Filed by Brookdale Senior Living Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Emeritus Corporation
(Commission File No. 001-14012)
The following investor presentation was posted by Brookdale on its web site:
Company Presentation
February 25, 2014
BROOKDALE
SENIOR LIVING SOLUTIONS
ALL THE PLACES LIFE CAN GO TM
Additional Information
In connection with the merger, the Company plans to file with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement/prospectus, as well as other relevant documents concerning the proposed transaction. THE COMPANY STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A free copy of the joint proxy statement/prospectus and other filings containing information about the Company and Emeritus Corporation may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from the Company at www.brookdale.com under the heading “About Brook dale/Investor Relations” or from Emeritus Corporation at www.emeritus.com under the heading “Investors.”
The Company and Emeritus Corporation and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s and Emeritus Corporation’s stock holders in connection with the merger . Information about the directors and executive officers of the Company and their ownership of Company comm on stock is set forth in the prox y statem ent for the Company’s 2013 annual meeting of stock holders, as filed with the SEC on Schedule 14A on Apr il 30, 2013. Inform ation about the director s and executive officers of Em eritus Corporation and their owners hip of Em er itus Corporation co m on stock is s et forth in the pr ox y statem ent for Em eritus Corporation’s 2013 annual m eeting of stock holders , as filed with the SEC on Schedule 14A on Apr il 9, 2013. Additional information regarding the interests of those participants and other persons who m a y be deem ed partic ipants in the m erger m ay be obtained by reading the joint prox y statem ent regarding the m erger when it becom es available . Free copies of this doc ument may be obtained as desc r ibed in the preceding paragraph . This presentation shall not constitute an offer to sell or the solic itation of an offer to sell or the solic itation of an offer to buy an y secur ities, nor shall there be an y s ale of secur ities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction . No offer of securities shall be made except by means of a prospectus m eeting the requirements of Section 10 of the Securities Act of 1933, as am ended.
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Additional Information
In connection with the merger, the Company plans to file with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement/prospectus, as well as other relevant documents concerning the proposed transaction. THE COMPANY STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A free copy of the joint proxy statement/prospectus and other filings containing information about the Company and Emeritus Corporation may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from the Company at www.brookdale.com under the heading “About Brook dale/Investor Relations” or from Emeritus Corporation at www.emeritus.com under the heading “Investors.”
The Com pan y and Em er itus Corporation and their respective direc tors and executive officers m ay be deem ed to be partic ipants in the solicitation of prox ies from the Com pan y’s and Em eritus Cor poration’s stock holders in connection with the m erger . Inform ation about the dir ectors and executive officers of the Com pany and their ownership of Com pan y com m on stock is set forth in the prox y statem ent for the Com pan y’s 2013 annual m eeting of stock holders, as filed with the SEC on Schedule 14A on Apr il 30, 2013. Inform ation about the director s and executive officers of Em eritus Corpor ation and their owners hip of Em er itus Corporation com m on stock is s et forth in the pr ox y statem ent for Em eritus Corporation’s 2013 annual m eeting of stock holders , as filed with the SEC on Schedule 14A on Apr il 9, 2013. Additional inform ation regarding the interes ts of those partic ipants and other persons who m a y be deem ed partic ipants in the m erger m ay be obtained by reading the joint prox y statem ent regarding the m erger when it becom es available . Fr ee copies of this doc um ent m ay be obtained as desc r ibed in the preceding paragraph . This presentation shall not constitute an offer to sell or the solic itation of an offer to sell or the solic itation of an offer to buy an y secur ities, nor shall there be an y s ale of secur ities in any j ur isdic tion in which such offer, solic itation or sale would be unlawf ul pr ior to regis tration or qualification under the secur ities laws of any such j ur isdic tion . No offer of securities shall be m ade except b y m eans of a prospec tus m eeting the requirem ents of Section 10 of the Securities Act of 1933, as am ended.
