-based compensation 8,106 5,934
Change in fair value of interest rate swaps (3,081) 182
Deferred straight-line rent 8,792 14,635
Deferred revenue 2,601 3,372
Other 5,754 955
Changes in other operating assets and liabilities 3,812   9,097
Net cash provided by operating activities 74,102 83,701
 
Cash flows from investing activities:
Acquisition of property and equipment (33,340) (23,593)
Community acquisitions, net of cash acquired (180,228) (33,015)
Deposits 525 -
Proceeds from the sale of assets 40,947 5,262
Lease and contract acquisition costs (368) (1,508)
Advances (to) from affiliates and other managed communities, net (2,224) (530)
Distributions from (contributions to) unconsolidated joint ventures, net 2,028   (18,218)
Net cash used in investing activities (172,660) (71,602)
 
Cash flows from financing activities:
Sale of stock, net 2,804 82,623
Contributions from (distributions to) from noncontrolling interest (6,668) 1,227
Decrease (increase) in restricted deposits (2,092) 437
Interest rate agreements on derivative instruments (1,590) -
Debt issuance and other financing costs (10,063) (2,776)
Proceeds from long-term borrowings and financings 297,991 28,000
Repayment of long-term borrowings and financings (234,029) (45,458)
Repayment of capital lease and financing obligations (14,249)   (12,098)
Net cash provided by (used in) financing activities 32,104 51,955
 
Net decrease in cash and cash equivalents (66,454) 64,054
Cash and cash equivalents at the beginning of the period 110,124 46,070
Cash and cash equivalents at the end of the period $ 43,670 $ 110,124
EMERITUS CORPORATION Lease, Interest and Depreciation Expense For the Quarters Ended (unaudited) (In thousands)
   
Projected Range
Q4 2011   Q1 2012
Community leases expense - GAAP $ 31,739 $ 31,500 - $31,600
Less:
Deferred straight-line rent (1,663) (1,200) - (1,250)
Above/below market rent (1,754) (1,800) - (1,850)
Plus:
Capital and financing lease interest 13,391 13,100 – 13,300
Capital lease principal 2,541   3,400 – 3,500
Community leases expense - CASH $ 44,254   $45,000 - $45,300
 
 
 
Interest expense – GAAP $ 41,418 $38,830 - $39,400
Less:
Capital and financing lease interest (13,391) (13,100) - (13,300)
Straight-line and equipment capital lease interest (21) (30) – (50)
Loan fee amortization (1,003)   (900) - (950)
Interest expense - CASH $ 27,003   $24,800 - $25,100

 

Depreciation – owned assets $ 18,241 $ 18,600 – $18,700
Depreciation – capital and financing leases 11,326 11,300 – 11,400
Amortization – intangible assets 2,740   2,700 – 2,800
Total depreciation and amortization expense $ 32,307   $32,600 - $32,900

EMERITUS CORPORATION

Consolidated Supplemental Financial Information

For the Quarters Ended

(unaudited) (Dollars in thousands, except non-financial and per-unit data)

         

Non-Financial Data

Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Average consolidated communities 296.7 306.7 316.0 333.3 332.8
Average available units 26,926 28,134 28,843 30,173 30,096
Average occupied units 23,212 24,205 24,793 26,095 26,059
Average occupancy 86.2% 86.0% 86.0% 86.5% 86.6%
Average monthly revenue per occupied unit $ 3,999 $ 4,059 $ 4,057 $ 4,065 $ 4,080
Calendar days 92 90 91 92 92
 

Community revenues:

Community revenues $ 274,845 $ 290,489 $ 297,501 $ 313,711 $ 313,613
Move-in fees 4,856 4,960 5,135 5,456 5,751
Move-in incentives (1,212) (729) (914) (930) (378)
Total community revenues $ 278,489 $ 294,720 $ 301,722 $ 318,237 $ 318,986
 

Community operating expenses:

Salaries and wages - regular and overtime $ 88,031 $ 91,549 $ 94,607 $ 100,223 $ 100,884
Average daily salary and wages $ 957 $ 1,017 $ 1,040 $ 1,089 $ 1,097
Average daily wages per occupied unit $ 41.22 $ 42.02 $ 41.93 $ 41.75 $ 42.08
 
Payroll taxes and employee benefits $ 27,016 $ 33,425 $ 31,588 $ 33,366 $ 32,347
Percent of salaries and wages 30.7% 36.5% 33.4% 33.3% 32.1%
 
Prior year self-insurance reserve adjustments $ 2,668 $ 32 $ 3,141 $8,605 $4,133
 
Utilities $ 11,453 $ 13,492 $ 12,073 $ 15,351 $ 12,586
Average monthly cost per occupied unit $ 164 $ 186 $ 162 $ 196 $ 161
 
Facility maintenance and repairs $ 6,023 $ 7,420 $ 7,687 $ 8,498 $ 8,178
Average monthly cost per occupied unit $ 86 $ 102 $ 103 $ 109 $ 105
 
All other community operating expenses $ 50,132 $ 53,113 $ 56,262 $ 57,380 $ 61,227
Average monthly cost per occupied unit $ 720 $ 731 $ 756 $ 733 $ 783
         
Total community operating expenses $ 185,323 $ 199,031 $ 205,358 $ 223,423 $ 219,355
 
Community operating income $ 93,166 $ 95,689 $ 96,364 $ 94,814 $ 99,631
 
Operating income margin 33.5% 32.5% 31.9% 29.8% 31.2%

EMERITUS CORPORATION

Selected Consolidated and Same Community Information

For the Quarters Ended

(unaudited)

(Community revenue and operating expense in thousands)

 
 
 

 

  Q4 2010   Q1 2011   Q2 2011   Q3 2011   Q4 2011

Consolidated:

Average consolidated communities 296.7 306.7 316.0 333.3 332.8
Community revenue $278,489 $294,720 $301,722 $318,237 $318,986
Community operating expense $185,323 $199,031 $205,358 $223,423 $219,355
Average occupancy 86.2% 86.0% 86.0% 86.5% 86.6%
Average monthly revenue per unit $ 3,999 $ 4,059 $ 4,057 $ 4,065 $ 4,080
Operating income margin 33.5% 32.5% 31.9% 29.8% 31.2%
 

Same Community:

Average consolidated communities 262.0 262.0 262.0 262.0 262.0
Community revenue $230,371 $231,510 $230,870 $233,266 $232,526
Community operating expense $147,950 $152,953 $151,012 $152,954 $153,390
Average occupancy 87.7% 87.8% 87.5% 88.1% 88.0%
Average monthly revenue per unit $ 3,807 $ 3,823 $ 3,825 $ 3,837 $ 3,831
Operating income margin 35.8% 33.9% 34.6% 34.4% 34.0%




7 of 8

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,880.36 -31.75 -0.19%
S&P 500 1,970.07 +0.12 0.01%
NASDAQ 4,462.9020 +20.2040 0.45%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs