-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MkFaT8vbU1dHNVq+4q48SuGQ7VNO0l7wAynoQlY8uE4x+CRinegSEP8+X3zGJeTT edctGEbdh4mf6xpIgE/ZhA== 0001157523-05-005336.txt : 20050608 0001157523-05-005336.hdr.sgml : 20050608 20050608073432 ACCESSION NUMBER: 0001157523-05-005336 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050505 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050608 DATE AS OF CHANGE: 20050608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN RETIREMENT CORP CENTRAL INDEX KEY: 0000787784 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 621674303 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-13031 FILM NUMBER: 05884009 BUSINESS ADDRESS: STREET 1: 111 WESTWOOD PLACE STREET 2: SUITE 202 CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6152212250 8-K/A 1 a4905889.txt AMERICAN RETIREMENT CORP. 8-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A (Amendment No. 1) CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): June 8, 2005 (May 5, 2005) AMERICAN RETIREMENT CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Tennessee 01-13031 62-1674303 - ---------------------------- ------------------ ------------------------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 111 Westwood Place, Suite 200 Brentwood, Tennessee 37027 - ------------------------------------------------ ------------------------ (Address of Principal Executive Offices) (Zip Code) (615) 221-2250 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) For the reasons specified in the Form 8-K filed by American Retirement Corporation on June 8, 2005 (relating to the restatement of its financial statements), this Amendment No. 1 to Form 8-K is being filed by American Retirement Corporation to amend and restate in its entirety the Form 8-K filed by American Retirement Corporation with the Securities and Exchange Commission on May 5, 2005. Item 2.02. Results of Operations and Financial Condition On June 8, 2005, American Retirement Corporation issued a press release announcing the filing of its first quarter 2005 Form 10-Q and reporting revised results for the first quarter reflecting the effects of the Company's previously announced restatement of its financial statements. A copy of the press release is furnished herewith as Exhibit 99.1. Revised supplemental information relating to American Retirement Corporation's revised first quarter 2005 results is furnished herewith as Exhibit 99.2. Item 7.01. Regulation FD Disclosure On June 8, 2005, American Retirement Corporation issued a press release announcing the filing of its first quarter 2005 Form 10-Q and reporting revised results for the first quarter reflecting the effects of the Company's previously announced restatement of its financial statements. A copy of the press release is furnished herewith as Exhibit 99.1. Revised supplemental information relating to American Retirement Corporation's revised first quarter 2005 results is furnished herewith as Exhibit 99.2. Item 9.01. Financial Statements and Exhibits (c) Exhibits. 99.1 Press Release dated June 8, 2005. 99.2 Supplemental Information. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. AMERICAN RETIREMENT CORPORATION By: /s/ Bryan D. Richardson ----------------------------------- Bryan D. Richardson Executive Vice President - Finance and Chief Financial Officer Date: June 8, 2005 3 EXHIBIT INDEX Exhibit Number Description ------- ----------- 99.1 Press Release dated June 8, 2005. 99.2 Supplemental Information. 4 EX-99.1 2 a4905889ex991.txt EXHIBIT 99.1 - PRESS RELEASE Exhibit 99.1 American Retirement Corporation to File First Quarter 10-Q and Upwardly Revises\ Net Income NASHVILLE, Tenn.--(BUSINESS WIRE)--June 8, 2005--American Retirement Corporation (NYSE: ACR), a leading national provider of senior living housing and care, announced it will file today its first quarter 2005 Form 10-Q. Also, the Company reported upwardly revised results for the first quarter reflecting the effect of its previously announced restatement of its financial statements. On May 5, 2005, the Company announced estimated first quarter results, subject to the completion of its accounting review. As detailed in the Form 10-Q, the first quarter results when compared to the earlier estimates are highlighted by the following: -- Net income was $2.6 million for the first quarter of 2005, revised from the $2.3 million previously announced. -- Fully diluted earnings per share were revised upward from $.08 to $.09 for the quarter. -- The revision to net income and earnings per share resulted from an adjustment of the straight-line lease accounting for certain leases related to the accounting methodology for certain prepaid rent and certain lease escalation provisions. The net impact of the adjustments resulted in a $302,000 reduction to previously announced lease expense. -- Revenues and community expenses remained the same as previously announced. -- Additionally, "gain on sale of assets" was reclassified to be a component of operating income as opposed to a component of other income as previously announced. The reclassification has no effect on net income or loss. Chairman's Comments Bill Sheriff, Chairman, President and CEO of the Company, commented, "As we had previously reported, we had a very solid first quarter. It is good to have any uncertainty caused by the delayed 10-Q filing that resulted from the new accounting guidance finally resolved. Consistent with the changes reflected in our 2004 Form 10-K/A, our first quarter 2005 earnings have increased from what we had previously estimated. The lowered lease expense will continue for the next several years, though in a diminishing amount. We still feel very positive about the rest of the year and expect to report net earnings per share of between $.46 to $.49 for 2005." Company Profile American Retirement Corporation is a national senior living and health care services provider offering a broad range of care and services to seniors, including independent living, assisted living, skilled nursing and Alzheimer's care. Established in 1978, the Company believes that it is a leader in the operation and management of senior living communities, including independent living communities, continuing care retirement communities, Free-standing AL's, and the development of specialized care programs for residents with Alzheimer's and other forms of dementia. The Company's operating philosophy is to enhance the lives of seniors by striving to provide the highest quality of care and services in well-operated communities designed to improve and protect the quality of life, independence, personal freedom, privacy, spirit, and dignity of its residents. The Company currently operates 67 senior living communities in 14 states, with an aggregate unit capacity of approximately 13,300 units and resident capacity of approximately 14,900. The Company owns 17 communities, leases 44 communities, and manages six communities pursuant to management agreements. Approximately 84% of the company's revenues come from private pay sources. Risks of Forward Looking Statements Statements contained in this press release and statements made by or on behalf of American Retirement Corporation relating hereto may be deemed to constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements include all statements that are not historical statements of fact and those regarding the intent, belief or expectations of the Company or its management, including, without limitation, all statements regarding the Company's future operating and financial expectations. These forward-looking statements may be affected by certain risks and uncertainties, including without limitation the following: (i) the risk associated with the Company's significant leverage, (ii) the Company's ability to sell its entrance fee units and to increase occupancy at the Company's communities (especially its Free-standing AL's), (iii) the risk that the Company will be unable to improve the Company's results of operations, increase cash flow and reduce expenses, (iv) the risks associated with adverse market conditions of the senior housing industry and the United States economy in general, (v) the risk that the Company is unable to obtain liability insurance in the future or that the costs thereof (including deductibles) will be prohibitive, (vi) the Company's ability to obtain new financing or extend and/or modify existing debt and (vii) the risk factors described in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2004 under the caption "Risk Factors" and in the Company's other filings with the SEC. In light of the significant uncertainties inherent in the forward-looking statements included herein, the Company's actual