1011064--2/25/2010--SUNRISE_SENIOR_LIVING

related topics

{investment, property, distribution}

{financial, litigation, operation}

{cost, operation, labor}

{debt, indebtedness, cash}

{operation, international, foreign}

{loss, insurance, financial}

{regulation, change, law}

{loan, real, estate}

{cost, regulation, environmental}

{provision, law, control}

Our failure to generate sufficient cash flow to cover required interest, principal and operating lease payments could result in defaults of the related debt or operating leases. Our failure to comply with financial obligations contained in debt instruments could result in the acceleration of the debt extended pursuant to such debt instruments, trigger other rights and restrict our operating and acquisition activity, and in the case of ventures, may cause acceleration of the venture s debt repayment obligations and any of our correlated guarantee obligations. The failure of our 2009 cost reduction plan to achieve sufficient expense savings. Our ability to execute our plan to sell certain assets. Risks Related to Our Business Operations The current economic environment could affect our ability to obtain financing for various purposes, including any refinancing of our Bank Credit Facility or other debt due in 2010 and 2011, on reasonable terms and could have other adverse effects on us and the market price of our common stock. Due to the dependency of our revenues on private pay sources, events which adversely affect the ability of seniors to afford our monthly resident fees or entrance fees (including downturns in housing markets or the economy) could cause our occupancy rates, revenues and results of operations to decline. Termination of resident agreements and vacancies in communities could adversely affect our revenues and earnings. Our international operations are subject to a variety of risks that could adversely affect those operations and thus our profitability and operating results. Early termination or non-renewal of our management agreements could cause a loss in revenues. Our failure to attract partners for developing senior living communities in the future could adversely affect our revenues and results of operations, and harm our ability to finance the construction of new communities. Ownership of the communities we manage is heavily concentrated with three of our business partners. We are in material litigation with one of the three. Our current and future investments in ventures could be adversely affected by our lack of sole decision-making authority, our reliance on venture partners financial condition, any disputes that may arise between us and our venture partners and our exposure to potential losses from the actions of our venture partners. The refinancing or sale of communities held in ventures may not result in future distributions to us. Liability claims against us in excess of insurance limits could adversely affect our financial condition and results of operations. Interest rate increases could adversely affect our earnings because a portion of our total debt is floating rate debt. We may be adversely affected by fluctuations in currency exchange rates. Our accounting policies and methods are fundamental to how we report our financial condition and results of operations and they may require management to make estimates about matters that are inherently uncertain. The discovery of environmental problems at any of the communities we own or operate could result in substantial costs to us, which would have an adverse effect on our earnings and financial condition. Unionization may impact wage rates and work rules. Risks Related to the Pending SEC Investigation and Pending Litigation Arising Out of the Prior Announcement of Our Restatement of Historical Financial Statements for 2005 and Prior Periods, Other Pending Government Proceedings and Other Pending Litigation The SEC s formal investigation has resulted in significant costs and expenses, diverted resources and could have a material adverse effect on our business, financial condition and results of operations. We are involved in other litigation matters that will continue to divert our resources and attention, and could result in substantial monetary damages that could have a material adverse effect on our financial condition and results of operations if we do not prevail. The IRS audit may result in substantial fines and penalties, which could harm our financial condition, results of operations and cash flow. Our potential indemnification obligations and limitations of our director and officer liability insurance may have a material adverse effect on our financial condition and results of operations. Risks Related to the Senior Living Industry Competition in our industry is high and may increase, which could impede our growth and have a material adverse effect on our revenues and earnings. Our success depends on attracting and retaining skilled personnel and increased competition for or a shortage of skilled personnel could increase our staffing and labor costs, which we may not be able to offset by increasing the rates we charge to our residents. The need to comply with government regulation of senior living communities may increase our costs of doing business and increase our operating costs. Risks Related to our Organization and Structure Anti-takeover provisions in our governing documents and under Delaware law could make it more difficult to effect a change in control.

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1011064--2/25/2010--SUNRISE_SENIOR_LIVING_INC