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All the places life can go tm
Brookdale Overview
Company Highlights Unit Mix by Product Type
Largest operator of senior housing in the United States
Operates 649 communities in 36 states Independent Living – Rental 22,349 34%
Most diversified service continuum and broadest geographic
footprint in the industry Independent Living – Entry Fee 5,687 8%
Capacity to serve approximately 67,000 residents
Assisted Living 27,481 41%
Ancillary services platform unique to Brookdale
Allows communities to deliver a fully-integrated set of ancillary Alzheimer’s Care 7,037 11%
services (home health, therapy, and/or hospice) to its residents
Skilled Nursing 3,970 6%
Real estate ownership of 47% of its communities (based on units)
80% of revenue generated from private pay sources
Favorable Payor Mix Strong Geographic Diversification
Medicare –
Florida
Ancillary 20%
8%
Other
Medicare – 49%
SNF
Private Pay 6% Texas
80% 15%
Medicaid
3%
Colorado
Insurance Ohio 6%
3% California 5%
5%
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Note: All data as of December 31, 2013.
Key Investment Considerations
Positive industry dynamics
Broadest range of solutions to meet the needs of a growing and increasingly frail senior population Largest provider with broad geographic presence and national brand Significant near and long-term growth opportunities
– Sustainable organic growth potential in seniors market in largely private pay business lines
– Opportunities to redevelop and enhance current portfolio while deploying capital at high incremental returns
– Accretive acquisition opportunities in highly fragmented market
Definitive agreement to acquire Emeritus
5
Improving Industry Operating Environment
( $ i n m i l l i o n s )
Total Fee Revenues Facility Operating Income
3000 1000
2,445 2,546
2,305 812
2500 2,213 744 758 759
1,928 2,023 800 690
2000 637
600
1500
1000 400
500 200
0
2008 2009 2010 2011 2012 2013 0 2008 2009 2010 2011 2012 2013
Adjusted EBITDA Cash From Facility Operations
350
500 463 279
408 403 410 300
400 349 241 240 239
250
303 197
300 200
150 130
200
100
100 50
0 0
2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013
6
(1) Note: See reconciliations of Non-GAAP measures at the end of the presentation
Favorable Demographics
Senior population is estimated to grow 3x faster than base population According to the U.S. Census Bureau, people 75 and over are expected to represent 12% of the population by 2030 (compared to just
6% in 2012)
Need for assistance increases progressively with aging; one in three over the age of 85 have Alzheimer’s
Strong Population Growth Need for Assistance Grows Dramatically
Millions of People
45%
40%
35.0 40%
35%
30.0 30%
25%
25.0 20% 15%
15%
20.0 10% 7%
5%
15.0 0%
65-74 75-84 85+
% of Population with limitation in three or more Activities
Population projection for 75 and older
of Daily Living
7
Sources: U.S Census Bureau National Health Interview 2003-2007 and Population projections; Alzheimer’s Association 2013 Report
Strong Supply-Demand Fundamentals
New construction starts remain at historic low levels despite population growth
Construction Starts in Top 31 Metros (Units)(1)
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Currently, only 1.9 million units serving a population of 12.0 million seniors (approx. 15% penetration rate) 1% increase in penetration is more than 100,000 new senior living residents
8
(1) Source: American Seniors Housing Association, NIC Map, PREI Research
Most Comprehensive Senior Care Provider
Only provider operating at scale across each segment of the senior living continuum with a fully integrated ancillary services platform
Hospitals
Brookdale Sub-acute
Skilled Nursing
Specialized Alzheimer’s Therapy,
Care Assisted Living Home Health
of and Hospice
Level Independent Living
Active Adult Housing Brookdale at Home
Low Wants Consumer Choice
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Organic Growth
Improving revenue growth with controlled costs produces significant cash flow growth High incremental margins from fixed cost structure Upside potential in occupancy and rate
Same Community Revenue and Facility Operating Income Growth
10
| (1) |
|
Note: See reconciliations of Non-GAAP measures at the end of the presentation |
Ancillary Services Growth Opportunities
Brookdale has a unique, fully-integrated ancillary services platform
– Strategic component of our service offerings providing solutions to address rising acuity, increases length of stay
– Strategic differentiator in evolving post-acute care continuum Growth Opportunities
– Rolling out services to new unit capacity through acquisitions, expansions or additional third-party management agreements
– Adding services such as hospice, private pay home care, private pay case management and taking services “outside the walls” to the community in general
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Development Growth (Program Max)
Current development program focused on repositioning and expanding communities in current portfolio
– Respond to changing customer needs by adding higher demand levels of care and services
– Expect to generate 12%—15% unlevered returns with lowest risk profile
Large pipeline of potential future Program Max projects Highest capital deployment priority, with best returns
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Transaction Overview
Brookdale Senior Living (“BKD”) is merging with Emeritus Corporation (“ESC”) in a 100% stock-for-stock transaction
Exchange Ratio Each share of ESC will be converted into 0.95 of a share of BKD
Ownership 73.1% BKD / 26.9% ESC
