Assisted Living Concepts, Inc. ("ALC") (NYSE: ALC) reported a net
loss of $2.6 million in the fourth quarter of 2012 as compared to
net income of $7.3 million in the fourth quarter of 2011.
During the fourth quarters of both 2012 and 2011, ALC recorded
One-Time Items described below. Excluding the One-Time Items, our
net loss in the fourth quarter of 2012 would have been $0.8 million
as compared to net income of $6.3 million in the fourth quarter of
2011.
Revenues in the fourth quarter of 2012 were $57.0 million as
compared to revenues of $58.9 million in the fourth quarter of
2011.
"In the fourth quarter of 2012, we increased our number of units
rented by 131, a significant improvement from recent history,"
commented Dr. Charles "Chip" Roadman, our President and Chief
Executive Officer. "Our continued progress in the regulatory arena
combined with quality initiatives were instrumental measures in
attaining this improvement."
For the year ended December 31, 2012, ALC reported a net loss of
$26.1 million as compared to net income of $24.4 million in the
year ended December 31, 2011.
Excluding the One-Time Items described below, net income for the
years ended December 31, 2012 and 2011 would have been $7.7 million
and $22.1 million, respectively.
Diluted earnings per common share for the fourth quarter and the
year ended December 31, 2012 and 2011 were:
Quarter ended Year ended
December 31, December 31,
2012 2011 2012 2011
--------- --------- --------- ---------
Diluted earnings/(loss) per
common share $ (0.11) $ 0.31 $ (1.14) $ 1.05
Pro forma diluted
earnings/(loss) per common
share excluding One-Time
Items $ (0.03) $ 0.27 $ 0.34 $ 0.95
One-Time Items (net of tax) in the quarter and year ended
December 31, 2012 included:
1. Charges related to the purchase of 12 previously leased
properties from Ventas Realty, Limited Partnership and MLD Delaware
Trust relating to the write off of $0.2 million and $22.4 million
related to a litigation settlement and a lease termination fee for
the quarter and year ended December 31, 2012, respectively, a $5.2
million write-off of an operating lease intangible, and $0.6
million of transaction costs, partially offset by $0.6 million of
rental savings for the year ended December 31, 2012. 2. The
write-off of construction costs associated with expansion projects
that management has determined will not be completed. ($0.0 million
and $0.3 million for the quarter and year ended December 31, 2012).
3. Expenses incurred in connection with an internal investigation,
litigation related to the Ventas transaction, public relations and
quality committee projects. ($1.1 million and $3.1 million for the
quarter and year ended December 31, 2012, respectively). 4. The
write down of long-lived assets determined to be impaired ($2.1
million for the year ended December 31, 2012). 5. The write-off of
deferred financing in connection with the amended U.S. Bank credit
facility ($0.7 million in both the quarter and year ended December
31, 2012). 6. Income recorded in connection with the sale of
investments ($0.1 million in both the quarter and year ended
December 31, 2012).
One-Time Items in the year ended December 31, 2011 included:
1. A reduction in tax expense associated with the settlement of
all issues associated with a tax allocation agreement with a
subsidiary of our former parent Extendicare Inc. (now Extendicare
Real Estate Investment Trust) and a reversal of tax reserves
associated with the completion of certain state audits ($0.6
million and $1.3 million for the quarter and year ended December
31, 2011, respectively). 2. Income associated with a mark to market
adjustment for interest rate swap agreements ($0.1 million and $0.0
million net of tax for the quarter and year ended December 31,
2011, respectively). 3. The write-off of deferred financing fees
associated with our refinanced debt ($0.0 million and $0.2 million
net of tax for the quarter and year ended December 31, 2011,
respectively). 4. Gains on sales of equity investments ($0.0
million and $0.6 million net of tax for the quarter and year ended
December 31, 2011, respectively). 5. Income associated with
purchase accounting adjustments ($0.4 million and $0.5 million net
of tax for the quarter and year ended December 31, 2011,
respectively).
