American Retirement Corporation Reports Third Quarter and Year-to-Date 2005 Results.NASHVILLE Nashville, city (1990 pop. 487,969), state capital, coextensive with Davidson co., central Tenn., on the Cumberland River, in a fertile farm area; inc. as a city 1806, merged with Davidson co. 1963. , Tenn. -- American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Retirement Corporation: --Reported diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $.13 for the third quarter versus a First Call estimate of $.12. --Free cash flow increased 123% for the third quarter to $5 million versus the prior year. --Occupancy averaged 94%, up from 93% for last year's third quarter. --Completed acquisition of eight Epoch communities. American Retirement Corporation (NYSE NYSE See: New York Stock Exchange : ACR See riser card. ) today reported third quarter 2005 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings of $.13 per share, compared with a loss of $.27 per share for the prior year's third quarter. Bill Sheriff, Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of the company, commented, "The third quarter was another successful period for us. We announced a large acquisition (which we closed yesterday), signed a new management contract on a CCRC Noun 1. CCRC - an agency in the Department of Defense that is a national center for research on all aspects of injury control and casualty care Casualty Care Research Center , continued to free up restricted cash and had solid operating results. As announced today in a separate release, we closed on the acquisition of the eight Epoch communities yesterday. The transaction fits well with our current portfolio and will be immediately accretive. We also completed transactions during the quarter that released $9 million of restricted cash and we used those funds, plus the company's positive cash flow, to improve our balance sheet and to fund development. We started the construction on a number of community expansions and will begin the construction of several new communities during the fourth quarter." "Again, our operations showed strong year over year increases in revenue and operating contribution with occupancies holding strong and ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services expanding nicely. We have been fortunate with Hurricanes Rita and Wilma. We had no harm to residents or associates and relatively little property damage. We did incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. about $350,000 of increased operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and lost revenue related to Hurricane Rita Hurricane Rita was the fourth-most intense Atlantic hurricane ever recorded and the most intense tropical cyclone ever observed in the Gulf of Mexico. Rita caused $11.3 billion in damage on the U.S. Gulf Coast in September 2005. in our Texas communities in September September: see month. . For both hurricanes, our teams performed with distinction - they put the residents' safety and care above all else. We are proud of their dedication, resourcefulness Resourcefulness Buck clever and temerarious dog perseveres in the Klondike. [Am. Lit.: Call of the Wild] Crichton, Admirable butler proves to be infinite resource for castaway family on island. [Br. Lit. and self-sacrifice Self-Sacrifice See also Sacrifice, Suicide. Sensuality (See BEAUTY, SENSUAL.) Aïda dies with her beloved Radames. [Ital. ." (All references to growth rate percentage compare the results of the current period to the prior year comparable period.) Financial Highlights --$125 million of total revenue for the third quarter of 2005, an 11% increase. --Net income of $4 million ($.13 per diluted share) versus a loss of $7 million. --Community operating contribution from the Company's three business segments of $41 million, an increase of 15%. --Operating income of $9 million, a 202% increase. Operational Highlights --Occupancy was 94%, with the company's large retirement communities ending the quarter at 95% and the free-standing free-standing Managed care adjective Referring to a physically and, often, financially discrete entity–eg, a surgical center, that is separate from, but may be affiliated with, a hospital; FS facilities may provide ambulatory surgery, emergency or assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. communities ending at 91%. --Retirement Centers produced an 8% increase in average monthly revenue per occupied oc·cu·py tr.v. oc·cu·pied, oc·cu·py·ing, oc·cu·pies 1. To fill up (time or space): a lecture that occupied three hours. 2. To dwell or reside in. 3. unit, and a 10% increase in operating contribution per occupied unit. --Free-standing assisted living communities produced a 10% increase in average monthly revenue per occupied unit, and a 21% increase in operating contribution per occupied unit. Operating Review The company operates in three business segments: --The Retirement Centers ("Retirement Centers") include CCRCs (continuing care continuing care a professional convention that a veterinarian who is treating an animal is obliged to continue treating that case unless an arrangement is made with its custodian to transfer the care to another practitioner or to a specialist. retirement centers), Entrance-Fee Communities ("EF Communities") and congregate con·gre·gate tr. & intr.v. con·gre·gat·ed, con·gre·gat·ing, con·gre·gates To bring or come together in a group, crowd, or assembly. See Synonyms at gather. adj. 1. Gathered; assembled. 