<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 11-K
-----------------
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Year Ended December 31, 1995
-----------------
GRANCARE, INC. 401(k) SAVINGS PLAN
GRANCARE, INC.
One Ravinia Drive, Suite 1500
Atlanta, Georgia 30346
-----------------
Commission File Number 1-19571
<PAGE>
Items 1-3 not applicable under ERISA Filing.
Item 4. Financial Statements and Exhibits.
Financial Statements Page No.
Independent Auditors' Report 1
Independent Auditors' Consent 2
Financial Statement Index 5
Supplemental Schedules Furnished Pursuant to Department
of Labor's Rules and Regulations
Item 27a - Schedule of Assets Held for Investment Purposes
Item 27d - Schedule of Reportable Transactions
All other schedules are omitted because they are not applicable
<PAGE>
[LETTERHEAD OF DELOITTE & TOUCHE LLP APPEARS HERE]
INDEPENDENT AUDITORS' REPORT
Board of Directors
GranCare, Inc. 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for
benefits of GranCare, Inc. 401(k) Savings Plan (the "Plan") as of December 31,
1995 and 1994 and the related statements of changes in net assets available for
benefits with supplemental fund information for the years then ended. 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 in accordance with generally accepted auditing
standards. Those standards 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. 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 benefits of the Plan as of
December 31, 1995 and 1994, and the changes in net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information by fund is
presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding net assets available
for benefits and changes in net assets available for benefits of the individual
funds, and is not a required part of the basic financial statements. The
accompanying supplemental schedules listed in the Table of Contents are also
presented for the purpose of additional analysis and are not a required part of
the basic 1995 financial statements, but are supplementary schedules 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
information by fund and supplemental schedules are the responsibility of the
Plan's management. Such supplemental information by fund has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects when considered
in relation to the basic financial statements taken as a whole. The
supplemental schedules 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 when considered in relation to the basic 1995
financial statements taken as a whole.
/S/DELOITTE & TOUCHE LLP
June 14, 1996
<PAGE>
Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
GRANCARE, INC. 401(k) SAVINGS PLAN
By /s/ Mark Rubenstein - VP
------------------------------------
Mark Rubenstein, Plan Administrator
Date: June 14, 1996
<PAGE>
[LETTERHEAD OF DELOITTE & TOUCHE LLP APPEARS HERE]
- --------------------------------------------------------------------------------
GRANCARE, INC. 401(K) SAVINGS PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994,
SUPPLEMENTAL SCHEDULES
FOR THE YEAR ENDED DECEMBER 31, 1995,
AND INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
- ---------------
DELOITTE TOUCHE
THOMATSU
INTERNATIONAL
- ---------------
<PAGE>
GRANCARE, INC. 401(K) SAVINGS PLAN:
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 1995 AND 1994:
Statements of Net Assets Available for Benefits 1
Statements of Changes in Net Assets Available for Benefits
With Supplemental Fund Information 2
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1995:
Item 27a - Schedule of Assets Held for Investment Purposes 9
Item 27d - Schedule of Reportable Transactions 10
Schedules required under the Employment Retirement Income Security Act of 1974
(ERISA), other than the schedules listed above, are omitted because of the
absence of the conditions under which they are required.
<PAGE>
GRANCARE,INC. 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1995 1994
<S> <C> <C>
INVESTMENTS - At fair value (Note 4):
Money Market Fund $ 4,508,824 $ 3,163,876
Income Fund of America 5,131,557 2,603,640
Investment Company of America 6,329,845 2,934,581
Company Stock Fund 1,286,181 883,960
Loan Fund 33,206 71,182
------------ ------------
17,289,613 9,657,239
CONTRIBUTIONS RECEIVABLE:
Participants 375,000 215,125
Company 1,577,744 1,206,900
------------ ------------
1,952,744 1,422,025
INTEREST AND DIVIDENDS RECEIVABLE 145,428 70,217
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 19,387,785 $ 11,149,481
============ ============
</TABLE>
See notes to financial statements.
