Sunrise Senior Living yesterday reported that it plans to reduce recorded profits by $98 million to $107 million for 1999 through 2005 as it corrects the way it accounted for certain joint ventures.
The McLean company, which operates hundreds of communities for senior citizens in the United States, Canada and Europe, said those profits would likely be moved to show up as income from 2006 through 2008.
The company offered no specific timetable for when it would formally restate its results, saying only a filing was near.
Brad Rush, Sunrise's chief financial officer, said the company was going through the "last stages" of its accounting review and was close to submitting its recast results for 2003 through 2005.
"It has been a long, frustrating and exhaustive process for us all," Rush said in a conference call with analysts and investors.
The company announced in May that it would restate results as it revamped the way it accounted for profits, losses and revenue from certain joint ventures. Last month, Sunrise said its review and restatement process would take longer than expected.
Sunrise has maintained that its cash flow has not been affected by the accounting troubles.
In a financial update released yesterday, Sunrise reported that same-community revenue, or revenue from the communities it operated in both 2005 and 2006, rose 5.7 percent, to $237.6 million, in the fourth quarter compared with the same period last year. The company attributed the rise in revenue to high occupancy rates and an increase in daily rates for its units. Same-community net operating income increased 5.5 percent in the quarter to $72.6 million, the company said.
Investment analysts, however, had hoped the company would be more definitive about when it would release its restated results and put the accounting problems behind it.
"There's nothing problematic here, and the operating results were fine, but people were hoping for an announcement about a submission to the SEC or perhaps stronger earnings," said Jerry Doctrow, an analyst at Stifel Nicolaus. "It would be nice to get this accounting issue over."
Some shareholders, such as the pension fund of Service Employees International Union, have pressed Sunrise to be more transparent about its review process. The group also has asked the company to look into the timing of stock sales by certain executives relative to when the accounting problems were disclosed.
In response, the company's board said it had appointed a special independent committee to look into the sales. News of the SEIU's request also prompted a request for information by the Securities and Exchange Commission.
Sunrise has accused the SEIU of raising the concerns as part of its campaign to organize Sunrise's workers. In an Oct. 11, 2006, letter, the Canadian chapters of SEIU appealed to Sunrise employees to join.
Steve Albrecht, executive director of the SEIU Master Trust in the United States, said operations by its Canadian chapters are separate from those in the United States and that the national union did not plan to seek membership from Sunrise employees.
"I don't have any say over what they do over there," Albrecht said. "As I've said all along, in the U.S. there is no organizing going on."