Assisted Living Concepts, Inc. ("ALC") (NYSE: ALC)
Highlights:
-- Increased Adjusted EBITDAR as a percent of revenues to record levels
of 35.7%, up from 34.1% and 34.5% in the fourth quarter of 2009 and the
third quarter of 2010, respectively
-- Increased average private pay occupancy by 45 and 3 units over the
fourth quarter of 2009 and the third quarter of 2010, respectively
-- Increased average private pay occupancy for the 2010 year by 90 units
over 2009
-- Refinanced $120 million revolving credit facility scheduled to expire
in November 2011 with a five-year $125 million revolving credit
facility expiring in February 2016
Assisted Living Concepts, Inc. ("ALC") (NYSE: ALC) reported net
income of $5.4 million ($0.46 per diluted common share) in the
fourth quarter of 2010 as compared to net income of $4.3 million
($0.37 per diluted common share) in the fourth quarter of 2009.
"During the fourth and early part of the first quarter, we
completed our acquisition of nine previously leased residences and
refinanced our line of credit. Appraised values of the units
securing the new line of credit were in excess of $130,000 per
unit," commented Laurie Bebo, President and Chief Executive
Officer. "Operating results continue to demonstrate the tremendous
potential of our private pay strategy as Adjusted EBITDAR dollars
and Adjusted EBITDAR margins reached record levels."
For the year ended December 31, 2010, ALC reported net income of
$16.5 million. During the second quarter of 2010, ALC recorded the
following "One-Time Charges": an impairment charge relating to a
non-cash write-down of certain equity investments ($1.3 million net
of income tax benefits); expenses associated with the realignment
of our divisions ($0.3 million net of income tax benefits); and a
write-off of expenses incurred with an expansion project that the
company decided not to complete ($0.1 million net of income tax
benefits). In the fourth quarter of 2010, ALC recorded transaction
fees associated with the purchase of nine previously leased
properties ($0.1 million net of income tax benefits). Excluding
these One-Time Charges and the transaction fees, net income for the
year ended December 31, 2010 would have been $18.2 million compared
to net income from continuing operations and a net loss of $0.8
million and $0.2 million, respectively, in the year ended December
31, 2009. Excluding an impairment charge related to the non-cash,
non-recurring write-off of all goodwill ($14.7 million net of
income tax benefits) recorded in the first quarter of 2009 and the
non-cash non-recurring write-off resulting from a decision not to
exercise a purchase option on four leased properties recorded in
the fourth quarter of 2009 ($0.9 million net of income tax
benefits, of which $0.1 million net of tax benefits was
attributable to continuing operations), net income from continuing
operations and net income for the year ended December 31, 2009,
would have been $15.6 million and $15.4 million, respectively.
Diluted earnings per common share for the fourth quarter and the
year ended December 31, 2010 and 2009 were:
Quarter ended Year ended
December 31, December 31,
2010 2009 2010 2009
------------ ------------- ------------ ------------
Diluted earnings
per common share
from continuing
operations $ 0.46 $ 0.37 $ 1.41 $ 0.07
Diluted earnings
(loss) per common
share $ 0.46 $ 0.37 $ 1.41 $ (0.01)
Pro forma diluted
earnings per
common share from
continuing
operations
excluding
non-recurring
charges $ 0.47(2) $ 0.37 $ 1.56(2) $ 1.33(1)(3)
(1) Excludes non-cash non-recurring write-off of property impairment, net
of income tax benefits.
(2) Excludes One-Time Charges and transaction costs, net of income tax
benefits.
(3) Excludes non-cash non-recurring write-off of goodwill net of income tax
benefits.
Certain non-GAAP financial measures are used in the discussions
in this release in assessing the performance of the business. See
attached tables for definitions of Adjusted EBITDA and Adjusted
EBITDAR, reconciliations of net income (loss) to Adjusted EBITDA
and Adjusted EBITDAR, calculations of Adjusted EBITDA and Adjusted
EBITDAR as a percentage of total revenues, and non-GAAP financial
measure reconciliation information.
