News Release

NEWS RELEASE



                        

For Immediate Release


EMERITUS ANNOUNCES FIRST QUARTER 2014
OPERATING RESULTS

SEATTLE, WA, May 8, 2014 - Emeritus Corporation (NYSE: ESC), a national provider of senior living services, today announced its first quarter 2014 results.  
 
Operating Summary for First Quarter 2014 Compared to First Quarter 2013
 
Community, ancillary services and management fee revenue increased $51.0 million, or 11.0%, to $514.5 million
Adjusted EBITDAR increased $15.3 million, or 12.4%, to $138.8 million
Adjusted CFFO per share was $0.43 for both periods
Total Portfolio Same Community (as defined below) average occupancy improved 80 basis points to 87.5%

Granger Cobb, President and Chief Executive Officer, commented, “Our intense focus on service and customer satisfaction yielded significant results - overcoming historical seasonal softness, we produced a 30-basis-point sequential improvement in Total Portfolio Same Community occupancy from the fourth quarter, and an 80-basis-point improvement over the first quarter of last year. Our performance is a tribute to our 32,000 extremely dedicated Emeritus employees who, amidst potential transaction distraction, remain resolutely focused on providing a fulfilling customer experience for our residents and peace of mind for their families.”

As of March 31, 2014, Emeritus operated 508 senior living communities:
494 communities are in the consolidated portfolio (consisting of owned and leased communities);
464 communities have been continuously operated (owned, leased, and managed) since January 1, 2013 (“Total Portfolio Same Community”) (information for this portfolio is included for certain comparative purposes but is not a subset of the Company’s historical consolidated results);
448 consolidated communities have been continuously operated in our consolidated portfolio since January 1, 2013 (“Consolidated Same Community”); and
14 communities are managed.  

First Quarter 2014 Consolidated Results

Community, ancillary services and management fee revenue increased $51.0 million, or 11.0%, to $514.5 million in the first quarter of 2014, compared to $463.5 million in the first quarter of 2013.  The increase in revenues resulted primarily from the Company's acquisition of 38 communities in September 2013 pursuant to an operating lease with Health Care REIT, Inc. These communities were previously operated by Merrill Gardens (the "Merrill Gardens Communities"). The increase in revenues was also attributable to improved occupancy and rate in the Consolidated Same Community portfolio as well as growth in the Company's ancillary services through the Nurse On Call, Inc. ("NOC") home health care subsidiary. Total average monthly revenue per occupied unit for the consolidated portfolio was $3,986 in the first quarter of 2014 compared to $4,012 in the first quarter of 2013.   The rate decrease is primarily due to the Merrill Gardens Communities, which have a higher proportion of independent living units that carry lower rates than assisted living units. In the first quarter of 2014, total average occupancy for the consolidated portfolio grew 160 basis points to 88.0%, compared to 86.4% in the first quarter of 2013; this increase was also impacted by the Merrill Gardens Communities, which have higher average occupancy than the Company's other portfolios.

Total Portfolio Same Community average monthly revenue per occupied unit was $4,042 in the first quarter of 2014, compared to $4,023 in the first quarter of 2013, and average occupancy improved by 80 basis points to 87.5% when comparing the same periods. Consolidated Same Community average monthly revenue was $4,058 in the first quarter of 2014, compared to $4,040 in the first quarter of 2013; average occupancy increased 90 basis points to 87.6% in the first quarter of 2014 compared to the same period last year.

Community and ancillary services operating expenses were $351.7 million in the first quarter of 2014 compared to $323.7 million in the first quarter of 2013.  The increase was primarily attributable to the acquisition of the 38 Merrill Garden Communities in

1



September 2013. Community operating expenses in the Consolidated Same Community portfolio increased $6.9 million, or 2.5%, due primarily to utilities and maintenance costs as a result of unusually severe winter weather, as well as increases in marketing and insurance expenses.