Certain non-GAAP financial measures are used in the discussions
in this release in assessing the performance of the business. See
the attached tables for definitions of Adjusted EBITDA and Adjusted
EBITDAR, reconciliations of net income 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, 2012, ALC operated 211 senior living
residences comprising 9,348 units.
The following discussions include the impact of the One-Time
Items.
Quarters ended December 31, 2012, December 31,
2011 and September 30, 2012
Revenues of $57.0 million in the fourth quarter ended December
31, 2012 decreased $1.9 million or 3.2% as compared to $58.9
million in the fourth quarter of 2011 and increased $1.4 million or
2.5% from $55.6 million in the third quarter of 2012.
Adjusted EBITDAR for the fourth quarter of 2012 was $9.0 million
or 15.8% of revenues and
- decreased $13.8 million or 60.5% from $22.7 million and 38.6%
of revenues in the fourth quarter of 2011; and
- increased $0.8 million or 9.2% from $8.2 million and 14.8% of
revenues in the third quarter of 2012.
Adjusted EBITDA for the fourth quarter of 2012 was $6.3 million
or 11.0% of revenues and
- decreased $12.0 million or 65.6% from $18.3 million and 31.1%
of revenues in the fourth quarter of 2011; and
- increased $0.9 million or 16.8% from $5.4 million and 9.7% of
revenues in the third quarter of 2012.
Fourth quarter 2012 compared to fourth quarter
2011
Revenues in the fourth quarter of 2012 decreased by $1.9 million
from the fourth quarter of 2011 primarily due to a decrease in
rented private pay units ($2.4 million), and the planned reduction
in the number of units rented by Medicaid residents ($0.2 million),
partially offset by rate increases ($0.7 million). Average private
pay rates increased in the fourth quarter of 2012 by 1.2% from
average private pay rates for the fourth quarter of 2011. Average
overall rates, including the impact of improved payer mix,
increased in the fourth quarter of 2012 by 1.5% from comparable
rates for the fourth quarter of 2011.
Both Adjusted EBITDAR and Adjusted EBITDA decreased in the
fourth quarter of 2012 primarily due to an increase in residence
operations expenses ($8.5 million) (this excludes the gain on
disposal of fixed assets), an increase in general and
administrative expenses ($3.4 million) (this excludes non-cash
equity based compensation) and a decrease in revenue ($1.9 million)
partially offset, for Adjusted EBITDA only, a decrease in residence
lease expense ($1.8 million) resulting from the June 15, 2012,
purchase of twelve previously leased properties. Residence
operations expenses increased primarily from an increases in labor
expenses ($5.8 million), reserves associated with self-insured
liabilities ($1.0 million), maintenance expense ($0.6 million),
food expense ($0.5 million), legal and consulting expenses ($0.4
million) and other administrative expenses ($0.4 million),
partially offset by an improvement in bad debt expense ($0.3
million). General and administrative expenses increased as a result
of the SEC investigation, litigation, and expenses incurred in
connection with public relations and quality improvement
initiatives.
Fourth quarter 2012 compared to the third
quarter 2012
Revenues in the fourth quarter of 2012 increased by $1.4 million
from the third quarter of 2012 primarily due to an increase in the
number of rented units ($1.4 million), insurance proceeds from
business interruption at a residence ($0.4 million), partially
offset by lower average daily revenue as a result of promotional
discounts ($0.4 million). Average private pay rates (excluding
revenue related to the business interruption proceeds) declined in
the fourth quarter of 2012 by 0.6% from average private pay rates
for the third quarter of 2012.