As of December 31, 2010, ALC operated 211 senior living
residences comprising 9,305 units.
The following discussions exclude the impact of discontinued
operations.
Quarters ended December 31, 2010, December 31, 2009, September
30, 2010
Revenues of $58.4 million in the fourth quarter ended December
31, 2010 increased $0.7 million or 1.2% from $57.7 million in the
fourth quarter of 2009 and declined by $0.1 million or 0.2% from
the third quarter of 2010.
Adjusted EBITDAR for the fourth quarter of 2010 was $20.9
million or 35.7% of revenues and
-- increased $1.2 million or 6.1% from $19.7 million and 34.1% of revenues
in the fourth quarter of 2009; and
-- increased $0.7 million or 3.4% from $20.2 million and 34.5% of revenues
in the third quarter of 2010.
Adjusted EBITDA for the fourth quarter of 2010 was $16.4 million
or 28.0% of revenues and
-- increased $1.8 million or 12.2% from $14.6 million and 25.3% of
revenues in the fourth quarter of 2009; and
-- increased $1.4 million or 9.0% from $15.0 million and 25.7% of
revenues in the third quarter of 2010.
Fourth quarter 2010 compared to fourth quarter 2009
Revenues in the fourth quarter of 2010 increased from the fourth
quarter of 2009 primarily due to higher average daily revenue as a
result of rate increases ($1.5 million) and an increase in private
pay occupancy ($0.5 million), partially offset by the planned
reduction in the number of units occupied by Medicaid residents
($1.3 million). Average private pay rates increased in the fourth
quarter of 2010 by 2.7% over average private pay rates for the
fourth quarter of 2009. Average overall rates, including the impact
of improved payer mix, increased in the fourth quarter of 2010 by
3.9% over comparable rates for the fourth quarter of 2009. The
average number of units occupied by Medicaid residents declined by
192 units.
Adjusted EBITDAR increased in the fourth quarter of 2010
primarily due to an increase in revenues discussed above ($0.7
million), a decrease in general and administrative expenses ($0.3
million) (this excludes non-cash equity-based compensation) and a
decrease in residence operations expenses ($0.2 million) (this
excludes gains and losses on the disposals of fixed assets).
Adjusted EBITDA increased in the fourth quarter of 2010 due to the
same reasons as Adjusted EBITDAR and from a decrease in residence
lease expense ($0.6 million). General and administrative expense
declined primarily from a decrease in professional fees. Residence
operations expense declined primarily from lower labor costs
associated with the reduction of Medicaid residents. Residence
lease expense decreased as a result of the November 1, 2010,
purchase of nine previously leased properties.
Fourth quarter 2010 compared to the third quarter 2010
Revenues in the fourth quarter of 2010 declined by $0.1 million
from the third quarter of 2010. This was due to the planned
reduction in the number of occupied Medicaid units slightly
outpacing gains in private pay occupancy.
Adjusted EBITDAR increased in the fourth quarter of 2010
primarily from a decrease in residence operations expenses ($0.6
million) (this excludes gains and losses on the disposals of fixed
assets) and a decrease in general and administrative expenses ($0.2
million) (this excludes non-cash equity-based compensation and
transaction fees), partially offset by the decline in overall
revenues ($0.1 million). Adjusted EBITDA increased in the fourth
quarter of 2010 for the same reasons as Adjusted EBITDAR and from a
decrease in residence lease expense ($0.7 million). Residence
operations expenses decreased primarily from decreases in utility
expenses resulting from normal seasonal fluctuations. Residence
lease expense decreased primarily as a result of the November 1,
2010, purchase of nine previously leased properties.
Years ended December 31, 2010 and December 31, 2009
Revenues of $233.1 million in the year ended December 31, 2010
increased $4.4 million or 1.9% from $228.7 million in the year
ended December 31, 2009.
