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Five Star Quality Care, Inc. Announces Filing of Restated Financial Statements
[April 16, 2014]

Five Star Quality Care, Inc. Announces Filing of Restated Financial Statements


NEWTON, Mass. --(Business Wire)--

Five Star Quality Care, Inc. (NYSE: FVE) today announced that it has filed restated financial results for 2011, 2012 and the first and second quarters of 2013. In addition, Five Star has filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.

"Five Star and our Audit Committee have concluded a thorough review and are satisfied that Five Star has appropriately addressed matters related to the restatement," stated Bruce Mackey, President and Chief Executive Officer. "We are very pleased to have completed the restatement process as it is an important step in becoming current with our financial reporting. We can now turn our attention to completing our delayed Annual Report for 2013, which we expect to file as soon as reasonably possible."

The net effects of correcting errors during the restatement process compared to the previously published financial statements are as follows:

  • Increases to shareholders' equity of $6.7 million and $8.1 million at December 31, 2012 and 2011, respectively.
  • A decrease to net income of $1.4 million (approximately $0.04 per share) for the year ended December 31, 2012 and an increase to net income of $6.6 million (approximately $0.14 per share) for the year ended December 31, 2011.
  • An increase to shareholders' equity of $6.9 million at March 31, 2013.
  • An increase to net income of $205,000 (less than $0.01 per share) and $103,000 (less than $0.01 per share) for the three months ended March 31, 2013 and 2012, respectively.
  • An increase to shareholders' equity of $7.0 million at June 30, 2013.
  • A decrease to net income of $27,000 (less than $0.01 per share) and an increase to net income of $178,000 (less than $0.01 per share) for the three and six months ended June 30, 2013, respectively.
  • Increases to net income of $272,000 (less than $0.01 per share) and $375,000 (less than $0.01 per share) for the three month and six months ended June 30, 2012, respectively.

The quarterly report on Form 10-Q for the quarter ended September 30, 2013, was filed by Five Star today. A balance sheet and income statement as of, and for the period ended, September 30, 2013, are attached. Five Star expects to schedule a conference call during which management will discuss, and take questions, regarding the restatements and updated financial results after its public reporting becomes current.

Five Star Quality Care, Inc. is a senior living and healthcare services company which owns, leases and manages senior living communities, including primarily private pay independent and assisted living communities located throughout the U.S. Five Star is headquartered in Newton, Massachusetts.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER WE USE WORDS SUCH AS "BELIEVE", "EXPECT", "ANTICIPATE", "INTEND", "PLAN", "ESTIMATE" OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE, ALTHOUGH FIVE STAR EXPECTS TO FILE ITS ANNUAL REPORT ON (News - Alert) FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2013 AS SOON AS REASONABLY POSSIBLE, THE AUDIT OF THE ANNUAL FINANCIAL STATEMENTS WHICH ARE TO BE INCLUDED IN THE 2013 FORM 10-K IS NOT FINISHED AND WILL REQUIRE ADDITIONAL TIME TO COMPLETE AND THERE CAN BE NO ASSURANCE AS TO WHEN THE 2013 FORM 10-K WILL BE COMPLETED AND FILED. IN ADDITION, THIS PRESS RELEASE MAY IMPLY THAT WE WILL BE CURRENT WITH OUR FINANCIAL REPORTING UPON FILING OUR 2013 FORM 10-K AND THAT WE WILL MAINTAIN CURRENT FILING STATUS. HOWEVER, IN LIGHT OF THE TIME AND EFFORT INVOLVED WITH COMPLETING OUR RESTATED FINANCIAL STATEMENTS AND TO COMPLETE OUR 2013 FORM 10-K, WE MAY BE DELAYED IN COMPLETING FUTURE FILINGS, INCLUDING OUR QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDING MARCH 31, 2014, WHICH IS CURRENTLY DUE ON MAY 12, 2014. YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.