Community and ancillary operating income grew $23.1 million, or 16.6%, to $162.1 million in the first quarter of 2014, compared to the first quarter of 2013, primarily as the result of the 38 Merrill Garden Communities.  Community and ancillary operating income margin increased to 31.5% in the first quarter of 2014 compared to 30.0% in the 2013 period due primarily to improvements in occupancy. 

Excluding consolidated non-cash stock-based compensation expenses, senior living general and administrative expenses as a percent of total operated senior living community revenue decreased to 4.7% in the first quarter of 2014, compared to 5.0% in the first quarter of 2013.

For the first quarter of 2014, Adjusted EBITDAR rose $15.3 million, or 12.4%, to $138.8 million, compared to the first quarter of 2013, driven by the increase in community operating income.  Adjusted CFFO increased $1.0 million, or 5.1%, in the first quarter of 2014, compared to the first quarter of 2013. Adjusted CFFO per share was $0.43 for both periods.

Financing and Other Activities

In January 2014, in connection with the sale of a community, the Company retired a note payable to Keybank with an outstanding principal balance of $4.0 million and an interest rate of 2.70%.
In March 2014, in connection with the sale of a community, the Company retired a note payable to GE Capital with an outstanding principal balance of $7.2 million and an interest rate of 5.05%.

Pending Merger Transaction

On February 20, 2014, the Company entered into a definitive merger agreement with Brookdale Senior Living Inc. ("Brookdale") (NYSE: BKD). Under the agreement, at the effective time of the merger, Emeritus shareholders will receive 0.95 of a share of Brookdale common stock in exchange for each share of their Emeritus common stock. The closing of the merger is expected to occur in the third quarter of 2014, subject to the satisfaction of customary closing conditions and regulatory approvals and shareholder approval for each company.

For additional important information regarding the pending merger transaction with Brookdale, please refer to the Company’s SEC filings at www.sec.gov.

Non-GAAP Financial Measures

Adjusted EBITDA/EBITDAR and CFFO are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).  The Company believes that these non-GAAP measures are useful in identifying trends in day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating performance.  In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in the senior living industry.  The Company strongly urges you to review the reconciliation of net loss to Adjusted EBITDA/EBITDAR and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with the Company’s consolidated balance sheets, statements of operations, and statements of cash flows.  The Company defines Adjusted EBITDA/EBITDAR and CFFO and provides other information about these non-GAAP measures in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, to be filed with the Securities and Exchange Commission.

The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three months ended March 31, 2014 and 2013 (in thousands):

2



 
 
Three Months Ended
 
 
March 31,
 
 
2014
 
2013
Net loss
 
$
(49,008
)
 
$
(39,665
)
Depreciation and amortization
 
46,228

 
45,218

Interest income
 
(109
)
 
(110
)
Interest expense
 
70,369

 
72,199

Net equity losses for unconsolidated joint ventures
 
131

 
12

Income tax provision
 
695

 
1,106

Loss from discontinued operations
 
1,539

 

Amortization of above/below market rents
 
1,230

 
1,246

Amortization of deferred gains
 
(224
)
 
(248
)
Gain on early extinguishment of debt
 

 
(493
)
Stock-based compensation
 
3,161

 
3,331

Change in fair value of derivative financial instruments
 
71

 
(5
)
Deferred revenue
 
258

 
2,088

Deferred straight-line rent
 
5,590

 
216

Impairment of long-lived assets
 
1,023

 

Transaction costs
 
10,366

 
647

Transition costs
 
79

 

Self-insurance reserve adjustments, prior years
 
2,023

 
7,482

Adjusted EBITDA
 
93,422

 
93,024

Lease expense
 
45,405

 
30,502

Adjusted EBITDAR
 
$
138,827

 
$
123,526


The following table shows the reconciliation of net cash (used in) provided by operating activities to CFFO and Adjusted CFFO (in thousands):
 
 
Three Months Ended
 
 
March 31,
 
 
2014
 
2013
Net cash (used in) provided by operating activities
 
$
(2,012
)
 
