American Retirement Reports Improved Second Quarter/Six Months Results.Business Editors 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.--(BUSINESS WIRE)--Aug. 6, 2003 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 second quarter 2003 results. Highlights of the quarter were: -- Revenue increased by $8.8 million - an 11% increase - over the prior year period. -- The Company produced its second consecutive quarter of positive 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. with a $14.7 million improvement over the second quarter of 2002. -- On a same community basis (communities that have been held for five or more quarters), revenue increased by 10%, community operating contribution increased by 29%, and 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 by 3%. -- Occupancy in 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. portfolio increased from 74% to 81% over the last year, while the Company's portfolio of large retirement communities ("Retirement Centers") remained at 93%. -- The Company's free-standing assisted living communities ("Free-standing AL's") increased community revenue by $3.6 million and community operating contribution (resident and healthcare revenues minus community 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. ) by $2.6 million for the second quarter of 2003 over the same period of 2002 - driven by a 9% increase in occupancy and a 6.5% increase in revenue per unit. -- The Company's five consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: entry fee communities benefited from 55 apartment sales, resulting in $8.4 million of gross entry fee receipts, or $5.2 million net of refunds paid to prior residents. -- Management services achieved $1.3 million in operating contribution versus $.6 million for the prior year comparable period. "The Company continues to make significant progress even in the face of difficult market conditions. We improved our bottom line by $1.5 million from last quarter. We have an unabated un·a·bat·ed adj. Sustaining an original intensity or maintaining full force with no decrease: an unabated windstorm; a battle fought with unabated violence. record of growing the Company's revenue and are showing the results of filling the capacity that was added over the last three years. This 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 continues to produce higher contribution margins. We also saw the free-standing assisted living business becoming more stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. in many of our markets, which allows for reduced use of price incentives and higher rates," 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. Bill Sheriff said. OPERATING RESULTS The Company operates principally in three business segments: (1) large retirement centers (Retirement Centers), (2) Free-standing assisted living residences (Free-standing AL's), and (3) Management services. The Company currently operates 26 Retirement Centers (with an aggregate capacity of 7,844 units), which provide a continuum Continuum (pl. -tinua or -tinuums) can refer to:
"We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." assisted living communities that are not located on a Retirement Center campus, most of which also provide some 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. Free-standing AL's are much smaller than Retirement Centers. The Management services segment includes fees from management agreements for communities owned by third parties, and reimbursed expense revenues together with associated expenses. Of the eight management agreements, the Company managed six Retirement Centers and two Free-standing AL's for third parties. Revenue The Company's total revenue increased for the second quarter, growing by $8.8 million to $90.6 million, an increase of 11% when compared to second quarter 2002. The most significant drivers for the quarter's revenue increase were increased occupancy in the Company's Free-standing AL's, increased billed revenue per unit, increased revenues from 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 such as therapy and increased revenue from management services. Following is a summary of the Company's total revenue by operating segment for the three months ended June June: see month. 30, 2003 and 2002 (in thousands):
Three Months Ended
---------------------------------
June 30, June 30, $ %
2003 2002 Change Change
-------- -------- ------- ------
Revenues:
Retirement Centers $68,652 $64,140 $4,512 7.0%
Free-standing AL's 19,378 15,812 3,566 22.6%
Management Services 2,594 1,856 738 39.8%
-------- -------- ------- ------
Total $90,624 $81,808 $8,816 10.8%
======== ======== ======= ======
Segment Operating Contribution The Company evaluates the performance of its business segments, primarily, based upon their operating contributions, which the Company defines as revenue for the segment less operating expenses associated with that segment. By achieving a higher occupancy, increasing rates, improving the performance of the managed communities and increasing ancillary revenue Ancillary Revenue Revenue generated from goods or services that differ from or enhance the main services or product lines of a company. By introducing new products and services or using existing products to branch into new markets, companies create additional opportunities for , the Company's three business segments achieved an aggregate of $5.7 million improvement over the same prior period as shown below:
Operating Contribution by Segment Three Months Ended
--------------------------------
June 30, June 30, $ %
2003 2002 Change Change
-------- -------- ------- ------
Community Operating Contribution:
Retirement Centers $23,106 $20,650 $2,456 12%
Free-standing AL's 3,785 1,186 2,599 219%
Management Services Operating
Contribution 1,314 620 694 112%
