x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-3068069 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
111 Westwood Place, Suite 400, Brentwood, Tennessee | 37027 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ |
PAGE | ||
PART I. | FINANCIAL INFORMATION | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 5. | ||
Item 6. | ||
March 31, 2017 | December 31, 2016 | ||||||
Assets | (Unaudited) | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 59,237 | $ | 216,397 | |||
Cash and escrow deposits – restricted | 30,070 | 32,864 | |||||
Accounts receivable, net | 138,149 | 141,705 | |||||
Assets held for sale | 106,344 | 97,843 | |||||
Prepaid expenses and other current assets, net | 139,917 | 130,695 | |||||
Total current assets | 473,717 | 619,504 | |||||
Property, plant and equipment and leasehold intangibles, net | 6,512,179 | 7,379,305 | |||||
Cash and escrow deposits – restricted | 31,484 | 28,061 | |||||
Investment in unconsolidated ventures | 203,297 | 167,826 | |||||
Goodwill | 710,783 | 705,476 | |||||
Other intangible assets, net | 82,114 | 83,007 | |||||
Other assets, net | 224,514 | 234,508 | |||||
Total assets | $ | 8,238,088 | $ | 9,217,687 | |||
Liabilities and Equity | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 174,714 | $ | 145,649 | |||
Current portion of capital and financing lease obligations | 58,834 | 69,606 | |||||
Trade accounts payable | 63,542 | 77,356 | |||||
Accrued expenses | 292,145 | 328,037 | |||||
Refundable entrance fees and deferred revenue | 113,842 | 106,946 | |||||
Tenant security deposits | 3,251 | 3,548 | |||||
Total current liabilities | 706,328 | 731,142 | |||||
Long-term debt, less current portion | 3,389,339 | 3,413,998 | |||||
Capital and financing lease obligations, less current portion | 1,544,316 | 2,415,914 | |||||
Deferred liabilities | 252,998 | 267,364 | |||||
Deferred tax liability | 169,263 | 80,646 | |||||
Other liabilities | 221,212 | 230,891 | |||||
Total liabilities | 6,283,456 | 7,139,955 | |||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized at March 31, 2017 and December 31, 2016; no shares issued and outstanding | — | — | |||||
Common stock, $0.01 par value, 400,000,000 shares authorized at March 31, 2017 and December 31, 2016; 194,977,351 and 193,224,082 shares issued and 191,798,950 and 190,045,681 shares outstanding (including 5,595,620 and 4,608,187 unvested restricted shares), respectively | 1,918 | 1,900 | |||||
Additional paid-in-capital | 4,105,640 | 4,102,397 | |||||
Treasury stock, at cost; 3,178,401 shares at March 31, 2017 and December 31, 2016 | (56,440 | ) | (56,440 | ) | |||
Accumulated deficit | (2,096,179 | ) | (1,969,875 | ) | |||
Total Brookdale Senior Living Inc. stockholders' equity | 1,954,939 | 2,077,982 | |||||
Noncontrolling interest | (307 | ) | (250 | ) | |||
Total equity | 1,954,632 | 2,077,732 | |||||
Total liabilities and equity | $ | 8,238,088 | $ | 9,217,687 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenue | |||||||
Resident fees | $ | 1,016,927 | $ | 1,061,148 | |||
Management fees | 15,894 | 16,780 | |||||
Reimbursed costs incurred on behalf of managed communities | 183,945 | 185,228 | |||||
Total revenue | 1,216,766 | 1,263,156 | |||||
Expense | |||||||
Facility operating expense (excluding depreciation and amortization of $114,879 and $114,103, respectively) | 674,542 | 715,902 | |||||
General and administrative expense (including non-cash stock-based compensation expense of $7,774 and $9,769, respectively) | 65,560 | 92,621 | |||||
Transaction costs | 7,593 | 850 | |||||
Facility lease expense | 88,807 | 96,689 | |||||
Depreciation and amortization | 127,487 | 127,137 | |||||
Asset impairment | 20,706 | 3,375 | |||||
Costs incurred on behalf of managed communities | 183,945 | 185,228 | |||||
Total operating expense | 1,168,640 | 1,221,802 | |||||
Income from operations | 48,126 | 41,354 | |||||
Interest income | 631 | 702 | |||||
Interest expense: | |||||||
Debt | (40,573 | ) | (43,990 | ) | |||
Capital and financing lease obligations | (49,859 | ) | (50,579 | ) | |||
Amortization of deferred financing costs and debt premium (discount) | (2,591 | ) | (2,310 | ) | |||
Change in fair value of derivatives | (46 | ) | (24 | ) | |||
Debt modification and extinguishment costs | (61 | ) | (1,110 | ) | |||
Equity in earnings of unconsolidated ventures | 981 | 1,018 | |||||
(Loss) gain on sale of assets, net | (603 | ) | 2,749 | ||||
Other non-operating income | 1,662 | 5,038 | |||||
Income (loss) before income taxes | (42,333 | ) | (47,152 | ) | |||
Provision for income taxes | (84,028 | ) | (1,665 | ) | |||
Net income (loss) | (126,361 | ) | (48,817 | ) | |||
Net (income) loss attributable to noncontrolling interest | 57 | 42 | |||||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders | $ | (126,304 | ) | $ | (48,775 | ) | |
Basic and diluted net income (loss) per share attributable to Brookdale Senior Living Inc. common stockholders | $ | (0.68 | ) | $ | (0.26 | ) | |
Weighted average shares used in computing basic and diluted net income (loss) per share | 185,689 | 185,153 |
Common Stock | ||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In- Capital | Treasury Stock | Accumulated Deficit | Stockholders' Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||
Balances at January 1, 2017 | 190,046 | $ | 1,900 | $ | 4,102,397 | $ | (56,440 | ) | $ | (1,969,875 | ) | $ | 2,077,982 | $ | (250 | ) | $ | 2,077,732 | ||||||||||||
Compensation expense related to restricted stock grants | — | — | 7,774 | — | — | 7,774 | — | 7,774 | ||||||||||||||||||||||
Net income (loss) | — | — | — | — | (126,304 | ) | (126,304 | ) | (57 | ) | (126,361 | ) | ||||||||||||||||||
Issuance of common stock under Associate Stock Purchase Plan | 50 | 1 | 598 | — | — | 599 | — | 599 | ||||||||||||||||||||||
Restricted stock, net | 2,052 | 20 | (20 | ) | — | — | — | — | — | |||||||||||||||||||||
Shares withheld for employee taxes | (349 | ) | (3 | ) | (5,109 | ) | — | — | (5,112 | ) | — | (5,112 | ) | |||||||||||||||||
Balances at March 31, 2017 | 191,799 | $ | 1,918 | $ | 4,105,640 | $ | (56,440 | ) | $ | (2,096,179 | ) | $ | 1,954,939 | $ | (307 | ) | $ | 1,954,632 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash Flows from Operating Activities | |||||||
Net income (loss) | $ | (126,361 | ) | $ | (48,817 | ) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Loss on extinguishment of debt, net | 54 | 139 | |||||
Depreciation and amortization, net | 130,078 | 129,447 | |||||
Asset impairment | 20,706 | 3,375 | |||||
Equity in earnings of unconsolidated ventures | (981 | ) | (1,018 | ) | |||
Distributions from unconsolidated ventures from cumulative share of net earnings | 439 | — | |||||
Amortization of deferred gain | (1,093 | ) | (1,093 | ) | |||
Amortization of entrance fees | (1,198 | ) | (926 | ) | |||
Proceeds from deferred entrance fee revenue | 1,927 | 3,087 | |||||
Deferred income tax provision | 83,310 | 934 | |||||
Change in deferred lease liability | (3,007 | ) | 3,935 | ||||
Change in fair value of derivatives | 46 | 24 | |||||
Loss (gain) on sale of assets, net | 603 | (2,749 | ) | ||||
Non-cash stock-based compensation | 7,774 | 9,769 | |||||
Non-cash interest expense on financing lease obligations | 6,156 | 6,439 | |||||
Amortization of (above) below market lease, net | (1,697 | ) | (1,733 | ) | |||
Other | (1,398 | ) | (2,330 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 3,556 | (2,738 | ) | ||||
Prepaid expenses and other assets, net | (8,630 | ) | (36,554 | ) | |||
Accounts payable and accrued expenses | (51,627 | ) | (1,388 | ) | |||
Tenant refundable fees and security deposits | (297 | ) | (226 | ) | |||
Deferred revenue | 8,406 | 12,766 | |||||
Net cash provided by operating activities | 66,766 | 70,343 | |||||
Cash Flows from Investing Activities | |||||||
Increase in lease security deposits and lease acquisition deposits, net | (420 | ) | (1,210 | ) | |||
(Increase) decrease in cash and escrow deposits — restricted | (629 | ) | 72 | ||||
Additions to property, plant and equipment and leasehold intangibles, net | (48,928 | ) | (108,510 | ) | |||
Acquisition of assets, net of related payables and cash received | — | (12,157 | ) | ||||
Investment in unconsolidated ventures | (185,971 | ) | (2,365 | ) | |||
Distributions received from unconsolidated ventures | 1,807 | 1,724 | |||||
Proceeds from sale of assets, net | 31,675 | 45,584 | |||||
Property insurance proceeds | 1,398 | 2,330 | |||||
Other | 696 | 84 | |||||
Net cash used in investing activities | (200,372 | ) | (74,448 | ) | |||
Cash Flows from Financing Activities | |||||||
Proceeds from debt | 34,455 | 177,370 | |||||
Repayment of debt and capital and financing lease obligations | (52,273 | ) | (84,016 | ) | |||
Proceeds from line of credit | — | 448,500 | |||||
Repayment of line of credit | — | (548,500 | ) | ||||
Payment of financing costs, net of related payables | (321 | ) | (818 | ) | |||
Proceeds from refundable entrance fees, net of refunds | (902 | ) | (593 | ) | |||
Payment on lease termination | — | (4,625 | ) | ||||
Payments of employee taxes for withheld shares | (5,112 | ) | (965 | ) | |||
Other | 599 | 585 | |||||
Net cash used in financing activities | (23,554 | ) | (13,062 | ) | |||
Net decrease in cash and cash equivalents | (157,160 | ) | (17,167 | ) | |||
Cash and cash equivalents at beginning of period | 216,397 | 88,029 | |||||
Cash and cash equivalents at end of period | $ | 59,237 | $ | 70,862 |
• | debt prepayment or debt extinguishment costs will be classified within financing activities; |
• | the portion of cash payments attributable to accreted interest at the settlement of debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate will be classified within operating activities; |
• | proceeds from insurance settlements will be classified based on the nature of the related insurance coverage; and |
• | companies must elect to classify distributions received from equity method investees using either a cumulative earnings approach or a nature of the distributions approach. |
• | Resident Fees: The Company does not anticipate that the adoption of ASU 2014-09 will result in a significant change to the amount and timing of the recognition of resident fee revenue. |
• | Management Fees and Reimbursed Costs Incurred on Behalf of Managed Communities: The Company manages certain communities under contracts which provide for payment to the Company of a periodic management fee plus reimbursement of certain operating expenses. The Company does not anticipate that there will be any significant change to the amount and timing of revenue recognized for these periodic management fees. Certain management contracts also provide for an annual incentive fee to be paid to the Company upon achievement of certain metrics identified in the contract. Upon adoption of ASU 2014-09, the Company anticipates that incentive fee revenue may be recognized earlier during the annual contract period. The Company is still evaluating the performance obligations and assessing the transfer of control |
• | Equity in Earnings (Loss) of Unconsolidated Ventures: Certain of the Company's unconsolidated ventures accounted for under the equity method have residency agreements which require the resident to pay an upfront entrance fee prior to moving into the community and a portion of the upfront entrance fee is non-refundable. The Company's unconsolidated ventures are still evaluating the impact of the adoption of ASU 2014-09, which may impact the recognition of equity in earnings of unconsolidated ventures. |
• | The Company and HCP agreed to terminate triple-net leases with respect to 25 communities, which the Company expects to occur in stages through the end of fiscal 2017. The results of operations of the 25 communities are reported in the following segments within the consolidated financial statements: Assisted Living (23 communities) and CCRCs-Rental (two communities). The 25 communities had resident fee revenue of $18.4 million, facility operating expenses of $14.9 million and cash lease payments of $2.7 million for the three months ended March 31, 2017 and resident fee revenue of $18.0 million, facility operating expenses of $14.8 million and cash lease payments of $4.9 million for the three months ended March 31, 2016. |
• | The Company and HCP agreed to terminate triple-net leases with respect to eight communities. HCP agreed to contribute immediately thereafter four of such communities, to an existing unconsolidated venture with HCP in which the Company has a 10% equity interest. During the three months ended December 31, 2016, the triple-net leases with respect to seven communities were terminated and HCP contributed four of the communities to the existing unconsolidated venture. The triple-net lease with respect to the remaining community was terminated during January 2017. The results of operations of the eight communities are reporting in the following segments within the condensed consolidated financial statements through the respective disposition dates: Assisted Living (six communities), Retirement Centers (one community) and CCRCs-Rental (one community). The eight communities had resident fee revenue of $11.4 million, facility operating expenses of $8.0 million and cash lease payments of $3.0 million for the three months ended March 31, 2016. |
Shares Granted | Value Per Share | Total Value | |||||||
Three months ended March 31, 2017 | 2,392 | $ | 14.84 | $ | 35,497 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Dispositions and Other Reductions | Net | Gross Carrying Amount | Dispositions and Other Reductions | Net | ||||||||||||||||||
Retirement Centers | $ | 28,141 | $ | (820 | ) | $ | 27,321 | $ | 28,141 | $ | (820 | ) | $ | 27,321 | |||||||||
Assisted Living | 605,469 | (48,817 | ) | 556,652 | 600,162 | (48,817 | ) | 551,345 | |||||||||||||||
Brookdale Ancillary Services | 126,810 | — | 126,810 | 126,810 | — | 126,810 | |||||||||||||||||
Total | $ | 760,420 | $ | (49,637 | ) | $ | 710,783 | $ | 755,113 | $ | (49,637 | ) | $ | 705,476 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||
Community purchase options | $ | 4,738 | $ | — | $ | 4,738 | $ | 4,738 | $ | — | $ | 4,738 | |||||||||||
Health care licenses | 65,126 | — | 65,126 | 65,126 | — | 65,126 | |||||||||||||||||
Trade names | 27,800 | (21,780 | ) | 6,020 | 27,800 | (21,135 | ) | 6,665 | |||||||||||||||
Management contracts | 13,531 | (7,301 | ) | 6,230 | 13,531 | (7,053 | ) | 6,478 | |||||||||||||||
Total | $ | 111,195 | $ | (29,081 | ) | $ | 82,114 | $ | 111,195 | $ | (28,188 | ) | $ | 83,007 |
March 31, 2017 | December 31, 2016 | ||||||
Land | $ | 451,875 | $ | 455,307 | |||
Buildings and improvements | 5,031,711 | 5,053,204 | |||||
Leasehold improvements | 123,541 | 126,325 | |||||
