EX-99.2 3 a4758436ex992.txt SUPPLEMENTAL INFORMATION Exhibit 99.2 AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RETIREMENT CENTER COMMUNITIES - THIRD QUARTER 2004 ($'s in thousands)
RETIREMENT CENTER COMMUNITIES: TOTAL Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 ---------- ---------- --------- ---------- --------- --------- ---------- Resident and healthcare revenue $ 75,355 $ 76,673 $ 79,307 $ 81,390 $ 85,288 $ 85,578 $ 86,526 Community operating expense 51,297 52,079 55,414 55,096 56,791 56,546 58,168 Community operating contribution 24,058 24,594 23,893 26,294 28,497 29,032 28,358 Community operating margin 31.9% 32.1% 30.1% 32.3% 33.4% 33.9% 32.8% Ending Occupancy 7,969 8,009 8,328 8,397 8,374 8,424 8,436 Ending Occupancy % 93.3% 93.4% 93.8% 94.6% 94.4% 95.0% 95.1% Average Monthly Occupancy 7,994 7,980 8,090 8,396 8,376 8,382 8,408 Monthly Revenue per unit $ 3,142 $ 3,203 $ 3,268 $ 3,231 $ 3,394 $ 3,403 $ 3,430 Monthly Operating Contribution per unit 1,003 1,027 984 1,044 1,134 1,155 1,124 RETIREMENT CENTER COMMUNITIES: RENTAL COMMUNITIES Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 ---------- ---------- --------- ---------- --------- --------- ---------- Resident and healthcare revenue $ 48,297 $ 48,920 $ 51,439 $ 52,853 $ 55,007 $ 55,249 $ 56,306 Community operating expense 30,743 30,998 33,371 32,793 34,326 33,983 35,422 Community operating contribution 17,554 17,922 18,068 20,060 20,681 21,266 20,884 Community operating margin 36.3% 36.6% 35.1% 38.0% 37.6% 38.5% 37.1% Ending Occupancy 5,223 5,275 5,548 5,588 5,576 5,595 5,581 Ending Occupancy % 94.5% 94.7% 90.9% 95.3% 95.2% 95.5% 95.2% Average Monthly Occupancy 5,266 5,256 5,327 5,615 5,582 5,576 5,580 Monthly Revenue per unit $ 3,057 $ 3,102 $ 3,219 $ 3,138 $ 3,285 $ 3,303 $ 3,364 Monthly Operating Contribution per unit 1,111 1,137 1,131 1,191 1,235 1,271 1,248 RETIREMENT CENTER COMMUNITIES: ENTRANCE FEE CCRCs Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 ---------- ---------- --------- ---------- --------- --------- ---------- Resident and healthcare revenue $ 27,058 $ 27,753 $ 27,868 $ 28,537 $ 30,281 $ 30,329 $ 30,220 Community operating expense 20,554 21,081 22,043 22,303 22,465 22,563 22,746 Community operating contribution 6,504 6,672 5,825 6,234 7,816 7,766 7,474 Community operating margin 24.0% 24.0% 20.9% 21.8% 25.8% 25.6% 24.7% Ending Occupancy 2,746 2,734 2,780 2,809 2,798 2,829 2,855 Ending Occupancy % 91.2% 90.8% 92.4% 93.3% 93.0% 94.0% 94.8% Average Monthly Occupancy 2,728 2,724 2,763 2,781 2,795 2,806 2,828 Monthly Revenue per unit $ 3,306 $ 3,396 $ 3,362 $ 3,420 $ 3,612 $ 3,603 $ 3,562 Monthly Operating Contribution per unit 795 816 703 747 932 923 881 Net Cash Flow per unit (includes Net Resale Cash Flow) 739 1,233 1,179 1,175 1,326 1,503 1,442 Entrance Fee Sales: Total Entrance Fee (Independent Living) Units 2,066 2,066 2,066 2,066 2,066 2,066 2,066 Ending Occupancy % 92.5% 92.7% 94.2% 94.9% 95.4% 96.3% 97.1% Entrance Fee Sales (in units) 48 73 90 78 69 84 79 Entrance Fee Sales $ 6,055 $ 10,261 $ 11,482 $ 10,693 $ 10,257 $ 11,976 $ 11,931 Refunds paid on Entrance Fee Terminations 2,836 3,685 3,851 3,267 2,433 2,868 3,181 Net Resale Cash Flow 3,219 6,576 7,631 7,426 7,824 9,108 8,750
NOTE: Includes Freedom Square for all periods presented. All periods have been reclassed to conform to this presentation. The sales proceeds at entrance fee CCRCs provide a source of financing to the community, thereby reducing the financing costs (interest or lease expense) that it would otherwise incur. As a result of the residents paying an up-front entrance fee, they pay a lower monthly service fee than they would pay at a similar rental community without entrance fees. As a result, entrance fee communities have lower operating margins (but lower non-operating financing costs) than similar rental communities. AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION FREE-STANDING ASSISTED LIVING COMMUNITIES - THIRD QUARTER 2004 ($'s in thousands)
FREE-STANDING ASSISTED LIVING COMMUNITIES Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 ----------- ---------- ---------- ---------- ---------- ---------- ---------- Resident and healthcare revenue $ 19,953 $ 20,705 $ 21,227 $ 21,697 $ 22,663 $ 23,532 $ 24,563 Community operating expense 16,949 16,819 16,589 16,565 17,061 17,519 17,657 Community operating contribution 3,004 3,886 4,638 5,132 5,602 6,013 6,906 Community operating margin 15.1% 18.8% 21.8% 23.7% 24.7% 25.6% 28.1% Ending Occupancy 2,291 2,311 2,340 2,368 2,394 2,456 2,504 Ending Occupancy % 80.9% 81.5% 82.6% 83.4% 84.3% 86.5% 88.3% Average Monthly Occupancy 2,282 2,298 2,316 2,357 2,384 2,430 2,478 Monthly Revenue per unit $ 2,915 $ 3,003 $ 3,055 $ 3,068 $ 3,169 $ 3,228 $ 3,304 Sequential Percentage Increase (Annualized) 12.2% 6.9% 1.7% 13.1% 7.5% 9.4% Monthly Operating Contribution per unit 439 564 668 726 783 825 929
