Amica Mature Lifestyles Announces Year End Results for Fiscal 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 7, 2009) - Amica Mature Lifestyles Inc. ("Amica" or the "Company") ACC, a leader in the management, marketing, design and development of luxury housing and services for mature lifestyles, is pleased to announce the Company's operating and financial results for the fiscal year and fourth quarter ended May 31, 2009. Mr. Samir Manji, Chairman, President and CEO of Amica commented: "Fiscal 2009 was one of the most challenging years in our short history. The year was shaped by a serious downturn in the domestic and global economy which had a profound impact on our Company. Many steps were taken and initiatives identified to improve our overall position and contribute to our ability to sustainably weather the financial conditions we faced. We have made some positive strides to position Amica to manage through the current economic environment." The Company's 2009 financial results fell short of expectations. The economy, housing market and other external factors had an impact on occupancy levels in many of Amica's Communities, which in turn had a direct impact on its consolidated financial results. Despite this, the Company has done what is necessary to ensure that the quality of the services that Amica provides to its Residents is not compromised. Simultaneously, the Company has taken steps to strengthen its financial position. Cash management strategies deployed during the fiscal year included: the refinancing of four properties at higher principal amounts as well as the completion of a new Canada Mortgage and Housing Corporation ("CMHC") insured second mortgage for Amica at Mayfair for $3.5 million; a staff reduction at the head office in Q2 to reduce general and administrative costs; and in certain co-tenancies, additional cash equity was raised that allowed the Company to repatriate certain loans receivable that were outstanding from those co-tenancies. Overall occupancy in Amica's mature residences at the end of the fiscal year was 91% compared to 95.2% at May 31, 2008 and MARPAS(1) for the year increased 1.7% on a same community(2) basis compared to an increase of 4.0% for the year ended May 31, 2008. The demand for Amica's high quality residences continues, although sustaining occupancy in the short-term will be difficult given the challenging economic conditions. During the fourth quarter, Amica at London, located in London, Ontario, opened its doors to its first residents. The $45 million retirement residence offers a selection of 164 suites (including 28 Vitalis(TM) suites) and was the third Amica Wellness & Vitality(TM) residence to open in fiscal 2009. The opening of three Amica residences during the fiscal year is a significant milestone for Amica and its project partners. As new residences join Amica's portfolio of communities in operation, the Company continues to strengthen the Amica brand within the areas in which it operates in and continues to deliver on its commitment to provide mature adults with first-class, luxury retirement living. The opening of Amica at London brought the Company's portfolio of Wellness & Vitality(TM) residences in operation to 19, with a further three under development and three in pre-development. The total cost of six rental retirement residences under development or pre-development for Amica and its partners is approximately $259 million of which Amica's share is approximately $78 million. In addition, the condominiums that will form part of the Amica at Bayview Gardens Rentals development, located in North York, Ontario, the Amica at Dundas development, located in Dundas, Ontario, and the Amica at Richmond Hill development, located in Richmond Hill, Ontario, represent approximately $122 million of which Amica's share is approximately $28 million in condominium projects under development or pre-development for Amica and its partners. The Dundas and Richmond Hill condominiums are not anticipated to commence construction in fiscal 2010. Amica at Dundas, which opened in March 2008, is leasing-up well with 80% occupancy, which is anticipated to increase to 88% following an additional 10 net pending move-ins over the months ahead. This community is currently on track to reach stabilized occupancy within 24 months of opening. Amica at Westboro Park, which opened in September 2008, is also leasing-up well with 41% occupancy, which is anticipated to increase to 47% following an additional 8 net pending move-ins over the months ahead. The Company also expects to see Amica at Westboro Park at stabilized occupancy within 24 months of opening. Amica at Thornhill, which opened in November 2008, has 25% occupancy, which is anticipated to increase to 37% following an additional 17 net pending move-ins over the months ahead. Amica at London, which opened in March 2009, currently has 16% occupancy, which is anticipated to increase to 22% following an additional 9 net pending move-ins over the months ahead. Amica at Whitby, located in Whitby, Ontario, is anticipated to open in the fall of 2009. Amica at Bayview Gardens Rentals, located in North York, Ontario, and Amica at Windsor, located in Windsor, Ontario, are anticipated to open in the spring of 2010. The Company has worked diligently to build its working capital position. Consolidated cash by the end of the fiscal year increased to over $12 million, which will enable the Company to meet its expected operating and development commitments over the next twelve months. First Quarter Dividend The Company's Board of Directors has approved a quarterly dividend of $0.06 per share on all issued and outstanding common shares which will be payable on September 15, 2009, to shareholders of record on August 31, 2009. /T/ Financial Highlights MANAGEMENT OPERATIONS --------------------------------------------------------------------------- (Expressed in thousands of 3 MONTHS ENDED 12 MONTHS ENDED Canadian May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008 dollars) (unaudited) (unaudited) (audited) (audited) --------------------------------------------------------------------------- MANAGEMENT OPERATIONS: Revenues Management fees from 100% owned communities $ 455 $ 462 $ 1,841 $ 1,836 Management fees from less than 100% owned communities 883 639 2,987 2,389 Design and marketing fees from new developments under construction 656 971 2,412 5,153 --------------------------------------------------------------------------- 1,994 2,072 7,240 9,378 General and administrative expenses (1,767) (2,381) (7,294) (8,186) --------------------------------------------------------------------------- $ 227 $ (309) $ (54) $ 1,192 --------------------------------------------------------------------------- --------------------------------------------------------------------------- OWNERSHIP AND CORPORATE OPERATIONS --------------------------------------------------------------------------- (Expressed in thousands of 3 MONTHS ENDED 12 MONTHS ENDED Canadian May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008 dollars) (unaudited) (unaudited) (audited) (audited) --------------------------------------------------------------------------- OWNERSHIP AND CORPORATE OPERATIONS: Retirement communities operating revenues $ 9,310 $ 9,386 $ 37,567 $ 37,363 Income (loss) from equity- accounted investment (12) (69) (14) 35 Distributions from cost- accounted investments 71 51 330 410 Expenses: Retirement communities operating (6,018) (5,675) (23,981) (22,823) Corporate (259) (72) (649) (795) Fees paid to and reported in management operations (574) (619) (2,397) (2,410) --------------------------------------------------------------------------- $ 2,518 $ 3,002 $ 10,856 $ 11,780 --------------------------------------------------------------------------- --------------------------------------------------------------------------- EARNINGS BEFORE OTHER OPERATING ITEMS (EBITDA) --------------------------------------------------------------------------- (Expressed in thousands of 3 MONTHS ENDED 12 MONTHS ENDED Canadian May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008 dollars) (unaudited) (unaudited) (audited) (audited) --------------------------------------------------------------------------- Earnings before other operating items $ 2,745 $ 2,693 $ 10,802 $ 12,972 --------------------------------------------------------------------------- --------------------------------------------------------------------------- CASH FLOW FROM OPERATIONS --------------------------------------------------------------------------- (Expressed in thousands of 3 MONTHS ENDED 12 MONTHS ENDED Canadian May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008 dollars) (unaudited) (unaudited) (audited) (audited) --------------------------------------------------------------------------- Cash flow $ 727 $ 1,506 $ 6,232 $ 8,196 --------------------------------------------------------------------------- --------------------------------------------------------------------------- PER SHARE CASH FLOW FROM OPERATIONS --------------------------------------------------------------------------- 3 MONTHS ENDED 12 MONTHS ENDED May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008 (unaudited) (unaudited) (audited) (audited) --------------------------------------------------------------------------- Basic cash flow $ 0.04 $ 0.09 $ 0.37 $ 0.47 Diluted cash flow $ 0.04 $ 0.09 $ 0.36 $ 0.46 Weighted average basic number of shares 16,571,957 17,402,857 17,048,322 17,534,068 Weighted average diluted number of shares 16,589,208 17,557,007 17,076,496 17,806,985 --------------------------------------------------------------------------- --------------------------------------------------------------------------- /T/ FINANCIAL REVIEW AND ANALYSIS Three Months and Year Ended May 31, 2009 Compared to Three Months and Year Ended May 31, 2008 Overview In the fourth quarter of fiscal 2009, the Company's cash flow from operations(3) was $0.7 million as compared to $1.5 million in the same period in the prior year. Earnings Before Other Operating Items (EBITDA(4)) for the fourth quarter of fiscal 2009 was $2.7 million, which was identical to EBITDA for the same period in the prior year. The decrease in cash flow from operations of $0.8 million was primarily due to the Company acquiring additional ownership interest in certain co-tenancies, which resulted in the switch from cost to equity accounting for such investments. Previously, design and marketing fees and any other fees earned on these co-tenancies were reflected in earnings whereas under equity accounting they are netted against the equity investment until the properties are considered to be income-producing properties. In addition, a higher current tax provision and lower cash distributions in excess of income from equity accounted investments also contributed to the decrease in cash flow from operations for the quarter. Net loss for the fourth quarter of fiscal 2009 was $1.8 million compared to net earnings for the fourth quarter of fiscal 2008 of $0.2 million. The net loss for the current quarter arose from the write-down of the Company's investment in Amica at Kingston of $1.3 million as well as a write-down of a mortgage and loan receivable from Amica at Bearbrook of $0.9 million. During fiscal 2008, the Company decided not to proceed with its development in Kingston, Ontario. As the development was discontinued before it commenced construction, the Company provided for the return of design and marketing fees totaling $0.6 million during the fourth quarter of fiscal 2008 that were previously charged by the Company during the last quarter of fiscal 2007 and the first three quarters of fiscal 2008. In November 2008, the Kingston co-tenancy returned 75% of the initial cash contributions made by each co-tenancy investor, except for Amica. The Company has agreed that it will not recover any of its investment until the balance of original cash contributions made by the other investors of $0.84 million has been returned. During fiscal 2008, the Company amended the terms of a $1.5 million mortgage and a $0.7 million loan receivable from Amica at Bearbrook from a fixed rate to receivables that paid interest limited to cash flows from the property. The receivables were discounted at the relevant interest rates of 10% and 12%, and the Company recorded the accretion of this discount as interest income until April 2009 when the mortgage payable on the property was coming due. As the mortgage refinancing on the property was not sufficient for the Company to repatriate the mortgage and loan receivable, the Company has discounted the receivables for a further five years from April 2009 based on management's estimate of when the property will generate sufficient cash flow to pay the interest on the receivables. The Company will be recording the accretion of the discount as interest income from April 2009 to March 2014. In fiscal 2009, EBITDA decreased from $13.0 million to $10.8 million, primarily due to a reduction of design and marketing fees from new developments under construction. This is due to the lower number of active developments as a result of the new communities under active development a year ago becoming operational. The decrease in design and marketing fees was partially offset by higher management fees from less than 100% owned communities. Although retirement communities' operating expenses increased by $1.2 million, this was offset by savings of $1.1 million in corporate and general and administrative expenses. In fiscal 2009, management fees from same communities were unchanged at $1.8 million. Management fees from less than 100% owned communities increased by $0.6 million to $3.0 million, and earnings from design and marketing fees decreased $2.7 million to $2.4 million in comparison with the prior fiscal period. General and administrative expenses decreased $0.9 million to $7.3 million. As a result, management operations generated a slight loss of $0.1 million compared to earnings of $1.2 million in fiscal 2008. Management Operations For the three month period ended May 31, 2009, fee revenue decreased $0.1 million to $2.0 million and general and administrative expenses decreased $0.6 million to $1.8 million, resulting in a profit from management operations of $0.2 million compared to a loss of $0.3 million in the fourth quarter of fiscal 2008. The fourth quarter of fiscal 2008 included $0.3 million in severance costs. For the year ended May 31, 2009, management operations revenues decreased by $2.1 million to $7.2 million, and general and administrative expenses decreased $0.9 million to $7.3 million resulting in a loss from management operations of $0.1 million in fiscal 2009 as compared to earnings of $1.2 million in fiscal 2008. The $2.1 million decrease in management operations revenues is primarily due to lower design and marketing fees of $2.7 million partially offset by $0.6 million higher management fees from less than 100% owned communities due a variety of factors including increased rents and ancillary service revenues at the retirement communities and the opening of three new communities. The $0.9 million decrease in general and administrative expenses is mostly attributable to savings from