American Retirement Reports Fourth Quarter Profit and Full Year 2004 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 (NYSE NYSE See: New York Stock Exchange : ACR See riser card. ), a leading national provider of senior living housing and care, today reported its financial results for the quarter ended December December: see month. 31, 2004. Highlights of the quarter were: --The Company produced $116 million of revenue for the fourth quarter of 2004, a 12% increase over the prior year's quarter and $448 million of revenue for the full 2004 year, a 12% increase over 2003. --The Company produced a profit of $1.8 million ($.07 per share) for the fourth quarter of 2004 versus a loss of $6.7 million for the prior year's fourth quarter. --Free cash flow for the fourth quarter, positive for the fifth consecutive quarter, was $2.6 million after principal payments on long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $4.9 million. For the full year, free cash flow was $9.7 million. --The operating contribution from the Company's three business segments increased 22% over the fourth quarter of 2003 to $39 million. For the full year, the total segment operating contribution increased by 24% to $145 million. --Average overall 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 rose to 94% from 90% for last year's fourth quarter, with the Company's large retirement communities' ("Retirement Centers") ending the quarter at 96%. --Retirement Centers' fourth quarter results were driven by a 10% 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 1% average occupancy growth. --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' ("Free-standing AL's") results were driven by a 7% occupancy growth and a 10% increase in average monthly revenue per occupied unit. 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 American Retirement, commented, "The results for the fourth quarter show the continued improvement in our operating results and the benefit from our refinancing Refinancing An extension and/or increase in amount of existing debt. activities. We continue to produce revenue growth in excess of 10% and we were profitable in this quarter. Strong growth in revenue per unit, driven by our 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, strength in assisted living pricing and the ability to pass on expense increases, as well as pushing occupancies to higher levels, continue the trend of increasing revenue performance. At the same time, we are controlling 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 producing record levels of operating contribution per unit - well above the industry average. The significant reduction in debt service costs that have resulted from our refinancing activities in 2004 also helped achieve solid profitability. " "We are excited about the future growth plans of the Company, which the equity offering that we successfully completed in January January: see month. will help support. This Company has a base of experience, talent, systems and market position to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the opportunities the future will present," Mr. Sheriff continued. OPERATIONAL HIGHLIGHTS The Company operates in three business segments: Retirement Centers, Free-standing AL's and Management Services. The 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. The Retirement Centers are established communities with strong reputations within their respective markets. 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 and reimbursed expenses. The Company's three operating segments produced the following results in total:
Three months ended
December 31,
------------------- $ %
2004 2003 Change Change
-------- ----------------------
Resident & Healthcare revenue $115,293 $103,087 12,206 11.8%
Community operating expense 77,055 71,661 5,394 7.5%
-------- -------- -------------
Community operating contribution $ 38,238 $ 31,426 6,812 21.7%
Community operating margin 33.2% 30.5%
Management Services op. contribution $ 443 $ 351 92 26.2%
Consolidated Communities:
# Locations 59 59
Avg. Occupancy 93.6% 89.9%
Avg. Occupied Units 10,959 10,529 430 4.1%
Avg. Mo. Revenue/unit $ 3,507 $ 3,264 $ 243 7.5%
Avg. Mo. Op Contribution/unit $ 1,163 $ 995 $ 168 16.9%
Retirement Centers The Company's 28 Retirement Centers produced strong increases in revenue and operating contribution for the fourth quarter of 2004 as follows: Retirement Centers ($ in 000's):
Three months ended
December 31,
----------------- $ %
2004 2003 Change Change
--------------------------------
Community Revenue 89,787 81,390 8,397 10.3%
Community Operating Contribution(1) 30,702 26,294 4,408 16.8%
Operating contribution margin 34.2% 32.3% 1.9pts 5.9%
(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.
