EX-99.1 2 v083434_ex99-1.txt Brookdale Announces Second Quarter 2007 Results Second Quarter 2007 Highlights - Revenue for the second quarter increased to $458.4 million, Facility Operating Income increased to $166.1 million and Adjusted EBITDA increased to $82.8 million. - Average occupancy for the quarter was 90.7%, and average revenue per month per occupied unit increased to $3,562 per month, up 1.8% from last quarter. - Cash From Facility Operations for the quarter was $43.0 million, or $0.42 per outstanding common share, a 27% increase on a per share basis over the prior quarter. Cash From Facility Operations includes integration and acquisition-related costs, and start-up expenses associated with ancillary services and facility expansions of $6.5 million, or $0.06 per outstanding common share, and excludes amortization related to capital leases and debt of $3.9 million, or $0.04 per outstanding common share, for a net effect of $2.5 million, or $0.03 per outstanding common share. - For the twelve months ended June 30, 2007, same store revenue increased 6.9% and Facility Operating Income grew 9.7% over the corresponding period ending in 2006, including the effect of the historical results of American Retirement's ("ARC") facilities for both periods. - Net loss of $(18.7) million, or $(0.18) per diluted common share, including non-cash expenses of $97.7 million for depreciation and amortization, non-cash compensation expense and straight-line lease expense, net of deferred gain amortization. - Increased dividend from $0.45 in the first quarter to $0.50 per share of common stock for the quarter ended June 30, 2007. CHICAGO, Aug. 7 /PRNewswire-FirstCall/ -- Brookdale Senior Living Inc. (NYSE: BKD) (the "Company") today reported financial results for the second quarter of 2007. Net loss for the quarter and six months ended June 30, 2007 was $(18.7) million and $(53.8) million, respectively, or $(0.18) and $(0.53) per diluted common share. The losses include non-cash items for depreciation and amortization, non-cash compensation expense and straight-line rent expense, net of deferred gain amortization, which totaled $97.7 million and $188.4 million, respectively. Bill Doniger, Brookdale's Vice Chairman, said, "Overall, we had another quarter of strong operating performance with impressive organic growth. Additionally, our growth initiatives, in particular the rollout of ancillary services including home health services, are performing well ahead of plan. This quarter's results plus our prospects for the remainder of the year underscore the strength and diversity of our business despite the challenges in the housing market which clearly impacted our entrance fee communities." As a dividend-paying company, Brookdale's management utilizes Adjusted EBITDA and Cash From Facility Operations to evaluate the Company's performance and liquidity because these metrics exclude non-cash expenses such as depreciation and amortization, non-cash compensation expense and straight-line rent expense, net of deferred gain amortization. Brookdale also uses Facility Operating Income to assess the performance of its facilities. For the quarter and six months ended June 30, 2007, Adjusted EBITDA was $82.8 million and $153.4 million, respectively. Facility Operating Income was $166.1 million and $326.4 million for the quarter and six month period ended June 30, 2007, respectively. For the quarter and six months ended June 30, 2007, Cash From Facility Operations was $43.0 million and $76.8 million, respectively, or $0.42 and $0.76 per common share outstanding at June 30, 2007, representing over a 62% increase on a per share basis for both periods over the same period in the prior year. Second quarter Adjusted EBITDA and Cash From Facility Operations included integration and acquisition-related expenses of $3.9 million and $0.4 million of integration-related training expenses. The majority of those expenses were related to systems and acquisition integration costs. Also affecting reported results are $2.2 million of start-up expenses associated with ancillary services and facility expansions. Cash From Facility Operations excluded $3.9 million of amortization related to capital leases and debt. Same store revenues grew 6.9% for the twelve months ended June 30, 2007 over the corresponding period ending in 2006, and Facility Operating Income grew 9.7% when compared to the same period, including, in both cases, the effect of the historical results of the ARC facilities. Similarly, same store revenues grew 7.8% for the quarter ended June 30, 2007 over the same period in 2006, and Facility Operating Income grew 9.7% when compared to the second quarter of 2006. Bill Sheriff, Co-CEO of Brookdale, commented, "Our