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8-K - ESC EARNINGS RELEASE Q2 2010 8-K - EMERITUS CORP\WA\escearningsreleaseq22010.htm
 

 
 
NEWS RELEASE
    For Immediate Release


EMERITUS ANNOUNCES OPERATING RESULTS FOR
SECOND QUARTER 2010
 
Company Increases Revenue Guidance Range

SEATTLE, WA, August 09, 2010 - Emeritus Corporation (NYSE: ESC), a national provider of assisted living and memory care services to seniors, today announced its second quarter 2010 results.  
 
Quarter Ended June 30, 2010 Operating Summary Compared to Prior Year Second Quarter
 
·  
Total revenues increased $16.9 million, or 7.6%, to $239.1 million.
·  
Same community average monthly revenue per occupied unit improved by 3.1% to $3,742.
·  
Total average occupancy increased 60 basis points to 87.2%.
·  
Same community average occupancy increased 50 basis points to 87.4%.
·  
Adjusted EBITDAR increased $4.8 million to $69.6 million.
·  
CFFO per share was $0.31 compared to $0.36 in the prior year quarter.

Granger Cobb, President and Co-Chief Executive Officer, stated, “Progress continued in the second quarter due to the need-driven fundamentals of our business.  In addition, our external growth strategy remained vibrant as we added four communities to our consolidated portfolio in the quarter and more recently closed our joint venture acquisition of 143 Sunwest communities that we are managing.”

2010 Second Quarter Results

Total revenue in the second quarter of 2010 increased 7.6% to $239.1 million, compared to $222.2 million in the 2009 second quarter.  The $16.9 million increase consisted of $8.3 million from improved rate and occupancy in our portfolio of 264 same communities that we have continuously operated since January 1, 2009, $10.3 million from the acquisition, development, and expansion of communities since the beginning of 2009, with offsets of $1.6 million from unallocated community revenue adjustments (primarily an increase in the deferral of move-in fee revenues) and a small decline in management fees  The improvement in same community revenues consisted of $6.9 million in rate improvement and $1.4 million in occupancy gains.

Total average monthly revenue per occupied unit increased 3.1% to $3,739 in the second quarter of 2010 from $3,626 in the second quarter of 2009.  On a same community basis, average monthly revenue per occupied unit also increased 3.1% to $3,742 in the second quarter of 2010 from $3,628 in the corresponding period in 2009.

In the second quarter of 2010, total average occupancy increased 60 basis points to 87.2% compared to 86.6% in second quarter of 2009, and same community average occupancy increased 50 basis points to 87.4% compared to 86.9% in the prior year second quarter.
 
 
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Community operating expenses increased $16.5 million to $157.4 million in the second quarter of 2010 compared to $140.9 million in the prior year second quarter.  Approximately $6.8 million of the increase resulted from the acquisition, development, or expansion of communities since the beginning of 2009, $4.0 million of the increase was from unallocated community expense adjustments (primarily representing actuarial self-insurance adjustments), and $5.7 million was from our 264 same community portfolio.  The increase in same community operating expenses consisted primarily of a $2.8 million increase in labor and benefits, of which payroll taxes increased $0.6 million, workers’ compensation expense increased $0.4 million and salary and wages increased $1.7 million, or 2.6%.  The remaining increase in same community operating expenses was due primarily to general expense increases across various operating expense categories.

Community operating income (community revenues less community operating expenses) increased $0.5 million to $80.3 million in the second quarter of 2010 compared with $79.8 million in the second quarter of 2009.  Excluding the effect of actuarial self-insurance adjustments in both periods, community operating income increased $4.1 million over the same period.
 
Community Transactions

In June 2010, the Company acquired four additional communities under long-term lease agreements consisting of approximately 552 units.  These four communities are accounted for as operating leases.  The Company entered into a purchase and sale agreement for one community in June 2010 and recorded a loss classified in discontinued operations of approximately $0.9 million.  As of June 30, 2010, the consolidated Emeritus portfolio consisted of 283 communities, of which 264 communities are included in our same community definition.

