Exhibit 99.2
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RETIREMENT CENTER COMMUNITIES - FOURTH QUARTER 2004
($'s in thousands)
RETIREMENT CENTER COMMUNITIES: TOTAL
-------------------------------------
Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04
-------- -------- -------- -------- -------- -------- -------- --------
Resident and healthcare revenue $75,355 $76,673 $79,307 $81,390 $85,288 $85,578 $86,526 $89,787
Community operating expense 51,297 52,079 55,414 55,096 56,791 56,546 58,168 59,085
-------- -------- -------- -------- -------- -------- -------- --------
Community operating contribution 24,058 24,594 23,893 26,294 28,497 29,032 28,358 30,702
Community operating margin 31.9% 32.1% 30.1% 32.3% 33.4% 33.9% 32.8% 34.2%
Ending Occupancy 7,969 8,009 8,328 8,397 8,374 8,424 8,436 8,482
Ending Occupancy % 93.3% 93.4% 93.8% 94.6% 94.4% 95.0% 95.1% 95.7%
Average Monthly Occupancy 7,994 7,980 8,090 8,396 8,376 8,382 8,408 8,438
Monthly Revenue per unit $3,142 $3,203 $3,268 $3,231 $3,394 $3,403 $3,430 $3,547
Year to Year % Change 8.0% 6.3% 5.0% 9.8%
Monthly Operating Contribution per unit 1,003 1,027 984 1,044 1,134 1,155 1,124 1,213
Year to Year % Change 13.0% 12.4% 14.2% 16.2%
RETIREMENT CENTER COMMUNITIES: RENTAL COMMUNITIES
--------------------------------------------------
Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04
-------- -------- -------- -------- -------- -------- -------- --------
Resident and healthcare revenue $48,297 $48,920 $51,439 $52,853 $55,007 $55,249 $56,306 $57,387
Community operating expense 30,743 30,998 33,371 32,793 34,326 33,983 35,422 35,932
-------- -------- -------- -------- -------- -------- -------- --------
Community operating contribution 17,554 17,922 18,068 20,060 20,681 21,266 20,884 21,455
Community operating margin 36.3% 36.6% 35.1% 38.0% 37.6% 38.5% 37.1% 37.4%
Ending Occupancy 5,223 5,275 5,548 5,588 5,576 5,595 5,581 5,623
Ending Occupancy % 94.5% 94.7% 90.9% 95.3% 95.2% 95.5% 95.2% 96.0%
Average Monthly Occupancy 5,266 5,256 5,327 5,615 5,582 5,576 5,580 5,594
Monthly Revenue per unit $3,057 $3,102 $3,219 $3,138 $3,285 $3,303 $3,364 $3,420
Year to Year % Change 7.5% 6.5% 4.5% 9.0%
Monthly Operating Contribution per unit 1,111 1,137 1,131 1,191 1,235 1,271 1,248 1,278
Year to Year % Change 11.2% 11.8% 10.3% 7.4%
RETIREMENT CENTER COMMUNITIES: ENTRANCE FEE CCRCs
--------------------------------------------------
Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04
-------- -------- -------- -------- -------- -------- -------- --------
Resident and healthcare revenue $27,058 $27,753 $27,868 $28,537 $30,281 $30,329 $30,220 $32,400
Community operating expense 20,554 21,081 22,043 22,303 22,465 22,563 22,746 23,153
-------- -------- -------- -------- -------- -------- -------- --------
Community operating contribution 6,504 6,672 5,825 6,234 7,816 7,766 7,474 9,247
Community operating margin 24.0% 24.0% 20.9% 21.8% 25.8% 25.6% 24.7% 28.5%