core business remains strong. We maintained occupancy of approximately 91% and improved the average revenue per occupied unit by over 7% annualized versus last quarter. The only part of our business that did not meet our expectations was the sales activity in some of our entrance fee communities. While over 70% of our potential residents own their homes mortgage-free, the weakness in the housing market delayed move-ins as people took longer to sell their homes. However, entrance fee sales continue to trend positively, with the second quarter generating $4.7 million of net entrance fees versus $1.9 million in the first quarter." Ancillary Services, Acquisitions and Facility Expansions Mark J. Schulte, Brookdale's Co-CEO, said, "The roll-out of ancillary services to the legacy Brookdale facilities is being accomplished ahead of our initial plans. We have aggressively focused on markets where we have the largest density of units and have completed the roll-out to over 10,000 new units so far this year. This brings the total to 14,245 legacy Brookdale units/beds as of the end of the quarter, well ahead of our stated plan of 12,000 for the full year. We are also making good progress at initiating home health in some of our markets. This was reflected in the 25% increase in monthly Facility Operating Income per occupied unit from ancillary services at the legacy ARC facilities to $195 this quarter from $156 in the first quarter." During the quarter, the Company completed the acquisition of 7 communities with a total of 1,767 units/beds for an aggregate cost of approximately $179 million. Brookdale already operated 4 of these facilities under long term leases or lease-like structures. So far this year, the Company has acquired ten communities with a total of 2,059 units/beds for an aggregate cost of approximately $199 million. Since the beginning of the year, the Company has opened expansions at five communities with a total of 210 units representing $35 million of project costs. The three expansions that opened during the first quarter 2007 are currently averaging occupancy of 80% and are producing positive operating income. Four other expansions with a total of 86 units representing $26 million of project costs are currently under construction. Earnings Conference Call Brookdale's management will conduct a conference call on Wednesday, August 8, 2007 to review the financial results for the three and six months ended June 30, 2007. The conference call is scheduled for 10:00 AM ET. All interested parties are welcome to participate in the live conference call. The conference call can be accessed by dialing (800) 289-0726 (from within the U.S.) or (913) 981-5545 (from outside of the U.S.) ten minutes prior to the scheduled start and referencing the "Brookdale Senior Living Second Quarter Earnings Call." A webcast of the conference call will be available to the public on a listen-only basis at http://www.brookdaleliving.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for three months on the Company's website following the call. A replay will also be available until 11:59 PM ET on August 15, 2007 by dialing (888) 203-1112 (from within the U.S.) or (719) 457-0820 (from outside of the U.S.) and referencing access code "5743253." A copy of this earnings release is posted on the Investor Relations page of the Brookdale website (http://www.brookdaleliving.com). About Brookdale Senior Living Brookdale Senior Living Inc. is a leading owner and operator of senior living facilities throughout the United States. The Company is committed to providing an exceptional living experience through properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents. Currently the Company owns and operates independent living, assisted living, and dementia-care facilities and continuing care retirement centers, with over 548 facilities in 35 states and the ability to serve over 52,000 residents. Safe Harbor Certain items in this press release and the associated earnings conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements relating to our ability to close accretive acquisitions; our ability to acquire the fee interest in facilities that we currently operate at attractive valuations; our ability to grow dividends and earnings, Adjusted EBITDA and Cash From Facility Operations; our expectations for the performance of our entrance fee communities; our plans to generate growth organically through occupancy improvements, increases in annual rental rates and the achievement of operating efficiencies and cost savings; our plans to expand our offering of ancillary services (therapy and home health); our plans to expand existing facilities and develop new facilities; and the expected project costs for our expansion and development program. