Five Star Quality Care Inc (NASDAQ:FVE) filed Quarterly Report for the period ended 2010-06-30.
Five Star Quality Care Inc has a market cap of $105.7 million; its shares were traded at around $2.96 with a P/E ratio of 12.3 and P/S ratio of 0.1. FVE is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:RMR provides certain management, administrative and information system services to us under the business management agreement, as amended in January 2010. During the three months ended June 30, 2010 and 2009, we incurred management services expenses due to RMR of $2.8 million and $2.5 million, respectively. During the six months ended June 30, 2010 and 2009, we incurred management services expense due to RMR of $5.5 million and $5.2 million, respectively.
As of June 30, 2010, we have invested approximately $5.2 million in Affiliates Insurance, an Indiana licensed insurance company organized by RMR and other companies to which RMR provides management services. We own 14.29% of Affiliates Insurance. All of our directors are also directors of Affiliates Insurance and RMR provides certain management services to Affiliates Insurance. During the three and six months ended June 30, 2010, we recognized a loss of approximately $24,000 and $52,000, respectively, related to this investment. In June 2010, we, RMR and other companies to which RMR provides management services purchased property insurance pursuant to an insurance program arranged by Affiliates Insurance. Our annual premiums and associated costs for this property insurance are expected to be approximately $2.9 million. We are currently investigating the possibilities to expand our insurance relationships with Affiliates Insurance because we believe we may realize improved coverage, lower insurance costs or profits by participating in the insurance programs and ownership of Affiliates Insurance.
by 10% of current interest rates and other credit market considerations remained unchanged, the aggregate market value of our $12.4 million mortgage debt and $42.0 million Notes outstanding on June 30, 2010 would decline by approximately $2.3 million; and, similarly, if prevailing interest rates were to decline by 10% of current interest rates and other credit market considerations remained unchanged, the aggregate market value of our $12.4 million mortgage debt and $42.0 million Notes outstanding on June 30, 2010, would increase by approximately $2.5 million.
Our revolving credit facility bears interest at floating rates and matures on March 18, 2013. As of June 30, 2010 and July 29, 2010, no amounts were outstanding under this credit facility. We borrow in U.S. dollars and borrowings under our revolving credit facility bear interest at LIBOR (with a floor of 2% per annum) plus 400 basis points. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically LIBOR. A change in interest rates would not affect the value of any outstanding floating rate debt but could affect our operating results. For example, if the maximum amount of $35.0 million were drawn under our credit facility and interest rates above the floor or minimum rate decreased or increased by 1% per annum, our annual interest expense would decrease or increase by $350,000, or $0.01 per share, based on our currently outstanding common shares. If interest rates were to change gradually over time, the impact would occur over time.
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