Five Star Quality Care, Inc. Reports Third Quarter 2009 Results

http://www.businesswire.com/news/home/20091102006264/en

NEWTON, Mass.--(Business Wire)--
Five Star Quality Care, Inc. (NYSE Amex: FVE) today announced its financial
results for the quarter and nine months ended September 30, 2009.

Third Quarter 2009 Financial Highlights:

* Total revenues for the third quarter of 2009 increased 5.9% to $297.2 million
from $280.6 million for the same period last year.
* Net income for the third quarter of 2009 was $4.1 million compared to a net
loss of $2.3 million for the same period last year.
* Net income per share from continuing operations for the third quarter of 2009
was $0.13 and $0.12, basic and diluted, respectively, compared to a net loss per
share from continuing operations of $0.05, basic and diluted, for the same
period last year.
* Net income from continuing operations for the third quarter of 2009 included
several items that, in aggregate, resulted in a positive impact of $4.0 million,
or $0.12 and $0.10 per basic and diluted share, respectively. These items
included a $3.0 million gain due to the early extinguishment of our convertible
senior notes (the Notes), a $795,000 gain on the sale of certain marketable
securities held by our captive insurance companies and a $455,000 unrealized
gain on our UBS put right related to auction rate securities, offset by a
$238,000 unrealized loss on our holdings of auction rate securities. Net loss
from continuing operations for the third quarter of 2008 also included several
items that, in aggregate, resulted in a negative impact of $4.0 million, or
$0.12 and $0.10 per basic and diluted share, respectively. These items included
a $3.0 million loss on impairment of our investments in certain marketable
securities held by our captive insurance companies and a $1.7 million unrealized
loss on our holdings of auction rate securities, offset by a $743,000 gain on
the early extinguishment of debt.
* Earnings before interest, taxes, depreciation and amortization, or EBITDA, for
the third quarter of 2009 was $9.4 million compared to $2.6 million for the same
period last year. As discussed above, EBITDA for the third quarter of 2009 had
items that, in aggregate, resulted in a positive impact of $4.0 million. EBITDA
for the third quarter of 2008 had items that, in aggregate, resulted in a
negative impact of $4.0 million.

Third Quarter 2009 Operating Highlights (Senior Living Communities):

* Senior living occupancy for the third quarter of 2009 was 86.1% compared to
88.3% for the same period last year.
* Senior living average daily rate for the third quarter of 2009 increased by
2.2% to $145.83 from $142.74 in the same period last year.
* The percentage of senior living revenue derived from private and other
resources for the third quarter of 2009 decreased to 69.3% from 69.8% for the
same period last year.
* For those senior living communities that we have operated continuously since
July 1, 2008 (comparable communities), occupancy for the third quarter of 2009
was 86.6% compared to 88.2% for the same period last year.
* The average daily rate at comparable communities for the third quarter of 2009
increased by 3.6% to $148.33 from $143.24 in the same period last year.

Year to Date Financial Highlights:

* Total revenues for the nine months ended September 30, 2009 increased 9.9% to
$887.7 million from $808.0 million for the same period last year.
* Net income for the nine months ended September 30, 2009 was $38.1 million
compared to net income of $2.9 million for the same period last year.
* Net income per share from continuing operations for the nine months ended
September 30, 2009 was $1.17 and $1.05, basic and diluted, respectively,
compared to $0.23, basic and diluted, for the same period last year.
* Net income from continuing operations for the nine months ended September 30,
2009 included several items that, in aggregate, resulted in a positive impact of
$32.8 million, or $1.00 and $0.85 per basic and diluted share, respectively.
These items included a $34.3 million gain due to the early extinguishment of our
Notes, a $3.4 million unrealized gain on our holdings of auction rate securities
and a $795,000 gain on sale of available for sale securities held by our captive
insurance companies, offset by a $2.9 million loss due to the impairment of our
investments in certain marketable securities held by our captive insurance
companies and a $2.8 million unrealized loss on our UBS put right related to
auction rate securities. Net income from continuing operations for the nine
months ended September 30, 2008 included several items that, in aggregate,
resulted in a negative impact of $8.4 million, or $0.26 and $0.20 per basic and
diluted share, respectively. These items included a $6.1 million unrealized loss
on our holdings of auction rate securities and a $3.0 million loss on impairment
of investments in certain marketable securities held by our captive insurance
companies, offset by a $743,000 gain on the early extinguishment of debt.
* EBITDA for the nine months ended September 30, 2009 was $54.1 million compared
to $19.1 million for the same period last year. As discussed above, EBITDA for
the first nine months of 2009, had items that, in aggregate, resulted in a
positive impact of $32.8 million. EBITDA for the first nine months of 2008, had
items that, in aggregate, resulted in a negative impact of $8.4 million.