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "would," "project," "predict," "continue," "plan" or other similar words or expressions. Forward-looking statements are based on certain assumptions or estimates, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition, or state other forward-looking information. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on our operations and future prospects or which could cause events or circumstances to differ from these forward-looking statements include, but are not limited to, our limited operating history on a combined basis, our ability to generate sufficient cash flow to cover required interest and long-term operating lease payments, the effect of our indebtedness and long-term operating leases on our liquidity, the risk of loss of property pursuant to our mortgage debt and long-term lease obligations, our ability to effectively manage our growth, our ability to integrate acquisitions (including the ARC acquisition), our ability to maintain consistent quality control, unforeseen costs associated with the acquisition of new facilities, competition for the acquisition of assets, our ability to obtain additional capital on terms acceptable to us, events which adversely affect the ability of seniors to afford our monthly resident fees or entrance fees, changes in governmental reimbursement programs, our vulnerability to economic downturns, the conditions of housing markets in certain geographic areas, acts of nature in certain geographic areas, terminations of our resident agreements and vacancies in the living spaces we lease, increased competition for skilled personnel, departure of our key officers, increases in market interest rates, environmental contamination at any of our facilities, failure to comply with existing environmental laws, an adverse determination or resolution of complaints filed against us, the cost and difficulty of complying with increasing and evolving regulation, and the other risks detailed from time to time in our SEC reports, including our Annual Report on Form 10-K filed with the SEC on March 16, 2007. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in such SEC filings. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our management's views as of the date of this press release and/or the associated earnings conference call. The factors discussed above and the other factors noted in our SEC filings from time to time could cause our actual results to differ significantly from those contained in any forward-looking statement. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements and we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. Condensed Consolidated Statements of Operations (unaudited, in thousands, except for per share data) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Revenue Resident fees $456,622 $267,842 $901,960 $488,878 Management fees 1,788 585 3,284 1,732 Total revenue 458,410 268,427 905,244 490,610 Expense Facility operating (excluding depreciation and amortization of $72,508, $30,042, $142,275 and $51,452, respectively) 285,866 161,281 566,675 298,226 General and administrative (including non-cash stock-based compensation expense of $8,192, $3,755, $19,012 and $6,773, respectively) 35,758 23,125 76,411 44,210 Facility lease expense 67,176 46,623 135,657 92,357 Depreciation and amortization 82,471 30,947 155,455 53,246 Total operating expense 471,271 261,976 934,198 488,039 (Loss) income from operations (12,861) 6,451 (28,954) 2,571 Interest income 1,563 625 3,383 1,677 Interest expense: Debt (35,078) (25,544) (68,530) (39,234) Amortization of deferred financing costs (2,109) (1,335) (3,727) (2,038) Change in fair value of derivatives and amortization 17,619 519 12,838 418 Loss on extinguishment of debt (803) - (803) (1,334) Equity in loss of unconsolidated ventures (601) (469) (2,054) (637) Other non-operating income 238 - 238 - Loss before income taxes (32,032) (19,753) (87,609) (38,577) Benefit (provision) for income taxes 12,715 (273) 33,283 (659) Loss before minority interest (19,317) (20,026) (54,326) (39,236) Minority interest 642 (233) 511 (349) Net loss $(18,675) $(20,259) $(53,815) $(39,585) Basic and diluted loss per share $(0.18) $(0.31) $(0.53) $(0.61) Weighted average shares used in computing basic and diluted loss per share 101,520 65,007 101,411 65,007 Dividends declared per share $0.50 $0.35 $0.95 $0.70 Condensed Consolidated Balance Sheets (in thousands) June 30, 2007 December 31, 2006 (Unaudited) Cash and cash equivalents $81,229 $68,034 Cash and investments - restricted 79,489 61,116 Accounts receivable, net 62,715 58,987 Other current assets 76,351 82,095 Total current assets 299,784 270,232 Property, plant, equipment