staff reductions that took place in the second quarter of fiscal 2009. Included in general and administrative expenses is $0.5 million in stock based compensation expense in comparison to $0.6 million in fiscal 2008. Ownership and Corporate Operations Revenues In the fourth quarter of fiscal 2009, retirement communities operating revenues remained consistent at $9.3 million compared to $9.4 million for the three months ended May 31, 2008. For the year ended May 31, 2009, retirement communities operating revenues increased $0.2 million to $37.6 million due to an increase in revenues from same communities as a result of increased rents and revenue from ancillary services provided by the communities. Expenses For the three month period ended May 31, 2009, retirement communities operating expenses increased $0.3 million to $6.0 million compared to $5.7 million for the three month comparative period. Retirement communities operating expenses increased $1.2 million to $24.0 million for the year ended May 31, 2009, due to increases in same community expenses consisting primarily of salaries, food costs, utilities, and advertising. Corporate expenses decreased by $0.2 million to $0.6 million due to an effort to manage expenses more tightly. Fees paid by consolidated properties and reported in management operations remained consistent at $2.4 million for the current and prior fiscal year. Earnings Before Other Operating Items (EBITDA) As a result of the changes in management operations and ownership and corporate operations, EBITDA of $2.7 million remained consistent in the fourth quarter of fiscal 2009 with that of the prior year. For the full year, as a result of the changes in management operations and ownership and corporate operations, EBITDA decreased $2.2 million to $10.8 million. The primary factor impacting EBITDA was the decrease in design and marketing fees of $2.7 million. The decrease was partially offset by the increase of $0.6 million in management fees from less than 100% owned communities. Other Items Depreciation and Amortization For the three month period ended May 31, 2009, depreciation and amortization were unchanged at $0.9 million. For the year ended May 31, 2009, depreciation and amortization were unchanged at $3.7 million. Interest Expense For the three month period ended May 31, 2009, interest expense increased by $0.1 million to $1.7 million. Interest expense for fiscal 2009 increased by $0.6 million to $6.8 million primarily due to a increase in mortgage loan values. Interest and Other Income For the three month period ended May 31, 2009, interest and other income increased $0.1 million to $0.2 million. For the year ended May 31, 2009, interest and other income increased by $1.0 million in fiscal 2009 to $2.8 million. The increase is partly due to the year over year increase in the weighted average mortgages and loans receivable balances and partly due to a $0.6 million provision recorded in the fourth quarter of fiscal 2008 for the return of design and marketing fees received from the Kingston, Ontario development which was no longer proceeding. Income Taxes The income tax recovery in Q4 fiscal 2009 resulted from the loss before tax during the quarter. The tax provision for the quarter was negatively affected by the non-deductible component of the write-down on the Kingston investment. In fiscal 2009, the Company's tax expense was $0.6 million, compared to tax expense of $0.3 million in fiscal 2008. The prior year included $1.6 million in tax savings as a result of $0.9 million in reductions in the Company's future tax rates resulting from changes in federal and provincial tax rates, and $0.7 million from non-capital losses the Company was able to reclaim through amendments to prior year tax returns. Net Earnings and Earnings Per Share For the three month period ended May 31, 2009, the Company had a net loss of $1.8 million (2008 - net earnings of $0.2 million). This resulted in $0.10 in basic loss per share (2008 - $0.01 basic earnings per share) and $0.10 in diluted loss per share (2008 - $0.01 diluted earnings per share). In fiscal 2009, the Company had a loss of $0.6 million (2008 - $4.6 million in net earnings). This resulted in $0.03 in basic loss per share (2008 - $0.26 basic earnings per share) and $0.03 in diluted loss per share (2008 - $0.26 diluted earnings per share). Cash Flow For the three month period ended May 31, 2009, the Company's cash flow from operations was $0.7 million as compared to $1.5 million in the same period in the prior year. As a result, basic per share cash flow from operations decreased $0.05 per share to $0.04; and diluted per share cash flow from operations decreased $0.05 per share to $0.04. After taking into consideration other changes in non-cash operating working capital, total cash flow for the three month period ended May 31, 2009 decreased to $1.8 million from $2.8 million in the same period in the prior year. In fiscal 2009, cash flow from operations decreased $2.0 million to $6.2 million. As a result, basic per share cash flow from operations decreased $0.10 per share to $0.37, and diluted per share cash flow from operations decreased $0.10 per share to $0.36. The decrease is primarily attributable to the lower EBITDA for the year of $2.2 million. After taking into consideration other changes in non-cash operating working capital, total cash flow in 2009 decreased to $5.1 million in fiscal 2009 from $8.9 million in fiscal 2008. LIQUIDITY AND CAPITAL RESOURCES The Company's cash balance at the end of the year was $12.9 million (2008 - $11.7 million). Cash flow generated from operations before changes in non-cash operating working capital was $6.2 million in 2009 (2008 - $8.2 million). Annual repayments of principal on the mortgages payable in each of the fiscal years ended May 31 and in aggregate thereafter, assuming that the first mortgages payable due on demand are classified as repayable in fiscal 2010, are as follows: /T/ ---------------------------------------------------------------------- (Expressed in thousands of Canadian dollars) May 31 ---------------------------------------------------------------------- 2010 $ 18,678 2011 9,219 2012 2,463 2013 19,248 2014 41,144 2015 4,310 Thereafter 27,392 Deferred financing costs (3,201) ---------------------------------------------------------------------- $ 119,253 ---------------------------------------------------------------------- /T/ The Company anticipates that its cash on hand and cash generated from operations, together with the equity available in its wholly-owned assets available for mortgaging, should the need arise, will be sufficient for it to meet its commitments and growth objectives for fiscal 2010 including capital expenditure commitments. Re-financings for Amica at Mayfair (Port Coquitlam, BC), and Amica at Bearbrook (Ottawa, Ontario), were completed during the fourth quarter. Construction financing for Amica at Windsor (Windsor, Ontario) has been secured, leaving Amica at Balmoral (Toronto, Ontario) and Amica at Somerset (Victoria, BC) (in which the Company has a 100% ownership interest in both communities, respectively) to be refinanced within the next two years, as outlined in the Liabilities Refinancing Schedule in note 9 to the Company's consolidated financial statements, Financial Instrument Risk and Capital Management. Amica at Bayview (in which the Company has a 15% ownership interest) is coming due to be refinanced in October 2009. The Company anticipates being able to refinance these three properties at least at the existing debt level as they satisfy current loan to value and debt service coverage ratios. While