Brookdale Announces Third Quarter 20...(0 Non-GAAP Financial Measures Adju...),Health

Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a measure of operating performance that is not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Adjusted EBITDA should not be considered in isolation or as a substitute for net income, income from operations or cash flows provided by or used in operations, as determined in accordance with GAAP. Adjusted EBITDA is a key measure of the Company's operating performance used by management to focus on operating performance and management without mixing in items of income and expense that relate to long-term contracts and the financing and capitalization of the business. We define Adjusted EBITDA as net income (loss) before provision (benefit) for income taxes, non-operating (income) loss items, depreciation and amortization, straight-line lease expense (income), amortization of deferred gain, amortization of deferred entrance fees, and non-cash compensation expense and including entrance fee receipts and refunds.

We believe Adjusted EBITDA is useful to investors in evaluating our performance, results of operations and financial position for the following reasons:

-- It is helpful in identifying trends in our day-to-day performance

because the items excluded have little or no significance to our

day-to-day operations;

-- It provides an assessment of controllable expenses and affords

management the ability to make decisions which are expected to

facilitate meeting current financial goals as well as achieve optimal

financial performance; and

-- It is an indication to determine if adjustments to current spending

decisions are needed.

The table below reconciles Adjusted EBITDA from net loss for the three and nine months ended September 30, 2007 and 2006 (in thousands):

Three Months Ended Nine Months Ended

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