Adjusted EBITDA and Adjusted EBITDAR increased in the fourth
quarter of 2012 as compared to the third quarter of 2012 primarily
from an increase in revenues discussed above ($1.4 million), a
reduction in residence operations expenses ($0.7 million) (this
excludes the gain on disposal of fixed assets), partially offset by
an increase in general and administrative expenses ($1.3 million)
(this excludes non-cash equity-based compensation) and, for
Adjusted EBITDA only, a decrease in residence lease expense ($0.1
million) resulting from the June 15, 2012, purchase of twelve
previously leased properties. Residence operations expenses
decreased primarily from a decrease in utilities expense ($0.6
million), a reduction in legal and consulting fees ($0.6 million),
an improvement in bad debt expense ($0.3 million), a reduction in
maintenance expense ($0.1 million), and an improvement in other
administrative expenses ($0.2 million), partially offset by an
increases in reserves associated with self-insured liabilities
($0.7 million), labor expenses ($0.2 million), and food expense
($0.2 million). General and administrative expenses increased as a
result of the SEC investigation, litigation and expenses incurred
in connection with public relations and quality improvement
initiatives.
Year ended December 31, 2012 and December 31,
2011
Revenues of $228.4 million in the year ended December 31, 2012
decreased $6.1 million or 2.6% from $234.5 million in the year
ended December 31, 2011.
Adjusted EBITDAR for the year ended December 31, 2012 was $55.4
million, or 24.3% of revenues and
- decreased $30.1 million or 35.2% from $85.5 million and 36.5%
of revenues in the year ended December 31, 2011.
Adjusted EBITDA for the year ended December 31, 2012 was $42.0
million, or 18.4% of revenues and
- decreased $25.8 million or 38.0% from $67.8 million and 28.9%
of revenues in the year ended December 31, 2011.
Year ended December 31, 2012 compared to the
year ended December 31, 2011
Revenues in the year ended December 31, 2012 decreased by $6.1
million from the year ended December 31, 2011 primarily due to a
decrease in rented private pay units ($7.5 million), and the
planned reduction in the number of units rented to by Medicaid
residents ($1.6 million), partially offset by higher average daily
revenue from rate increases ($2.4 million) and one additional day
in the 2012 period due to leap year ($0.6 million). Average rates
increased in the year ended December 31, 2012 by 1.5% over average
rates for the year ended December 31, 2011.
Both Adjusted EBITDA and Adjusted EBITDAR decreased in the year
ended December 31, 2012 primarily from an increase in residence
operations expenses ($17.2 million) (this excludes the gain on
disposal of fixed assets and write-off of construction costs), a
decrease in revenues discussed above ($6.1 million), and an
increase in general and administrative expenses ($6.8 million)
(this excludes non-cash equity based compensation) and, for
Adjusted EBITDA only, a decrease in residence lease expense ($4.3
million). Residence operations expenses increased as a result of
increased salaries and wages associated with quality restoration
efforts initiated in June 2012 and an increase in professional fees
from litigation and regulatory issues primarily in the southeast.
General and administrative expenses increased as a result of an
internal investigation, the SEC investigation, litigation and
expenses incurred in connection with public relations, and quality
improvement initiatives.
Liquidity
At December 31, 2012 ALC had cash of $10.2 million and
availability of $8.0 million under its credit agreement. At
December 31, 2012, ALC owned 94 unencumbered residences that may be
used to secure future capital.
Other Information
As previously announced, on February 25, 2013, ALC entered into
an Agreement and Plan of Merger (the "Merger Agreement") with
affiliates of TPG Capital, L.P. At the effective time of the
merger, each share of ALC Class A and Class B common stock issued
and outstanding immediately prior to the effective time of the
merger will be converted automatically into the right to receive
$12.00 and $12.90 in cash, respectively.
About Us
Assisted Living Concepts, Inc. and its subsidiaries operated 211
senior living residences comprising 9,348 resident units in 20
states at December 31, 2012. ALC's senior living facilities
typically consist of 40 to 60 units and offer residents a
supportive, home-like setting and assistance with the activities of
daily living. ALC employed approximately 4,600 people at December
31, 2012.