approximately $52.0 million of the debt due is currently held by conduits, the Company anticipates replacing such debt with conventional lenders either through conventional financing or by using CMHC insured financing. Financing Provided to Co-tenancies The Company, in conjunction with its development participants, usually funds cash shortfalls in operating co-tenancies and co-tenancy investments under development. The Company charges interest on these advances and is indemnified by the other capital participants or co-tenancy investors. As at May 31, 2009, advances to co-tenancies totaled $25.0 million compared to $28.0 million at May 31, 2008. During the year ended May 31, 2008, the Company amended the terms of a $1.5 million mortgage and a $0.7 million loan receivable from Amica at Bearbrook from a fixed rate to receivables that paid interest limited to cash flows from the property. The receivables were discounted at the relevant interest rates of 10% and 12%, and the Company recorded the accretion of this discount as interest income until April 2009 when the loan was due for repayment. As the senior mortgage re-financing was not sufficient for the Company to repatriate its mortgage and loan receivable, the Company has discounted the receivables for a further five years from April 2009 based on management's estimate of when the property will generate sufficient cash flow to pay the interest on the receivables. The Company will be recording the accretion of the discount as interest income from April 2009 to March 2014. Guarantees The Company also has provided guarantees on the mortgages of certain co-tenancies, whose properties and mortgages payable are not included in the consolidated financial statements because they are accounted for on a cost or equity basis. The Company's proportionate share of the underlying mortgages on these specific properties totaled $30.3 million at May 31, 2009, compared to $20.8 million at May 31, 2008. Guarantees provided by the Company in excess of the proportionate share of underlying mortgages totaled $58.0 million at May 31, 2009, compared to $34.1 million at May 31, 2008. The Company is indemnified by the other investors. Recovery from co-owners of amounts guaranteed beyond the realization of their respective co-tenancy interests is uncertain. /T/ --------------------------------------------------------------------------- (Expressed 2009 2008 in thousands of Canadian dollars) --------------------------------------------------------------------------- Properties held by Proportionate Guarantee Proportionate Guarantee non- share in excess of share in excess of consolidated of mortgages proportionate of mortgages proportionate co-tenancies payable share payable share --------------------------------------------------------------------------- Properties under development $ 14,433 $ 32,219 $ 4,494 $ 13,255 Income- producing properties 15,908 25,745 16,290 20,857 --------------------------------------------------------------------------- $ 30,341 $ 57,965 $ 20,784 $ 34,112 --------------------------------------------------------------------------- /T/ Independent third party appraisals were performed at the time the properties were financed and the guarantees provided and indicated a value in excess of the indebtedness that is guaranteed. The underlying properties are available to satisfy any claims under these guarantees and to reimburse the Company for any advances made to the co-tenancies. New Ownership and Changes of Ownership in Properties In accordance with the co-tenancy agreements, the Company, sometimes in conjunction with its development participants, elects to fund its co-investors' share of funding shortfalls in co-tenancy investments. During the second quarter, some investors in Amica at Bayview Gardens Rentals elected not to participate in a $5.0 million cash call to investors that was in addition to the original equity injection of $5.0 million; the Company viewed this as an attractive investment opportunity and therefore elected to increase its ownership interest in the project by 28%, at a cost of $2.8 million which was financed from existing working capital (the Company originally had a 0% ownership interest in the project); a further 6% ownership interest was acquired from a group of existing investors in the project at a cost of $0.6 million. This brought the Company's total ownership interest in Amica at Bayview Gardens Rentals to 34%. Effective November 1, 2008, the Company is equity accounting for this investment. During the second quarter, the Company acquired a 2.5% ownership interest in Amica at Oakville from a group of existing investors in the project at a cost of $0.14 million, which was financed from existing working capital. The Company viewed this as an attractive investment opportunity and this brought the Company's total ownership interest in Amica at Oakville to 19.5%. During the second quarter, the Company acquired a 3.2% ownership interest in Amica at Bayview Gardens Condominiums from a group of existing investors in the project at a cost of $0.16 million, which was financed from existing working capital (the Company originally had a 0% ownership interest in the project). The Company viewed this as an attractive investment opportunity and this brought the Company's total ownership interest in Amica at Bayview Gardens Condominiums to 3.2%. During the second quarter, the Company subscribed for a 24.4% ownership interest in Amica at Aspen Woods (a new project) at a total cost of $2.44 million which was financed from existing working capital. This project is accounted for using the equity basis of accounting. During the third quarter, as a result of a $7.0 million cash call to investors of Amica at Windsor, the Company made a further equity injection of $1.33 million, based on the Company's original 19% ownership interest in the project. Some investors elected not to provide the additional required equity; the Company viewed this as an attractive investment opportunity and therefore elected to increase its ownership interest in the project by 12% at an additional cost of $1.68 million, which was financed from existing working capital. This brought the Company's total ownership interest in Amica at Windsor to 31%. Effective January 1, 2009, the Company is equity accounting for this investment. During the third quarter, as a result of a $4.0 million cash call to investors of Amica at London, the Company made a further equity injection of $0.72 million, based on the Company's original 18% ownership interest in the project. Some investors elected not to provide the additional required equity; the Company viewed this as an attractive investment opportunity and therefore elected to increase its ownership interest in the project by 11.5% at an additional cost of $0.92 million which was financed by converting completion loans to equity. Effective March 1, 2009, the Company is equity accounting for this investment. On March 30, 2009, the Company acquired an additional 3.125% ownership interest from an existing investor in the project at a cost of $0.38 million. This brought the Company's total ownership interest in Amica at London to 32.625%. During the third quarter, as a result of a $3.5 million cash call to investors of Amica at Thornhill, the Company made a further equity injection of $0.35 million based on the Company's original 10% ownership interest in the project. Some investors elected not to provide the additional required equity; the Company viewed this as an attractive investment opportunity and therefore elected to increase its ownership interest in the project by 12% at