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Five Star Quality Care, Inc. Reports Third Quarter 2012 Results

Stocks in this article: FVE

WARNING REGARDING FORWARD LOOKING STATEMENTS

THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

  • THIS PRESS RELEASE STATES THAT WE EXPECT TO BEGIN MANAGING THE REMAINING TWO COMMUNITIES OWNED BY SNH AND CURRENTLY LEASED BY SUNRISE BEFORE YEAR END 2012 AND AFTER ALL APPROPRIATE REGULATORY APPROVALS ARE OBTAINED. THE TRANSFER OF OPERATING CONTROL OF THESE TWO COMMUNITIES IS SUBJECT TO REGULATORY APPROVALS IN THE STATE WHERE EACH COMMUNITY IS LOCATED. WE CANNOT CONTROL THE RESULTS OR TIMING OF THESE APPROVAL PROCESSES. ACCORDINGLY, SOME OF THESE APPROVALS MAY BE DELAYED OR NOT OCCUR AND OUR BEGINNING TO MANAGE THESE COMMUNITIES MAY BE DELAYED OR MAY NOT OCCUR.
  • THIS PRESS RELEASE REFERS TO OUR FOCUSING OPERATIONS ON THE PRIVATE PAY INDEPENDENT AND ASSISTED LIVING BUSINESS. OUR ABILITY TO SUCCESSFULLY OPERATE INDEPENDENT AND ASSISTED LIVING BUSINESSES DEPENDS ON A NUMBER OF FACTORS, INCLUDING OUR RESIDENTS’ CONTINUED ABILITY TO PAY FOR SERVICES WITH PRIVATE RESOURCES, OUR ABILITY TO MAINTAIN AND INCREASE OCCUPANCY AND RATES FOR THESE SERVICES, OUR ABILITY TO SUCCESSFULLY ADD ADDITIONAL INDEPENDENT AND ASSISTED LIVING UNITS BY ACQUISITION OR OTHERWISE, GOVERNMENT REGULATION IMPACTING THESE BUSINESSES AND OTHER MATTERS. AS SUCH, THERE CAN BE NO ASSURANCE THAT WE WILL BE ABLE TO SUCCESSFULLY INCREASE OR MAINTAIN OUR FOCUS ON THESE OPERATIONS.
  • RESIDENTS AND PATIENTS WHO PAY FOR OUR SERVICES WITH THEIR PRIVATE RESOURCES MAY BECOME UNABLE TO AFFORD OUR SERVICES WHICH COULD RESULT IN DECREASED OCCUPANCY AND REVENUES AT OUR SENIOR LIVING COMMUNITIES AND REHABILITATION HOSPITALS AND INCREASED RELIANCE ON GOVERNMENT AND OTHER PAYERS.
  • THIS PRESS RELEASE STATES THAT OUR EXPECTED EFFECTIVE NET CASH RECEIPTS RESULTING FROM THE SALE OF OUR PHARMACY BUSINESS ARE $37.8 MILLION, BEFORE TAXES AND TRANSACTION COSTS. THESE NET CASH RECEIPTS INCLUDE ACCOUNTS RECEIVABLE THAT WE RETAINED. FURTHER, THE PURCHASE AGREEMENT INCLUDES CUSTOMARY INDEMNIFICATION OBLIGATIONS AND REQUIRED US TO ESCROW A PORTION OF THE PURCHASE PRICE IN CONNECTION WITH THE INDEMNIFICATION OBLIGATIONS. IF WE ARE UNABLE TO COLLECT ACCOUNTS RECEIVABLE THAT WE HAVE RETAINED OR ARE REQUIRED TO PAY AMOUNTS (INCLUDING WITH ESCROWED PROCEEDS) TO SATISFY INDEMNIFICATION OBLIGATIONS IN THE FUTURE, THE ACTUAL NET CASH RECEIPTS WE MAY REALIZE FROM THE SALE, AND ANY CORRESPONDING CAPITAL GAIN, MAY BE REDUCED.
  • THIS PRESS RELEASE STATES THAT WE HAVE ENTERED INTO AN AGREEMENT TO SELL TWO SNFs THAT WE OWN LOCATED IN MICHIGAN. THIS SALE IS SUBJECT TO CUSTOMARY CLOSING CONDITIONS. SOME OF THESE CONDITIONS MAY NOT BE MET, THE SALE MAY NOT OCCUR OR THE SALE MAY BE DELAYED.

