SOURCE: Assisted Living Concepts, Inc.

August 10, 2009 16:05 ET

Assisted Living Concepts, Inc. Announces 2009 Second Quarter Results, Strong Margins, and Upward Occupancy Trend

MENOMONEE FALLS, WI--(Marketwire - August 10, 2009) - Assisted Living Concepts, Inc. (NYSE: ALC)

Highlights:

--  June 30, 2009 private pay occupancy exceeds April 1, 2009 private pay
    occupancy by 92 units
--  Average private pay occupancy declines by 22 units from first quarter
    2009 but trends up throughout the second quarter
--  Adjusted EBITDAR as a percent of revenues increases to 32.2% in the
    second quarter of 2009, up from 28.5% in the first quarter of 2009 and
    30.9% in the second quarter of 2008
--  299 expansion units on line by June 30, 2009
--  Completed $14.0 million, 6.5%, five year mortgage financing
    
    

Assisted Living Concepts, Inc. ("ALC") (NYSE: ALC) reported net income of $3.9 million in the second quarter of 2009 compared to net income of $4.3 million in the second quarter of 2008. Diluted earnings per common share of $0.33 per share in the second quarter of 2009 compared to $0.34 per share in the second quarter of 2008.

"I am very pleased with our second quarter performance," commented Laurie Bebo, President and Chief Executive Officer of Assisted Living Concepts, Inc. "An upward trend in occupancy and careful expense management led us to impressive EBITDAR margins and gave us a strong starting point for the third quarter."

For the first six months of 2009, ALC reported a net loss of $7.9 million compared to net income of $8.3 million in the first six months of 2008. Excluding an impairment charge related to the non-cash, non-recurring write-off of goodwill of $14.7 million recorded in the first quarter of 2009, net income for the first six months of 2009 would have been $6.8 million. Diluted earnings (loss) per common share for the six months ended June 30, 2009 and 2008 were ($0.66) and $0.65, respectively. Excluding the impairment charge, diluted earnings per share for the six months ended June 30, 2009 would have been $0.57 per share.

The non-cash, non-recurring charge recorded in the first quarter of 2009 of $14.7 million (net of income tax benefits of $1.6 million) related to the impairment of goodwill. The impairment charge was primarily driven by adverse equity market conditions which intensified during the first quarter of 2009 and caused a decrease in ALC's market multiples and stock price at March 31, 2009 as compared to December 31, 2008. This non-cash charge does not impact ongoing business operations, liquidity, cash flows from operating activities, or financial covenants and will not result in any future cash expenditure.

Effective March 16, 2009 ALC implemented a one-for-five reverse stock split of its Class A and Class B common stock. All share and per share data in this press release have been adjusted to reflect this reverse stock split.

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 (loss) to adjusted EBITDA and adjusted EBITDAR, calculations of adjusted EBITDA and adjusted EBITDAR as a percentage of total revenues (EBITDAR and EBITDA margins), and non-GAAP financial measure reconciliation information.

As of June 30, 2009, ALC operated 216 assisted living residences comprising 9,375 units.

Share Repurchase Program

On August 9, 2009, ALC's Board of Directors authorized the repurchase of up to $15 million in Class A common stock through August 9, 2010. Under a previous Class A common stock repurchase plan which expired on August 6, 2009, ALC repurchased 194,948 and 2,268,049 shares in the second quarter of 2009 and in total under the plan, respectively. The repurchases in the second quarter of 2009 were at an aggregate cost (including commissions) of $2.9 million and an average price (including commissions) of $14.84 per share, equivalent to a per unit cost of approximately $51 thousand per unit. Repurchases to date were at an aggregate cost (including commissions) of $71.4 million and an average price (including commissions) of $31.54 per share, equivalent to a per unit cost of approximately $72 thousand per unit.

