UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8‑K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
 
 
Date of Report (Date of earliest event reported)
 
May 1, 2013 (May 1, 2013)


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


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


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



Section 2 — Financial Information

Item 2.02     Results of Operations and Financial Condition.

On May 1, 2013, Brookdale Senior Living Inc. (the "Company") issued a press release announcing its first quarter 2013 financial results and announcing a conference call to review these results. A copy of the press release is furnished herewith as Exhibit 99.1.

Supplemental information relating to the Company's first quarter 2013 results is furnished herewith as Exhibit 99.2.

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

Section 7 — Regulation FD

Item 7.01     Regulation FD Disclosure.

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

Section 9 — Financial Statements and Exhibits

Item 9.01     Financial Statements and Exhibits.

(d)
Exhibits
 
 
 
99.1
 
Press Release dated May 1, 2013
 
 
 
99.2
 
Supplemental Information



SIGNATURE

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

 
 
BROOKDALE SENIOR LIVING INC.
 
 
 
 
 
 
Date:
May 1, 2013
 
By:
 
/s/ Chad C. White
 
 
Name:
Chad C. White
 
 
Title:
Vice President, Co-General Counsel and Secretary




EXHIBIT INDEX


Exhibit No.
 
Exhibit
 
 
 
99.1
 
Press Release dated May 1, 2013.
 
 
 
99.2
 
Supplemental Information.







 
 
FOR IMMEDIATE RELEASE

Contact:
Brookdale Senior Living Inc.
Ross Roadman  615-564-8104

Brookdale Announces First Quarter 2013 Results

Nashville, Tenn.  May 1, 2013 – Brookdale Senior Living Inc. (NYSE: BKD) (the "Company") today reported financial and operating results for the first quarter of 2013.

·
Cash From Facility Operations ("CFFO") was $69.9 million, or $0.57 per share, a 19.6% increase compared to CFFO of $58.5 million, or $0.48 per share, for the first quarter of 2012, excluding $2.1 million and $3.9 million of integration, transaction-related and electronic medical records ("EMR") roll-out costs for the three months ended March 31, 2013 and 2012, respectively.
·
Average occupancy was 88.5%, a 70 basis point increase from 87.8% in the first quarter of 2012 and down 20 basis points from the fourth quarter of 2012.
·
Average monthly revenue per unit for the senior housing portfolio improved by 2.8% to $4,375 for the first quarter of 2013 from $4,257 for the first quarter of 2012.
·
Same community Facility Operating Income for the senior housing portfolio grew by 6.1% compared to the prior year quarter as same community revenue grew by 3.6% and same community expenses grew by 2.4%, with margin improving to 34.5%, an 80 basis point increase.
·
Adjusted EBITDA was $112.4 million, up 11.8% as compared to $100.5 million in the first quarter of 2012, excluding integration, transaction-related and EMR roll-out costs in both periods.
·
Net income was $3.6 million for the first quarter of 2013 compared to a net loss of $10.5 million in the first quarter of 2012.

Andy Smith, Brookdale's CEO, said, "We are very pleased with our first quarter results.  It's a solid start to the year. We are encouraged by the trends we continue to see driving organic growth. Occupancy was up 70 basis points over last year's first quarter and first quarter move-ins increased 7% from a year ago.  Pricing growth remained steady as revenue per unit for our senior housing business increased 2.8% versus the prior year period. We also made significant progress in controlling our cost growth, demonstrating our business model's inherent leverage when occupancy and rate grow. With the senior living industry's largest and most comprehensive platform, we continue to be enthusiastic about our prospects for 2013, and we remain intently focused on creating value for our shareholders."

Mark Ohlendorf, Co-President and CFO of Brookdale, commented, "The Company's good first quarter results come from solid execution, a less volatile economy and, importantly, the investments we are making in our own assets.  Upgrading, expanding and repositioning select
Page 1 of 14



communities in our portfolio remains our highest capital deployment priority and produces enhanced returns and CFFO.  Our strong cash flow generation and access to capital provide us with the ability to redevelop and reposition our communities to take advantage of favorable industry dynamics as well as to meet the evolving needs of our residents and their families."

Financial Results

Total revenue for the first quarter was $712.3 million, an increase of $29.6 million, or 4.3%, from the first quarter of 2012.  First quarter 2013 total revenue is comprised of resident fee revenue of $624.4 million, which increased $27.8 million, or 4.7%, from the first quarter of 2012, management fee revenue of $7.6 million, which increased $0.2 million, or 2.2%, from the first quarter of 2012, and managed community reimbursed costs of $80.3 million, which increased $1.6 million, or 2.0%.

Resident fee revenue increased primarily as a result of an increase in the average monthly revenue per unit compared to the prior year period and an increase in occupancy.  Average monthly revenue per unit for the senior housing portfolio was $4,375 in the first quarter, an increase of $118, or 2.8%, over the first quarter of 2012.  Average occupancy for all consolidated communities for the first quarter of 2013 was 88.5%, compared to 87.8% for the first quarter of 2012 and 88.7% for the fourth quarter of 2012.  For the managed community portfolio, which includes a number of pre-stabilized communities in the initial fill-up phase, average occupancy for the first quarter was 84.9%, a 60 basis point increase from 84.3% in the first quarter of 2012 and a 50 basis point decrease from the fourth quarter of 2012.

Facility operating expenses for the first quarter were $413.0 million, an increase of $14.2 million, or 3.6%, from the first quarter of 2012.  Costs incurred on behalf of managed communities increased $1.6 million, or 2.0%.

General and administrative expenses for the first quarter were $46.6 million.  Excluding integration, transaction-related and EMR roll-out costs of $2.1 million and $3.9 million in the first quarters of 2013 and 2012, respectively, and non-cash stock-based compensation expense from both periods, general and administrative expenses were $37.6 million in the first quarter of 2013 versus $34.6 million for the prior year same period.  Demonstrating the Company's efficient platform, general and administrative expenses were, excluding these items, 4.8% of resident fee revenue (including resident fee revenues under management) in the first quarter of 2013, up from 4.6% the prior year.

Non-GAAP Financial Measures

Brookdale's management utilizes Adjusted EBITDA and CFFO to evaluate the Company's performance and liquidity because these metrics exclude non-cash items such as depreciation and amortization, asset impairment charges, non-cash stock-based compensation expense, gain on facility lease termination and straight-line lease expense, net of deferred gain amortization.  Adjusted EBITDA and Cash From Facility Operations include integration, transaction-related and EMR roll-out costs of $2.1 million and $3.9 million for the three months ended March 31, 2013 and 2012, respectively.  Brookdale also uses Facility Operating Income to assess the performance of its communities.
Page 2 of 14



For the quarter ended March 31, 2013, Facility Operating Income was $204.2 million, an increase of $12.5 million, or 6.5%, over the first quarter of 2012, and Adjusted EBITDA, excluding integration, transaction-related and EMR roll-out costs in 2013 and 2012, was $112.4 million, an increase of $11.9 million, or 11.8%, over the first quarter of 2012.

Cash From Facility Operations was $67.8 million for the first quarter of 2013, or $0.55 per share.  CFFO, excluding integration, transaction-related and EMR roll-out costs for both periods, was $69.9 million for the first quarter of 2013, or $0.57 per share, an increase of $11.5 million, or 19.6%, over CFFO of $58.5 million, or $0.48 per share, for the first quarter of 2012.

Net Income

Net income for the first quarter of 2013 was $3.6 million, or $0.03 per basic and diluted common share. The net income for the quarter includes non-cash items for depreciation and amortization, non-cash stock-based compensation expense and straight-line lease expense, net of deferred gain amortization.

Operating Activities

The Company reports information on six segments.  Four segments (Retirement Centers, Assisted Living, CCRCs – Rental and CCRCs – Entry Fee) constitute the Company's consolidated senior housing portfolio.  The fifth segment, Innovative Senior Care, includes the Company's outpatient therapy, home health and hospice services.  The sixth segment, Management Services, includes the services provided to unconsolidated communities that are operated under management agreements.