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," "point toward," "intend," "will,"
"indicate," "anticipate," "believe," "estimate," "target," "plan,"
"foresee," "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: any conditions imposed on the
parties in connection with consummation of the transactions
contemplated by the Merger Agreement; the ability to obtain
regulatory approvals of the transactions contemplated by the Merger
Agreement on the proposed terms and schedule; the failure of ALC's
stockholders to approve the transactions contemplated by the Merger
Agreement; ALC's ability to maintain relationships with customers,
employees or suppliers following the announcement of the Merger
Agreement; the ability of the parties to satisfy the conditions to
closing of the transactions contemplated by the Merger Agreement;
the risk that the transactions contemplated by the Merger Agreement
may not be completed in the time frame expected by the parties or
at all; the risk that ALC is unable to comply with covenants under
its credit agreement or ALC cannot obtain waivers of or amendments
to the covenants; 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2012 2011 2012 2011
Revenues $ 56,980 $ 58,863 $ 228,397 $ 234,452
Expenses:
Residence operations
(exclusive of
depreciation and
amortization and
residence lease expense
shown below) 42,329 33,515 154,194 136,659
General and administrative 6,173 2,803 19,822 13,361
Residence lease expense 2,686 4,461 13,369 17,686
Lease termination and
settlement 300 - 37,430 -
Depreciation and
amortization 6,827 5,843 24,915 23,103
Intangible impairment - - 8,650 -
Asset impairment - - 3,500 -
Transaction costs - - 1,046 -
Total operating expenses 58,315 46,622 262,926 190,809
(Loss)/income from
operations (1,335) 12,241 (34,529) 43,643
Other (expense) income:
Interest expense:
Debt (2,483) (1,826) (8,143) (7,872)
Change in fair value of
derivatives and
amortization - 94 - -
Write-off of deferred
financing costs (1,137) - (1,137) (279)
Interest income 1 4 9 12
Gain on sale of securities 257 46 257 956
(Loss)/income before income
taxes (4,697) 10,559 (43,543) 36,460
Income tax benefit/(expense) 2,074 (3,249) 17,418 (12,100)
Net (loss)/income $ (2,623) $ 7,310 $ (26,125) $ 24,360
Weighted average common
shares:
Basic 22,970 22,967 22,970 22,955
Diluted 22,970 23,239 22,970 23,256
Per share data:
Basic (loss)/earnings per
common share $ (0.11) $ 0.32 $ (1.14) $ 1.06
========= ========= ========= =========
Diluted (loss)/earnings per
common share: $ (0.11) $ 0.31 $ (1.14) $ 1.05
========= ========= ========= =========
Dividends declared and paid
per common share $ - $ 0.10 $ 0.20 $ 0.30
========= ========= ========= =========
Adjusted EBITDA (1) $ 6,292 $ 18,286 $ 42,040 $ 67,824
========= ========= ========= =========
Adjusted EBITDAR (1) $ 8,978 $ 22,747 $ 55,409 $ 85,510
========= ========= ========= =========
(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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31,
-------------------------
2012 2011
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 10,182 $ 2,652
Cash and escrow deposits - restricted 2,714 3,150
Investments 900 1,840
Accounts receivable, less allowances of $3,461
and $2,903, respectively 4,294 4,609
Prepaid expenses, supplies and other
receivables 4,604 3,387
Income tax receivable 4,089 606
Deferred income taxes 4,640 4,027
----------- -----------
Total current assets 31,423 20,271
Property and equipment, net 481,913 430,733
Intangible assets, net - 9,028
Restricted cash 2,035 1,996
Other assets 398 2,025
----------- -----------
Total Assets $ 515,769 $ 464,053
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 9,909 $ 7,086
Accrued liabilities 21,034 17,877
Deferred revenue 8,266 8,004
Current maturities of long-term debt 114,575 2,538
Current portion of self-insured liabilities 500 500
----------- -----------
Total current liabilities 154,284 36,005
Accrual for self-insured liabilities 1,700 1,557