Quarters ended June 30, 2009, June 30, 2008, March 31, 2009

Revenues of $57.4 million in the second quarter ended June 30, 2009 decreased $0.5 million or 0.8% from $57.9 million in the second quarter of 2008 and decreased $0.3 million from the first quarter of 2009.

Adjusted EBITDA for the second quarter of 2009 was $13.5 million, and 23.5% of revenues and:

--  increased $0.6 million or 4.6% from $12.9 million and 22.3% of
    revenues in the second quarter of 2008; and
--  increased $2.0 million or 17.0% from $11.5 million and 20.0% of
    revenues in the first quarter of 2009.
    

Adjusted EBITDAR for the second quarter of 2009 was $18.5 million, and 32.2% of revenues and:

--  increased $0.6 million or 3.2% from $17.9 million and 30.9% of
    revenues in the second quarter of 2008; and
--  increased $2.0 million or 12.3% from $16.4 million and 28.5% of
    revenues in the first quarter of 2009.
    
    

Second quarter 2009 compared to second quarter 2008

Revenues in the second quarter of 2009 decreased from the second quarter of 2008 primarily due to the planned reduction in the number of units occupied by Medicaid residents ($2.0 million) and a reduction in the number of units occupied by private pay residents ($0.7 million), partially offset by higher average daily revenue as a result of rate increases ($2.2 million).

Both adjusted EBITDA and adjusted EBITDAR increased in the second quarter of 2009 primarily due to a decrease in residence operations expenses ($1.3 million), partially offset by a decrease in revenues discussed above ($0.5 million) and an increase in general and administrative expenses excluding non-cash equity based compensation ($0.3 million). Residence operations expenses decreased primarily from a reduction in labor and food expenses associated with lower occupancy.

Second quarter 2009 compared to the first quarter 2009

Revenues in the second quarter of 2009 decreased from the first quarter of 2009 primarily due to the planned reduction in the number of units occupied by Medicaid residents ($0.5 million), a reduction in the number of units occupied by private pay residents ($0.2 million) and a reduction in rates primarily related to Medicaid residents ($0.2 million), partially offset by one additional day in the second quarter of 2009 quarter ($0.6 million).

Increased adjusted EBITDA and EBITDAR in the second quarter of 2009 as compared to the first quarter of 2009 resulted primarily from a decrease in residence operations expenses ($2.1 million) and a decrease in general and administrative expenses excluding non-cash equity based compensation ($0.2 million), partially offset by a decrease in revenues discussed above ($0.3 million). Residence operations expenses decreased primarily from a seasonal reduction in utility expenses and lower labor expenses associated with lower occupancy. General and Administrative expenses decreased primarily due to a reduction in professional fees and other administrative expenses.

Six months ended June 30, 2009 and June 30, 2008

Revenues of $115.0 million in the six months ended June 30, 2009 decreased $3.1 million or 2.6% from $118.1 million in the six months ended June 30, 2008.

Adjusted EBITDA for the six months ended June 30, 2009 was $25.0 million, and 21.7% of revenues and decreased $1.2 million or 4.7% from $26.2 million and 22.2% of revenues in the six months ended June 30, 2008.

Adjusted EBITDAR for the six months ended June 30, 2009 was $34.9 million, and 30.4% of revenues and decreased $1.2 million or 3.3% from $36.1 million and 30.6% of revenues in the six months ended June 30, 2008.

Six months ended June 30, 2009 compared to the six months ended June 30, 2008

Revenues in the six months ended June 30, 2009 decreased from the six months ended June 30, 2008 primarily due to the planned reduction in the number of units occupied by Medicaid residents ($4.2 million), a reduction in the number of units occupied by private pay residents ($2.6 million) and, as a result of 2008 being a leap year, one less day in the 2009 six month period ($0.6 million), partially offset by higher average daily revenue as a result of rate increases ($4.3 million).

