Commission File No 1-10875
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark one)
/X/ ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10875
NOVACARE, INC. 401(k) RETIREMENT SAVINGS PLAN
(Full title of the plan and address of the plan,
if different from that of the issuer named below)
NOVACARE, INC.
1016 West Ninth Avenue, King of Prussia, PA 19406
(Name of issuer of the securities held pursuant to the plan
and the address of it's principal executive office)
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
- ----------------------------------------------
Financial Statements Page
-------------------- ----
Report of Independent Accountants 2
Financial Statements:
Net Assets Available for Plan Benefits,
with Fund Information, at December 31, 1995
and 1994 3 - 4
Changes in Net Assets Available for Plan
Benefits, with Fund Information, for the years
ended December 31, 1995 and 1994 5 - 6
Notes to Financial Statements 7 - 11
Additional Information: *
Schedule of Assets Held For Investment Purposes
at December 31, 1995 12
Schedules of Reportable Transactions:
Single Transactions in excess of 5% of
net assets for the year ended December 31,
1995 13
Series of Transactions aggregating more
than 5% of net assets for the year ended
December 31, 1995 14
Exhibit Exhibit Number
------- --------------
Consent of Independent Accountants 23
* Other schedules required by Section 2520.103-10 of the
Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA have been omitted because they are not
applicable.
1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of the NovaCare, Inc. 401(k) Retirement Savings Plan
In our opinion, the accompanying statements of net assets
available for plan benefits and the related statements of changes
in net assets available for plan benefits present fairly, in all
material respects, the net assets available for plan benefits of
the NovaCare, Inc. 401(k) Retirement Savings Plan (the "Plan") at
December 31, 1995 and 1994, and the changes in net assets
available for plan benefits for the years then ended in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Plan's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the
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, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
additional information included in the schedule of assets held
for investment purposes and the schedules of reportable
transactions is presented for purposes of additional analysis and
is not a required part of the basic financial statements but is
additional information required by ERISA. The Fund Information
in the statements of net assets available for plan benefits and
the statements of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather
than to present the net assets available for plan benefits and
changes in net assets available for plan benefits of each fund.
The schedule of assets held for investment purposes, the
schedules of reportable transactions and the Fund Information
have been subjected to the auditing procedures applied in the
audits 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.
The schedule of assets held for investment purposes and schedules
of reportable transactions that accompany the Plan's financial
statements do not disclose the historical cost of certain plan
assets held by the Plan custodian. Disclosure of this
information is required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974.
PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
June 4, 1996
2
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
- -------------------------------------------------------------
December 31, 1995
- -------------------------------------------------------------------------------
FUND INFORMATION
--------------------------------------------------
Fidelity
Managed Fidelity Fidelity NovaCare
Income Puritan Magellan Stock
Portfolio* Fund* Fund* Fund*
---------- ----------- ----------- ---------
Investments $ 16,355,184 $ 20,128,172 $ 32,003,730 $4,016,385
Receivables/payables:
Employee's contributions 254,970 371,341 545,321 116,173
Employer's contributions 59,741 84,367 121,578 26,838
Due to NovaCare (132,527) (78,225) (119,928) (313,317)
Due (to) from other funds (166,402) (24,791) 150,692 40,501
---------- ------------ ----------- ---------
Net assets available
for Plan benefits $ 16,370,966 $ 20,480,864 $ 32,701,393 $3,886,580
=========== ============ ============ ==========
Fidelity NovaCare
Money Market Loan
Portfolio Fund TOTAL
------------ ------------ ------------
Investments $ 37,577 $ 191,019 $ 72,732,067
Receivables/payables:
Employee's contributions - - 1,287,805
Employer's contributions - - 292,524
Due to NovaCare (37,577) - (681,574)
Due (to) from other funds - - -
------------ ------------ ------------
Net assets available
for Plan benefits $ - $ 191,019 $ 73,630,822
============ ============ ============
* Investment in this fund represents more than 5% of the Plan's net assets.
