<PAGE>
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission File Number 1-8195
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A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
MANOR CARE, INC. 1997 QUALIFIED RETIREMENT SAVINGS & INVESTMENT PLAN
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B. Name of the issuer of the securities held pursuant to the plan and the
address of its principle executive office:
MANOR CARE, INC.
11555 Darnestown Road, Gaithersburg, Maryland 20878
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I N D E X
Page
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Report of Independent Public Accountants 1
Statements of Net Assets Available for Plan Benefits 2
as of December 31, 1995 and 1994
Statement of Changes in Net Assets Available 3
for Plan Benefits with fund information for the
year ended December 31, 1995
Notes to Financial Statements 4-7
Item 27a-Schedule of Assets Held 8
for Investment Purposes as of December 31, 1995
Item 27b-Schedule of Loans or Fixed Income Obligations *
Item 27c-Schedule of Leases in Default or Classified as
Uncollectible *
Item 27d-Schedule of Reportable Transactions 9
for the year ended December 31, 1995
Item 27e-Schedule of Non-Exempt Transactions *
* Not applicable
<PAGE>
Report of Independent Public Accountants
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To the Administrator of the Manor Care, Inc. Retirement Savings and Investment
Plan:
We have audited the accompanying statements of net assets available for benefits
of the Manor Care, Inc. Retirement Savings and Investment Plan (the "Plan") as
of December 31, 1995 and 1994, and the related statement of changes in net
assets available for Plan benefits for the year ended December 31, 1995. These
financial statements and schedules referred to below are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for Plan benefits as of December
31, 1995 and 1994, and the changes in its net assets available for Plan benefits
for the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Washington, DC
August 8, 1996
1
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MANOR CARE, INC.
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RETIREMENT SAVINGS AND INVESTMENT PLAN
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STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
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AS OF DECEMBER 31, 1995 AND 1994
--------------------------------
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Investments
At fair value--
Shares of registered
investment companies:
Vanguard US Treasury Money
Market Fund $ 25,691,125 $ 23,656,771
Vanguard Wellington
Balanced Fund 29,487,660 19,822,042
T. Rowe Price International Stock Fund 14,646,866 11,747,809
Janus Fund 25,735,150 17,380,235
T. Rowe Price Stable Value Fund 13,340,763 11,622,594
Manor Care, Inc. Stock 8,837,698 4,994,755
Participants loans receivable 3,538,461 2,585,343
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Total Investments 121,277,723 91,809,549
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Receivables:
Employer's contribution 5,789,726 5,105,361
Participants' contribution 250,000 200,000
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Total receivables 6,039,726 5,305,361
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Net assets available for Plan benefits $127,317,449 $ 97,114,910
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</TABLE>
The accompanying notes are an integral part of these statements.
2
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Manor Care, Inc.
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Retirement, Savings and Investment Plan
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Statement of Changes in Net Assets Available for Plan Benefits with Fund
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Information
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For the Year Ended December 31, 1995
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<TABLE>
<CAPTION>
Vanguard Vanguard
Wellington U.S. Treasury T Rowe T Rowe Price
Balanced Janus Money Market Stable International
Fund Fund Fund Value Fund Stock Fund
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning of year $19,822,042 $17,380,235 $23,656,771 $11,622,594 $11,747,809
Additions:
Contributions - - - 8,346 -
Employee contributions 3,709,230 3,265,957 3,366,753 1,985,380 2,225,020
Employer contributions 673,617 531,628 683,740 466,405 377,213
Investment income/(loss) 1,500,681 1,400,293 1,334,506 769,140 544,271
Unrealized gain 5,395,309 4,039,362 - - 976,041
Interfund transfers 666,720 834,128 401,192 191,892 612,871
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11,945,557 10,071,368 5,786,191 3,421,163 4,735,416
Deductions:
Withdrawals & transfers 2,279,939 1,716,453 3,751,837 1,702,994 1,836,359
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Increase in net assets 9,665,618 8,354,915 2,034,354 1,718,169 2,899,057
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Market value at end of year $29,487,660 $25,735,150 $25,691,125 $13,340,763 $14,646,866
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
Manor
Care, Inc. Loan Eliminations Total
Stock Fund Cash & Accruals 1995
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<S> <C> <C> <C> <C> <C>
Beginning of year $4,994,755 $2,585,343 $0 $5,305,361 $97,114,910
Additions:
Contributions - - - - 8,346
Employee contributions - - - 50,000 14,602,340
Employer contributions 2,355,640 - - 701,483 5,789,726
Investment income/(loss) 186,069 148,201 23,393 - 5,906,554
Unrealized gain 1,747,102 - - - 12,157,814
Interfund transfers 5,685 2,052,003 262 (4,764,753) -
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4,294,496 2,200,204 23,655 (4,013,270) 38,464,780
Deductions:
Withdrawals & transfers 451,553 1,247,086 23,655 (4,747,635) 8,262,241
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Increase in net assets 3,842,943 953,118 - 734,365 30,202,539
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Market value at end of year $8,837,698 $3,538,461 - $6,039,726 $127,317,449
=======================================================================
</TABLE>
The accompanying notes are an integral part of this statement.