Expect to have 171mm (approx.) shares outstanding following the
Shares Outstanding merger
Expected Close Expected to close in the third quarter of 2014
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Combined Company Overview
Merger creates the largest owner-operator of senior housing in the U.S with approximately 1,200 properties and 113,000 units $4.9bn of combined revenues in 2013 – over 80% from private pay sources
Diversified Product Mix Diversified Operating Model
(Properties) Skilled Nursing
(% of Total)
Independent 5,164
5%
Living
34,449 Assisted 31% Living
59,026 52%
14,055
Memory 12% Care
(Properties) (% of Total)
Managed
Owned
18,900 17%
38,442 34%
55,352
Leased
49%
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Builds Out Geographic Coverage
Combined portfolio reaches 330 markets, covering 81% of the U.S. population
Emeritus Brookdale
Will have a presence in all top 31 markets, with a #1 position in 18 markets Will have a presence in 88 of the top 100 markets There will be 6.5 million of those 80+ and 37.7 million of those age 50 to 69 (adult influencers) living within 10 miles of a post-merger community
Emeritus Significantly Expands Brookdale’s Coverage and Density in Key Geographies
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Enhances Organic Growth Opportunity
Merger strengthens BKD’s national presence, supports rate and occupancy growth Expanded service continuum increases customer base for all services Geographic clustering and scale provide opportunities to drive operational effectiveness on multiple fronts Cost-effective ability to drive brand recognition for ESC properties
– Leverage BKD’s existing brand activities, which was initiated in 2013
Brand Supports Leading Rate Growth
(Rate Growth %)
3.0%
2.0%
1.0% (1)
BKD Industry
Q1’13 Q2’13 Q3’13 Q4’13
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(1) NIC Top 100, 2013.
Transaction Benefits
Combined company will be largest senior living solutions platform in the U.S. – create significant shareholder value in evolving post-acute market
| 1 |
|
Value of Owned Real Estate |
– Large owned real estate portfolio, with future purchase options
– Value of owned real estate increases as EBITDA grows
– Deploy capital in ESC assets (“Program Max 2.0”)
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Revenue Synergies |
– Offer new products/services to 100K residents with $4.5bn of annual healthcare spend
– Expansion of existing products/services – drive up to $100mm of synergies per year
| 3 |
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Cost Synergies |
– Significant cost synergies resulting from greater scale
– Expect to reduce operating expenses by up to $45mm annually
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| (1) |
|
Note: See reconciliations of Non-GAAP measures at the end of the presentation |
Revenue Synergies – Healthcare Delivery
| • |
|
A significant portion of healthcare spend occurs in the later years of life |
| • |
|
Capture part of $4.5bn of healthcare spend per year generated by 100K residents |
| • |
|
Earning 1% of $4.5bn would drive $45mm of revenue |
An Integrated Post-Acute Care Spectrum(1)
Current BKD Services Potential BKD Services
Geriatric Palliative Independent Outpatient Case/Disease Therapies Assessment Management Care Living
Community Services Home Care Senior Living Skilled Nursing Hospitalization
Wellness
Home Health Hospice Assisted Inpatient Programs Care Living Rehab
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| (1) |
|
Source: The Advisory Board |
Potential for Merger to Drive Upside
Management Base Case – Year 3 Accretion
G&A $0.14
Cost
Property Level OpEx $0.12
Revenue New Ancillary Services $0.14
Total CFFO/Share Accretion $0.40
Levers for Potential Upside
Implement innovative products/services to capture residents’ healthcare spend
Program Max 2.0 at ESC properties Additional synergies and cost savings Value of purchase options
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| (1) |
|
Note: See reconciliations of Non-GAAP measures at the end of the presentation |
Financial Impact
Strong balance sheet available to capitalize on real estate opportunities
Post-merger leverage consistent with historical levels and BKD target
Net Debt to EBITDA(1)
10.0x
8.0x
5.6x 6.2x 6.0x
6.0x
4.0x
2.0x
0.0x
Pre Post Target Acquisition Acquisition
Pro Forma Acq. Summary(1)
Revenues $4.9bn
Adj. EBITDA $867mm
CFFO $401mm
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(1) Based on 2013 Brookdale and Emeritus public reporting, excludes synergies. (2) Note: See reconciliations of Non-GAAP measures at the end of the presentation
Roadmap to Closing
1. Customary regulatory and lender approvals
2. BKD and ESC shareholder approvals
3. Closing expected in the third quarter of 2014
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Brookdale Non-GAAP Financial Measure Definitions
Adjusted? Adjusted EBITDA EBITDA is a measure of operating performance that is not calculated in accordance with U.S. as generally a substitute accepted for net accounting income, income principles from (“GAAP”) operations . Adjusted or cash EBITDA flows provided should not by or be used considered in operations, in isolation as or determined performance in used accordance by management with GAAP to .focus Adjusted on operating EBITDA performance is a key measure and management of the Company’s without operating mixing in items of We income define and Adjusted expense EBITDA that relate as net to income long -term (loss) contracts before provision and the financing (benefit) and for income capitalization taxes, non of the -operating business .