The Retirement Centers continued to produce strong revenue per unit gains while increasing occupancy from the solid levels at which they ended the third quarter. Average monthly revenue per occupied unit increased 10% during the quarter to $3,547 versus prior year 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, such as therapy. The number of occupied units increased 1%, with ending occupancy increasing from 95% to 96% versus the fourth quarter of 2003. The Retirement Centers ended the quarter with 97% occupancy in independent living, 96% in assisted living and 90% in skilled nursing. In the fourth quarter of 2004, the operating contribution for Retirement Centers exceeded $30 million for the first time, producing a 34% margin. This represented a $4.4 million increase or 17% increase over the prior year's fourth quarter. 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. operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: on the fourth quarter's revenue increase was 52%. The Retirement Centers continue to increase the monthly operating contribution per occupied unit hitting $1,213 per unit in the fourth quarter of 2004, a 16% improvement from the prior year's fourth quarter. The fourth quarter was in line with the full year results with Retirement Center revenue increasing by $34 million or 11% and operating contribution increasing by $18 million or 18% versus 2003. The full year results for the segment were driven by a 7% increase in average monthly revenue per occupied unit and a 3% average occupancy growth. Free-standing AL's Revenue from the Free-standing AL segment increased 18% to $25.5 million in 2004's fourth quarter compared with last year's fourth quarter revenue of $21.7 million. Occupancy for the Free-standing AL portfolio reached 89% at the end of the 2004 fourth quarter, up from 83% a year ago.
Free-standing AL ($ in 000's): Three Months Ended
------------------------------ December 31,
-------------- $ %
2004 2003 Change Change
--------------------------------
Revenues 25,506 21,697 3,809 17.6%
Community Operating Contribution(1) 7,536 5,132 2,404 46.8%
Operating contribution margin 29.5% 23.7% 5.8pts 24.5%
% Occupancy 89% 83% 6.0pts 7.2%
Note: Includes results of 31 Free-standing AL's and excludes two
non-consolidated Free-standing AL's held in joint ventures
The Free-standing AL portfolio produced a solid year-over-year increase in average monthly revenue per occupied unit of 10%, while continuing to make progress on occupancy levels. The quarter over quarter average occupied units grew by 7%, while the average monthly revenue per unit increased to $3,372. The monthly revenue per occupied unit in December 2004 was $3,417 per month, a 10% increase from $3,101 per month in December 2003. The revenue per occupied unit increase was due to rate increases, reduced discounts and 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 therapy services, also contributed significantly to the revenue and operating contribution increase for this segment. The operating contribution from the Free-standing AL segment increased 47%, or $2.4 million, in the fourth quarter of 2004 from the fourth quarter of 2003. As in prior periods, the Free-standing AL's added revenue without proportionally pro·por·tion·al adj. 1. Forming a relationship with other parts or quantities; being in proportion. 2. Properly related in size, degree, or other measurable characteristics; corresponding: increasing expenses and resulting in an incremental operating margin of 63% on incremental revenue. As such, the Free-standing AL segment continues to demonstrate the high incremental margin that results from increasing revenue in a portfolio that is currently 89% occupied. The fourth quarter performance for the segment was in line with the full year results, with revenue increasing by $13 million or 15% and operating contribution increasing by $9 million or 56% versus 2003. The full year results were driven by a 9% increase in average monthly revenue per occupied unit and a 6% average occupancy growth. Management Services The Company's management services business segment included management contracts on five Retirement Centers and two Free-standing AL's, with an aggregate capacity of 1,351 units. Management Services segment had an operating contribution of $.4 million in fourth-quarter 2004, a 26% increase versus the same prior-year period. 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 2004 fourth-quarter financial results. The call will be held on Thursday Thursday: see week. , March 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 Investor Relations Investor relations The process by which the corporation communicates with its investors. portion of the Company's web site. Additional Filings The Company's results are to be described in greater detail in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , which will be filed with the Securities and Exchange Commission. The Company also will file on or about March 3rd 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 Securities and Exchange Commission, which includes supplemental information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's fourth quarter 2004 results. These filings will also be available through the Investor Relations 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 operations 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 67 senior living communities in 14 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. 