an additional cost of $0.84 million which was financed by converting completion loans to equity. This brought the Company's total ownership interest in Amica at Thornhill to 22%. Effective March 1, 2009, the Company is equity accounting for this investment. Capital Expenditures In fiscal 2010, the Company expects to spend approximately $1.8 million on capital expenditures on its wholly-owned or proportionately consolidated communities and corporate operations, excluding the major renovation of Amica at Arbutus Manor (Vancouver, British Columbia), on which $1.6 million has been spent in fiscal 2009. The major renovation of Amica at Arbutus Manor commenced in November 2008 and is expected to be completed in December 2009 at a total cost of $5.1 million. Contractual Obligations The Company's contractual obligations for each of the next five years and thereafter are as follows: /T/ --------------------------------------------------------------------------- (Expressed in thousands of May 31, 2009 Canadian Contractual There- dollars) Obligation 2010 2011 2012 2013 2014 after --------------------------------------------------------------------------- Debt Repayment - Mortgages Payable 122,454 18,678 9,219 2,463 19,248 41,144 31,702 Commitments to provide financing to co-tenancies 9,743 9,743 - - - - - Capital expenditures - Arbutus Manor Renovation 3,500 3,500 - - - - - Premises lease 949 190 198 200 146 44 171 Total 136,646 32,111 9,417 2,663 19,394 41,188 31,873 --------------------------------------------------------------------------- /T/ Mortgage Financing On December 15, 2008, the Company provided $2.0 million of a $10.0 million second mortgage financing for Amica at Windsor at a rate of 12% per annum, which replaces mezzanine financing of $1.983 million. In addition to the $10.0 million second mortgage, the Company has received a CMHC certificate of insurance and a corresponding commitment letter from a lender for a $20.6 million construction financing. On February 4, 2009, the Company refinanced the first mortgage on Amica at Beechwood Village for a total of $14.6 million which consists of two facilities. Facility one of $6.8 million has a variable interest rate of one month banker's acceptance +2.5% for a five year term and is secured in part by joint guarantees of 50% of the principal balance by the Company and to a maximum amount of $6.8 million by a company of which the Chief Executive Officer and a Director of the Company are directors. The second facility of $7.8 million has a variable interest rate of one month banker's acceptance +3.75% for a five year term, and is secured in part by a guarantee of 50% by the Company. The Company has entered into two interest rate swaps to fix the interest rate on the first facility to 4.7% and to 5.95% on the second facility. As a result of the refinancing of Amica at Rideau Manor (Burnaby, British Columbia) and Amica at Beechwood Village, the Company's operating facility was reduced from $8.5 million to nil. The operating facility has now been cancelled. On May 27, 2009, the Company financed a second mortgage on Amica at Mayfair for a total of $4.0 million including CMHC premium, at a stated interest rate of 3.41%. This mortgage is secured by joint and several guarantees of 100% of the principal balance by the Company and the Chief Executive Officer of the Company. The Company also has six mortgages with a total value of $54.0 million which have been guaranteed in the amount of $35.0 million by the Chief Executive Officer jointly and severally with the Company. The Chief Executive Officer will receive aggregate guarantee fees of $0.1 million per annum related to these guarantees. Normal Course Issuer Bid The Company's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the expected returns on debt, equity capital and capital raised from co-tenants/investors and the level of dividends to shareholders. The Company seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Company's Normal Course Issuer Bid ("NCIB") program is intended to create sustainable shareholder value by reducing the outstanding capital of the Company. In January 2008, the Company received approval from the Toronto Stock Exchange (the "TSX") for its notice of intention to acquire up to 880,663 of its common shares, representing 5% of the Company's issued and outstanding shares, by way of Normal Course Issuer Bid (the "First Bid") through the facilities of the TSX. The First Bid commenced on January 15, 2008, and expired on January 14, 2009. During the twelve months ended May 31, 2009, the Company purchased and cancelled 245,600 shares under the First Bid, representing a total purchase cost including commissions of approximately $1.18 million at May 31, 2009, or an average of $4.78 per share, excluding commissions. In January 2009, the Company filed a notice of intention to conduct a second Normal Course Issuer Bid (the "Second Bid"), which received approval from the TSX on January 12, 2009. The Second Bid allows Amica to purchase and cancel up to 1,179,626 of its common shares, representing 10% of the public float at December 31, 2008. The Second Bid commenced on January 15, 2009 and will terminate on January 14, 2010, or such earlier date as the Company may complete its purchases pursuant to the notice of intention. As of May 31, 2009, the Company had purchased 823,500 shares under the Second Bid, representing a total purchase cost including commissions of approximately $2.76 million, or an average of $3.34 per share, excluding commissions. 811,900 shares purchased under the Second Bid were cancelled by the Company during fiscal 2009; 11,600 shares purchased under the Second Bid were cancelled by the Company in June 2009. Aggregating share purchases under the First and Second Bids, the Company purchased and cancelled 1,069,100 shares in fiscal 2009 (fiscal 2008 - 242,100), representing a total purchase cost including commissions of approximately $3.9 million (fiscal 2008 - $1.77 million) or an average of $3.67 per share, excluding commissions (fiscal 2008 - $7.28 per share). To date since January 15, 2008, Amica has purchased and cancelled 1,311,200 shares at a total purchase cost including commissions of approximately $5.7 million or an average of $4.34 per share, excluding commissions. Trading and Blackout Policy With the approval of Amica's Board of Directors, the Company's blackout periods imposed under its Trading and Blackout Policy (the "Policy") in connection with the preparation of quarterly and annual financial statements has been shortened and amended to better reflect the period during which the Company is involved in the preparation of its quarterly and annual financial statements to commence on the 21st day of the month following the first, second and third quarter end and 30th day of the first month following year end. The end of the black-out periods remains unchanged. Thus the Q1 blackout period commences September 21st; Q2 blackout Period commences December 21st; Q3 blackout period commences March 21st and the Q4 and year-end blackout period commences June 30th. These blackout periods end the first full trading day following the issuance of a news release disclosing the financial results. Amica's directors, management and staff and other people and companies in a special relationship with Amica remain unable to trade in shares of the Company if they are in possession of material undisclosed information relating to the Company. The amended Policy became effective January 8, 2009, and can be accessed online on the investor relations section of the Company's website at www.amica.ca under "Corporate Governance". Related