0001332349-12-000036.txt : 20121102 0001332349-12-000036.hdr.sgml : 20121102 20121101215405 ACCESSION NUMBER: 0001332349-12-000036 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20121101 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20121102 DATE AS OF CHANGE: 20121101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Brookdale Senior Living Inc. CENTRAL INDEX KEY: 0001332349 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-NURSING & PERSONAL CARE FACILITIES [8050] IRS NUMBER: 203068069 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32641 FILM NUMBER: 121174975 BUSINESS ADDRESS: STREET 1: 111 WESTWOOD PLACE STREET 2: SUITE 400 CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: (615) 221-2250 MAIL ADDRESS: STREET 1: 111 WESTWOOD PLACE STREET 2: SUITE 400 CITY: BRENTWOOD STATE: TN ZIP: 37027 8-K 1 form8-k.htm FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8‑K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
 
 
Date of Report (Date of earliest event reported)
 
November 1, 2012 (November 1, 2012)


Brookdale Senior Living Inc.
(Exact name of registrant as specified in its charter)


Delaware
001-32641
20-3068069
(State or other jurisdiction
(Commission File Number)
(IRS Employer
of incorporation)
 
Identification No.)
 
 
 
 
 
 
111 Westwood Place, Suite 400, Brentwood, Tennessee
37027
(Address of principal executive offices)
(Zip Code)


Registrant's telephone number, including area code
 
(615) 221-2250
 
 
 
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Section 2 — Financial Information

Item 2.02     Results of Operations and Financial Condition.

On November 1, 2012, Brookdale Senior Living Inc. (the "Company") issued a press release announcing its third quarter 2012 financial results and announcing a conference call to review these results. A copy of the press release is furnished herewith as Exhibit 99.1.

Supplemental information relating to the Company's third quarter 2012 results is furnished herewith as Exhibit 99.2.

The information furnished pursuant to this Current Report on Form 8-K (including the exhibits hereto) shall not be considered "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, unless the Company expressly sets forth by specific reference in such filing that such information is to be considered "filed" or incorporated by reference therein.

Section 7 — Regulation FD

Item 7.01     Regulation FD Disclosure.

The information set forth in Item 2.02 of this report is incorporated herein by reference.

Section 9 — Financial Statements and Exhibits

Item 9.01     Financial Statements and Exhibits.

(d)
Exhibits
 
 
 
99.1
 
Press Release dated November 1, 2012
 
 
 
99.2
 
Supplemental Information



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
BROOKDALE SENIOR LIVING INC.
 
 
 
 
 
 
Date:
November 1, 2012
 
By:
 
/s/ T. Andrew Smith
 
 
Name:
T. Andrew Smith
 
 
Title:
Executive Vice President, General Counsel and Secretary




EXHIBIT INDEX


Exhibit No.
 
Exhibit
 
 
 
99.1
 
Press Release dated November 1, 2012.
 
 
 
99.2
 
Supplemental Information.






EX-99.1 2 exhibit99_1.htm PRESS RELEASE
 
 
FOR IMMEDIATE RELEASE
 
Contact:
Brookdale Senior Living Inc.
Ross Roadman  615-564-8104
Brookdale Announces Third Quarter 2012 Results
Nashville, TN.  November 1, 2012 – Brookdale Senior Living Inc. (NYSE: BKD) (the "Company") today reported financial and operating results for the third quarter of 2012.
·
Cash From Facility Operations ("CFFO") was $66.1 million, or $0.54 per share, excluding $4.6 million of integration, transaction-related and electronic medical records ("EMR") roll-out costs in the third quarter of 2012.
·
Average occupancy was 88.0%, a 60 basis point increase from 87.4% in the third quarter of 2011 and a 30 basis point increase from the second quarter of 2012.
·
Average monthly revenue per unit for the senior housing portfolio improved by 1.5% to $4,279 for the third quarter of 2012 from $4,214 for the third quarter of 2011.
·
Entry Fee CCRCs produced a record 147 independent living entry fee unit closings and $19.1 million of net cash flow, an increase of $6.6 million over the third quarter of 2011.
·
Adjusted EBITDA was $111.5 million, a 5.9% increase from $105.2 million in the third quarter of 2011, excluding integration, transaction-related and EMR roll-out costs in both periods.
Bill Sheriff, Brookdale's CEO, said, "We were pleased with our overall performance in the third quarter. In general, we saw a continuation of trends that we have been reporting on in recent quarters, including favorable growth in occupancy, improvement in entry fee sales and continued solid average revenue rate growth.  We have positioned the Company to make the most of an improving market by focusing on sales and marketing execution and reinvesting in our portfolio."
Mark Ohlendorf, Co-President and CFO of Brookdale, commented, "We continue to spend capital on our portfolio to assure that our communities are well positioned in the market place.  We have spent almost $100 million so far in 2012 on improvements such as unit upgrades, common space renovations, service level conversions, expansions and major repositionings.  Our completed Program Max projects continue to produce solid returns on invested capital."
Financial Results
Total revenue for the third quarter was $696.5 million, an increase of $80.8 million, or 13.1%, from the third quarter of 2011.  Resident fee revenue for the third quarter increased $30.7
 
Page 1 of 14

million, or 5.3%, from the third quarter of 2011, primarily as a result of an increase in the average monthly revenue per unit compared to the prior year period, including growing revenues from the Company's ancillary services programs, an increase in occupancy and a 2.6% increase in consolidated units operated.  Revenue attributed to "reimbursed costs incurred on behalf of managed communities" increased by $46.0 million, primarily due to the addition of managed communities from the Horizon Bay acquisition, which occurred on September 1, 2011.
Beginning October 1, 2011, the Company's two CCRC segments were impacted by a reduction in the RUGS IV reimbursement rate for Medicare skilled nursing patients as well as a negative change in the allowable method for delivering therapy services to skilled nursing patients.  For the third quarter of 2012, the combined negative financial impact of these changes was approximately $5.4 million, comprised of approximately $4.8 million of reduced revenue from the rate reduction and approximately $0.6 million of additional expense relating to increased therapy labor.  This impact is reflected in the financial results presented throughout this release and, in particular, increased expense and decreased revenue, Facility Operating Income, Adjusted EBITDA and Cash From Facility Operations.
Average monthly revenue per unit for the senior housing portfolio was $4,279 in the third quarter, an increase of $65, or 1.5%, over the third quarter of 2011 (2.4% excluding the impact of the change in Medicare RUGs IV rates effective October 1, 2011).  Average occupancy for all consolidated communities for the third quarter of 2012 was 88.0%, compared to 87.4% for the third quarter of 2011 and 87.7% for the second quarter of 2012.  For the managed community portfolio, which includes a number of pre-stabilized communities in the initial fill-up phase, average occupancy for the third quarter was 84.3%.
Facility operating expenses for the third quarter were $411.5 million, an increase of $30.1 million, or 7.9%, from the third quarter of 2011, primarily due to the inclusion of expenses from communities acquired during the prior year period and additional current year expense incurred in connection with the continued expansion of the Company's ancillary services programs during 2012 and 2011, as well as an increase in salaries and wages.  Expenses attributed to "reimbursed costs incurred on behalf of managed communities" increased by $46.0 million, primarily due to the addition of managed communities from the Horizon Bay acquisition.
General and administrative expenses for the third quarter were $43.2 million.  Excluding integration, transaction-related and EMR roll-out costs of $4.6 million and $5.5 million in the third quarters of 2012 and 2011, respectively, and non-cash stock-based compensation expense from both periods, general and administrative expenses were $32.5 million in the third quarter of 2012 versus $28.0 million for the prior year same period.  The increase in general and administrative expenses was primarily related to the addition of the Horizon Bay communities.  Demonstrating the Company's efficient platform, general and administrative expenses were 4.3% of resident fee revenue (including resident fee revenues under management) in the third quarter of 2012.
Brookdale's management utilizes Adjusted EBITDA and CFFO to evaluate the Company's performance and liquidity because these metrics exclude non-cash expenses such as depreciation and amortization, asset impairment charges, non-cash stock-based compensation expense and straight-line lease expense, net of deferred gain amortization.  Adjusted EBITDA and Cash From
 
Page 2 of 14

 
 
Facility Operations include integration, transaction-related and EMR roll-out costs of $4.6 million and $16.2 million for the three and nine months ended September 30, 2012, respectively, and $5.5 million and $6.4 million for the three and nine months ended September 30, 2011, respectively.  Brookdale also uses Facility Operating Income to assess the performance of its communities.
For the quarter ended September 30, 2012, Facility Operating Income was $187.6 million, an increase of $0.4 million, or 0.2%, over the third quarter of 2011, and Adjusted EBITDA, excluding integration, transaction-related and EMR roll-out costs in 2012 and 2011, was $111.5 million, an increase of $6.3 million, or 5.9%, over the third quarter of 2011.  For the nine months ended September 30, 2012, Facility Operating Income was $571.5 million, an increase of $1.9 million, or 0.3%, over the same period of 2011, and Adjusted EBITDA, excluding integration, transaction-related and EMR roll-out costs in 2012 and 2011, was $324.2 million, an increase of $11.5 million, or 3.7%, over the same period of 2011.
Cash From Facility Operations was $61.5 million for the third quarter of 2012, or $0.50 per share.  CFFO, excluding integration, transaction-related and EMR roll-out costs for both periods, was $66.1 million for the third quarter of 2012, or $0.54 per share, an increase of $0.5 million, or 0.8%, over CFFO of $65.6 million, or $0.54 per share, for the third quarter of 2011.  CFFO, excluding integration, transaction-related and EMR roll-out costs for both periods, was $193.8 million for the nine months ended September 30, 2012, or $1.59 per share, an increase of $4.2 million, or 2.2%, over CFFO of $189.5 million, or $1.57 per share, for the same period in 2011.
Net loss for the third quarter of 2012 was $(12.0) million, or $(0.10) per diluted common share. The loss for the quarter includes non-cash items for depreciation and amortization, non-cash stock-based compensation expense and straight-line lease expense, net of deferred gain amortization.
Operating Activities
The Company reports information on six segments.  Four segments (Retirement Centers, Assisted Living, CCRCs – Rental and CCRCs – Entry Fee) constitute the Company's consolidated senior housing portfolio.  The fifth segment, Innovative Senior Care, includes the Company's outpatient therapy, home health and hospice services.  The sixth segment, Management Services, includes the services provided to unconsolidated communities that are operated under management agreements.
Senior Housing
Revenue for the consolidated senior housing portfolio was $549.0 million for the third quarter of 2012, an increase of 4.8% from the third quarter of 2011.  Revenue was impacted by increases in occupancy and rate and the addition of 12 leased Horizon Bay communities.  Operating income for the senior housing portfolio for the third quarter of 2012, which included approximately $5.4 million of negative RUGS IV Medicare skilled nursing changes, increased by $3.1 million from the third quarter of 2011.
 
Page 3 of 14

Same community results for the consolidated senior housing portfolio for the three months ended September 30, 2012 showed revenues grew 2.0% over the corresponding period in 2011 as revenue per unit increased by 1.3% and occupancy grew by 60 basis points.  Same community expenses grew by 3.2% and included a $1.9 million increase in expense related to the Company's employee health insurance programs over the third quarter of 2011.  Same community Facility Operating Income for the senior housing portfolio decreased by 0.3% over the third quarter of 2011.  This decline in Facility Operating Income includes the impact of an 11.1% reduction in Medicare skilled nursing rates and the elimination of group therapy on October 1, 2011. Excluding the negative impact of these changes related to the Medicare skilled nursing benefit, same community senior housing revenue increased by 3.0% and same community senior housing Facility Operating Income increased by 2.8% over the corresponding period in 2011.
Innovative Senior Care
Revenue for the Company's ISC segment increased $5.5 million, or 10.7%, to $56.9 million, for the third quarter of 2012, primarily due to the roll-out of the Company's ancillary services programs to additional units subsequent to the prior year period.  The increase was partially offset by a reduction in Medicare reimbursement rates.  ISC operating expenses increased $8.0 million, or 21.5%, primarily due to an increase in expenses incurred in connection with the continued expansion of the Company's ancillary services programs and an increase in therapy direct labor expenses.

