Assisted Living Concepts, Inc. ("ALC") (NYSE: ALC) today released
supplemental financial information for the quarter and nine months
ended September 30, 2010. This supplemental information is intended
to provide investors, analysts and interested parties with further
detail regarding ALC's owned versus leased portfolio of properties.
"Recent real estate transactions have demonstrated the value of
senior housing owned assets," commented Laurie Bebo, President and
Chief Executive Officer. "We believe that providing additional
transparency into the value proposition of our owned and leased
assets is meaningful information to share with our investors."
At September 30, 2010, ALC owned 152 residences consisting of
6,780 units and operated an additional 59 residences consisting of
2,525 units under operating leases. On November 1, 2010 ALC
purchased nine residences consisting of 365 units it had previously
leased (the "Purchased Properties"). At the date of this release
ALC owned 161 residences consisting of 7,145 units and operated an
additional 50 residences consisting of 2,160 units under operating
leases.
Certain non-GAAP financial measures are used in this release.
See the attached table for definitions of Adjusted EBITDA,
reconciliations of net income to Adjusted EBITDA and non-GAAP
financial measure reconciliation information.
The following unaudited table presents selected financial
information for ALC's owned and leased properties: (dollars in
thousands)
Three Months Ended
September 30, 2010
----------------------------------------------------------------
Pro Forma Pro Forma
Net Adjusted Net Adjusted
Revenues Income (2) EBITDA (2) Income (2,3) EBITDA (2,4)
------------ ------------ ------------ ------------ ------------
Owned (1) $ 44,345 $ 4,203 $ 14,093 $ 4,368 $ 14,789
Leased 14,184 364 943 364 943
------------ ------------ ------------ ------------ ------------
Total $ 58,529 $ 4,567 $ 15,036 $ 4,732 $ 15,732
============ ============ ============ ============ ============
Nine Months Ended
September 30, 2010
----------------------------------------------------------------
Pro Forma Pro Forma
Net Adjusted Net Adjusted
Revenues Income (2) EBITDA (2) Income (2,3) EBITDA (2,4)
------------ ------------ ------------ ------------ ------------
Owned (1) $ 133,966 $ 10,774 $ 41,554 $ 11,236 $ 43,640
Leased 40,727 302 1,582 302 1,582
------------ ------------ ------------ ------------ ------------
Total $ 174,693 $ 11,076 $ 43,136 $ 11,538 $ 45,222
============ ============ ============ ============ ============
(1) Includes financial results associated with the Purchased Properties.
(2) All amounts previously reported in the ALC financial statements
as general and administrative expenses are allocated 100 percent
to owned properties.
(3) Includes pro forma adjustments (net of income tax affects) to:
i) eliminate amounts historically recorded in residence lease
expense, ii) add management's estimate of interest expense, and
iii) add or reduce depreciation expense from the Purchased Properties
as if the purchase occurred on the first day of the reported period.
See Reconciliation of Non-GAAP Financial Measures below.
(4) Includes pro forma adjustments to eliminate amounts historically
included in residence lease expense for the Purchased Properties as if
the purchase occurred on the first day of the reported periods. Residence
lease expense for the Purchased Properties was $696 and $2,086 for the
three and nine month periods ended September 30, 2010, respectively.
About Us
Assisted Living Concepts, Inc. and its subsidiaries operate 211
senior living residences comprising 9,305 units in 20 states. ALC's
senior living residences typically consist of 40 to 60 units and
offer residents a supportive, home-like setting and assistance with
the activities of daily living. ALC employs approximately 4,100
people.
Forward-looking Statements
Statements contained in this release other than statements of
historical fact, including statements regarding anticipated
financial performance, business strategy and management's plans and
objectives for future operations, including management's
expectations about improving occupancy and private pay mix, are
forward-looking statements. Forward-looking statements generally
include words such as "expect," "project," "point toward,"
"intend," "will," "indicate," "anticipate," "believe," "estimate,"
"plan," "strategy" or "objective." Forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed or implied. In addition
to the risks and uncertainties referred to in the release, other
risks and uncertainties are contained in ALC's filings with United
States Securities and Exchange Commission and include, but are not
limited to, the following: changes in the health care industry in
general and the senior housing industry in particular because of
governmental and economic influences; changes in general economic
conditions, including changes in housing markets, unemployment
rates and the availability of credit at reasonable rates; changes
in regulations governing the industry and ALC's compliance with
such regulations; changes in government funding levels for health
care services; resident care litigation, including exposure for
punitive damage claims and increased insurance costs, and other
claims asserted against ALC; ALC's ability to maintain and increase
census levels; ALC's ability to attract and retain qualified
personnel; the availability and terms of capital to fund
acquisitions and ALC's capital expenditures; changes in
competition; and demographic changes. Given these risks and
uncertainties, readers are cautioned not to place undue reliance on
ALC's forward-looking statements. All forward-looking statements
contained in this release are necessarily estimates reflecting the
best judgment of the party making such statements based upon
current information. ALC assumes no obligation to update any
forward-looking statement.