Adjusted EBITDAR for the year ended December 31, 2010 was $79.4
million, or 34.0% of revenues and
-- increased $5.7 million or 7.8% from $73.6 million and 32.2%
of revenues in the 2009 year.
Adjusted EBITDA for the year ended December 31, 2010 was $59.5
million, or 25.5% of revenues and
-- increased $5.9 million or 11.2% from $53.6 million and 23.4%
of revenues in the 2009 year.
Year ended December 31, 2010 compared to year ended December 31,
2009
Revenues in the year ended December 31, 2010 increased from the
year ended December 31, 2009 primarily due to higher average daily
revenue from rate increases ($7.5 million) and an increase in
private pay occupancy ($3.7 million), partially offset by the
planned reduction in the number of units occupied by Medicaid
residents ($6.8 million). The average number of units occupied by
private pay residents increased by 90 units, while the average
number of units occupied by Medicaid residents declined by 257
units. Average private pay rates increased in the year ended
December 31, 2010 by 3.4% over average private pay rates for the
year ended December 31, 2009. Average overall rates, including the
impact of improved payer mix, increased in the year ended December
31, 2010 by 5.0% over the comparable rates for the year ended
December 31, 2009.
Adjusted EBITDAR increased in the year ended December 31, 2010
primarily from the increase in revenues discussed above ($4.4
million), and a decrease in residence operations expenses ($2.4
million) (this excludes the loss on disposal of fixed assets),
partially offset by an increase in general and administrative
expenses ($1.1 million) (this excludes non-cash equity based
compensation and transaction fees). Adjusted EBITDA increased in
the year ended December 31, 2010 for the same reasons as Adjusted
EBITDAR and from a decrease in residence lease expense ($0.2
million). Residence operations expenses decreased primarily from
lower labor expenses. Staffing needs in the year ended December 31,
2010 as compared to the year ended December 31, 2009 decreased
primarily because of a reduction in the number of units occupied by
Medicaid residents who tend to have higher care needs than private
pay residents. In addition, general economic conditions enabled us
to hire new employees at lower wage rates. General and
administrative expenses increased primarily from upfront costs
associated with transitioning payroll and benefits from a third
party vendor to in-house, expenses associated with an all-company
conference held in the second quarter of 2010, and expenses
associated with the second quarter realignment of our
divisions.
Liquidity
On February 18, 2011, ALC entered into a five year, $125 million
revolving credit facility with U.S. Bank National Association as
administrative agent and certain other lenders (the "U.S. Bank
Credit Facility"). ALC and three of ALC's subsidiaries that own 31
residences consisting of approximately 1,313 units have granted
first priority security interests of each of the three subsidiaries
including a perfected first priority mortgage on certain real
properties. The appraised average per unit value was in excess of
$130,000. Interest rates applicable to funds borrowed under the
facility are based, at ALC's option, on either a base rate
(essentially equal to the prime rate) or a Eurodollar rate
(essentially equal to LIBOR) plus a margin that varies according to
a pricing grid based on a consolidated leverage test. The initial
margin on base rate and Eurodollar rate loans are 1.75% and 2.75%,
respectively.
The U.S. Bank Facility replaced a $120 million credit facility
with General Electric Capital Corporation and other lenders (The
"GE Facility") which was scheduled to expire on November 11, 2011.
The GE Facility was secured by certain ALC subsidiaries that owned
64 residences and by a lien against substantially all of the assets
of ALC. The GE Facility bore interest at a rate of LIBOR plus
1.50%.