results could differ materially from such forward-looking statements. The Company does not undertake any obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) Three months ended Increase March 31, 2005 (Decrease) --------------------- --------------- 2005 2004 $ % -------- --------- ------ ------- (restated) (restated) Revenues: Resident and health care $117,689 $ 107,951 $9,738 9.0% Management services 500 424 76 17.9% Reimbursed expenses 802 768 34 4.4% -------- --------- ------ ------- Total revenues 118,991 109,143 9,848 9.0% Operating expenses: Community operating expenses 79,337 73,852 5,485 7.4% General and administrative 6,591 6,588 3 0.0% Lease expense 15,510 14,821 689 4.6% Depreciation and amortization 9,271 6,913 2,358 34.1% Amortization of leasehold acquisition costs 699 718 (19) -2.6% Loss (gain) on sale of assets 12 (105) 117 -111.4% Reimbursed expenses 802 768 34 4.4% -------- --------- ------ ------- Total operating expenses 112,222 103,555 8,667 8.4% -------- --------- ------ ------- Operating income 6,769 5,588 1,181 21.1% Other income (expense): Interest expense (3,557) (9,701) 6,144 63.3% Interest income 720 602 118 19.6% Other 139 111 28 25.2% -------- --------- ------ ------- Other expense, net (2,698) (8,988) 6,290 70.0% -------- --------- ------ ------- Earnings (loss) before income taxes, and minority interest 4,071 (3,400) 7,471 219.7% Income tax expense 1,375 145 1,230 848.3% -------- --------- ------ ------- Earnings (loss) before minority interest 2,696 (3,545) 6,241 176.1% Minority interest in earnings of consolidated subsidiaries, net of tax (71) (962) (891) -92.6% -------- --------- ------ ------- Net income (loss) $ 2,625 $ (4,507) $7,132 158.2% ======== ========= ====== ======= Basic earnings (loss) per share $ 0.09 $ (0.21) ======== ========= Diluted earnings (loss) per share $ 0.09 $ (0.21) ======== ========= Weighted average shares used for basic earnings (loss) per share data 28,899 21,258 Weighted average shares used for diluted earnings (loss) per share data 30,700 21,258 - -------------------------------------------------------------------- March 31, December 31, 2005 2004 -------- --------- (restated) Selected Balance Sheet Data: Cash and cash equivalents $ 35,680 $ 28,454 Restricted cash, including current portion 50,655 50,134 Refundable portion of entrance fees, deferred entrance fee income, and tenant deposits included in current liabilities 118,685 117,752 Working capital (83,363) (101,767) Land, buildings and equipment, net 514,542 496,297 Total assets 774,102 746,478 Long-term debt, capital and lease financing obligation, including current portion 302,844 335,082 Shareholders' equity 59,413 5,701 CONTACT: American Retirement Corporation Ross C. Roadman, 615-376-2412 EX-99.2 3 a4905889ex992.txt EXHIBIT 99.2 - SUPPLEMENTAL INFORMATION Exhibit 99.2 AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RETIREMENT CENTER COMMUNITIES - FIRST QUARTER 2005 ($'s in thousands) RETIREMENT CENTER COMMUNITIES: TOTAL ------------------------------------- Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 -------- -------- -------- -------- -------- Resident and healthcare revenue $85,288 $85,578 $86,526 $89,787 $91,482 Community operating expense 56,791 56,546 58,168 59,085 60,890 ------- ------- ------- ------- ------- Community operating contribution 28,497 29,032 28,358 30,702 30,592 Community operating margin 33.4% 33.9% 32.8% 34.2% 33.4% Community operating contribution excluding Amortization of Deferred Entrance Fee Revenue 25,832 26,592 26,249 27,553 28,357 Ending Occupancy 8,374 8,424 8,436 8,482 8,585 Ending Occupancy % 94.4% 95.0% 95.1% 95.7% 94.6% Average Monthly Occupancy 8,376 8,382 8,408 8,438 8,532 Monthly Revenue per unit $ 3,394 $ 3,403 $ 3,430 $ 3,547 $ 3,574 Year to Year % Change 8.0% 6.3% 5.0% 9.8% 5.3% Monthly Operating Contribution per unit 1,134 1,155 1,124 1,213 1,195 Year to Year % Change 13.0% 12.4% 14.2% 16.2% 5.4% RETIREMENT CENTER COMMUNITIES: RENTAL COMMUNITIES -------------------------------------------------- Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 -------- -------- -------- -------- -------- Resident and healthcare revenue $55,007 $55,249 $56,306 $57,387 $58,493 Community operating expense 34,326 33,983 35,422 35,932 36,739 ------- ------- ------- ------- ------- Community operating contribution 20,681 21,266 20,884 