Other Highlights:

During the third quarter, we purchased and retired $15.6 million par value of
our outstanding Notes for $12.1 million, plus accrued interest, and recorded a
$3.0 million gain, net of related unamortized costs, on the early extinguishment
of debt. In October 2009, we purchased and retired an additional $800,000 par
value of the Notes for $638,000. We funded these purchases principally from cash
received in connection with the lease realignment agreement we entered into with
Senior Housing Properties Trust (Senior Housing) on August 4, 2009.

On October 1, 2009, we commenced leasing from Senior Housing a continuing care
retirement community with a total of 259 independent, assisted living and
skilled nursing units that Senior Housing purchased from an unrelated party.

Conference Call:

On November 2, 2009 at 5:00 p.m. Eastern Daylight Time, Bruce J. Mackey Jr.,
President and Chief Executive Officer, and Francis R. Murphy, III, Chief
Financial Officer, will host a conference call to discuss the third quarter and
nine month financial results. Following the Company`s remarks, there will be a
question and answer period.

The conference call telephone number is (866) 416-5346. Participants calling
from outside the United States and Canada should dial (913) 981-5596. No pass
code is necessary to access the call from either number. Participants should
dial in about 15 minutes prior to the scheduled start of the call. A replay of
the conference call will be available through 8:00 p.m. Eastern Daylight Time
Monday, November 9th. To hear the replay, dial (719) 457-0820. The replay pass
code is 1239436.

A live audio webcast of the conference call will also be available in a listen
only mode on the Company`s web site at www.fivestarseniorliving.com.
Participants wanting to access the webcast should visit the Company`s web site
about five minutes before the call. The archived webcast will be available for
replay on the Company`s web site for about one week after the call.

About Five Star Quality Care, Inc.:

Five Star Quality Care, Inc. is a senior living and healthcare services company.
Five Star owns or leases and operates 206 senior living communities with 21,953
living units located in 30 states. These communities include independent living,
assisted living and skilled nursing communities. Five Star also operates five
institutional pharmacies and two rehabilitation hospitals. Five Star is
headquartered in Newton, Massachusetts.

FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(unaudited)

Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Senior living revenue $ 253,699 $ 239,867 $ 757,305 $ 682,602
Rehabilitation hospital revenue 24,641 23,938 75,008 73,103
Institutional pharmacy revenue 18,868 16,814 55,418 52,301
Total revenues 297,208 280,619 887,731 808,006

Operating expenses:
Senior living wages and benefits 130,266 119,792 387,078 338,809
Other senior living operating expenses 62,903 60,820 184,220 172,108
Rehabilitation hospital expenses 22,363 22,332 68,011 67,539
Institutional pharmacy expenses 18,296 17,368 54,957 50,918
Rent expense 44,520 41,718 133,086 116,380
General and administrative 13,465 11,948 38,914 34,803
Depreciation and amortization 4,003 3,684 12,445 10,954
Total operating expenses 295,816 277,662 878,711 791,511

Operating income 1,392 2,957 9,020 16,495

Interest, dividend and other income 479 1,071 2,394 4,867
Interest and other expense (964 ) (1,696 ) (3,390 ) (4,890 )
Unrealized gain (loss) on investments in trading securities (238 ) (1,733 ) 3,473 (6,099 )
Unrealized gain (loss) on UBS put right related to auction rate securities 455 - (2,832 ) -
Equity in losses of Affiliates Insurance Company (23 ) - (132 ) -
Gain on early extinguishment of debt 3,031 743 34,262 743
Gain on sale of available for sale securities 795 - 795 -
Impairment of investments in available for sale securities - (3,019 ) (2,947 ) (3,019 )

Income (loss) from continuing operations before income taxes 4,927 (1,677 ) 40,643 8,097
(Provision) benefit for income taxes (565 ) 90 (2,074 ) (920 )
Income (loss) from continuing operations 4,362 (1,587 ) 38,569 7,177
Loss from discontinued operations (254 ) (663 ) (511 ) (4,321 )

Net income (loss) $ 4,108 $ (2,250 ) $ 38,058 $ 2,856

Weighted average shares outstanding - basic 34,219 31,845 32,890 31,832

Weighted average shares outstanding - diluted 38,835 31,845 38,554 31,832

Basic income (loss) per share from:
Continuing operations $ 0.13 $ (0.05 ) $ 1.17 $ 0.23
Discontinued operations (0.01 ) (0.02 ) (0.02 ) (0.14 )
Net income (loss) per share - basic $ 0.12 $ (0.07 ) $ 1.15 $ 0.09

