Five Star Quality Care, Inc. to Restate 2011, 2012 and First and Second
Quarter 2013 Financial Results
NEWTON, Mass. -- November 27, 2013
Five Star Quality Care, Inc. (NYSE: FVE) today announced that it will restate
its financial results for 2011, 2012 and the first and second quarters of
2013. As previously disclosed in FVE’s press release dated November 12, 2013,
in connection with the preparation of FVE’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2013, management identified certain errors
primarily relating to the accounting for non-cash income tax items in prior
periods. At this time, correcting these errors is expected to:
*Increase the net deferred tax assets previously reported in FVE’s
financial statements as of December 31, 2011 and December 31, 2012.
*Increase the cumulative other comprehensive income as previously reported
in FVE’s financial statements as of December 31, 2011 and December 31,
*Increase the benefit for income taxes as previously reported in FVE’s
financial statements and create a corresponding increase in net income for
the year ended December 31, 2011.
*Increase the provision for income taxes as previously reported in FVE’s
financial statements and create a corresponding decrease in net income for
the year ended December 31, 2012. The decrease in FVE’s income for the
year ended December 31, 2012, is currently expected to be less than the
amount of the increase in income for the year ended December 31, 2011.
In addition, some of FVE’s net deferred tax assets previously reported are
expected to be reclassified from long term assets to current assets as of each
of December 31, 2011 and December 31, 2012. It is also expected that there
will be adjustments made to FVE’s previously reported net deferred tax assets,
provision or benefit for income taxes for the periods ending March 31, 2013
and June 30, 2013; but it has not yet been determined if these adjustments
will increase or decrease the previously reported net deferred tax assets,
provision or benefit for income taxes for these 2013 periods.
Because of the restatements described herein, FVE’s previously filed financial
reports for the years ended December 31, 2011 and December 31, 2012 and for
the periods ended March 31, 2013 and June 30, 2013 should no longer be relied
FVE has determined that, as a result of the matters discussed above, FVE has a
material weakness in its internal control over financial reporting because FVE
did not maintain adequate and effective internal control over its accounting
for income taxes. FVE is currently in the process of remediating this material
weakness in its internal control over financial reporting by designing and
implementing new procedures related to FVE’s accounting for income taxes. FVE
is also working to prepare restated financial reports for the affected
periods. These restated reports and a late filed Quarterly Report on Form 10-Q
for the period ended September 30, 2013, will be filed with the U.S.
Securities and Exchange Commission as soon as they are prepared, audited or
reviewed, as the case may be, by FVE’s independent public accounting firm and
approved for filing.
Five Star Quality Care, Inc. is a senior living and healthcare services
company that owns, leases and manages senior living communities, including
primarily private pay independent and assisted living communities located
throughout the U.S. FVE 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:
THE DISCUSSION CONTAINED IN THIS PRESS RELEASE OF FVE’S FINANCIAL RESULTS TO
BE CORRECTED AND RESTATED HAS BEEN PREPARED BY FVE’S MANAGEMENT AND REPRESENTS
MANAGEMENT’S CURRENT ASSESSMENTS FOR THE PERIODS SPECIFIED. FVE’S MANAGEMENT
HAS NOT YET COMPLETED ITS ASSESSMENTS OF THE ERRORS IN THE PREVIOUSLY FILED
FINANCIAL REPORTS DISCUSSED IN THIS PRESS RELEASE. WHEN MANAGEMENT COMPLETES
ITS ASSESSMENTS, THOSE ASSESSMENTS WILL BE AUDITED OR REVIEWED, AS THE CASE
MAY BE, BY FVE’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. THE ACTUAL
AMOUNTS OF THE IDENTIFIED ERRORS AND THE IMPLICATIONS OF ANY CORRECTIONS WHICH
WILL BE MADE ARE NOT YET DETERMINED AND COULD DIFFER FROM THE DISCUSSION IN
THIS PRESS RELEASE. THERE CAN BE NO ASSURANCE THAT FVE OR ITS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM WILL NOT IDENTIFY ADDITIONAL ACCOUNTING
ISSUES REQUIRING ADJUSTMENT AS THE RESTATEMENT PROCESS CONTINUES AND IS
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 Quality Care, Inc.
Timothy A. Bonang, 617-796-8245
Vice President, Investor Relations
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