NOTE: Excludes two non-consolidated joint ventures. All periods have been reclassed to conform to this presentation. AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION FREE CASH FLOW ($'s in thousands)
Three months Six months Nine months ended ended ended March 31, 2004 June 30, 2004 Sept. 30, 2004 -------------- ------------- -------------- Loss from continuing operations $(4,800) $(7,346) $(14,290) Adjustments to reconcile loss from continuing operations to net cash provided by operating activities: Depreciation and amortization 8,432 16,114 28,726 Amortization of deferred entrance fee revenue / termination gains (4,526) (8,745) (12,737) Proceeds from entrance fee sales, net of refunds 7,553 16,748 25,305 Deferred income tax benefit - - (1,808) Amortization of deferred gain on sale- leaseback transactions (2,546) (5,078) (7,954) Amortization of deferred compensation, restricted stock - - 182 Minority interest in earnings of consolidated subsidiaries 962 1,825 1,555 Losses from unconsolidated joint ventures 144 220 85 (Gain) loss on sale of assets (105) (111) (63) -------------- ------------- -------------- Net cash provided by continuing operations (before changes in assets and liabilities, exclusive of acquisitions and sale leaseback transactions) 5,114 13,627 19,001 Accrued but unpaid HCPI interest due at mezzanine loan maturity 1,988 4,074 4,074 Interest accretion on bond conversions 196 209 209 Adjustments for lease escalators and other accruals 1,689 3,362 5,012 Additions to land, building and equipment (4,665) (9,572) (14,288) Plus: Development expenditures (funded separately) 706 1,043 1,296 Distributions to minority interest holders (1,068) (2,225) (3,243) Principal reductions in master trust liability (322) (634) (940) Other adjustments for refinancing activities (see Note A) 5,509 -------------- ------------- -------------- Free cash flow before principal payments 3,638 9,884 16,630 Principal payments on long-term debt, net of amounts paid as part of a refinancing transaction (2,506) (5,033) (9,577) -------------- ------------- -------------- Free cash flow $1,132 $4,851 $7,053 ============== ============= ============== Quarter Ended ------------------------------------------------------------- March 31, 2004 June 30, 2004 Sept 30, 2004 Loss from continuing operations $(4,800) $(2,546) $(6,944) Adjustments to reconcile loss from continuing operations to net cash provided by operating activities: Depreciation and amortization 8,432 7,682 12,612 Amortization of deferred entrance fee revenue / termination gains (4,526) (4,219) (3,992) Proceeds from entrance fee sales, net of refunds 7,553 9,195 8,557 Deferred income tax benefit (1,808) Amortization of deferred gain on sale- leaseback transactions (2,546) (2,532) (2,876) Amortization of deferred compensation, restricted stock 182 Minority interest in earnings of consolidated subsidiaries 962 863 (270) Losses from unconsolidated joint ventures 144 76 (135) (Gain) loss on sale of assets (105) (6) 48 -------------- ------------- -------------- Net cash provided by continuing operations (before changes in assets and liabilities, exclusive of acquisitions and sale leaseback transactions) 5,114 8,513 5,374 Accrued but unpaid HCPI interest due at mezzanine loan maturity 1,988 2,086 - Interest accretion on bond conversions 196 13 - Adjustments for lease escalators and other accruals 1,689 1,673 1,650 Additions to land, building and equipment (4,665) (4,907) (4,716) Plus: Development expenditures (funded separately) 706 337 253 Distributions to minority interest holders (1,068) (1,157) (1,018) Principal reductions in master trust liability (322) (312) (306) Other adjustments for refinancing activities (see Note A) - - 5,509 -------------- ------------- -------------- Free cash flow before principal payments 3,638 6,246 6,746 Principal payments on long-term debt, net of amounts paid as part of a refinancing transaction (2,506) (2,527) (4,544) -------------- ------------- -------------- Free cash flow $1,132 $3,719 $2,202 ============== ============= ==============
