SOURCE: Assisted Living Concepts, Inc.

February 24, 2009 07:00 ET

Assisted Living Concepts, Inc. Announces 2008 Fourth Quarter and Full Year Results -- Solid Fourth Quarter Results Despite Economic Conditions

MENOMONEE FALLS, WI--(Marketwire - February 24, 2009) - Assisted Living Concepts, Inc. (NYSE: ALC)

Highlights:

--  Percent of revenue from private pay grows to 93% in 2008 fourth
    quarter
--  Adjusted EBITDAR as a percent of revenues increases to 29.4% in 2008,
    from 28.2 % in 2007
--  Private pay occupancy in 2008 fourth quarter maintains third quarter
    level
--  Approximately 80 expansion units on line at year end
    

Assisted Living Concepts, Inc. ("ALC") (NYSE: ALC) reported net income of $3.0 million in the 2008 fourth quarter as compared to net income of $4.1 million in the 2007 fourth quarter. Net income declined primarily from an increase in residence lease expense. For the 2008 year, ALC reported net income of $14.3 million as compared to net income of $17.2 million in 2007.

Diluted earnings per common share for the fourth quarter of 2008 were $0.05 per share as compared to $0.06 per share for the fourth quarter of 2007. Diluted earnings per common share for the 2008 year were $0.23 per share as compared to $0.25 per share for 2007.

"Private pay occupancy remained flat in the fourth quarter of 2008, despite the numerous economic headwinds," commented Laurie Bebo, President and Chief Executive Officer of Assisted Living Concepts, Inc. "We look forward to the new year with the opening of the remaining expansion units helping to offset the soft economic outlook."

Certain non-GAAP financial measures are used in the discussions in this release in evaluating the performance of the business. See attached tables for definitions of adjusted EBITDA and adjusted EBITDAR, reconciliations of net income to adjusted EBITDA and adjusted EBITDAR, calculations of adjusted EBITDA and adjusted EBITDAR as a percentage of total revenues, and non-GAAP financial measure reconciliation information.

As of December 31, 2008, ALC operated 216 assisted living residences representing 9,154 units.

Quarters ended December 31, 2008, December 31, 2007, September 30, 2008

Revenues of $57.6 million in the fourth quarter ended December 31, 2008 increased $1.1 million or 2.0% from $56.5 million in the fourth quarter of 2007 and decreased $0.8 million or 1.3 % from $58.4 million in the third quarter of 2008.

Adjusted EBITDA for the fourth quarter of 2008 was $11.2 million, and 19.5% of revenues and

--  decreased $1.2 million or 9.9% from $12.5 million and 22.1% of
    revenues in the fourth quarter of 2007; and
--  decreased $0.3 million or 2.7% from $11.6 million and 19.8% of
    revenues in the third quarter of 2008.
    

Adjusted EBITDAR for the fourth quarter of 2008 was $16.3 million, and 28.2% of revenues and

--  increased $0.2 million or 1.3% from $16.0 million and declined from
    28.4% of revenues in the fourth quarter of 2007; and
--  decreased $0.3 million or 1.8% from $16.6 million and decreased from
    28.4% of revenues in the third quarter of 2008.
    

Fourth quarter 2008 compared to fourth quarter 2007

Revenues in the fourth quarter of 2008 increased from the fourth quarter of 2007 primarily due to additional revenues from acquired residences ($4.0 million) and higher average daily revenue as a result of rate increases ($2.0 million), partially offset by the planned reduction in the number of units occupied by Medicaid residents ($2.8 million) and a reduction in the number of units occupied by private pay residents ($2.1 million).

Adjusted EBITDA decreased in the fourth quarter of 2008 primarily due to an increase in residence lease expense ($1.4 million) and an increase in residence operations expenses excluding the loss on property from hurricanes ($1.2 million), partially offset by increased revenues discussed above ($1.1 million) and a decrease in general and administrative expenses excluding non-cash equity based compensation ($0.3 million). Adjusted EBITDAR increased for the reasons discussed above for adjusted EBITDA excluding the increase in residence lease expense ($1.4 million). Residence operations expenses decreased primarily from a reduction in labor and food expenses associated with lower occupancy, partially offset by less favorable experience in our self-insurance programs as compared to the prior year. General and administrative expenses decreased primarily from a decrease in salaries and bonus expenses. Residence lease expense increased primarily from the January 1, 2008, acquisition of the operations of BBLRG, LLC, doing business as CaraVita.

