Capital Senior Living Corporation Reports Third Quarter 2004 Earnings.DALLAS Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. -- Capital Senior Living Corporation ("Capital") (NYSE NYSE See: New York Stock Exchange :CSU See DSU/CSU. 1. CSU - California State University. 2. CSU - Cleveland State University. 3. CSU - Channel Service Unit. ), one of the country's largest operators of senior living communities, today announced operating results for the third quarter of fiscal 2004. Company highlights for the third quarter include: --Revenues of $23.7 million vs. $18.7 million for the third quarter last year --Net loss of $1.4 million, or a $0.05 loss per share --Cash earnings (net income plus depreciation and amortization) of $1.7 million, or $0.07 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share --Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (income from operations plus depreciation and amortization) of $5.1 million --Triad communities leased to 89 percent and physical occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy was 88 percent --Average occupancy rate Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) on stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. communities of 90 percent --Operating margins (before property taxes, insurance and management fees) of 45 percent in stabilized independent and assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. communities --All community revenue increase of 8 percent from the prior year For the third quarter of 2004, the Company reported revenues of $23.7 million, compared to revenues of $18.7 million in the third quarter of 2003, an increase of 27 percent. The 2004 revenues include approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.8 million of revenue from seven communities in Triad I that are consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: due to the adoption on Dec. 31, 2003 of FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). Interpretation No. 46 "Consolidation of Variable Interest Entities" ("FIN fin, organ of locomotion characteristic of fish and consisting of thin tissue supported by cartilaginous or bony rays. In some fish, e.g., the eel, a single fin extends from the back, around the tail, and along the ventral surface. 46"). Revenues for the third quarter of 2004 also include approximately $0.2 million of management fees earned through CGI CGI in full Common Gateway Interface. Specification by which a Web server passes data between itself and an application program. Typically, a Web user will make a request of the Web server, which in turn passes the request to a CGI application program. Management, Inc. ("CGIM CGIM Conference on Computer Graphics and Imaging (IASTED International Conference) "), a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. which currently operates 14 senior independent and assisted living communities, including one community in prelease. As previously announced, Capital acquired CGIM in mid-August Noun 1. mid-August - the middle part of August period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" of this year. Revenues for the third quarter of 2003 include approximately $0.8 million of revenue from a property in Sacramento Sacramento, city, United States Sacramento (săkrəmĕn`tō), city (1990 pop. 369,365), state capital and seat of Sacramento co., central Calif. , Calif. that was sold in a sale/manage back transaction at the end of the third quarter last year. On a comparable basis, total revenues grew by approximately 10 percent from the third quarter of the prior year. The Company reported a third quarter 2004 loss of $1.4 million, or $0.05 per share, compared to income of $0.3 million or $0.01 per diluted share in the comparable period of 2003. Last year's third quarter included a gain from the sale/manage back of the Sacramento property. Excluding this gain from last year's results, the Company would have reported a loss of $0.08 per share from operations. "We are pleased to report that revenues, EBITDA and cash earnings from operations continue to demonstrate significant growth," commented James A. Stroud This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. , Chairman of the Company. "This growth is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to both higher occupancy rates and improvement in average monthly rents, which have combined for an annual revenue increase of 10% in our consolidated portfolio." Operating and Financial Results For the third quarter of 2004, the Company reported revenues of $23.7 million, compared to revenues of $18.7 million in the third quarter of 2003, an increase of 27 percent. Adjusted EBITDA (defined as income from operations plus depreciation and amortization) for the third quarter of 2004 increased 61 percent to $5.1 million, compared to $3.1 million in the prior year period. Interest expense net of interest income was approximately $0.5 million higher in the third quarter of 2004 compared to the third quarter of 2003, primarily due to the