By the end of the third quarter, the Company's ancillary services programs provided outpatient therapy services to approximately 38,000 Brookdale units and the Company's home health agencies were serving approximately 32,700 units across the consolidated Brookdale portfolio.   Including non-consolidated communities served by ISC, the Company's outpatient therapy and home health operations serve approximately 50,600 and 45,250 units, respectively.  By the end of the third quarter, the Company had reached approximately 11,300 Horizon Bay units for therapy and approximately 10,200 Horizon Bay units for home health.  The Company had four markets where hospice services were provided during the third quarter.
Balance Sheet
Brookdale had $42.5 million of unrestricted cash and cash equivalents and $104.6 million of restricted cash on its balance sheet at the end of the third quarter.  As of September 30, 2012, the Company had an available secured line of credit with a $230.0 million commitment and $190.0 million of availability (of which $80.0 million had been drawn as of that date).  The Company also had secured and unsecured letter of credit facilities of up to $92.5 million in the aggregate as of September 30, 2012.  $78.1 million of letters of credit had been issued under these facilities as of that date.
On August 11, 2011, the Company's board of directors approved a share repurchase program that authorizes the Company to purchase up to $100.0 million in the aggregate of the Company's common stock.  Pursuant to this authorization, 1,217,100 shares had been purchased as of September 30, 2012, at a cost of approximately $17.6 million, or a weighted average price of approximately $14.44 per share.  No shares were purchased during the third quarter.  As of
 
Page 4 of 14

September 30, 2012, approximately $82.4 million remains available under this share repurchase authorization.
Supplemental Information
The Company will shortly post on the Investor Relations section of the Company's website at www.brookdaleliving.com supplemental information relating to the Company's third quarter 2012 results.  This information will also be furnished in a Form 8-K to be filed with the SEC.
Earnings Conference Call
Brookdale's management will conduct a conference call to review the financial results of its third quarter ended September 30, 2012 on Friday, November 2, 2012 at 9:00 AM ET.  The conference call can be accessed by dialing (866) 900-2996 (from within the U.S.) or (706) 643-2685 (from outside of the U.S.) ten minutes prior to the scheduled start and referencing the "Brookdale Senior Living Third Quarter Earnings Call."
A webcast of the conference call will be available to the public on a listen-only basis at 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 through the website for three months following the call.
For those who cannot listen to the live call, a replay will be available until 11:59 PM ET on November 9, 2012 by dialing (855) 859-2056 (from within the U.S.) or (404) 537-3406 (from outside of the U.S.) and referencing access code "28539327".  A copy of this earnings release is posted on the Investor Relations page of the Brookdale website (www.brookdaleliving.com).
About Brookdale Senior Living

Brookdale Senior Living Inc. is a leading owner and operator of senior living communities 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 operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with 648 communities in 35 states and the ability to serve approximately 67,000 residents.  Through its Innovative Senior Care program, the Company also offers a range of outpatient therapy, home health and hospice services, primarily to residents of its communities.

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 operational initiatives and our expectations regarding their effect on our results; our expectations regarding
 
Page 5 of 14

 
 
the economy, occupancy, revenue, cash flow, expenses, capital expenditures, Program Max opportunities, cost savings, the demand for senior housing, the home resale market, expansion and development activity, acquisition opportunities, asset dispositions, our share repurchase program, taxes, capital deployment, returns on invested capital and CFFO; our belief regarding the value of our common stock and our expectations regarding returns to shareholders and our growth prospects; our expectations concerning the future performance of recently acquired communities and the effects of acquisitions on our financial results; our ability to secure financing or repay, replace or extend existing debt at or prior to maturity; our ability to remain in compliance with all of our debt and lease agreements (including the financial covenants contained therein); our expectations regarding liquidity; our plans to deleverage; our expectations regarding financings and refinancings of assets (including the timing thereof) and their effect on our results; our expectations regarding changes in government reimbursement programs and their effect on our results; 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, home health and hospice); our plans to expand, redevelop and reposition existing communities; our plans to acquire additional communities, asset portfolios, operating companies and home health agencies; the expected project costs for our expansion, redevelopment and repositioning program; our expected levels of expenditures and reimbursements (and the timing thereof); our expectations for the performance of our entrance fee communities; our ability to anticipate, manage and address industry trends and their effect on our business; our expectations regarding the payment of dividends; and our ability to increase revenues, earnings, Adjusted EBITDA, Cash From Facility Operations, and/or Facility Operating Income.  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, the risk that we may not be able to successfully integrate the new Horizon Bay communities into our operations; our determination from time to time to purchase any shares under the repurchase program; our ability to fund any repurchases; the risk associated with the current global economic crisis and its impact upon capital markets and liquidity; our inability to extend (or refinance) debt (including our credit and letter of credit facilities) as it matures; the risk that we may not be able to satisfy the conditions precedent to exercising the extension options associated with certain of our debt agreements; events which adversely affect the ability of seniors to afford our monthly resident fees or entrance fees; the conditions of housing markets in certain geographic areas; 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; the possibilities that changes in the capital markets, including changes in interest rates and/or credit spreads, or other factors could make financing more expensive or unavailable to us; changes in governmental
 
Page 6 of 14

 
reimbursement programs; our ability to effectively manage our growth; our ability to maintain consistent quality control; delays in obtaining regulatory approvals; the risk that we may not be able to expand, redevelop and reposition our communities in accordance with our plans; our ability to complete acquisitions and integrate them into our operations; competition for the acquisition of assets; our ability to obtain additional capital on terms acceptable to us; a decrease in the overall demand for senior housing; our vulnerability to economic downturns; acts of nature in certain geographic areas; terminations of our resident agreements and vacancies in the living spaces we lease; early terminations or non-renewal of management agreements; increased competition for skilled personnel; increased union activity; 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 other risks detailed from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.  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.  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.
 
Page 7 of 14


 
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)

 
 
Three Months Ended
   
Nine Months Ended
 
 
 
September 30,
   
September 30,
 
 
 
2012
   
2011
   
2012
   
2011
 
Revenue
 
   
   
   
 
Resident fees
 
$
605,867
   
$
575,159
   
$
1,805,140
   
$
1,707,117
 
Management fees
   
7,407
     
3,336
     
22,350
     
6,246
 
Reimbursed cost incurred on behalf of managed communities
   
83,208
     
37,233
     
242,847
     
72,584
 
Total revenue
   
696,482
     
615,728
     
2,070,337
     
1,785,947
 
 
                               
Expense
                               
Facility operating expense (excluding depreciation and amortization of $56,956, $56,893, $172,982 and $173,660, respectively)
   
 
411,467
     
 
381,414
     
 
1,213,751
     
 
1,118,610
 
General and administrative expense (including non-cash stock-based compensation expense of $6,021, $5,221, $19,185 and $14,316, respectively)
   
 
43,158
     
 
38,711
     
 
134,202
     
 
105,935
 
Facility lease expense
   
71,167
     
68,314
     
213,240
     
200,694
 
Depreciation and amortization
   
62,876
     
64,071
     
189,781
     
206,430
 
Asset impairment
   
-
     
-
     
8,329
     
14,846
 
(Gain) loss on acquisition
   
-
     
(3,520
)
   
636
     
(3,520
)
Gain on facility lease termination
   
-
     
-
     
(2,780
)
   
-
 
Costs incurred on behalf of managed communities
   
83,208
     
37,233
     
242,847
     
72,584
 
Total operating expense
   
671,876
     
586,223
     
2,000,006
     
1,715,579
 
Income from operations
   
24,606
     
29,505
     
70,331
     
70,368
 
 
                               
Interest income
   
676
     
1,171
     
2,220
     
2,569
 
Interest expense:
                               
Debt
   
(32,262
)
   
(30,433
)
   
(96,743
)
   
(92,667
)
Amortization of deferred financing costs and debt discount
   
(4,543
)
   
(4,310
)
   
(13,602
)
   
(9,024
)
Change in fair value of derivatives and amortization
   
140
     
(1,508
)
   
(371
)
   
(4,151
)
Loss on extinguishment of debt
   
-
     
(715
)
   
(221
)
   
(18,863
)
Equity in (loss) earnings of unconsolidated ventures
   
(249
)
   
(117
)
   
(211
)
   
295
 
Other non-operating income (loss)
   
500
     
(116
)
   
392
     
260
 
Loss before income taxes
   
(11,132
)
   
(6,523
)
   
(38,205
)
   
(51,213
)
Provision for income taxes
   
(878
)
   
(513
)
   
(2,953
)
   
(2,087
)
Net loss
 
$
(12,010
)
 
$
(7,036
)
 
$
(41,158
)
 
$
(53,300
)
 
                               
Basic and diluted loss per share
 
$
(0.10
)
 
$
(0.06
)
 
$
(0.34
)
 
$
(0.44
)
 
                               
Weighted average shares used incomputing basic and diluted net loss per share
   
122,493
     
121,616
     
121,784
     
121,232
 
 
Page 8 of 14

 
 
Condensed Consolidated Balance Sheets
(Audited, in thousands)

 
 
September 30, 2012
   
December 31, 2011
 
 
 
(unaudited)
   
 
Cash and cash equivalents
 
$
42,504
   
$
30,836
 
Cash and escrow deposits - restricted
   
52,144
     
45,903
 
Accounts receivable, net
   
105,588
     
98,697
 
Other current assets
   
101,119
     
105,439
 
Total current assets
   
301,355
     
280,875
 
Property, plant, and equipment and leasehold intangibles, net
   
3,789,971
     
3,694,064
 
Other assets, net
   
496,095
     
491,122
 
Total assets
 
$
4,587,421
   
$
4,466,061
 
 
               
Current liabilities
 
$
1,150,307
   
$
620,950
 
Long-term debt, less current portion
   
2,027,573
     
2,415,971
 
Other liabilities
   
388,074
     
388,932
 
Total liabilities
   
3,565,954
     
3,425,853
 
Stockholders' equity
   
1,021,467
     
1,040,208
 
Total liabilities and stockholders' equity
 
$
4,587,421
   
$
4,466,061
 
 
Page 9 of 14

 

Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
 
 
 
Nine Months Ended September 30,
 
 
 
2012
   
2011
 
Cash Flows from Operating Activities
 
   
 
Net loss
 
$
(41,158
)
 
$
(53,300
)
Adjustments to reconcile net loss to net cash provided by operating activities:
               
Loss on extinguishment of debt
   
221
     
18,863
 
Depreciation and amortization
   
203,383
     
215,454
 
Asset impairment
   
8,329
     
14,846
 
Equity in loss (earnings) of unconsolidated ventures
   
211
     
(295
)
Distributions from unconsolidated ventures from cumulative share of net earnings
   
1,435
     
700
 
Amortization of deferred gain
   
(3,279
)
   
(3,280
)
Amortization of entrance fees
   
(19,846
)
   
(18,865
)
Proceeds from deferred entrance fee revenue
   
30,303
     
26,475
 
Deferred income tax benefit
   
(41
)
   
-
 
Change in deferred lease liability
   
5,324
     
5,006
 
Change in fair value of derivatives and amortization
   
371
     
4,151
 
Loss (gain) on sale of assets
   
245
     
(1,180
)
Loss (gain) on acquisition
   
636
     
(3,520
)
Gain on facility lease termination
   
(2,780
)
   
-
 
Non-cash stock-based compensation
   
19,185
     
14,316
 
Other
   
(487
)
   
-
 
Changes in operating assets and liabilities:
               
Accounts receivable, net
   
(8,092
)
   
(2,375
)
Prepaid expenses and other assets, net
   
1,653
     
(9,488
)
Accounts payable and accrued expenses
   
9,552
     
2,826
 
Tenant refundable fees and security deposits
   
(1,556
)
   
(1,941
)
Deferred revenue
   
4,369
     
3,609
 
Net cash provided by operating activities
   
207,978
     
212,002
 
Cash Flows from Investing Activities
               
Increase in lease security deposits and lease acquisition deposits, net
   
(6,767
)
   
(1,591
)
(Increase) decrease in cash and escrow deposits — restricted
   
(2,402
)
   
56,244
 
Purchase of marketable securities — restricted
   
(1,453
)
   
(33,545
)
Sale of marketable securities — restricted
   
-
     
1,415
 
Additions to property, plant and equipment and leasehold intangibles, net of related payables
   
(151,381
)
   
(114,588
)
Acquisition of assets, net of related payables and cash received
   
(111,308
)
   
(54,597
)
Purchase of Horizon Bay Realty, L.L.C., net of cash acquired
   
-
     
5,516
 
(Issuance of) payment on notes receivable, net
   
(591
)
   
1,674
 
Investment in unconsolidated ventures
   
(571
)
   
(13,711
)
Distributions received from unconsolidated ventures
   
256
     
156
 
Proceeds from sale of assets, net
   
325
     
30,817
 
Other
   
487
     
-
 
Net cash used in investing activities
   
(273,405
)
   
(122,210
)
Cash Flows from Financing Activities
               
Proceeds from debt
   
193,607
     
477,525
 
Repayment of debt and capital lease obligations
   
(136,957
)
   
(879,573
)
Proceeds from line of credit
   
280,000
     
120,000
 
Repayment of line of credit
   
(265,000
)
   
(85,000
)
Proceeds from issuance of convertible notes, net
   
-
     
308,233
 
Issuance of warrants
   
-
     
45,066
 
Purchase of bond hedge
   
-
     
(77,007
)
Payment of financing costs, net of related payables
   
(2,810
)
   
(8,170
)
Other
   
(295
)
   
(454
)
Refundable entrance fees:
               
   Proceeds from refundable entrance fees
   
29,512
     
18,594
 
   Refunds of entrance fees
   
(19,555
)
   
(16,886
)
Cash portion of loss on extinguishment of debt
   
(118
)
   
(17,040
)
Recouponing and payment of swap termination
   
(1,289
)
   
(99
)
Purchase of treasury stock
   
-
     
(17,613
)
   Net cash provided by (used in) financing activities
   
77,095
     
(132,424
)
            Net increase (decrease) in cash and cash equivalents
   
11,668
     
(42,632
)
            Cash and cash equivalents at beginning of period
   
30,836
     
81,827
 
            Cash and cash equivalents at end of period
 
$
42,504
   
$
39,195
 
 
Page 10 of 14

 
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) expense items, (gain) loss on sale or acquisition of communities (including  gain (loss) on facility lease termination), depreciation and amortization (including non-cash impairment charges), straight-line lease expense (income), amortization of deferred gain, amortization of deferred entrance fees, non-cash stock-based compensation expense, and change in future service obligation and including entrance fee receipts and refunds (excluding (i) first generation entrance fee receipts from the sale of units at a recently opened entrance fee CCRC prior to stabilization and (ii) first generation entrance fee refunds not replaced by second generation entrance fee receipts at the recently opened community prior to stabilization).