Given the Company's leverage and reported operating losses, the Company believes that Free Cash Flow is a useful liquidity measurement for investors in analyzing the Company's progress. Note A: Other adjustments for refinancing activities include costs relating to the July 2004 HCPI sale-leaseback transaction and are comprised of $1.2 million of general and administrative costs, $2.5 million of current tax expense and $1.8 million of deferred taxes. AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION SAME COMMUNITY RESULTS - THIRD QUARTER 2004 ($'s in thousands)
INCLUDING ENTRANCE FEE COMMUNITIES: ----------------------------------- Three months ended September 30, $ % --------------------------------- 2004 2003 Change Change -------------- ---------------- --------- ----------- Resident & Healthcare revenue $106,204 $96,842 $9,362 9.7% Community operating expense 73,011 69,904 3,107 4.4% -------------- ---------------- --------- ----------- Community operating contribution $33,193 $26,938 6,255 23.2% Community operating margin 31.3% 27.8% # Locations 57 57 Avg. Occupancy 92.9% 89.4% Avg. Occupied Units 10,386 9,978 408 4.1% Avg. Mo. Revenue/unit $3,409 $3,235 $173 5.4% Avg. Mo. Operating Contribution/unit 1,065 900 165 18.4% EXCLUDING ENTRANCE FEE COMMUNITIES: ----------------------------------- Three months ended September 30, $ % --------------------------------- 2004 2003 Change Change -------------- ---------------- --------- ----------- Resident & Healthcare revenue $75,984 # 68,975 $7,009 10.2% Community operating expense 50,265 47,860 2,405 5.0% -------------- ---------------- --------- ----------- Community operating contribution $25,719 $21,115 4,604 21.8% Community operating margin 33.8% 30.6% # Locations 51 51 Avg. Occupancy 92.6% 88.6% Avg. Occupied Units 7,558 7,223 335 4.6% Avg. Mo. Revenue/unit $3,351 $3,183 $168 5.3% Avg. Mo. Operating Contribution/unit 1,134 974 160 16.4%
* This table sets forth certain selected financial and operating data on a Same Community basis. "Same Community basis" refers to communities that were owned and/or leased by the company throughout each of the periods being compared. Two communities that were acquired in August 2003 have been excluded from this presentation AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION REVENUE - THIRD QUARTER 2004 ($'s in thousands)
Three months ended September 30, Three months ended September 30, -------------------------------------------------------------------------- 2004 % 2003 % ------------ ----------- ----------- ----------- COMPOSITION ----------- Revenues: Retirement Centers Independent living $36,623 32.7% $34,112 33.6% Assisted living 14,449 12.9% 13,287 13.1% Skilled Nursing 19,263 17.2% 18,574 18.3% Ancillary Services (including Therapy) 14,082 12.6% 11,420 11.3% Amortization of Deferred Entrance Fee Revenue 2,109 1.9% 1,914 1.9% ------------ ----------- ----------- ----------- 86,526 77.3% 79,307 78.2% Free-Standing Assisted Living Assisted living 21,839 19.5% 19,314 19.0% Ancillary Services (including Therapy) 2,724 2.4% 1,913 1.9% ------------ ----------- ----------- ----------- 24,563 21.9% 21,227 20.9% Total Resident and Healthcare Revenue 111,089 99.1% 100,534 99.1% Management and Contract Services 500 0.5% 338 0.3% Reimbursed Expenses 460 0.4% 529 0.6% ------------ ----------- ----------- ----------- 960 0.9% 867 0.9% ------------ ----------- ----------- ----------- Total Revenues $112,049 100.0% $101,401 100.0% BY PAYOR -------- Private Pay $95,515 85.2% $87,657 86.5% Medicare 13,946 12.5% 11,177 11.0% Medicaid 2,588 2.3% 2,567 2.5% ------------ ----------- ----------- ----------- Total $112,049 100.0% $101,401 100.0%
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION OTHER STATISTICS - THIRD QUARTER 2004 UNIT CAPACITY BY COMMUNITY TYPE ----------------------------------- At September 30, 2004 --------------------- Locations Capacity ---------- ---------- Rental Retirement Centers: Owned-100% 2 272 Leased 20 5,587 Managed with purchase rights - - Managed - other 3 713 ---------- ---------- 25 6,572 Entrance Fee Retirement Centers: Owned-90% 2 712 Leased 3 1,564 Managed-Freedom Square 1 735 Managed-other 2 474 ---------- ---------- 8 3,485 Free-Standing AL's: Owned-100% 8 778 Owned-Joint Venture 3 254 Leased 22 1,967 ---------- ---------- 33 2,999 All Communities: Owned-100% 12 1,762 Owned-Joint Venture 3 254 Leased 45 9,118 Managed with purchase rights - - Managed-Freedom Square 1 735 Managed-other 5 1,187 ---------- ---------- 66 13,056
Note: Leased communities include both operating and capital leases. Two of the three Owned-Joint Ventures are managed and are not consolidated. Freedom Square is consolidated due to the variable interest entity rules set forth in FIN 46.