Share Repurchase Program
In 2010, ALC repurchased 92,485 shares of its Class A Common
Stock at a cost of $2.8 million and an average price of $30.27 per
share (excluding fees). Through March 3, 2011 ALC repurchased an
additional 19,600 shares of its Class A Common Stock at a cost of
$0.6 million and an average price of $31.50 per share (excluding
fees). At March 3, 2011, $13.5 million remained under a previously
authorized plan to purchase ALC Class A common stock. Since
becoming a separately traded public company on November 11, 2006
ALC has repurchased 2,460,937 shares of its Class A Common Stock at
a cost of $76.4 million and an average price of $31.03 per share
(excluding fees).
Acquisition
On November 1, 2010 ALC completed its previously announced
acquisition of nine senior living residences. The nine residences
were previously leased and operated by ALC. The purchase price was
$27.5 million in cash plus certain transaction costs. As part of
the consideration, ALC reclassified $0.5 million of unamortized
leasehold improvements to property and equipment. The nine
residences, two of which are located in New Jersey and seven in
Texas, contain a total of 365 units.
Investor Call
ALC has scheduled a conference call later this morning, Friday,
March 4, 2011 at 10:00 a.m. (ET) to discuss its financial results
for the fourth quarter. The toll-free number for the live call is
(800) 230-1059 or international (612) 234-9960. A taped rebroadcast
of the conference call will be available approximately three hours
following the live call until midnight on April 4, 2011, by dialing
toll free (800) 475-6701 or international (320) 365-3844 and using
access code 191235.
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 a supportive, home-like setting. Residents may receive
assistance with the activities of daily living either directly from
ALC employees or through our wholly owned home health subsidiaries.
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 report 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.
ASSISTED LIVING CONCEPTS, INC.
Consolidated Statements of Operations
(In thousands, except earnings per share)
Three Months Ended Year Ended
December 31, December 31,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Revenues $ 58,435 $ 57,737 $ 233,128 $ 228,723
Expenses:
Residence operations
(exclusive of depreciation
and amortization and
residence lease expense
shown below) 34,270 34,555 139,689 142,048
General and administrative 3,386 3,594 15,080 13,515
Residence lease expense 4,491 5,068 19,846 20,044
Depreciation and amortization 5,693 5,630 22,806 21,219
Impairment of long-lived asset -- -- -- 148
Goodwill impairment -- -- -- 16,315
--------- --------- --------- ---------
Total operating expenses 47,840 48,847 197,421 213,289
--------- --------- --------- ---------
Income from operations 10,595 8,890 35,707 15,434
Other income (expense):
Other-than-temporary
investments impairment -- -- (2,026) --
Other 23 -- 23 --
Interest income 1 28 11 54
Interest expense (2,102) (1,892) (7,782) (7,343)
--------- --------- --------- ---------
Income from continuing
operations before income taxes 8,517 7,026 25,933 8,145
Income tax expense (3,109) (2,722) (9,449) (7,343)
--------- --------- --------- ---------
Net income from continuing
operations 5,408 4,304 16,484 802
Loss from discontinued
operations, net of tax -- 23 -- (957)
--------- --------- --------- ---------
Net income (loss) $ 5,408 $ 4,327 $ 16,484 $ (155)
Weighted average common shares:
Basic 11,500 11,606 11,540 11,755
Diluted 11,664 11,762 11,706 11,755
Per share data:
Basic earnings per common
share
Earnings from continuing
operations $ 0.47 $ 0.37 $ 1.43 $ 0.07
Loss from discontinued
operations -- -- -- (0.08)
--------- --------- --------- ---------
Net income (loss) $ 0.47 $ 0.37 $ 1.43 $ (0.01)
========= ========= ========= =========
Diluted earnings per common
share
Earnings from continuing
operations $ 0.46 $ 0.37 $ 1.41 $ 0.07
Loss from discontinued
operations -- -- -- (0.08)
--------- --------- --------- ---------
Net income (loss) $ 0.46 $ 0.37 $ 1.41 $ (0.01)
========= ========= ========= =========
Adjusted EBITDA (1) $ 16,388 $ 14,606 $ 59,524 $ 53,576
Adjusted EBITDAR (1) $ 20,879 $ 19,674 $ 79,370 $ 73,620
(1) See attached tables for definitions of Adjusted EBITDA and Adjusted
EBITDAR and reconciliations of net income to Adjusted EBITDA and
Adjusted EBITDAR.
