Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information [Abstract]

Segment Information

24.       Segment Information

The Company has four reportable segments: retirement centers; assisted living; CCRCs; and management services. These segments were determined based on the way that the chief operating decision makers organize the Company’s business activities for making operating decisions and assessing performance.

During the year ended December 31, 2011, four communities moved between segments to more accurately reflect the underlying product offering of each segment.  The movement did not change the Company’s reportable segments, but it did impact the revenues and cost reported within each segment.

During the year ended December 31, 2009, eight communities moved between segments to more accurately reflect the underlying product offering of each segment.  The movement did not change the Company’s reportable segments, but it did impact the revenues and cost reported within each segment.

Retirement Centers.    Retirement center communities are primarily designed for middle to upper income senior citizens age 70 and older who desire an upscale residential environment providing the highest quality of service. The majority of the Company’s retirement center communities consist of both independent living and assisted living units in a single community, which allows residents to “age-in-place” by providing them with a continuum of senior independent and assisted living services.

Assisted Living.    Assisted living communities offer housing and 24-hour assistance with activities of daily life to mid-acuity frail and elderly residents.  Assisted living communities include both freestanding, multi-story communities and freestanding single story communities. The Company also operates memory care communities, which are freestanding assisted living communities specially designed for residents with Alzheimer’s disease and other dementias.

CCRCs.   CCRCs are large communities that offer a variety of living arrangements and services to accommodate all levels of physical ability and health. Most of the Company’s CCRCs have retirement centers, assisted living and skilled nursing available on one campus, and some also include memory care and Alzheimer’s units.

Management Services.    The Company’s management services segment includes communities operated by the Company pursuant to management agreements, where the controlling financial interest in the community is held by others.  Under the management agreements for these communities, the Company receives management fees as well as reimbursed expenses, which represent the reimbursement of certain expenses it incurs on behalf of the owners.

The accounting policies of the Company’s reporting segments are the same as those described in the summary of significant accounting policies. The following table sets forth certain segment financial and operating data (dollars in thousands):

	For the Years Ended December 31,
	2011		2010		2009
Revenue(1):
Retirement Centers	$	526,207	$	530,161	$	496,744
Assisted Living		1,063,155		1,023,785		925,917
CCRCs		702,395		653,727		593,688
Management Services(2)		166,161		72,862		83,925
	$	2,457,918	$	2,280,535	$	2,100,274
Segment Operating Income(3):
Retirement Centers	$	212,828	$	218,816	$	213,608
Assisted Living		367,691		361,926		324,969
CCRCs		202,667		189,001		175,495

	For the Years Ended December 31,
	2011		2010		2009
Management Services		9,517		3,914		4,703
		792,703		773,657		718,775

General and administrative (including non-cash stock-based compensation expense)(4)		144,249			130,032			132,848
Facility lease expense		274,858			270,905			272,096
Depreciation and amortization:
Retirement Centers		60,780			62,510			52,258
Assisted Living		83,275			92,914			83,144
CCRCs		86,051			86,266			80,594
Corporate and Management Services		38,400			50,651			55,939
(Gain) loss on sale of communities, net		—			(3,298	)		2,043
Asset impairment		16,892			13,075			10,073
Gain on acquisition		(1,982	)		―			―
Facility lease termination expense		—			4,608			―
Income from operations	$	90,180		$	65,994		$	29,780
Total interest income:
Retirement Centers	$	311		$	19		$	55
Assisted Living		18			17			41
CCRCs		2,298			970			870
Corporate and Management Services		911			1,232			1,388
	$	3,538		$	2,238		$	2,354
Total interest expense:
Retirement Centers	$	28,444		$	35,222		$	31,837
Assisted Living		58,453			63,591			58,855
CCRCs		35,640			38,871			33,326
Corporate and Management Services		19,641			8,038			10,591
	$	142,178		$	145,722		$	134,609
Total expenditures for property, plant and equipment, and leasehold intangibles:
Retirement Centers	$	46,344		$	23,079		$	11,949
Assisted Living		44,329			24,911			13,142
CCRCs		37,325			28,729			81,720
Corporate and Management Services		32,133			16,962			10,642
	$	160,131		$	93,681		$	117,453
	As of December 31,
		2011			2010			2009
Total assets:
Retirement Centers	$	1,061,815		$	1,132,934		$	1,109,806
Assisted Living		1,463,198			1,433,123			1,519,760
CCRCs		1,563,004			1,632,755			1,690,121
Corporate and Management Services		378,044			331,658			330,192
	$	4,466,061		$	4,530,470		$	4,649,879

___________

(1)   All revenue is earned from external third parties in the United States.

(2)   Management services segment revenue includes reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities.

(3)   Segment operating income is defined as segment revenues less segment operating expenses (excluding depreciation and amortization).  

(4)   Net of general and administrative costs allocated to management services reporting segment.