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
NOVACARE, INC. 401(K) RETIRMENT SAVINGS PLAN
NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
- -------------------------------------------------------------
December 31, 1994
- -------------------------------------------------------------------------------
FUND INFORMATION
-------------------------------------------------------
Fidelity
Managed Fidelity Fidelity NovaCare
Income Puritan Magellan Stock
Portfolio* Fund* Fund* Fund*
------------ ------------ ------------ -----------
Investments $ 11,483,500 $ 11,631,143 $ 17,497,934 $ 3,554,261
Receivables/payables:
Accrued contributions 251,705 344,369 492,575 204,180
Accrued interest - - - -
Due (to) from other
funds 207,715 234,354 (29,594) (232,818)
------------- ------------- ------------ -----------
Net assets available
for Plan benefits $ 11,942,920 $ 12,209,866 $ 17,960,915 $ 3,525,623
============ ============= ============ ===========
Fidelity NovaCare
Money Market Loan
Portfolio Fund Total
------------ ------------ ------------
Investments $ 153,893 $ 205,753 $ 44,526,484
Receivables/payables:
Accrued contributions - - 1,292,829
Accrued interest - 4,231 4,231
Due (to) from other
funds (153,893) (25,764) -
------------ ------------ ------------
Net assets available
for Plan benefits $ - $ 184,220 $ 45,823,544
============ ============ ============
*Investment in this fund represents more than 5% of the Plan's net assets.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
- -----------------------------------------------------------------------
Year Ended December 31, 1995
- --------------------------------------------------------------------------------
FUND INFORMATION
-------------------------------------------------------
Fidelity
Managed Fidelity Fidelity NovaCare
Income Puritan Magellan Stock
Portfolio Fund Fund Fund
------------ ------------ ------------ ------------
Additions to net assets:
Investment income:
Dividends and interest $ 873,138 $ 960,898 $ 1,694,409 $ -
Net realized and
unrealized gain (loss)
on investments - 2,131,371 5,991,418 (1,679,745)
------------ ------------ ------------ ------------
873,138 3,092,269 7,685,827 (1,679,745)
------------ ------------ ------------ ------------
Contributions:
Employee 4,009,088 5,374,260 7,527,897 2,104,990
Employer 766,039 1,002,889 1,390,874 459,767
Plan merger (Note 6) 2,365,071 1,471,922 1,876,035 346,182
Investment transfers (454,197) 23,406 660,747 (95,643)
------------ ------------ ------------ ------------
6,686,001 7,872,477 11,455,553 2,815,296
------------ ------------ ------------ ------------
Total additions 7,559,139 10,964,746 19,141,380 1,135,551
------------ ------------ ------------ ------------
Deductions from net
assets:
Plan Transfers Out
(Note 7) 1,596,067 1,061,328 2,288,030 338,079
Distributions to
participants 1,535,026 1,632,420 2,112,872 436,515
------------ ------------ ------------ ------------
Total Deductions 3,131,093 2,693,748 4,400,902 774,594
------------ ------------ ------------ ------------
Net increase 4,428,046 8,270,998 14,740,478 360,957
Net assets at beginning
of year 11,942,920 12,209,866 17,960,915 3,525,623
------------ ------------ ------------ ------------
Net assets at end
of year $16,370,966 $ 20,480,864 $32,701,393 $ 3,886,580
============ ============ ============ ============
Fidelity
Money NovaCare
Market Loan
Portfolio Fund Total
------------ ------------ ------------
Additions to net assets:
Investment income:
Dividends and interest $ 79,594 $ - $ 3,608,039
Net realized and
unrealized gain (loss)
on investments - - 6,443,044
------------ ------------ ------------
79,594 - 10,051,083
------------ ------------ ------------
Contributions:
Employee - - 19,016,235
Employer - - 3,619,569
Plan merger (Note 6) - 61,518 6,120,728
Investment transfers (79,594) (54,719) -
------------ ----------- ------------
(79,594) 6,799 28,756,532
------------ ----------- ------------
Total additions - 6,799 38,807,615
------------ ----------- ------------