21,455 21,754 Community operating margin 37.6% 38.5% 37.1% 37.4% 37.2% Ending Occupancy 5,576 5,595 5,581 5,623 5,586 Ending Occupancy % 95.2% 95.5% 95.2% 96.0% 95.4% Average Monthly Occupancy 5,582 5,576 5,580 5,594 5,602 Monthly Revenue per unit $ 3,285 $ 3,303 $ 3,364 $ 3,420 $ 3,480 Year to Year % Change 7.5% 6.5% 4.5% 9.0% 5.9% Monthly Operating Contribution per unit 1,235 1,271 1,248 1,278 1,294 Year to Year % Change 11.2% 11.8% 10.3% 7.4% 4.8% RETIREMENT CENTER COMMUNITIES: ENTRANCE FEE CCRCs -------------------------------------------------- Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 -------- -------- -------- -------- -------- Resident and healthcare revenue $30,281 $30,329 $30,220 $32,400 $32,989 Community operating expense 22,465 22,563 22,746 23,153 24,151 ------- ------- ------- ------- ------- Community operating contribution 7,816 7,766 7,474 9,247 8,838 Community operating margin 25.8% 25.6% 24.7% 28.5% 26.8% Ending Occupancy 2,798 2,829 2,855 2,859 2,999 Ending Occupancy % 93.0% 94.0% 94.8% 95.0% 93.3% Average Monthly Occupancy 2,795 2,806 2,828 2,844 2,930 Monthly Revenue per unit $ 3,612 $ 3,603 $ 3,562 $ 3,797 $ 3,753 Year to Year % Change 9.2% 6.1% 5.9% 11.0% 3.9% Monthly Operating Contribution per unit 932 923 881 1,084 1,005 Year to Year % Change 17.3% 13.0% 25.4% 45.0% 7.9% Net Cash Flow per unit (includes Net Resale Cash Flow) 1,326 1,503 1,442 1,323 1,399 Entrance Fee Sales: Total Entrance Fee (Independent Living) Units 2,066 2,066 2,066 2,064 2,217 Ending Occupancy % 95.4% 96.3% 97.1% 97.2% 95.8% Entrance Fee Sales (in units) 69 84 79 68 70 Entrance Fee Sales $10,257 $11,976 $11,931 $ 9,224 $11,589 Refunds paid on Entrance Fee Terminations 2,433 2,868 3,181 3,192 4,137 Net Resale Cash Flow 7,824 9,108 8,750 6,032 7,452 NOTE: Galleria Woods, a 207 unit Entrance Fee CCRC community, was acquired in February 2005. The sales proceeds at entrance fee CCRCs provide a source of financing to the community, thereby reducing the financing costs (interest or lease expense) that it would otherwise incur. As a result of the residents paying an up-front entrance fee, they pay a lower monthly service fee than they would pay at a similar rental community without entrance fees. As a result, entrance fee communities have lower operating margins (but lower non-operating financing costs) than similar rental communities. AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION FREE-STANDING ASSISTED LIVING COMMUNITIES - FIRST QUARTER 2005 ($'s in thousands) FREE-STANDING ASSISTED LIVING COMMUNITIES ----------------------------------------- Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 -------- -------- -------- -------- -------- Resident and healthcare revenue $22,663 $23,532 $24,563 $25,506 $26,207 Community operating expense 17,061 17,519 17,657 17,970 18,447 ------- ------- ------- ------- ------- Community operating contribution 5,602 6,013 6,906 7,536 7,760 Community operating margin 24.7% 25.6% 28.1% 29.5% 29.6% Ending Occupancy 2,394 2,456 2,504 2,533 2,562 Ending Occupancy % 84.3% 86.5% 88.3% 89.3% 90.1% Average Monthly Occupancy 2,384 2,430 2,478 2,521 2,537 Monthly Revenue per unit $ 3,169 $ 3,228 $ 3,304 $ 3,372 $ 3,443 Year to Year % Change 8.7% 7.5% 8.2% 9.9% 8.7% Monthly Operating Contribution per unit 783 825 929 996 1,020 Year to Year % Change 78.5% 46.3% 39.2% 37.3% 30.2% NOTE: Excludes two non-consolidated joint ventures. AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION FREE CASH FLOW ($'s in thousands) Three months ended March 31, 2005 -------------- Net income (loss) $ 2,625 Adjustments to reconcile net income to cash and cash equivalents provided by operating activities: Depreciation and amortization 10,066 Amortization of deferred entrance fee revenue (4,064) Proceeds from entrance fee sales - deferred income 7,805 Deferred income tax benefit (765) Amortization of deferred gain on sale-leaseback transactions (2,956) Amortization of deferred compensation 218 Minority interest in earnings of consolidated subsidiaries 71 Tax benefit from exercise of stock options 395 (Gains) losses from unconsolidated joint ventures (66) Loss (gain) on sale of assets 12 -------------- Net cash and cash equivalents provided by operating activities (before changes in assets and liabilities, exclusive of acquisitions and sale leaseback transactions) 13,341 Adjustments