Balance Sheet

As of June 30, 2010, the Company had $50.9 million of cash and cash equivalents, and had no outstanding borrowings under its $25.0 million line of credit.  On June 30, 2010, total assets were $2.1 billion, including $1.7 billion of net investments in properties, total debt was $1.6 billion, including capital lease obligations, and shareholders’ equity was $287.6 million.

Subsequent Event

In July 2010, the Company entered into an agreement to extend the maturity date on a $50.0 million loan from July 2011 to July 2014.

In May 2010, the Company announced that the joint venture between Emeritus, Blackstone Real Estate Advisors and Columbia Pacific Advisors was selected as the successful bidder in the joint venture’s proposed acquisition of communities operated by an affiliate of Sunwest Management.  The joint venture closed on 132 communities effective August 5, 2010, with the closing on 12 additional communities deferred until a later date.  Emeritus began operating 143 of the 144 communities under management agreements effective as of August 5, 2010.

Revised Guidance

The Company is raising  full year 2010 revenue guidance based on recent acquisitions and current business expectations.  Total revenue is now expected to be in the range of $965.0 to $980.0 million, an increase from the  prior range of $940.0 to $960.0 million.  This revenue guidance includes estimated management fee revenues from the Sunwest joint venture.  In addition, the Company is reducing its full year routine capital expenditures to a range of $13.5 to $15.5 million from a previous range of $16.0 to $18.0 million.

 
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Conference Call:

The Company will host a conference call on Monday, August 9, 2010, at 5:00 P.M. Eastern Time to discuss its financial results for the quarter ended June 30, 2010.  Hosting the call will be Mr. Daniel Baty, Chairman and Co-Chief Executive Officer, Mr. Granger Cobb, President and Co-Chief Executive Officer, and Mr. Robert Bateman, Executive Vice President and Chief Financial Officer.

The conference call will be webcast live over the internet from the Company’s web site at www.emeritus.com under the “investors” section.  The conference call can also be accessed by dialing (877) 407-9039, or for international participants (201) 689-8470.  A replay of the conference call will be available after 8:00 P.M. Eastern Time on Monday, August 9, 2010, until midnight Eastern Time, Monday, August 16, 2010.  The dial in numbers for the replay are (877) 660-6853, or for international participants (201) 612-7415.  To access the telephonic replay, enter account number 3055 along with the conference ID 353633.

Non-GAAP Financial Measures

Adjusted EBITDA/EBITDAR and Cash From Facility Operations (CFFO) are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP).  We believe these non-GAAP measures are useful in identifying trends in our day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating performance.  In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in our industry.  We strongly urge you to review the reconciliation of net loss to Adjusted EBITDA/EBITDAR, and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with our consolidated balance sheets, statements of operations, and cash flows.  We define Adjusted EBITDA/EBITDAR and CFFO and provide other information about these non-GAAP measures in our annual report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2010, and in any subsequent Quarterly Reports on Form 10-Q.

 
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The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three and six month periods ended June 30, 2010 and 2009 (in thousands):

   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Net loss
  $ (14,143 )   $ (7,304 )   $ (28,545 )   $ (22,399 )
Equity earnings in unconsolidated joint ventures
    (302 )     (560 )     (451 )     (1,184 )
Provision for income taxes
    326       270       645       540  
Depreciation and amortization
    20,655       17,952       41,101       39,617  
Interest expense
    27,211       26,416       54,252       52,608  
Interest income
    (131 )     (189 )     (243 )     (327 )
Non-cash stock option compensation expenses
    1,495       1,116       2,931       2,063  
Amortization of deferred gains
    (302 )     (74 )     (607 )     (148 )
Deferred straight-line rent
    3,480       4,945       7,071       9,931  
Above/below market rent amortization
    2,173       2,427       4,347       4,914  
Deferred revenues
    1,496       (57 )     2,505       15  
Change in fair value of interest rate swaps
    (42 )     (752 )     12       (842 )
Impairments on long-lived assets
    320       36       320       1,132  
Acquisition and development expenses
    459       351       512       464  
Discontinued operations
    949       (23 )     1,170       51  
Actuarial self-insurance reserve adjustments
    1,864       (1,726 )     2,461       (1,726 )
Adjusted EBITDA
  $ 45,508       42,828       87,481       84,709  
Community lease expense, net
    24,063       21,975       47,336       43,571  
Adjusted EBITDAR
  $ 69,571     $ 64,803     $ 134,817     $ 128,280  