Both adjusted EBITDA and adjusted EBITDAR decreased in the six months ended June 30, 2009 primarily due to decreased revenues discussed above ($3.1 million) and an increase in general and administrative expenses excluding non-cash equity based compensation ($0.5 million), partially offset by a decrease in residence operations expenses ($2.4 million). Residence operations expenses decreased primarily from a reduction in labor and food expenses associated with lower occupancy.

Expansion Program Update

By the end of the second quarter of 2009 we had completed, licensed, and begun accepting new residents in 299 units under our program to add 400 units to existing owned buildings. Construction continues on the remaining expansion units. We are currently targeting completion of 21 units in the remainder of 2009, and the remaining 80 units by the second quarter of 2010. To date, actual costs remain consistent with our original estimates of $125,000 per unit.

Financing Activities and Liquidity

At June 30, 2009 ALC maintained a strong liquidity position with cash of approximately $5.7 million and undrawn lines of $60 million. On June 12, 2009, ALC completed the previously announced $14 million mortgage financing with TCF bank. The mortgage is for a period of five years at a fixed rate of 6.5% and is secured by three ALC residences. The proceeds were used to repay amounts outstanding under ALC's $120 million revolving credit facility.

Investor Call

ALC has scheduled a conference call for tomorrow morning, August 11, 2009 at 10:00 a.m. (Eastern Time) to discuss financial results for the second quarter. The toll-free number for the live call is 800-230-1059 or international 612-234-9959. A taped rebroadcast of the conference call will be available approximately three hours following the live call until midnight on September 10, 2009, by dialing toll free 800-475-6701, or international 320-365-3844; and using access code 107880.

About Us

Assisted Living Concepts, Inc. and its subsidiaries operate 216 assisted living residences with capacity for over 9,375 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 pay mix, are forward-looking statements. 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, other risks and uncertainties are contained 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 governmental and economic influences; changes in general economic conditions, including changes in housing markets and 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 acquisitions and 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 Operations
                (In thousands, except earnings per share)



                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Revenues                        $  57,381  $  57,854  $ 115,015  $ 118,101
Expenses:
   Residence operations
    (exclusive of depreciation
    and amortization and
    residence lease expense
    shown below)                   35,699     37,020     73,518     75,945
   General and administrative       3,341      2,990      6,775      6,080
   Residence lease expense          4,990      5,009      9,917      9,907
   Depreciation and
    amortization                    5,316      4,348     10,344      9,244
Goodwill impairment                    --         --     16,315         --
                                ---------  ---------  ---------  ---------
      Total operating
       expenses                    49,346     49,367    116,869    101,176
                                ---------  ---------  ---------  ---------
Income (loss) from operations       8,035      8,487     (1,854)    16,925
Other expense:
Interest income                         8        291         21        470
   Interest expense                (1,973)    (1,882)    (3,816)    (3,965)
                                ---------  ---------  ---------  ---------
Income (loss) before income
 taxes                              6,070      6,896     (5,649)    13,430
Income tax expense                 (2,163)    (2,620)    (2,219)    (5,103)
                                ---------  ---------  ---------  ---------
Net income (loss)               $   3,907  $   4,276  $  (7,868) $   8,327
                                =========  =========  =========  =========
Weighted average common
 shares:
   Basic                           11,808     12,603     11,882     12,756
   Diluted                         11,927     12,733     11,882     12,887
Per share data:
   Basic earnings (loss) per
    common share                $    0.33  $    0.34  $   (0.66) $    0.65
                                =========  =========  =========  =========
   Diluted earnings (loss) per
    common share                $    0.33  $    0.34  $   (0.66) $    0.65
                                =========  =========  =========  =========
Adjusted EBITDA (1)            $  13,474  $  12,876  $  24,993  $  26,213
                                =========  =========  =========  =========
Adjusted EBITDAR (1)           $  18,464  $  17,885  $  34,910  $  36,120
                                =========  =========  =========  =========


(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)