RESULTS THAT DIFFER FROM THOSE STATED OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS MAY ALSO BE CAUSED BY VARIOUS CHANGES IN OUR BUSINESS OR MARKET CONDITIONS, AS DESCRIBED MORE FULLY IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2011, UNDER “WARNING CONCERNING FORWARD LOOKING STATEMENTS,” AND “RISK FACTORS” AND UNDER “WARNING CONCERNING FORWARD LOOKING STATEMENTS” AND ELSEWHERE IN OUR QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2012. COPIES OF THAT ANNUAL REPORT AND QUARTERLY REPORT ARE AVAILABLE AT THE WEBSITE OF THE U.S. SECURITIES AND EXCHANGE COMMISSION: WWW.SEC.GOV.

FOR THESE REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.

FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
(unaudited)
           
Three months ended

September 30,

Nine months ended

September 30,

2012   2011   2012   2011  
Revenues:
Senior living revenue $ 277,568 $ 275,605 $ 831,864 $ 803,647
Rehabilitation hospital revenue 26,328 26,273 79,501 78,235
Management fee revenue 1,277 359 3,666 383

Reimbursed costs incurred on behalf of managed communities

  27,247     8,324     76,750     8,887  
Total revenues   332,420     310,561     991,781     891,152  
 
Operating expenses:
Senior living wages and benefits 137,816 136,135 412,808 398,975

Other senior living operating expenses

66,858 68,669 200,062 193,123

Costs incurred on behalf of managed communities

27,247 8,324 76,750 8,887
Rehabilitation hospital expenses 23,734 23,300 71,725 70,798
Rent expense 50,523 50,138 151,043 145,474
General and administrative 14,602 14,418 45,445 42,242
Depreciation and amortization   6,324     5,497     18,631     13,705  
Total operating expenses   327,104     306,481     976,464     873,204  
 
Operating income 5,316 4,080 15,317 17,948
 
Interest and other income 199 355 638 975
Interest and other expense (1,762 ) (1,034 ) (4,793 ) (2,405 )
Acquisition related costs (100 ) (226 ) (100 ) (1,530 )
Gain on settlement - - 3,365 -
Gain on early extinguishment of debt - - 45 1
Equity in earnings of Affiliates Insurance Company 115 28 236 111

Gain on sale of available for sale securities reclassified from other comprehensive income

  63     529     62     656  
 

Income from continuing operations before income taxes

3,831 3,732 14,770 15,756
Provision for income taxes   (426 )   (186 )   (4,835 )   (1,006 )
Income from continuing operations 3,405 3,546 9,935 14,750
Income (loss) from discontinued operations   13,034     (4,074 )   11,511     (5,950 )
 
Net income (loss) $ 16,439   $ (528 ) $ 21,446   $ 8,800  
 
 
Weighted average shares outstanding - basic   47,927     47,557     47,913     40,294  
 
Weighted average shares outstanding - diluted   50,388     47,557     47,913     43,169  
 
Basic income (loss) per share from:
Continuing operations $ 0.07 $ 0.08 $ 0.21 $ 0.37
Discontinued operations   0.27     (0.09 )   0.24     (0.15 )
Net income (loss) per share - basic $ 0.34   $ (0.01 ) $ 0.45   $ 0.22  
 
Diluted income (loss) per share from:
Continuing operations $ 0.07 $ 0.08 $ 0.21 $ 0.36
Discontinued operations   0.26     (0.09 )   0.24     (0.14 )
Net income (loss) per share - diluted $ 0.33   $ (0.01 ) $ 0.45   $ 0.22  
 
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS DATA
(in thousands)
(unaudited)
       