Company including the debt on the seven communities in Triad I on Dec. 31, 2003. The Company reported a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss of $1.7 million in the third quarter of 2004, compared to a pre-tax profit of $0.4 million in the third quarter of last year. During the third quarter of last year, the Company realized a pre-tax gain of approximately $3.1 million due to the sale/manage back of a community in Sacramento, Calif. Excluding gains on the sale of assets from both quarters, the Company's pre-tax loss was reduced from approximately $2.7 million in the third quarter of 2003 to $1.8 million in the third quarter of 2004. Of the $1.8 million pre-tax loss in the third quarter of 2004, approximately $0.8 million is attributable to the consolidation of Triad I under FIN 46 and $1.0 million is attributable to other operations. The Company reported a net loss of $1.4 million, or $0.05 per share, for the third quarter of 2004. Approximately $0.03 of the $0.05 per share loss is the result of consolidating Triad I. While the Company consolidates Triad I under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), it does not receive a tax benefit from these losses. If the Triad I loss had received a tax benefit consistent with the other consolidated entities, the loss per share for the Company would have been reduced from $0.05 to $0.04 for the third quarter of 2004. Cash earnings, defined as net income plus depreciation, were $1.7 million or $0.07 per diluted share. "We are pleased that the occupancy rates on our Triad communities reached 88 percent and our stabilized portfolio achieved a 90 percent level," said Lawrence Lawrence. 1 City (1990 pop. 26,763), Marion co., central Ind., a residential suburb of Indianapolis, on the West Fork of the White River. It has light manufacturing. 2 City (1990 pop. 65,608), seat of Douglas co., NE Kans. A. Cohen cohen or kohen (Hebrew: “priest”) Jewish priest descended from Zadok (a descendant of Aaron), priest at the First Temple of Jerusalem. The biblical priesthood was hereditary and male. , Chief Executive Officer. "Industry trends are positive and we expect overall occupancy rates to continue to improve through 2005. Results continue in line with expectations, with losses narrowing and continued growth in cash earnings, the yardstick by which we measure operating performance." For the first nine months of 2004, the Company produced revenues of $69.3 million and a net loss of $5.0 million, or a loss of $0.20 per share. This compares to revenues of $47.4 million and net income of $4.5 million or $0.23 per diluted share for the same period of 2003. The net income of $0.23 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the first nine months of 2003 included gains on the sale of assets of approximately $0.20 diluted earnings per share. Adjusted EBITDA was $13.7 million in the first nine months of 2004 and cash earnings were $3.9 million or $0.16 per diluted share. As of Sept. 30, 2004, the Company had $23.3 million in cash, cash equivalents, restricted cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has . During the quarter, the Company classified approximately $33 million of mortgage debt as current and plans to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. this obligation prior to its September September: see month. 2005 maturity. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was $151.3 million, equivalent to $5.88 per outstanding share. 3Q04 Conference Call Information The Company will host a conference call with senior management to discuss the Company's third quarter 2004 financial results. The call will be held on Wednesday Wednesday: see week. , Nov. 3, 2004 at 11:00 a.m. Eastern Time. The call-in call-in adj. Being in a format such that listeners or viewers are invited to have their telephone conversations with the host or guests on a show broadcast to other listeners: a call-in radio show. n. number is 913-981-5571. No confirmation number is required. A link to a simultaneous webcast of the teleconference will be available at www.capitalsenior.com through Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. or RealPlayer A multimedia player from RealNetworks that plays RealAudio and RealVideo transmissions. Included is the technology (see RealJukebox) for organizing music files and creating MP3 files from audio CDs. . For the convenience of the Company's shareholders and the public, the conference call will be recorded and available for replay starting Nov. 3, 2004 at 2:00 p.m. Eastern Time, until Nov. 10, 2004 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 491011. The conference call will also be made available for playback Playback could mean:
About the Company Capital Senior Living Corporation is one of the nation's largest operators of residential communities for senior adults. The Company's operating philosophy emphasizes a continuum Continuum (pl. -tinua or -tinuums) can refer to:
