Sunrise Senior Living charges pile up
Washington Business Journal – by Erin Killian Staff Reporter
Sunrise Senior Living Inc. continues to take a battering as it finds more charges it expects to take as a result of restatements over the past decade.
The McLean-based operator assisted living facilities said Monday it expects to pay $10 million more than previously reported in its restatement charges between 1996 and 2005 for a total of $140 million.
Sunrise (NYSE: SRZ) also said it will take millions in additional charges it has not previously disclosed in 2006 and 2007, according to the Monday statement.
Those charges include a $14.6 million impairment charge in 2006 related to four small senior living communities Sunrise acquired in the late 1990s, a $4 million impairment charge in 2007 related to a senior living community the company acquired in 1999 and a “material loss” in 2007 related to its investment in Trinity Hospice Inc.
Sunrise also said it expects a take an additional $7 million loss in 2007 added on to a previously disclosed $23 million loss related to an increase in budget costs the company underestimated to build senior living condominiums.
Sunrise also took on $42 million in legal fees in 2007 related to its accounting restatement.
The company formed a special committee a year ago to investigate possible abuses of stock options grants and insider trading.
In December, Sunrise Senior Living said its president and two other top executives left the company after an internal investigation “found that inappropriate accounting occurred during the third quarter of 2003 through the fourth quarter of 2005,” Sunrise said at the time.
The departed officers included Thomas Newell, who was president since 2000, Larry Hulse, who headed the company’s insurance captive and was finance chief from 2000 to 2005 and treasurer Carl Adams.
Sunrise is required by the New York Stock Exchange to release its 2006 numbers, which will include restated results for 2004 and 2005, by March 17 or it will face de-listing of the company’s stock.
Sunrise said in the statement that “no assurance can be given” that it will meet this deadline.
As of Dec. 31, Sunrise operated 457 communities with 54,000 residents in the U.S., Canada, the United Kingdom and Germany. The company has 45 communities under construction.
Sunrise said its same-community portfolio, 206 operations open longer than a year or that have 95 percent occupancy, had $311.5 million in revenue in the fourth quarter 2007, a 6 percent increase from $294 million in the same quarter a year ago.