2. living residences. --Free-standing assisted living communities ("Free-standing AL's") are smaller than Retirement Centers and provide assisted living and specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. care such as Alzheimer's Noun 1. Alzheimer's - a progressive form of presenile dementia that is similar to senile dementia except that it usually starts in the 40s or 50s; first symptoms are impaired memory which is followed by impaired thought and speech and finally complete helplessness and memory enhancement programs. --The Management Services segment includes fees from management agreements for communities owned by others, development fees and reimbursed expenses. The results for the Company's three operating segments for the third quarter of 2005 were as follows:
Three months ended
($ in 000's) Sept. 30,
------------------------------------- ------------------- $ %
2005 2004 Change Change
----------------------------------------------------------------------
Resident & Healthcare revenue $123,439 $111,089 12,350 11%
----------------------------------------------------------------------
Community operating expense $ 82,956 $ 75,825 7,131 9%
----------------------------------------------------------------------
Community operating contribution(1) $ 40,483 $ 35,264 5,219 15%
----------------------------------------------------------------------
Community operating margin 32.8% 31.7%
----------------------------------------------------------------------
Management Services op. contribution $ 664 $ 500 164 33%
----------------------------------------------------------------------
(1) The company evaluates the performance of its business
segments, primarily, based upon their operating contributions,
which the company defines as revenue from the segment less
operating expenses associated with that segment.
Retirement Centers Segment The company's 29 Retirement Centers exhibited strong increases in revenue and operating contribution for the third quarter of 2005 as follows:
Retirement Centers ($ in 000's): Three Months
-------------------------------------- Ended:
Sept. 30,
------------------------------------------------------- $ %
2005 2004 Change Change
----------------------------------------------------------------------
Revenues $95,244 $86,526 $8,718 10%
----------------------------------------------------------------------
Community Operating Contribution $31,762 $28,358 $3,404 12%
----------------------------------------------------------------------
Operating contribution margin 33.3% 32.8%
----------------------------------------------------------------------
% Ending Occupancy 95% 95%
----------------------------------------------------------------------
The Retirement Center segment continued to produce strong revenue gains. --Ending occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy was 95%, level with the third quarter of 2004, though the number of occupied units increased 2% due to the acquisition of Galleria Woods in the first quarter. --The Retirement Centers ended the quarter with 97% occupancy in independent living, 95% in assisted living and 88% in skilled nursing. --Average monthly revenue per occupied unit increased 8% during the quarter versus the prior year to $3,695 - due to increases in monthly service fees and per diem per diem adj. or n. Latin for "per day," it is short for payment of daily expenses and/or fees of an employee or an agent. rates in skilled nursing, turnover of residents (the "Mark to Market" effect of reselling or reletting units at higher current rates) and increased ancillary services, primarily driven by the company's Innovative Senior Care therapy, education and wellness programs. The operating contribution for Retirement Centers was $32 million for the third quarter of 2005, and $94 million for the nine months ended September 30, 2005. This represented a $3 million or 12% increase over the prior year's third quarter and an $8 million (10%) increase over the first nine months of 2004. The Retirement Centers continue to increase the monthly operating contribution per occupied unit, attaining $1,232 per unit in the third quarter of 2005, a 10% improvement from the prior year's third quarter. Free-standing AL's Segment The company's 32 Free-standing AL's exhibited strong increases in revenue and operating contribution for the third quarter of 2005 as follows:
Free-standing AL's ($ in 000's) (1): Three Months
--------------------------------------- Ended:
Sept. 30,
--------------------------------------------------------- $ %
2005 2004 Change Change
----------------------------------------------------------------------
Revenues $28,195 $24,563 3,632 15%
----------------------------------------------------------------------
Community Operating Contribution $ 8,721 $ 6,906 1,815 26%
----------------------------------------------------------------------
Operating contribution margin 30.9% 28.1%
----------------------------------------------------------------------
% Ending Occupancy 91% 88%
----------------------------------------------------------------------
(1) Includes results of 32 Free-standing AL's and excludes a
non-consolidated Free-standing AL held in a joint venture.