$
27,761

Changes in operating assets and liabilities, net
 
22,991

 
(5,044
)
Repayment of capital lease and financing obligations
 
(8,176
)
 
(6,001
)
Recurring capital expenditures
 
(4,995
)
 
(5,661
)
Distributions from unconsolidated joint ventures (a)
 
79

 
177

Cash From Facility Operations
 
7,887

 
11,232

Transaction costs
 
10,366

 
647

Transition costs
 
79

 

Self-insurance reserve adjustments, prior years
 
2,023

 
7,482

Adjusted Cash From Facility Operations
 
$
20,355

 
$
19,361

 
 
 
 
 
CFFO per share
 
$
0.17

 
$
0.25

Adjusted CFFO per share
 
$
0.43

 
$
0.43

(a) Excludes distributions resulting from the sale of communities and refinancing of debt. Also excludes distributions in the first quarter of 2013 related to the sale of our equity interest in the former Sunwest JV.
 
Recurring capital expenditures are actual costs incurred to maintain the Company’s communities for their intended business purpose and exclude expenditures for community acquisitions, expenditures incurred in the months immediately following acquisition (and specifically excludes the $30.0 million capital commitment under the lease for 133 of the former Sunwest JV communities), new construction and expansions, ROI-designated projects, computer hardware and software, and vehicles.

For a more detailed understanding of Emeritus, please refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, to be filed with the SEC, or visit the Company’s web site at www.emeritus.com to obtain copies.


3



About Emeritus

Emeritus Senior Living is the nation’s largest assisted living and memory care provider, with the ability to serve approximately 54,000 residents. Nearly 32,000 employees support more than 500 communities throughout 45 states coast to coast. Emeritus offers the spectrum of senior residential choices, care options and life enrichment programs that fulfill individual needs and promote purposeful living throughout the aging process. Its experts provide insights on senior living, care, wellness, brain health, caregiving and family topics at www.emeritus.com, which also offers details on the organization’s services. Emeritus’ common stock is traded on the New York Stock Exchange under the symbol ESC.

Important Additional Information about the Proposed Transaction

In connection with the proposed transaction, Brookdale plans to file with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement of Emeritus and Brookdale that also constitutes a prospectus of Brookdale. Emeritus and Brookdale will mail the proxy statement/prospectus to each of their respective shareholders. This communication does not constitute a solicitation of any vote or approval. The joint proxy statement/prospectus to be filed with the SEC related to the proposed transaction will contain important information about Brookdale, Emeritus, the proposed transaction and related matters. WE URGE INVESTORS AND SHAREHOLDERS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. You may obtain free copies of the joint proxy statement/prospectus, when it is filed with the SEC, and other documents filed by Emeritus and Brookdale with the SEC through the website maintained by the SEC at www.sec.gov. The joint proxy statement/prospectus, when it is filed with the SEC, and the other documents filed by Emeritus and Brookdale with the SEC may also be obtained for free by accessing Emeritus' website at www.emeritus.com (which website is not incorporated herein by reference) and clicking on the “Investors” link and then clicking on the link for “SEC Filings” or by accessing Brookdale’s website at www.brookdale.com (which website is not incorporated herein by reference) and clicking on “About Brookdale” and then clicking on the link for “Investor Relations” and then the link “SEC Filings.” Emeritus, Brookdale and their respective directors and officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies from its shareholders in connection with the merger transaction. Information regarding these persons who may, under the rules of the SEC, be considered participants in the solicitation of shareholders in connection with the proposed merger transaction will be set forth in the joint proxy statement/prospectus described above when it is filed with the SEC. Additional information regarding each of Emeritus’ and Brookdale’s respective executive officers and directors, including shareholdings, is included in Emeritus’ Form 10-K/A for the year ended December 31, 2013, and Brookdale’s Form 10-K/A for the year ended December 31, 2013, both of which were filed with the SEC on April 30, 2014. You can obtain free copies of this document from Emeritus or Brookdale, respectively, using the contact information above.