3
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MANOR CARE, INC.
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RETIREMENT SAVINGS AND INVESTMENT PLAN
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NOTES TO FINANCIAL STATEMENTS
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FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
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1. PLAN DESCRIPTION
General
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The Manor Care, Inc. Employee Stock Ownership, Profit-Sharing and
Retirement Plan (the "Prior Plan") became effective June 1, 1984. Effective
January 1, 1992, the Prior Plan was amended and restated as the Manor Care,
Inc. Retirement Savings and Investment Plan (the "Plan"). The Plan includes
all eligible employees of Manor Care, Inc. and subsidiaries (the
"Company"). The Plan's trustee is Chemical Bank.
Contributions
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Each year, participants may contribute up to 15 percent of pretax annual
compensation, as defined in the Plan. The Company contributes to the Plan
up to a dollar-for-dollar match of an employee's pretax contribution (up to
6% of the employee's gross earnings) which, in the aggregate, is not to
exceed 6% of "net profit" of the Company. "Net profit" is defined in the
Plan as the total net income of the Company adjusted to exclude
contributions made under the Plan, provision for income taxes, capital
gains and losses and income or loss which is determined to be of a
nonrecurring nature. Such determination shall be made solely by the
administrator of the Plan.
Upon enrollment in the Plan, a participant may direct employee
contributions in 10 percent increments in any of five investment options:
Vanguard Wellington Balanced Fund, Vanguard US Treasury Money Market Fund,
Janus Fund, T. Rowe Price Stable Value Fund and T. Rowe Price International
Stock Fund. Participants may also elect to receive up to 50 percent of the
Company match in Manor Care, Inc. stock.
Under the contribution formula described above, the required Company
contributions for the year ended December 31, 1995 and 1994 were $5,789,726
and $5,105,361, respectively, for the matching contribution. Company
contributions were reduced for forfeitures in the amount of $184,886 in
1995 and $246,000 in 1994.
4
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Participant Accounts
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Each participant's account is credited with the participant's contribution
and the Company's matching contribution. Forfeited balances of terminated
participants' nonvested accounts are used to reduce future Company
contributions. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
Eligibility and Vesting
-----------------------
Employees are eligible to participate in the Plan after completing 1,000
hours during one year of service and attaining age 21. Participants vest in
Plan earnings and Company matching contributions at the rate of 20% per
year after the first three years and are fully vested after seven years
participation in the Plan.
Forfeitures
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Forfeitures will be used to reduce future employer contributions.
Administration of the Plan
--------------------------
The Plan is administered by the Company's Human Resources Department. The
costs of administration are principally borne by the Company. Expenses
related to records administration services and trustee services were paid
by the Company in the amounts of $609,600 and $107,779 for the years ended
December 31, 1995 and 1994. All other trustee and other reasonable expenses
are provided by the Plan.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
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The financial statements of the Plan are prepared under the accrual method
of accounting.
Investment Valuation and Income Recognition
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The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices which represent the
net asset value of shares held by the Plan at year-end. The Company stock
is valued at its quoted market price. Participant loans receivable are
valued at cost which approximates fair value.
5
<PAGE>
3. PLAN TERMINATION
Upon termination of the Plan, no new funds will be contributed by the
Company, and the assets on hand shall be administered and distributed by
the trustee in accordance with the plan document. Participants will be
entitled to receive the amount then credited to their respective accounts
in the Plan.
4. PARTICIPANT LOANS
The Plan may make loans to participants not to exceed one-half of the
participant's vested balance or $50,000, whichever is less. Loans are
repayable, with interest at the market rate, over a period not to exceed
five years, except those for the designated purpose of purchasing a home
that is a primary residence which may be paid back in up to 15 years.
Interest rates on loans outstanding at December 31, 1995 ranged from 8.0%
to 11.0%.
5. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated December 29, 1994, that the Plan is qualified and the trust
established under the Plan is tax-exempt under the appropriate sections of
the Internal Revenue Code (the "Code"). Furthermore, the Company and legal
counsel believe that the Plan continues to qualify and to operate as
designed as of December 31, 1995.
6
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6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for Plan
benefits per the financial statements to the Form 5500 for the year ended
December 31, 1995:
<TABLE>
<S> <C>
Net assets available for Plan benefits per financial
statements $127,317,449
Amounts allocated to withdrawing participants (2,157,346)
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Net assets available for Plan benefits per the Form 5500 $125,160,103
============
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31,
1995:
<TABLE>
<S> <C>
Benefits paid to participants per the financial statements $ 8,262,241
Add: Amounts allocated to withdrawing participants at
December 31, 1995 2,157,346
Less: Amounts allocated to withdrawing participants at
December 31, 1994 (1,677,539)
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Benefits paid to participants per the Form 5500 $ 8,742,048
===========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have occurred to December 31 but not paid as of that date.
7. SUBSEQUENT EVENT
In relation to a proposed spin-off of the Company's lodging operations in
the fall of 1996, the Plan will be divided between the Manor Care, Inc.
and Choice Hotels International, Inc. employee accounts. Choice Hotels
International, Inc. will become the plan administrator of a new plan
representing the Choice Hotels International, Inc. employee accounts.
7
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MANOR CARE, INC.
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RETIREMENT SAVINGS AND
----------------------
INVESTMENT PLAN
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ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
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DECEMBER 31, 1995
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<TABLE>
<CAPTION>
Description of
Investment
(including maturity
date, rate of interest Current
Identity of issue, borrower, collateral, par Cost Value
lessor or similar party or maturity value) @12/31/95 @12/31/95
- ----------------------- ------------------ --------- ---------
<S> <C> <C> <C>
Short Term Investments:
Vanguard U.S. Treasury
Market Fund $25,691,125 $25,691,125
Equity Mutual Funds:
Vanguard Wellington Balanced Fund 23,962,461 29,487,660
T. Rowe Price Int'l Stock Fund 12,933,816 14,646,866
Janus Fund Diversified Mutual 21,612,374 25,735,150
Total Equity Mutual Funds $58,508,651 $69,869,676
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Investment in Manor Care:
*Manor Care, Inc. Stock $ 4,939,711 $ 8,837,698
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Loans to Participants:
Loan Fund 8.0% to 11.0%
Interest $ 3,538,461 $ 3,538,461
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Common Trust Fund:
T. Rowe Price
Stable Value Fund $13,340,763 $13,340,763
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Total Investments $106,018,711 $121,277,723
============ ============
</TABLE>
*party in interest
The accompanying notes are an integral part of this schedule.
8
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MANOR CARE, INC
---------------
RETIREMENT SAVINGS AND INVESTMENT PLAN
--------------------------------------
<TABLE>
ITEM 27d-SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1995
- ---------------------------------------------------------------------------------
<CAPTION>
Identity of Party Involved
Description of Asset Purchase Price Original Cost Selling Price Net Gain or (Loss)
- -------------------- -------------- ------------- ------------- ------------------
<S> <C> <C> <C> <C>
Chemical Bank Short
Term Reserve Fund $19,726,443 $19,661,235 $19,661,235 $ 0
Number of Transactions 523 290
Janus Investment Fund $ 4,693,780 $ 441,803 $ 500,783 $ 58,980
Number of Transactions 34 7
Vanguard US Treasury
Money Market Fund $ 4,046,832 $ 2,018,938 $ 2,018,938 $ 0
Number of Transactions 43 14
Vanguard Wellington $ 4,904,479 $ 688,485 $ 784,014 $ 95,529
Fund, Inc.
Number of Transactions 36 9
</TABLE>
The accompanying notes are an integral part of this schedule.
9
<PAGE>
EXHIBITS.
23 - Consent of Independent Public Accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustee (or other persons who administer the employee benefit plan) has duly
caused this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: November 22, 1996 MANOR CARE, INC. RETIREMENT SAVINGS
& INVESTMENT PLAN
By: CHASE MANHATTAN BANK, as trustee
By: /s/ Catherine E. Kidder
-----------------------------
Asst. Vice President
-----------------------------
[Name and Title]
10
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 11-K for the year ended December 31, 1995,
into Manor Care, Inc.'s previously filed Registration Statement on Form S-8
File No. 333-_______.
ARTHUR ANDERSEN LLP
Washington, D.C.,
November 21, 1996
11