Deductions from net
assets:
Plan Transfers Out
(Note 7) - - 5,283,504
Distributions to
participants - - 5,716,833
------------ ------------ ------------
Total Deductions - - 11,000,337
------------ ------------ ------------
Net increase - 6,799 27,807,278
Net assets at beginning
of year - 184,220 45,823,544
------------ ------------ ------------
Net assets at end
of year $ - $ 191,019 $73,630,822
============ ============ ============
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
- ------------------------------------------------------------------------
Year Ended December 31, 1994
- -------------------------------------------------------------------------------
FUND INFORMATION
----------------------------------------------------
Fidelity
Managed Fidelity Fidelity NovaCare
Income Puritan Magellan Stock
Portfolio Fund Fund Fund
------------ ------------ ------------ -----------
Additions to net assets:
Investment income:
Dividends and interest $ 434,222 $ 718,396 $ 443,594 $ -
------------ ------------ ------------ -----------
434,222 718,396 443,594 -
------------ ------------ ------------ -----------
Contributions:
Employee 3,018,437 3,685,652 5,693,192 2,364,931
Employer 590,702 714,080 1,071,086 477,413
Plan merger (Note 6) 2,768,844 1,227,169 1,890,015 380,066
Investment transfers 208,491 222,346 (107,341) (192,771)
------------ ------------ ------------ ------------
6,586,474 5,849,247 8,546,952 3,029,639
------------ ------------ ------------ ------------
Total additions 7,020,696 6,567,643 8,990,546 3,029,639
------------ ------------ ------------ ------------
Deductions from net
assets:
Distributions to
participants 1,254,159 1,024,376 1,654,737 56,575
Net realized and
unrealized loss
on investments - 662,818 688,386 3,438,281
------------ ------------ ------------ ------------
Total Deductions 1,254,159 1,687,194 2,343,123 3,494,856
------------ ------------ ------------- -----------
Net increase/(decrease) 5,766,537 4,880,449 6,647,423 (465,217)
Net assets at beginning
of year 6,176,383 7,329,417 11,313,492 3,990,840
------------ ------------ ------------ ------------
Net assets at end of year $11,942,920 $12,209,866 $17,960,915 $ 3,525,623
============ ============ ============ ============
Fidelity
Money NovaCare
Market Loan
Portfolio Fund Total
------------ ------------ ------------
Additions to net assets:
Investment income:
Dividends and interest $ 19,653 $ 4,231 $ 1,620,096
------------ ------------ ------------
19,653 4,231 1,620,096
------------ ------------ ------------
Contributions:
Employee - - 14,762,212
Employer - - 2,853,281
Plan merger (Note 6) - 205,753 6,471,847
Investment transfers (104,200) (26,525) -
------------ ------------ ------------
(104,200) 179,228 24,087,340
------------ ------------ ------------
Total additions (84,547) 183,459 25,707,436
------------ ------------ ------------
Deductions from net
assets:
Distribution to
participants - - 3,989,847
Net realized and
unrealized loss
on investments - - 4,789,485
------------ ------------ ------------
Total Deductions - - 8,779,332
------------ ------------ ------------
Net increase/(decrease) (84,547) 183,459 16,928,104
Net assets at beginning
of year 84,547 761 28,895,440
------------ ------------ ------------
Net assets at end
of year $ - $ 184,220 $45,823,544
============ ============ ===========
The accompanyng notes are an integral part of these financial statements.
6
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------
1. DESCRIPTION OF PLAN
GENERAL. The NovaCare, Inc. (the "Company") 401(k) Retirement
Savings Plan (the "Plan"), which was formed effective July 1,
1990, is a defined contribution plan subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") and the Internal
Revenue Code of 1986, as amended ("IRC"). All full and part-time
employees of the Company working a minimum of twenty hours per
week on a regularly scheduled basis may enroll beginning on the
first day of the first payroll period of the month following six
months of consecutive service.