and leasehold intangibles, net 3,751,666 3,658,788 Other long-term assets 803,034 813,435 Total assets $4,854,484 $4,742,455 Current liabilities $508,733 $508,905 Long-term debt, less current portion 1,869,089 1,690,570 Other long-term liabilities 842,720 774,367 Total liabilities 3,220,542 2,973,842 Minority interests 3,620 4,601 Stockholders' equity 1,630,322 1,764,012 Total liabilities and stockholders' equity $4,854,484 $4,742,455 Condensed Consolidated Statements of Cash Flow (unaudited, in thousands) Six Months Ended June 30, 2007 2006 Cash Flows from Operating Activities Net loss $(53,815) $(39,585) Adjustments to reconcile net loss to net cash provided by operating activities: Non-cash portion of loss on extinguishment of debt - 1,334 Depreciation and amortization 159,182 55,284 Minority interest (511) 349 Gain on sale of assets (403) - Equity in loss of unconsolidated ventures 2,054 637 Distributions from joint ventures from cumulative share of net earnings 961 - Amortization of deferred gain (2,170) (2,173) Amortization of entrance fees (8,900) (145) Proceeds from deferred entrance fee revenue 8,642 613 Deferred income tax benefit (33,326) - Change in deferred lease liability 12,364 10,498 Change in fair value of derivatives and amortization (12,838) (418) Stock-based compensation 19,012 6,773 Changes in operating assets and liabilities: Accounts receivable, net (4,363) (10,715) Prepaid expenses and other assets, net 4,669 7,376 Accounts payable and accrued expenses (10,763) (3,596) Tenant refundable fees and security deposits 4,656 2,182 Other 459 (5,175) Net cash provided by operating activities 84,910 23,239 Cash Flows from Investing Activities Decrease in lease security deposits and lease acquisition deposits, net 1,602 5,266 (Increase) decrease in cash and investments - restricted (12,281) 14,854 Additions to property, plant, equipment and leasehold intangibles, net of related payables (68,933) (14,957) Acquisition of assets, net of related payables and cash received (149,788) (531,895) Issuance of notes receivable, net (10,251) - Investment in joint ventures (1,176) - Distributions received from unconsolidated ventures 1,765 - Net cash used in investing activities (239,062) (526,732) Cash Flows from Financing Activities Proceeds from debt 249,011 321,170 Repayment of debt (25,999) (11,356) Buyout of capital lease obligations (51,114) - Proceeds from line of credit 328,500 215,000 Repayment of line of credit (232,000) (20,000) Payment of dividends (93,178) (39,714) Payment of financing costs, net of related payables (5,179) (10,636) Other (612) - Refundable entrance fees: Proceeds from refundable entrance fees 8,322 2,756 Refunds of entrance fees (10,404) (1,011) Net cash provided by financing activities 167,347 456,209 Net (decrease) increase in cash and cash equivalents 13,195 (47,284) Cash and cash equivalents at beginning of period 68,034 77,682 Cash and cash equivalents at end of period $81,229 $30,398 Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA is a measure of operating performance that is not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Adjusted EBITDA should not be considered in isolation or as a substitute for net income, income from operations or cash flows provided by or used in operations, as determined in accordance with GAAP. Adjusted EBITDA is a key measure of the Company's operating performance used by management to focus on operating performance and management without mixing in items of income and expense that relate to long-term contracts and the financing and capitalization of the business. We define Adjusted EBITDA as net income (loss) before provision (benefit) for income taxes, non-operating (income) loss items, depreciation and amortization, straight-line rent expense (income), amortization of deferred gain, amortization of deferred entrance fees, and non-cash compensation expense and including entrance fee receipts and refunds. We believe Adjusted EBITDA is useful to investors in evaluating our performance, results of operations and financial position for the following reasons: -- It is helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance to our day- to-day operations; -- It provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance; and -- It is an indication to determine if adjustments to current spending decisions are needed. The table below reconciles Adjusted EBITDA from net loss for the three and six months ended June 30, 2007 and 2006 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2007(1) 2006(1) 2007(1) 2006(1) Net loss $(18,675) $(20,259) $(53,815) $(39,585) Minority interest (642) 233 (511) 349 (Benefit) provision for income taxes (12,715) 273 (33,283) 659 Equity in loss of unconsolidated