Senior Housing

Revenue for the consolidated senior housing portfolio was $564.2 million for the first quarter of 2013, an increase of 4.0% from the first quarter of 2012.  Revenue was positively impacted by a 70 basis point increase in occupancy and a 2.8% increase in rate over the first quarter of 2012.  Facility operating expenses increased by $9.6 million, or 2.7%, with operating margin increasing to 35.1% from 34.3% in the first quarter of 2012. Operating income for the senior housing portfolio for the first quarter of 2013 increased by $11.9 million, or 6.4%, from the first quarter of 2012.

Same community results for the consolidated senior housing portfolio for the three months ended March 31, 2013 showed revenues grew 3.6% over the corresponding period in 2012 as revenue per unit increased by 2.6% and occupancy grew by 90 basis points.  Same community expenses grew by 2.4% over the first quarter of 2012.  Same community Facility Operating Income for the senior housing portfolio increased by 6.1% over the first quarter of 2012.

Innovative Senior Care

Revenue for the Company's ISC segment increased $6.3 million, or 11.8%, to $60.2 million, for the first quarter of 2013, primarily due to the roll-out of the Company's ancillary services programs to additional units.  In comparison to the first quarter of 2012, a volume increase in home health was partially offset by a reduction in volume in outpatient therapy.  ISC operating
Page 3 of 14



expenses increased $4.6 million, or 10.9%, primarily due to an increase in expenses incurred in connection with the continued expansion of the Company's ancillary services programs.  As a result, ISC operating income was $13.1 million, an increase of $1.7 million, or 14.9%, versus the first quarter of 2012.

By the end of the first quarter, the Company's ancillary services programs provided outpatient therapy services to approximately 38,000 Brookdale units and the Company's home health agencies were serving approximately 32,400 units across the consolidated Brookdale portfolio.   Including non-consolidated communities served by ISC, the Company's outpatient therapy and home health operations serve approximately 51,500 and 45,700 units, respectively.  The Company had six markets where hospice services were provided during the first quarter.

Liquidity

Brookdale had $28.2 million of unrestricted cash and cash equivalents and $105.0 million of restricted cash on its balance sheet at the end of the first quarter.  As of March 31, 2013, the Company had an available secured line of credit with a $230.0 million commitment and $198.6 million of availability (of which $45.0 million had been drawn as of that date).  The Company also had secured and unsecured letter of credit facilities of up to $92.5 million in the aggregate as of March 31, 2013, with issued letters of credit totaling $78.0 million.

Transactions

During the first quarter, two communities were acquired by a joint venture in which the Company has a minority interest.  The communities will be managed by the Company.  The Company also sold two communities for an aggregate selling price of $7.2 million.  The results of operations of the disposed communities were previously reported in the Assisted Living segment.  Management contracts for three newly-opened communities began in the first quarter.

During April, the Company completed refinancings of several mortgage loans totaling $339.3 million, which primarily had maturities in 2013.  In their place, the Company obtained mortgage loans totaling $312.0 million to repay the loans, with the remainder paid in cash.  Additionally, four communities became unencumbered and were added to the Company's line of credit borrowing capacity, increasing it by $25.7 million.

2013 Outlook

For the full year 2013, the Company continues to expect Cash From Facility Operations to range between $2.30 and $2.40 per share, excluding integration, transaction-related and EMR roll-out costs.  These estimates do not include the impact on operating results from possible future acquisitions or dispositions.

Supplemental Information

The Company will shortly post on the Investor Relations section of the Company's website at www.brookdaleliving.com supplemental information relating to the Company's first quarter 2013 results.  This information will also be furnished in a Form 8-K to be filed with the SEC.
Page 4 of 14



Earnings Conference Call

Brookdale's management will conduct a conference call to review the financial results of its first quarter ended March 31, 2013 on Thursday, May 2, 2013 at 9:00 AM ET.  The conference call can be accessed by dialing (866) 900-2996 (from within the U.S.) or (706) 643-2685 (from outside of the U.S.) ten minutes prior to the scheduled start and referencing the "Brookdale Senior Living First Quarter Earnings Call."

A webcast of the conference call will be available to the public on a listen-only basis at www.brookdaleliving.com.  Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast.  A replay of the webcast will be available through the website for three months following the call.

For those who cannot listen to the live call, a replay will be available until 11:59 PM ET on May 16, 2013 by dialing (855) 859-2056 (from within the U.S.) or (404) 537-3406 (from outside of the U.S.) and referencing access code "55622995".  A copy of this earnings release is posted on the Investor Relations page of the Brookdale website (www.brookdaleliving.com).

About Brookdale Senior Living

Brookdale Senior Living Inc. is a leading owner and operator of senior living communities throughout the United States.  The Company is committed to providing senior living solutions within properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents.  Currently Brookdale operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with 650 communities in 36 states and the ability to serve approximately 67,000 residents.  Through its Innovative Senior Care program, the Company also offers a range of outpatient therapy, home health, personalized living and hospice services.

Safe Harbor

Certain items in this press release and the associated earnings conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Those forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements relating to our operational initiatives and our expectations regarding their effect on our results; our expectations regarding the economy, occupancy, revenue, cash flow, expenses, capital expenditures, Program Max opportunities, cost savings, the demand for senior housing, the home resale market, expansion and development activity, acquisition opportunities, asset dispositions, our share repurchase program, taxes, capital deployment, returns on invested capital and CFFO; our expectations regarding returns to shareholders and our growth prospects; our expectations concerning the future performance of recently acquired communities and the effects of acquisitions on our financial results; our ability to secure financing or repay, replace or extend existing debt at or prior to maturity; our ability to remain in compliance with all of our debt and lease agreements (including the financial covenants contained therein); our expectations regarding liquidity and leverage; our expectations regarding financings and refinancings of assets (including the timing thereof) and their effect on our results; our expectations regarding changes in government
Page 5 of 14



reimbursement programs and their effect on our results; our plans to generate growth organically through occupancy improvements, increases in annual rental rates and the achievement of operating efficiencies and cost savings; our plans to expand our offering of ancillary services (therapy, home health and hospice); our plans to expand, redevelop and reposition existing communities; our plans to acquire additional communities, asset portfolios, operating companies and home health agencies; the expected project costs for our expansion, redevelopment and repositioning program; our expected levels of expenditures and reimbursements (and the timing thereof); our expectations regarding our sales, marketing and branding initiatives and their impact on our results; our expectations for the performance of our entrance fee communities; our ability to anticipate, manage and address industry trends and their effect on our business; our expectations regarding the payment of dividends; and our ability to increase revenues, earnings, Adjusted EBITDA, Cash From Facility Operations, and/or Facility Operating Income.  Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "would," "project," "predict," "continue," "plan" or other similar words or expressions.  Forward-looking statements are based on certain assumptions or estimates, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition, or state other forward-looking information.  Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on our operations and future prospects or which could cause events or circumstances to differ from these forward-looking statements include, but are not limited to, the risk associated with the current global economic situation and its impact upon capital markets and liquidity; changes in governmental reimbursement programs; our inability to extend (or refinance) debt (including our credit and letter of credit facilities) as it matures; the risk that we may not be able to satisfy the conditions precedent to exercising the extension options associated with certain of our debt agreements; events which adversely affect the ability of seniors to afford our monthly resident fees or entrance fees; the conditions of housing markets in certain geographic areas; our ability to generate sufficient cash flow to cover required interest and long-term operating lease payments; the effect of our indebtedness and long-term operating leases on our liquidity; the risk of loss of property pursuant to our mortgage debt and long-term lease obligations; the possibilities that changes in the capital markets, including changes in interest rates and/or credit spreads, or other factors could make financing more expensive or unavailable to us; our determination from time to time to purchase any shares under the repurchase program; our ability to fund any repurchases; our ability to effectively manage our growth; our ability to maintain consistent quality control; delays in obtaining regulatory approvals; the risk that we may not be able to expand, redevelop and reposition our communities in accordance with our plans; our ability to complete acquisitions and integrate them into our operations; competition for the acquisition of assets; our ability to obtain additional capital on terms acceptable to us; a decrease in the overall demand for senior housing; our vulnerability to economic downturns; acts of nature in certain geographic areas; terminations of our resident agreements and vacancies in the living spaces we lease; early terminations or non-renewal of management agreements; increased competition for skilled personnel; increased union activity; departure of our key officers; increases in market interest rates; environmental contamination at any of our facilities; failure to comply with existing environmental laws; an adverse determination or resolution of complaints filed against us; the cost and difficulty of complying
Page 6 of 14



with increasing and evolving regulation; and other risks detailed from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.  When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in such SEC filings.  Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our management's views as of the date of this press release and/or the associated earnings conference call.  The factors discussed above and the other factors noted in our SEC filings from time to time could cause our actual results to differ significantly from those contained in any forward-looking statement.  We cannot guarantee future results, levels of activity, performance or achievements and we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