for lease escalators and other accruals 1,277 Additions to land, building and equipment (19,629) Plus: Development expenditures (funded separately) 693 Proceeds from entrance fee sales - refundable portion, net of refunds paid (1,521) Distributions to minority interest holders (984) Principal reductions in master trust liability (285) Other adjustments for transactions / refinancings 14,742 -------------- Free cash flow before principal payments 7,634 Principal payments on long-term debt (4,897) -------------- Free cash flow $ 2,737 ============== AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION SAME COMMUNITY RESULTS - FIRST QUARTER 2005 ($'s in thousands) INCLUDING ENTRANCE FEE COMMUNITIES: - ------------------------------------ Three months ended March 31, $ % ------------------- 2005 2004 Change Change -------- -------- ------- ------ Resident & Healthcare revenue $116,903 $107,951 $8,952 8.3% Community operating expense 78,542 73,852 4,690 6.4% -------- -------- ------ ------ Community operating contribution $ 38,361 $ 34,099 4,262 12.5% Community operating margin 32.8% 31.6% # Locations 59 59 Avg. Occupancy 93.9% 91.9% Avg. Occupied Units 10,989 10,761 228 2.1% Avg. Mo. Revenue/unit $ 3,546 $ 3,344 $ 202 6.0% Avg. Mo. Operating Contribution/unit 1,164 1,056 107 10.2% EXCLUDING ENTRANCE FEE COMMUNITIES: - ----------------------------------- Three months ended March 31, $ % ------------------- 2005 2004 Change Change -------- -------- ------- ------ Resident & Healthcare revenue $ 84,700 77,670 $7,030 9.1% Community operating expense 55,186 51,387 3,799 7.4% -------- -------- ------ ------ Community operating contribution $ 29,514 $ 26,283 3,231 12.3% Community operating margin 34.8% 33.8% # Locations 53 53 Avg. Occupancy 93.6% 91.6% Avg. Occupied Units 8,139 7,966 173 2.2% Avg. Mo. Revenue/unit $ 3,469 $ 3,250 $ 219 6.7% Avg. Mo. Operating Contribution/unit 1,209 1,100 109 9.9% 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. AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION REVENUE - FIRST QUARTER 2005 ($'s in thousands) Three months Three months ended March 31, ended March 31, --------------------------------- 2005 % 2004 % -------- ------ -------- ------ COMPOSITION - ----------- Revenues: Retirement Centers Independent living $ 38,234 32.1% $ 35,682 32.7% Assisted living 15,010 12.6% 14,175 13.0% Skilled Nursing 20,396 17.1% 19,633 18.0% Ancillary services, including Innovative Senior Care (therapy and wellness programs) 15,607 13.1% 13,133 12.0% Amortization of Deferred Entrance Fee Revenue 2,235 1.9% 2,665 2.4% -------- ------ -------- ------ 91,482 76.9% 85,288 78.1% Free-Standing Assisted Living Assisted living 23,169 19.5% 20,392 18.7% Ancillary services, including Innovative Senior Care (therapy and wellness programs) 3,038 2.5% 2,271 2.1% -------- ------ -------- ------ 26,207 22.0% 22,663 20.8% Total Resident and Healthcare Revenue 117,689 98.9% 107,951 98.9% Management and Contract Services 500 0.5% 424 0.4% Reimbursed Expenses 802 0.6% 768 0.7% -------- ------ -------- ------ 1,302 1.1% 1,192 1.1% -------- ------ -------- ------ Total Revenues $118,991 100.0% $109,143 100.0% BY PAYOR - -------- Private Pay $ 99,761 83.8% $ 93,181 85.4% Medicare 16,747 14.1% 13,354 12.2% Medicaid 2,483 2.1% 2,608 2.4% -------- ------ -------- ------ Total $118,991 100.0% $109,143 100.0% AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION OTHER STATISTICS - FIRST QUARTER 2005 UNIT CAPACITY BY COMMUNITY TYPE - ------------------------------- At March 31, 2005 ------------------ Locations Capacity --------- -------- Rental Retirement Centers: Owned-100% 2 272 Leased 20 5,584 Managed - other 3 713 --------- -------- 25 6,569 Entrance Fee Retirement Centers: Owned-100% 1 207 Owned- 90% 2 712 Leased 3 1,562 Managed-Freedom Square 1 735 Managed-other 2 474 --------- -------- 9 3,690 Free-Standing AL's: Owned-100% 10 969 Owned-Joint Venture 2 164 Leased 20 1,783 Leased-Joint Venture 1 91 --------- -------- 33 3,007 All Communities: Owned-100% 13 1,448 Owned- 90% 2 712 Owned-Joint Venture 2 164 Leased 43 8,929 Leased-Joint Venture 1 91 Managed-Freedom Square 1 735 Managed-other 5 1,187 --------- -------- 67 13,266 Note: Leased communities include both operating and capital leases. The two 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. -----END PRIVACY-ENHANCED MESSAGE-----