929994--3/11/2010--ASSISTED_LIVING_CONCEPTS

related topics

{regulation, government, change}

{debt, indebtedness, cash}

{cost, contract, operation}

{acquisition, growth, future}

{stock, price, operating}

{financial, litigation, operation}

{loss, insurance, financial}

{regulation, change, law}

{competitive, industry, competition}

{operation, international, foreign}

{cost, operation, labor}

{provision, law, control}

Our planned exit from Medicaid programs could reduce overall occupancy and revenues. Changes in state laws or regulations could cause us to accelerate our exit from Medicaid programs. Labor costs comprise a substantial portion of our operating expenses. An increase in wages, as a result of a shortage of qualified personnel or otherwise, or an increase in staffing requirements as a result of regulatory changes, could substantially increase our operating costs and reduce our earnings. We may not be able to increase residents fees enough to cover increased energy, food or other costs, which could reduce our earnings. We may not be able to compete effectively in those markets where overbuilding exists and future overbuilding in markets where we operate could adversely affect our operations. We may not be able to successfully complete the acquisition of new residences or the expansion of existing residences which could adversely affect our operations. Competition for the acquisition of strategic assets from buyers with lower costs of capital than us or that have lower return expectations than we do could limit our ability to compete for strategic acquisitions and therefore to grow our business effectively. We operate in an industry that has an inherent risk of personal injury claims. If one or more claims are successfully made against us, our financial condition and results of operations could be materially and adversely affected. We self-insure a portion of our general and professional liability, workers compensation, health and dental and certain other risks. We operate in a regulated industry. Failure to comply with laws or government regulation could lead to fines and penalties. Compliance with the Americans with Disabilities Act, Fair Housing Act, and fire, safety and other regulations may require us to make unanticipated expenditures which could increase our costs and therefore adversely affect our earnings and financial condition. We face periodic reviews, audits and investigations under our contracts with federal and state government agencies, and these audits could have adverse findings that may negatively impact our business. Market conditions could restrict our ability to fill refurbished residences and expansion units. State regulations affecting the construction or expansion of healthcare providers could impair our ability to expand through construction and redevelopment. Risk Relating to Our Indebtedness and Lease Arrangements Financial market conditions could restrict the availability of credit which could adversely affect our ability to refinance indebtedness or to borrow funds for working capital, acquisitions, expansions and share repurchases. Our credit facility, existing mortgage loans and lease agreements contain covenants that restrict our operations. Any default under such facilities, loans or leases could result in the acceleration of indebtedness, cross-defaults, or lease terminations, any of which would negatively impact our liquidity and our ability to grow our business and increase revenues. If we do not comply with the requirements prescribed within our leases or debt agreements pertaining to revenue bonds, we would be subject to financial penalties. If we do not comply with terms of the leases related to certain of our assisted living residences, or if we fail to maintain the residences, we could be faced with financial penalties and/or the termination of the lease related to the residence. Our indebtedness and long-term leases could adversely affect our liquidity and our ability to operate our business and our ability to execute our growth strategy. Increases in market interest rates or various financial indices could significantly increase the costs of our unhedged debt and lease obligations, which could adversely affect our liquidity and earnings. Risks Relating to Our Class A Common Stock and Our Continuing Relationships with Scotia Investments Limited and Extendicare Scotia Investments Limited has the ability to control the direction of our business. The concentrated ownership of our Class B Common Stock makes it difficult for holders of our Class A Common Stock to influence significant corporate decisions. Our corporate governance documents may delay or prevent an acquisition of us that stockholders may consider favorable.

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929994--3/11/2010--ASSISTED_LIVING_CONCEPTS_INC