SEGMENT RESULTS Retirement Centers The 26 Retirement Centers produced a 7% increase in community revenue for the second quarter of 2003 when compared to the second quarter of 2002. The increase in revenue was the result of increased occupancy, rate increases, and increased ancillary services provided by the Company. Continuing its quarterly trend, the Retirement Centers achieved a $1.4 million revenue increase, or 2% better than the first quarter of 2003. Over the last three years, revenue from this segment has grown by a compounded 14% per year. The operating contribution of the Retirement Centers increased by $.8 million from the first quarter of 2003, a 4% increase. Over the last three years, Retirement Center operating contribution also grew by a compounded 14% per year. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a difficult selling environment during the second quarter, the Retirement Centers maintained their historically high occupancy levels. At June 30, 2003, occupancy at the Retirement Centers was at 93%, with 95% occupancy in independent living, 93% in assisted living and 91% in skilled nursing. Five of the Company's consolidated Retirement Centers charge entry fees to new independent living residents. The five entry fee communities contain over 1,700 independent living apartments with entrance fees that have a current aggregate market value (based on current sales prices) of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $269 million (for sold and unsold units), or an average of $158,000 per unit. With the success of our marketing program, the current unsold apartments available for sale at the end of June dropped to an aggregate potential entrance fee sale value of $21.6 million from $24.2 million a year ago. In the second quarter, the Company sold 55 entry-fee apartments in its consolidated Retirement Centers, producing $8.4 million of proceeds or $5.2 million after refunds to previous residents. The second quarter was a challenging period for entrance fee sales given the many uncertainties associated with the general economic conditions in 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. . Nonetheless, the Company achieved one of its highest entry-fee sales quarters. Free-standing AL's The Company currently operates 31 Free-standing AL's, including three communities which have been segregated as being held for sale and as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Occupancy for the Free-standing AL portfolio reached 81% at the end of the second quarter, up from 74% a year ago. Currently, 19 of the 31 Free-standing AL's are at greater than 80% occupancy and 9 are at greater than 90% occupancy. The following table presents quarterly Free-standing AL operating results for the three months ended June 30, 2003 and 2002 (in thousands):
Three Months Ended
------------------------------------
June 30, June 30, $ %
-------- -------- ----------- ------
Free-standing AL's: 2003 2002 Change Change
-------- -------- ----------- ------
Revenues $19,378 $15,812 $3,566 22.6%
Community Operating
Contribution $3,785 $1,186 $2,599 219.1%
% Occupancy 82% 75% 7pts 9%
Note: Excludes three Free-standing AL's held for sale and as
discontinued operations
Compared to the prior quarter, revenue from the Free-standing AL's (excluding the three communities held for sale) achieved a $.6 million revenue increase, a 3% rise. Over the last three years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time community revenue for this segment has grown from $1.7 million to $19.4 million. This improvement was driven primarily by occupancy and higher revenue per unit. Average revenue per unit increased from $2,946 per month to $3,030 per month during the quarter as rate increases were implemented and fewer discounts were given. The operating contribution of the Free-standing AL portfolio increased by $.8 million from the first quarter of 2003, a 26% increase. Over the last three years, the consolidated operating contribution for this segment has grown from a loss of $.4 million to a positive operating contribution of $3.8 million. Management Services The Company manages six additional Retirement Centers, with an aggregate capacity of 2,098 units, under various forms of management agreements, which are included in the management services segment. The Company also manages two unconsolidated joint-venture Free-standing AL's that are included in this segment. The management service revenue from these eight communities was $1.3 million in the second quarter of 2003. This represents an increase of $854,000 from the first quarter of 2003 resulting mainly from improvements in operating results at the managed communities. In addition to the five owned and leased entry-fee communities described above, the Company receives the cash flow benefit, including the net resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. from entry-fee sales, through its management agreement, of a sixth entry-fee Retirement Center. That community has 362 apartments with 14 apartments currently available. For the second quarter, this community sold 18 apartments for a net cash flow of approximately $1.4 million. SAME COMMUNITY RESULTS Another measure of the Company's operating performance is its Same Community Results - which represent the results of communities that have been held for five or more quarters. The Company's Same Community Results showed a revenue increase of 10%, a community operating contribution increase of 29%, and an increase in occupancy from 88% to 91%, during the second quarter of 2003 versus the second quarter of 2002. While average monthly revenue per unit increased by 6%, average expense per unit was unchanged. The Company's Same Community Results, which exclude the effects of expansions and acquisitions within the past year, included 53 communities for both periods. OPERATING INCOME (LOSS) and NET LOSS The Company produced its second consecutive quarter of positive operating income and the largest since the first quarter of 2000 when many of the Free-standing AL's were first opened. The components of operating income are as follows:
Operating Income (Loss): Three Months Ended
-----------------------------------
June 30, June 30, $ %
2003 2002 Change Change
-------- ---------- -------- ------
Community Operating Contribution
-Retirement Centers $23,106 $20,650 $2,456 12%
Community Operating Contribution
- Free-standing AL's 3,785 1,186 2,599 219%
Management Services Operating
Contribution 1,314 620 694 112%
G&A (6,837) (6,554) 283 4%
Lease expense(1) (10,207) (17,865) (7,658) (43%)
Depreciation and amortization(2) (6,866) (8,419) (1,553) (18%)
-------- ---------- -------- ------
Operating (loss) income $4,295 $( 10,382) $14,677 141%
======== ========== ======== ======
(1) Lease expense for the three months ended June 30, 2002 includes
$7.0 million of additional lease expense related to terminated
synthetic leases prior to the sale lease-back transactions as part
of the Company's refinancing activities.