The revenue increase in the Free-standing AL segment of 15% to $28 million was driven by the following factors: --Average occupancy for the Free-standing AL portfolio was 90% for the third quarter, up from 87% a year ago and up from 89% in the second quarter of 2005. --The average monthly revenue per occupied unit increased 10% to $3,626, up from $3,304 per month in September 2004. The revenue per occupied unit increase was due to rate increases, reduced promotional allowances, increased care services and turnover of residents (the "Mark to Market" effect of reletting units at higher current rates). --The increased use of ancillary services, particularly Innovative Senior Care therapy, education and wellness services, also contributed significantly to the revenue increase for this segment. The operating contribution for Free-standing AL's was almost $9 million for the third quarter of 2005 and $25 million for the first nine months of 2005. This represented a $2 million or 26% increase over the prior year's third quarter and a $7 million (37%) increase over the first nine months of 2004. The Free-standing AL's continue to increase the monthly operating contribution per occupied unit, hitting $1,122 per unit in the third quarter of 2005, a 21% improvement from the prior year's third quarter. For the nine months year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , 65% of the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue from the Free-standing AL segment fell to operating contribution. Management Services Segment The company's Management Services business segment includes management contracts on six Retirement Centers and one Free-standing AL, with an aggregate capacity of 1,539 units. The Management Services segment had an operating contribution of $.7 million in the third quarter of 2005, a 33% increase from the same prior-year period. This resulted from improved performance at the managed communities. Also, at the end of the quarter, the Company took over the management of a third-party owned community, Bradford Bradford, city, England Bradford, city (1991 pop. 293,336) and metropolitan district, N central England, on a small tributary of the Aire River. It is a center of the worsted industry, which dates from the Middle Ages. Village in Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). , which we expect to contribute in future quarters. Financial Review Revenues for the quarter increased 11% to $125 million versus the prior year quarter and 10% to $365 million for the full nine months, reflecting the increased average occupied units, the incremental rate increase from new residents, rate increases to existing residents and increased ancillary services. Ancillary services revenue was over $20 million for the quarter, up from $17 million a year ago. Ancillary services revenue currently comprises 17% of total revenue. Community operating expenses increased 9% for the quarter versus the prior year period, while revenue increased 11%, evidencing good cost control and the low incremental cost Incremental Cost The encompassing change that a company experiences within its balance sheet due to one additional unit of production. Notes: Incremental cost is the overall change that a company experiences by producing one additional unit of good. of additional occupancy. General and administrative expenses increased 2% from the third quarter of 2004 (excluding transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). in 2004), reflecting the growth of the Company's business. Net income for the third quarter of 2005 was $4 million or $.13 per diluted share, compared with a loss of $7 million for the prior year's third quarter. Year-to-date net income was $66 million, which included the second quarter benefit of $56 million due to certain past tax benefits, and a $794,000 cost related to the second quarter payment of a debt. Free cash flow was $5 million for the third quarter, versus $2 million for the third quarter of 2004. For the nine months ended September 30, free cash flow was $14 million versus $7 million for the same prior year period. The primary drivers of the increased cash flow were increased operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and entrance fee sale proceeds, net of refunds. 2005 Earnings Outlook The company expects to report net earnings per diluted share of $0.48 to $0.50 for 2005, excluding the $1.69 per share effect of the tax benefit and debt repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan costs reported in the second quarter. Conference Call Information American Retirement Corporation will hold a conference call with Bill Sheriff, Chairman, President and Chief Executive Officer, and Bryan Bryan, city (1990 pop. 55,002), seat of Brazos co., E central Tex.; inc. 1872. Settled in the early 19th cent. in an area of large plantations, Bryan was long a cotton center. Richardson Richardson, city (1990 pop. 74,840), Dallas and Collins counties, N Tex., a suburb of Dallas; founded in the 1850s, inc. as a city 1956. Richardson manufactures telecommunications equipment, medical devices, supercomputers, computer chips, and fiber optics. , Chief Financial Officer, to discuss the company's 2005 third-quarter financial results and the other matters described above. The call will be held on Thursday Thursday: see week. , November November: see month. 