The following table shows CFFO for the three and six month periods ended June 30, 2010 and 2009 (in thousands):
 
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Net cash provided by operating activities
  $ 20,546     $ 12,159     $ 37,923     $ 33,349  
Remove effect of changes in operating assets and liabilities
    (2,954 )     7,613       (4,458 )     3,410  
Recurring capital expenditures
    (3,055 )     (3,723 )     (5,847 )     (7,582 )
Repayment of capital lease and financing obligations
    (2,980 )     (2,274 )     (5,854 )     (4,508 )
Distributions from unconsolidated joint ventures, net
    490       470       869       1,018  
Cash From Facility Operations
  $ 12,047     $ 14,245     $ 22,633     $ 25,687  
                                 
CFFO per share
  $ 0.31     $ 0.36     $ 0.58     $ 0.66  
                                 
Adjust for actuarial self-insurance reserve adjustments
    1,864       (1,726 )     2,461       (1,726 )
Cash From Facility Operations, as adjusted
  $ 13,911     $ 12,519     $ 25,094     $ 23,961  
                                 
CFFO per share, as adjusted
  $ 0.35     $ 0.32     $ 0.64     $ 0.61  

We define recurring capital expenditures as actual costs incurred to maintain our communities for their intended business purpose and exclude expenditures for acquisitions, development, expansions and general corporate purposes.

 
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For a more detailed understanding of Emeritus, please refer to the Company’s annual report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 15, 2010 and any subsequent Quarterly Reports on Form 10-Q, or visit the Company’s Internet site at www.emeritus.com to obtain copies.
 

 
ABOUT THE COMPANY
 

Emeritus Corporation is a national provider of assisted living and Alzheimer’s and related dementia care services to seniors.  Emeritus is one of the largest and most experienced operators of freestanding assisted living communities located throughout the United States.  These communities provide a residential housing alternative for senior citizens who need assistance with the activities of daily living, with an emphasis on personal care services, which provides support to the residents in the aging process.  Emeritus currently operates 460 communities in 44 states representing capacity for approximately 39,000 units and approximately 45,000 residents, including the recent Sunwest acquisition of managed communities.  Our common stock is traded on the New York Stock Exchange under the symbol ESC, and our home page can be found on the Internet at www.emeritus.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:  A number of the matters and subject areas discussed in this report that are not historical or current facts deal with potential future circumstances, operations, and prospects.  The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience as a result of such factors as: the effects of competition and economic conditions on the occupancy levels in our communities; our ability under current market conditions to maintain and increase our resident charges in accordance with our rate enhancement programs without adversely affecting occupancy levels; increases in interest costs as a result of refinancings; our ability to control community operation expenses without adversely affecting the level of occupancy and the level of resident charges; our ability to generate cash flow sufficient to service our debt and other fixed payment requirements; our ability to find sources of financing and capital on satisfactory terms to meet our cash requirements to the extent that they are not met by operations, and uncertainties related to professional liability and workers’ compensation claims.  We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area.  These and other risks and uncertainties are detailed in our reports filed with the Securities and Exchange Commission, including “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009 and any subsequent Quarterly Report on Form 10-Q.  The Company undertakes no obligation to update the information provided herein.