Fourth quarter 2008 compared to the third quarter 2008

Revenues in the fourth quarter of 2008 decreased from the third quarter of 2008 primarily due to the planned reduction in the number of units occupied by Medicaid residents ($0.5 million) and decreases in rates ($0.3 million).

Decreased adjusted EBITDA and adjusted EBITDAR in the fourth quarter of 2008 as compared to the third quarter of 2008 resulted primarily from decreased revenues as discussed above ($0.8 million), partially offset by a decrease in residence operations expenses excluding the loss on property from hurricanes ($0.3 million) and general and administrative expenses excluding non-cash equity based compensation ($0.2 million). Residence operations expenses decreased primarily from seasonal decreases in utility expenses and favorable experience in our self-insurance programs. General and administrative expenses decreased primarily because our all-company annual conference occurred in the third quarter of 2008.

Years ended December 31, 2008 and December 31, 2007

Revenues of $234.1 million in 2008 increased $4.7 million or 2.1% from $229.3 million in 2007.

Adjusted EBITDA for 2008 was $49.0 million, and 20.9% of revenues and decreased $1.3 million or 2.5% from $50.3 million and 21.9% of revenues in 2007.

Adjusted EBITDAR for 2008 was $68.9 million, and 29.4% of revenues and increased $4.3 million or 6.7% from $64.6 million and 28.2% of revenues in 2007.

2008 year compared to 2007 year

Revenues in 2008 increased from 2007 primarily due to additional revenues from acquired residences ($18.3 million), higher average daily revenue as a result of rate increases ($12.1 million), and one additional day in 2008 due to leap year ($0.6 million), partially offset by a reduction in the number of units occupied by private pay residents ($9.8 million), the planned reduction in the number of units occupied by Medicaid residents ($15.9 million), and the absence of revenue from leasing ALC's corporate office ($0.6 million) in 2008 only.

Adjusted EBITDA decreased for 2008 as compared to 2007 primarily from an increase in residence lease expense ($5.6 million) and an increase in residence operations expenses excluding the loss on property from hurricanes ($0.8 million), partially offset by higher revenues as discussed above ($4.7 million) and a decrease in general and administrative expenses excluding non-cash equity based compensation ($0.4 million). Adjusted EBITDAR increased as a result of the reasons discussed above for adjusted EBITDA excluding the increase in residence lease expense ($5.6 million). Residence operations expenses increased primarily from acquisitions, partially offset by a reduction in labor and food expense associated with lower occupancy. Residence lease expenses increased primarily from the CaraVita acquisition.

Share repurchase program

On August 6, 2008, ALC's Board of Directors authorized an increase in its Class A common stock repurchase program by $15 million bringing the total authorization to $80 million. In the fourth quarter of 2008, ALC repurchased approximately 1.4 million shares of its Class A common stock at an aggregate cost of approximately $5.9 million and an average price of $4.24 per share.

Expansion Program Update

We had completed, licensed, and begun accepting new residents in approximately 80 units under our expansion program by the end of the fourth quarter of 2008. Construction continues on the remaining expansion units in our program to add 400 units to existing owned buildings. Weather issues, primarily related to heavy rains and flooding in the Midwest and hurricanes in the Texas and Louisiana regions, obtaining regulatory approvals, and other unforeseen circumstances have resulted in delays. We are currently targeting completion of 170 units in the first quarter of 2009, 100 in the second quarter, 25 units in the third quarter, and the remaining 25 in the fourth quarter. To date, cost estimates remain consistent with our original estimates of $125,000 per unit.

Financing Activities and Liquidity

At December 31, 2008 ALC maintained a strong liquidity position with cash of approximately $19 million and undrawn lines of $41 million. Expenses during the fourth quarter included $120 thousand of costs associated with a financing proposal that was not completed. ALC continues to seek additional financing on unencumbered properties.