September 30,

2012

December 31,

2011

Assets
Current assets:
Cash and cash equivalents $ 14,295 $ 28,374
Accounts receivable, net of allowance 54,880 56,509
Investments in available for sale securities 14,942 9,114
Restricted cash 5,904 4,838
Prepaid expenses and other current assets 25,441 20,395
Assets of discontinued operations   13,003   29,022
Total current assets 128,465 148,252
 
Property and equipment, net 336,889 332,185
Restricted cash 9,262 4,092
Restricted investments in available for sale securities 11,904 13,115
Goodwill, equity investment and other long term assets   76,986   85,833
Total assets $ 563,506 $ 583,477
 
Liabilities and Shareholders' Equity
Current liabilities:
Bridge loan from Senior Housing Properties Trust $ - $ 38,000
Other current liabilities   157,904   151,331
Total current liabilities 157,904 189,331
 
Mortgage notes payable 37,900 38,714
Convertible senior notes 24,872 37,282
Other long term liabilities 40,103 37,956
Shareholders’ equity   302,727   280,194
Total liabilities and shareholders' equity $ 563,506 $ 583,477
 
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
           
Three months ended September 30, Nine months ended September 30,
2012   2011   2012   2011  
 
Cash flows from operating activities:
Net income (loss) $ 16,439 $ (528 ) $ 21,446 $ 8,800

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 6,324 5,497 18,631 13,705
Gain on early extinguishment of debt - - (45 ) (1 )
(Gain) loss from discontinued operations (13,034 ) 4,074 (11,511 ) 5,950
Gain on sale of available for sale securities (63 ) (529 ) (62 ) (656 )

Equity in earnings of Affiliates Insurance Company

(115 ) (28 ) (236 ) (111 )
Stock-based compensation 159 87 649 949
Provision for losses on receivables 1,470 1,143 3,949 5,178
Changes in assets and liabilities:
Accounts receivable (520 ) 1,441 (2,320 ) (2,118 )
Prepaid expenses and other assets (1,240 ) (3,031 ) 2,408 (2,735 )
Accounts payable and accrued expenses (2,198 ) 7,665 906 7,028
Accrued compensation and benefits 3,650 (2,643 ) 9,143 6,096
Due to related persons (3,165 ) (1,111 ) (5,868 ) (1,535 )

Other current and long term liabilities

  6,200     4,598     6,145     5,407  
Cash provided by operating activities   13,907     16,635     43,235     45,957  
 

Net cash (used in) provided by discontinued operations

  (9,259 )   514     (8,317 )   652  
 
Cash flows from investing activities:
Acquisition of property and equipment (11,933 ) (14,786 ) (40,251 ) (44,562 )

Acquisition of senior living communities, net of working capital assumed

- (53,426 ) - (107,165 )
Payments from restricted cash and investment accounts, net (2,346 ) (698 ) (6,236 ) (3,117 )
Purchase of available for sale securities (522 ) - (5,076 ) -
Proceeds from sale of pharmacy 34,298 - 34,298 -

Proceeds from disposition of property and equipment held for sale

4,156 10,554 18,249 25,877

Proceeds from sale of available for sale securities

  156     1,223     928     2,504  

Cash provided by (used in) investing activities

  23,809     (57,133 )   1,912     (126,463 )
 
Cash flows from financing activities:
Net proceeds from issuance of common stock - - - 53,953

Proceeds from borrowings on credit facilities

- - 47,500 12,000
Repayments of borrowings on credit facilities (37,500 ) - (47,500 ) (12,000 )

Proceeds from borrowing on the bridge loan from Senior Housing Properties Trust

- 39,000 - 80,000

Repayments of borrowing on the bridge loan from Senior Housing Properties Trust

- - (38,000 ) (32,000 )
Purchase and retirement of convertible senior notes - - (12,038 ) (623 )

Repayments of mortgage notes payable

  (297 )   (228 )   (871 )   (300 )

Cash (used in) provided by financing activities

  (37,797 )   38,772     (50,909 )   101,030  
 
Change in cash and cash equivalents during the period (9,340 ) (1,212 ) (14,079 ) 21,176
Cash and cash equivalents at beginning of period   23,635     43,158     28,374     20,770  
Cash and cash equivalents at end of period $ 14,295   $ 41,946   $ 14,295   $ 41,946  
 