Forward-Looking Statements

Statements made in this communication and related statements that express Emeritus' or our management’s intentions, hopes, indications, beliefs, expectations, or predictions of the future constitute forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, and relate to matters that are not historical facts. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience as a result of such factors as: the ability to obtain licensure, regulatory and other third party approvals of the merger transaction on the proposed terms and schedule; the ability to obtain shareholder approval of the pending merger transaction; any delay in the closing of the pending merger transaction; disruptions to our business as a result of the pending merger transaction, affecting relationships with residents, employees and other business relationships; the effects of competition and economic conditions on the occupancy levels in our communities; our ability under current market conditions to maintain and increase our resident charges without adversely affecting occupancy levels; successfully integrating home health agency services into our senior living communities; uncertainties regarding government-reimbursement programs for our services; increases in interest costs as a result of refinancing; our ability to control community operation expenses without adversely affecting the level of occupancy and the level of resident charges; our ability to generate cash flow sufficient to service our debt and other fixed payment requirements; our ability to find sources of financing and capital on satisfactory terms to meet our cash requirements to the extent that they are not met by operations, and uncertainties related to professional liability and workers’ compensation claims. We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area.  These and other risks and uncertainties are detailed in our reports filed with the Securities and Exchange Commission, including “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC.  The Company undertakes no obligation to update the information provided herein.



4



Contact:
Investor Relations
(206) 298-2909

Media Contacts:
Liz Brady
Liz.brady@icrinc.com
646-277-1226

Sari Martin
Sari.martin@icrinc.com
203-682-8345














5



EMERITUS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except share data)
ASSETS
 
March 31,
 
December 31,
 
2014
 
2013
Current Assets:
 
 
 
Cash and cash equivalents
$
58,670

 
$
76,672

Short-term investments
7,692

 
7,394

Trade accounts receivable, net of allowance of $10,375 and $9,380
56,555

 
53,714

Other receivables
12,299

 
10,310

Tax, insurance, and maintenance escrows
29,506

 
28,067

Prepaid insurance expense
27,676

 
28,109

Deferred tax asset
48,126

 
49,203

Other prepaid expenses and current assets
15,803

 
14,588

Property held for sale
7,714

 
17,459

          Total current assets
264,041

 
285,516

Investments in unconsolidated joint ventures
2,571

 
2,720

Property and equipment, net of accumulated depreciation of $746,269 and $701,743
3,840,932

 
3,875,172

Restricted deposits and escrows
85,677

 
80,919

Goodwill
189,382

 
189,626

Other intangible assets, net of accumulated amortization of $42,479 and $40,665
121,743

 
123,557

Other assets, net
37,228

 
37,138

          Total assets
$
4,541,574

 
$
4,594,648

 
 
 
 
LIABILITIES, SHAREHOLDERS' EQUITY AND NONCONTROLLING INTEREST
 
 
Current Liabilities:
 
 
 
Current portion of long-term debt
$
141,848

 
$
152,989

Current portion of capital lease and financing obligations
35,671

 
33,565

Trade accounts payable
13,167

 
30,856

Accrued employee compensation and benefits
48,384

 
44,603

Accrued interest
7,497

 
7,529

Accrued real estate taxes
14,471

 
16,528

Accrued insurance liabilities
40,710

 
40,482

Other accrued expenses
42,653

 
39,954

Deferred revenue
26,349

 
25,822

Unearned rental income
32,654

 
30,745

          Total current liabilities
403,404

 
423,073

Long-term debt obligations, less current portion
1,336,672

 
1,345,242

Capital lease and financing obligations, less current portion
2,479,631

 
2,481,930

Deferred gain on sale of communities
2,561

 
2,786

Deferred straight-line rent
78,111

 
74,320

Other long-term liabilities
154,961

 
153,278

          Total liabilities
4,455,340

 
4,480,629

Commitments and contingencies
 
 
 