13,200 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 85% of the Company's revenues come from private pay sources. 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. STATEMENT 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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information made pursuant to the safe harbor 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 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. 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 and its strategy to improve financial and operating results. 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 entry-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 and (vii) the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2003 under the caption "Risk Factors" and in the Company's other filings with the Securities and Exchange Commission. 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
December 31, 2004 Increase(Decrease)
------------------- ----------------
2004 2003 $ %
--------- --------- -------- -------
Revenues:
Resident and health care $115,293 $103,087 $12,206 11.8%
Management services 443 351 92 26.2%
Reimbursed expenses 532 318 214 67.3%
--------- --------- -------- -------
Total revenues 116,268 103,756 12,512 12.1%
Operating expenses:
Community operating expenses 77,055 71,661 5,394 7.5%
General and administrative 7,569 6,241 1,328 21.3%
Lease expense 15,590 15,106 484 3.2%
Depreciation and amortization 9,200 6,149 3,051 49.6%
Amortization of leasehold
acquisition costs 736 776 (40) -5.2%
Reimbursed expenses 532 318 214 67.3%
--------- --------- -------- -------
Total operating expenses 110,682 100,251 10,431 10.4%
--------- --------- -------- -------
Operating income 5,586 3,505 2,081 59.4%
Other income (expense):
Interest expense (4,444) (9,685) (5,241) -54.1%
Interest income 794 537 257 47.9%
Gain (loss) on sale of assets (22) (17) 5 29.4%
Other 442 112 330 294.6%
--------- --------- -------- -------
Other expense, net (3,230) (9,053) (5,823) -64.3%
--------- --------- -------- -------
Earnings (loss) from
continuing operations
before income taxes,
and minority interest 2,356 (5,548) 7,904 142.5%
Income tax expense (300) 1,106 (1,406) -127.1%
--------- --------- -------- -------
Earnings (loss) from
continuing operations
before minority interest 2,656 (6,654) 9,310 139.9%
Minority interest in earnings of
consolidated subsidiaries, net of
tax (851) (85) 766 901.2%
--------- --------- -------- -------
Net income (loss) $1,805 $(6,739) $8,544 126.8%
========= ========= ======== =======
Basic earnings (loss) per share $0.07 $(0.36)
========= =========
Diluted earnings (loss) per share $0.07 $(0.36)
========= =========
Weighted average shares used for
basic earnings (loss) per share
data 24,977 18,962
Weighted average shares used for
diluted earnings (loss) per share
data 26,606 18,962
----------------------------------------------------------------------
December 31, December 31,
2004 2003
------------ ------------
Selected Balance Sheet Data:
Cash and cash equivalents $28,454 $17,192
Restricted cash, including
current portion 50,134 43,601
Working capital 14,864 8,603
Land, buildings and
equipment, net 496,297 533,145
Total assets 745,991 774,283
Long-term debt, capital and
lease financing obligation,
including current portion 335,082 371,535
Refundable portion of
entrance fees 79,148 72,980
Shareholders' equity 3,355 807
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Twelve months ended
December 31, Increase(Decrease)
---------------- ------------------
2004 2003 $ %
--------- --------- -------- ------
Revenues:
Resident and health care $443,443 $396,307 $47,136 11.9%
Management services 1,882 1,522 360 23.7%
Reimbursed expenses 2,284 2,148 136 6.3%
--------- --------- -------- ------
Total revenues 447,609 399,977 47,632 11.9%
Operating expenses:
Community operating expenses 300,797 280,808 19,989 7.1%
General and administrative 28,671 25,410 3,261 12.8%
Lease expense 61,244 47,664 13,580 28.5%
Depreciation and amortization 31,148 26,867 4,281 15.9%
Amortization of leasehold
acquisition costs 2,917 2,421 496 20.5%
Reimbursed expenses 2,284 2,148 136 6.3%
--------- --------- -------- ------
Total operating expenses 427,061 385,318 41,743 10.8%
--------- --------- -------- ------
Operating income 20,548 14,659 5,889 40.2%
Other income (expense):
Interest expense (31,477) (53,570) (22,093) -41.2%
Interest income 2,783 2,762 21 0.8%
Gain (loss) on sale of assets 41 23,153 (23,112) -99.8%
Other 447 132 315 238.6%
--------- --------- -------- ------
Other expense, net (28,206) (27,523) 683 2.5%
--------- --------- -------- ------
Loss from continuing
operations before income
taxes and minority interest (7,658) (12,864) 5,206 40.5%
Income tax expense 2,421 2,661 (240) -9.0%
--------- --------- -------- ------
Loss from continuing
operations before minority
interest (10,079) (15,525) 5,446 35.1%
Minority interest in earnings of
consolidated subsidiaries,
net of tax (2,406) (1,789) 617 34.5%
--------- --------- -------- ------
Net loss $(12,485) $(17,314) $4,829 27.9%
========= ========= ======== ======
Basic and diluted loss per share $(0.52) $(0.95)
========= =========
Weighted average shares used for
basic and diluted loss per share
data 23,798 18,278
========= =========
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