Long-term debt 67,140 85,703
Deferred income taxes 8,701 23,961
Other long-term liabilities 6,301 9,107
----------- -----------
Total liabilities 238,126 156,333
----------- -----------
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,
160,000,000 authorized at December 31, 2012 and
December 31, 2011; 25,004,381 and 24,980,958
shares issued and 20,072,509 and 20,049,086
shares outstanding, respectively 250 250
Class B Common Stock, $0.01 par value,
30,000,000 authorized at December 31, 2012 and
December 31, 2011; 2,897,996 and 2,919,790
issued and outstanding, respectively 29 29
Additional paid-in capital 317,473 316,694
Accumulated other comprehensive income 19 156
Retained earnings 36,717 67,436
Treasury stock at cost, 4,931,872 and 4,931,872
shares, respectively (76,845) (76,845)
----------- -----------
Total stockholders' equity 277,643 307,720
----------- -----------
Total Liabilities and Stockholders' Equity $ 515,769 $ 464,053
=========== ===========
ASSISTED LIVING CONCEPTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Year Ended December 31,
------------------------------------
2012 2011 2010
---------- ---------- ----------
OPERATING ACTIVITIES:
Net (loss)/income $ (26,125) $ 24,360 $ 16,484
Adjustments to reconcile net
(loss)/income to net cash provided
by operating activities:
Depreciation and amortization 24,915 23,103 22,807
Other-than-temporary investments
impairment - - 2,026
Deferred financing write off and
amortization 1,674 782 455
Loss due to property and
equipment impairment 3,500 - -
Intangible impairment 8,650 - -
Amortization of purchase
accounting adjustments for
leases and debt (402) (647) (645)
Provision for bad debts 559 1,489 676
Provision for self-insured
liabilities 1,638 554 639
Loss on sale or disposal of fixed
assets 249 (121) 401
Equity-based compensation expense 779 1,199 659
Deferred income taxes (15,888) 4,447 5,599
Gain on investments (195) (956) (78)
Changes in assets and liabilities:
Accounts receivable (244) (2,897) (1,209)
Prepaid expenses, supplies and
other receivables 760 (199) 517
Deposits in escrow 436 290 (378)
Current assets - discontinued
operations - - (132)
Accounts payable 2,873 1,268 (1,170)
Accrued liabilities 2,995 (1,376) 25
Deferred revenue 262 3,220 (1,584)
Current liabilities -
discontinued operations - - (34)
Payments of self-insured
liabilities (1,495) (592) (458)
Income taxes payable/receivable (3,483) (250) 367
Changes in other non-current
assets (43) 1,456 758
Other non-current assets -
discontinued operations - - 399
Other long-term liabilities (2,342) (455) 48
---------- ---------- ----------
Cash (used in)/provided by
operating activities (927) 54,675 46,172
INVESTING ACTIVITIES:
Payment for securities (218) (208) (818)
Proceeds on sales of securities 1,231 3,406 515
Payment for acquisitions (62,570) - (27,500)
Proceeds on sale of fixed assets 1,486 168 -
Payments for new construction
projects (2,327) (684) (5,619)
Payments for purchases of
property and equipment (16,572) (15,067) (11,000)
---------- ---------- ----------
Cash used in investing
activities (78,970) (12,385) (44,422)
FINANCING ACTIVITIES:
Payments of financing costs (1,391) (1,907) (310)
Purchase of treasury stock - (798) (2,803)
Proceeds from issuance of shares
for employee stock options - 283 31
Repayment of borrowings on
revolving credit facility (99,000) (137,500) -
Proceeds on borrowings on
revolving credit facility 195,000 99,500 -
Repayment of mortgage debt (2,588) (5,686) (1,914)
Proceeds from mortgage debt - - 12,250
Payment of dividends (4,594) (6,894) -
---------- ---------- ----------
Cash provided by/(used in)
financing activities 87,427 (53,002) 7,254
---------- ---------- ----------
Increase/(decrease) in cash and
cash equivalents 7,530 (10,712) 9,004
Cash and cash equivalents,
beginning of year 2,652 13,364 4,360
---------- ---------- ----------
Cash and cash equivalents, end of
year $ 10,182 $ 2,652 $ 13,364
========== ========== ==========
ASSISTED LIVING CONCEPTS, INC.