                                                    June 30,   December 31,
                                                      2009        2008
                                                  -----------  -----------
                         ASSETS                   (unaudited)
Current Assets:
  Cash and cash equivalents                       $     5,681  $    19,905
  Investments                                           3,094        3,139
  Accounts receivable, less allowances of $662 and
   $689, respectively                                   2,363        2,696
  Prepaid expenses, supplies and other receivables      4,490        3,463
  Deposits in escrow                                    1,955        2,343
  Income tax receivable                                    --        3,147
  Deferred income taxes                                 4,152        4,614
                                                  -----------  -----------
    Total current assets                               21,735       39,307
Property and equipment, net                           427,930      422,791
Goodwill                                                   --       16,315
Intangible assets, net                                 12,628       13,443
Restricted cash                                         3,495        4,534
Other assets                                            2,461        2,231
                                                  -----------  -----------
    Total Assets                                  $   468,249  $   498,621
                                                  ===========  ===========

          LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
  Accounts payable                                $     7,843  $    13,574
  Accrued liabilities                                  17,667       17,898
  Deferred revenue                                      7,163        6,739
  Income taxes payable                                  1,141           --
  Current maturities of long-term debt                 12,367       19,392
  Current portion of self-insured liabilities             500          300
                                                  -----------  -----------
       Total current liabilities                       46,681       57,903
Accrual for self-insured liabilities                    1,108        1,176
Long-term debt                                        130,818      136,890
Deferred income taxes                                  11,195       11,811
Other long-term liabilities                            11,334       11,102
Commitments and contingencies
                                                  -----------  -----------
    Total Liabilities                                 201,136      218,882
                                                  -----------  -----------
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,
 80,000,000 authorized, 10,121,266 and 10,443,313
 issued and outstanding, respectively                     124          124
Class B Common Stock, par value $0.01 per share,
 15,000,000 authorized, 1,559,829 and 1,562,101
 issued and outstanding, respectively                      16           16
Additional paid-in capital                            314,384      314,202
Accumulated other comprehensive loss                   (2,069)      (1,989)
Retained earnings                                      25,773       33,641
Treasury stock at cost, 2,242,749 and 1,918,398
 shares, respectively                                 (71,115)     (66,255)
                                                  -----------  -----------
    Total Stockholders’ Equity                        267,113      279,739
                                                  -----------  -----------
Total Liabilities and Stockholders’ Equity        $   468,249  $   498,621
                                                  ===========  ===========



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

                                                      Six Months Ended
                                                           June 30,
                                                  ------------------------
                                                      2009         2008
                                                  -----------  -----------
OPERATING ACTIVITIES:
Net  (loss) income                                $    (7,868) $     8,327
Adjustments to reconcile net (loss) income to net
 cash provided by operating activities:
  Depreciation and amortization                        10,344        9,244
  Goodwill impairment                                  16,315           --
  Amortization of purchase accounting adjustments
   for leases and debt                                   (198)        (397)
  Provision for bad debts                                 (27)          39
  Provision for self-insured liabilities                  392          447
  Loss on sale or disposal of fixed assets                 34           --
  Equity-based compensation expense                       188           44
  Deferred income taxes                                  (154)       2,298
Changes in assets and liabilities:
  Accounts receivable                                     360           83
  Supplies, prepaid expenses and other current
   assets                                              (1,027)         790
  Deposits in escrow                                      388           (4)
  Accounts payable                                     (1,735)       2,120
  Accrued liabilities                                    (231)        (796)
  Deferred revenue                                        424          805
  Payments of self-insured liabilities                   (320)        (140)
  Income taxes payable / receivable                     4,296          558
  Changes in other non-current assets                     809        7,576
  Other long-term liabilities                             553          524
                                                  -----------  -----------
     Cash provided by operating activities             22,543       31,518
                                                  -----------  -----------
INVESTING ACTIVITIES:
  Payment for executive retirement plan securities        (95)         (49)
  Payment for acquisitions                                 --      (14,532)
  Cash designated for acquisition                          --       14,864
  Payments for new construction projects              (11,768)      (3,125)
  Accrued costs for new construction                       --         (945)
  Payments for purchases of property and equipment     (6,930)      (8,350)
                                                  -----------  -----------
     Cash used in investing activities                (18,793)     (12,137)
                                                  -----------  -----------
FINANCING ACTIVITIES:
  Purchase of treasury stock                           (4,860)     (20,632)
  Proceeds on borrowings on revolving credit
   facility                                                --        6,000
  Repayment of revolving credit facility              (19,000)          --
  Proceeds from issuance of new mortgage debt          14,000        9,026
  Repayment of mortgage debt                           (8,114)     (12,909)
                                                  -----------  -----------
     Cash used by financing activities                (17,974)     (18,515)
                                                  -----------  -----------
(Decrease) increase in cash and cash equivalents      (14,224)         866
Cash and cash equivalents, beginning of year           19,905       14,066
                                                  -----------  -----------
Cash and cash equivalents, end of period          $     5,681  $    14,932
                                                  ===========  ===========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest                                          $     3,663  $     4,061
Income tax payments, net of refunds                    (1,892)       2,245