In the first quarter of 2012, we revised the definition of Adjusted EBITDA to clarify the point at which first generation entrance fee receipts and refunds at recently opened entrance fee CCRCs will be included.  We determine the stabilization date of recently opened entrance fee communities to be the first day of the first full fiscal quarter occurring two years subsequent to the community's opening date for occupancy of all levels of care on the campus.

As a result of this change, beginning in the first quarter of 2012, we include all net entrance fee activity from a recently opened entrance fee CCRC in our non-GAAP financial measures.  For the three and nine months ended September 30, 2012, first generation net entrance fee receipts which would have been excluded under the previous definition of Adjusted EBITDA were $1.6 million and $3.6 million, respectively.

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.
 
Page 11 of 14


 
The table below reconciles Adjusted EBITDA from net loss for the three and nine months ended September 30, 2012 and 2011 (in thousands):
 
 
 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
 
 
2012(1)
   
2011 (1)
   
2012(1)
   
2011 (1)
 
Net loss
 
$
(12,010
)
 
$
(7,036
)
 
$
(41,158
)
 
$
(53,300
)
Provison for income taxes
   
878
     
513
     
2,953
     
2,087
 
Equity in loss (earnings) of unconsolidated ventures
   
249
     
117
     
211
     
(295
)
Loss on extinguishment of debt
   
-
     
715
     
221
     
18,863
 
Other non-operating (income) loss
   
(500
)
   
116
     
(392
)
   
(260
)
Interest expense:
                               
    Debt
   
24,615
     
22,602
     
73,691
     
68,762
 
    Capitalized lease obligation
   
7,647
     
7,831
     
23,052
     
23,905
 
    Amortization of deferred financing costs and debt discount
   
4,543
     
4,310
     
13,602
     
9,024
 
    Change in fair value of derivatives and amortization
   
(140
)
   
1,508
     
371
     
4,151
 
Interest income
   
(676
)
   
(1,171
)
   
(2,220
)
   
(2,569
)
Income from operations
   
24,606
     
29,505
     
70,331
     
70,368
 
Gain on facility lease temination
   
-
     
-
     
(2,780
)
   
-
 
(Gain) loss on acquisition
   
-
     
(3,520
)
   
636
     
(3,520
)
Depreciation and amortization
   
62,876
     
64,071
     
189,781
     
206,430
 
Asset impairment
   
-
     
-
     
8,329
     
14,846
 
Straight-line lease expense
   
2,118
     
1,834
     
5,324
     
5,016
 
Amortization of deferred gain
   
(1,093
)
   
(1,094
)
   
(3,279
)
   
(3,280
)
Amortization of entrance fees
   
(6,796
)
   
(6,499
)
   
(19,846
)
   
(18,865
)
Non-cash stock-based compensation expense
   
6,021
     
5,221
     
19,185
     
14,316
 
Entrance fee receipts(2)
   
25,132
     
18,019
     
59,815
     
45,069
 
First generation entrance fees received (3)
   
-
     
(2,293
)
   
-
     
(7,177
)
Entrance fee disbursements
   
(6,024
)
   
(5,475
)
   
(19,555
)
   
(16,886
)
Adjusted EBITDA
 
$
106,840
   
$
99,769
   
$
307,941
   
$
306,317
 
 
(1) The calculation of Adjusted EBITDA includes integration, transaction-related and EMR roll-out costs of $4.6 million and $16.2 million for the three and nine months ended September 30, 2012, respectively. The calculation of Adjusted EBITDA includes integration, transaction-related and EMR roll-out costs of $5.5 million and $6.4 million for the three and nine months ended September 30, 2011, respectively.
(2) Includes the receipt of refundable and non-refundable entrance fees.
(3) First generation entrance fees received represents initial entrance fees received from the sale of units at a recently opened entrance fee CCRC prior to stabilization. 
 
Cash From Facility Operations
Cash From Facility Operations (CFFO) 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 CFFO 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, first generation entrance fee receipts at a recently opened entrance fee CCRC prior to stabilization, entrance fee refunds disbursed adjusted for first generation entrance fee refunds not replaced by second generation entrance fee receipts at the recently opened community prior to stabilization, lease financing debt amortization with fair market value or no purchase options, gain (loss) on facility lease termination, recurring capital expenditures (net), distributions from unconsolidated ventures from cumulative share of net earnings, CFFO from unconsolidated ventures, and other.  Recurring capital expenditures include routine expenditures capitalized in accordance with GAAP that are funded from current operations.  Amounts excluded from recurring capital expenditures consist primarily of major projects, renovations, community repositionings, expansions, systems projects or other non-recurring or unusual capital items (including integration capital expenditures) or community purchases that are funded using lease or
 
Page 12 of 14

 
financing proceeds, available cash and/or proceeds from the sale of communities that are held for sale.

In the first quarter of 2012, we revised the definition of CFFO to clarify the point at which first generation entrance fee receipts and refunds at recently opened entrance fee CCRCs will be included.  We determine the stabilization date of recently opened entrance fee communities to be the first day of the first full fiscal quarter occurring two years subsequent to the community's opening date for occupancy of all levels of care on the campus.

As a result of this change, beginning in the first quarter of 2012, we include all net entrance fee activity from a recently opened entrance fee CCRC in our non-GAAP financial measures.  For the three and nine months ended September 30, 2012, first generation net entrance fee receipts which would have been excluded under the previous definition of CFFO were $1.6 million and $3.6 million, respectively.
We believe CFFO 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 CFFO from net cash provided by operating activities for the three and nine months ended September 30, 2012 and 2011 (in thousands):
 
 
 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
 
 
2012(1)
   
2011 (1)
   
2012(1)
   
2011 (1)
 
 
 
   
   
   
 
Net cash provided by operating activities
 
$
79,431
   
$
54,650
   
$
207,978
   
$
212,002
 
Changes in operating assets and liabilities
   
(10,731
)
   
16,617
     
(5,926
)
   
7,369
 
Refundable entrance fees received(2)
   
12,206
     
7,204
     
29,512
     
18,594
 
First generation entrance fees received (3)
   
-
     
(2,293
)
   
-
     
(7,177
)
Entrance fee refunds disbursed
   
(6,024
)
   
(5,475
)
   
(19,555
)
   
(16,886
)
Recurring capital expenditures, net
   
(11,475
)
   
(8,675
)
   
(28,138
)
   
(25,000
)
Lease financing debt amortization with fair market value or no purchase options
   
(3,066
)
   
(2,645
)
   
(8,988
)
   
(7,765
)
Distributions from unconsolidated ventures from cumulative share of net earnings
   
(420
)
   
-
     
(1,435
)
   
-
 
CFFO from unconsolidated ventures
   
1,559
     
738
     
4,097
     
2,040
 
Cash From Facility Operations
 
$
61,480
   
$
60,121
   
$
177,545
   
$
183,177
 
 
(1) The calculation of Cash From Facility Operations includes integration, transaction-related and EMR roll-out costs of $4.6 million and $16.2 million for the three and nine months ended September 30, 2012, respectively. The calculation of Cash From Facility Operations includes integration, transaction-related and EMR roll-out costs of $5.5 million and $6.4 million for the three and nine months ended September 30, 2011, respectively.
(2) Total entrance fee receipts for the three months ended September 30, 2012 and 2011 were $25.1 million and $18.0 million, respectively, including $12.9 million and $10.8 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating activities.  Total entrance fee receipts for the nine months ended September 30, 2012 and 2011 were $59.8 million and $45.1 million, respectively, including $30.3 million and $26.5 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating activities.
(3) First generation entrance fees received represents initial entrance fees received from the sale of units at a recently opened entrance fee CCRC prior to stabilization. 
 
Page 13 of 14


 
The calculation of CFFO per share is based on weighted average outstanding common shares for the period, excluding any unvested restricted shares.  Annual CFFO per share for all periods is calculated as the sum of the quarterly amounts for the year.
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) expense items, (gain) loss on sale or acquisition of communities (including gain (loss) on facility lease termination), depreciation and amortization (including non-cash impairment charges), facility lease expense, general and administrative expense, including non-cash stock-based compensation expense, change in future service obligation, 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 nine months ended September 30, 2012 and 2011 (in thousands):

 
 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
 
 
2012
   
2011
   
2012
   
2011
 
 
 
   
   
   
 
Net loss
 
$
(12,010
)
 
$
(7,036
)
 
$
(41,158
)
 
$
(53,300
)
Provision for income taxes
   
878
     
513
     
2,953
     
2,087
 
Equity in loss (earnings) of unconsolidated ventures
   
249
     
117
     
211
     
(295
)
Loss on extinguishment of debt
   
-
     
715
     
221
     
18,863
 
Other non-operating (income) loss
   
(500
)
   
116
     
(392
)
   
(260
)
Interest expense:
                               
    Debt
   
24,615
     
22,602
     
73,691
     
68,762
 
    Capitalized lease obligation
   
7,647
     
7,831
     
23,052
     
23,905
 
    Amortization of deferred financing costs and debt discount
   
4,543
     
4,310
     
13,602
     
9,024
 
    Change in fair value of derivatives and amortization
   
(140
)
   
1,508
     
371
     
4,151
 
Interest income
   
(676
)
   
(1,171
)
   
(2,220
)
   
(2,569
)
Income from operations
   
24,606
     
29,505
     
70,331
     
70,368
Gain on facility lease termination
   
-
     
-
     
(2,780
)
   
-
 
Depreciation and amortization
   
62,876
     
64,071
     
189,781
     
206,430
 
Asset impairment
   
-
     
-
     
8,329
     
14,846
 
(Gain) loss on acquisition
   
-
     
(3,520
)
   
636
     
(3,520
)
Facility lease expense
   
71,167
     
68,314
     
213,240
     
200,694
 
General and administrative (including non-cash stock-based compensation expense)
   
43,158
     
38,711
     
134,202
     
105,935
 
Amortization of entrance fees
   
(6,796
)
   
(6,499
)
   
(19,846
)
   
(18,865
)
Management fees
   
(7,407
)
   
(3,336
)
   
(22,350
)
   
(6,246
)
Facility Operating Income
 
$
187,604
   
$
187,246
   
$
571,543
   
$
569,642
 
 
Page 14 of 14
EX-99.2 3 exhibit99_2.htm SUPPLEMENTAL INFORMATION
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 
Corporate Overview - selected financial information
 
 
 
 
 
 
 
 
 
As of September 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Overview
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brookdale Senior Living Inc. ("BKD") is a leading owner and operator of senior living communities 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.  As of September 30, 2012, the Company operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with 648 communities in 35 states and the ability to serve approximately 67,000 residents. Through its Innovative Senior Care program, the Company also offers a range of outpatient therapy, home health and hospice services, primarily to residents of its communities.
 
 
 
 
 
 
 
 
 
 
 
 
Stock Listing
 
 
 
 
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
NYSE: BKD
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Community Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ownership Type
 
 
 
Number of Facilities
 
 
 
 
Number of Units
Percentage of
Q3 2012
Resident and Management Fees
 
Percentage of
Q3 2012 Facility
Operating
Income
Percentage of
YTD 2012
Resident and
Management
Fees
Percentage of
YTD 2012
Facility
Operating
Income
Owned
210
               22,172
40.4%
37.9%
40.3%
 
38.4%
Leased
341
               26,679
49.1%
52.5%
49.3%
 
52.0%
Innovative Senior Care ("ISC")
N/A
N/A
9.3%
5.9%
9.2%
 
6.0%
Managed
97
               18,097
1.2%
3.7%
1.2%
 
3.6%
    Total
648
               66,948
100.0%
100.0%
100.0%
 
100.0%
 
 
 
 
 
 
 
 
Operating Type - By Segment
 
 
 
 
 
 
 
Retirement Centers
76
               14,533
20.6%
25.1%
20.6%
 
25.2%
Assisted Living
434
               21,698
41.4%
45.2%
41.5%
 
44.3%
CCRCs - Rental
27
                 6,748
15.8%
12.4%
15.7%
 
13.0%
CCRCs - Entry Fee
14
                 5,872
11.7%
7.7%
11.8%
 
7.9%
Innovative Senior Care ("ISC")
N/A
N/A
9.3%
5.9%
9.2%
 
6.0%
Managed
97
               18,097
1.2%
3.7%
1.2%
 
3.6%
    Total
648
               66,948
100.0%
100.0%
100.0%
 
100.0%
 
 
 
 
 
 
 
 
 
 
 
 
CFFO Per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ except where indicated)
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year(1)
     
Q1
     
Q2
     
Q3
 
Reported CFFO
 
$
0.51
   
$
0.51
   
$
0.49
   
$
0.47
   
$
1.98
   
$
0.45
   
$
0.51
   
$
0.50
 
Add: integration, transaction-related and EMR roll-out costs
   
 
-
     
 
0.01
     
 
0.05
     
 
0.07
   
 
$
 
0.13
     
 
0.03
     
 
0.06
     
 
0.04
 
Adjusted CFFO
 
$
0.51
   
$
0.52
   
$
0.54
   
$
0.54
   
$
2.11
   
$
0.48
   
$
0.57
   
$
0.54
 
 
                                                               
Weighted average shares (000's)
   
120,792
     
121,280
     
121,616
     
120,951
             
121,145
     
121,708
     
122,493
 
Period end outstanding shares (excluding unvested restricted shares) (000's)
   
 
 
120,835
     
 
 
121,973
     
 
 
120,911
     
 
 
121,133
             
 
 
121,197
     
 
 
122,474
     
 
 
122,575
 
 
                                                               
(1) Full year CFFO for all periods is calculated as the sum of the quarterly amounts for the year.
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investor Relations
 
 
 
 
 
 
 
 
 
Ross Roadman
 
 
 
 
 
 
 
 
 
SVP, Investor Relations
 
 
 
 
 
 
 
 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 
111 Westwood Place, Suite 400
 
 
 
 
 
 
 
 
 
Brentwood, TN 37027
 
 
 
 
 
 
 
 
 
Phone (615) 564-8104
 
 
 
 
 
 
 
 
 
rroadman@brookdaleliving.com
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note:  See accompanying third quarter earnings release for non-GAAP financial measure definitions and reconciliations.
 