Cash paid for interest $ 960 $ 259 $ 3,711 $ 1,454
Cash paid for income taxes $ 317 $ 215 $ 1,552 $ 1,257
 
Non-cash activities:
Issuance of common stock $ - $ - $ 114 $ 298
Real estate acquisition $ - $ (20,337 ) $ - $ (40,289 )
Assumption of mortgage notes payable $ - $ 20,337 $ - $ 40,289
 
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA (1)
(dollars in thousands, except average daily rate)
         
Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
Senior living communities owned and leased: (2)
Number of communities 222 222 222 222
Number of units 23,764 23,764 23,764 23,764
Occupancy 85.7% 86.0% 85.7% 85.6%
ADR $ 145.56 $ 147.46 $ 146.64 $ 150.15
 
Senior living revenue:
Independent and assisted living community revenue $ 124,387 $ 119,082 $ 369,864 $ 334,919
Continuing care retirement communities revenue 96,810 99,285 291,197 298,056
Skilled nursing facility revenue 53,060 54,745 160,919 163,580
Other (3)   3,311   2,493   9,884   7,092
Total senior living revenue $ 277,568 $ 275,605 $ 831,864 $ 803,647
 
Senior living wages and benefits:
Independent and assisted living community wages and benefits $ 53,803 $ 52,144 $ 161,321 $ 147,951
Continuing care retirement communities wages and benefits 47,889 48,358 144,109 143,116
Skilled nursing facility wages and benefits 33,998 34,579 102,611 103,780
Other (3)   2,126   1,054   4,767   4,128
Total senior living wages and benefits $ 137,816 $ 136,135 $ 412,808 $ 398,975
 
Senior living other operating expenses:
Independent and assisted living community other operating expenses $ 29,651 $ 29,019 $ 88,332 $ 78,540

Continuing care retirement communities other operating expenses

23,829 25,283 71,101 73,351
Skilled nursing facility other operating expenses 13,056 13,816 39,116 39,954
Other (3)   322   551   1,513   1,278
Total other senior living operating expenses $ 66,858 $ 68,669 $ 200,062 $ 193,123
 
 
 
Percent breakdown of independent and assisted living community revenues:
Private and other sources 98.8% 98.9% 98.9% 98.9%
Medicaid   1.2%   1.1%   1.1%   1.1%
Total   100.0%   100.0%   100.0%   100.0%
 
Percent breakdown of continuing care retirement community revenues:
Private and other sources 71.1% 68.7% 70.8% 68.1%
Medicare 22.3% 24.8% 22.6% 25.8%
Medicaid   6.6%   6.5%   6.6%   6.1%
Total   100.0%   100.0%   100.0%   100.0%
 
Percent breakdown of skilled nursing facility revenues:
Private and other sources 25.9% 24.7% 25.3% 24.4%
Medicare 24.2% 27.9% 24.6% 27.8%
Medicaid   49.9%   47.4%   50.1%   47.8%
Total   100.0%   100.0%   100.0%   100.0%
 
Percent breakdown of total senior living revenues:
Private and other sources 75.0% 73.0% 74.5% 72.0%
Medicare 12.6% 14.7% 12.8% 15.4%
Medicaid   12.4%   12.3%   12.7%   12.6%
Total   100.0%   100.0%   100.0%   100.0%
 

(1) Excludes data for managed communities and discontinued senior living operations.

(2) Includes independent and assisted living communities, continuing care communities and skilled nursing facilities.

(3) Other senior living relates primarily to rehabilitation and other specialty service revenues provided at residential facilities and does not include revenues from institutional pharmacy or rehabilitation hospital operations.