Non-GAAP Financial Measures
Adjusted EBITDA and Pro Forma Adjusted EBITDA
Adjusted EBITDA is defined as net income before income taxes,
interest expense net of interest income, depreciation and
amortization, non-cash equity based compensation expense,
transaction costs and non-cash, non-recurring gains and losses,
including disposal of assets and impairment of long-lived assets
(including goodwill) and loss on refinancing and retirement of
debt. Pro Forma Adjusted EBITDA is defined as Adjusted EBITDA plus
historically recorded residence lease expense resulting from nine
residences consisting of 365 units that ALC previously leased and
subsequently purchased on November 1, 2010, as if they were
purchased on the first day of the reported period. Adjusted EBITDA
and Pro Forma Adjusted EBITDA are not measures of performance under
accounting principles generally accepted in the United States of
America, or GAAP. We use Adjusted EBITDA as a key performance
indicator.
We understand that EBITDA, or derivatives such as Pro Forma
Adjusted EBITDA, are customarily used by lenders, financial and
credit analysts, and many investors as a performance measure in
evaluating a company's ability to service debt and meet other
payment obligations or as a common valuation measurement in the
long-term care industry. Moreover, ALC's revolving credit facility
contains covenants in which a form of EBITDA is used as a measure
of compliance, and we anticipate EBITDA will be used in covenants
in any new financing arrangements that we may establish. We believe
Adjusted EBITDA and its derivatives provide meaningful supplemental
information regarding our core results because this measure
excludes the effects of non-operating factors related to our
capital assets, such as the historical cost of the assets.
We report specific line items separately, and exclude them from
Adjusted EBITDA and its derivatives because such items are
transitional in nature and would otherwise distort historical
trends. In addition, we use Adjusted EBITDA and its derivatives to
assess our operating performance and in making financing decisions.
In particular, we use Adjusted EBITDA and its derivatives in
analyzing potential acquisitions and internal expansion
possibilities. Adjusted EBITDA and its derivatives should not be
considered in isolation or as a substitute for net income, cash
flows from operating activities, and other income or cash flow
statement data prepared in accordance with GAAP, or as a measure of
profitability or liquidity. We present Adjusted EBITDA and its
derivatives on a consistent basis from period to period, thereby
allowing for comparability of operating performance.
Reconciliation of Non-Gaap Financial Measures
The following unaudited table sets forth a reconciliation of net
income to Adjusted EBITDA and Pro Forma Adjusted EBITDA: (in
thousands)
Three Months Ended Nine Months Ended
September 30, 2010 September 30, 2010
---------------------------- -----------------------------
Owned (a) Leased Total Owned (a) Leased Total
-------- --------- -------- --------- --------- ---------
Net income $ 4,203 $ 364 $ 4,567 $ 10,774 $ 302 $ 11,076
Add: provision
for income
taxes 2,389 210 2,599 6,167 173 6,340
-------- --------- -------- --------- --------- ---------
Income before
income taxes 6,592 574 7,166 16,941 475 17,416
Add: -
Depreciation
and
amortization 5,376 369 5,745 16,006 1,107 17,113
Interest
expense, net 1,891 - 1,891 5,670 - 5,670
Non-cash
equity based
compensation 252 - 252 614 - 614
Loss (gain) on
disposal of
fixed assets (36) - (36) 279 - 279
Write-down of
equity
investments - - 2,026 - 2,026
Transaction
expenses
associated
with property
acquisition 18 - 18 18 - 18
-------- --------- -------- --------- --------- ---------
Adjusted EBITDA $ 14,093 $ 943 $ 15,036 $ 41,554 $ 1,582 $ 43,136
-------- --------- -------- --------- --------- ---------
Pro forma
Adjustments
(b):
Net income $ 165 - $ 165 $ 462 - $ 462
Provision for
income taxes 94 - 94 266 - 266
-------- --------- -------- --------- --------- ---------
Pro forma
income before
income taxes 259 - 259 728 - 728
Add: - -
Pro forma
depreciation
and
amortization (10) - (10) 17 - 17
Pro forma
interest
expense, net 447 - 447 1,341 - 1,341
-------- --------- -------- --------- --------- ---------
Adjusted EBITDA
from pro forma
adjustments $ 696 - $ 696 $ 2,086 - $ 2,086
-------- --------- -------- --------- --------- ---------
Pro forma
Adjusted
EBITDA $ 14,789 $ 943 $ 15,732 $ 43,640 $ 1,582 $ 45,222
======== ========= ======== ========= ========= =========
(a) Includes financial results associated with the Purchased Properties.
(b) Includes pro forma adjustments (net of income tax affects) to: i)
eliminate amounts historically recorded in residence lease expense, ii) add
management's estimate of interest expense, and iii) add or reduce
depreciation expense from the Purchased Properties as if the purchase
occurred on the first day of the reported period.
For further information, contact: Assisted Living Concepts, Inc.
John Buono Sr. Vice President, Chief Financial Officer and
Treasurer Phone: (262) 257-8999 Fax: (262) 251-7562 Email: Email
Contact Visit ALC's Website @ www.alcco.com
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