ventures 601 469 2,054 637 Loss on extinguishment of debt 803 - 803 1,334 Other non-operating income (238) - (238) - Interest Expense: Debt 27,953 18,963 53,192 30,493 Capitalized lease obligation 7,125 6,581 15,338 8,741 Amortization of deferred financing costs 2,109 1,335 3,727 2,038 Change in fair value of derivatives and amortization (17,619) (519) (12,838) (418) Interest income (1,563) (625) (3,383) (1,677) (Loss) income from operations (12,861) 6,451 (28,954) 2,571 Depreciation and amortization 82,471 30,947 155,455 53,246 Straight-line lease expense 6,028 5,239 12,364 10,498 Amortization of deferred gain (1,085) (1,086) (2,170) (2,173) Amortization of entrance fees (4,641) (62) (8,900) (145) Non-cash compensation expense 8,192 3,755 19,012 6,773 Entrance fee receipts(2) 8,790 1,300 16,964 3,369 Entrance fee disbursements (4,089) (308) (10,404) (1,011) Adjusted EBITDA $82,805 $46,236 $153,367 $73,128 (1) The calculation of Adjusted EBITDA includes merger, integration, and certain other non-recurring expenses, as well as acquisition transition costs, totaling $3.9 million and $3.7 million for the three months ended June 30, 2007 and 2006, respectively and $7.0 million and $6.7 million for the six months ended June 30, 2007, respectively. (2) Includes the receipt of refundable and non-refundable entrance fees. Cash From Facility Operations Cash From Facility Operations is a measurement of liquidity that is not calculated in accordance with GAAP and should not be considered in isolation as a substitute for cash flows provided by or used in operations, as determined in accordance with GAAP. We define Cash From Facility Operations as net cash provided by (used in) operating activities adjusted for changes in operating assets and liabilities, deferred interest and fees added to principal, refundable entrance fees received, entrance fee refunds disbursed, other and recurring capital expenditures. Recurring capital expenditures include expenditures capitalized in accordance with GAAP that are funded from Cash From Facility Operations. Amounts excluded from recurring capital expenditures consist primarily of unusual or non-recurring capital items, facility purchases and/or major renovations that are funded using financing proceeds and/or proceeds from the sale of facilities that are held for sale. We believe Cash From Facility Operations is useful to investors in evaluating our liquidity for the following reasons: -- It provides an assessment of our ability to facilitate meeting current financial and liquidity goals. -- To assess our ability to: (i) service our outstanding indebtedness; (ii) pay dividends; and (iii) make regular recurring capital expenditures to maintain and improve our facilities. The table below reconciles Cash From Facility Operations from net cash provided by operating activities for the three and six months ended June 30, 2007 and 2006 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2007(1) 2006(1) 2007(1) 2006(1) Net cash provided by operating activities $56,082 $11,120 $84,910 $23,239 Changes in operating assets and liabilities (6,797) 9,097 5,342 9,928 Refundable entrance fees received(2) 4,064 1,135 8,322 2,756 Entrance fee refunds disbursed (4,089) (308) (10,404) (1,011) Recurring capital expenditures, net (7,049) (5,299) (13,274) (7,360) Reimbursement of operating expenses and other 812 1,350 1,942 2,850 Cash From Facility Operations $43,023 $17,095 $76,838 $30,402 (1) The calculation of Cash From Facility Operations includes merger, integration and certain other non-recurring expenses, as well as acquisition transition costs, totaling $3.9 million and $3.7 million for the three months ended June 30, 2007 and 2006, respectively, and $7.0 million and $6.7 million for the six months ended June 30, 2007 and 2006, respectively. (2) Total entrance fee receipts for the three months ended June 30, 2007 and 2006 were $8.8 million and $1.3 million, respectively, including $4.7 million and $0.2 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating activities. Total entrance fee receipts for the six months ended June 30, 2007 and 2006 were $17.0 million and $3.4 million, respectively, including $8.6 million and $0.6 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating activities. The calculation of Cash From Facility Operations per outstanding common share is based on outstanding common shares at the end of the period, excluding any unvested restricted shares. Facility Operating Income Facility Operating Income is not a measurement of operating performance calculated in accordance with GAAP and should not be considered in isolation as a substitute for net income, income from operations, or cash flows provided by or used in operations, as determined