Investor Call

ALC has scheduled a conference call later this morning, February 24, 2009 at 10:00 a.m. (Eastern Time) to discuss financial results for the fourth quarter. The toll-free number for the live call is 888-428-4476, or international 651-291-0618. A taped rebroadcast will be available approximately three hours following the live call until midnight on March 24, 2009. To access the rebroadcast of the call, dial 800-475-6701, or international 320-365-3844 and use the access code 984774.

About Us

Assisted Living Concepts, Inc. and its subsidiaries operate 216 assisted living residences with capacity for over 9,000 residents in 20 states. ALC's assisted living facilities typically consist of 40 to 60 units and offer residents a supportive, home-like setting and assistance with the activities of daily living. ALC employs approximately 4,650 people.

Forward-looking Statements

Statements contained in this release other than statements of historical fact, including statements regarding anticipated financial performance, business strategy and management's plans and objectives for future operations including managements expectations about improving occupancy and private payer mix, are forward-looking statements. These forward-looking statements generally include words such as "expect," "point toward," "intend," "will," "indicate," "anticipate," "believe," "estimate," "plan," "strategy" or "objective." Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. In addition to the risks and uncertainties referred to in the release in connection with forward-looking statements, other risks and uncertainties are identified in ALC's' filings with United States Securities and Exchange Commissions and include, but are not limited to, the following: changes in the health care industry in general and the long-term senior care industry in particular because of political and economic influences; changes in general economic conditions, including changes in the availability of credit at reasonable rates; changes in regulations governing the industry and ALC's compliance with such regulations; changes in government funding levels for health care services; resident care litigation, including exposure for punitive damage claims and increased insurance costs, and other claims asserted against ALC; ALC's ability to maintain and increase census levels; ALC's ability to attract and retain qualified personnel; the availability and terms of capital to fund ALC's capital expenditures; changes in competition; and demographic changes. Given these risks and uncertainties, readers are cautioned not to place undue reliance on ALC's forward-looking statements. All forward-looking statements contained in this report are necessarily estimates reflecting the best judgment of the party making such statements based upon current information. ALC assumes no obligation to update any forward-looking statement.

                       ASSISTED LIVING CONCEPTS, INC.
                 Condensed Consolidated Statements of Income
                  (In thousands, except earnings per share)

                                 Three Months Ended
                                    December 31,          Year Ended
                                    (Unaudited)           December 31,
                               --------------------- ---------------------
                                  2008       2007       2008       2007
                               ---------- ---------- ---------- ----------
Revenues                       $   57,617 $   56,502 $  234,085 $  229,347
Expenses:
  Residence operations
   (exclusive of depreciation
   and amortization and
   residence lease expense
   shown below)                    38,329     36,875    152,851    151,684
  General and administrative        3,251      3,584     12,789     13,073
  Residence lease expense           5,006      3,556     19,900     14,310
  Depreciation and amortization     4,775      4,554     18,710     17,642
  Transaction costs                    --         --         --         56
                               ---------- ---------- ---------- ----------
    Total operating expenses       51,361     48,569    204,250    196,765
                               ---------- ---------- ---------- ----------
Income from operations              6,256      7,933     29,835     32,582
Other expense:
  Interest income                     143        240        630      1,718
  Interest expense                 (1,876)    (1,854)    (7,727)    (6,809)
                               ---------- ---------- ---------- ----------
Income before income taxes          4,523      6,319     22,738     27,491
Income tax expense                 (1,493)    (2,264)    (8,415)   (10,312)
                               ---------- ---------- ---------- ----------
Net income                     $    3,030 $    4,055 $   14,323 $   17,179
                               ========== ========== ========== ==========
Weighted average common shares:
  Basic                            60,825     65,875     62,428     68,172
  Diluted                          61,457     66,532     63,084     68,863
Per share data:
  Basic earnings per common
   share                       $     0.05 $     0.06 $     0.23 $     0.25
                               ========== ========== ========== ==========
  Diluted earnings per
   common share                $     0.05 $     0.06 $     0.23 $     0.25
                               ========== ========== ========== ==========
Adjusted EBITDA (1)            $   11,248 $   12,487 $   49,026 $   50,280
                               ========== ========== ========== ==========
Adjusted EBITDAR (1)           $   16,254 $   16,043 $   68,926 $   64,590
                               ========== ========== ========== ==========

(1) See attached tables for definitions of adjusted EBITDA and adjusted
    EBITDAR and reconciliations of net income to adjusted EBITDA and
    adjusted EBITDAR.