(income) lease termination), expense items, depreciation (gain) loss and on amortization sale or acquisition (including of non communities -cash impairment (including charges), gain (loss) straight on—facility line lease based expense compensation (income), amortization expense, and of deferred change in gain, future amortization service obligation of deferred and entrance including fees, entrance non—cash fee receipts stock- and refunds entrance (excluding fee CCRC (i) prior first to generation stabilization entrance and (ii) fee first receipts generation from entrance the sale of fee units refunds at a not recently replaced opened by second generation entrance fee receipts at the recently opened community prior to stabilization).
? Cash Cash From From Facility Facility Operations Operations (CFFO) is a measurement of liquidity that is not calculated in accordance with operations, GAAP and should as determined not be in considered accordance in with isolation GAAP as . a W e substitute define CFFO for cash as net flows cash provided provided by by or (used used in) in operating to principal, activities refundable adjusted entrance for changes fees received, in operating first generation assets and entrance liabilities, fee deferred receipts interest at a recently and fees opened added fee entrance refunds fee not CCRC replaced prior to by stabilization, second generation entrance entrance fee refunds fee receipts disbursed at adjusted the recently for first opened generation community entrance prior to facility stabilization, lease termination, lease financing recurring debt capital amortization expenditures with fair (net), market distributions value or no from purchase unconsolidated options, ventures gain (loss) from on cumulative expenditures share include of routine net earnings, expenditures CFFO capitalized from unconsolidated in accordance ventures, with GAAP and that other are . funded Recurring from current capital operations renovations, . community Amounts excluded repositionings, from expansions, recurring capital systems expenditures projects or other consist non primarily -recurring of or major unusual projects, capital financing items (including proceeds, integration available capital cash and/or expenditures) proceeds or from community the sale of purchases communities that that are are funded held for using sale lease . or Facility? Facility Operating Operating Income Income is not a measurement of operating performance calculated in accordance with GAAP and flows should provided not by be considered or used in in operations, isolation as as adetermined substitute for in accordance net income, with income GAAP from . operations, W e define or Facility cash expense Operating items, Income (gain) as net loss income on sale (loss) or before acquisition provision of communities (benefit) for (including income taxes, gain (loss) non-operating on facility (income) lease general termination), and administrative depreciation and expense, amortization including (including non-cash non stock -cash -based impairment compensation charges), expense, facility change lease expense, in future service obligation, amortization of deferred entrance fee revenue and management fees.
