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

  Five Star Quality Care, Inc. Announces Filing of Restated Financial   Statements        Company Is Now Current With its Filings through September 30, 2013  Business Wire  NEWTON, Mass. -- April 16, 2014  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 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 QUALITY CARE,INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited)                                                                                                                             September 30,     December 31,                                               2013              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       38,226            39,205 and December 31, 2012, respectively Due from related persons                      6,884             6,881 Investments in available for sale securities, of which $5,100 and $3,684        19,042            12,920 are restricted at September 30, 2013 and December 31, 2012, respectively 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     5,781             5,629 Company Restricted cash                               8,184             12,166 Restricted investments in available for       11,597            10,580 sale securities 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,           $   10,000        $   — principally by real estate 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     9,232             16,977 notes payable at September 30, 2013 and December 31, 2012, respectively 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      482               482 at September 30, 2013 and December 31, 2012, respectively 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              Nine months ended                     September 30,                   September 30,                     2013            2012           2013         2012                                      (Restated)                   (Restated) Revenues: Senior living       $  269,839       $  268,645     $ 807,906     $  804,543 revenue Management fee      2,290            1,277          6,873         3,667 revenue Reimbursed costs incurred on behalf of        51,983           27,247         156,194       76,750 managed communities Total revenues      324,112          297,169        970,973       884,960                                                                               Operating expenses: Senior living wages and           130,824          131,384        393,641       393,446 benefits Other senior living              68,227           64,579         200,317       192,636 operating expenses Costs incurred on behalf of        51,983           27,247         156,194       76,750 managed communities Rent expense        48,743           47,659         145,035       142,451 General and         15,081           14,647         45,664        45,580 administrative Depreciation and                 6,736            6,175          19,691        18,196 amortization Gain on             —                —              —             (3,365     ) settlement Total operating     321,594          291,691        960,542       865,694 expenses                                                                               Operating           2,518            5,478          10,431        19,266 income                                                                               Interest, dividend and        191              199            599           638 other income Interest and        (1,179      )    (1,762       ) (3,990      ) (4,793     ) other expense Acquisition         (78         )    (100         ) (119        ) (100       ) related costs (Loss) gain on early               (599        )    —              (599        ) 45 extinguishment of debt Gain on sale of available for sale securities reclassified        36               63             6             62 from other comprehensive income                                                                               Income from continuing operations before income taxes and           889              3,878          6,328         15,118 equity in earnings of Affiliates Insurance Company Provision for       (226        )    (905         ) (582        ) (5,523     ) income taxes Equity in earnings of Affiliates          64               115            219           236 Insurance Company Income from continuing          727              3,088          5,965         9,831 operations (Loss) income from                (925        )    13,125         (3,225      ) 11,764 discontinued operations                                                                               Net income          $  (198     )    $  16,213      $ 2,740       $  21,595 (loss)                                                                               Weighted average shares      48,272           47,927         48,253        47,913 outstanding - basic                                                                               Weighted average shares      48,417           49,840         49,571        50,185 outstanding - diluted                                                     . Basic income per share from: Continuing          $  0.02          $  0.06        $ 0.12        $  0.21 operations Discontinued        (0.02       )    0.28           (0.06       ) 0.24 operations Net income per      $  —             $  0.34        $ 0.06        $  0.45 share - basic                                                                               Diluted income per share from: Continuing          $  0.02          $  0.06        $ 0.12        $  0.21 operations Discontinued        (0.02       )    0.27           (0.06       ) 0.23 operations Net income per      $  —             $  0.33        $ 0.06        $  0.44 share - diluted                                                                                                                                                              Contact:  Five Star Quality Care, Inc. Kimberly Brown, 617-796-8245 Director, Investor Relations www.fivestarseniorliving.com