3, 2005 at 11:00 a.m. ET and parties may participate by either calling (877) 252-6354 or through the company's website at www.arclp.com. Click on the broadcast icon to listen to the earnings call - Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. (TM) is required to listen to this webcast. In addition, the call will be archived on the company's website until the next regularly scheduled earnings conference call. If any material information is disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). on the conference call that has not been previously disclosed publicly, that information will also be available at the Investors Welcome portion of the company's website. Additional Filings The company will file on or about November 3, 2005 a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. with the SEC which includes supplemental information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the company's third quarter 2005 results. This filing will also be available through the Investors Welcome section of the company's website - www.arclp.com. 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 dementia (dĭmĕn`shə) [Lat.,=being out of the mind], progressive deterioration of intellectual faculties resulting in apathy, confusion, and stupor. In the 17th cent. . 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 Dignity See also Noblemindedness. cherub celestial being symbolizing dignity, glory, and honor. [Heraldry: Halberts, 23] cloves symbolic of stateliness. [Plant Symbolism and Folklore: Jobes, 350] dahlia symbol of dignity. of its residents. The Company currently operates 76 senior living communities in 19 states, with an aggregate unit capacity of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 14,300 units and resident capacity of approximately 16,000. The Company owns 27 communities (including nine communities in joint ventures), leases 43 communities, and manages six communities pursuant to management agreements. Approximately 83% 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 here·to adv. To this document, matter, or proposition. hereto Adverb Formal or law to this place, matter, or document Adv. 1. may be deemed to constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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, all statements regarding the financial effects of the Epoch acquisition and Bradford Village management agreement, and all statements regarding planned expansions and development. 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 debt and lease obligations, (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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. 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 pro·hib·i·tive also pro·hib·i·to·ry adj. 1. Prohibiting; forbidding: took prohibitive measures. 2. , (vi) the company's ability to obtain new financing or extend and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. modify existing debt, (vii) the risk that the company will not be able to successfully integrate the Epoch and Bradford Village communities into the company's operations, (viii) the risk of changes in government reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. programs including caps on therapy reimbursements, and (ix) the risk factors described in the company's Annual Report on Form 10-K/A for the year ended December December: see month. 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 ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to any forward-looking statements contained herein to reflect events and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or occurring after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" 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
September 30, (Decrease)
------------------- ----------------
2005 2004 $ %
-------- -------- ------- -------
Revenues:
Resident and health care $123,439 $111,089 $12,350 11.1%
Management services 664 500 164 32.8%
Reimbursed expenses 646 460 186 40.4%
-------- -------- ------- -------
Total revenues 124,749 112,049 12,700 11.3%
Operating expenses:
Community operating expenses 82,956 75,825 7,131 9.4%
General and administrative 7,360 8,400 (1,040) -12.4%
Lease expense 15,014 15,100 (86) -0.6%
Depreciation and amortization 9,019 8,488 531 6.3%
Amortization of leasehold
acquisition costs 588 735 (147) -20.0%
Loss on sale of assets 121 48 73 152.1%