Ending Occupancy 2,746 2,734 2,780 2,809 2,798 2,829 2,855 2,859
Ending Occupancy % 91.2% 90.8% 92.4% 93.3% 93.0% 94.0% 94.8% 95.0%
Average Monthly Occupancy 2,728 2,724 2,763 2,781 2,795 2,806 2,828 2,844
Monthly Revenue per unit $3,306 $3,396 $3,362 $3,420 $3,612 $3,603 $3,562 $3,797
Year to Year % Change 9.2% 6.1% 5.9% 11.0%
Monthly Operating Contribution per unit 795 816 703 747 932 923 881 1,084
Year to Year % Change 17.3% 13.0% 25.4% 45.0%
Net Cash Flow per unit (includes Net Resale Cash
Flow) 739 1,233 1,179 1,175 1,326 1,503 1,442 1,323
Entrance Fee Sales:
Total Entrance Fee (Independent Living) Units 2,066 2,066 2,066 2,066 2,066 2,066 2,066 2,064
Ending Occupancy % 92.5% 92.7% 94.2% 94.9% 95.4% 96.3% 97.1% 97.2%
Entrance Fee Sales (in units) 48 73 90 78 69 84 79 68
Entrance Fee Sales $6,055 $10,261 $11,482 $10,693 $10,257 $11,976 $11,931 $9,224
Refunds paid on Entrance Fee Terminations 2,836 3,685 3,851 3,267 2,433 2,868 3,181 3,192
Net Resale Cash Flow 3,219 6,576 7,631 7,426 7,824 9,108 8,750 6,032
NOTE: Includes Freedom Square for all periods presented.
The sales proceeds at entrance fee CCRCs provide a source of financing to
the community, thereby reducing the financing costs (interest or lease expense)
that it would otherwise incur. As a result of the residents paying an up- front
entrance fee, they pay a lower monthly service fee than they would pay at a
similar rental community without entrance fees. As a result, entrance fee
communities have lower operating margins (but lower non-operating financing
costs) than similar rental communities.
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
FREE-STANDING ASSISTED LIVING COMMUNITIES - FOURTH QUARTER 2004
($'s in thousands)
FREE-STANDING ASSISTED LIVING COMMUNITIES
-----------------------------------------
Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04
-------- -------- -------- -------- -------- -------- -------- --------
Resident and healthcare revenue $19,953 $20,705 $21,227 $21,697 $22,663 $23,532 $24,563 $25,506
Community operating expense 16,949 16,819 16,589 16,565 17,061 17,519 17,657 17,970
-------- -------- -------- -------- -------- -------- -------- --------
Community operating contribution 3,004 3,886 4,638 5,132 5,602 6,013 6,906 7,536
Community operating margin 15.1% 18.8% 21.8% 23.7% 24.7% 25.6% 28.1% 29.5%
Ending Occupancy 2,291 2,311 2,340 2,368 2,394 2,456 2,504 2,533
Ending Occupancy % 80.9% 81.5% 82.6% 83.4% 84.3% 86.5% 88.3% 89.3%
Average Monthly Occupancy 2,282 2,298 2,316 2,357 2,384 2,430 2,478 2,521
Monthly Revenue per unit $2,915 $3,003 $3,055 $3,068 $3,169 $3,228 $3,304 $3,372
Year to Year % Change 8.7% 7.5% 8.2% 9.9%
Monthly Operating Contribution per unit 439 564 668 726 783 825 929 996
Year to Year % Change 78.5% 46.3% 39.2% 37.3%
NOTE: Excludes two non-consolidated joint ventures.
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
FREE CASH FLOW Three Six Nine Twelve
months months months months
($'s in thousands) ended ended ended ended
March June Sept. Dec.