ASSISTED LIVING CONCEPTS, INC.
Consolidated Balance Sheets
(In thousands, except share and per share data)
2010 2009
--------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $ 13,364 $ 4,360
Investments 4,599 3,427
Accounts receivable, less allowances of $1,414 and
$738, respectively 3,201 2,668
Prepaid expenses, supplies and other receivables 3,020 3,537
Deposits in escrow 2,371 1,993
Income tax receivable 356 723
Deferred income taxes 5,108 4,636
Current assets of discontinued operations 168 36
--------- ---------
Total current assets 32,187 21,380
Property and equipment, net 437,303 415,454
Intangible assets, net 10,193 11,812
Restricted cash 3,448 4,389
Other assets 1,973 1,935
Non-current assets of discontinued operations -- 399
--------- ---------
Total Assets $ 485,104 $ 455,369
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,154 $ 8,005
Accrued liabilities 20,173 19,228
Deferred revenue 4,784 6,368
Current maturities of long-term debt 2,449 1,823
Current portion of self-insured liabilities 500 500
Current liabilities of discontinued operations -- 34
--------- ---------
Total current liabilities 34,060 35,958
Accrual for self-insured liabilities 1,597 1,416
Long-term debt 129,661 119,914
Deferred income taxes 20,503 13,257
Other long-term liabilities 10,024 11,853
Commitments and contingencies
--------- ---------
Total Liabilities $ 195,845 $ 182,398
========= =========
Preferred Stock, par value $0.01 per share,
25,000,000 shares authorized, no shares issued and
outstanding, respectively -- --
Class A Common Stock, $0.01 par value, 80,000,000
authorized at December 31, 2010 and December 31,
2009; 12,408,369 and 12,397,525 shares issued and
9,967,033 and 10,048,674 shares outstanding,
respectively 124 124
Class B Common Stock, $0.01 par value, 15,000,000
authorized at December 31, 2010 and December 31,
2009; 1,520,310 and 1,528,650 issued and
outstanding, respectively 15 15
Additional paid-in capital 315,292 314,602
Accumulated other comprehensive loss (95) (2,012)
Retained earnings 49,970 33,486
Treasury stock at cost, 2,441,336 and 2,348,851
shares, respectively (76,047) (73,244)
--------- ---------
Total Stockholders' Equity 289,259 272,971
--------- ---------
Total Liabilities and Stockholders' Equity $ 485,104 $ 455,369
========= =========
ASSISTED LIVING CONCEPTS, INC.
Consolidated Statements of Cash Flows
(In thousands)
Year Ended
December 31,
------------------
2010 2009
-------- --------
OPERATING ACTIVITIES:
Net income (loss) $ 16,484 $ (155)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 22,807 21,518
Other-than-temporary investments impairment 2,026 --
Goodwill impairment -- 16,315
Loss due to property and equipment impairment -- 1,369
Amortization of purchase accounting adjustments for
leases (645) (395)
Provision for bad debts 676 49
Provision for self-insured liabilities 639 1,080
Loss on sale or disposal of fixed assets 401 82
Equity-based compensation expense 659 406
Deferred income taxes 5,599 1,477
Gains on investments (78) --
Changes in assets and liabilities:
Accounts receivable (1,209) (38)
Prepaid expenses, supplies and other receivables 517 (180)
Deposits in escrow (378) 320
Current assets - discontinued operations (132) 117
Accounts payable (1,170) (2,076)
Accrued liabilities 25 1,281
Deferred revenue (1,584) (319)
Current liabilities - discontinued operations (34) (13)
Payments of self-insured liabilities (458) (640)
Income taxes payable / receivable 367 2,415
Changes in other non-current assets 1,213 (156)
Other non-current assets - discontinued operations 399 539
Other long-term liabilities 48 1,050
Other long-term liabilities - discontinued operations -- (14)