                       ASSISTED LIVING CONCEPTS, INC.
                        Consolidated Balance Sheets
              (In thousands, except share and per share data)

                                                          December 31,
                                                      --------------------
                                                        2008       2007
                                                      ---------  ---------
                        ASSETS
Current Assets:
  Cash and cash equivalents                           $  19,905  $  14,066
  Investments                                             3,139      5,252
  Accounts receivable, less allowances of $689 and
   $992, respectively                                     2,696      2,908
  Prepaid expenses, supplies and other receivables        3,463      5,089
  Deposits in escrow                                      2,343      2,482
  Income tax receivable                                   3,147         --
  Deferred income taxes                                   4,614      4,080
                                                      ---------  ---------
    Total current assets                                 39,307     33,877
Property and equipment, net                             422,791    395,141
Goodwill                                                 16,315     19,909
Intangible assets, net                                   13,443        827
Restricted cash                                           4,534      8,943
Cash designated for acquisition                              --     14,864
Other assets                                              2,231      2,680
                                                      ---------  ---------
    Total Assets                                      $ 498,621  $ 476,241
                                                      =========  =========

           LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                                    $  13,574  $   7,800
  Accrued liabilities                                    17,898     17,951
  Deferred revenue                                        6,739      6,346
  Accrued income taxes                                       --        198
  Current maturities of long-term debt                   19,392     26,543
  Current portion of self-insured liabilities               300        300
                                                      ---------  ---------
    Total current liabilities                            57,903     59,138
Accrual for self-insured liabilities                      1,176        941
Long-term debt                                          136,890    103,176
Deferred income taxes                                    11,811      9,008
Other long-term liabilities                              11,102      9,444
Commitments and contingencies
                                                      ---------  ---------
    Total Liabilities                                   218,882    181,707
                                                      ---------  ---------
Preferred stock, par value $0.01 per share,
 25,000,000 shares authorized, no shares issued and
 outstanding, respectively                                   --         --
Class A Common Stock, par value $0.01 per share,
 400,000,000 authorized, 52,296,246 and 56,131,873
 issued and outstanding, respectively                       595        595
Class B Common Stock, par value $0.01 per share,
 75,000,000 authorized, 7,736,398 and 8,727,458
 issued and outstanding, respectively                       100        100
Additional paid-in capital                              313,647    313,548
Accumulated other comprehensive (loss) income            (1,989)       103
Retained earnings                                        33,641     19,318
Treasury stock at cost, 9,591,993 and 4,691,060
 shares, respectively                                   (66,255)   (39,130)
                                                      ---------  ---------
    Total Stockholders' Equity                          279,739    294,534
                                                      ---------  ---------
Total Liabilities and Stockholders' Equity            $ 498,621  $ 476,241
                                                      =========  =========





                       ASSISTED LIVING CONCEPTS, INC.
                   Consolidated Statements of Cash Flows
                             (In thousands)