 
 
 
 

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 
Segment Operating Information
 
 
 
 
 
 
 
 
 
As of September 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Housing Operating Information
 
 
 
 
 
 
 
 
 
 
 
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
 
Retirement Centers
                                 
                         
Number of communities (period end)
   
75
     
74
     
76
     
76
     
76
     
76
     
76
     
76
 
Total average units(1)
   
14,104
     
14,050
     
14,131
     
14,468
     
14,188
     
14,452
     
14,451
     
14,445
 
Weighted average unit occupancy
   
87.3
%
   
87.3
%
   
88.4
%
   
88.9
%
   
88.0
%
   
88.8
%
   
88.8
%
   
89.1
%
Senior Housing average monthly revenue per unit(2)
 
$
3,129
   
$
3,150
   
$
3,186
   
$
3,185
   
$
3,163
   
$
3,235
   
$
3,268
   
$
3,275
 
 
                                                               
Assisted Living
                                                               
Number of communities (period end)
   
428
     
428
     
433
     
434
     
434
     
434
     
434
     
434
 
Total average units(1)
   
21,295
     
21,145
     
21,265
     
21,589
     
21,323
     
21,635
     
21,637
     
21,652
 
Weighted average unit occupancy
   
88.2
%
   
87.4
%
   
88.4
%
   
88.7
%
   
88.2
%
   
88.5
%
   
88.6
%
   
89.1
%
Senior Housing average monthly revenue per unit(2)
 
$
4,280
   
$
4,288
   
$
4,274
   
$
4,260
   
$
4,275
   
$
4,379
   
$
4,390
   
$
4,393
 
 
                                                               
CCRCs - Rental
                                                               
Number of communities (period end)
   
22
     
22
     
26
     
26
     
26
     
26
     
27
     
27
 
Total average units(1)
   
6,073
     
6,071
     
6,243
     
6,624
     
6,253
     
6,626
     
6,659
     
6,691
 
Weighted average unit occupancy
   
87.2
%
   
86.3
%
   
86.3
%
   
86.3
%
   
86.5
%
   
86.5
%
   
85.8
%
   
85.8
%
Senior Housing average monthly revenue per unit(2)
 
$
5,681
   
$
5,643
   
$
5,672
   
$
5,464
   
$
5,612
   
$
5,536
   
$
5,561
   
$
5,619
 
 
                                                               
CCRCs - Entry Fee
                                                               
Number of communities (period end)
   
14
     
14
     
14
     
14
     
14
     
14
     
14
     
14
 
Total average units(1)
   
5,138
     
5,141
     
5,152
     
5,161
     
5,148
     
5,171
     
5,199
     
5,221
 
Weighted average unit occupancy
   
83.1
%
   
82.3
%
   
82.2
%
   
83.2
%
   
82.7
%
   
83.7
%
   
83.4
%
   
83.4
%
Senior Housing average monthly revenue per unit(2)
 
$
5,079
   
$
5,106
   
$
5,124
   
$
4,902
   
$
5,052
   
$
5,055
   
$
4,963
   
$
4,975
 
 
                                                               
Senior Housing Totals
                                                               
Number of communities (period end)
   
539
     
538
     
549
     
550
     
550
     
550
     
551
     
551
 
Total average units(1)
   
46,610
     
46,407
     
46,791
     
47,842
     
46,912
     
47,884
     
47,946
     
48,009
 
Weighted average unit occupancy
   
87.2
%
   
86.6
%
   
87.4
%
   
87.8
%
   
87.3
%
   
87.8
%
   
87.7
%
   
88.0
%
Senior Housing average monthly revenue per unit(2)
 
$
4,198
   
$
4,203
   
$
4,214
   
$
4,160
   
$
4,193
   
$
4,257
   
$
4,266
   
$
4,279
 
 
                                                               
Management Services - Total
                                                               
Number of communities (period end)
   
19
     
19
     
98
     
97
     
97
     
96
     
96
     
97
 
Total average units(1)
   
3,784
     
3,785
     
8,649
     
18,328
     
8,636
     
18,253
     
18,144
     
18,081
 
Weighted average occupancy
   
84.7
%
   
84.8
%
   
84.3
%
   
84.4
%
   
84.5
%
   
84.3
%
   
84.0
%
   
84.3
%
Average monthly revenue per unit(2)
 
$
3,778
   
$
3,836
   
$
3,484
   
$
3,344
   
$
3,480
   
$
3,373
   
$
3,369
   
$
3,386
 
 
Innovative Senior Care Operating Information
 
 
 
 
 
 
 
 
 
 
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
     
Q1
     
Q2
     
Q3
 
Innovative Senior Care
                                                       
Brookdale units served:
                                                       
Outpatient Therapy consolidated
   
35,428
     
35,535
     
35,761
     
36,212
     
35,909
     
36,844
     
38,016
 
Home Health consolidated
   
27,277
     
28,129
     
28,347
     
28,924
     
32,655
     
31,944
     
32,650
 
Outpatient Therapy non-consolidated
   
6,038
     
6,045
     
6,022
     
6,050
     
9,685
     
9,861
     
12,540
 
Home Health non-consolidated
   
3,088
     
2,987
     
2,975
     
2,976
     
4,735
     
10,667
     
12,597
 
Total Brookdale units served:
                                                       
Outpatient Therapy
   
41,466
     
41,580
     
41,783
     
42,262
     
45,594
     
46,705
     
50,556
 
Home Health
   
30,365
     
31,116
     
31,322
     
31,900
     
37,390
     
42,611
     
45,247
 
 
                                                       
Outpatient Therapy treatment codes
   
818,122
     
823,539
     
848,205
     
859,988
     
907,816
     
957,364
     
939,241
 
Home Health average census
   
3,147
     
3,316
     
3,379
     
3,479
     
3,448
     
3,554
     
3,651
 
 
(1)
Total average units operated represent the average units operated during the period, excluding equity homes.
 
 
(2)
Average monthly revenue per unit represents the average of the total monthly revenues, excluding amortization of entrance fees, divided by average occupied units.

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 
Senior Housing Data by Ownership Type
 
 
 
 
 
 
 
 
 
As of September 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Housing Operating Information
 
 
 
 
 
 
 
 
 
 
 
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
 
 
                                 
                         
Owned Properties
                                 
                         
Number of communities (period end)
   
201
     
200
     
199
     
200
     
200
     
209
     
210
     
210
 
Total average units(1)
   
20,212
     
20,012
     
19,912
     
19,939
     
20,019
     
21,281
     
21,350
     
21,425
 
Weighted average unit occupancy
   
86.6
%
   
86.0
%
   
86.5
%
   
87.0
%
   
86.5
%
   
87.2
%
   
87.4
%
   
87.6
%
Senior Housing average monthly revenue per unit(2)
 
$
4,347
   
$
4,359
   
$
4,376
   
$
4,318
   
$
4,340
   
$
4,302
   
$
4,297
   
$
4,318
 
 
                                                               
Leased Properties with Bargain Purchase Options
                                                               
Number of communities (period end)
   
18
     
18
     
18
     
18
     
18
     
18
     
18
     
18
 
Total average units(1)
   
3,263
     
3,261
     
3,261
     
3,264
     
3,262
     
3,263
     
3,263
     
3,261
 
Weighted average unit occupancy
   
88.5
%
   
88.2
%
   
88.6
%
   
88.0
%
   
88.3
%
   
88.4
%
   
87.6
%
   
88.0
%
Senior Housing average monthly revenue per unit(2)
 
$
3,856
   
$
3,834
   
$
3,845
   
$
3,797
   
$
3,833
   
$
3,878
   
$
3,874
   
$
3,903
 
 
                                                               
Leased Properties with Fair Market Value Purchase Options
                                                               
Number of communities (period end)
   
86
     
86
     
86
     
86
     
86
     
77
     
77
     
77
 
Total average units(1)
   
5,226
     
5,226
     
5,226
     
5,224
     
5,225
     
3,929
     
3,927
     
3,927
 
Weighted average unit occupancy
   
89.0
%
   
88.8
%
   
89.8
%
   
91.3
%
   
89.7
%
   
91.1
%
   
91.2
%
   
92.0
%
Senior Housing average monthly revenue per unit(2)
 
$
3,874
   
$
3,872
   
$
3,872
   
$
3,835
   
$
3,863
   
$
4,384
   
$
4,423
   
$
4,482
 
 
                                                               
Leased Properties without Purchase Options
                                                               
Number of communities (period end)
   
234
     
234
     
246
     
246
     
246
     
246
     
246
     
246
 
Total average units(1)
   
17,909
     
17,908
     
18,392
     
19,415
     
18,406
     
19,411
     
19,406
     
19,396
 
Weighted average unit occupancy
   
87.2
%
   
86.5
%
   
87.6
%
   
87.7
%
   
87.3
%
   
87.6
%
   
87.3
%
   
87.6
%
Senior Housing average monthly revenue per unit(2)
 
$
4,189
   
$
4,197
   
$
4,209
   
$
4,158
   
$
4,188
   
$
4,241
   
$
4,264
   
$
4,256
 
 
                                                               
Senior Housing Totals
                                                               
Number of communities (period end)
   
539
     
538
     
549
     
550
     
550
     
550
     
551
     
551
 
Total average units(1)
   
46,610
     
46,407
     
46,791
     
47,842
     
46,912
     
47,884
     
47,946
     
48,009
 
Weighted average unit occupancy
   
87.2
%
   
86.6
%
   
87.4
%
   
87.8
%
   
87.3
%
   
87.8
%
   
87.7
%
   
88.0
%
Senior Housing average monthly revenue per unit(2)
 
$
4,198
   
$
4,203
   
$
4,214
   
$
4,160
   
$
4,193
   
$
4,257
   
$
4,266
   
$
4,279
 
 
(1)
Total average units operated represent the average units operated during the period, excluding equity homes.
 
 
 
 
 
(2)
Average monthly revenue per unit represents the average of the total monthly revenues, excluding amortization of entrance fees, divided by average occupied units.

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 
 
 
Segment Financial Data
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
Financial Data
 
 
 
 
 
 
 
 
 
 
($ in 000s)
 
 
 
 
 
 
 
 
 
 
 
Retirement Centers
FY 2011   FY 2012  
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
115,529
     
115,916
     
119,548
     
122,849
     
473,842
     
124,512
     
125,813
     
126,401
     
376,726
 
Expenses
   
66,952
     
66,992
     
69,601
     
71,858
     
275,403
     
73,521
     
73,138
     
75,679
     
222,338
 
Segment Operating Income
   
48,577
     
48,924
     
49,947
     
50,991
     
198,439
     
50,991
     
52,675
     
50,722
     
154,388
 
Segment Operating Margin
   
42.0
%
   
42.2
%
   
41.8
%
   
41.5
%
   
41.9
%
   
41.0
%
   
41.9
%
   
40.1
%
   
41.0
%
 
                                                                       
Assisted Living
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
241,228
     
237,665
     
241,037
     
244,655
     
964,585
     
251,352
     
252,399
     
254,179
     
757,930
 
Expenses
   
155,553
     
151,618
     
158,933
     
158,553
     
624,657
     
160,789
     
162,233
     
163,017
     
486,039
 
Segment Operating Income
   
85,675
     
86,047
     
82,104
     
86,102
     
339,928
     
90,563
     
90,166
     
91,162
     
271,891
 
Segment Operating Margin
   
35.5
%
   
36.2
%
   
34.1
%
   
35.2
%
   
35.2
%
   
36.0
%
   
35.7
%
   
35.9
%
   
35.9
%
 
                                                                       
CCRCs - Rental
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
90,198
     
88,618
     
91,628
     
93,651
     
364,095
     
95,112
     
95,258
     
96,681
     
287,051
 
Expenses
   
60,249
     
58,863
     
62,671
     
65,463
     
247,246
     
67,093
     
68,494
     
71,581
     
207,168
 
Segment Operating Income
   
29,949
     
29,755
     
28,957
     
28,188
     
116,849
     
28,019
     
26,764
     
25,100
     
79,883
 
Segment Operating Margin
   
33.2
%
   
33.6
%
   
31.6
%
   
30.1
%
   
32.1
%
   
29.5
%
   
28.1
%
   
26.0
%
   
27.8
%
 
                                                                       
CCRCs - Entry Fee
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
70,843
     
71,390
     
71,571
     
69,651
     
283,455
     
72,056
     
71,195
     
71,750
     
215,001
 
Expenses
   
53,052
     
53,403
     
53,232
     
53,783
     
213,470
     
54,914
     
55,341
     
56,249
     
166,504
 
Segment Operating Income
   
17,791
     
17,987
     
18,339
     
15,868
     
69,985
     
17,142
     
15,854
     
15,501
     
48,497
 
Segment Operating Margin
   
25.1
%
   
25.2
%
   
25.6
%
   
22.8
%
   
24.7
%
   
23.8
%
   
22.3
%
   
21.6
%
   
22.6
%
 
                                                                       
Bridge to Cash Basis for CCRCs - Entry Fee segment
                                                                 
Revenue
   
70,843
     
71,390
     
71,571
     
69,651
     
283,455
     
72,056
     
71,195
     
71,750
     
215,001
 
Less: revenue amortization (non-cash)
   