The Company currently operates 56 senior living communities in 20 states with an aggregate capacity of approximately 8,700 residents, including 41 senior living communities which the Company owns or in which the Company has an ownership interest, and 15 communities it manages for third parties. In the communities operated by the company, 85 percent of residents live independently and 15 percent of residents require assistance with activities of daily living. This release contains certain financial information not derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles (GAAP), including adjusted EBITDA, cash earnings, cash earnings per share and other items. The Company believes this information is useful to investors and other interested parties. Such information should not be considered as a substitute for any measures derived in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Reconciliation of this information to the most comparable GAAP measures is included as an attachment See attach a file. to this release. The forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. in this release are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to, the Company's ability to find suitable acquisition properties at favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms, financing, licensing, business conditions, risks of downturns in economic conditions generally, satisfaction of closing conditions such as those pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to licensure licensure (lī´s  nsh , availability of insurance at
commercially reasonable rates, and changes in accounting principles and
interpretations among others, and other risks and factors identified
from time to time in our reports filed with the Securities and Exchange
Commission.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
September December
30, 31,
2004 2003
--------- ---------
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $17,110 $6,594
Restricted cash 6,200 7,187
Accounts receivable, net 2,149 1,295
Accounts receivable from affiliates 264 604
Federal and state income taxes receivable 3,629 994
Deferred taxes 356 385
Property tax and insurance deposits 2,461 1,855
Prepaid expenses and other 4,904 2,437
--------- ---------
Total current assets 37,073 21,351
Property and equipment, net 372,949 380,115
Deferred taxes 6,279 6,554
Notes receivable from affiliates 5,220 4,981
Investments in limited partnerships 1,898 1,762
Assets held for sale 2,034 2,391
Other assets, net 7,280 4,179
--------- ---------
Total assets $432,733 $421,333
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,669 $2,158
Accrued expenses 7,932 6,611
Current portion of notes payable 42,907 23,488
Customer deposits 1,931 1,929
--------- ---------
Total current liabilities 55,439 34,186
Deferred income 863 112
Deferred income from affiliates 120 102
Other long-term liabilities 7,480 6,736
Notes payable, net of current portion 217,316 255,549
Minority interest in consolidated partnership 254 281
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value:
Authorized shares -- 15,000; no shares issued
or outstanding -- --
Common stock, $.01 par value:
Authorized shares -- 65,000
Issued and outstanding shares -- 25,736 and
19,847 at September 30, 2004 and December
31, 2003, respectively 257 198
Additional paid-in capital 124,914 92,336
Retained earnings 26,090 31,833
--------- ---------
Total shareholders' equity 151,261 124,367
--------- ---------
Total liabilities and shareholders' equity $432,733 $421,333
========= =========
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2004 2003 2004 2003
--------- -------- --------- --------
Revenues:
Resident and health care
revenue $22,964 $17,973 $67,569 $44,490
Unaffiliated management
services revenue 229 -- 310 295
Affiliated management services
revenue 503 665 1,460 2,467
Affiliated development fees -- 26 -- 163
--------- -------- --------- --------
Total revenues 23,696 18,664 69,339 47,415
Expenses:
Operating expenses 14,458 12,034 43,673 27,877
General and administrative
expenses 4,156 3,482 11,994 8,749
Depreciation and amortization 3,023 2,541 8,931 5,227
--------- -------- --------- --------
Total expenses 21,637 18,057 64,598 41,853
--------- -------- --------- --------
Income from operations 2,059 607 4,741 5,562
Other income (expense):
Interest income 147 441 468 3,862
Interest expense (4,024) (3,784) (11,939) (8,954)
Other income 135 3,181 275 6,745
--------- -------- --------- --------
(Loss) income before income
taxes and minority interest in
consolidated partnership (1,683) 445 (6,455) 7,215
Benefit (provision) for income
taxes 325 (171) 1,421 (2,783)
--------- -------- --------- --------
(Loss) income before minority
interest in consolidated
partnership (1,358) 274 (5,034) 4,432
Minority interest in
consolidated partnership 2 6 36 116
--------- -------- --------- --------
Net (loss) income $(1,356) $280 $(4,998) $4,548
========= ======== ========= ========
Per share data:
Basic (loss) earnings per
share $(0.05) $0.01 $(0.20) $0.23
========= ======== ========= ========
