Exhibit 99.1
American Retirement Corporation to File First Quarter 10-Q and Upwardly Revises\
Net Income
NASHVILLE, Tenn.--(BUSINESS WIRE)--June 8, 2005--American
Retirement Corporation (NYSE: ACR), a leading national provider of
senior living housing and care, announced it will file today its first
quarter 2005 Form 10-Q. Also, the Company reported upwardly revised
results for the first quarter reflecting the effect of its previously
announced restatement of its financial statements.
On May 5, 2005, the Company announced estimated first quarter
results, subject to the completion of its accounting review. As
detailed in the Form 10-Q, the first quarter results when compared to
the earlier estimates are highlighted by the following:
-- Net income was $2.6 million for the first quarter of 2005,
revised from the $2.3 million previously announced.
-- Fully diluted earnings per share were revised upward from $.08
to $.09 for the quarter.
-- The revision to net income and earnings per share resulted
from an adjustment of the straight-line lease accounting for
certain leases related to the accounting methodology for
certain prepaid rent and certain lease escalation provisions.
The net impact of the adjustments resulted in a $302,000
reduction to previously announced lease expense.
-- Revenues and community expenses remained the same as
previously announced.
-- Additionally, "gain on sale of assets" was reclassified to be
a component of operating income as opposed to a component of
other income as previously announced. The reclassification has
no effect on net income or loss.
Chairman's Comments
Bill Sheriff, Chairman, President and CEO of the Company,
commented, "As we had previously reported, we had a very solid first
quarter. It is good to have any uncertainty caused by the delayed 10-Q
filing that resulted from the new accounting guidance finally
resolved. Consistent with the changes reflected in our 2004 Form
10-K/A, our first quarter 2005 earnings have increased from what we
had previously estimated. The lowered lease expense will continue for
the next several years, though in a diminishing amount. We still feel
very positive about the rest of the year and expect to report net
earnings per share of between $.46 to $.49 for 2005."
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. 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 of its residents. The
Company currently operates 67 senior living communities in 14 states,
with an aggregate unit capacity of approximately 13,300 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 84% 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 may be
deemed to constitute forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act
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. 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 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 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, (vi) the
Company's ability to obtain new financing or extend and/or modify
existing debt and (vii) the risk factors described in the Company's
Annual Report on Form 10-K/A for the year ended December 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 to any forward-looking statements contained herein to
reflect events and circumstances occurring after the date hereof 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
March 31, 2005 (Decrease)
--------------------- ---------------
2005 2004 $ %
-------- --------- ------ -------
(restated) (restated)
Revenues:
Resident and health care $117,689 $ 107,951 $9,738 9.0%
Management services 500 424 76 17.9%
Reimbursed expenses 802 768 34 4.4%
-------- --------- ------ -------
Total revenues 118,991 109,143 9,848 9.0%
Operating expenses:
Community operating expenses 79,337 73,852 5,485 7.4%
General and administrative 6,591 6,588 3 0.0%
Lease expense 15,510 14,821 689 4.6%
Depreciation and amortization 9,271 6,913 2,358 34.1%
Amortization of leasehold
acquisition costs 699 718 (19) -2.6%
Loss (gain) on sale of assets 12 (105) 117 -111.4%
Reimbursed expenses 802 768 34 4.4%
-------- --------- ------ -------
Total operating expenses 112,222 103,555 8,667 8.4%
-------- --------- ------ -------
Operating income 6,769 5,588 1,181 21.1%
Other income (expense):
Interest expense (3,557) (9,701) 6,144 63.3%
Interest income 720 602 118 19.6%
Other 139 111 28 25.2%
-------- --------- ------ -------
Other expense, net (2,698) (8,988) 6,290 70.0%
-------- --------- ------ -------
Earnings (loss) before
income taxes, and minority
interest 4,071 (3,400) 7,471 219.7%
Income tax expense 1,375 145 1,230 848.3%
-------- --------- ------ -------
Earnings (loss) before minority
interest 2,696 (3,545) 6,241 176.1%
Minority interest in earnings of
consolidated subsidiaries, net
of tax (71) (962) (891) -92.6%
-------- --------- ------ -------
Net income (loss) $ 2,625 $ (4,507) $7,132 158.2%
======== ========= ====== =======
Basic earnings (loss) per share $ 0.09 $ (0.21)
======== =========
Diluted earnings (loss) per
share $ 0.09 $ (0.21)
======== =========
Weighted average shares used for
basic earnings (loss) per share
data 28,899 21,258
Weighted average shares used for
diluted earnings (loss) per
share data 30,700 21,258
- --------------------------------------------------------------------
March 31, December 31,
2005 2004
-------- ---------
(restated)
Selected Balance Sheet Data:
Cash and cash equivalents $ 35,680 $ 28,454
Restricted cash, including
current portion 50,655 50,134
Refundable portion of
entrance fees, deferred
entrance fee income, and
tenant deposits included
in current liabilities 118,685 117,752
Working capital (83,363) (101,767)
Land, buildings and
equipment, net 514,542 496,297
Total assets 774,102 746,478
Long-term debt, capital
and lease financing
obligation,
including current portion 302,844 335,082
Shareholders' equity 59,413 5,701
CONTACT: American Retirement Corporation
Ross C. Roadman, 615-376-2412