-------- --------
Cash provided by operating activities 46,172 44,032
INVESTING ACTIVITIES:
Payments for securities (818) (216)
Proceeds on sales of securities 515 --
Payment for acquisition (27,500) --
Payments for new construction projects (5,619) (13,337)
Payments for purchases of property and equipment (11,000) (14,564)
-------- --------
Cash used in investing activities (44,422) (28,117)
FINANCING ACTIVITIES:
Purchase of treasury stock (2,803) (6,989)
Issuance of shares for employee stock options 31 --
Repayment of revolving credit facility -- (29,000)
Proceeds from issuance of new mortgage debt 12,250 14,000
Repayment of mortgage debt (1,914) (9,113)
Payment of financing costs (310) (358)
-------- --------
Cash provided by (used in) financing activities 7,254 (31,460)
-------- --------
Increase (decrease) in cash and cash equivalents 9,004 (15,545)
Cash and cash equivalents, beginning of year 4,360 19,905
-------- --------
Cash and cash equivalents, end of year $ 13,364 $ 4,360
======== ========
Supplemental schedule of cash flow information:
Cash paid during the year for:
Interest $ 7,285 $ 7,575
Income tax payments, net of refunds 3,459 2,884
ASSISTED LIVING CONCEPTS, INC.
Financial and Operating Statistics
Continuing residences(1) Three months ended
-------------------------------
December September December
31, 30, 31,
2010 2010 2009
--------- --------- ---------
Average Occupied Units by Payer Source
Private 5,495 5,492 5,450
Medicaid 106 123 298
--------- --------- ---------
Total 5,601 5,615 5,748
========= ========= =========
Occupancy Mix by Payer Source
Private 98.1% 97.8% 94.8%
Medicaid 1.9% 2.2% 5.2%
Percent of Revenue by Payer Source
Private 98.8% 98.7% 96.5%
Medicaid 1.2% 1.3% 3.5%
Average Revenue per Occupied Unit Day $ 113.40 $ 113.29 $ 109.18
Occupancy Percentage(1) 62.1% 62.3% 63.5%
(1) Depending on the timing of new additions and temporary closures of our
residences, we may increase or reduce the number of units we actively
operate. For the three months ended December 31, 2010, September 30, 2010
and December 31, 2009 we actively operated 9,016, 9,016 and 9,056 units,
respectively.
Same residence basis(1) Three months ended
-------------------------------
December September December
31, 30, 31,
2010 2010 2009
--------- --------- ---------
Average Occupied Units by Payer Source
Private 5,455 5,460 5,432
Medicaid 106 123 270
--------- --------- ---------
Total 5,561 5,583 5,702
========= ========= =========
Occupancy Mix by Payer Source
Private 98.1% 97.8% 95.3%
Medicaid 1.9% 2.2% 4.7%
Percent of Revenue by Payer Source
Private 98.7% 98.7% 96.8%
Medicaid 1.3% 1.3% 3.2%
Average Revenue per Occupied Unit Day $ 112.18 $ 112.43 $ 109.48
Occupancy Percentage 62.4% 62.6% 64.0%
(1) Excludes quarterly impact of 25 completed expansion units and 76
re-opened renovated units.
ASSISTED LIVING CONCEPTS, INC.
Financial and Operating Statistics
Continuing residences(1) Year ended
--------------------------
December 31, December 31,
2010 2009
--------------------------
Average Occupied Units by Payer Source
Private 5,483 5,393
Medicaid 151 408
------------ ------------
Total 5,634 5,801
============ ============
Occupancy Mix by Payer Source
Private 97.3% 93.0%
Medicaid 2.7% 7.0%
Percent of Revenue by Payer Source
Private 98.3% 95.3%
Medicaid 1.7% 4.7%
Average Revenue per Occupied Unit Day $ 113.37 $ 108.02
Occupancy Percentage(1) 62.5% 64.2%
(1) Depending on the timing of new additions and temporary closures of our
residences, we may increase or reduce the number of units we actively
operate. For the year ended December 31, 2010 and December 31, 2009 we
actively operated 9,010 and 9,037 units, respectively.