ENROLLMENT. An eligible employee participates in the Plan by
authorizing the Company to make tax-deferred contributions to the
plan on the employee's behalf, resulting in a reduction of the
employee's taxable earnings. Tax-deferred contributions may be
an amount ranging from 1% to 15% of compensation. The employee
may direct the investment of these contributions (see "Investment
Directions" below).
CONTRIBUTIONS TO THE PLAN. Participants may authorize basic
contributions ranging from 1% to 15% of their compensation.
Certain highly compensated participants may have their basic
contributions limited to 6% of their compensation. Such
contributions may not exceed $9,240 for both 1995 and 1994. The
Company makes matching contributions in the amount of 30% of
participant contributions up to the first 6% of compensation. No
matching contributions are made with respect to participant
contributions exceeding 6% of compensation.
Certain percentage tests ensure that contributions by or on
behalf of employees do not favor the highly compensated. If
these tests are not met, contributions and the earnings
attributable thereto will be distributed to the highly
compensated employees in accordance with the Plan document. The
Plan met the 401(k) non-discrimination test for the years ended
December 31, 1995 and 1994.
PARTICIPANT ACCOUNT. Each account is credited with the
participant's contributions and an allocation of (a) the
Company's matching contribution and (b) Plan earnings. Company
contributions are allocated based on the matching percentage for
participant contributions. Plan earnings are allocated to each
participant's account based on the respective account balances.
The benefit to which a participant is entitled is the amount that
can be provided from their account.
VESTING. Participants are fully vested in their elective
deferrals plus actual earnings thereon. Vesting in the remainder
of the account is based on years of continuous service.
Participants become fully vested upon death or disability,
attainment of normal retirement age, or after five years of
credited service.
7
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS
NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------
INVESTMENT DIRECTIONS.Upon enrollment in the Plan,
participants may direct contributions among one or more of the
following investment funds:
I. Fidelity Managed Income Portfolio - An open-end
commingled pool which invests in short- and long-term investment
contracts issued by insurance companies (GICs), investment
contracts issued by commercial banks (BICs), synthetic investment
contracts designed to simulate conventional GICs through the
purchase of securities and inclusion of a benefit responsive
feature (put feature), and cash equivalents.
II. Fidelity Puritan Fund - A mutual fund which invests in
common and preferred stocks and bonds, including lower-quality,
high-yielding debt securities.
III. Fidelity Magellan Fund - A mutual fund which invests in
the stocks of companies with an expected above-average growth
potential and a corresponding higher level of risk.
IV. NovaCare Stock Fund - Funds are invested in NovaCare,
Inc. common stock.
The Fidelity Money Market Portfolio acts as an account
through which contributions and distributions are transferred
among the four investment options, and as a depository for the
cash rollovers in the NovaCare Stock Fund.
The NovaCare Loan Fund provides loans against participant
contributions as further described in Note 6. Except for loans
which were outstanding as of the dates of the RehabClinics, Inc.
and the NovaCare Orthotics & Prosthetics Plan mergers into the
NovaCare Plan, the NovaCare Plan does not provide for participant
loans.
DISTRIBUTIONS AND WITHDRAWALS. Distributions are paid in
the following manner:
I. Distributions from the Fidelity Managed Income
Portfolio, Fidelity Puritan Fund and Fidelity Magellan Fund are
paid in cash.
II. Distributions from the NovaCare Stock Fund are paid in
cash or shares of NovaCare, Inc. common stock at the
participant's option. Fractional shares are paid in cash.
Prior to termination of service, participants may, in the
event of financial hardship, withdraw amounts from the Plan twice
in any 12-month period. In the absence of financial hardship, a
participant's contribution may not be withdrawn prior to
attainment of age 59 1/2.
Upon termination of service for reasons other than death,
participants are entitled to a lump-sum amount equal to the
value of the vested balance of their account. Participants with
account balances exceeding $3,500 may defer receipt of the lump-
sum amount until reaching age 70 1/2. If a participant dies, the
entire amount in the participant's account is distributed in a
lump-sum to the participant's beneficiaries. A terminating
participant's unvested account balance is forfeited and used to
reduce future employer contributions.