Reimbursed expenses 646 460 186 40.4%
-------- -------- ------- -------
Total operating expenses 115,704 109,056 6,648 6.1%
-------- -------- ------- -------
Operating income 9,045 2,993 6,052 202.2%
Other income (expense):
Interest expense (4,228) (8,400) 4,172 49.7%
Interest income 1,567 718 849 118.2%
Other 340 257 83 32.3%
-------- -------- ------- -------
Other expense, net (2,321) (7,425) 5,104 68.7%
-------- -------- ------- -------
Income (loss) before income
taxes and minority interest 6,724 (4,432) 11,156 251.7%
Income tax expense 2,151 2,501 (350) -14.0%
-------- -------- ------- -------
Income (loss) from continuing
operations before minority
interest 4,573 (6,933) 11,506 166.0%
Minority interest in (earnings)
losses of consolidated
subsidiaries, net of tax (483) 270 (753) -278.9%
-------- -------- ------- -------
Net income (loss) $ 4,090 $ (6,663) $10,753 161.4%
======== ======== ======= =======
Basic income (loss) per share $ 0.13 $ (0.27)
======== ========
Diluted income (loss) per share $ 0.13 $ (0.27)
======== ========
Weighted average shares used for
basic earnings (loss) per share
data 30,918 24,665
Effect of dilutive common stock
options 1,595 -
-------- --------
Weighted average shares used for
diluted earnings (loss) per share
data 32,513 24,665
======== ========
----------------------------------------------------
September December
30, 31,
2005 2004
-------- --------
Selected Balance Sheet Data:
Cash and cash equivalents $ 33,952 $ 28,454
Restricted cash 30,022 50,134
Working capital deficit (95,832) (98,995)
Land, buildings and equipment,
net 552,242 496,297
Total assets 858,353 749,250
Long-term debt, including
current portion 135,671 135,956
Capital lease and lease
financing obligations,
including current portion 187,090 199,126
Refundable portion of entrance
fees 83,676 79,148
Current portion of deferred
entrance fee income 35,848 33,800
Long-term deferred entrance
fee income 122,222 111,386
Deferred gain on sale lease-
back transactions 90,009 98,876
Shareholders' equity 124,796 5,701
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Nine months ended Increase
September 30, (Decrease)
------------------- -----------------
2005 2004 $ %
-------- -------- -----------------
Revenues:
Resident and health care $361,769 $328,150 $ 33,619 10.2%
Management services 1,680 1,439 241 16.7%
Reimbursed expenses 1,990 1,752 238 13.6%
-------- -------- -----------------
Total revenues 365,439 331,341 34,098 10.3%
Operating expenses:
Community operating expenses 242,189 223,742 18,447 8.2%
General and administrative 20,716 21,102 (386) -1.8%
Lease expense 45,969 44,793 1,176 2.6%
Depreciation and amortization 27,063 21,948 5,115 23.3%
Amortization of leasehold
acquisition costs 1,976 2,181 (205) -9.4%
Loss (gain) on sale of assets 477 (63) 540 857.1%
Reimbursed expenses 1,990 1,752 238 13.6%
-------- -------- -----------------
Total operating expenses 340,380 315,455 24,925 7.9%
-------- -------- -----------------
Operating income 25,059 15,886 9,173 57.7%
Other income (expense):
Interest expense (11,701) (27,033) 15,332 56.7%
Interest income 3,161 1,989 1,172 58.9%
Other 484 4 480 -12000.0%
-------- -------- -----------------
Other expense, net (8,056) (25,040) 16,984 67.8%
-------- -------- -----------------
Income (loss) before income
taxes and minority
interest 17,003 (9,154) 26,157 285.7%
Income tax (benefit) expense (49,866) 2,721 52,587 1932.6%
-------- -------- -----------------
Income (loss) from
continuing operations
before minority interest 66,869 (11,875) 78,744 663.1%
Minority interest in earnings
of consolidated subsidiaries,
net of tax (1,154) (1,555) 401 25.8%
-------- -------- -----------------
Net income (loss) $ 65,715 $(13,430) $ 79,145 589.3%
======== ======== =================
Basic income (loss) per share $ 2.18 $ (0.57)
======== ========
Diluted income (loss) per
share $ 2.06 $ (0.57)
======== ========
Weighted average shares used
for basic earnings (loss) per
share data 30,147 23,404
Effect of dilutive common stock
options 1,701 -
-------- --------
Weighted average shares used
for dilutive earnings (loss)
per share data 31,848 23,404
======== ========
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
GAAP RECONCILIATION
FREE CASH FLOW
($'s in thousands)
Free cash flow is presented to provide additional information
concerning cash flow available to meet future debt service
obligations and working capital requirements. Free cash flow should
not be considered as a measure of financial performance or liquidity
under U.S. generally accepted accounting principles. Free cash flow
should not be considered in isolation or as alternative to financial
statement data presented in the Company's consolidated financial
statements as an indicator of financial performance or liquidity.
Free cash flow, as presented, may not be comparable to similarly
titled measures of other companies.