(2) Depreciation and amortization expense for the three months ended
June 30, 2002 includes $2.3 million of additional amortization
expense related to terminated synthetic leases prior to sale
lease-back transactions as part of the Company's refinancing
activities.
While the Company produced increased operating income during the second quarter, the Company experienced a net loss for the quarter of $9.5 million or $.53 per 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. share, compared to a loss of $19.4 million or $1.12 per diluted share for the same prior year period. CASH FLOW Net cash and cash equivalents provided by continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were $1.1 million for the second quarter of 2003. As shown below, the free cash flow of the Company was a negative $5.4 million. Excluding debt principal payments, the Company's cash flow was a positive $710,000 in the second quarter versus a negative $2.6 million in the first quarter. Free cash flow is defined as net cash and cash equivalents provided or used by continuing operations, adjusted by working capital changes, certain noncash accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. , capital expenditures, and payments of principal and minority interest distributions. "The Company achieved a positive cash flow in the quarter before the repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of $6.2 million of debt for the first time in several years. As we have stated, improving cash flow and reducing our debt level is one of our main focus areas currently. In fact, the $6.2 million of debt repayment included $3.4 million of pay-downs beyond standard principal amortization," said 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. FURTHER INFORMATION Conference Call Information American Retirement Corporation will hold a conference call with Bill Sheriff, Chairman, President and Chief Executive Officer, and Bryan Richardson, Chief Financial Officer, to discuss the Company's second quarter financial results. The call will be held on Thursday Thursday: see week. , August 7, 2003 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 web cast. In addition, the call will be archived on the Company's website (click on the broadcast icon). Any material information 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 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 described in greater detail in the Company's Form 10-Q Form 10-Q See 10-Q. , which will be filed with the Securities and Exchange Commission on or about August 8th, 2003. The Company also will file on or about August 6th 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 second quarter 2003 results. These filings will 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 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 communities, free-standing assisted living communities, 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 was inspired by the vision of its founders, Dr. Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs F. Frist v. t. 1. To sell upon credit, as goods. , Sr. and Jack C. Massey Mas·sey , (Charles) Vincent 1887-1967. Canadian politician who served as high commissioner for Canada in Great Britain (1935-1946) and as governor-general (1952-1959). , to enhance the lives of seniors by providing 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 65 senior living communities in 14 states, with an aggregate unit capacity of approximately 12,900 units and resident capacity of approximately 14,500. The Company owns 21 communities, leases 36 communities, and manages eight communities pursuant to management agreements. Approximately 90 percent 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 financial condition and significant leverage, including the fact that its cash flow does not currently cover its obligations, (ii) the possibility of future defaults under the Company's debt or lease agreements, (iii) 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), (iv) the Company's ability to improve the Company's results of operations, increase cash flow and reduce expenses, (v) the Company's ability to sell the assets that it currently has for sale, (vi) the risks associated with the adverse market conditions of the senior housing industry and the United States economy in general, (vii) 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. , (viii) 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,(ix) the risk that the Company's equity deficit may adversely effect the Company's business and/or prospects and (x) the risk factors described in the Company's Annual Report on 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. for the year ended December December: see month. 31, 2002 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 Increase
June 30, (Decrease)
------------------ --------------
2003 2002 $ %
-------- --------- ------- ------
Revenues:
Resident and health care $88,030 $79,952 $8,078 10.1%
Management services 1,314 620 694 111.9%
Reimbursed expenses 1,280 1,236 44 3.6%
-------- --------- ------- ------
Total revenues 90,624 81,808 8,816 10.8%
Operating expenses:
Community operating expenses 61,139 58,116 3,023 5.2%