ADMINISTRATIVE EXPENSES. The Company may elect to pay all
Plan administrative expenses. If the Company elects not to pay
such expenses, the expenses shall be paid by the Plan. During
the years ended in December 31, 1995 and 1994, all Plan
administrative expenses were paid by the Company.
PLAN TERMINATION. Although it has not expressed any intent
to do so, the Company has the right under the Plan to discontinue
its contributions at any time and terminate the Plan subject to
the provisions of ERISA. In the event of Plan termination,
participants will become fully vested in their accounts.
8
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
The Plan's financial statements are prepared on the accrual basis
of accounting. Investments are stated at fair value based on
quoted market prices.
Realized and unrealized gains or losses are calculated based upon
historical cost of assets for financial statement purposes. Such
gains and losses are computed on a current value basis for Form
5500. This may result in a differing classification between
realized and unrealized, but the total gain or loss will be
unaffected.
Basic and matching contributions are recorded in the period
during which the Company makes payroll deductions from
participants earnings.
3. DISTRIBUTIONS PAYABLE
Distributions requested but not paid were as follows:
December 31,
-------------------------
1995 1994
---------- ----------
Fidelity Managed Income Portfolio $ 978,201 $ 203,525
Fidelity Puritan Fund 751,433 320,853
Fidelity Magellan Fund 1,285,499 274,946
NovaCare Stock Fund 217,144 55,498
---------- ----------
Total Distributions Payable $3,232,277 $ 854,822
========== ==========
Distributions are recorded as a reduction in Plan net assets when
paid. For Form 5500 reporting purposes, such distributions are
recorded as a reduction in Plan assets when requested.
4. PARTICIPANT ELECTIONS
At December 31, the number of participants in each investment
fund were as follows:
1995 1994
------ ------
Fidelity Managed Income Portfolio 2,574 3,818
Fidelity Puritan Fund 3,613 4,226
Fidelity Magellan Fund 3,837 4,665
NovaCare Stock Fund 1,719 3,068
At December 31, 1995 and 1994, 5,085 and 5,096 participants
respectively, were contributing to the Plan; 3,200 and 1,748
participants , respectively, were not contributing to the Plan.
Because many participants direct their contributions to more than
one investment fund, the total number of participants in the Plan
is less than the sum of the number of participants in each
investment fund.
9
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for
benefits per the financial statements to the Form 5500 at
December 31, 1995 and 1994:
1995 1994
---------- ----------
Net assets available for benefits
per the financial statements $73,630,822 $45,823,544
Less: Amounts allocated to
withdrawing participants (3,232,277) (854,822)
---------- ----------
Net assets available for benefits
per the Form 5500 $70,398,545 $44,968,722
========== ==========
The following is a reconciliation of benefits paid to
participants according to the financial statements to Form 5500:
Year Ended
December 31, 1995
-----------------
Benefits paid to participants per the
financial statements $ 5,716,833
Add: Amounts allocated to withdrawing
participants at December 31, 1995 3,232,277
Less: Amounts allocated to withdrawing
participants at December 31, 1994 (854,822)
----------
Benefits paid per Form 5500 $ 8,094,288
==========
Amounts allocated to withdrawing participants are recorded on the
Form 5500 for benefit claims that have been processed and
approved for payment prior to December 31 but not yet paid as of
that date.
6. PLAN MERGER
Effective January 1, 1995, the net assets available for plan
benefits of the RehabClinics, Inc. 401 (k) Profit Sharing Plan
totaling $ 6,120,728 were transferred to the Plan. Included in
the transfer were amounts relating to thirteen participant loans
totaling $61,518.
Effective January 1, 1994, the net assets available for plan
benefits of the Rehabilitation Hospital Corporation of America
401 (k) Profit Sharing Plan totaling $846,515 were transferred to
the Plan.
10
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------
Effective September 1, 1994, the net assets available for plan
benefits of the NovaCare Orthotics & Prosthetics 401(k) Profit
Sharing Plan totaling $5,625,332 were transferred to the Plan.
Included in the transfer were amounts relating to sixty
participant loans totaling $205,753.