 
Contact:
   
Investor Relations
   
(206) 298-2909
   
     
Media Contacts:
   
Liz Brady
 
Sari Martin
Liz.brady@icrinc.com
 
Sari.martin@icrinc.com
646-277-1226
 
203-682-8345
 


 
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EMERITUS CORPORATION
 
CONSOLIDATED BALANCE SHEETS
 
(In thousands, except share data)
 
             
ASSETS
 
    (unaudited)        
   
June 30,
   
December 31,
 
 
 
2010
   
2009
 
 Current Assets:                
Cash and cash equivalents
  $ 50,912     $ 46,070  
Short-term investments
    2,398       2,208  
Trade accounts receivable, net of allowance of $895 and $1,009
    12,746       10,861  
Other receivables
    7,426       7,251  
Tax, insurance, and maintenance escrows
    20,291       23,565  
Prepaid workers' compensation
    23,045       21,397  
Other prepaid expenses and current assets
    32,644       27,790  
Total current assets
    149,462       139,142  
Long-term investments
    3,696       4,132  
Property and equipment, net of accumulated depreciation of $261,360 and $222,518
    1,730,105       1,716,472  
Restricted deposits
    15,121       14,349  
Lease acquisition costs, net of accumulated amortization of $2,118 and $1,889
    3,880       3,805  
Goodwill
    74,376       74,755  
Other intangible assets, net of accumulated amortization of $32,744 and $28,883
    110,325       116,418  
Other assets, net
    18,969       20,867  
Total assets
  $ 2,105,934     $ 2,089,940  
                 
LIABILITIES, SHAREHOLDERS' EQUITY AND NONCONTROLLING INTEREST
 
                 
Current Liabilities:
               
Current portion of long-term debt
  $ 41,671     $ 21,324  
Current portion of capital lease and financing obligations
    12,705       11,144  
Trade accounts payable
    5,701       5,928  
Accrued employee compensation and benefits
    44,101       37,624  
Accrued interest
    7,773       8,013  
Accrued real estate taxes
    9,527       10,715  
Accrued professional and general liability
    9,385       8,445  
Accrued income taxes
    194       542  
Other accrued expenses
    14,336       13,491  
Deferred revenue
    12,883       10,729  
Unearned rental income
    17,479       18,669  
Total current liabilities
    175,755       146,624  
Long-term debt obligations, less current portion
    1,342,627       1,375,088  
Capital lease and financing obligations, less current portion
    201,826       165,372  
Deferred gain on sale of communities
    6,504       7,111  
Deferred straight-line rent
    42,775       34,659  
Other long-term liabilities
    42,051       42,188  
Total liabilities
    1,811,538       1,771,042  
                 
Commitments and contingencies
               
Shareholders' Equity and Noncontrolling Interest:
               
Preferred stock, $.0001 par value. Authorized 20,000,000 shares, none issued
    -       -  
Common stock, $.0001 par value. Authorized 100,000,000 shares; issued and outstanding
               
39,361,205 and 39,274,590 shares
    4       4  
Additional paid-in capital
    729,300       725,652  
Accumulated other comprehensive income
    788       807  
Accumulated deficit
    (442,509 )     (414,381 )
Total Emeritus Corporation shareholders' equity
    287,583       312,082  
Noncontrolling interest – related party
    6,813       6,816  
Total shareholders’ equity
    294,396       318,898  
   Total liabilities, shareholders' equity and noncontrolling interest
  $ 2,105,934     $ 2,089,940  


 
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EMERITUS CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(unaudited)
 
(In thousands, except per share data)
 
                         
                         
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Revenues:
                       
Community revenue
  $ 237,787     $ 220,773     $ 470,660     $ 440,404  
Management fees
    1,344       1,453       2,675       2,920  
Total operating revenues
    239,131       222,226       473,335       443,324  
                                 
Expenses:
                               
Community operations (exclusive of depreciation and amortization
                               
    and community lease expense shown separately below)
    157,452       140,935       312,474       284,833  
General and administrative
    17,109       15,932       34,271       30,850  
Acquisitions and development
    309       312       351       387  
Impairments on long-lived assets
    -       36       -       1,132  
Depreciation and amortization
    20,655       17,952       41,101       39,617  
Community leases
    29,716       29,347       58,754       58,416  
Total operating expenses
    225,241       204,514       446,951       415,235  
Operating income from continuing operations
    13,890       17,712       26,384       28,089  
                                 