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Brookdale Adjusted EBITDA Reconciliation
The table below reconciles Adjusted EBITDA from net loss for the three months and years ended December 31, 2013 and
2012 (in thousands):
Three Months Ended December 31(1) , Years Ended December 31(1) ,
2013 2012 2013 2012
Net loss $ (975) $ (24,692) $ (3,584) $ (66,467)
(Benefit) provision for income taxes (1,516) (1,040) 1,756 1,519
Equity in (earnings) loss of unconsolidated ventures (493) 3,277 (1,484) 3,488
Loss on extinguishment of debt 319 — 1,265 221
Other non-operating income (1,360) (201) (2,725) (593)
Interest expense:
Debt 24,840 24,492 96,131 98,183
Capitalized lease obligation 6,029 7,103 25,194 30,155
Amortization of deferred financing costs and debt discount 4,037 4,479 17,054 18,081
Change in fair value of derivatives and amortization (386) (7) (980) 364
Interest income (312) (1,792) (1,339) (4,012)
Income from operations 30,183 11,619 131,288 80,939
Gain on facility lease termination — (8,804) — (11,584)
Loss on acquisition — — — 636
Depreciation and amortization 68,200 62,500 268,757 252,281
Asset impairment 10,233 19,348 12,891 27,677
Straight-line lease expense 347 1,344 2,597 6,668
Amortization of deferred gain (1,093) (1,093) (4,372) (4,372)
Amortization of entrance fees (7,831) (6,527) (29,009) (25,362)
Non-cash stock-based compensation expense 5,202 6,335 25,978 25,520
Change in future service obligation (1,917) 2,188 (1,917) 2,188
Entrance fee receipts (2) 32,482 22,890 92,331 82,705
Entrance fee disbursements (10,821) (7,801) (35,325) (27,356)
Adjusted EBITDA $ 124,985 $ 101,999 $ 463,219 $ 409,940
(1) The calculation of Adjusted EBITDA includes integration, transaction-related and EMR roll-out costs of $4.1 million and $14.5 million for the three months and year ended December 31, 2013, respectively. The calculation of Adjusted EBITDA includes integration, transaction-related and EMR roll-out costs of $7.2 million and $23.5 million for the three months and year ended December 31, 2012, respectively.
(2) Includes the receipt of refundable and non-refundable entrance fees.
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Brookdale Cash From Facility Operations Reconciliation
The table below reconciles CFFO from net cash provided by operating activities for the three months and years ended December 31,
2013 and 2012 (in thousands):
Three Months Ended December 31(1) , Years Ended December 31(1) ,
2013 2012 2013 2012
Net cash provided by operating activities $ 117,046 $ 82,991 $ 366,121 $ 290,969
Changes in operating assets and liabilities (27,473) (14,772) (33,198) (20,698)
Refundable entrance fees received(2) 18,875 13,088 48,140 42,600
Entrance fee refunds disbursed (10,821) (7,801) (35,325) (27,356)
Recurring capital expenditures, net (10,786) (10,168) (42,901) (38,306)
Lease financing debt amortization with fair market value or no purchase options (3,594) (3,132) (13,927) (12,120)
Distributions from unconsolidated ventures from cumulative share of net earnings (602) (72) (2,691) (1,507)
CFFO from unconsolidated ventures 1,825 1,279 7,804 5,376
Cash From Facility Operations $ 84,470 $ 61,413 $ 294,023 $ 238,958
(1) The calculation of Cash From Facility Operations includes integration, transaction-related and EMR roll-out costs of $4.1 million and $14.5 million for the three months and year ended December 31, 2013, respectively. The calculation of Cash From Facility Operations includes integration, transaction-related and EMR roll-out costs of $7.2 million and $23.5 million for the three months and year ended December 31, 2012, respectively.
(2) Total entrance fee receipts for the three months ended December 31, 2013 and 2012 were $32.5 million and $22.9 million, respectively, including $13.6 million and $9.8 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating activities. Total entrance fee receipts for the years ended December 31, 2013 and 2012 were $92.3 million and $82.7 million, respectively, including $44.2 million and $40.1 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating activities.