Shareholders' Equity and Noncontrolling Interest:
 
 
 
Preferred stock, $0.0001 par value. Authorized 20,000,000 shares, none issued

 

Common stock, $0.0001 par value. Authorized 100,000,000 shares, issued and outstanding 48,999,284 and 48,118,623 shares
5

 
5

Additional paid-in capital
913,542

 
892,319

Accumulated deficit
(829,100
)
 
(780,654
)
Total Emeritus Corporation shareholders' equity
84,447

 
111,670

Noncontrolling interest
1,787

 
2,349

Total shareholders' equity
86,234

 
114,019

Total liabilities, shareholders' equity, and noncontrolling interest
$
4,541,574

 
$
4,594,648


6



EMERITUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
 
Three Months Ended
 
March 31,
 
2014
 
2013
Revenues:
 
 
 
Community and ancillary services revenue
$
513,817

 
$
462,719

Management fees
703

 
785

Community, ancillary services and management fee revenue
514,520

 
463,504

Reimbursed costs incurred on behalf of managed communities
7,310

 
8,864

Total operating revenues
521,830

 
472,368

 
 
 
 
Expenses:
 
 
 
Community and ancillary services operations
351,716

 
323,741

General and administrative
29,644

 
29,440

Transaction costs
10,366

 
647

Impairments of long-lived assets
1,023

 

Depreciation and amortization
46,228

 
45,218

Lease expense
52,225

 
31,964

Costs incurred on behalf of managed communities
7,310

 
8,864

Total operating expenses
498,512

 
439,874

Operating income from continuing operations
23,318

 
32,494

 
 
 
 
Other income (expense):
 
 
 
Interest income
109

 
110

Interest expense
(70,369
)
 
(72,199
)
Change in fair value of derivative financial instruments
(71
)
 
5

Net equity losses for unconsolidated joint ventures
(131
)
 
(12
)
Other, net
370

 
1,043

Net other expense
(70,092
)
 
(71,053
)
 
 
 
 
Loss from continuing operations before income taxes
(46,774
)
 
(38,559
)
Provision for income taxes
(695
)
 
(1,106
)
Loss from continuing operations
(47,469
)
 
(39,665
)
Loss from discontinued operations
(1,539
)
 

Net loss
(49,008
)
 
(39,665
)
Net loss (income) attributable to the noncontrolling interests
562

 
(91
)
Net loss attributable to Emeritus Corporation common shareholders
$
(48,446
)
 
$
(39,756
)
 
 
 
 
Basic and diluted loss per common share attributable to
 
 
 
    Emeritus Corporation common shareholders:
 
 
 
   Continuing operations
$
(0.99
)
 
$
(0.88
)
   Discontinued operations
(0.03
)
 

 
$
(1.02
)
 
$
(0.88
)
 
 
 
 
Weighted average common shares outstanding: basic and diluted
47,633

 
45,417





7



EMERITUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
 
Three Months Ended March 31,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net loss
$
(49,008
)
 
$
(39,665
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
 
 
 
Depreciation and amortization
46,228

 
45,218

Amortization of above/below market rents
1,230

 
1,246

Amortization of deferred gains
(224
)
 
(248
)
Loss on lease termination
85

 

Loss (gain) on early extinguishment of debt
233

 
(493
)
Impairment of long-lived assets
2,399

 

Amortization of loan fees
705

 
790

Allowance for doubtful receivables
2,759

 
2,172

Net equity losses for unconsolidated joint ventures
131

 
12

Gain on sale of assets
(131
)
 

Stock-based compensation
3,161

 
3,331

Change in fair value of derivative financial instruments
71

 
(5
)
Deferred straight-line rent
5,590

 
216

Deferred revenue
258

 
2,088

Non-cash interest expense
7,466

 
7,975

Other
26

 
80

Changes in operating assets and liabilities:
(22,991
)
 
5,044

Net cash (used in) provided by operating activities
(2,012
)
 