Other income (expense):
                               
Interest income
    131       189       243       327  
Interest expense
    (27,211 )     (26,416 )     (54,252 )     (52,608 )
Change in fair value of interest rate swaps
    42       752       (12 )     842  
Equity earnings for unconsolidated joint ventures
    302       560       451       1,184  
Other, net
    (22 )     146       456       358  
Net other expense
    (26,758 )     (24,769 )     (53,114 )     (49,897 )
                                 
        Loss from continuing operations before income taxes
    (12,868 )     (7,057 )     (26,730 )     (21,808 )
        Provision for income taxes
    (326 )     (270 )     (645 )     (540 )
Loss from continuing operations
    (13,194 )     (7,327 )     (27,375 )     (22,348 )
Income (loss) from discontinued operations
    (949 )     23       (1,170 )     (51 )
Net loss
    (14,143 )     (7,304 )     (28,545 )     (22,399 )
         Net loss attributable to the noncontrolling interest
    226       229       417       443  
Net loss attributable to Emeritus Corporation common shareholders
  $ (13,917 )   $ (7,075 )   $ (28,128 )   $ (21,956 )
                                 
Basic and diluted loss per common share attributable to
                               
Emeritus Corporation common shareholders:
                               
Continuing operations
  $ (0.33 )   $ (0.18 )   $ (0.69 )   $ (0.56 )
Discontinued operations
    (0.02 )     0.00       (0.03 )     (0.00 )
    $ (0.35 )   $ (0.18 )   $ (0.72 )   $ (0.56 )
                                 
Weighted average common shares outstanding-basic and diluted
    39,301       39,147       39,290       39,132  
                                 


 
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EMERITUS CORPORATION
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30,
 
(unaudited)
(In thousands)
 
 
   
 
 
   
2010
   
2009
 
Cash flows from operating activities:
           
          Net loss
  $ (28,545 )   $ (22,399 )
Adjustments to reconcile net loss to net cash provided by
operating activities:
         
Depreciation and amortization
    41,101       39,617  
Amortization of above/below market rents
    4,347       4,914  
Amortization of deferred gains
    (607 )     (148 )
Loss on sale of assets
    1,179       -  
Impairments on long-lived assets
    320       1,132  
Amortization of loan fees
    1,512       1,572  
Allowance for doubtful receivables
    2,135       1,634  
Equity investment earnings
    (451 )     (1,184 )
Stock based compensation
    2,931       2,063  
Change in fair value of interest rate swaps
    12       (842 )
Other
    (45 )     454  
Changes in operating assets and liabilities:
               
Deferred straight-line rent
    7,071       9,931  
Deferred revenue
    2,505       15  
Change in other operating assets and liabilities
    4,458       (3,410 )
          Net cash provided by operating activities
    37,923       33,349  
                 
Cash flows from investing activities:
               
Acquisition of property and equipment
    (10,073 )     (16,108 )
Community acquisition
    -       (10,579 )
Sale of property and equipment
    -       2,677  
Lease and contract costs and acquisition deposits
    (4,527 )     (170 )
Payments  (to) from affiliates and other managed communities, net
    (1.639 )     699  
Distributions from unconsolidated joint ventures/other
    869       1,018  
          Net cash used in investing activities
    (15,370 )     (22,463 )
                 
Cash flows from financing activities:
               
Proceeds from sale of stock and noncontrolling interest contribution
    1,132       257  
Increase in restricted deposits
    (730 )     (256 )
Debt issuance and other financing costs
    (145 )     (274 )
Proceeds from long-term borrowings and financings
    -       10,864  
Repayment of long-term borrowings and financings
    (12,114 )     (2,736 )
Repayment of capital lease and financing obligations
    (5,854 )     (4,508 )
          Net cash provided by (used in) financing activities
    (17,711 )     3,347  
          Net increase in cash and cash equivalents
    4,842       14,233  
Cash and cash equivalents at the beginning of the period
    46,070       27,254  
Cash and cash equivalents at the end of the period
  $ 50,912     $ 41,487  


