<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.4)
INTEGRATED HEALTH SERVICES, INC.
(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE
(Title of Class of Securities)
45812C106
(CUSIP Number)
CHRISTOPHER HILBERT, ESQ.
MORGAN, LEWIS & BOCKIUS LLP
101 PARK AVENUE, NEW YORK, NEW YORK 10178
(212) 309-6830
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
OCTOBER 31, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement //. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ROHIT MOJILAL DESAI
###-##-####
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) / /
(B) /X/
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or (e) / /
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ---------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
------------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 928,060 SHARES
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
928,060 SHARES
- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
928,060 SHARES
- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.01%
- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ---------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DESAI CAPITAL MANAGEMENT INCORPORATED
13-3229933
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) / /
(B) /X/
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or (e) / /
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- ---------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
------------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 928,060 SHARES
EACH -----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
928,060 SHARES
- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
928,060 SHARES
- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.01%
- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IA, CO
- ---------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
Item 1. Security and Issuer.
This Statement relates to the Common Stock, $0.01 par value,
of Integrated Health Services, Inc. (the "Company"). The address of the
Company's principal executive offices is 10065 Red Run Boulevard, Owing Mills,
Maryland 21117.
Item 2. Identity and Background.
This Statement is filed by Desai Capital Management
Incorporated ("DCMI") and Rohit M. Desai, each of whom may be deemed to be the
beneficial owners of securities owned directly by Equity-Linked Investors, L.P.
("ELI-I") and Equity-Linked Investors-II ("ELI-II").
ELI-I and ELI-II are each New York limited partnerships whose
principal business is investing in a portfolio of convertible debt securities,
convertible preferred stock and other debt securities with equity features.
Rohit M. Desai Associates ("RMDA-I") is a New York general
partnership and is the general partner of ELI-I. Rohit M. Desai Associates-II
("RMDA-II") is a New York general partnership and is the general partner of
ELI-II. RMDA-I has no business activities other than acting as ELI-I's general
partner. RMDA-II has no business activities other than acting as ELI-II's
general partner. The partners of RMDA-I and RMDA-II are Rohit M. Desai,
Katharine B. Desai and the Rohit M. Desai Family Trust (of which Katharine B.
Desai and Joseph F. McDonald are the trustees under a trust agreement dated July
1, 1987).
DCMI is a New York corporation whose principal business is
that of an investment adviser. DCMI acts as investment adviser to ELI-I and
ELI-II. The sole stockholder of DCMI is Rohit M. Desai. The directors of DCMI
are Rohit M. Desai and Katharine B. Desai. Rohit M. Desai, Katharine B. Desai,
Frank J. Pados, Jr., Damon H. Ball, Thomas P. Larsen, Timothy R. Kelleher, Tom
W. Perlmutter, Kathy T. Abramson, Paul A. Blaustein and Catherine K. Janson are
officers of DCMI (each a "Reporting Person" and collectively the, "Reporting
Persons").
The address of the principal business and principal office of
DCMI is 540 Madison Avenue, 36th Floor, New York, New York 10022.
The present principal occupation and employment of Rohit M.
Desai, who is a citizen of the United States, is as the president, treasurer and
chairman of the board of directors of
<PAGE> 5
DCMI and as the managing general partner of RMDA-I, the general partner of
ELI-I, and as the managing general partner of RMDA-II, the general partner of
ELI-II. The present principal occupation and employment of Katharine B. Desai,
who is a United States citizen, is as the secretary and director of DCMI. The
present principal occupation and employment of Joseph F. McDonald, who is a
United States citizen, is as a member of the law firm of Morgan, Lewis &
Bockius. The present principal occupation and employment of Frank J. Pados, Jr.,
who is a United States citizen, is as executive vice president of DCMI. The
present principal occupation and employment of Damon H. Ball, who is a United
States citizen, is as senior vice president of DCMI. The present principal
occupation and employment of Thomas P. Larsen, who is a United States citizen,
is as senior vice president of DCMI. The present principal occupation and
employment of Timothy R. Kelleher, who is a United States citizen, is as vice
president of DCMI. The present principal occupation and employment of Tom W.