Page 7 of 14


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

 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2013
   
2012
 
Revenue
 
   
 
Resident fees
 
$
624,370
   
$
596,549
 
Management fees
   
7,609
     
7,444
 
Reimbursed costs incurred on behalf of managed communities
   
80,287
     
78,715
 
Total revenue
   
712,266
     
682,708
 
 
               
Expense
               
Facility operating expense (excluding depreciation and amortization of $57,255 and $57,936, respectively)
   
413,003
     
398,769
 
General and administrative expense (including non-cash stock-based compensation expense of $6,894 and $6,435, respectively)
   
46,611
     
44,973
 
Facility lease expense
   
69,019
     
71,445
 
Depreciation and amortization
   
64,659
     
63,344
 
Asset impairment
   
-
     
1,083
 
Loss on acquisition
   
-
     
636
 
Gain on facility lease termination
   
-
     
(2,780
)
Costs incurred on behalf of managed communities
   
80,287
     
78,715
 
Total operating expense
   
673,579
     
656,185
 
Income from operations
   
38,687
     
26,523
 
 
               
Interest income
   
303
     
852
 
Interest expense:
               
Debt
   
(30,971
)
   
(32,050
)
Amortization of deferred financing costs and debt discount
   
(4,569
)
   
(4,473
)
Change in fair value of derivatives and amortization
   
135
     
(233
)
Loss on extinguishment of debt
   
-
     
(221
)
Equity in earnings of unconsolidated ventures
   
115
     
99
 
Other non-operating income (loss)
   
1,006
     
(111
)
Income (loss) before income taxes
   
4,706
     
(9,614
)
Provision for income taxes
   
(1,148
)
   
(930
)
Net income (loss)
 
$
3,558
   
$
(10,544
)
Basic earnings (loss) per share
 
$
0.03
   
$
(0.09
)
Weighted average shares used in computing basic earnings (loss) per share
   
122,823
     
121,145
 
 
               
Diluted earnings (loss) per share
 
$
0.03
   
$
(0.09
)
Weighted average shares used in computing diluted earnings (loss) per share
   
124,391
     
121,145
 

 

Page 8 of 14


Condensed Consolidated Balance Sheets
(in thousands)


 
 
March 31, 2013
   
December 31, 2012
 
 
 
(unaudited)
   
(audited)
 
 
 
   
 
Cash and cash equivalents
 
$
28,242
   
$
69,240
 
Cash and escrow deposits - restricted
   
42,666
     
43,096
 
Accounts receivable, net
   
109,178
     
100,401
 
Other current assets
   
103,276
     
96,301
 
Total current assets
   
283,362
     
309,038
 
Property, plant, and equipment and leasehold intangibles, net
   
3,853,423
     
3,879,977
 
Other assets, net
   
484,123
     
476,963
 
Total assets
 
$
4,620,908
   
$
4,665,978
 
 
               
Current liabilities
 
$
911,345
   
$
1,130,898
 
Long-term debt, less current portion
   
2,331,085
     
2,169,826
 
Other liabilities
   
370,609
     
368,268
 
Total liabilities
   
3,613,039
     
3,668,992
 
Stockholders' equity
   
1,007,869
     
996,986
 
Total liabilities and stockholders' equity
 
$
4,620,908
   
$
4,665,978
 
 
               




Page 9 of 14



Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
 
 
 
Three Months Ended March 31,
 
 
 
2013
   
2012
 
Cash Flows from Operating Activities
 
   
 
Net income (loss)
 
$
3,558
   
$
(10,544
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Loss on extinguishment of debt
   
-
     
221
 
Depreciation and amortization
   
69,228
     
67,817
 
Asset impairment
   
-
     
1,083
 
Equity in earnings of unconsolidated ventures
   
(115
)
   
(99
)
Distributions from unconsolidated ventures from cumulative share of net earnings
   
668
     
206
 
Amortization of deferred gain
   
(1,093
)
   
(1,093
)
Amortization of entrance fees
   
(7,133
)
   
(6,066
)
Proceeds from deferred entrance fee revenue
   
9,237
     
7,000
 
Deferred income tax benefit
   
-
     
(135
)
Change in deferred lease liability
   
748
     
1,642
 
Change in fair value of derivatives and amortization
   
(135
)
   
233
 
(Gain) loss on sale of assets
   
(926
)
   
114
 
Loss on acquisition
   
-
     
636
 
Gain on facility lease termination
   
-
     
(2,780
)
Non-cash stock-based compensation
   
6,894
     
6,435
 
Changes in operating assets and liabilities:
               
Accounts receivable, net
   
(9,064
)
   
(5,317
)
Prepaid expenses and other assets, net
   
9,140
     
(1,681
)
Accounts payable and accrued expenses
   
(10,871
)
   
(23,705
)
Tenant refundable fees and security deposits
   
(335
)
   
(442
)
Deferred revenue
   
(5,316
)
   
12,168
 
Net cash provided by operating activities
   
64,485
     
45,693
 
Cash Flows from Investing Activities
               
Increase in lease security deposits and lease acquisition deposits, net
   
(1,952
)
   
(2,217
)
Decrease in cash and escrow deposits — restricted
   
826
     
8,442
 
Purchase of marketable securities — restricted
   
-
     
(761
)
Additions to property, plant, and equipment and leasehold intangibles, net of related payables
   
(51,614
)
   
(41,533
)
Acquisition of assets, net of related payables and cash received
   
(2
)
   
(104,984
)
Issuance of notes receivable, net
   
(17
)
   
(439
)
Investment in unconsolidated ventures
   
(5,843
)
   
-
 
Distributions received from unconsolidated ventures
   
-
     
100
 
Proceeds from sale of assets, net
   
440
     
-
 
Net cash used in investing activities
   
(58,162
)
   
(141,392
)
Cash Flows from Financing Activities
               
Proceeds from debt
   
8,955
     
175,838
 
Repayment of debt and capital lease obligations
   
(17,707
)
   
(86,068
)
Proceeds from line of credit
   
105,000
     
130,000
 
Repayment of line of credit
   
(140,000
)
   
(110,000
)
Payment of financing costs, net of related payables
   
(2,200
)
   
(2,378
)
Refundable entrance fees:
               
   Proceeds from refundable entrance fees
   
7,636
     
7,989
 
   Refunds of entrance fees
   
(9,320
)
   
(8,102
)
Cash portion of loss on extinguishment of debt
   
-
     
(118
)
Recouponing and payment of swap termination
   
-
     
(99
)
Other
   
315
     
(86
)
   Net cash (used in) provided by financing activities
   
(47,321
)
   
106,976
 
            Net (decrease) increase in cash and cash equivalents
   
(40,998
)
   
11,277
 
            Cash and cash equivalents at beginning of period
   
69,240
     
30,836
 
            Cash and cash equivalents at end of period
 
$
28,242
   
$
42,113
 
 
               
 
Page 10 of 14


Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a measure of operating performance that is not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  Adjusted EBITDA should not be considered in isolation or as a substitute for net income, income from operations or cash flows provided by or used in operations, as determined in accordance with GAAP.  Adjusted EBITDA is a key measure of the Company's operating performance used by management to focus on operating performance and management without mixing in items of income and expense that relate to long-term contracts and the financing and capitalization of the business.  We define Adjusted EBITDA as net income (loss) before provision (benefit) for income taxes, non-operating (income) expense items, (gain) loss on sale or acquisition of communities (including  gain (loss) on facility lease termination), depreciation and amortization (including non-cash impairment charges), straight-line lease expense (income), amortization of deferred gain, amortization of deferred entrance fees, non-cash stock-based compensation expense, and change in future service obligation and including entrance fee receipts and refunds (excluding (i) first generation entrance fee receipts from the sale of units at a recently opened entrance fee CCRC prior to stabilization and (ii) first generation entrance fee refunds not replaced by second generation entrance fee receipts at the recently opened community prior to stabilization).