                      ASSISTED LIVING CONCEPTS, INC.
                    Financial and Operating Statistics



All residences                                  Three months ended
                                        ----------------------------------
                                         June 30,   March 31,    June 30,
                                           2009        2009        2008
                                        ----------  ----------  ----------
Average Occupied Units by Payer Source
Private                                      5,413       5,435       5,481
Medicaid                                       455         532         763
                                        ----------  ----------  ----------
Total                                        5,868       5,967       6,244
                                        ==========  ==========  ==========

Occupancy Mix by Payer Source
Private                                       92.3%       91.1%       87.8%
Medicaid                                       7.7%        8.9%       12.2%

Percent of Revenue by Payer Source
Private                                       94.9%       93.7%       91.4%
Medicaid                                       5.1%        6.3%        8.6%

Average Revenue per Occupied Unit Day   $   107.45  $   107.33  $   101.82

Occupancy Percentage                          64.1%       65.7%       68.8%



Same residence basis*                           Three months ended
                                        ----------------------------------
                                         June 30,   March 31,    June 30,
                                           2009        2009        2008
                                        ----------  ----------  ----------
Average Occupied Units by Payer Source
Private                                      5,376       5,408       5,454
Medicaid                                       455         524         740
                                        ----------  ----------  ----------
Total                                        5,831       5,932       6,194
                                        ==========  ==========  ==========

Occupancy Mix by Payer Source
Private                                       92.2%       91.2%       88.0%
Medicaid                                       7.8%        8.8%       12.0%

Percent of Revenue by Payer Source
Private                                       94.9%       93.8%       91.6%
Medicaid                                       5.1%        6.2%        8.4%

Average Revenue per Occupied Unit Day   $   107.27  $   107.27  $   101.92

Occupancy Percentage                          65.4%       66.5%       69.5%



* Excludes quarterly impact of 299 completed expansion units and 159 units
  temporarily closed for renovation.



                      ASSISTED LIVING CONCEPTS, INC.
                    Financial and Operating Statistics


All residences                                         Six months ended
                                                    ----------------------
                                                     June 30,    June 30,
                                                       2009        2008
                                                    ----------  ----------
Average Occupied Units by Payer Source
Private                                                  5,424       5,556
Medicaid                                                   493         818
                                                    ----------  ----------
Total                                                    5,917       6,374
                                                    ==========  ==========

Occupancy Mix by Payer Source
Private                                                   91.7%       87.2%
Medicaid                                                   8.3%       12.8%

Percent of Revenue by Payer Source
Private                                                   94.3%       91.0%
Medicaid                                                   5.7%        9.0%

