Sunrise Senior Living Inc., working to maintain its New York Stock Exchange listing and revive its flagging share price, restated financial results for the past 10 years last week and named a new top executive on March 20.
The McLean company, the largest assisted-living facility operator in the country, restated 2006 net income at $20.4 million, or 40 cents per share, down 77 percent from restated 2005 net income of $87.1 million, or $1.82 per share. Sunrise still has not filed its financial reports for 2007.
The restatement, which enables Sunrise shares to maintain their listing, also reduced the company’s earnings by $173 million over the period from 1996 through 2005.
Sunrise’s restated revenues for 2004 and 2005 were $1.5 billion and $1.3 billion, respectively, compared with the originally reported $1.8 billion and $1.4 billion.
The company operates about 450 retirement communities, including 12 in Maryland, 29 in Virginia and three in the District.
Sunrise also tapped former Mills Corp. Chief Executive Officer Mark Ordan as chief investment and administrative officer, emphasizing his success in finding buyers for troubled Mills Corp., as well as for Fresh Fields Markets, where he was founder and chief executive.
Mr. Ordan was recruited to save regional shopping-mall developer and operator Mills Corp. of Chevy Chase in early 2006. He led the sale of the real estate investment trust, also devastated by an accounting scandal, to Simon Property Group and Farallon Capital Management last spring. Fresh Fields was sold to Whole Foods Markets.
Sunrise fired three top executives in December after an internal probe revealed what the company called inappropriate accounting.
The company began the probe in 2006, and also underwent an investigation by an independent committee of its board, into accounting related to its investments in certain senior-living properties.
Subsequently, the Securities and Exchange Commission initiated its own review.
The reviews found some accounting errors, but no evidence of stock-option backdating or insider trading.
“We believe Sunrise has a high probability of meeting its future filing obligations,” analyst Frank Morgan of investment firm Jefferies & Co. wrote yesterday. “That being said, visibility remains clouded given the multitude of distractions/uncertainties over litigation and funding obligations.”
He maintained his hold rating on the shares.
Other analysts agree that Sunrise shares are unlikely to rise significantly any time soon.
“We think near-term continued volatility in the housing market and issues related to the company’s restatement of prior year financial results will remain an overhang on the shares,” wrote Jeffrey Englander, an analyst for Standard & Poor’s, in maintaining his hold rating on the shares last week.
Sunrise shares fell 13 cents, or 0.6 percent, yesterday to $22.28 and has fallen about 44 percent in the past year.
The company has until Sept. 17 to report its full-year 2007 earnings.
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