Furniture and equipment | 978,654 | 974,516 | |||||
Resident and leasehold operating intangibles | 615,128 | 705,000 | |||||
Construction in progress | 69,215 | 69,803 | |||||
Assets under capital and financing leases | 2,039,736 | 2,879,996 | |||||
9,309,860 | 10,264,151 | ||||||
Accumulated depreciation and amortization | (2,797,681 | ) | (2,884,846 | ) | |||
Property, plant and equipment and leasehold intangibles, net | $ | 6,512,179 | $ | 7,379,305 |
March 31, 2017 | December 31, 2016 | ||||||
Mortgage notes payable due 2017 through 2047; weighted average interest rate of 4.61% for the three months ended March 31, 2017, less debt discount and deferred financing costs of $6.1 million and $4.5 million at March 31, 2017 and December 31, 2016, respectively (weighted average interest rate of 4.50% in 2016) | $ | 3,167,914 | $ | 3,184,229 | |||
Capital and financing lease obligations payable through 2032; weighted average interest rate of 7.90% for the three months ended March 31, 2017 (weighted average interest rate of 8.08% in 2016) | 1,603,150 | 2,485,520 | |||||
Convertible notes payable in aggregate principal amount of $316.3 million, less debt discount and deferred financing costs of $17.3 million and $20.9 million at March 31, 2017 and December 31, 2016, respectively, interest at 2.75% per annum, due June 15, 2018 | 298,918 | 295,397 | |||||
Construction financing due 2032; weighted average interest rate of 8.00% for the three months ended March 31, 2017 (weighted average interest rate of 8.00% in 2016) | 6,088 | 3,644 | |||||
Notes payable issued to finance insurance premiums, weighted average interest rate of 2.94% for the three months ended March 31, 2017, due 2017 | 17,262 | — | |||||
Other notes payable, weighted average interest rate of 6.04% for the three months ended March 31, 2017 (weighted average interest rate of 5.33% in 2016) and maturity dates ranging from 2017 to 2021 | 73,871 | 76,377 | |||||
Total long-term debt and capital and financing lease obligations | 5,167,203 | 6,045,167 | |||||
Less current portion | 233,548 | 215,255 | |||||
Total long-term debt and capital and financing lease obligations, less current portion | $ | 4,933,655 | $ | 5,829,912 |
Three Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | |||||
Supplemental Disclosure of Cash Flow Information: | |||||||
Interest paid | $ | 81,094 | $ | 92,270 | |||
Income taxes paid, net of refunds | $ | (107 | ) | $ | 246 | ||
Additions to property, plant and equipment and leasehold intangibles, net: | |||||||
Property, plant and equipment and leasehold intangibles, net | $ | 43,830 | $ | 79,017 | |||
Accounts payable | 5,098 | 29,493 | |||||
Net cash paid | $ | 48,928 | $ | 108,510 | |||
Acquisition of assets, net of related payables: | |||||||
Property, plant and equipment and leasehold intangibles, net | $ | — | $ | 19,457 | |||
Other intangible assets, net | — | (7,300 | ) | ||||
Net cash paid | $ | — | $ | 12,157 | |||
Proceeds from sale of assets, net: | |||||||
Prepaid expenses and other assets | $ | (356 | ) | $ | (121 | ) | |
Assets held for sale | (5,621 | ) | (42,714 | ) | |||
Investments in unconsolidated ventures | (26,301 | ) | — | ||||
Loss (gain) on sale of assets | 603 | (2,749 | ) | ||||
Net cash received | $ | (31,675 | ) | $ | (45,584 | ) | |
Formation of the Blackstone Venture: | |||||||
Prepaid expenses and other assets | $ | (8,173 | ) | $ | — | ||
Property, plant and equipment and leasehold intangibles, net | (768,897 | ) | — | ||||
Investments in unconsolidated ventures | 66,816 | — | |||||
Capital and financing lease obligations | 879,959 | — | |||||
Deferred liabilities | 7,504 | — | |||||
Other liabilities | 1,998 | — | |||||
Net cash paid | $ | 179,207 | $ | — | |||
Supplemental Schedule of Non-cash Operating, Investing and Financing Activities: | |||||||
Assets designated as held for sale: | |||||||
Prepaid expenses and other assets | $ | 106 | $ | — | |||
Assets held for sale | (14,122 | ) | — | ||||
Property, plant and equipment and leasehold intangibles, net | 14,016 | — | |||||
Net | $ | — | $ | — |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash basis payment | $ | 94,604 | $ | 95,580 | |||
Straight-line (income) expense | (3,007 | ) | 3,935 | ||||
Amortization of (above) below market lease, net | (1,697 | ) | (1,733 | ) | |||
Amortization of deferred gain | (1,093 | ) | (1,093 | ) | |||
Facility lease expense | $ | 88,807 | $ | 96,689 |
VIE Type | Asset Type | Maximum Exposure to Loss | Carrying Amount | |||||
CCRC Venture opco | Investment in unconsolidated ventures | $ | 47.9 | $ | 47.9 | |||
RIDEA Ventures | Investment in unconsolidated ventures | $ | 82.3 | $ | 82.3 | |||
Blackstone Venture | Investment in unconsolidated ventures | $ | 47.3 | $ | 47.3 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenue | |||||||
Retirement Centers (1) | $ | 172,620 | $ | 169,426 | |||
Assisted Living (1) | 590,537 | 617,270 | |||||
CCRCs-Rental (1) | 141,798 | 152,260 | |||||
Brookdale Ancillary Services (1) | 111,972 | 122,192 | |||||
Management Services (2) | 199,839 | 202,008 | |||||
$ | 1,216,766 | $ | 1,263,156 | ||||
Segment Operating Income (3) | |||||||
Retirement Centers | $ | 74,002 | $ | 74,449 | |||
Assisted Living | 217,439 | 220,810 | |||||
CCRCs-Rental | 35,315 | 35,469 | |||||
Brookdale Ancillary Services | 15,629 | 14,518 | |||||
Management Services | 15,894 | 16,780 | |||||
358,279 | 362,026 | ||||||
General and administrative (including non-cash stock-based compensation expense) | 65,560 | 92,621 | |||||
Transaction costs | 7,593 | 850 | |||||
Facility lease expense | 88,807 | 96,689 | |||||
Depreciation and amortization | 127,487 | 127,137 | |||||
Asset impairment | 20,706 | 3,375 | |||||
Income from operations | $ | 48,126 | $ | 41,354 |
As of | |||||||
March 31, 2017 | December 31, 2016 | ||||||
Total assets | |||||||
Retirement Centers | $ | 1,301,173 | $ | 1,452,546 | |||
Assisted Living | 5,271,709 | 5,831,434 | |||||
CCRCs-Rental | 783,383 | 935,389 | |||||
Brookdale Ancillary Services | 280,301 | 280,530 | |||||
Corporate and Management Services | 601,522 | 717,788 | |||||
Total assets | $ | 8,238,088 | $ | 9,217,687 |
(1) | All revenue is earned from external third parties in the United States. |
(2) | Management services segment revenue includes reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities. |
(3) | Segment operating income is defined as segment revenues less segment facility operating expenses (excluding depreciation and amortization). |
• | We and HCP agreed to terminate triple-net leases with respect to 25 communities (2,031 units), which we expect to occur in stages through the end of fiscal 2017. The results of operations of the 25 communities are reported in the following segments within the consolidated financial statements: Assisted Living (23 communities; 1,759 units) and CCRCs-Rental (two communities; 272 units). The 25 communities had resident fee revenue of $18.4 million, facility operating expenses of $14.9 million and cash lease payments of $2.7 million for the three months ended March 31, 2017 and resident fee revenue of $18.0 million, facility operating expenses of $14.8 million and cash lease payments of $4.9 million for the three months ended March 31, 2016. |
• | We and HCP agreed to terminate triple-net leases with respect to eight communities (867 units). HCP agreed to contribute immediately thereafter four of such communities, consisting of 527 units, to an existing unconsolidated venture with HCP in which we have a 10% equity interest. During the three months ended December 31, 2016, the triple-net leases with respect to seven communities (773 units) were terminated and HCP contributed four of the communities to the existing unconsolidated venture. The triple-net lease with respect to the remaining community was terminated during January 2017. The results of operations of the eight communities are reporting in the following segments within the condensed consolidated financial statements through the respective disposition dates: Assisted Living (six communities; 514 units), Retirement Centers (one community; 109 units) and CCRCs-Rental (one community; 244 units). The eight communities had resident fee revenue of $11.4 million, facility operating expenses of $8.0 million and cash lease payments of $3.0 million for the three months ended March 31, 2016. |
Three Months Ended March 31, | Increase (Decrease) | |||||||||||||
2017 | 2016 | Amount | Percent | |||||||||||
Total revenues | $ | 1,216.8 | $ | 1,263.2 | $ | (46.4 | ) | (3.7 | )% | |||||
Facility operating expense | $ | 674.5 | $ | 715.9 | $ | (41.4 | ) | (5.8 | )% | |||||
Net income (loss) | $ | (126.4 | ) | $ | (48.8 | ) | $ | 77.5 | 158.8 | % | ||||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders | $ | (126.3 | ) | $ | (48.8 | ) | $ | 77.5 | 159.0 | % | ||||
Adjusted EBITDA (1) | $ | 198.3 | $ | 182.7 | $ | 15.6 | 8.5 | % | ||||||
Net cash provided by operating activities | $ | 66.8 | $ | 70.3 | $ | (3.6 | ) | (5.1 | )% | |||||
Adjusted Free Cash Flow(1) | $ | 63.4 | $ | 27.9 | $ | 35.6 | 127.5 | % |
(1) | Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures we use to assess our operating performance and liquidity. We changed our definition and calculation of Adjusted EBITDA when we reported results for the second quarter of 2016. Prior period amounts of Adjusted EBITDA included in this Quarterly Report on Form 10-Q have been recast to conform to the new definition. See "Non-GAAP Financial Measures" below for important information regarding both measures, including a description of the changes to the definition of Adjusted EBITDA. |
(dollars in thousands, except Total RevPAR, RevPAR and RevPOR) | Three Months Ended March 31, | |||||||||||||
2017 | 2016 | Increase (Decrease) | % Increase (Decrease) | |||||||||||
Statement of Operations Data: | ||||||||||||||
Revenue | ||||||||||||||
Resident fees | ||||||||||||||
Retirement Centers | $ | 172,620 | $ | 169,426 | $ | 3,194 | 1.9 | % | ||||||
Assisted Living | 590,537 | 617,270 | (26,733 | ) | (4.3 | )% | ||||||||
CCRCs-Rental | 141,798 | 152,260 | (10,462 | ) | (6.9 | )% | ||||||||
Brookdale Ancillary Services | 111,972 | 122,192 | (10,220 | ) | (8.4 | )% | ||||||||
Total resident fees | 1,016,927 | 1,061,148 | (44,221 | ) | (4.2 | )% | ||||||||
Management services (1) | 199,839 | 202,008 | (2,169 | ) | (1.1 | )% | ||||||||
Total revenue | 1,216,766 | 1,263,156 | (46,390 | ) | (3.7 | )% | ||||||||
Expense | ||||||||||||||
Facility operating expense | ||||||||||||||
Retirement Centers | 98,618 | 94,977 | 3,641 | 3.8 | % | |||||||||
Assisted Living | 373,098 | 396,460 | (23,362 | ) | (5.9 | )% | ||||||||
CCRCs-Rental | 106,483 | 116,791 | (10,308 | ) | (8.8 | )% | ||||||||
Brookdale Ancillary Services | 96,343 | 107,674 | (11,331 | ) | (10.5 | )% | ||||||||
Total facility operating expense | 674,542 | 715,902 | (41,360 | ) | (5.8 | )% | ||||||||
General and administrative expense | 65,560 | 92,621 | (27,061 | ) | (29.2 | )% | ||||||||
Transaction costs | 7,593 | 850 | 6,743 | 793.3 | % | |||||||||
Facility lease expense | 88,807 | 96,689 | (7,882 | ) | (8.2 | )% | ||||||||
Depreciation and amortization | 127,487 | 127,137 | 350 | 0.3 | % | |||||||||
Asset impairment | 20,706 | 3,375 | 17,331 | 513.5 | % | |||||||||
Costs incurred on behalf of managed communities | 183,945 | 185,228 | (1,283 | ) | (0.7 | )% | ||||||||
Total operating expense | 1,168,640 | 1,221,802 | (53,162 | ) | (4.4 | )% | ||||||||
Income from operations | 48,126 | 41,354 | 6,772 | 16.4 | % | |||||||||
Interest income | 631 | 702 | (71 | ) | (10.1 | )% | ||||||||
Interest expense | (93,069 | ) | (96,903 | ) | (3,834 | ) | (4.0 | )% | ||||||
Debt modification and extinguishment costs | (61 | ) | (1,110 | ) | (1,049 | ) | (94.5 | )% | ||||||
Equity in earnings of unconsolidated ventures | 981 | 1,018 | (37 | ) | (3.6 | )% | ||||||||
(Loss) gain on sale of assets, net | (603 | ) | 2,749 | (3,352 | ) | (121.9 | )% | |||||||
Other non-operating income | 1,662 | 5,038 | (3,376 | ) | (67.0 | )% | ||||||||
Income (loss) before income taxes | (42,333 | ) | (47,152 | ) | (4,819 | ) | (10.2 | )% | ||||||
Provision for income taxes | (84,028 | ) | (1,665 | ) | 82,363 | NM | ||||||||
Net income (loss) | (126,361 | ) | (48,817 | ) | 77,544 | 158.8 | % | |||||||
Net (income) loss attributable to noncontrolling interest | 57 | 42 | 15 | 35.7 | % | |||||||||
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders | $ | (126,304 | ) | $ | (48,775 | ) | $ | 77,529 | 159.0 | % |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | Increase (Decrease) | % Increase (Decrease) | |||||||||||
Selected Operating and Other Data: | ||||||||||||||
Total number of communities (period end) | 1,052 | 1,121 | (69 | ) | (6.2 | )% | ||||||||
Total units operated (2) | ||||||||||||||
Period end | 102,470 | 107,574 | (5,104 | ) | (4.7 | )% | ||||||||
Weighted average | 102,564 | 107,554 | (4,990 | ) | (4.6 | )% | ||||||||
Owned/leased communities units (2) | ||||||||||||||
Period end | 71,186 | 80,927 | (9,741 | ) | (12.0 | )% | ||||||||
Weighted average | 76,862 | 80,941 | (4,079 | ) | (5.0 | )% | ||||||||
Total RevPAR (3) | $ | 4,405 | $ | 4,366 | $ | 39 | 0.9 | % | ||||||
RevPAR (4) | $ | 3,919 | $ | 3,863 | $ | 56 | 1.4 | % | ||||||
Owned/leased communities occupancy rate (weighted average) | 85.3 | % | 86.1 | % | (0.8 | )% | (0.9 | )% | ||||||
RevPOR (5) | $ | 4,597 | $ | 4,485 | $ | 112 | 2.5 | % | ||||||
Selected Segment Operating and Other Data: | ||||||||||||||
Retirement Centers | ||||||||||||||
Number of communities (period end) | 86 | 95 | (9 | ) | (9.5 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 16,071 | 17,096 | (1,025 | ) | (6.0 | )% | ||||||||
Weighted average | 17,108 | 17,096 | 12 | 0.1 | % | |||||||||
RevPAR (4) | $ | 3,363 | $ | 3,303 | $ | 60 | 1.8 | % | ||||||
Occupancy rate (weighted average) | 88.0 | % | 88.9 | % | (0.9 | )% | (1.0 | )% | ||||||
RevPOR (5) | $ | 3,823 | $ | 3,715 | $ | 108 | 2.9 | % | ||||||
Assisted Living | ||||||||||||||
Number of communities (period end) | 720 | 820 | (100 | ) | (12.2 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 47,296 | 53,503 | (6,207 | ) | (11.6 | )% | ||||||||
Weighted average | 50,540 | 53,510 | (2,970 | ) | (5.6 | )% | ||||||||
RevPAR (4) | $ | 3,895 | $ | 3,845 | $ | 50 | 1.3 | % | ||||||
Occupancy rate (weighted average) | 84.7 | % | 85.6 | % | (0.9 | )% | (1.1 | )% | ||||||
RevPOR (5) | $ | 4,600 | $ | 4,493 | $ | 107 | 2.4 | % | ||||||
CCRCs-Rental | ||||||||||||||
Number of communities (period end) | 32 | 44 | (12 | ) | (27.3 | )% | ||||||||
Total units (2) | ||||||||||||||
Period end | 7,819 | 10,328 | (2,509 | ) | (24.3 | )% | ||||||||
Weighted average | 9,214 | 10,335 | (1,121 | ) | (10.8 | )% | ||||||||