-1-
<PAGE>
GRANCARE, INC. 401(K) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS WITH SUPPLEMENTAL FUND INFORMATION
YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Supplemental Information By Fund
-----------------------------------------------------------------------
Company
Income Investment Money Stock Fund-
Fund of Company Market GranCare, Loan
America of America Fund Inc. Fund Total
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $1,040,313 $1,446,712 $ 757,143 $ 540,986 $ 3,785,154
Company 182,806 150,650 1,620,308 58,757 2,012,521
Interest 3,651 4,335 214,283 3,492 225,761
Dividends 263,067 341,326 604,393
Net appreciation (depreciation) in fair
value of investments (Note 4) 644,258 737,760 (205,908) 1,176,110
Transfer from other plan (Note 3) 734,588 793,712 951,418 88,998 2,568,716
Other (20,434) (7,503) (27,937)
---------- ---------- ---------- --------- ---------- -----------
Total additions 2,868,683 3,474,495 3,522,718 478,822 10,344,718
DEDUCTIONS:
Benefits paid to participants 473,012 607,043 856,777 169,582 2,106,414
Interfund transfers out (in) (310,094) (599,317) 1,020,883 (111,472) -
Loan payments (37,977) $ 37,977 -
---------- ---------- ---------- --------- ---------- -----------
Total deductions 162,918 7,726 1,839,683 58,110 37,977 2,106,414
---------- ---------- ---------- --------- ---------- -----------
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR BENEFITS 2,705,765 3,466,769 1,683,035 420,712 (37,977) 8,238,304
NET ASSETS AVAILABLE FOR BENEFITS -
Beginning of year 2,743,880 3,039,762 4,365,920 928,736 71,183 11,149,481
---------- ---------- ---------- --------- ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS - End
of year $5,449,645 $6,506,531 $6,048,955 $1,349,448 $ 33,206 $19,387,785
---------- ---------- ---------- --------- ---------- -----------
</TABLE>
(Continued)
-2-
<PAGE>
GRANCARE, INC. 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS WITH SUPPLEMENTAL FUND INFORMATION
YEAR ENDED DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Supplemental Information By Fund
-----------------------------------------------------------------
Company
Income Investment Money Stock Fund -
Fund of Company Market GranCare, Loan
America of America Fund Inc. Fund Total
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $ 778,890 $ 978,554 $ 618,423 $392,093 $ 2,767,960
Company 68,778 78,438 1,209,224 32,431 1,388,871
Interest 516 603 113,774 765 115,658
Dividends 129,487 150,852 280,339
Net depreciation in fair
value of investments (Note 4) (181,665) (174,380) (63,371) (419,416)
Transfer from other plan (NOte 3) 1,793,745 1,793,745
Other 4,039 $85,054 89,093
---------- ---------- ---------- -------- ------- -----------
Total additions 796,006 1,034,067 3,735,166 365,957 85,054 6,016,250
DEDUCTIONS:
Benefits paid 315,813 324,357 553,573 157,301 838 1,351,882
Interfund transfers out (in) (692,914) (794,973) 1,679,741 (204,887) 13,033 -
---------- ---------- ---------- -------- ------- -----------
Total deductions (377,101) (470,616) 2,233,314 (47,586) 13,871 1,351,882
---------- ---------- ---------- -------- ------- -----------
INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 1,173,107 1,504,683 1,501,852 413,543 71,183 4,664,368
NET ASSETS AVAILABLE FOR BENEFITS-Beginning of
year 1,570,773 1,535,079 2,864,068 515,193 6,485,113
---------- ---------- ---------- -------- ------- -----------
NET ASSETS AVAILABLE FOR BENEFITS-End of year $2,743,880 $3,039,762 $4,365,920 $928,736 $71,183 $11,149,481
========== ========== ========== ======== ======= ===========
</TABLE>
See notes to financial statements.
(Concluded)
-3-
<PAGE>
GRANCARE, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
1. PLAN DESCRIPTION
The following brief description of GranCare 401(k) Savings Plan (the
"Plan") is provided for general information purposes only. Participants
should refer to "GranCare Savings Plan Summary Plan Description," copies
of which are available from the Plan Administrator, for more complete
information.
Estimates - The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ from those
estimates.