31, 30, 30, 31,
2004 2004 2004 2004
-------- -------- --------- ---------
Loss from continuing operations $(4,800) $(7,346) $(14,290) $(12,485)
Adjustments to reconcile loss from continuing operations
to net cash provided by operating activities:
Depreciation and amortization 8,432 16,114 28,726 38,765
Amortization of deferred entrance fee revenue / termination gains (4,526) (8,745) (12,737) (17,502)
Proceeds from entrance fee sales, net of refunds 7,553 16,748 25,305 31,190
Deferred income tax benefit - - (1,808) (484)
Amortization of deferred gain on sale-leaseback transactions (2,546) (5,078) (7,954) (10,902)
Amortization of deferred compensation - - 182 400
Minority interest in earnings of consolidated subsidiaries 962 1,825 1,555 2,406
Tax benefit from exercise of stock options 432
Losses from unconsolidated joint ventures 144 220 85 278
Gain on sale of assets (105) (111) (63) (41)
-------- -------- --------- ---------
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 32,057
Accrued but unpaid HCPI interest due at mezzanine loan maturity 1,988 4,074 4,074 4,074
Interest accretion on bond conversions 196 209 209 209
Adjustments for lease escalators and other accruals 1,689 3,362 5,012 6,537
Additions to land, building and equipment (4,665) (9,572) (14,288) (19,262)
Plus: Development expenditures (funded separately) 706 1,043 1,296 1,771
Distributions to minority interest holders (1,068) (2,225) (3,243) (4,215)
Principal reductions in master trust liability (322) (634) (940) (1,234)
Other adjustments for refinancing activities (see Note A) 5,509 4,185
-------- -------- --------- ---------
Free cash flow before principal payments 3,638 9,884 16,630 24,122
Principal payments on long-term debt, net of amounts paid
as part of a refinancing transaction (2,506) (5,033) (9,577) (14,452)
-------- -------- --------- ---------
Free cash flow $1,132 $4,851 $7,053 $9,670
======== ======== ========= =========
Quarter Ended
-------------------------------------
March June Sept. Dec.
31, 30, 30, 31,
2004 2004 2004 2004
Income (loss) from continuing operations $(4,800) $(2,546) $(6,944) $1,805
Adjustments to reconcile income (loss) from continuing operations
to net cash provided by operating activities:
Depreciation and amortization 8,432 7,682 12,612 10,039
Amortization of deferred entrance fee revenue / termination gains (4,526) (4,219) (3,992) (4,765)
Proceeds from entrance fee sales, net of refunds 7,553 9,195 8,557 5,885
Deferred income tax benefit - - (1,808) 1,324
Amortization of deferred gain on sale-leaseback transactions (2,546) (2,532) (2,876) (2,948)
Amortization of deferred compensation, restricted stock - - 182 218
Minority interest in earnings of consolidated subsidiaries 962 863 (270) 851
Tax benefit from exercise of stock options - - - 432
Losses from unconsolidated joint ventures 144 76 (135) 193
(Gain) loss on sale of assets (105) (6) 48 22
-------- -------- --------- ---------
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 13,056
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 1,525
Additions to land, building and equipment (4,665) (4,907) (4,716) (4,974)
Plus: Development expenditures (funded separately) 706 337 253 475
Distributions to minority interest holders (1,068) (1,157) (1,018) (972)
Principal reductions in master trust liability (322) (312) (306) (294)
Other adjustments for refinancing activities (see Note A) - - 5,509 (1,324)
-------- -------- --------- ---------
Free cash flow before principal payments 3,638 6,246 6,746 7,492
Principal payments on long-term debt, net of amounts paid
as part of a refinancing transaction (2,506) (2,527) (4,544) (4,875)
-------- -------- --------- ---------
Free cash flow $1,132 $3,719 $2,202 $2,617
======== ======== ========= =========
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, $2.5 million of current tax expense
and the deferred tax impact of the transaction.