We believe Adjusted EBITDA is useful to investors in evaluating our performance, results of operations and financial position for the following reasons:

·
It is helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance to our day-to-day operations;
·
It provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance; and
·
It is an indication to determine if adjustments to current spending decisions are needed.
Page 11 of 14



The table below reconciles Adjusted EBITDA from net income (loss) for the three months ended March 31, 2013 and 2012 (in thousands):
 
 
 
Three Months Ended March 31(1),
 
 
 
2013
   
2012
 
Net income (loss)
 
$
3,558
   
$
(10,544
)
Provision for income taxes
   
1,148
     
930
 
Equity in earnings of unconsolidated ventures
   
(115
)
   
(99
)
Loss on extinguishment of debt
   
-
     
221
 
Other non-operating (income) loss
   
(1,006
)
   
111
 
Interest expense:
               
    Debt
   
24,448
     
24,340
 
    Capitalized lease obligation
   
6,523
     
7,710
 
    Amortization of deferred financing costs and debt discount
   
4,569
     
4,473
 
    Change in fair value of derivatives and amortization
   
(135
)
   
233
 
Interest income
   
(303
)
   
(852
)
Income from operations
   
38,687
     
26,523
 
Gain on facility lease termination
   
-
     
(2,780
)
Loss on acquisition
   
-
     
636
 
Depreciation and amortization
   
64,659
     
63,344
 
Asset impairment
   
-
     
1,083
 
Straight-line lease expense
   
748
     
1,642
 
Amortization of deferred gain
   
(1,093
)
   
(1,093
)
Amortization of entrance fees
   
(7,133
)
   
(6,066
)
Non-cash stock-based compensation expense
   
6,894
     
6,435
 
Entrance fee receipts(2)
   
16,873
     
14,989
 
Entrance fee disbursements
   
(9,320
)
   
(8,102
)
Adjusted EBITDA
 
$
110,315
   
$
96,611
 
 
               
 
(1) The calculation of Adjusted EBITDA includes integration, transaction-related and EMR roll-out costs of $2.1 million and $3.9 million for the three months ended March 31, 2013 and 2012, respectively.
(2) Includes the receipt of refundable and non-refundable entrance fees.

Cash From Facility Operations

Cash From Facility Operations (CFFO) is a measurement of liquidity that is not calculated in accordance with GAAP and should not be considered in isolation as a substitute for cash flows provided by or used in operations, as determined in accordance with GAAP.  We define CFFO as net cash provided by (used in) operating activities adjusted for changes in operating assets and liabilities, deferred interest and fees added to principal, refundable entrance fees received, first generation entrance fee receipts at a recently opened entrance fee CCRC prior to stabilization, entrance fee refunds disbursed adjusted for first generation entrance fee refunds not replaced by second generation entrance fee receipts at the recently opened community prior to stabilization, lease financing debt amortization with fair market value or no purchase options, gain (loss) on facility lease termination, recurring capital expenditures (net), distributions from unconsolidated ventures from cumulative share of net earnings, CFFO from unconsolidated ventures, and other.  Recurring capital expenditures include routine expenditures capitalized in accordance with GAAP that are funded from current operations.  Amounts excluded from recurring capital expenditures consist primarily of major projects, renovations, community repositionings, expansions, systems projects or other non-recurring or unusual capital items (including
Page 12 of 14



integration capital expenditures) or community purchases that are funded using lease or financing proceeds, available cash and/or proceeds from the sale of communities that are held for sale.

We believe CFFO is useful to investors in evaluating our liquidity for the following reasons:

·
It provides an assessment of our ability to facilitate meeting current financial and liquidity goals.
·
To assess our ability to:
(i)
service our outstanding indebtedness;
(ii)
pay dividends; and
(iii)
make regular recurring capital expenditures to maintain and improve our facilities.

The table below reconciles CFFO from net cash provided by operating activities for the three months ended March 31, 2013 and 2012 (in thousands):
 
 
 
Three Months Ended March 31(1),
 
 
 
2013
   
2012
 
 
 
   
 
Net cash provided by operating activities
 
$
64,485
   
$
45,693
 
Changes in operating assets and liabilities
   
16,446
     
18,977
 
Refundable entrance fees received(2)
   
7,636
     
7,989
 
Entrance fee refunds disbursed
   
(9,320
)
   
(8,102
)
Recurring capital expenditures, net
   
(9,324
)
   
(8,064
)
Lease financing debt amortization with fair market value or no purchase options
   
(3,371
)
   
(2,929
)
Distributions from unconsolidated ventures from cumulative share of net earnings
   
(668
)
   
(206
)
CFFO from unconsolidated ventures
   
1,958
     
1,228
 
Cash From Facility Operations
 
$
67,842
   
$
54,586
 
 
(1) The calculation of Cash From Facility Operations includes integration, transaction-related and EMR roll-out costs of $2.1 million and $3.9 million for the three months ended March 31, 2013 and 2012, respectively.
(2) Total entrance fee receipts for both the three months ended March 31, 2013 and 2012 were $16.9 million,  and $15.0 million, respectively, including $9.2 million and $7.0 million, respectively, of non-refundable entrance fee receipts included in net cash provided by operating activities.

The calculation of CFFO per share is based on weighted average outstanding common shares for the period, excluding any unvested restricted shares.  Annual CFFO per share for all periods is calculated as the sum of the quarterly amounts for the year.

Facility Operating Income

Facility Operating Income is not a measurement of operating performance calculated in accordance with GAAP and should not be considered in isolation as a substitute for net income, income from operations, or cash flows provided by or used in operations, as determined in accordance with GAAP.  We define Facility Operating Income as net income (loss) before provision (benefit) for income taxes, non-operating (income) expense items, (gain) loss on sale or acquisition of communities (including gain (loss) on facility lease termination), depreciation and amortization (including non-cash impairment charges), facility lease expense, general and
Page 13 of 14



administrative expense, including non-cash stock-based compensation expense, change in future service obligation, amortization of deferred entrance fee revenue and management fees.

We believe Facility Operating Income is useful to investors in evaluating our facility operating performance for the following reasons:

·
It is helpful in identifying trends in our day-to-day facility performance;
·
It provides an assessment of our revenue generation and expense management; and
·
It provides an indicator to determine if adjustments to current spending decisions are needed.

The table below reconciles Facility Operating Income from net income (loss) for the three months ended March 31, 2013 and 2012 (in thousands):
 
 
 
Three Months Ended March 31,
 
 
 
2013
   
2012
 
 
 
   
 
Net income (loss)
 
$
3,558
   
$
(10,544
)
Provision for income taxes
   
1,148
     
930
 
Equity in earnings of unconsolidated ventures
   
(115
)
   
(99
)
Loss on extinguishment of debt
   
-
     
221
 
Other non-operating (income) loss
   
(1,006
)
   
111
 
Interest expense:
               
    Debt
   
24,448
     
24,340
 
    Capitalized lease obligation
   
6,523
     
7,710
 
    Amortization of deferred financing costs and debt discount
   
4,569
     
4,473
 
    Change in fair value of derivatives and amortization
   
(135
)
   
233
 
Interest income
   
(303
)
   
(852
)
Income from operations
   
38,687
     
26,523
 
Gain on facility lease termination
   
-
     
(2,780
)
Depreciation and amortization
   
64,659
     
63,344
 
Asset impairment
   
-
     
1,083
 
Loss on acquisition
   
-
     
636
 
Facility lease expense
   
69,019
     
71,445
 
General and administrative (including non-cash stock-based compensation expense)
   
46,611
     
44,973
 
Amortization of entrance fees
   
(7,133
)
   
(6,066
)
Management fees
   
(7,609
)
   
(7,444
)
Facility Operating Income
 
$
204,234
   
$
191,714
 
 
               

 

 
Page 14 of 14

Brookdale Senior Living Inc.
 