Same residence basis(1) Year ended
--------------------------
December 31, December 31,
2010 2009
--------------------------
Average Occupied Units by Payer Source
Private 5,389 5,337
Medicaid 150 357
------------ ------------
Total 5,539 5,694
============ ============
Occupancy Mix by Payer Source
Private 97.3% 93.7%
Medicaid 2.7% 6.3%
Percent of Revenue by Payer Source
Private 98.2% 95.7%
Medicaid 1.8% 4.3%
Average Revenue per Occupied Unit Day $ 112.81 $ 108.07
Occupancy Percentage 63.9% 65.7%
(1) Excludes full year impact of 270 completed expansion units, 39 units
temporarily closed for renovation and 76 re-opened renovated units.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDAR
Adjusted EBITDA is defined as net income from continuing
operations before income taxes, interest expense net of interest
income, depreciation and amortization, 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. Adjusted EBITDAR is defined as Adjusted EBITDA before rent
expenses incurred for leased assisted living properties. Adjusted
EBITDA and Adjusted EBITDAR are not measures of performance under
accounting principles generally accepted in the United States of
America, or GAAP. We use Adjusted EBITDA and Adjusted EBITDAR as
key performance indicators and Adjusted EBITDA and Adjusted EBITDAR
expressed as a percentage of total revenues as a measurement of
margin.
We understand that EBITDA and EBITDAR, or derivatives thereof,
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
Adjusted EBITDAR provide meaningful supplemental information
regarding our core results because these measures exclude 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 Adjusted EBITDAR because such items are
transitional in nature and would otherwise distort historical
trends. In addition, we use Adjusted EBITDA and Adjusted EBITDAR to
assess our operating performance and in making financing decisions.
In particular, we use Adjusted EBITDA and Adjusted EBITDAR in
analyzing potential acquisitions and internal expansion
possibilities. Adjusted EBITDAR performance is also used in
determining compensation levels for our senior executives. Adjusted
EBITDA and Adjusted EBITDAR 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 Adjusted EBITDAR on a
consistent basis from period to period, thereby, allowing for
comparability of operating performance.
Adjusted EBITDA and Adjusted EBITDAR Reconciliation
Information
The following table sets forth a reconciliation of net income
(loss) to Adjusted EBITDA and Adjusted EBITDAR:
Three months ended Year ended
------------------------------- --------------------
December December September December December
31, 31, 30, 31, 31,
2010 2009 2010 2010 2009
--------- ---------- --------- ---------- ---------
(in thousands)
Net income (loss) $ 5,408 $ 4,327 $ 4,567 $ 16,484 $ (155)
Less: income (loss)
from discontinued
operations, net
of tax - 23 - - (957)
Add: provision for
income taxes 3,109 2,722 2,599 9,449 7,343
--------- ---------- --------- ---------- ---------
Income from
continuing
operations before
income taxes $ 8,517 $ 7,026 $ 7,166 $ 25,933 $ 8,145
Add:
Depreciation and
amortization 5,693 5,630 5,745 22,806 21,219
Interest expense,
net 2,101 1,864 1,891 7,771 7,289
Non-cash equity
based compensation 45 86 252 659 406
Loss due to
property
impairment - - - - 148
Loss (gain) on
disposal of fixed
assets (55) - (36) 224 54
Write-down (gain on
sale) of equity
investments (23) - - 2,003 -
Transaction
expenses
associated
with property
acquisition 110 - 18 128 -
Goodwill impairment - - - - 16,315