                                                 Year Ended December 31,
                                              ----------------------------
                                                2008      2007      2006
                                              --------  --------  --------
OPERATING ACTIVITIES:
Net income                                    $ 14,323  $ 17,179  $  9,009
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Depreciation and amortization                 18,710    17,642    16,699
  Amortization of purchase accounting
   adjustments for:
    Leases and debt                               (248)   (1,076)     (527)
    Below market resident leases                    --       (39)   (1,187)
  Provision for bad debts                         (303)       94       214
  Provision for self-insured liabilities           435        78       415
  Payments of self-insured liabilities            (200)     (308)     (271)
  Loss on sale or disposal of fixed assets         196        --        --
  Loss on impairment of long-lived assets,
   including impairments in discontinued
   operations                                       --        --     5,018
  Equity-based compensation expense                 99        --        --
  Change in fair value of derivative              (655)       --        --
  Deferred income taxes                          5,878     1,334       335
Changes in assets and liabilities:
  Accounts receivable                              515     1,555    (1,258)
  Supplies, prepaid expenses and other
   receivables                                   1,626     1,507    (3,564)
  Deposits in escrow                               139       (62)      290
  Accounts payable                                 230     2,666       107
  Accrued liabilities                              (53)     (363)   (1,167)
  Deferred revenue                                 393     5,080       480
  Income taxes payable/ receivable              (2,669)      597      (999)
  Changes in other non-current assets            4,858     1,849    (7,264)
  Other long-term liabilities                    1,658     1,379     2,649
  Current due to Extendicare                        --        --        76
                                              --------  --------  --------
    Cash provided by operating activities       44,932    49,112    19,055
                                              --------  --------  --------
INVESTING ACTIVITIES:
  Payment for acquisitions                     (14,546)  (24,444)   (4,619)
  Cash designated for acquisition               14,864   (14,864)       --
  Payments for new construction projects       (21,333)   (3,904)   (3,338)
  Payments for purchases of property and
   equipment                                   (17,764)  (12,457)  (12,832)
  Proceeds from sales of property and
   equipment                                        --        --        79
                                              --------  --------  --------
    Cash used in investing activities          (38,779)  (55,669)  (20,710)
                                              --------  --------  --------
FINANCING ACTIVITIES:
  Capital contributions from Extendicare            --        74    43,678
  Purchase of treasury stock                   (27,125)  (39,130)       --
  Proceeds on borrowings on revolving credit
   facility                                     37,000    42,000        --
  Repayment of interest bearing advances to
   Extendicare                                      --        --   (25,200)
  Repayment of mortgage debt                   (19,215)   (6,573)   (2,312)
  Proceeds from mortgage debt                    9,026     4,301        --
  Payment of deferred financing fees                --        --      (999)
                                              --------  --------  --------
    Cash (used in) provided by financing
     activities                                   (314)      672    15,167
                                              --------  --------  --------
Increase (decrease) in cash and cash
 equivalents                                     5,839    (5,885)   13,512
Cash and cash equivalents, beginning of year    14,066    19,951     6,439
                                              --------  --------  --------
Cash and cash equivalents, end of year        $ 19,905  $ 14,066  $ 19,951
                                              ========  ========  ========





                       ASSISTED LIVING CONCEPTS, INC.
                     Financial and Operating Statistics

All residences                               Three Months Ended
                                  ----------------------------------------
                                  December 31,  September 30, December 31,
                                      2008          2008          2007
                                  ------------  ------------  ------------
Average Occupied Units by Payer Source
Private                                  5,499         5,498         5,316
Medicaid                                   602           677         1,032
                                  ------------  ------------  ------------
Total                                    6,101         6,175         6,348
                                  ============  ============  ============

Occupancy Mix by Payer Source
Private                                   90.1%         89.0%         83.7%
Medicaid                                   9.9%         11.0%         16.3%

Percent of Revenue by Payer Source
Private                                   93.0%         92.0%         88.1%
Medicaid                                   7.0%          8.0%         11.9%

Average Revenue per Occupied Unit Day by Payer Source
Private                           $     105.90  $     106.19  $     101.75
Medicaid                          $      72.99  $      74.72  $      70.97
Combined                          $     102.65  $     102.74  $      96.75

Occupancy Percentage                      67.2%         68.0%         74.4%


All residences                                          Year Ended
                                                --------------------------
                                                December 31,  December 31,
                                                    2008          2007
                                                ------------  ------------
Average Occupied Units by Payer Source
Private                                                5,527         5,297
Medicaid                                                 728         1,357
                                                ------------  ------------
Total                                                  6,255         6,654
                                                ============  ============

Occupancy Mix by Payer Source
Private                                                 88.4%         79.6%
Medicaid                                                11.6%         20.4%

Percent of Revenue by Payer Source
Private                                                 91.7%         85.0%
Medicaid                                                 8.3%         15.0%

Average Revenue per Occupied Unit Day by Payer Source
Private                                         $     106.15  $     100.61
Medicaid                                        $      72.61  $      69.11
Combined                                        $     102.24  $      94.19