     
 

FIVE STAR (News - Alert) QUALITY CARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 
September 30,
2013
December 31,
2012
(Restated)
ASSETS
 
Current assets:
Cash and cash equivalents $ 19,580 $ 24,638
Accounts receivable, net of allowance of $4,308 and $2,792 at September 30, 2013 and December 31, 2012, respectively 38,226 39,205
Due from related persons 6,884 6,881
Investments in available for sale securities, of which $5,100 and $3,684 are restricted at September 30, 2013 and December 31, 2012, respectively 19,042 12,920
Restricted cash 8,913 6,548
Prepaid expenses and other current assets 34,534 38,318
Assets of discontinued operations 21,499 30,100
Total current assets 148,678 158,610
 
Property and equipment, net 331,108 337,494
Equity investment in Affiliates Insurance Company 5,781 5,629
Restricted cash 8,184 12,166
Restricted investments in available for sale securities 11,597 10,580
Goodwill and other intangible assets 26,829 27,708
Other long term assets 40,548 40,382
$ 572,725 $ 592,569
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
Revolving credit facility, secured, principally by real estate $ 10,000 $ -
Revolving credit facility, secured, principally by accounts receivable - -
Convertible senior notes - 24,872
Accounts payable 30,743 38,035
Accrued expenses 26,780 28,010
Accrued compensation and benefits 39,302 35,302
Due to related persons 21,227 19,484
Mortgage notes payable 1,142 1,092
Accrued real estate taxes 14,058 10,723
Security deposit liability 8,493 9,057
Other current liabilities 15,675 14,775
Liabilities of discontinued operations, of which $0 and $7,547 relate to mortgage notes payable at September 30, 2013 and December 31, 2012, respectively 9,232 16,977
Total current liabilities 176,652 198,327
 
Long term liabilities:
Mortgage notes payable 36,758 37,621
Continuing care contracts 1,635 1,708
Accrued self-insurance obligations 35,148 34,647
Other long term liabilities 5,583 6,712
Total long term liabilities 79,124 80,688
 
Commitments and contingencies
 
Shareholders' equity:
Common stock, par value $.01; 75,000,000 shares authorized, 48,271,522 and 48,234,022 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively 482 482
Additional paid in capital 354,956 354,164
Accumulated deficit (41,715 ) (44,455 )
Accumulated other comprehensive income 3,226 3,363
Total shareholders' equity 316,949 313,554
$ 572,725 $ 592,569
 
 

FIVE STAR QUALITY CARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

     
Three months ended September 30, Nine months ended September 30,
2013   2012
(Restated)
2013   2012
(Restated)
Revenues:
Senior living revenue $ 269,839 $ 268,645 $ 807,906 $ 804,543
Management fee revenue 2,290 1,277 6,873 3,667
Reimbursed costs incurred on behalf of managed communities 51,983 27,247 156,194 76,750
Total revenues 324,112 297,169 970,973 884,960
 
Operating expenses:
Senior living wages and benefits 130,824 131,384 393,641 393,446
Other senior living operating expenses 68,227 64,579 200,317 192,636
Costs incurred on behalf of managed communities 51,983 27,247 156,194 76,750
Rent expense 48,743 47,659 145,035 142,451
General and administrative 15,081 14,647 45,664 45,580
Depreciation and amortization 6,736 6,175 19,691 18,196
Gain on settlement - - - (3,365 )
Total operating expenses 321,594 291,691 960,542 865,694
 
Operating income 2,518 5,478 10,431 19,266
 
Interest, dividend and other income 191 199 599 638
Interest and other expense (1,179 ) (1,762 ) (3,990 ) (4,793 )
Acquisition related costs (78 ) (100 ) (119 ) (100 )
(Loss) gain on early extinguishment of debt (599 ) - (599 ) 45
Gain on sale of available for sale securities reclassified from other comprehensive income 36 63 6 62
 
Income from continuing operations before income taxes and equity in earnings of Affiliates Insurance Company 889 3,878 6,328 15,118
Provision for income taxes (226 ) (905 ) (582 ) (5,523 )
Equity in earnings of Affiliates Insurance Company 64 115 219 236
Income from continuing operations 727 3,088 5,965 9,831
(Loss) income from discontinued operations (925 ) 13,125 (3,225 ) 11,764
 
Net income (loss) $ (198 ) $ 16,213 $ 2,740 $ 21,595
 
Weighted average shares outstanding - basic 48,272 47,927 48,253 47,913
 
Weighted average shares outstanding - diluted 48,417 49,840 49,571 50,185
.
Basic income per share from:
Continuing operations $ 0.02 $ 0.06 $ 0.12 $ 0.21
Discontinued operations (0.02 ) 0.28 (0.06 ) 0.24
Net income per share - basic $ - $ 0.34 $ 0.06 $ 0.45
 
Diluted income per share from:
Continuing operations $ 0.02 $ 0.06 $ 0.12 $ 0.21
Discontinued operations (0.02 ) 0.27 (0.06 ) 0.23
Net income per share - diluted $ - $ 0.33 $ 0.06 $ 0.44
 
 


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