27,761

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchase of property and equipment
(18,008
)
 
(15,907
)
Acquisitions

 
(78
)
Proceeds from the sale of assets
13,895

 

Lease acquisition costs and other assets, net
(89
)
 
(1,029
)
Advances (to) from affiliates and other managed communities, net
(898
)
 
1,273

Distributions from unconsolidated joint ventures, net
79

 
14,926

          Net cash used in investing activities
(5,021
)
 
(815
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Sale of stock and exercise of options, net
17,168

 
37,826

Purchase and distributions to non-controlling interest, net

 
(3,726
)
Increase in restricted deposits
(159
)
 
(525
)
Debt issuance and other financing costs
(91
)
 
(819
)
Proceeds from long-term borrowings and financings

 
50,000

Repayment of long-term borrowings and financings
(19,711
)
 
(49,972
)
Repayment of capital lease and financing obligations
(8,176
)
 
(6,001
)
          Net cash (used in) provided by financing activities
(10,969
)
 
26,783

 
 
 
 
Net (decrease) increase in cash and cash equivalents
(18,002
)
 
53,729

Cash and cash equivalents at the beginning of the period
76,672

 
59,795

Cash and cash equivalents at the end of the period
$
58,670

 
$
113,524


8



Emeritus Corporation
Cash Lease and Interest Expense
(unaudited)
(In thousands)
 
 
 
 
Projected
 
 
Actual
 
Range
 
 
Q1-14
 
Q2-2014
Facility lease expense - GAAP
 
$
52,225

 
$
49,000

$
50,000

Less:
 
 
 
 
 
 
   Straight-line rents
 
(5,590
)
 
(3,500
)
(4,000
)
   Above/below market rents
 
(1,230
)
 
(1,200
)
(1,300
)
Plus:
 


 





   Capital lease interest
 
47,716

 
47,000

48,000

   Capital lease interest - noncash
 
(7,466
)
 
(7,500
)
(8,000
)
   Capital lease principal
 
8,176

 
8,000

8,500

Facility lease expense - CASH
 
$
93,831

 
$
91,800

$
93,200

 
 
 
 
 
 
 
Interest expense - GAAP
 
$
70,369

 
$
70,000

$
72,000

Less:
 
 
 
 
 
 
   Capital lease interest
 
(47,716
)
 
(47,000
)
(48,000
)
   Loan fee amortization and other
 
(718
)
 
(700
)
(800
)
Interest expense - CASH
 
$
21,935

 
$
22,300

$
23,200

 
 
 
 
 
 
 
Depreciation - owned assets
 
$
21,429

 
$
21,000

$
22,000

Depreciation - capital leases
 
24,161

 
24,000

24,500

Amortization - intangible assets
 
638

 
600

700

Total depreciation and amortization
 
$
46,228

 
$
45,600

$
47,200


9




EMERITUS CORPORATION
 Consolidated Supplemental Financial Information
For the Quarters Ended
 (unaudited)
 (Dollars in thousands, except non-financial and per-unit data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Financial Data:
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Average consolidated communities
463

465

476

500

496

Average available units
40,524

40,757

42,109

44,909

44,557

Average occupied units
35,007

35,333

36,765

39,434

39,228

Average occupancy
86.4
%
86.7
%
87.3
%
87.8
%
88.0
%
Average monthly revenue per occupied unit
$
4,012

$
4,014

$
4,008

$
3,968

$
3,986

Calendar days
90

91

92

92

90

 
 
 
 
 
 
Community and Ancillary Services Revenues:
 
 
 
 
 
Community revenues
$
417,581

$
422,288

$
438,732

$
465,811

$
464,672

Move-in fees
5,503

5,430

5,538

6,038

6,126

Move-in incentives
(1,722
)
(2,282
)
(2,186
)
(2,422
)
(1,751
)
     Total community revenues
421,362

425,436

442,084

469,427

469,047

Ancillary services revenues
41,357

42,374

41,774

43,257

44,770

     Total community and ancillary services revenues
462,719

467,810

483,858

512,684

513,817

 
 