General and administrative 6,837 6,554 283 4.3%
Lease expense 10,207 17,865 (7,658) -42.9%
Depreciation and amortization 6,336 5,381 955 17.7%
Amortization of leasehold
acquisition costs 530 3,038 (2,508) -82.6%
Reimbursed expenses 1,280 1,236 44 3.6%
-------- --------- ------- ------
Total operating expenses 86,329 92,190 (5,861) -6.4%
-------- --------- ------- ------
Operating income (loss) 4,295 (10,382) 14,677 141.4%
Other income (expense):
Interest expense (13,977) (9,767) 4,210 -43.1%
Interest income 868 1,268 (400) -31.5%
Gain (loss) on sale of assets 79 (27) (106) 392.6%
Other 281 233 48 20.6%
-------- --------- ------- ------
Other expense, net (12,749) (8,293) 4,456 -53.7%
-------- --------- ------- ------
Loss from continuing
operations before income
taxes, minority interest (8,454) (18,675) 10,221 54.7%
Income tax expense 64 122 (58) -47.5%
-------- --------- ------- ------
Loss from continuing
operations before minority
interest (8,518) (18,797) 10,279 54.7%
Minority interest in earnings of
consolidated subsidiaries, net of
tax (629) - (629) -
-------- --------- ------- ------
Loss from continuing
operations (9,147) (18,797) 9,650 51.3%
Discontinued operations, net of tax (337) (621) 284 -45.7%
-------- --------- ------- ------
Net loss $(9,484) $(19,418) $9,934 51.2%
======== ========= ======= ======
Diluted loss per share $(0.53) $(1.12)
======== =========
Weighted average shares used for
diluted loss per share data 18,051 17,277
======== =========
----------------------------------------------------------------------
June 30, Dec. 31,
2003 2002
-------- ---------
Selected Balance Sheet Data:
Cash and cash equivalents $12,369 $18,244
Working capital 6,407 15,725
Land, buildings and
equipment, net 562,143 578,804
Total assets 804,054 839,998
Long-term debt, including
current portion 524,752 540,651
Refundable portion of
entrance fees 61,547 60,066
Shareholders' equity (4,471) 12,907
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Six months ended Increase
June 30, (Decrease)
------------------- ---------------
2003 2002 $ %
--------- --------- -------- ------
Revenues:
Resident and health care $174,082 $154,482 $19,600 12.7%
Management services 1,774 685 1,089 159.0%
Reimbursed expenses 2,972 2,687 285 10.6%
--------- --------- -------- ------
Total revenues 178,828 157,854 20,974 13.3%
Operating expenses:
Community operating expenses 121,876 111,191 10,685 9.6%
General and administrative 12,818 12,474 344 2.8%
Lease expense 20,290 50,463 (30,173) -59.8%
Depreciation and amortization 12,490 10,365 2,125 20.5%
Amortization of leasehold
acquisition costs 1,048 10,124 (9,076) -89.6%
Reimbursed expenses 2,972 2,687 285 10.6%
--------- --------- -------- ------
Total operating expenses 171,494 197,304 (25,810) -13.1%
--------- --------- -------- ------
Operating income (loss) 7,334 (39,450) 46,784 118.6%
Other income (expense):
Interest expense (26,776) (20,165) 6,611 -32.8%
Interest income 1,564 2,928 (1,364) -46.6%
Gain (loss) on sale of assets 21 (53) (74) 139.6%
Other 455 830 (375) -45.2%
--------- --------- -------- ------
Other expense, net (24,736) (16,460) 8,276 -50.3%
--------- --------- -------- ------
Loss from continuing operations
before income taxes,
minority interest (17,402) (55,910) 38,508 68.9%
Income tax expense 194 219 (25) -11.4%
--------- --------- -------- ------
Loss from continuing
operations before
minority interest (17,596) (56,129) 38,533 68.7%
Minority interest in earnings of
consolidated subsidiaries, net of
tax (1,241) - (1,241) -
--------- --------- -------- ------
Loss from continuing
operations (18,837) (56,129) 37,292 66.4%
Discontinued operations, net of tax (1,617) (1,360) (257) 18.9%
--------- --------- -------- ------
Net loss $(20,454) $(57,489) $37,035 64.4%
========= ========= ======== ======
Diluted loss per share $(1.16) $(3.33)
========= =========
Weighted average shares used for
diluted loss per share data 17,697 17,277
========= =========
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
FREE CASH FLOW
(UNAUDITED)
(in thousands)
Incremental
Six Three Three
Months Months Months
Ended Ended Ended
June 30, March 31, June 30,
2003 2003 2003
Net cash and cash equivalents (used)
/provided by continuing operations $(2,203) $(3,346) $1,143
Adjustments for Free Cash Flow:
Changes in assets and liabilities,
exclusive of acquisitions
and sale leaseback transactions (798) 586 (1,384)
Accrued but unpaid HCPI interest
due at loan maturity 6,378 3,120 3,258
Adjustments for lease and
derivative accruals 1,230 476 754
Additions to land, building and
equipment (4,614) (2,200) (2,414)
Distributions to minority interest
holders (613) (312) (301)
Principal reductions in master
trust liability (703) (357) (346)
Accrual of contingent earnouts (594) (594) -
--------- --------- ------------
Free cash flow before principal
payments (1,917) (2,627) 710
Principal payments on long-term
debt (9,020) (2,866) (6,154)
--------- --------- ------------
Free cash flow $(10,937) $(5,493) $(5,444)
========= ========= ============
Given the Company's high 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.
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