(5,762
)
   
(6,604
)
   
(6,499
)
   
(6,536
)
   
(25,401
)
   
(6,403
)
   
(6,647
)
   
(6,796
)
   
(19,846
)
Add: net entrance fees (cash)
   
7,511
     
8,128
     
12,544
     
14,052
     
42,235
     
6,887
     
14,265
     
19,108
     
40,260
 
Adjusted revenue
   
72,592
     
72,914
     
77,616
     
77,167
     
300,289
     
72,540
     
78,813
     
84,062
     
235,415
 
Expenses
   
53,052
     
53,403
     
53,232
     
53,783
     
213,470
     
54,914
     
55,341
     
56,249
     
166,504
 
Adjusted Segment Operating Income
   
19,540
     
19,511
     
24,384
     
23,384
     
86,819
     
17,626
     
23,472
     
27,813
     
68,911
 
Adjusted Segment Operating Margin
   
26.9
%
   
26.8
%
   
31.4
%
   
30.3
%
   
28.9
%
   
24.3
%
   
29.8
%
   
33.1
%
   
29.3
%
 
                                                                       
 
                                                                       
Total Senior Housing
 
FY 2011
   
FY 2012
 
(GAAP Basis)
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
517,798
     
513,589
     
523,784
     
530,806
     
2,085,977
     
543,032
     
544,665
     
549,011
     
1,636,708
 
Expenses
   
335,806
     
330,876
     
344,437
     
349,657
     
1,360,776
     
356,317
     
359,206
     
366,526
     
1,082,049
 
Operating Income
   
181,992
     
182,713
     
179,347
     
181,149
     
725,201
     
186,715
     
185,459
     
182,485
     
554,659
 
Operating Margin
   
35.1
%
   
35.6
%
   
34.2
%
   
34.1
%
   
34.8
%
   
34.4
%
   
34.1
%
   
33.2
%
   
33.9
%
G&A Allocation (1)
   
22,568
     
21,489
     
20,598
     
18,991
     
83,646
     
22,751
     
20,876
     
21,402
     
65,029
 
G&A Allocation as a % of revenue
   
4.4
%
   
4.2
%
   
3.9
%
   
3.6
%
   
4.0
%
   
4.2
%
   
3.8
%
   
3.9
%
   
4.0
%
Adjusted Operating Income
   
159,424
     
161,224
     
158,749
     
162,158
     
641,555
     
163,964
     
164,583
     
161,083
     
489,630
 
Adjusted Operating Margin
   
30.8
%
   
31.4
%
   
30.3
%
   
30.5
%
   
30.8
%
   
30.2
%
   
30.2
%
   
29.3
%
   
29.9
%

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 
 
 
Segment Financial Data
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Data (continued)
 
 
 
 
 
 
 
 
 
 
($ in 000s)
 
 
 
 
 
 
 
 
 
 
 
Innovative Senior Care ("ISC")
 
FY 2011
 
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
50,237
     
50,334
     
51,375
     
53,834
     
205,780
     
53,854
     
57,722
     
56,856
     
168,432
 
Expenses
   
35,148
     
35,366
     
36,977
     
40,304
     
147,795
     
42,452
     
44,309
     
44,941
     
131,702
 
Segment Operating Income
   
15,089
     
14,968
     
14,398
     
13,530
     
57,985
     
11,402
     
13,413
     
11,915
     
36,730
 
Segment Operating Margin
   
30.0
%
   
29.7
%
   
28.0
%
   
25.1
%
   
28.2
%
   
21.2
%
   
23.2
%
   
21.0
%
   
21.8
%
G&A Allocation (1)
   
5,377
     
5,610
     
4,912
     
4,301
     
20,200
     
5,954
     
5,453
     
5,467
     
16,874
 
G&A Allocation as a % of revenue
   
10.7
%
   
11.1
%
   
9.6
%
   
8.0
%
   
9.8
%
   
11.1
%
   
9.4
%
   
9.6
%
   
10.0
%
Adjusted Segment Operating Income
   
9,712
     
9,358
     
9,486
     
9,229
     
37,785
     
5,448
     
7,960
     
6,448
     
19,856
 
Adjusted Segment Operating Margin
   
19.3
%
   
18.6
%
   
18.5
%
   
17.1
%
   
18.4
%
   
10.1
%
   
13.8
%
   
11.3
%
   
11.8
%
 
                                                                       
Total Senior Housing and ISC
 
FY 2011
   
FY 2012
 
(GAAP Basis)
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
568,035
     
563,923
     
575,159
     
584,640
     
2,291,757
     
596,886
     
602,387
     
605,867
     
1,805,140
 
Expenses
   
370,954
     
366,242
     
381,414
     
389,961
     
1,508,571
     
398,769
     
403,515
     
411,467
     
1,213,751
 
Operating Income
   
197,081
     
197,681
     
193,745
     
194,679
     
783,186
     
198,117
     
198,872
     
194,400
     
591,389
 
Operating Margin
   
34.7
%
   
35.1
%
   
33.7
%
   
33.3
%
   
34.2
%
   
33.2
%
   
33.0
%
   
32.1
%
   
32.8
%
G&A Allocation (1)
   
27,945
     
27,099
     
25,510
     
23,292
     
103,846
     
28,705
     
26,329
     
26,869
     
81,903
 
G&A Allocation as a % of revenue
   
4.9
%
   
4.8
%
   
4.4
%
   
4.0
%
   
4.5
%
   
4.8
%
   
4.4
%
   
4.4
%
   
4.5
%
Adjusted Operating Income
   
169,136
     
170,582
     
168,235
     
171,387
     
679,340
     
169,412
     
172,543
     
167,531
     
509,486
 
Adjusted Operating Margin
   
29.8
%
   
30.2
%
   
29.3
%
   
29.3
%
   
29.6
%
   
28.4
%
   
28.6
%
   
27.7
%
   
28.2
%
 
                                                                       
Management Services
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue (Management Fees)
   
1,405
     
1,505
     
3,336
     
7,349
     
13,595
     
7,444
     
7,499
     
7,407
     
22,350
 
Expenses (G&A Allocation) (1)
   
1,058
     
1,133
     
2,512
     
5,534
     
10,237
     
5,929
     
5,325
     
5,644
     
16,898
 
Segment Operating Income
   
347
     
372
     
824
     
1,815
     
3,358
     
1,515
     
2,174
     
1,763
     
5,452
 
Segment Operating Margin
   
24.7
%
   
24.7
%
   
24.7
%
   
24.7
%
   
24.7
%
   
20.4
%
   
29.0
%
   
23.8
%
   
24.4
%
 
                                                                       
Total Senior Housing, ISC and Management
Services
 
 
FY 2011
   
 
FY 2012
 
(GAAP Basis)
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
569,440
     
565,428
     
578,495
     
591,989
     
2,305,352
     
604,330
     
609,886
     
613,274
     
1,827,490
 
Expenses
   
370,954
     
366,242
     
381,414
     
389,961
     
1,508,571
     
398,769
     
403,515
     
411,467
     
1,213,751
 
Operating Income
   
198,486
     
199,186
     
197,081
     
202,028
     
796,781
     
205,561
     
206,371
     
201,807
     
613,739
 
Operating Margin
   
34.9
%
   
35.2
%
   
34.1
%
   
34.1
%
   
34.6
%
   
34.0
%
   
33.8
%
   
32.9
%
   
33.6
%
G&A Allocation (1)
   
29,003
     
28,232
     
28,022
     
28,826
     
114,083
     
34,634
     
31,654
     
32,513
     
98,801
 
G&A Allocation as a % of revenue
   
5.1
%
   
5.0
%
   
4.8
%
   
4.9
%
   
4.9
%
   
5.7
%
   
5.2
%
   
5.3
%
   
5.4
%
Adjusted Operating Income
   
169,483
     
170,954
     
169,059
     
173,202
     
682,698
     
170,927
     
174,717
     
169,294
     
514,938
 
Adjusted Operating Margin
   
29.8
%
   
30.2
%
   
29.2
%
   
29.3
%
   
29.6
%
   
28.3
%
   
28.6
%
   
27.6
%
   
28.2
%
 
(1) Excludes non-cash stock-based compensation expense and integration, transaction-related and EMR roll-out costs.

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 
 
 
Senior Housing Data by Ownership Type
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
Financial Data
 
 
 
 
 
 
 
 
 
 
($ in 000s)
 
 
 
 
 
 
 
 
 
 
 
Owned Properties
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
231,894
     
228,970
     
230,159
     
228,401
     
919,424
     
243,601
     
245,019
     
247,772
     
736,392
 
Expenses
   
154,474
     
151,506
     
155,689
     
154,670
     
616,339
     
163,822
     
165,862
     
171,356
     
501,040
 
Segment Operating Income
   
77,420
     
77,464
     
74,470
     
73,731
     
303,085
     
79,779
     
79,157
     
76,416
     
235,352
 
Segment Operating Margin
   
33.4
%
   
33.8
%
   
32.4
%
   
32.3
%
   
33.0
%
   
32.7
%
   
32.3
%
   
30.8
%
   
32.0
%
 
                                                                       
Bridge to Cash Basis for CCRCs - Entry Fee
                                                                       
Revenue
   
231,894
     
228,970
     
230,159
     
228,401
     
919,424
     
243,601
     
245,019
     
247,772
     
736,392
 
Less: revenue amortization (non-cash)
   
(3,629
)
   
(4,018
)
   
(4,054
)
   
(4,154
)
   
(15,855
)
   
(3,991
)
   
(4,507
)
   
(4,593
)
   
(13,091
)
Add: net entrance fees (cash)
   
6,791
     
5,010
     
10,383
     
12,297
     
34,481
     
5,802
     
10,487
     
14,234
     
30,523
 
Adjusted revenue
   
235,056
     
229,962
     
236,488
     
236,544
     
938,050
     
245,412
     
250,999
     
257,413
     
753,824
 
Expenses
   
154,474
     
151,506
     
155,689
     
154,670
     
616,339
     
163,822
     
165,862
     
171,356
     
501,040
 
Adjusted Segment Operating Income
   
80,582
     
78,456
     
80,799
     
81,874
     
321,711
     
81,590
     
85,137
     
86,057
     
252,784
 
Adjusted Segment Operating Margin
   
34.3
%
   
34.1
%
   
34.2
%
   
34.6
%
   
34.3
%
   
33.2
%
   
33.9
%
   
33.4
%
   
33.5
%
 
                                                                       
Leased Properties with Bargain Purchase
Options
 
 
FY 2011
   
 
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
34,936
     
35,126
     
35,261
     
34,629
     
139,952
     
35,432
     
34,891
     
35,400
     
105,723
 
Expenses
   
22,662
     
22,662
     
22,897
     
22,871
     
91,092
     
23,287
     
23,433
     
24,264
     
70,984
 
Segment Operating Income
   
12,274
     
12,464
     
12,364
     
11,758
     
48,860
     
12,145
     
11,458
     
11,136
     
34,739
 
Segment Operating Margin
   
35.1
%
   
35.5
%
   
35.1
%
   
34.0
%
   
34.9
%
   
34.3
%
   
32.8
%
   
31.5
%
   
32.9
%
 
                                                                       
Leased Properties with Fair Market Value Purchase Options
 
 
FY 2011
   
 
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
54,067
     
53,882
     
54,519
     
54,889
     
217,357
     
47,104
     
47,534
     
48,560
     
143,198
 
Expenses
   
35,281
     
34,435
     
35,941
     
35,687
     
141,344
     
29,974
     
30,192
     
28,999
     
89,165
 
Segment Operating Income
   
18,786
     
19,447
     
18,578
     
19,202
     
76,013
     
17,130
     
17,342
     
19,561
     
54,033
 
Segment Operating Margin
   
34.7
%
   
36.1
%
   
34.1
%
   
35.0
%
   
35.0
%
   
36.4
%
   
36.5
%
   
40.3
%
   
37.7
%
 
                                                                       
Leased Properties without Purchase Options
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
196,901
     