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Brookdale Facility Operating Income Reconciliation
The table below reconciles Facility Operating Income from net loss for the three months and years ended December 31, 2013 and
2012 (in thousands):
Three Months Ended December 31, Years Ended December 31, 2013 2012 2013 2012
Net loss $ (975) $ (24,692) $ (3,584) $ (66,467) (Benefit) provision for income taxes (1,516) (1,040) 1,756 1,519 Equity in (earnings) loss of unconsolidated ventures (493) 3,277 (1,484) 3,488 Loss on extinguishment of debt 319—1,265 221 Other non-operating income (1,360) (201) (2,725) (593) Interest expense: Debt 24,840 24,492 96,131 98,183 Capitalized lease obligation 6,029 7,103 25,194 30,155 Amortization of deferred financing costs and debt discount 4,037 4,479 17,054 18,081 Change in fair value of derivatives and amortization (386) (7) (980) 364 Interest income (312) (1,792) (1,339) (4,012) Income from operations 30,183 11,619 131,288 80,939 Gain on facility lease termination—(8,804)—(11,584) Depreciation and amortization 68,200 62,500 268,757 252,281 Asset impairment 10,233 19,348 12,891 27,677 Loss on acquisition ——636 Facility lease expense 69,701 70,785 276,729 284,025 General and administrative (including non-cash stock-based compensation expense) 46,078 44,627 184,548 178,829 Change in future service obligation (1,917) 2,188 (1,917) 2,188 Amortization of entrance fees (7,831) (6,527) (29,009) (25,362) Management fees (8,150) (8,436) (31,125) (30,786)
Facility Operating Income $ 206,497 $ 187,300 $ 812,162 $ 758,843
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Emeritus Non-GAAP Financial Measure Definitions
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 Annual Report on Form 10 -K for the year ended
December 31, 2013, to be filed with the SEC.
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Emeritus Adjusted EBITDA/EBITDAR Reconciliation
The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three months and year ended December 31, 2013 and 2012 (in thousands):
Three Months Ended Year Ended
December 31, December 31,
2013 2012 2013 2012
Net loss $ (49,059) $ (27,525) $ (152,970) $ (85,075)
Depreciation and amortization 45,869 42,605 181,483 140,629
Interest income (116) (105) (462) (408)
Interest expense 71,659 60,862 287,389 176,945
Net equity losses for unconsolidated joint ventures 32 76 125 576
Income tax (benefit) provision (1,480) (2,078) 639 (1,158)
Loss from discontinued operations 5,878 — 11,100 7,705
Amortization of above/below market rents 1,230 1,309 4,930 6,299
Amortization of deferred gains (230) (264) (957) (1,046)
Loss on early extinguishment of debt 207 53 204 186
Stock-based compensation 4,154 2,727 14,505 11,046
Change in fair value of derivative financial
instruments 83 29 6 948
Deferred revenue (30) (620) 2,605 (1,375)
Deferred straight-line rent 3,419 2,859 4,788 6,080
Impairment of long-lived assets 8,227 — 8,227 2,135
Transaction and financing costs 3,904 3,284 5,737 5,923
Transition costs 1,142 — 2,189 —
Self-insurance reserve adjustments, prior years 5,952 3,560 19,376 5,996
Adjusted EBITDA 100,841 86,772 388,914 275,406
Lease expense 45,157 29,446 142,498 114,382
Adjusted EBITDAR $ 145,998 $ 116,218 $ 531,412 $ 389,788
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Emeritus Cash From Facility Operations Reconciliation
The following table shows the reconciliation of net cash provided by operating activities to CFFO and Adjusted CFFO (in thousands):
Three Months Ended Year Ended
December 31, December 31,
2013 2012 2013 2012
Net cash provided by operating activities $ 4,348 $ 5,937 $ 98,189 $ 116,558
Changes in operating assets and liabilities, net 25,002 17,005 20,092 (14,735)
Repayment of capital lease and financing obligations (7,664) (5,432) (27,146) (17,882)
Recurring capital expenditures (7,780) (9,303) (26,473) (23,947)
Distributions from unconsolidated joint ventures (a) 1 161 472 1,177
Cash From Facility Operations 13,907 8,368 65,134 61,171
Transaction costs 3,904 3,030 5,737 5,510
Transition costs 1,142 — 2,189 —
Self-insurance reserve adjustments, prior years 5,952 3,560 19,376 5,996
Unusual income tax items (b) — 3,048 — 3,048
Adjusted Cash From Facility Operations $ 24,905 $ 18,006 $ 92,436 $ 75,725
CFFO per share $ 0.30 $ 0.19 $ 1.40 $ 1.37
Adjusted CFFO per share $ 0.53 $ 0.40 $ 1.99 $ 1.69
| (a) |
|
Excludes distributions resulting from the Blackstone JV transaction, the sale of communities and refinancing |
of debt.
| (b) |
|
Consists of state tax expense related to the taxable gain on the Blackstone JV transaction. |
28