Perlmutter, who is a United States citizen, is as vice president of DCMI. The
present principal occupation and employment of Kathy T. Abramson, who is a
United States citizen, is as vice president of DCMI. The present principal
occupation and employment of Catherine K. Janson, who is a United States
citizen, is as vice president of DCMI. The present principal occupation and
employment of Paul A. Blaustein, who is a United States citizen, is as vice
president of DCMI. The business address of each of these individuals, except
Joseph F. McDonald, is the same as that of DCMI. The business address of Joseph
F. McDonald is c/o Morgan, Lewis & Bockius, 101 Park Avenue, New York, New York
10178.
During the last five years neither Joseph F. McDonald nor any
Reporting Person has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the last five years, neither Joseph
F. McDonald nor any Reporting Person has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction resulting in a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or a
finding of any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
ELI-I has acquired $13,550,000 principal amount of the
Company's 5.75% Convertible Subordinated Debentures due January 1, 2001 (the
"5.75% Debentures") and 99,700 shares of the Company's Common Stock; and ELI-II
has acquired $9,950,000 principal amount of the 5.75% Debentures and 107,500
shares of the Company's Common Stock.
<PAGE> 6
In making the purchases described above, (i) ELI-I used
working capital from its operating account, which is funded by capital
contributions from ELI-I's limited partners and gains and proceeds from ELI-I's
investment portfolio, and (ii) ELI-II used working capital from its operating
account, which is funded by capital contributions from ELI-II's limited partners
and gains and proceeds from ELI-II's investment portfolio.
Item 4. Purpose of Transaction.
Each of ELI-I and ELI-II have acquired securities of
the Company in the ordinary course of their respective businesses solely for
investment purposes. The 5.75% Debentures grant the holders thereof the right to
convert the 5.75% Debentures into shares of the Company's Common Stock at the
rate of $32.60 of principal amount of 5.75% Debentures per share exchanged
thereof, subject to adjustment.
Neither DCMI, the Rohit M. Desai Family Trust, Joseph F.
McDonald nor any Reporting Person has any plans or proposals which relate to or
would result in:
(a) the acquisition by any person of additional securities of
the issuer or the disposition of securities of the Company, except that ELI-I,
ELI-II and/or DCMI may from time to time and in furtherance of their respective
investment programs, acquire (for investment) or dispose of the 5.75%
Debentures, the Common Stock or any other securities of the issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
issuer or any of its subsidiaries;
(d) any change in the present board of directors or management
of the issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or
dividend policy of the issuer;
(f) any other material change in the issuer's business or
corporate structure;
(g) any change in the issuer's charter or by-laws;
<PAGE> 7
(h) causing a class of securities of the issuer to be delisted
from a national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) a class of equity securities of the issuer becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
(j) any action similar to those enumerated above.
Item 5. Interest in Securities of the Issuer.
ELI-I and ELI-II in the aggregate directly hold $23,500,000
principal amount of the 5.75% Debentures (convertible into approximately
720,860 shares of the Company's Common Stock). ELI-I and ELI-II in the
aggregate directly hold 207,200 shares of the Company's Common Stock. For
purposes of this Schedule 13D, each of DCMI and Rohit M. Desai could be deemed
to be the beneficial owner of securities held by ELI-I and ELI-II; the combined
total of such holdings is 928,060 shares of the Company's Common Stock (after
conversion), which would constitute beneficial ownership of approximately 4.01%
of the outstanding shares of the Company's Common Stock.