Financial and Operating Statistics
Continuing residences* Three Months Ended
-----------------------------------------------
December 31, September 30, December 31,
2012 2012 2011
Average Occupied Units by
Payer Source 5,382 5,251 5,642
============== ============= ==============
Average Revenue per
Occupied Unit Day $ 115.09 115.05 $ 113.41
============== ============= ==============
Occupancy Percentage* 60.9% 59.5% 62.7%
============== ============= ==============
* 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, 2012, September 30, 2012 and December 31, 2011 we
actively operated 8,837, 8,822 and 8,995 units,
respectively.
Same residence basis** Three Months Ended
------------------------------------------------
December 31, September 30, December 31,
2012 2012 2011
-------------- -------------- --------------
Average Occupied Units by
Payer Source 5,379 5,251 5,607
============== ============== ==============
Average Revenue per
Occupied Unit Day $ 115.04 $ 115.05 $ 113.47
============== ============== ==============
Occupancy Percentage* 61.0% 59.5% 63.6%
============== ============== ==============
** Excludes quarterly impact of 23 completed
expansion and 194 units temporarily closed for renovation in each
of the December 31, 2012, September 30, 2012 and December 31, 2011
three month periods.
Continuing residences* Year Ended
-------------------------------
December 31, December 31,
2012 2011
Average Occupied Units 5,369 5,612
============== ==============
Average Revenue per Occupied Unit Day $ 116.22 $ 114.16
============== ==============
Occupancy Percentage* 60.5% 62.4%
============== ==============
* 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, 2012 and December 31, 2011 we actively operated 8,872 and 8,992
units, respectively.
Same residence basis** Year Ended
---------------------------
December 31, December 31,
2012 2011
------------ ------------
Average Occupied Units 5,319 5,536
============ ============
Average Revenue per Occupied Unit Day $ 116.03 $ 114.38
============ ============
Occupancy Percentage* 60.9% 63.4%
============ ============
** Excludes impact of 43 completed expansion
units, 72 re-opened units and 217 units temporarily closed for
renovation in the 2012 year and units temporarily closed for
renovation in the 2011 year.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDAR
Adjusted EBITDA is defined as net loss/income from continuing
operations before income taxes, interest expense net of interest
income, depreciation and amortization, equity based compensation
expense, transaction costs and certain non-cash, gains and losses,
including disposal of assets, impairment of goodwill and other
long-lived assets, impairment of investments, impairment of
intangibles and non-recurring lease termination and settlement
fees. 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 to
Adjusted EBITDA and Adjusted EBITDAR:
Three Months Ended Year Ended
-------------------------------- --------------------
December December September December December
31, 31, 30, 31, 31,
2012 2011 2012 2012 2011
--------- --------- ---------- --------- ---------
(in thousands)
Net income $ (2,623) $ 7,310 $ (4,042) $ (26,125) $ 24,360
Add provision for
income taxes (2,074) 3,249 (2,941) (17,418) 12,100
--------- --------- ---------- --------- ---------
Income before income
taxes $ (4,697) $ 10,559 $ (6,683) $ (43,543) $ 36,460
Add:
Depreciation and
amortization 6,827 5,843 6,526 24,915 23,103
Interest expense,
net 2,482 1,822 2,318 8,134 8,028
Non-cash equity
based
compensation 237 227 182 779 1,199
(Gain)/loss on
disposal of
fixed assets 263 (25) (433) (255) (121)
Write-down of cost
associated with
expansion