 
 
 
 
Community and Ancillary Services Operating Expenses:
 
 
 
 
 
Salaries and wages - regular and overtime
127,713

129,904

135,849

142,169

138,741

Average daily salary and wages
1,419

1,428

1,477

1,545

1,542

Average daily wages per occupied unit
41

40

40

39

39

 
 
 
 
 
 
Payroll taxes and employee benefits
45,523

40,981

41,706

41,358

46,722

Percent of salaries and wages
35.6
%
31.5
%
30.7
%
29.1
%
33.7
%
 
 
 
 
 
 
Prior year self-insurance reserve adjustments
7,482

5,654

288

5,952

2,023

 
 
 
 
 
 
Utilities
18,595

16,963

21,090

20,521

22,593

Average monthly cost per occupied unit
177

160

191

173

192

 
 
 
 
 
 
Facility maintenance and repairs
11,830

11,674

12,783

12,365

13,173

Average monthly cost per occupied unit
113

110

116

105

112

 
 
 
 
 
 
All other community operating expenses
81,140

81,970

84,945

92,098

92,924

Average monthly cost per occupied unit
773

773

770

778

790

 
 
 
 
 
 
Community operating expenses
292,283

287,146

296,661

314,463

316,176

Ancillary services operating expenses
31,458

32,702

32,966

34,962

35,540

     Total community and ancillary services operating expenses
323,741

319,848

329,627

349,425

351,716

 
 
 
 
 
 
Community operating income
129,079

138,290

145,423

154,964

152,871

Consolidated operating income
$
138,978

$
147,962

$
154,231

$
163,259

$
162,101

 
 
 
 
 
 
Operating income margin - Communities
30.6
%
32.5
%
32.9
%
33.0
%
32.6
%
Operating income margin - Consolidated
30.0
%
31.6
%
31.9
%
31.8
%
31.5
%



10




EMERITUS CORPORATION
 Selected Consolidated and Same Community Information
For the Quarters Ended
 (unaudited)
(Community and ancillary revenue and operating expense in thousands)
 
 
 
 
 
 
 
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Consolidated:
 
 
 
 
 
Average consolidated communities
463

465

476

500

496

Community and ancillary revenue
$
462,719

$
467,810

$
483,858

$
512,684

$
513,817

Community and ancillary operating expense
323,741

319,848

329,627

349,425

351,716

Average occupancy
86.4
%
86.7
%
87.3
%
87.8
%
88.0
%
Average monthly revenue per unit
$
4,012

$
4,014

$
4,008

$
3,968

$
3,986

Operating income margin
30.0
%
31.6
%
31.9
%
31.8
%
31.5
%
 
 
 
 
 
 
Consolidated Same Community:
 
 
 
 
 
Average consolidated communities
448

448

448

448

448

Community revenue
$
414,052

$
415,542

$
418,578

$
417,509

$
420,002

Community operating expense
277,854

273,790

281,376

276,616

284,720

Average occupancy
86.7
%
86.9
%
87.2
%
87.3
%
87.6
%
Average monthly revenue per unit
$
4,040

$
4,045

$
4,060

$
4,046

$
4,058

Operating income margin
32.9
%
34.1
%
32.8
%
33.7
%
32.2
%
 
 
 
 
 
 
Total Portfolio Same Community:
 
 
 
 
 
Average consolidated communities
464

464

464

464

464

Community revenue
$
427,168

$
428,873

$
432,060

$
430,793

$
433,136

Community operating expense
287,224

282,646

290,787

286,118

294,252

Management fees
738

587

627

606

600

Average occupancy
86.7
%
86.8
%
87.2
%
87.2
%
87.5
%
Average monthly revenue per unit
$
4,023

$
4,032

$
4,046

$
4,031

$
4,042

Operating income margin
32.8
%
34.1
%
32.7
%
33.6
%
32.1
%

11