General - The Plan is a defined contribution 401(k) plan for eligible
employees of GranCare, Inc. and subsidiaries ("GCI"). The Plan became
effective as of July 1, 1987; however, there was no plan activity prior to
1988. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
Eligibility - Employees become eligible to participate in the Plan upon
completion of one year of service and at least 1,000 hours of service.
Employees must be age 21 or older to participate in the Plan.
Contributions- An eligible employee of GCI may authorize pre-tax payroll
deductions for the purposes of the Plan of amounts up to 15% of eligible
compensation or $7,000 per year (adjusted annually for the cost of
living), whichever is less. GCI contributes an amount equal to 25% of the
first 4% of each participant's contribution to the Plan. To receive the
Company matching contributions, the employee must be employed on the last
day of the plan year.
In addition to the contributions to the 401(k) portion of the Plan,
discussed in the previous paragraph, the Company also makes a profit
sharing contribution annually. Employees do not need to participate in the
401(k) component of the Plan to receive a profit sharing contribution. The
annual contribution is equal to 2% of total compensation and 2% of pay
earned over one-half of the Social Security base.
Participant Accounts - Each participant's account is credited with the
participant's contribution, the Company's contribution, and an allocation
of the Plan earnings based on the participant's account balance.
Vesting - Participants have a nonforfeitable interest at all times in the
value of their individual account.
Payment of Benefits -The participant's contributions may be withdrawn upon
retirement, death, termination of employment, or certain hardship
situations.
-4-
<PAGE>
Loans - The Plan document does not provide for loans to participants.
However, the Plan accepted the loans on the accompanying statements of net
assets available in connection with a merger of another plan. The loans
bear interest at 10%. They are secured by the account balances of the
participant and are generally payable over five years.
Administrative Expenses - Administrative expenses are paid by GCI.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements of the Plan
have been prepared on an accrual basis of accounting.
Valuation of Investments - The Plan's investments in the GranCare, Inc.
Company Stock Fund and pooled equity funds are stated at fair value as
reported by United Missouri Bank, N.A. (the "Trustee") and are based on
quoted market prices on the last business day of the plan year.
3. TRANSFERS FROM OTHER PLANS
Effective March 31, 1994, the International Health Care Management, Inc.
Retirement Savings Plan merged with the Plan and its assets and
participants' account balances were transferred to the Plan.
Effective July 1, 1995, the Automated Pharmaceutical Service 401(k)
Retirement Savings Plan and the Compudose Pharmacies 401(k) Retirement
Savings Plan were merged with the Plan and their assets and participants'
account balances were transferred to the Plan.
4. INVESTMENTS
The Plan provides four investment options to participants. Participating
employees may elect to have their contributions initially invested 100% in
any one, or in multiples of 1%, in any of the following: Company Stock
Fund (GranCare, Inc. common stock), two available stock mutual funds of
equity securities (Income Fund of America and Investment Company of
America, referred to as pooled equity funds), and a Money Market Fund.
Participants may change their investment elections more than once each
plan year; however, any requested change is effective at the beginning of
the next quarter. The Plan's investments are held and transactions are
executed by the Trustee.
-5-
<PAGE>
The following table presents the fair value of investments at December 31,
1995 and 1994. Investments that represent 5% or more of the Plan's net
assets are separately identified:
<TABLE>
<CAPTION>
1995 1994
----------------------------------- -------------------------------
Number of Market Number of Market
Shares/Units Value Shares/Units Value
<S> <C> <C> <C> <C>
Money Market Fund $ 4,508,824 $3,163,876
Income Fund of America:
Income Fund of America 298,589 4,738,610 194,420 2,554,680
Money Market Fund 392,947 48,960
----------- ----------
5,131,557 2,603,640
Investment Company of America:
Investment Company of America 268,786 5,808,457 162,241 2,866,801
Money Market Fund 521,388 67,780
----------- ----------
6,329,845 2,934,581
Company Stock Fund:
GranCare, Inc. Stock 77,654 1,125,983 48,062 841,085
Money Market Fund 160,198 42,875
----------- ----------
- 1,286,181 883,960
Loan Fund 33,206 71,182
----------- ----------
Total Investments $17,289,613 $9,657,239
=========== ==========
</TABLE>
-6-
<PAGE>
During the years ended December 31, 1995 and 1994, the net appreciation
(depreciation) in fair value of investments was as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Income Fund of America $ 644,258 $ (181,665)
Investment Company of America 737,760 (174,380)
Company Stock Fund (205,908) $ (63,371)
---------- ----------
$1,176,110 $ (419,416)
========== ==========
</TABLE>
Transactions in the common stock of GCI for the years ended December 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------- ----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C>
Aggregate purchases 39,110 $641,273 27,305 $521,948
Aggregate sales and distributions
to participants 9,358 169,202 5,812 108,349
</TABLE>
5. BENEFITS PAYABLE
Benefits payable to participants at December 31, 1995 and 1994 were
$497,894 and $310,819, respectively.