--------- ---------- --------- ---------- ---------
Adjusted EBITDA $ 16,388 $ 14,606 $ 15,036 $ 59,524 $ 53,576
Add: Lease expense 4,491 5,068 5,161 19,846 20,044
--------- ---------- --------- ---------- ---------
Adjusted EBITDAR $ 20,879 $ 19,674 $ 20,197 $ 79,370 $ 73,620
========= ========== ========= ========== =========
The following table sets forth the calculations of Adjusted
EBITDA, Adjusted EBITDAR, Adjusted EBITDA before division
realignment and Adjusted EBITDAR before division realignment as
percentages of total revenue:
Three months ended Year ended
------------------------------- --------------------
December December September December December
31, 31, 30, 31, 31,
2010 2009 2010 2010 2009
--------- --------- --------- --------- ---------
(in thousands)
Revenues $ 58,435 $ 57,737 $ 58,529 $ 233,128 $ 228,723
========= ========= ========= ========= =========
Adjusted EBITDA $ 16,388 $ 14,606 $ 15,036 $ 59,524 $ 53,576
========= ========= ========= ========= =========
Adjusted EBITDAR $ 20,879 $ 19,674 $ 20,197 $ 79,370 $ 73,620
========= ========= ========= ========= =========
Adjusted EBITDA as
percent of total
revenues 28.0% 25.3% 25.7% 25.5% 23.4%
========= ========= ========= ========= =========
Adjusted EBITDAR as
percent of total
revenues 35.7% 34.1% 34.5% 34.0% 32.2%
========= ========= ========= ========= =========
ASSISTED LIVING CONCEPTS, INC.
Reconciliation of Non-GAAP Measures
(unaudited)
Three Months Three Months Year Ended Year Ended
Ended Ended December 31, December 31,
December 31, December 31, 2010 2009
2010 2009
----------- ------------ ----------- -----------
(In thousands, except per share data)
Net income (loss) $ 5,408 $ 4,327 $ 16,484 $ (155)
Less: Gain (loss) from
discontinued
operations, net of tax - 23 - (957)
----------- ------------ ----------- -----------
Income from continuing
operations 5,408 4,304 16,484 802
----------- ------------ ----------- -----------
Add non-recurring
charges:
Write down/(gain on
sale) of equity
investments (23) - 2,003 -
Goodwill impairment - - - 16,315
Loss due to property
impairment - - - 148
Loss on disposal of
fixed assets
related to
expansion project - - 125 -
Division realignment
expense - - 453 -
Transaction costs
related to
acquisition of
properties 110 128
Less: Income tax
benefits from
non-recurring charges 31 - 989 1,675
----------- ------------ ----------- -----------
Pro forma net income
from continuing
operations excluding
non-recurring
charges $ 5,464 $ 4,304 $ 18,204 $ 15,590
Weighted average common
shares:
Basic 11,500 11,606 11,540 11,755
Diluted 11,664 11,762 11,706 11,755
Per share data:
Basic earnings per
common share
Net income (loss) $ 0.47 $ 0.37 $ 1.43 $ (0.01)
Less: loss from
discontinued
operations - - - (0.08)
Less: loss from
non-recurring
charges (0.01) - (0.15) (1.26)
----------- ------------ ----------- -----------
Pro forma net income
from continuing
operations excluding
non-recurring
charges $ 0.48 $ 0.37 $ 1.58 $ 1.33
=========== ============ =========== ===========
Diluted earnings
per common share
Net income (loss) $ 0.46 $ 0.37 $ 1.41 $ (0.01)
Less: loss from
discontinued
operations - - - (0.08)
Less: loss from
non-recurring
charges (0.01) - (0.15) (1.26)
----------- ------------ ----------- -----------
Pro forma net income
from continuing
operations excluding
non-recurring
charges $ 0.47 $ 0.37 $ 1.56 $ 1.33
=========== ============ =========== ===========
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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