Occupancy Percentage                                    68.9%         79.1%





                       ASSISTED LIVING CONCEPTS, INC.
                     Financial and Operating Statistics


Same residence basis*                        Three Months Ended
                                  ----------------------------------------
                                  December 31,  September 30, December 31,
                                      2008          2008          2007
                                  ------------  ------------  ------------
Average Occupied Units by Payer Source
Private                                  5,018         5,017         5,316
Medicaid                                   602           677         1,032
                                  ------------  ------------  ------------
Total                                    5,620         5,694         6,348
                                  ============  ============  ============

Occupancy Mix by Payer Source
Private                                   89.3%         88.1%         83.7%
Medicaid                                  10.7%         11.9%         16.3%

Percent of Revenue by Payer Source
Private                                   92.4%         91.4%         88.1%
Medicaid                                   7.6%          8.6%         11.9%

Average Revenue per Occupied Unit Day by Payer Source
Private                           $     106.43  $     106.51  $     101.75
Medicaid                          $      72.99  $      74.72  $      70.97
Combined                          $     102.85  $     102.73  $      96.75

Occupancy Percentage                      65.9%         66.7%         74.4%


Same residences basis*                                  Year Ended
                                                --------------------------
                                                December 31,  December 31,
                                                    2008          2007
                                                ------------  ------------
Average Occupied Units by Payer Source
Private                                                4,999         5,297
Medicaid                                                 728         1,357
                                                ------------  ------------
Total                                                  5,727         6,654
                                                ============  ============

Occupancy Mix by Payer Source
Private                                                 87.3%         79.6%
Medicaid                                                12.7%         20.4%

Percent of Revenue by Payer Source
Private                                                 91.0%         85.0%
Medicaid                                                 9.0%         15.0%

Average Revenue per Occupied Unit Day by Payer Source
Private                                         $     106.83  $     100.61
Medicaid                                        $      72.61  $      69.11
Combined                                        $     102.48  $      94.19

Occupancy Percentage                                    67.9%         79.1%

* Same residence basis excludes the impact of  residents added from the
  acquisition of the 185 unit Dubuque, Iowa residence on July 20, 2007
  and the 541 unit CaraVita operations on January 1, 2008, and includes
  changes in these acquisitions' occupancy since their respective dates
  of acquisition.

Weighted Average Basic and Diluted Shares

The basic weighted average number of shares of common stock is based upon the number of shares of Class A and Class B common stock of ALC outstanding. For purposes of determining the diluted weighted average number of shares, the Class B shares were deemed to have been converted into Class A shares at the 1 to 1.075 conversion rate applicable to the Class B common stock. This resulted in an additional 0.7 million shares included in the fully diluted weighted average number of shares outstanding in the quarter and year ended December 31, 2007 and 0.6 million shares included in the quarter and year ended December 31, 2008 .

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDAR

Adjusted EBITDA is defined as net income from continuing operations before income taxes, interest expense net of interest income, depreciation and amortization, equity based compensation expense, transaction costs and non-cash, non-recurring gains and losses, including disposal of assets and impairment of long-lived assets and loss on refinancing and retirement of debt. Adjusted EBITDAR is defined as adjusted EBITDA before rent expenses incurred for leased assisted living properties. Adjusted EBITDA and adjusted EBITDAR are not measures of performance under accounting principles generally accepted in the United States of America, or GAAP. We use adjusted EBITDA and adjusted EBITDAR as key performance indicators and adjusted EBITDA and adjusted EBITDAR expressed as a percentage of total revenues as a measurement of margin.

We understand that EBITDA and EBITDAR, or derivatives thereof, are customarily used by lenders, financial and credit analysts, and many investors as a performance measure in evaluating a company's ability to service debt and meet other payment obligations or as a common valuation measurement in the long-term care industry. Moreover, ALC's revolving credit facility contains covenants in which a form of EBITDA is used as a measure of compliance, and we anticipate EBITDA will be used in covenants in any new financing arrangements that we may establish. We believe adjusted EBITDA and adjusted EBITDAR provide meaningful supplemental information regarding our core results because these measures exclude the effects of non-operating factors related to our capital assets, such as the historical cost of the assets.