6. RELATED PARTY TRANSACTION
One of the investment vehicles available to employees, the Company Stock
Fund, contains the stock of GCI, the Plan Sponsor. The cost, market
value, and number of shares held by the Plan as well as net depreciation
is more fully described in Note 4.
Participant contributions which have been allocated to the Income Fund of
America, the Investment Company of America, and the Company Stock Fund are
temporarily invested in the Plan Trustee's Money Market Fund until such
time as shares of those investment vehicles can be purchased.
7. INCOME TAX STATUS
The Plan obtained its latest determination letter on September 11, 1995,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code.
-7-
<PAGE>
SUPPLEMENTAL SCHEDULES
----------------------
(See Independent Auditors' Report)
-8-
<PAGE>
GRANCARE, INC. 401(k) SAVINGS PLAN
<TABLE>
<CAPTION>
ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------
Party-In Shares/ Current
Interest Identity of Issue or Borrower Description of Investment Units Cost Value
<S> <C> <C> <C> <C> <C>
* United Missouri Bank, N.A. Money Market Fund $ 4,508,824 $ 4,508,824
Income Fund of America Pooled Equity Funds 298,589 4,300,057 4,738,610
* United Missouri Bank, N.A. Money Market Funds 392,946 392,947
Investment Company of America Pooled Equity Funds 268,786 5,288,211 5,808,457
* United Missouri Bank, N.A. Money Market Funds 521,388 521,388
* Company Stock Fund GranCare, Inc. Stock 77,654 1,374,530 1,125,983
* United Missouri Bank, N.A. Money Market Funds 160,198 160,198
Loans to Participants 33,206 33,206
------------ ------------
$ 16,579,360 $ 17,289,613
============ ============
* Represents party-in-interest to the Plan.
</TABLE>
-9-
<PAGE>
GRANCARE, INC. 401(K) SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CURRENT VALUE
IDENTITY OF DESCRIPTION NUMBER OF PURCHASE SELLING COST OF ON TRANSACTION NET GAIN
PARTY/ASSET OF ASSET TRANSACTIONS PRICE PRICE ASSET DATE (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C>
SINGLE TRANSACTION:
United Missouri Bank:
* Money Market Fund Money Market $ 4,956,071 $ 4,956,071 $ 4,956,071
Income Fund of America Pooled Equity Fund 809,148 809,148 809,148
Investment Company
of America Pooled Equity Fund 902,358 902,358 902,358
SERIES OF TRANSACTIONS:
United Missouri Bank:
* UMB - Prime - R Money Market 242 22,497,846 22,497,846 22,497,846
148 $20,116,495 20,116,495 20,116,495
Income Fund of America Pooled Equity Fund 18 2,097,978 2,097,978 2,097,978
12 558,305 519,941 558,305 $ 38,364
Investment Company of
America Pooled Equity Fund 22 2,891,123 2,891,123 2,891,123
11 687,225 622,651 687,225 64,574
* GranCare, Inc. Common Stock 16 641,273 641,273 641,273
7 140,199 169,202 140,199 (29,003)
</TABLE>
-10-
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Grancare, Inc. on Form S-8, Registration No. 33-94994, of our report dated June
14, 1996 appearing in the Annual Report on 11-K of the GranCare, Inc. 401(k)
Savings Plan for the year ended December 31, 1995.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Atlanta, Georgia
July 1,1996