projects not
completed - - - 504 -
Gain on sale of
equity
investments (257) (46) - (257) (956)
Recovery of
purchase
accounting
associated with
early termination
of debt - - (168)
Write-off of
operating lease
intangible, lease
termination fee
and settlement 300 - (25) 46,080 -
Change in value of
derivative and
amortization - (94) -
Write-off of
deferred
financing fees 1,137 - - 1,137 279
Asset impairment 3,500 3,500
Transaction costs - - - 1,046 -
--------- --------- ---------- --------- ---------
Adjusted EBITDA $ 6,292 $ 18,286 $ 5,385 $ 42,040 $ 67,824
Add: Lease expense 2,686 4,461 2,834 13,369 17,686
--------- --------- ---------- --------- ---------
Adjusted EBITDAR $ 8,978 $ 22,747 $ 8,219 $ 55,409 $ 85,510
========= ========= ========== ========= =========
The following table sets forth the calculations of Adjusted
EBITDA, Adjusted EBITDAR, Adjusted EBITDA and Adjusted EBITDAR as
percentages of total revenue:
Three Months Ended Year Ended
------------------------------- --------------------
December December September December December
31, 31, 30, 31, 31,
2012 2011 2012 2012 2011
-------- --------- ---------- --------- ---------
(dollars in thousands)
Revenues 56,980 $ 58,863 $ 55,576 228,397 $ 234,452
======== ========= ========== ========= =========
Adjusted EBITDA 6,292 $ 18,286 $ 5,385 $ 42,040 $ 67,824
======== ========= ========== ========= =========
Adjusted EBITDAR 8,978 $ 22,747 $ 8,219 $ 55,409 $ 85,510
======== ========= ========== ========= =========
Adjusted EBITDA as
percent of total
revenues 11.0% 31.1% 9.7% 18.4% 28.9%
======== ========= ========== ========= =========
Adjusted EBITDAR as
percent of total
revenues 15.8% 38.6% 14.8% 24.3% 36.5%
======== ========= ========== ========= =========
ASSISTED LIVING CONCEPTS, INC.
Reconciliation of Non-GAAP Measure
(unaudited)
Three Three
Months months
Ended Ended Year Ended Year Ended
December December December December
31, 2012 31, 2011 31, 2012 31, 2011
(dollars in thousands except per share data)
Net income $ (2,623) $ 7,310 $ (26,125) $ 24,360
Add one time charges:
Expenses incurred in
connection with
internal investigation,
public relations and
Ventas litigation 2,118 - 5,393 -
Write-off of deferred
financing costs 1,137 - 1,137 279
Change in value of
derivative net of
amortization - - - -
Asset Impairment - - 3,500 -
Loss on disposal of
fixed assets related to
expansion project - - 504 -
Loss on write off of
lease intangible,
termination and
settlement fee and
transaction costs 300 - 47,126 -
Less one time credits:
Rent - - 906 -
Settlements relating to
tax allocation
agreement and state
audits - 570 - 1,320
Change in value of
derivative net of
amortization - 94 -
Gain on sale of equity
investments 257 46 257 956
Recovery of purchase
accounting associated
with early termination
of debt - 583 - 751
Net tax benefit/
(expense) from charges
and credits 1,457 (262) 22,655 (526)
----------- ----------- ----------- -----------
Pro forma net (loss)/
income excluding one-
time charges and
credits $ (782) $ 6,279 $ 7,717 $ 22,138
=========== =========== =========== ===========
Weighted average common
shares:
Basic 22,970 22,967 22,970 22,955
Diluted 22,970 23,239 22,970 23,256
Diluted earnings per
common share*
Net loss $ (0.11) $ 0.31 $ (1.14) $ 1.05
Less: gain/(loss)
from one time
charges and credits (0.08) 0.04 (1.47) 0.10
----------- ----------- ----------- -----------
Pro forma net
income/loss
excluding one-time
charges and credits $ (0.03) $ 0.27 $ 0.34 $ 0.95
=========== =========== =========== ===========
* Per share numbers may not add due to rounding
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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