RevPAR (4) | $ | 5,086 | $ | 4,881 | $ | 205 | 4.2 | % | ||||||
Occupancy rate (weighted average) | 83.5 | % | 84.3 | % | (0.8 | )% | (0.9 | )% | ||||||
RevPOR (5) | $ | 6,091 | $ | 5,790 | $ | 301 | 5.2 | % | ||||||
Management Services | ||||||||||||||
Number of communities (period end) | 214 | 162 | 52 | 32.1 | % | |||||||||
Total units (2) | ||||||||||||||
Period end | 31,284 | 26,647 | 4,637 | 17.4 | % | |||||||||
Weighted average | 25,702 | 26,613 | (911 | ) | (3.4 | )% | ||||||||
Occupancy rate (weighted average) | 86.3 | % | 87.1 | % | (0.8 | )% | (0.9 | )% |
Brookdale Ancillary Services | ||||||||||||||
Outpatient Therapy treatment codes | 193,853 | 509,651 | (315,798 | ) | (62.0 | )% | ||||||||
Home Health average daily census | 15,370 | 15,835 | (465 | ) | (2.9 | )% | ||||||||
Hospice average daily census | 920 | 654 | 266 | 40.7 | % |
(1) | Management services segment revenue includes management fees and reimbursements for which we are the primary obligor of costs incurred on behalf of managed communities. |
(2) | Period end units operated excludes equity homes. Weighted average units operated represents the average units operated during the period, excluding equity homes. |
(3) | Total RevPAR, or average monthly resident fee revenues per available unit, is defined by the Company as resident fee revenues, excluding entrance fee amortization, for the corresponding portfolio for the period, divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period. |
(4) | RevPAR, or average monthly senior housing resident fee revenues per available unit, is defined by the Company as resident fee revenues, excluding Brookdale Ancillary Services segment revenue and entrance fee amortization, for the corresponding portfolio for the period, divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period. |
(5) | RevPOR, or average monthly senior housing resident fee revenues per occupied unit, is defined by the Company as resident fee revenues, excluding Brookdale Ancillary Services segment revenue and entrance fee amortization, for the corresponding portfolio for the period, divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net cash provided by operating activities | $ | 66,766 | $ | 70,343 | |||
Net cash used in investing activities | (200,372 | ) | (74,448 | ) | |||
Net cash used in financing activities | (23,554 | ) | (13,062 | ) | |||
Net decrease in cash and cash equivalents | (157,160 | ) | (17,167 | ) | |||
Cash and cash equivalents at beginning of period | 216,397 | 88,029 | |||||
Cash and cash equivalents at end of period | $ | 59,237 | $ | 70,862 |
• | cash balances on hand; |
• | cash flows from operations; |
• | proceeds from our credit facilities; |
• | funds generated through unconsolidated venture arrangements; |
• | proceeds from mortgage financing, refinancing of various assets or sale-leaseback transactions; |
• | funds raised in the debt or equity markets; and |
• | proceeds from the disposition of assets. |
• | working capital; |
• | operating costs such as employee compensation and related benefits, general and administrative expense and supply costs; |
• | debt service and lease payments; |
• | acquisition consideration and transaction and integration costs; |
• | capital expenditures and improvements, including the expansion, renovation, redevelopment and repositioning of our current communities and the development of new communities; |
• | cash collateral required to be posted in connection with our financial instruments and insurance programs; |
• | purchases of common stock under our share repurchase authorizations; |
• | other corporate initiatives (including integration, information systems, branding and other strategic projects); and |
• | prior to 2009, dividend payments. |
• | working capital; |
• | operating costs such as employee compensation and related benefits, general and administrative expense and supply costs; |
• | debt service and lease payments; |
• | capital expenditures and improvements, including the expansion, renovation, redevelopment and repositioning of our existing communities; |
• | acquisition consideration and transaction costs; |
• | cash funding needs of our unconsolidated ventures for operating, capital expenditure and financing needs; |
• | cash collateral required to be posted in connection with our financial instruments and insurance programs; |
• | purchases of common stock under our share repurchase authorization; and |
• | other corporate initiatives (including information systems and other strategic projects). |
Actual Three Months Ended March 31, 2017 | Anticipated 2017 Range | |||||
Community-level capital expenditures, net (1) | $ | 28.7 | $ | 150.0 - 155.0 | ||
Corporate | 6.0 | 40.0 - 45.0 | ||||
Non-development capital expenditures, net (2) | 34.7 | 190.0 - 200.0 | ||||
Development capital expenditures, net (3) | 1.1 | 40.0 - 50.0 | ||||
Total capital expenditures, net | $ | 35.8 | $ | 230.0 - 250.0 |
(1) | Amount shown for the three months ended March 31, 2017 is the amount invested, net of lessor reimbursements of $5.2 million. Anticipated amounts shown for 2017 are amounts invested or anticipated to be invested, net of approximately $5.0 million to $10.0 million of lessor reimbursements received or anticipated to be received. |
(2) | Amounts are included in Adjusted Free Cash Flow. |
(3) | Amount shown for the three months ended March 31, 2017 is the amount invested, net of lessor reimbursements of $2.8 million. Anticipated amounts shown for 2017 are amounts invested or anticipated to be invested, net of approximately $40.0 million to $50.0 million of lessor reimbursements anticipated to be received. |
• | the cash portion of interest expense, income tax (benefit) provision and non-recurring charges related to gain (loss) on sale of communities (or facility lease termination) and extinguishment of debt activities generally represent charges (gains), which may significantly affect our operating results; and |
• | depreciation and amortization and asset impairment represent the wear and tear and/or reduction in value of our communities and other assets, which affects the services we provide to residents and may be indicative of future needs for capital expenditures. |
Three Months Ended March 31, (1) | |||||||
2017 | 2016 | ||||||
Net income (loss) | $ | (126,361 | ) | $ | (48,817 | ) | |
Provision for income taxes | 84,028 | 1,665 | |||||
Equity in earnings of unconsolidated ventures | (981 | ) | (1,018 | ) | |||
Debt modification and extinguishment costs | 61 | 1,110 | |||||
Loss (gain) on sale of assets, net | 603 | (2,749 | ) | ||||
Other non-operating income | (1,662 | ) | (5,038 | ) | |||
Interest expense | 93,069 | 96,903 | |||||
Interest income | (631 | ) | (702 | ) | |||
Income from operations | 48,126 | 41,354 | |||||
Depreciation and amortization | 127,487 | 127,137 | |||||
Asset impairment | 20,706 | 3,375 | |||||
Straight-line lease expense (income) | (3,007 | ) | 3,935 | ||||
Amortization of (above) below market lease, net | (1,697 | ) | (1,733 | ) | |||
Amortization of deferred gain | (1,093 | ) | (1,093 | ) | |||
Non-cash stock-based compensation | 7,774 | 9,769 | |||||
Adjusted EBITDA | $ | 198,296 | $ | 182,744 |
(1) | For the three months ended March 31, 2017, the calculation of Adjusted EBITDA includes $7.6 million and $0.2 million of transaction and strategic project costs, respectively. For the three months ended March 31, 2016, the calculation of Adjusted EBITDA includes $10.0 million, $0.9 million and $9.1 million of integration, transaction and transaction-related and strategic project costs, respectively. Integration costs include transition costs associated with organizational restructuring (such as severance and retention payments and recruiting expenses), third party consulting expenses directly related to the integration of acquired communities (in areas such as cost savings and synergy realization, branding and technology and systems work), and internal costs such as training, travel and labor, reflecting time spent by Company personnel on integration activities and projects. Transaction and transaction-related costs include third party costs directly related to acquisition and disposition activity, community financing and leasing activity and corporate capital structure assessment activities (including shareholder relations advisory matters), and are primarily comprised of legal, finance, consulting, professional fees and other third party costs. Strategic project costs include costs associated with certain strategic projects related to refining our strategy, building out enterprise-wide capabilities (including the EMR roll-out project) and reducing costs and achieving synergies by capitalizing on scale. |
• | Adjusted Free Cash Flow does not represent cash available for dividends or discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures not reflected in this measure; and |
• | the cash portion of non-recurring charges related to gain (loss) on lease termination and extinguishment of debt activities generally represent charges (gains), which may significantly affect our financial results. |
Three Months Ended March 31, (1) | |||||||
2017 | 2016 | ||||||
Net cash provided by operating activities | $ | 66,766 | $ | 70,343 | |||
Net cash used in investing activities | (200,372 | ) | (74,448 | ) | |||
Net cash used in financing activities | (23,554 | ) | (13,062 | ) | |||
Net decrease in cash and cash equivalents | $ | (157,160 | ) | $ | (17,167 | ) | |
Net cash provided by operating activities | $ | 66,766 | $ | 70,343 | |||
Changes in operating assets and liabilities | 48,592 | 28,140 | |||||
Proceeds from refundable entrance fees, net of refunds | (902 | ) | (593 | ) | |||
Lease financing debt amortization | (17,248 | ) | (15,302 | ) | |||
Distributions from unconsolidated ventures from cumulative share of net earnings | (439 | ) | — | ||||
Non-development capital expenditures, net | (34,722 | ) | (57,034 | ) | |||
Property insurance proceeds | 1,398 | 2,330 | |||||
Adjusted Free Cash Flow | $ | 63,445 | $ | 27,884 |
(1) | For the three months ended March 31, 2017, the calculation of Adjusted Free Cash Flow includes $7.6 million and $0.2 million of transaction and strategic project costs, respectively. For the three months ended March 31, 2016, the calculation of Adjusted Free Cash Flow includes $10.0 million, $1.8 million and $9.1 million of integration costs, transaction and transaction-related costs and strategic project costs, respectively (including $1.0 million of debt modification costs excluded from Adjusted EBITDA). Integration costs include transition costs associated with organizational restructuring (such as severance and retention payments and recruiting expenses), third party consulting expenses directly related to the integration of acquired communities (in areas such as cost savings and synergy realization, branding and technology and systems work), and internal costs such as training, travel and labor, reflecting time spent by Company personnel on integration activities and projects. Transaction and transaction-related costs include third party costs directly related to acquisition and disposition activity, community financing and leasing activity and corporate capital structure assessment activities (including shareholder relations advisory matters), and are primarily comprised of legal, finance, consulting, professional fees and other third party costs. Strategic project costs include costs associated with certain strategic projects related to refining our strategy, building out enterprise-wide capabilities (including the EMR roll-out project) and reducing costs and achieving synergies by capitalizing on scale. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net cash provided by operating activities | $ | 59,924 | $ | 54,593 | |||
Net cash used in investing activities | (1,150,080 | ) | (37,924 | ) | |||
Net cash provided by (used in) financing activities | 1,145,059 | (5,851 | ) | ||||
Net increase in cash and cash equivalents | $ | 54,903 | $ | 10,818 | |||
Net cash provided by operating activities | $ | 59,924 | $ | 54,593 | |||
Changes in operating assets and liabilities | 2,086 | (2,320 | ) | ||||
Proceeds from refundable entrance fees, net of refunds | (4,365 | ) | (2,099 | ) | |||
Non-development capital expenditures, net | (17,027 | ) | (21,805 | ) | |||
Property insurance proceeds | $ | 393 | $ | — | |||
Adjusted Free Cash Flow of unconsolidated ventures | $ | 41,011 | $ | 28,369 | |||
Brookdale weighted average ownership percentage | 21.3 | % | 30.0 | % | |||
Brookdale's proportionate share of Adjusted Free Cash Flow of unconsolidated ventures | $ | 8,750 | $ | 8,505 |
(a) | Not applicable. |
(b) | Not applicable. |
(c) | The following table contains information regarding purchases of our common stock made during the quarter ended March 31, 2017 by or on behalf of the Company or any ''affiliated purchaser,'' as defined by Rule 10b-18(a)(3) of the Exchange Act: |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ($ in thousands) (2) | ||||||||
1/1/2017 - 1/31/2017 | 2,102 | $ | 14.97 | — | 90,360 | |||||||
2/1/2017 - 2/28/2017 | 347,318 | 14.63 | — | 90,360 | ||||||||
3/1/2017 - 3/31/2017 | — | — | — | 90,360 | ||||||||
Total | 349,420 | $ | 14.63 | — |
(1) | Consists entirely of shares withheld to satisfy tax liabilities due upon the vesting of restricted stock. The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock or, if such date is not a trading day, the trading day immediately prior to such vesting date. |
(2) | On November 1, 2016, the Company announced that its Board of Directors had approved a share repurchase program that authorizes the Company to purchase up to $100.0 million in the aggregate of its common stock. The share repurchase program is intended to be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements, and capital availability. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the program may be suspended, modified or discontinued at any time at the Company's discretion without prior notice. Shares of stock repurchased under the program will be held as treasury shares. No shares were purchased pursuant to the repurchase program during the three months ended March 31, 2017, and approximately $90.4 million remained available under the repurchase program as of March 31, 2017. |
BROOKDALE SENIOR LIVING INC. | |||
(Registrant) | |||
By: | /s/ Lucinda M. Baier | ||
Name: | Lucinda M. Baier | ||
Title: | Chief Financial Officer (Principal Financial Officer) | ||
Date: | May 9, 2017 | ||
Exhibit No. | Description | |
3.1 | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K filed on February 26, 2010 (File No. 001-32641)). | |