 
 
 
 
 
 
Corporate Overview - selected financial information
 
 
 
 
 
 
 
As of March 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Overview
 
 
 
 
 
 
 
 
Brookdale Senior Living Inc. ("BKD") is a leading owner and operator of senior living communities throughout the United States.  The Company is committed to providing an exceptional living experience through properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents.  As of March 31, 2013, the Company operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with 649 communities in 36 states and the ability to serve approximately 67,000 residents. Through its Innovative Senior Care program, the Company also offers a range of outpatient therapy, home health and hospice services, primarily to residents of its communities.
 
Stock Listing
 
 
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
NYSE: BKD
 
 
 
 
 
 
 
 
Community Information
 
Ownership Type
 
Number of Communities
   
Number of Units
   
Percentage of
Q1 2013
Resident and
Management
Fees
   
Percentage of
Q1 2013 Facility
Operating
Income
 
Owned
   
219
     
22,914
     
42.1
%
   
41.5
%
Leased
   
329
     
25,710
     
47.2
%
   
49.0
%
Innovative Senior Care ("ISC")
   
N/A
 
   
N/A
 
   
9.5
%
   
6.0
%
Managed
   
101
     
18,284
     
1.2
%
   
3.5
%
    Total
   
649
     
66,908
     
100.0
%
   
100.0
%
 
                               
Operating Type - By Segment
                               
Retirement Centers
   
76
     
14,524
     
20.4
%
   
24.3
%
Assisted Living
   
431
     
21,489
     
41.2
%
   
44.0
%
CCRCs - Rental
   
27
     
6,745
     
15.9
%
   
13.3
%
CCRCs - Entry Fee
   
14
     
5,866
     
11.8
%
   
8.9
%
Innovative Senior Care ("ISC")
   
N/A
 
   
N/A
 
   
9.5
%
   
6.0
%
Managed
   
101
     
18,284
     
1.2
%
   
3.5
%
    Total
   
649
     
66,908
     
100.0
%
   
100.0
%
 
CFFO Per Share
 
 
 
 
 
 
 
 
($ except where indicated)
 
FY 2012
   
FY 2013
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year(1)
     
Q1
 
Reported CFFO
 
$
0.45
   
$
0.51
   
$
0.50
   
$
0.50
   
$
1.96
   
$
0.55
 
Add: integration, transaction-related and EMR roll-out costs
   
0.03
     
0.06
     
0.04
     
0.06
     
0.19
     
0.02
 
Adjusted CFFO
 
$
0.48
   
$
0.57
   
$
0.54
   
$
0.56
   
$
2.15
   
$
0.57
 
 
                                               
Weighted average shares (000's)
   
121,145
     
121,708
     
122,493
     
122,608
             
122,823
 
Period end outstanding shares (excluding unvested restricted shares) (000's)
   
121,197
     
122,474
     
122,575
     
122,738
             
123,040
 
 
(1) Full year CFFO for all periods is calculated as the sum of the quarterly amounts for the year.
 
Investor Relations
Ross Roadman
 
 
 
 
 
 
 
SVP, Investor Relations
 
 
 
 
 
 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
111 Westwood Place, Suite 400
 
 
 
 
 
 
 
Brentwood, TN 37027
 
 
 
 
 
 
 
Phone (615) 564-8104
 
 
 
 
 
 
 
rroadman@brookdaleliving.com
 
 
 
 
 
 
 
 
Note:  See accompanying first quarter earnings release for non-GAAP financial measure definitions and reconciliations.
 
 
 
 
Page 1

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
Segment Operating Information
 
 
 
 
 
 
 
As of March 31, 2013
 
 
 
 
 
 
 
 
Senior Housing Operating Information
 
 
 
 
 
 
 
 
 
FY 2012
   
FY 2013
 
 
   
Q1
     
Q2
     
Q3
     
Q4
   
Full Year
     
Q1
 
Retirement Centers
                                 
         
Number of communities (period end)
   
76
     
76
     
76
     
76
     
76
     
76
 
Total average units(1)
   
14,452
     
14,451
     
14,445
     
14,433
     
14,445
     
14,429
 
Weighted average unit occupancy
   
88.8
%
   
88.8
%
   
89.1
%
   
89.7
%
   
89.1
%
   
89.5
%
Senior Housing average monthly revenue per unit(2)
 
$
3,235
   
$
3,268
   
$
3,275
   
$
3,276
   
$
3,263
   
$
3,328
 
 
                                               
Assisted Living
                                               
Number of communities (period end)
   
434
     
434
     
434
     
433
     
433
     
431
 
Total average units(1)
   
21,635
     
21,637
     
21,652
     
21,577
     
21,625
     
21,556
 
Weighted average unit occupancy
   
88.5
%
   
88.6
%
   
89.1
%
   
89.7
%
   
88.9
%
   
89.1
%
Senior Housing average monthly revenue per unit(2)
 
$
4,379
   
$
4,390
   
$
4,393
   
$
4,401
   
$
4,390
   
$
4,523
 
 
                                               
CCRCs - Rental
                                               
Number of communities (period end)
   
26
     
27
     
27
     
27
     
27
     
27
 
Total average units(1)
   
6,626
     
6,659
     
6,691
     
6,691
     
6,667
     
6,687
 
Weighted average unit occupancy
   
86.5
%
   
85.8
%
   
85.8
%
   
87.0
%
   
86.3
%
   
87.6
%
Senior Housing average monthly revenue per unit(2)
 
$
5,536
   
$
5,561
   
$
5,619
   
$
5,639
   
$
5,588
   
$
5,709
 
 
                                               
CCRCs - Entry Fee
                                               
Number of communities (period end)
   
14
     
14
     
14
     
14
     
14
     
14
 
Total average units(1)
   
5,171
     
5,199
     
5,221
     
5,249
     
5,210
     
5,281
 
Weighted average unit occupancy
   
83.7
%
   
83.4
%
   
83.4
%
   
84.1
%
   
83.7
%
   
84.6
%
Senior Housing average monthly revenue per unit(2)
 
$
5,055
   
$
4,963
   
$
4,975
   
$
4,921
   
$
4,978
   
$
5,011
 
 
                                               
Senior Housing Totals
                                               
Number of communities (period end)
   
550
     
551
     
551
     
550
     
550
     
548
 
Total average units(1)
   
47,884
     
47,946
     
48,009
     
47,950
     
47,947
     
47,953
 
Weighted average unit occupancy
   
87.8
%
   
87.7
%
   
88.0
%
   
88.7
%
   
88.0
%
   
88.5
%
Senior Housing average monthly revenue per unit(2)
 
$
4,257
   
$
4,266
   
$
4,279
   
$
4,282
   
$
4,271
   
$
4,375
 
 
                                               
Management Services - Total
                                               
Number of communities (period end)
   
96
     
96
     
97
     
97
     
97
     
101
 
Total average units(1)
   
18,253
     
18,144
     
18,081
     
18,141
     
18,155
     
18,114
 
Weighted average occupancy
   
84.3
%
   
84.0
%
   
84.3
%
   
85.4
%
   
84.5
%
   
84.9
%
Average monthly revenue per unit(2)
 
$
3,373
   
$
3,369
   
$
3,386
   
$
3,399
   
$
3,382
   
$
3,460
 
 
Innovative Senior Care Operating Information
 
 
 
 
 
 
 
 
FY 2012
 
 
FY 2013
 
Q1
Q2
Q3
Q4
 
 
Q1
Innovative Senior Care
 
 
 
 
 
 
 
Brookdale units served:
 
 
 
 
 
 
 
Outpatient Therapy consolidated
        35,909
          36,844
        38,016
         37,961
 
 
       38,017
Home Health consolidated
        32,655
          31,944
        32,650
         32,242
 
 
       32,389
Outpatient Therapy non-consolidated
          9,685
            9,861
        12,540
         13,448
 
 
       13,502
Home Health non-consolidated
          4,735
          10,667
        12,597
         13,569
 
 
       13,326
Total Brookdale units served:
 
 
 
 
 
 
 
Outpatient Therapy
        45,594
          46,705
        50,556
         51,409
 
 
       51,519
Home Health
        37,390
          42,611
        45,247
         45,811
 
 
       45,715
 
 
 
 
 
 
 
 
Outpatient Therapy treatment codes
907,816
957,364
939,241
762,233
 
 
821,308
Home Health average census
3,448
3,554
3,651
4,187
 
 
4,289
 
(1)
Total average units operated represent the average units operated during the period, excluding equity homes.
(2)
Average monthly revenue per unit represents the average of the total monthly revenues, excluding amortization of entrance fees, divided by average occupied units.
 