The following table reconciles Free cash flow, as described above, to
net income (loss) as reflected in the Company's consolidated
statements of earnings.
Three Six months Nine
months ended months
ended ended
March 31, June 30, Sept. 30,
2005 2005 2005
Net income $ 2,625 $ 61,625 $ 65,715
Adjustments to reconcile net income
to cash and cash equivalents
provided by operating activities:
Tax benefit from release of tax
valuation allowance - (55,697) (55,697)
Depreciation and amortization 10,066 19,685 29,572
Loss on extinguishment of debt - 794 794
Amortization of deferred entrance
fee revenue (4,064) (8,894) (13,418)
Proceeds from entrance fee sales,
net of refunds 7,805 18,211 26,463
Deferred income tax benefit (765) - -
Amortization of deferred gain on
sale-leaseback transactions (2,956) (5,911) (8,867)
Amortization of deferred
compensation 218 412 695
Minority interest in earnings of
consolidated subsidiaries 71 671 1,154
Tax benefit from exercise of
stock options 395 558 847
(Gains) losses from
unconsolidated joint ventures (66) (160) (260)
Loss (gain) on sale of assets 12 356 477
--------- --------- ---------
Net cash and cash equivalents
provided by operating
activities (before
changes in assets and liabilities,
exclusive of acquisitions
and sale leaseback transactions) 13,341 31,650 47,475
Proceeds from refundable entrance
fee sales, net of refunds (1,521) (2,737) (4,611)
Adjustments for lease escalators
and other accruals 1,004 2,220 3,502
Additions to land, building and
equipment (19,629) (27,533) (44,303)
Plus: Development expenditures
(funded separately) 693 2,266 5,929
Distributions to minority
interest holders (984) (2,378) (3,222)
Principal reductions in master
trust liability (285) (553) (817)
Other adjustments for
transactions / refinancings 15,015 15,764 24,319
--------- --------- ---------
Free cash flow 7,634 18,699 28,272
Principal payments on long-term
debt (4,897) (9,869) (14,527)
--------- --------- ---------
Free cash flow after principal
payments $ 2,737 $ 8,830 $ 13,745
========= ========= =========
Quarter Ended
--------------------------------
March 31, June 30, Sept. 30,
2005 2005 2005
Net income $ 2,625 $ 59,000 4,090
Adjustments to reconcile net income
to cash and cash equivalents
provided by operating activities:
Tax benefit from release of tax
valuation allowance - (55,697) -
Depreciation and amortization 10,066 9,619 9,887
Loss on extinguishment of debt - 794 -
Amortization of deferred entrance
fee revenue (4,064) (4,830) (4,524)
Proceeds from entrance fee sales,
net of refunds 7,805 10,406 8,252
Deferred income tax benefit (765) 765 -
Amortization of deferred gain on
sale-leaseback transactions (2,956) (2,955) (2,956)
Amortization of deferred
compensation 218 194 283
Minority interest in earnings of
consolidated subsidiaries 71 600 483
Tax benefit from exercise of
stock options 395 163 289
(Gains) losses from
unconsolidated joint ventures (66) (94) (100)
Loss (gain) on sale of assets 12 344 121
--------- --------- ---------
Net cash and cash equivalents
provided by operating activities
(before changes in assets and
liabilities, exclusive of
acquisitions and sale leaseback
transactions) 13,341 18,309 15,825
Proceeds from refundable entrance
fee sales, net of refunds (1,521) (1,216) (1,874)
Adjustments for lease escalators
and other accruals 1,004 1,216 1,282
Additions to land, building and
equipment (19,629) (7,904) (16,770)
Plus: Development expenditures
(funded separately) 693 1,573 3,663
Distributions to minority
interest holders (984) (1,394) (844)
Principal reductions in master
trust liability (285) (268) (264)
Other adjustments for
transactions / refinancings 15,015 749 8,555
--------- --------- ---------
Free cash flow 7,634 11,065 9,573
Principal payments on long-term
debt (4,897) (4,972) (4,658)
--------- --------- ---------
Free cash flow after principal
payments $ 2,737 $ 6,093 $ 4,915
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