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
SAME COMMUNITY RESULTS - FOURTH QUARTER 2004
($'s in thousands)
INCLUDING ENTRANCE FEE COMMUNITIES:
-----------------------------------
Three months ended December 31,
-------------------------------- $ %
2004 2003 Change Change
-------------- ---------------- --------- -----------
Resident & Healthcare revenue $115,293 $103,086 $12,207 11.8%
Community operating expense 77,055 71,661 5,394 7.5%
-------------- ---------------- --------- -----------
Community operating contribution $38,238 $31,425 6,813 21.7%
Community operating margin 33.2% 30.5%
# 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. Operating Contribution/unit 1,163 995 168 16.9%
EXCLUDING ENTRANCE FEE COMMUNITIES:
- ------------------------------------
Three months ended December 31,
-------------------------------- $ %
2004 2003 Change Change
-------------- ---------------- --------- -----------
Resident & Healthcare revenue $82,893 74,550 $8,343 11.2%
Community operating expense 53,903 49,358 4,545 9.2%
-------------- ---------------- --------- -----------
Community operating contribution $28,990 $25,192 3,798 15.1%
Community operating margin 35.0% 33.8%
# Locations 53 53
Avg. Occupancy 93.3% 89.1%
Avg. Occupied Units 8,115 7,748 367 4.7%
Avg. Mo. Revenue/unit $3,405 $3,207 $198 6.2%
Avg. Mo. Operating Contribution/unit 1,191 1,084 107 9.9%
* This table sets forth certain selected financial and operating data on a
Same Community basis. "Same Community basis" refers to communities that were
owned and/or leased by the company throughout each of the periods being
compared.
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
REVENUE - FOURTH QUARTER 2004
($'s in thousands)
Three months Three months
ended December ended December
31, 31,
---------------- ----------------
2004 % 2003 %
--------- ------ --------- ------
COMPOSITION
- -----------
Revenues:
Retirement Centers
Independent living $37,160 32.0% $34,800 33.5%
Assisted living 14,703 12.6% 13,840 13.3%
Skilled Nursing 19,760 17.0% 19,188 18.5%
Ancillary services, including Innovative Senior Care (therapy and wellness programs) 15,015 12.9% 11,400 11.0%
Amortization of Deferred Entrance Fee Revenue 3,149 2.8% 2,161 2.1%
--------- ------ --------- ------
89,787 77.3% 81,389 78.4%
Free-Standing Assisted Living
Assisted living 22,766 19.6% 19,927 19.2%
Ancillary services, including Innovative Senior Care (therapy and wellness programs) 2,740 2.3% 1,770 1.7%
--------- ------ --------- ------
25,506 21.9% 21,697 20.9%
Total Resident and Healthcare Revenue 115,293 99.2% 103,086 99.4%
Management and Contract Services 443 0.4% 352 0.3%
Reimbursed Expenses 532 0.4% 318 0.3%
--------- ------ --------- ------
975 0.8% 670 0.6%
--------- ------ --------- ------
Total Revenues $116,268 100.0% $103,756 100.0%
BY PAYOR
- --------
Private Pay $98,189 84.5% $89,892 86.7%
Medicare 15,244 13.1% 11,254 10.8%
Medicaid 2,835 2.4% 2,610 2.5%
--------- ------ --------- ------
Total $116,268 100.0% $103,756 100.0%
AMERICAN RETIREMENT CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
OTHER STATISTICS - FOURTH QUARTER 2004
UNIT CAPACITY BY COMMUNITY TYPE
- -------------------------------
At December 31, 2004
---------------------
Locations Capacity
---------- ----------
Rental Retirement Centers:
Owned-100% 2 272
Leased 20 5,585
Managed - other 3 713
---------- ----------
25 6,570
Entrance Fee Retirement Centers:
Owned-90% 2 712
Leased 3 1,562
Managed-Freedom Square 1 735
Managed-other 2 474
---------- ----------
8 3,483
Free-Standing AL's:
Owned-100% 9 868
Owned-Joint Venture 2 164
Leased 21 1,878
Leased-Joint Venture 1 92
---------- ----------
33 3,002
All Communities:
Owned-100% 13 1,852
Owned-Joint Venture 2 164
Leased 44 9,025
Leased-Joint Venture 1 92
Managed-Freedom Square 1 735
Managed-other 5 1,187
---------- ----------
66 13,055
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.