Page 2

 
Brookdale Senior Living Inc.
 
 
 
 
 
 
Senior Housing Data by Ownership Type
 
 
 
 
 
 
As of March 31, 2013
 
 
 
 
 
 
 
Senior Housing Operating Information
 
 
 
 
 
 
 
 
 
FY 2012
   
FY 2013
 
 
   
Q1
     
Q2
     
Q3
     
Q4 (1)
   
Q1
 
 
                                       
Owned Properties
                                       
Number of communities (period end)
   
209
     
210
     
210
     
221
     
219
 
Total average units(2)
   
21,281
     
21,350
     
21,425
     
22,243
     
22,243
 
Weighted average unit occupancy
   
87.2
%
   
87.4
%
   
87.6
%
   
89.0
%
   
88.8
%
Senior Housing average monthly revenue per unit(3)
 
$
4,302
   
$
4,297
   
$
4,318
   
$
4,323
   
$
4,416
 
 
                                       
Leased Properties with Bargain Purchase Options
                                       
Number of communities (period end)
   
18
     
18
     
18
     
9
     
9
 
Total average units(2)
   
3,263
     
3,263
     
3,261
     
2,948
     
2,949
 
Weighted average unit occupancy
   
88.4
%
   
87.6
%
   
88.0
%
   
88.3
%
   
88.2
%
Senior Housing average monthly revenue per unit(3)
 
$
3,878
   
$
3,874
   
$
3,903
   
$
3,802
   
$
3,891
 
 
                                       
Leased Properties with Fair Market Value Purchase Options
                                       
Number of communities (period end)
   
77
     
77
     
77
     
74
     
74
 
Total average units(2)
   
3,929
     
3,927
     
3,927
     
3,364
     
3,364
 
Weighted average unit occupancy
   
91.1
%
   
91.2
%
   
92.0
%
   
91.8
%
   
90.8
%
Senior Housing average monthly revenue per unit(3)
 
$
4,384
   
$
4,423
   
$
4,482
   
$
4,549
   
$
4,675
 
 
                                       
Leased Properties without Purchase Options
                                       
Number of communities (period end)
   
246
     
246
     
246
     
246
     
246
 
Total average units(2)
   
19,411
     
19,406
     
19,396
     
19,395
     
19,397
 
Weighted average unit occupancy
   
87.6
%
   
87.3
%
   
87.6
%
   
87.9
%
   
87.9
%
Senior Housing average monthly revenue per unit(3)
 
$
4,241
   
$
4,264
   
$
4,256
   
$
4,256
   
$
4,344
 
 
                                       
Senior Housing Totals
                                       
Number of communities (period end)
   
550
     
551
     
551
     
550
     
548
 
Total average units(2)
   
47,884
     
47,946
     
48,009
     
47,950
     
47,953
 
Weighted average unit occupancy
   
87.8
%
   
87.7
%
   
88.0
%
   
88.7
%
   
88.5
%
Senior Housing average monthly revenue per unit(3)
 
$
4,257
   
$
4,266
   
$
4,279
   
$
4,282
   
$
4,375
 
 
                                       
 
(1)
During the three months ended December 31, 2012, the Company acquired the underlying real estate interest in 12 communities that the Company previously leased.  The results of operations of the previously leased communities are included within Owned Properties beginning in the fourth quarter of FY 2012.  Prior quarters have not been recast.
(2)
Total average units operated represent the average units operated during the period, excluding equity homes.
(3)
Average monthly revenue per unit represents the average of the total monthly revenues, excluding amortization of entrance fees, divided by average occupied units.
 
Page 3

 
Brookdale Senior Living Inc.
Segment Financial Data
As of March 31, 2013
 
Financial Data
($ in 000s)
 
 
Retirement Centers
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
       124,512
    125,813
    126,401
    127,176
     503,902
 
    128,922
Expenses
         73,521
      73,138
      75,679
      75,979
     298,317
 
      75,588
Segment Operating Income
         50,991
      52,675
      50,722
      51,197
     205,585
 
      53,334
Segment Operating Margin
41.0%
41.9%
40.1%
40.3%
40.8%
 
41.4%
 
 
 
 
 
 
 
 
Assisted Living
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
       251,352
    252,399
    254,179
    255,407
  1,013,337
 
    260,615
Expenses
       160,789
    162,233
    163,017
    166,114
     652,153
 
    164,330
Segment Operating Income
         90,563
      90,166
      91,162
      89,293
     361,184
 
      96,285
Segment Operating Margin
36.0%
35.7%
35.9%
35.0%
35.6%
 
36.9%
 
 
 
 
 
 
 
 
CCRCs - Rental
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
         95,112
      95,258
      96,681
      98,428
     385,479
 
    100,327
Expenses
         67,093
      68,494
      71,581
      72,248
     279,416
 
      71,250
Segment Operating Income
         28,019
      26,764
      25,100
      26,180
     106,063
 
      29,077
Segment Operating Margin
29.5%
28.1%
26.0%
26.6%
27.5%
 
29.0%
 
 
 
 
 
 
 
 
CCRCs - Entry Fee
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
         71,719
      70,858
      71,413
      71,711
     285,701
 
      74,308
Expenses
         54,914
      55,341
      56,249
      57,792
     224,296
 
      54,737
Segment Operating Income
         16,805
      15,517
      15,164
      13,919
       61,405
 
      19,571
Segment Operating Margin
23.4%
21.9%
21.2%
19.4%
21.5%
 
26.3%
 
 
 
 
 
 
 
 
Bridge to Cash Basis for CCRCs - Entry Fee segment
 
 
 
 
 
 
Revenue
         71,719
      70,858
      71,413
      71,711
     285,701
 
      74,308
Less: revenue amortization (non-cash)
         (6,066)
      (6,310)
      (6,459)
      (6,527)
      (25,362)
 
      (7,133)
Add: net entrance fees (cash)
           6,887
      14,265
      19,108
      15,089
       55,349
 
        7,553
Adjusted revenue
         72,540
      78,813
      84,062
      80,273
     315,688
 
      74,728
Expenses
         54,914
      55,341
      56,249
      57,792
     224,296
 
      54,737
Adjusted Segment Operating Income
         17,626
      23,472
      27,813
      22,481
       91,392
 
      19,991
Adjusted Segment Operating Margin
24.3%
29.8%
33.1%
28.0%
29.0%
 
26.8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Senior Housing
FY 2012
 
FY 2013
(GAAP Basis)
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
       542,695
    544,328
    548,674
    552,722
  2,188,419
 
    564,172
Expenses
       356,317
    359,206
    366,526
    372,133
  1,454,182
 
    365,905
Operating Income
       186,378
    185,122
    182,148
    180,589
     734,237
 
    198,267
Operating Margin
34.3%
34.0%
33.2%
32.7%
33.6%
 
35.1%
G&A Allocation (1)
         22,751
      20,876
      21,402
      20,374
       85,403
 
      25,526
G&A Allocation as a % of revenue
4.2%
3.8%
3.9%
3.7%
3.9%
 
4.5%
Adjusted Operating Income
       163,627
    164,246
    160,746
    160,215
     648,834
 
    172,741
Adjusted Operating Margin
30.2%
30.2%
29.3%
29.0%
29.6%
 
30.6%
 
 
Page 4

 
 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
Segment Financial Data
 
 
 
 
 
 
 
 
As of March 31, 2013
 
 
 
 
 
 
 
 
 
Financial Data (continued)
($ in 000s)
 
Innovative Senior Care ("ISC")
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
         53,854
      57,722
      56,856
      56,085
     224,517
 