 
8

 


EMERITUS CORPORATION
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(unaudited)
 
(In thousands, except per share data)
 
             
   
Three Months Ended
 
   
June 30, 2010
   
March 31, 2010
 
Revenues:
           
Community revenue
  $ 237,787     $ 232,873  
Management fees
    1,344       1,331  
Total operating revenues
    239,131       234,204  
                 
Expenses:
               
Community operations (exclusive of depreciation and amortization
               
    and community lease expense shown separately below)
    157,452       155,022  
General and administrative
    17,109       17,162  
Acquisitions and development
    309       42  
Depreciation and amortization
    20,655       20,446  
Community leases
    29,716       29,038  
Total operating expenses
    225,241       221,710  
Operating income from continuing operations
    13,890       12,494  
                 
Other income (expense):
               
Interest income
    131       112  
Interest expense
    (27,211 )     (27,041 )
Change in fair value of interest rate swaps
    42       (54 )
Equity earnings (losses) in unconsolidated joint ventures
    302       149  
Other, net
    (22 )     478  
Net other expense
    (26,758 )     (26,356 )
                 
          Loss from continuing operations before income taxes
    (12,868 )     (13,862 )
          Provision for income taxes
    (326 )     (319 )
Loss from continuing operations
    (13,194 )     (14,181 )
Income (loss) from discontinued operations
    (949 )     (221 )
Net loss
    (14,143 )     (14,402 )
    Net loss attributable to the noncontrolling interest
    226       191  
Net loss attributable to Emeritus Corporation common shareholders
  $ (13,917 )   $ (14,211 )
                 
Basic and diluted loss per common share attributable to
               
Emeritus Corporation common shareholders:
               
    Continuing operations
  $ (0.33 )   $ (0.35 )
    Discontinued operations
    (0.02 )     (0.01 )
    $ (0.35 )   $ (0.36 )
                 
Weighted average common shares outstanding-basic and diluted
    39,301       39,279  


 
9

 

 
Emeritus Corporation
 
Lease, Interest and Depreciation Expense
 
For the Calendar Quarters Ended
 
(unaudited)
 
(In Thousands)
 
             
         
Projected
 
         
Range
 
      Q2-2010       Q3-2010  
Community leases expense - GAAP
  $ 29,716     $ 31,500 - $31,800  
Less:
               
   Deferred straight-line rent
    (3,480 )     (3,500) - (3,600 )
   Above/below market rent
    (2,173 )    
(2,200) - (2,300
)
Plus:
               
   Capital lease interest
    3,918       3,900 - 4,000  
   Capital lease principal
    2,819       2,800 - 2,900  
Community leases expense - CASH
  $ 30,800     $ 32,500 - $32,800  
                 
                 
                 
Interest expense - GAAP
  $ 27,211     $ 27,530 - $28,040  
Less:
               
   Straight-line interest
    (19 )     (30) - (40 )
   Capital lease interest
    (3,918 )     (3,900) - (4,000
   Loan fee amortization
    (760 )     (800) - (900 )
Interest expense - CASH
  $ 22,514     $ 22,800 - $23,100  
                 
Depreciation – owned assets
  $ 15,459     $ 15,500 – $15,600  
Depreciation – capital leases
    4,232       4,300 – 4,400  
Amortization – intangible assets
    964       1,000 – 1,100  
Total depreciation and amortization expense
  $ 20,655     $ 20,800 - $21,100  
 

 
10

 


 
 
EMERITUS CORPORATION
 Consolidated Supplemental Financial Information
For the Calendar Quarters Ended
 (unaudited)
 (Dollars in thousands, except non-financial and per-unit data)
 
 