195,611
     
203,845
     
212,887
     
809,244
     
216,895
     
217,221
     
217,279
     
651,395
 
Expenses
   
123,389
     
122,273
     
129,910
     
136,429
     
512,001
     
139,234
     
139,719
     
141,907
     
420,860
 
Segment Operating Income
   
73,512
     
73,338
     
73,935
     
76,458
     
297,243
     
77,661
     
77,502
     
75,372
     
230,535
 
Segment Operating Margin
   
37.3
%
   
37.5
%
   
36.3
%
   
35.9
%
   
36.7
%
   
35.8
%
   
35.7
%
   
34.7
%
   
35.4
%
 
                                                                       
Total Senior Housing
 
FY 2011
   
FY 2012
 
(GAAP Basis)
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
   
YTD
 
Revenue
   
517,798
     
513,589
     
523,784
     
530,806
     
2,085,977
     
543,032
     
544,665
     
549,011
     
1,636,708
 
Expenses
   
335,806
     
330,876
     
344,437
     
349,657
     
1,360,776
     
356,317
     
359,206
     
366,526
     
1,082,049
 
Operating Income
   
181,992
     
182,713
     
179,347
     
181,149
     
725,201
     
186,715
     
185,459
     
182,485
     
554,659
 
Operating Margin
   
35.1
%
   
35.6
%
   
34.2
%
   
34.1
%
   
34.8
%
   
34.4
%
   
34.1
%
   
33.2
%
   
33.9
%

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
Same Community and Capital Expenditure Information
 
 
 
 
 
 
As of September 30, 2012
 
 
 
 
 
 
 
Same Community Information
($ in 000s, except Avg. Mo. Revenue/Unit)
 
   Senior Housing
   
   Senior Housing
 
 
 
Three Months Ended September 30,
   
Twelve Months Ended September 30,
 
 
 
2012
   
2011
   
% Change
   
2012
   
2011
   
% Change
 
Revenue
 
$
518,887
   
$
508,593
     
2.0
%
 
$
2,053,540
   
$
2,013,364
     
2.0
%
Operating Expense
   
349,523
     
338,675
     
3.2
%
   
1,371,788
     
1,320,339
     
3.9
%
Facility Operating Income
 
$
169,364
   
$
169,918
     
-0.3
%
 
$
681,752
   
$
693,025
     
-1.6
%
Facility Operating Margin
   
32.6
%
   
33.4
%
   
-0.8
%
   
33.2
%
   
34.4
%
   
-1.2
%
 
                                               
# Communities
   
535
     
535
             
535
     
535
         
Avg. Period Occupancy
   
88.1
%
   
87.5
%
   
0.6
%
   
88.0
%
   
87.2
%
   
0.8
%
Avg. Mo. Revenue/Unit
 
$
4,271
   
$
4,217
     
1.3
%
 
$
4,233
   
$
4,186
     
1.1
%
 
                                               
 
                                               
($ in 000s)
       Innovative Senior Care          Innovative Senior Care  
 
 
Three Months Ended September 30,
   
Twelve Months Ended September 30,
 
 
   
2012
     
2011
   
% Change
     
2012
     
2011
   
% Change
 
Revenue
 
$
33,741
   
$
36,333
     
-7.1
%
 
$
142,886
   
$
146,447
     
-2.4
%
Operating Expense
   
26,422
     
25,753
     
2.6
%
   
108,545
     
99,983
     
8.6
%
Facility Operating Income
 
$
7,319
   
$
10,580
     
-30.8
%
 
$
34,341
   
$
46,464
     
-26.1
%
Facility Operating Margin
   
21.7
%
   
29.1
%
   
-7.4
%
   
24.0
%
   
31.7
%
   
-7.7
%
 
                                               
# Units served (1)
   
28,030
     
28,030
             
28,030
     
28,030
         
 
                                               
 
                                               
(1) Units are included in same store calculation where either the therapy or home health, whichever came later, has stabilized or produced revenue for twenty-four months.
 
 
                                               
 
Schedule of Capital Expenditures
 
 
 
 
 
 
 
($ in 000s)
                                               
 
                                               
 
 
Three Months Ended September 30,
                                 
Type
   
2012
     
2011
                                 
Recurring
 
$
11,975
   
$
9,500
                                 
Reimbursements
   
(500
)
   
(825
)
                               
    Net Recurring
   
11,475
     
8,675
                                 
Corporate (2)
   
6,711
     
8,291
                                 
EBITDA-enhancing / Major Projects (3)
   
27,641
     
14,842
                                 
Program Max / Development, net (4)
   
10,700
     
14,026
                                 
        Net Total Capital Expenditures (5)
 
$
56,527
   
$
45,834
                                 
 
(2)  Corporate includes home health acquisitions, capital expenditures for information technology systems and equipment and expenditures supporting the expansion of our support platform and ancillary services programs.
(3)  Includes EBITDA-enhancing projects (primarily community renovations and apartment upgrades) and other major building
infrastructure projects.
 
 
 
 
 
 
(4)  Includes community expansions and major repositioning or upgrade projects.  Also includes de novo community developments.
Amounts shown are amounts invested, net of third party lender or lessor funding received of $2.4 million for the three months ended
September 30, 2012.
 
 
 
 
 
 
(5)  Approximately $11.2 million and $10.0 million of expense was recognized during the three months ended September 30, 2012 and 2011,
respectively, for normal repairs and maintenance and capital spend under $1,500 per invoice, except for unit turnovers.

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Structure - selected financial information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in 000s)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Maturities and Scheduled Principal Repayments
 
 
 
   
   
   
   
   
   
   
   
 
 
 
Initial Maturities
 
 
 
Mortgage
   
weighted
   
Line of
   
weighted
   
Mort. Debt
   
weighted
   
Capital
   
weighted
   
Total
 
 
 
Debt (1)
   
rate (2)
   
Credit
   
rate (2)
   
& Line
   
rate (2)
   
Leases
   
rate (2)
   
Debt
 
 
 
   
   
   
   
   
   
   
   
 
2012
 
$
8,689
     
3.50
%
 
$
-
     
-
   
$
8,689
     
3.50
%
 
$
6,874
     
8.38
%
 
$
15,563
 
2013
   
512,484
     
3.53
%
   
-
     
-
     
512,484
     
3.53
%
   
29,864
     
8.40
%
   
542,348
 
2014
   
149,943
     
5.70
%
   
-
     
-
     
149,943
     
5.70
%
   
31,682
     
8.44
%
   
181,625
 
2015
   
39,193
     
5.62
%
   
-
     
-
     
39,193
     
5.62
%
   
33,762
     
8.49
%
   
72,955
 
2016
   
34,495
     
5.15
%
   
80,000
     
6.50
%
   
114,495
     
6.09
%
   
30,588
     
8.62
%
   
145,083
 
Thereafter
   
1,398,019
     
4.17
%
   
-
     
-
     
1,398,019
     
4.17
%
   
219,718
     
8.62
%
   
1,617,737
 
Total
 
$
2,142,823
     
4.16
%
 
$
80,000
     
6.50
%
 
$
2,222,823
     
4.25
%
 
$
352,488
     
8.57
%
 
$
2,575,311
 
 
 
 
 
Final Maturities (3)
 
 
 
Mortgage
   
weighted
   
Line of
   
weighted
   
Mort. Debt
   
weighted
   
Capital
   
weighted
   
Total
 
 
 
Debt (1)
   
rate (2)
   
Credit
   
rate (2)
   
& Line
   
rate (2)
   
Leases
   
rate (2)
   
Debt
 
 
 
   
   
   
   
   
   
   
   
 
2012
 
$
8,689
     
3.50
%
 
$
-
     
-
   
$
8,689
     
3.50
%
 
$
6,874
     
8.38
%
 
$
15,563
 
2013
   
306,491
     
3.03
%
   
-
     
-
     
306,491
     
3.03
%
   
29,864
     
8.40
%
   
336,355
 
2014
   
10,888
     
4.75
%
   
-
     
-
     
10,888
     
4.75
%
   
31,682
     
8.44
%
   
42,570
 
2015
   
180,518
     
5.76
%
   
-
     
-
     
180,518
     
5.76
%
   
33,762
     
8.49
%
   
214,280
 
2016
   
35,887
     
5.08
%
   
80,000
     
6.50
%
   
115,887
     
6.06
%
   
30,588
     
8.62
%
   
146,475
 
Thereafter
   
1,600,350
     
4.18
%
   
-
     
-
     
1,600,350
     
4.18
%
   
219,718
     
8.62
%
   
1,820,068
 
Total
 
$
2,142,823
     
4.16
%
 
$
80,000
     
6.50
%
 
$
2,222,823
     
4.25
%
 
$
352,488
     
8.57
%
 
$
2,575,311
 
 
 
Coverage Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2012
 
 
 
   
   
   
Interest/Cash Lease
 
 
 
Units
   
FOI
   
Adj. FOI **
   
Payments
   
Coverage
 
Owned communities
   
22,172
     
244,174
     
198,192
     
73,691
     
2.7
x
Leased communities *
   
26,679
     
343,450
     
287,171
     
243,500
     
1.2
x
 
*  The leased communities include the capital leases.
**  Adjusted for 5% management fee and capital expenditures @ $350/unit.
 
Debt Amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30,
 
 
 
2012
   
2011
 
Scheduled debt amortization
 
$
34,275
   
$
12,722
 
Lease financing debt amortization - FMV or no purchase option (4)
   
8,987
     
7,765
 
Lease financing debt amortization - bargain purchase option
   
10,592
     
9,242
 
    Total debt amortization
 
$
53,854
   
$
29,729
 
 
 
Line Availability
 
 
 
 
 
 
 
 
 
 
 
 
($000s)
 
06/30/11
   
09/30/11
   
12/31/11
   
03/31/12
   
06/30/12
   
09/30/12
 
 
 
   
   
   
   
   
 
Total line commitment
 
$
230,000
   
$
230,000
   
$
230,000
   
$
230,000
   
$
230,000
   
$
230,000
 
 
                                               
Line availability (7)
 
$
172,105
   
$
162,057
   
$
194,165
   
$
199,786
   
$
201,659
   
$
189,978
 
Ending line balance
   
-
     
35,000
     
65,000
     
85,000
     
75,000
     
80,000
 
Available to draw
 
$
172,105
   
$
127,057
   
$
129,165
   
$
114,786
   
$
126,659
   
$
109,978
 
Cash and cash equivalents
   
40,126
     
39,195
     
30,836
     
42,113
     
38,676
     
42,504
 
Total liquidity (available to draw + cash)
 
$
212,231
   
$
166,252
   
$
160,001
   
$
156,899
   
$
165,335
   
$
152,482
 
 
                                               
Total letters of credit outstanding
 
$
72,051
   
$
71,785
   
$
78,104
   
$
77,754
   
$
78,324
   
$
78,127
 
 
 
Leverage Ratios
 
   
 
 
 
   
 
 
 
   
Annualized
 
 
 
Balance
   
Leverage
 
Debt (1)
 
$
2,142,823
   
 
Capital leases
   
352,488
   
 
   Total Debt
 
$
2,495,311
     
6.1
x
 
               
Plus: Line of credit (cash borrowings)
   
80,000
         
Less: Unrestricted cash
   
(42,504
)
       
Less: Cash held as collateral against existing debt
   
(3,650
)
       
   Subtotal
 
$
2,529,157
     
6.2
x
 
               
2012 YTD annualized Adjusted EBITDA
 
$
410,588
         
 
               
Annual cash lease expense multiplied by 8
   
2,252,747
         
   Total adjusted debt
 
$
4,781,904
     
6.9
x
 
               
2012 YTD annualized Adjusted EBITDAR
 
$
692,181
         
 
 
Debt Structure
 
   
 
 
 
   
 
 
 
   
weighted
 
 
 
Balance
   
rate (2)
 
Fixed rate debt (1)
 
$
1,470,137
     
4.94
%
Variable rate debt (1)
   
672,686
     
2.37
%
Capital leases
   
352,488
     
8.57
%
Line of credit (cash borrowings)
   
80,000
     
6.50
%
   Total debt
 
$
2,575,311
         
 
               
 
 
Balance
   
% of total
 
Variable rate debt with interest rate swaps (1) (5)
 
$
27,473
     
4.1
%
Variable rate debt with interest rate caps (1) (6)
   
407,631
     
60.6
%
Variable rate debt - unhedged (1)
   
237,582
     
35.3
%
Total variable rate debt (1)
 
$
672,686
     
100.0
%
 
               
(1) Includes mortgage debt, bond and discount mortgage backed security financing and convertible notes, but excludes capital leases and line of credit.
(2) Pertaining to variable rate debt, reflects a) market rates for stated reporting period and b) applicable swap rates / cap rates for hedged debt.
(3) Assumes extension options are exercised.
(4) Payments are included in CFFO.
(5) Weighted swap rate for stated reporting period is 5.49%.
(6) Weighted cap rate for stated reporting period of 5.49% is materially above current market rates, therefore caps have no impact on consolidated interest expense for given period.
(7) The actual amount available to borrow under the line may vary from time to time as it is based on borrowing base calculations related to the value and performance of the communities securing the facility.

 
 
 Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
 Selected Data - 2011 Convertible Debt Issuance
 
 
 
 
 
 As of September 30, 2012
 
 
 
 
 
 
 
 
 ($ in 000's)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance Proceeds:
 
 
 
 
 
 
 
 
 Face Amount of Notes
         316,250
 
 
 
 
 
 
 
 Total Issuance Costs
           (7,949)
 
 See detail below.
 
 
 
 
 Purchase of Hedge
         (77,007)
 
 The net cost of the bond hedge is $31,941.
 
 
 Sale of Warrants
           45,066
 
 This net amount will reduce equity resulting from the issuance.
 