Diluted income (loss) per share from:
Continuing operations $ 0.12 $ (0.05 ) $ 1.05 $ 0.23
Discontinued operations (0.01 ) (0.02 ) (0.01 ) (0.14 )
Net income (loss) per share - diluted $ 0.11 $ (0.07 ) $ 1.04 $ 0.09

FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands, except share data)
(unaudited)

September 30, December 31,
2009 2008
Assets
Current assets:
Cash and cash equivalents $ 26,432 $ 16,138
Accounts receivable, net of allowance 61,932 66,023
Investments in trading securities 66,189 -
Investments in available for sale securities 8,865 7,232
Restricted cash and investments 7,293 7,518
UBS put right related to auction rate securities 8,249 -
Prepaid expenses and other current assets 16,803 17,350
Total current assets 195,763 114,261

Property and equipment, net 187,282 190,627
Investments in trading securities - 62,866
Equity investment in Affiliates Insurance Company 4,977 -
UBS put right related to auction rate securities - 11,081
Restricted cash and investments 12,891 13,368
Goodwill and other long term assets 18,675 20,435
Total assets $ 419,588 $ 412,638

Liabilities and Shareholders' Equity
Current liabilities:
UBS secured revolving credit facility related to auction rate securities $ 39,704 $ -
Other current liabilities 140,350 129,139
Total current liabilities 180,054 129,139

UBS secured revolving credit facility related to auction rate securities - 21,875
Long term liabilities 37,333 37,344
Mortgage notes payable 12,314 12,441
Convertible senior notes 51,552 126,500
Shareholders` equity (35,436,064 and 32,205,604 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively) 138,335 85,339
Total liabilities and shareholders` equity $ 419,588 $ 412,638

FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)

Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008

Number of communities (end of period) 206 198 206 198
Number of living units (end of period) 21,953 21,031 21,953 21,031
Number of living units % growth 4.4 % - 4.4 % -

Occupancy 86.1 % 88.3 % 86.3 % 89.1 %
Average daily rate (ADR) $ 145.83 $ 142.74 $ 146.44 $ 143.05
ADR % growth 2.2 % - 2.4 % -

Percent breakdown of net senior living revenues:
Medicare 14.2 % 13.7 % 14.5 % 14.9 %
Medicaid 16.5 % 16.5 % 16.3 % 16.9 %
Private and other sources 69.3 % 69.8 % 69.2 % 68.2 %
Total 100.0 % 100.0 % 100.0 % 100.0 %

Senior living revenues $ 253,699 $ 239,867 $ 757,305 $ 682,602
Senior living revenues % growth 5.8 % - 10.9 % -

Senior living wages and benefits $ 130,266 $ 119,792 $ 387,078 $ 338,809
Senior living wages and benefits as a % of senior living revenues 51.3 % 49.9 % 51.1 % 49.6 %
Other senior living operating expenses $ 62,903 $ 60,820 $ 184,220 $ 172,108
Other senior living operating expenses as a % of senior living revenues 24.8 % 25.4 % 24.3 % 25.2 d>
Lines of credit and short-term debt $ 6,098 $ 207,149
Accounts payable 47,561 57,339
Accrued liabilities 31,195 32,241
Income tax payable 358 3,484
Current portion of long-term debt 1,339 372
Current portion of capital lease obligations 377 313
Total current liabilities 86,928 300,898

LONG-TERM DEBT, net of current portion
Convertible senior notes 155,451 123,098
Long-term borrowings 217,146 3,540

CAPITAL LEASE OBLIGATIONS, net of current portion 1,854 1,726
DEFERRED INCOME TAXES, non-current 7,986 18,189
OTHER LONG-TERM LIABILITIES 22,935 36,820
Total liabilities 492,300 484,271

COMMITMENTS AND CONTINGENCIES - -

EQUITY
Diodes Incorporated stockholders' equity
Preferred stock - par value $1.00 per share; 1,000,000 shares authorized; no shares issued or outstanding - -
Common stock - par value $0.66 2/3 per share; 70,000,000 shares authorized; 41,378,816 and 43,508,314 issued and outstanding at December 31, 2008 and September 30, 2009, respectively 27,586 29,006
Additional paid-in capital 167,964 205,549
Retained earnings 241,814 235,114
Accumulated other comprehensive loss (48,439 ) (48,788 )
Total Diodes Incorporated stockholders' equity 388,925 420,881
Noncontrolling interest 9,453 9,462
Total equity 398,378 430,343
Total liabilities and equity $ 890,678 $ 914,614

Note: The December 31, 2008 amounts were adjusted for the retrospective
application of FASB ASC 470-20 and ASC 810-10-65.

Five Star Quality Care, Inc.
Timothy A. Bonang, 617-796-8245
Vice President, Investor Relations
or
Katherine L. Johnston, 617-796-8245
Manager, Investor Relations
www.fivestarseniorliving.com

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