The power to vote, to convert, or to dispose of or to direct
the voting, conversion, or disposal of Common Stock or 5.75% Debentures held by
ELI-I is vested in RMDA-I as general partner of ELI-I, but such decisions (and
similar decisions with respect to the rest of ELI-I's investment portfolio) may
also be made by DCMI under an investment and advisory agreement between ELI-I
and DCMI. The power to vote, to convert, to dispose of, or to direct the voting,
conversion or disposal of, any Common Stock or 5.75% Debentures held by ELI-II
is vested in RMDA-II as general partner of ELI-II, but such decisions (and
similar decisions with respect to the rest of ELI-II's investment portfolio) may
also be made by DCMI under an investment and advisory agreement between ELI-II
and DCMI. Rohit M. Desai is the managing general partner of RMDA-I and RMDA-II
and the sole stockholder, chairman of the board of directors, president and
treasurer of DCMI. Katharine B. Desai is the secretary and a director of DCMI, a
general partner of RMDA-I and RMDA-II and trustee of the Rohit M. Desai Family
Trust. The Rohit M. Desai Family Trust is a general partner of RMDA-I and
RMDA-II. Joseph F. McDonald is a trustee of the Rohit M. Desai Family Trust.
Damon H. Ball and Thomas P. Larsen are senior vice presidents of DCMI. Timothy
R. Kelleher, Tom W. Perlmutter, Kathy T. Abramson, Paul A. Blaustein and
Catherine K. Janson are vice presidents of DCMI.
<PAGE> 8
Accordingly for purposes of Schedule 13D, DCMI and Rohit M.
Desai may each be deemed to share the power to vote or to direct the vote and
may be deemed to share the power to dispose or to direct the disposition with
respect to the securities held by ELI-I and ELI-II and therefore each
may be deemed to be a beneficial owner with respect to such securities.
Pursuant to Rule 13d-4 under the Securities Exchange Act of
1934, DCMI, the Rohit M. Desai Family Trust, Joseph F. McDonald and each
Reporting Person hereby declare that the filing of this Statement shall not be
construed as an admission that any person other than ELI-I and ELI-II is
the beneficial owner of any securities covered by this Statement, or that
ELI-I or ELI-II is the beneficial owner of any securities held by the other.
No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
the securities covered by this Statement.
During the sixty days preceding the filing of this Statement,
ELI-I has disposed of 42,800 shares of the Company's Common Stock on the open
market at the following prices per share: on October 2, 1996, ELI-I disposed of
25,000 shares at $25.00 per share; on October 3, 1996, ELI-I disposed of 17,800
shares at $25.34 per share.
During the sixty days preceding the filing of this Schedule,
no transactions in the class of securities reported were effected by any persons
reporting on this Schedule, other than those described in the preceding
paragraphs.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of
the Issuer.
Neither DCMI, the Rohit M. Desai Family Trust, Joseph F.
McDonald, nor any Reporting Person is party to any contract, arrangement,
understanding or relationship specifically relating to any securities of the
Company.
ELI-I, ELI-II and the Individually Managed Accounts have each
contracted with DCMI for DCMI to provide investment advisory and other services
to each of ELI-I, ELI-II and the Individually Managed Accounts. Pursuant to
their respective investment and advisory contracts, DCMI may exercise investment
power and voting power with respect to the investment portfolios of ELI-I and
ELI-II. For its services under these investment and advisory agreements DCMI
receives a management fee from each of
<PAGE> 9
ELI-I and ELI-II generally based on the value of their respective portfolios.
Item 7. Material Previously Filed as Exhibits.
1. Joint Filing Agreement regarding the filing of this
Statement.
2. Investment and Advisory Agreement between ELI-I and DCMI,
as amended.
3. Investment and Advisory Agreement between ELI-II and DCMI,
as amended.
4. Power of Attorney authorizing Kathy T. Abramson to sign on
behalf of Rohit M. Desai.
<PAGE> 10
SIGNATURE
After reasonable inquiry and to the best of their knowledge
and belief, each of the undersigned certifies that the information set forth in
this Amendment No. 4, is true, complete and correct.
Dated: November 12, 1996
DESAI CAPITAL MANAGEMENT
INCORPORATED
By: /s/ Kathy T. Abramson
--------------------------------
Kathy T. Abramson
Attorney-in-fact for
Rohit M. Desai, President
/s/ Kathy T. Abramson
------------------------------------
Kathy T. Abramson
Attorney-in-fact for
Rohit M. Desai