 Net Cash Proceeds
         276,360
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance Costs:
 
 
 
 
 
 
 
 
 
 Notes Payable
             5,944
 
 
 
 
 
 
 
 Equity Component
             2,005
 
 
 
 
 
 
 
 
 
             7,949
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Initial GAAP Recording:
 
 
 
 
 
 
 
 
 Cash Proceeds
         276,360
 
 
 
 
 
 
 
 Deferred Financing Costs
             5,944
 
 
 
 
 
 
 
 
 
         282,304
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Notes Payable
 
         237,444
 
 
 Face amount discounted using effective 7.5% interest rate.
 
 Paid In Capital
 
           44,860
 
 
 See detail below.
 
 
 
 
 
         282,304
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change In Equity:
 
 
 
 
 
 
 
 
 Imbedded Conversion Option
           78,806
 
 
 
 
 
 
 
 Purchase of Hedge
         (77,007)
 
 
 
 
 
 
 
 Sale of Warrants
           45,066
 
 
 
 
 
 
 
 Equity Issuance Costs
           (2,005)
 
 
 
 
 
 
 
 
 
           44,860
 
 
 
 
 
 
 
 
 
 
 Balance Sheet Balances
 
 Interest Expense Amounts
 
 
 Notes
 
 Deferred
 
 Period
 GAAP
 Cash
 
 As of
 Liability
 
 Fin. Costs
 
 Ending
 Interest
 Interest
 
 Closing
         237,444
 
             5,944
 
 
 
 
 
31-Dec-2011
         241,899
 
             5,519
 
 6 Mo. 12/2011
             9,214
             4,759
 
31-Dec-2012
         251,314
 
             4,670
 
 Year 12/2012
           18,112
             8,697
 
31-Dec-2013
         261,445
 
             3,821
 
 Year 12/2013
           18,828
             8,697
 
31-Dec-2014
         272,347
 
             2,972
 
 Year 12/2014
           19,599
             8,697
 
31-Dec-2015
         284,079
 
             2,123
 
 Year 12/2015
           20,429
             8,697
 
31-Dec-2016
         296,704
 
             1,274
 
 Year 12/2016
           21,322
             8,697
 
31-Dec-2017
         310,290
 
                424
 
 Year 12/2017
           22,283
             8,697
 
15-Jun-2018
         316,250
 
                    -
 
 6 Mo. 6/2018
             9,946
             3,986

 
 
Brookdale Senior Living Inc.
CFFO Reconciliation
As of September 30, 2012
 
CFFO Calculation
 
   
 
($ in 000s)
 
   
 
 
 
Three Months Ended September 30,
 
 
 
2012
   
2011
 
 
 
   
 
Net cash provided by operating activities (includes non-refundable entrance fees)
 
$
79,431
   
$
54,650
 
Changes in operating assets and liabilities (eliminates cash flow effect)
   
(10,731
)
   
16,617
 
Add: Refundable entrance fees received
   
12,206
     
7,204
 
Less: First generation entrance fees received
   
-
     
(2,293
)
Less: Entrance fee refunds disbursed
   
(6,024
)
   
(5,475
)
Less: Recurring capital expenditures, net
   
(11,475
)
   
(8,675
)
Less: Lease financing debt amortization with fair market value or no purchase options
   
(3,066
)
   
(2,645
)
Less: Distributions from unconsolidated ventures from cumulative share of net earnings
   
(420
)
   
-
 
Add: CFFO from unconsolidated ventures
   
1,559
     
738
 
Cash From Facility Operations
 
$
61,480
   
$
60,121
 
 
               
Add: Integration, transaction-related and EMR roll-out costs
   
4,624
     
5,468
 
Adjusted Cash From Facility Operations
 
$
66,104
   
$
65,589
 
 
Revenue Reconciliation (1)
 
 
 
 
 
 
 
 
 
($ in 000s except average monthly revenue per quarter)
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
     
Q2
     
Q3
 
Revenue reconciliation excl. entrance fee amortization
                           
                         
Average monthly revenue per quarter
   
4,198
     
4,203
     
4,214
     
4,160
     
4,193
     
4,257
     
4,266
     
4,279
 
Average monthly units (excluding equity homes) available
   
46,625
     
46,430
     
46,817
     
47,846
     
46,910
     
47,858
     
47,935
     
47,998
 
Average occupancy for the quarter
   
87.2
%
   
86.6
%
   
87.4
%
   
87.8
%
   
87.3
%
   
87.8
%
   
87.7
%
   
88.0
%
Senior Housing Resident fee revenue
 
$
512,036
   
$
506,985
   
$
517,285
   
$
524,270
   
$
2,060,576
   
$
536,629
   
$
538,018
   
$
542,215
 
 
                                                               
Add:  ISC segment revenue
   
50,237
     
50,334
     
51,375
     
53,834
     
205,780
     
53,854
     
57,722
   
$
56,856
 
Add:  management fee revenue
   
1,405
     
1,505
     
3,336
     
7,349
     
13,595
     
7,444
     
7,499
     
7,407
 
Total revenues excluding entrance fee amortization
 
$
563,678
   
$
558,824
   
$
571,996
   
$
585,453
   
$
2,279,951
   
$
597,927
   
$
603,239
   
$
606,478
 
 
CFFO Reconciliation to the Income Statement
 
 
 
 
 
 
 
 
 
 
                                                               
Resident and management fee revenue
 
$
569,440
   
$
565,428
   
$
578,495
   
$
591,989
   
$
2,305,352
   
$
604,330
   
$
609,886
   
$
613,274
 
Less: Entrance fee amortization
   
(5,762
)
   
(6,604
)
   
(6,499
)
   
(6,536
)
   
(25,401
)
   
(6,403
)
   
(6,647
)
   
(6,796
)
Adjusted revenues
   
563,678
     
558,824
     
571,996
     
585,453
     
2,279,951
     
597,927
     
603,239
     
606,478
 
 
                                                               
Less: Facility operating expenses
   
(370,954
)
   
(366,242
)
   
(381,414
)
   
(389,961
)
   
(1,508,571
)
   
(398,769
)
   
(403,515
)
   
(411,467
)
 
                                                               
Less: G&A including non-cash stock-based compensation expense
   
(33,543
)
   
(33,681
)
   
(38,711
)
   
(42,392
)
   
(148,327
)
   
(44,973
)
   
(46,071
)
   
(43,158
)
Add:  G&A non-cash stock-based compensation expense
   
4,540
     
4,555
     
5,221
     
5,540
     
19,856
     
6,435
     
6,729
     
6,021
 
Net G&A
   
(29,003
)
   
(29,126
)
   
(33,490
)
   
(36,852
)
   
(128,471
)
   
(38,538
)
   
(39,342
)
   
(37,137
)
 
                                                               
Less: Facility lease expense
   
(66,315
)
   
(66,065
)
   
(68,314
)
   
(74,164
)
   
(274,858
)
   
(71,445
)
   
(70,628
)
   
(71,167
)
Add:  Straight-line lease expense
   
1,726
     
1,456
     
1,834
     
3,592
     
8,608
     
1,642
     
1,564
     
2,118
 
Less: Amortization of deferred gain
   
(1,093
)
   
(1,093
)
   
(1,094
)
   
(1,093
)
   
(4,373
)
   
(1,093
)
   
(1,093
)
   
(1,093
)
Net lease expense
   
(65,682
)
   
(65,702
)
   
(67,574
)
   
(71,665
)
   
(270,623
)
   
(70,896
)
   
(70,157
)
   
(70,142
)
 
                                                               
Add:  Entrance fee receipts
   
9,712
     
12,454
     
15,726
     
17,480
     
55,372
     
14,989
     
19,694
     
25,132
 
Less: Entrance fee disbursements
   
(4,930
)
   
(6,481
)
   
(5,475
)
   
(8,107
)
   
(24,993
)
   
(8,102
)
   
(5,429
)
   
(6,024
)
Net entrance fees
   
4,782
     
5,973
     
10,251
     
9,373
     
30,379
     
6,887
     
14,265
     
19,108
 
 
                                                               
Adjusted EBITDA
   
102,821
     
103,727
     
99,769
     
96,348
     
402,665
     
96,611
     
104,490
     
106,840
 
 
                                                               
Less: Recurring capital expenditures, net
   
(7,057
)
   
(9,268
)
   
(8,675
)
   
(8,661
)
   
(33,661
)
   
(8,064
)
   
(8,599
)
   
(11,475
)
Less: Interest expense, net
   
(30,936
)
   
(29,900
)
   
(29,262
)
   
(31,237
)
   
(121,335
)
   
(31,198
)
   
(31,739
)
   
(31,586
)
Less: Lease financing debt amortization with fair market value or no purchase options
   
 
(2,533
 
)
   
 
(2,587
 
)
   
 
(2,645
 
)
   
 
(2,700
 
)
   
 
(10,465
 
)
   
 
(2,929
 
)
   
 
(2,993
 
)
   
 
(3,066
 
)
Less: Distributions from unconsolidated ventures from cumulative share of net earnings
   
 
-
     
 
-
     
 
-
     
 
(582
 
)
   
 
(582
 
)
   
 
(206
 
)
   
 
(809
 
)
   
 
(420
 
)
Add:  CFFO from unconsolidated ventures
   
641
     
661
     
738
     
1,249
     
3,289
     
1,228
     
1,310
     
1,559
 
Less: Other
   
(1,185
)
   
(1,328
)
   
196
     
2,329
     
12
     
(856
)
   
(181
)
   
(372
)
 
                                                               
Reported CFFO
 
$
61,751
   
$
61,305
   
$
60,121
   
$
56,746
   
$
239,923
   
$
54,586
   
$
61,479
   
$
61,480
 
 
                                                               
Add:  integration, transaction-related and EMR roll-out costs
   
-
     
894
     
5,468
     
8,026
     
14,388
     
3,904
     
7,688
     
4,624
 
Adjusted CFFO
 
$
61,751
   
$
62,199
   
$
65,589
   
$
64,772
   
$
254,311
   
$
58,490
   
$
69,167
   
$
66,104
 
 
                                                               
 
CFFO Per Share
 
 
 
 
 
 
 
 
 
 
                                                               
($ except where indicated)
 
FY 2011
   
FY 2012
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year(2)
     
Q1
     
Q2
     
Q3
 
Reported CFFO
 
$
0.51
   
$
0.51
   
$
0.49
   
$
0.47
   
$
1.98
   
$
0.45
   
$
0.51
   
$
0.50
 
Add:  integration, transaction-related and EMR roll-out costs
   
 
-
     
 
0.01
     
 
0.05
     
 
0.07
     
 
0.13
     
 
0.03
     
 
0.06
     
 
0.04
 
Adjusted CFFO
 
$
0.51
   
$
0.52
   
$
0.54
   
$
0.54
   
$
2.11
   
$
0.48
   
$
0.57
   
$
0.54
 
 
                                                               
Shares used in calculation of CFFO (000's)
   
 
120,792
     
 
121,280
     
 
121,616
     
 
120,951
             
 
121,145
     
 
121,708
     
 
122,493
 
 
(1) Revenue excludes reimbursed costs incurred on behalf of managed communities.
(2) Full year CFFO for all periods is calculated as the sum of the quarterly amounts for the year.
 
Note:  CFFO is a measurement of liquidity that is not calculated in accordance with GAAP and should not be considered in isolation as a substitute for any GAAP financial measure. CFFO is not a measure of financial performance under GAAP.  We strongly urge you to review the reconciliation of CFFO to GAAP net cash provided by operating activities, along with our consolidated financial statements, included in the accompanying earnings release.