3.2 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, dated July 30, 2014 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on August 5, 2014 (File No. 001-32641)). | |
3.3 | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on March 6, 2017 (File No. 001-32641)). | |
4.1 | Form of Certificate for common stock (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Amendment No. 3) filed on November 7, 2005 (File No. 333-127372)). | |
4.2 | Indenture, dated as of June 14, 2011, between the Company and American Stock Transfer & Trust Company, LLC, as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 14, 2011 (File No. 001-32641)). | |
4.3 | Supplemental Indenture, dated as of June 14, 2011, between the Company and American Stock Transfer & Trust Company, LLC, as Trustee (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on June 14, 2011 (File No. 001-32641)). | |
4.4 | Form of 2.75% Convertible Senior Note due 2018 (included as part of Exhibit 4.3). | |
10.1 | Form of Restricted Share Agreement under the Brookdale Senior Living Inc. 2014 Omnibus Incentive Plan (the "Omnibus Incentive Plan") (2017 Time-Vesting Form for Executive Committee Members). | |
10.2 | Form of Restricted Share Agreement under the Omnibus Incentive Plan (2017 Time-Vesting Form for Executive Vice Presidents). | |
10.3 | Form of Restricted Share Agreement under the Omnibus Incentive Plan (2017 Performance-Vesting Form for Executive Committee Members). | |
10.4 | Form of Restricted Share Agreement under the Omnibus Incentive Plan (2017 Performance-Vesting Form for Executive Vice Presidents). | |
10.5 | Amendment No. 3 to Severance Pay Policy, Tier I, adopted by the Company on January 19, 2017. | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
1. | Section 3(k) is amended and restated in its entirety to provide as follows: |
2. | Section 3(q) is amended and restated in its entirety to provide as follows: |
3. | Section 4(a)(i)(1)(B) is amended and restated in its entirety to provide as follows: |
4. | The lead-in to Section 4(a)(i)(2) is amended and restated in its entirety to provide as follows: |
5. | Section 4(a)(ii)(2) is amended and restated in its entirety to provide as follows: |
Title: | President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Brookdale Senior Living Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: May 9, 2017 | /s/ T. Andrew Smith | |
T. Andrew Smith | ||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Brookdale Senior Living Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: May 9, 2017 | /s/ Lucinda M. Baier | |
Lucinda M. Baier | ||
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2017 |
May 05, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Brookdale Senior Living Inc. | |
Entity Central Index Key | 0001332349 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 186,199,291 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Equity, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, shares issued (in shares) | 194,977,351 | 193,224,082 |
Common stock, shares outstanding (in shares) | 191,798,950 | 190,045,681 |
Treasury stock, shares (in shares) | 3,178,401 | 3,178,401 |
Unvested Restricted Stock [Member] | ||
Equity, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common stock, shares outstanding (in shares) | 5,595,620 | 4,608,187 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Statement [Abstract] | ||
Depreciation and amortization | $ 114,879 | $ 114,103 |
Non-cash stock-based compensation expense | $ 7,774 | $ 9,769 |
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Treasury Stock [Member] |
Accumulated Deficit [Member] |
Stockholders' Equity [Member] |
Noncontrolling Interest [Member] |
---|---|---|---|---|---|---|---|
Balances at beginning of period at Dec. 31, 2016 | $ 2,077,732 | $ 1,900 | $ 4,102,397 | $ (56,440) | $ (1,969,875) | $ 2,077,982 | $ (250) |
Balances at beginning of period (in shares) at Dec. 31, 2016 | 190,045,681 | 190,046,000 | |||||
Compensation expense related to restricted stock grants | $ 7,774 | 7,774 | 7,774 | ||||
Net income (loss) | (126,361) | (126,304) | (126,304) | (57) | |||
Issuance of common stock under Associate Stock Purchase Plan | 599 | $ 1 | 598 | 599 | |||
Issuance of common stock under Associate Stock Purchase Plan (in shares) | 50,000 | ||||||
Restricted stock, net | $ 20 | (20) | |||||
Restricted stock, net (in shares) | 2,052,000 | ||||||
Shares withheld for employee taxes | (5,112) | $ (3) | (5,109) | (5,112) | |||
Shares withheld for employee taxes (in shares) | (349,000) | ||||||
Balances at end of period at Mar. 31, 2017 | $ 1,954,632 | $ 1,918 | $ 4,105,640 | $ (56,440) | $ (2,096,179) | $ 1,954,939 | $ (307) |
Balances at end of period (in shares) at Mar. 31, 2017 | 191,798,950 | 191,799,000 |
Description of Business |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Brookdale Senior Living Inc. ("Brookdale" or the "Company") is the leading operator of senior living communities throughout the United States. The Company is committed to providing senior living solutions primarily within properties that are designed, purpose-built and operated to provide the highest quality service, care and living accommodations for residents. The Company operates independent living, assisted living and dementia-care communities and continuing care retirement centers ("CCRCs"). Through its ancillary services programs, the Company also offers a range of outpatient therapy, home health and hospice services to residents of many of its communities and to seniors living outside its communities. |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for quarterly reports on Form 10-Q. In the opinion of management, these financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash flows of the Company as of March 31, 2017, and for all periods presented. The condensed consolidated financial statements are prepared on the accrual basis of accounting. All adjustments made have been of a normal and recurring nature. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures included are adequate and provide a fair presentation of interim period results. Interim financial statements are not necessarily indicative of the financial position or operating results for an entire year. It is suggested that these interim financial statements be read in conjunction with the audited financial statements and the notes thereto, together with management's discussion and analysis of financial condition and results of operations, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on February 15, 2017. Principles of Consolidation The consolidated financial statements include the accounts of Brookdale and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Investments in affiliated companies that the Company does not control, but has the ability to exercise significant influence over governance and operation, are accounted for by the equity method. The ownership interest of consolidated entities not wholly-owned by the Company are presented as noncontrolling interests in the accompanying consolidated financial statements. Noncontrolling interest represents the share of consolidated entities owned by third parties. Noncontrolling interest is adjusted for the noncontrolling holder's share of additional contributions, distributions and the proportionate share of the net income or loss of each respective entity. The Company continually evaluates its potential variable interest entity ("VIE") relationships under certain criteria as provided for in Financial Accounting Standards Board ("FASB") ASC 810, Consolidation ("ASC 810"). ASC 810 broadly defines a VIE as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity's activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity's activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Company performs this analysis on an ongoing basis and consolidates any VIEs for which the Company is determined to be the primary beneficiary, as determined by the Company's power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. Refer to Note 13 for more information about the Company's VIE relationships. Revenue Recognition Resident Fees Resident fee revenue is recorded when services are rendered and consists of fees for basic housing and support services and fees associated with additional services such as assisted living care, skilled nursing care, ancillary services and personalized health services. Residency agreements are generally for a term of 30 days to one year, with resident fees billed monthly in advance. Revenue for certain skilled nursing services and ancillary services is recognized as services are provided, and such fees are billed monthly in arrears. Management Fees The Company manages certain communities under contracts which provide for payment to the Company of a periodic management fee. Management fees are generally determined by an agreed upon percentage of gross revenues (as defined) and are recorded monthly. Certain management contracts also provide for an annual incentive fee to be paid to the Company upon achievement of certain metrics identified in the contract. Incentive fee revenue is recorded at the conclusion of the contract year at the amount due pursuant to the contractual arrangements. Reimbursed Costs Incurred on Behalf of Managed Communities The Company manages certain communities under contracts which provide for payment to the Company of a periodic management fee plus reimbursement of certain operating expenses. Where the Company is the primary obligor with respect to any such operating expenses, the Company recognizes revenue when the goods have been delivered or the service has been rendered and the Company is due reimbursement. Such revenue is included in "reimbursed costs incurred on behalf of managed communities" on the condensed consolidated statements of operations. The related costs are included in "costs incurred on behalf of managed communities" on the condensed consolidated statements of operations. Income Taxes Income taxes are accounted for under the asset and liability approach which requires recognition of deferred tax assets and liabilities for the differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance reduces deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Fair Value of Financial Instruments ASC 820, Fair Value Measurements and Disclosures establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Cash and cash equivalents and cash and escrow deposits – restricted are reflected in the accompanying condensed consolidated balance sheets at amounts considered by management to reasonably approximate fair value due to the short maturity. The Company estimates the fair value of its debt using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness. The Company had outstanding debt (excluding capital and financing lease obligations) with a carrying value of approximately $3.6 billion as of both March 31, 2017 and December 31, 2016. Fair value of the debt approximates carrying value in all periods. The Company's fair value of debt disclosure is classified within Level 2 of the valuation hierarchy. Stock-Based Compensation The Company follows ASC 718, Compensation – Stock Compensation (“ASC 718”) in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date are recognized when incurred. Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. On January 1, 2017, the Company adopted Accounting Standards Update ("ASU") 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09") and changed its policy from estimating forfeitures to recording forfeitures when they occur. The Company’s adoption of ASU 2016-09 did not have a material impact on its condensed consolidated financial statements. For all share-based awards with graded vesting other than awards with performance-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period. For graded-vesting awards with performance-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting tranche of the award as if the award is, in substance, multiple awards once the performance target is deemed probable of achievement. Performance goals are evaluated quarterly. If such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed. Self-Insurance Liability Accruals The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the Company maintains general liability and professional liability insurance policies for its owned, leased and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim. As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts. In addition, the Company maintains a high deductible workers compensation program and a self-insured employee medical program. The Company reviews the adequacy of its accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third-party administrator estimates, consultants, advice from legal counsel and industry data, and adjusts accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored, and estimates are updated as information becomes available. Community Leases The Company, as lessee, makes a determination with respect to each of its community leases as to whether each should be accounted for as an operating lease or capital lease. The classification criteria is based on estimates regarding the fair value of the leased community, minimum lease payments, effective cost of funds, the economic life of the community and certain other terms in the lease agreements. In a business combination, the Company assumes the lease classification previously determined by the prior lessee absent a modification, as determined by ASC 840, Leases ("ASC 840"), in the assumed lease agreement. Payments made under operating leases are accounted for in the Company's consolidated statements of operations as lease expense for actual rent paid plus or minus a straight-line adjustment for estimated minimum lease escalators and amortization of deferred gains in situations where sale-leaseback transactions have occurred. For communities under capital lease and lease financing obligation arrangements, a liability is established on the Company's consolidated balance sheets representing the present value of the future minimum lease payments and a residual value for financing leases and a corresponding long-term asset is recorded in property, plant and equipment and leasehold intangibles in the consolidated balance sheets. For capital lease assets, the asset is depreciated over the remaining lease term unless there is a bargain purchase option in which case the asset is depreciated over the useful life. For financing lease assets, the asset is depreciated over the useful life of the asset. Leasehold improvements purchased during the term of the lease are amortized over the shorter of their economic life or the lease term. All of the Company's leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. In addition, all rent-free or rent holiday periods are recognized in lease expense on a straight-line basis over the lease term, including the rent holiday period. Sale-leaseback accounting is applied to transactions in which an owned community is sold and leased back from the buyer if certain continuing involvement criteria are met. Under sale-leaseback accounting, the Company removes the community and related liabilities from the consolidated balance sheets. Gain on the sale is deferred and recognized as a reduction of facility lease expense for operating leases and a reduction of interest expense for capital leases. For leases in which the Company is involved with the construction of the building, the Company accounts for the lease during the construction period under the provisions of ASC 840. If the Company concludes that it has substantively all of the risks of ownership during construction of a leased property and therefore is deemed the owner of the project for accounting purposes, it records an asset and related financing obligation for the amount of total project costs related to construction in progress. Once construction is complete, the Company considers the requirements under ASC Subtopic 840-40. If the arrangement qualifies for sale-leaseback accounting, the Company removes the assets and related liabilities from the consolidated balance sheets. If the arrangement does not qualify for sale-leaseback accounting, the Company continues to amortize the financing obligation and depreciate the assets over the lease term. New Accounting Pronouncements In February 2017, the FASB issued ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 clarifies the scope of subtopic 610-20, Other Income - Gains and Losses from Derecognition of Nonfinancial Assets and adds guidance for partial sales of nonfinancial assets. The amendments are effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the impact the adoption of ASU 2017-05 will have on its condensed consolidated financial statements and disclosures. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 removes Step 2 from the goodwill impairment test. Under ASU 2017-04, if a reporting unit's carrying amount exceeds its fair value, an impairment charge will be recorded based on the difference, with the impairment charge limited to the amount of goodwill allocated to the reporting unit. The Company adopted ASU 2017-04 on a prospective basis on January 1, 2017. There was no impact on the Company's condensed consolidated financial statements as a result of the adoption of ASU 2017-04. In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business to assist companies in determining whether transactions should be accounted for as an asset acquisition or a business combination. Under ASU 2017-01, if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business and the transaction is accounted for as an asset acquisition. Transaction costs associated with asset acquisitions are capitalized while those associated with business combinations are expensed as incurred. The amendments are effective for the Company's fiscal year beginning January 1, 2018 and early adoption is permitted, including within interim periods. Upon adoption, the Company anticipates that the changes to the definition of a business may result in acquisitions of real estate, communities or senior housing operating companies being accounted for as asset acquisitions. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash, a consensus of the FASB Emerging Issues Task Force ("ASU 2016-18"). ASU 2016-18 intends to address the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. Upon adoption, the changes required by ASU 2016-18 must be applied retrospectively to all periods presented. The Company is currently evaluating the impact the adoption of ASU 2016-18 will have on its condensed consolidated financial statements and disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented in the statement of cash flows. Among other clarifications, the amendments in ASU 2016-15 provide additional guidance on the classification within the statement of cash flows for the following transactions:
ASU 2016-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. Upon adoption, the changes in classification within the statement of cash flows must be applied retrospectively to all periods presented. The Company is currently evaluating the impact the adoption of ASU 2016-15 will have on its condensed consolidated financial statements and disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 replaces the current incurred loss impairment methodology for credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements and disclosures. In March 2016, the FASB issued ASU 2016-09, which is intended to simplify the accounting for share-based payment transactions, including the accounting for income taxes and forfeitures, as well as the classification of awards and classification on the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017 and changed its accounting policy from estimating forfeitures to recording forfeitures when they occur. The Company’s adoption of ASU 2016-09 did not have a material impact on its condensed consolidated financial statements. There was no current impact on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2017 from the adoption of ASU 2016-09 as the Company is in a net operating loss position and any excess tax benefits require a full valuation allowance. See Note 12 for more information about the Company's deferred income taxes. The changes have been applied using a modified retrospective approach in accordance with ASU 2016-09 and prior periods have not been adjusted. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 amends the existing accounting principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet for most leases. Additionally, ASU 2016-02 makes targeted changes to lessor accounting. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its condensed consolidated financial statements and disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The five step model defined by ASU 2014-09 requires the Company to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contact, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. ASU 2014-09 may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). ASU 2014-09, as amended, is effective for the Company's fiscal year beginning January 1, 2018, and, at that time, the Company expects to adopt the new standard under the modified retrospective approach. Under the modified retrospective approach, the guidance is applied to the most current period presented, recognizing the cumulative effect of the adoption change as an adjustment to beginning retained earnings. The Company continues to evaluate the impact the adoption of ASU 2014-09 will have on its condensed consolidated financial statements and disclosures. The evaluation includes identifying revenue streams by like contracts to allow for ease of implementation. In addition, the Company is monitoring specific developments for the senior living industry and evaluating potential changes to our business processes, systems, and controls to support the recognition and disclosure under the new standard. Preliminary conclusions based upon procedures to-date include the following:
Additionally, real estate sales with customers are within the scope of ASU 2014-09. Under ASU 2014-09 the revenue recognition for real estate sales is largely based on the transfer of control versus continuing involvement under the current guidance. As a result, more transactions may qualify as sales of real estate and revenue may be recognized sooner. Upon adoption, the Company will apply the five step revenue model to all future real estate transaction with customers. Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's condensed consolidated financial position or results of operations. |
Earnings Per Share |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share ("EPS") is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS includes the components of basic EPS and also gives effect to dilutive common stock equivalents. For purposes of calculating basic and diluted earnings per share, vested restricted stock awards are considered outstanding. Under the treasury stock method, diluted EPS reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock. Potentially dilutive common stock equivalents include unvested restricted stock, restricted stock units and convertible debt instruments and warrants. During the three months ended March 31, 2017 and 2016, the Company reported a consolidated net loss. As a result of the net loss, unvested restricted stock, restricted stock units and convertible debt instruments and warrants were antidilutive for each period and were not included in the computation of diluted weighted average shares. The weighted average restricted stock and restricted stock units excluded from the calculations of diluted net loss per share were 5.2 million and 3.9 million for the three months ended March 31, 2017 and 2016, respectively. The calculation of diluted weighted average shares excludes the impact of conversion of the outstanding principal amount of $316.3 million of the Company's 2.75% convertible senior notes due June 15, 2018. As of March 31, 2017 and 2016, the maximum number of shares issuable upon conversion of the notes is approximately 13.8 million (after giving effect to additional make-whole shares issuable upon conversion in connection with the occurrence of certain events); however it is the Company's current intent and policy to settle the principal amount of the notes in cash upon conversion. The maximum number of shares issuable upon conversion of the notes in excess of the amount of principal that would be settled in cash is approximately 3.0 million. In addition, the calculation of diluted weighted average shares excludes the impact of the exercise of warrants to acquire the Company's common stock. As of March 31, 2017 and 2016, the number of shares issuable upon exercise of the warrants was approximately 10.8 million. |
Acquisitions, Dispositions and Other Significant Transactions |
3 Months Ended | ||||||||
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Mar. 31, 2017 | |||||||||
Business Combinations [Abstract] | |||||||||
Acquisitions, Dispositions and Other Significant Transactions | 4. Acquisitions, Dispositions and Other Significant Transactions Formation of Venture with Blackstone On March 29, 2017, the Company and affiliates of Blackstone Real Estate Advisors VIII L.P. (collectively, "Blackstone") formed a venture (the “Blackstone Venture”), that acquired 64 senior housing communities for a purchase price of $1.1 billion. The Company had previously leased the 64 communities from HCP, Inc. ("HCP") under long-term lease agreements with a remaining average lease term of approximately 12 years. At the closing, the Blackstone Venture purchased the 64-community portfolio from HCP subject to the existing leases, and the Company contributed its leasehold interests for 62 communities and a total of $179.2 million in cash to purchase a 15% equity interest in the Blackstone Venture, terminate leases, and fund its share of closing costs. As of the formation date, the Company continued to operate two of the communities under lease agreements and began managing 60 of the communities on behalf of the venture under a management agreement with the venture. The two remaining leases will be terminated, pending certain regulatory and other conditions, at which point we will manage the communities; however, there can be no assurance that the terminations will occur or, if they do, when the actual terminations will occur. Two of the communities are managed by a third party for the venture. The results and financial position of the 62 communities for which leases were terminated were deconsolidated from the Company prospectively upon formation of the Blackstone Venture. The Company's interest in the venture is accounted for under the equity method of accounting. Under the terms of the venture agreement, the Company may be entitled to distributions which are less than or in excess of the Company's 15% equity interest based upon specified performance criteria. The results of operations of the 62 communities for which leases were terminated were reported in the following segments within the condensed consolidated financial statements through the formation date: Assisted Living (47 communities), Retirement Centers (eight communities) and CCRCs-Rental (seven communities). The Company’s condensed consolidated financial statements included resident fee revenue of $64.0 million, facility operating expenses of $43.9 million and cash lease payments of $22.2 million for the 62 communities for the three months ended March 31, 2017, and resident fee revenue of $65.2 million, facility operating expenses of $44.1 million and cash lease payments of $21.3 million for the 62 communities for the three months ended March 31, 2016. Initially, the Company determined that the contributed carrying value of the Company's investment was $66.8 million, representing the amount by which the $179.2 million cash contribution exceeded the carrying value of the Company's liabilities under operating, capital and financing leases contributed by the Company net of the carrying value of the assets under such operating, capital and financing leases. However, the Company estimated the fair value of its 15% equity interest in the Blackstone Venture at inception to be $47.1 million. As a result, the Company recorded a $19.7 million charge within asset impairment expense for the three months ended March 31, 2017 for the amount of the contributed carrying value in excess of the estimated fair value of the Company's investment. Additionally, these transactions related to the Blackstone Venture required the Company to record a significant increase to the Company's existing tax valuation allowance, after considering the change in the Company's future reversal of estimated timing differences resulting from these transactions, primarily due to removing the deferred positions related to the contributed leases. During the three months ended March, 31, 2017, the Company recorded a provision for income taxes to establish an additional $85.0 million of valuation allowance against its federal and state net operating loss carryforwards and tax credits as the Company anticipates these carryforwards and credits will not be utilized prior to expiration. See Note 12 for more information about the Company's deferred income taxes. Community Dispositions The Company began 2017 with 16 of its owned communities classified as held for sale as of December 31, 2016. During the three months ended March 31, 2017, the Company