Equity LifeStyle Adjusts Quarterly Earnings
Equity LifeStyle Properties Inc. (ELS) announced Wednesday (Dec. 15) that the company will incur a non-cash charge related to the write-off of goodwill in the fourth quarter of 2010 of approximately $3.6 million, or 10 cents per share.
The goodwill was recorded in connection with the company’s August 2009 acquisition of a small Florida Internet and media-based advertising business, according to a news release. The business operates a professional call center to promote advertising and resale brokerage services for the sale of campground memberships and vacation ownership intervals.
A primary purpose of this acquisition was to consolidate most of the company’s call center operations at this location. Overall call center activity improved in 2010 due in part to increased RV resort reservations and the rollout of new low-cost membership products. The company is evaluating the sale to a third party of the advertising and resale brokerage services. Alternatively, the company may transfer these services to another subsidiary that operates a reciprocal use campground membership business or cease certain operations. The net income from the advertising and resale brokerage services in 2010 is expected to be approximately $300,000.
In light of the company and its board’s objective of full and transparent disclosure and due to the uncertainty in valuing the advertising and resale brokerage services, the company has decided to recognize a non-cash charge for the goodwill allocated to the acquisition. As a result of the charge, fourth quarter net income will be reduced by approximately $3.6 million, or 10 cents per share. Excluding this item, the company reiterates its previously announced 2010 and 2011 earnings guidance.
ELSowns or has an interest in 307 quality properties in 27 states and British Columbia consisting of 110,984 sites. The company is a self-administered, self-managed, real estate investment trust with headquarters in Chicago.