Average Revenue per Occupied Unit Day               $   107.39  $   101.81

Occupancy Percentage                                      64.8%       70.2%


Same residence basis*                                  Six months ended
                                                    ----------------------
                                                     June 30,    June 30,
                                                       2009        2008
                                                    ----------  ----------
Average Occupied Units by Payer Source
Private                                                  5,393       5,516
Medicaid                                                   489         789
                                                    ----------  ----------
Total                                                    5,882       6,305
                                                    ==========  ==========

Occupancy Mix by Payer Source
Private                                                   91.7%       87.5%
Medicaid                                                   8.3%       12.5%

Percent of Revenue by Payer Source
Private                                                   94.3%       91.2%
Medicaid                                                   5.7%        8.8%

Average Revenue per Occupied Unit Day               $   107.26  $   101.87

Occupancy Percentage                                      66.0%       70.7%


* Excludes year to date impact of 299 completed expansion units and 159
  units temporarily closed for renovation.

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, in the quarters ended June 30, 2008 and 2009 and the six months ended June 30, 2008, 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 117 thousand, 130 thousand and 131 thousand shares included in the quarters ended June 30, 2009 and 2008 and six months ended June 30, 2008, respectively. Since ALC sustained a loss in the six months ended June 30, 2009, no conversions were assumed as their impact would have been anti-dilutive.

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 (including goodwill) 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 (loss) to adjusted EBITDA and adjusted EBITDAR:

                    Three Months Ended Three Months Ended Six Months Ended
                         June 30,           March 31,         June 30,
                     ----------------- -----------------  ----------------
                       2009     2008     2009      2008     2009     2008
                     -------- -------- --------  -------- -------  --------
                                   (In thousands, unaudited)

Net income (loss)    $  3,907 $  4,276 $(11,775) $  4,051 $(7,868) $  8,327
Provision for income
 taxes                  2,163    2,620       56     2,483   2,219     5,103
                     -------- -------- --------  -------- -------  --------

Income (loss)  from
 operations before
 income taxes           6,070    6,896  (11,719)    6,534  (5,649)   13,430
Add:
  Depreciation and
   amortization         5,316    4,348    5,028     4,896  10,344     9,244
  Interest expense,
   net                  1,965    1,591    1,830     1,904   3,795     3,495
  Non-cash equity
   based compensation     123       41       65         3     188        44
  Goodwill
   impairment              --       --   16,315        --  16,315        --
                     -------- -------- --------  -------- -------  --------

Adjusted EBITDA        13,474   12,876   11,519    13,337  24,993    26,213
Add: Lease expense      4,990    5,009    4,927     4,898   9,917     9,907
                     -------- -------- --------  -------- -------  --------

Adjusted EBITDAR     $ 18,464 $ 17,885 $ 16,446  $ 18,235 $34,910  $ 36,120
                     ======== ======== ========  ======== =======  ========

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


                    Three Months Ended Three Months Ended Six Months Ended
                         June 30,           March 31,         June 30,
                     ----------------- -----------------  ----------------
                          (Dollars amounts in thousands, unaudited)
                    ------------------------------------------------------
                      2009     2008     2009     2008     2009      2008
                    -------  -------  -------  -------  --------  --------
Revenues            $57,381  $57,854  $57,634  $60,247  $115,015  $118,101
                    -------  -------  -------  -------  --------  --------

Adjusted EBITDA     $13,474  $12,876  $11,519  $13,337  $ 24,993  $ 26,213
                    -------  -------  -------  -------  --------  --------

Adjusted EBITDAR    $18,464  $17,885  $16,446  $18,235  $ 34,910  $ 36,120
                    -------  -------  -------  -------  --------  --------

Adjusted EBITDA as
 percent of total
 revenues              23.5%    22.3%    20.0%    22.1%     21.7%     22.2%
                    -------  -------  -------  -------  --------  --------

Adjusted EBITDAR as
 percent of total
 revenues              32.2%    30.9%    28.5%    30.3%     30.4%     30.6%
                    -------  -------  -------  -------  --------  --------

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