completed the disposition of one community previously classified as held for sale. The results of operations of the disposed community are reported within the CCRCs-Rental segment within the condensed consolidated financial statements through the disposition date. Additionally, the Company entered into an agreement to sell one community and to terminate the lease for one adjacent community. As of March 31, 2017, $106.3 million was recorded as assets held for sale and $60.5 million of mortgage debt was included in the current portion of long-term debt within the condensed consolidated balance sheet with respect to the 16 communities held for sale as of such date. This debt will either be repaid with the proceeds from the sales or be assumed by the prospective purchasers. The results of operations of the 16 communities are reported in the following segments within the condensed consolidated financial statements: Assisted Living (13 communities) and CCRCs-Rental (three communities). The 16 communities had resident fee revenue of $13.8 million and $14.2 million and facility operating expenses of $11.9 million and $12.5 million for the three months ended March 31, 2017 and March 31, 2016, respectively. The closings of the sales of the unsold communities classified as held for sale and the termination of the lease of an adjacent community are subject to receipt of regulatory approvals and satisfaction of other customary closing conditions and are expected to occur during fiscal 2017; however, there can be no assurance that the transactions will close or, if they do, when the actual closings will occur. The Company completed dispositions, through sales and lease terminations, of 59 communities during the period from January 1, 2016 through March 31, 2017 (excluding the 62 communities for which the financial results were deconsolidated from our financial statements prospectively upon formation of the Blackstone Venture on March 29, 2017). The Company's condensed consolidated financial statements included resident fee revenue of $0.7 million and $43.5 million and facility operating expenses of $1.3 million and $33.8 million for the 59 communities for the three months ended March 31, 2017 and March 31, 2016, respectively. Dispositions and Restructurings of Leased Communities On November 1, 2016, the Company announced that it had entered into agreements to, among other things, terminate triple-net leases with respect to 97 communities, four of which were contributed to an existing unconsolidated venture in which the Company holds an equity interest and 64 of which were acquired by the Blackstone Venture. In addition to the formation of the Blackstone Venture described above, the transactions include the following components:
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Stock-Based Compensation |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Current year grants of restricted stock under the Company's 2014 Omnibus Incentive Plan were as follows (amounts in thousands except for value per share):
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Goodwill and Other Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets, Net | Goodwill and Other Intangible Assets, Net The following is a summary of the carrying amount of goodwill as of March 31, 2017 and December 31, 2016 presented on an operating segment basis (in thousands):
Goodwill is tested for impairment annually with a test date of October 1 or sooner if indicators of impairment are present. The Company determined no impairment was necessary for the three months ended March 31, 2017. Factors the Company considers important in its analysis, which could trigger an impairment of such assets, include significant underperformance relative to historical or projected future operating results, significant negative industry or economic trends, a significant decline in the Company's stock price for a sustained period and a decline in its market capitalization below net book value. A change in anticipated operating results or the other metrics indicated above could necessitate further analysis of potential impairment at an interval prior to the Company's annual measurement date. The following is a summary of other intangible assets at March 31, 2017 and December 31, 2016 (in thousands):
Amortization expense related to definite-lived intangible assets for the three months ended March 31, 2017 and 2016 was $0.9 million and $2.9 million, respectively. Health care licenses were determined to be indefinite-lived intangible assets and are not subject to amortization. The community purchase options are not currently amortized, but will be added to the cost basis of the related communities if the option is exercised, and will then be depreciated over the estimated useful life of the community. |
Property, Plant and Equipment and Leasehold Intangibles, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment and Leasehold Intangibles, Net | Property, Plant and Equipment and Leasehold Intangibles, Net As of March 31, 2017 and December 31, 2016, net property, plant and equipment and leasehold intangibles, which include assets under capital and financing leases, consisted of the following (in thousands):
Long-lived assets with definite useful lives are depreciated or amortized on a straight-line basis over their estimated useful lives (or, in certain cases, the shorter of their estimated useful lives or the lease term) and are tested for impairment whenever indicators of impairment arise. The Company recorded $1.0 million of non-cash charges within asset impairment expense for the three months ended March 31, 2017 for property damage at certain communities and the cancellation of certain community expansion and redevelopment projects during the three months ended March 31, 2017. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long-term Debt and Capital and Financing Lease Obligations Long-term debt and capital and financing lease obligations consist of the following (in thousands):
Credit Facilities On December 19, 2014, the Company entered into a Fourth Amended and Restated Credit Agreement with General Electric Capital Corporation (which has since assigned its interest to Capital One Financial Corporation), as administrative agent, lender and swingline lender, and the other lenders from time to time parties thereto. The agreement currently provides for a total commitment amount of $400.0 million, comprised of a $400.0 million revolving credit facility (with a $50.0 million sublimit for letters of credit and a $50.0 million swingline feature to permit same day borrowing) and an option to increase the revolving credit facility by an additional $250.0 million, subject to obtaining commitments for the amount of such increase from acceptable lenders. The maturity date is January 3, 2020, and amounts drawn under the facility bear interest at 90-day LIBOR plus an applicable margin from a range of 2.50% to 3.50%. The applicable margin varies based on the percentage of the total commitment drawn, with a 2.50% margin at utilization equal to or lower than 35%, a 3.25% margin at utilization greater than 35% but less than or equal to 50%, and a 3.50% margin at utilization greater than 50%. The quarterly commitment fee on the unused portion of the facility is 0.25% per annum when the outstanding amount of obligations (including revolving credit, swingline and term loans and letter of credit obligations) is greater than or equal to 50% of the total commitment amount or 0.35% per annum when such outstanding amount is less than 50% of the total commitment amount. Amounts drawn on the facility may be used to finance acquisitions, fund working capital and capital expenditures and for other general corporate purposes. The facility is secured by a first priority mortgage on certain of the Company's communities. In addition, the agreement permits the Company to pledge the equity interests in subsidiaries that own other communities (rather than mortgaging such communities), provided that loan availability from pledged assets cannot exceed 10% of loan availability from mortgaged assets. The availability under the line will vary from time to time as it is based on borrowing base calculations related to the appraised value and performance of the communities securing the facility. The agreement contains typical affirmative and negative covenants, including financial covenants with respect to minimum consolidated fixed charge coverage and minimum consolidated tangible net worth. A violation of any of these covenants could result in a default under the credit agreement, which would result in termination of all commitments under the agreement and all amounts owing under the agreement becoming immediately due and payable and/or could trigger cross default provisions in our other outstanding debt and lease agreements. As of March 31, 2017, there was no outstanding balance under this credit facility and there were $32.5 million of letters of credit outstanding under this credit facility. In addition to the sublimit for letters of credit on this credit facility, the Company also had separate letter of credit facilities of up to $64.5 million in the aggregate as of March 31, 2017. Letters of credit totaling $64.4 million had been issued under these separate facilities as of that date. As of March 31, 2017, the Company is in compliance with the financial covenants of its outstanding debt and lease agreements. |
Litigation |
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Mar. 31, 2017 | |
Litigation [Abstract] | |
Litigation | Litigation The Company has been and is currently involved in litigation and claims incidental to the conduct of its business which are comparable to other companies in the senior living industry. Certain claims and lawsuits allege large damage amounts and may require significant costs to defend and resolve. As a result, the Company maintains general liability and professional liability insurance policies in amounts and with coverage and deductibles the Company believes are adequate, based on the nature and risks of its business, historical experience and industry standards. The Company's current policies provide for deductibles for each claim. Accordingly, the Company is, in effect, self-insured for claims that are less than the deductible amounts. Similarly, the senior living industry is continuously subject to scrutiny by governmental regulators, which could result in litigation related to regulatory compliance matters. In addition, as a result of the Company's participation in the Medicare and Medicaid programs, the Company is subject to various governmental reviews, audits and investigations, including but not limited to audits under various government programs, such as the RAC and ZPIC programs. The costs to respond to and defend such reviews, audits and investigations may be significant, and an adverse determination could result in the Company's refunding amounts the Company has been paid under such programs, the imposition of fines, penalties and other sanctions (including payment suspensions) on the Company, the Company's loss of its right to participate in government reimbursement programs and/or damage to the Company's business and reputation. |
Supplemental Disclosure of Cash Flow Information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosure of Cash Flow Information | Supplemental Disclosure of Cash Flow Information
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Facility Operating Leases |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Facility Operating Leases | Facility Operating Leases A summary of facility lease expense and the impact of straight-line adjustment and amortization of (above) below market rents and deferred gains are as follows (in thousands):
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Income Taxes |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The difference between the tax statutory rate and the Company's effective tax rates for the three months ended March 31, 2017 and 2016 was primarily due to an increase in the valuation allowance against the Company's deferred tax assets. The increase in the valuation allowance during the three months ended March 31, 2017 is comprised of multiple components. The increase includes $85.0 million related to the removal of future timing differences as a result of the formation of the Blackstone Venture and termination of leases associated therewith. See Note 4 for more information about the Company's entry into the Blackstone Venture. In addition, the Company increased its valuation allowance by $48.5 million upon the adoption of ASU 2016-09. The $48.5 million offsets the increase to the Company's net operating loss carryforward position previously reflected in an additional paid-in capital pool, and accordingly, does not impact the current period income tax position. The remaining change of approximately $11.8 million for the three months ended March 31, 2017 reflects the allowance established against the current period operating loss. The Company recorded an aggregate deferred federal, state and local tax benefit of $13.2 million as a result of the operating loss for the three months ended March 31, 2016, which was offset by an increase in the valuation allowance of $14.2 million. The Company evaluates its deferred tax assets each quarter to determine if a valuation allowance is required based on whether it is more likely than not that some portion of the deferred tax asset would not be realized. The Company's valuation allowance as of March 31, 2017 and December 31, 2016 is $409.7 million and $264.3 million, respectively. The Company recorded interest charges related to its tax contingency reserve for cash tax positions for the three months ended March 31, 2017 and 2016 which are included in income tax expense or benefit for the period. Tax returns for years 2012 through 2015 are subject to future examination by tax authorities. In addition, the net operating losses from prior years are subject to adjustment under examination. |