 
 
Brookdale Senior Living Inc.
Quarterly Entry Fee Information
As of September 30, 2012
 
Cash Basis ($ in 000's except average resale and refund)
   
   
   
   
   
 
 
   
Q1 11
     
Q2 11
     
Q3 11
     
Q4 11
     
Q1 12
     
Q2 12
     
Q3 12
 
# Closings
   
53
     
73
     
88
     
85
     
94
     
106
     
147
 
# of Refunds
   
69
     
72
     
73
     
75
     
92
     
62
     
66
 
 
                                                   
Resale Receipts:
                                                       
    Proceeds from non-refundable entrance fees (1)(2)
   
4,918
     
8,305
     
9,360
     
8,387
     
7,000
     
10,377
     
12,926
    Proceeds from refundable entrance fees (2)(3)
   
4,794
     
4,149
     
6,366
     
9,093
     
7,989
     
9,317
     
12,206
 
      Total Cash Proceeds (2)
   
9,712
     
12,454
     
15,726
     
17,480
     
14,989
     
19,694
     
25,132
 
Refunds of entrance fees (4)(5)
   
(4,930
)
   
(6,481
)
   
(5,475
)
   
(8,107
)
   
(8,102
)
   
(5,429
)
   
(6,024
)
Net Resale Cash Flow (excluding first generation entrance fees, net)
   
 
4,782
     
 
5,973
     
 
10,251
     
 
9,373
     
 
6,887
     
 
14,265
     
 
19,108
 
First generation entrance fees, net (6)
   
2,729
     
2,155
     
2,293
     
4,679
     
-
     
-
     
-
 
Net Resale Cash Flow (as reported)
   
7,511
     
8,128
     
12,544
     
14,052
     
6,887
     
14,265
     
19,108
 
 
                                                       
My Choice proceeds included in refundable resale receipts above
   
 
1,144
     
 
1,591
     
 
2,264
     
 
3,994
     
 
2,363
     
 
3,602
     
 
2,466
 
 
                                                       
Average Resale $ (excluding My Choice and first generation proceeds)
   
 
161,660
     
 
148,808
     
 
152,977
     
 
158,659
     
 
134,319
     
 
151,811
     
 
154,190
 
Average Refund $ (excluding My Choice and first generation refunds)
   
 
(70,058
 
)
   
 
(81,681
 
)
   
 
(71,863
 
)
   
 
(98,040
 
)
   
 
(84,283
 
)
   
 
(77,500
 
)
   
 
(87,273
 
)
 
 
Value of Unsold Inventory ($ in 000's except average resale price)
 
 
 
 
 
 
 
Gross Value @ Average Resale Price of $155,000
 
 
 
 
 
 
          101,990
Refund Attachments
 
 
 
 
 
 
          (10,664)
Net Cash Value
 
 
 
 
 
 
            91,326
 
 
Income Statement Impact ($ in 000's)
 
 
 
 
 
 
 
On BKD's income statement, non-refundable entrance fees are amortized into revenue based on the unamortized balance per contract divided by the actuarial life of the resident. The following are the non-cash amortized non-refundable entrance fees for each quarter:
 
 
 
 
 
 
 
 
 
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Amortization of entrance fees (incl. gains on terminations) (7)
            (5,204)
            (6,022)
            (5,890)
            (5,869)
            (6,403)
            (6,647)
            (6,796)
 
 
Principles of Entry Fee Accounting
 
 
 
 
 
 
 
Certain of BKD's communities have residency agreements which require the resident to pay an upfront fee prior to occupying the community and in return for a reduced monthly service fee and certain healthcare benefits.  BKD has a number of options for residents that give a choice of the amount of refundability of the upfront fee, the amount of entry fee for the unit and the amount of health care benefit in the community's various levels of care.  The non-refundable portion of the entrance fee is recorded as deferred revenue and amortized over the estimated stay of the resident based on an actuarial valuation.  The refundable portion of a resident's entrance fee is generally refundable within a certain time period following contract termination or in certain agreements, upon the resale of a comparable unit or 12 months after the resident vacates the unit and is not amortized.
 
 
Notes:
 
 
 
 
 
 
 
(1) From Statement of Cash Flows (Operating Activities section) with line description: Proceeds from deferred entrance fee revenue.
(2) Excludes first generation entrance fees received, net (Note 6).
(3) From Statement of Cash Flows (Financing Activities section) with line description: Proceeds from refundable entrance fees (which includes My Choice proceeds).
(4) From Statement of Cash Flows (Financing Activities section) with line description: Refunds of entrance fees.
(5) Excludes first generation entrance fee refunds ($0.8 million for the three months ended December 31, 2011). (Note 6)
(6) First generation entrance fees, net represents initial entrance fees received from the sale of units at a recently opened entrance fee CCRC prior to stabilization, less first generation entrance fee refunds not replaced by second generation entrance fee receipts. We determine the stabilization date of recently opened entrance fee communities to be the first day of the first full fiscal quarter occurring two years subsequent to the community's opening date for occupancy of all levels of care on the campus.  Stabilization was achieved at a recently opened entrance fee CCRC in Q1 2012.
(7) Excludes first generation entrance fee amortization prior to stabilization (Note 6).

 
 
Brookdale Senior Living Inc.
Quarterly Cash Flow Statements
As of September 30, 2012
($ in 000s)
 
Cash Flow Statements
 
   
   
   
   
   
   
   
 
 
 
   
   
   
   
   
   
   
 
 
   
Q1 2011
     
Q2 2011
     
Q3 2011
     
Q4 2011
   
FY 2011
     
Q1 2012
     
Q2 2012
     
Q3 2012
 
Cash Flows from Operating Activities
                                 
                         
Net loss
 
$
(12,305
)
 
$
(33,959
)
 
$
(7,036
)
 
$
(14,875
)
 
$
(68,175
)
 
$
(10,338
)
 
$
(18,810
)
 
$
(12,010
)
Adjustments to reconcile net loss to net cash provided
by operating activities:
                                                         
Loss on extinguishment of debt
   
2,894
     
15,254
     
715
     
-
     
18,863
     
221
     
-
     
-
 
Depreciation and amortization
   
74,486
     
72,587
     
68,381
     
66,479
     
281,933
     
67,817
     
68,147
     
67,419
 
Asset impairment
   
14,846
     
-
     
-
     
2,046
     
16,892
     
1,083
     
7,246
     
-
 
Equity in (earnings) loss of unconsolidated ventures
   
(266
)
   
(146
)
   
117
     
(1,137
)
   
(1,432
)
   
(99
)
   
61
     
249
 
Distributions from unconsolidated ventures from cumulative share of net earnings
   
 
-
     
 
-
     
 
700
     
 
582
     
 
1,282
     
 
206
     
 
809
     
 
420
 
Amortization of deferred gain
   
(1,093
)
   
(1,093
)
   
(1,094
)
   
(1,093
)
   
(4,373
)
   
(1,093
)
   
(1,093
)
   
(1,093
)
Amortization of entrance fees
   
(5,762
)
   
(6,604
)
   
(6,499
)
   
(6,536
)
   
(25,401
)
   
(6,403
)
   
(6,647
)
   
(6,796
)
Proceeds from deferred entrance fee revenue
   
6,361
     
9,299
     
10,815
     
11,903
     
38,378
     
7,000
     
10,377
     
12,926
 
Deferred income tax (benefit) provision
   
(11,841
)
   
11,841
     
-
     
943
     
943
     
(4
)
   
(37
)
   
-
 
Change in deferred lease liability
   
1,726
     
1,456
     
1,824
     
3,602
     
8,608
     
1,642
     
1,564
     
2,118
 
Change in fair value of derivatives and amortization
   
8
     
2,635
     
1,508
     
(273
)
   
3,878
     
233
     
278
     
(140
)
(Gain) loss on sale of assets
   
(1,315
)
   
-
     
135
     
-
     
(1,180
)
   
114
     
58
     
73
 
(Gain) loss on acquisition
   
-
     
-
     
(3,520
)
   
1,538
     
(1,982
)
   
636
     
-
     
-
 
Gain on facility lease termination
   
-
     
-
     
-
     
-
     
-
     
(2,780
)
   
-
     
-
 
Lessor cash reimbursement for tenant incentive
   
-
     
-
     
-
     
1,251
     
1,251
     
-
     
-
     
-
 
Non-cash stock-based compensation
   
4,540
     
4,555
     
5,221
     
5,540
     
19,856
     
6,435
     
6,729
     
6,021
 
Other
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(487
)
Changes in operating assets and liabilities:
                                                               
Accounts receivable, net
   
(105
)
   
1,728
     
(3,998
)
   
(2,992
)
   
(5,367
)
   
(5,317
)
   
(3,484
)
   
709
 
Prepaid expenses and other assets, net
   
460
     
1,477
     
(11,425
)
   
(13,446
)
   
(22,934
)
   
(1,681
)
   
7,622
     
(2,793
)
Accounts payable and accrued expenses
   
8,453
     
(7,136
)
   
1,509
     
10,895
     
13,721
     
(23,705
)
   
14,410
     
17,352
 
Tenant refundable fees and security deposits
   
310
     
(287
)
   
(1,964
)
   
(245
)
   
(2,186
)
   
(442
)
   
(675
)
   
(439
)
Deferred revenue
   
11,269
     
(6,921
)
   
(739
)
   
(7,757
)
   
(4,148
)
   
12,168
     
(3,701
)
   
(4,098
)
Net cash provided by operating activities
   
92,666
     
64,686
     
54,650
     
56,425
     
268,427
     
45,693
     
82,854
     
79,431
 
Cash Flows from Investing Activities
                                                               
Decrease (increase) in lease security deposits and lease acquisition deposits, net
   
941
     
(1,313
)
   
(1,219
)
   
(1,497
)
   
(3,088
)
   
(2,217
)
   
(4,119
)
   
(431
)
Decrease (increase) in cash and escrow deposits — restricted
   
54,455
     
3,841
     
(2,052
)
   
(68
)
   
56,176
     
8,442
     
(3,038
)
   
(7,806
)
Purchase of marketable securities — restricted
   
(26,409
)
   
(6,315
)
   
-
     
-
     
(32,724
)
   
(761
)
   
(341
)
   
(351
)
Sale of marketable securities — restricted
   
809
     
608
     
(2
)
   
16
     
1,431
     
-
     
-
     
-
 
    Additions to property, plant and equipment and leasehold intangibles, net of related payables
   
 
(28,589
 
)
   
 
(39,340
 
)
   
 
(46,659
 
)
   
 
(45,543
 
)
   
 
(160,131
 
)
   
 
(41,533
 
)
   
 
(50,433
 
)
   
 
(59,415
 
)
Acquisition of assets, net of related payables and cash received
   
(51,330
)
   
(3,178
)
   
(89
)
   
(34,085
)
   
(88,682
)
   
(104,984
)
   
(4,975
)
   
(1,349
)
Purchase of Horizon Bay Realty, L.L.C., net of cash acquired
   
-
-
     
5,516
     
-
     
5,516
     
-
     
-
     
-
 
Payment on (issuance of) notes receivable, net
   
403
     
-
     
1,271
     
(190
)
   
1,484
     
(439
)
   
-
     
(152
)
Investment in unconsolidated ventures
   
-
     
-
     
(13,711
)
   
(279
)
   
(13,990
)
   
-
     
(571
)
   
-
 
Distributions received from unconsolidated ventures
   
60
     
56
     
40
     
50
     
206
     
100
     
84
     
72
 
Net proceeds from sale of assets
   
23,147
     
5,885
     
1,785
     
-
     
30,817
     
-
     
325
     
-
 
Other
   
(164
)
   
(304
)
   
(353
)
   
(93
)
   
(914
)
   
-
     
-
     
487
 
Net cash (used in) provided by investing activities
   
(26,677
)
   
(40,060
)
   
(55,473
)
   
(81,689
)
   
(203,899
)
   
(141,392
)
   
(63,068
)
   
(68,945
)
Cash Flows from Financing Activities
                                                               
Proceeds from debt
   
28,000
     
2,417
     
447,108
     
5,144
     
482,669
     
175,838
     
17,178
     
591
 
Repayment of debt and capital lease obligations
   
(134,550
)
   
(283,626
)
   
(461,397
)
   
(18,992
)
   
(898,565
)
   
(86,068
)
   
(32,585
)
   
(18,304
)
Proceeds from line of credit
   
40,000
     
15,000
     
65,000
     
105,000
     
225,000
     
130,000
     
75,000
     
75,000
 
Repayment of line of credit
   
(40,000
)
   
(15,000
)
   
(30,000
)
   
(75,000
)
   
(160,000
)
   
(110,000
)
   
(85,000
)
   
(70,000
)
Proceeds from issuance of convertible notes, net
   
-
     
308,335
     
(102
)
   
(21
)
   
308,212
     
-
     
-
     
-
 
Issuance of warrants
   
-
     
45,066
     
-
     
-
     
45,066
     
-
     
-
     
-
 
Purchase of bond hedge
   
-
     
(77,007
)
   
-
     
-
     
(77,007
)
   
-
     
-
     
-
 
Payment of financing costs, net of related payables
   
(2,575
)
   
(910
)
   
(4,685
)
   
(542
)
   
(8,712
)
   
(2,378
)
   
(336
)
   
(96
)
Other
   
(184
)
   
(148
)
   
(122
)
   
(833
)
   
(1,287
)
   
(86
)
   
(178
)
   
(31
)
Refundable entrance fees:
                                                               
   Proceeds from refundable entrance fees
   
6,080
     
5,310
     
7,204
     
11,017
     
29,611
     
7,989
     
9,317
     
12,206
 
   Refunds of entrance fees
   
(4,930
)
   
(6,481
)
   
(5,475
)
   
(8,868
)
   
(25,754
)
   
(8,102
)
   
(5,429
)
   
(6,024
)
Cash portion of loss on extinguishment of debt
   
(2,861
)
   
(14,153
)
   
(26
)
   
-
     
(17,040
)
   
(118
)
   
-
     
-
 
Recouponing and payment of swap termination
   
(64
)
   
(35
)
   
-
     
-
     
(99
)
   
(99
)
   
(1,190
)
   
-
 
Purchase of treasury stock
   
-
     
-
     
(17,613
)
   
-
     
(17,613
)
   
-
     
-
     
-
 
   Net cash provided by (used in) financing activities
   
(111,084
)
   
(21,232
)
   
(108
)
   
16,905
     
(115,519
)
   
106,976
     
(23,223
)
   
(6,658
)
            Net (decrease) increase in cash and cash equivalents
   
(45,095
)
   
3,394
     
(931
)
   
(8,359
)
   
(50,991
)
   
11,277
     
(3,437
)
   
3,828
 
            Cash and cash equivalents at beginning of period
   
81,827
     
36,732
     
40,126
     
39,195
     
81,827
     
30,836
     
42,113
     
38,676
 
            Cash and cash equivalents at end of period
 
$
36,732
   
$
40,126
   
$
39,195
   
$
30,836
   
$
30,836
   
$
42,113
   
$
38,676
   
$
42,504