in accordance with GAAP. We define Facility Operating Income as net income (loss) before provision (benefit) for income taxes, non-operating (income) loss items, depreciation and amortization, facility lease expense, general and administrative expense, including non-cash stock compensation expense, amortization of deferred entrance fee revenue and management fees. We believe Facility Operating Income is useful to investors in evaluating our facility operating performance for the following reasons: -- It is helpful in identifying trends in our day-to-day facility performance; -- It provides an assessment of our revenue generation and expense management; and -- It provides an indicator to determine if adjustments to current spending decisions are needed. The table below reconciles Facility Operating Income from net loss for the three and six months ended June 30, 2007 and 2006 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Net loss $(18,675) $(20,259) $(53,815) $(39,585) (Benefit) provision for income taxes (12,715) 273 (33,283) 659 Minority interest (642) 233 (511) 349 Equity in loss of unconsolidated ventures 601 469 2,054 637 Loss on extinguishment of debt 803 - 803 1,334 Other non-operating income (238) - (238) - Interest expense: Debt 27,953 18,963 53,192 30,493 Capitalized lease obligation 7,125 6,581 15,338 8,741 Amortization of deferred financing costs 2,109 1,335 3,727 2,038 Change in fair value of derivatives and amortization (17,619) (519) (12,838) (418) Interest income (1,563) (625) (3,383) (1,677) (Loss) income from operations (12,861) 6,451 (28,954) 2,571 Depreciation and amortization 82,471 30,947 155,455 53,246 Facility lease expense 67,176 46,623 135,657 92,357 General and administrative (including non-cash stock compensation expense) 35,758 23,125 76,411 44,210 Amortization of entrance fees(1) (4,641) (62) (8,900) (145) Management fees (1,788) (585) (3,284) (1,732) Facility Operating Income $166,115 $106,499 $326,385 $190,507 (1) Entrance fee sales, net of refunds paid, provided $4.7 million and $1.0 million of cash for the three months ended June 30, 2007 and 2006, respectively, and $6.6 million and $2.4 million for the six months ended June 30, 2007 and 2006, respectively. Operating Data Our facility breakdown at June 30, 2007 was as follows: Percentage of Number of Number of Q2 2007 Ownership Type Facilities Units/Beds Revenues Owned 167 18,545 39.1% Leased 360 28,876 60.5% Managed 21 4,195 0.4% Total 548 51,616 100.0% Operating Type Independent Living 70 12,331 24.5% Assisted Living 409 21,083 42.9% Retirement Centers/CCRCs 48 14,007 32.2% Managed 21 4,195 0.4% Total 548 51,616 100.0% Our quarterly facility financial data for the three months ended June 30, 2007 and March 31, 2007 was as follows (in thousands, except occupancy, margin and average revenue per occupied unit): For The Three Months Ended June 30, March 31, Increase 2007 2007 Decrease Percentage Average Occupancy 90.7% 90.8% (0.1%) (0.1%) Average Revenue per Occupied Unit $3,562 $3,498 $64 1.8% Resident Fees(1) $451,981 $441,079 $10,902 2.5% Facility Operating Expenses 285,866 280,809 5,057 1.8% Facility Operating Income $166,115 $160,270 $5,845 3.6% Facility Operating Income Margin 36.8% 36.3% (1) Excluding amortization of entrance fees of $4,641 and $4,259, respectively. Our capital expenditures for the three and six months ended June 30, 2007 and 2006 were as follows (in thousands): Three Months Six Months Ended June 30, Ended June 30, 2007 2006 2007 2006 Type Recurring $7,921 $5,970 $14,146 $8,702 Reimbursements (872) (671) (872) (1,342) Net recurring 7,049 5,299 13,274 7,360 Other/Corporate(1) 3,219 - 9,198 2,731 EBITDA-enhancing(2) 14,619 2,250 25,010 3,524 Development(3) 8,843 - 20,579 - Net Total Capital Expenditures $33,730 $7,549 $68,061 $13,615 (1) Corporate primarily includes capital expenditures for information technology systems and equipment. (2) EBITDA-enhancing capital expenditures generally represent unusual or non-recurring capital items and/or major renovations. (3) Development capital expenditures primarily relate to the facility expansion and de novo development program. Our debt amortization for the three months and six months ended June 30, 2007 and 2006 was as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Type Scheduled Debt Amortization $454 $116 $1,028 $146 Lease Financing Debt Amortization 3,490 509 6,850 509 Total Debt Amortization $3,944 $625 $7,878 $655 Our ancillary services data for the last three quarters was as follows: As of: June 30, March 31, December 31, 2007 2007 2006 Units served by therapy staff: Legacy Brookdale 14,245 7,442 3,937 Legacy ARC 12,716 12,680 12,422 Total 26,961 20,122 16,359 Therapy Clinics 302 260 186 Therapy staff 1,377 1,139 935