Variable Interest Entities |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities At March 31, 2017, the Company has equity interests in unconsolidated VIEs. The Company has determined that it does not have the power to direct the activities of the VIEs that most significantly impact the VIEs' economic performance and is not the primary beneficiary of these VIEs in accordance with ASC 810. The Company's interests in the VIEs are, therefore, accounted for under the equity method of accounting. The Company holds a 51% equity interest, and HCP owns a 49% interest, in a venture that owns and operates entry fee CCRCs (the "CCRC Venture"). The CCRC Venture's opco has been identified as a VIE. The equity members of the CCRC Venture's opco share certain operating rights, and the Company acts as manager to the CCRC Venture opco. However, the Company does not consolidate this VIE because it does not have the ability to control the activities that most significantly impact this VIE's economic performance. The assets of the CCRC Venture opco primarily consist of the CCRCs that it owns and leases, resident fees receivable, notes receivable and cash and cash equivalents. The obligations of the CCRC Venture opco primarily consist of community lease obligations, mortgage debt, accounts payable, accrued expenses and refundable entrance fees. The Company holds an equity ownership interest in each of the propco and opco of three ventures ("RIDEA Ventures") that operate senior housing communities in a RIDEA structure. As of March 31, 2017, the Company's equity ownership interest is 10% for each of the RIDEA Ventures. Affiliates of HCP own the remaining 90% equity ownership interests in the RIDEA Ventures. The RIDEA Ventures have been identified as VIEs. The equity members of the RIDEA Ventures share certain operating rights, and the Company acts as manager to the opcos of the RIDEA Ventures. However, the Company does not consolidate these VIEs because it does not have the ability to control the activities that most significantly impact the economic performance of these VIEs. The assets of the RIDEA Ventures primarily consist of the senior housing communities that the RIDEA Ventures own, resident fees receivable, and cash and cash equivalents. The obligations of the RIDEA Ventures primarily consist of notes payable, accounts payable and accrued expenses. The Company holds a 15% equity ownership interest in the Blackstone Venture. The Blackstone Venture has been identified as a VIE due to the Company lacking substantive participation rights in the management of the venture and the Company lacking kick-out rights over the managing member. The equity members of the Blackstone Venture share certain operating rights and the Company acts as manager to 60 communities owned by the Blackstone Venture. However, the Company does not consolidate this VIE because it does not have the ability to control the activities that most significantly impact the economic performance of the VIE. The assets of the Blackstone Venture primarily consist of senior housing communities, resident fees receivable and cash and cash equivalents. The obligations of the Blackstone Venture primarily consist of long-term mortgage debt, accounts payable and accrued expenses. In addition to $636.2 million of long-term mortgage debt, the Blackstone Venture obtained $66.8 million of mortgage debt that is payable in 2017. In the event that refinancing proceeds for the $66.8 million of mortgage debt are insufficient to repay the debt principal amount, the Company may be required to lend the amount of the shortfall, up to $12.0 million, to the Blackstone Venture. As of March 31, 2017, the Company leases two communities from the Blackstone Venture with annual lease payments of approximately $2.5 million. Under the terms of the lease agreements, the Company may be required to purchase the two leased communities for an amount equal to the greater of the fair market value of the communities or $33.8 million if there is an event of default under the lease agreement. See Note 4 for more information about the Company's entry into the Blackstone Venture. The carrying value and classification of the related assets, liabilities and maximum exposure to loss as a result of the Company's involvement with these VIEs are summarized below at March 31, 2017 (in millions):
As of March 31, 2017, the Company is not required to provide financial support, through a liquidity arrangement or otherwise, to its unconsolidated VIEs. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information As of March 31, 2017, the Company has five reportable segments: Retirement Centers; Assisted Living; CCRCs-Rental; Brookdale Ancillary Services; and Management Services. Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses; for which separate financial information is available; and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment. During the three months ended March 31, 2017, one community moved from the CCRCs-Rental segment to the Retirement Centers segment to more accurately reflect the underlying product offering of the community in the current period given changes to the community. The movement did not change the Company's reportable segments, but it did impact the revenues, expenses and assets reported within the two segments. Revenue and expenses for the three months ended March 31, 2016 and total assets for the period ended December 31, 2016 have not been recast. Retirement Centers. The Company's Retirement Centers segment includes owned or leased communities that are primarily designed for middle to upper income seniors generally age 75 and older who desire an upscale residential environment providing the highest quality of service. The majority of the Company's retirement center communities consist of both independent living and assisted living units in a single community, which allows residents to "age-in-place" by providing them with a continuum of senior independent and assisted living services. Assisted Living. The Company's Assisted Living segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily life to mid-acuity frail and elderly residents. Assisted living communities include both freestanding, multi-story communities and freestanding single story communities. The Company also operates memory care communities, which are freestanding assisted living communities specially designed for residents with Alzheimer's disease and other dementias. CCRCs-Rental. The Company's CCRCs-Rental segment includes large owned or leased communities that offer a variety of living arrangements and services to accommodate all levels of physical ability and health. Most of the Company's CCRCs have independent living, assisted living and skilled nursing available on one campus or within the immediate market, and some also include memory care/Alzheimer's units. Brookdale Ancillary Services. The Company's Brookdale Ancillary Services segment includes the outpatient therapy, home health and hospice services, as well as education and wellness programs, provided to residents of many of the Company's communities and to seniors living outside of the Company's communities. The Brookdale Ancillary Services segment does not include the inpatient therapy services provided in the Company's skilled nursing units, which are included in the Company's CCRCs-Rental segment. Management Services. The Company's Management Services segment includes communities operated by the Company pursuant to management agreements. In some of the cases, the controlling financial interest in the community is held by third parties and, in other cases, the community is owned in a venture structure in which the Company has an ownership interest. Under the management agreements for these communities, the Company receives management fees as well as reimbursed expenses, which represent the reimbursement of expenses it incurs on behalf of the owners. The accounting policies of the Company's reportable segments are the same as those described in the summary of significant accounting policies in Note 2. The following table sets forth selected segment financial and operating data (in thousands):
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for quarterly reports on Form 10-Q. In the opinion of management, these financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash flows of the Company as of March 31, 2017, and for all periods presented. The condensed consolidated financial statements are prepared on the accrual basis of accounting. All adjustments made have been of a normal and recurring nature. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures included are adequate and provide a fair presentation of interim period results. Interim financial statements are not necessarily indicative of the financial position or operating results for an entire year. It is suggested that these interim financial statements be read in conjunction with the audited financial statements and the notes thereto, together with management's discussion and analysis of financial condition and results of operations, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on February 15, 2017. |
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Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Brookdale and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Investments in affiliated companies that the Company does not control, but has the ability to exercise significant influence over governance and operation, are accounted for by the equity method. The ownership interest of consolidated entities not wholly-owned by the Company are presented as noncontrolling interests in the accompanying consolidated financial statements. Noncontrolling interest represents the share of consolidated entities owned by third parties. Noncontrolling interest is adjusted for the noncontrolling holder's share of additional contributions, distributions and the proportionate share of the net income or loss of each respective entity. The Company continually evaluates its potential variable interest entity ("VIE") relationships under certain criteria as provided for in Financial Accounting Standards Board ("FASB") ASC 810, Consolidation ("ASC 810"). ASC 810 broadly defines a VIE as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity's activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity's activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Company performs this analysis on an ongoing basis and consolidates any VIEs for which the Company is determined to be the primary beneficiary, as determined by the Company's power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. Refer to Note 13 for more information about the Company's VIE relationships. |
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Revenue Recognition | Revenue Recognition Resident Fees Resident fee revenue is recorded when services are rendered and consists of fees for basic housing and support services and fees associated with additional services such as assisted living care, skilled nursing care, ancillary services and personalized health services. Residency agreements are generally for a term of 30 days to one year, with resident fees billed monthly in advance. Revenue for certain skilled nursing services and ancillary services is recognized as services are provided, and such fees are billed monthly in arrears. Management Fees The Company manages certain communities under contracts which provide for payment to the Company of a periodic management fee. Management fees are generally determined by an agreed upon percentage of gross revenues (as defined) and are recorded monthly. Certain management contracts also provide for an annual incentive fee to be paid to the Company upon achievement of certain metrics identified in the contract. Incentive fee revenue is recorded at the conclusion of the contract year at the amount due pursuant to the contractual arrangements. Reimbursed Costs Incurred on Behalf of Managed Communities The Company manages certain communities under contracts which provide for payment to the Company of a periodic management fee plus reimbursement of certain operating expenses. Where the Company is the primary obligor with respect to any such operating expenses, the Company recognizes revenue when the goods have been delivered or the service has been rendered and the Company is due reimbursement. Such revenue is included in "reimbursed costs incurred on behalf of managed communities" on the condensed consolidated statements of operations. The related costs are included in "costs incurred on behalf of managed communities" on the condensed consolidated statements of operations. |
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Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability approach which requires recognition of deferred tax assets and liabilities for the differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance reduces deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 820, Fair Value Measurements and Disclosures establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Cash and cash equivalents and cash and escrow deposits – restricted are reflected in the accompanying condensed consolidated balance sheets at amounts considered by management to reasonably approximate fair value due to the short maturity. The Company estimates the fair value of its debt using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness. The Company had outstanding debt (excluding capital and financing lease obligations) with a carrying value of approximately $3.6 billion as of both March 31, 2017 and December 31, 2016. Fair value of the debt approximates carrying value in all periods. The Company's fair value of debt disclosure is classified within Level 2 of the valuation hierarchy. |
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Stock-Based Compensation | Stock-Based Compensation The Company follows ASC 718, Compensation – Stock Compensation (“ASC 718”) in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date are recognized when incurred. Certain of the Company’s employee stock awards vest only upon the achievement of performance targets. ASC 718 requires recognition of compensation cost only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires a significant level of judgment in estimating the probability of achievement of these performance targets. On January 1, 2017, the Company adopted Accounting Standards Update ("ASU") 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09") and changed its policy from estimating forfeitures to recording forfeitures when they occur. The Company’s adoption of ASU 2016-09 did not have a material impact on its condensed consolidated financial statements. For all share-based awards with graded vesting other than awards with performance-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period. For graded-vesting awards with performance-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting tranche of the award as if the award is, in substance, multiple awards once the performance target is deemed probable of achievement. Performance goals are evaluated quarterly. If such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed. |