 
FIVE STAR QUALITY CARE, INC.
COMPARABLE SENIOR LIVING COMMUNITY FINANCIAL DATA (1)
(dollars in thousands, except average daily rate)
  Three months ended   Nine months ended
September 30, (2) September 30, (3)
2012   2011 2012   2011
Senior living communities owned and leased: (4)
Number of communities 218 218 209 209
Number of units 23,278 23,278 22,175 22,175
Occupancy 85.7% 86.0% 85.4% 85.5%
ADR $ 146.88 $ 147.65 $ 150.79 $ 151.48
 
Senior living revenue:
Independent and assisted living community revenue $ 121,233 $ 118,531 $ 332,096 $ 322,989
Continuing care retirement communities revenue 96,810 99,285 291,197 298,056
Skilled nursing facility revenue 53,060 54,745 160,919 163,580
Other (5)   3,311   2,493   9,884   7,092
Total senior living revenue $ 274,414 $ 275,054 $ 794,096 $ 791,717
 
Senior living wages and benefits:
Independent and assisted living community wages and benefits $ 52,874 $ 51,830 $ 148,823 $ 143,700
Continuing care retirement communities wages and benefits 47,889 48,358 144,109 143,116
Skilled nursing facility wages and benefits 33,998 34,579 102,611 103,780
Other (5)   2,126   1,054   4,767   4,128
Total senior living wages and benefits $ 136,887 $ 135,821 $ 400,310 $ 394,724
 
Senior living other operating expenses:
Independent and assisted living community other operating expenses $ 28,673 $ 28,787 $ 78,586 $ 75,513
Continuing care retirement communities other operating expenses 23,829 25,283 71,101 73,351
Skilled nursing facility other operating expenses 13,056 13,816 39,116 39,954
Other (5)   322   551   1,513   1,278
Total other senior living operating expenses $ 65,880 $ 68,437 $ 190,316 $ 190,096
 
 
Percent breakdown of independent and assisted living community revenues:
Private and other sources 98.9% 98.9% 99.0% 98.9%
Medicaid   1.1%   1.1%   1.0%   1.1%
Total   100.0%   100.0%   100.0%   100.0%
 
Percent breakdown of continuing care retirement community revenues:
Private and other sources 71.1% 68.7% 70.8% 68.1%
Medicare 22.3% 24.8% 22.6% 25.8%
Medicaid   6.6%   6.5%   6.6%   6.1%
Total   100.0%   100.0%   100.0%   100.0%
 
Percent breakdown of skilled nursing facility revenues:
Private and other sources 25.9% 24.7% 25.3% 24.4%
Medicare 24.2% 27.9% 24.6% 27.8%
Medicaid   49.9%   47.4%   50.1%   47.8%
Total   100.0%   100.0%   100.0%   100.0%
 
Percent breakdown of total senior living revenues:
Private and other sources 74.7% 72.9% 73.4% 71.7%
Medicare 12.7% 14.7% 13.4% 15.6%
Medicaid   12.6%   12.4%   13.2%   12.7%
Total   100.0%   100.0%   100.0%   100.0%
 

(1) Excludes data for managed communities and discontinued senior living operations.

(2) Communities that we have operated continuously since July 1, 2011.

(3) Communities that we have operated continuously since January 1, 2011.

(4) Includes independent and assisted living communities, continuing care communities and skilled nursing facilities.

(5) Other senior living relates primarily to rehabilitation and other specialty service revenues provided at residential facilities and does not include revenues from institutional pharmacy or rehabilitation hospital operations.

 
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING OTHER OPERATING DATA (1)
(dollars in thousands, except average daily rate)
         
Three months ended
September 30, June 30, March 31, December 31, September 30,
  2012     2012     2012     2011     2011
Number of senior living communities (end of period)
Senior living communities, owned 31 31 31 31 31
Senior living communities, leased 191 191 191 191 191
Senior living communities, managed   30     25     25     23     14
Total number of senior living communities   252     247     247     245     236
 
Number of senior living units (end of period):
Senior living communities, owned 2,952 2,952 2,952 2,952 2,952
Senior living communities, leased 20,812

20,812

20,812 20,812 20,812
Senior living communities, managed   4,498     3,738     3,738     3,393     1,415
Total number of senior living units   28,262     27,502     27,502     27,157     25,179
 
