Sunrise Announces Overhead Downsizing PlanLast update: 5/4/2009 8:00:00 AM--Expects to Achieve $20 Million of Annual Recurring Savings through Further Cost Reductions --Announces Chief Financial Officer Transition MCLEAN, Va., May 4, 2009 /PRNewswire-FirstCall via COMTEX/ -- Sunrise Senior Living, Inc. (SRZ) today announced details of its efforts to reduce overhead spending and become a leaner organization. Sunrise expects to realize more than $20 million of annual recurring savings from a reduction in non-care related administrative costs. In connection with this announcement, Richard J. Nadeau, Sunrise's chief financial officer, will transition from his role on or before June 15, 2009, at which time Julie A. Pangelinan, Sunrise's chief accounting officer, will succeed Mr. Nadeau as chief financial officer of Sunrise. "We continue to work on a number of fronts to strengthen the financial position of Sunrise," said Mark Ordan, Sunrise's chief executive officer. "The decision to reduce the number of people at Sunrise is never easy, but it was essential given today's economic environment and our need to further reduce spending. We want to be completely clear that none of these changes will affect the extraordinary care and services we provide in our communities." Overhead Downsizing The Company's plan for downsizing its overhead is designed to reduce non-care related corporate expenses by reorganizing Sunrise's corporate cost structure, including through a reduction in spending related to administrative processes, vendors and consultants. Sunrise expects the plan will reduce the Company's annual recurring general and administrative expenses by more than $20 million, from the 2009 budgeted annual recurring level of approximately $120 million to approximately $100 million, and to reduce the Company's centrally administered services, which are charged to the communities, by approximately $1.5 million. Sunrise has identified at least 150 positions to be eliminated at its corporate headquarters, in Germany, and in Sunrise's regional support group (costs above the community level). Sunrise currently expects to record additional severance expense of approximately $4.5 million in 2009 as a result of this plan, which is expected to be completed by early 2010. CFO Transition As part of the Sunrise's overhead downsizing plan, Mr. Nadeau's employment with Sunrise will be terminated effective on or before June 15, 2009, and, at that time, Ms. Pangelinan, Sunrise's chief accounting officer, will be promoted to chief financial officer and lead Sunrise's finance team. Mr. Nadeau's departure was based on mutual agreement and accordingly is pursuant to the "other than for cause" clause under his employment agreement with Sunrise. "This is a win-win. I have worked with Rick throughout my Sunrise term and before, and we are all grateful for all he has done to help put Sunrise on a better path," said Mr. Ordan. "We are all very fortunate that we can continue to rely on the proven skills and leadership of Julie Pangelinan and her management team." Ms. Pangelinan joined Sunrise as chief accounting officer in April 2006. Prior to joining Sunrise, Ms. Pangelinan worked for Marriott International, Inc. as vice president, accounting policy, from April 2003 to April 2006 and as senior director of accounting policy from August 2000 to May 2003, where Ms. Pangelinan was responsible for providing proactive leadership on accounting policy for business transactions and deal structures, as well as managing all external financial reporting and regulatory filings, and ensuring compliance with the rules of the U.S. Securities and Exchange Commission and generally accepted accounting principles. Prior to working at Marriott International, Inc., Ms. Pangelinan was an audit partner at BDO Seidman, LLP. Further details concerning the overhead downsizing plan and CFO transition will be contained in a Form 8-K to be filed by Sunrise today with the U.S. Securities and Exchange Commission.