We report specific line items separately, and exclude them from adjusted EBITDA and adjusted EBITDAR because such items are transitional in nature and would otherwise distort historical trends. In addition, we use adjusted EBITDA and adjusted EBITDAR to assess our operating performance and in making financing decisions. In particular, we use adjusted EBITDA and adjusted EBITDAR in analyzing potential acquisitions and internal expansion possibilities. Adjusted EBITDAR performance is also used in determining compensation levels for our senior executives. Adjusted EBITDA and adjusted EBITDAR should not be considered in isolation or as a substitute for net income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity. We present adjusted EBITDA and adjusted EBITDAR on a consistent basis from period to period, thereby allowing for comparability of operating performance.

Adjusted EBITDA and  Adjusted EBITDAR Reconciliation Information

The following table sets forth a reconciliation of net income to adjusted
 EBITDA and adjusted EBITDAR:

                Three Months Ended  Three Months Ended       Year Ended
                    December 31,       September 30,        December 31,
                ------------------- ------------------  -------------------
                  2008       2007      2008     2007       2008      2007
                --------  --------- --------- --------  --------- ---------
                                 (In thousands, unaudited)
Net income      $  3,030  $   4,055 $   2,966 $  4,225  $  14,323 $  17,179
Provision for
 income taxes      1,493      2,264     1,819    2,594      8,415    10,312
                --------  --------- --------- --------  --------- ---------

Income from
 operations
 before income
 taxes             4,523      6,319     4,785    6,819     22,738    27,491
Add:
  Depreciation
   and
   amortization    4,775      4,554     4,691    4,584     18,710    17,642
  Interest
   expense, net    1,733      1,614     1,869    1,405      7,097     5,091
  Transaction
   costs              --         --        --       --         --        56
  Loss on
   disposal of
   assets            222         --       160       --        382        --
  Non-cash
   equity based
   compensation       (5)        --        60     (192)        99        --
                --------  --------- --------- --------  --------- ---------

Adjusted EBITDA   11,248     12,487    11,565   12,616     49,026    50,280
Add: Lease
 expense           5,006      3,556     4,987    3,595     19,900    14,310
                --------  --------- --------- --------  --------- ---------

Adjusted
 EBITDAR        $ 16,254  $  16,043 $  16,552 $ 16,211  $  68,926 $  64,590
                ========  ========= ========= ========  ========= =========


The following table sets forth the calculations of adjusted EBITDA and
 adjusted EBITDAR as percentages of total revenue:


                Three Months Ended  Three Months Ended      Year Ended
                   December 31,        September 30,       December 31,
                ------------------  ------------------  ------------------
                         (Dollars amounts in thousands, unaudited)
                ----------------------------------------------------------
                  2008      2007      2008      2007      2008      2007
                --------  --------  --------  --------  --------  --------
Revenues        $ 57,617  $ 56,502  $ 58,367  $ 57,898  $234,085  $229,347
                --------  --------  --------  --------  --------  --------

Adjusted EBITDA $ 11,248  $ 12,487  $ 11,565  $ 12,616  $ 49,026  $ 50,280
                --------  --------  --------  --------  --------  --------

Adjusted
 EBITDAR        $ 16,254  $ 16,043  $ 16,552  $ 16,211  $ 68,926  $ 64,590
                --------  --------  --------  --------  --------  --------

Adjusted EBITDA
 as percent of
 total revenues     19.5%     22.1%     19.8%     21.8%     20.9%     21.9%
                --------  --------  --------  --------  --------  --------

Adjusted EBITDAR
 as percent of
 total revenues     28.2%     28.4%     28.4%     28.0%     29.4%     28.2%
                --------  --------  --------  --------  --------  --------

Contact Information

  • For further information, contact:
    Assisted Living Concepts, Inc.
    John Buono
    Sr. Vice President, Chief Financial Officer and Treasurer
    Phone: (262) 257-8999
    Fax: (262) 251-7562
    Email: Email Contact
    Visit ALC's Website @ www.alcco.com