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