Except for loans which were outstanding as of the dates of the
RehabClinics, Inc. and the NovaCare Orthotics & Prosthetics Plan
mergers into the NovaCare Plan, the NovaCare Plan does not
provide for participant loans.
7. PLAN TRANSFERS OUT
Effective April 1, 1995, NovaCare, Inc. sold its Medical Rehabilitation
Hospitals division to HEALTHSOUTH Corporation. Due to this sale,
former NovaCare employees now employed by HEALTHSOUTH were fully
vested in the matching contributions made by NovaCare and their
net assets totaling $5,283,504 were transferred to the
HEALTHSOUTH 401 (k) Retirement Savings Plan.
8. INCOME TAXES
On February 2, 1996 the Internal Revenue Service ruled that the
Plan qualifies under Section 401 (a) of IRC and is exempt from
federal income taxes under Section 501(a) of IRC. Once
qualified, the Plan is required to operate in conformity with the
Code to maintain its qualification. The Plan Administrator is
not aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified status.
9. SUBSEQUENT EVENTS
Effective January 2, 1996, a trust agreement between NovaCare,
Inc. and Fidelity Management Trust Company was established in
which NovaCare, Inc. appointed Fidelity as successor trustee of
the trust under the Plan. In addition, Fidelity will perform
certain ministerial recordkeeping and administrative functions of
the Plan.
11
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
- -----------------------------------------------
December 31, 1995
- -------------------------------------------------------------------------------
Number of Fair
Name of issuer and title of issue shares Cost(2) Value
- --------------------------------- ------------ ------------ -----------
Mutual Funds:
Fidelity Managed Income Portfolio 16,355,184 $ 16,355,184 $ 16,355,184
Fidelity Puritan Fund 1,183,314 18,216,059 20,128,172
Fidelity Magellan Fund 372,223 26,951,785 32,003,730
Fidelity Money Market Portfolio 37,577 37,577 37,577
------------ ------------
61,560,605 68,524,663
NovaCare Stock Fund:
NovaCare, Inc. Common Stock (1) 783,685 5,799,654 4,016,385
NovaCare Loan Fund - 191,019 191,019
------------ ------------
$ 67,551,278 $ 72,732,067
============ ============
(1) Non-income producing security.
(2) Current value at beginning of year or cost of purchase if acquired during
the year.
12
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1995
- ------------------------------------------------------------------------
Single transactions in excess of 5% of the January 1, 1995
current value of Plan assets
Number of Purchase Selling
Party Involved Description of Asset Transactions Price Price
- ------------- -------------------- ------------ ----------- ----------
Fidelity Management Fidelity Money
Trust Company Market Portfolio 1 $ - $2,365,071
Fidelity Management Fidelity Money
Trust Company Market Portfolio 1 2,300,205 -
Fidelity Management Fidelity Money
Trust Company Market Portfolio 1 3,200,000 -
Fidelity Management Fidelity Money
Trust Company Market Portfolio 1 4,089,829 -
Fidelity Management Fidelity Managed
Trust Company Income Portfolio 1 2,365,071 -
Current Value
Description Expense Cost of at Transactions
Party Involved of Asset Incurred Asset (1) Date
- ------------------- ----------- -------- ----------- ---------------
Fidelity Management Fidelity Money
Trust Company Market Portfolio $ - $ 2,365,071 $ 2,365,071
Fidelity Management Fidelity Money
Trust Company Market Portfolio - 2,300,205 2,300,205
Fidelity Management Fidelity Money
Trust Company Market Portfolio - 3,200,000 3,200,000
Fidelity Management Fidelity Money
Trust Company Market Portfolio - 4,089,829 4,089,829
Fidelity Managment Fidelity Managed
Trust Company Income Portfolio - 2,365,071 2,365,071
Party Involved Description of Asset Net Gain/(Loss)
- -------------------- -------------------- ---------------
Fidelity Management Fidelity Money
Trust Company Market Portfolio $ -
Fidelity Management Fidelity Money
Trust Company Market Portfolio -
Fidelity Management Fidelity Money
Trust Company Market Portfolio -
Fidelity Management Fidelity Money
Trust Company Market Portfolio -
Fidelity Management Fidelity Managed
Trust Company Income Portfolio -
(1) Current value at beginning of year or cost of purchase if acquired
during the year.