 
Non-Financial Data
    Q2 2009       Q3 2009       Q4 2009       Q1 2010       Q2 2010  
Average consolidated communities
    268.3       269.0       271.0       279.5       281.3  
Average available units
    23,439       23,529       23,710       24,080       24,305  
Average occupied units
    20,298       20,495       20,654       20,986       21,198  
Average occupancy
    86.6 %     87.1 %     87.1 %     87.2 %     87.2 %
Average monthly revenue per occupied unit
  $ 3,626     $ 3,649     $ 3,684     $ 3,699     $ 3,739  
Calendar days
    91       92       92       90       91  
                                         
Community revenues:
                                       
Community revenues
  $ 217,303     $ 221,016     $ 225,206     $ 229,815     $ 234,560  
Move-in fees
    4,549       4,196       3,948       3,753       3,838  
Move-in incentives
    (1,079 )     (864 )     (864 )     (695 )     (611 )
     Total community revenues
  $ 220,773     $ 224,348     $ 228,290     $ 232,873     $ 237,787  
                                         
Community operating expenses:
                                       
Salaries and wages - regular and overtime
  $ 67,707     $ 68,627     $ 70,323     $ 69,808     $ 72,574  
Average daily salary and wages
  $ 744     $ 746     $ 764     $ 776     $ 798  
Average daily wages per occupied unit
  $ 36.66     $ 36.40     $ 37.01     $ 36.96     $ 37.62  
                                         
Payroll taxes and employee benefits
  $ 22,116     $ 23,689     $ 24,503     $ 26,244     $ 24,672  
Percent of salaries and wages
    32.7 %     34.5 %     34.8 %     37.6 %     34.0 %
                                         
Actuarial self-insurance reserve adjustments
  $ (1,726 )   $ 818     $ (1,033 )   $ 584     $ 1,859  
                                         
Utilities
  $ 9,406     $ 11,420     $ 9,878     $ 11,522     $ 9,792  
Average monthly cost per occupied unit
  $ 154     $ 186     $ 159     $ 183     $ 154  
                                         
Facility maintenance and repairs
  $ 5,027     $ 5,508     $ 5,683     $ 5,898     $ 5,715  
Average monthly cost per occupied unit
  $ 83     $ 90     $ 92     $ 94     $ 90  
                                         
All other community operating expenses
  $ 38,405     $ 39,331     $ 42,203     $ 40,966     $ 42,840  
Average monthly cost per occupied unit
  $ 631     $ 640     $ 681     $ 651     $ 674  
                                         
Total community operating expenses
  $ 140,935     $ 149,393     $ 151,557     $ 155,022     $ 157,452  
                                         
Community operating income
  $ 79,838     $ 74,955     $ 76,733     $ 77,851     $ 80,335  
                                         
Operating income margin
    36.2 %     33.4 %     33.6 %     33.4 %     33.8 %


 
11

 


EMERITUS CORPORATION
 
Selected Consolidated and Same Community Information
For the Calendar Quarters Ended
 
(unaudited)
(Community revenue and operating expense in thousands)
 
 
      Q2 2009       Q3 2009       Q4 2009       Q1 2010       Q2 2010  
Consolidated:
                                       
    Average consolidated communities
    268.3       269.0       271.0       279.5       281.3  
    Community revenue
  $ 220,773     $ 224,348     $ 228,290     $ 232,873     $ 237,787  
    Community operating expense
  $ 140,935     $ 149,393     $ 151,557     $ 155,022     $ 157,452  
    Average occupancy
    86.6 %     87.1 %     87.1 %     87.2 %     87.2 %
    Average monthly revenue per unit
  $ 3,626     $ 3,649     $ 3,684     $ 3,699     $ 3,739  
                                         
Same Community:
                                       
    Average consolidated communities
    264.0       264.0       264.0       264.0       264.0  
    Community revenue
  $ 219,398     $ 222,344     $ 224,418     $ 225,917     $ 227,648  
    Community operating expense
  $ 140,658     $ 145,611     $ 148,252     $ 148,433     $ 146,348  
    Average occupancy
    86.9 %     87.4 %     87.4 %     87.3 %     87.4 %
    Average monthly revenue per unit
  $ 3,628     $ 3,656     $ 3,690     $ 3,718     $ 3,742  
                                         
           


 
12