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Self-Insurance Liability Accruals | Self-Insurance Liability Accruals The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the Company maintains general liability and professional liability insurance policies for its owned, leased and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim. As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts. In addition, the Company maintains a high deductible workers compensation program and a self-insured employee medical program. The Company reviews the adequacy of its accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third-party administrator estimates, consultants, advice from legal counsel and industry data, and adjusts accruals periodically. Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported. Subsequent changes in actual experience are monitored, and estimates are updated as information becomes available. |
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Community Leases | Community Leases The Company, as lessee, makes a determination with respect to each of its community leases as to whether each should be accounted for as an operating lease or capital lease. The classification criteria is based on estimates regarding the fair value of the leased community, minimum lease payments, effective cost of funds, the economic life of the community and certain other terms in the lease agreements. In a business combination, the Company assumes the lease classification previously determined by the prior lessee absent a modification, as determined by ASC 840, Leases ("ASC 840"), in the assumed lease agreement. Payments made under operating leases are accounted for in the Company's consolidated statements of operations as lease expense for actual rent paid plus or minus a straight-line adjustment for estimated minimum lease escalators and amortization of deferred gains in situations where sale-leaseback transactions have occurred. For communities under capital lease and lease financing obligation arrangements, a liability is established on the Company's consolidated balance sheets representing the present value of the future minimum lease payments and a residual value for financing leases and a corresponding long-term asset is recorded in property, plant and equipment and leasehold intangibles in the consolidated balance sheets. For capital lease assets, the asset is depreciated over the remaining lease term unless there is a bargain purchase option in which case the asset is depreciated over the useful life. For financing lease assets, the asset is depreciated over the useful life of the asset. Leasehold improvements purchased during the term of the lease are amortized over the shorter of their economic life or the lease term. All of the Company's leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease. In addition, all rent-free or rent holiday periods are recognized in lease expense on a straight-line basis over the lease term, including the rent holiday period. Sale-leaseback accounting is applied to transactions in which an owned community is sold and leased back from the buyer if certain continuing involvement criteria are met. Under sale-leaseback accounting, the Company removes the community and related liabilities from the consolidated balance sheets. Gain on the sale is deferred and recognized as a reduction of facility lease expense for operating leases and a reduction of interest expense for capital leases. For leases in which the Company is involved with the construction of the building, the Company accounts for the lease during the construction period under the provisions of ASC 840. If the Company concludes that it has substantively all of the risks of ownership during construction of a leased property and therefore is deemed the owner of the project for accounting purposes, it records an asset and related financing obligation for the amount of total project costs related to construction in progress. Once construction is complete, the Company considers the requirements under ASC Subtopic 840-40. If the arrangement qualifies for sale-leaseback accounting, the Company removes the assets and related liabilities from the consolidated balance sheets. If the arrangement does not qualify for sale-leaseback accounting, the Company continues to amortize the financing obligation and depreciate the assets over the lease term. |
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New Accounting Pronouncements | New Accounting Pronouncements In February 2017, the FASB issued ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 clarifies the scope of subtopic 610-20, Other Income - Gains and Losses from Derecognition of Nonfinancial Assets and adds guidance for partial sales of nonfinancial assets. The amendments are effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the impact the adoption of ASU 2017-05 will have on its condensed consolidated financial statements and disclosures. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 removes Step 2 from the goodwill impairment test. Under ASU 2017-04, if a reporting unit's carrying amount exceeds its fair value, an impairment charge will be recorded based on the difference, with the impairment charge limited to the amount of goodwill allocated to the reporting unit. The Company adopted ASU 2017-04 on a prospective basis on January 1, 2017. There was no impact on the Company's condensed consolidated financial statements as a result of the adoption of ASU 2017-04. In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business to assist companies in determining whether transactions should be accounted for as an asset acquisition or a business combination. Under ASU 2017-01, if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business and the transaction is accounted for as an asset acquisition. Transaction costs associated with asset acquisitions are capitalized while those associated with business combinations are expensed as incurred. The amendments are effective for the Company's fiscal year beginning January 1, 2018 and early adoption is permitted, including within interim periods. Upon adoption, the Company anticipates that the changes to the definition of a business may result in acquisitions of real estate, communities or senior housing operating companies being accounted for as asset acquisitions. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash, a consensus of the FASB Emerging Issues Task Force ("ASU 2016-18"). ASU 2016-18 intends to address the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. Upon adoption, the changes required by ASU 2016-18 must be applied retrospectively to all periods presented. The Company is currently evaluating the impact the adoption of ASU 2016-18 will have on its condensed consolidated financial statements and disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented in the statement of cash flows. Among other clarifications, the amendments in ASU 2016-15 provide additional guidance on the classification within the statement of cash flows for the following transactions:
ASU 2016-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. Upon adoption, the changes in classification within the statement of cash flows must be applied retrospectively to all periods presented. The Company is currently evaluating the impact the adoption of ASU 2016-15 will have on its condensed consolidated financial statements and disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 replaces the current incurred loss impairment methodology for credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements and disclosures. In March 2016, the FASB issued ASU 2016-09, which is intended to simplify the accounting for share-based payment transactions, including the accounting for income taxes and forfeitures, as well as the classification of awards and classification on the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017 and changed its accounting policy from estimating forfeitures to recording forfeitures when they occur. The Company’s adoption of ASU 2016-09 did not have a material impact on its condensed consolidated financial statements. There was no current impact on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2017 from the adoption of ASU 2016-09 as the Company is in a net operating loss position and any excess tax benefits require a full valuation allowance. See Note 12 for more information about the Company's deferred income taxes. The changes have been applied using a modified retrospective approach in accordance with ASU 2016-09 and prior periods have not been adjusted. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 amends the existing accounting principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet for most leases. Additionally, ASU 2016-02 makes targeted changes to lessor accounting. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its condensed consolidated financial statements and disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The five step model defined by ASU 2014-09 requires the Company to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contact, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. ASU 2014-09 may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). ASU 2014-09, as amended, is effective for the Company's fiscal year beginning January 1, 2018, and, at that time, the Company expects to adopt the new standard under the modified retrospective approach. Under the modified retrospective approach, the guidance is applied to the most current period presented, recognizing the cumulative effect of the adoption change as an adjustment to beginning retained earnings. The Company continues to evaluate the impact the adoption of ASU 2014-09 will have on its condensed consolidated financial statements and disclosures. The evaluation includes identifying revenue streams by like contracts to allow for ease of implementation. In addition, the Company is monitoring specific developments for the senior living industry and evaluating potential changes to our business processes, systems, and controls to support the recognition and disclosure under the new standard. Preliminary conclusions based upon procedures to-date include the following:
Additionally, real estate sales with customers are within the scope of ASU 2014-09. Under ASU 2014-09 the revenue recognition for real estate sales is largely based on the transfer of control versus continuing involvement under the current guidance. As a result, more transactions may qualify as sales of real estate and revenue may be recognized sooner. Upon adoption, the Company will apply the five step revenue model to all future real estate transaction with customers. |
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Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's condensed consolidated financial position or results of operations. |
Stock-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Current year grants of restricted shares | Current year grants of restricted stock under the Company's 2014 Omnibus Incentive Plan were as follows (amounts in thousands except for value per share):
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Goodwill and Other Intangible Assets, Net (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in the carrying amount of goodwill | The following is a summary of the carrying amount of goodwill as of March 31, 2017 and December 31, 2016 presented on an operating segment basis (in thousands):
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Other intangible assets | The following is a summary of other intangible assets at March 31, 2017 and December 31, 2016 (in thousands):
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Property, Plant and Equipment and Leasehold Intangibles, Net (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment and leasehold intangibles, net | As of March 31, 2017 and December 31, 2016, net property, plant and equipment and leasehold intangibles, which include assets under capital and financing leases, consisted of the following (in thousands):
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | Long-term debt and capital and financing lease obligations consist of the following (in thousands):
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Supplemental Disclosure of Cash Flow Information (Tables) |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental cash flow information |
|
Facility Operating Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of facility operating leases | A summary of facility lease expense and the impact of straight-line adjustment and amortization of (above) below market rents and deferred gains are as follows (in thousands):
|
Variable Interest Entities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The carrying value and classification of the related assets, liabilities and maximum exposure to loss as a result of the Company's involvement with these VIEs are summarized below at March 31, 2017 (in millions):
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information | The following table sets forth selected segment financial and operating data (in thousands):
|
Summary of Significant Accounting Policies (Details) - USD ($) $ in Billions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Fair Value of Financial Instruments [Line Items] | ||
Term of residency agreements- minimum | 30 days | |
Term of residency agreements - maximum | 1 year | |
Carrying Value, Fair Value Disclosure [Member] | ||
Fair Value of Financial Instruments [Line Items] | ||
Outstanding debt | $ 3.6 | $ 3.6 |
Stock-Based Compensation (Details) - Unvested Restricted Stock [Member] $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted Shares Granted (in shares) | shares | 2,392 |
Value Per Share (in dollars per share) | $ / shares | $ 14.84 |
Total value of restricted shares granted | $ | $ 35,497 |
Facility Operating Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Schedule of facility operating lease expense [Abstract] | ||
Cash basis payment | $ 94,604 | $ 95,580 |
Straight-line (income) expense | (3,007) | 3,935 |
Amortization of (above) below market lease, net | (1,697) | (1,733) |
Amortization of deferred gain | (1,093) | (1,093) |
Facility lease expense | $ 88,807 | $ 96,689 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Valuation Allowance [Line Items] | |||
Change in valuation allowance | $ 14.2 | ||
Deferred federal, state and local tax benefit | $ 13.2 | ||
Valuation allowance | $ 409.7 | $ 264.3 | |
Formation of Blackstone Joint Venture [Member] | |||
Valuation Allowance [Line Items] | |||
Change in valuation allowance | 85.0 | ||
Adoption Of Accounting Standards Update 2016-09 [Member] | |||
Valuation Allowance [Line Items] | |||
Change in valuation allowance | 48.5 | ||
Allowance Against Current Operating Loss [Member] | |||
Valuation Allowance [Line Items] | |||
Change in valuation allowance | $ 11.8 |
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