Independent and assisted living communities: (2)
Number of communities 153 153 153 153 153
Number of units 13,005 13,005 13,005 13,005 13,005
Occupancy 88.0% 87.6% 87.7% 88.3% 88.2%
ADR $ 117.24 $ 117.90 $ 117.21 $ 114.90 $ 115.87
 
CCRC communities: (2)
Number of communities 31 31 31 31 31
Number of units (3) 7,336 7,336 7,336 7,336 7,336
Occupancy 84.1% 84.0% 84.8% 84.9% 84.2%
ADR $ 170.57 $ 172.83 $ 172.20 $ 168.63 $ 174.73
 
Skilled nursing facilities: (2)
Number of communities 38 38 38 38 38
Number of units (4) 3,423 3,423 3,423 3,423 3,423
Occupancy 80.2% 80.9% 81.6% 81.4% 81.7%
ADR $ 207.35 $ 215.79 $ 208.85 $ 206.94 $ 212.82
 
Senior living communities owned and leased: (2)
Number of communities 222 222 222 222 222
Number of units 23,764 23,764 23,764 23,764 23,764
Occupancy 85.7% 85.5% 85.9% 86.2% 86.0%
ADR $ 145.56 $ 147.89 $ 146.50 $ 143.73 $ 147.46
 
Managed communities:
Number of communities 30 25 25 23 14
Number of units (5) 4,498 3,738 3,738 3,393 1,415
Occupancy 87.4% 87.6% 87.3% 85.4% 83.0%
ADR $ 132.08 $ 133.34 $ 132.01 $ 120.51 $ 114.68
 
Rehabilitation hospital data:
Rehabilitation hospital units 321 321 321 321 321
Rehabilitation hospital occupancy 60.7% 59.8% 60.4% 61.4% 59.7%
 
Other ancillary services:
Rehabilitation and wellness inpatient clinics 50 48 47 47 47
Rehabilitation and wellness outpatient clinics 46 44 41 39 30
Home health communities served 6 6 6 6 6
 

(1) Excludes data for discontinued operations.

(2) Excludes data for managed communities.

(3) Includes 2,020 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.

(4) Includes 87 assisted living and independent living units in communities where skilled nursing services are the predominant services provided.

(5) Includes 71 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.

 

FIVE STAR QUALITY CARE, INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except per share data)

Earnings before interest, taxes, depreciation and amortization, or EBITDA, and EBITDA excluding certain items (collectively, Non-GAAP Financial Measures) are not financial measures determined according to U.S. generally accepted accounting principles, or GAAP. We consider these Non-GAAP Financial Measures to be meaningful disclosures because we believe that the presentation of these Non-GAAP Financial Measures may help investors to gain a better understanding of changes in our operating results, and may also help investors who wish to make comparisons between us and other companies on both a GAAP and a non-GAAP basis. These Non-GAAP Financial Measures are used by management to evaluate our financial performance and for comparing our performance over time and to the performance of our competitors. These Non-GAAP Financial Measures as presented may not, however, be comparable to amounts calculated by other companies. This information should not be considered as an alternative to income from continuing operations, net income from continuing operations, net income, cash flows from operating activities or any other financial operating or performance or liquidity measure established by GAAP. The reconciliation of income from continuing operations to these Non-GAAP Financial Measures is as follows:

    Three months ended     Nine months ended
September 30,   September 30, September 30,   September 30,
2012   2011   2012   2011  
Income from continuing operations $ 3,405 $ 3,546 $ 9,935 $ 14,750
Add: interest and other expense 1,762 1,034 4,793 2,405
Add: income tax expense 426 186 4,835 1,006
Add: depreciation and amortization 6,324 5,497 18,631 13,705

Less: interest, dividend and other income

  (199 )   (355 )   (638 )   (975 )
EBITDA 11,718 9,908 37,556 30,891
Add: acquisition related costs 100 226 100 1,530

Less: gain on sale of investments in available for sale securities

(63 ) (529 ) (62 ) (656 )
Less: gain on early extinguishment of debt - - (45 ) (1 )
Less: gain on settlement   -     -     (3,365 )   -  
EBITDA excluding certain items $ 11,755   $ 9,605   $ 34,184   $ 31,764  




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