13
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1995
- ------------------------------------------------------------------------
Series of transactions in the same issue aggregating more than 5% of the
January 1, 1995 current value of Plan assets.
Description Number of Purchase Selling
Party Involved of Asset Transactions Price Price
- -------------- ---------------- ------------ ------------ ------------
Fidelity Management Fidelity Money
Trust Company Market Portfolio 67 $ - $24,308,672
Fidelity Management Fidelity Money
Trust Company Market Portfolio 76 24,226,234 -
Fidelity Management Fidelity Managed
Trust Company Income Portfolio 35 - 3,178,999
Fidelity Managment Fidelity Managed
Trust Company Income Portfolio 62 8,098,660 -
Fidelity Fidelity Magellan
Investments Fund 37 - 4,654,329
FiIdelity Fidelity Magellan
Investments Fund 55 13,234,262 -
Fidelity Fidelity Puritan
Investments Fund 34 - 2,697,480
Fidelity Fidelity Purtian
Investments Fund 64 9,063,137 -
NovaCare, Inc. NovaCare, Inc.
Common Stock 10 2,476,284 -
Current
Value at
Description Expense Cost of Transaction
Party Involved of Asset Incurred Asset (1) Date
- ------------------- ----------- --------- ------------ -----------
Fidelity Management Fidelity Money
Trust Company Market Portfolio $ - $ 24,308,672 $ 24,308,672
Fidelity Managment Fidelity Money
Trust Company Market Portfolio - 24,226,234 24,226,234
Fidelity Managment Fidelity Managed
Trust Company Income Portfolio - 3,178,999 3,178,999
Fidelity Management Fidelity Managed
Trust Company Income Portfolio - 8,098,660 8,098,660
Fidelity Fidelity Magellan
Investments Fund - 3,714,856 4,654,329
Fidelity Fidelity Magellan
Investments Fund - 13,234,262 13,234,262
Fidelity Fidelity Puritan
Investments Fund - 2,478,221 2,697,480
Fidelity Fidelity Puritan
Investments Fund - 9,063,137 9,063,137
NovaCare, Inc. NovaCare, Inc.
Common Stock - 2,476,284 2,476,284
Net Gain/
Party Involved Description of Asset (Loss)
- ------------------- --------------------- ------------
Fidelity Management Fidelity Money
Trust Company Market Portfolio $ -
Fidelity Managment Fidelity Money
Trust Company Market Portfolio -
Fidelity Managment Fidelity Managed
Trust Company Income Portfolio -
Fidelity Managment Fidelity Managed
Trust Company Income Portfolio -
Fidelity Investments Fidelity Magellan
Fund 939,473
Fidelity Investments Fidelity Magellan
Fund -
Fidelity Investments Fidelity Puritan
Fund 219,259
Fidelity Investments Fidelity Puritan
Fund -
NovaCare, Inc. NovaCare, Inc.
Common Stock -
(1) Current value at beginning of year or cost of purchase if aquired during
the year.
14
<PAGE>
NOVACARE, INC. 401(K) RETIREMENT SAVINGS PLAN
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
"NovaCare, Inc. 401(k) Retirement Savings Plan" has duly caused this annual
report to be signed on its behalf by the Undersigned therunto duly authorized.
NovaCare, Inc. 401(k)Retirement Savings Plan
--------------------------------------------
Date: June 28,1996 By: /s/Robert E. Healy, Jr.
------------ -----------------------
Robert E. Healy, Jr.
Trustee
By: /s/Bernard F. Thompson
----------------------
Bernard F. Thompson
Trustee
15
(PAGE)
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-36889 and No. 33-88746) of NovaCare, Inc.
of our report dated June 4, 1996 appearing on Page 2 of this Form 11-K.
PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
June 28, 1996