      60,198
Expenses
         42,452
      44,309
      44,941
      45,035
     176,737
 
      47,098
Segment Operating Income
         11,402
      13,413
      11,915
      11,050
       47,780
 
      13,100
Segment Operating Margin
21.2%
23.2%
21.0%
19.7%
21.3%
 
21.8%
G&A Allocation (1)
           5,954
        5,453
        5,467
        5,358
       22,232
 
        6,055
G&A Allocation as a % of revenue
11.1%
9.4%
9.6%
9.6%
9.9%
 
10.1%
Adjusted Segment Operating Income
           5,448
        7,960
        6,448
        5,692
       25,548
 
        7,045
Adjusted Segment Operating Margin
10.1%
13.8%
11.3%
10.1%
11.4%
 
11.7%
 
 
 
 
 
 
 
 
 
Total Senior Housing and ISC
FY 2012
 
FY 2013
(GAAP Basis)
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
       596,549
    602,050
    605,530
    608,807
  2,412,936
 
    624,370
Expenses
       398,769
    403,515
    411,467
    417,168
  1,630,919
 
    413,003
Operating Income
       197,780
    198,535
    194,063
    191,639
     782,017
 
    211,367
Operating Margin
33.2%
33.0%
32.0%
31.5%
32.4%
 
33.9%
G&A Allocation (1)
         28,705
      26,329
      26,869
      25,732
     107,635
 
      31,581
G&A Allocation as a % of revenue
4.8%
4.4%
4.4%
4.2%
4.5%
 
5.1%
Adjusted Operating Income
       169,075
    172,206
    167,194
    165,907
     674,382
 
    179,786
Adjusted Operating Margin
28.3%
28.6%
27.6%
27.3%
27.9%
 
28.8%
 
 
 
 
 
 
 
 
 
Management Services
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue (Management Fees)
           7,444
        7,499
        7,407
        8,436
       30,786
 
        7,609
Expenses (G&A Allocation) (1)
           5,929
        5,325
        5,644
        5,311
       22,209
 
        6,031
Segment Operating Income
           1,515
        2,174
        1,763
        3,125
         8,577
 
        1,578
Segment Operating Margin
20.4%
29.0%
23.8%
37.0%
27.9%
 
20.7%
 
 
Total Senior Housing, ISC and Management Services
FY 2012
 
FY 2013
(GAAP Basis)
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
       603,993
    609,549
    612,937
    617,243
  2,443,722
 
    631,979
Expenses
       398,769
    403,515
    411,467
    417,168
  1,630,919
 
    413,003
Operating Income
       205,224
    206,034
    201,470
    200,075
     812,803
 
    218,976
Operating Margin
34.0%
33.8%
32.9%
32.4%
33.3%
 
34.6%
G&A Allocation (1)
         34,634
      31,654
      32,513
      31,043
     129,844
 
      37,612
G&A Allocation as a % of revenue
5.7%
5.2%
5.3%
5.0%
5.3%
 
6.0%
Adjusted Operating Income
       170,590
    174,380
    168,957
    169,032
     682,959
 
    181,364
Adjusted Operating Margin
28.2%
28.6%
27.6%
27.4%
27.9%
 
28.7%
 
(1) Excludes non-cash stock-based compensation expense and integration, transaction-related and EMR roll-out costs.
 
Page 5

 
Brookdale Senior Living Inc.
 
 
 
 
 
 
 
 
Senior Housing Data by Ownership Type
 
 
 
 
 
 
 
 
As of March 31, 2013
 
 
 
 
 
 
 
 
 
Financial Data
($ in 000s)
 
Owned Properties
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4 (1)
Full Year
 
Q1
Revenue
        243,302
        244,720
        247,473
        260,980
        996,475
 
        266,322
Expenses
        163,822
        165,862
        171,356
        177,350
        678,390
 
        175,672
Segment Operating Income
          79,480
          78,858
          76,117
          83,630
        318,085
 
          90,650
Segment Operating Margin
32.7%
32.2%
30.8%
32.0%
31.9%
 
34.0%
 
 
 
 
 
 
 
 
Bridge to Cash Basis for CCRCs - Entry Fee
 
 
 
 
 
 
 
Revenue
        243,302
        244,720
        247,473
        260,980
        996,475
 
        266,322
Less: revenue amortization (non-cash)
          (3,692)
          (4,208)
          (4,294)
          (4,265)
        (16,459)
 
          (4,664)
Add: net entrance fees (cash)
            5,802
          10,487
          14,234
          11,481
          42,004
 
            5,449
Adjusted revenue
        245,412
        250,999
        257,413
        268,196
     1,022,020
 
        267,107
Expenses
        163,822
        165,862
        171,356
        177,350
        678,390
 
        175,672
Adjusted Segment Operating Income
          81,590
          85,137
          86,057
          90,846
        343,630
 
          91,435
Adjusted Segment Operating Margin
33.2%
33.9%
33.4%
33.9%
33.6%
 
34.2%
 
 
 
 
 
 
 
 
Leased Properties with Bargain Purchase Options
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
          35,394
          34,853
          35,362
          31,494
        137,103
 
          32,254
Expenses
          23,287
          23,433
          24,264
          21,334
          92,318
 
          20,766
Segment Operating Income
          12,107
          11,420
          11,098
          10,160
          44,785
 
          11,488
Segment Operating Margin
34.2%
32.8%
31.4%
32.3%
32.7%
 
35.6%
 
 
 
 
 
 
 
 
Leased Properties with Fair Market Value Purchase Options
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
          47,104
          47,534
          48,560
          42,140
        185,338
 
          42,842
Expenses
          29,974
          30,192
          28,999
          27,443
        116,608
 
          26,940
Segment Operating Income
          17,130
          17,342
          19,561
          14,697
          68,730
 
          15,902
Segment Operating Margin
36.4%
36.5%
40.3%
34.9%
37.1%
 
37.1%
 
 
 
 
 
 
 
 
Leased Properties without Purchase Options
FY 2012
 
FY 2013
 
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
        216,895
        217,221
        217,279
        218,108
        869,503
 
        222,754
Expenses
        139,234
        139,719
        141,907
        146,006
        566,866
 
        142,527
Segment Operating Income
          77,661
          77,502
          75,372
          72,102
        302,637
 
          80,227
Segment Operating Margin
35.8%
35.7%
34.7%
33.1%
34.8%
 
36.0%
 
Total Senior Housing
FY 2012
 
FY 2013
(GAAP Basis)
Q1
Q2
Q3
Q4
Full Year
 
Q1
Revenue
        542,695
        544,328
        548,674
        552,722
     2,188,419
 
        564,172
Expenses
        356,317
        359,206
        366,526
        372,133
     1,454,182
 
        365,905
Operating Income
        186,378
        185,122
        182,148
        180,589
        734,237
 
        198,267
Operating Margin
34.3%
34.0%
33.2%
32.7%
33.6%
 
35.1%
 
(1)  During the three months ended December 31, 2012, the Company acquired the underlying real estate interest in 12 communities that the Company previously leased.  The results of operations of the previously leased communities are included within Owned Properties beginning in the fourth quarter of FY 2012.  Prior quarters have not been recast.
 
 
Page 6

 
Brookdale Senior Living Inc.
 
 
 
 
 
 
Same Community and Capital Expenditure Information
 
 
 
 
 
 
As of March 31, 2013
 
 
 
 
 
 
 
Same Community Information
($ in 000s, except Avg. Mo. Revenue/Unit)
 
  
Senior Housing
 
 
 
Three Months Ended March 31,
 
 
 
2013
   
2012
   
% Change
 
Revenue
 
$
550,402
   
$
531,052
     
3.6
%
Operating Expense
   
360,667
     
352,234
     
2.4
%
Facility Operating Income
 
$
189,735
   
$
178,818
     
6.1
%
Facility Operating Margin
   
34.5
%
   
33.7
%
   
0.8
%
 
                       
# Communities
   
545
     
545
         
Avg. Period Occupancy
   
88.6
%
   
87.7
%
   
0.9
%
Avg. Mo. Revenue/Unit
 
$
4,365
   
$
4,254
     
2.6
%
 
                       
 
                       
 
      
Innovative Senior Care
 
 
 
Three Months Ended March 31,
 
 
   
2013
     
2012
   
% Change
 
Revenue
 
$
32,549
   
$
37,457
     
-13.1
%
Operating Expense
   
25,756
     
28,910
     
-10.9
%
Facility Operating Income
 
$
6,793
   
$
8,547
     
-20.5
%
Facility Operating Margin
   
20.9
%
   
22.8
%
   
-1.9
%
 
                       
# Units served (1)
   
27,707
     
27,707
         
 
 
(1)  Units are included in same store calculation where either the therapy or home health, whichever came later, has stabilized or produced revenue for twenty-four months.
 