Party Transactions A Board member and the Chief Executive Officer participated in certain co-tenancy investments on terms identical to the other investors. They have direct or indirect equity interests of between 4% and 20% in twelve (May 31, 2008 - ten) co-tenancies, and they benefit from the guarantees and funding shortfalls provided by the Company. The share of guarantees provided by the Company on behalf of related parties at May 31, 2009, totaled $5.7 million (May 31, 2008 - $2.9 million). Another Board member participated for a 1% interest in a co-tenancy (May 31, 2008 - nil), on terms identical to the other investors. Funds advanced to co-tenancies in which the related parties participated at May 31, 2009, totaled $12.2 million (May 31, 2008 - $10.0 million) and are included in mortgages and loans receivable. The Company charges interest on these advances in accordance with the contracted terms. The Company has six mortgages with a total value of $54.0 million which have been guaranteed in the amount of $35.0 million by the Chief Executive Officer jointly and severally with the Company. The Chief Executive Officer will receive aggregate guarantee fees of $0.1 million per annum related to these loans. The Company has indemnified the Chief Executive Officer for these guarantees. Related Party Transactions with Non-Consolidated Co-Tenancies For the twelve months ended May 31, 2009, the Company earned $4.2 million ($6.4 million for the twelve months ended May 31, 2008) in recurring management fees and design and marketing fees from co-tenancies, co-tenancy loan interest income of $2.6 million (May 31, 2008 - $2.2 million), and guarantee fees from co-tenancies of $0.4 million (May 31, 2008 - $0.1 million). As at May 31, 2009, co-tenancy loan interest and management fees receivable equal $1.5 million (May 31, 2008 - $2.7 million). Related party transactions are recorded at the exchange amount, which has been agreed to by the parties. The transactions are with co-tenancies that are not consolidated in these financial statements which are all in the normal course of business. Outstanding Share Data /T/ ------------------------------------------------------------------------- Designation Outstanding as of August 5, 2009 ------------------------------------------------------------------------- Common shares 16,370,224 Options to acquire common shares 1,105,500 ------------------------------------------------------------------------- ------------------------------------------------------------------------- /T/ Dividend Policy The Company approved quarterly dividends of $0.06 per share on all issued and outstanding common shares in each of the four quarters during this fiscal year. The first, second, third and fourth quarter dividends were paid on September 15, 2008, December 15, 2008, March 15, 2009, and June 15, 2009, respectively, to shareholders of record on August 29, 2008, November 28, 2008, February 27, 2009, and May 29, 2009, respectively. On August 5, 2009, the Board approved a fourth quarter dividend of $0.06 per share on all issued and outstanding common shares, to be paid on September 15, 2009, to shareholders of record on August 31, 2009. Future dividends will depend on a number of factors, including operating cash flow, growth opportunities, and liquidity and no assurance can be provided on amounts of dividends, if any, paid in future quarters. Risks and Uncertainties The business of the Company is subject to many risks and uncertainties, which are outlined in the "Risks and Uncertainties" section of the Company's MD&A for the third quarter ended February 28, 2009, dated April 6, 2009, which is available on the System for Electronic Document Analysis and Retrieval ("SEDAR"), which can be accessed at www.sedar.com or on the Company's website at www.amica.ca. Looking Ahead The Company's business plan for fiscal 2010 has been developed with an overarching goal of "Solidifying Our Foundation". The business plan includes objectives with a short-term focus on key aspects of Amica's business. The Company is focused on ensuring its foundation is strong, and getting stronger thereby further enhancing its brand and its reputation in the market. The Company believes a time will come when the economy will turn around, consumer confidence will be on the rise again, and collectively, these and other factors will provide for a stronger economic and operating environment. In the meantime, it is committed to its focus on its communities in operation and those under development. Most importantly, it remains committed to delivering a superior quality of service to each and every current and future customer who resides in an Amica community. From a long term perspective, the Company is focused on increasing shareholder value through improving EBITDA from management operations and creating a stable of five-star luxury retirement residences branded as Amica Wellness & Vitality(TM) Residences. As new communities open and lease-up, this will enhance revenues from management operations. This combined with the effective management of general and administration expenses will contribute towards the achievement of the above goal. Additional Information A two year summary by quarter of selected financial data is included in Note 1. Additional information about the Company (including its most recent Annual Information Form, Management's Discussion and Analysis (MD&A), Audited Financial Statements for the year ended May 31, 2009, and Interim Consolidated Financial Statements) will be available online at www.sedar.com. The Company expects to file with the securities regulators within the next three weeks its Annual Report for the year ended May 31, 2009, which will include the MD&A and Audited Financial Statements. /T/ Note 1 ---------------------------------------------------------------------------- (Expressed in thousands of Canadian dollars, except 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter per share --------------- --------------- --------------- --------------- amounts) 2009 2008 2009 2008 2009 2008 2009 2008 ---------------------------------------------------------------------------- Consolidated revenues from operations $10,801 $10,890 $10,949 $11,266 $10,553 $11,372 $10,437 $11,213 Earnings (loss): Management operations $ 227 $ (309)$ 472 $ 346 $ (428)$ 431 $ (325)$ 724 Ownership and corporate operations 2,518 3,002 2,689 2,936 2,852 3,109 2,797 2,733 Earnings before other operating items (EBITDA) $ 2,745 $ 2,693 $ 3,161 $ 3,282 $ 2,424 $ 3,540 $ 2,472 $ 3,457 Net earnings and comprehensive income $(1,848)$ 202 $ 175 $ 1,529 $ 549 $ 1,767 $ 539 $ 1,071 Basic earnings per share $ (0.10)$ 0.01 $ 0.01 $ 0.09 $ 0.03 $ 0.10 $ 0.03 $ 0.06 Diluted earnings per share $ (0.10)$ 0.01 $ 0.01 $ 0.09 $ 0.03 $ 0.10 $ 0.03 $ 0.06 Cash flow from operations $ 727 $ 1,506 $ 1,894 $ 1,763 $ 1,851 $ 2,806 $ 1,759 $ 2,121 Basic per share cash flow from operations: $ 0.04 $ 0.09 $ 0.11 $ 0.10 $ 0.11 $ 0.16 $ 0.10 $ 0.12 Diluted per share cash flow from operations: $ 0.04 $ 0.09 $ 0.11 $ 0.10 $ 0.11 $ 0.16 $ 0.10 $ 0.12 /T/ Generally, the Company's business is relatively stable and does not produce significant swings from quarter to quarter due to any seasonality issues. The Company's consolidated revenues from operations are relatively stable from quarter to quarter with nominal variations driven by occupancy levels and the number of active developments generating design and marketing fees underway at any quarter. Where fewer active developments are underway, this results in lower earnings (or higher losses) from management operations as has been the case recently