Diluted (loss) earnings per
share $(0.05) $0.01 $(0.20) $0.23
========= ======== ========= ========
Weighted average shares
outstanding -- basic 25,733 19,806 25,035 19,764
========= ======== ========= ========
Weighted average shares
outstanding -- diluted 25,733 20,005 25,035 19,922
========= ======== ========= ========
CAPITAL SENIOR LIVING CORPORATION
RECONCILIATION OF NON GAAP ITEMS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash earnings
reconciliation:
Net (loss) income $(1,356) $280 $(4,998) $4,548
Depreciation and
amortization 3,023 2,541 8,931 5,227
----------- ----------- ----------- -----------
Cash earnings $1,667 $2,821 $3,933 $9,775
=========== =========== =========== ===========
Cash earnings per
diluted share
reconciliation:
Net (loss) income
per diluted share $(0.05) $0.01 $(0.20) $0.23
Depreciation and
amortization per
diluted share 0.12 0.13 0.36 0.26
----------- ----------- ----------- -----------
Cash earnings per
diluted share $0.07 $0.14 $0.16 $0.49
=========== =========== =========== ===========
Adjusted EBITDA
reconciliation:
Income from
operations $2,059 $607 $4,741 $5,562
Depreciation and
amortization 3,023 2,541 8,931 5,227
----------- ----------- ----------- -----------
Adjusted EBITDA $5,082 $3,148 $13,672 $10,789
=========== =========== =========== ===========
Reconciliation of net
(loss) income before
gain on sale of
assets:
Net income $280 $4,548
Less: Gain on sale
of assets, net of
tax (1,929) (4,081)
----------- -----------
Net (loss) income
before gain on
sale of assets $(1,649) $467
=========== ===========
Reconciliation of net
(loss) income before
gain on sale of
assets per diluted
share:
Net income $0.01 $0.23
Less: Gain on sale
of assets, net of
tax (0.09) (0.20)
----------- -----------
Net (loss) income
before gain on
sale of assets $(0.08) $0.03
=========== ===========
Reconciliation of
pretax loss excluding
gains on sale of
assets:
Pretax loss $(1,683) $445 $(4,998) $607
Less: Gain on sale
of assets, net of
tax (159) (3,112) (159) (6,603)
----------- ----------- ----------- -----------
Adjusted pretax
loss $(1,842) $2,667 $(5,157) $5,996
=========== =========== =========== ===========
Reconciliation of net
loss per diluted
share if Triad I loss
had received a tax
benefit:
Net loss reported $(1,356)
Income tax benefit
reported 325
-----------
Loss before income
taxes (1,681)
Proforma provision
for income taxes 605
-----------
Net loss $(1,076)
-----------
Net loss per diluted
share $(0.04)
===========
Reconciliation of
shareholders' equity
per
outstanding share:
Shareholders' equity $151,261
Common shares
outstanding at
September 30, 2004 25,736
-----------
Shareholders'
equity per
outstanding share $5.88
===========
Capital Senior Living Corporation
Supplemental Information
Communities Resident
Capacity
----------------- -------------
Q3 04 Q3 03 Q3 04 Q3 03
-------- -------- ------ ------
Portfolio Data
I. Property Ownership / Management
Consolidated properties 31 25 4,831 4,109
Joint Venture properties (equity
method) 10 17 1,867 2,745
Third party property managed 14 -- 1,824 --
Third party property managed
(prelease) 1 -- 146 --
-------- -------- ------ ------
Total 56 42 8,668 6,854
Independent living 7,331 5,925
Assisted living 1,167 759
Skilled nursing 170 170
------ ------
Total 8,668 6,854
II. Percentage of Operating
Portfolio
Consolidated properties 55.4% 59.5% 55.7% 60.0%
Joint venture properties (Equity
Method) 17.9% 40.5% 21.5% 40.0%
Third Party property managed 25.0% 0.0% 21.0% 0.0%
Third party property managed
(prelease) 1.8% 0.0% 1.79% 0.0%
-------- -------- ------ ------
Total 100.0% 100.0% 100.0% 100.0%
Independent living 84.6% 86.4%
Assisted living 13.5% 11.1%
Skilled nursing 2.0% 2.5%
------ ------
Total 100.0% 100.0%
Selected Operating Results
I. Consolidated Properties
Number of properties 31 25
Resident capacity 4,831 4,109
Occupancy 85.3% 80.8%
Revenue (in millions) 22.9 17.9
Average monthly rent 2,074 1,999
Operating margin 37% 33%
II. Waterford / Wellington
properties
Number of properties 19 19
Resident capacity 2,548 2,548
Occupancy 86.3% 79.6%
Revenue (in millions) 10.4 9.1
Average monthly rent 1,803 1,710
Operating margin 35% 28%
III. Total Portfolio
Number of properties 56 42
Resident capacity 8,668 6,854
Occupancy 84.8% 81.2%
Revenue (in millions) 37.5 30.7
Average monthly rent 2,101 2,078
Operating margin 39% 37%
IV.General and Administrative Expenses (in thousands)
Corporate 2,097 1,836
Property 2,059 1,646
-------- --------
Total 4,156 3,482
V. Consolidated Debt Information (in thousands, except for
interest rates)
Excludes insurance premium financing
Fixed rate debt 68,111 69,574
Variable rate debt with a floor 50,678 48,105
Variable rate debt, with a cap 34,843 35,928
Variable rate debt, no cap or
floor 103,542 83,549
-------- --------
Total debt 257,174 237,156
-------- --------
Fixed rate debt -- weighted
average rate 7.8% 7.8%
Variable rate debt -- weighted
average rate 4.9% 4.4%
Total debt -- weighted rate 5.7% 5.4%
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