 
Schedule of Capital Expenditures
($ in 000s)
 
 
 
Three Months Ended March 31,
 
Type
 
2013
   
2012
 
Recurring
 
$
9,324
   
$
8,564
 
Reimbursements
   
-
     
(500
)
    Net Recurring
   
9,324
     
8,064
 
Corporate (2)
   
4,046
     
6,705
 
EBITDA-enhancing / Major Projects (3)
   
21,173
     
13,673
 
Program Max / Development, net (4)
   
14,636
     
12,158
 
        Net Total Capital Expenditures (5)
 
$
49,179
   
$
40,600
 
 
(2)  Corporate includes capital expenditures for information technology systems and equipment and expenditures supporting the expansion of our support platform and ancillary services programs.
(3)  Includes EBITDA-enhancing projects (primarily community renovations and apartment upgrades) and other major building infrastructure projects.
(4)  Includes community expansions and major repositioning or upgrade projects.  Also includes de novo community developments.  Amounts shown are amounts invested, net of third party lender or lessor funding received of $2.4 million and $0.4 million for the three months ended March 31, 2013 and 2012, respectively.
(5)  Approximately $10.3 million and $11.4 million of expense was recognized during the three months ended March 31, 2013 and 2012, respectively, for normal repairs and maintenance and capital spend under $1,500 per invoice, except for unit turnovers.
 
 
Page 7

 
 
Brookdale Senior Living Inc.
Capital Structure - selected financial information
As of March 31, 2013
($ in 000s)
 
Debt Maturities and Scheduled Principal Repayments
 
 
 
 
Initial Maturities
 
 
 
Mortgage
   
weighted
   
Line of
   
weighted
   
Mort. Debt
   
weighted
   
Capital
   
weighted
   
Total
 
 
 
Debt (1)
   
rate (2)
   
Credit
   
rate (2)
   
& Line
   
rate (2)
   
Leases
   
rate (2)
   
Debt
 
 
 
   
   
   
   
   
   
   
   
 
2013
 
$
271,100
     
2.11
%
 
$
-
     
-
   
$
271,100
     
2.11
%
 
$
23,371
     
8.27
%
 
$
294,471
 
2014
   
166,079
     
5.49
%
   
-
     
-
     
166,079
     
5.49
%
   
32,318
     
8.29
%
   
198,397
 
2015
   
48,952
     
5.41
%
   
-
     
-
     
48,952
     
5.41
%
   
33,346
     
8.32
%
   
82,298
 
2016
   
44,853
     
5.01
%
   
-
     
-
     
44,853
     
5.01
%
   
29,152
     
8.41
%
   
74,005
 
2017
   
332,763
     
5.16
%
   
-
     
-
     
332,763
     
5.16
%
   
47,047
     
9.10
%
   
379,810
 
Thereafter
   
1,417,504
     
3.83
%
   
45,000
     
3.75
%
   
1,462,504
     
3.83
%
   
147,445
     
7.72
%
   
1,609,949
 
Total
 
$
2,281,251
     
4.00
%
 
$
45,000
     
3.75
%
 
$
2,326,251
     
3.99
%
 
$
312,679
     
8.16
%
 
$
2,638,930
 
 
                                                                       
 
 
 
Final Maturities (3)
 
 
 
Mortgage
   
weighted
   
Line of
   
weighted
   
Mort. Debt
   
weighted
   
Capital
   
weighted
   
Total
 
 
 
Debt (1)
   
rate (2)
   
Credit
   
rate (2)
   
& Line
   
rate (2)
   
Leases
   
rate (2)
   
Debt
 
 
                                                                       
2013
 
$
172,777
     
1.62
%
 
$
-
     
-
   
$
172,777
     
1.62
%
 
$
23,371
     
8.27
%
 
$
196,148
 
2014
   
27,458
     
4.11
%
   
-
     
-
     
27,458
     
4.11
%
   
32,318
     
8.29
%
   
59,776
 
2015
   
190,386
     
5.70
%
   
-
     
-
     
190,386
     
5.70
%
   
33,346
     
8.32
%
   
223,732
 
2016
   
46,345
     
4.95
%
   
-
     
-
     
46,345
     
4.95
%
   
29,152
     
8.41
%
   
75,497
 
2017
   
334,314
     
5.14
%
   
-
     
-
     
334,314
     
5.14
%
   
47,047
     
9.10
%
   
381,361
 
Thereafter
   
1,509,971
     
3.77
%
   
45,000
     
3.75
%
   
1,554,971
     
3.77
%
   
147,445
     
7.72
%
   
1,702,416
 
Total
 
$
2,281,251
     
4.00
%
 
$
45,000
     
3.75
%
 
$
2,326,251
     
3.99
%
 
$
312,679
     
8.16
%
 
$
2,638,930
 
 
 
Coverage Ratios
 
 
 
Three months ended March 31, 2013
 
 
 
Units
   
FOI
   
Adj. FOI **
   
Interest/Cash Lease
Payments
   
Coverage
 
Owned communities
   
22,914
   
$
96,059
   
$
79,591
   
$
24,448
     
3.3
x
Leased communities *
   
25,710
   
$
114,305
   
$
95,814
   
$
79,259
     
1.2
x
 
*  The leased communities include the capital leases.
 
 
 
 
 
 
 
**  Adjusted for 5% management fee and capital expenditures @ $350/unit.
 
 
 
 
 
 
 
Debt Amortization
 
 
 
Three months ended March 31,
 
 
 
2013
   
2012
 
Scheduled debt amortization
 
$
10,361
   
$
11,596
 
Lease financing debt amortization - FMV or no purchase option (4)
   
3,371
     
2,929
 
Lease financing debt amortization - bargain purchase option
   
3,975
     
3,442
 
    Total debt amortization
 
$
17,707
   
$
17,967
 
 
 
Line Availability
 
($000s)
 
12/31/11
   
03/31/12
   
06/30/12
   
09/30/12
   
12/31/12
   
03/31/13
 
 
 
   
   
   
   
   
 
Total line commitment
 
$
230,000
   
$
230,000
   
$
230,000
   
$
230,000
   
$
230,000
   
$
230,000
 
 
                                               
Line availability (7)
 
$
194,165
   
$
199,786
   
$
201,659
   
$
189,978
   
$
191,436
   
$
198,563
 
Ending line balance
   
65,000
     
85,000
     
75,000
     
80,000
     
80,000
     
45,000
 
Available to draw
 
$
129,165
   
$
114,786
   
$
126,659
   
$
109,978
   
$
111,436
   
$
153,563
 
Cash and cash equivalents
   
30,836
     
42,113
     
38,676
     
42,504
     
69,240
     
28,242
 
Total liquidity (available to draw + cash)
 
$
160,001
   
$
156,899
   
$
165,335
   
$
152,482
   
$
180,676
   
$
181,805
 
 
                                               
Total letters of credit outstanding
 
$
78,104
   
$
77,754
   
$
78,324
   
$
78,127
   
$
78,112
   
$
77,952
 
 
 
 
Leverage Ratios
 
 
 
 
 
 
 
 
 
 
 
 
   
Annualized
 
 
 
Balance
   
Leverage
 
Debt (1)
 
$
2,281,251
   
 
Capital leases
   
312,679
   
 
   Total Debt
 
$
2,593,930
     
5.9
x
 
               
Plus: Line of credit (cash borrowings)
   
45,000
         
Less: Unrestricted cash
   
(28,242
)
       
Less: Cash held as collateral against existing debt