and therefore reflected in some of the quarters. Also, the last two quarters reflect the change from cost to equity accounting for four of the co-tenancy investments. This change results in design and marketing and other fees earned on these co-tenancies being deferred against the equity investment until the properties are considered to be income producing properties. These fees are included in management operations revenues with an offset to Fees credited to Investments to properly reflect the impact on the Management Operations segment of the Company's operations. This, combined with the write-downs of $2.2 million in the investment in Amica at Kingston and the Amica at Bearbrook mortgage and loan receivables in the fourth quarter, account for the decrease in net earnings and comprehensive income shown in the third and fourth quarters. /T/ CONSOLIDATED BALANCE SHEETS --------------------------------------------------------------------------- May 31 May 31 (Expressed in thousands of Canadian dollars) 2009 2008 --------------------------------------------------------------------------- ASSETS PROPERTIES: Income-producing $ 119,560 $ 120,238 Properties under and held for development 5,561 5,256 Co-tenancy investments 20,398 11,287 --------------------------------------------------------------------------- 145,519 136,781 Cash and cash equivalents 12,876 11,731 Management fees receivable 614 1,824 Mortgages and loans receivable 24,961 28,058 Accounts receivable 1,623 1,644 Income taxes receivable 260 - Other assets 7,639 8,263 --------------------------------------------------------------------------- $ 193,492 $ 188,301 --------------------------------------------------------------------------- --------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Mortgages payable $ 119,253 $ 103,294 Accounts payable and accrued liabilities 5,692 6,372 Income taxes payable - 1,537 Dividends payable 980 1,045 Future income taxes 5,020 5,282 Non-controlling interest 1,249 1,453 --------------------------------------------------------------------------- 132,194 118,983 SHAREHOLDERS' EQUITY: Share capital 60,362 64,261 Contributed surplus 2,326 1,787 Retained earnings (deficit) (1,390) 3,270 --------------------------------------------------------------------------- 61,298 69,318 --------------------------------------------------------------------------- $ 193,492 $ 188,301 --------------------------------------------------------------------------- --------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) --------------------------------------------------------------------------- 3 MONTHS ENDED 12 MONTHS ENDED May 31, May 31, May 31, May 31, (Expressed in thousands of 2009 2008 2009 2008 Canadian dollars, except (unau- (unau- (au- (au- per share amounts) dited) dited) dited) dited) --------------------------------------------------------------------------- Consolidated revenues $ 10,801 $ 10,890 $ 42,740 $ 44,741 --------------------------------------------------------------------------- --------------------------------------------------------------------------- MANAGEMENT OPERATIONS: Revenues 1,994 2,072 7,240 9,378 General and administrative expenses (1,767) (2,381) (7,294) (8,186) --------------------------------------------------------------------------- 227 (309) (54) 1,192 --------------------------------------------------------------------------- OWNERSHIP AND CORPORATE OPERATIONS: Retirement communities operating revenues 9,310 9,386 37,567 37,363 Income (loss) from equity-accounted investment (12) (69) (14) 35 Distributions from cost-accounted investments 71 51 330 410 Expenses: Retirement communities operating (6,018) (5,675) (23,981) (22,823) Corporate (259) (72) (649) (795) Fees to management operations (574) (619) (2,397) (2,410) --------------------------------------------------------------------------- 2,518 3,002 10,856 11,780 --------------------------------------------------------------------------- Earnings before other operating items 2,745 2,693 10,802 12,972 Depreciation and amortization (926) (912) (3,678) (3,655) --------------------------------------------------------------------------- Earnings from operations 1,819 1,781 7,124 9,317 Interest expense (1,725) (1,614) (6,867) (6,234) Interest and other income 227 91 2,801 1,793 Fees credited to investments (465) - (889) (123) Write down of investments, mortgages and loans receivable (2,193) - (2,193) - Earnings (loss) before income taxes and non-controlling interest (2,337) 258 (24) 4,753 --------------------------------------------------------------------------- Income taxes: Current expense 187 (45) 863 1,095 Future expense (recovery) (673) 127 (262) (790) --------------------------------------------------------------------------- (486) 82 601 305 --------------------------------------------------------------------------- Earnings (loss) before non-controlling interest (1,851) 176 (625) 4,448 Non-controlling interest 3 26 40 121 --------------------------------------------------------------------------- Net earnings and comprehensive income (loss) (1,848) 202 (585) 4,569 Retained earnings, beginning of period 1,438 4,113 3,270 2,999 Adjustment for impact of adopting new accounting policies - - - (94) Dividends declared (980) (1,045) (4,075) (4,204) --------------------------------------------------------------------------- Retained earnings (deficit), end of period $ (1,390) $ 3,270 $ (1,390) $ 3,270 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Basic earnings (loss) per share $ (0.10) $ 0.01 $ (0.03) $ 0.26 Diluted earnings (loss) per share $ (0.10) $ 0.01 $ (0.03) $ 0.26 --------------------------------------------------------------------------- --------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS --------------------------------------------------------------------------- 3 MONTHS ENDED 12 MONTHS ENDED May 31, May 31, May 31, May 31, 2009 2008 2009 2008 (Expressed in thousands of (unau- (unau- (au- (au- Canadian dollars) dited) dited) dited) dited) --------------------------------------------------------------------------- CASH PROVIDED BY (USED IN): OPERATIONS: Net earnings and comprehensive income (loss) $ (1,848) $ 202 $ (585) $ 4,569 Items not involving cash: Stock-based compensation 138 93 532 565 Depreciation and amortization 926 912 3,678 3,655 Amortization of deferred financing charges 136 27 394 128 Write down of investment, mortgages and loans receivable 2,193 - 2,193 - Unrecognized loss on interest rate swaps (200) - 39 - Future income taxes (recovery) (673) 127 (262) (790) Cash distributions in excess of income and loss from equity-accounted investment 59 171 283 67 Non-controlling interest (4) (26) (40) (121) Other - - - 123 --------------------------------------------------------------------------- 727 1,506 6,232 8,196 Other changes in non-cash operating working capital 1,094 1,332 (1,179) 687 --------------------------------------------------------------------------- 1,821 2,838 5,053 8,883 --------------------------------------------------------------------------- INVESTMENTS: Co-tenancy investments, net of recoveries 259 (100) (10,684) 410 Mortgages and loans receivable, net of recoveries (2,699) (945) 2,194 (9,435) Expenditures on income-producing properties (1,509) (321) (3,000) (3,795) Acquisition of income-producing property - - - (522) Restricted cash - 90 8 102 Deposits made on land 157 (362) 510 (3,018) Land held for sale - - - 4,026 Properties under development 26 (196) (305) (3,901) --------------------------------------------------------------------------- (3,766) (1,834) (11,277) (16,133) --------------------------------------------------------------------------- FINANCING: Proceeds from mortgages payable 3,992 18,783 48,279 30,183 Principal repayments on mortgages payable (624) (11,194) (30,193) (20,050) Deferred financing costs paid (507) (51) (2,521) (167) Cash distribution to non-controlling interest - - (164) - Issuance of common shares for cash, net of costs - 1 44 262 Repurchase of common shares, net of costs (2,532) (287) (3,936) (1,776) Dividends paid (1,028) (1,046) (4,140) (4,036) --------------------------------------------------------------------------- (699) 6,206 7,369 4,416 --------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (2,644) 7,210 1,145 (2,834) Cash and cash equivalents, beginning of period 15,520 4,521 11,731 14,565 --------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 12,876 $ 11,731 $ 12,876 $ 11,731 --------------------------------------------------------------------------- --------------------------------------------------------------------------- /T/ About Amica Mature Lifestyles Inc. Amica Mature Lifestyles Inc., a Vancouver based public company, is a leader in the management, marketing, design and development of luxury housing and services for mature lifestyles. There are 25 Amica Wellness & Vitality(TM) Residences, including three under development and three in pre-development. The common shares of Amica are traded on the Toronto Stock Exchange under the symbol "ACC". For more information, visit www.amica.ca. Forward-Looking Information This news release contains "forward-looking information" within the meaning of applicable securities laws ("forward-looking statements"). These forward-looking statements are made as of the date of this news release and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as otherwise required by law. Users of forward-looking statements are cautioned that actual results may vary from forward-looking statements contained herein. Forward-looking statements include, but are not limited to, statements concerning the number of management contracts expected to be added in this and future years, profit margin and earnings trends, expected future financing opportunities, prospects for growth, the development and opening of new residences, the ability of the Company to meet its obligations and growth objectives, the ability of the Company to refinance mortgages, future capital expenditures, the renovation of Amica at Arbutus Manor, the Company's ability to increase MARPAS and improve EBITDA from management operations, management of cash resources and other similar statements concerning anticipated future events, conditions or results that are not historical facts. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". While the Company has based these forward-looking statements on its expectations about future events as at the date that such statements were prepared, the statements are not a guarantee of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors and assumptions include, amongst others, the effects of general economic conditions, actions by government authorities, uncertainties associated with legal proceedings and negotiations and misjudgements in the course of preparing forward-looking statements. In addition, there are known and unknown risk factors which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Known risk factors include, among others, risks related to dependence on the ability of Amica's co-tenancy participants to meet their obligations; interest rate volatility in the marketplace; job actions including strikes and labour stoppages; possible liability under environmental laws and regulations, relating to removal or remediation of hazardous or toxic substances on properties owned or operated by Amica; risks associated with new developments, including cost overruns and start-up losses; the ability of seniors to pay for Amica's services; regulatory changes; risks inherent in the ownership of real property; operational risks inherent in owning and operating Residences; the risks associated with global events such as infectious diseases, extreme weather conditions and natural disasters; the availability of capital to finance growth or refinance debt as it comes due; Amica's ability to attract seniors with its services and keep pace with changing consumer preferences, as well as those factors discussed in Amica's Annual Information Form dated August 18, 2008, filed with the Canadian Securities Administrators and available at www.sedar.com and in the "Operating Risks" section of the Management's Discussion and Analysis for the period ended February 28, 2009. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements, or the material factors or assumptions used to develop such forward looking statements, will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements. (1) MARPAS is defined by the Company as Monthly Average Revenue Per Available Suite and is equal to gross monthly revenues generated at the seniors residences divided by the number of suites. MARPAS is used by the Company to measure period-over-period performance of its properties. (2) Same communities are defined by the Company as mature communities that were classified as income-producing properties for thirteen months after reaching 95% occupancy. (3) Cash flow from operations is a supplemental non-GAAP measure of operating performance and is equal to net earnings and comprehensive income plus (i) stock-based compensation plus (ii) depreciation and amortization plus (iii) amortization of deferred financing charges plus (iv) future income taxes (recovery) plus (v) cash distributions in excess of income (loss) from equity-accounted investment plus (vi) non-controlling interest plus (vii) other. Cash flow from operations may not be comparable to similar measures presented by other entities in the same industry. Management considers cash flow from operations to be a useful measure for reviewing the Company's operating and financial performance because, by excluding non-cash expenses and depreciation and amortization which can vary based on estimates of useful lives of real estate assets, cash flow from operations can help to compare the operating performance of the Company between financial reporting periods and with other entities in the same industry. (4) Earnings before interest, taxes, depreciation and amortization (EBITDA) is equal to net earnings and comprehensive income plus (i) interest expense plus (ii) income tax expense plus (iii) depreciation and amortization plus (iv) write down on investment and mortgages and loans receivable plus (v) fees credited to investments less (vi) interest and other income less (vii) income tax recovery less (viii) non-controlling interest. EBITDA is the same as earnings before other operating items as disclosed in the consolidated financial statements. EBITDA is not intended to represent cash flow from operations as defined by Canadian generally accepted accounting principles, and EBITDA should not be considered as an alternative to net earnings, cash flow from operations or any other measure of performance prescribed by Canadian generally accepted accounting principles. EBITDA of Amica Mature Lifestyles Inc. may also not be comparable to EBITDA used by other companies, which may be calculated differently. EBITDA is included because the Company's management believes it can be used to measure the Company's ability to service debt, fund capital expenditures and expand its business. See Table under "Earnings Before Other Operating Items (EBITDA) in the Company's consolidated financial statements for the year ended May 31, 2009 for a reconciliation of net earnings to EBITDA.